Category Archives: Economics

Desocialization Revisited

Merlin

The Main Idea: Looking back on the Albanian desocialization drive of the early ’90s, the failure to securitize state-owned assets and the insistence on a disastrous policy of physical land restitution stand out as the main failings.

1. Introduction

1.1 Something more than twenty years ago, the Socialist Regimes of Eastern Europe fell one by one after the unwillingness of the Soviets to resist such development by force became known. Despite having severed all meaningful political connections to its European fellows since the ’50 and its lone Chinese ally since the ’70, the Albanian regime still could not avoid joining the fate of the overt Socialism in Europe, and by 1992 a feverish desocialization effort guided by a new government was in the works.

1.2 Looking back on that effort, what can one say about the long-term effects of the route chosen to transform a state-run economy into a mostly private one? To what extent where the Austrian prescriptions on desocialization followed, and to what effect? I will try to answer these questions, without expecting my analysis to apply to every eastern desocialization effort.

Long time no see

Long time no see

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The Euro as a proto-Gold Standard: local insights

Merlin

1. Better than nothing? 

Modern Europe: where 50 shades of gray make all the difference

Modern Europe: where 50 shades of gray make all the difference

1.1 Few of those interested in economics can afford to show no interest at all in the Euro experiment, undoubtedly the most salient monetary development of the last decade (not of the current one, though), for better or worse. To libertarians, the question of interest is such: was the adoption of the Euro an improvement over the previous situation of a multitude of national fiat currencies, or a regression to a less desirable state of affairs?

1.2 I will try to provide my answer by availing myself of the local perspective of a citizen with, as it were, a first-row seat to the Euroshow. For prior discussions of the Euro on this humble blog, see here and here.

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Bitcoins for Misesians and Hayekians

Merlin

EDIT: Our own z1235 has posted a couple of months ago a reconciliation theory of Bitcoin and the Regression Theorem which is very similar to the one exposed below. Unfortunately I managed to miss that post in due time and was reminded of it only after publishing this.

 

The main idea: Bitcoin’s current rise to prominence will both mark the end of the use of Regression Theorem to discourage any alternative to the Gold Standard, and serve as the testbed of Hayek’s monetary insights.

1

Let yours truly add his own two cents to the substantial analyses recently published on the great performance of Bitcoin (see herehere, here or here for a few Austrian perspectives), or specifically on what the its undeniable, if perhaps temporary, success may yet show to followers of the Austrian tradition.

1. Bitcoin for Misesians

Bring it on!

Bring it on!

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Pro-business or Pro-market?

[This is the second article in the left-leaning LBRT101 section of the Guided Study at Liberty HQ]

Big Business
paul bica / Amazing Photos / CC BY

One of the main concerns curious people have about libertarianism is that it is pro-business and pro-Big Business. If it ain’t multinational, it ain’t capitalism! But is being pro-market inherently the same as being pro-business? Do libertarians really love large corporations? These are questions that are often ignored, but are central to the discussion of economics.

So what do the questions mean? Isn’t being pro-market the same as being pro-business? In fact, the answer is a surprising “no.” To understand why this is the case, we need to understand the concept of corporatism as opposed to that of free markets. Free markets and libertarianism are about property rights and the freedom of choice that arises from those property rights. Corporatism, as we shall see, is the negation of both of these principles.

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Anarchists for the Euro (Yeah Baby!)

What a splendid sight the last Smiling Dave’s post has turned out to be. Who can’t appreciate the sheer deliciousness of an anarchist recommending a country (Italy) stay on the Euro. That’s what we’re all about. Right after shilling for NATO and giving a thumbs up to the NWO, we are majorly into giving the positive sides of the Euro for screwed up countries! We also like to stick up for the gulag, nuclear arms races, and a well-armed police force to keep the proles in check.

The whole process of how Smiling Dave arrives at his radical conclusion is a sight to behold. He starts by positing Italy produces “little to nothing” or “almost nothing”. That’s funny because most years Italian manufacturing output is estimated as being the 6th largest in the world. So according to Smiling Dave there are at most just five countries in the world which produce anything worthy of note. All the others make even less stuff than Italy which already makes just about jack shit!

Ever heard of Fiat, Alfa Romeo, Lancia, Iveco, Aprilia, Ducati, Vespa, Beretta, Benelli, Zanussi, Ferrero, Lavazza, Parmalat, Diadora? You think you have, but actually they’re just figments of your damaged mind! Too many shrooms, bro. If they were real it would mean there is load of stuff that is Italian made, but from what we know from Smiling Dave that just isn’t possible.

Dave insightfully informs us a currency which could only be spent on Italian goods would turn into “useless garbage”. Since Italians don’t make anything anyone could use their currency would be worthless. You know, because who could have a use for a Lamborghini?

On the strength of this observation Smiling Dave concludes Italy is therefore better off staying on the Euro. If it were to go back to Lira, it would be shooting itself in the foot. Italians would not be able to import anything because they have nothing to offer in return. Because you know, what could the 8th economy in the world by exports have to export?

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Should Italy leave the Euro?

Michele asked me about Italy leaving the Euro. Here’s her question:

i’m italian and a friend of mine claims that in order to solve all our economic problems we should exit the euro and devalue the currency.
he than claims that devaluating a currency doesn’t bring inflation…

note that i just want to refute the claim that devaluations don’t bring inflation, not his entire claim.

sadly i don’t have a competent guy in economics at hand and i really need a check on the whole thing.
i’d really like to read your take on this account.

thanks

Short answer: he may be right. But he is looking at only a small part of the big picture. Leaving the Euro will be a big mistake for Italy, economically.

To understand what is going on in Italy,

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Summary of Keynes’ Theory, and the More Obvious Flaws in it.

Wisely Written by Smiling Dave, and Expertly Edited by Lady Saiga.

We have a Special Guest from Beyond the Grave with us for this article, the famed Henry Hazlitt. Using Clayton’s Universe-as-an-Acting-Being Ouija Board, we were able to establish contact with the late, great Mr Hazlitt. What follows is an exact transcript of our communication with the Next World:

SD: Mr Hazlitt, are you basing this article on your conversations with John Maynard Keynes in the afterlife?

HH: We are not in the same place, unfortunately, so I am unable to chat with him. All I say here is from my researches on Earth, as published in my book, The Critics of Keynesian Economics, Chapter 14.

SD: Could you begin by summarizing the essence of Keynes’s theory, in 25 words or less?

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The Myth of Money Shortage

Inspired by a discussion over at the libertyhq forum, Smiling Dave has decided to explain why there cannot be a shortage of money, that the whole idea is born of ignorance, as J. B. Say rightly wrote in Chapter 15 of his classic work.

To make sure there is no foul play, Dave has invited his friendly adversary, Devil’s Advocate, to debate the topic. What follows is a verbatim transcript of their epic meeting.

ID-100100894Image courtesy of Stuart Miles / FreeDigitalPhotos.net

DA: Up to your shenanigans again, hey Dave?

SD: If you mean am I about to debunk yet another economic fallacy with rapier sharp insight, why yes.

DA: Rumor has it you are about to take on not only Keynes and all his merry men, but a group of scholars who call themselves Austrian Economists, who purport to march under the banner of the mighty Nobel Prize winner, Friedrich August von Hayek.

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Is High-Frequency Trading Detrimental to Markets?

by z1235

The prevalent view in the media over the last few years has been that high-frequency trading (HFT) is dangerous for the financial markets and that regulation is necessary to ensure market stability. From a voluntaryist perspective I will argue that HFT — as any other technological advancement and voluntary interaction — is beneficial to the markets and that most of the undesirable phenomena for which it is blamed (market instability) are the result of unintended consequences from regulation.

DJ_flashcrash_620x349

HFT is implemented via computer algorithms that take market data (trades and orders) as input, process it based on statistical arbitrage algorithms, and issue trading orders as output. Statistical arbitrage is a process of discerning and exploiting statistical patterns in the market data. What makes these algorithms high-frequency, as opposed to any other trading algorithm, is the quick (sub-second) turn-around time between the occurrence of the input data and the output orders. Driven by increases in computing power and network bandwidths, the technological arms race between profit-seeking firms has driven the turn-around times down to the order of micro-seconds.

Why is speed important to a HFT firm? Assume a pattern has been discerned in the behavior of IBM and MSFT shares by which a move in the price of MSFT (and IBM) is expected to be more likely over the next few seconds/minutes given a certain input of IBM and MSFT market data (trades and orders). Whoever is the fastest in (1) acquiring the input data, (2) processing it to establish the existence of the pattern, and (3) sending the orders out to take advantage of the discerned statistical edge, will take the largest piece of the profits and, at the same time, diminish or extinguish the statistical anomaly by its actions. This is why constant investment towards lower latency (smaller delay in communicating market data and orders between the HFT algorithm and the exchanges) is necessary for maintaining competitiveness. Continue reading

Liberty and Property: Two Sides of the Same Coin

This is part 3 of a multi-part reproduction of Auberon Herbert’s A Plea for Voluntaryism. Part 2 is here.

Herbert discusses the intimate link between liberty and property. You cannot love liberty and undermine property rights. He says, “property is … the crystallized form of free faculties.” Without liberty, the individual is reduced to a slave, a robot, an automaton, a mere cog in a machine. Happiness and flourishing are impossible under conditions of containment that deprive the individual of the full expression of his higher faculties. But it is property that preserves for the individual the fruits of this expression. Thus, without property, these expressions are fruitless; which is the same as to say the individual really has no freedom at all.

Delacroix – Liberty leading the people

Nothing can be well and rightly done, nothing can bear the true fruit, until you become deeply and devotedly in love with personal liberty, consecrating in your hearts the great and sacred principle of self-ownership and self-direction. That great principle must be our guiding star through the whole of this life’s pilgrimage.

Away from its guiding we shall only continue to wander, as of old, hopelessly in the wilderness. For its sake we must be ready to make any and every sacrifice. It is worth them all–many times worth them all. For its sake you must steadily refuse all the glittering gifts and bribes which many politicians of both parties eagerly press upon you, if you will but accept them as your leaders, and lend them the power which your numbers can give.

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