Cafe Hayek - Latest Comments in Gifted in Nepal

Re: Gifted in Nepal

Guest — Thu, 30 Apr 2009 11:20:08 -0000

but in an economics discussion it is either a non sequitor (if we pay heed to your parenthetical) or it's a contradiction (if we ignore it).

You'd have to explain that one to me. I draw a distinction between preferences and gains from trade. You don't?

Re: Gifted in Nepal

Daniel Kuehn — Thu, 30 Apr 2009 10:42:23 -0000

MnM -

I want to apologize for that last statement. I'm sure it sounded very rude, and I'm sorry about that.

But I really take strong issue on this subject. I think fundamentally Russ and Don agree with what I'm saying about the difference between forced autarky and voluntary autarky... but it really makes me scratch my head the way they present it sometimes.

Re: Gifted in Nepal

Daniel Kuehn — Thu, 30 Apr 2009 10:40:36 -0000

MnM -

RE: "I chose the loss because I prefer the activity. But that preference doesn't mean that it isn't a (monetary) loss."

Just reread that sentence for me!

This is why I have serious doubts about comments on this blog sometimes. Maybe this comment has some place in a personal finance discussion - but in an economics discussion it is either a non sequitor (if we pay heed to your parenthetical) or it's a contradiction (if we ignore it).

Re: Gifted in Nepal

Guest — Thu, 30 Apr 2009 10:35:22 -0000

I like to do my own taxes and I like to cook my own meals because I like that kind of control, and at least in the case of cooking, I get enjoyment out of it. Do I "lose the gains from trade" by choosing to be self-sufficient?

You may if you grow/hunt your own food.

I like to do my own home repair too. Do I lose the "gains from trade" by not hiring a plumber? Of course not.

Depends on how valuable your time is. If you could generate higher returns with your time than the cost of hiring a plumber, then yes, you've missed on a possible gain. That might be your preference, I don't have a problem with that, and I don't think that Russ has a problem with that. However, that preference is not the same as missing on a gain from trade.

I'm with you on home repair. I'm a DIY'er. I'm relatively certain that some of the repairs I've made could have been done more cheaply by a professional. I chose the loss because I prefer the activity. But that preference doesn't mean that it isn't a (monetary) loss.

But sometimes this blog gets side-tracked into thinking that self-sufficiency in and of itself is somehow dangerous. It's not.

I think that might be a bit of an overstatement. All Russ is talking about is the specialization and division of labor. He's just doing it tangentially. A person who does everything (in the literal sense) for himself won't be able to specialize and profit from that specialization.

Re: Gifted in Nepal

Daniel Kuehn — Thu, 30 Apr 2009 10:04:28 -0000

Lee Kelly -

RE: "Another example, Daniel, is when Marxists advocate complete government control of the means of production, and other such hogwash"

HUH???? How does the fact that a Marxist gets utility from stealing private property have anything to do with the fact that I like to buy tomatoes at a farmer's market?

MnM -

RE: "You miss their meaning. What Russ means (if I've read him correctly) is that "abstinence from trade is the road to poverty." He's using "self-sufficient" in the literal sense (i.e. a person who, quite literally doesn't rely on anyone for anything: he makes his own food, clothes, shelter, etc). "

I don't actually think Russ and Don think that these personal decisions hurt people. I'm hoping they don't actually think that at least. I think Russ really does mean "forced self-sufficiency is the road to poverty". I like to do my own taxes and I like to cook my own meals because I like that kind of control, and at least in the case of cooking, I get enjoyment out of it. Do I "lose the gains from trade" by choosing to be self-sufficient? I like to do my own home repair too. Do I lose the "gains from trade" by not hiring a plumber? Of course not. I would lose the possibility of those gains from trade only if someone forced me not to consult an accountant, told me I could never go to a restaurant, and told me that I could never hire a plumber. THAT is the road to poverty. And I think ultimately that's all Russ means.

But sometimes this blog gets side-tracked into thinking that self-sufficiency in and of itself is somehow dangerous. It's not.

Re: Gifted in Nepal

Guest — Thu, 30 Apr 2009 09:53:05 -0000

However - you bring up a VERY good point that I've observed here too. For some reason, Russ and Don always seem confused on this point. They say "self-sufficiency is the road to poverty".

Absolutely not true.

You miss their meaning. What Russ means (if I've read him correctly) is that "abstinence from trade is the road to poverty." He's using "self-sufficient" in the literal sense (i.e. a person who, quite literally doesn't rely on anyone for anything: he makes his own food, clothes, shelter, etc).

Because of this self-sufficiency he/she misses out on gains from trade.

Re: Gifted in Nepal

Lee Kelly — Thu, 30 Apr 2009 09:33:04 -0000

Another example, Daniel, is when Marxists advocate complete government control of the means of production, and other such hogwash. Obviously, such events would have some value to Marxists, because they think them the road to freedom and prosperity. And, perhaps, for a short time, they really would derive some benefit. However, in the long run, when reality runs into their false assumptions, they are not likely to be as happy.

So what is your advice to the Marxists? "Go ahead, bring about the Communist revolution, don't let Russ and Don tell you that it will not work, it's not the road to poverty becuase you think otherwise". Respecting another's right to believe as they choose, is not to think they should believe what they do.

Re: Gifted in Nepal

Lee Kelly — Thu, 30 Apr 2009 09:25:21 -0000

Daniel,

You are continually confused on this issue. It matters not only what people want to do, but why they want to do it.

If people shop at "Mom and Pop" stores, or advocate self-sufficiency, while understanding the trade-offs involved, then Don and Russ would likely remain quiet. What they object to are the illusory benefits such advocates suppose shopping at "Mom and Pop" stores, or more self-sufficiency, would bring. In other words, Don and Russ are merely trying to point out what trade-offs such decisions entail, because with full recognition of the costs few people, they believe, would continue to advocate such positions.

A man is completely within his rights to try and make it rain by dancing around a fire. A meteorologist, however, while respecting the man's liberty, might nonetheless object that dancing around the fire will not cause his desired end, and suggest others not to emulate his example unless they just like dancing around fires.

Re: Gifted in Nepal

Daniel Kuehn — Thu, 30 Apr 2009 08:52:25 -0000

muirgeo -

RE: "To hear a libertarian proclaim a self sufficient man a poor man and by inference a dependent man a wealthy man was to me a tell-tale of a fatal flaw in a philosophy that holds such disdain for socialism and puts liberty above all else."

I'm comforted that Russ's answer was exactly my answer - the division of labor, plain and simple.

However - you bring up a VERY good point that I've observed here too. For some reason, Russ and Don always seem confused on this point. They say "self-sufficiency is the road to poverty".

Absolutely not true.

What they SHOULD be saying, and what SHOULD be obvious to them as libertarians is "forced self-sufficiency is the road to poverty".

If you choose to be self-sufficient, clearly it has some value to you - it can't be impoverishing.

So go ahead and shop at the farmer's markets and the mom and pop shops! Don't let Russ and Don tell you not to! I promise you, it's not the road to poverty (unless some hippie is making you do it by force... which seems somewhat unlikely, doesn't it?).

Re: Gifted in Nepal

Martin Brock — Thu, 30 Apr 2009 08:49:48 -0000

Finally, can economist ever have a discussion that does not assume that all people engage only in the pursuit of a blind “hill-climbing” strategy that finally results with summiting on a small local mound?

Assuming the truth seems a reasonable strategy.

Re: Gifted in Nepal

Carl — Thu, 30 Apr 2009 08:36:10 -0000

When does a slavish adherence to the principle of comparative advantage lead to a suboptimal solution? In other words when does over specialization lead to extinction? Finally, can economist ever have a discussion that does not assume that all people engage only in the pursuit of a blind “hill-climbing” strategy that finally results with summiting on a small local mound?

Re: Gifted in Nepal

Healthy Markup — Thu, 30 Apr 2009 08:26:09 -0000

to add...thr is no doubt tht slavery was prevalent in most parts of the world but its not only about the contribution of slave but also that of "master" and in US..the "masters" utilized their resouces in a manner that was more efficient than anywhere else in the world

You say that slaves were common world-wide, but their masters did something different in the US. Is it because of these different market behaviors that everyone here has mentioned that the US used their slave (and other) resources more efficiently than in other countries?

Re: Gifted in Nepal

Catherine — Thu, 30 Apr 2009 07:38:56 -0000

I value specialization and division of labor but I do not think we should consider them as radically antithetical to self-sufficiency. Such an approach leads too much in the mind of many people to the easy conclusion that we need all the specialized government bureaucrats to run the country and regulate the markets.

It is hard to freely negotiate and engage in trade when you are totally dependent. I believe that it is one of the reasons we have been able to observe such a growth in popularity of government and the regulatory state.

Re: Gifted in Nepal

Martin Brock — Thu, 30 Apr 2009 05:46:08 -0000

To hear a libertarian proclaim a self sufficient man a poor man and by inference a dependent man a wealthy man was to me a tell-tale of a fatal flaw in a philosophy that holds such disdain for socialism and puts liberty above all else.

I couldn't disagree more. Maybe "libertarian" is a poor title, but nominally "libertarian" rhetoric typically emphasizes virtues of market organization, and markets are all about interdependence.

Personally, I prefer "mutualism" to "libertarianism", but I don't expect to craft any "mutualist" movement here, and I don't want to craft one, because political movements invariably morph into something ugly that I don't want to endorse.

I much prefer "mutualism" to "capitalism", but I don't expect folks here to eschew "capitalism" either; however, I will make the distinction when objectionable tenets of "capitalist" ideology appear.

In ironic reality, the modern "libertarian" movement (personified by Rothbard and others) is rooted in nineteenth century movements inspired by men like Proudhon and Tucker, then called "socialism" and opposed to "capitalism".

Rothbard himself understood this fact. That's just the way political rhetoric evolves. Words reverse meaning, because politicians always speak from both sides of their mouths.

We are indeed social beings and that is where our success comes from. But apparently the holders of liberal philosophy see no conflict with their proclamations and definitions of liberty, wealth and dependence.

Of course, not. Where did you get the idea that (classical) liberals oppose interdependence?

Re: Gifted in Nepal

True_Liberal — Thu, 30 Apr 2009 05:26:13 -0000

One need only look around the world today to see the correlation between slavery and a strong economy. In countries with significant slavery elements, there is significant-to-extreme poverty.

To claim the converse for the antebellum US is most curious.

Re: Gifted in Nepal

abhi gupta — Thu, 30 Apr 2009 04:58:02 -0000

Re: Gifted in Nepal

abhi gupta — Thu, 30 Apr 2009 04:47:11 -0000

Dear vid,

I am reerring to the period pre 1776, by 19th centuary the economic structure was already in place...

before 1776, north was little different from south..

diference in growth from north to south after 1776 can be explained by the more industry led growth in north as compared to south..but pre-american revolution the contribution of slaves in creating economic structure that can then florish to modern US can not be denied...

Re: Gifted in Nepal

John — Thu, 30 Apr 2009 03:48:04 -0000

"Is there any doubt that if the founding fathers could have known that Washington would ever be extracting $3 trillion a year from us and demanding more, that they would have re-written the Constitution with more constraints?"

They did.

In the Constitution, as originally written, taxes levied on income needed to be distributed back according to census, not the whim of federal blackmailers.

In addition the Senate was chosen by the States, not the people, so the States actually had representation in Washington.

If those two things had been kept in place the feds would have been unable to blackmail the States as they do, and the State governments tasked with implementing all these mandates would have had a voice.

Re: Gifted in Nepal

Christopher_Renner — Thu, 30 Apr 2009 03:35:26 -0000

abhi gupta,

You're wrong. Slavery and indentured servitude and their alleged profits to the economy as a whole don't explain one bit of the US economic growth from 1865 to 2009, since those institutions haven't existed in that time.

You're also ignoring the fact that the Southern U.S. in 1865 was far behind the North both economically and culturally.

Whereas if your statement was true the "profits" from slavery and the great "efficiencies" thought up by the leisured plantation owners should have led to massive growth in the South relative to the North.

Re: Gifted in Nepal

vidyohs — Thu, 30 Apr 2009 03:28:45 -0000

As I pointed, in an admittedly long winding way, in the first post on this subject, being gifted, skilled, or competent on a very broad scope of things has never translated into large increases of income for me.

What it has meant is that I spend a lot less money, than the majority of my fellow man, to keep things I have running or usable, virtually all the solutions to any problems encountered are generated out of my own head, and generally in a timely basis.

What it all means to me is greater freedom than the majority of my fellow man, because I am not tied to specific things or people to keep my life chugging on down the road. And, in general, I enjoy the time spent doing and don't see it as a waste of time that could be spent on something more rewarding. "Rewarding" is interpreted the way I want it to be, and not by others.

This is not to say that I do not recognize that there are many who specialize in such a way, and in highly profitable efforts, that doing what I do would make no sense to them. Therefore, I certainly do not denigrate them or their choices.

All of this brings me to another point that was not mentioned at all by anyone; there was no measure or statement as to how the Nepal cook viewed his own life in his own context. Did he view his own life as rewarding?

Comparing incomes or skills between such vastly different cultures as the USA and Nepal seems to me to be the least effective measure of how people in either country view their own life.

Re: Gifted in Nepal

vidyohs — Thu, 30 Apr 2009 02:23:00 -0000

"suspect that many French workers have the same problem as the unemployed, i.e. they would prefer fewer hours of "leisure", and more hours of work. Posted by: Lee Kelly | Apr 30, 2009 2:14:36 AM"

Lee Kelly,

Let me reveal my very well hidden cynical side.

I think that the French worker, the French unemployed, and the American unemployed, in the main, do not seek more work. What they seek, and would be entirely happy with, is simply more money for the little work they do, or more money in their welfare checks.

I suspect it is dreaming to believe that most people of any nationality actually seek more work, much less to work harder and longer at what they do.

The whole goal of humanity from Lucy to vidyohs has been to get more for less.

Re: Gifted in Nepal

abhi gupta — Thu, 30 Apr 2009 01:33:26 -0000

typo:

1. read 140 hours as 140 years...u need to enslave ppl for a long period of time to prosper :)

Re: Gifted in Nepal

abhi gupta — Thu, 30 Apr 2009 01:31:35 -0000

ur answer makes sense but to put it in right perspective it is essential to answer the question that why Americans have lower payoff to self sufficiency than Nepalese and why modern day US is more affluent than modern day Nepal:

To me the answer lies between the events that happened between 1630-1780 : Indentured slaves or bonded slaves who did all the menial tasks for 140 hours at ver low cost leaving sufficient leisure for rest of the people to think of ways to effectively and efficiently utilize the resources lefft by the displaced Indian. This division of labor in those 150 years of history empowered innovation...credit to the American wealthy of 17th-18th centuary who at that point of time was more inclined towards production and investment rather than consumption which most of the wealthy families did in europe and asia when founding themselves in similar situation- this in my opinion is why a useless american more wealthy today than a skilled nepalese...

Re: Gifted in Nepal

Lee Kelly — Wed, 29 Apr 2009 22:30:39 -0000

K Ackermann,

Do you have something against Nepalese people?

If Nepalese people want to spin nuts and an American businessman wants to pay them to do it, what is the problem? Should the Nepalese be denied this opportunity for the sake of an arbitrary political boundary? Before the nut-spinning robot was invented, was there something wrong with hiring American workers to spin nuts, or is it only when the Nepalese spin nuts that you have a problem with it?

Just because there may exist some technology capable of performing a task, does not mean it is the most cost-effective method. Denying labour in poor nations the opportunity to earn money does neither them, nor the end consumer, any favours.

Re: Gifted in Nepal

MWG — Wed, 29 Apr 2009 22:18:43 -0000

Damn... Scratch my response to K Ackermann. I like Lee's more... Though I think my point is still valid.