I have many many times as a student of economics. however, as much as i dislike it there are elements of it that should be taken seriously and are valuable
Joe Salerno is an authority on Austrian Economics. We don’t usually appreciate the greats when they are living amongst us. Mr Salerno is one of the greatest minds and in my top 10 economists historically
Cronyism, the convoluted tax code, excessive regulations, the national debt and the Federal Reserve are the major causes of the widening income inequality gap. Solutions: Abolish tax code and IRS. Enact the Fair Tax. Minimize regulations to only what is absolutely necessary. Balance the budget. Start decreasing the national debt. Abolish the Federal Reserve, the FDIC and all bank regulations except one; require full disclosure on full or fractional reserve backing of deposits. Treat gold, silver and cryptocurrencies as legal tender (not as an asset) for tax purposes. The income inequality problem is counterintuitive. Big government equals more income inequality. Smaller government equals less income inequality. The middle class is the byproduct of a free market economy; it is not manufactured by a politician's tax gimmicks, minimum wage laws, or government redistribution of wealth. There is no such thing as a living wage; there is only a wage that someone can afford to pay. You have to tailor your living around your wage, not have government tailor your wage around your living. It is about supply and demand. If you have an easy time filling your employee needs, you offer lower wages, if you have a hard time filling your employee needs, you offer higher wages; because if you do not your competition will and you will be out of business. It is not about what people deserve or what is fair or what is just; it is about what the market will bear. Blame the consumer for shopping for the lowest price and blame the voter for voting for government to fix their problems.
@@tompatherookiecrusher885 This person described the problem 7 years ago brilliantly and what’s played out has only supported that description. Things are only getting worse and it’s entirely because of the fed and big government. I hope you realize this 2 years after your comments.
The moment people are left free to make their own choices is the very same moment you will have inequality of all kinds. This is not a problem, it is a feature. Those who seek absolute equality seek absolute controll over all others. Equality is not a one way street. You can't garauntee equality of success without equal chances for failure and there are far more ways to fail than to do something right. So when people want equality, ask them who they assert you are to be equal to. Who is this person that is the standard for your life and why you should not be able to choose and act. You cannot speak for humanity. You do not share other people's personal visions for their life anymore than you can share their value estimations. Everyone saying "Society will do X" or "Society needs Y" is actually asserting their own personal vision above all others. This is the source of tyranny. Society has no mind, no wants, no needs anymore than it has a stomach. Only each individual person has that. If you want what is good for the whole, do what is good for the individual.
This is an excellent interview, very informative as an introduction to the vast topic of Austrian Free Market Economics and a warning to all who are open minded enough to hear. For those people who are suspicious of and distrust a market that is free of government manipulation, may I suggest you consider the value of the Amazon Marketplace, where buyers can read a vast array of ratings and comments by other consumers and make informed decisions about what to purchase and even what price they are willing to pay, as the prices for the same item can vary a great deal. The better a product is described and displayed, disclosing its ingredients, origins, etc., the more attention it receives. Amazon shoppers demand a lot of their products, I've noticed. And the reputation of a company matters! This "word-of-mouth" advertising is worth it's weight in gold for good products and a boon to consumers who are trying to use their resources effectively. In a free market the consumers pick the winners based on the quality of the product and its price. Please show me how that can possibly happen in a controlled, socialist or fascist economy, where the government decides what we need and what will be produced. There would be no consumer choice at all and no way to rate, evaluate and select products or services based on their merit. But there would be a thriving black market, as was so throughout the USSR, which is always a dirty, socially destabilizing business. Why would anyone want to live under such a system, where their choices are limited, controlled, and manipulated by the powerful people at the top?
Compared to centralized planning - even the current crony capitalist system is arguably better! Because free markets are not really free in practice (if that is ever possible). To pick your Amazon example, the mass of the low wage Amazon workers are being subsidized through the government welfare system (healthcare etc), massive tax incentives from local cities etc!
The lack of distribution in a free market vs. State distribution in a fascist/socialist economy is a good explanation for the lack of rationing in a free market vs. State rationing in a fascist/socialist economy.
Even the exclusive billionaire gathering at the recent Davos summit featured regurgitations of the income inequality theme. Do I sense a coordinated media blitz around a theme? Problem-reaction-solution?
Joe needs to be our Austro-Libertarian ambassador in the media. Sorry Walter Block you just aren't cutting it. Joe could have much better explained the Austro-Libertarian perspective on minimum wage to Sam of the Majority report. I just watched Walter debate Sam and, although I agree with Walter's logic he failed as a rhetorician/marketer/persuader/ambassador. GRADE F for Walter. GRADE A for JOE
Walton has no legal power to force govt to give health care and food assistance. Walton is legally unarmed. Govt has guns to force obedience. Govt should protect rights, not steal and regulate.
PissedFechtmeister Statism corrupts virtually everyone w/its power of initiating force. So people (poor, middle, rich) use whatever influence as individuals or groups they have to use that power for their own, necessarily short-range, advantage before others use it against them. There is no objectivity to it. Its all legal but the principle is a street thief's smash and grab mentality. Atlas Shrugged dramatizes it. Govt must be shrunk to the power that the Founder knew was safe. A good start would be to abolish Antitrust, the Fed, the Interstate Commerce Commission, and the EPA. After the chains are off business, they will be more productive and prices will fall. There will be more and higher wage jobs. Then, in that context, the welfare state, inc/SS, Medicare, Medicaid? and food stamps can be gradually ended.
The growth rate of capital return is higher than the growth of return of labor that is dependent on technology growth.(See Solow Model) This is why capitalists have much higher growth rates in income than workers. This leads to a 2 class society, how does Austrian Economics "solve" this problem? Or does the Austrian Economics support a 2-class society?
From the article linked by Richard Strum: Piketty misconceives the nature of economic growth. He bemoans the gains of capitalists, but without their investments growth would not take place. He follows a famous model of Robert Solow, in which changes in technology, not additions to capital, are the primary drivers of growth. But as [quintessential Austrian economist] Mises long ago noted, knowledge of technology in poor countries far exceeds the ability of these countries to put this knowledge into practice. What these countries need is more capital; and if economic growth is to continue in well-off countries, they need increases in investment also. Piketty’s confiscatory policies would choke off growth and prosperity in the name of equality. (This basic point against Piketty has been made most effectively in a short book, George Reisman’s _Piketty’s Capital._ ) The economist Randall Holcombe uses a point much stressed by Austrian economists to dismember Piketty’s entire approach to capital theory. Piketty writes as if the return to capital were automatic: all a capitalist needs to do is invest his money and rewards will flow to him at a fixed rate. Precisely the opposite is the case: _"The general idea - that capital does not just earn a rate of return, but has to be employed in productive activity by its owner - plays no role in the way Piketty analyzes his extensive data set on inequality. Piketty makes it appear that earning a return on capital is a passive activity. ... But capital has value only because it provides a flow of income to its owners, and it only provides that flow if the owners employ it productively"_ [i.e. in successfully serving consumer demands---in other words, contributing to the self-perceived well being of individuals in the economy.]
As a libertarian I agree with Austrian Economics, but in the real world of everyday life, as your normal- typical- Jo shmo- pleb, I think it its a waste of time ( from an economic point of view). The biggest loser isn't the poor receiving subsidies or the rich that are doing the same, no- the biggest loser is your typical middle class american, who has never taken government assistance, who works in the private sector, who doesn't believe in unions aaaaand for what???!!! So that a CEO gets several millions in bonuses from a government bail out that such company received as a reward for bankrupting his business.
And you do? I think you miss the point- señor fake account account guy with the wanna be third eye- true free markets, a la libertarian will never be a reality.
Hector W Padilla the idea that the middle class doesn't get handouts as well is facile thinking. Who do you think are the ones that are taking student loans to go on campuses wasting time protesting about foolishness?
No, you have it backwards. If the producers make a product that consumers want then everyone benefits. If the consumers don't want the product then the producers lose.
KC Culp Your correct claim, "If the producers....," does not validate your consumptionist economics. Something must first be produced. Then and only then is consumption possible. Keynes is wrong. As JB Say said, "Production, production, production. That is the whole thing." The mere desire to consume may cause theft but cannot cause production. Only producers can economically consume. Producers produce and then consume (their own production or the production of other producers). Consumers as consumers (beggars, welfare recipients, thieves, etc) are not part of economics.
TeaParty Ba Boom Consumer demand driving what products are produced is not "consumptionist economics". Those consumers must have first produced as well. But if one is a producer in a modern economy, producing goods TO SELL, they have to produce things that CONSUMERS WILL BUY. "The mere desire to consume may cause theft but cannot cause production" Production is driven by producer's desires to consume. I make a sandwich because I desire to consume a sandwich. I run a business because I desire to make money to consume other things. Consumption and production are two sides of the same coin in a normal market.
mtanousable Youre evading the priority of production. A desire to consume does not cause consumption, as shown by the near-starvation lives of virtually everyone prior to the 18th century Capitalist Revolution. Those people wanted to consume more food but more food was not produced. So they could not consume more ,not even when they prayed for manna from Heaven. The Fed, a modern attempt at manna from Heaven, can shift consumption from some people to others but cannot increase sustainable production. Economics is production for a market, not a rationalization of mystical consumption.
mtanousable TP1776's point is that consumer demand doesn't drive what is produced, it determines which producers are successful. His example about starving people is instructive. A more recent example: depending on your age, you might have trouble appreciating this, but no one used to carry a phone. At some point in the 90's people started carrying pagers (beepers) and when cell phones became popular I assure you that no one "demanded" smart phones. Steve Jobs is often praised for providing consumers with things they didn't know they wanted/needed. The "demand" for smart phones happened AFTER they were produced and THEN a company's success is determined by how well they satisfy consumers' demands. From a logical standpoint, for consumers to drive production, they must know in advance what they'll ever need and want. Think about it. Does that even make sense? Is it even possible? It's simply not possible. Consumer demand drives efficiency and competition, but not production. Obviously, the anecdotal evidence I'm providing shouldn't be used to base a theory on, so I recommend you check out "Say's Law", by Thomas Sowell or "The Structure of Production", by Mark Skousen, for a lighter touch.
I'm wondering if there is some research or data on the correlation between interest rates and something like organizational or class-power structures: From what I gathered, central financial institutions and the federal government, among the most powerful organizations (in addition to military, media, medical, religious organizations), get the lowest interest rates (around the prime rate), but, for instance, business loans, home loans, credit cards, and Pay Day loan operations will charge higher and higher interest rates, respectively. I know this is a bit sloppy, but that is why I am asking if there is a clear study that correlates interest rates with institutions and/or organizations, industries, industrial sectors, consumer markets, etc.
+asdimd The markets are manipulated by private central bankers, there is no research to be made where you can apply intuition. It's all controlled. We don't live in a system where the laws of action reaction apply. If you want the truth please research the banking system.
+Catalin Nistor Intuition is a poor substitute for systematic research, which is why the sciences are distinguished from common sense, hearsay, speculation, rumors, etc. I know that central banks are at the core of the political-economic manipulation of society, but that is not what I'm asking. I want to see a spreadsheet, at the least, or a full study that shows how, or whether or not, interest rates increase or decrease.
Would top management fall into the role of government as well? They are ”taxing” worker income by giving them less than their share of profit. Great points though, would just like to hear his opinion on if this extends outside government.
It cannot be considered a "tax" because workers are paid according to current input: they receive their money now or in the very near future for the work they do. If the firm goes bankrupt the worst that happens is they lose future income. Owners on the other hand do not receive gains now but have to wait from the time they invested (which may before the first stone is laid) to when the firm actually turns a profit. This carries additional risk, but even in a "certain" economy the owners have to receive an extra return on their investment-profit-to make up for the time through to production and sale. This extra profit is the interest rate.
The guy asking the question is soo interested in being Austrian... but citizenship dont matter in the market as Ludwig von mises described it thru his life
I do almost completely disagree with the points brought forth in this interview. I do, however wish to learn the facts, and the truths built upon them by those that do agree with the points brought forth in this interview.
There is a lot here left very vague. I here comparisons which support certain positions and accusations. Having no regulations would be ideal if it weren't for the very creative ways people pursue profit. This takes into account the producer's risk in the marketplace yet ignores the consumer's. What about the ice cream vendors of the early 20th century causing a TB epidemic or chemical companies producing products such as DDT? Which market actor caused more market distortion the government by forming regulatory agencies such as the FDA or the loss of life and property caused by the producers? Considering that there was a market crash due to inept regulation, and market producers are profiting greater from pandering to investors rather than actually producing a quality product at a fair price to consumers. What market distortions occur when a bank intentionally creates a conflict of interest between shareholders and its customers while profiting in the exchange. Also, considering the fact that no criminal charges resulted from this practice it is hard grasp that regulatory capture is the cause of any price distortions in the modern economy. Perhaps Austrian economics works best in perfect laboratory conditions.
PissedFechtmeister You missed my point. My comment was relative to the assertions and accusations made in the video. The assertion was made that governmental regulations manipulate, effect markets causing them to be disconnected from the law of supply and demand. I merely made the point that there was no explanation as to how the producers distort pricing. I also posed the question of which causes the greater pricing distortion in certain instances, & to give an example of how & why regulations come into effect to protect consumers from the producers. Also, in the last part of the video the gentleman stated that regulations were used by government as a tool for wealth distribution. This was not an explanation of economics so much as it was an accusation. I don't know much about that. Personally, I have seen where product specifications were used to ensure that a certain company received some benefit. However, There are literally millions of people who want to see some real and meaningful justice for the crimes that caused the market to crash. My assertion was that in lieu of the causes of the market crash and other relative instances such as LIBOR that it is hard to make the case for "regulatory capture". In a perfect environment, producers market quality products at a fair price. In reality, producers often sell a very shiny package with a poor quality product inside. This is called "the bait and the switch". The true value given to a product rests in the consumers perception. The law of supply and demand often only determines the cost of producing a product not its market price.
PissedFechtmeister I'm no lawyer. My guess is that as far as what you mentioned if there was collusion between bankers and regulators or politicians or other officials then there was rigging of the system and not legal gaming. One big part of all that was the AAA ratings given to secondary derivative packages that did not meet that standard. If done intentionally, it isn't just disingenuous that is fraud. It's a matter of criminal intent in any one case. How those packages get their rating is according to criteria which is guided by regulations. Additionally, my assertions and questions are not about regulations for the sake of regulations. The issue is proper regulation to maintain integrity of the market and its participants. Too much regulation and all producers end up with identical business models and there is no competition. Not enough guidance or structure and a few bad actors will do whatever is allowed to monopolize. It is really not easy to balance in an economy as dynamic as ours. What I reject is the Darwinian analogy made between our human economy and the natural ecology. They may be similar in a lot of respects, and the human economic markets and their products do evolve, but not according to the same rules. There is mountains of evidence which proves the irrational nature of peoples purchase decisions. Which means there is a distinctive difference between a creature searching for food and someone shopping for a protective cover for their iphone. Perception is a determining factor for what someone is willing to give for a product which is why image is so important. In many ways perception is a product. That is, it's that way on the retail side. On the wholesale side, marketing is not about being flashy. Why? Because companies are not living entities and they make their critical purchase decisions based more on facts and not so subject to psychological factors when purchasing raw material. I say this and yet....there is the stock market.
So what was the labor movement about? His explanations completely remove the human elements to working life. his theory im sure is economically sound as stone but its not realistic. We need a theory that accounts for the exploitation of human capital in the market and that side of theory must come from the people in the factories, on the floors and under your sinks. I find many professors if not all to be completely out if touch with the inner workings of the worker, manager, owner relationship and the workers are out of touch with the owner/client relationship. A good is not simply produced and sold and needs are not abundant enough for massive economies to simply provide for them, there is the human psychology which plays the biggest role of all in business and unfortunately it seems those who play that side of the game best are doing so at the great cost and detriment of the greater population. Whens the last time you saw a commercial that said, this is good product you should buy it? Or do you see this product will make you happy and yes happiness can be bought at the store. As a business owner who both makes my products, manages the structure and deals in client relationships I can tell you from first hand experience the natural tendency is to get rock bottom labor prices and high retail/wholesale prices for my business to grow and expand. There are people who can tell themselves what needs to be done and have a vision for the day and those who wait for instructions and the one often does not understand the intrinsic value nor see the vast differences. Our similarities lie in our basic humanity and desires to live comfortable lives and contributing respectable services.
Tigerfire75 Individuals choose values. Then markets interrelate reveryone's values in terms of relative commodities amounts. Eg, 10 chickens for one goat. Then, each individual, w/his own values, evaluates that. Then, again, markets interrelate....And the process continues while man produces for a market.
I'm on the side of the Austrian school. However I do believe that we need some sort of government for keeping peace in a particular area. Because without government whatsoever there would be total anarchy I think. What would withold you from killing your neightbour and raping his wife? Some people Just have to keep the order and you can call tham whatever you want. But yeah people should be left the choice what they want to use as money and taxes should only be levied for what is absolutely necessary to maintain the order. As little as possible or you can go to a voluntary tax system in which you basically buy citisenship by paying tax...
As a libertarian I agree with Austrian Economics, but in the real world of everyday life, as your normal- typical- Jo shmo- pleb, I think it its a waste of time ( from an economic point of view). The biggest loser isn't the poor receiving subsidies or the rich that are doing the same, no- the biggest loser is your typical middle class american, who has never taken government assistance, who works in the private sector, who doesn't believe in unions aaaaand for what???!!! So that a CEO gets several millions in bonuses from a government bail out that such company received as a reward for bankrupting his business.
Always good to hear a true free market discussion. How many students have been exposed to the alternative to the progressive agenda?
I have many many times as a student of economics. however, as much as i dislike it there are elements of it that should be taken seriously and are valuable
Joe Salerno is an authority on Austrian Economics. We don’t usually appreciate the greats when they are living amongst us. Mr Salerno is one of the greatest minds and in my top 10 economists historically
Keep up the good work Mises Institute
Please do one of these interviews with Professor Hans-Hermann Hoppe!!
Cronyism, the convoluted tax code, excessive regulations, the national debt and the Federal Reserve are the major causes of the widening income inequality gap.
Solutions:
Abolish tax code and IRS.
Enact the Fair Tax.
Minimize regulations to only what is absolutely necessary.
Balance the budget.
Start decreasing the national debt.
Abolish the Federal Reserve, the FDIC and all bank regulations except one; require full disclosure on full or fractional reserve backing of deposits.
Treat gold, silver and cryptocurrencies as legal tender (not as an asset) for tax purposes.
The income inequality problem is counterintuitive. Big government equals more income inequality. Smaller government equals less income inequality.
The middle class is the byproduct of a free market economy; it is not manufactured by a politician's tax gimmicks, minimum wage laws, or government redistribution of wealth.
There is no such thing as a living wage; there is only a wage that someone can afford to pay. You have to tailor your living around your wage, not have government tailor your wage around your living.
It is about supply and demand. If you have an easy time filling your employee needs, you offer lower wages, if you have a hard time filling your employee needs, you offer higher wages; because if you do not your competition will and you will be out of business.
It is not about what people deserve or what is fair or what is just; it is about what the market will bear. Blame the consumer for shopping for the lowest price and blame the voter for voting for government to fix their problems.
No
@@tompatherookiecrusher885 Said the ignorant communist.
@@TklistNet1 whoa you replied?
@@TklistNet1 do you still hold the same beliefs 5 years later?
@@tompatherookiecrusher885 This person described the problem 7 years ago brilliantly and what’s played out has only supported that description. Things are only getting worse and it’s entirely because of the fed and big government. I hope you realize this 2 years after your comments.
The moment people are left free to make their own choices is the very same moment you will have inequality of all kinds. This is not a problem, it is a feature. Those who seek absolute equality seek absolute controll over all others. Equality is not a one way street. You can't garauntee equality of success without equal chances for failure and there are far more ways to fail than to do something right. So when people want equality, ask them who they assert you are to be equal to. Who is this person that is the standard for your life and why you should not be able to choose and act.
You cannot speak for humanity. You do not share other people's personal visions for their life anymore than you can share their value estimations. Everyone saying "Society will do X" or "Society needs Y" is actually asserting their own personal vision above all others. This is the source of tyranny. Society has no mind, no wants, no needs anymore than it has a stomach. Only each individual person has that. If you want what is good for the whole, do what is good for the individual.
Excellent interview and good answers.
This is an excellent interview, very informative as an introduction to the vast topic of Austrian Free Market Economics and a warning to all who are open minded enough to hear. For those people who are suspicious of and distrust a market that is free of government manipulation, may I suggest you consider the value of the Amazon Marketplace, where buyers can read a vast array of ratings and comments by other consumers and make informed decisions about what to purchase and even what price they are willing to pay, as the prices for the same item can vary a great deal. The better a product is described and displayed, disclosing its ingredients, origins, etc., the more attention it receives. Amazon shoppers demand a lot of their products, I've noticed. And the reputation of a company matters! This "word-of-mouth" advertising is worth it's weight in gold for good products and a boon to consumers who are trying to use their resources effectively. In a free market the consumers pick the winners based on the quality of the product and its price. Please show me how that can possibly happen in a controlled, socialist or fascist economy, where the government decides what we need and what will be produced. There would be no consumer choice at all and no way to rate, evaluate and select products or services based on their merit. But there would be a thriving black market, as was so throughout the USSR, which is always a dirty, socially destabilizing business. Why would anyone want to live under such a system, where their choices are limited, controlled, and manipulated by the powerful people at the top?
Because some people evade independent judgment.
And yet the west is moving towards more and more socialism.
Compared to centralized planning - even the current crony capitalist system is arguably better! Because free markets are not really free in practice (if that is ever possible). To pick your Amazon example, the mass of the low wage Amazon workers are being subsidized through the government welfare system (healthcare etc), massive tax incentives from local cities etc!
The lack of distribution in a free market vs. State distribution in a fascist/socialist economy is a good explanation for the lack of rationing in a free market vs. State rationing in a fascist/socialist economy.
Even the exclusive billionaire gathering at the recent Davos summit featured regurgitations of the income inequality theme. Do I sense a coordinated media blitz around a theme? Problem-reaction-solution?
Joe needs to be our Austro-Libertarian ambassador in the media. Sorry Walter Block you just aren't cutting it. Joe could have much better explained the Austro-Libertarian perspective on minimum wage to Sam of the Majority report. I just watched Walter debate Sam and, although I agree with Walter's logic he failed as a rhetorician/marketer/persuader/ambassador. GRADE F for Walter. GRADE A for JOE
very nice conversation. Very informative.
Si ya hay doblaje en español por inteligencia artifiacial que esta esparando mises org ?
Life is not "fair", and nothing the government can do can change that.
Sam Walton with his hands out "Please big government pay my workers health care and food assistance so I can continue to increase my profitability!"
Walton has no legal power to force govt to give health care and food assistance. Walton is legally unarmed. Govt has guns to force obedience. Govt should protect rights, not steal and regulate.
PissedFechtmeister Statism corrupts virtually everyone w/its power of initiating force. So people (poor, middle, rich) use whatever influence as individuals or groups they have to use that power for their own, necessarily short-range, advantage before others use it against them. There is no objectivity to it. Its all legal but the principle is a street thief's smash and grab mentality. Atlas Shrugged dramatizes it. Govt must be shrunk to the power that the Founder knew was safe. A good start would be to abolish Antitrust, the Fed, the Interstate Commerce Commission, and the EPA. After the chains are off business, they will be more productive and prices will fall. There will be more and higher wage jobs. Then, in that context, the welfare state, inc/SS, Medicare, Medicaid? and food stamps can be gradually ended.
The growth rate of capital return is higher than the growth of return of labor that is dependent on technology growth.(See Solow Model) This is why capitalists have much higher growth rates in income than workers. This leads to a 2 class society, how does Austrian Economics "solve" this problem? Or does the Austrian Economics support a 2-class society?
Xez1919 You might find this article to be of some relevance: mises.org/library/inequality-capital-and-problem-piketty
From the article linked by Richard Strum:
Piketty misconceives the nature of economic growth. He bemoans the gains of capitalists, but without their investments growth would not take place. He follows a famous model of Robert Solow, in which changes in technology, not additions to capital, are the primary drivers of growth. But as [quintessential Austrian economist] Mises long ago noted, knowledge of technology in poor countries far exceeds the ability of these countries to put this knowledge into practice. What these countries need is more capital; and if economic growth is to continue in well-off countries, they need increases in investment also. Piketty’s confiscatory policies would choke off growth and prosperity in the name of equality. (This basic point against Piketty has been made most effectively in a short book, George Reisman’s _Piketty’s Capital._ )
The economist Randall Holcombe uses a point much stressed by Austrian economists to dismember Piketty’s entire approach to capital theory. Piketty writes as if the return to capital were automatic: all a capitalist needs to do is invest his money and rewards will flow to him at a fixed rate. Precisely the opposite is the case:
_"The general idea - that capital does not just earn a rate of return, but has to be employed in productive activity by its owner - plays no role in the way Piketty analyzes his extensive data set on inequality. Piketty makes it appear that earning a return on capital is a passive activity. ... But capital has value only because it provides a flow of income to its owners, and it only provides that flow if the owners employ it productively"_ [i.e. in successfully serving consumer demands---in other words, contributing to the self-perceived well being of individuals in the economy.]
As a libertarian I agree with Austrian Economics, but in the real world of everyday life, as your normal- typical- Jo shmo- pleb, I think it its a waste of time ( from an economic point of view). The biggest loser isn't the poor receiving subsidies or the rich that are doing the same, no- the biggest loser is your typical middle class american, who has never taken government assistance, who works in the private sector, who doesn't believe in unions aaaaand for what???!!! So that a CEO gets several millions in bonuses from a government bail out that such company received as a reward for bankrupting his business.
And you do? I think you miss the point- señor fake account account guy with the wanna be third eye- true free markets, a la libertarian will never be a reality.
Hector W Padilla the idea that the middle class doesn't get handouts as well is facile thinking. Who do you think are the ones that are taking student loans to go on campuses wasting time protesting about foolishness?
Producers, not consumers, create income inequality.
No, you have it backwards. If the producers make a product that consumers want then everyone benefits. If the consumers don't want the product then the producers lose.
KC Culp Your correct claim, "If the producers....," does not validate your consumptionist economics. Something must first be produced. Then and only then is consumption possible. Keynes is wrong. As JB Say said, "Production, production, production. That is the whole thing." The mere desire to consume may cause theft but cannot cause production. Only producers can economically consume. Producers produce and then consume (their own production or the production of other producers). Consumers as consumers (beggars, welfare recipients, thieves, etc) are not part of economics.
TeaParty Ba Boom Consumer demand driving what products are produced is not "consumptionist economics". Those consumers must have first produced as well. But if one is a producer in a modern economy, producing goods TO SELL, they have to produce things that CONSUMERS WILL BUY.
"The mere desire to consume may cause theft but cannot cause production"
Production is driven by producer's desires to consume. I make a sandwich because I desire to consume a sandwich. I run a business because I desire to make money to consume other things. Consumption and production are two sides of the same coin in a normal market.
mtanousable Youre evading the priority of production. A desire to consume does not cause consumption, as shown by the near-starvation lives of virtually everyone prior to the 18th century Capitalist Revolution. Those people wanted to consume more food but more food was not produced. So they could not consume more ,not even when they prayed for manna from Heaven. The Fed, a modern attempt at manna from Heaven, can shift consumption from some people to others but cannot increase sustainable production. Economics is production for a market, not a rationalization of mystical consumption.
mtanousable
TP1776's point is that consumer demand doesn't drive what is produced, it determines which producers are successful. His example about starving people is instructive. A more recent example: depending on your age, you might have trouble appreciating this, but no one used to carry a phone. At some point in the 90's people started carrying pagers (beepers) and when cell phones became popular I assure you that no one "demanded" smart phones. Steve Jobs is often praised for providing consumers with things they didn't know they wanted/needed. The "demand" for smart phones happened AFTER they were produced and THEN a company's success is determined by how well they satisfy consumers' demands. From a logical standpoint, for consumers to drive production, they must know in advance what they'll ever need and want. Think about it. Does that even make sense? Is it even possible? It's simply not possible. Consumer demand drives efficiency and competition, but not production. Obviously, the anecdotal evidence I'm providing shouldn't be used to base a theory on, so I recommend you check out "Say's Law", by Thomas Sowell or "The Structure of Production", by Mark Skousen, for a lighter touch.
Great discussion. Whats the intro/outtro music?
I'm wondering if there is some research or data on the correlation between interest rates and something like organizational or class-power structures: From what I gathered, central financial institutions and the federal government, among the most powerful organizations (in addition to military, media, medical, religious organizations), get the lowest interest rates (around the prime rate), but, for instance, business loans, home loans, credit cards, and Pay Day loan operations will charge higher and higher interest rates, respectively.
I know this is a bit sloppy, but that is why I am asking if there is a clear study that correlates interest rates with institutions and/or organizations, industries, industrial sectors, consumer markets, etc.
+asdimd The markets are manipulated by private central bankers, there is no research to be made where you can apply intuition. It's all controlled. We don't live in a system where the laws of action reaction apply. If you want the truth please research the banking system.
+Catalin Nistor Intuition is a poor substitute for systematic research, which is why the sciences are distinguished from common sense, hearsay, speculation, rumors, etc.
I know that central banks are at the core of the political-economic manipulation of society, but that is not what I'm asking. I want to see a spreadsheet, at the least, or a full study that shows how, or whether or not, interest rates increase or decrease.
Awesome
Would top management fall into the role of government as well? They are ”taxing” worker income by giving them less than their share of profit. Great points though, would just like to hear his opinion on if this extends outside government.
It cannot be considered a "tax" because workers are paid according to current input: they receive their money now or in the very near future for the work they do. If the firm goes bankrupt the worst that happens is they lose future income. Owners on the other hand do not receive gains now but have to wait from the time they invested (which may before the first stone is laid) to when the firm actually turns a profit. This carries additional risk, but even in a "certain" economy the owners have to receive an extra return on their investment-profit-to make up for the time through to production and sale. This extra profit is the interest rate.
The guy asking the question is soo interested in being Austrian... but citizenship dont matter in the market as Ludwig von mises described it thru his life
Why do we pay taxes if the fed just buys the bonds? It's ridiculous.
I do almost completely disagree with the points brought forth in this interview. I do, however wish to learn the facts, and the truths built upon them by those that do agree with the points brought forth in this interview.
What, specifically, do you disagree with?
There is a lot here left very vague. I here comparisons which support certain positions and accusations. Having no regulations would be ideal if it weren't for the very creative ways people pursue profit. This takes into account the producer's risk in the marketplace yet ignores the consumer's.
What about the ice cream vendors of the early 20th century causing a TB epidemic or chemical companies producing products such as DDT? Which market actor caused more market distortion the government by forming regulatory agencies such as the FDA or the loss of life and property caused by the producers?
Considering that there was a market crash due to inept regulation, and market producers are profiting greater from pandering to investors rather than actually producing a quality product at a fair price to consumers. What market distortions occur when a bank intentionally creates a conflict of interest between shareholders and its customers while profiting in the exchange. Also, considering the fact that no criminal charges resulted from this practice it is hard grasp that regulatory capture is the cause of any price distortions in the modern economy.
Perhaps Austrian economics works best in perfect laboratory conditions.
PissedFechtmeister You missed my point. My comment was relative to the assertions and accusations made in the video. The assertion was made that governmental regulations manipulate, effect markets causing them to be disconnected from the law of supply and demand. I merely made the point that there was no explanation as to how the producers distort pricing. I also posed the question of which causes the greater pricing distortion in certain instances, & to give an example of how & why regulations come into effect to protect consumers from the producers.
Also, in the last part of the video the gentleman stated that regulations were used by government as a tool for wealth distribution. This was not an explanation of economics so much as it was an accusation. I don't know much about that. Personally, I have seen where product specifications were used to ensure that a certain company received some benefit. However, There are literally millions of people who want to see some real and meaningful justice for the crimes that caused the market to crash. My assertion was that in lieu of the causes of the market crash and other relative instances such as LIBOR that it is hard to make the case for "regulatory capture".
In a perfect environment, producers market quality products at a fair price. In reality, producers often sell a very shiny package with a poor quality product inside. This is called "the bait and the switch". The true value given to a product rests in the consumers perception. The law of supply and demand often only determines the cost of producing a product not its market price.
PissedFechtmeister I'm no lawyer. My guess is that as far as what you mentioned if there was collusion between bankers and regulators or politicians or other officials then there was rigging of the system and not legal gaming. One big part of all that was the AAA ratings given to secondary derivative packages that did not meet that standard. If done intentionally, it isn't just disingenuous that is fraud. It's a matter of criminal intent in any one case. How those packages get their rating is according to criteria which is guided by regulations.
Additionally, my assertions and questions are not about regulations for the sake of regulations. The issue is proper regulation to maintain integrity of the market and its participants. Too much regulation and all producers end up with identical business models and there is no competition. Not enough guidance or structure and a few bad actors will do whatever is allowed to monopolize. It is really not easy to balance in an economy as dynamic as ours.
What I reject is the Darwinian analogy made between our human economy and the natural ecology. They may be similar in a lot of respects, and the human economic markets and their products do evolve, but not according to the same rules. There is mountains of evidence which proves the irrational nature of peoples purchase decisions. Which means there is a distinctive difference between a creature searching for food and someone shopping for a protective cover for their iphone. Perception is a determining factor for what someone is willing to give for a product which is why image is so important. In many ways perception is a product. That is, it's that way on the retail side. On the wholesale side, marketing is not about being flashy. Why? Because companies are not living entities and they make their critical purchase decisions based more on facts and not so subject to psychological factors when purchasing raw material. I say this and yet....there is the stock market.
PissedFechtmeister > Should Bernanke and Greenspan be thrown in jail
Counterfeiting is a Constitutional crime.
> Having no regulations would be ideal if it weren't for the very creative ways people pursue profit.
Note the fascist evasion of anything definite.
Sicilian Salerno
So what was the labor movement about? His explanations completely remove the human elements to working life. his theory im sure is economically sound as stone but its not realistic. We need a theory that accounts for the exploitation of human capital in the market and that side of theory must come from the people in the factories, on the floors and under your sinks. I find many professors if not all to be completely out if touch with the inner workings of the worker, manager, owner relationship and the workers are out of touch with the owner/client relationship. A good is not simply produced and sold and needs are not abundant enough for massive economies to simply provide for them, there is the human psychology which plays the biggest role of all in business and unfortunately it seems those who play that side of the game best are doing so at the great cost and detriment of the greater population. Whens the last time you saw a commercial that said, this is good product you should buy it? Or do you see this product will make you happy and yes happiness can be bought at the store. As a business owner who both makes my products, manages the structure and deals in client relationships I can tell you from first hand experience the natural tendency is to get rock bottom labor prices and high retail/wholesale prices for my business to grow and expand. There are people who can tell themselves what needs to be done and have a vision for the day and those who wait for instructions and the one often does not understand the intrinsic value nor see the vast differences. Our similarities lie in our basic humanity and desires to live comfortable lives and contributing respectable services.
Hello ? A surgeon does not earn the same as a fast food worker. Hello?????
CHEESUS! They are too close together! They are almost footsying each other!
High interest rates aren't bad if you are saving your money. Sure if you are buying stuff high rates are bad but not in themselves are they bad.
High in what context? Only the market knows.
TeaParty Ba Boom Exactly. Of course the higher the better if I am saving up my money. You know 10% interest is a lot better then 5%.
Tigerfire75 Man is a spender and investor as well as saver. Again, only the market knows.
TeaParty Ba Boom High enough interest rate will get me saving. Of course then the market will adjust to get me to invest and spend.
Tigerfire75 Individuals choose values. Then markets interrelate reveryone's values in terms of relative commodities amounts. Eg, 10 chickens for one goat. Then, each individual, w/his own values, evaluates that. Then, again, markets interrelate....And the process continues while man produces for a market.
I'm on the side of the Austrian school. However I do believe that we need some sort of government for keeping peace in a particular area. Because without government whatsoever there would be total anarchy I think. What would withold you from killing your neightbour and raping his wife? Some people Just have to keep the order and you can call tham whatever you want. But yeah people should be left the choice what they want to use as money and taxes should only be levied for what is absolutely necessary to maintain the order. As little as possible or you can go to a voluntary tax system in which you basically buy citisenship by paying tax...
What would keep you from killing your neighbour and raping his wife? Basic decency. Lowest common denominator civility.
How does Mises/Austrian economics frame the income inequality issue? By teaching their students to steal more.
Not even sure how to respond to that...
No, that's left to the Central Banks and their currency debasing and interest rate controls, not the school of Austrian Economics.
really? how many austrians are lobbyists?
ChrisDutch is too busy watching pregnant ladies rub their bellies to be responding to you plebs! (look at his activities)
Dumbass comment
As a libertarian I agree with Austrian Economics, but in the real world of everyday life, as your normal- typical- Jo shmo- pleb, I think it its a waste of time ( from an economic point of view). The biggest loser isn't the poor receiving subsidies or the rich that are doing the same, no- the biggest loser is your typical middle class american, who has never taken government assistance, who works in the private sector, who doesn't believe in unions aaaaand for what???!!! So that a CEO gets several millions in bonuses from a government bail out that such company received as a reward for bankrupting his business.