[jmherbener]

Don’t let the tail of formal analysis wag the dog of human action. MU analysis is used to explain human action, it has no other meaning. Sometimes a person trades one good for another, sometimes he does not do so. In the former case he ranks the first good higher than the second and in the latter case he ranks the second good below the first. If he has only one unit of each good, then a sizable gap might exist between the value of the the two units. If we stipulate that the goods remain scarce to him and yet are available to him in multiple units, each of which can be used to attain a different end, then he can trade between actions with units of the first and actions with units of the second good in a way that narrows the value gap between the last unit of the first and the last unit of the second good. Even if the goods were indefinitely divisible, however, the value difference (while shrinking to a minimum) would not disappear entirely because to reach his preferred outcome he must choose to give up action with the last unit of one good to obtain action with the last unit of the other good. At that point, he could not reallocate the units of the different goods further without reducing his overall satisfaction.

[jmherbener]

In a market economy there would be diversity of contractual terms across different occupations. Entrepreneurs would adopt the method of contracting that generated the greatest benefits. Every compensation system from piece rate to hourly to salary and from wages to benefits to profit sharing would exist in the economy, each one in the appropriate occupation. Here is a NBER article on the decline of piece rate pay, which the authors attribute to the rise of team production:

http://www.nber.org/digest/may11/w16540.html

State intervention can introduce inefficiencies in the pattern of contracting methods. One example is entrepreneurs shifting from wages to paid health care insurance in the wake of the federal government divergent tax treatment of the two imposed during wage and price controls of the Second World War.

One example of government intervention that could affect the balance between hourly and salary compensation is the Federal Labor Standards Act which mandates minimum wages and overtime for hourly workers. Some entrepreneurs and their workers might find it advantageous to have salary contracts, and longer working days, to avoid hourly compensation levels above the workers productivity.

http://smallbusiness.chron.com/salary-vs-hourly-employment-1770.html

[jmherbener]

Banks lend their reserves to other banks. This particular credit market is called the Federal Funds Market.

http://www.newyorkfed.org/aboutthefed/fedpoint/fed15.html

[jmherbener]

I don’t know the history of this case in particular, but there are several instances in which governments leased timber and mining rights to companies instead of privatizing the land. In those cases, the forests tend to be clear cut and mines wastefully exploited because there was no private owner of the land and therefore, no one had a monetary incentive to account for the market price of the land itself. This is a case of the so-called tragedy of the commons.

A famous illustration is the terrible Pishtigo fire of 1871 in Wisconsin.

http://www.peshtigofire.info/

In contrast, companies that own their forest and mine land do not damage the market value of the land in these ways, Georgia Pacific for example.

Alternatively, as you point out, government subsidies may be to blame. Also, if timber companies know that the government is buying land titles, they would have incentive to clear cut and then sell to the state. Governments might buy even if the market value of the land to commercial owners has been, at least temporarily, destroyed by clear cutting.

Here’s a brief history of land ownership in West Virginia. A fifth of the land in West Virginia is still owned by governments. The Monongahela National forest was established in the early 20th century on land owned by Senators Davis and Camden, among others.

http://www.wvencyclopedia.org/articles/1293

Here’s a nice introduction to free market environmental policy.

http://www.independent.org/publications/article.asp?id=1447

And here’s a more scholarly treatment of private property and land use.

http://www.independent.org/publications/tir/article.asp?a=453

[jmherbener]

Studies of poverty are notoriously shoddy. Cross-country studies are especially problematic. If you look at just the U.S., the poverty rate was declining until LBJ’s war on poverty. Take a look at the work at the Independent Institute:

http://www.independent.org/issues/google_results.asp?cx=018225991961863933630%3Awvyquibswjc&ie=UTF-8&cof=FORID%3A11&q=poverty

Charles Murray made this point in his book, Losing Ground.

Thomas Sowell has done some good work on poverty. Take a look at his book, Poverty, Wealth, and Politics:

http://www.amazon.com/Wealth-Poverty-Politics-International-Perspective/dp/0465082939/ref=sr_1_1?s=books&ie=UTF8&qid=1437685010&sr=1-1&keywords=wealth+poverty+and+politics

Here Sowell points out that market reforms have lifted hundreds of millions of people out of poverty in China in the last three decades:

http://www.realclearpolitics.com/Commentary/com-1_10_06_TS.html

Henry Hazlitt wrote an entire book on that point:

https://mises.org/library/conquest-poverty

Here is a Mises Institute wiki on poverty:

http://wiki.mises.org/wiki/Poverty

Here’s a recent Mises Daily article:

https://mises.org/library/freedom-global-poverty-and-failure-foreign-aid

Another point is that private charity actually works to reduce poverty whereas government programs do not. Here is Michael Tanner:

http://www.cato.org/publications/commentary/more-welfare-more-poverty

Marvin Olasky has written about this as well:

http://www.amazon.com/Tragedy-American-Compassion-Marvin-Olasky/dp/089526725X

[jmherbener]

The subjective value theory does not say that there can be no objective way of determining which course of action is ethical better.

Subjective value refers only to the fact that each person’s valuation of alternatives in action exist in his mind. It is an intensive state of mind that has no extensive property. Without an extensive property there can be no objective measurement of valuation since an objective unit of valuation cannot be defined. This fact implies that the subjective valuations of different persons cannot be objectively compared. Therefore, when a social interaction benefits some and harms others, there is no objective method to determine whether society has more or less utility.

Subjective value, however, does not imply that there can be no grounds whatsoever for an objective ethical system. Just because one cannot objectively demonstrate that a social interaction that benefits some and harms other is better in the sense of generating great social utility doesn’t imply that there are no other grounds on which the social interaction could be objectively deemed better.

Murray Rothbard, in his book The Ethics of Liberty, famously grounded an objective ethics in the human nature and natural law. Here is an article by Rothbard on the topic:

https://mises.org/library/justice-and-property-rights-failure-utilitarianism

Also, even though one cannot objectively determine the social utility of a social interaction, a person can make a judgment that it seems likely that the gain to one group outweighs the loss to another group. Such judgments are the basis for economic history as opposed to economic theory. Here is an article by Joe Salerno explaining how the economist uses his own judgments in doing economic history:

https://mises.org/library/how-do-economic-history

As you say, even if one judges the outcome of a social interaction to be socially beneficial, it doesn’t logically follow that violating property rights to bring about the social interaction is ethical.

[jmherbener]

Standard statistics like GDP are unreliable indicators of standards of living during wartime. For example, the government imposed wage and price controls during the war.

For an analysis of the wartime economy, see the article by Robert Higgs.

http://www.independent.org/newsroom/article.asp?id=138

Moreover, GDP includes government expenditures. So as the government drastically cut its expenditures after the war, GDP fell. This decline is an artifact of the way GDP is calculated. As government expenditures were falling, however, consumption was increasing. Here is Gene Smiley’s analysis of the wartime economy and transition to peacetime.

http://www.qc-econ-bba.org/instructors/Edelstein11/ECON224/08.pdf

[jmherbener]

In the latest housing boom, there were unfinished houses and housing developments left to decay during the bust. But malinvestments mean too much of some things have been produced to satisfy demand for them and too little of other things to satisfy demand for them. For example, there would be new logging roads left unused, lumber mills with excess capacity, empty office space, and so on. The evidence is revealed in the liquidation process of the bust.

There are entire uninhabited cities in China.

http://realestate.aol.com/blog/2013/03/05/china-empty-cities-photos/

[jmherbener]

Of course, but in analyzing social processes one must conceive, as Frederic Bastiat stressed, both the seen and the unseen. If we look only at the seen, then every government subsidy can be justified by the output stimulated by the subsidy regardless of the greater value of the goods not produced by the same resources.

http://www.econlib.org/library/Bastiat/basEss1.html

Consider Mises’s metaphor of the master builder. He argues that monetary inflation and credit expansion leads entrepreneurs as a group, like a master builder, to begin to lay a foundation for a building (i.e., the capital structure of the economy) that is much too large to complete given the resources he has. Of course, as construction begins, one could see that resources are shifted into the laying of the foundation. But the alternative uses of those resources in constructing a building with a smaller foundation are not seen since they are not undertaken. Only when the master builder comes to realize that he lacks the resources necessary to complete the larger building that he began to construct does he see that he malinvested his resources by laying to big a foundation.

https://mises.org/library/malinvestment-not-overinvestment-causes-booms

[jmherbener]

Monetary inflation and credit expansion change the lines of capital investment but not the overall amount of resources devoted to building the capital stock. They divert capital investment into lengthening the capital structure of the economy by expanding investment in the higher stages relative to lower stages. So, yes, some particular entrepreneur may have his project funded because of monetary inflation and credit expansion, but for the economy as a whole no additional resources are moved into building up the capital stock. There is no shift of resources overall into capital buildup because monetary inflation and credit expansion leave the demand for consumer goods and the lowest stage capital goods intact. In fact, the demand for consumer goods may increase as people’s wealth rises from the asset price inflation, e.g., the stock market boom, the housing bubble, etc. set in motion by monetary inflation and credit expansion. The boom that results from monetary inflation and credit expansion is therefore characterized by over-consumption and mal-investment.

Take a look at Joe Salerno’s article:

https://mises.org/sites/default/files/qjae15_1_1.pdf

[jmherbener]

The First Bank of the United States was an instrument of monetary inflation and credit expansion. It was a proto-central bank and therefore, not a different idea but a less extreme version of the same idea.

Here is Murray Rothbard’s assessment from his book, A History of Money and Banking in the United States:

https://mises.org/library/8-first-bank-united-states-1791-1811

Here’s more information on the FBUS:

http://wiki.mises.org/wiki/First_Bank_of_the_United_States

[jmherbener]

Entrepreneurs estimate the MRP of an input to determine what they are willing to pay to hire it. MRP is what is behind an entrepreneur’s demand for labor and other inputs. MRP is the contribution another unit of an input makes to an entrepreneur’s revenue. For example, if Tim Cook is considering hiring another engineer at Apple, he needs to estimate what that person’s labor will add to Apple’s revenue beyond what Apple’s revenue would be if the engineer was not hired. If the engineer’s MRP exceeds the market wages to hire him, then it will add to Apple’s net income to so so. If the engineer’s MRP is less than the market wage to hire him, then he will not be hired.

MPP diminishes for adding more and more workers to a given set of complementary factors of production because of the fixed productive capacity of the complementary factors and the diversity of workers. If Apple posts a job opening and receives 100 applications, it will hire the most productive additional worker from the pool of applicants. If it wishes to expand its labor force further, it will have to hire less productive workers, in other words, workers from the same 100 applicants that it didn’t hire before. Moreover, as it expands its work force with a given set of complementary factors, the workers will eventually exhaust the productive capacity of the complementary factors of production. If Apple has an office complex designed for 1,000 workers to use and then it hires another 100 workers the office complex with be used less efficiently, e.g., shared offices, staggered work schedules, etc.

The reason why Apple is always hiring in the area of diminishing returns for labor is that to avoid doing so, it would have to invest in a much larger capital capacity such that adding workers to the bigger facility did not exhaust its productive capacity. But doing that means that Apple would have large excess capacity. It would have paid to build capacity that it cannot use. It’s more efficient to build smaller facilities and then duplicate them as they need arises. But that means, that entrepreneurs will always be in the diminishing marginal productivity area in the use of their variable inputs.

[jmherbener]

Not under the circumstances stipulated. If the berry bushes are configured diversely on the island, with some more robust and some nearer to Crusoe’s shelter and others less robust and some further away and if Crusoe is concerned in his berry picking activity with the end of producing berries (instead of some combination of ends, like picking berries getting exercise), then he will allocate his first efforts toward the most robust berry bushes nearby and having exhausted them he will move on to the next most robust berry bushes nearby and so on.

[jmherbener]

Here are the official Kansas state revenue statistics:

http://budget.ks.gov/cre.htm

To find out whether revenues have been falling and if so from what source just compare an entry for 2015 with that of 2014. For example, the cumulative income tax revenue in March 2014 for fiscal year 2014 was $1.91 billion (total tax revenue was $4.13 billion) and for March 2015 was $1.84 billion (total was $4.08). Then you would have to investigate whether or not the decline was caused by a declining income base (because of the recession) or declining income tax rates (because of Brownback’s policy). Then you would need to look at the expenditure side of the budget to see if rising expenditures are pushing up the deficit as well as falling tax revenues.

[jmherbener]

Thankfully, there are several career paths available in promoting liberty. I recommend that you play to your strengths. If your comparative advantage is in scholarship and high theory, aim for a professorship. If you’re gifted in math, become an economics professor. If not, go for political science, law, literature, etc. If your comparative advantage is in writing, then become a journalist or novelist or write books about topics of interest from a libertarian perspective. If you have a heart for charity, then pioneer voluntary associations to provide aid to people in need. If you’re entrepreneurial, become the next Tom Woods or just make a pile of money and donate it to support others who advocate liberty in their writing and speaking.

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