Curt Doolittle

Category: Economics, Finance, and Political Economy

  • Defining Capitalism

    “Capitalism as it is used in common discourse, refers to a decision making-methodology in it’s narrowest form, and a general bias in it’s broader form, that is used by members of a population that describes a broad spectrum of property definitions from the most several (individual) property, to the most shareholder (collective) forms of property, the entire spectrum of which requires calculable means of planning production, and the transfer between individuals by voluntary means — and which specifically prohibits transfer by involuntary means. This institutional bias, it’s property definitions, the modes of transfer, and the means of dispute resolution, can be represented along a second axis describing a broad spectrum of enforcement mechanisms from the most informal and voluntary, which rely entirely upon the power of ostracization and opportunity deprivation, to the most formal and involuntary, which rely upon a contract called a constitution that enumerates property rights and exceptions, either written and explicit or oral and traditional, and that includes a judiciary that resolves disputes according to those enumerated rights and exceptions no matter how they are encoded.’ X-Axis: Individual ->Shareholder Y-Axis: Informal -> Formal (Diagram Attached)

    An anarchist might argue that capitalism consists of individual property rights (informal+individual). A classical liberal would argue that capitalism consists of individual property rights that are constitutionally administered (Individual+Formal). A communist would argue that property is entirely shareholder driven and at least according to marx, rules would be unnecessary under communism (Shareholder + informal). A democratic socialist would argue that property is communal, and divided up for purely utilitarian purposes, and that laws and administration are needed (Shareholder + Formal). All current political philosophies incorporate the notion of property rights, since economic calculation is impossible without them. The current argument is that all individuals in an economy are shareholders (which is hard to refute), and that because they are shareholders they are due dividends. Our ancestors solved this problem by suggesting that freedom was sufficient compensation for shareholders. ‘Input freedom’ or ‘freedom of opportunity’. This means that there are no involuntary transfers allowed. Property requires institutions because institutions are required to defend property. The private law society, and it’s progenitor the monarchy, are superior forms of government. They are perhaps the best form of government ever invented.

  • Capitalism

    http://www.capitalismv3.com/index.php/2011/12/defining-capitalism/Defining Capitalism

    Source date (UTC): 2011-12-11 20:47:00 UTC

  • From Freedom To Slavery: The Five Evolutionary Stages Of Fiat Money

    From Freedom To Slavery: The Five Evolutionary Stages Of Fiat Money http://www.capitalismv3.com/index.php/2011/12/the-five-evolutionary-stages-of-fiat-money/

    Source date (UTC): 2011-12-11 13:46:01 UTC

    Original post: https://twitter.com/i/web/status/145861900180267008

  • From Freedom To Slavery: The Five Evolutionary Stages Of Fiat Money

    From Freedom To Slavery: The Five Evolutionary Stages Of Fiat Money http://www.capitalismv3.com/index.php/2011/12/the-five-evolutionary-stages-of-fiat-money/

    Source date (UTC): 2011-12-10 18:43:37 UTC

    Original post: https://twitter.com/i/web/status/145574404510846976

  • Q: “So why is everyone so opposed to inflation? Don’t they realize that inflatio

    Q: “So why is everyone so opposed to inflation? Don’t they realize that inflation reduces debt in real terms?”

    This is why people are opposed to inflation:

    1) Moral hazard – punishes people who save and live within their means

    2) Fixed Income Punishment – Harms those on fixed incomes who are impoverished by inflation.

    3) Business Risk Taking Impediments – planning becomes difficult because of price variability (this can be good and bad).

    4) Interest Rate Peaks – barrier to rates. Effectively inflation helps big companies with fixed capital costs, and hurts small businesses who need cheap access to capital. This is why Paul Krugman’s chart was effective in 1935 and is ineffective today.

    Source date (UTC): 2011-12-10 15:06:00 UTC

  • Freedom to Slavery: The Five Evolutionary Stages Of Fiat Currency

    http://www.capitalismv3.com/index.php/2011/12/the-five-evolutionary-stages-of-fiat-money/From Freedom to Slavery: The Five Evolutionary Stages Of Fiat Currency.

    Source date (UTC): 2011-12-10 13:42:00 UTC

  • Democracy is Irrelevant for The Creation Of Prosperity

    Democracy is Irrelevant for The Creation Of Prosperity. http://www.capitalismv3.com/index.php/2011/12/democracy-is-irrelevant-for-the-creation-of-prosperity/

    Source date (UTC): 2011-12-08 14:59:47 UTC

    Original post: https://twitter.com/i/web/status/144793298962362370

  • “We don’t let children play with matches. It’s dangerous. Not just for them, but

    “We don’t let children play with matches. It’s dangerous. Not just for them, but for everyone else. They can burn down the whole house. For the same reason, we shouldn’t let Keynesians play with money. They burn the civilization to the ground while they cheer the bonfire, congratulating themselves on having made heat for everyone.” — (Me.)

    Source date (UTC): 2011-12-05 09:17:00 UTC

  • Labor and Education Numbers Illustrate What’s Wrong With Progressives And Keynesianism

    On Modeled Behavior Karl Smith uses these diagrams, and from it concludes:

    “The United States is becoming more educated faster than the economy would absorb educated workers.”

    Actually, that statement would attribute value to education that is not demonstrated by the numbers in the market. It would just as likely suggest that ‘education’ has lost it’s meaning, and that being ‘educated’ is becoming disconnected from being ‘productive’ where ‘Productive’ is determined by the return on one’s skills in the marketplace. Islamic countries misallocate human capital too — by educating people in “islamic studies”. Just as westerners do by educating people into the vast literature and pseudoscience of the democratic mythos. We are still educating people as if they’re farm workers moving into industrial labor as if it’s 1949, and in college in particular, educating the middle class as if they are entering a world of comparative privilege – and the market is demonstrating the folly of it. If the absolute number of ‘hard’ degrees has remained constant since 1963, while the percentage of the population with degrees has increased so dramatically, then we cannot have kept pace with technology that increasingly requires hard degrees. SOLUTION?

      The market is smarter than planners, politicians and economists. ILLUSTRATING THE PROGRESSIVE FAILURE And this is the second post on Modeled Behavior in three days that illustrates what’s wrong with solving for employment using monetary policy instead of solving for inter-temporal productivity using ALL AVAILABLE POLICY. It assumes that inter-temporal redistribution of money for the purpose of increasing consumption regardless of productive ends has NO EFFECT on future productivity. (Thats the whole problem with Keynesianism isn’t it?) It’s the great progressive failure, It demonstrates the failure of progressive policy. It demonstrates the folly of the progressive hijacking of Keynesian ideas — just as progressives – democratic socialists – have hijacked the world ‘liberal’. (Keynesianism has become synonymous with irrational progressive philosophy despite that it does not have to be.) Progressivism is the philosophy of kicking the can down the road until the entire economy collapses from long term misallocation of human capital. From that perspective the IS-MP approach is even more destructive than IS-LM. FWIW: I’m not an anarchist, but a neo-classical liberal using Austrian methodology. Austrianism is a methodology of observation using Propertarian analysis. Austrian methods have been adopted by people with libertarian sentiments. Libertarianism is a philosophy that is an outgrowth of Catholic Natural Law, which is an a restatement of greek philosophy, which in turn is the science of ‘observation’ of human behavior. From this standpoint, Keynesianism is UNSCIENTIFIC because it denies the observation of some factors in order to provide confirmation of other factors. The purpose of the entire progressive project is the accumulation of state power using methods that produce consequences that are harmful to the polity over the long term. There is no free lunch. There is no ‘natural momentum’ to innovation in an economy. Consumption also consumes differences in innovation that make consumption possible. You can borrow across time, but it’s either an investment or a loss, and both investments and losses are cumulative. BTW: There is nothing that can be expressed in mathematics that cannot be expressed in human language. There is quite a bit that can be expressed in human language that cannot be expressed in mathematics. This is because mathematics is a process of maintaining ratios, and language is a process for determining causality. Curt

    • Keynesian Absurd Optimism

      From Modeled Behavior

      The desire of the expanders to expand is always exponential. In the end you only need one of them and they will attempt to take over the entire economy. What’s stops them is competition, scarce real resources and financing. Thus if you are in a world where no one else is looking to expand, and real resources are slack, financing is all that’s holding one of these folks back. Practically speaking the price of slack resources also matters because if they actually collapsed in price then at some point you could simply self-finance your empire. But, there is never a shortage of empire builders. There is only a shortage of people willing to lend to empire builders.

      Well, first lets understand that it is entirely possible to saturate all opportunity within any economy unless there is some sort of asymmetry of either resources, information, or technology. The typical keynesian assumption is that we will continue to discover opportunities by the application of technology. And that we can keep doing so forever. I’ll have to answer that obviously historical falsehood in a later posting. But the choice sentence elsewhere in the article was this one:

      “If people genuinely couldn’t find good ways to employ resources then everyone would get poorer but as long as financing is available there need be no recession.”

      That’s the whole point now, isn’t it? Are you sure you understand the implications of that sentence? I don’t think so. Whenever one group of people (a) flocks to an opportunity in significant numbers that they deny access to another group of people (b), the group (b) will work against the interests of group (a) in order to gain their own opportunity. If you view society as a collective consisting of a community of common interests, then perhaps you might favor your progressive bias. However, if you see society as consisting of groups engaged in perpetual and unrelenting class and cultural warfare over the distribution and means of obtaining status and opportunity — where each group uses the state to apply coercion against other sects, then one would develop an entirely different conclusion. Furthermore, if you view yourself as a minority competing with foreign groups, then you would increase your bias in favor group persistence. And from that position, you would see people who ally with the state as your competitors, not members of your community. You (Keynesians) assume the state is a benefit, and apply a methodology that confirms that the state is a benefit, because it serves to confirm your bias. But that benefit is working AGAINST as many preferences as it is in FAVOR of it. Because we have no community of common interest. There is no community of common interest in an empire. The meaning of empire is precisely that people do not share common interests. Small homogenous states are egalitarian because of the status economy – which determines access to mates, people, and opportunity. The status economy is also the natural accounting system of many. People value money and culture, morals,ethics and manners, (that set of forgone opportunity costs we all pay in each moment of our day) as well as different I don’t think you grasp the importance of the fact that almost all decisions consist of far more than prices. In fact, at any given point, market prices are only one factor in any transaction. People actively seek circumstances where they can avoid price consideration – either to demonstrate their status, or to gain human attention, or to simply avoid existing in the monetary economy. In complex decisions, all sorts of different biases are ‘funded’ by choices between one provider of goods and another whenever prices are not marginally different. Assuming all prices are equal for a particular good or service, people generally do business with those people with whom they can exchange status signals, or options on future discounts due to loyalty. It’s not that you’re mistaken in your understanding of the monetary models, or the benefit of monetary policy. It’s that you’re not accounting for the friction in that model that is determined by the signaling economy. And that friction can approach the infinite whenever you do not have a homogenous society. And if you have a homogenous society, you then need a common currency. Because a currency is the means of shared investment, risk and reward among a people with a set of common interests. (Homogenous: meaning the shared mythology, the shared methods of signaling within the methodology, the shared definitions of property, the shared methods of paying for the informal institutions that perpetuate those property definitions: manners, ethics, and morals, the shared institutions for resolving conflicts over the transfer of property, and the shared institutions for concentrating and applying capital toward shared ends. All of which is bounded by the complexity of the division of labor in in turn which is determined by the percentage of the population with an of IQ over 105.) 🙂 Curt