In many political discussions, the following question arises "Is action X good for the economy". I used to hear the arguments out about whether or not X was good or bad for the economy, but now I am thinking the entire question is misguided. Shouldn't the question be abanonded, and be rephrased as "Does action X increase or decrease the liberty of individuals in the economy"
The biggest problem with the first phrasing is that it is exceedingly vague. What do you mean by "good for the economy"? Increasing GDP? Increasing tax revenue? Increasing real wages? Decreasing unemployment? The second problem which applies to both phrasings is the fact that the "goodness" of them is subjective. Even if you made a concise definition for the first phrase, what makes this "good" for the economy, and what makes "liberty" good or desirable in the second phrasing. The other problem with the second phrasing is that, once again, it is not concise. When you say liberty, do you mean number of uninhibited actions and number of choices? Or do you mean the ability of people to act without interference by the state? If it is the latter case, then it relates little to the first "question", and the two have nothing in common and indeed the question does us little good in the first place.
At any rate, expound upon purpose and give a more precise definition of either.
It's not completely invalid.
The structural problem in the question is that it treats the economy (an aggregate) as if it can valuate, which it cannot. Only individuals can valuate. However, it is clear that basically everyone in North Korea is in much worse shape than basically everyone in, say, the US or UK or any European country. So, there is some general sense in which we can "all" be better off or worse off.
The trouble arises when you try to apply this very crude differentiation to policy debates... "Will Americans be better off if those making $250,000 or more per year are taxed more heavily?" is a fallacious question. Those Americans who are subjected to the tax will definitely be worse off and some of those who are not subjected to the tax will benefit. The trouble is that we are asking a value question about an aggregate when aggregates cannot value things.
Contrast this with what you do when deciding whether to buy an apple or an orange with the $1.50 in your pocket. You're hungry, you want to eat a piece of fruit and the question facing you is which piece of fruit you prefer to eat at this moment - an apple or an orange? This is entirely different than the question "do Americans prefer to tax those making more than $250,000 at a higher or lower rate?" even though the public policy discourse mistakenly plows ahead as if these two questions are of the same basic variety.
Clayton -
Thank you both for the replies.
Clayton, I think you have summed up what I was trying to get at. You are just far more articulate.
Let me play Devil's advocate though: why can't aggregates value things?
Perhaps it is not liberty but quality of life the indeviduals would like for themselves that should be answered. It is fairly obvious that the american public value security over liberty and luxury over freedom.
i know this world is full of fools but why are they so damn powerful?
why can't aggregates value things?
I am fairly certain "mainstream" and "average American" have made it into your lexicon. There is such a concept of standard deviation and mean as used in statistics. Aggregating a group of people based on nationality is possible in a scenario as there are are two polls with the majority of individiduals somewhere in the middle.
i hope this may clear any confusion as to what i meant.
if basic communication is a challange maybe you should take it down a couple notches
misspelling and impropper are fine as long as the concept is understood.
you can understand what i am expressing but i belive you wish to obscure to make yourself feel a little smarter.
try to be a little more constructive
to the original question
1. economics by definition deals with the material welfare of mankind
2. the goal for most countries is (by most opinion)
a. to provide everyone at least basic necessities (food,water,medical care,ect)
b. to improve the living standards of its citizens
c. to make life easier for everyone
3. in the free (somewhat) market system work is the main avenue of distributing wealth
a. if many people do not have work they do not have money
b. if they do not have money they cannot buy goods and services
c. if they cannot buy goods and services then people who seek to sell goods and services
d. thus the economic multiplier
The modern discussion focuses on whether Keynesian monetary policy can reduce unemployment and thus create and distribute more wealth.
(it can but the fed is screwed it up)
malachi
tell me in plain English
"you cannot group together the collective will of citizens in a nation"
i can't believe you truly disagree
I wasn't polled...
i hate tsa more than anyone (figure of speech) i am simply disclosing the results to defend my position that.
1. values of a nation can be aggregated.
2. the tsa is a breach of liberty that the majority of people support because they value security over liberty.
i think that malachi simply wanted to argue for its own sake.
"the goal for most countries"
How can countries want things?
"The modern discussion focuses on whether Keynesian monetary policy can reduce unemployment and thus create and distribute more wealth.
(it can but the fed is screwed it up)"
Which one can? And how? I agree that in a perfect world a central bank could do a fair amount of good, but in the real world the most that can realistically be hoped is that it fixes its own mistakes.
here i define a countries "will" by the actions and motives of its govenment.
As for the distinction between keynesian theory and central banking monitary policy
i mean both togeather. it seems that like you say, good in theory bad in practice
the fed's original goal was to maintain the value of the $. keynesian policy value favors what is coined the 99%. now the feds actions are influenced by a broke(n) govt.
So the will of Germans circa 1933-1944 was, clearly, to murder large numbers of Jews.
From Man, Economy and State:
"The first truth to be discovered about human action is that it can be undertaken only by individual "actors." Only individuals have ends and can act to attain them. There are no such things as ends of or actions by "groups," "collectives," or "States," which do not take place as actions by various specific individuals. "Societies" or "groups" have no independent existence aside from the actions of their individual members. Thus, to say that "governments" act is merely a metaphor; actually, certain individuals are in a certain relationship with other individuals and act in a way that they and the other individuals recognize as "governmental." The metaphor must not be taken to mean that the collective institution itself has any reality apart from the acts of various individuals. Similarly, an individual may contract to act as an agent in representing another individual or on behalf of his family. Still, only individuals can desire and act. The existence of an institution such as government becomes meaningful only through influencing the actions of those individuals who are and those who are not considered as members."
"The first truth to be discovered about human action is that it can be undertaken only by individual "actors."
1. it is true that human action can only taken by the individual.
2. it is true that government is an abstract concept and only exists in your mind and cannot be physically observed with any sense
however...
3. will, economy, Austrian, mathematics are all abstract concepts
suppose there was an evil being with power greater than my own who committed his power to deceive me. i am real. mathematics is real. this i know with absolute certainty
4. math can be only expressed in metaphors. the symbol "1" expresses something real but not palpable.
thus,
5. a concept may be expressed with a metaphor yet still be real
only individuals can desire and act
6. a room contains 3 individuals. 2 has favorite color red 1 has favorite color blue.
let us say that "F" is the aggregate favorite color
r is number of red favorites
b is number of blue favorites
F=r+b
Fr+b=P or number of people in the room
P-F=0
r' is the rate at which peer pressure increases the value of r towards the maximum value P
thus a mathimatical equation of human action in a group
7. a scenario of some complexity.
the end result/decision is can be summarized as collective will or decision of government public and it unfortunately is sometimes a self destructive dictatorship.
this is a model of a complex system involving millions of people
8. in order to understand the overall of a group so large statistical sampling is used through polling.
i hope this cleared up any misunderstanding
x--x
the symbol "1" expresses something real but not palpable.
r' is the rate at which peer pressure increases the value of r towards the maximum value P thus a mathimatical equation of human action in a group
To add to what Malachi said, aggregation restricts any meaningful dynamic in the situation. In your example for the three individuals with favorite color red: your equation doesn't account and give meaning to the fact that anyone can change their mind to prefer turquoise at any moment in time. If one does, your equation is no longer representative.
The only answer to this dilemma is to provide all of the possible equations for all of the possible choices that a person can possibly have, aggregate those and you've got a wildebeast on your hands. Praxeology, on the other hand, does take time into account. We see it manifested in free market economics - Adam Smith talked about the invisible hand and the spontaneous order that results from economic anarchy.
In conclusion: I believe aggregate equations are good descriptors of a single moment in time, and yes they are accurate - but only for that instant. They should not be used as justification to do X or Y - this assumes that everyone has an equal value scale. For more on the topic, check out Subjective Value Theory - this is the basis of our fundamental disagreement.
"here i define a countries "will" by the actions and motives of its govenment."
So then the will of a country has nothing to do with what most people in the country actually want? Because government is a terrible system of recognizin the individual wants of the people. At very best it will always yield what 50.001 want.
"it seems that like you say, good in theory bad in practice"
Yes but in that it's practically impossible to get it right. It's more like "okay in theory, very hard to do in practice, and very dangerous"
"i hope this cleared up any misunderstanding"
I understand what you're saying, but it is still disingenuous to call something the will of the "nation" or in the dinner example the will of those at dinner. It was the preference of select people at dinner, not of everyone there. You might as well say that, for that is true, rather than hiding behind labels.
1. i apologize. i have barged onto a forum and entered into a debate without reading the basis of the opponents arguments and their school of thought.
2. it is wrong for me to argue with Austrians without reading a "human understanding" and at least understanding its view (which are close enough to truth to gather an academic following)
3. if you want i can respond (i am not backing out with my tail in between my legs)
or
4. out of respect for your views i could withdraw from this argument
excuse me... human action