Econ on da groun… econ on da groun

11 Responses to Econ on da groun… econ on da groun

1. Unfinished says:

   26 January 2010 at 12:45 PM

   My jaw is on the ground. My college econ classes did not help me keep up with that. But I feel like I learned something…from a rap. I don’t think I have ever said that before.
2. lidphile says:

   26 January 2010 at 1:27 PM

   Saw this first at mises.org posted by the illustrious Jeffrey Tucker. What’s this strange connection between liturgical awesomeness and Austrian economics that keeps popping up? for me it was in the opposite order.
3. JohnE says:

   26 January 2010 at 1:59 PM

   I know you know (ya know?) but that’s the Acton Institute, not the Action Institute, although radio interviewers frequently call it the Action Institute.
4. JonM says:

   26 January 2010 at 2:00 PM

   This was pretty funny. But I majored in Economics so I would find the humor in this!

   Within two decades Keynes will be one of the most condemned economic minds.

   But Austrian school economists are not perfect because they often will not accept that some authority has to regulate capital, be it sheets of cotton or silver ingots. No way around this if we want to prevent .05% of the population gaining 98% of capital. But certainly, their assessment of how booms are typically just the result of unsustainable banking policy is flawless.

   I saw they brought up the broken glass fallacy. This is so important to understand in order to untangle the mess that is modern economic theory.

   Imagine a bookstore has its front window smashed. Some think that if we smash a window, there is a net stimulative effect because now the shopkeeper has to pay a glacier to repair the window. Keeping the explanation simple, what this notion fails to take into account is that the glacier is paid either out of money that would have gone towards something else (eventually) or has to be borrowed and repaid with interest.

   There is a reason usury was once a serious crime. Clearly in Dante’s time, usurers were not held in esteam. Today some fundamental aspects of money have shifted making money lending arguably morally different, which is why I imagine Canon Law was rewritten in 1983 on this point.

   Indeed, borrowing massive sums to pay for wars, day to day operations, and retirement benefits cannot be sustained particularly in societies with declining fertility rates.
5. JohnE says:

   26 January 2010 at 3:42 PM

   “…cannot be sustained particularly in societies with declining fertility rates.”

   This is what I fear. We are spending like there’s no tomorrow, and in a way it may be a self-fulfilling prophecy. What will be the fallout when we increase debt while killing off subsequent generations that are responsible for paying it? I think the effects of nearly 40 years of legalized abortion and the widespread acceptance of contraception are only just beginning to be felt.
6. mfranks says:

   26 January 2010 at 8:49 PM

   This was brilliant and funny (in my opinion) – even for a financially challenged human being such as myself, who never took a single class from the business school at the university I attended.

   I did take a classes in statistics, including Game Theory – and never gamble as a result.
7. Orlandu84 says:

   26 January 2010 at 11:46 PM

   Superb! I guess I was able to understand the humor since I just read “The Ascent of Money” by Niall Ferguson (which is an excellent and straight-forward book on the history of money). Nonetheless, videos like this need to be standard viewing for college and/or high school students.
8. Timbot2000 says:

   27 January 2010 at 12:12 AM

   Very good, though on the level of the actual theory expressed, the content of the rap owed more distinctly to Mises and Bohm-Bawerk than to Hayek (since his most personal addition to the Austrian theory set was the role of knowledge in economic systems, and dealing with economics ans an epistemological problem rather than an empirical one.
   “In the long run, we’re all dead”
   Sun Zi had some choice words for generals with such a non-holistic, and blinkered view of things, it applies equally well to economists:
   “???????????????????????“
   ?…he is without humanity, is no leader of the people, no counselor to his lord, and no master of victory”
9. Timbot2000 says:

   27 January 2010 at 12:25 AM

   “There is a reason usury was once a serious crime. Clearly in Dante’s time, usurers were not held in esteam. Today some fundamental aspects of money have shifted making money lending arguably morally different, which is why I imagine Canon Law was rewritten in 1983 on this point”

   No fundamental aspects of anything changed, midaeval thinkers on money were simply vindicated in their observation that the lender, far from operating a zero-sum utility model of money, actually suffers loss in terms of opportunity cost as he is deprived of use of his money for some discrete period of time bu the lending of it to another, whether at interest or not. This floats on top of the risk the lender automatically shoulders by lending. In a no-interest system, even if civil authority were able to force deadbeats to repay the principal owed, the lender will still suffer additional loss by the extended deprivation from his capital above and beyond what he budgeted for. Interest is moral insofar as it is negotiated without compulsion or fraud between two competent parties. It is however, immoral to knowingly make a loan, with or without interest, to someone with no reasonable ability to repay, just as it is likewise immoral to procure a loan with no intent to repay or under false pretense or misrepresentation of ability to repay, with or without interest.
10. Eric says:

    27 January 2010 at 11:30 AM

    I’m thinking about growing a moustache.
11. JonM says:

    28 January 2010 at 8:05 AM

    @Mfranks,

    Game Theory was my favorite aspect of Microeconomics. Its development is usually creditted to the US military, however I think Italian diplomacy represented its organic development.

    @Timbot,

    Yes, you are correct that when we assess what is a ‘necessary rate of interest,’ not only risk is a factor as there is a time value to money. Sometimes we might use US Treasuries as the ‘assured’ rate of return on any cash. Similarly, we need to know the ‘standard’ return for a given project or sector.

    In Luke, we have a parable of a man who essentially lost his position to his lord. The man, who counted and collected debt, made agreements with those who owed money by reducing the face value of notes.

    This was not theft from his lord because note collectors would take a spread between the actually money borrowed and the value of the note. I am welcome to correction, but my understanding is that the man sacrificed ‘commission’ for the sake of freeing those indebted to higher amounts. Christ clearly speaks of the man in a positive way.

    As with much in Scripture, there are multiple levels and dimensions. The morality of usury is in here.

    Furthermore, going back to Greek philosophy, usury was condemned because it did not represent real work; rather, to lend money as a way of life was deplorable as the lender did not contribute labor or skill.

    Flash forward to the late 19th century in America, industry titans who were financed by a certain collection of banking houses in Europe succeeded in persauding states to allow for corporations, and thus organic business of owners (proprietors and partners) has become extremely difficult.

    SSPX actually has a pretty insightful discussion on their website about usury, the nature of money, etc.

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