Curt Doolittle

Category: Economics, Finance, and Political Economy

  • not bashing NPR. I just dont’ think should be publicly funded

    http://www.capitalismv3.com/?p=2415I’m not bashing NPR. I just dont’ think should be publicly funded.

    Source date (UTC): 2011-03-12 19:20:00 UTC

  • The Luddism Of Marxism And Anarcho Capitalism

    All human beings seek to game the market. The market system depends upon it. Without the desire to game the market and prices, we would have no innovation, no production increases, and no price decreases. In our market, innovation is the only ‘fair’ means by which we tolerate winning. Because winning in this market, means consumers reap the rewards of competition. Credit innovation is perhaps the most powerful advantage that the west has possessed. But all human beings seek to game the market. The market is a construct of man. As a construct it needs to be maintained. Not just from external forces, not jjust from governemnts, not just from cooperative organizations, but from individuals as well. Marxism is an effort to game the market. Anarchic libertarianism is an effort to game the market. Both seek to obtain the rewards of market activity at a discount. Both are luddite strategies. Both seek trade rather than market. Both are regressive strategies. The market, it’s incentives, it’s rules, and it’s communication system of prices are a construct of man. And like any other machine, it needs maintenance. It does not need direction – no human can provide the knowlege to guide it. Instead, It needs to protect against rust: the human propensity for corruption. The very propensity for curruption that guarantes that ihumans innovate to drive the market itself. And silly philosophies whether they be the marxist suppostion that people will not ‘cheat’ or the libertarian suppostiion that people will not act with corruption, are both no more than wishing that gravity did not exist, or that iron did not oxidize. Or, that there is a divine god who gives us scritpture and determines the course of our lives.

  • Capitalism Is A Political Concept

    THIS IS FALSE: “capitalism is not a political concept” – Andrew J Galambos. THIS IS TRUE: Capitalism is not a *rhetorical* concept that relies upon the process of debate for the purpose of decision-making about the use of resources within a geography. However, capitalism is a political concept, because it relies upon the **absence** of rhetorical debate for the purpose of decision-making about the use of resources in a geography. And it requires agreement upon the *absence* of authoritarian property definitions, and managerial administration of property and transactions. Any principle that requires unanimity of compliance in a population is by definition political. Property rights require unanimity of compliance in a population. And creating those rights (albeit expressed differently in different cultures) is the purpose of government. Some governments create horrid property rights, others egalitarian. All nations have property rights of some sort. But few have individual property rights. And it’s individual property rights that permit economic calculation and incentives in a vast division of knowledge and labor. Therefore Capitalism is a political concept even if it does not include a dependence upon the process of debate for the purpose of allocating resources. Capitalism is a process of utilizing and allocating resources and providing incentives to serve one another. It is a political concept. It simply does not depend upon the decision-making of politicians – managers. Even totalitarianism is a political process because some number of people must be incentivized to comply with the totalitarian edicts for the purpose of compelling those people who are non-compliant. The capitalist system simply acknowledges that the market is superior to both managerial socialism, authoritarianism, and classical republican rhetorical debate. Because the purpose of the market is to allow us to cooperate in large numbers WITHOUT debate when our minds are incapable of possessing sufficient knowledge, and we are not capable of coordinating actions in a vast division of knowledge and labor. Nor is debate capable of providing the individual incentives needed for peaceful cooperation, since there is no ordered agreement on the use of resources in a population, nor can there be agreement on the use of resources other than under market prices. This is the fundamental criticism of socialism that brought about its end. it is not that socialism is immoral. It is that it is IMPOSSIBLE for people to cooperate, to calculate, and to possess incentives for increasing production that then causes decreases in prices by any other means, whether rhetorical or dictatorial. – CD. We have given up on socialism, which means the destruction of private property. We have instead, adopted redistributive socialism, which treats all property as collective, and where individual property is a temporary right for the purpose of cooperating and coordinating, and where rights to commissions on the use of property are determined by the state. This democratic socialism is simply a slower way of destroying a civilization than individual property rights. That there may be limits on the concentration of capital is not unreasonable. If money and property can be used to distort the market, or for political ends, then this is the exercise of power that is not in the interest of citizens. Therefore there must be limits on the use of capital. Especially under fiat money, where all money is effectively borrowed from average citizens.

  • Capitalism? It’s Cooperative Technology. It’s Not A Religion.

    A laugh. From a Galambos Fan. A link to a posting on Dubai’s economy.

    “Capitalism is that societal structure whose mechanism is capable of protecting all forms of property completely.” — Galambos   Is the new epic-center of capitalism to be the Islamic World?

    They already have a religion… 😉 But let’s look at this Islamic world:

    • Low median iq.
    • Poor education.
    • Science-denying biases.
    • Rampant mysticism.
    • Religious schism.
    • No core state

    Dubai simply has no oil and wants to be the Switzerland of the Muslim world. This is not a capitalist strategy per se. It makes no appeal to the social order.  Instead It is a casino strategy – draw from extended regions whomever you can regardless of how they obtained their money.  Capitalism is either a social order with incentives for all members, or it is a platonic and absurd personal philosophy that runs counter to the facts.  😉 Curt

  • Trump? A person of interest in an economic debate? Yes, a few economists erroneo

    http://www.capitalismv3.com/index.php/2010/12/another-on-the-myth-that-isnt-manufacturing-jobs/Donald Trump? A person of interest in an economic debate? Yes, a few economists erroneously take Trump to task for suggesting that we need more manufacturing jobs. They’re wrong. He’s right. I state why – economists are confused.

    Source date (UTC): 2010-12-05 17:55:00 UTC

  • natural to attempt to benefit from a market economy while avoiding any participa

    http://www.capitalismv3.com/index.php/2010/11/the-nature-of-man/It’s natural to attempt to benefit from a market economy while avoiding any participation in it.

    Source date (UTC): 2010-12-05 17:40:00 UTC

  • The Need For Manufacturing Jobs Is Not a Myth

    Myth of China’s Manufacturing Prowess

    Myth of China’s Manufacturing Prowess

    Contrary to the conventional view, manufacturing in the U. S. has been growing in the past two decades despite the decline in manufacturing jobs. The latest data show that the United States is still the largest manufacturer in the world. In 2008, U.S. manufacturing output was $1.8 trillion, compared to $1.4 trillion in China. This means that the United States is producing goods with higher value, such as airplanes and medical equipment. In addition, most jobs the United States lost to China are low-skilled jobs. By outsourcing those low-skilled jobs to China, Americans have actually become more competitive in high-skilled jobs such as management, innovation, and marketing. The low-skilled jobs also serve China well as Chinese rural migrants have opportunities to move up in life and gain some skills.

    I love it: “manufacturing in the U. S. has been growing in the past two decades despite the decline in manufacturing jobs”. What she means is ” productivity has grown as jobs have decreased. Which is a silly metric when the reason people are talking about manufacturing jobs, not productivity. Secondly, what is hidden in those numbers is the vast difference between small plastics firms for example, that are struggling to survive, and vast, highly efficient manufacturing and engineering organizations that ship goods around the world. (I need to get my hands on this data and mine it a bit. I think that it’s far worse than we see. Productivity can jump simply by consuming capital stock, or temporarily slashing wages.) It is a logical fallacy, and perhaps, a socially destructive one, to compare productivity to unemployment. The question is what is the highest productivity available without redistribution of productivity gains? We have a lot of unemployed people due to government’s misallocation of capital over decades if not a century. We need more manufacturing jobs that are also more productive than elsewhere. Manufacturing job != manual labor. It means ‘PRODUCING GOODS FOR EXPORT”. And yes, we need more of them, and the people clamoring for them are right to do so. It’s as if ‘it’s good enough to win numerically, is the same as actually reaching maximum productivity”. I mean, what kind of over-intellectualizing nut makes these kind of comparisons? The problem is that MONETARY POLICY is NOT ENOUGH of a lever. We need policy that intentionally uses the private sector to create productivity enhancing exports that require the creation of jobs. But our ethic of non-involvement, our unsophisticated politicians who are far more skilled at redistribution and regulation are not skilled at, nor capable of, producing long-term investment. And they are very unlikely to ask the top 1000 business people in the country, exclusive of the multinationals, how to accomplish it. Even though we all know The top seven:

      Some Simple Rules Of Thumb:

        8) The private sector is not able to concentrate capital in capital-intensive industries that create exports without both removal of state disincentives, and the assistance of the state in creating a market in which people will risk time and capital. A polity does not always need leadership except in time of crisis. Crisis in this case, created by a government too foolishly dancing with the devil of socialism, dressed up in Keynesian costume, with a joyful following of clerks of the church of positivism chanting from tomes whose authors pretend wisdom. THEREFORE General Liquidity Is An Insufficient Lever For Altering A Distorted Economy. People need opportunities to flock together and exploit together. Opportunities to create exports. Not consumption but exports.

      • Myths That Are Realities: Donald Trump vs CATO and Don Boudreaux

        On Cafe Hayek, Don Boudreaux references a CATO posting which in turn references a Wall Street Journal article, that criticizes Donald Trump for stating that we need more manufacturing jobs. The libertarian sentiments held by my friends at CATO and Cafe Hayek, inform them that productivity gains show that we produce just plenty of manufacturing – thank you very much. Wherein Don supports the Cato position that we do not need more manufacturing, and that any perception that we do, is a myth. (Articles are linked below.) But they are mistaken. A polity desires not productivity, but employment, and not simply employment, but competitive, status-enriching employment — and the lower classes in particular find their social enfranchisement in producing these ‘collective goods’ we call competitive production. They cannot achieve status through individualism, so they seek to find it in collective membership: They want to ‘do good.’ For example, a friend of mine in the advertising business, says that all agency guys want to produce ads that lots of people see, so that if they go into a bar or club or social gathering that they can talk about it and ‘get laid’. They use the term doing “Get Laid Ads”.  To some degree, this is kind of ‘fame’ or social status. The mechanic who produces a fine vehicle, or trendy bit of electronics feels the same. The janitorial staff at an elegant landmark feels the same way as long as they are invested in that cultural value system. Human beings flock to opportunities. Economics does not measure opportunities. It measures results. If we could measure opportunities, we would solve the problem of induction in economic theory instead of having to rely upon equilibria for our calculations. But we cannot read men’s minds. So we cannot measure opportunities. Yes, we can measure imbalances.  We can measure asymmetry. But not innovation. Not creativity. That said, whether we can measure it or not, human beings flock behind opportunities until they are exhausted. This is the reason for the boom and bust cycle: People flock to opportunities, and the flocks accumulate people in vast complex networks in order to exploit those opportunities.  The problem with fiat money and current monetary policy is that our attempts at keeping interests rates low block the information system that interest rates provide us with, and allow people to ‘flock’ well past when others who know better see the opportunity as having exhausted itself. This is the problem with monetary policy, rather that simple lending.  We should not provide unbridled liquidity tot he market. We should provide loans with terms, including terms of use. But, back to the topic of status-enhancing work, these cooperative bits of social membership through work are the processes that create social bonds in the post-religious world. They are more effective than services, redistribution and transfer payments at creating a polity .  And in case I haven’t made it clear, we need a cohesive polity in order for people to trust government, and to enable government to act on their behalf. So:

          IE: TRUMP IS RIGHT. Productivity gains explain the data, but they do not solve the problem of unemployment and underemployment. It is perfectly possible for us to compete with Chinese skilled labor in manufacturing high quality electronics, because they are relying upon labor not mechanization. It may require tax incentives. It may require loans. And it will most definitely require design and development of machines that are faster and better than human hands at manufacturing.  But that task as well, will create manufacturing jobs. Personally, I’m in the business solving for something else: maintaining the wealth created by the US ownership of the system of international trade, and maintaining western technological leadership.  Because,as a minority, only technology can maintain our institutions, our system of defense, and relative economic status. That’s the lesson of western civilization – rate of adoption of technology. Western civilization is a minority strategy for competitiveness: invest in skill, knowledge and technology and you will keep the east at bay despite our inferior numbers. DEFINITIONS:

          1. Productivity: the increase in sales revenue per hour worked.
          2. Employment/Unemployment: The percentage of the population employed.
          3. Unrealized Employment Productivity : The potential productivity gains that could be realized by allocating capital to unemployed resources. The error of mixing short-term return on capital versus long-term return on capital that is achievable through the competitive advantage obtained by accumulated built capital, accumulated knowledge (tacit knowledge), and accumulated skills (explicit knowledge).

          THE MYTHS

          1. The first myth is that capital is, or should be, fluid, and that more fluid capital will seek the greatest returns, rather than the maximum shortest returns. It takes a lot of money to create factories, and machinery and returns take longer than profits on consumer speculation.
          2. The second myth is that human incentives are monetary, rather than status driven. They are status driven first, and monetary second.
          3. The third myth is that economies can ENTIRELY specialize in agrarian, transportation, industrial, service, or research sectors, given the distribution of ability (IQ) in their populations. When instead, they must simply keep as many people employed as productively as possible. While we can attempt to keep the majority of the population living a middle class lifestyle (ie: consuming) we must understand that social classes are largely a function of ability, and that we must not fool ourselves that we must create status enhancing job opportunities for everyone in the spectrum if we want our political enfranchisement to mean anything at all.

          References:

          From CATO http://www.cato-at-liberty.org/a-wall-street-journal-column-understates-the-size-of-u-s-manufacturing/ A Wall Street Journal Column Understates the Size of U.S. Manufacturing by Alan Reynolds “…the manufacturing share of GDP declined markedly over this period as measured in current dollar value of output.” “In 1950, the manufacturing share of the U.S. economy amounted to 27% of nominal GDP, but by 2007 it had fallen to 12.1%. How did a sector that experienced growth at a faster pace than the overall economy become a smaller part of the overall economy? The answer again is productivity growth.” “Those who imagine “we don’t make anything anymore,” as Donald Trump claims, don’t grasp the magnitude of America’s industrial productivity gains.”

          FROM Cafe Hayek Trumped-Up Fiction by DON BOUDREAUX on DECEMBER 2, 2010

          Trumped-Up Fiction
          “If myths could be buried, this item would be yet another nail in the coffin of the data-less myth that Americans “don’t make things any more.” Alas, one can neither reason nor empirically demonstrate people out of positions that they reached without reason or empirical support.”

        • Tyler Re-Reads Road To Serfdom And Misses The Point

          I don’t particularly like criticizing Tyler Cowen, but this is a bit ridiculous, and I”m going to have to chalk it up to excess holiday tryptophan. Last time I read Road To Serfdom was this fall, driving cross country. Actually, I listened to it on tape. And I cautiously pulled aside whenever I needed to take notes. I took ten pages of notes. But that’s OK. It helped with fatigue. Tyler recently re-read Road To Serfdom. Here are his comments.

          Rereading *The Road to Serfdom* Given all the recent fuss, I picked it up again and found: 1. It was more boring and less analytic on matters of public choice than I had been expecting. 2. Although some of Hayek’s major predictions have been proven wrong, they are more defensible than I had been expecting. 3. The most important sentence in the book is “This book, written in my spare time from 1940 to 1943…”  In those years, how many decent democracies were in the world?  How clear was it that the Western powers, even if they won the war, would dismantle wartime economic planning?  How many other peoples’ predictions from those years have panned out?  At that time, Hayek’s worries were perfectly justified. 4. If current trends do turn out very badly, this is not the best guide for understanding exactly why. It’s fine to downgrade the book, relative to some of the claims made on its behalf, but the book doesn’t give us reason to downgrade Hayek.

          Straw man. Self serving at that. No direct criticisms. Obtuse criticisms are illogical. a) The book contributed to the current state of affairs. b) The book was written for the masses, and that is why it has been widely read., and why it contributed to the current state of affairs. (more so than Braudel – although no discredit to him – and others.) c) The book’s criticism of central planning is not the same as the current criticism of the welfare state. And I do not understand, nor does it appear others here do, why you grant particular grace to current democracies – the merit of which is still in play, until we observe how we fare now that the rest of the world has adopted capitalist instituions, and erased our prior advantage. It certainly appears, that instead of Democracy, the award goes to capitalist institutions, calculation and incentives. Democracy is irrelevant. Other than, under democracy, it appears, it is far more common to vote one’s self into tyranny, than is possible under parliamentary monarchy, or oligarchy. I believe the three points above refute all four of your observations. In fact, I’m having trouble understanding why you even view it through your empirical framework. It is a narrative pedagogical work. And as a narrative pedagogical work it will very likely be as durable as most innovative narrative works are, versus the very perishable empirical works of political economy that are fashionable flashes of the moment. AFWIW: Whether one lives under tyranny or not is a matter of perspective determined by one’s definition of property. Cheers

        • Two Founder Quotes Translated Into Forgone Opportunity Costs

          “To suppose that any form of government will secure liberty or happiness without any virtue in the people is a chimerical idea.” — James Madison Becomes: “Liberty represents the ability of each individual to achieve his greatest happiness, but only by servicing the wants and needs of others, and to do so by participating in the market. By doing so he reduces prices and increases choices, and creates value through exchange and decreasing prices through a division of knowledge and labor. It is an impossible supposition, that any form of government that we create, and any system of incentives and punishments we invent, will secure us our desired prosperity without the willing contributions of citizens, who daily pay for that prosperity by their expenditure of effort in production and exchange, but also by their forgoing of opportunity for gain by means of legal plunder, or by fraud, or by theft, and therefore avoiding paying the high cost of maintaining that prosperity.” “To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.” — Thomas Jefferson Becomes: “A man pays for his government first, in forgone opportunity costs, and second, by the expenditure of his time and labor in production and trade, and third, by the taxes he directly pays to the government. He pays with all three: since all three are avoidable, he pays with all three methods. Manners, Ethics, Morals, and most importantly, his avoidance of corruption: to live off the productive results of others without voluntary exchange – provide his easiest means of cheating – of obtaining the benefits of such a society at a discount. A man who does not pay the cost of manners, ethics, morals, AND observation of the cultural system of obligatory payments we call culture, is a thief. Therefore when the government ‘tolerates’ counter-cultural behavior it condones theft. When it supports people who do not make such payments, it pays one group to steal from another. Therefore, no man who makes payments to the state either in taxes or in forgone opportunity costs, should ever tolerate redistribution of his efforts to brigands, and thieves. The purpose of a government is to disallow people to obtain extra-market discounts while obtaining the benefits of participating in the market. A barbarian is someone who does not participate in the market, and in particular, someone who steals from the payments of citizens by avoiding the forgone opportunity costs we call ‘culture’.