Generation Null: LOL(some)conservatives Thread

[Antero]

If you weren't so condescending I might consider a rebuttal.

If you'd look up the history of this stuff I wouldn't be so condescending.

[Babar]

This is pretty important stuff... Everyone no doubt appreciates your tolerance for other viewpoints, and your willingness to accept a disagreement of opinion and leave it at that. But Ron Paul represents some seriously bad ideas.

Like I said, if they're bad ideas democracy should take care of it. And again, everything Paul proposes should be weighed against what Obama endorses. That's stuff like TSA, the Patriot Act and the NDAA, intervening in foreign politics with armed forces and having military bases all over the world, war on drugs and a Federal Reserve system. I think these are seriously bad ideas much like you think Paul's ideas are seriously bad. The difference is these ideas are actually in effect.

[Good Intentions]

Raising the debt ceiling year after year and having a Federal Reserve pumping out fiat money into the economy doesn't solve anything, it just creates booms and recessions like a windshield wiper for a long period of time and we happen to be in a recession as of now.

This is not how booms and busts happen.

This business cycle is the result of a Keynesian economy and I think it can be avoided.

The second clause of this, maybe. The first is just wrong. Where did you hear that? That's not the type of mistake someone makes out of brute ignorance.

The business cycle is an effect of economies not being at equilibrium while there is less than perfect information in the market. This goes for every type of market economy. It so happens that every economy in human history is both one which is not at equilibrium and doesn't have perfect economy. Keynesianism doesn't enter into it, nor does any other similar theory.

Here is how booms and busts happen. To cut a long story short, the way capital gets distributed in an economy is that people want their capital to be as productive as possible, so it earns them the most money possible. Different industries have different profit rates. The way it's supposed to work is that if someone is in an industry where the rate of return is, say, 3%, and an opportunity to invest somewhere with a 5% return on investment opens up, the guy is going to move his money to the second industry because more money is better. Of course, the more money is invested in a particular industry, the less slack there is in the system, and the ROI invariably drops as more people rush into the field - no demand of any good is infite, and the more capital in the industry, the more of the good is produced. More goods, lower demand, less ROI. The ROI on the most profitable industry will thus drop as people rush towards the best deal available until it's no better a deal than any other. In this way the ROI across the industries is supposed to even out, until all of them are equally profitable, and we have an equilibrium - no capital gets moved from one industry to another, and the economy becomes as efficient as it could be. All would be fine and dandy.

But very often it isn't possible to know at which point an industry stops being the most profitable (less than perfect information) - for instance, in the lag between making an investment and getting a pay-out the conditions change and the pay-out you get is no longer the most profitable. That's too bad. But if the industry was very profitable before, then a lot of people are throwing their capital at it. And in the bits of uncertainty that are caused by less than perfect information - by not knowing exactly at what point the industry starts to become less profitable, it is possible, even likely, that not only will the market overshoot investment in that industry, but will do so on an enormous level. This means that very quickly the most profitable industry becomes not very productive at all, with everybody's capital in it. And if the capital is there, it's not easy to get out, especially as the industry becomes less attractive and less people want to buy you out. You very quickly go from record pay-outs to a recession. That's how you go from boom to bust - too many people rushing to the prize, until they are stuck with worthless capital.

This effect is magnified a lot of people are taking on a lot of debt to invest in the industry, which they will, because it's rational to do so. Paying 2% interest on a loan you can invest for an ROI of 3% is free money. But if the ROI suddenly drops through the floor, as it does when a market overheats and too much capital gets invested in it, then you've got two problems - unproductive capital, and the interest on that capital. If you are using the capital as collateral, which you'd often be an idiot not to, then you are double fucked, because now your capital is not only unproductive, even costing you money from the interest on it, but you are in the red because it is worth less than the loan you took out to get it. This is another example of how behaviour which normally would be A+ money-in-the-bank rational gets you fucked six ways till Sunday once the bubble bursts.

That, and not some other way, is how booms and busts happen.

[Babar]

Yup, you're right. I was oversimplifying.

[Good Intentions]

You weren't oversimplifying, you were saying something wrong. There's no more complex version of what you said which is right, because you said that the cause was something which plays no part in the cause. You can have booms and busts without large central bank interventions - human history is rife with them - but you can't have booms and busts without the stuff I mentioned above.

[Babar]

I'm wrong according to mainstream economics and I don't mind you asserting that I'm wrong. Personally I lean towards the Austrian School.

[Antero]

*headdesk*

[Antero]

That's some evolution-is-just-a-theory shit right there.

[Good Intentions]

I'm wrong according to mainstream economics and I don't mind you asserting that I'm wrong. Personally I lean towards the Austrian School.

The Austrian school believes everything I've said as well - they believe it in an especially unreconstructed form. On account of that school being based on market economics. Everybody has believed that since Adam Smith. This is fundamental, first principles type shit. Marx believed it. Ricardo believed it. Well-educated kindergarteners believe it.

[Antero]

Even educated fleas believe it.

[cold before sunrise]

babar: can i buy you an ice cream cone? come to whistler and we can go to cows.

[Babar]

I'm wrong according to mainstream economics and I don't mind you asserting that I'm wrong. Personally I lean towards the Austrian School.

The Austrian school believes everything I've said as well - they believe it in an especially unreconstructed form. On account of that school being based on market economics. Everybody has believed that since Adam Smith. This is fundamental, first principles type shit. Marx believed it. Ricardo believed it. Well-educated kindergarteners believe it.

Hey man, I did say you were right.

[Good Intentions]

So, you personally lean towards a school of thought according to which what you said is still ass-backward? The best response for you is not to make peace with being told you're wrong. The best response for you is to stop believing false things and start believing true ones.

[elpollodiablo]

Goddamn dude, chill out

[Babar]

I don't understand what the problem is. That mammoth post you wrote is all right from what I can tell and I said it was and I appreciate your effort. You're also 100% right that there can be booms and recessions without a central bank system. Now, I think where we differ is whether the Austrian business cycle theory is correct or not. I don't like to deal in absolutes, saying it's wrong or right, but personally I think it makes a lot of sense. Solid arguments can be made both ways and if you choose to write it off as incorrect, you absolutely can and I don't mind that as long as you don't implore me to concur.

[elpollodiablo]

Saying whether something is wrong or right is "dealing in absolutes?"

[DCDave]

The things that you listed Obama as endorsing are the same laws passed by Congress that, by your standards, Ron Paul would also "endorse."

[Babar]

When dealing with some economic theories and policies, yes.

x-post: Ron Paul actively opposes them while Obama does not. I also forgot to mention the violating of human rights in Guantanamo which Obama said he would end but then he signed the NDAA which makes it even harder.

[Good Intentions]

When dealing with economic theories and policies, yes.

I wasn't talking about a policy. You made a rather brash claim about the effect of deficient spending (that it causes the boom-bust business cycle). What you said is false - straightforwardly, incontrovertibly false. Could-have-been-prevented-by-reading-the-Wikipedia-article-on-the-issue false. There are no shades of grey here. There is a fact of the matter about what the consequences of a theory, if true, would be. If you think theories, economic or otherwise, can't be evaluated for truth, you'll have to explain to me what you think theories are, because everybody else takes them to be exactly the type of thing which has to be true or false.

I'm bemused by your continued attempts to avoid facing up to the facts. At one moment you acknowledge that what you said was wrong, but then you try to say that there is leeway for you to believe - arguments both for and against the position. Bollocks. I suspect you don't have any idea what you're talking about, about the Austrian school or anything in the vicinity, and are stalling. Austrian school economics is completely on my side on the point in question, as is everything written on this point since the late 18th century - I quoted to you Econ 101 level stuff, which you got grievously wrong. I think you are repeating something you heard somewhere - that on the Austrian model, deficit spending deepens the boom-bust cycle (which is true, the Austrian school believes that), but aren't equipped to understand that point. The reason I say this is because you've dropped buzz-words, but haven't gone any distance to using them appropriately. Which isn't a crime, but you're the one speaking up and sticking your neck out.

[elpollodiablo]

Yeah actually Marinus forget I said anything.

[jm]

can't stop feedin trolls


every day I'm feedin trolls

[DCDave]

When dealing with some economic theories and policies, yes.

x-post: Ron Paul actively opposes them while Obama does not. I also forgot to mention the violating of human rights in Guantanamo which Obama said he would end but then he signed the NDAA which makes it even harder.

Obama signed a piece of legislation after it was clear that his veto would be overrode, correct.

[Babar]

Marinus, I don't understand what the problem is. That mammoth post you wrote is all right from what I can tell and I said it was and I appreciate your effort. You're also 100% right that there can be booms and recessions without a central bank system. Now, I think where we differ is whether the Austrian business cycle theory is correct or not.

[elpollodiablo]

In what ways do you differ?

[Babar]

I don't know what he thinks about, I'm guessing he rejects it but I think it makes a lot of sense. I hear another mammoth coming...