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Archive for the ‘austrian stupidity’ Category

Centrally planned economies in the information age don’t work for the same reason that we don’t write computer programs that detect bombs in luggage — the problem set is so huge that there is no set of heuristics that can cover all the permutations. Instead we set up a system that learns, and some rules to let it know when it’s working right, and then train it in the real world. In the industrial age the Soviets could compete, albeit with significant inefficiencies that I’ll discuss separately if you’re interested. Once we moved into the computer age, economies became too complex to centrally plan. Training them with tokens, a.k.a. money, really is the only way that works with modern economies.

Unfortunately the set of rules has been hijacked by rich jackasses who care only about themselves and not about the health of the economy as a whole. Or as Michael Roberts says, “a rentier economy is a dying economy”. But people continue to think that the set of rules that currently exist, “natural law” rules that are actually “survival of the richest” rules, are the only ones that can exist. Our nation grew its economy best back when the government imposed a set of rules that redistributed money back to the people who actually created wealth (i.e., the workers who actually built Buicks and Chevrolets) rather than allow it to concentrate in the hands of a few rich people, because that allowed the tokens to be used to train the economy to generate wealth that benefited the common folk. Obviously now that money has become magic talismans and “market economies” have congealed rule sets that have become religious in nature rather than practical, we end up with what we observe — an economy that benefits only the few, not the many.

Rich people continue to whine that changing the rules is “Communism”. No, it’s not. They are pushing a religion that contains a rule set designed to enrich the rich, rather than upon the concepts of money and markets as a whole. I am quite capitalist, capitalism is the only proven way of actually encouraging the creation of wealth. What I’m against are rules that benefit only owners of capital, not the workers who generate capital. We’ve had rules that benefited both owners and workers before, and it worked out well for this nation. Saying that this was “Communism” is saying that the entire USA of the 1950’s was Communist — which is patently absurd in every way possible.

– Badtux the Economics Penguin

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have a liberal bias. And in this case, Paul Krugman notices that the IMF, austerity perpetrators par excellance, have… err… noticed that austerity causes economies to get worse than doing nothing at all. Because, y’know, the Austerity Fairy simply isn’t *real*.

Which Paul Krugman has been steadily beating the drum about for the past five years, to the point that he must be as sick and tired of pointing that out as I am, but it’s nice to have, like, actual facts on your side. Of course, conservatives then whine the IMF is wrong. Except, err, the data is the data. What is, is. You can’t just wish away reality with a wave of the Austerity Fairy’s magic wand. Or even with a firm application of said wand up the posterior. Reality simply doesn’t work that way.

But nevermind, the facts have a liberal bias, thus must be ignored. Ignorance is strength. Damn, I wish the conservatives would quit using 1984 as an instructional manual. Besides, austerity allows cold-blooded lizard people from Planet Sociopath to snap up the assets of entire nations at fire-sale prices, and it’d be wrong to interfere with our reptilian overlords, right? Right?!

– Badtux the Economics Penguin

Ugh. Me Austerity Fairy. Bend over.

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Despite three years of improvement under Obama’s administration, there are still three job seekers for every job opening. The common right-wing rubric is “structural unemployment”. But if you ask actually businesses, what they say is, “there’s not enough demand to justify hiring”. Which implies that we need to spend money and buy stuff. Well, except we don’t have money. But see, the government has this little thing called the “Printing Press”, and the government could just *print* money and buy stuff. Which would create demand. Which would cause businesses to hire. And then we *would* have money to spend on buying stuff. And then government could quit printing money and quit buying stuff, and all would live happily ever after.

So why doesn’t it happen? Well… you know the reason for that.

— Badtux the Economics Penguin

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Here is the most important thing to remember about economics theory: Any time economics theory contradicts reality, reality wins.

For example: It is an iron law of reality that human beings have certain fundamental needs: Food, shelter, clothing, and fucking. These needs are imposed by biology, and are not amenable to discussion any more than the fact that 1+1=2 is amenable to discussion. If an activity does not provide one of these fundamentals, human beings may do it out of a desire for intellectual or physical stimulation (see: hobby), but they won’t do it otherwise.

So let’s look at Austrian “economics”. As I’ve previously pointed out, the Austrians view the Great Depression as more of a Great Vacation, and view today’s unemployed the same way — as slackers who simply aren’t interested in working. This is because they have a supply-demand curve that looks like this: If the supply of something (say, labor) exceeds the demand (jobs to be filled by labor), all you have to do is lower the price of the commodity until demand is created for it, and voila.

The problem is that this runs smack dab into the iron law of reality. Below a certain point, the wages received from labor fail to provide food, shelter, clothing, and sex. If the wages are not sufficient to provide food, shelter, clothing, and sex, then people simply will not perform the activity. And given that most of the low-wage jobs are dreary drudgery, people clearly aren’t going to do those jobs for intellectual or physical stimulation either. Chamber orchestras may be able to pay their players wages insufficient to sustain life because the players find it so intellectually stimulating to play the world’s greatest music, but nobody ever felt that way about flipping burgers at Micky Dee’s.

In short, there is a fundamental physical constraint of reality that the Austrians ignore while extolling the beauty of their theory. That physical constraint is the biological needs of the workers. If those biological needs aren’t met — if there is insufficient food, shelter, clothing, and sex (well, the sex is optional, sort of, but folks who don’t get any tend to be rather unhappy), the worker ceases to exist. Given that human beings evolved to resist that kinda thing (survival of the fittest and all that), they simply won’t accept work that fails to provide the essentials of life. They’ll find some other way to acquire those essentials — they’ll spend their time foraging the dumpsters behind restaurants, performing petty burglaries and selling the proceeds on eBay, or otherwise doing whatever it takes to provide food, shelter, clothing and sex for themselves and their family.

In short, there is a lower bounds below which wages cannot fall because it doesn’t matter how brilliant the Austrian’s theory is, it runs smack dab into fundamental biological reality. Thus if you hear somebody whining about how they can’t find employees and thus this means all the unemployed are slackers, what they’re really saying is that they’re such cheapskates that they refuse to pay their workers the minimum needed for fundamental biological survival — with clear and obvious results. Of course, lizard people don’t care about fundamental biological survival of human beings, since to lizard people human beings are just disposable labor items, sorta like the latex gloves that surgeons use, something to use once then throw away once it’s finished. But human beings tend to value their personal survival somewhat more than that…

— Badtux the Reality-based Penguin

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So some apocalyptic Austrian types are still whining about how many U.S. Treasuries China holds and how this makes us somehow beholden to China. Err…. no.

Our debt to China is denominated in dollars. We can get out from under our debt from China by simply having the Federal Reserve print freshly minted $100 bills and flying pallets of them to Beijing. It’s called the PRINTING PRESS. I realize that, to the Austrian mind, the printing press is some newfangled invention that isn’t ever gong to catch on, but the Federal Reserve has some mighty fine printing presses — why, some of their printing presses don’t even need *paper*, they create money by simply moving zeros and ones in computer data registers that represent bank account balances! Whoa! What a concept!

China knows this, which is why it’s been diversifying its investment portfolio away from Treasuries recently. But since our grifter class (oops, “upper class”) has been buying the Treasuries instead because their mattresses are already overstuffed, that hasn’t resulted in any problems finding buyers for Treasuries… much the contrary, Treasuries are so hot a commodity right now as a mattress substitute that in some cases they’re selling for *NEGATIVE* interest!

It always amuses me that people forget that money is just toilet paper with pictures of dead people on it. Real wealth is the stuff you *buy* with money (which is the whole point of money, remember? As a token to make trade — buying and selling — easier). We have the stuff China sold us. China has the toilet paper, whole piles of it, which they’re holding onto as if it’s actually worth something. Who, indeed, is the sucker here?

– Badtux the Monetary Penguin

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The Austerians still continue to insist that the solution to a depression is to cut government spending. If you do that, they say, the magic Free Market Fairy (see left) will wave her (his?) magic wand and make the depression just magically end.

Of course, the question then is, has this ever worked? Has any depression, anywhere, has ever been ended by cutting government spending? And a study of history shows that…. errr. No. None has ever been so ended. Indeed, the solution to the Great Depression was a massive *INCREASE* in government spending — as in, in 1944, government spending consumed over 80% of the U.S. GDP! And total U.S. debt then was *TWICE* what it is today as a percentage of US GDP! Clearly that destroyed the U.S. economy in 1944, which is why, err, the post-war U.S. economy was the strongest that any economy anywhere had ever been, because it had been utterly destroyed by out of control U.S. spending and U.S. debt.

Yet the Austerians still insist that at some point in the future, if we just cut government spending enough, the magical Free Market Fairy will (when? When I’m dead and buried?) wave her magic wand and POOOF! More wealth out of nowhere! Just by magic. In the meantime they continue to insist that the solution to a depression is to literally kill people — to cut off people’s food stamps, unemployment benefits, healthcare benefits, and other such government-provided programs for relieving the misery of the unemployed. Because only once all the unemployed are dead, I suppose, will we have solved the problem of unemployment. That’s a rather… final… solution. But I guess that’s the new Austerian slogan: “Arbeit Macht Frei durch den Schornstein”. Alrighty, then!

– Badtux the Snarky Penguin

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Dealing with the Austerian “economist” bozos is like dealing with the deranged offspring of Bozo the Clown and Ann Coulter: Not only are they stupid, but they have the same level of mendacity as Richard Nixon.

— Badtux the Snarky Penguin

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