You are browsing the archive for 2014 September 30.

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Israel Kirzner for the Nobel Prize!

September 30, 2014 in Economics

By Peter G. Klein

Kirzner

Thomson Reuters has been predicting Nobel Prizes for the last dozen years, with modest success, and this year names Israel Kirzner as a potential economics winner, in a hypothetical joint prize with William Baumol for research in entrepreneurship. (This is one of three scenarios imagined by Thomson Reuters, the others being Philippe Aghion and Peter Howitt for growth theory and Mark Granovetter for economic sociology.)

Like most Austrians, I will be delighted if Kirzner wins the prize, not only as recognition of Kirzner’s work and the general field of entrepreneurship, but also for the attention it would bring to the Austrian school itself. Kirzner’s accomplishments are many, not only in entrepreneurship theory but also in economic methodology, capital theory, and the history of economic thought. I will also be surprised — as I have argued (e.g., here and here), Kirzner’s influence on the specialized field of entrepreneurship is vast, but his influence on economic theory has been modest. Kirzner’s theory of entrepreneurship is not, after all, a theory of entrepreneurship per se, but a theory of what he calls the entrepreneurial market process. “My work has explored, not the nature of the talents needed for entrepreneurial success, not any guidelines to be followed by would-be successful entrepreneurs, but, instead, the nature of the market process set in motion by the entrepreneurial decisions.” As I put it in a 2008 article: “Kirzner’s aim is not to characterize entrepreneurship per se, but to explain the tendency for markets to clear. In the Kirznerian system, opportunities are (exogenous) arbitrage opportunities and nothing more.Entrepreneurship itself serves a purely instrumental function; it is the means by which Kirzner explains market clearing.”

The irony is that while management scholars interested in entrepreneurship and innovation have embraced Kirzner’s concept of entrepreneurial opportunities, neoclassical economists have continued to embrace Walrasian equilibrium, with little interest in the processes of adjustment and coordination highlighted in Kirzner’s work. (The influence of Kirzner’s work on both groups of scholars is easily demonstrated with citation data, which I provide in the links above.) This is not a criticism of Kirzner, of course, but a comment on the state of neoclassical economics. To be sure, the Nobel committee has previously recognized economists whose contributions have not been fully incorporated into the mainstream (Simon, Coase, North, Schelling, Williamson, Ostrom, and of course Hayek). And Baumol’s contributions, which focus on the economics of innovation and technical change, are far …read more

Source: MISES INSTITUTE

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It's Crazy to Blame Fat People for Ruining Air Travel

September 30, 2014 in Blogs

By Lindy West, The Guardian

The experience of air travel has always been dismal — yet there are entire blogs devoted to hating overweight people on planes.


I don’t want to intimidate anyone here, but I recently flew first class on an aeroplane. Yes, I know. You’re impressed. I know. No, I am neither a venture capitalist nor a sultan. Yes, I paid for the upgrade myself. No, I cannot invest in your start-up. (Yes, I know what a “start-up” is, kind of.) And no, flying first class is not a regular occurrence in my life. In fact, I can think of few things more glamorously, unattainably alien than sitting to the fore of that little curtain – that imperious cotton-poly shroud that separates the serfs from their betters. Yet there I was, up front, next to a businessman in a suit that cost more than my car, and behind a man who kept angrily attempting to sell a boat over the phone even after they told us to stop making phone calls.

The first rule of first class, apparently, is that there are no rules. (The second rule is “don’t let the poor people use the rich-people bathroom”.)

I wondered if my fellow first-classers – all virility and spreadsheets – could discern that I was a fraud, that I only paid $50 for my upgrade, that I could only afford that much because my job covered the rest of my ticket. I may have betrayed myself when the flight attendant asked if I’d like a “special drink” before take-off and I yelled, “A SPECIAL DRINK!?” and then ordered three. Why just have coffee like some row-26 peasant when you could have coffee, ginger ale and a mimosa!? This, as I’d been assured by the airline industry, was the life.

But as the flight progressed, its sheen dulled. At some point, once the initial thrill of being adjacent to a four-figure boat sale had worn off, I realised: these special drinks weren’t remotely special. This free french-dip sandwich was in no way luxurious (also, “sandwich” is a rather generous term for a microwaved wad of airborne …read more

Source: ALTERNET

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Scottish Referendum Gives Reasons to be Hopeful

September 30, 2014 in Economics

By Ryan McMaken

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Mises Daily Tuesday by Ron Paul:

Devolving government into smaller units promotes economic growth. The smaller the size of government, the less power it has to hobble free enterprise with taxes and regulations.

Just because people do not wish to live under the same government does not mean they are unwilling or unable to engage in mutually beneficial trade. By eliminating political conflicts, secession could actually make people more interested in trading with each other. Decentralizing government power would thus promote true free trade as opposed to “managed trade” controlled by bureaucrats, politicians, and special interests.

…read more

Source: MISES INSTITUTE

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Economic Isolationism in The Walking Dead

September 30, 2014 in Economics

By Ryan McMaken

Back To The Dead

Mises Daily Tuesday by Mark Tovey:

When dealing with people in a potentially hostile environment (such as a zombie apocalypse) how do we decide if we should trade with strangers or kill them? It turns out time preference and the division of labor have a lot to do with it.

…read more

Source: MISES INSTITUTE

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Does ‘Neoliberalism’ Make Psychopaths Rise to the Top?

September 30, 2014 in Economics

By Ryan McMaken

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Whenever you see someone use the word “neoliberalism” you are probably dealing with someone who spends most of his or her time in a left-wing echochamber where people believe they are being oppressed by “free markets” and that things will be set right only when the kind, calming hand of government is able to tame the vile “free for all” that is people enjoying personal freedom.

So, one can hardly be surprised by the conclusions found in a recent article by Belgian psychology professor Paul Verhaeghe in which he declares that “neoliberalism” is “an economic system that rewards psychopathic personality traits has changed our ethics and our personalities.”

The economic system he refers to, by the way, isn’t the modern system of state-subsidized and controlled corporatism that actually prevails in the world today. No, he means that basically every voluntary economic transaction rewards psychopathic behavior. With that in mind, we can turn to Predrag Rajšić who points out:

The thesis of his article is that neoliberalism[1] has brought out the worst in people, that it rewards psychopathic personality traits and thus brings people with such traits to the top of the social structure.

Dr. Verhaeghe is, according to most criteria, a successful academic, close to the top of the academic achievement scale and pretty high in the general social structure. To avoid ad hominem criticism, I will assume that Dr. Verhaeghe is an outlier, that he climbed to the top despite the goodness of his heart, and not because of some psychopathic personality traits on his part.

Having this out of the way, I can critique the logic of his argument on its own merit. Dr. Verhaeghe claims that

A highly skilled individual who puts parenting before their career comes in for criticism. A person with a good job who turns down a promotion to invest more time in other things is seen as crazy – unless those other things ensure success.

From this, he concludes that this system rewards career and penalizes one’s love for his family. There are at least two problems with this conclusion. First, we don’t know how other social systems perform in this regard. Did feudalism favour “success” to a lesser extent than the system Dr. Verhaeghe is critiquing? How about communism? Were there fewer psychopaths at the top of the social structures in the communist/socialist Yugoslavia or the USSR than in the current system?

I don’t have quantitative …read more

Source: MISES INSTITUTE

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Inevitable Partners: Why the US and India Are Still Destined to Cooperate

September 30, 2014 in Economics

By Doug Bandow

Doug Bandow

Before becoming prime minister, India’s Narendra Modi was barred from receiving a visa to visit the U.S. A rising leader in the Hindu nationalist Bharatiya Janata Party (BJP), he was tied to deadly sectarian violence. But now he leads one of Asia’s most important powers and the Obama administration is rolling out the red carpet.

India long was ruled by the dynastic Indian National Congress Party, which enshrined dirigiste economics as the state’s secular religion. As a result, a land which spawned a global network of entrepreneurs and traders remained desperately poor.

Eventually, however, reality seeped into New Delhi. The Congress Party liberalized the economy. The BJP broke the Congress monopoly on power.

Prime Minister Modi’s visit to America offers an opportunity for a reset in bilateral relations.”

New Delhi appeared ready to follow the People’s Republic of China to international superstar status. But then enthusiasm for economic reform ebbed, economic growth slowed, and conflict with Pakistan flared.

However, on May 26 Narendra Modi became prime minister. He is visiting the U.S. to speak before the United Nations and meet with President Barack Obama. The trip could yield rich benefits for both countries.

Of course, there was that embarrassing visa ban, the only one ever issued for that reason by Washington. The matter was quietly forgotten, though the underlying issue never was resolved.

While serving as the chief minister of the state of Gujarat in 2002, Modi was implicated in Hindu riots which killed over 1,200 people, mostly Muslims. It was generally agreed that some in his government were complicit in the violence. However, Modi escaped responsibility—some proclaimed him innocent, others contended that evidence had been destroyed.

Modi so far has focused on India’s future. He was elected to reform the sputtering economy, which would not be helped by fueling religious hatred. To date his administration appears to be pragmatic and practical.

The prime minister’s visit to America offers an opportunity for a reset in bilateral relations. The Bush administration made a major push to improve ties by accepting New Delhi’s development of nuclear weapons, but little progress has occurred during the current administration. Indeed, controversies over trade policy and criminal charges against an Indian diplomat put the two governments at sharp odds.

The result is a lost opportunity for both nations. India, which, based on purchasing power parity, trails only America and China economically, so far performs far below its potential.

Modi naturally hopes …read more

Source: OP-EDS

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More European “Growth” Shenanigans

September 30, 2014 in Economics

By David Howden

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Europe got some good news in early June as the EU changed its statistical guidelines on how to compute GDP. Among other changes, expenditures on prostitution and illicit drugs (hookers and blow, colloquially) will now be included.

Of course, some countries have been including these items for years. Back in 2006, the Greek government was able to increase its reported GDP by 25% overnight by including these items! The reason the Greek government made the change back then was to have more flattering debt and deficit to GDP figures than otherwise. We now know how that story ended.

As Tim Harford recently brought to light about Britain´s Office of National Statistics´ (ONS) attempts to include some of these less savory expenditures into its GDP calculation:

The ONS has made valiant assumptions in estimating that 60,879 sex workers are each employed 1,300 times a year at an average rate of £67.16. If true, that is an industry big enough to allow every man in the country between the age of 15 and 64 to visit a sex worker every three months.

For government officials putting stock in GDP figures when drafting new policies, maybe it´s time to come to the realization that these numbers obscure more than they expose.

(Cross posted at Mises Canada.)

…read more

Source: MISES INSTITUTE

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I Played Japan’s Best-Selling Dating Simulator — and Loved It

September 30, 2014 in Blogs

By Tracy Clark-Flory, Salon

These anime novels are being customized for American women, and could give “Fifty Shades” a run for its money


Don’t ask how I ended up an accidental stowaway on a pirate ship — long story. What’s important was that I had been threatened with being blindfolded and forced to walk the plank. But after rescue by the dark-haired captain, I was allowed to stay on the ship — so long as I chose to room with one of the men  – all strapping, young and decidedly metrosexual, especially for pirates. Would it be Christopher, the kindhearted doctor with a buzz cut? Eduardo, the one with the eyepatch and slicked-back hair? Morgan, the captain with the alluring bed-head and cleave rivaling most women’s?

Just as I made my decision — the captain, obviously — the game came to a screeching halt. Did I want to buy an expansion for $3.99 so that I might see what happened next? Why yes, yes I did. I clicked “purchase” before I could even register what I was doing.

How, you might ask, did I end up not only playing but paying for extras on the iPhone app “Pirates in Love”? Great question. You see, last week when I read a report on Wired.com about the Japanese explosion of romance video games for women, I knew I had to try some out — for my job. Strictly professional. Lucky for me, and my sorry handful of Japanese phrases, countless games have been translated into English — and these companies are even creating games to be marketed specifically to American women. They were a mega-hit in Japan, so why not try to broaden their reach, right? They’re known as “otome” games, or “girl” games; sometimes they’re called dating simulators, which pretty accurately communicates what these games are all about: flirting, courtship and lots of blushing.

That is how I’ve found myself in a situation in which I never quite imagined. If my husband read my inbox right now, he might think I was having an affair with some creepy narcissist with a yacht. That’s because currently I have open an email with the subject line, “Don’t fall for me; you …read more

Source: ALTERNET