Hi, The thesis has been made that all famines are the cause of government intervention. I was asked to provide two examples. I also thought of an example where a famine was averted due to government intervention. The current hurricane in Belize. Had the government not stepped in and 'price fixed' the stores would have been depleted and cached by the few a week ago. Why in major disasters do prices go up, when it is clear this is contrary to the best interest of the market? That without price fixing the majority of people will be left without. Why is this hands-off philosophy not held accountable for its failings? I must assume that the resultant famine due to price inflation by the individual resource owners is still a result of that government interference. ;) ____________________________________________________________________ He is able who thinks he is able. Buddha The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------
Jim Choate wrote:
Why in major disasters do prices go up, when it is clear this is contrary to the best interest of the market?
Because markets have no interests, the participants in them do. The argument is exactly the same as that advanced by biologists against the idea of group selection. NB in a real famine (as opposed to temporary shortages, which a place like Belize can probably get through with less hassle than a richer more efficient economy with all our "Just in Time" suppliers) food prices go *down* at first... strange but true. It is due to farmers unloading stock to get money in as quickly as they can. Ken
On Tue, 3 Oct 2000, Ken Brown wrote:
Because markets have no interests, the participants in them do.
There is NO difference between a 'market' and the 'participants in them'. Silly pseudo-economics. ____________________________________________________________________ He is able who thinks he is able. Buddha The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------
Hang about! You asked why sellers wanted to put prices up when they thought a big storm was coming, when "the good of the market" might want prices kept down (as the government tried to do). I was pointing out that there is no "good of the market" in this context at all, just the interests of the participants. If someone thinks they can get more money by selling at a higher price, they probably will, regardless of any concept they (or you) might ave of the interests of the market as a whole. Not pseudo-economics at all. Now you seem to be accusing me of saying what you said... Jim Choate wrote:
On Tue, 3 Oct 2000, Ken Brown wrote:
Because markets have no interests, the participants in them do.
There is NO difference between a 'market' and the 'participants in them'.
Silly pseudo-economics.
Ah, but who decides what the best interests of the market are? Its participants, of course, by pricing things as they see fit. The best interest of the market, arguably, is to be left alone, or at least interfered with in a very predictable way. -Declan On Tue, Oct 03, 2000 at 07:58:46AM -0500, Jim Choate wrote:
Why in major disasters do prices go up, when it is clear this is contrary to the best interest of the market? That without price fixing the majority
At 10:55 AM 10/5/2000, Marcel Popescu wrote:
There's no person called "market", therefore it has no "interest". It's a decision of the current resource owners - and when demand increases (as in the case of a major disaster), they *have to* increase their prices until the supply is equal to the demand (if they don't, the first buyers will sell what they bought on the "black market" to those who value it more). Basic economics, even US public schools must teach that much.
The stores might have been "depleted", but the high prices would have made it profitable to sell food there, and someone would have done that. Furthermore, the expectation of high prices due to an impeding disaster would have created incentives for "hoarding" - that is, gathering as many resources as possible, which would have attracted imports BEFORE the disaster. Price fixing destroys any incentive for spending now in order to profit later.
The public schools do teach this much, but it's an elective. I didn't like Vo. Ag. Yes, if you ONLY restrict inflation, those who come first can purchase your full stock and resell it to a higher bidder later. Simple supply and demand. From my perspective, this would only work if the government also limited the buyers to a set amount, and then included some element to restrict someone from hitting several stores for the same quota. The three methods I can see to do the latter are, stiff penalties for buying more than allowed, ration tickets, and both. Did the government have such limits in place? Good luck, Sean
At 12:19 PM -0500 10/5/00, Sean Roach wrote:
At 10:55 AM 10/5/2000, Marcel Popescu wrote:
There's no person called "market", therefore it has no "interest". It's a decision of the current resource owners - and when demand increases (as in the case of a major disaster), they *have to* increase their prices until the supply is equal to the demand (if they don't, the first buyers will sell what they bought on the "black market" to those who value it more). Basic economics, even US public schools must teach that much.
The stores might have been "depleted", but the high prices would have made it profitable to sell food there, and someone would have done that. Furthermore, the expectation of high prices due to an impeding disaster would have created incentives for "hoarding" - that is, gathering as many resources as possible, which would have attracted imports BEFORE the disaster. Price fixing destroys any incentive for spending now in order to profit later.
The public schools do teach this much, but it's an elective. I didn't like Vo. Ag.
"Vo. Ag." in a public school is certainly not where I would expect basic economics to be taught (more's the pity, but this is how things are). Your words here indicate you don't understand the economics of middlemen, lubrication of markets, risk arbitrage, etc. Suffice it to say that "speculators" perform an incredibly important function. See any non-socialist textbook. (Even Samuelson, for example, as opposed to Prof. Raisa Gorbachev's text on socialist economics.)
Yes, if you ONLY restrict inflation, those who come first can purchase your full stock and resell it to a higher bidder later. Simple supply and demand. From my perspective, this would only work if the government also limited the buyers to a set amount, and then included some element to restrict someone from hitting several stores for the same quota. The three methods I can see to do the latter are, stiff penalties for buying more than allowed, ration tickets, and both.
Did the government have such limits in place?
See basic textbooks. Jeesh. --Tim May -- ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, ComSec 3DES: 831-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, "Cyphernomicon" | black markets, collapse of governments.
On Thu, 5 Oct 2000, Marcel Popescu wrote:
X-Loop: openpgp.net From: "Jim Choate" <ravage@EINSTEIN.ssz.com>
I also thought of an example where a famine was averted due to government intervention.
The current hurricane in Belize. Had the government not stepped in and 'price fixed' the stores would have been depleted and cached by the few a week ago.
Why in major disasters do prices go up, when it is clear this is contrary to the best interest of the market? That without price fixing the majority of people will be left without. Why is this hands-off philosophy not held accountable for its failings? I must assume that the resultant famine due to price inflation by the individual resource owners is still a result of that government interference. ;)
Jim, are you really THIS dumb? Nobody can be this dumb and live long.
There's no person called "market", therefore it has no "interest".
No stupid, there are lot's of persons called the 'market'. There is no 'market' without those individuals. When the market goes out of equilibrium then free market mechanisms are not enough to correct. It is not in the interest of the market to have a percentage of the market die due to resource limitations. If you don't get this then I'm not the dumb one here. Oh, on your comment about database usage and the 'ownership of 39'. You mis-represent the situation. It isn't the number that is of interest and debate, it's the 'Marcel is ...' part. In effect you are taking a number (i.e. your 39) and applying a context to it based on the activity of one or more individuals. They in effect 'author context' that gives the '39' a meaning greater than it's cardinality/ordinality. The reality is that anytime any agent accesses data in a database that has context provided by my activity then they are accessing a work of my creation. How come I don't get, for example, a dollar each time my context is accessed? It's effectively theft. ____________________________________________________________________ He is able who thinks he is able. Buddha The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------
On Fri, 13 Oct 2000, Jim Choate wrote:
No stupid, there are lot's of persons called the 'market'. There is no 'market' without those individuals. When the market goes out of equilibrium then free market mechanisms are not enough to correct.
On a similar vein, just about every somehow understandable version of free market theory is based on the assumption of a steady state market. The theory does not include a temporal element. If you want to study those, you're bound for such a quagmire of stochastic nonlinear differential equations that you would not believe. Hence, the global stability of any reasonably realistic model of markets is practically impossible to guarantee with current mathematical tools. It is quite possible for such systems to behave badly enough to kill most of the participants in the market, for instance. Besides, the basic continuity assumptions behind mathematical economics practically guarantee that the theory does not take such possibilities seriously - I know of no models which take into account the discrete, limited number of people participating in the market. Free market theory, though interesting, useful and absolutely much better than most available alternatives simply does not cover it all. It is an abstraction which probably should not be attained any more than the socialist one. Sampo Syreeni <decoy@iki.fi>, aka decoy, student/math/Helsinki university
On Sat, 14 Oct 2000, Sampo A Syreeni wrote:
On Fri, 13 Oct 2000, Jim Choate wrote:
No stupid, there are lot's of persons called the 'market'. There is no 'market' without those individuals. When the market goes out of equilibrium then free market mechanisms are not enough to correct.
On a similar vein, just about every somehow understandable version of free market theory is based on the assumption of a steady state market.
Is there a distinction between 'equilibrium' and 'steady state' in this context?
The theory does not include a temporal element.
I'd say with respect to individual exchanges you are correct. This means the results of some exchange i doesn't effect exchange t, even if they involve the same participants. This lack of information transfer, economic amnesia, is my primary dislike for this theory. However, the concept of equilibrium does have a time variable. The flow of time is actualy required for any 'measurement' of that 'equilibrium' (I'll continue to assume parity per my question above) to be meaningful. There is of course no requirement that time be linear or smooth.
If you want to study those, you're bound for such a quagmire of stochastic nonlinear differential equations that you would not believe. Hence, the global stability of any reasonably realistic model of markets is practically impossible to guarantee with current mathematical tools. It is quite possible for such systems to behave badly enough to kill most of the participants in the market, for instance. Besides, the basic continuity assumptions behind mathematical economics practically guarantee that the theory does not take such possibilities seriously - I know of no models which take into account the discrete, limited number of people participating in the market.
Many of the folks I deal with have turned to cellular models. They seem to behave in a reasonable manner and they're reasonably easy to manage. My personal interest is in the application of modelling the near term politico-military situation with the two China's. There is psychohistory@egroups.com, there are several interesting participants and several of us are working on a CROWDS model. I also have a history list at SSZ, cliology@ssz.com. For more info, http://einstein.ssz.com/sci-tech/index.html#cliology Right now I'm working on a CROWDS project that models behaviour in aircraft. It's pretty simple, an ASCII map and some behaviour rules to animate the passengers written in Perl. Pretty standard cellular automaton theory. I hope to start on my China simulator some time next year. Right now I'm collecting data on the American Civil War, WWII (German perspective), and the current China participants. The goal is to include 'political', 'social', and 'economic' factors into a CA and their effect on military force growth and use. Speaking of CA's. I've heard that Wolfrom's new book is supposed to be out sometime in the next year or so. He claims to have a fundamentaly new modelling science if I understand the marketing slicks (and they're not too inaccurate). I've been saying for several years that an unrecognized threat is the amount of data available to the larger governments is enough to setup and run a economic simulator using real world data sets. It's the reason I am so certain that there must be increased individual involvement and that control of that data must be mediated by the person generating it - in all cases. There is no justification for any access to that record being exempt from monitoring - law enforcement arguments considered.
Free market theory, though interesting, useful and absolutely much better than most available alternatives simply does not cover it all. It is an abstraction which probably should not be attained any more than the socialist one.
Which raises the real question of "Ok, where to now?"... ____________________________________________________________________ He is able who thinks he is able. Buddha The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------
On Sat, 14 Oct 2000, Jim Choate wrote:
On a similar vein, just about every somehow understandable version of free market theory is based on the assumption of a steady state market.
Is there a distinction between 'equilibrium' and 'steady state' in this context?
None. But I think both terms are easily misunderstood - in most cases we can analyze the local time behavior of differential equations based on steady state assumptions. However, global properties of the system, like unconditional stability, cannot. I think most of what a layperson knows about economics is based on the former while the latter is a specialty to chaos theorists.
Many of the folks I deal with have turned to cellular models. They seem to behave in a reasonable manner and they're reasonably easy to manage. My personal interest is in the application of modelling the near term politico-military situation with the two China's.
Cellular automata are nice and well understood. But isn't this quite a leap from analytic treatment to the direction of numerical simulation? Not that there's anything wrong with that, but to me some of the theoretical questions (like the question of fundamental stability) really seem to live more in the domain of equations. Sampo Syreeni <decoy@iki.fi>, aka decoy, student/math/Helsinki university
On Sun, 15 Oct 2000, Sampo A Syreeni wrote:
On Sat, 14 Oct 2000, Jim Choate wrote:
On a similar vein, just about every somehow understandable version of free market theory is based on the assumption of a steady state market.
Is there a distinction between 'equilibrium' and 'steady state' in this context?
None. But I think both terms are easily misunderstood - in most cases we can analyze the local time behavior of differential equations based on steady state assumptions.
Good. I agree with your comment. The reason that I was asking was situations like 'A-B Chemical Oscillators' and B-Z generators from chemistry as well. There is a clear stability but there isn't a singular steady-state. It seems to me that a statistical mechanical market modelled as a CA could have similar structures (e.g. Glider Guns). It would be interesting to understand what that meant in real world behaviour.
Many of the folks I deal with have turned to cellular models. They seem to behave in a reasonable manner and they're reasonably easy to manage. My personal interest is in the application of modelling the near term politico-military situation with the two China's.
Cellular automata are nice and well understood. But isn't this quite a leap from analytic treatment to the direction of numerical simulation? Not that there's anything wrong with that, but to me some of the theoretical questions (like the question of fundamental stability) really seem to live more in the domain of equations.
Since it's well understood that CA's represent a general computing mechanism it's not a leap at all really. Just a different manner of instantiating them. I think the clear superiority comes from CA's treating a distinctly modular market modularly where'as DE's tend to consider a continous domain. people, time, items, services, and specie come in modular forms. CA's inherently instantiate the concept of 'I' in the model, allow each cell to have unique 'neighborhood' rulesets. The hard part is to figure out how to take that equation and convert it into a 'neighborhood' ruleset. The work of Wolfram and Rucker has been quite helpful in this aspect. Other nice features of CA's is that they are naturals for parallel processing. They also fit into OO programming concepts easily. When you couple this with concepts like 'small networks', 'cake cutting algorithms', evolutionary/genetic algorithms, and fuzzy algebra/logic, and include game theory in the 'neighborhood' ruleset you end up with a very flexible tool. This approach is very multi-disciplinary and differs in characteristics from normal CA's with simple 'survival neighborhood' rulesets. One difference that drasticlly changes the behaviour is the allowance of 'action at a distance' with respect to 'neighborhood' selection. Make the state of the current cell a function of distant cells and not just immediate neighbors. Along this same vein, instead of the state dependencies being immediate add 'speed of light' limits via diffusion mechanisms. You can also use things like 'Annealling Theory' and spin-glasses. As Rucker says, There is a better way. YOU can do it. Seek the Gnarl! ____________________________________________________________________ He is able who thinks he is able. Buddha The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------
At 4:02 PM +0300 10/14/00, Sampo A Syreeni wrote:
On a similar vein, just about every somehow understandable version of free market theory is based on the assumption of a steady state market. The theory does not include a temporal element. If you want to study those, you're bound for such a quagmire of stochastic nonlinear differential equations that you would not believe. Hence, the global stability of any reasonably realistic model of markets is practically impossible to guarantee with current mathematical tools. It is quite possible for such systems to behave badly enough to kill most of the participants in the market, for instance. Besides, the basic continuity assumptions behind mathematical economics practically guarantee that the theory does not take such possibilities seriously - I know of no models which take into account the discrete, limited number of people participating in the market.
There's a _lot_ of work being done in this area. Some key words: computational economics, multi-agent systems, Swarm, evolutionary game theory, etc. It may be true that these are not the simple, econometric models which textbooks present with nice, neat graphs showing supply and demand and computing elasticity, but this is hardly surprising. In any case, the theory of free markets is a lot more than about proving theorems in continuous, steady-state models.
Free market theory, though interesting, useful and absolutely much better than most available alternatives simply does not cover it all. It is an abstraction which probably should not be attained any more than the socialist one.
Saying that there is a "free market theory" is itself pretty misleading. There are economic models, there are viewpoints about the role of regulation and the advantages of non-interventionist policies, and so on. Those who believe that nominally free markets have certain practical and ideological benefits (vis-a-vis price discovery, signalling mechanisms, risk/reward, etc.) may adopt the short-hand of saying they are "free market theory" advocates. This doesn't mean there is some "theory of free markets" which is distinct from economics in general. In a nutshell, treat economic theory as just a common language for certain types of analysis. "Elasticity" has its place, but it is only a part of the bigger picture. Folks like Hayek and von Mises, and entrepreneurs taking advantage of free markets, don't need to solve differential equations! A Korean stall vendor deciding to offer pomegranates for sale doesn't need a "theory" of mathematical economics to practice free market strategies. --Tim May -- ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, ComSec 3DES: 831-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, "Cyphernomicon" | black markets, collapse of governments.
On Fri, 13 Oct 2000, Jim Choate wrote:
No stupid, there are lot's of persons called the 'market'. There is no 'market' without those individuals. When the market goes out of equilibrium then free market mechanisms are not enough to correct.
They most assuredly are enough to correct the problem, provided they are allowed to work.
It is not in the interest of the market to have a percentage of the market die due to resource limitations. If you don't get this then I'm not the dumb one here.
If there is a resource limitation such that a larger population cannot be supported *easily*, then the market comes back into equilibrium by killing off the excess humans. The problem is corrected, and things may then continue on a more even keel. Get it through your head -- the Market is NOT the same thing as the individual economic actors whose actions make it up. That is the fundamental mistake made by Marx and Rousseau -- Thoroughly refuted by Adam Smith and Thoreau, but you can ignore the theorists anyway, and look at history for the refutation instead. Bear
The following seems just backwards. Marxist thought holds that the whole is greater than the sum of the parts. Ray Dillinger wrote: . . .
Get it through your head -- the Market is NOT the same thing as the individual economic actors whose actions make it up. That is the fundamental mistake made by Marx and Rousseau -- Thoroughly refuted by Adam Smith and Thoreau, but you can ignore the theorists anyway, and look at history for the refutation instead.
Bear
With respect to equilibria, it's an unwarranted assumption that a market has just one stable point. Certainly the Great Depression was a stable but undesirable situation. With respect to weird math and models, there is no proof that -any- math describes the situation. You are free to use any math that you like. If there were a predictive model, you'd become extremely rich. Models are just pictorial aids to thinking. Finite number of market participants? No problem. Combined Value auctions handle this perfectly. Indeed, find me an infinite number of buyers for something and I'll figure out a way to produce it.
-- At 12:04 PM 10/14/2000 -0700, Richard Fiero wrote:
With respect to equilibria, it's an unwarranted assumption that a market has just one stable point. Certainly the Great Depression was a stable but undesirable situation.
It was only stable thanks to massive government intervention. You will notice that the recent Asian crisis started with a market crisis of confidence in government financial instruments similar to that which occurred just before the beginning of the great depression. The Asian governments responded to this crisis by looking at what governments did back during the great depression, and proceeding to do the opposite of whatever governments did back then. While the crisis of confidence caused some initial hardship, this would have swiftly evaporated as it did in the Asian crisis. What really caused the great depression in the United states was Smoot Hawley and government intervention to maintain artificially high wages for some groups, and artificially high prices to pay those artificially high wages. Similar wage and price policies in France today are accompanied by similarly high permanent unemployment, with totalitarian parties receiving a larger vote in France than they ever received in America during the great depression. If those wage and price policies were accompanied by Smoot Hawley, we would probably soon enough get a totalitarian regime in France. In Spain during the great depression, they simultaneously employed artificial wage policies, Smoot Hawley like tariff policies, and also massive Keynsian stimulation. This had the interesting result that they suffered an inflationary depression, the first major occurrence of the infamous stagflation, and did wind up with a totalitarian regime. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG /Il4oyhjZLMpYwPkHNBPkbDOvCqdT3i6s2Idi6VJ 4sWymZlb3VNvWA2v0KrisTwsq0/5Ts0zVfqLM8ICX
James A.. Donald wrote:
At 12:04 PM 10/14/2000 -0700, Richard Fiero wrote:
With respect to equilibria, it's an unwarranted assumption that a market has just one stable point. Certainly the Great Depression was a stable but undesirable situation.
It was only stable thanks to massive government intervention. . . .
Jah jah, Herr Donald. Yes, the stupid and pampered working class caused businessmen to not invest in production and wages sufficient to consume the output. Haha! Perhaps at gunpoint the slackers will work a bit harder. Or faced with starvation and no health care the louts will return to their machines. Oops, sounds like today. A wooden shoe, a sabot, in your machine, sir. But this was a deflationary spiral where an investment today is worth less tomorrow, or the same investment can be made cheaper tomorrow -- or next year. Not being a theologian, I can only offer Friedrich Hayek's sadly wrong observations: "[U]p to 1927 I should have expected that the subsequent depression would be very mild. But in that year an entirely unprecedented action was taken by the American monetary authorities [who] succeeded, by means of an easy-money policy, inaugurated as soon as the symptoms of an impending reaction were noticed, in prolonging the boom for two years beyond what would otherwise have been its natural end. And when the crisis finally occurred, deliberate attempts were made to prevent, by all conceivable means, the normal process of liquidation." This is contrary to events. Fearing a bubble, the Fed tightened not loosened. As Herbert Hoover later wrote: "The 'leave-it-alone liquidationists' headed by Secretary of the Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate'. He held that even panic was not altogether a bad thing. He said: 'It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.'" Friedrich Hayek again: "...still more difficult to see what lasting good effects can come from credit expansion. The thing which is most needed to secure healthy conditions is the most speedy and complete adaptation possible of the structure of production. If the proportion as determined by the voluntary decisions of individuals is distorted by the creation of artificial demand resources [are] again led into a wrong direction and a definite and lasting adjustment is again postponed. The only way permanently to 'mobilise' all available resources is, therefore to leave it to time to effect a permanent cure by the slow process of adapting the structure of production..." And herein we wander off into fantasy land:
You will notice that the recent Asian crisis started with a market crisis of confidence in government financial instruments similar to that which occurred just before the beginning of the great depression.
The Asian governments responded to this crisis by looking at what governments did back during the great depression, and proceeding to do the opposite of whatever governments did back then.
While the crisis of confidence caused some initial hardship, this would have swiftly evaporated as it did in the Asian crisis. What really caused the great depression in the United states was Smoot Hawley and government intervention to maintain artificially high wages for some groups, and artificially high prices to pay those artificially high wages.
Similar wage and price policies in France today are accompanied by similarly high permanent unemployment, with totalitarian parties receiving a larger vote in France than they ever received in America during the great depression. If those wage and price policies were accompanied by Smoot Hawley, we would probably soon enough get a totalitarian regime in France.
In Spain during the great depression, they simultaneously employed artificial wage policies, Smoot Hawley like tariff policies, and also massive Keynsian stimulation. This had the interesting result that they suffered an inflationary depression, the first major occurrence of the infamous stagflation, and did wind up with a totalitarian regime.
--digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG /Il4oyhjZLMpYwPkHNBPkbDOvCqdT3i6s2Idi6VJ 4sWymZlb3VNvWA2v0KrisTwsq0/5Ts0zVfqLM8ICX
-- At 12:04 PM 10/14/2000 -0700, Richard Fiero wrote:
With respect to equilibria, it's an unwarranted assumption that a market has just one stable point. Certainly the Great Depression was a stable but undesirable situation.
James A.. Donald wrote:
It was only stable thanks to massive government intervention.
Jah jah, Herr Donald. Yes, the stupid and pampered working class caused businessmen to not invest in production and wages sufficient to consume the output. Haha!
You are presupposing the Marxist explanation of depressions, an explanation that Lenin abandoned in 1910.
As Herbert Hoover later wrote: : : "The 'leave-it-alone liquidationists' headed by Secretary of : : the Treasury Mellon felt that government must keep its hands : : off and let the slump liquidate itself. Mr. Mellon had only : : one formula: 'Liquidate labor, liquidate stocks, liquidate : : the farmers, liquidate real estate'.
President Herbert Hoover, evidently, was not of the leave it alone philosophy. During the Asian economic crisis, a crisis very similar to that which Hoover faced, Clinton WAS of the liqudidate and leave it alone philosophy, perhaps because the world has seen the consequences of Hoover's philosophy. Everyone commended the Hong Kong approach, instant liquidation for any insolvent enterprise, with the bailiffs taking the pictures off the boardroom walls and cleaning out the liquor cabinent, while the Indonesian approach of resisting liquidation was met with hostility and eventually the foreign encouraged overthrow of the then Indonesian government. The key reason the Indonesian government was overthrown was that it was stiffing Hong Kong creditors in the same way that President Hoover was stiffing American creditors. Hoover's meddling had utterly disastrous and counterproductive results. The result, as usual with government programs that fail catastrophically, was for the government to react to failure by escalating the program. Stiffing creditors of course instantly dries up private credit. Everyone stops lending, which produces a dramatic fall in privately issued liquidity, a catastrophic fall in the volume and velocity of money, which of course swiftly turns a modest recession into a major depression. Of course that was only a minor catastrophe compared to wage and price control policy practiced first by Hoover and then far more forcefully by his successor. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG Q/jE+dKkT0Z6VKG21oD8CkhHtBpvihdy+jG+g+lq 4C3pJhlLPi6Jgc5i7eeGS9OZSmeM50dJAcMcrn9di
participants (10)
-
Declan McCullagh -
James A.. Donald -
Jim Choate -
Ken Brown -
Marcel Popescu -
Ray Dillinger -
Richard Fiero -
Sampo A Syreeni -
Sean Roach -
Tim May