[GenghisTron]

Originally Posted by uBeR

OK, "bro," don't get so mad. If you can't even make an intellectual argument without resorting to calling people "douchebags," then perhaps this might say something about your argument. Let's look at it.

uBer, stop projecting. You initiated the ad homs, not me. I'll agree to stop ad homs as long as you do, just uh, realize that your post in the previous thread was a monument to intellectual dishonesty and ad hominem attacks. It was kind of repulsing, tbh.

Originally Posted by uBeR

You say there are a lot of different views, schools, or thoughts in economics. This is true. But I never said there wasn't.

Right, but what you are trying to do, is claim that something is objectively true, when that's not the case. Your only argument for backing up the fact that externalities exist, was that that the mainstream supports it. That's my contention. The simple fact is, economics is not a 'hard science'. Every passing year, we come across new theories and new data that shake the foundations of what we previously thought. Economics, as Rothbard pointed out, is a process--a process of understanding human psychology. No one has a monopoly on the ideas in Economics, it is still a hotly contested field of ideas.

Originally Posted by uBeR

What I said was that externalities (or whatever euphemism you wish to use) exist, along with other forms of market failure, which is indicative of the inefficiency of markets, in particular free markets.

This is according to neoclassical economics (which both laissez-faire and Keynesian economics rely on).

Not true. Unless you're using a broad interpretation of 'laissez-faire', then no, you're wrong. Modern day laissez-faire (Austrian) is endogenous, whereas neoclassical economics are exogenous. Neoclassical economics rely on multiple theories that have been proven bunk, and even some Top 20 Econ school professors are moving away from Neoclassical orthodoxy.

Originally Posted by uBeR

You say I should look at Austrian economics. I say no I shouldn't.

I've read work by Austrians. It's usually all garbage, which is the reason why Austrian economics is not mainstream, is considered heterodoxal, and why no one takes them seriously anymore.

Despite the fact that it's obvious you have read nothing by Austrians, and have a very shaky understanding of the Austrian school, your critique of it being considered 'heterdoxal' is yet again an indictment of your own confirmation bias. Just because something is outside the mainsteam means jackshit. As a liberal, you should realize that orthodoxy is bullshit. Remember how in my 'Control' thread, you tried to use John Stuart Mill against me, oh right, here's what JSM had to say about that;

The despotism of custom is everywhere the standing hindrance to human advancement, being in unceasing antagonism to that disposition to aim at something better than the customary, which is called, according to circumstances, the spirit of liberty, or that of progress or improvement.... Custom is there, in all things, the final appeal; justice and right mean conformity to custom.... All deviations ... come to be considered impious, immoral, even monstrous and contrary to nature.

Besides, laissez-faire economics used to be considered 'orthodox' and 'mainstream' long before Keynes came around. Wealth of Nations was written in 1776, and Keynes wrote The General Theory in the 1930's.

Pro-tip: There's tons of schools of thought that are 'heterdoxal', your attempt to use it as some sort of way to discredit by association is kind of sad.

Also, I'm interested in knowing what you've supposedly 'read' by Austrians?

Originally Posted by uBeR

There's a reason for this, namely that it's patently off-base. What's the Austrian response to externalities anyway (for now ignoring other obvious causes of market failure)?

I already gave you a general outline in my last post. Mises said externalities in an Austrian free market would not exist because there were be robust property rights and contract law, based on the homesteading principal. So, say you find an oil deposit that you homestead (Make use of, when no one else is using). Using these principals, by contract, whoever homestead the deposit would be contractually-obligated to be fully liable for any damage caused.

Another problem with externalities, is the fact that we have corporations. Corporations enjoy reduced moral hazard because they get special treatment by Governments (LLC status which caps their liability, for example).

The point is, if you force a company to be fully responsible for their actions (Through a contract) it will be in their best interest to not cause a potential negative externality. Some things, like over-fishing, are already being addressed by market mechanisms. Catch-sharing is addressing the once widely accepted negative externality of over-fishing or 'The tragedy of the commons'.

Originally Posted by uBeR

Rothbard says they don't really exist, because prices in the market reflect precisely what everyone wants. Is it true? Of course it's not.

No, Rothbard does not say that. Again, you're either being taught factually incorrect things about the Austrian school, or you just plain don't know what you're talking about.

Originally Posted by uBeR

Maybe we could say externalities don't exist when all market participants are perfectly rational, perfectly informed, and experience no transactions costs. Nothing comes close to reflecting this.

That's funny you say that, because a lot of mainstream Neoclassical economists think that agents are perfectly rational, they maximize utility and profits, probability distributions, efficient market hypothesis, etc.

Whereas the Austrians don't believe all agents are rational, etc., vis a vis the subjective theory of value/Marginalism. It's clear you don't understand Austrian theory, or were wrongly taught about Austrian theory in your mainstream school. Sad.

You should try reading some, expand your horizons. Wait.. I thought that's what colleges were for?

Originally Posted by uBeR

They also say Pigouvian taxes are wrong because they don't rely on price mechanisms (and current market prices already reflect exactly what everyone wants), so it doesn't reflect what people want because it's just big bad government imposing its will on us pawns. Well, that's not true when the Pigouvian tax is implemented through democratic means, for example, representing the will of the people.

You're wrong. Rothbard teaches us that Pigouvian economics are bunk because the only way you can truly judge what an individual likes and dislikes are through his own actions. A mathematical model cannot and does not account for the subjective likes and dislikes of every individual. I'm curious who taught you that, because it's so far off-base, it makes my head hurt in confusion.

Also, 'democratic means' really is a joke. Again, a 'democracy' cannot and does not account for the individual likes and dislikes of every person, and therefore is not capable of accounting for what people want and do not want. A dictatorship of the proletariat (democracy) is still a dictatorship.

Originally Posted by uBeR

So, anyway, what was my argument? That externalities exist and they represent the inefficiency of markets, particularly free markets. Your response? Yes, they exist!

Wow, now you're pulling a Scuzzy. No, I don't agree externalities exist, well let me rephrase that--externalities exist when there's perverse incentives set in place by Central Economic Planners that create undue moral hazard by corporations, whereas if we had a free market based around strictly-defined property rights and contract law, externalities would not exist.

Also, in my last post, I wrongly said Coase admitted externalities existed. Coase, in his paper 'The Problem of Social Cost', concluded the same thing (roughly the same, at least) Mises did. With sufficiently-defined property rights, and low transaction costs, the business in question would more readily internalize a potential externality. So I was wrong earlier, Coase does in fact say that externalities don't exist--my apologies!

Originally Posted by uBeR

Well then. That settles the issue. You say it's a problem of transactions costs. OK, sure. So what? The result is the same. Inefficient markets. Call it what you want, but you're going to get the same thing.

Once again, you're completely misrepresenting everything I've said on this topic. Please, get some intellectual honesty. It's not that hard. I've gone over the same thing multiple times with you, then you pull a Scuzzy and completely misrepresent what I've said so far. Maybe you just have a bad memory? I dunno.

Originally Posted by uBeR

In telling me to explain the problems of economic planning and calculation, you create a grave (but false) dichotomy between free markets and planned markets (in other words, laissez-faire capitalism or state capitalism). Of course, it doesn't take a genius to figure out the absurdity of such a dichotomy. It should be clear that just because I think free markets are inefficiency that I automatically support state capitalism Ã* la the USSR.

You're missing the point. The Knowledge Problem and the Economic Calculation Problem are an affront to all forms of Central Economic Planning. Doesn't matter if it's socialism, communism, or some prototype. The central point of these two theories remains constant--a central planner, or a group of central planners, cannot account for the intricacies of the market. Quite simply put. Hayek and Rothbard/Mises obviously have gone in far greater detail, but it's clear that people are not omnipotent enough to correctly account for the intricacies of the trillions of nearly invisible interactions that occur in a market. Which is why CEP simply does not work.

Originally Posted by uBeR

Also, your suggestion that I was somehow calling the United States a free market is totally off-base. Your entire tirade about the unfree nature of Americans is duly noted, but completely irrelevant. I'm not judging free markets based on the U.S. or any other country.

The U.S. is not a free market, and the closest things we have reflecting free markets are Third World countries (which is for a reason) who have its doctrine rammed down their throats.

Oh god, I hope you're kidding.

According to virtually every major index for economic freedom, Third World countries run by dictators and rival gangs (surprisingly!) rate near the bottom, and countries with advanced economics that have sufficient property rights, legal systems, etc., are near the top.

If you're going to make such an extravagant claim, it's usually best to back it up with some facts.

Originally Posted by uBeR

But that doesn't mean you can't talk about free markets. Nothing I've said here depends on the U.S. as a model. We can talk about free markets despite the U.S. not being one.

I'm apologize for assuming you were using the US as a model, because there are a lot of people who hold the same ideas and criticisms of the 'free market' as you do, and commonly use the US as an example. As we both realize, anyone with a shred of intellectual honesty realizes this is simply not the case!

Originally Posted by uBeR

Neoclassical economics tells us exactly what I've been saying. Externalities, including those resulting from transactions costs, exist and they are Pareto inefficient--especially so in unregulated, free markets (even if they don't really exist anywhere).

Neoclassical economics also tell us that all agents are profit and utility maximizing.

And again, you're trying to authoritatively dictate that something which is very much a contentious topic, is objectively true, and there are no alternatives. Objectivity. Get some.

Originally Posted by uBeR

In fact, the less measures there are to prevent externalities (like pollution standards), i.e. the freer the market, the more prevalent externalities are likely to be. The "market forces" you laud are the very source of economic inefficiency.

Again, you're making extravagant claims without providing a shred of evidence. I mean, it's clear you're wrong, but I'd like a launching point from which to destroy this erroneous idea of yours.

Originally Posted by uBeR

As for the other thread, you'll have to excuse my low interest in your nonsensical psychobabble, as I'm currently moving and don't have the time or energy to entertain all of your silly notions at the moment.

That's funny you say that, because you proposed a number of arguments which were completely and totally factually incorrect, and I called you out on it. Oh right, but I'm the one spewing psycho-babble.

No one says you have to respond right away, shit, it took me a week to reply to this thread. It's lame to type up a huge post, respond to someone's rebuttal, and then have your rebuttal totally ignored because it's 'psycho-babble'. Sounds to me like you're making excuses.