Wednesday, February 5, 2014

Noah Smith vs Austrians

Comment on:  How the New Classicals drank the Austrians' milkshake


Eh. It's kinda surprising that you dedicated an entire post to Austrian economics. But it's not surprising that you didn't touch on the opportunity cost concept. LOL
First, economics is all about individuals. That is because economics is all about choice. We can’t have everything, so we have to choose which things are most important to us: would we prefer a new car, for example, or a summer holiday? To go out with friends, or to relax at home? Invariably, we have to give up one thing (an amount of money or time and effort, say) to get another (such as a new pair of shoes or a tidy garden). These are economic decisions – even when no money is involved. They are questions of how we juggle scarce resources (cars, holidays, company, leisure, money, time, effort) to best satisfy our many wants. They are what economics is all about. - Eamonn Butler, Austrian Economics
That entire PDF is worth reading if you're genuinely interested in learning about Austrian economics. It also touches on heterogeneous activity. Heterogeneous activity is obviously the opposite of homogeneous activity. Homogeneous activity is where you tie all the kids together and then send them to go find the Easter Eggs. It's a centralized, top down approach. It's saying "public infrastructure is a SURE investment! We don't need to create a market in the public sector because I know exactly where the Easter Eggs are. I wear a large electric purple turban that makes me omniscient!"

Also quite good are Rothbard's The Myth of Neutral Taxation and Toward a Reconstruction of Utility and Welfare Economics

Because of the coercive nature of government activity, two additional results come forth. First, by voluntarily purchasing an item on the market, an individual demonstrates that he values the item more than the money price. But in paying taxes, he makes no such demonstration. The government does not know, as a business does, the value individuals place on its activity. Since government cannot obtain the information and incentive by demonstrated preferences of individuals, they cannot efficiently serve individuals. - Jeffrey Herbener, Austrian Methodology: The Preferred Tax Type
Austrians acknowledged that it's a problem that we don't know what the demand is for public goods. You and your electric purple turban wearing posse think otherwise. Please take your turban off. It really doesn't make you just fills you up with hubris.

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