 Hello everyone good started This panel is on theory and method we're still we're missing one. Oh, here she comes So, please keep your questions Concise help us out help us get through a bunch of questions because I think this is a shorter sessions about 30 minutes long Could you comment on the idea of there being a savings glut such that there are no more productive opportunities for investment? Like what would that look like? What would be implications of that or is that even possible? Savings glut was a way that Bernanke tried to explain the very low interest rates that occurred during the Run-up to the global financial crisis and what he said was that the saving in Japan and Elsewhere was so great that it moved through capital markets They invested a lot of it in the US and that pushed down the interest rates in the United States Causing These asset bubbles people would borrow and buy houses They would refinance their houses and use them as ATM machines basically to buy luxury goods So it was really just a made-up Theory to cover the fact that the Fed was pumping money into into the economy so That's my take on it. Does anyone else want to just yeah, I actually looked at the figures for capital for direct direct foreign investment by Chinese Traders in America and I don't remember the exact numbers But if you look at the chart it started in 2000 I think you could charge it's very small figures very small again I don't remember the numbers and then and then they just balloon but when they balloon it's like 2015 So so it's clearly clearly the evidence doesn't even support the claim that there was something like a Chinese, you know this flood of Chinese Money coming to the US buying things and driving interest rates down Question I guess to all of you. Do you think in like a Kunian? Paradigmatic sense kind of like in how science shifts That the inability of Austrian economics to really sort of precisely calculate when some things happen or just seem to do I mean There is yes this critique of math But the whole inability to kind of do math in the science indicate perhaps some some failure in some of the assumptions Or maybe work where where work could be done sort of to further the discipline You want to do it David? it's certainly right that the Austrians don't characteristically use math in their theory, but I Don't see unless you don't accept the Austrian views of things I don't see that that would be a problem if you thought that math was essential to doing economics, then it would be it I I'm not seeing it's I'm slow at these things what this has to do with the Thomas Kuhn's notion of a Paradigm shift it's I don't Did you have anything could you say it perhaps a bit more on them? Oh, all right Yeah, yes well that that that is the way you're quite right Joe that is the way coonian paradigm shifts Do Austrians accept Do you know does the Austrian school accept the existence of? Giffen goods and backwards bending supply curves and if so how might it be explained in a causal realist framework? Austrians believe show that all demand curves. I don't really explain it here, but but all demand curves Slope downward and that's because of the law of marginal utility And maybe Peter Klankin say something in a moment, but there is one curve that that slopes backwards and that is the supply of labor curve because it's also a demand for leisure which slopes downward and Depending on certain assumptions It can in the real world In other words that very hot for example, well when Muhammad Ali was the champion He might he might At the peak of his fame, you know, he was making 10 20 30 million dollars a fight It may be More more profitable for him maximizes income to fight once once a year at 30 million then maybe six times a year at 2 million per fight So that's a back with bending supply curve. Yeah, it has it. It's intuitive I've written something on this and I'll let you know what what what that is Yeah, I have a short comment that I can send you as well on Giffen goods that the the example described by Joe does not It's not explained through the same mechanism as the standard textbook Giffen good model which depends on the marshallion Construction of demand so in causal realist analysis, we don't distinguish between separate substitution effects and income effects which you need to generate the Giffen good in the sort of Standard textbook model so for reasons that we can discuss later The Austrian model starts from a completely different set of assumptions about what demand is what preferences are how preferences are expressed in demand Then the textbook model so it's not really possible to generate a Demand curve that slopes the wrong way for the same reasons that you get in the textbook I was wondering if you if you comment on The fundamental problems with the which Friedman's aim in his paper I think it's called methodology the positive is economics not so much on its implications applications but on the very I guess motivations for it Well, I think one thing Friedman has a Mistaken or questionable assumption there Roderick longest one who's written on this that Friedman says in Economic theory we have to use Assumptions that aren't completely true because Whenever we have an assumption of whatever kind we're leaving material out so all Abstractions are necessarily incomplete and What he's really overlooking is that although it's true that Statement can will omit certain details of phenomena It's that doesn't prevent. It's being completely true It isn't required that to have a true statement that it Mirror every detail of reality if I say for example There are more than 50 people in this room Whether that's true or not if that's true that isn't Made less true or not completely true Because it omits various details about each person in the room You asked about the motivation and I think the answer is you prediction He wanted to be able to predict and in order to conjure up a model in which You could make those sorts of predictions. You would have to have those Precise inputs in there. You have to you have to make the precise of abstractions that long-term talked about Can I respond to that with something that's slightly off-color? Someone I know Who someone I knew who was friends with Friedman and also with Carl Popper? Once organized a small group dinner when Popper was visiting the United States Invited Milton Friedman and his wife and a few others. I wasn't present But I heard this story from someone who was at the dinner that they discussed Friedman's 1953 article among other topics and the Friedman's left the dinner first and Popper turned to the host and said that Milton Friedman not very clever is he? So we talked about firms a little bit and then today there was a larger lecture on it, but I was wondering My conception of firms has largely been built upon Coase's works Up until really now at least and there was no mention of that at all this entire week And or any of Coase's work and then especially during the lecture today. It almost sounded like it was kind of I Guess mutually exclusive with like Coase's theory of the firm and I was just wondering if Austrian theory is actually is Usually exclusive with that. I guess that's something I've wondered even before coming here, but I've never heard anyone Have an answer on it. Well, okay Why don't you save that question for the second panel and pair who gave the lecture this morning? You're referring to can address it more directly. I mean It's worth noting that both both Rothbard and Kersner Express some sympathy with Coase's idea in my mind. It's not really even a theory It's just sort of a heuristic framework an analytical device for Characterizing the difference between transactions between firms and transactions within firms Each of them gave us sort of an Austrian interpretation of what that how that framework might be put into practice But I think pairs should discuss that in more detail in the second panel What what sorts of criticisms did the German Historical school offer of praxeology and how did how was that subsequently responded to? Well, that won't prevent me from answering I Think the the German hysteresis Were questioned whether there were Economic laws that were universally true, they would say if there are economic laws they would hold only for specific periods say they would say about Price theory this might hold for the Develop capitalist economy, but it doesn't apply to Societies say in the Middle Ages or more primitive societies that they have different Laws so it's generally skeptical about Universal law so that would be their their main criticism. I would say My question is more on the direction of how we understand market efficiency Because we do we we believe that markets do not achieve equilibrium and we also Say that markets do achieve a plain state of rest every time a market price is determined And my question is more on the sense that can we affirm any Efficiency properties to markets other than market clearing. Can we say that markets are efficient? In the sense other than just establishing prices that showcase Unlocation of good satisfied marginal utilities That's a great question and the answer is absolutely The economists wh hot who was sort of a quasi Austrian had a notion called price Coordination and what markets do at any moment in time if you look at the present Prices of the factors of production land labor capital and so on all different types of labor all of those reflect the judgments and estimations of entrepreneurs of the future Values or or more marginal value products of those things So markets are always generating price coordination the entrepreneurs who believe they have the best uses or Or that they can judge the future conditions better than others and and bid a higher price for for these things Are at that moment? Setting up a scale of uses of those things. So that's in a way a sort of a dynamic efficiency if you will So it's often said in Austrian circles that the empiricists claim that for a statement to be meaningful it must be empirically verifiable What's an empiricist response to that Austrian argument So the argument which specific argument you know, which was the specific argument that you wanted The pierce is pierce's response to which specific argument the argument that for a claim to be meaningful It must be empirically verifiable. Oh, yes, that's the empiricist's claim. So you want to know what would be the Austrian, okay, so the Austrian response that that isn't in and of itself empirically verifiable. Oh Well, they had several different responses to that the one that seemed to Come out become popular most later when this criticism was raised was that their The empiricist Statement should not be taken as a statement, but just as a proposal that didn't have a Real truth value we say if you want to Proceed Scientifically you should adopt this proposal. So they would say That isn't it isn't an analytic statement, it isn't Empirical, but it's proposals aren't Regular statements. So it would be immune to the self-refutation claim of course the Contrary to that as well if it's a proposal Why should we adopt it? This is kind of directed to everyone or anyone But do you have a dominant argument or strategy for convincing neo-classicals that we are correct? I mentioned in my lecture that a lot of the The common arguments that Austrians make against neo-classicals actually have The neoclassicals have escape hatches like the ordinality of preferences So they they just they back up a little bit and say yeah We can handle ordinal preferences because we can just shift the utility function to represent any set of preferences Therefore We aren't even though we do have a number Associated with a certain level of utility It's it's still it's still ordinal because we can shift it any direction that we want to so it can reflect any Any set of preferences so I think I think those sorts of attacks aren't as What's the word that aren't as effective as as we might think Hello What I was gonna say what I was gonna say is I Think our best strategy is to do good economics And to show the mainstream that they should be doing good economics by the example of the power of our analysis Well again Where's some of the key differences between Hayek and Rothbard? height One was that they spoke different dialects of English I was at a conference once and Murray Rothbard was giving a talk and at the end of the talk Hayek Was we were standing talked to Hayek and he he turned to us. He says I can't understand one word that man says So it's Murray's New York Jewish dialect versus Hayek's Sort of British German Anyone have a more substantive What would be a good reading Joe your Dehemogenization stuff. Yeah, I think you should read Hayek's economics and knowledge and his use of knowledge in society too once the first one's 1937 and the second one is at 45 45, yeah, and then Read Rothbard's a present state of Austrian economics in which it's late in his life, but he's he's He's been exposed to him de-hemogenization debate and he saw more about Hayek because he initially Accepted a lot of the things about that Hayek said, but he thought that they were sort of just Extra glosses on mesas that that they they they helped to extend mesas But but he kind of rejects that in his later article a present state of Austria Austrian economics, which is in economic controversies I Would like to know how much of a reality. Do you think the Brick's currency is going to be and what do you think we can expect from it? It's a government scheme. I mean it's at best it would be a watered-down goal standard and at worst it would just be a sort of a cover for Them inflating in unison. So I I don't think much of it. I haven't looked really closely at the plan I I do like it because it's trying to at least the aim the stated aim is to break the dominance of the US dollar and and and to Effectively decrease the man to hold dollars in a world economy Which which would then push our interest rates up? and It would cause the Fed would have to become tighter if the Brick's currency actually came to fruition and was used I mean You covered it. No, yeah, you covered it in the sense that the upside of the Bricks and the Brick proposal and the Brick bank and the Brick Brick currency is in opposition to the US dollar and The dominance in the monopoly that the Fed enjoys and you know, it's we're exporting inflation We're exporting business cycles And these other countries which are growing And expanding And they want the political influence that a leading monetary system Would give them so it's it's political But it's political against the US dollar and the in the federal and the Federal Reserve and its dominance So it does have sort of a political upside to it increasingly kind of wing of Modern right wingism kind of offers a critique of Austrianism where they say, okay, yeah, maybe you're right but what if we want our society to be poorer and more but Like we don't want these a moral or immoral things Is that kind of a short-sighted response? What would be how would you respond to that? well anybody can you know lower their standard of living and Stop working for you know, give up their job and move into the wilderness and be by themselves and You know set up their own camp out in the wilderness You can do that today Now the problem of course occurs The problem of course occurs if if somebody some political force wants to Mandate that for everyone mandate lower standards of living Mandate certain behaviors Symbols and so forth and you're talking kind of like a form of fascism basically Which is socialism and which it you know gives the state an incredible amount of Power over people's lives and the economy If you think about HOA is the same sort of thing happens people like voluntarily go into these neighborhoods Knowing that there's going to be restrictions on the way that they use their property So this is open to pretty much all of you Where would you say Rothbard went wrong? We're not a cult right So, I mean one of the great things even in the past summers that I've been here as a fellow is Is being able to talk with with scholars like Salerno and actually talking through differences between Mises and Rothbard So like this there's this is not a monolithic sort of thing. There are differences between these economists Sometimes it's as simple as I think think Mises could have been more clear here. I think Rothbard He took this slightly different approach to explain the same sort of thing compared to Mises And sometimes there are even larger differences between them So it's it's not it's not like a great sin to to point out issues in fact You should always have your critical thinking Engaged while you're reading and one can embrace a general approach and sort of you know Philosophical system a way of doing economics while still working out some of the details and for example Rothbard his treatment in his theory of the firm of what he calls the decision-making factor And actually Joe has a piece on this too that I think is completely wrong But haven't had a chance haven't had a chance to write up why I think it's wrong But you know, there's some there are also some inconsistencies in the early parts of man economy and state His supply and demand analysis There's some I think there's some minor details that are wrong in terms of how he derives the demand curve You know, I don't think these things have a huge impact on Rothbard's overall kind of you know economic system But of course there's always room for rethinking and questioning and looking at details both substantive and also Expositional Yeah, I just want to say Patrick Newman and I are writing a book on on Rothbard's writing of man economy and state and how he developed in the very act of writing it over a course of six years into an Austrian economist and The one thing that was is clear to us is that he didn't have professional economists reading the chapters as he went along He didn't have Because people you know, he was writing on the very small or School of thought he's writing in the tradition of school of thought whether hardly any any economists So he didn't get he didn't get high-level feedback That he was the people that read his chapters were were lay people who sort of new economics So there are minor details where where I would disagree with him But the overall approach is correct and what's really amazing is the fact that he actually did what Mises Talked about but never really did because Mises assumed you had a lot of knowledge He derived the whole of economic theory The main propositions from the action axiom. I mean his deduction very difficult to find any logical errors in that deduction So I think whatever Problems that there may have been and there are a few here and there. I think it was his achievement was overwhelming I'm gonna answer that question a little differently assuming that what by what you mean by that is where did he go wrong with his career and You know because Murray graduated from the number one economics program with a PhD number one program in the world rear really Under the leading professors of economics in the profession at the time He published You know some amazing stuff including man economy and state In America's Great Depression early in his career plus the panic of 1819 which was critically acclaimed he published Articles and comments in the American economic review He was sending things to the journal political economy and publishing in other leading journals So he was on the highway to a lot of professional prestige That comes what he was under consideration for an appointment at the University of Chicago He knew and corresponded with some of the leading people in the profession like James Buchanan and Gordon Tullick Sam Peltzman just a bunch of people that I couldn't possibly make up the entire list But he went on to do other things that were professionally dangerous like Developing libertarian theory like Developing a sustained attack on central banking Things that were professionally During the Cold War and and the the rise of the central bank were not popular at all within the profession because of political pressure against that so, you know professionally, he suffered a great deal as a result of those decisions, but Frankly, we should all thank God that he did it and You know, I think one of the things that the the panel was a little bit hesitant when the question was asked is because you know, we've been following Rothbard's path and It's not an easy path to follow professionally. There's a lot of easier paths that these people up here That have been teaching you all week. They could have taken other paths to higher heights and easier circumstances So if you think that's Where Rothbard went wrong we disagree Thanks everyone next panel is in here momentarily