A Personal Note on Mises University

Every year, the Mises Institute holds an economics seminar called Mises University. It attracts many eager students of Austrian economics from both the United States and abroad. I happily attended this year’s seminar for the second year in a row. I originally wrote this as a letter to a friend while there and slightly amended it for publication on the Daily Anarchist.

Read my note about the experience:
https://dailyanarchist.com/2013/07/30/a-personal-note-on-mises-university/

How to Think About Magic Tricks and Economics

If you have ever seen something that defied explanation, did you think it to be something you merely couldn’t explain, or that perhaps it was actually was pure magic? Perhaps you have seen David Blaine’s street magic specials and saw something like this. Magicians gain fame and reputation by performing illusions for eager spectators who wish to be fooled. In this case, a glimpse at the unknown is a tantalizing bit to savor. When someone sees such a trick, they are baffled, but because of this they usually try to figure out how it was done.

Regular people do this with economic phenomena every so often too. For instance, laymen sometimes wonder why the owner of a business raises his prices and remains highly successful. The laymen might attribute an arbitrary reason to the phenomenon at hand without thinking about it any further. The same is done with a baffling magic trick; it’s realized that a trick was done by some sleight of hand, though usually no further thought is given to what the magician actually did. So a vague notion is attributed to how each of these things happened, and I want to encourage the reader to pursue this initial spark of investigative work as far as he or she possible can.

What I want to suggest here is that we must embrace—and take as far as possible—this desire to understand. In order to come to a correct conclusion about we observe—whether with magic tricks, social phenomena, or anything else—we must stringently focus on the logic of the situation at hand, for only then can we actually make sense of what we see.

Ludwig von Mises stresses this point, telling us that a logically consistent theory is necessary in order to understand the human story (see the work suggested at end of this article). The reason why we find things such as magic tricks so confounding is precisely because they do not mesh with the way we think the world works. We correctly tend to place logic above what we observe. Thus, most of us realize that this is not actual sorcery, but some sort of illusion. And we are right.

Take for instance the magic trick called the Ambitious Card. The ‘effect’ of the Ambitious Card is that one selected card is plainly placed in the middle of the deck only to end up on the top again. But it does not do this by magic; it is accomplished by practiced sleight of hand. We came to this conclusion because logic tells us not to believe what we see right off the bat, but to match what we see with our intuitive logical insight. Here, then, is where we begin to figure it out. We must ask ourselves: What means (the magician’s ‘method’) can be used to achieve the end (the effect of the trick) sought? From this point we logically move forward until we have sufficiently explained it.

I’ll save you the trouble of figuring it out: the method for the trick (and I apologize for breaking the magician’s code) is usually that the selected card is actually the second card from the top. The magician picks up both cards and shows the face of the bottom card in what is called a double lift. He turns them back over, so that when he takes the top card—what we think is the selected card—, and places it in the middle of the deck, the selected card is still on top. Thus, when the magician snaps his fingers and says the magic words, the selected card “magically rises” to the top. However, this is only one way the magician might accomplish his goal. (I don’t want to spoil all the fun.) Should he choose this effect, many more methods could be used to achieve it. The magician’s choice of such methods depends on the time, the place, and the social environment in which the magician finds himself, just like any other person who decides to undertake a particular action. If you change the terms ‘method’ and ‘effect’ to the more general terms ‘means’ and ‘ends’, you will be at the starting point for understanding economics.

If we can figure out how such a feat as the Ambitious Card was accomplished, it no longer seems miraculous to us. The same goes for seemingly unexplainable economic events.  Now, while knowing the method of magic tricks might take the fun out of the whole thing, this is not the case with economic theory. Rather, theory puts the magic into what happens around us, because it enables us to give a true explanation of what occurs in reality. Indeed, figuring out the method to this trick—by applying logic to the situation—is similar to how the economist figures out what happens in society using economic “theory”. 

To go back to our earlier example, using consistent, logical theory, we can understand why we see a businessman raising the price a thing that he sells. I’ll save you the trouble of figuring that out, too. First, we must consider the person who is undertaking that action, namely the owner. Here we realize that, as an entrepreneur and as a human being, he prefers to have more than to have less. This fact is true for every person. (Note too that the want for things does not always mean money). Thus, it must also apply to the buyer of the good. The seller prefers to gain the most amount of money that he can per item sold, while the buyer wants to spend the least amount of money per item bought. The amount that the seller prefers to charge for each of his goods is shown on the ‘supply curve’ below. At the same time, the buyer will purchase a certain amount of the good at a given price, shown on the ‘demand curve’. Only at a price on which each person agrees will an exchange be made. The point at which the businessman can reach the maximum number of agreeable exchanges is called the ‘equilibrium point’. To give a visual example of this, each curve in the graph below shows the respective preference of the businessman and the consumer, as well as the equilibrium point.

Also consider what happens if the seller—who wishes to gain as much profit as possible—sets his price elsewhere. If he went above the equilibrium price, buyers prefer not to buy as much as they would have otherwise, thus the seller does not gain as much as he could have had his price been lower, so he lowers his price. And if he went below equilibrium, buyers prefer to buy more than they would have before; the seller realizes that he could make more money per item if he raises his price, so he does so. (This is precisely why the point at which the seller will make the most money is called the equilibrium point, for every deviation from it will eventually bring it back to this point.) This is the built-in mechanism in the economy called the ‘price system’.

(And it should be mentioned while we’re at it that the agreed upon price does not render each good’s “value” equal to one another, as you might be led to believe. In fact, in an exchange, each person must value what he is receiving more than what he is trading away, otherwise the exchange cannot take place. In this case, the buyer values the good he is receiving more than the amount of money that he is trading for it, while the seller values the money he is receiving more than the good he is trading away. Thus, each item’s value relative to each person is necessarily different and in no way can the two items be considered equal in value to one another.)

Now we are in a position to answer the question at hand: Why has the seller raised his prices and still remains successful? We have just seen that the seller will not raise his prices above the equilibrium point arbitrarily, else he will lose profit. Thus, we are left with the necessary conclusion that he has done so because his buyers are willing to pay more for his goods. So the seller’s raise in price is no longer a mystery to us. Using logic, it can be explained, just like a magic trick.

The proper method of economics is to form a consistent body of knowledge (theory) and then apply it to reality. Indeed, this is the only way to go about things. Some schools of thought wish to explain reality using history as a guide. But this will lead us astray and give us mistaken explanations. For example, if we tried to explain reality after seeing a magic trick, we might well come to the conclusion that some events in the world are simply miraculous and defy all explanation. This might be well and good if we want to settle there, but operating in this fashion would not get us anywhere in the pursuit of truth. So what we must do is use the tools of logic—which come prior to observation—to give an accurate account of why things happen the way they do. The entire edifice of economics is built with this purpose in mind.  Indeed, this way of reasoning is the only way that we could properly explain the Ambitious Card, and it is the only way that we can properly explain economic phenomena.

Try this as mental exercise: Whenever you see something that baffles you and you think that there must be a logical explanation for it, follow this thought process as far as you can. If you let logic assemble the pieces to reality—so that you come to one precise conclusion—you will not be led astray. Economic theory, far from being a “dismal science”, does explain a lot about human reality. It always helps to have a head start, so pick up the following works in order to get one:

Economics in One Lesson by Henry Hazlitt

Chapter 1 of Epistemological Problems of Economics by Ludwig von Mises

Economic Science and the Austrian Method by Hans-Hermann Hoppe

Man, Economy, and State by Murray Rothbard

As a bonus, this work uses the method of economics to explain social phenomena outside of economics proper: Democracy: The God That Failed by Hans-Hermann Hoppe

This article originally appeared in The Libertarian.

End the Fed?

Directly ending the Federal Reserve System through legislation is the wrong goal, both morally and practically, for those who oppose the Fed. Rather, we should be concerned with abolishing the legal tender laws that largely force us to use Federal Reserve notes. If this is achieved, the Fed will collapse under its own weight, for the Fed note could not hope to stand up to competition with sounder currencies in the free market.

Read the rest here: http://dailyanarchist.com/2013/03/24/end-the-fed/

The Euphemism of Libertarianism

by Christopher Zimny

The libertarian world can be summed up, ultimately, as freedom from crime. Based on the principles of private property and non-aggression, many anarcho-capitalist writers propound and rework “ideal” visions of a “libertarian world”.
 
What must never be admitted into such a world by writers of this stripe is a coercive government, even when it is admitted that force will nevertheless exist such a world But there seems to be something slightly amiss in this idea, even perhaps at a first glance. Many libertarian writers theorize a world in which no force is used by individuals who make up a State, but wherein force is used by still other individuals, such as petty thieves or gun-wielding extortionists—aggression which is usually admitted as impossible to fully eradicate.

But it must be realized that insofar as one admits the existence of unwarranted force into such a society—and it would indeed be absurd to pretend that it would be otherwise—one must also admit that compulsory states exist in it too.

Read this rest on Daily Anarchist: http://dailyanarchist.com/2013/03/17/the-euphemism-of-libertarianism/

Their War: A Minority Interest

 As the nation reflects today on those lost in battle, we must not forget to seek out the active, interested minorities in society who chose to put those men into harm's way, and why.


by Christopher Zimny

Had he and I but met
By some old ancient inn,
We should have set us down to wet
Right many a nipperkin!

But ranged as infantry,
And staring face to face,
I shot at him as he at me,
And killed him in his place.

—Thomas Hardy, "The Man He Killed"

The concept of war is a rather straightforward one for most people. It is usually divided into a plethora of arguments on the "legitimacy" of any given war by those using cool rationale, and emotional anti-war sentiment from those against it. Any of these are seemingly acceptable points of view for discussion; it certainly seems reasonable enough to debate whether the Hussein or Gaddafi regime should go, for instance. Counter that with the most recent body bag count and raw video of war, asking if involvement is worth it. Draw up reasons why the enemy fights, then put forward arguments to dissuade people from this myth. Point out why we are fighting to begin with and argue about the merits of our mission. Each side's purpose in debating about war, of course, is to persuade or dissuade in each case. This always is done with remarkable candor, though it is done under the mousetrap of the State.

In the course of modern events, there is a whole series of issues to be debated about the conflicts in the Middle East alone, let alone fighting with specialized forces in other parts of the world. A war fought in a "conventional" manner (i.e. one country's army against another) provides a stark picture of what is needed to gain popular acceptance for a war. When a country fights in a guerrilla war, convincing the citizens of the country to support the war effort or participate in it might be tough going, but it can be done. A mission like the one (many, perhaps) in Afghanistan might be hard to follow. It is much easier when one can recognize the enemy—that is to say, when "the enemy" is in a place that could be recognized on a map. The foe has a face that can be drawn on propaganda posters or socially cast out. With a little effort, the side opposite of one's own can easily be transformed into the true and just enemy, needed to be fought.

Note that engineering minds for war is a peculiar task. Once the seeds are put into place, the poison becomes as a virus does, and a war between people who would not have otherwise harbored any unfriendly spirit toward one another virtually manufactures itself. Use the present day example of North Korea. The situation is steeped obviously with the porcine dictatorship, but the situation is useful as the state exhibits the same behavior has any other, though to a more terrible degree. The government and people of and under the Democratic People's Republic of Korea are not at war today, nor do they have the means on their own to have any kind of prolonged conflict. But that aside, if the "Great Successor" wished for war with Japan, South Korea, or the U.S., the reputedly credulous people between the border of China and the 38^th Parallel would not hesitate to spit in the faces of "their enemy." Why is this? North Korean children are taught in school about the U.S. imperialist bastards and Japanese "occupiers" who the Koreans tore loose from prior to the Korean War. Then couple these doctrines with the divine status and personality cults of DPRK leaders. For over sixty years, North Koreans have been fed the same nauseating notions, thus they are ready to pounce when the order comes.

We see that when the same diluted food is fed to us on our own plates in America, we simply call it something different and pretend that it is not the same thing. All in all, the two have some different subtleties, but we can call a spade a spade when the drums of war begin to beat. The same hype is offered by the government—that "the enemy" hates "us" for "our freedoms", they are crazed by their religion, their political ideology, that they are willing to stop at literally nothing to destroy us as a whole civilization, or that any given scenario is a "threat to national security" and that one has a duty to "protect his neighbor" in these perilous times.

In the spirit of Memorial Day, along these lines, your author feels the need to point out the most insidious, in my opinion, of all tricks used by the government: praise of military veterans of all kinds. This sentiment is an obviously admirable one, but it is contorted for the benefit of those who started the war to help keep support for the war. (One can see people respecting Presidents for honoring the fallen, forgetting that the Presidents themselves sent those men to their deaths in the first place.) The aim of the State is to have its subjects focused on the task it has set for them. A collectivized mindset is put into place, under a guise of "patriotism" or whatever the government pulls out of its hat: wayward ideas are "brought to reason" or denounced soon without any encouragement from the state apparatus itself.

Fighting "for the good of the country" is the classic state paradigm, or in some parts of the world and at different times, on behalf of the Emperor or God. The common denominator in any war is a given set of governments which have it out for each other. That is the point needed to be most stressed. Stripped bare, this is what a war is: nothing but two sets of people in positions of power who want to come to blows with one another. The rest is predicated on convincing everyone else to join them (or at least tacit acceptance) in the cause or in the fight. (This is conceptually easy to visualize. For instance, think of how much vitriol you do not feel for a shop owner in Tehran, and vice versa, then imagine the nature of what it would take for you to fight one another.) To use the words of Murray Rothbard in his great essay, "Anatomy of the State": "The first task of the State and its intellectuals was to convince the people of [any given state] that the attack was really upon them and not simply upon the ruling caste. In this way, a war between rulers was converted into a war between peoples. . ."

Of course, convincing the citizenry can take many shapes: force is one of them. Conscription may be the clearest example of this, in practice. A doubter of the doctrine so presented is invited to refuse to present themselves when called for the draft to see what the consequences are. A state's conscription program is inherently a system which takes the unwilling citizens of a country to fights its battles—else the draftee would have volunteered. In short, it is evidently their war—a war by those in government—not one of "the people".

So on Memorial Day, when those fallen soldiers, Marines, airmen, and seamen are remembered for their service, do them the honor of contemplating why they are not sitting next to you having a conversation, or sharing the meal you're having tonight. My humble thanks go to those who joined and fought under the impression that they were serving to protect their families and the citizens of America (of which I am part) from aggressors. This writer only asks that you consider what their sacrifice means, along with who placed them, and for what reason were they put, in such a perilous situation.

This article was originally published on Memorial Day by The Libertarian Review.

The Best Advice The Beatles Ever Gave

Before the psychedelia shown in the later albums of The Beatles, a track on Rubber Soul gives advice that has always been timely, but never more needed than today. The following speech, given in competition, takes that idea and expands on it.

by Christopher Zimny

“Although your mind’s opaque
Try thinking more if just
For your own sake
Do what you want to do
And go where you’re going to
Think for yourself
‘Cause I won’t be there with you."

These are the lyrics to the famous Beatles song, “Think For Yourself” from their celebrated album Rubber Soul. It was written by the most talented songwriter of the group—as any true Beatles fan would know: George Harrison.

As it turns out, independent thought, or thinking for yourself, surprisingly today isn’t something that is held to a very high standard. If today, one looked at society as a whole, one will likely find that independent thought is in fact absolutely, pricelessly rare. In her 2009 article “Is Independent Thought Extinct in America?”, social commentator Leslie Weise concludes that soon, “we will live in a country where independent thought will be a thing of the past.” So let us examine three different areas to determine why independent thought is in danger, and realize how important thinking for ourselves really is. First, we’ll look at how we seem to so easily adopt the views of others; second, how individual and independent thought is so vital for our progress and third, ways to break away from society’s grip and learn to think for ourselves. In the end, we will see that “Think For Yourself” is not just another one of the Beatles’ top hits, but in fact has a message that we should all consider.

“In the moment of our creation we receive the stamp of our individuality; and much of life is spent rubbing off or defacing the impression.” said Augustus and Julius Hare in their book Guesses at Truth, by Two Brothers. But why do we continue to erode that impression? Doesn’t it seem like a good thing to keep? Authors Bill Strauss and Neil Howe, in their books Generations and Millennials Rising, explain that this generation’s team oriented activities and constant encouragement to accomplish things together, leads teens to develop a sort of sameness mentality which will be lasting throughout life. They point out many generational trends that show us that we will strive to be standardized, and for the most part we’ll do things and think the same thoughts as everyone else.

When I read those books, I thought of the short story Harrison Bergeron. In the story, everyone is the same. There is no creativity, there aren’t any new thoughts, and there is no such thing as above average. Everyone is literally equal. No, Kurt Vonnegut, was not describing Soviet Russia where car drive you, he was describing the United States in the relatively near future. And if we don’t stay on our toes, we just may arrive in our future in just that fashion.

Well-known developmental psychologist William Perry explains that as we mature to adulthood, we go through different stages in determining our own thoughts and opinions. As young people, many of us see the world as if there’s only one right answer, and it’s always the adult’s job the authority figure to give us that answer. Unfortunately though, many adults never really grow out of this stage.  Instead of first looking to their parents or teachers like they did when they were young for answers, adults immediately look up at a television or down at a newspaper, without thinking about a given situation for themselves first.

But when we rely solely on others to give us all of the information, we lose the ability to think for ourselves. And it is at this time that we can take George Harrison’s timeless advice.Thinking for ourselves is imperative for both our progress as individuals and for mankind as a whole.

Independent thought, as far as the individual is concerned, is vital for learning anything in life successfully. As you might think, it all starts with education; but Howard Gardner, developmental psychologist and professor of Cognition at Harvard University, notes that simply studying and memorizing material doesn’t quite do the trick. He describes how even when students do well at problems like those that are found in the textbook, they do not truly understand what they’ve learned. His point is this: that we have to actually engage ourselves, interact, and explore what we’re learning in order to gain a full understanding of it. Simply reading it or seeing it on television doesn’t do it. Independent thought is crucial, even in these beginning stages—just as much as it will be fifty years down the road—in the development of an individual’s mind.

And how it benefits us collectively, well that’s easy to see. The best minds mankind has ever produced are those of independent thinkers: Thomas Edison with the light bulb is a… shining example. Alexander Graham Bell might call in second with his telephone. John Lennon, at least I would imagine, would in third with his vast array of songs. These people truly did change the world, and they did it all with their own minds. Galileo Galilee was the first to prove that the Earth was not the center of the universe… and his radical claims landed him on house arrest for the rest of his life… but don’t let that deter you. If Galileo would have given in to the status quo, thought like everyone else and adopted conventional wisdom, maybe we would still be at the center of the universe and centuries of gaining knowledge of the cosmos may have never even happened.

“In all affairs it’s a healthy thing now and then to hang a question mark on the things you have long taken for granted,” said famous British philosopher and social critic, Bertrand Russell. That’s a small bit of advice for those wanting to think independently. I think we could agree, for instance, that if we usually eat at the same restaurants, always eat the same food at those same restaurants, and interact with the same people while eating the same food at those same restaurants… it’s time for a change. Instead of going through the regular routine (whatever that may be), we might read a different type of book, meet new people, take a road trip. Be a little spontaneous.  Exploring different ways of thinking and doing different things will help us to think for ourselves, because more divers experiences that we have, the better off we will be.

Tom O’Leary, in his article “5 Ways to Develop Independent Thought,” recommends that instead of immediately turning on the television or running to Google, we try thinking for ourselves first. We try to figure out a situation on our own, without the input of anyone else—at least initially. Further, if you disagree with something, go and throw yourself into the other world for a while. Putting what you hear through this kind of test is certainly the prizewinning way to think independently. Try to really understand the other point of view; whether it’s reading a controversial book or truly listening to the words of someone you may not agree with. In the end, if our views have change somewhat, good. If they haven’t, we can now say that we’ve really looked at both sides and can draw conclusions that are actually ours, based on our own knowledge and experience.

Christopher Hitchens, in his Letters to a Young Contrarian, notes that, “The essence of an independent mind is not what it thinks, but how it thinks.” Thinking for yourself is certainly important, and the results are worth it. The sad part is, although independent thought is by no means hidden, it’s also not fully realized by a vast number of people. So that’s what I ask of you: spread the word of independent thought; encourage it in your parents and classmates, or your friends and coworkers. Remember to think for yourself, “’cause I won’t be there with you.” Don’t forget to question everything. Above all, remember the words of Friedrich Nietzsche, the famous 19th-century German philosopher, who said, “The individual has always had to struggle to keep from being overwhelmed by the tribe. But no price [—no price—] is too high to pay for the privilege of owning yourself.”

The article was originally published by The Libertarian Review.

A Queer Wedding

Evidenced every so often—most recently with President Obama's support of homosexual marriage—the hardly different sets of major ideologies still give each other enough rub to create an intense amount of friction. Your author offers a libertarian compromise for the popular issue of the day.

by Christopher Zimny

"There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are 'just' because the law makes them so." — Frederic Bastiat, The Law

"Isn’t that the ultimate homeland security, standing up and defending marriage?" — Richard John Santorum

Apparently, for Rick Santorum, the various laws of the land which "preserve" traditional marriage between one man and one woman are so sacred that if they were changed, they would violate the entire "sanctity" of marriage as we know it. During the heat of the primaries before he suddenly suspended his campaign, he served as the latest flair in a long list of defenders of the "traditional values" staple of the Grand Old Party.

Whatever the phrase "traditional values" really means might be subjective (as culture has shifted significantly over the years), but maybe it is not; maybe it does have some kind of objective meaning. I don't call myself an expert in these matters.

Clear on the other side, as it were, of the political spectrum are the challengers of these values. Social liberals claim that marriage may as well be between a man and a man (or the same of two females); after all, what difference does it make? They make the argument that in respect to government recognition of marriage and the benefits that flower from this which married couples enjoy, same-sex couples who earnestly love each other should also be put under such laws. Perhaps this is a fair point, but insofar as it is up to the government to sort this out, one should not consult me.

With all the fervent attack on and defense of traditional values—and the laws which codify them—as oppose to liberal ones, one might rightly suspect that, in fact, the reverse is true: it is instead the laws that give meaning to the values, instead of the other way about.

One might picture a social conservative responding to this theory by saying it is the value of marriage itself that will be threatened with the outcome of these debates (and, they may as well add, with the debates themselves). In fact, this is what one hears time and time again from the religious right. But threatened with what, exactly? If the laws are changed, your author contends that nothing of grave importance will change with them.

Take this idea for instance, Robert Murphy uses it to show how consumer demand ultimately shapes the consumer good: If Webster defined the word ‘up’ as ‘moving toward the ground,’ people would see right through it and the dictionary company would go out of business. Similarly, in the business of marriage, if the Obama administration (or indeed all the social liberals in the world) espoused that homosexual marriage is indeed ‘marriage’, this would not redefine ‘marriage’ as such, and it should not affect, in truth, what the term or what the ceremony really means to those who hold it to a certain traditional standard. In short, even if the doctrine were to be made official law, the meaning of marriage would not change.

Proponents of same-sex marriage usually have arguments along these lines. (For example, "If gay people get married how does that affect your marriage?") The conservative response goes something along the lines of the "degeneration of society" (as if a change in the law itself is the only thing stopping society from changing). It is maintained that letting homosexuals in on the marriage scene (i.e. government benefits, tax breaks, the works) would muddle up the heterosexual monopoly on the practice.

But the law itself is our concern. Instead of this sophomoric bickering between the parties, the libertarian proposal gives a way out for both sides: removal of government from the practice of marriage. Do away with the official benefits and all of that nonsense and let the institution marriage be taken over by the Churches or whatever other place of meaning; get it out of City Hall. The fact that the state has its hands in the business has led to the erroneous debate that was mentioned above. Our compromise is to privatize the institution of marriage. This would be the only idea in practice in which homosexuals would be on equal footing with their neighbors. As we have seen, it should not affect the God-fearing conservative’s idea of marriage (if it does, there might some unseen problem in their own lives).

It might remain a mystery on how to get the two sides to actually agree to such a proposal without some kind of strong emotional resistance, but if these fiercely fighting foes could come together on this long-standing issue, it might ironically be the queerest wedding in our society to date.

This article was originally published by The Libertarian Review.