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jmherbener
ParticipantParticipantBoth the PowerPoint slides for each lecture and a bibliography for the course should be posted soon. That they were not posted with the launch of the course was an unfortunate oversight. Thanks for alerting us to the problem.
ParticipantThe additional profit from having a legal-privilege monopoly can be taken either in the form of additional annual net income or in the form of a one time capital gain. They are equivalent. The gain, then, accrues to the initial owner of the special resources used. All latecomers, who must buy the assets to enter the market, earn no additional profit. That is why the latecomers continue to lobby for additional legal privileges.
Take the case of the taxi medallions in NYC. If you acquired one from the city in the 1950s, its price today might be $500,000, which is the present value of the future additional revenue generated by owning the legal privilege. The original owner of the medallion can either stay in the business and get the additional annual revenue or sell out and get the capital value of the medallion. They are equivalent monetary sums. But the new entrant only earns a normal rate of return because he must pay for the medallion. It is part of his cost structure. Of course, it is also part of the (opportunity) cost structure of the original owner as well if he stays in business.
https://mises.org/wire/theres-bubble-new-york-city-taxi-medallions
ParticipantBusinessmen tend to think that additional money is necessary to fund the expenditures of a growing economy. An insufficiently increasing money stock would choke off economic growth.
Among mainstream economists, the main reason is the belief that price deflation is the cause of economic downturns. Ideally monetary policy would bring about stable money, neither price inflation nor price deflation. Since they believe that mild price inflation is not harmful, however, they advocate mild price inflation, like the Fed’s target of 2%, to avoid the possibility of the economy slipping into price deflation.
Ludwig von Mises discusses inflationism (the businessman’s view) and monetary stability (the economist’s view) in chapter 7 of his book, The theory of Money and Credit:
ParticipantYou are correct. Mises discusses this point in the Human Action citation above. The monopolist receives a capital gain on the price of his assets when investors at large recognize the monetary advantage of the monopolist’s position. Proper accounting of the higher price of assets would render a normal rate of return. The historical case often cited to illustrate this is Alcoa’s exclusive ownership of bauxite mines. Once investors at large recognized the extra profitability of such a position, they bid up Alcoa’s stock price reflecting their view of the higher asset prices of the bauxite mines owned by Alcoa.
Rothbard also discusses the “capitalization” of asset prices in chapter 4, section 4, sub-section b on Property Taxes of his book, Power and Market:
https://mises.org/library/power-and-market-government-and-economy
ParticipantHis main point was that credit expansion would finance industrialization. Yeoman farmers didn’t need cheap credit. Empirically, it seems he was correct. The credit expansion in the north went to infrastructure and manufacturing. In the south it financed capital projects on large plantations. Jefferson was more troubled by the former since it fostered urbanization, which he thought was a life of dependence, at the expense of rural life, which he thought was a life of independence.
In reporting to President Washington, Jefferson made constitutional objections to the Bank of the United States, not economic objections:
http://avalon.law.yale.edu/18th_century/bank-tj.asp
Here’s a short piece on Jefferson’s views more broadly:
ParticipantThe force of the Austrian argument is that no matter the conditions of the market, each entrepreneur behaves in exactly the same way. Therefore, the social consequences of their actions are the same. Every entrepreneur, regardless of market conditions, asks a price that maximizes the revenue from sales (this is the unit elastic point on demand for his product). Every entrepreneur, regardless of market conditions, has a cost structure that is bid up to the point of earning just the interest rate of return. If an enterprise is profitable, then outside investors will bid more intensely for its assets (including share of its stock if it’s a public company). this bids up the opportunity cost for the entrepreneur to continue to use these assets in his production. So price is never permanently above MC, when opportunity cost is considered. There are no monopoly profits.
Take a look at Murray Rothbard on monopoly in chapter 10 of Man, Economy, and State:
https://mises.org/library/man-economy-and-state-power-and-market
Ludwig von Mises makes the same point in chapter 16, section 6 of Human Action:
ParticipantThe provision concerning states admitted to the United States out of the territories is that “such state shall be admitted, by its delegates, into the Congress of the United States, on an equal footing with the original states in all respects whatever…” The text is in Art. 5 of the Northwest Ordinance:
https://www.ourdocuments.gov/doc.php?flash=true&doc=8&page=transcript
Whether or not new states could secede raises only the same issues as those for the original states.
ParticipantSince I am not a philosopher, I asked Dr. David Gordon for his response to the comment, which follows:
“If someone denies the Action Axiom, he is not saying, “No actions are purposeful” He is saying, “There are no actions.” The contradiction he falls into is that his making this statement is an action, so his making the statement shows that there is at least one action. The contradiction is not that his statement shows that there is at least one action that is purposeful, so it is false that no actions are purposeful. “Non-purposeful action” makes no sense. It is true that the contradiction in denying the Action Axiom shows only that there is at least one action, but that isn’t the way we know there is more than one action..
“The statement ‘human action is purposeful’ is a definition, where by a definition is meant an account of the essence of action, not a stipulation. In other words, that’s what action is. We know that this definition is correct by thinking about the nature of action, That is, we realize that there is such a thing as purposeful behavior.”March 11, 2019 at 8:25 am in reply to: Who took a haircut, who were the barbers, how were foreign purchases paid for? #21905ParticipantThe debts to foreigner governments were mostly paid and paid in specie, although, payments were suspended for a time and not paid in full until after the war. The bonds issued by states and the general government were sold to bondholders at large. They were mainly wealthy Americans. Much of this debt was assumed by the Federal government and the states, but to the extent that these bonds were not paid it was generally American bond holders who suffered the loss. Regular Americans suffer losses in the monetary inflation of the war financing to the extent that the government obtained goods with printed money before prices rose. So, the other beneficiaries of the war spending were those who obtained the new money early in the process. Morris made sweetheart deals, for example, with companies other than his own in war procurement spending.
It is Murray Rothbard’s thesis that the war could have been won and won more readily through guerrilla tactics instead of by a conventional army approach.
ParticipantThe case is somewhat mixed, but mainly it’s different cargo. Luxury goods were imported from England into the colonies, which commanded higher prices with lower physical volume than raw materials.
You can find discussion of this issue in the book: E.R. Johnson et al., History of Domestic and Foreign Commerce of the United States(Carnegie Institution of Washington, 1915).
Participanta. Government bureaus make estimates of aggregate demand. Conceptually, they seek to add together all monetary expenditures on final goods, which they call Gross Domestic Product.
b. Say’s Law implies that there cannot be insufficient aggregate demand. If demand in insufficient to buy all of some goods that have been produced, there must be a corresponding excess demand of other goods produced.
https://mises.org/library/says-law-markets
Moreover, any case of insufficient demand for a particular good puts in motion entrepreneurial reallocation to eliminate the unprofitable production. Facing losses, entrepreneurs reduce output production. Their demands for inputs decline, which lowers input prices, and their reduced supply of output raises output prices. Both of these changes restores profitability at a smaller output production. The resources no longer used find employ in other lines of production at their now lower prices.
c. You might consult the book of collected essays edited by Henry Hazlitt, Critics of Keynesian Economics:
ParticipantSocial benefit accrues anytime a good moves out of the hands of persons who value it less into the hands of persons who value it more. Any voluntary exchange accomplishes this social benefit. The persons who might be mutually benefited from trade between them could be aided by a middlemen who buys the good from the person who values it less and then sells it to the person who values it more. The middleman generates a social benefit by bringing the trading partners together more efficiently than they could do themselves. Speculators are middlemen between persons in the present and persons in the future.
In Hazlitt’s example of farmers, the speculators buy grain from the farmers at harvest time (which, by increasing demand for grain, pushes grain prices up benefiting the farmers as sellers) and then they store the grain (relieving the farmers from the expenses of storing it themselves) and then they sell the grain at higher prices in the future (which, by increasing supply, pushes prices down benefiting users of the grain as buyers). As long as speculators deal more efficiently with the uncertainty of future grain markets than farmers would, the speculators generate a social benefit.
ParticipantYes, the cargo volume was roughly the same, but the monetary value of the cargo shipped was lower among the colonies than between the colonies and England.
ParticipantThe subsidies were funded mainly by taxes and fees. Here’s a article on the early colonial imposition of fees and taxes:
https://www.hoover.org/research/colonial-roots-american-taxation-1607-1700
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