Default Economic Theory vs Austrian Economic Theory

Which explanation is more accurate?

Default:

The default market standard is a market working perfectly and peopled by rather dull individuals who can only respond to “given” market prices, wages, and interest rates – both currently existing and ‘rationally’ expected.

 

Austrian:

The default standard for Austrians is a market currently filled with all manner of errors, both of commission and omission, but populated by creative individuals who, although each has knowledge and information only very limited and local, identify opportunities to profit by arranging for markets to work better if never “perfectly.”

Can there be anything that is perfect? Of course not. But that is what the Default camp uses in their theories and economics courses. If does not reflect reality. There is a problem of limited knowledge.

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Investment Creates Jobs

John Tamny:

 

Businesses don’t exist to create jobs. If readers doubt this they need only try to raise start-up funds with “creating jobs” listed at the top of their business plan. Lots of luck finding investors when your goal is costs, as opposed to returns.

Crucial here is that the desire for returns among investors is what indirectly leads to copious hiring. Workers enable the returns that entice those with means to delay consumption in favor of the investment without which there are no companies, jobs, and progress.

 

People need to invest first before jobs are created. Invest in start-up as above, themselves to enhance their usable skill-set, in ideas, innovations, physical structures, machines, processes, stocks, bonds.

Onward:

Up front, Lowry’s focus on wages is rooted in a surprising conservative belief that compensation has long been stagnant in the U.S. Ok, but if the latter were even remotely true then it would also be true that the U.S. would not presently be showered with imports from around the world. Stated simply, a law of economics (Say’s) embraced by conservatives disproves a popular conservative narrative of the moment. We’re only able to consume insofar as we’re able to produce first. That wages are supposedly stagnant in the U.S. is further evidence that the economic statistics followed by economists and pundits aren’t worth their attention.

Its the measurement of wages and income that needs fixing.

This one’s a keeper. Read the whole informative thing.

Elon Musk’s Achievements

Agree with Stuart Varney:

Elon Musk doesn’t give a hoot about what people think of him or say about him. He took a lot of heat for smoking marijuana on camera. He was ridiculed for his wild, middle of the night tweets. Lots of name calling because of his behavior. I think its time for a re-evaluation. I think its time to look at the man’s achievements, rather than his public image.

Like him, or not, Elon Musk is surely the prime example of a brilliant entrepreneur.

Amazon.com is not a Monopoly

A monopoly raises prices and provides mediocre service in a market with no competition. Amazon is fighting for sales, profits, and market share. It is competing against Walmart, Alibaba, and hundreds of e-commerce sites that specialize/focus on particular market segments, such as CB radios for off-road vehicles operates by small business owners.

Business Wire:

Amazon is offering a sneak peek of its plans for Black Friday and, with deals across 30 categories, there is something for everyone this holiday. Now through Black Friday, customers will find deals on items including toys, electronics, fashion, beauty, kitchen, sporting goods, and more, in addition to Amazon Devices and products from small businesses and entrepreneurs, at amazon.com/blackfriday. Customers can expect to find incredible deals across a wide selection of top holiday products throughout the duration of the “Turkey 5” – those five popular shopping days starting at midnight PT on Thanksgiving and continuing through Cyber Monday. Black Friday will feature more than 30 Deals of the Day and thousands of Lightning Deals. Customers will find new deals every day, all season long.

Discover all of the great Amazon Black Friday deals at amazon.com/blackfriday or shop anytime, anywhere with the Amazon App (to download, visit amazon.com/mobileapps from your mobile browser). Customers shopping with the Amazon App can also set Watch a Deal alerts to ensure they never miss out on a hot holiday product, and even use AR view, a new augmented reality feature, to view thousands of items in their space before they buy. Voice Shoppers can shop select Black Friday deals, starting as early as 5pm PT, Wednesday, Nov. 22 – just ask Alexa.

Obamacare was Not Designed to Fail

A conservative critique of ACA, aka Obamacare, is that it was designed to fail so Democrats could instead implement a single-payer health care “system”. Here’s a column by the respected Larry Elder.

I disagree with that view. ACA was the Democrats’ attempt at using government bureaucracy to administer health insurance and resulting health care. Democrats, following progressive ideology, do not trust the market process. Progressives believe they are smarter than the rest of us and can allocate resources better and fairer than market processes. Note also some conservatives believe this as well. People in government, whether (modern) liberal, conservative, or middle-of-the-road take simply cannot give up the power and control that government provides them. They could be in an elected or appointed capacity.

The market process consists of individuals making decisions, voluntarily interacting with one another in commercial transactions, trial-and-error, competition, choice, and experimentation. You can see from this description how some failures will occur with market processes. But it also allows for many more successes, inventions, and improvements.

If health care cannot be administered by government bureaucracy while letting some limited individual decision-making as the ACA allows, it certainly cannot be distributed by freed market processes. Its too important. Government has to completely take over.

But the Democrats have been pushing, with some Republican help, for bureaucratic administration, which consists of unelected government employees issuing rules and regulations that do not have to be implemented legislatively. Adding language in legislation gives the appropriate government agency the rule-making power.

The Consumer Financial Protection Bureau (CFPB) is one such agency. It reports into the unelected bankers at the Federal Reserve.

 

Let Democrats Make Case for GOP Tax Cuts

Huh? John Tamny starts off with a story about Kentucky Fried Chicken in Ghana:

“The food is just…When you taste it you feel good.” Those are the words of Daniel Awaitey, a 27-year old Ghanaian.  He was talking to New York Times reporters Dionne Searcey and Matt Richtel about his favorite restaurant in Accra, the capital city of Ghana.  That restaurant is Kentucky Fried Chicken (KFC).

Me: Is this what Democrat’s mean by equality:

In a perfect world every American, and certainly every American politician, would read about Daniel Awaitey.  He comes from a country that’s long been defined by equality in the sense that most have been equally poor in ways that the most destitute Americans couldn’t reasonably comprehend.

Tamny quoting Jeffery Tucker on McDonalds:

[T]he original McDonald’s was just one branch in San Bernardino, and the founders were too narrow-minded, squeamish, and lacking in vision that the situation proved ripe for a go-getting promoter like Ray Kroc to come along and franchise the idea.”

Kroc saw global possibility where McDonald’s originators saw a small business serving a tiny portion of America’s population.  Thank goodness Kroc envisioned what no one did, and better yet, acted on it.  McDonald’s didn’t attain a $100 billion market capitalization by exploiting people as much it got that way by virtue of serving the needs of a world desperate for a taste of much more than American food.

How do these quotes fit into the tax cut issue? Find out Here.

 

The Democrats “A Better Deal”

Reading through their agenda, I conclude its the same old crap. More government control, rules, and bureaucracy. And, the results will be the very results they say they are trying to fix. For example, their first issue complains about special interests and so-called the rich getting the benefits of government largess. But, any legislation or regulatory change involves the input of special interests. In fact, Democrats welcome special interests to provide expertise in writing legislation. They are the experts and that’s why they’re involved. The Democrats invite the special interests that fit their agenda to help who then tilt the legislation to their benefit. The result is more bureaucracy and more complexity in the lives of the middle class they say they are trying to help. How much record-keeping do we already have for taxes, medical care, and on and on? Well, that is the result of the very government Democrats are pushing.

How about this:

Our plan for A Better Deal starts by creating millions of good-paying, full-time jobs by directly investing in our crumbling infrastructure and prioritizing small business and entrepreneurs, instead of giving tax breaks to special interests.

How are they going to “creating millions of good-paying, full-time jobs” Well, that crumbling infrastructure is located in states that have been run by Democrats, with an occasional Republican elected such as NY, NJ, CA, IL. The fiscal problem at the state level is that government employee pensions, public education, and Medicaid have consumed their budgets, leaving little budget dollars left for infrastructure. Having the federal government spend on infrastructure relieves the state governors, legislators, and judges of being responsible for the infrastructure in their states. No real reform here.

Next, “prioritizing small business and entrepreneurs, instead of giving tax breaks to special interests.” is funny because “small business” and “entrepreneurs”, from a political perspective, are special interests. “prioritizing” means giving special treatment to special interests. Democrats just hide it from the public by burdening firms with the rules then we get ticked off at the firms for acting the way they do.

Here’s another: “We will crack down on monopolies and the concentration of economic power that has led to higher prices for consumers, workers, and small business”. The monopolies in the economy are the federal, state, and local governments. Further, firms cannot raise their prices. The prices of products and services that are rising faster then general inflation are those with heavy government involvement such as college tuition and public education.

Another problem with their approach is that all this activity interferes with the peaceful, voluntary actions of the American people interacting with each other and others across borders. That interference tilts the playing field because that is how the Democrats view everything. In Progressivism, someone must lose for someone else to win.

Next, their plan “provides new tax incentives to employers that invest in workforce training and education and make sure the rules of the economy support companies that focus on long-term growth, rather than short-term profits.” That means more paperwork, meetings, and time taken away from concentrating resources on doing the work for the customers of the firm. As well, firms have strategies for the short, medium, and long terms. They may not be completely filled out, but that is not possible because the future is unknown. The details get filled in as more information is available and more knowledge acquired. That’s why 10 or 20 years plans are nonsense.

The funny thing is, if a firm invests for the long-term, the results might pay off in government antitrust action against it, see Amazon.com. They invested for the long-term by keeping the retail prices low to build market share. But, Democrats want congressional hearings on its proposed acquisition of Whole Foods Market Inc. So the people at Amazon.com invested for the long-term and they get rewarded with congressional hearings. That makes no sense unless of course the hearings are for show and graft. Ahhh, graft. Squeeze a firm so its employees make financial contributions to the party.

And let’s not forget the mess the Democrats created in the health insurance market with Obamacare — monthly premiums higher, deductibles, higher, insurers leaving markets. So all in all, the Democrats are pulling the same stunts they always do.