Austrian Economics: A Primer

Austrian Economics: A Primer by Eamonn Butler. Read it and learn.

So You Want to Get a Ph.D. in the Humanities

In Praise of Peter Thiel

For those who have read my articles in the Dallas Morning News on education, here and here, you know that I have been increasingly questioning the basic value of certain kinds of education. I value the education I received in the humanities, but I'm not so narcissistic as to believe that, therefore, everyone should have my kind and level of education. Of course, most highly educated Leftists are so narcissistic; thus, this screed against Peter Thiel. Who is Peter Thiel? Well, among other things, he's the founder of PayPal and a founding investor of Facebook. That is internet genius. More, he's a strong libertarian -- one willing to put his millions to work to create a more libertarian world. The issue in the article -- the attitude of which is no doubt more connected to Thiel's being a libertarian rather than a good, feels-shame-at-his-wealth leftist billionaire -- is the Thiel Fellowship, which "will give entrepreneurs under age 20 a cash award of $100,000 to drop out of school and pursue their business ideas." Whether expressed this way in his announcement, the Thiel Foundation's website doesn't say anything about "having" to drop out of college. But it does point out that they will help educate those who win. They will no doubt receive the kind of education that entrepreneurs really need -- which cannot in fact be achieved at a university. Invention and creativity are two things that cannot be taught at any university, by any professor. A university education can teach you skills, structures of known things, and challenge your thinking. You can participate in discovery in the sciences, of course, and it can teach you what it known so you become aware of the existence of gaps in knowledge -- two things very necessary for the sciences to advance -- but it cannot teach you how to be innovative, entrepreneurial, creative. All too often, I have seen formal education kill those very things. I have seen great painters, poets, and fiction writers become technically much better, but conceptually much worse. To remain innovative, you have to manage to retain a rebelliousness that education is often designed to crush. And if you retain it, you are likely to suffer once you graduate, since it is the conformists who get the jobs, not the rebels. Thus, I celebrate Thiel's Fellowship. It's the sort of thing that will in fact help grow our economy and, thus, improve people's lives -- something few university professors (especially the anti-growth leftist ones) are able to accomplish.

All Is Force -- The World View of the Left

The Left cannot tell the difference between voluntary exchange and the use of force. That is why they think there is no difference between slavery and working for an employer for pay. That is why they think it is valid to replace voluntary exchange with force. If it is all force anyway, it might as well be MY force. How does one combat this? If they cannot see the difference between a voluntary economic exchange and the use of force to accomplish your ends, how can you begin to have a discussion?

How the Humanities are Useful

Never mind the nonsense about economics (this crisis is of course causing questions, but increasingly they are questions about the nature of macroeconomics -- thankfully), this article on how the humanities are in fact useful (contra Fish) is fantastic. It certainly explains my obsession with rules and rule-changing. :-)

From Trivium to Triviality

I have a new article at The Pope Center: From Trivium to Triviality

Benoît B. Mandelbrot, Father of Fractal Geometry, has Died, Age 85

One of my heroes, one of the greatest scientists of all time, who will no doubt be mentioned in the same breath as Netwon and Einstein, Benoît B. Mandelbrot, has died at age 85. The Mandelbrot set is an image of infinity, and image of the finite -- of the paradoxes that lies at the heart of beauty. It is a shame that such a great mind has to pass -- but, like his Mandelbrot set, though finite in life, he will live on into infinity because of his contributions to knowledge. There are a few people who change the world to such a degree that one can recognize a time before his work, and after. Mandelobrot is one of those great people. RIP

Why I Chose to Be an Artist

Just because one can identify the chemicals and the neurological structures involved in the creation of emotions, that doesn't mean one has "reduced" everything to those structures and chemicals. Reductionism is only one side; the other is emergence. What is then interesting is how these elements and structures creates this emergent quality. But perhaps that is best understood by the arts, and not by the sciences.

To Do List

My task:

"All sciences are now under the obligation to prepare the ground for the future task of the philosopher, which is to solve the problem of value, to determine the true hierarchy of values." -- Nietzsche

My challenges:

"A subject for a great poet would be God's boredom after the seventh day of creation." -- Nietzsche.

"Art is not merely an imitation of the reality of nature, but in truth a metaphysical supplement to the reality of nature, placed alongside thereof for its conquest." -- Nietzsche

Why I am a poet: "I do not know what the spirit of a philosopher could more wish to be than a good dancer. For the dance is his ideal, also his fine art, finally also the only kind of piety he knows, his "divine service." " -- Nietzsche

"The essence of all beautiful art, all great art, is gratitude." -- Nietzsche

"For art to exist, for any sort of aesthetic activity to exist, a certain physiological precondition is indispensable: intoxication." -- Nietzsche

Not Yet -- A Poem

The caracaras circle. Surely I'm
Not facing death. I'm scarcely half through time.
They land and flush and throw their heads far back
And screech their call. What do I surely lack
That I can't move, that I'm mistaken on
The midday of my life for carrion?
Or is it I who am mistaken? Fate
Does not bring them for me, but for a mate.
I've granted meaning where none could exist.
I look around. I wonder what I've missed.

The Socialists' Favorite Mammal: Mole Rats

Often when arguing with socialists (here I am talking about self-professed socialists), I bring up the problem that socialism seems to demand of people that they act like social insects (i.e., ants and bees) rather than social mammals. This typically results in their denying that that is what they really mean. However, recently, I have run into an entirely new argument: "what about the mole rat?" Indeed, there are two species of mole rat which are considered to be "eusocial," in the same way that social insects are. (I find it interesting that once a mammalian example was found, the socialists I have argued with happily abandoned their denial about trying to make us like social insects, and have embraced practically the same model just because it's a mammalian one -- which suggests to me that I was right about their wanting to make us like social insects, with a central ruler and everyone else equally ruled by that ruler.) I am considering writing an article on the issue of the eusocial mole rat, and its (ir)relevance to evolutionary biological arguments for or against socialism. Or am I the only one getting the mole rat argument?

The Importance of Startups in Job Creation and Job Destruction

The Kauffman Foundation has a research article, The Importance of Startups in Job Creation and Job Destruction, that makes an even stronger argument than I did below regarding the importance of new products and ideas driving the economy. Specifically, the author argues that, "net job growth occurs in the U.S. economy only through startup firms." That's a pretty strong statement. If true, then, again, we have a pretty clear reason why the economy cannot be jump-started through Keynesian methods.

Economies are Driven by Supply

Peter Smith points out that, "Keynesians believe that economies are driven by demand." Let us take a few seconds to demolish this nonsense, shall we?

What was the demand for the iPod before the iPod was invented and, afterwards (as it necessarily had to be), supplied?

What was the demand for the iPhone before the iPhone was invented and supplied?

What was the demand for the internet before the internet was invented and supplied?

What was the demand for the car before the car was invented and supplied?

Hector Sabelli points out in Bios that "creation necessarily precedes destruction." Schumpeter's concept of the dynamic economy as "creative destruction" requires creation before there can be destruction. To put it another way: there has to be supply before there can be demand. Once the supply is made available, demand increated, and demand can then drive the creation of more supply.

In a recession or depression, there is widespread destruction. Creation/supply must occur for there to be demand. Therefore, Keynesian policies are going to have no real effect on the economy, as any demand will be for what is already created. Thus we will see what we are now seeing: some economic growth without a change in employment. We will see growth in already-existing companies (indeed, we see greater profits), but no creation of new companies and new products. Keynesianism is why we get such things as "jobless recoveries." It is why we have reports from experts that the economy is out of recession, while there is little evidence from the real economy that any such recovery is or has been underway. Now we know why.

Is Macroeconomics Nonsense?

In 2009, I argued that we need to completely reconceive the field of macroeconomics. Well, Peter Smith, in Quadtrant, argues that macroeconomics is outright nonsense. If you go back to my earlier posting, I'm not sure I would agree, but he nevertheless makes some pretty valid points. Insofar as macroeconomics = Keynesianism, it is, of course, utter nonsense. But there can and should be a non-Keynesian macroeconomics. I say this because, in the way I conceive of what macroeconomics should be, to argue against macroeconomics would be like arguing that there is no such thing as a cell, that there is only biochemistry. Why might Smith think this way? Well, from the perspective of a biochemical, the idea that there might in fact be a cell could sound like utter nonsense. The theory of the cell isn't what it nonsense, though -- it's the theory that any given biochemical ought to be in charge of it that's nonsense (for all the reasons Hayek gave for why controlling or even sensibly regulating an economy is at all possible).

Smith goes on to criticize GDP, which I think needs criticism. GDP hides what really happens in an economy. I have given the example (which I read or heard somewhere -- I wish I could remember where) of two countries, A and B, which each produce Good X at the rate of 1 unit a year. The difference between the two, though, is that each year A destroys each X it produces, while B accumulates X. Both have the exact same GDP, but after 5 years, A will have 1X, while B will have 5X and, thus, be wealthier (a point Smith makes with his example of the government-built library). What doesn't seem to be taken into consideration is what happens to each good once it is produced and "consumed." The true nature of wealth seems to never be considered -- or to have even been properly theorized. Which is undoubtedly why we have people arguing that we need to "redistribute the wealth" -- a task which is quite literally impossible -- when in fact what they mean is they want to "redistribute riches." There is a difference between riches and wealth. Riches can certainly be redistributed, but wealth can either be created or destroyed (but never redistributed). That difference needs to be properly theorized as well.

Conceptual Integration and Education

"Conceptual integration -- also known as vertical integration -- refers to the principle that the various disciplines within the behavioral and social sciences should make themselves mutually consistent with what is known in the natural sciences as well" (Cosmides, et al. from the Introduction of "The Adaptive Mind, 4).

And, I would add, the humanities as well.

"A conceptually integrated theory is one framed so that it is compatible with data and theory from other relevant fields" (4).

We see this in physics, chemistry and biology, where chemistry, for example, is compatible with, but not reducible to, the laws of physics. Psychology would similarly be compatible with, but not reducible to, the laws of physics, chemistry, and biology/evolution, and the social/humane sciences and the humanities compatible with, but not reducible to, the laws of physics, chemsitry, biology, and psychology.

However, psychology, the social sciences, and the humanities are not fully conceptually integrated -- except in the theories of a handful of scholars. This is damaging to the creation of knowledge in those fields, and it is damaging to students who major in those fields.

Education is overdue for renaissance and reform. Anything short of full conceptual integration of all fields of study will be a failure.