Fan Mail

Here is an email I received concerning an article I wrote in February 2010 on the recession of 1937,

Jonathan, that is ths most outrageous example of right-wing BS and double-speak I've ever heard.  Blaming the recession of 1937 on unions and government regulation is in a word....crazy.  Tax revenues went up because 1936 was a pretty good year, but the government did in fact cut domestic spending significantly and monetary policy probably in fact played the largest role.  You are quite simply...living in a fantasy world.

By far, the best fan mail I've received yet.

Revisiting Intellectual Property

Here is an email I shot over to Stephen Kinsella:

_________________________

Dear Mr. Kinsella,

I admit that I have yet to read your monograph on intellectual property (not out of disinterest, but because I am notoriously bad at actually reading what I intend to read), so I am not completely familiar with your stance on intellectual property (but, I know the general gist of it all).  Originally, this email was meant more as a question in "opposition" to your stance on IP, but I realized that it's not really developed or researched enough to be presentable.

Basically, I hold the position that intellectual property rights are not necessarily mutually exclusive to a free market, although I do agree that IP rights as they exist today are.  I've considered for some time -- admittedly, perhaps out of ignorance (this will be one of my questions, below) -- that intellectual property rights were just not allowed to develop on a free market, so we really have no example of what they would have looked like had they not been monopolized by government at a very early stage of their development.  I believe, however, that your case against IP (in the broadest sense) starts at the middle.  I don't think that that the fact that ideas are not scarce is a good starting place for whether or not IP rights should exist.

Let me expand upon this last point.  The reason property rights exist are not just because material property is scarce, although it is a major contributing factor.  Property rights developed out of the human interest to avoid conflict and instead opt for self-progress.  Of course, that material property is scarce is a major reason why this conflict arose, but I think the pivotal contribution is the idea of conflict.  I do admit that in many ways material property and IP are incomparable, but they are comparable in the fact that IP does create conflict.  This conflict is largely magnified by state monopolies, but the conflict nevertheless exists.  Furthermore, I think that in a free-market people would find ways of internalizing the benefits of their ideas.

How people internalize the benefits of their ideas may materialize completely different to how they did so with material property, but I think that this evolution would take place nonetheless.

I hope to further develop and elaborate these thoughts in an article very far down the road (after I read your monograph!).

Questions:

1)  Is there a good book on the history of IP?
2)  What is your opinion of what I wrote above?

Anybody?

I wrote the following in an article I am preparing on "discoordination economics",

Neither would Keynes necessarily disagree with the more general concepts of macroeconomic coordination during times of full employment.  Keynes’ concerns primarily dealt with periods marked by a dramatic fall in effective demand.

This is my paraphrasing of something I remember reading recently.  I just can't remember where I read it.  Anybody have any clue?  I've asked around quite a bit, but no responses.  Maybe I imagined it.

What Happened to Heterogeneity?

From an interview with Joseph Salerno,

Daily Bell: Do you believe in private fractional banking or should it be illegal?

Dr. Joseph Salerno: I am neither a philosopher nor a legal theorist, but I believe in the absolute right of individuals to enter into any voluntary contract that they choose. But a contract must be meaningful to be enforceable. If I pay you for a promise to paint my house red and green all over, this is not a contract but an absurdity. Likewise if I pay you (or even if you pay me) to store my motorcycle in your garage so that it is always available for me to use it and I grant you the freedom to rent it out at will. My point is that the deposit contract as modern free bankers conceive it, is a meaningless fiction. It implies that a sum of money can be both maintained on deposit for instantaneous withdrawal by the depositor and lent out to a borrower.

Motorcycles are not fungible.  Just a "small" oversight on Salerno's part.

What I am Writing

I have not been using my spare time very wisely.  Apart from the little reading I've been doing and the work on an upcoming newsletter that I will edit and write for (a newsletter which may replace my blogging, although the writing will be on slightly different topics and much better organized), I have been doing very little writing.  I've started to pick up the slack, though, and now the only relevant factor is whether or not I will carry through my plans.

Here's what I've been writing on, so far,

1. I have an article coming out on the LvMI website, I believe sometime next week, on the Electric Daisy Carnival, drug legalization, and the unintended consequences of prohibition.  The best part is that I wrote the article when my brain was still recovering from the 72 hours worth of that electro-house music festival;
2. I am writing two articles based on this interview with Greenspan.  The first is indirectly related and deals with Austrian economics and the concept of market (im)perfection.  For another subtle hint, also read my comment on a recent blog post at Coordination Problem;
3. The second article is more directly related to that interview with Greenspan, and will be a (hopefully) introductory essay on why Greenspan did influence the creation of the housing bubble.  In other words, it will be an introduction to capital theory (an introduction being all I can really write, given my [lack of] expertise);
4. As I alluded to in a previous post, I will be writing on war, aggregate demand, stimulus, and economic performance.

Saving(s) War as a Depression-Killer

I am re-reading Robert Higgs' articles "Wartime Prosperity" and "From Central Planning to the Market", in Depression, War, and Cold War, with the intention of writing a piece on the Second World War for Mises Daily.  In "Wartime Prosperity" Higgs seems to support a thesis that I've considered for quite some time: that the war led to an increase in personal savings.  Writes Higgs,

In any event, people were building up bank accounts and bond holdings; while actually living worse than before, they were feeling wealthier.

I mentioned my theory that an increase in savings during the war could explain much of the post-war economic success before, but I remember being told that much of these savings (including savings held by U.S. personnel overseas) were held in the form of treasury bonds, and so the value of these savings is questionable.  Surely, it is true that many of the saved capital goods were squandered in the war (that is, they were consumed in the process of fighting the Axis powers).

But the industrial recuperation that took place in the years after the war required a stock of capital goods, and I think it's plausible to believe that a good volume of these capital goods were made available by abstention from consumption during the war.

Any thoughts?

Too Radical of Subjectivism?

[ed. I should warn readers that this is one of those posts that I didn't really think through.  It's one of those half serious, half in jest posts.  Despite this warning label, on the surface I think I'm about to make an interesting point (interesting as in, "Heh, this was entertaining."   I thought this would be a great post to inaugurate the new blog, since it would follow in the tradition of dumb posts.  I don't know if this has been brought up or discussed elsewhere, so if it has do please point me to it.]

My intention is to bring into question the validity of the supply and demand graph.  My argument is that in order to determine the slope of either the demand or supply curve you have to make assumptions about individuals' behaviors, and that this has two implications: (1) upward sloping supply and downward sloping demand cannot be considered economic laws (although, I'm not sure anybody does consider them as such), and (2) the supply and demand graph may offer some evidence towards the usefulness of empiricism in economic science (although, just the same, one could go as far as to argue that the common supply and demand model, as shown above, is actually not that useful a tool in economic science).

I'll illustrate my point by analyzing it behind the concept of a shortage.  Anybody, or at least 99% of economists, will agree that artificially (fixing) the price at a point lower than the equilibrium (P_E) price will create a shortage of that product.  This is because decreasing the price to a point lower than P_E will lead buyers to increase quantity demanded.  Similarly, an artificial increase in price above P_E (price floor) will lead to a surplus of the good in question.  This is because it is assumed that a rise in price will cause quantity demanded to decrease.

We see how in making the argument for shortages and surpluses as related to the simple, common supply and demand model we implicitly make an assumption of how the buyer (in general) will behave.  If prices fall, quantity demanded will rise; if prices rise, quantity demanded will fall.  But, we can't really definitively comment on how exactly the buyer will respond to a change in price, even assuming ceteris paribus (that all else remains the same) — we don't even really know what "all else" is.  That the price of product X falls does not mean that it is suddenly more lucrative for me to demand over other products, even if the price of other products remains the same.  You simply cannot definitively comment on how individuals economize means amongst ends — this is outside of the scope of economics (we can only say that individuals do economize; this is, more or less (more accurately: human individuals act purposefully), Mises' praxeological axiom).


So, supply and demand graphs contain at least two conditional statements.  If the price moves in $_whatever_direction, and if the buyer (on average) responds in $_whatever_direction, then $_something will occur.


At least, this is what seems completely consistent with subjectivism.


Again, I understand that the relevance or importance of these facts may come into question (and, I repeat, this post is only half serious).  None of this will lead me to dropping the model as a useful elementary tool.  We know (or, I think we know) that supply and demand graphs are usually accurate in the broadest senses.  A rise in price above P_E will lead to a surplus, and the opposite will lead to a shortage.  But, this is based on a broad empirical observation of people's behavior.  

What implications does this have in regards to empiricism, economic theory, and subjectivism?