Thursday, April 09, 2009

More on Austrians

BG Prior made a number of comments on my Austrian Economics and RFID

A few comments by me.

I don't see why the imprudent are more deserving of our intervention than the prudent?

I don't think Capitalism rewards the prudent and imprudent, it rewards the lucky and punishes the unlucky.

As I have said elsewhere, I am on the side of the "runts".

You're proposing the replacement of markets by computerised economic planning, aren't you?

I am suggesting that this is already happening, that is its taking place in the private sector just as much as the public sector. In fact, it's being pushed by private companies who as institutions - unlike banks - have no intrinsic desire to see "free markets." While I have some real reservations about privacy, I don't thing this is a bad thing.

Austrians are betting that, on the whole, (a) he will guess what will increase his utility more often, more accurately than would a government-agent or computer making the choices for him, and (b) that even if he were so useless that an agent could make better choices for him, he would value his freedom sufficiently to prefer to make his own mistakes than have them made for him.

This may or may not be true. It's a metaphysical rather than a scientific statement.


Personally I think markets are destructive of happiness and the environment. They tread on families and create false ideas about status and wealth.

Once the world can been organized in such a way - by IT if necessary - that everyone is fed, clothed, housed, given medical treatment, and access to education in a sewage-free sustainable world ecology. If all that can happen, I am then quite prepared to let some people choose between Prada and Versace handbags.

Until them, I think a well planned economy will produced the shared wealth better.


bgprior said...

"I don't think Capitalism rewards the prudent and imprudent, it rewards the lucky and punishes the unlucky."

A bit of both, don't you think? Certainly luck plays a big part in whether you will be rich or poor. You could be born into money, you could win the lottery, you could decide to invest in something that does well for reasons you never anticipated.

But it's not just about the hand you are dealt, but what you do with it. There are plenty of examples of rich idiots who have frittered away their inheritance, gamblers who blew their winnings on ephemera, and businessmen who threw their money away on vanity projects. And conversely, people who started with little and worked their way up, many of them against impediments and adversity.

To suggest that judgment has nothing to do with it is an insult to all those who chose to live within their (often limited) means rather than rack up unsustainable debts. It is an insult to pensioners who thought they were being socially-responsible by putting a little away each week, often doing without, expecting to reap the modest rewards when they retired, only to find that their anticipated income is destroyed by a deliberately-suppressed rate of interest intended to support those who racked up debts (and encourage more to follow them) and punish those who put money away for a rainy day. It is an insult to businessmen who risked their capital to invest in products or services that they judged correctly people would want, and applied their business acumen to find ways of doing so more efficiently than their competitors.

And let's not forget skill, effort and self-sacrifice. Capitalism rewards them too, don't you think? It rewards the people who work the overtime or the second job in order to improve their (or their children's) lot. It rewards the people who study hard to achieve the qualifications for their vocation or profession. It rewards people who through aptitude and effort help their organisation to do well, gain the respect of their colleagues and work their way up the ladder. It rewards those who entertain audiences through their creativity, skill or application. Where it is allowed, it rewards people who impart knowledge effectively and enhance our understanding.

No doubt, some people are brought low by fortune, however great their efforts, judgment, and skill. It could happen to anyone, I agree. That is why we should never lose our compassion, and why I support a (specific type of) state-funded social safety-net (in which I may be in a minority of modern Austrians, but which I believe can be justified in Austrian terms).

The distinction between us is not whether we believe that luck plays a part, but whether it plays the only part in people's prosperity. It seems to me that it is just one of many factors, and often not a determining factor. It is in the interests of social cooperation and welfare that the other factors be encouraged and rewarded. It seems from your statement above that you deny the relevance of these factors, and attribute all gains to luck. What distinguishes your philosophy is not that you are on the side of the "runts" (even ignoring the strange identity that sees the unlucky as necessarily runts and runts as necessarily unlucky). It is that you are on the side of anyone who is dependent (whether unlucky or feckless) and against anyone who is not (whether as the result of luck or their own efforts).

I am not on anyone's side. Nor is Austrian economics. I am interested in the best way to coordinate social cooperation to everyone's benefit.

This is a truly disturbing dystopia you are painting. In it, not only do governments read our thoughts and predict the future (about which you seem somewhat ambivalent), but individuals have no ability to influence their destiny, tossed like leaves on the winds of fate and government direction.

Paul Halsall said...

There are dystopian aspects to the world a I expect it will develop. But there is a fair amount of current unpleasant aspects to Capitalist life, and I am not at all sure what I think will happen will be worse.

BTW, I think the luck aspect plays a much bigger role in life that you grant it.

bgprior said...

I was going to disagree with the other two points as well, but that seems like a good place to leave it - two pairs of fairly untestable views of life:

1. Our prosperity is mainly determined by luck; or is determined by a number of factors, including luck, and

2. People would rather have the option (illusion, if you prefer) of choosing for themselves; or would be happier having the options chosen for them.

People can make their own subjective judgments.

Paul Halsall said...

Well that's fine. It's clear we disagree. Probably less than it seems, but you certainly made me try (even if I failed) to clarify what I wanted to say.