[Note: Many economists justify their use of unrealistic mathematical models by reference to “the map and the territory”: that mathematical models are merely a map to the territory of the real world, and that a “perfect” map wouldn’t be a map at all. The origin of this metaphor is an extremely short (only 145 words!) story called “On Exactitude in Science,” which recounts an ancient myth of map makers who made the perfect map as big as the empire, which unsurprisingly turned out to be useless. However, I have recently uncovered a second part to this legendary tale, which elaborates on what happened when the map-makers abandoned their desire for realism….]
… The New Cartographers, having long ago abandoned their obsession with exactitude, had a new focus: prediction. Thus, they crafted a System of Symbols to simplify and minimize the size of their Maps, while maximizing their predictive Power. But the Symbolism became so complex and divorced from Reality that, instead of occupying a small Corner, Map Legends occupied many Pages—and required trained Expertise for interpretation. Hiring Teams of Map Interpreters became the norm for Travelers, creating many Employment Opportunities for the New Cartographers. Yet the Maps were so confusing, that even with Professional help, Travelers still lost their way in spectacular Fashion. In fact, as the Symbolism grew more complex, and the Fees of the New Cartographers skyrocketed, more Travelers failed to ever reach their Destination. And soon, for Reasons of Self-Preservation and Economy, both the New Maps and the New Cartographers were discarded.
–Suarez Miranda, Viajes de varones prudentes, Libro IV, Cap. XLVI, Lerida, 1658
To ask it another way: Is it really a good thing to tell people who are ignorant of law (so they don’t know which proposed policies are illegal), and/or ignorant of economics (so they don’t know what the actual outcomes of proposed policies will be), and/or ignorant of political science (so they don’t know which proposed policies are politically feasible with the actual people and institutions we already have)?
If politics is serious business, shouldn’t people have more than causal understanding law, economics, and political science before voting? How are people supposed to judge platforms otherwise–by what “feels right”? Continue reading “Should Everyone Vote?”→
Occasionally, when Austrians try to distinguish their brand of doing economics from the mainstream, they get hit with accusations that they are attacking straw men; that no one believes what Austrians claim is the mainstream approach.
Is this true? Are Austrians attacking enemies that don’t exist anymore? I say no. While it might be true that many of the top economists may in general agree with broad Austrian methodological conclusions, the typical economist is much more likely to either (a) explicitly deny the Austrian criticisms, or (b) implicitly or casually invoke these fallacies during their analyses for reasons I shall explain below. Let’s look at the evidence. Continue reading “Are Austrian Criticisms of Mainstream Economics Still Relevant?”→
You recently wrote an open letter to Apple, Inc. (To Apple, Love Taylor) where you spelled out your decisions on why you will not be allowing them to stream your album, 1989, without paying you for the privilege. Your letter was clear and eloquent, and provides a strong emotional case for why you feel Apple needs to pay artists during the three-month trial period for their new streaming service.
As I understand your letter, your grievance with Apple can be summed up with your statement that “it is unfair to ask anyone to work for no compensation.” In a biting kicker, you conclude, “We don’t ask you for free iPhones. Please don’t ask us to provide you with our music for no compensation.”
If Apple is truly asking you (and other artists) to provide them with labour or products with absolutely no compensation, then I agree that would be an unfair deal. In order to acquire your property, it’s only fair that the richest corpor
ation in the world offers some of theirs. But what if Apple has already compensated you for your work (or more accurately, your property), and you are now double-dipping—asking for even more compensation? Wouldn’t that be unfair? Continue reading “To Taylor Swift, Love Freedom”→
A recent proposal out of Iceland has been making the waves around economics blogosphere. In it, Frosti Sigurjonsson critiques the current fractional-reserve banking system and proposes instead a system he calls “Sovereign Money”. But what is “sovereign money”, how is it different from the current system, and how will it work? In this post I’ll first explain how the current system works and the problems it has from an Austrian perspective, then go through the sovereign money proposal to see how it solves any of the short-comings of the current system.
How is money created in the current system?
Before we can analyze the sovereign money proposal, we need to understand how the current system operates. This can be demonstrated in a 4 step process. But first understand that a central bank (like the Bank of Canada or the Federal Reserve) is a lot like any other bank: it offers deposit accounts and loans to clients. The difference is that you can only become a customer of the central bank by invitation only.