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jmherbenerParticipant
Take a look at the classic work by Murray Rothbard:
And this article by Walter Block:
http://mises.org/etexts/Environfreedom.pdf
And this article by George Reisman:
jmherbenerParticipantTake a look at this monograph by Guido Huelsmann:
http://library.mises.org/books/J246rg%20Guido%20H252lsmann/Deflation%20and%20Liberty.pdf
And this article by Joe Salerno:
jmherbenerParticipantDuring my college education as an economics major and then graduate student, none of my professors, save one, ever mentioned an Austrian school economist. I knew about the Chicago school from my undergraduate days and studied under a student of Milton Friedman’s in graduate school, but never considered myself a member of the Chicago school. In microeconomics, the free-market implications of general-equilibrium models were plain enough and reinforced my philosophical attachment to liberty. Friedman was fine in this realm, but his macroeconomics was a mess. Being dissatisfied with neoclassical economics after finishing my PhD, I started to read the Austrians, first Hayek, then Mises, then Rothbard. The power of their ideas convinced me.
jmherbenerParticipantThey likely mean that theses are the two most prominent free-market schools (at least Chicago once was). But, as you point out, method is crucial. A model is a foundation of sand (as the decline of the Chicago school as a proponent of the free market illustrates) and leaves one open to the charge that one’s economic theory is just a scientific fig leaf for covering up one’s unseemly libertarian prejudice.
Liberty Magazine published a piece on the “Austro-Chicagoan Empire” in 2005:
https://mises.org/journals/liberty/Liberty_Magazine_November_2005.pdf
jmherbenerParticipantFractional-reserve banks supply credit in two ways: they intermediate the savings of their customers and they credit credit out of thin air by issuing fiduciary media, i.e., checking account balances of their customers that are not backed by a corresponding reserve of cash.
There is no “money-multiplier” for the savings of people that banks intermediate into the credit markets. The “money multiplier” refers only to fiduciary media that banks create out of thin air on the basis of their cash reserves. If the Fed provides prints more money and buys securities from banks, then the banks banks can create a multiple amount of checkable deposits on top of those addition cash reserves.
A monetary system with a central bank and fractional-reserve banks is inherently inflationary, as you say.
Take a look at Murray Rothbard’s book, the Mystery of Banking:’
http://library.mises.org/books/Murray%20N%20Rothbard/Mystery%20of%20Banking.pdf
jmherbenerParticipantThe policy proposal by the greenbackers is to abolish the Fed and turn the power of the printing press over to Congress. Here is Bob Murphy on why that’s a bad idea:
http://www.theamericanconservative.com/articles/the-follies-of-the-modern-greenbacker-movement/
jmherbenerParticipantNo apologies are necessary. If I now understand the scenario correctly to which you are responding, someone is claiming that raising the minimum wage will merely create a wealth transfer from the capitalists to the lower-skilled workers without having any effect on employment.
Even if this were true, you are correct that raising the minimum wage would still have detrimental effects on social production and therefore, middle class standards of living. The main reason is such a transfer de-capitalizes those who have demonstrated superior entrepreneurship by running successful business enterprises and capitalizes those who have not demonstrated such abilities. The entrepreneurs would have invested a larger portion of the capital transferred than the workers will invest and would have invested it more wisely. Social production suffers and standards of living fall below the levels they would have obtained. Moreover, by giving monetary incentive to workers who have not produced value commensurate with their subsidized income, the coercive transfer will draw more marginally productive workers into the subsidized areas and out of areas in which the value of what they produced was higher. And, by taking monetary incentive away from entrepreneurs who have produced value, some of them are draw into other areas in which they produce less value for consumers at large.
jmherbenerParticipantMost economists do agree that a minimum wage at a high enough level is destructive and would increase unemployment. What they disagree about is the answer to empirical questions such as “what is the magnitude of the unemployment generated by raising the minimum wage incrementally from $7.25 to $10.10 over the next two years” and policy trade-offs such as “would the gains in higher wages for some offset the losses in wages for others,”
This business week story is indicative of these issues:
So, I don’t think you’re missing anything. I think the economics profession, having sowed the wind of model building, is reaping the whirlwind of politicalization.
jmherbenerParticipantThe productivity measure computed by the BLS doesn’t refer to the marginal productivity of labor that relates to the wage rate. Here is a brief BLS explanation of its method of computation:
http://www.bls.gov/lpc/iprread1.htm
And here is the technical explanation:
http://www.bls.gov/opub/hom/homch11.htm
The BLS computation of wages and real wages is also problematic as a metric for assessing actual markets:
Here is the BLS explanation of the method:
http://www.bls.gov/news.release/realer.tn.htm
Here’s the technical details.
http://www.bls.gov/opub/hom/pdf/homch8.pdf
The short answer is that “productivity” in the chart does not refer to the productivity that relates to wages. So the alleged relationship shown in the chart is a statistical artifact. It does not show that workers are working more productively and yet not being paid more. To show that, one would have to look at a single production process to determine what the change in physical production of a unit of labor has been over some time period and then what the corresponding change has been in the wage of that labor. And then, this would need to be done for all production processes to get a sense of the what’s happening across the entire economy.
jmherbenerParticipantYour premise about what determines the level of a person’s wage is correct. The wage a person earns is based on his productivity and the value of the output he helps produce. As you say, in a market economy there is a spectrum of wages, those who have the greatest productivity in the most valuable goods earn the highest wages and those who have the smallest productivity in the least valuable goods earn the lowest wages.
What the minimum wage does, then, is criminalize the payment of wages earned by those workers with the smallest productivity in the least valuable goods. They can no longer be legally employed. This has no direct effect on wages and employment above the legal minimum. It simply criminalizes the employment of the least productive workers. The workers made legally unemployable by the minimum wage cannot compete with the employed workers because they lack the productivity to earn the higher wages commanded by the more productive workers. The jobs once done by the now unemployed workers will not exist, at least not in the manner in which they did before the minimum wage.
Of course, by forcing workers into unemployment, the output they were producing is lost and therefore, the standards of living of people decline. The burden of this decline is felt not just by the unemployed. To the extent that other workers were employed because of the demand for their goods by those now unemployed, they too might have their wages fall. They might even fall below the minimum and force them into unemployment as well.
This process of declining wages is only partially offset by rising wages in areas that now become targets of investment in capital. At least part of the investment previously made in the processes of production now abandoned because of the minimum wage will be invested in capital that will raise worker productivity sufficiently to sustain these new production processes. (A recent example is the robo-burger-flipping machine. A McDonald’s restaurant, perhaps, can have a work-force of three instead of six and serve the same number of customers.)
jmherbenerParticipantThe course is at an introductory level. It covers material in a two-semester sequence in college: Principles of Microeconomics and Principles of Macroeconomics.
jmherbenerParticipantYes, to state the principle in general: those whose buying prices rise more than their selling prices over the period of inflation lose and those whose buying prices rise less than their selling prices over a period of inflation gain.
Rothbard is simplifying the calculation by assuming the money balances of the recipients remains the same during the period in which the late buyers are waiting to spend their new money. In fact, the money balances of people would begin to change as soon as the new money is spent and that would affect who winds up being a winner or losers in the process of inflation.
Remember that Rothbard’s point is not to trace out the complete effects of inflation, but merely to show that even a proportional and instantaneous increase in everyone’s money balances would not leave the pattern of real income the same in the market after the new money is spent.
jmherbenerParticipantTake a look at Joe Salerno’s recent article on ABCT. I think it will answer your questions:
http://mises.org/journals/qjae/pdf/qjae15_1_1.pdf
Hayek’s work on the cycle can be found in his book, Prices and Production and Other Essays:
http://mises.org/books/hayekcollection.pdf
In brief, credit expansion suppresses the rate of interest below its market level. But the rate of interest is the price spread between the stages of production, i.e., it is the spread between the buying prices of inputs and the selling prices of output. As Rothbard shows in Man, Economy, and State, the lowering of the rate of interest shifts investment toward the higher stages of production and away from the lower stages. The capital structure is lengthened out. This boom is self-reversing because the people’s time preference do not support the lengthening out of the capital structure. People prefer to have resources devoted to the pattern of investment that existed before the boom, i.e., more to lower stages and less to higher stages than is brought about artificially during the boom. The bust corrects the malinvestments made in the boom.
jmherbenerParticipantForeign governments, especially the French, began to redeem dollars for gold. They could take $35 and redeem it at the Treasury for an ounce of gold and then have an asset that was worth more than $35 in world markets. Gold was flowing out of the Treasury into the hands of foreign governments during the 1960s. Foreign governments realized that the Fed had inflated the dollar money stock to the point at which redemption of the dollar at $35 an ounce was becoming untenable.
Take a look at chart 14.1 in the publication below.
http://fraser.stlouisfed.org/docs/publications/bms/1941-1970/section14.pdf
It documents that the Treasury gold stock peaked in Jan. 1958 at $22,784 million and then started to steadily decline. By Dec. 1970 it stood at $10,732 million.
Here is Jacques Rueff’s account of the collapse of Bretton Woods. Rueff was an economic adviser to French president Charles de Gaulle.
jmherbenerParticipantDuring Bretton Woods, only foreign governments and their central banks could directly redeem dollars for gold at the Treasury. Take a look at Rothbard’s chapter on Bretton Woods in his book, What Has Government Done to Our Money:
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