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Hey libertarians
How does the free market rectify hyperinflation?
Through its existence. Free market = competing currencies.
Wait. This guy is seriously an…
So-called sticky prices are a result of intervention. It’s a concept that is basically meaningless in an actual free market.
And that’s where I disagree with “Austrians”.
Prices and wages are sticky for a lot of reasons but one of the major reasons is because people prefer stability and convenience.
No one wants to renegotiate their wage once a month, once a week or once an hour. It’s just easier to roll with the flow and renegotiate on predetermined intervals.
But that’s not stickiness, per se. Austrians understand that principle and lay it out in the ordinal ranking of subjective preferences and with regards to marginality. But stickiness is a persistence not a hesitation, and it is specifically an extra-market (meaning outside of the market) failure. That’s why “sticky” prices are almost always referencing wages - because of all of the governmental costs and “protections” involved. I think Bob Murphy has written some solid stuff on sticky prices.
Also, why scare quotes for Austrians? What’s that all about, bro?
It’s still stickiness. It unchanging prices even with the information as to why they should change being known.
There are a lot of reasons why stickiness occurs and one of the big ones is incomplete or unknown information.
I guess you can argue (and I’d agree) that if everyone had perfect information then they could in theory instantly eliminate stickiness, if they wanted. But ten our brains would also have to be able to adapt to all the complex math that would have to go into that.
And it’s not just “government costs and protections”. Free markets have contracts and agreements and those contracts carry set prices. Unless you make contracts completely flexible in pricing (price fixing is a major component of contracts, then what’s the point of contracts, really, other than guaranteeing delivery?).
Also, I know we separate wages because it’s the purchase of a specific and important type of good & service, but wages are prices. Wages are nothing more than the price of labor.
I’d love to read what Murphy wrote. I like his work and I think he’s got an advantage over others due to his dual education.
I put “Austrians” in quotes because of a few reasons. #1, it’s a title given to a group based on their overall theories, and not a reference to citizenship of a specific country. #2, not all Austrians share all the same beliefs on all topics and I was pointing out that this is one that I diverge from the mainstream on. I don’t mean to offend or anything, just thought it was applicable.
Another thing I diverge from the typical Austrian economist about is that Gold or Silver is the solution to currency manipulation (you can still have inflation or value dilution with a gold standard) or that gold & silver have intrinsic value (they don’t).
Anyway, price stickiness is very real and possible to eliminate but not probable. Humans themselves would practically have to evolve into quantum calculators to solve that issue. I know why Austrians think stickiness can be eliminated (In a perfect system with perfect info, blah blah blah), but isn’t the entire point of Austrian Economics the idea that it’s not a perfect system and that human action is the driving force and that humans are flawed and that we can’t always scientifically map or predict human action? Why all of a sudden flip the philosophy?
What I don’t get is why Austrian Economics just won’t let this one thing go. I don’t see why “unstickiness” is so important that they can’t just say, “yea, stuff is sticky because it’s easier that way. end of story, bros”.
Perhaps I’m just ignorant to how unsticky prices relates to the overall Austrian theory.
The Truth About The Minimum Wage
FEE:
People don’t like to think that anyone’s labor is worth less than the minimum wage. Someone might end up flipping burgers for $5.00 an hour. You might think the minimum wage is a way of paying some sort of dignity premium—hence language like “living wage.” People with such good intentions look at the direct beneficiaries of these policies, say, burger flippers now making $7.50 an hour. They pat themselves on the back. But they rarely count the invisible costs: willing human beings who never get hired in the first place.
“But $5.00 an hour is not enough to live on!,” they’ll say. For whom? A teenager living at home with his parents? An elderly person who wants simply to stay active? A single mom with three kids? A single woman sharing an apartment with 2 roommates? Of course, not all of these people could live off of $5.00 an hour. But some of them could given the opportunity. Concerns about those who couldn’t don’t justify minimum wages even if we ignored the invisible costs of the policy, which include reduced margins to businesses that might otherwise grow (and hire more people).
In other words, if you take off the bottom two rungs of the income ladder, many will never climb it. That’s the effect of the minimum wage. The more cynical side of me says that’s how many politicians and the overpaid teamsters want it.
See Also
What people forget is that there are plenty of people who work that don’t need to support anyone, not even themselves. Many of these people work because sitting at home is boring or because they would like some extra spending money or because they want to help make a difference in someone’s life and don’t necessarily need the money.
A lot of these people live in a household that has other income earners that completely support and help sustain their lifestyles regardless if they work and contribute or not.
The minimum wage already requires us to pay them a minimum wage determined by the price floor, increasing the minimum wage for others would also require us to pay these people more.
The minimum wage isn’t for someone who is trying to support a family, it’s this grand illusion that politicians and union reps have constructed so that they can claim that they are doing something to help the people.
I’ll save my stark commentary about unskilled low wage workers and starting a family for another time.
(via anarcho-alowisney)
Do Women Earn Less Than Men?
The Real “Truth About the Economy:” Have Wages Stagnated? (by LearnLiberty)
Economics: A Weapon of mass Distortion.
“There are three kinds of lies: lies, damned lies and statistics.” - Mark Twain.
I thought it would be rather fitting to open with that particular Mark Twain quote. He was on to something when he quantified three different types of lies and while I do think stats have been twisted and mangled and distorted more than words themselves, we need to go a step further.
Mr. Twain misses the point here, if ever so slightly. Guns don’t kill people, people kill people. And with that logic in mind, lies don’t lie to people, people lie to people. it just so happens that statistics happen to create the most trustworthy lies since they are soaking in both tangible and reputable facts. This is the underlying problem with economics, stats can be twisted to show nearly whatever the presenter wants them to show. It might be the one barrier that keeps economics fluctuating between theory and science.
Not picking a side on whether or not our wages have stagnated or if we are actually making more or less and if our fringe benefits help offset the inflation adjusted stagnation and blah blah blah.
There are so many angles on economics, as Don Boudreaux mentions. Economics is as much theory as it is proven science. Statistics, which most of this economics leans on, can be altered in which ever way one would like to point their audience. The same exact data can be twisted to prove both sides correct, so I warn you to take all of these stats and economic “lessons” with a grain of salt. Especially in an election year in an obviously slumping economy, there will be lots of numbers, lots of facts and stats and lots of economists standing behind their ivy league PhDs barking out completely different ideals and theories of where this country is headed and how exactly we should arrive there.
I will say this much, and it’s the one place I totally disagree with Reich (a man that I have respect for) is that taxation and heavily taxing the successful is not the path to prosperity and it’s not the answer to solving our poverty problem. As Winston Churchill once said, “We contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
There’s no reason for us to try and take from our own rich and give to our own poor. That’s not a solution, that’s a variable. That’s like solving your famine problem by taking food from those that have food and giving it to those that don’t. Eventually, everyone will become malnourished.
We shouldn’t try to give everyone an “equal” slice of a pie, especially when they have not earned it. We should try to grow the size of that pie all while teaching those with smaller slices on how to obtain a larger percentage.
We always hear politicians and liberal economists mention that we need to tax the rich and give to the poor. I believe that’s the wrong mentality. A loser’s mentality, if you will. It’s the very same mentality that the current administration has ushered into office and has infected a large portion of the country with.
Why do we not teach our poor how to stop being poor instead of teaching them how to maintain being poor? I for one believe that even in the worst cases, those people are still willing to work and earn their way, or at least they should be.
The mentality that plagues how we approach our poverty issue is the same irresponsible and illogical mentality that plagues much of our healthcare system. No one tries to cure anything anymore, they simply try to keep you alive, constantly one the same drugs and forever indebted to BigPharma.
Let’s stop teaching people how to maintain and let’s start teaching them how to get better. It’s what’s best.
The Real “Truth About the Economy”: Have Wages Stagnated?
Don Boudreaux of CafeHayek responds to Robert Reich’s claim that wages have stagnates over the last 30 years. Reich ignores the growing amount of benefits people receive from jobs, uses selective measurements when calculating inflation, and ignores income mobility to arrive at his conclusion.
