(not profound, but almost) (good Austrian argumentative material)
I need to update Peter Boettke’s definition of Austrian Economics to include the reasons WHY certain groups of people are morally and intellectual attracted to the Austrian model, rather than just the methodological differences:
1) The testability of incentives as rational
2) The visibility of voluntary versus involuntary transfers
3) The visibility of the redistribution of risk to entrepreneurs, and the impact on entrepreneurial incentives.
4) The visibility of the impact on opportunity costs.
5) The visibility of the cumulative effect on opportunity costs.
6) The visibility of decline in linguistic, rational, social, moral, mythological, and institutional capital.
The longer your time preference the higher the cost of the portfolio of opportunity costs. (I should diagram this out a bit.)
It was very frustrating to read the number articles of late that just put us outside the consensus, and paint us as extremists. I mean, I know that *I* agree with the mainstream: they affect what they measure. They achieve their short term objectives. But I disagree with the mainstream that the accumulation of externalities is inferior to the short term benefits.
I don’t think honest progressives like Karl Smith disagree that there may be a cumulative effect of continuous distortion of the monetary system. I think they just feel that the moral good in the short term is greater than the risk and damage in the long.
Now, I was right in my prediction, and Paul Krugman was wrong, that voters would absolutely NOT tolerate what they viewed was immoral behavior; and that the Germans would simply adjust Europe slowly rather than allow ‘immoral’ redistribution, or financially expensive adjustments to occur rapidly. Politics is a moral, not empirical exercise. (See my post on Paul Krugman’s Moral Blindness). And he couldn’t grasp that. The first problem of politics may be the suppression of violence. But the SECOND problem of politics, is the suppression of free riding. It doesn’t matter the size of the group, whether tribe or nation.
Now, just because we are too unsophisticated to measure the impact on moral, social, calculative-coordinative, and institutional capital except in the longer term, because we don’t know how to price it, doesn’t mean that that stock of capital, priced or not, doesn’t increase or decrease. Or that we do not depend on that stock of capital as much or more than any other.
So, given that the math in economics isn’t really all that challenging (knowing which data to pull, and its construction is), it’s not that Austrians are afraid of empirical work. (Although we get more nuts and fruits because we lack that filtration system). Its that what we care to measure doesn’t leave behind a record of prices. And opportunity costs dont create a record of prices. Furthermore, the use of large scale aggregates, launders all causality from the analysis.
And in our view of the world, basing policy on these aggregates, unless it is extremely TACTICAL and LOCAL (loans, and debt forgiveness), pays the vast majority of attention is to that which matters very little, and ignores that which matters very much.
We can spend down social and moral capital, just as we can spend down environmental capital, but we must give these things a few generations to recover. We have been spending it down for over fifty years. Probably a century as of 2014.
I think our side does disagree with the fact that ‘it’s all demand’. And I am not certain that we are right. I’m certain that there are extremely negative consequences for stimulating demand unless it’s given directly to consumers as cash by bypassing the financial system. But the cumulative effect on the quality of goods and services still appears to diminish – although proving that’s a very hard task of teasing signal from noise.
The stock of capital that troubles me most, because of the Marxist, Freudian, Postmodern, and Feminist attacks on the meaning of terms via obscurant language, is the stock of metaphysical bias embedded in the language. It’s eroded pretty consistently since the first world war. Even if our scientific language (nod to Flynn) is increasing, our stock of moral capital in the language is declining rapidly. This stock is what the Postmoderns attempt to ‘steal’ from the commons. And they are very good at stealing.
So, in POLITICAL ECONOMY I tend to look at our biases as a division of knowledge and labor along time preferences. With Austrians and conservatives with very long time preference (aristocrats) and common people with shorter time preferences, and most progressives simply displaying conspicuous consumption as a means of demonstrating status.
I don’t really care about the mathematical and procedural Platonists. They’re everywhere. But that’s an entirely different battle.
Austrian Economics isn’t a debate over method. Thats a nonsensical sideshow. It’s a debate over priorities. Our methods are different because our TIME PREFERENCE is different – and we don’t have the LUXURY of taking the EASY way out, because our stock of preferred capital isn’t PRICED. It’s just HARDER to do what we do.
That is how we must position it. And with that positioning we wipe out the influence of the … ahem, silly ideological pseudo-Austrians bent on stealing our name and identity.
That’s my mission with reforming libertarianism anyway.