Austrian economics
- Thread starter Timshel
- Start date
evince
Truthmatters
For some reason young men just LOVE the austrains clap trap.
they like feeling like they know something others don't know.
Like they KNOW the secret way to put the world on automatic setting.
what they buy is a line of fake bullshit.
the Austrian school is the short bus school
they like feeling like they know something others don't know.
Like they KNOW the secret way to put the world on automatic setting.
what they buy is a line of fake bullshit.
the Austrian school is the short bus school
Truck Fump / h1b
Verified User
I love austrian Food. guday mate. Throw another shrimp on the barbie. a dingo took my baby.
Truck Fump / h1b
Verified User
But seriously. The economy in the u.s. is screwed up due to one thing. Globalization. All the neocon stupidity. Comparative advantage, outsourcing and all that stupid shit. You guys are arguing over economic schools, but in none of them does it make sense to send all your jobs overseas.
You don't know what Austrian economics are or what they are not.
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Truck Fump / h1b
Verified User
you guys are like two idiots in an idiot fight.
Seriously, this is like watching a Columbus-time flat-earther argue that most scientists believe that the earth was flat and that other "scientists" use the wrong hypotheses...
Just because they're experts that believe one theory, doesn't make them right. That's called appeal to authority, and it is quite literally one of the most frequently used fallacies other than the straw man on this site.
evince
Truthmatters
nope damo its not
they are bullshit ideas that are so unworkable in reality no one is willing to actually implement the stupidty.
I know its fun to be the guy who knows the secret way to put the economy on automatic but there is NO automatic setting.
unfettered capitalism turns into other things rather quicky.
they are bullshit ideas
they are bullshit ideas that are so unworkable in reality no one is willing to actually implement the stupidty.
I know its fun to be the guy who knows the secret way to put the economy on automatic but there is NO automatic setting.
unfettered capitalism turns into other things rather quicky.
they are bullshit ideas
Nonsense, you have no idea what Austrian economics predict (such as the bubble/bust cycle inherent in Keynesian economics) and do not know what even Keynesian economics predict or entail. You, quite literally, just keep repeating "the experts say this", just like the flat eathers of Columbus' time.
Ironic post is ironic.
evince
Truthmatters
http://en.wikipedia.org/wiki/Austrian_school#Methodology_2
Methodology[edit]
Critics generally argue that Austrian economics lacks scientific rigor and rejects scientific methods and the use of empirical data in modelling economic behavior.[10][82][90] Some economists describe Austrian methodology as being a priori or non-empirical.[10][20][82][91]
Economist Mark Blaug has criticized over-reliance on methodological individualism, arguing it would rule out all macroeconomic propositions that cannot be reduced to microeconomic ones, and hence reject almost the whole of received macroeconomics.[92]
Economist Thomas Mayer has stated that Austrians advocate a rejection of the scientific method which involves the development of empirically falsifiable theories.[90][91] Furthermore, many supporters of using models of market behavior to analyze and test economic theory argue that economists have developed numerous experiments that elicit useful information about individual preferences.[93][94]
Methodology[edit]
Critics generally argue that Austrian economics lacks scientific rigor and rejects scientific methods and the use of empirical data in modelling economic behavior.[10][82][90] Some economists describe Austrian methodology as being a priori or non-empirical.[10][20][82][91]
Economist Mark Blaug has criticized over-reliance on methodological individualism, arguing it would rule out all macroeconomic propositions that cannot be reduced to microeconomic ones, and hence reject almost the whole of received macroeconomics.[92]
Economist Thomas Mayer has stated that Austrians advocate a rejection of the scientific method which involves the development of empirically falsifiable theories.[90][91] Furthermore, many supporters of using models of market behavior to analyze and test economic theory argue that economists have developed numerous experiments that elicit useful information about individual preferences.[93][94]
evince
Truthmatters
http://en.wikipedia.org/wiki/Austrian_business_cycle_theory#Criticisms
Criticisms[edit]
According to John Quiggin, most economists believe that the Austrian business cycle theory is incorrect because of its incompleteness and other problems.[33][further explanation needed] Economists such as Gottfried von Haberler, Milton Friedman,[50][51] Gordon Tullock,[52] Bryan Caplan,[53] and Paul Krugman[54] have argued that the theory is incorrect.
Theoretical objections[edit]
Some economists argue that the Austrian business cycle theory requires bankers and investors to exhibit a kind of irrationality, because their theory requires bankers to be regularly fooled into making unprofitable investments by temporarily low interest rates.[52][53][55] In response, historian Thomas Woods argues that few bankers and investors are familiar enough with the Austrian business cycle theory to consistently make sound investment decisions. Austrian economists Anthony Carilli and Gregory Dempster argue that a banker or firm loses market share if it does not borrow or loan at a magnitude consistent with current interest rates, regardless of whether rates are below their natural levels. Thus businesses are forced to operate as though rates were set appropriately, because the consequence of a single entity deviating would be a loss of business.[56] Austrian economist Robert Murphy argues that it is difficult for bankers and investors to make sound business choices because they cannot know what the interest rate would be if it were set by the market.[57] Austrian economist Sean Rosenthal argues that widespread knowledge of the Austrian business cycle theory increases the amount of malinvestment during periods of artificially low interest rates.[58]
Economist Paul Krugman has argued that the theory cannot explain changes in unemployment over the business cycle. Austrian business cycle theory postulates that business cycles are caused by the misallocation of resources from consumption to investment during "booms", and out of investment during "busts". Krugman argues that because total spending is equal to total income in an economy, the theory implies that the reallocation of resources during "busts" would increase employment in consumption industries, whereas in reality, spending declines in all sectors of an economy during recessions. He also argues that according to the theory the initial "booms" would also cause resource reallocation, which implies an increase in unemployment during booms as well.[54] In response, Austrian economist David Gordon argues that Krugman's argument is dependent on a misrepresentation of the theory. He furthermore argues that prices on consumption goods may go up as a result of the investment bust, which could mean that the amount spent on consumption could increase even though the quantity of goods consumed has not.[59] Furthermore, Roger Garrison argues that a false boom caused by artificially low interest rates would cause a boom in consumption goods as well as investment goods (with a decrease in "middle goods"), thus explaining the jump in unemployment at the end of a boom.[60] Many Austrians also argue that capital allocated to investment goods cannot be quickly augmented to create consumption goods.[61]
Economist Jeffery Hummel is critical of Hayek's explanation of labor asymmetry in booms and busts. He argues that Hayek makes peculiar assumptions about demand curves for labor in his explanation of how a decrease in investment spending creates unemployment. He also argues that the labor asymmetry can be explained in terms of a change in real wages, but this explanation fails to explain the business cycle in terms of resource allocation.[62]
Empirical objections[edit]
Hummel argues that the Austrian explanation of the business cycle fails on empirical grounds. In particular, he notes that investment spending remained positive in all recessions where there are data, except for the Great Depression. He argues that this casts doubt on the notion that recessions are caused by a reallocation of resources from industrial production to consumption, since he argues that the Austrian business cycle theory implies that net investment should be below zero during recessions.[62] In response, Austrian economist Walter Block argues that the misallocation during booms does not preclude the possibility of demand increasing overall.[63]
In 1969, economist Milton Friedman, after examining the history of business cycles in the U.S., concluded that "The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false."[50] He analyzed the issue using newer data in 1993, and again reached the same conclusion.[51] Economist Jesus Huerta de Soto claims that Milton Friedman has not proven his conclusion because he focuses on the contraction of GDP being as high as the previous contraction, but that the theory "establishes a correlation between credit expansion, microeconomic malinvestment and recession, not between economic expansion and recession, both of which are measured by an aggregate (GDP)" and that the empirical record shows strong coorelation.[64]
Referring to Friedman's discussion of the business cycle, Austrian economist Roger Garrison stated, "Friedman's empirical findings are broadly consistent with both Monetarist and Austrian views," and goes on to argue that although Friedman's model "describes the economy's performance at the highest level of aggregation; Austrian theory offers an insightful account of the market process that might underlie those aggregates."[65][66]
Criticisms[edit]
According to John Quiggin, most economists believe that the Austrian business cycle theory is incorrect because of its incompleteness and other problems.[33][further explanation needed] Economists such as Gottfried von Haberler, Milton Friedman,[50][51] Gordon Tullock,[52] Bryan Caplan,[53] and Paul Krugman[54] have argued that the theory is incorrect.
Theoretical objections[edit]
Some economists argue that the Austrian business cycle theory requires bankers and investors to exhibit a kind of irrationality, because their theory requires bankers to be regularly fooled into making unprofitable investments by temporarily low interest rates.[52][53][55] In response, historian Thomas Woods argues that few bankers and investors are familiar enough with the Austrian business cycle theory to consistently make sound investment decisions. Austrian economists Anthony Carilli and Gregory Dempster argue that a banker or firm loses market share if it does not borrow or loan at a magnitude consistent with current interest rates, regardless of whether rates are below their natural levels. Thus businesses are forced to operate as though rates were set appropriately, because the consequence of a single entity deviating would be a loss of business.[56] Austrian economist Robert Murphy argues that it is difficult for bankers and investors to make sound business choices because they cannot know what the interest rate would be if it were set by the market.[57] Austrian economist Sean Rosenthal argues that widespread knowledge of the Austrian business cycle theory increases the amount of malinvestment during periods of artificially low interest rates.[58]
Economist Paul Krugman has argued that the theory cannot explain changes in unemployment over the business cycle. Austrian business cycle theory postulates that business cycles are caused by the misallocation of resources from consumption to investment during "booms", and out of investment during "busts". Krugman argues that because total spending is equal to total income in an economy, the theory implies that the reallocation of resources during "busts" would increase employment in consumption industries, whereas in reality, spending declines in all sectors of an economy during recessions. He also argues that according to the theory the initial "booms" would also cause resource reallocation, which implies an increase in unemployment during booms as well.[54] In response, Austrian economist David Gordon argues that Krugman's argument is dependent on a misrepresentation of the theory. He furthermore argues that prices on consumption goods may go up as a result of the investment bust, which could mean that the amount spent on consumption could increase even though the quantity of goods consumed has not.[59] Furthermore, Roger Garrison argues that a false boom caused by artificially low interest rates would cause a boom in consumption goods as well as investment goods (with a decrease in "middle goods"), thus explaining the jump in unemployment at the end of a boom.[60] Many Austrians also argue that capital allocated to investment goods cannot be quickly augmented to create consumption goods.[61]
Economist Jeffery Hummel is critical of Hayek's explanation of labor asymmetry in booms and busts. He argues that Hayek makes peculiar assumptions about demand curves for labor in his explanation of how a decrease in investment spending creates unemployment. He also argues that the labor asymmetry can be explained in terms of a change in real wages, but this explanation fails to explain the business cycle in terms of resource allocation.[62]
Empirical objections[edit]
Hummel argues that the Austrian explanation of the business cycle fails on empirical grounds. In particular, he notes that investment spending remained positive in all recessions where there are data, except for the Great Depression. He argues that this casts doubt on the notion that recessions are caused by a reallocation of resources from industrial production to consumption, since he argues that the Austrian business cycle theory implies that net investment should be below zero during recessions.[62] In response, Austrian economist Walter Block argues that the misallocation during booms does not preclude the possibility of demand increasing overall.[63]
In 1969, economist Milton Friedman, after examining the history of business cycles in the U.S., concluded that "The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false."[50] He analyzed the issue using newer data in 1993, and again reached the same conclusion.[51] Economist Jesus Huerta de Soto claims that Milton Friedman has not proven his conclusion because he focuses on the contraction of GDP being as high as the previous contraction, but that the theory "establishes a correlation between credit expansion, microeconomic malinvestment and recession, not between economic expansion and recession, both of which are measured by an aggregate (GDP)" and that the empirical record shows strong coorelation.[64]
Referring to Friedman's discussion of the business cycle, Austrian economist Roger Garrison stated, "Friedman's empirical findings are broadly consistent with both Monetarist and Austrian views," and goes on to argue that although Friedman's model "describes the economy's performance at the highest level of aggregation; Austrian theory offers an insightful account of the market process that might underlie those aggregates."[65][66]
You quite literally do exactly what I stated you've been doing throughout. You simply don't have understanding so you try to find "experts" that say what you think supports your side of the argument and pretend that none exist that support the other side.
Your complete ignorance of the topic is only underlined by using this logical fallacy (Appeal to Authority) as the only support, the foundation, of your argument.
The reality is they take only the early assumptions of von Mises on the theory and ignore later theory supporters who chose to follow a different path than von Mises and rejected his a priori approach. They, quite literally, choose to ignore later impiricists to promote this fallacy so that you can call upon them later in ignorance and pretend you are making an argument.
cawacko
Well-known member
Look at this, I found criticism of Keynesian Theory. This shows Keynesian is the definite short bus of economic theory.
http://dailycapitalist.com/2010/07/27/why-keynesian-economics-is-internally-inconsistent/
http://spectator.org/archives/2011/07/22/fatal-flaws-of-keynesian-econo
http://www.fee.org/the_freeman/deta...-failure-of-keynesian-economics#axzz2adyddgni
http://doublethinkblog.blogspot.com/2009/07/critics-of-keynesian-economics.html
http://dailycapitalist.com/2010/07/27/why-keynesian-economics-is-internally-inconsistent/
http://spectator.org/archives/2011/07/22/fatal-flaws-of-keynesian-econo
http://www.fee.org/the_freeman/deta...-failure-of-keynesian-economics#axzz2adyddgni
http://doublethinkblog.blogspot.com/2009/07/critics-of-keynesian-economics.html