Economics, Agorism, and more!

Time Preference

2011-12-28T18:06:00.000-08:00

Time preference is an economic term for the degree to which we prefer present to future satisfaction (consumption). It relates to how much money we want to spend now, and relates that to how much we're willing to invest to consume at a future date.

But it doesn't just apply to our capital, but how we spend our time as well. How much time we spend in leisure (consumption) compared to the labor we're willing to work in order to have future leisure in the conditions we want.

Now, how is this important? The first implications are that time preference affects how much is saved and invested for future use. The lower time preference is willing to save more and consume less. The saved funds become potential capital to be invested, and make the individual richer. The more capital a society as a whole invests, the faster that society will advance due to capital investment's positive effects on production.

Now another important implication of time preference builds on the first implication, that capital investment builds and lengthens the structure of production. The Austrian Business Cycle Theory states that when banks print new money and loan it to businesses it lengthens the structure of production. It tricks businesses into thinking there's new savings available to fund new business ventures, for there is new money to invest.

The problem arrives when this money filters down to individuals through wages and purchased goods, where these individuals, based on their otherwise unhampered time preferences, rush to reestablish their old savings/consumption ratios. This bids investment away from capital goods back to consumer goods, causing a crisis to occur when businesses who've invested in longer capital structures to realize these were malinvestments.

And so, that's a very simplified version of the Austrian Business Cycle Theory and why the time preference axiom is important to economics.

Thanks for reading, and like always - questions and comments are welcome and appreciated.

The College Industrial Complex

2011-12-23T18:05:00.000-08:00

College is just like war and the united state's prison system - it's an industrial complex, where government throws lots of money at an otherwise unsustainable system. Basically, here's how it goes - government does massive intervention in the student loans market, making it easier for more people to go to college, since there's easy money available to do so.

Governments institute rules for private colleges and industries, that 10% of their revenue has to be from non-government tuition, so these institutions have to raise their tuition rates. This forces more people to either take student loans or turn to the government, which in turn creates a vicious cycle of raising tuition and more government intervention in the market.

Public colleges and universities are worse, as they hike up tuition not necessarily out of necessity, but out of the freedom they have to do so. They ride on the questionable statistic that "those who go to college make a million dollars more in their lifetime!" and so on, using that as justification to charge outrageous tuition rates.

Now, what's the solution to this problem? Price controls? Is there a better, free market alternative to such madness?

Get government out of the student loan market! Don't guarantee student loans that private banks do, and don't fund student loans with taxpayer dollars. Allow private banks and individuals to do loans to those who are most likely to be able to pay it back. Socializing it, just like government intervention in any other market, just makes it more expensive, hurting lots of people involved.

Basically, by getting rid of these loans then college attendance will drop. Which is a good thing, too many people these days go to college, get a stupid degree, and aren't able to get a decent job worth the money they invested into that degree. Colleges and universities will have to adapt due to huge drops in enrollment - cut all their stupid spending (eg: Million dollar paychecks to football coaches), and in order to make money again will have to lower prices to let students be able to afford going again.

Now, I'm not saying that college is worthless for everyone, I'm just saying it is worthlesss to most people. The number one degree given by the University of Utah is economics degrees, but I'm willing to bet that with the internet as an excellent resource, they would have learned more without sitting in a huge auditorium filled with hundreds of other students. Another example is Computer Science degrees. I've heard stories of kids in their 20's applying for programming/software related jobs but not having a lick of experience in software, even though they have a piece of paper saying they're certified! What's the point of being certified if you aren't useful to an employer?

Peter Schiff has an excellent video on the topic:

An excellent movie to expound on the subject is "College Conspiracy", released earlier this year by the National Inflation Association.

On Abortion - A Liberty Perspective

2011-12-21T19:28:00.000-08:00

Abortion is one of those issues that keeps coming up when discussing the message of individual liberty and self-ownership, and it is indeed disputed even among Libertarians. Two libertarian candidates for president of the United States disagree on this issue - One of which is Dr. Ron Paul, who is pro-life; the other being Gary Johnson, who is pro-choice.

To start, I'll quote something from a fellow Libertarian who has also has strong feelings about abortion, cause you've got to get this out of the way in order to have an intelligent discussion: "I am a male. And I have an opinion on abortion. This does not make me a misogynist, nor does it validate the ridiculous ADHOMINEM attack on pro-life men by pro-choice extremists. Pro-life women use the same arguments as pro-life men. Address those arguments, not genitalia."

The first issue of Libertarianism that comes up is self-ownership, the right to control one's own self. Now, who has self-ownership? Obviously the mother does, but the major question in this discussion is does the Fetus have this same right, and if so, does the mother have an obligation to provide for it?

I'm lazy, and since the moral obligation is more interesting to discuss, you can jump over to A Libertarian Vent to see his argument as to why conception is where personhood begins. I'll begin with that assumption.

Walter Block tries to give a satisfactory answer to this question in this lecture:

Walter's lecture to the conclusion that mothers should be able to kick fetuses out of their bodies as long as they don't kill it. He brings up how there might be a implicitcontract between the mother and fetus to keep it in her body for 9 months, but that since there is no "meeting of the minds", that this implicit contract cannot exist. But what about children who also cannot protest but still deserve being taken care of by their parents.

Personally, I think that eviction IS putting someone in a situation where they would otherwise die (lifeboat situation), as in a parent kicking their 3 year old out on the street. And because the parent is having this kid, there is an implied contract that mother shouldn't do any harm to her fetus, even if it is parasitical at this point of development. What did the fetus do to get put in this situation? Nothing, so the mother is AT LEAST obligated to put it in a situation where it can survive until it can fend for itself - whether that is adoption, or even potentially in the future have it given up to an artificial uterus.

My other problem is that without conception as a clear status of living/not you don't really have a way to determine whether or not it's moral to abort the fetus. What, check whether or not it has brain waves before determining to kick it out or not? Ridiculous.

Continuing on the same logic, why can't a parent kick out their kids whenever they want, at whatever age? Can libertarianism be this cold hearted? And if there isn't an implied contract between a mother and her fetus, why is there between a mother and her fetus that is now living outside her body, albeit still reliant on parental support?

So that's kinda my position on abortion, and why I agree with presidential candidate Ron Paul, a doctor who's delivered over 4,000 babies:
"Who are we to decide that we pick and throw one away, and pick up and struggle to save another one? Unless we resolve this and understand that life is precious and we must protect life, we can't protect liberty."

I'm probably going to do a follow up article on this, so stay tuned. And as always, questions and comments are appreciated.

Agorist Thesis #8

2011-12-07T17:31:00.000-08:00

Agorist Thesis #8 - Force distorts market information.

Violent intervention in the market distorts market information - the signals that tell entrepreneurs what to produce and what not to produce. For example, do you think that bombs and fighter jets would be as abundant if it weren't for taxation funding military spending? Would people be using the same government schools, or would they opt to send their kids to better private alternatives?

The thing is, we don't know for certain the answer to these questions because people don't have a choice whether or not to fund public projects. If you don't pay taxes, you risk being locked up in a taxation-funded prison.

Government subsidized services outdo private ones. As I cited before, public education is an example of this. The United States Postal Service is another example.

Another good example of this is fiat currency - money that doesn't necessarily have market value, but is forced legal tender by government. Paper money in a free market is useless, as paper is not a relatively scarce commodity. The saying goes "bad money drives the good" because the good money is undervalued in the market, and therefore leaves circulation and is hoarded, - or it moves to other countries where it isn't undervalued.

On a praxeological level - when I'm threatened by violence, I make the economic decision that I see best based on my moral and utilitarian preferences. Some people might chose to defend their property because they can realistically defend it from attack, others might do it because they see it as the right thing to do. But most people, when they're not in a situation to defend their property from infringement will not resist, and make the decision to not risk a threat to their life or other property they may have.

The overall point here is that violent interactions distort voluntary interactions between individuals.

Agorist Thesis #7

2011-11-27T17:06:00.000-08:00

Agorist Thesis #7 - Prices are information.

This is building off the previous theses, that Markets are better at managing and distributing information than any central authority.

Prices are information, they're signals to consumers, entrepreneurs, laborers, - everyone who participates in the market. They are the information you need in order to make your own subjective judgements as to what to buy and what not to buy, what to sell, what not to sell, what to invest your time into, etc.

Prices affect, and at the same time are an effect of, supply and demand. If the supply is low and the demand is high, the price will be set higher. If the price is set low when there is a limited supply and high demand, it will cause the supply to diminish relative to the demand.

Agorist Theses originally from An Agorist Manifesto by Kyle Bennett.

Agorist Thesis #6

2011-11-25T19:33:00.000-08:00

Agorist Thesis #6 - Markets collect, organize, and distribute information more rapidly, accurately, fairly, and efficiently than any central authority could ever do, even with superior resources.

Markets work with information in a decentralized manner. Each individual in the market makes information decisions for themselves - whether it be to share information, consume (take in) information, and how much time to spend doing each of these things. Markets share information in a decentralized manner - whether this information is prices, details about products, instructions, etc.

If you live in the United States, and have attended any of the Occupy (Wall Street) rallies, there is a free market of ideas there - where anyone can go out and share their ideas with others.

The internet is one of the best examples of markets operating in today's world; there is a free market of ideas online, where pretty much anyone can share their knowledge on a topic. When it comes to collecting, organizing, and distributing information, just look at the various tools on the internet that are used for this purpose - Wikipedia, for example, has nearly 4 million articles that have been created and edited by millions of users.

Torrents are another example of the success of market - various members share information with others so users can get what they need, whether it be games, books, movies, music, etc. Once information is out in the swarm, tough luck getting rid of it. Bitcoin, based on the same concept as Torrents, is a decentralized digital currency based on individual interactions, without any central authority.

The US emergency alert test last month showed a drastic failure of government trying to spread information - it left individuals confused, and in some states it didn't even work!

Top-down planning doesn't work because individuals are best at making decisions for themselves. If there's information I feel is worthy to share with others, I might share this information using email, a phone call, through a text, on facebook, by word of mouth, etc. Because in the market it is up to individuals to decide what's worth sharing, information is spread fairly based on individual preference. In a hierarchy, the planners are the ones who get their information shared, and those lower in the chain might not get their information shared as much as it should be.

If I wanted to sell a car, I would probably tell my friends and family about it, and have them tell who they think would be interested. This form of voluntary interactions to spread information is always preferable and more efficient than central planning.

Agorist Theses originally from An Agorist Manifesto by Kyle Bennett.

Agorist Thesis #5

2011-11-24T20:47:00.000-08:00

5. Government regulation forces people to abstain from trades they would otherwise voluntarily make.

Government regulations may be seen as a necessity by some, but the reality is that the market regulates much more efficiently than any government can. A system of private property rights and arbitration is best to deal with the demands of millions of people, rather than the current monopoly on regulations that can often be twisted for one group of individuals to be able to take advantage of another. Big businesses can lobby to change the laws in their favor, unions can legislative to give wage laborers an unfair advantage over their employers, etc.

Government regulations often have unintended consequences - minimum wages, for instance, lead to the unemployment of those individuals whose labor isn't worth the minimum amount set by government. This leads to unskilled workers (eg: teenagers) having high levels of unemployment.

One of the first examples of this thesis became apparent to me at a young age - when I was about 12 or 13, there was a business who wanted to buy land from another business - to build a new factory in my county. They had to get permission from the city counsel. The council put several unnecessary requirements on that transaction, which led to the deal falling through. That was one of the first times I started to realize how wrong government was - that a small group of individuals could make decisions for the rest of us.

Here are a few videos on the topic of government regulations:

And of course, questions and comments are always appreciated.

Agorist Theses originally from An Agorist Manifesto by Kyle Bennett.

Agorist Thesis #4

2011-11-22T20:06:00.000-08:00

Agorist Thesis #4 - Taxation forces people to pay for things that aren't worth the cost.

This one is obvious just in the premise of what taxation is. Taxation is a threat of taking away your property with whatever force necessary if you don't pay. If it was worth paying, everyone would do it voluntarily, and government wouldn't have to threaten force to make you pay for its services.

Taxation forces individuals to pay for foreign wars of aggression, bailouts, subsidies, and monopolies on such a massive scale that it could not possibly be sustainable in a voluntary society.

Taxation takes away market accountabilities - such as consumer sovereignty and profit/loss signals, and replaces them with less effective systems such as voting, bureaucracy, etc. While there may be checks and balances in certain governmental systems, these never come close to the efficiency of which a market of voluntary exchanges operates.

In a market environment, you get to vote with your dollar - every time you chose to buy or not buy a good or service. You put your money where you subjectively think it will best serve you - whether it be food, education, entertainment, retirement or savings, protection of your property - whatever you want.

Agorist Theses originally from An Agorist Manifesto by Kyle Bennett.

Agorist Thesis #3

2011-10-31T16:18:00.000-07:00

Nobody gets taken advantage of through mutually voluntary trade.

This one is often contested when I share my moral beliefs. Because one person can "clearly" benefit more than the other, it means that they're being taken advantage of.

The most common argument I hear is that of the wage laborer, and how they are "enslaved" by their boss or by capitalists. This is ridiculous to say the least...I respond "So if I offered you $0.50 an hour to do whatever I want for 15 hours a week, would you take up my offer?" No one's accepted it yet, I'm still hoping for my own personal servant though.

It comes back to the truth that all value is relative - and each person makes the decision for themselves what is worth more. I might look at two people making a trade and say that I think that one person gets more out of it, but that's just my opinion. What matters is each person in the trade, and remember: in a voluntary trade, both parties receive more than they give up, otherwise neither would trade.

Agorist Theses originally from An Agorist Manifesto by Kyle Bennett.

Agorist Thesis #2

2011-10-30T22:54:00.000-07:00

Agorist Thesis #2 - In a voluntary trade, both parties receive more than they give up, otherwise neither would trade.

This is pretty straightforward. In all voluntary trade, those who trade get more out of it that what they give up, otherwise they wouldn't trade.

This is why I work for my boss, this is why I'm able to buy food with the money I earn from my labor, etc. I get more out of trade than I give up, otherwise I wouldn't trade.

It comes back to the truth that all value is relative. I may want a new phone more than I want a new computer,but there isn't a specific number I could tie to in order to say how much I want the new phone more than the computer.

And for some simple, yet informative introduction to economics, I really recommend this video:

Agorist Theses originally from An Agorist Manifesto by Kyle Bennett.

Agorist Thesis #1

2011-10-29T16:56:00.000-07:00

1. Trade that is unregulated, untaxed, and unmonitored is the natural right of all human beings.

This thesis is pretty straightword, now let me sell my case to you.

Taxation is forcing people to spend money on goods or services they wouldn't do voluntarily. Taxation is bad economically, because it distorts the profit/loss signals the market provides - causing you to not know if your resources are being used wisely or not. Also, by taking away part of what I earn, it is less incentive for me to earn more - especially if there's different tax brackets.

I often hear arguments from those promoting the legalization of marijuana say 'hey, we should tax it to pay for healthcare and stuff!'. I support legalizing marijuana 100%. But I do not support coercing businesses into paying for services involuntarily, just because of the product they're selling. There is nothing wrong with a business donating to hospitals and charities voluntarily, forcing a business to do this is immoral.

One way I could see this working is that if there's a public demand for it, a business might say 'hey! we're donating x% of our profits to the local children's hospital!', and people might chose that business over another one for that reason.

In today's growing surveylance/police state, oversight is becoming another concern. Individuals have a right to have their trade be as private or as public as they want. But forcing them to be more public than they want to over a trade (whether it be medicine, sex, food, ect) is wrong.

Everyone has a natural right to have their trade be unregulated, untaxed, and unmonitored. This doesn't mean you *can't* voluntarily have your goods/services be regulated by a 3rd party, but it does means that you have a right to opt out of anything (eg: omish people should be able to sell milk that doesn't have any labels on it).

Let's say you own a restaurant in a free market. After a rise of food poisoning (for whatever reason), a business that regutes restaraunts was created, and because consumers found the service valuable, it received donations from individuals allowing it to financially sound.

This agency would require permission from individual restaraunts before inspecting them. Restaraunts that failed to pass inspection wouldn't be closed, but would gain bad marks from the inspection agency and the more creditable the agency was, the more damage it would do to that restaraunt's business.

Let's say that a very nice restaraunt *did* get bad marks from the certain free market food and safety agency. You know the owner, and he claims it's because the agency inspector was dishonest about his business. Since this is a free market and not a government monopoly on regulations, you can still enjoy the restaraunt, - and consumers can say that the opinion of that regulation agency isn't creditable - therefore that agency would most likely lose a lot of business, and would lose influence on the market.

It is impossible to tell if this situation would happen in a free market, because goods and services would be provided according to what people need and want. For example, with technological advances, you can check out restarants and other businesses online to see what hundreds of other customers think of them.

Questions and comments are appreciated! If you have any, please leave them in the comments section below.

Agorist Theses originally from An Agorist Manifesto by Kyle Bennett.

The Real Cause of the Financial Crisis

2011-10-29T16:14:00.000-07:00

The Austrian Economist Jesús Huerta de Soto explains the real cause of the financial crisis.

Introduction to Agorism

2011-09-28T21:04:00.000-07:00

Agorism is a political philosophy based on the belief that everything in society should be voluntary, a free market. Agorists believe that government is a coercive monopoly that shouldn't exist. Now, this is a hefty charge, - and raises skepticism across the political spectrum. Governments affect everyone, whether it be government managed roads, healthcare, courts, the postal service, public education, regulations, subsidies, taxes, police, fire departments, etc.

The Agorist argues against these services being government controlled on both moral and utilitarian levels.

The moral principle is referred to as the Non-aggression Principle. The Non-aggression Principle states that using coercion (defined as "force, fraud, or the threat of either of these things") on a person or their justly acquired property is wrong, and that violence is only justified in protecting yourself from these things (self-defense).

A society without government doesn't expect everyone to accept these principles, - these just are the most preferred form of conduct between individuals and are self evident.

The utilitarian argument for Agorism is that free markets are the most efficient way to accomplish things. Through competition, markets allow innovation and experimentation in ways government monopolies cannot. Price signals tell whether your business model is productive or not. Resources are allocated to what people need and want.

There are a lot of concepts to expand on and explain in the last several paragraphs, but I hope that you get the gist of what Agorism is now. There are 95 theses to Agorism, and over the next few months I will go over one a day, expounding and explaining them.

If you have any questions or comments, please post them in the comments section below!