Economics Questions

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

nirgrahamUK — Thu, 05 Aug 2010 03:01:45 GMT

what you are saying is that you can sometimes be reasonable, and you can present your abstract models (thought experiments) as what they are, present with all their imperfections , qualifications, and with warnings of what should not be deduced to be true about the real world despite the seductiveness of the model.

but routinely you just say 'we are in equilibrium now and always'. you aren't being consistent.

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

Lagrange multiplier — Thu, 05 Aug 2010 02:55:28 GMT

Okay, now imagine if millions of other people were looking. Some of them dedicating their entire working days to it. How are your chances?

That's all I'm saying.

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

nirgrahamUK — Thu, 05 Aug 2010 02:40:04 GMT

if not complete luck, since my odds are better if i go and look at many floors than if i stay in bed

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

Lagrange multiplier — Thu, 05 Aug 2010 02:33:49 GMT

Of course I believe there are dollars lying somewhere out there.

The point is that there are very few, they won't last long, and it's complete luck to stumble upon one!

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

nirgrahamUK — Thu, 05 Aug 2010 02:23:27 GMT

its funny because its *absurd* and makes a mockery of *science*.

you aren't actually supposed to believe that there are literaly no $100 bills lying on the floor anywhere in the real world. this is what happens when you build a model to help you clarify your thinking, only it renders you completely unable to say anything that is not absurd.

we aren't in equilibrium, there is only a tendency towards reaching it.

the tendency is not mechanical/automatic, it is the result of individual agents striving to profit under a regime of private property and competition.

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

Lagrange multiplier — Thu, 05 Aug 2010 02:19:29 GMT

nirgrahamUK:

AJ:
Don't many investors claim that they make their money by identifying government distortions in the market?

impossible ! other investors would have already done that ...

(tee hee!)

As absurd as that sounds, that is the point I am making!

There is an old joke, widely told among economists and one that I've already shared, about an economist strolling down the street with a companion when they come upon a $100 bill lying on the ground. As the companion reaches down to pick it up, the economist says "Don’t bother — if it were a real $100 bill, someone would have already picked it up."

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

Lagrange multiplier — Thu, 05 Aug 2010 02:17:28 GMT

AJ, yes. If there was a publicly available model that made accurate predictions about stock market prices, then--get this--investors would apply the information, thus correcting the prices!

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

nirgrahamUK — Thu, 05 Aug 2010 02:05:28 GMT

AJ:

Don't many investors claim that they make their money by identifying government distortions in the market?

impossible ! other investors would have already done that ...

(tee hee!)

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

AJ — Thu, 05 Aug 2010 02:03:51 GMT

Don't many investors claim that they make their money by identifying government distortions in the market?

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

Lagrange multiplier — Thu, 05 Aug 2010 01:49:55 GMT

Yes, abskebabs.

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

nirgrahamUK — Thu, 05 Aug 2010 01:45:19 GMT

This is where neoclassical models get you

>>You can make average returns, but you'll never make above-market returns. To put it more bluntly, if you get unusually rich from investments, >>then you just got lucky.

you can never do X, but if you happen to do X then we call you Y !

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

abskebabs — Thu, 05 Aug 2010 01:36:17 GMT

If you get "unusually" poor from investments are you just "unlucky?"

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

Lagrange multiplier — Thu, 05 Aug 2010 01:25:19 GMT

In what sense?

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

abskebabs — Thu, 05 Aug 2010 01:22:37 GMT

I hope that makes sense. You can make average returns, but you'll never make above-market returns. To put it more bluntly, if you get unusually rich from investments, then you just got lucky.

Why can't we say the same thing about losses?

Re: Ludwig Von Mises vs. Milton Friedman? PLEASE HELP ME

Consultant — Thu, 05 Aug 2010 01:17:17 GMT

I agree with Fama for free markets, but I agree with the Austrians that markets are far from free.