V-Radio, Economic Calculation, and Rage.

“Revenge is a dish best served cold” – Marie Joseph Eugène Sue

On April 7, 2011 I posted a blog about V-Radio and their blog post at attempting to address the economic calculation problem. I posted it before I had my morning coffee and i had to retract a lot of it and edit it heavily. However, my frustration is evident but I feel was justified. Neil had not looked at any of the material we gave him and relied on Wikipedia. Wikipedia cannot be an objective source of information in regards to politics, economics, religion, or any other topic where there is debate, it’s just a starting point. I took that, amongst other things, as an attempt to deliberately distort our position.

Another thing that angered me further was after I posted this blog addressing this you ignored it. It could very well be true you were not aware of it’s existence as I didn’t send it to you directly. However, you were aware that I was one of the many people you could of asked to come on and talk about it, and you didn’t bother to invite me or the multitude of other people who you could have asked and other people who offered to be on the show with you.

Also in this show you claimed we were ‘disciples’ of Mises who ‘dogmatically’ believe everything he says and intentionally ignore your arguments because we are ‘religiously’ opposed to them. This is a high level of dishonest debate techniques that is abhorrently hypocritical. In your debate with Stefan Molyneux (and you boast so eagerly) that The Zeitgeist Movement he says it doesn’t matter if you guys are a cult if what you advocate is true. You attempt to tackle an argument that is irrelevant to the conversation that The Zeitgeist Movement is a dogmatic religion, then turn around and use that exact style of argument with others.

So concluding this part, the Zeitgeist movement is not a religion. Does not advocate a religion. Does not encourage religious practices. Has no rituals. Or ceremonies. We obviously don’t have any “sacred ideology” and do not have any “sacred symbols” because we don’t believe in the concept of anything being “sacred” because we don’t believe in religion. And that basically disqualifies it from all of the negative connotations that are generally brought up when using the world “cult” in the derogatory.
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A lot of people in TZM do admire Jacque Fresco for his work. Nobody is building any shrines to him. Nobody believes he is God. Or mystical. I know people who admire Muhammad Ali for his boxing prowess. That doesn’t mean they worship him. So, religion again is out of the way here.

*THE PARADIGM SHIFT*

“The problem is that I answered him, but like, as typical with Austrian Economics enthusiasts, that are very set in their ways, so to speak, and very dogmatic.”

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“It’s very funny how people come out of the woodwork, even from just reading my blog and how angry they get when you talk in contridictionary to the way their free-market ‘Gods’ speak.” 

I never said The Zeitgeist Movement or The Venus Project is a destructive cult or a religion, and have said it isn’t numerous times. While I have expressed concerns about how The Zeitgeist Movement is structured and the recruitment methods, I have made it clear that this is not why I oppose the Venus Project. Even if contend that if they are a cult, it doesn’t negate their political ideology that might very well be true. Neil was quick to attack me for even hinting that it could be a cult for this very same reason. Fine, then don’t say I’m in a cult as your argument against my position.

You need to offer a formal apology to not only me, but the people you said these things too. Even if Austrian economics are a fringe dogmatic religion, this is the very same stupid “ad-hom bomb” you are quick to correct others on.

Now let’s put this all aside for now and re-write the article as I think it should be for the sake of the real ECP debate.

Now Neil says he was a libertarian. He claims that during the 2004 election, he was turned on to the ideals of liberty from Dr. Ron Paul’s debate and later running for office on the Libertarian ticket. I too came from another political ideology myself, and I’ll delve into it if Neal ever brings me on the show and asks the usual thinking out of the box question. So we both can agree that no system is perfect. One we see an optimal solution to the problems facing us, we are both willing to give up those ideas we hold on strongly onto for what we feel is a better solution. So either one of us could be wrong, or worse yet, BOTH OF US ARE WRONG.

Neil expresses that he and other who support The Venus Project are falsely labeled as socialists and communists when we propose that the RBE falls into the economic calculation problem of socialist economies. While it is true I think that this system is a new flavor of anarcho-syndicalism (which is ‘voluntary’ socialism) this is irrelevant. They are just labels.

To give you an understanding of the debate at the time Mises wrote the article, there were 2 camps. The crazy Utopian Socialists (name given by Marx after he realized these guys were getting clobbered by the classical economists for saying things like roasted chickens would fly into your mouth and the seas would turn to lemonade) and ‘Scientific Socialism’ which would be latter called Communism. The issue Mises had was not because communism and socialism was ‘evil’ and was afraid of ‘sharing.’ It was the ideas proposed by them that you also share; central planning of an economy and no money. The reason we bring this up is not because you said ‘share’ and we heard ‘SOCIALISM! PINKO COMMIES!’ No, we heard ‘managing all the worlds resources and distributing them for free,’ the very problem with communist and socialist systems. If The Venus Project also were around during that debate, he would of dropped the word ‘socialist’ from the paper for another word that collectively shares the same problem.

Neil goes on to try to explain the economic calculation problem, but completely misrepresents it. Mises said there are 3 things you need for a functional economy:

1. You need private property in all means of production. Not just in consumer goods, but capital goods as well. The machines that make the goods, the resource collection for those goods…etc. The things that you and I will never buy as end consumers. Which is necessary for #2
2. You need to have exchange. If the capital goods or consumer end goods are owned by a one party (i.e. The Common Heritage of The Earth) you can’t have exchange. Without exchange, you can’t determine the marginal utility of goods and services. In order to know what to make given the limited resources and the infinite possible combinations to use them, you need to take into account what the ever-changing and unpredictable individual whims have. The only way to extrapolate the data derived from those exchanges is #3.
3. Sound money. By sound, we mean a currency based in value that cannot be printed out of thin air. Most likely, the favorable would be a gold . As it’s durable, high value to weight ratio, easy to determine quality. (You don’t have to be an expert to see if it’s low quality or fakes like diamonds are.) What this does is turn those exchanges based on the heterogeneous subjective desires or wants, into an objective homogeneous number to calculate and make future profit forecasts with. If it’s not profitable to fashion a particular resource into something, it means people do not value it’s utility enough to spend time, energy, labor, and recourses to trade with it in the form of money. Companies would have to figure out how to produce it with less production costs. (i.e. maybe we don’t need to buy a machine to remove apple stems if it will make apples too expensive and not worth the effort if most of the consumers don’t care about the stem..)

It has nothing to do with companies trying to “dominate” a market. Companies want competition if they are willing to admit it or not. If Google continued without Bing, Google would have a hard time figuring out what people want if they are the only ones providing the service. They need to look to competition to build a better mousetrap, and via versa.

Neil gives an analogy:

Bob produces widgets. Bob calculates a price based on the cost of the resources that were used in making his widgets, including how much he had to pay his employees at the widget factory. He of course wants to make a profit so he charges a price that is above and beyond the costs involved in production. If he gets too greedy then people instead may buy a rival product that has a lower price.

This is bad analogy. Here’s a more accurate one:

Bob produces widgets. Based on this system, Bob can predict that his widget would cost 100 dollars if he adds features ‘x’, ‘y’, and ‘z’. If he leaves out feature ‘y’ and places a new feature he developed that’s called ‘a’ that’s more efficient than ‘y’ but it would cost 10 more dollars in production. He could use prices to forecast how much people would pay to see if producing it with a over ‘y’ is a good idea, and the market will either embrace ‘a’ and pay a higher cost, or just settle for ‘y’. This does NOT mean that if ‘a’ is better, that anyone still producing ‘y’ will become obsolete and bankrupt. The market will reflect that ‘a’ is more preferable, but not everyone should get ‘a’ if ‘y’ will suffice at a lower cost. Since there is only enough resources to allow a few people to have this widget at a given time, the price system gives people the necessary information to calculate it’s utility. If you need ‘a’ because you need it for work or whatever, you will value it’s utility more than someone who just wants ‘a’ for fun when ‘y’ would suffice. In order to figure this out, he needs to look to prices to forecast profits and losses whether or not he could produce it for a nominal extra charge. Something a system without prices to determine production costs, could not figure out until lots of resources are misallocated to the point of some form of collapse.

This is also why scientific efficiency differs from economic efficiency. It may be scientifically efficient to make a widget with x, y, z, a, b, and g but it couldn’t tell you who will utilize it to their peak economic efficiency. Only economics will determine if people need all those features, and who should get it.

Neil goes on to quote Wikipedia. Let me stop you there. With all the videos, books and articles we gave you that explains this, you go with Wikipedia? Are you trying to be dishonest or are you naive to think Wikipedia is an unbiased objective source of information? Look no further than The Venus Project’s entry for reliability of Wikipedia. That whole article is ripped right off The Venus Project’s website verbatim. No criticism section, not so much of a hint that people may object to this.

Now Neil, using Wikipedia, finds that money is mentioned and assumes that we contend the American Dollar is sound money. This is incorrect. I can use this same fallacious reasoning to say this loaf of Wonder Bread is white, ergo ALL bread is white. Neil also points to various heavily regulated regulated and protected industries as examples of free-exchange. This is also incorrect. He also assumes that the indoctrination into a consumer culture is a monetary issue. This is also incorrect. He may not explicitly say we advocates it, but he does point to it as if we would contend it should be true in this scenario.

1. Zeitgeist 1, 2, and 3 goes into detail about why the American Dollar is anything but sound money. It is a Ponzi scheme to amass wealth and cause wealth disparities. The problem, is it conflates this problem with all forms of money. Neil, you were a libertarian. To told me expressly in no uncertain terms that you know this. You went and presented it anyways. This, in my mind at least,  is either a retraction on your previous claim, a blatant strawman, or a case of amnesia. 
2. The oil industry is anything but a free-enterprise, it’s mercantilism. Government props up organizations like OPEC who sets the price for all companies to adhere to. Regulations are in place to ensure no new competition to the market. Can you find this in an area of even our current system that is at least half as regulated as oil? Oil is arguably the least free-market sector of our whole economy that isn’t expressly a government body, other countries have even nationalized their oil production. 
3. Advertising. We both know who educates the children in this country. We both know they impose the idea that once we get out of school, the best thing to do is get the wife, kids, huge house, huge car that you cannot afford and ‘build credit’ (or as we say in the real world, build debt.) So the government is teaching this and not teaching critical thinking skills. We’ll get into marketing later. 

Mises suggests that no rational prices can be reached without a price system. But are rational prices actually reached within a price system? No. The reason? The entire price engine is driven by the profit motive. And profit by no means depends on rationality.

He goes into planned obsolescence, predatory pricing, and collusion. Again, this is only possible in a market which puts barriers to entry and enforces corporate collusion.

Planned obsolescence can be easily counteracted by allowing entrepreneurs to compete with more reliable products. If they fail, you could always create a fundraiser and offer a cash prize the the company that produces this item first. If these won’t work, then you could figure out a way to encourage them to do so. The free-market is like ZomboCom, anything is possible and the only limitation is YOU.*

Predatory pricing is bullshit, even today. We see examples of companies like Wal-Mart. coming in and driving away competition. What we don’t see is after the competition is gone, they jack up prices. This is a bare assertion that isn’t backed up with any evidence. In the real world, what’s to stop these companies to buy up the goods from Wal-Mart and then sell them at a higher price? This has happened before with Herbert Dow. Dow found a way to make bromine cheaper than his competitors. The German chemical cartel couldn’t compete with Dow when he came to Europe. What did this cartel do? They went to America and sold bromine for half the price in an attempt to undercut him. Dow was brilliant, he had his people go and buy up all this under-priced bromine and resold it. The cartels got angry and slashed their price in half yet again hoping to under bid him. Dow continued to buy up this even cheaper bromine and resell it even cheaper. The cartel gave up after it got so laden down with debt and Dow became very rich from this endeavor. Economists today know this to be a fallacy, even outside of Chicago and Austrian schools because there’s simply no evidence for this.

Ah yes, the old vestige of the statist think; Oil companies are a prime example of the free-market in action. With all the regulations that are placed on the oil companies that are written by oil company lobbyists to protect their cartel (OPEC,) how is this free-market? Funny how you only see this in health care, oil, pharmaceuticals, and diamonds which are heavily regulated and have government enforcement cartelization or monopolies and not in more free-market sectors.

Neil claims that the price system allows for ‘worker exploitation.’ Exploitation is a subjective term, especially in RBE terms as punching a time clock is not only exploitative, it’s a dictatorship. You must remember, you are the final arbiter. If you don’t want to support what you feel is exploitation, don’t buy it. If you can’t afford alternatives, it might be due the the fact half of your income was stolen by the government. I personally try to avoid sweatshop goods, and you say you do as well. I doubt Zeitgeisters who take TVP seriously as you buy sweatshop goods regularly. This is the free-market principles in action. People are understanding this is bad, and competition has emerged to satisfy a sweatshop-free demand for clothes. If we weren’t taxed to hell, having our money inflated, and had to have 2 working people in a household just for ends meat, we could afford to pay twice as much for a hat. If you don’t want to support companies outsourcing, then don’t fucking shop at Wal-Mart! It’s not the companies that are forcing people out of work and out of business and outsourcing, it’s the consumers who demand lower prices and support their business practices by buying those goods. There are thousands of companies that successfully compete with Wal-Mart, some of whom offer those goods in sweatshop-free factories. Don’t blame Wal-Mart for fulfilling the wishes of their customers, blame the customers.

Neil then says that in Z3 and in his own experience that there are random children starving and dying in the streets while we are selling a thousand dollar handbag next to them. While I would agree this system is leaving hundreds of thousands, if not millions people with substandard living conditions, I cannot agree to this extent. The American poverty class have way higher standards of living than any other poverty stricken people in most other nations. While Detroit and it failed planned economy might be an example of people living under even those modest means, this is still appealing to emotions. Do I feel bad there are people suffering? Yes. Do I think there’s a way to fix this? Yes. Do I think it’s the RBE? Hell no.

When attacking any centrally planned system, the Austrian economists point to examples such as the various instances of mass starvation supposedly created by centrally planned economies. They point to death camps and gulags as the inevitable solutions of failed centrally planned economies.
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Mises and his disciples stated that centrally planned economies fail due to the fact that the resources would be distributed according to the “whims” of bureaucrats.

Bullshit, we know you won’t have gulags and concentration camps, thats not what we’re saying. We’re pointing out people dying as a result of famines and miss allocation of other resources that caused people to flee the cities and build anarcho-primitivist communes. NOT BECAUSE OF BRUTAL PSYCHOTIC DICTATORS! Mises never said it was because of the ‘whims,’ he said you could only have ‘whims’ as there is not a system to calculate production costs and marginal utility.

Neil goes on to point out wealth disparities in America as if that’s free-market in action. This is also incorrect. The wealth disparities in America did not arise until after the foundation of The Federal Reserve and the hundreds of thousands of barriers to entries created by government. I would ask him to point out anywhere in history or currently where there was sound money, limited government intervention and egregious wealth disparities in it’s populous. There have been numerous examples of countries having the first 2, but not all 3.

It’s ironic that the same incident of the rules suddenly changing in the book “Animal Farm” that was supposed to be a story about communism applies just as well to people living in a capitalist system.

That’s because we’re a sociofascistic country who are enacting laws and programs like those in Animal Farm. Is it any wonder why we are starting become like them when we start emulating them?

Neil goes on to point out why Mises and Hayek are wrong because they argued this in the 1920’s (ignoring that they continued arguing this up until their deaths in the 70’s and 90’s and further ignoring other contributions to the ECP and Salerno and Woods which continue today.) The age of the idea that the earth is round is irrelevant even when we take into account how wrong the originators were. The earth is not a perfect sphere or pear shaped and we know this now due to new techologies that could determine this.  Neil tried to paint the picture that Mises came up with the idea, Hayek finished it, and it’s been set in stone ever since. This is patently dishonest if he holds to the claim he has looked into this and I’ll show you why.

ECP is not completely Mises’ idea. It started with Charles Menger and his thesis on money and marginal utility. Menger knew that prices reflected marginal utility, but couldn’t explain exactly how. Mises came along and showed how this worked. Hayek pointed out some discrepancies and divided the school on this issue. Rothbard and Salerno also had their contributions as well. As the ECP debate rages on today, Austrian and other schools have come closer on this issue over time. Some Marxist economists still propose a world wide communist system where they still allow Hong Kong to be a free market just so they can use their prices in planning. It is a real debate, the other sides are taking it seriously. The only people not taking it seriously are the RBE folks, which is understandable. The Zeitgeist films which is responsible for most of the interest in RBE are laden down with all the possible economic fallacies that it weeds out people who know a thing or two about economics from even participating.

Neil goes on to say that Hayek is wrong that people would have no incentive to provide information to use in the economy. While it is true that people will want to voluntarily provide information if it will better suit their desires, people will ultimately not. Why? Think about all the economic decisions you make in a given day. Do you want a banana, or some ice cream? Do you want a Pepsi, or a Dr. Pepper? Tuna or black forest ham? iPhone or Android? Could you imagine if every time you have a decision thats not a reflection of what you wanted in the past you had to fill out a survey? Or worse yet, had to learn about all the possible resources available and decide based with a survey afterwards? Even if you limit it just to the resources needed for just that particular need, it will end up being too much of a daunting task for any one person to do every time they decide they want a chicken burger over a beef burger.

An error I see Neil making, that other Zeitgeisters are guilty as well, of is compartmentalize goods into a overarching group. There are no beans, celery, t-bone steaks, or burgers; there is just food. There are no skirts, tank tops, pants or shoes; there are just clothes. This is another foundational falsehood in TVP. If you have ‘food’ and ‘clothes’ and distribute them, people will become sick of ‘food’ and unhappy with the ‘cloths’ provided. This is a veiled one-size-fits-all approach system that they are unwilling to admit to. I don’t want ‘food’ today. Today I want oatmeal and scrabbled eggs for breakfast, for lunch I think a coto-salami and cheese sandwich will suffice, and for dinner I think I will make some mole chicken and Mexican rice. Tomorrow, I will probably eat none of those things. Even if you drastically reduced my number of options of food and still could satisfy my food desires, you couldn’t predict what I will want to eat tomorrow. Nor could I! Also I really don’t care what people say about my attire, but there is no way you’re getting me to wear a skirt, dress, moo-moo, or shaw. I’ll take the button up work shirt and work pants. Something a lot of people won’t want to wear either. If we all end up dressing the same, then I most definitely want to part of it.

As far as Project Cybersyn example, I can show this is inaccurate. Chile at the time was ran by a communist dictator who bought into the whole technocracy. Beer designed the “schematics” of the “computer” which was really just an an over-elaborate analogy for how the brain works and how people working together can operate like a computer simulating a brain. Nowhere in his schematics was there ever a plan to calculate information with a computer. The telex computers used were just a way to transfer information to the central location, but no information is sent back. Why? Because the control room was just a mock up. A team of unknown bureaucrats took all this information received and and made graphs and flowcharts onto slides which were projected onto the screens. The sad thing is, that even this was fake just to show the concept to the Chilean rulers how it would work. The strike example is an error. The telex machines never calculated the answer to the problem, the telex systems only relayed the information to the rulers for which they manually devised an alternative. Good luck getting someone, everyone is dead now who worked close on it’s development. They were killed in the military coup or passed away from old age. Beer did comment later before his death that the Project Cybersyn that running the country from a computer “..was rubbish. I did no such thing.”

For more information about Project Cybersyn, check out this video:
http://player.vimeo.com/video/8000921

Neil goes back into the tangent that we should ignore Austrians because they are not infallible and mainstream economists (who Neil agrees are ruining the country) consider them cranks. So what? Are we to presume that Mr. Fresco is correct because he declared it to be true and thus is infallible? Of course not. No one is saying Mises or Fresco is infallible, so why bring it up as an argument against it if infallibility is your criteria from being a correct economist? No one says that socialist planning is impossible because Mises said so, Mises just first introduced a thesis that shown itself to be true. If modern proponents of this idea still hold it to be true, you can’t promise them we’ll figure it out later and climb aboard! What you need to do to show us that the model you propose, that has shown itself historically to be a disaster, can show itself to work under this NEW system. Show us an algorithm or show us a test city that works.

You ignored it over and over when Stefan brought this up to you, but I think you need to listen this time. You are offering a business plan to the world that says “Get on board and we’ll make sure everyone gets wealth!” How exactly? “Don’t worry about it, we’ll figure it out when the time comes.” This stockholder wants more explanation before he gambles on a system that has historically shown itself to be a total failure.

I’m a stockholder of planet earth, you proposed a business strategy for most of us to agree to. I need the details of this proposal before I can vote on it in good faith. So show us, the skeptical stockholders, how exactly you can fulfill the unspoken needs of 6 billion people with a team of scientists and computers. If you can’t I will vote ‘Nay.’ If you can show me how this system can work in detail or provide a test city as an example of it’s efficiency, count me in. Do you honestly believe I want to work hard to get the necessities and luxuries of life? No one does, it’s just the most efficient way we are aware of. Show me exactly how to get to this better world you speak of.

*unless of course you plan on coersing or ripping people off, people will not stand for that very long.