Automation and Comparative Advantage

Sanford Ikeda points out that given super-competent but not super-abundant (i.e., scarce and expensive) robots, the principle of comparative advantage comes into serious play. It entails that a robot may exceed any human in technical efficiency for producing all sorts of goods, but it would still make sense to allocate the robot entirely toward those tasks in which it is relatively more efficient, reserving the other tasks for the humans.

So long as the robot is better than a human at producing X by more than it is better than the human at producing Y, it will be cheaper to specialize it fully for X and set the human to take care of Y, despite the robot's absolute advantages over the human at both X and Y.

Austrian Foresight

Ikeda mentions 2 interesting examples that should vex the neoclassical economists.

1. Suppose, he says, "the state issues and strictly enforces a prohibition against commercial vehicles driving over 200-miles per hour." Since no truck right now on today's highways would even approach this speed, this policy, as far as a neoclassical would imagine, has no effect on the market. An Austrian economist, however, sees farther. What if a technology could exist that would allow such fast transportation in a safe manner? If it is discovered in the future, entrepreneurs, constrained by the law, would never invest into it, and this beneficial advance would never be commercialized. Even worse, the technology itself might never be invented in the first place, if the law would not permit a payoff from research and development in this area of science.

"In addition, too much investment [compared to what is optimal] would take place over time in technologies that depend on lower-speed travel. As in standard analysis, the current costs of commercial transport remain unaffected, yet a subtle though very real impediment to economic development now exists because of the regulation." (95-6)

2. Let the state "mandate that insurance companies cover a minimum of two days of post-partum care for women who give birth in hospitals." Both the neoclassical and the Austrian will point out that "this will... reduce the number of women covered by insurance (by the law of demand)." But only the Austrian will notice in addition that the bill will "also tend to discourage researchers from investigating new medicines and procedures that could in fact safely speed up the in-hospital post-partum recovery process." (164)

We can conclude that neoclassical economists are like little babes, unable to glean the more remote yet for all that crucial consequences of government interventions.

Pigovian Taxes

It is a tax levied on output producing which is alleged to generate negative externalities. Generally, we want the production of widgets to increase as long as their marginal benefits exceed the marginal costs. But the externality has a "social cost" to some group of strangers superadded onto the cost of the widget to the producer yet not taken into consideration by him. By taxing the widgets, the government reduces output and makes the marginal benefit equal to the combined marginal individual + social cost.

It's hard to believe that economists were so easily misled by this prospect of power to optimize production. There are 3 devastating problems with Pigovian taxes.

First, one can engage in calculation of costs and benefits only within the market. The externality is by its nature external to the market. As a result, the proper amount of the tax can only be politically determined. For example, the people can only register their preferences regarding the production / pollution trade-off in their capacity as voters not as consumers. It is true that an economist can come up with some function that links pollution and production. But then the choice would be between politician A who promises to cut pollution by 10% and production by 8%; B, by 20% and 18%; and C who would practice laissez-faire. How much pollution to allow is a political decision in this sense.

Second, there are millions of existing products out there. Each product may be accused of generating some negative externalities. Yet the tax on each product for the sake of improving economic efficiency has to be unique and proper to that product: say, 10% on bacon; 12% on wine; 4% on aluminum; and so on. We can see that no politician can aggregate these values into a platform on which to run for office.

Third, no entrepreneur would be free to introduce a new product to the market, as it could conceivably turn out to be produced "inefficiently." Any such product would have to be submitted to the government Externalities Bureau for evaluation of the correct tax to be imposed on it. Not only would an epic amount of money have to be given to this bureau to do its work, but this would effectively shut down all economic progress.

Pigovian taxes are a nonsensical attempt to recruit the government into improving economic outcomes. To the extent that there are unhappy externalities (such as on community B when residents of nearby community A dispose of their garbage by throwing it out the windows), they have to be addressed by other means.

Filioque

In the previous post I describe the Holy Spirit as proceeding from the Father through the Son into humans.

But the Son after His incarnation is full of the Holy Spirit. His intellect was upgraded just before the giving of the first grace to the angels (which some angels accepted and were confirmed in goodness and some rejected and become demons). His power, upon His conception and birth. His will, upon His resurrection.

As a result, the Holy Spirit can proceed just as effectively from the Son, as well; or indeed from the Father and the Son.

Numbering of the Persons, 2

I have proposed some reasons why the Holy Spirit may be called the 2nd rather than 3rd person of the divine Trinity, and the Son, instead the 3rd person. As of right now, I see no flaws in these particular arguments.

But here is one defense of the traditional numbering. Incidentally, I don't think God cares which number we assign to which person. But insofar as there is a meaning behind such designations, the controversy is valuable.

The Father is the creator of the universe as a whole. That includes stars and planets and trees and ants.

The Son redeems mankind as a whole. His mission decided the fate of the entire human race.

And the Holy Spirit injects unique grace into an individual human being.

This narrowing of the "scope" of the missions of the persons regarding the created world suggests a natural progression: the Father is #1; the Son, #2; and the Holy Spirit, #3.

The Holy Spirit again proceeds from the Father through the Son (who has attached our humanity to the Godhead) into us in the form of grace bearing fruit.

However, I still find it implausible that grace, whether sanctifying or gratuitous, was not given in any measure whatsoever before Christ. I maintain that the Holy Spirit's mission began right after the fall of man and continued, albeit in an upgraded form, after the Incarnation.

Discoordination in the Market

Disequilibrating entrepreneurship banks on global ignorance not on human error. To be unaware of opportunities is something other than to err. Being blind is not the same as seeing illusions.

For example, having a blank canvas rather than a beautiful painting is not an evil. The painting is under no necessity to exist; it is not something that ought to be; therefore, its absence cannot be called evil. But creating a painting does improve the global state of affairs and is, therefore, good.

Similarly, it is not the case that various types of market knowledge ought to be had by men; therefore, ignorance is not an evil as error is an evil; though, again, discovery of truth is good.

Saying that entrepreneurial profits are made possible by errors in human actions condemns our entire civilization to be a gigantic mistake, because things can always be better. But that I am enjoying a cup of coffee does not seem to me to be a lamentable sin for which I should scold myself and resolve never to do likewise, just because in a decade, the quality of coffee will improve. (SAtK, I, 10)

At the same time, though there is no doubt certain beauty to the construction of the perfectly coordinated evenly rotating economy, this beauty is deceptive, because something still better can always be created. Beauty is a real if subjective property, unless one does not want to treat such imperfect knowledge equilibriums as containing an aspect of perfection.

A true final equilibrium, then, would be a "heavenly" society, where there cannot in principle be any improvement. It is next to impossible to imagine such a thing, but that is exactly the implication of Kirzner's (2000) strange artifice of treating even an ERE as still discoordinated, because it can develop further. This is paradoxical, for an inventor's action could be coordinative in Kirzner's sense with regard to a previous state of affairs but discoordinative with regard to some succeeding state.

As a result, the term "coordination" comes to mean "closeness to absolute perfection" which is entirely unhelpful. (I, 11)

Any introduction of a novel plan into the free market economy starts with an act of saving money with the goal of purchasing capital goods. When I save, I lower my demand for existing goods. Their producer, surprised by my behavior, may have to sell his existing inventory below costs, thereby incurring a loss. He will likely restore equilibrium in the next round of production. A smaller quantity will be produced and sold at a lower price.

Meanwhile, once I have accumulated some cash, I buy the factors of production. Unless I specifically ordered a custom-made good, there is an increase in the demand for these factors. There is now a temporary shortage of them, again remedied in the next round of their production. A greater quantity will come into existence at a higher price.

From my point of view, the factors were underpriced and will continue to be underpriced even after the factors' supply and demand are equilibrated. If I am right, then upon combining them and creating the final product, I will be able to sell it at a profit. This means that the consumers will lower their demand for existing goods in order to have the funds to buy my stuff. Once again disequilibrium is reinforced.

But my goods and my revenues are public. Every potential entrepreneur can observe me profiting without laboring. This is too fun and lucrative an opportunity for them to pass up. They help themselves to my profits by imitating my production process. In so doing they bid on the same factors, raising both my and their costs and try to compete with me on price, lowering their prices. The costs and revenues converge, eventually eliminating all my profits.

(Since my method of production is private, commencing imitation can take some time during which my profits will be more or less secure. This period will also give me a chance myself to improve my products so as to stay ahead of the imitators.)

Finally, new entrepreneurs enter the market and by the exact same process just described turn my now profit-less even rotation into losses. My business starts out with a bang, then grows old, and finally dies with a whimper, supplanted with firms producing superior goods.

Interventionist Dynamics

Capitalism habituates people to respect each other's (justly acquired) private property.

However, to the extent that "the state is that great fiction by which everyone tries to live at the expense of everyone else," as per Bastiat, as more people decide to enter the political game, looting each other through the machinery of state, each citizen's "moral restraint" against using the political means to wealth diminishes.

"Why should I remain the 'moral' loser?" each public chooser thinks. "I at least need to protect myself in the free-for-all political brouhaha, or even myself pillage and plunder something."

This beefs up the welfare state still more and and accelerates its growth.

Left-Wing Penchant

The left has built a secular church with a large number of pieties to be observed. It so happens that this church is atrociously bad. Nevertheless, the "left-wing penchant" is that "anyone who disagrees with their policies is a bad person. End of story," says Jeffrey Tucker.

He describes the responses to him of his defense of freedom for younger kids to work. "I was called out for being a bad person, a cruel person, a man with a heart of stone, a complete jerk who lacks a shred of human decency," Jeffrey writes.

But I don't understand why the left is against kids having money, marketable skills, entrepreneurial mindsets, or serving their communities.

Perhaps they imagine that, absent child labor laws, parents will want to exploit their kids by sending them to work at "salt mines." But that makes no sense. The best way to "exploit" children would be to invest into their long-term productivity, including training for sophisticated jobs. The whole point is that starting working at a young age builds the children's characters and prepares them for adulthood most efficiently. It makes these kids into future winners and effective (and grateful) helpers in their parents' old age.

What's not to like?

Two Parts of Socialist Computation

In Human Action, Mises considers a curious hypothetical scenario:

If the memory of all prices of the past were to fade away, the pricing process would become more troublesome, but not impossible as far as the mutual exchange ratios between various commodities are concerned.

It would be harder for the entrepreneurs to adjust production to the demand of the public, but it could be done nonetheless.

It would be necessary for them to assemble anew all the data they need as the basis of their operations.

They would not avoid mistakes which they now evade on account of experience at their disposal. Price fluctuations would be more violent at the beginning, factors of production would be wasted, want-satisfaction would be impaired.

But finally, having paid dearly, people would again have acquired the experience needed for a smooth working of the market process. (337)

Apparently, even a complex market like ours could recover after a wound as grievous as the destruction of the knowledge of all present / immediate past prices.

But can a socialist dictator also solve his many millions of simultaneous equations to determine the "shadow" equilibrium prices of the factors of production if similarly afflicted? I think not; this problem is too hard computationally.

And this is just the first part of the socialist calculation problem. Even if one has a fully solved system, the next task is how to improve it, to re-configure the entirety of the structure of production upon introductions of novelties into the system and inventions of new technologies and methods of production, and to do so every day.

This second problem is, in my view, completely intractable with a complex economy.

Governmental Process?

Contra Sanford Ikeda, I am not sure there is such a thing.

Ikeda defines "process" as ordered change. That corresponds well enough to my own change-amidst-permanence or creative advance that leads from a more primitive and less coherent economy to one superior on both counts.

The market process on an abstract level is an interaction of innovation and imitation that, when woven together, bear fruit in the form of economic improvement.

But either the government is a gang of bandits who randomly prey on the populace with unpredictable raids, thereby being all crazy and destructive yang, pure chaos; or it operates according rules and regulations that are strict, ossified, inflexible, and indeed also very unprocess-like, being all unchanging yin, pure order.

Pure yang can also manifest itself through price controls which check basic equilibration, as well as in socialist planned chaos.

On their own and without their complement, both yang and yin are barren.

To be sure, bureaucrats, too, "spontaneously adjust to changing circumstances," (77) but only through political pressures, budget cuts, and major technological shifts. These pale in comparison with the glory of the market process.

Unitary Executive

In an interesting article, Andrew Napolitano describes the doctrine of "unitary executive" as follows:

That concept, which was accepted in theory by the federal government until the Watergate era, states that the president is the chief executive officer of the federal government and therefore everyone in the executive branch works for him.

I contend that it is actually a very good theory, but not for the reasons Napolitano adduces:

Because he and he alone in the executive branch is answerable to the voters, this theory relates, there can be no people or entities in that branch that are not subject to him.

Were this not so, then vast areas of governance would take place and vast amounts of government resources would be spent by those not answerable to the people, and that would violate the right of the people to be governed by a government to which a majority of the voters in the states have consented.

But look, the majority of the people did not prefer Trump's rule to no one's rule; they did not prefer Trump's rule to 1,000 other contenders' rule; they merely preferred him to one Hillary Clinton. That is hardly much of a vote of confidence.

Nevertheless, having every federal bureaucrat obey Trump is a very good idea. We want Trump to be able to exercise effective and personal control over every aspect of his administration. This becomes impossible if the bureaucracy grows large. Thus, Mises argues:

For under government interference with business the unity of government policies has long since disintegrated into badly coordinated parts. Gone are the days when it was still possible to speak of a government's policy.

Today in most countries each department follows its own course, working against the endeavors of the other departments. (Bureaucracy, 85)

We need Trump himself personally to make the entirety of the federal executive branch's policy on all things within its competence. Incidentally, this will shrink government dramatically. This will also suppress the ongoing coup d'état against him by the "deep state." It will do so by entirely eliminating the deep state.

"I see no good in having several lords: Let one alone be master, let one alone be king." Amen, Odysseus.

Hayek on Security

Hayek writes in The Road to Serfdom:

With every grant of such security to one group the insecurity of the rest necessarily increases.

If you guarantee to some a fixed part of a variable cake, the share left to the rest is bound to fluctuate proportionally more than the size of the whole.

And the essential element of security which the competitive system offers, the great variety of opportunities, is more and more reduced.

He means, I speculate, that if 90 ounces of a 100-ounce cake is guaranteed to be given to the privileged, then if the size of the cake declines by 5 ounces, the share to the non-secured declines by 50% which is greater than 5%.

Hayek's observation that the "the great variety of opportunities" is the essence of security under laissez-faire capitalism is nothing short of eye-opening. So you lost your job? Your business has gone under? Find another way to make money! There are plenty of opportunities to outshine your competitors in some area of production.

However, the more people are protected from your competition, the smaller your range of action, and the less secure you are against your own competitors wherever you happen to be if you are not protected. If, however, everyone is protected, then we obtain Cuban-style socialism, certainly something highly undesirable.

Your security under free market is found in the insecurity of others.

Looting Directions

Logically, legal plunder can flow either from a minority to the majority or vice versa.

In the first case, the minority is simply outvoted. Of course, expropriating wealth or progressive income taxation so obviously lead to economic stagnation that only abject stupidity can cause the voters to decide to loot the "rich" in this manner.

In the second case, the stupidity is of a different sort. Here the people falsely believe that being looted is either in their own interest or in the interest of the common good.

Thus, for instance, young people agree to pay payroll taxes to finance old retirees, imagining that they, too, one day will benefit from this system. Again, the public, thoroughly in thrall to the Keynesian ideology, is sanctioning the awful money and banking regime that so spectacularly undermines economic progress.

What else but a mass hallucination of the tax victims can account for the fact that trillions of their dollars are taken from them and fed to the American war machine? Either they are really enamored of the "beauty of their weapons" or they are just fucking idiots.

Concupiscible Powers

Those are centered around bodily senses, particularly sight, hearing, taste, smell, and touch. But they also include the goods and evils, and pleasures and pains associated with them. Thus, for sight, we have beauty and the love of it, and ugliness and hatred of it. Some of these might be more intellectualized than others; perception of beauty may have a more robust cognitive component than of a delicious dish, but all senses come with apprehension of reality (such as again texture for touch) and delight or discomfort thereof.

To these it must be added sexual pleasure which seems to have no corresponding pain, other than for women in childbirth. (It's unlikely there would be new generations at all if women did not thoroughly crave cock.) Of course, there is plenty of "pain" in relationships, but it's more akin to sorrow, i.e., not sensual.

Further, there is the pleasure of the operation of a fit and healthy body. This is divided into is the pleasure of rest and the pleasure of exercise, such as a mastered sport. The pain of a decaying or dying body or of an illness complements it.

It is curious that that the pleasures of health tend to be much less intense than the pains of sickness or dying. Nevertheless, some genetic luck and a healthy lifestyle can ensure that pleasure rather than pain is felt most of the time.

Overall, when all the pleasures and pains are tallied up, it seems that our human sensual experience is well-nigh balanced in these terms.

Divine Goods

Mercy is plentiful; glory is scarce.

What Is a “Republic”?

It's a local government that combines with a measure of harmony commonwealth-democracy for the legislature, aristocracy for the judicial branch, and monarchy for the executive.

Drugs: A Constitutional Amendment

The legislature shall make no law restricting, nor shall any judge abridge, the right of the people to manufacture, transport, sell, trade, or consume marijuana or any of its ingredients.

All existing state laws to that effect are repealed.

All existing federal laws to that effect are null and void.

No special tax shall be imposed on any marijuana product with an express purpose of discouraging consumption or production of marijuana.

The right of private property owners to regulate the use of marijuana on their premises shall not be infringed.


The last clause is to ensure in our crazy world that no one can complain if, say, a company prohibits smoking marijuana at its place of business.

Gratitude in Political Obligations

Simmons points out nicely that it's hard to feel grateful to a faceless bureaucracy and have those feelings generate political obligations.

Another point is that in our interventionist society, the legislators are often bought by moneyed interests. The lawmakers run their own feudal fiefs. It is only in this sort of corruption or social de-evolution that gratitude may play a role.

Even if there are political obligations, on whatever ground, people differ as to how much government services are worth to them. Yet the tax system demands payments without discriminating properly. Grotesque taxation principles like "ability to pay" have been invented to loot the populace. However useful, even local taxes must still be condemned as unjust.

The Essence of Gratitude

There is an aspect of gratitude that remains even under robust capitalism, and that is personal love, such as between spouses, parents and children, or friends.

Now as I noted before, when one does good to someone he loves, the profit to the beloved is his profit, as well. But there is a complication. Personal relationships are complex, and one is rarely a mind reader. Therefore, there is a need for a somewhat ritualistic expressions of gratitude to assure the benefactor that his efforts have been enjoyed by the recipient of the benefits. That should be sufficient to satisfy the benefactor, as well.

Parents, too, need feedback as to whether their efforts are bearing fruit. The gratitude of children is precisely that. The children need not even necessarily repay the parental favors; their success and happiness in life are their own rewards to the parents who build their children up when they are young but ultimately leave them in command of their own counsel. But a sincere show of gratitude is still useful.

The Obscurity of Gratitude

Simmons wonders about the reasons why the phenomenon of gratitude has been neglected in modern philosophy. Mises had an explanation:

It is only the mentality of a capitalistic environment that makes people feel the indignity of giving and receiving alms. Outside of the field of the cash nexus and of deals transacted between buyers and sellers in a purely businesslike manner, all interhuman relations are tainted by the same failing. It is precisely the absence of this personal element in market transactions that all those deplore who blame capitalism for hard-heartedness and callousness. ...

Feudal society was founded on acts of grace and on the gratitude of those favored. The mighty overlord bestowed a benefit upon the vassal and the latter owed him personal fidelity. Conditions were human in so far as the subordinates had to kiss their superiors' hands and to show allegiance to them. In a feudal environment the element of grace inherent in charitable acts did not give offense. It agreed with the generally accepted ideology and practice.

Since our present society is "based entirely upon contractual bonds, ... to be an almsman is shameful and humiliating. It is an unbearable condition for a self-respecting man." (HA, 838-9)

The scope of grace and gratitude then has greatly diminished with the coming of capitalism. Gratitude has been relegated to etiquette.