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Debunking “America has become so anti-innovation – it's economic suicide”

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Re: Debunking “America has become so anti-innovation – it's economic suicide”

#41

Post by pixl97 »

ThomPete wrote: post #32
pixl97 wrote: post #27

Earlier quoted context omitted.

You will fail (almost all of the time). People tend to forget that when talking about waste. Almost every project, company, idea will end in failure. Pointing at the successes around us is a case of survivorship bias. Government projects fail all the time. Company projects fail all the time. Personal projects fail all the time. So, looking at failures is really useless, it tells us nothing. In the end we have to look…

Agree completely, however companies tend to have better feedback loops to point to lack of ROI.

Ehh, maybe.

Then again the Great Retail Apocalypse of 2017 may lead to to think otherwise. US retail is massively overbuild, most of that because the companies are allowed to take on tens or hundreds of millions of debt. This debt acts as a buffer "It's only bad now, it will be better soon, we promise". By the time feedback signals give a clear message that the investment will never be repaid investors are overextended and losses occur.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#43

Post by ska »

padobson wrote: post #18
atmosx wrote: post #3

> When the government floods the economy with cheap money printed out of thin air, it distorts market indicators, making many unprofitable projects appear profitable. Oh, is that a new one? It's the first time I read someone stating that when VCs get high on drugs and spend their money on stupid ideas, it's because of something the government did.

It's not new at all. It's actually fairly easy to demonstrate. I recommend Murray Rothbard's America's Great Depression[0] from 1963. The quick hit is this: A. US Monetary policy provides large banks with extremely cheap capital B. Large banks competing with each other in the free market must make use of that capital C. Only so many investments are good investments, because in the end, there's only so much consumptio…

Beyond the issues with Rothbard's thinking, this :

"Systemic financial crises can't happen without cheap, printed money"

is ahistorical nonsense.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#44

Post by colorint »

padobson wrote: post #38
stephen_g wrote: post #22

Classic Austrian economics. There's a clear misunderstanding throughout the whole article about how money works, which is typical of the entire school. This sentence is illuminating: "... monetary expansion, the latter of which causes prices to go up and the purchasing power of the dollars in my pocket to go down." That is not necessarily true, and in fact is often false. That is called the 'quantity theory of money'…

>For price rises to be the case, the economy must be both at full capacity and full employment. Who's using intuition now? Stagflation in the 70's is a pretty jarring counter-example. We're living in an interesting economic time where Keynesian policies seem intuitively more effective than Austrian economics. Afterall, the Fed has been printing money like mad for the last 20 years, and there's no worrying inflation t…

Stagflation was associated with two things: high spending on the Vietnam War, and OPEC oil price hikes. To illustrate this, let's take for granted that inflation is "too much money chasing too few goods." That's really a statement about two things: inflation very much can be driven by having fewer goods with the same amount of money. This is why Germany and Zimbabwe are bad examples, because both of them involved a real goods collapse. Likewise, oil supply shock can easily drive large inflation.

In other words, the way to reconcile stagflation with the text you quoted is, "full capacity" was lower in the 70s, so we had inflation without full employment. And to be fair, the text you quoted should be "full capacity OR full employment."

Quantitative easing is also very different from what you might think, but in a sense, QE was also the ultimate refutation of, at least, the money multiplier view. The Fed injected far more base money than necessary to maintain the prime rate, and what happened? The money multiplier fell. So really the Fed had the story backwards there, or else they were trying to invoke some voodoo magic.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#45

Post by padobson »

frgtpsswrdlame wrote: post #33
padobson wrote: post #18

Earlier quoted context omitted.

It's not new at all. It's actually fairly easy to demonstrate. I recommend Murray Rothbard's America's Great Depression[0] from 1963. The quick hit is this: A. US Monetary policy provides large banks with extremely cheap capital B. Large banks competing with each other in the free market must make use of that capital C. Only so many investments are good investments, because in the end, there's only so much consumptio…

Please step out of your bubble and try reading some analysis from people who call themselves economists before they call themselves libertarians or austrians(aka not mises.org). The other commenter is right, Rothbard is not taken seriously and anyhow citing economics thats over 50 years old isn't exactly good practice. Austrian economics is the climate science denialism of economics, there's a reason "we are all Keyn…

It's fine to call me and Rothbard and other proponents of Austrian economics kooks, if that does it for you.

But where's your counter example? What book should I read to become enlightened? If I was curious enough to read Rothbard's book from 1963, don't you think I'd at least consider your recommendation?

If you can find me a Keynesian who can explain a systemic financial crisis without ringing their hands and shouting "Capitalism is reckless and greed causes financial crises!" than I'll consider their ideas.

But a systemic problem demands a systemic explanation. Austrians give us monetary policy. Keynesians give us greed.

I'm not going to simply side with the Keynesians because they have the dominant view. I'm not built that way. I need a better explanation than hand wringing and worship of Piketty.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#46

Post by pjc50 »

stephen_g wrote: post #22

Classic Austrian economics. There's a clear misunderstanding throughout the whole article about how money works, which is typical of the entire school. This sentence is illuminating: "... monetary expansion, the latter of which causes prices to go up and the purchasing power of the dollars in my pocket to go down." That is not necessarily true, and in fact is often false. That is called the 'quantity theory of money'…

> economies actually have a lot more capacity to absorb extra money than people think (many people are spooked by cases like Zimbabwe and Venezuela, whose problems in reality were caused by completely different factors)

The critical thing to understand these cases - and Weimar - is that you can't print foreign currency.

What happens in those economies is that the balance of trade worsens dramatically, but either people still need imports (oil, pharmaceuticals, spare parts for industry) or in the case of Weimar the country was obliged to export gold by the reparations treaty.

So prices of imports or import-dependant goods rise; the goverment prints money to try to keep up, but since it can't print exports or forex this doesn't work.

(I'm not sure whether your PV=MQ argument is precisely correct or if it overlaps with IS/LM, but it's broadly right)

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#47

Post by ska »

subverter wrote: post #30
AmIFirstToThink wrote: post #14

Government does engage into efforts/projects that end up being wasteful. But, market forces should not be heralded as panacea of there being no-waste. Every private sector bankruptcy is wasteful for its investors. Yahoo, HP, Former Dell, Anderson Ton of examples of failed efforts, pure waste, nepotism, bribery and downright illegal (civil/criminal) behavior in private sector. I look at it this way... The will of the…

The market is certainly not perfect. There is waste, bad investment, etc. There's no avoiding that. Unlike government, however, the market is much more efficient in realizing and correcting for that.

If only we had the evidence to support this sort of sweeping generalization. It's a nice theory on paper, in practice it seems to be more complicated depending on time scales and type of goal. There is a lot of no-true-scotsman-ing in support of the dogma, which muddies the waters. For people who want to affect actual change and believe in evidence-based approaches, it's really hard to avoid the conclusion that (today at least) you are best off with a mix.

This empirical mismatch is either handled by engaging in no-true-scotsman support for the dogma, or engaging

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#48

Post by ska »

burkaman wrote: post #11
sschueller wrote: post #2

Why does he list Bitcoin as an American innovation? Or did I miss read that.

It's sort of a stretch, but nobody knows who Satoshi is and many of the major players are American. The Bitcoin Foundation is American, the first user[1] is American, the predecessor to Bitcoin was developed by an American[2]. [1] https://en.wikipedia.org/wiki/Hal_Finney_(computer_scientist... [2] https://en.wikipedia.org/wiki/Nick_Szabo

For this sort of distributed project, it's mostly inept to attempt to nationalize any claim to innovation anyway. Not that it will stop countries from doing it, but it's all rather silly.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#49

Post by frgtpsswrdlame »

padobson wrote: post #45
frgtpsswrdlame wrote: post #33

Earlier quoted context omitted.

Please step out of your bubble and try reading some analysis from people who call themselves economists before they call themselves libertarians or austrians(aka not mises.org). The other commenter is right, Rothbard is not taken seriously and anyhow citing economics thats over 50 years old isn't exactly good practice. Austrian economics is the climate science denialism of economics, there's a reason "we are all Keyn…

It's fine to call me and Rothbard and other proponents of Austrian economics kooks, if that does it for you. But where's your counter example? What book should I read to become enlightened? If I was curious enough to read Rothbard's book from 1963, don't you think I'd at least consider your recommendation? If you can find me a Keynesian who can explain a systemic financial crisis without ringing their hands and shout…

>But a systemic problem demands a systemic explanation. Austrians give us monetary policy. Keynesians give us greed.

Keynesians give regulation. If you're unwilling to consider the ideas of someone who believes that capitalism is reckless, that greed does cause financial crises and that regulation is an answer, then why are you asking for a book recommendation? You should also note that I believe in regulated markets not socialism or communism. There are a million shades of gray here.

>I need a better explanation than hand wringing and worship of Piketty.

Have you read Piketty?

I'm going to recommend two books which should be a gentle introduction to my viewpoint:

23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

Economism: Bad Economics and the Rise of Inequality by James Kwak

EDIT: I'd also note that one of the things that frustrates me most is to see the politicization of economics. The misuse of economic terminology to advocate a specific political viewpoint is exactly what mises and similar institutions engage in and it leads to a group of the public who believes that they're educated in economics when they're actually just inculcated to a political worldview. If you read those books and still disagree, that's fine but just think about whether it's an intelligent disagreement. I've run into so many individuals who know Friedman, Hayek, Mises, Rothbard, maybe Hoppe and no one else. People who explain to me all about how supply and demand lead to market clearing but don't know a single model other than "the free market model" (actually the perfectly competitive model) and definitely don't know its assumptions. People who have never read an empirical/econometric study of economics that did not come with an easy synopsis from a blog they read(and agree with). These people do not know economics, they know politics.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#50

Post by stephen_g »

padobson wrote: post #38
stephen_g wrote: post #22

Classic Austrian economics. There's a clear misunderstanding throughout the whole article about how money works, which is typical of the entire school. This sentence is illuminating: "... monetary expansion, the latter of which causes prices to go up and the purchasing power of the dollars in my pocket to go down." That is not necessarily true, and in fact is often false. That is called the 'quantity theory of money'…

>For price rises to be the case, the economy must be both at full capacity and full employment. Who's using intuition now? Stagflation in the 70's is a pretty jarring counter-example. We're living in an interesting economic time where Keynesian policies seem intuitively more effective than Austrian economics. Afterall, the Fed has been printing money like mad for the last 20 years, and there's no worrying inflation t…

> Who's using intuition now? Stagflation in the 70's is a pretty jarring counter-example.

My wording wasn't clear. I meant for price rises to necessarily be the case for any rise in the monetary supply, by the PY = MV identity. Of course inflation is still still possible when the economy is not at full capacity or full employment.

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