 So it's time for the next panel We're gonna do the same thing. I'm not gonna introduce anyone just questions if you have them and then a microphone will be delivered Hi, so I was wondering so a lot of Austrians disagree on where you should start studying the Austrian tradition Do you think that we should start with like man economy in state or should we start with human action? Or should we go far enough back and start with like mangers principles of economics? my primer No, seriously. Yes Yeah, I'd say that then many commune state would be the order that I would suggest I would say whatever you find engaging I my first I was introduced to Austrian arms through man or human action and Before I finished it I went out and found Mises's collection of essays planning for freedom and other essays and those were more digestible Most of those pieces and then I eventually finished and then there's only many years after that I came back to man economy in state and so I think I mean different people probably different different approaches are for is better for different people, but I Would not say that that starting with Paris book would be a bad thing. I think it would be a good introduction but You know different people might find different works more Attractive to start with I don't know Yeah, don't start with Hayek I Hayek is good and you should read him but as a start. He's probably not the best author I started with Hayek and you see where it got me Dr. Bilan especially in your presentation, I know you Basically, I don't know if you were defining a firm this way But I said it was like a specialization or I'm sorry. It's an island of specialization whereas I thought if I'm Paraphrasing coast that it was really like an island of socialism where and it's a refuge from Prices because of transaction costs and I was wondering if that are those mutually exclusive or those compatible Okay, yeah, I can't believe Peter punted on that question because it's done work on this too So I'm not known as a cosian and the reason for that is that coast didn't understand economics and When I say that I mean in his 1937 paper on the nature of the firm he did not understand economics He was not even an economic student. He was a student of commerce and what he knew about economic theory He learned from his fellow student Abba learner. Yes that Abba learner and he what he learned was That the market economy the free market economy would create an efficient outcome But then Hayek gave a number of lectures at LSE at the time and he learned from height and wait a minute There's heterogeneity in the resources in an economy So coast concluded that wait a minute. That's so there's heterogeneity that makes it really hard to discover things And the economy is efficient. Well, maybe it's Difficult and costly to figure out what the right prices are for everything I need to buy and Therefore since there's a cost to being efficient in the market economy then a manager Directing resources instead can save on those transaction costs and therefore you have a firm The problem with this of course is What a transaction costs if they're not part of the calculation of what is efficient? So obviously they have to be part of that. Well, then Efficiency is really based off of the opportunity cost including transaction costs But he treats transaction costs being external to what is the efficient solution? So hence my comment that he didn't understand economics because that's a sort of a newbie mistake and As to your follow-up sort of are they compatible and I don't think they are Because the way I perceive the firm it is a a greater intensity of the division of labor Implemented by the entrepreneur that the market does not yet support it. It's nothing to do with transaction costs transaction costs will perhaps increase profitability and Extend the life of the firm, but it's not why it is created. It doesn't explain what the firm is at all Coast even there's maybe a little too deep for this but coast Really conceived of the firm and market production as being equal in terms of how you use resources The only difference is that either you have the pricing mechanism to Direct resources or you have the manager. So when transaction costs change, you just shift between the two Which of course doesn't make any sense at all And if you see the firm is doing something different than the market is already doing That argument simply doesn't apply right and and part of my theory Is really based on an observation that you find in the great economist Karl Marx's work That's capital where he talks about that the division of labor within the firm is of a different kind and It's much much more intensive than it is in the marketplace Often heard this term used the US exports inflation. I Seems favorable, but I was wondering what are the actual methods of transmission by which that happens which that occurs like how What in what accounting sense does the US export inflation? well, that was a an idea that Was used in economic history specifically for the period of the Bretton Wood system when Major currencies in Europe were tied to the US dollar so The Americans would inflate their money supply and The Europeans were basically forced to follow The Americans and print new money and buy the dollars to keep their own currencies At the fixed exchange rate to the US dollar and the whole system of course broke when Europeans started to ask for the gold that was stored in Fort Knox under the leadership of Charles de Gaulle And back in the late 60s And then Richard Nixon decided to end the Bretton Wood system So that was a period when inflation in a sense was exported From the from the US to other countries because other countries had to follow the expansionary monetary policy course of the Americans In regards to the socialist calculation debate There's obviously a ton of responses that the socialists have thrown out there and some of them are just so obviously bad Do you think maybe it's because they're just misunderstanding? Maybe they're not reading the source material or are they just lying? Are they just bad faith? um Yeah, so I can't look into their heads to see what what's not clicking but Think if you just break it down start with let me say with value theory because I think a lot of them miss that part of it And it does seem like Mises says I mean he really I mean if you follow logic He's really smashed the intellectual case for socialism, but it seems like I mean they really want to have this end. We really want this. We'll keep trying To figure out some way of solving the problem But they won't so I Think there is some progress to be made is being made Like discussing with the the cyber communists at least the ones contributing to the special issue that I mean they see the problem with say using the labor theory of value to try to create a Cardinal unit for measurement So there is a bit of talking past one another and I think I mean the continuing project is honing in Precisely where that is and communicating that so I I hold out hope That's possible I guess one thing I speculate about is how much it starts with a moral sense I like if you start with the moral sense that socialism is good Then it logically follows it must be possible That's the intuition of it And I kind of wonder how much that is interfering With their ability to grasp the arguments that no it's not possible It's not possible that it can't be good And questioning people's moral foundations is very very difficult to get people to shift on I would like the panel's opinion on Ludwig von Mises's claim in human action That birth control is indispensable for the preservation of peaceful human cooperation And the social division of labor Well, I thought about this I had a couple of minutes so I think that sounds maybe a bit controversial as a statement, but It's probably not that controversial at least in the historical context There are some historians economic historians sociologists Who have done some work on the impact of demographics on Military conflicts or in Germany for example, there's Gunnar Heinz on here was a professor in Bremen he passed away a couple of years ago and he presented an argument that basically strong population growth In particular the number of young men in families Is a contributing factor to military conflicts So it's obviously not necessarily Necessarily the case that military conflict arises out of strong population growth, but It makes conflicts more likely so to speak and I think that was not a controversial View Back in the days when Mises wrote that and I think something like that he probably had in mind As far as the social division of labor Is concerned. I have don't have a good answer on that really. I don't see how Strong population growth causes a problem there Hello, um, so I I I had a question about public goods and this was a question that I brought up to dr. Engelhardt earlier yesterday But is the Austrian view of public goods that they don't exist in so far that In entrepreneurs can find ways to make them rivalrous or exclusive or It like how exactly what what is the Austrian view of public goods in that way? On this question. I'd recommend reading I believe it's in the appendix of man economy and state might be in power and market in which rothbard comments on public goods and also the idea of positive and negative externalities And I think an issue with like your typical public goods analysis Um from mainstream perspective Is that okay? So I think of a an example that was presented where they say so you got these stargazers in a city and uh, they want other people in the city turn their lights off and we assume collectively they'd be willing to pay enough to Get everybody else to voluntarily turn their lights off pay us off, but there's a free rider problem And so the authors say, you know you tax these people their willingness to pay and They make the deal happen. Look the state improves welfare But the problem with that is that there's conceptually I mean we can distinguish between Transaction costs this transaction being made Being too high and all of the state just comes in and solves it uh versus I mean Like I said transaction costs. I mean are already baked into it. So people can't There's we can't make this distinction between uh people actually not wanting to do it Not being willing to pay A sufficient amount to get people to turn their lights off versus They would like to but they Transaction costs are too high. So the thing if you can't I Through demonstrated preference observe the fact that this public good should be provided But it's not That's no different than um saying people demonstrate. They don't want this thing. So as an outside observer We can't say this good is being under provided Does that make sense? Yeah That wasn't very articulate. No, that was a very good take Um, I just want to add that a lot of the criticism of Rothbard's utility and welfare Economics is based on examples that are made up where they make all the necessary assumptions to know Whether a certain government intervention improves The situation or not the problem is in practice. We don't have these information And Rothbard's hammers this home in the article, right? It's on the basis of demonstrated preferences that we can know what people want if at all A couple other responses that we could add to this one. I think it was actually coax for better or worse observed that one of the common examples that is given of A public that would be a lighthouse And you just made the observation that nobody is actually checked to see if it's impossible to provide a lighthouse Uh, and after you made this observation like other mainstream economists looked and found no Actually, we we see organizations spontaneously forms because they don't want to have their ships crashing to the coast Right, so so they managed to do some cost sharing and provide these lighthouses without the need for it to be funded by taxes And there are other cases where they're being very obviously see non rivalry non excludability I think I mentioned in my lecture about radio waves And yet radio stations exist Well, it turns out people do value the ability to listen to music over the radio So radio stations figured out they could pair that good, which is non excludable and also non rival with airtime Which is excludable in rival and they can sell off some airtime to advertisers to provide this good All right, so we do see that entrepreneurs Do actually solve these problems Right, so it's not just theoretically do we have problems with identifying if there's even a public good here But practically we see things we think might be public goods actually provided Hello, um, what has been the if there is one the historical approach from the austrian perspective into investing into public and private markets And how should we go about approaching these investments today from an austrian perspective? I don't know what public markets are Is that even such a thing? Ah I mean, I think that the only I mean you invest in them Entrepreneurially, right? So you just try to assess um, you know what what What's going to happen to the value of the assets of the firm which would be reflected in the value of the asset of the share And make your decisions that way. I mean by low sell high would be my My austrian recommendation So in dr. Patrick Newman's lecture on banking he talked about how in a free banking system The adverse clearing mechanism prevents banks from over-inflating But I know some austrians prefer a policy of 100% reserve banking So why isn't a free banking system sufficient to control inflation? Well, it probably would be sufficient. I mean, uh, it's not entirely clear What a free banking system would mean or how it would look like in practice, right? It depends on certain institutional arrangements rules and regulations that do not necessarily come from the states but just um rules of the game that are implemented in some way and I believe a free banking system generally speaking if it is not Distorted by too much government, uh regulation will lead certainly to lower inflation than we have right now Whether it prevents inflation entirely I don't know. Maybe that's also not Not desirable. Who knows what the optimal rate of Of inflation or deflation is in terms of Arguments against central planning. I wonder if you guys might be able to shed some light on the difference between Hayek's knowledge problem and Mises calculation problem and whether or not they are the same thing or a restatement of the same argument Is Joe Salerno still here? I see those arguments as Complementary in in some ways. I believe Mises made the more fundamental argument, but I think Hayek cleared or added to that in in certain ways by emphasizing Some types of knowledge that are not Um Communicated through the pricing mechanism a tacit knowledge that uh is sort of decentralized and Distributed in the in the society and can come into Yeah, can have an in a good effect on the economic outcome only to the extent that we have a market order not a central planning Is it conceivable that the hoarding of money during a recession could ever be problematic it seems that The austrians are the only one who deny this and even Hayek talked about a secondary depression and Well, I know he had many different views over his career But at some point at least talked about keeping the flow of spending Mv constant, but this isn't universally accepted amongst austrians I think I think mises even commented on that too in one of the essays in On one of the essays that was that he published in the like 29 to 32 That's in the what the collection. I'm not the manipulation of money credit or something but he seems to me that people holding money is just acting according to preference and so I mean if The the recession occurs when you have a large cluster of entrepreneurial error and If people if the entrepreneurs Do not foresee the demand for their products are falling because or will fall will fall Because people are going to want to hold their cash instead of spend it Well, then they're going to earn losses but those entrepreneurs that do perceive that that is happening and act accordingly they will They'll reap profits. They'll come out. Okay, and so The the preference for money isn't isn't Isn't in any special economic category Relative to a preference to want to buy rutabagas or something So it's just it's it's if if then that is the case, which I think is the case If we act to try to somehow You know If we act to increase the money supply sort of to to to respond to that We actually work against the Desire of the people to want to hold more purchasing power Because we watering down the value the thing that they want to hold So we're we're actually working against the preferences of the people that are wanting to hold hold more money and as long as long as as long as we have a free free price system prices do adjust they will adjust and The markets will clear and we won't have we won't we won't be wallowing in in depression This is for dr. Bailand What is your opinion on the swedish national bank prize in economic sciences in memory of alfred nobel and its historic winners? Do you want me to comment on all of them? I mean it's to begin with it's not a real nobel prize Right, uh, it was not in alfred nobel's will. It was instituted by the central bank Um, I think hyac put it really well in in his nobel lecture that this type of prize is dangerous That doesn't mean I would turn it down but but giving Economists this kind of prestige is dangerous, especially when economists are working on Evaluating policy and recommending policy To then give them this prestige. I mean that means that they can That there are fewer limits to what Nasty business they can actually implement through policy So in that sense, I'm I'm opposed it to it, but I'm also glad that it brings attention to economic issues Which is a good thing, but there are other ways of doing it than having a major prize and and a king handing it out If I could comment on that too another another way this this danger sort of works itself out is Most often more often than not the winners when they start commenting in public policy Are commenting on policy areas that have nothing to do with the research for which they actually supposedly won the prize And so that mean it really does ante up to prestige level and and make people think that they know Way more than they do about almost anything um So seeing as one of the key starting assumptions of austrianism is preferences being rendered intelligible through a price system How would we contend with some of the um limitations of an austrian standard of analysis When there are certain assumedly valid subjective preferences that are not easily reducible to money terms I have to admit I did not understand the question Yeah, could you so It seems to me. Okay. So even if Sure, everybody has preferences that are not easily reduced to to money, you know to money terms, I mean how Only a fool would try to sort of place a monetary value on the love that he has for his wife or something That marriage is not going to last very long Try to do that. It's just a it's a just a little life hack from old doc ritenauer Um, so but but those preferences those preferences Will will um, still those preferences affect our action Will then that which then will have some impact on Whatever we do and to the extent that it has an impact on what we Buy and sell It'll be affecting the price system. So there is no again as long as we as long as we have a free society Those preferences will work themselves out the way other preferences work themselves out There's no necessary there's no necessary conflict. There's no necessary contradiction. There's no necessary Things we have to sort out it seems to me that As far as I understand your question All right, we're out of time. Thank you so much