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Around the ’50s a political ideology formed. I’m sure its ideas date back further but it was at this time that it crystalised into a coherent group. More than a political ideology, it was, and is, a worldview. This worldview has no explicit pop-culture presence. No-one preaches it overtly. So most people are unaware of it directly. However it was, and still is, insidiously influential on the thoughts of some important people.

One of the most basic assertions/assumptions of this worldview is what is technically called strong reductionism. This is the idea that any system is just the sum of the elements in the system. Put plainly: to understand a society you have to only understand individuals. So, for example, if crime increases by 10% then the explanation is that individuals like crime by 10% more than before. It is this idea that lead Thatcher to believe and proclaim that “there is no such thing as society.” What she meant is that society is a kind of academic myth. A mirage created by a bad understanding of the world.

I don’t know how but this worldview has filtered out into popular culture. The world is confusing right now, and confusion both inspires and demands analysis. Reading the never-ending stream of analyses of how we got here, on racism, on sexism, on equality, on social justice, I have noticed that the worldview I mention is encoded right into all of them, and it makes these analysis irrelevant because they’re blind to the biggest factors.

These analyses seem mostly to try to reduce behaviours of societies down to how individuals think and act. Attributing things to individuals is difficult, as there are billions of them, so this approach necessarily requires demographic segmentation i.e. stereotypical thinking (which is ironically often what the analysis is out to criticise.) You have to find the demographic group whose behaviour, or thoughts, or opinions can reasonably be said to contain the behaviour you are trying to explain. I say reasonably because these analyses are usually only opinions; what the writer thinks is a reasonable explanation is accepted, usually without any actual evidence, instead relaying on the reader liking the sound of the conclusion. How many “why Trump got elected” videos and articles have you seen? Few provide any causal evidence, most only provide demographics as data masquerading as evidence. These are plentiful and have, undoubtedly, already coloured peoples ideas of how the world works.

This approach to understanding the world is limited to specific types of conclusions. If the phenomena we are most concerned about are recent this type of analysis can only conclude that the difference in our society is obviously the fault of whichever group represents the biggest recent demographic change; millennials. Things like institutional racism or sexism are incomprehensible because those phrases don’t mean anything. How can an institution be racist if none of the individuals in the institution are guilty of overt racism? How can we even approach fixing a sexist education system if none of the parts of that system are being sexist? How can inhuman labour practices be an issue if everyone working in the factories chose to work there?

Strong reductionism is bullshit. It was shown, with actual maths, to be bullshit over 100 years ago. The hard sciences, you know, the people who put robots on comets millions of miles away, predict weather with miraculous precision, run optical cables across the ocean floor, create self-driving vehicles, use general relativity to account for transmission distortion in communication between machines in geo-stationary orbits, put the magic machine you are looking at in front of you, those people, dropped strong reductionism at that time and never looked back.

If you want to understand radical changes in the behaviour of our society in the last decade there is an elephant in the room: social media. Social media itself mediates the new social interaction. The important word there being interaction. Interaction is not a feature of individuals so strong reductionist worldviews are blind to it. For them interaction is effectively inert. It just transmits benignly, having no overall effect on behaviour. It can express behavioural traits, that’s it.

When the world, apparently in unison, listens to Gangnam Style then a month later ritualistically pours buckets of water over their heads, what does that tell you? That everyone woke up one morning and decided they like songs about Korean horse farming, then changed their mind and really wanted to pour whatever over their heads and social media was just there to record it? Or is it a more feasible explanation that those things went viral largely because of the nature of social media itself? So many variables in that process are obviously part of how social media and the internet themselves work and cannot be reduced to individuals at all. If social media didn’t exist, but every music shop in the world sold copies of Gangnam Style one day, would people have bought it? There is clearly another factor at play here that isn’t just peoples’ traits.

There is a motion that fake news, transmitted by social media, was a large factor in recent political events. You might think that this is an example of a break from the worldview above because it is laying blame at Zuckerberg’s feet. Maybe it is, but this analysis, again, seems to be about the content traveling around social media rather than the system itself. The system is at fault in that it contains this type of content. It is recognised that social media creates filter bubbles in which our view of the world is coloured to match our outlook, biasing our opinions. Again, this looks at the situation in terms of individuals. Social media biases the individual, or more accurately the individual biases themselves using social media, which manifests itself as a societal bias. Social media is just providing a way for individuals to do what they as individuals want to do, but if that is true there is no bias… ta da!

This is, I’m sure, a factor but it’s an incomplete story. Social media filters content based on two broad factors: the user’s interaction with it and marketing revenue. So if we like things that steers social media’s shaping of the filter bubble but what we like is a function of our social interaction, which is itself mediated by social media and distorted by our filter bubble. It might sound like I have added nothing to this analysis. The first says “A affects B”. Mine says “A affects B which affects A”. I’ve just pointed out a feedback loop made from the same elements, but that feedback loop is an important extra element. Put a feedback loop in a speaker-microphone system and you get a loud, shrill whine, right? That screechy noise isn’t a product of the singer, or the mic, or the speaker, or the cables; it’s a product of those things combined. It’s exact pitch is a product of the properties of all of those things and it’s volume is a product of their interaction. You can sing a different song but you’ll still get the same pitch. The only way to get rid of it is to get rid of the feedback loop.

We all see definite polarisation on most important issues. The standard analysis is, again, that two groups form, and the difference in opinion between the two sums to the outlook of the society. And again we are ignoring interaction. What people miss out is that both sides have a vested interest in portraying the other side as as crazy as possible. So most of the examples of either side are actually picked out by the other side. Those articles about air conditioning being sexist, a woman with 40 kids on benefits, people complaining about a movie poster, outrage about this and that, political correctness gone made, are in every case minor incidents involving a handful of people selected by the other side and made viral. Then the analysis that follows is based on data handed over by this process. Apparently the worlds leading experts on gender equality are all well-off white men who think that feminists are all men hating nut-cases; a conclusion based on a biased view of the world provided largely by a social media system designed to respond to those opinions by shaping its filters to make the world look more like that view!

In technical science systems with feedback loops have a mathematical property called non-linearity. They’re called complex systems because they have complex and often weird behaviours. The properties of these systems are well understood by people whose opinions no one cares about, and are unknown unknowns to a huge number of people whose opinions that shape our society. You probably aren’t aware of this but the idea of strong reductionism is axiomatic to all neo-classical economics, which includes all the ideas about how economies function in official practice right now. It’s embedded in the university curricula studied by many of our government ministers, although to be fair they probably didn’t pay much attention.

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It is argued that in a free market monopolies either aren’t possible or possible but acceptable. The reasoning behind both is really the same: the mechanics of free markets only allow a monopoly if no one has any objections to it. In classical economics there is an idea called diminishing marginal returns. It’s held that as companies get bigger their unit costs increase. Actually, it’s a law. It seems to be derived from observations of agricultural economies in which the most fertile land is usually taken first. As the agricultural industry scales up every unit of land it takes is progressively less productive. This idea clearly doesn’t apply to most industries, and might not even apply to agriculture anymore, but it is held as a law. It, in of itself, if true, would prohibit monopolies.

In the real world there are ideas called economy of scale and profit maximization, which are some of the most fundamental and generalizable concepts in all business modeling, both of which form a powerful incentive to monopolize. I doubt any pro-market types could disagree with that and keep a straight face. So the pressures exist, so what stops bad monopolies from forming? The answer is competition.

Take the example of banking. There are lots of banks. You can use whichever you want. The banks all form a cartel, agreeing to charge the same super-normal prices. We don’t need to worry about that because in a free market there are no barriers to entry. Anyone can create a bank, charge market prices and everyone will sheeple over to the new, non-monopoly bank. Great, right? Almost magical. This argument is profoundly flawed for the following reasons.

Firstly, imagine the context. You have a series of large, established banks. Banks, by their nature, work better the bigger they are because they have to cover fewer inter-bank payments, which reduces their reserve requirements (or risk exposure). There probably aren’t that many of them because they managed to form a stable cartel. The new-comer would have to compete, from day zero, with all existing banks. This comes down to more than just saying “hi, I’m a bank and I’m cheaper than all the other ones.” You have to find someone willing to invest who agrees with you mission to bring down the cartel, or use your own money, in an extraordinarily risky venture. And you have to source your capital, including all of the technology needed to be a competitive, integrated bank, which hopefully doesn’t belong to someone that’s in the cartel. Or you could build it from scratch. This is risky and expensive, and the whole banking sector is against you, so you’ll probably find it hard to get a loan. The “no barriers to entry” idea seems a little naïve.

The next problem is getting people to use your bank. In real life there are all kinds of transition costs that are ignored in most pro-market positions, which tend to assume frictionless interactions. In this case there are costs, both financial and otherwise, associated with changing bank. Anyone who can’t afford the cost of changing bank, can’t change bank, regardless of how good a deal the new bank is. What are the transition costs? Who knows. They could be anything, free market theories don’t prohibit any of the financial ones and can’t prohibit any of the non-financial ones. The transition costs mean that even if the new-comer charged market prices, they would still be too high. They would have to expect the customers to take the hit, or cover those costs, making themselves uncompetitive. Hopefully that doesn’t push prices up to monopoly levels.

Another problem is scalability. As I mentioned banks, by their nature, become more efficient as they get bigger. The reverse is that small banks don’t make any practical sense. The pro-market anti-monopoly mechanism assumes a kind of perfect scalability, in which the new-comer’s business model is competitive from the first customer and remains so after every new customer joins, regardless of the passage of time. All new businesses generally make a loss at first and are vulnerable to cash-flow problems. A bank with 1 customer is not even a viable bank because any transaction that customer would like to do would incur use of a vast proportion of the bank’s reserves, they’d also have no lending power, so no profit. Banks are only banks because the aggregate transactions to almost to zero and can lend. Their profits are interest payments. For a new business the clock is ticking, it needs to get to a viable size in a relatively short time. If it’s cash-flow fails the business fails. There is a chasm between the new-comer and success that can’t be jumped one customer at a time, it has to be cleared in one go, quickly.

What’s more is that the above process, which seems to rely on a lot of ideal circumstances, must happen so frequently and reliably that investors believe it to be a reasonable investment.

Things get worse though. If the new-comer jumps the chasm and becomes a viable bank, in stable competition with the cartel… why wouldn’t it join the cartel? It seems like the most attractive reason to do all of the above is to do just that.

None of the above takes into account the possible action of the existing cartel, which, according to pro-market theory, just roles over. How can it intervene without breaching free-market rules? Easily. Obviously. Firstly by refusing to fund the venture. Secondly, savings account aren’t liquid, you can’t just close them, and the rules about changing bank accounts generally could be anything. Everyone might have signed a contract saying they have to give 6 months notice to change their accounts. Why would they? It’s a monopoly they have no choice.

There is also a pretty obvious step the cartel could take: give their customers discounts for staying until the new-comer’s cash-flow fails. They’ve been raking money in from years of monopolying, it would be trivial to put some of that money into a fund to bribe customers to stay put whenever a new-comer shows up, strangling them and making the idea of competing with the cartel even more un-fundable.

 

In economic theory it is held that the market, without external shocks, reaches equilibrium prices where supply meets demand. Those that talk about this equilibrium price effect use adjectives like “efficient”, “optimum”, “correct”, “valid”, even “objective”. The standard position in all neoclassical economics is that equilibrium prices established by the market facilitate the perfect ongoing distribution of resources, a situation that is very very hard to reproduce without a free market, and very very hard is the same as impossible in economics. This idea is asserted with more or less venom depending on which school is involved but the basic idea is foundational to mainstream as well as most fringe schools. Some call this the “calculation problem”, the problem being that proper prices can’t be calculated, only derived by the market.

I think there is a far more fundamental calculation problem: Prices.

Price is a funny word in economic theory. It ostensibly means “exchange ratio” and is modeled as such. This leads to the miraculous observation that a massive proportion of consumer goods happen to have a “exchange ratio” of one penny under the pound, but this is perhaps because “prices” are really an internal variable, a kind of force of nature, and what we think of as prices are some kind of outward manifestation wobbled by human judgment. We can only hold price as an abstraction.

It’s nice to have the view that there are these prices everywhere, on everything, as if there’s a big book of real prices somewhere that guides us all in making the correct economic decisions. You can partially accept this if you take prices as labels on things, because price tags are everywhere. Trouble is that the price tags are irrelevant because, as mentioned, they are just outward manifestations, judgements or wishes about what a real price might be. It seems pretty clear that prices (i.e. the ones economics like to talk about) only exist at the moment of a transaction. A lot of things aren’t for sale, so don’t have prices in any technical sense, only factors that influence future real prices. Even those things that are for sale can’t be said to have a definite price until they are bought, then they instantly lose their definite price. It’s a bit like a probability density function in Quantum Mechanics, the price can be anything but at the moment of transaction the function collapses and the price briefly becomes definite. This definite price is only correct for that one transaction, that one distinct event, and instantly goes out of date. Even worse, the collapsing of that price can change the future prices for everything else to any extent. This can happen for any number of reasons; for example, people trading a thing can give the impression that, you know, people want it, pushing up supply, or demand, or both.

If we wanted to track the price of a thing, say coffee beans, even if we could record every transaction that ever happened, instantly, that would give us only out-of-date data on a subset of coffee beans. An important set of coffee beans (the ones yet to be sold, or even yet to be grown) don’t even feature in that data set. Who is gathering this data? Data itself is a commodity so how does everyone get access to the total set? If the acquisition is a private institution then there are plenty of opportunities for distortion of the measurement of prices without breaching any free-market principals. If a company is selling price data it is itself interacting with price data even if it isn’t tracking price data on price data. This is a problem for pure market models: does the valid market include whatever is gathering the price data or is it valid only without that entity? If it is included then… how are it’s prices tracked (and therefor set)?? If it isn’t included then valid markets can never exist because they’d require a lack of a price gathering agent which would be required to track prices at all. Or perhaps the price data agent would give the data away… pricing below the equilibrium price, interfering with clearing, causing perpetual non-equilibrium prices, which is invalid/inefficient/evil/socialist.

This isn’t dealt with in neoclassical economic theory, instead real prices are some kind of fundamental force to which all of the everyday prices, on the whole, over time, or on average, or whatever, converge; it doesn’t matter what those prices actually are, the market will get them right. As I have said, even if the market does generate correct prices we still have to measure them, and face a significant challenge in doing so and even if we succeed we would distort the prices being measured.

I doubt many people know what Praxeology is despite its followers regarding it as the single most important and applicable advance in all of intellectual history. It’s more relevant than you might think. It inhabits the thoughts of many pro-market, anti-social responsibility think tanks and lobby groups. I think it’s only a matter of time before UKIP incorporate into their public manifesto.

Economics is split into ‘Schools’, one of which was called the Austrian School, which was largely similar to any neoclassical economics school until a guy called Ludwig von Mises came along and, in my opinion, fundamentally changed the school’s basic assertions. He kept the von in his name because he was a colossal snob and moved to the US  where an anarcho-capitalist movement was building political steam. The movement took the title ‘The Libertarian Party’ (a word that until then meant something completely different.) So called ‘Austrian Economics’ was chosen as its technical basis.

I say so called because nowadays ‘Austrian Economics’ means anything Mises said[2] and ‘Austrian Economists’ means a bunch of self-publishing, capitalist-funded apologists that unanimously conclude that capitalism is the answer. If you take a look at Mises.org you’ll see an obvious personality cult that literally praises Mises whenever possible.

Mises came up with Praxeology, which he presented as “the (not a) science of human action” (while spending a lot of time explaining that science is useless for understanding economic behavior). This is taken as the philosophical basis of Austrian economics. Taken in the sense that I’m not sure to what extent Austrian economists used praxeology, but Libertarians today seem to regard its position with respect to Austrian Economics as undisputed.

So, here’s the thing… Anarcho-capitalism smacks of religion. You have The Market. The Market is always right. You can’t ‘know’ The Market because it’s mysterious and if you try to know it or control it it’ll strike you down with righteous fury. If you think The Market is wrong you are wrong. There are no alternatives. There can be no compromise. This is just true, get over it. Global warming is a myth.

More similarities can be found in Praxeology texts. For example: Non-Overlapping Magisteria. This is the argument that theology and science deal with different aspects of reality and therefor cannot comment on each other’s findings. This is recreated explicitly in Praxeology, and some. They argue that “human action” can only be understood through pure-thought logic and that empirical evidence is of no consequence because it can’t prove or falsify economic theories.

Praxeology is a body of philosophical work. It presents itself as both complete and self-validating. It proves itself. It uses a kind of custom variant of logic, missing out a lot of key findings, like incompleteness. Like any quasi-philosophical crap it makes heavy use of special, private definitions of otherwise common words, while not making much effort to make that explicit. I think this is, in a sense, a useful property of the theory: it makes it very hard to think about competing ideas because it’s just confusing. It’s a bit like how companies use custom power adapters; it keeps you in the eco-system. For example, “true” means something like “valid” and/or “consistent”; and the terms “valid” and “consistent” themselves are often conflated. Formal logic allows a set of statements to be both valid and inconsistent; Praxeology doesn’t seem to allow that, or at least when this situation arises it’s discarded without justification. The same is true of words like “right”, “freedom”, “truth”, “valid”, “action”, “act”, “logic”, “axiom”, “aggression”, “state”… all of which have special definitions (sometimes explicit, sometimes implicit) in Praxeology and are often defined as derivatives of other concepts within Praxeology, making their use confusing.

Praxeology plays a strange game of switching between deduction and induction and back again (incoherently insisting it is both at once with only the fuzziest justification) to make statements that are asserted as empirical statements but defended as deductive ones. The only support for this necessary habit is to insist on the existence of a third category of statement beyond a priori and a posteriori, without providing any formalized way of deducing which of these categories a statement belongs to (arguably the third category is axioms, more on that later). This imposed ambiguity is actually used to allow unsupported shifts between deduction and induction. They argue that while many might think that a statement is either a priori or a posteriori, that in reality a statement can be a synthetic a priori (one that is deductive but tells you something about reality [5]). This is wobbly already because it’s like saying “a statement is verifiable, not verifiably, or something else”, but beyond that it also betrays a faulty idea of what a statement is. They imply that “all statements belong to one and only one of these three categories and you can just tell by looking at it”. This is not quite right. The statement “the moon is made of cheese” is neither a priori nor a posteriori in of itself. Only in it’s use in some system of statements does it become one of those things. Statements can be either, depending on use. Praxeologists assert statements, don’t specify what their usage is, and use that ambiguity to allow the impression that the statements are synthetic a priori statements by varying how it is framed.

You can get a taste of that when Austrian economists talk about governments causing inflation…then, when pursued, explain that they define inflation as increase in the money supply so their presented assertion about the world is just a statement about their own private definitions of common words[3].

The whole structure rests on one statement, the Action Axiom, from which Mises derived everything else. The action axiom is simply “human action in purposeful behaviour”. Mises then went on to argue that action is comprised of “categories of action” like “ends”, “means”, “profit”, “causation”, “time”, “space”. He argued that an “action” has a concept of “ends” built into it, or put another way, that an agent considering action must have an concept of end. To me, that is a boldly empirical claim, one that if demonstrated would be worth a Nobel Prize in Neuroscience. Of course, if forced to defend the assertion, it would be defended as a deductive statement. It’s as if “action includes ends” is just what those words mean… but also a statement about the world… but they don’t need to prove it empirically… so it’s deductive… so it’s just what those words mean…but it is definitely true…but they kind of use the words “true” and “valid” interchangeably…and “valid” often means “derivable from the action axiom”…which is true…because it is…

The Action Axiom is fraught with ambiguity. Is breathing purposeful? If so is every breath an action or are all breaths one action? Is every step an action with it’s own explicit purpose? What’s a purpose? Are there purposes to be found? If not in what sense is the Axiom true? Is converting oxygen to carbon dioxide purposeful? Is something not an action if it isn’t purposeful? If I don’t know I’m doing it is it an action? What are unintended consequences? How would you prove the axiom false? If the answer (which I believe it is) is that you can’t falsify it then I can use it to show that every molecule of oxygen you breath corresponds to a distinct and conceived purpose. Decomposing actions like this leads to the problem that the sum effort in performing individual acts is far higher than treating the whole breath as a single act, and that sum increases the more you arbitrarily split the action.. so the Praxeologist can’t argue that arbitrary division always adds to the same total. Obviously it limits at infinity, which has to be wrong.

Praxeologists… Praxeologians… use the word “axiom” a lot, which they define as something like “a statement that cannot be argued against without employing it”. Actually this is, again, a private definition. It’s not what an axiom is to everyone else in the world. An axiom is simply and underived statement. That’s it. Any statement can be used as an axiom. For example “the moon is made of cheese” is an axiom if it you use it as an axiom. That’s how logic works. It doesn’t deal with meaning and it doesn’t tell you anything about the world. It’s just a bunch of rules about how to derive statements from statements. Your axioms are your chosen starting point. If you can demonstrate that your axioms are true then any other statements you derive from those axioms are true, right? So, for example, if my chosen axioms are “the moon is made of cheese” and “cheese contains milk” then I can derive the statement “the moon contains milk”. If the axioms were true then all three of those statements would be true… or reality is crazy. This is going somewhere.

I really want to focus on one part of Praxeology; is it’s most clever and batshit bonkers idea: Performative Contradiction. It kind of follows from the their idea of what an axiom is. They never prove the Action Axiom (if they did it wouldn’t really be an axiom) instead they argue that a human can’t argue that humans don’t act without acting, therefor humans act. Many are very impressed with this idea. Arguing is an (intentional) action so arguing against the Action Axiom proves the Action Axiom. Brilliant and literally ridiculous.

The first problem is that contradiction happens between statements. A statement can contradict a statement. An act can’t contradict a statement. So there’s that. The act of asserting a statement is not a statement in the argument being asserted. Obviously. Perhaps the act demonstrates the arguer is a hypocrite. So by saying “the moon is made of cheese” I prove that I must believe that humans act with intention? The problem is that that still doesn’t prove the axiom is true. It simply demonstrates, at best, I presented a collection of statements that contain at least one contradiction. It doesn’t establish which side of the contradiction is false. If I say “the moon is made of cheese” and “the moon is not made of cheese”, those two statements collectively are invalid, but there is no way to deduce which of those statements is true from just those statements. Similarly the “performative contradiction” doesn’t establish that the axiom is true, only that it is either true or it’s antithesis is true, but that’s just an axiom of logic itself (it’s the definition of ‘not’). The performative contradiction argument only really works if the axiom is true, because if it is true then I did act with intention (regardless of whether I believe that I did or believe that I didn’t)… if it’s true it’s true. So what?* If it isn’t true then I didn’t act with intention regardless of what I actually said. The possibility remains that the counter-arguer doesn’t believe that humans act with intention, only that they believe they do, in which cause they could assert “humans believe they act with intention” and “humans don’t act with intention” without contradiction and therefor without proving the action axiom. This opens up the possibility of constructing an argument that disagrees with the action axiom without using the action axiom. So the action axiom isn’t an Austrian axiom.

In fact the Action Axiom isn’t event a genuine axiom. Another common property of internet nonsense is the use of hidden axioms. These are things that are axiomatic in the theory but never explicitly stated. This can be done intentionally or not, it’s hard to tell. Praxeology has a lot of them. If the Action Axiom is indeed proved by use of Performative Contradiction in an argument then the Action Axiom clearly isn’t axiomatic; the content of the Performative Contradiction argument is. The theory should, if it were proper formal logic, construct Performative Contradiction from other statements or it is itself axiomatic. Contradiction can be taken as given from logic theory itself but the theory has to establish that making an argument can somehow prove that the arguer has assumed something and how to derive what that something is. This is never given as far as I can tell but more importantly it isn’t derived from the Action Axiom. It’s just there. So the whole “praxeology proves itself” is plain wrong.

There are many other hidden axioms in Praxeology. Big ones too. Like “homesteading”; also known as “original appropriation”. It is held that people own themselves (which is bonkers in of itself). A statement that is defended with Performative Contradiction (bonkersly).  They then argue that owning something can only happen by voluntary exchange or original appropriation, by which I mean that they are established as congruent but not proved, and further that something can become owned once a moral agent “mixes his labour (as far as I can tell there are literally no women in Praxeology except Ayn Rand)” with the whatever it is. That’s right… mixes labour with stuff. Those people who snigger at “leftists” and “socialists” and “liberals” for being “economically illiterate” believe that mixing an action with a substance makes sense. This mixing is never derived. It’s just held that it can be done. How this mixing causes something to become owned is never demonstrated or derived from the Axiom Axiom. It’s not even proved by Performative Contradiction. Even further they make unfounded leaps; you “mix your labour” with soil but end up owning a geographic region. How? How do you “mix your labour” with a geographic region? As far as I can tell the only validation of homesteading is that it doesn’t, and cannot, be an act of aggression and therefor doesn’t breach their non-aggression principal. But this is clearly not true. I suspect that if you push a Praxeologian on it they’ll likely fall back to that being what the word “aggression” means i.e. a breach of property rights and nature has no property rights (another hidden axiom).

While Praxeology is presented as logically infallible it skirts over all kinds of ambiguity. A good example is the idea of a “threat.” You can’t initiate force, but you can use force to stop your property rights being breached, which is the basis of self/property defense. This argument is intrinsically flawed because you can’t use force to stop something that has already happened. If someone invades your property they have already done it. Using force can never stop them from doing it. If you use force before they invade your property you are the originator. Their theory only seems to permit something that it also forbids. It does however allow someone to respond to a threat but does so in a categorical way: if someone breaches your property rights then you can breach theirs (note that to a Praxeologian that includes murder). Praxeology removes the problematic ambiguity of lesser moral systems… but what constitutes a threat? A threat is, and can only be, a perception in the mind of the threatened. Remember that these are people who complain about the arbitrary power of states to deprive you of property, but have no problem peddling the idea that if someone steals your pen you can murder them. Of course, surely, no Praxeologist would argue that murdering someone over a pen is something that should be happening in any functional society, but how do they resolve that inherent ambiguity? We can employ arbitration, I have no objections to systems that need arbitration, but I do have a problem when people claim that they have a logically airtight moral system that generates such ambiguity. Praxeology doesn’t set a good foundation for resolution of what constitutes a threat, because, ultimately, who has the authority to deny anyone the right to murder a pen stealer? Any such authority is, by their own arguments, invalid. Some might argue that the only force that is allowed is whatever is necessary to return the pen to it’s owner, but, again, what is necessary? The approach also renders any third party force intervention invalid, because the third parties rights were never breached. The only way around that is to allow the third party to joint-own everything that could be stolen, granting them rights to use force against theives… sounds familiar. Or perhaps they could argue that anyone whose property rights are indirectly breached by the pen owner’s act to return the pen (say the pen owner’s boss who lost a day’s labour because the pen owner skipped work to murder someone) also have the right to use force against the pen thief, but who isn’t in that group? Something I have never understood about this is what happens if the pen thief kills the pen owner? Very caustic social castigation?

The incorporation of threat into Praxeology also leads to a clear self-contradiction with other parts of the theory. Praxeologians hold that the point of property norms is to minimize conflict (another hidden axiom) and that exclusive private property norms are the only realistic option[6] (which is a fantastic coincidence because by a completely unrelated argument exclusive property rights are undeniable). They argue that “argumentation” can never cause conflict but that is clearly false. A threat is a statement and arguments contain statements, so an argument can contain threats of any type. And anyone can be the target of the threat. So any “argumentation” between any two people can constitute a threat to any number of people. Obviously. They allow, by the use of the concept of threat, for “argumentation” to be a literal source of conflict. And, even more, the inclusion of a threat in an argument can happen without breaching any “argumentation” principals. For example, the arguer might not know it’s a threat. So there is no get out clause. They can’t say “the inclusion of the threat terminates the argumentation and avoids the contradiction” but even if that were valid argumentation would still clearly have the potential to lead to conflict. The only remaining defense is that responding to a threat doesn’t count as conflict, which would show that a world filled with people brutalizing each other all day long, because some third party argued that some pens might get nicked, is perfectly congruent with Praxeological morality, while a world in which no-one kills anyone but everyone pays tax isn’t and, as such, that this system of thought minimizes conflict by simply defining it a certain way. Good work guys.

So far I have dealt with Praxeology on a mostly logical level but there are some aspects that are worrying, rather than just absurd. They argue all rights are derived from self-ownership, which is itself just a special example of property right. But who has rights? You might think that those that have the right to not be harmed are those capable of suffering, right? Wrong. Harm to others is framed purely in terms of damage of property; the individual’s body being property. Rights are granted to “moral agents” and “moral agents” are individuals capable of deliberately respecting or breaching property rights. If a given being is not capable of conceptualizing their principals, like the principal of private property or self ownership or purposeful action, then they don’t have rights. That’s how they exclude animals. What is worrying is how easy it would be to include anyone in that category and how, coincidentally, that category seems to include anyone who disagrees with them. Not believing their fundamental principals is the same as not being able to deliberate over their implications. How can someone truly deliberately respect someone’s property rights while not believing they have them? So if you disagree you are either wrong or you have no basis claim your rights can be breached. Sound familiar? Like the annihilation of entire indigenous populations? It also demonstrates a tragic irony: no one has rights unless it can be established that they are moral agents… how would that be established?

[1] At best all Mises did was show that humans think that humans act with intention and can’t think otherwise, but that’s a pretty generous description, really he showed that any human that thinks the way Mises did will find it hard to conceive of themselves as not being intentional (we can easily conceive of others as not intentional), but clearly not impossible because his only proof requires humans to be able to at least conceive of themselves as not being intentional actors else how could they, even in theory, form the invalid argument Mises needs to prove his Action Axiom?

[2] Although they convieniently miss out when Mises said that any regulation that is beneficial to the efficacy of the market is valid, citing fire regulation as something that no sane man could disagree with. Or how Mises didn’t believe “Fiat Currency” existed. They also don’t mention that Hayek thought that government control of interest rates could have no significant effect (they very much disagree with him on that) because the expansion caused by private bank lending far outpaced it’s effects. That one isn’t so yay-capitalism.

[3] All government managed currencies inflate because that’s what those words really mean to them. They’ll never point out the epistemic invalidity of data gathering if people find data to back their ideas up but no data can prove them false.

[4] This video contains a few more examples of this similarity. A few minutes in Hoppe starts a slightly mocking attack on empirical scientists (positivists) with an inaccurate caricature of the scientific method (he hedges early on by saying he used to be an expert in this but forgot most of it). He says that they lack the luxury of absolute certainty possessed by praxeologians and that they repeatedly modify predictions until data fits them. You can find identical recreations of these criticisms in fundamentalist/creation science/intelligent design literature. He then argues that if Praxeology was accepted economists would all be out of work and as a result they all have a vested interest in opposing it (he missed out how Austrian Economists would also be out of work, but whatever). This persecution complex non-sequitur, again, can be found in anti-secularism texts; specifically that atheists like atheism and hate faith because it allows them to get away with their amoral way of life.

[5] I suspect that this is another special use. They seem to assume that a synthetic a priori tells you something about reality, but that’s not the classical meaning. A synthetic statement is one that asserts a concept not found in it’s subject concept (regardless of whether it refers to reality).

 [6] Yes, practicality is included in Praxeology despite it not accepting empirical methods.

I often think that if people knew what our governors really believe, or are willing to pretend they believe, about how our country works they would be horrified. The theories that form the basis of the political class’ framework for managing our country are mostly superstitions and religious nonsense, but the topics are so convoluted and boring that they’ve managed to keep it all a secret. This smokescreen around their beliefs has created a kind messy, self-contradicting, cartoon reality that can be twisted and shaped to fit any story, which is exactly the way politicians, all politicians, like things to be. Politicians would never risk reality coming into their discussions if they can help it.

I just overheard a man from the Guardian newspaper on TV, on a discussion show, say to the audience members “the deficit on all of your pensions will be £75 000!” I have no idea what he could possibly think that means.

Luckily, I have a high threshold for convoluted, boring subjects. In these religious ideas there is a particularly crazy idea. One that they will never let slip. They think that unemployment is necessary.

This idea is interesting because it really shows everything that has gone wrong with how we run our country, but first thing’s first, why do they think unemployment is necessary? The reasoning is this: if there were more jobs than people the companies would have to compete for workers, this would force them to offer higher wages to get staff. Higher wages mean higher costs, which means higher prices. Higher prices is called inflation and inflation is like the devil incarnate to economists. So if you eliminate unemployment you unleash the inflation monster and you destroy the economy.

Now this misses the obvious point that prices might be higher but wages would be too. If everything costs twice as much but wages are twice as much then any inflation just cancels itself out. So what’s the problem?

The problem is that there is a group of people who earn money, not by being paid wages, but by capital investment (which is a technical term for “owning stuff”, another one of those smoke screens). For those people wages are a cost they pay to maintain those capital investments. For example, if you own a stretch of land that you rent out you might have to pay people to look after it. Those people have a vested interest in wages being as low as possible. Those people also have vast amounts of money from centuries of capital investments, they could pay people wages with that money or they could spend a fraction of it to buy politicians and theorists to write and spread nonsense scare stories about what will happen if they don’t get what they want.

The result of this is everything we see. Wages have been held down for decades while returns for capital investors have increased. Wealth, and therefor control, is being concentrated into a smaller and smaller fraction of the population. At the top of the pile we have a financial sector that engages in no actual production, their capital is imaginary, hires very few people, and yet commands extraordinary profits for the people who own that capital. The government is implementing policies designed to cause unemployment.  When the government increases interest rates they do it because they believe it will slow down economic expansion, that is, stop people doing new productive activities, because they are afraid, or say they are, of runaway inflation. The most extreme measure is austerity. New jobs require new pounds. New pounds come from the treasury deficit. Austerity is designed to stop the creation of new pounds and thereby limit how many new jobs the economy can finance. They want to maintain what they call a “buffer stock” of workers to ensure employers can always find someone cheaper.

The UK’s £1.7 billion surcharge is the big thing in UE/UK news right now. It’s in the interests of Cameron and Osborne to present this surcharge as a serious problem for two reasons. Firstly, because it presents the EU in a negative light forcing us to part with pounds at a time when we need them all, and secondly because it’s an opportunity to spin themselves as heroes, even if only in that they publicly resist it. Although they managed to totally **** that up. ALittleEcon describes the situation here.

The question is why should we be worried about this? Well, as far as I can tell even if paying the surcharge causes a problem for us, which is questionable, the problem is not at all what we are supposed to think it is.

We are supposed to imagine that we can only pay this bill if we give something else up. We need to give up a hospital or something. What actually happens when the government pays this bill? Someone at the Bank of England opens a spread sheet, finds the row that represents the EU’s bank account, and increments it by 1.7 billion. That’s it. They don’t have to raid any savings, or some budget. They don’t have to find a pile of cash somewhere. There is no bank account they withdraw from. They just press some keys and that’s that. No budgetary effects at all. If they then choose to subtract the same amount from somewhere else that’s purely up to them. Incidentally, the talk about the interest that might or might not be incurred is ridiculous. The government can pay that bill any time they want regardless of how big it is, so if they could only be forced to pay late fees if they choose to put off paying it, but there is no intrinsic reason for them to wait. Again, they don’t have to get the money from anywhere.

The EU can then do two things with the pounds in that account. They can buy things from the UK or they can trade it on the currency exchange market. If they buy things from us then, obviously, the pounds go right into one of our bank accounts. That would have some effect on prices. What effect? No-one has of yet provided a model to figure that out so there is no way to know. Anybody buying anything has a similar effect but we rarely stress about that.

The only clear effect of our government issuing the pounds needed to pay the surcharge is it’s effect on the exchange rate. You have to accept that the law of supply and demand holds, which is shaky but, assuming it does, if we increase the supply of pounds by some factor then it’s value should drop by the same factor. If we double the number of pounds in circulation then we would halve it’s value. In theory… which they call a law. So the magnitude of the effect is equal to the magnitude of the change of supply… right? We know the change is £1.7 billion, but what’s the total supply of pounds? If you go to the Bank of England website they have data on this. I think it’s at about £1.5 trillion. That puts this theoretical total effect on exchange rates in the range of about 0.1% over some period of time. To put this in perspective the Pound:Euro exchange rate has moved around over a range of 10% over the last couple of years. We’d have to issue 100 times this surcharge just to get back to 2012 rates.

Would this flicker in exchange rates be bad? Who knows. It would (again assuming theory holds) make imports more expensive and exports more profitable. Is this enough to warrant offsetting the pounds placed in the EU’s bank account by taking the same number away from some other public services? Given that our public services are being strangled to death through lack of investment I imagine that the theoretical exchange rate blip is a better choice.

 

 

Immediately after the Scottish Independence referendum Nigel Farage complained that the UK government “made a promise to maintain the Barnett Formula whereby the UK taxpayer spends £1,600 more on every Scot than on every English person”. This kind of factoid is the sort of thing that immediately pisses people off. The problem is that it’s a nonsense figure that refers to nothing meaningful and hides far more important information.

If government spending consisted entirely of paying money directly into people’s pockets then he might have a point. Some is spent that way, of course, but, as everyone is well aware, a huge chunk of government spending pays for goods and services. There would be no point in the government paying people just to pay taxes. The government wants certain things done. For example, a large part goes to the NHS. The NHS then translates that money into a health services. The taxpayer then receives those services, not the money. The NHS provides those services by spending it’s budget on provisioning the goods and services necessary to provide health services. Ultimately the money it is budgeted ends up in the revenue stream of companies that provide it goods and services, some of which will end up in people’s pay packets and some of which will end up in share holders’ and owners’ pockets. Those share holders and owners could be anyone, anywhere. They could, and statistically are likely to be, in London. They could be in the US. The fact that the initial spending is geographically, in a sense, in Scotland has almost no baring on how the money filters down to people.

Another fact is that cost structures vary. So, say for the sake of argument, that for some reason transporting things is more expensive in Scotland. Maybe because of all of the hills. That means that provisioning of services to the public via the public sector will incur higher costs, say, to pay for extra fuel. That extra payment would show up, again, in the revenue stream of a company, in the case a multinational energy company. Or more precisely some weird holding account system somewhere so that shareholder profits can be maximised. Again, where the money ends up is a matter of topology of the economy, which has almost nothing to do with geography.

It might be, arguably, more reasonable to look at spending per head at the whole-nation level, but that figure is largely meaningless as it could be anything. Working out where money really ends up would, as far as I can tell, be perfectly doable. What makes it hard is that we would need access to data on where companies spend their money and, specifically, who all the shareholders are. That data might be available, partially, through public audit records, but we have no intention of really knowing because that might be too revealing. It’s far better to use nonsense metrics like spending-per-head.