Gordon’s The Philosophical Origins of Austrian Economics

Full text here.

My brief summary:

Austrian economists Menger, Bohm-Bawerk, and Mises all had various philosophical influences.

Aristotle – influenced Menger through Bentrano. Against the German Historical School, which emphasized the interconnectedness of everything and denied the existence of any kind of universal economic laws that would apply across different societies, Bentrano emphasized the ability to separate pieces of reality in our analysis. Specifically, Bentrano separated the acts of the mind from the objects of those acts. In Menger, this showed up as people making judgments of value. So, value is not intrinsic to the good – or even to the mind. Rather, it is a matter of a judgment that the mind makes about the good. Aristotle also emphasized that true science is deductive – treating empirical science as a stand-in for true science until our understanding of the deductive structure develops sufficiently.

Occam – had a big influence on Bohm-Bawerk – especially in the need to trace all concepts back to their origin in perception. This led Bohm-Bawerk to reject mystical sorts of notions in social science and to be very concerned with clarity and thoroughness in the analysis. This is especially obvious in his criticism of Marx. Rather than settling at criticizing the labor theory of value (which would have been sufficient), Bohm-Bawerk criticized Marx more or less line-by-line.

Kant – Not as big an influence as you’d expect. He provided some of the Misesian language, but Mises doesn’t rely on Kant’s philosophical system.

The Logical Positivists – probably the biggest influence on Mises, but in the negative direction. Much of Mises’s more philosophical work was defending a deductive method against the logical positivists, who favored empirical methods as being the only real way to do “science”.

Rothbard’s Anatomy of the State

~200 words, ~1 min reading time

Confession: Despite having been on the faculty for Mises University for a few years now, I haven’t actually done all the readings. Now, don’t get me wrong, I read the readings for when I was a student back in 2003 and 2004. But, things have changed a bit. So, I’ve decided to try to read through some of the Mises U readings this year – anything I’ve not read, or have too vague a memory of. Then, I’ll offer a (very!) brief synopsis here. So, here’s the first – which I had never previously read!

Anatomy of the StateMurray Rothbard

What the State isn’t – us.

What the State is – a regional monopoly on the use of force.

How the State preserves itself – creating vested economic interests, but ideology that supports the State as good or at least inevitable even moreso.

How the State transcends its limits – by controling the power of interpretation of its limits.

What the State fears – losing its power through conquest or revolution.

How States relate to one another – mostly through war. Though we used to recognize that war was between States rather than between peoples.

History as a race between social power and State power – sometimes the creative forces run ahead of the State – leading to an increase in freedom. Other times, the State catches up. We have yet to find a good method of limiting State power.

A Fundamental Problem with Socialized Medicine – One Lesson Alfie Teaches Us

~750 words, ~4 min read time

I’m a bit of a weirdo when it comes to medicine. I will happily agree with basically anyone who says that the American medical system is messed up. The system is designed so that no one ends up actually comparing costs and benefits. Patients and doctors generally are trying to maximize benefits while insurance companies are trying to minimize costs, with no one really comparing the two against each other. The result is a system that gives mediocre performance on the whole, and does so very expensively.

I’m even willing to acknowledge that a reasonably designed socialized system might even perform better. Along that measure, the UK’s NHS is quite good. They evaluate cost per quality-adjusted life year (QALY). So, expensive routines that aren’t likely to extend or improve life aren’t likely to be approved. On the face of it, this seems like a reasonable system. Compare the cost of a treatment to the benefit. Obviously a good idea.

But, there’s a reason that I don’t advocate for socialized medicine. Preferences are subjective. How much is another year of life worth to you? I suspect everyone who reads that question will give a different answer. And there’s nothing special about years in your life. We each have different values we attach to everything. Some people believe that black licorice is very valuable. So valuable they’d even be willing to pay for the ability to eat it. Then there’s me. The subjectivity and diversity of preference is part of fundamental economic reality. What the market system allows us to do, rather brilliantly, is convert a vast array of subjective preferences into an objective number – price – that reflects the value of increasing the production of a good by an additional unit. This price can then be compared with the cost of increasing production by that unit, so that profit-seeking entrepreneurs produce just the right amount of the goods that are produced by the market.

Socialized systems cannot do this. They lack the necessary mechanism for reacting to individual preference. So, even if we assume perfect information about cost per QALY, the fact that we don’t have perfect information about each patient’s VALUE per QALY suggests that some patients will be over-served (if they place a low value on extending their life) and others will be under-served (if they place a high value on it).

To me, this is one of the lessons that Baby Alfie can teach us. The NHS simply could not account for the preferences of the people involved (the parents in this case). What they knew: treatment was expensive and unlikely to add QALY. So, it should stop.

I know it is uncomfortable – and to many feels borderline sociopathic – but when it comes to decisions about life and death, we have to consider both benefit and cost. For most of human history the reality was that death was not a financial choice. Staying alive was either cheap (buying basic food and shelter) or impossible (because we couldn’t effectively offset the effects of most diseases, old age, war, accidents, etc.). So, there was never really a point where a person would have to make a financial decision about life and death.

Today, though, things have changed. We have the technological ability to keep our bodies going for long periods of time. We can treat most diseases on some level. But, it’s often expensive. And worse, it’s expensive in monetary terms. So, someone has to decide: is it worth $3,000 per day to keep someone alive on life support?

It’s a difficult decision, no doubt. But, it must be made. The question is by whom? On the one hand, doctors are in a good position to estimate the odds of recovery. Naturally, if keeping someone on life support for a week is likely to lead to a full recovery so that the person will go on to live for another 30 years the calculation is a bit different than if the odds of ever recovering is basically zero.

However, doctors are not in a position to place a value on the person’s life – where the person’s family is in a much better position both to represent the person’s own decision, if they were in a position to make it themselves, and also to account for the impact of the person’s life on those around them. Easy? No. Heart-wrenching? Absolutely. But, is it better to ignore the subjectivity involved and impose a one-size-fits-all policy instead? I suspect not.

Fitness Friday – New Program!

~450 words, approx. 2 min read time

Last week over on Facebook I discussed dealing with failing (to hit my reps, that is). One thing that I’m doing now – switching up programs!

Personally, I try to train in 8 week blocks. This keeps me from program hopping too badly, while at the same time giving me the opportunity to make significant course corrections when needed. I think it’s a nice balance.

So, for the past 8 weeks, I’ve been trying to do a novice-type of progression, but with changing things as I described in the previous posts – failure led to a change in the number of sets and reps. The specific rules created a really bad outcome in terms of how long it took to complete a workout, so to limit the time I’m spending on this, I’m switching things up.

I found this program which has some nice features. 5 workouts per week – better than the 6 I had resorted to. A reasonable number of sets so I can complete every day within about 45 minutes. And a good mix of exercises. I confess: I still like the idea of full body workouts 3 times per week, but I had effectively given that up anyway. I’m still hitting each muscle group 2 times per week, so I’m okay.

One of the new ideas that is being implemented here – though I saw something like it when I did HST – is using an “intermediate” wave progression for some exercises. The idea is pretty simple: as the weight goes up, the reps go down, and occasionally you intentionally lift relatively light for low reps and sets (a “deload”). To some degree the “higher weight, lower reps” is just unavoidable when you get to a certain point. So, the intermediate progression plans for it.

As I reflect on this, I realize there is a larger life lesson just from considering novice v intermediate progressions.

As a novice, the key is to keep moving forward. Always try to do better than you did before. When you fail try again. If you fail again, step back (deload!), make sure you actually have mastered the previous step, and then try again.

Eventually, though, you find yourself having to revisit what you did before again and again and again. That is: we hit a plateau. Plateaus require that we make more subtle adjustments (the equivalent of increasing weight but decreasing reps) – a little more here, a little less there. We also need to take breaks to recharge – and that happens more regularly at this level.

Now I wonder what would happen if I applied this to things like playing Civilization…

Welcome to Prof E’s Blog! – Expectation Formation

Welcome to my new blog! I’m going to include a smattering of whatever I happen to be thinking about. So, no promise of any unified theme – but, you’ll probably see a few common topics:

  • Economics (especially in the Austrian tradition)
  • My kids
  • Quakerism (mostly of the evangelical variety)
  • College Teaching
  • Eurovision

Enjoy!