Go back and read through this thread. We covered the exact point you are trying to make.
The fact that nobody is challenging me directly on my main point about “sub-optimal strategy”, that I keep repeating, is giving me great confidence that it is correct.
The fact that no one has challenged me directly on my belief that the sun revolves around the Earth has given me great confidence that it is correct.
–the Pope, centuries ago
In any voluntary transaction, the individual and total benefit to the parties exchanging is increased (in this case the benefit to the borrower plus the benefit to the lender). This follows directly from the human action axiom.
Also in your so-called “non-productive” transaction, your borrower going on a vacation cruise etc, does spend his borrowed money on the cruise, restaurants, goods, etc. In each of these transactions the benefit to each side is increased.
Thus, I say your statement: “the total benefit is equal to the benefit to the borrower” is wrong. Without even going into the individual subjectivity, and non-cardinality, of the terms “benefits” and “productive”.
(not 100% sure, but I suspect…) When the house builder, exchanges some of his food borrowed from the food bank for wood/concrete/whatever, the food he gives in exchange already existed in the economy. The house builder man is not creating new wealth by taking wood from the villagers.
Yes he is. Before him there was one less house and alot of wood.
The new existence of the house is part of the “benefit the banker can see”. What I was suggesting is that there is no additional benefit to the community.
Actually I’ve just seen a flaw in my own previous argument which I shall correct when I get some time (its a bit complicated) but I have to go right now… I’ll be back when i get some free time.
I disagree.
In any voluntary transaction, the individual and total benefit to the parties exchanging is increased. The increase in this benefit IS an increase in wealth (think weal, well-ness, welfare). It is not distinctly quantifiable or compare-able, but it exists.
I believe this is Mises’ view. I know that it is mine 
Have you read Human Action?
More consumer goods on the market means more wealth to society as a whole. A statement like this can only come from economic ignorance. Hazlitt also talks about this in his econ and one lesson.
You want to assertain what is a valuable investment ot societty and what is not. Though all attempts to do so will be made arbitrarily but your own opinionated standards.
With your a same argument a socialist could argue that we need not build houses but a community park. This is a more ‘beneficial’ investment for society. So they end up wasting the wood on an object that consumers did not generally want. Consumers did however on the hand want houses. In the situation where the central planner attempted at making a benefiical investment for society they actually ended up wasting the resource pool of society and limited the number of houses coming into the market.
What this does is each house unit costs more. Driving up cost of living prices and making it more difficult for new interested home owners in buying a home.
On the flip side, had the home been allowed to be built consumer demand would have been met. Housing prices would have fallen and cost of living in general would have fallen.
Your a picture perfect example of someone who did not understand Hazlitt’s lesson of what is seen and not seen. You are also playing the roll of central planner, making judgements on what is or is not a benefit to society. The contridiction however lies in meeting consumer demand. On the market the houses would have been made thereby satisifying the needs of the consumer, alternatively if those houses were restricted from being built and in place a ‘societal’ investment was putt here instead. It cannot be said that the investment is any sort of investment at all, especially if no one wanted whatever it was in the first place.
A good economy is one that meets the needs and desires of consumers, nothing more.
Before you distastefully insulted my intellectual character people have been repeating this to you over an dover. It’s obvious that your not open to researching economics. It’s obvious that your not open to scrutiny. Your extremely stubborn and it leads me to believe your more concerned with being right rather then finding the truth. If you were truly interested in finding the truth you wouldn’t be posting here at all you would be reading our book recommendations instead.
Your point is a good one and it has made me think hard. I realise now that I need to modify my claim (despite some peoples claims to the contrary I am here to learn)… I am not stubbornly and irrationally sticking to my original claim.
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Productive investment: The total benefit derived from borrowing X units is equal to to the (A) the benefit to the borrower plus (B) The benefit of trade between the borrower and the community during the investment phase as the borrower spends the X units. (C) The benefit to the community from having cheaper goods available to purchase as a result of the completed investment.
Non-productive investment: The total benefit derived from borrowing X units is equal to (A) the benefit to the borrower plus (B) The benefit of trade between the borrower and the community during the investment phase as the borrower spends the X units + (there is no C).
The B’s in the two cases will be approximately equal because they are both instances of the borrower spending X units.
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.
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I tried, but found it too painful. The old fashioned style made it heavy going- I had to use a dictionary every other sentence. If there is a modern book which covers the same grounds I would perhaps give that a try. Care to suggest something?
Bankers are not “rich” – they are propped up by Consumer-Abdicationist. When the latter become Consumer-Sovereign then their “assets” will be seized – like heads of state chopping block
Politicians - Lobbyist - Bankers - Corporatist - and Unionists all have the same Revenue Stream (in a fashion): 1) Consumers-who-Purchase, 2) Consumers-who-Invest, and 3) Consumers-who-Abdicate (Vote - Lobby - Pay Taxes - Keep Assets in Banks or on Wall Street - Buy Products from Corporatists).
That’s there power – it lies 100% in the control of consumers.
Politicians - Lobbyist - Banks - Unionist, and Corporatist all exist because of Right-Seeking (both positive and negative).
A Consumer-Sovereignty can only exist if Workers and Owners have no rights (voting or lobbying).
We vote and lobby at point-of-sale – Only.
I do believe in a Ron Paul / Misesian Consumer-Minarchist Transition.
Mises was not a Homsteader.
I realise that its going to be hard for me to keep the focus of this thread on the precise issue of totting up the benefits of the loans, because the original post covered potentially much broader issues. So I am now going to make a new thread specifically about the benefits of loans of different types.
The new thread is called “On the benefits of productive vs non-productive loans.”