Rothbardian Principles

[kuronosan]

Someone explain this to me. I recently engaged in a discussion with someone about politics and they cornered me with "Go read Rothbard, it will show you why the free market works".

I was trying to explain that corporate oversight is a problem because of lack of regulation and his counter was that the oversight only exists because of excessive regulation and that government laissez-faire is the only solution to avoid it. Also, I'm apparently a communist and my college professors (who were biological scientists) have lied to me with propaganda and misdirection.

I've heard Rothbardian tossed around here, but I'm not keen on economics....

So, what is the significance of this?

[Blubbartron]

Your first problem seems to be that you were arguing with someone that believes economics is a hard science that makes predictions that are true with any regularity at all. Those types of people are intellectual invalids. They're the people that forget about all the economists that go on TV explaining why some new policy will work (because <insert economic theory here>), and then 2 years later after it's obvious that the policy had the exact opposite effect of what they previously claimed, they're back on TV to explain how they weren't really wrong and here's this new theory that shows it will work if we only do it better (less regulation, etc etc).

More succinctly:

http://demotivators.despair.com/demo...emotivator.jpg

[Edelweiss]

You know, we had some guy named Rothbardian around here a couple years back.

I think we got similar levels of crazy out of him.

[Pirian]

Tell him to go read Upton Sinclair's The Jungle, if he really insists on arguing his point by saying "go read a book". While the novel itself is a fictitious story, it is commonly accepted as an example the unregulated meatpacking industry of the early 20th century, as well as what happens in the absence of social programs.

[Ashmada]

I'd never heard of Rothbard before, but if Wikipedia is to be trusted, we're talking about a pro-torture holocaust denier who believed in the theory of races having different levels of intelligence (mainly that blacks were quite dumb, indeed)... his economic theories seem to make precious little sense.

I get a "time cube" vibe from the guy.

[Blubbartron]

I'd never heard of Rothbard before, but if Wikipedia is to be trusted, we're talking about a pro-torture holocaust denier who believed in the theory of races having different levels of intelligence (mainly that blacks were quite dumb, indeed)... his economic theories seem to make precious little sense.

I get a "time cube" vibe from the guy.

If he's a holocaust denier he's a moron, but the bold part isn't exactly some crackpot theory - literally dozens of papers have been published investigating whether or not people of different races tend to be more or less intelligent (controlling for as many socioeconomic variables as possible, and using the least biased testing methods that people could devise), and blacks were consistently one standard deviation (give or take) lower than other groups. You can argue that more investigation needs done, and I'd agree with that, but right now the evidence is pointing that way. It doesn't mean it'll always be true (because evolution), but it does appear to be true at the moment.

Good luck if you do try to get people to do more research though. Even if people honestly aren't racist, and they do their damnedest to remove every trace of bias from testing methods, and their study is scientifically flawless, if the results end up consistent with previous research, they'll be labeled racists.

[Serra]

Your first problem seems to be that you were arguing with someone that believes economics is a hard science that makes predictions that are true with any regularity at all. Those types of people are intellectual invalids.

I take offense at this.

Is the data as clear cut as hard science data? No, of course not -- there's a human element to the data and real experiments are generally impossible/frowned upon. But, any economist, political scientist, or other social scientist (those who actually do econometrics) know that their predictions are based on imperfect data. That's why things published in academic journals have statistical significance, confidence intervals, error terms, and things like that. It's not that they're saying "given x, y, and z, this is definitely what's going to happen," but rather "the population or sample of data makes us believe, with some degree of confidence, that given these factors, we will observe this phenomenon."

It's just people don't want to hear that stuff, don't want to hear about the statistical analysis, the methods used, the painful math, the assumptions made, etc. I'm not convinced that the majority of people in the fields really want to read all that. Most people just want to simply know, if we do X, what will happen?

Is there a lot of voodoo math involved? Unless someone can succinctly explain to me what robust standard errors are and what they actually do, you're not going to convince me there's not.

Am I saying econometric models are right all the time? No, of course not. But to just say, "lolEconomist can't predict anything because it's not a hard science" makes it seem like you don't know anything about econometrics.

And for the record, based on a cursory reading of Rothbard's wiki page, he's not one of those who actually believed in econometrics -- IE, he didn't believe in looking at actual evidence.

Tell him to go read Upton Sinclair's The Jungle, if he really insists on arguing his point by saying "go read a book". While the novel itself is a fictitious story, it is commonly accepted as an example the unregulated meatpacking industry of the early 20th century, as well as what happens in the absence of social programs.

Yeah, it sounds like he's basing his economic world views on something he was told should shape them -- in other words, he doesn't actually understand the content of it well enough to explain it to others.

[Stilzkin]

Your first problem seems to be that you were arguing with someone that believes economics is a hard science that makes predictions that are true with any regularity at all. Those types of people are intellectual invalids. They're the people that forget about all the economists that go on TV explaining why some new policy will work (because <insert economic theory here>), and then 2 years later after it's obvious that the policy had the exact opposite effect of what they previously claimed, they're back on TV to explain how they weren't really wrong and here's this new theory that shows it will work if we only do it better (less regulation, etc etc).

Apparently that can't be said about Rothbardians as:

Rothbard rejected the application of the scientific method to economics, and dismissed econometrics, empirical and statistical analysis, and other tools of mainstream social science as useless for the study of economics

He instead embraced praxeology, the strictly a priori methodology of Ludwig von Mises. Praxeology conceives of economic laws as akin to geometric or mathematical axioms: fixed, unchanging, objective, and discernible through logical reasoning, without the use of any evidence

So it's a more extreme view then you think.

[BaneTheBrawler]

edit: oops, new posts.

[Blubbartron]

I take offense at this.

Is the data as clear cut as hard science data? No, of course not -- there's a human element to the data and real experiments are generally impossible/frowned upon. But, any economist, political scientist, or other social scientist (those who actually do econometrics) know that their predictions are based on imperfect data. That's why things published in academic journals have statistical significance, confidence intervals, error terms, and things like that. It's not that they're saying "given x, y, and z, this is definitely what's going to happen," but rather "the population or sample of data makes us believe, with some degree of confidence, that given these factors, we will observe this phenomenon."

It's just people don't want to hear that stuff, don't want to hear about the statistical analysis, the methods used, the painful math, the assumptions made, etc. I'm not convinced that the majority of people in the fields really want to read all that. Most people just want to simply know, if we do X, what will happen?

Is there a lot of voodoo math involved? Unless someone can succinctly explain to me what robust standard errors are and what they actually do, you're not going to convince me there's not.

Am I saying econometric models are right all the time? No, of course not. But to just say, "lolEconomist can't predict anything because it's not a hard science" makes it seem like you don't know anything about econometrics.

And for the record, based on a cursory reading of Rothbard's wiki page, he's not one of those who actually believed in econometrics -- IE, he didn't believe in looking at actual evidence.

The problem is that a lot of economic theory isn't based on econometrics, and further, that the statistical investigation being done is (like most statistical analysis) prone to spurious correlations that aren't reflective of actual causation (and people have a nasty habit of forgetting that correlation != causation). Don't forget that the "hard" sciences depend on confidence intervals/sigma levels as well - the difference is that hard sciences have much, much stricter rules for determining if something is true/observed. I believe the gravity wave thing for proving the big bang was 5 sigma. That's 99.9999% likely to be correct. Compare that with the standard CI required to publish anything in a soft science (~95%). In other words, the soft sciences are going to be wrong on the order of 100,000 times more frequently than hard sciences.

Time to talk about assumptions - economics makes assumptions about human behavior that are plainly and obviously wrong. They do this in order to simplify things that are otherwise impossible to model. When you start with an assumption that's wrong on the face of it, no results that come from that assumption should be trusted. The biggest assumption economics makes is that people will behave rationally in order to maximize outcomes in favor of their own self interest. I shouldn't have to explain that human beings are more often irrational than they are rational, and that's especially true when it comes to things like their wants and needs.

Lastly, the inability to control for variables and do proper experimentation isn't some small hurdle that can be brushed aside (slightly related to the standard errors you mentioned, but more so the fact that this is largely relying on observational data). The folly of not being able to experimentally test a theory is that literally dozens/hundreds of mathematical models can be created that fit the data set, and all roughly equally explain the correlations present in the data set. Observationally data frequently contains a high number of strongly associated covariates, and the number of possible models for explaining the data set explodes with each new covariate.

To put it more simply - trying to model why people choose to do things (whether that be for sociology, psychology, or economics) is largely a waste of time until we can mathematically model a single brain. If we can't model a single brain, why the hell are we trying to model the results of millions of brains working in concert? It's completely ridiculous.

[Kuya]

We had a discussion about rothbard ages ago. Cliffnotes:

We came to the conclusion rothbardians are racists. Or at least they seem to think that if blacks do worse than whites economocally then that is simply the way things should be cause capitalism.

[Kuya]

Also if his response to you is to go read a book then he's not worh having a discussion with. If he understands his theories well enough he should be able to explain them to you. It isn't much different than telling someone to go read the bible as evidence of what they're arguing for.

[Serra]

On my phone atm, so no desire to write paragraphs, but just briefly, I actually do believe that people behave rationally. It's just that a lot of people assume that what's the highest utility for me is the highest utility for everyone. But utility is subjective. If I receive the highest utility from wearing a tinfoil hat and living out of a dumpster, then I should behave accordingly.

[kuronosan]

Well, my argument was that if the free market were working, we wouldn't have corporate monopolies and oversight. His response was that because I support single payer health care and social programs (Public education, Social Security, Welfare, etc) I'm a socialist... which by extension is a communist. Then I was called a Marxist to which I asked if he knew what the Communist Manifesto was and if he had read it. My answer was what I posted above - "I'm well-versed in Marxism because I went to college and unlike you, who is a pseudo-scholar, I know my stuff - you should read Rothbard if you really want to be enlightened. All social programs are bad. Free market is the only way to go".

[Blubbartron]

On my phone atm, so no desire to write paragraphs, but just briefly, I actually do believe that people behave rationally. It's just that a lot of people assume that what's the highest utility for me is the highest utility for everyone. But utility is subjective. If I receive the highest utility from wearing a tinfoil hat and living out of a dumpster, then I should behave accordingly.

You're making the assumption that people actually analyze the consequences of their decisions or examine them in context of their beliefs prior to making them (which would be rational), but they often don't. People are impulsive, emotionally-driven animals.

[Kuya]

Well, my argument was that if the free market were working, we wouldn't have corporate monopolies and oversight. His response was that because I support single payer health care and social programs (Public education, Social Security, Welfare, etc) I'm a socialist... which by extension is a communist. Then I was called a Marxist to which I asked if he knew what the Communist Manifesto was and if he had read it. My answer was what I posted above - "I'm well-versed in Marxism because I went to college and unlike you, who is a pseudo-scholar, I know my stuff - you should read Rothbard if you really want to be enlightened. All social programs are bad. Free market is the only way to go".

Sounds like a waste of time. Next time make a thread about hot chicks.

[Quicklet]

I've read some Rothbard in my day. I don't think it's fair to completely dismiss some of his ideas from an academic perspective. He is basically the American father of libertarianism and embodies the viewpoint of someone who takes that stance to a logical extreme, both economically and socially, and he viewed the goal of economics to be to explain historical causes and reasons for economic events, not to suggest fiscal and monetary policy by the government (other than to argue that any government interference in a truly free market distorts the true market equilibrium). I think some of his work on the Great Depression and on monetary policy is underappreciated as to how modern government monetary policy tends to create economic bubbles and favor a certain segment of the population over others (you see shades of this in the housing bubble of the 2000s and the 2008 bailout of Wall Street).

You can see a reflection of Rothbard in someone like Rand Paul, who made similar remarks on the civil rights movement before he become a serious national figure and had to backtrack his comments. It is basically anarcho-capitalism and views the government's role as only for preventing fraud and unjust violence, and views the notion of government as one that tends to corruption and overreach over time.

Pure Rothbardianism is a fringe view, but there are a number of academic descendants of Rothbard who are more moderate in their views while blending many of his better ideas with the rest of economic thought. Are some of these writings worth reading? Sure, especially for context for some of the opposition to Keynesian economics. Is it all (or even mostly) stuff you would want to agree with? Probably not.

[Meresgi]

Economists are Meteorologists but instead of a frowny face storm its a frowny face $$, they bullshit you about things they can't predict 100% and then tell you "Well actually I was right because....".

[kuronosan]

So am I right that free market economics don't work in reality? Or is free market only possible in anarchist societies?

[Andalusian girls]

regulated free market economies have done more than anything else to pull the masses out of poverty while affecting technological advancement and are correlated with increased political and social freedoms.

a completely unregulated free market as favored by Rothbard (who attacked Milton Friedman for being a socialist and Adam Smith for enabling Marxism) is Somalia. the guy advocated the end of the state monopoly on force and championed a reliance on private security forces, id est the guy advocated anarchy, or what he called anarcho-capitalism.

all that need be said of him and his historical antecedent von Mises is that they rejected empiricism and statistical analysis while claiming to be scientists.