Economics Questions

Re: Rothbard on Schiff

jmorris84 — Sat, 15 Jan 2011 17:14:24 GMT

Kaz:
it's as if your proof that the Bible is the word of God is the Pope saying so.

How is this the same as Mises stating that Rothbard understood what Mises himself was saying and was correct in his teachings and writings?

Re: Rothbard on Schiff

David K. — Sat, 15 Jan 2011 17:07:52 GMT

Kaz, I wasn't responding to your claim that Rothbard departed from Mises's "value freedom" doctrine. Everyone knows Rothbard believed in natural rights while Mises didn't. Neither did I say, "Mises liked Rothbard, so Rothbard must be right." Instead, I was responding to your claim that Rothbard didn't understand Austrian monetary theory and "ignored all other Austrian thought." If you are right, then Mises himself didn't understand "Austrian thought," since he says that Rothbard "develops the correct theory." E.g., Mises might be wrong about whether or not praxeology is correct, but he can't be wrong about what praxeology is since he invented praxeology.

Consider the following two arguments:

1. "The pope says the bible is inerrant. Therefore, the bible is inerrant."

2. "The pope says the inerrancy of the bible is part of Catholic doctrine. Therefore, it is part of Catholic doctrine."

1 is a bad and "cultish" argument, but 2 is perfectly reasonable.

As to your claim that Rothbard didn't use praxeology, I don't know what makes you think so. Rothbard's economics obviously relies on the same kind of a priori reasoning that Mises used and is value-free.

Re: Rothbard on Schiff

JAlanKatz — Sat, 15 Jan 2011 02:31:01 GMT

Seems to me he's directly responding to one of your claims. To wit, you claim Rothbard totally misunderstood Mises.

Re: Rothbard on Schiff

nirgrahamUK — Sat, 15 Jan 2011 00:10:42 GMT

Gold must be in the cash holdings of everyone. Everybody must see gold coins changing hands, must be used to having gold coins in his pockets, to receiving gold coins when he cashes his paycheck, and to spending gold coins when he buys in a store.

Attribution game! play it!!!

Re: Rothbard on Schiff

Kaz — Fri, 14 Jan 2011 23:04:46 GMT

Kaz, when Rothbard began writing "Man, Economy, and State," he wrote a sample chapter about money and credit that was explicitly approved by Mises (cf. David Gordon, "The Essential Rothbard," p. 14). Does this mean Mises didn't understand his own monetary theory?

And if Rothbard "didn't follow Austrian methodology" and "ignored all other Austrian thought," how come Mises wrote (http://mises.org/efandi/ch36.asp) the following:

"In every chapter of his treatise, Dr. Rothbard, adopting the best of the teachings of his predecessors, and adding to them highly important observations, not only develops the correct theory but is no less anxious to refute all objections ever raised against these doctrines."

See, that's why people start describing Rothbardians as cultish and dogmatic.

I gave specific arguments, about his departure from the Value Free condition of Austrian philosophy, for example, and your response was to claim that a Higher Authority said he liked what Rothbard wrote. You didn't explain how his advocacy of liberty as a form of morality could somehow be compatible with the value free philosophy...it's as if your proof that the Bible is the word of God is the Pope saying so.

Well, not even that, because nowhere in what you cite does Mises actually say that it's sound Austrian methodology. Only that he really likes it, and considers it a contribution to praxeology, human action, and economics. But I'm sure he considered the efforts of Friedman a contribution to those things, too...even though Friedman certainly didn't stick to them enough to be Austrian in methodology.

He did, though, come closer than Rothbard.

Re: Rothbard on Schiff

David K. — Fri, 14 Jan 2011 21:06:41 GMT

Kaz, when Rothbard began writing "Man, Economy, and State," he wrote a sample chapter about money and credit that was explicitly approved by Mises (cf. David Gordon, "The Essential Rothbard," p. 14). Does this mean Mises didn't understand his own monetary theory?

And if Rothbard "didn't follow Austrian methodology" and "ignored all other Austrian thought," how come Mises wrote (http://mises.org/efandi/ch36.asp) the following:

"In every chapter of his treatise, Dr. Rothbard, adopting the best of the teachings of his predecessors, and adding to them highly important observations, not only develops the correct theory but is no less anxious to refute all objections ever raised against these doctrines."

Re: Rothbard on Schiff

Kaz — Fri, 14 Jan 2011 19:57:07 GMT

Kaz, what is your definition of an Austrian economist? Peter Schiff and Murray Rothbard are identified with the Austrian school, according to Wikipedia. Peter Schiff has been interviewed on the Lew Rockwell show and his columns have appeared on LewRockwell.com. Rothbard has an archive on LewRockwell.com.

How does any of that make them Austrian?

They do/did not follow Austrian methodology, they depart(ed) completely from the logic sequences the actual Austrians were using, rather than progressing on those, et cetera. Rothbard distorted it not only by completely failing to understand monetary theory, getting Mises wrong and ignoring all other Austrian thought, but also by abandoning the Value-Neutral requirements, turning Rothbardian thought into a cultish, dogmatic "liberty is moral" issue, akin to the very Objectivism he so despised.

Re: Rothbard on Schiff

Gero — Fri, 14 Jan 2011 02:03:15 GMT

Kaz, what is your definition of an Austrian economist? Peter Schiff and Murray Rothbard are identified with the Austrian school, according to Wikipedia. Peter Schiff has been interviewed on the Lew Rockwell show and his columns have appeared on LewRockwell.com. Rothbard has an archive on LewRockwell.com.

Here is a roughly 8:00 minute video showing the multi-trillion dollar cost of U.S. entitlements (Medicare, Medicaid, and Social Security) cannot be paid. Here is the transcript. That interview was in 2007.

The so-called balanced budgets of the Clinton years were misleading.

The National Debt is the total amount of money owed by the government; the federal budget deficit is the yearly amount by which spending exceeds revenue. Add up all the deficits (and subtract those few budget surpluses we've had) for the past 200+ years and you'll get the current National Debt. Politicians love to crow "The deficit is down! The deficit is down!" like it's a great accomplishment. Don't be fooled. Reducing the deficit just means we're adding less to the Debt this year than we did last year. Big deal -- we're still adding to the Debt. When are we going to start seeing the Debt actually go down?

NewsBusters associate editor Noel Sheppard pointed out that the U.S. debt increased each year of the Clinton presidency, according to the U.S. Treasury Department. When PolitiFact (which sometimes is accurate) asked Sheppard about his claim, he said:

"If the public debt during those years was bought with other debt -- meaning by the Social Security trust and the Federal Reserve -- we didn't actually pay down any debt, did we? If you take out an equity line of credit on your home to pay off your car loan, your debt didn't decrease. Furthermore, if you take out an equity line of credit to pay off your car loan and buy a boat, it would be deceitful on your part to say you reduced your debt, right? This is what happened those four years: We did retire some debt held by the public, but we did so by increasing debt held by the government and the (Federal Reserve). That's not retiring debt. That's just shifting it from one lender to another."

Re: Rothbard on Schiff

Smiling Dave — Fri, 14 Jan 2011 01:46:51 GMT

Welcome, John James. Way to go.

Re: Rothbard on Schiff

John James — Fri, 14 Jan 2011 01:05:23 GMT

The only thing we need, to make the debt magically become soluble again is rapid, healthy economic growth.

Great. And the only thing a frog needs to magically not bump his ass when he hops is wings. I think the key word in both of these situations is "magically."

In fact, in 1994 the Clinton administration pretty much declared the deficit impossible to overcome [...]

Then, just a year later[...] the economy grew so rapidly that the deficit vanished, mostly on its own...

Do you actually believe that the dotcom/Nasdaq bubble economy of the 1990s was an example of "rapid economic growth"? And what's more, do you seriously believe the budget "surpluses" of the time were anything other than legerdemain? I'm surprised that a poster on this forum would fall victim to such fallacy.

Re: Rothbard on Schiff

Smiling Dave — Thu, 13 Jan 2011 23:09:39 GMT

OOPS, EDITED

Re: Rothbard on Schiff

Kaz — Thu, 13 Jan 2011 22:59:11 GMT

Your excerpt is part of a commentary on the 1987 stock market crash, not Austrian economist Peter Schiff specifically. However, it is relevant because he and Peter Schiff seem to differ on the significance of trade deficits.

Schiff is not an Austrian. Even if he appears to disagree with Rothbard on this detail, he's best described as a Rothbardian, complying generally with Rothbard's non-Austrian fallacies about monetary theory.

Rothbard is certainly correct about there being no such thing as a trade deficit. We trade dollars for goods. This is a win/win exchange, where the giver always thinks he's getting the better part of the deal. As has been pointed out innumerable times, we all have a trade deficit with Wal Mart, and are the better for it.

Rothbard's pretty good on most non-monetary issues, where he's standard free market economics libertarian.

The U.S. has spent much more than it can ever repay without massive inflation or debt renegotiation.

Wrong. Laughably, hugely mistaken.

During pretty much every economic downturn, static analysis makes the debt look unfixable. In fact, it was just as apparently true when Rothbard was writing that, and guys like you and Schiff were saying exactly the same thing.

It was even more true in the late seventies.

The only thing we need, to make the debt magically become soluble again is rapid, healthy economic growth. We can easily outgrow the debt, as the economy's size makes it appear irrelevant.

In fact, in 1994 the Clinton administration pretty much declared the deficit impossible to overcome, which meant the debt would someday explode.

Then, just a year later, the Republicans took over, gridlock occurred, government was therefore gotten out of the way, and the economy grew so rapidly that the deficit vanished, mostly on its own...not really because of the Republicans doing much to check spending, other than not expanding it as much as Clinton would have if he'd retained control of Congress.

In the past, the U.S. has had little to no national debt.

The last time we had no national debt was in the 1830s. 180 years ago.

It's also worth note that the means of getting to that state had the side-effect of the worst economic depression in the country's short history of that time.

Re: Rothbard on Schiff

resist272727 — Thu, 13 Jan 2011 02:14:03 GMT

That's Schiff's problem with the current trade deficit with China and he wants it to end ASAP. So he does think trade deficits can be bad. Not that they are uniformly bad.

Re: Rothbard on Schiff

Caley McKibbin — Thu, 13 Jan 2011 02:05:47 GMT

That is not a disagreement. Those are two different things.

Re: Rothbard on Schiff

resist272727 — Thu, 13 Jan 2011 02:01:12 GMT

Marko:
This has nothing to do with Schiff. He doesn't say the trade deficit was a cause for the crash.

I think the point is that Rothbard said "There is nothing wrong with a trade deficit." but that Schiff disagrees. Schiff says the deficit is not sustainable and that it contributes to the "phony economy."