Woods (This guy Rocks)

[Serge_Tomiko]

Re: Woods (This guy Rocks)

I think that the Austrians (such as Woods) are missing something.

In the days of old, all the essential inputs to production, including labor, machinery, buildings, transportation, raw materials, capital, ... were more often than not limited to the locality of the consumers of the resulting products. Eventually a steady state can be achieved in which labor, in particular, can be reimbursed sufficiently to purchase their own productive capacity.

For example, Henry Ford made it a point to pay the workers on his Model T assembly lines enough ($5/hour, I believe) so that they could afford to buy a Model T.

For another example, labor was always a scarce commodity when I was a child on a farm in a classic rural agriculture community. The food we ate depended on my helping out on the fields, even when I was a young child.

Now the essential inputs to production (listed above) are fungible world wide. The cheapest labor (in China or Bangladesh, say) can produce more than the wealthiest can consume, leaving the wealthy (e.g., us Americans) with no known sustainable, ethical, justification to claim such wealth. The few remaining limits to unlimited bounty for all humans are examined in dread with great intensity, as if those limits were guiding us to a necessary and desirable future of broad spectrum reduction in human economic capacity.

The global corptocracy, in particular their financial divisions and institutions, have "done their best" to remedy this problem by extending credit to putative consumers that they might purchase this great bounty. The bulk of GM's and GE's profits these last couple decades came from their financing divisions, not from their manufacturing divisions. The most profitable corporations (JPMorgan Chase, etc) were purely financial. But that cannot be sustained. The debt balloons and collapses.

The Austrians are correct that the projection of the world wide economic structure downward onto any particular nation or region these last few decades is Keynesian and is a disaster. However the world is no longer a collection of relatively separate regions and nations, and the extrapolation upward of the Austrian model to a global economy is unexamined, at present unrealizable, and depending on how accomplished equally likely to be a disaster.

Human civilization lacks a world wide economic model that would work if it were done, or that could be brought into being if it would work.

A very articulate post. I would also add that nowhere, except in the heads of libertarians, has this notion of globalism truly been proven to be desirable for the people. It doesn't seem to work, it's doubtful it would work, but if it did - would we really want it to?

[Mashuri]

Re: Woods (This guy Rocks)

The Austrians are correct that the projection of the world wide economic structure downward onto any particular nation or region these last few decades is Keynesian and is a disaster. However the world is no longer a collection of relatively separate regions and nations, and the extrapolation upward of the Austrian model to a global economy is unexamined, at present unrealizable, and depending on how accomplished equally likely to be a disaster.

Human civilization lacks a world wide economic model that would work if it were done, or that could be brought into being if it would work.

The last thing that is needed is a model. The Austrian view understands that there is no separation of macro and micro economics. It's all micro (human action) and a global economy simply involves a lot more micros acting within the same boundaries of human behavior that evolution has naturally bestowed on all of us. Read a little on mises.org and you'll find quite a bit of study on the global economy.

[Mashuri]

Re: Woods (This guy Rocks)

A very articulate post. I would also add that nowhere, except in the heads of libertarians, has this notion of globalism truly been proven to be desirable for the people. It doesn't seem to work, it's doubtful it would work, but if it did - would we really want it to?

Globalism as it exists now is certainly undesirable, especially by Austrians. It's being manipulated by central banks stealing from the real savings of developing countries and transferring that wealth to Western societies. We're now (hopefully) witnessing the beginning of the end of this fiasco.

[Mashuri]

Re: Woods (This guy Rocks)

This is totally true if we allow a centrally managed gold standard.

That has tempted my thinking, yes.

But I think not.

Would a weber carb:


be of any use getting the engine in the following tractor to run like a Ferrari:


The enormous imbalances and instabilities in our current world economy would face one of two possible resolutions if faced with a gold standard, even one underlying some high-tech whiz-bang electronic settlement mechanism:

1. The gold gets blown out, as Nixon encountered when he closed the gold window, or
2. The world economy gets mostly shut down, sending our world population in a sharp and ugly reverse :eek:.

[due_indigence]

Re: Woods (This guy Rocks)

In the days of old, all the essential inputs to production, including labor, machinery, buildings, transportation, raw materials, capital, ... were more often than not limited to the locality of the consumers of the resulting products...Human civilization lacks a world wide economic model that would work if it were done, or that could be brought into being if it would work.

You are describing Marxist overproduction. Marxism is coherent only in a global context ('workers of the world unite.') Gobalism represented advanced capitalism scouring the earth for successively lower costs of production. Now that the world is small, integrated (albeit imbalanced between nations) and 'capitalistically coherent', there are two option as I see it 1) capitalism pressing the reset button via large-scale world war with the resultant supply/demand/capacity destruction and the opportunity to 'rebuild' ala a Marshall Plan II or 2) capitalism's defeat and the ascendance of a marxist/socialist model.

[Mashuri]

Re: Woods (This guy Rocks)

You are describing Marxist overproduction. Marxism is coherent only in a global context ('workers of the world unite.') Gobalism represented advanced capitalism scouring the earth for successively lower costs of production. Now that the world is small, integrated (albeit imbalanced between nations) and 'capitalistically coherent', there are two option as I see it 1) capitalism pressing the reset button via large-scale world war with the resultant supply/demand/capacity destruction and the opportunity to 'rebuild' ala a Marshall Plan II or 2) capitalism's defeat and the ascendance of a marxist/socialist model.

Economic Law will hit the reset button regardless of which "ism" gets credit. Unfortunately, it will likley result in armed conflict (option 1) as the elite in power resist this change.

[tombat1913]

Re: Woods (This guy Rocks)

I could not disagree more.

The Nixon blowout was an advanced warning provided by gold. It was ignored. The result is, the current situation is much worse than the one Nixon faced. The Western society still puts too much faith in gov't and is being punished for this. The world economy gets shut down because of monstrous bubbles and imbalances created by the current fiat "regulation" regime.

Regarding Austrians missing something I agree. They created their theories long ago, and things have changed quite a bit. There are too many social/political differences between market participants these days. Uncontrolled economic/financial relationship between them is a recipe for disaster, but this control cannot be provided by their govt's exclusively. Gold standard (at least, in its Bretton-Woods reincarnation) is an example of "good" regulation. Hopefully, the current situation may force the market participants to return to something that looks like Bretton - Woods.

What do social and political differences have to do with logical economic practices that are congruent with natural market phenomina? The fact that society has abondoned rational economic behavior shines poorly on your beloved regulations, as plentiful as they are, not on austrian theory. These differences you talk about should have no more impact on wise personal and professional financial decision making than religious views have on the effects of gravity. The recipe for disaster is a centralized power creating regulations incongruent with the free market, insisting every citizen be a home owner (CRA) for example, and diverting productivity into speculation.

I view Bretton Woods more as an international agreement than a regulation, and the rest of the world would have been better off telling Nixon to stuff it when he dropped the gold standard thus breaking the original intent of the agreement. This would have stunted American imperialism over the last four decades and required us to adopt more sound menetary policies to compete in the world free market. We wouldn't likely be having a global recession now.

[tombat1913]

Re: Woods (This guy Rocks)

I think that the Austrians (such as Woods) are missing something.

In the days of old, all the essential inputs to production, including labor, machinery, buildings, transportation, raw materials, capital, ... were more often than not limited to the locality of the consumers of the resulting products. Eventually a steady state can be achieved in which labor, in particular, can be reimbursed sufficiently to purchase their own productive capacity.

For example, Henry Ford made it a point to pay the workers on his Model T assembly lines enough ($5/hour, I believe) so that they could afford to buy a Model T.

For another example, labor was always a scarce commodity when I was a child on a farm in a classic rural agriculture community. The food we ate depended on my helping out on the fields, even when I was a young child.

Now the essential inputs to production (listed above) are fungible world wide. The cheapest labor (in China or Bangladesh, say) can produce more than the wealthiest can consume, leaving the wealthy (e.g., us Americans) with no known sustainable, ethical, justification to claim such wealth. The few remaining limits to unlimited bounty for all humans are examined in dread with great intensity, as if those limits were guiding us to a necessary and desirable future of broad spectrum reduction in human economic capacity.

The global corptocracy, in particular their financial divisions and institutions, have "done their best" to remedy this problem by extending credit to putative consumers that they might purchase this great bounty. The bulk of GM's and GE's profits these last couple decades came from their financing divisions, not from their manufacturing divisions. The most profitable corporations (JPMorgan Chase, etc) were purely financial. But that cannot be sustained. The debt balloons and collapses.

The Austrians are correct that the projection of the world wide economic structure downward onto any particular nation or region these last few decades is Keynesian and is a disaster. However the world is no longer a collection of relatively separate regions and nations, and the extrapolation upward of the Austrian model to a global economy is unexamined, at present unrealizable, and depending on how accomplished equally likely to be a disaster.

Human civilization lacks a world wide economic model that would work if it were done, or that could be brought into being if it would work.

I can't make sense of this. Austrians have it wrong because the theories have yet to be tested in a globalized economy? How can it be wrong if it hasn't been tested yet?

[Mashuri]

Re: Woods (This guy Rocks)

http://www.youtube.com/watch?v=541ba...eature=related
Up there with EJ/Marc Farber/Rogers & "Crusty"

Mike
*Note to Metalman:- "PS" will be know as "Crusty" till my A/C is back in profit

BTW, I bought and read Woods' book, "Meltdown," soon after it came out. I have since given extra copies to friends and relatives as he does a fantastic job explaining sound economics in layman's terms. Chapter 4 is perhaps the best explanation of Hayek's Austrian Business Cycle Theory I have ever read, and is worth the price of admission alone. Highly recommended reading.

[rjwjr]

Re: Woods (This guy Rocks)

I think your answer is already in motion thanks to China, others, and the IMF...SDR's...the new gold standard/BrettonWoods replacement solution for a global economy.

[raja]

Re: Woods (This guy Rocks)

Unfortunately we haven't a clue how to organize such an economy in a sustainable manner that allows reasonable opportunities and freedoms for those would behave responsibly.

Yes, we do.

Keep the Financial Elite from robbing us blind by enforcing regulations to control the greedy bastards.

[ThePythonicCow]

Re: Woods (This guy Rocks)

The Austrian view understands that there is no separation of macro and micro economics. It's all micro (human action) ...

The Austrian view is wrong then. Complex system behavior is not just the aggregate of the behavior of the individual participants. Rather it takes on a life of its own.

[LargoWinch]

Re: Woods (This guy Rocks)

... Complex system behavior is not just the aggregate of the behavior of the individual participants. Rather it takes on a life of its own.

TPC, I do not understand how in an "anchored monetary system", the sum of its parts will be inferior to the whole system?

I agree that an anchored monetary system will not prevent bubbles and manias.

However, such event would surely be accompanied by an opposite reaction (i.e. price decreases) within the system?

I understand that the above is an utopian view, excluding the fractional banking system, but lets keep it simple for argument sakes.

[Mashuri]

Re: Woods (This guy Rocks)

The Austrian view is wrong then. Complex system behavior is not just the aggregate of the behavior of the individual participants. Rather it takes on a life of its own.

No, it is you who is wrong. There is no new life life or sentient being spontaneously created by a group of individuals interacting with each other. Assessment and action is still taken at the individual level.

[ThePythonicCow]

Re: Woods (This guy Rocks)

In response to several excellent posts above ... I sense strong Libertarian politics and Austrian economics. When what I say disagrees with them, it seems perhaps that I am presumed to be advocating a strong central authority and neo-capitalist economics.

In other words, this is seen as a struggle between liberty and tyranny, between an honest gold standard and a centrally managed fiat currency. If what I say doesn't support liberty and gold, then it seems that I must be for tyranny and fiat currency crapola.

I am convinced that these are false or at least too simplistic dichotomies. But I lack the clarity and power at this point to guide the other gentle respondents on this thread to any better understanding. I am confident that I will be able to guide myself to a better understanding, as usual, but how and when that endeavor will play out can never be known to me ahead of time.

I could attempt to respond point by point, but given the fragility of my insight, it would quickly turn into a frustrating and futile debate, marked only the scoring of points for "one side" or "the other."

Instead I am spending these hours reading Survival+: Structuring Prosperity for Yourself and the Nation by Charles Hugh Smith. I am 15% of the way through at this moment, reading it on Amazon's free Kindle reader for PC's, running inside Wine on my Linux desktop. Good book so far.

My apologies for not giving the several excellent comments above the consideration they deserve.