NeoNote — Practical economics

Friday - 26Jul2019 Filed in: Free Markets&Politics&Liberty

❝❝Beer, cheese, and bread.

These things were discovered hundreds, perhaps thousands of years ago. We don't know exactly when. What we do know is that chemistry and science in general originated because someone wanted to make beer, cheese, and bread better.

Money, measurement and accounting in general started because someone tried to figure out how many goats their grain harvest was worth.

That doesn't even count fundamentals like fire or the wheel which are still basics of our science and technology today.

Science and technology use what works. When we find something that works better, we modify our science and technology.

And yes, economics in it's pure form is a science. The problem comes when we try to use economics to do things that it can't do well. Most of this is directly traceable to government interference in the exchange.

Economics describes the flow of value. We know how value moves as long as it isn't diverted. Rather than top-down "managing the system" and diverting (and diminishing value), I'd rather see new ideas in products and services. I'd rather see incremental improvements in technology than a clumsy effort to shift money by government edict. I'd rather see lower prices than tariffs protecting the "balance of payments."

No, the correct phrase is that when we find something that works better, we modify our science and technology. Sometimes it's an improvement, sometimes it is a dead end. Modify is appropriate, not improvement.

Your point is wrong. The poor are getting richer, in cash, opportunities, and in available goods (at a lower cost). Cell phones are dirt cheap. Grocery stores have a better selection and sell for lower relative prices.

There is a disparity between the rate of wealth growth of the rich and poor, but the majority of people are better off. But since that doesn't cost the poor, that's hardly a problem.

Are there problems with unemployment and low paying jobs? Yes, but it's not government's job to fix that. We know that when government tries to set prices or wages, things get worse.

You want specifics, then I will give you specifics. Cut taxes so that the combined (Federal, state, local) tax on anything is no more than ten percent. Do away with the income tax and it's reporting requirements. Prevent government from spending more than it takes in, possibly by punishing the legislators. I can give you hundreds more, but all of it is unimportant until taxes get cut way back AND government spends within it's means and no more.

If I say things that are correct and they don't fit your "mental image of the world," maybe that image isn't all that clear.

For American history, I usually work from about 1750 CE on. For Western civilization in general, I usually work from the age of Charlemagne or the Roman republic

Now, what you are talking about is the 20th Century. That just happens to be the century of American central banking, command economy, war as an industry, active intervention in the internal affairs of other nations, massive corporations mostly unbound by local laws, and the birth of "globalism." I put "globalism" in quotes because our "elites" don't mean opening up the world to trade and cultural exchange, they mean control. Specifically deciding what is and is not allowed under what circumstances.

I group these things together because they are closely and intimately related. These are also things that you are not supposed to pay attention to, indeed most of the media constantly tries to distract people from these things. It's just taken for granted that government is supposed to handle those things and we mere citizens aren't supposed to worry.

We're conditioned from birth to accept that government is the first, last, and best solution.

Plot the events and trend lines for yourself. Increase any of these six items and the impact falls mostly on the middle class and then the poor. These changes don't affect the rich as much as those trying to become rich. Changing your financial circumstances becomes harder. Indeed, a society that puts those six factors first "locks out changes," it resists any disruption from within the system. Usually the only change that can happen starts externally. For the elites, this is not a flaw, this is deliberate design.

So when I say that government is not your friend and when the solution to almost all widespread economic problems is to get government out of the picture, it's because I know what it has done.

The truly scary part is "helping the little guy" relies on more government intervention and control. Even though that is what hurt the them to begin with. Let's fix government… with more government!

The problem for the elites is that the economy can't be controlled, not even mostly. Remember when I said that economics was about the flow of value? It's like piping water in a swamp. Yes, you can clean it up the water and direct it where you want, but there is still a lot of water flowing around. The more water, the more it seeps and looks for lower ground. You can only" fix" that by draining all the water and taking away what used to be widely available.

Now let's change that phrasing that a bit.

Yes, you can clean it up the value and direct it where you want, but there is still a lot of value flowing around. The more value, the more it seeps and looks for lower ground. You can only" fix" that by draining all the value and taking away what used to be widely available.

That's a whole new different perspective. Economic activity and free markets create more value. The flow of value and value in the wrong hands threatens the central systems and the elites. As the elites see it, their best interests are served by controlling value and directing it where they see problems. They want their choice to supersede the choices of others, particularly the unwashed masses who don't know when something is being done for the Greater Good.

Build a system insulated from the free market that "controls" value and it will always serve the elites at the expense of everyone else. Manipulate the system, tinker with it, and the elites always come out ahead.

“When has an economist ever been right about anything?!”

Hernando de Soto. The Other Path: The Economic Answer to Terrorism. Almost any of the Chicago school of economics. But the politicos don't like a free market approach because it reduces their power and their ability to pick "winners" and "losers" in a national economy. Of course when things go wrong, that doesn't stop the politicos and pundits from blaming economics in general and the Chicago school specifically. Even if the politicos and technocrats did the exact opposite of what Chicago school of economics experts told them they needed to do.

Meteorology measures and predicts the weather within limits. No one expects meteorology to control the weather. Even in a massive internal environment like a skyscraper, no one uses the tools and techniques to of meteorology to control the "weather" except in the most basic ways. Meteorology is about understanding the weather, not controlling it.

Any meteorologist who told you that he could control the weather is either a fool or a con man.

Likewise, any meteorologist who claimed he could predict the wind by measuring the humidity isn't using the right tools.

The Other Path tells that story. de Soto was part of the international economics team brought in to advise to Chilean government how to grow their economy and how to deal with The Shining Path's promises. It's one of the best examples of practical economics and the Chicago school specifically.

A word of advice. Never argue practical economics with a small "L" libertarian.

A good economist isn't going to promise he can control the flow of value. What he can do is tell you that diverting value reduces value.

Value isn't something that can be generated by political dictate. You have to provide something that people want. Free market competition means that over time, goods and services become better, cheaper, and more widely distributed, even as the overall value flow increases. It's all based on choice without coercion. Voluntary exchanges between consenting adults.

When you get people who don't like the choices others make and see the coercive power of government as a way to change or stop those choices, that's when things get complicated. We effectively outlaw cannabis and cocaine, but nicotine and alcohol are only regulated. Sex is okay in marriage, but not as a commercial transaction. You can make a statue of a bare breasted Liberty leading the charge, but most American beaches require covered breasts.

The economic choices allowed by government to most American citizens are meant to control them, not to free them.❞❞