The benefit to society is proportional to the benefit to the inventor, but not equal to it. So if a banker is to choose to invest between two different inventions then considering the benefit to the inventor alone works perfectly to maximize benefit to society. No problem. But if a banker is choosing between a productive investment and a non-productive one then considering the benefit to the potential borrowers alone does not maximize total benefit to society.
Clartification:
Productive investment: The total benefit is proportional to the benefit to the borrower, but not equal to it.
Non-productive investment: The total benefit is equal to the benefit to the borrower.
So if you are trying to maximize total benefit when comparing a productive investment to a non-productive one then simply comparing benefits to the borrowers is a sub-optimal strategy.
i’m sorry to have given up on you; but i have
How ironic.
Me tolds you all. Btw, how is it that Micka is able to cite Hazlitt while he admits that he hasn’t read any Austrian Economists? Hmm, the wonders of the Internetz.
Things get much worse on the boom phase of an ABCT cycle. During that period, the demand (and therefore interest bid) for non-productive investments, like housing, become unreasonably heightened. So the bias towards lending for non-productive investments becomes even worse.
I know. I remember. And I then joined in too wondering about how somebody can get a 20x20 centrally planned swimming pool.
I’ve been mis-quoted, I have read some Austrian economics. And I’ve watched almost every youtube video the peter schiff has ever made - and that’s a lot!
I prefer watching economics lectures to reading books. I’ve sat through the entire shiller lecture series (not-in one sitting), that’s something like 20 hours in total.
I also watch everything made by max-keiser.
If you look at the links down the right hand side of my mickanomics blog you can see my influences.
This is a mischaracterization of what Hazlitt said. He’s making a point that economics is about what is seen and NOT seen. In otherwords there are likely to be flaws in your desire to central plan bankers. And the consequences of your flaws are likely not to be seen or analyzed into after you put your plan into effect. And as is all to common that flaws of the system are then blamed back on the market.
Really?
This is what I was thinking about…
“The bad economist sees only what immediately
strikes the eye; the good economist also looks
beyond. The bad economist sees only the direct consequences
of a proposed course; the good economist looks
also at the longer and indirect consequences. The bad economist
sees only what the effect of a given policy has been or
will be on one particular group; the good economist inquires
also what the effect of the policy will be on all groups.”
…or to give it the mickanomics treatment..
“The bad banker sees only what immediately
strikes the eye; the good banker also looks
beyond. The bad banker sees only the direct consequences
of a proposed course; the good banker looks
also at the longer and indirect consequences. The bad banker
sees only what the effect of a given policy has been or
will be on one particular group; the good banker inquires
also what the effect of the policy will be on all groups”
Yes really. And every social planner thinks they are wisely looking ‘beyond’. Just like you.
If you actually read the whole book you would have seen that Hazlitt OPENS with an explanation of “The Lesson” and also closes on that same explanation. Have you actually read the book?
Every word… I thought it was pretty good.
The banker is NOT an economist. He is a business man. You cannot substitute banker for economist in this particular context. I think your bias towards proving some market failure is so great that it is causing you to misinterpret, misunderstand, and basically obfuscate what are simple logical propositions leading to natural conclusions.
I was being frivolous.
I have no idea what this thread is about anymore.
Yes, we are drifting somewhat… my main point was this:
===============
Productive investment: The total benefit is proportional to the benefit to the borrower, but not equal to it.
Non-productive investment: The total benefit is equal to the benefit to the borrower.
So if you are trying to maximize total benefit when comparing a productive investment to a non-productive one then simply comparing benefits to the borrowers is a sub-optimal strategy.
Look your whole thesis is there is something wrong with the Banking Sector. But you build your asumption of whats wrong with the banking sector at whim from your own unsubstantiated opinions.
You then denounce the austrian argument but half-ass state your using some of ‘our’ theory’s in your opinion. It mis-characterizes us all togerther and its making you come to insanely rediculous conclusions. Your blog post explains.
- You State: Money does not mirror ‘bartering’.
- Whatever thats suppose to mean. its not suppose to and we don’t WANT it to. We want money to act as a universal unit of exchange
- You state: Most “savings” are just agreements between people.
- You then attack people and mis-construe understandings of savings.
- You state. False conclusion 1. Everyone can save.
False conclusion 2. Savings are safe. - But these are both NOT true and your fabricating your understanding on False conclusions of false conclusions!
- First off everyone CAN save, but it’s up to their own personal preferences as to whether they want to or not. An external party cannot judge or measure as to whether or not someone CAN or CANNOT save. Needs are determined by human action after the fact. Assessing before action has taken place is conjecture.
- Your second point is that savings are safe. No one states this. The argument is that savings are ‘safer’. You seem to take this belief and probably assume that most people save ‘money’ but thats not true. People invest and that becomes their savings. Very few people have thousands of dollars sitting idle in their bank. All savings are investments and are taken at risk. The idea is that it is safer, not simply ‘safe’.
- You state:
- When actually it does essentially work exactly like that
- You then go on to espouse rational exhuberance and try to associate it with the ABCT. We have already refuted this over and over and over. Rational Exhuberance and Austrian Economics do not mix.
In short your conclusion is built apon one fallacious understanding of markets to the next.
At this point it’s not worth the time investment for us to go through each and every single fallacious point you have made on your blog. You basically have a spaghetti roll of mis-understandings. Whats frustrating is you continue to refuse to educate yourself before you derive these opinions.
Great than you remember the first and last chapters.
nirgrahamUK and I constructively debated the issue. nirgrahamUK made some very clever points which made me think very hard about my claims. We whittled down our disagreement to one very specific issue which I will repeat again:
=======================
Productive investment: The total benefit is proportional to the benefit to the borrower, but not equal to it.
Non-productive investment: The total benefit is equal to the benefit to the borrower.
So if you are trying to maximize total benefit when comparing a productive investment to a non-productive one then simply comparing benefits to the borrowers is a sub-optimal strategy.
=======================
I don’t wish to open up the debate again with you covering 101 new areas. I’ve debated with you in the past and from what I’ve seen, you are nowhere near as smart as nirgrahamUK and I won’t get much out of the process. If you want to dispute the very specific claim I’ve just repeated, I may consider debating that with you, but you’d better keep on topic, logical and not abusive otherwise I will just ignore you.
Start one, then get back to us.