Sustainability: An Assault on Economics – Tyler A. Watts

One of my key areas of interest is how to deliver sustainable, stable and inclusive prosperity. This is why I dedicate so much time to economics.

However, the word “sustainable” may not convey the same thing to everyone: via Sustainability: An Assault on Economics – Tyler A. Watts – Mises Institute:

The sustainability movement is an assault on economics. It claims at its core that prices don’t operate through time to direct consumption and production decisions in a sustainable way. A lesson in basic economics should suffice to defend against the sustainists’ attack.

Prices arise in the market economy as a concomitant of mutually beneficial exchange. People want things that improve their lives — we call this value. Some valuable things are more scarce than others; take the classic case of water and diamonds. In absolute terms, water is more valuable than diamonds: you don’t need diamonds to live.

Yet water is, pound for pound, far cheaper. Why? Although it’s valuable, it is also relatively abundant; in many parts of the world, it literally does fall from the sky. The price of any good reflects this combination of value and scarcity. We’re willing to pay more for valuable things as they become relatively scarce (e.g., oil); and we needn’t pay as much for valuable things as they become more abundant (e.g., grain).

Likewise, as scarce things lose their value, people are no longer willing to pay for them (e.g., typewriters), and people must pay more for scarce things that suddenly become sought after (e.g., vintage Michael Jackson records). The awesome thing about prices is that they seamlessly convey this combination of facts about an item’s value (demand) and it’s scarcity (supply). Prices, of course, are subject to change — prices of certain goods fluctuate every day. But this is a good thing; discernable trends in prices over time indicate relative changes in the “market fundamentals” of supply and demand.

Read more.

I am put in mind of this from philosopher Karl Popper:

Do not allow your dreams of a beautiful world to lure you away from the claims of men who suffer here and now. Our fellow men have a claim to our help; no generation must be sacrificed for the sake of future generations, for the sake of an ideal of happiness that may never be realised.

The American Museum in Britain, Bath

This past weekend, we visited the American Museum in Britain. It was thought-provoking: America was of course conceived in liberty but American history, like every nation’s, is filled with examples of man’s inhumanity to man.

The exhibition began with a wall of quotations from significant figures. These particularly stood out:

William Penn (1644-1718):

Those people who will not be governed by God will be ruled by tyrants.

Albert Einstein1:

Never do anything against conscience even if the state demands it.

Apache Chief Geronimo (1829-1909):

Once I moved about like the wind. Now I surrender to you and that is all.

Thus, beside the lives of pioneers, the museum introduced the history of native Americans and of African-American slaves, terrible experiences which no person should ever know. I was reminded of Karl Popper’s lines in The Open Society and its Enemies:

There is no history of mankind, there is only an indefinite number of histories of all kinds of aspects of human life. And one of these is the history of political power. This is elevated into the history of the world. But this, I hold, is an offence against every decent conception of mankind. It is hardly better than to treat the history of embezzlement or of robbery or of poisoning as the history of mankind. For the history of power politics is nothing but the history of international crime and mass murder (including it is true, some of the attempts to suppress them). This history is taught in schools, and some of the greatest criminals are extolled as heroes.

Coincidentally, I am just finishing John O’Farrell’s An Utterly Impartial History of Britain: (or 2000 Years of Upper Class Idiots in Charge). Perhaps spotting the gathering dust on my scholarly history books, Beth gave me this book as a starting point. It is at least an entertaining read, but the author’s endless cynicism, though supported by events, combined with his wearisome ignorance of sound economics, produces a tiresome read. Compare O’Farrell’s history with that of, say, This Little Britain: How One Small Country Changed the Modern World or The Welfare State We’re in and we quickly find that history, as the record of acting people, deserves to be understood through sound theories of human action.

Enter one of my preferred writers — Ludwig von Mises — with Theory and History (online). From the back cover:

Theory and History deals with the theory of economics, i.e., the study of purposive human action, and with history, the record of the past actions of individuals. All actions are determined by ideas. Thoughts and ideas are “real things,” Mises writes. “Although intangible and immaterial, they are factors in bringing about changes in the realm of tangible and material things.” Rather than rejecting the study of historical change as a “useless pastime,” Mises considers it of the utmost practical importance. “History looks backward into the past, but the lesson it teaches concerns things to come.” History opens the mind to an understanding of human nature, increases wisdom, and distinguishes civilized man from the barbarian. Moreover, historical knowledge is of the utmost importance in helping to anticipate and plan for the future.

A major part of this book is a critique of Karl Marx and his fallacious view of theory and history. Marx attributes the creation of tools and machines, as well as the economic structure of society, to undefined “material productive forces”; Mises rejects this materialistic view and points out that tools and machines are actually created by individuals acting on the basis of non-materialistic ideas. Marx predicts that society is moving towards socialism “with the inexorability of a law of nature.” Mises responds: “The outstanding fact about history is that it is a succession of events that nobody anticipated before they ocurred.”

The book is a tour de force of the ideas that have shaped human history and their refutations. In particular, bearing in mind O’Farrell’s sneering treatment of the free market:

The history of the nineteenth and twentieth centuries has discredited the hopes and the prognostications of the philosophers of the Enlightenment. The peoples did not proceed on the road toward freedom, constitutional government, civil rights, free trade, peace, and good will among nations. Instead the trend is toward totalitarianism, toward socialism. And once more there are people who assert that this trend is the ultimate phase of history and that it will never give way to another trend.

And, closing the book, on attempts at predicting the future:

The fallacy inherent in predicting the course of history is that the prophets assume no ideas will ever possess the minds of men but those they themselves already know of. Hegel, Comte, and Marx, to name only the most popular of these soothsayers, never doubted their own omniscience. Each was fully convinced that he was the man whom the mysterious powers providently directing all human affairs had elected to consummate the evolution of historical change. Henceforth nothing of importance could ever happen. There was no longer any need for people to think. Only one task was left to coming generations-to arrange all things according to the precepts devised by the messenger of Providence. In this regard there was no difference between Mohammed and Marx, between the inquisitors and Auguste Comte.

Up to now in the West none of the apostles of stabilization and petrification has succeeded in wiping out the individual’s innate disposition to think and to apply to all problems the yardstick of reason. This alone, and no more, history and philosophy can assert in dealing with doctrines that claim to know exactly what the future has in store for mankind.

Museums and historians must remind us of the wrongs of the past, and do so through the histories of many aspects of human life, even political power. Let us be guided by them to a better and more open future in which people can be free of all kinds of oppression.

Above all, let us use our reason to reflect on our present circumstances and conclude with Karl Popper that,

even our greatest troubles spring from something that is as admirable and sound as it is dangerous — from our impatience to better the lot of our fellows.

The idea whose time has come, the idea which can carry us forward — from difficulties created by people who wished to better the lot of their fellows, by people who wish to better the lot of future generations — is liberty under the rule of law.

  1. Also, “If one purges the Judaism of the Prophets and Christianity as Jesus Christ taught it of all subsequent additions, especially those of the priests, one is left with a teaching which is capable of curing all the social ills of humanity. It is the duty of every man of good will to strive steadfastly in his own little world to make this teaching of pure humanity a living force, so far as he can. If he makes an honest attempt in this direction without being crushed and trampled under foot by his contemporaries, he may consider himself and the community to which he belongs lucky.” []

“If men were like ants”

From Rothbard’s “Freedom, Inequality, Primitivism, and the Division of Labor”:

If men were like ants, there would be no interest in human freedom. If individual men, like ants, were uniform, interchangeable, devoid of specific personality traits of their own, then who would care whether they were free or not? Who, indeed, would care if they lived or died? The glory of the human race is the uniqueness of each individual, the fact that every person, though similar in many ways to others, possesses a completely individuated personality of his own.

I recommend the full article:

It is the intense egalitarian drive of the New Left that accounts, furthermore, for its curious theory of education — a theory that has made such an enormous impact on the contemporary student movement in American universities in recent years. The theory holds that, in contrast to “old-fashioned” concepts of education, the teacher knows no more than any of his students. All, then, are “equal” in condition; one is no better in any sense than any other. Since only an imbecile would actually proclaim that the student knows as much about the content of any given discipline as his professor, this claim of equality is sustained by arguing for the abolition of content in the classroom. This content, asserts the New Left, is “irrelevant” to the student and hence not a proper part of the educational process. The only proper subject for the classroom is not a body of truths, not assigned readings or topics, but open-ended, free-floating participatory discussion of the student’s feelings, since only his feelings are truly “relevant” to the student. And since the lecture method implies, of course, that the lecturing professor knows more than the students to whom he imparts knowledge, the lecture too must go. Such is the caricature of “education” propounded by the New Left.

Mises.org: Financial Crisis and Recession

Via mises.org, from an article by the brilliant Jesús Huerta de Soto:

The artificial expansion of credit and money is never more than a short-term solution, and often not even that. In fact, today there is no doubt about the recessionary consequence that the monetary shock always has in the long run: newly created loans (of money citizens have not first saved) immediately provide entrepreneurs with purchasing power they use in overly ambitious investment projects (in recent years, especially in the building sector and real-estate development). In other words, entrepreneurs act as if citizens had increased their saving, when they have not actually done so.

… and the consequences of this misdirected investment are inevitable. Yet these Austrian-school economists were not the only Jeremiahs.

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Winston Churchill, Tony Benn and New Labour government

Churchill on socialism:

There can be no doubt that socialism is inseparably interwoven with totalitarianism and the abject worship of the state. … A free Parliament is odious to the socialist doctrinaire.

Benn on New Labour in power:

In short parliamentary democracy and cabinet government have been quietly abandoned in favour of a King and his courtiers, sustained by ministers and MPs who are expected to fall into line or get the chop, almost as if we have a President without even a House of Representatives to keep him in check.

Pitt the Younger, Gladstone and Disraeli

(Bumped up from 9 May 08, as I found it while reflecting on Britain today.)

On the basis that those who are not familiar with history are condemned to repeat it, I have begun to study Pitt, Gladstone and Disraeli. Here are some quotations, which seem apt in the present circumstances. I will let them stand for themselves.

Pitt:

“Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.” Speech to Parliament 1783

“I return you many thanks for the honour you have done me; but Europe is not be saved by any single man. England has saved herself by her exertions, and will, I trust, save Europe by her example.” (reply, at the Guildhall, 1805, in response to the Lord Mayor toasting him as the ‘Saviour of Europe’. From: Ellis & Treasure Britain’s Prime Ministers (2005), p.80)

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Boris the butterfly?

Matthew Parris, writing in The Spectator of Boris Johnson’s recent transformation, suggests he should read Tennyson:

Today I saw the dragon-fly
Come from the wells where he did lie.
An inner impulse rent the veil
Of his old husk: from head to tail
Came out clear plates of sapphire mail.
He dried his wings: like gauze they grew;
Thro’ crofts and pastures wet with dew
A living flash of light he flew.

Dare to dream of a charming, charismatic London mayor showing the way to lift the state off people’s backs across the nation.

C S Lewis’ moral busybodies

Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience. — C. S. Lewis

Merry Christmas!