The libertarian disconnect!!

So, what do you think will explain it? To the same degree of accuracy (even if you think that accuracy is very limited).

 

I believe in it, but I refrain from arguing it.

We can make reasonably accurate models of how people act under a limited and specific set of circumstances. We cannot, however, make an accurate model of how people act under a constantly changing and virtually unlimited set of circumstances, which is what the "economy" is.

You're better than this. You know that's not my position.

But the leap to normative statements is inevitable. You start with a model that you assume can "reasonably" predict how people will act under a given set of circumstances and then make normative statements on the basis of whether or not a given outcome is "good" or "bad".

 

We can keep building however. For example, the endowment effect could explain features of the stock market but wouldn't be the be all and end all. It also has implications for other area.

After the positive statements you have moved outside of science. Science says what will happen given X or Y. Normative statements say whether or not we should pick X or Y.

One cannot derive an is from an ought.

 

I never said you couldn't make predictions, only that they wouldn't be very accurate.

Determining the orbits of a celestial body is a relatively straightforward process. It is not subject to the amount of variables and chance that weather systems and humans are.

As for your contention that we can predict climate, let us not open that can of worms in this thread.

It's only a decent theory if it can consistently predict human behavior with accuracy and precision.

Because the Austrian approach does not advocate for top-down management and allocation of capital and labor; we do not want to control and direct people, we want to let them determine for themselves what actions to take. Under our system, individuals would choose what works best for themselves and an equilibrium would be realized organically.

 

Supply and demand; the invisible hand, more or less.

 

(Take this as a response to the previous reply as well).

To say that the Austrian approach is better because it does not advocate intervention is the greatest in normative statements ever. First off, it is a normative statement to say we shouldn't intervene and it is an even further normative statement to say that it is a good approach because it espouses the above position.


Science should make no such statements. The objective is to describe not diagnose. Now it is true that politicians and zealous economists stray across this line but that is not a condemnation of the methodology.

We could very well determine that policy X increases employment but that does not mean that we should do that policy.

As for the invisible hand. That does not explain economics. It is a major aspect but it doesn't explain everything. Furthermore the assumption of Say's Law is interesting....have you tested it? (Although that would massively derail the thread).

 

The Austrian approach makes many unsupportable assumptions based on one entirely fantastic first principle, which is that individuals are rational actors who will always base their every action on considered economic calculation. From this false first principle they assume that it is the accumulation of rational decisions by rational actors which creates a rational economy where resources will always be appropriately allocated because every individual will always make the most rational economic choice.

Unfortunately for them this model of human behavior upon which their massive edifice has been painstakingly constructed is entirely bereft of scientific foundation, still adrift in the sea of blind speculation from which it first arose so many decades ago.

 

If someone does what they perceive to be in their own rational self-interest, who are you to say they are acting irrationally? Isn't the rationality of their decision based entirely upon what they subjectively perceive as being in their own self-interest? Who determines whether or not they are acting rationally? You? Some distant central planner?

The fact of the matter is that people will act according to their own perceived self-interest. Of course, this means that some people will end up making "bad" decisions, but what's the alternative? Forcibly depriving them of the ability to make choices that you or some technocrat arbitrarily deems to be irrational?

Anyway, the bottom line is that the Austrian School does not operate under the assumption of perfect rationality, at least, not in the sense you are thinking. They operate under the assumption that the individual is in the best position to determine for themselves how to run their own life - not that they will act with perfect efficiency and rationality in every situation.

 

The essence of the OP is that government will always cater to the bankers, corporatists, and MIC, so therefore libertarianism is illogical.


Wow, that is one of the strongest critiques I have ever heard of libertarianism. Mike Huben would be proud.

 

No, that is incorrect. The essence is that "government will always cater to the bankers, corporatists, and MIC" therefore when you advocate for smaller government and lower taxes, you are only decreasing the parts of government that help regular people, but never the parts of government that benefit the elite. And that you are creating a circumstance whereby the elite continue to receive the benefits from government, but are not asked to pay for the benefits they receive. It is quite simple actually.

PS. Do you want to reply to that argument, or do you prefer to just continue making up straw men?

 

It is ironic that you call my reply a strawman considering that is what your OP is.

Anyways, I am quite aware of the political favoritism and cronyism that occurs between Washington and the rich and the powerful. However, you are under the impression that I should simply view this reality as a logical disconnect for smaller government.

I am not buying it.

 

Your response was objectively a straw man. And nothing I said could be construed as a straw man, so I have a hard time seeing the irony.

Next up, there is a disconnect. The cronyism means that while government may shrink, it will only shrink in ways that hurt the average person and poor people. The wealthy will use their influence to ensure they never bear the brunt of the sacrifices. We just saw this reality in action last month. Republicans refused to cut spending in any way that would impact the wealthy or to raise taxes on the wealthy, and yet Democrats put entitlement spending on the table. Eventually we will see SS attacked(a program that helps millions of average Americans, and yet only contributes 3% of the deficit), but we will not see an end to bailouts, subsidies, patents, copyrights, etc. Government will continue granting privilege to those people in perpetuity. I simply want those people to then be asked to pay for those privileges by paying slightly higher marginal tax rates. Which will then allow us to continue the programs that help others besides the elite(like SS). That seems excessively reasonable to me.

 

I agree with you, but your contention is with modern day Republicans (and Democrats), not libertarians.

Nonetheless, we have a spending problem, not a revenue problem. If we want to spend, then we need to cut elsewhere. The best place to cut right now is our war machine.

As for taxes, I am somewhat of an iconoclast libertarian. We should end all taxes on income, savings, and investment, and resort to a progressive income tax. Regardless, I can't think of a single libertarian who is happy with our tax code.

 

The problem I have with the Austrians is Von Mises assumption that all human decisions come from calculation based solely on economic self- interest and it is the aggregation of individuals acting purely from economic self-interest that creates society. Von Mises sinks further in my opinion by attempting to explain away the imperfection of rational economic decision making to market information deficiencies.

In more simple words, the Austrian School theology is that people act only in their best economic interest and if they do so irrationally it is only because they lack sufficient information.

There is no evidence from actual human mind research (all of which postdate Von Mises assertions) that this is true. In fact the vast majority recent human mind research points to something entirely different, that the vast majority of human decision making had nothing to do with economic calculation, or any sort of rational mental calculation at all, but is mostly emotionally based.

You seem to be asserting a position that individuals acting in their own self interest are, by default, acting rationally. This is all well and good for people who live off by themselves in the wilderness but it is problematic in places where people must live together in close proximity. In fact society has developed a number of descriptives for those who hold such views, psychopath and sociopath are common descriptions.

Individuality has its limits. The failure to recognize social boundaries does not come without penalties, which are rarely applied by authorities since they are bound by law to be ignorant of all but the most egregious, but applied they are nonetheless.

 

Sounds about right to me. Like I said, the "rationality" of someone's choices is entirely dependent upon what they subjectively perceive to be in their own self interest. Who are you to say otherwise?

Unless they've studied real-world actors making real-world economic decisions, I don't see how you could make such a ridiculous assertion.

And who's to say an "emotional" response to something can't have a rational basis? For instance, if a stock I own is plummeting in value, I might become emotional and sell it, but that's not to say my decision was entirely irrational, since it would make sense to sell the stock before it hit rock bottom.

Whether or not they are acting "rationally" is pretty much irrelevant. The position I'm asserting is that individuals are better suited to run their own lives and make decisions for themselves than you or some faceless technocrat. Of course, when people are at liberty to decide for themselves how to act, they will invariably make "bad" decisions, but I ask again: What's the alternative? Forcibly depriving them of the ability to make choices because they might act irrationally or emotionally? Sounds positively delightful!

As long as no one is initiating violence against other people, then they should be at liberty to make choices for themselves, irrational and otherwise. If that makes me a psychopath, then so be it...

Well, duh. Anyone who knows anything about libertarian philosophy knows that it's predicated upon the non-aggression principle, which clearly and rationally defines the limitations of individual action.

 

When I teach my students about rationality, I love to use "Nub" City (i.e. Vernon Florida) as an example.

"Nub" City was a backwards and poor place in Florida where they gain notoriety for severed limbs. It turned out that resident were "accidentally" severing their limbs for insurance money.

In economic terms, they were behaving "rational" since the benefits of an insurance payment exceeded that of a limb. Conversely, people who didn't "accidentally" severe their limbs were also behaving rational since the benefit of having a limb exceeded the insurance payment.

 

What do you teach, if you don't mind me asking?

 

Economics and statistics.

 

I don't think that is untrue. My main contention IS with Democrats and Republicans. Libertarians have little power to do anything that will harm me, where as Democrats and Republicans have lots of it. However, the point of this thread was to raise this particular disconnect in libertarian reasoning that I saw.

That is a nice talking point, but it isn't really true. We have a revenue problem as well, because the recession drastically reduced revenue(and that decrease in revenue plus the bailouts and stimulus that followed it, are at the source of our debt/deficit problems). It is also true that we could easily raise more revenue. So it isn't true we have a spending problem, not a revenue problem. What is true, is that we have a problem, and that problem can be remedied by EITHER raising extra revenues, or by cutting spending. Which one a person thinks we should do is largely based on ideology and subjective preferences.

I actually agree with this to a very large extent. I AM liberal, but I support a drastic reduction in corporate/business taxes, coupled with an increase in taxes on the highest income earners. Which means a more progressive(and more gradually progressive) income tax system. Where the highest tax bracket would be quite high(something like 15-20 million). That way the person in the upper middle class making 363,000 a year isn't paying the same marginal tax rate as a guy making 363,000,000 dollars a year(and a much higher effective tax rate).


However I disagree on one point. Capital gains are income, and they often are the primary source of income for the very wealthy. If we do not tax that source of income, but increase income taxes, and remove loopholes, the very wealthy will simply take all their compensation in stock options, and wind up paying NO taxes. That would not make sense in my opinion.

 

It is true to a point and you are right that it is not an "either or" problem. It is ludicrous to think that it is. In fact, it baffles me that some people think that it is.

Nonetheless, spending is out of control. It is what put us into this mess in the first place. We spend more than what we take in. We have been doing this for years and it is finally catching up to us.

It is unfortunate, but I agree with you (I am not an ideologue). Most of the uber rich earn their income simply by owning capital rather than producing anything and this is a shame.

 

The problem with this position is that it that the bureaucrats who make the decisions are not distant and faceless but the people in your community, county, state, nation, and planet.

Forcibly depriving people of the "freedom to make a bad decision" is one of the primary reasons why we have governments. Since there is a large accumulation of historical knowledge about what sort of private decision making should not be allowed since they are most likely to bring about social, economic, environmental and other calamities, it is perfectly reasonable for people to engage their government to make and enforce laws to control these behaviors.

The Libertarian version of non-aggression is extremely limited. According to libertarians the only limit of aggression is direct physical violence against people and property. This does not include threats of violence or other forms of intimidation and coercion despite a long history of human behavior that shows unequivocally that such activities are no less effective in depriving people of their freedoms.

What libertarianism seeks is nothing but a tyranny of property holders, a new feudalism where property holders are allowed to employ all forms of coercion and intimidation short of physical violence while their right to maintain their property remains sacrosanct. This will become particularly true in a nation like the US where 85% of private property (wealth) is held by less than 10% of the population.

 

I don't know that I like taxes but I do like Texas.

 

This is where I have to disagree. This is not a reason for government. Government exists to protect rights, not to take them away. By taking away the freedom to make a bad decision you are taking away a person's right to succeed or fail by their own merit. You take away one of the prime methods people have for learning and eliminate personal responsibility.

 

Let's look at why people band together to form governments in the first place. It seems to me they do so in the recognition that group force has become necessary to rein in certain behaviors so that everyone can live in peace. In order to limit the applications of this group force certain specific behaviors are prescribed as rights that the government may not limit but must instead uphold and defend for all people. The government's most fundamental job is to maintain the social peace.

As anyone can see, this is not a remit for the government to defend all behavior or to uphold as a right any and all behavior that an individual might wish to engage in.

Contrary to your opinion having a government by law based on specific rights actually allows more people to behave more responsibly because the rules of responsible personal behavior are spelled out explicitly and so do not require learning by your preferred method of trial and error from ignorance with all its painful and destructive consequences, not just for the individual but for everyone around them too.

I may be wrong but it just seems to me that people are more comfortable when there are some ground rules that everyone must abide by, and some entity to make sure that everyone does.

 

Maybe you could clarify your argument for me because if the bureaucrat is only just another person in the community, how does that qualify them to make a better decision than another person?

And how can the superior government historical knowledge make such a idiotic assumption that forcing banks to make loans to people who can't afford them is a good idea?