All The Wiser, You Say?

When the seed lands on fertile soil its intended purpose begins to unfold. Weeds will need to be removed and care will need to be sustained though.

At every instant we take in information that comes from observation or deliberate research and this influx of information is knowledge. Even if it is misunderstood it still becomes part of our knowledge base for the time being until we learn otherwise. I like the use of the word “otherwise” because it includes the word ‘wise.’ Wisdom is knowledge that has gone through this process and is aligned with reality.

For all individuals knowledge is ever-present and readily accessible. The nature of knowledge is that it is ever-present and readily accessible. The role of knowledge is to satisfy the need to know. This loop of the nature and role of knowledge is self-sustaining if unimpeded.

When the nature and role of knowledge is unimpeded the economy functions at its highest potential.

In the divine economy model it is the axis of the “Nature and Role of Knowledge” that all things revolve around.

Whatever allows the free flow of knowledge serves the economy best. All interventionism constrains the free flow of knowledge hence it is harmful to the economy and to the people of the world.

Now is the time to learn about macroeconomics without the State.

Savings, Time Preference, and Future Civilization

Randy notices things and he takes the time to think about what he sees. He is like you and me because he gains understanding by examining and pondering cause and effect.

Good economics is the opposite of the nonsense of debt and spending. The very best school of economic thought is Austrian economics which is built upon the foundation laid by Menger and Bohm-Bawerk, Mises, and Rothbard, and which recognizes the subjective nature of human decisions. One aspect of the subjective decision-making that humans make has to do with the future.

Time preference and savings are part of economics and economics is, broadly speaking, the study of human action. One of the laws of human action that is understood apriori is that humans prefer to have now what is desired rather than at some time in the future. This is what the economic term of time preference represents.

Of course time preference is subjective so the degree of preferring now to the future changes for an individual and across individuals for many reasons and over time. In societies where humans are no longer just barely subsistent it manifests itself in the economy as savings which in turn becomes capital and becomes a part of the capital structure. The capital and the capital structure transform the level of productivity in the economy in a manner that meets the hopes for the future that is inherent in the time preference of that society.

As examples, if one society fears war and inflation in the future the time preferences would be very high and under those conditions saving makes little sense. If another society is at peace with other neighboring societies and the value of its money is appreciating because of the effects of increasing productivity then the time preference is relatively low and the tendency to save would be greater.

Not only is time preference an indicator of the anxiety or tranquility of a society but it also directly affects the amount of savings which then affects directly the potential for transformation since it affects the capital and the capital structure.

In other words, the peaceful society will be more prosperous and the people in that society will not only have more goods and service available but will also have put aside money as savings which will enable them to be able to purchase and enjoy these new and wondrous things.

Now suppose the peaceful and prosperous society has a significant number of people who become less attached to earthly pleasures because of a changed spiritual orientation. In the present they will not need as much as before and this means that their time preference decreases. This translates into more savings and more capital to enter the capital structure. The capital and the capital structure is what transforms the economy and that transformation always is in the direction of serving the consumer.

What goods and services will best serve the increasing number of these spiritually motivated members of society? None of this can be known ahead of time. What is known is that societies in the future will look different from the one we know and at some point in time those societies will be significantly different from anything we imagined.

A new economic technology shows the promise of the future.

Socialism = Declination. It is the destroyer of civilization.

Lurking in the dark is the phantom, but being unsuspecting Richard and Elaham just go about their business as usual. They are in danger and do not know it. There are serious consequences ahead for them, perpetuated by the silent phantom. Richard and Elaham would have been wise to have been watchful.

Watchful and wise. When the incentive to save wanes the immediate consequences are not seen unless socialism is full-blown and chronic.

If a society has in the past had incentives to save, then when it transitions to socialism the full effect of this destructive ideology will be masked by capital consumption. There will still be resources carried over from the earlier times when capital was used to generate products for the future.

Examine the incentives to save in socialism. You do not own anything because it is collectivized. Some may reply ‘that is only in an extreme system of socialism but other lesser degrees of socialism allow ownership.’ But at some point the table tips because the disincentives to be the productive members of society become too great. Why work hard and save when others who do not work hard and save receive the benefits? This progressively whittles away at the numbers who are willing to work hard and save.

For example, when you do not own the place where you live and it needs repair do you (or will most people) take on the costs of the repairs?

The declination and deterioration begins to set in. Look at Venezuela.

Getting out of the blight of socialism is far more difficult than being lulled into it. Without ownership there is very little incentive to save (“Save for what?” is the pressing question.) which means that over time there are less and less available goods and services, eventually leading to the extreme system where the political class has all the wealth and the rest are impoverished.

Why would politicians strive for this? First, they are the ones in the political class. Then there are those who are actually militant Marxists who think that helping to destroy capitalism leads to the glorious age of communism!

How can politicians get away with portraying socialism as a noble ends?

  • First, there is enough remnant capital that hides – in the short run – the destructiveness of socialism.
  • Second, the politician demonizes wealth which enables the State:
  1.  to distract attention away from the corruption of the State
  2. to extract even more from those who have wealth, sustaining the State
  3. and this also satisfies the envy of the masses.
  • Third, the politician actually unabashedly promises to give people some of the wealth that it confiscates from the wealthy.
  • Fourth, the politician allows the State to counterfeit the currency and amass great debt to give the illusion of viability.

Socialism = Declination. It is the destroyer of civilization.

Now is the time to learn about macroeconomics without the State.

Illuminating Economics

Where is the light switch to turn on the light so we can navigate through the Dark Ages of economics in which we are living?

What better way to gain focus than to use a lens made with precision and which accurately does two things:

  1. Provides such clarity that all things economic can be examined from all directions.
  2. Completely exposes the flaws, the fallacies, the superstitions, and the destructiveness of statism.

Implied – going from the dark to the light – is leaving the darkness that is causing such great suffering and instead benefiting from true economic science, the light of which honors subjective human beings.

Of course, this means leaving behind the superstitions which have burdened economic science for a long time. These economic fallacies continue to linger and the only sensible way to deal with them is to let them disappear into their own darkness of ignorance.

An illuminating new technology is the best and most powerful way to completely dissociate true economic science from the darkness of economic ignorance and its corollary – political corruption.

Now is the perfect time to gain freedom of thought and action by becoming acquainted with this new economic technology. It’s free, it’s illuminating, and it brings great clarity. Check it out.

Use of the Empirical Method in Economics is at Best Irrelevant.

Bert had good intentions! He thought he was being diligent and practical, plus he dedicated a significant amount of his time to these tasks that he valued. To be honest, he pretty much knew what the outcome ‘should’ be but thought it was proper to follow a method which he could then use to substantiate his declarations. Such is the plight of the empirical economists. The use of empirical methods in economics is like catching the wind with a hammer!

First of all, since humans are subjective and they value any and all things – material and ideal – subjectively, there is no way to represent the subjective choices and decisions by the use of a point of data. Even an exchange made in the market – the buyer exchanges money for a product – cannot be a piece of data. If the two things exchanged were perfectly equal what would be the point? One person values what they get more than what they give up or else there would be no exchange. A data point has no information about the double inequality of value that occurs at the time of an exchange.

And secondly the real world is dynamic and not static. In other words, even if the fallacy of economic information contained in data points is ignored, the empirical methodology can at best be irrelevant. First the data is collected, then it has to be interpreted. By who? With what objective? All of the sudden someone is introduced into the process for the purpose of interpreting the data. This person is a so-called ‘expert’ but more accurately, this person is an ego-driven interpreter of the data with an objective in mind.

In other words, the data cannot even get to the next stage without the interjection of an ego-driven interpreter.

But if we ignore the bias and corruption of this practice there is still another absurdity associated with empirical economics. What about lag time? The so-called data was collected at a different time and place which no longer exists in the real world. Whatever the conclusion is derived from fallacy upon fallacy is no longer relevant!

Yet this is what the State and its central-planners inflict on people as ‘remedies’ for the ills which were – in fact – created by the errors of earlier charlatans using empirical economics.

The alternative and scientifically-valid methodology is subjectivism as is used by Austrian economists and economists in the classical liberalism tradition.

Here is a great resource to help you learn more about this scientifically-valid methodology.

Here Is A Microeconomics Definition Emphasizing Entrepreneurship.

Jenna wakes every day and along with going through her routines she pursues her goals. She has long term goals but also she spends much of her time each day sorting through life’s tests and trials and her memories of experiences throughout her life, all with the purpose of moving forward. She is functioning in the realm of microeconomics.

One definition of microeconomics is as follows: it is a study of how individuals discover and react to information in the market as part of their division of labor to produce and to earn income, so as to meet their personal desires for goods and services.

·        Each experience in the series of knowledge gaining experiences is more competitive than the preceding period.

·        In other words, we are constantly searching for ways to make things better for ourselves.

·        And since competition and entrepreneurship are analytically inseparable these experiences act to stimulate our entrepreneurship.

·        That is very good news indeed since releasing our potential, by changing our entrepreneurship from latent to active, leads to prosperity.

If you want to explore further this soulful microeconomics go here.

Entrepreneurship In The Early Stages

Take a look at this YouTube video (“I, Pencil” video), this classic tale of how the economy works, and notice how there are entrepreneurs serving at every single step along the way even though the steps in the process are innumerable!

Watching this video will get you in the generous mood to praise the division of labor and the entrepreneurial spirit that drives this whole process from its humble beginnings all the way to the end. But the video also makes it evident that the division of labor and the entrepreneurial spirit are vital and powerful everywhere, either directly or indirectly, across the entire time horizon. Talk about roundabout production! Without capital these processes would come to a standstill. Think about that the next time someone who is indoctrinated in the ideology of statism misrepresents the importance of capital.

It is never too late to understand how the magnificent market process works. If, at every point along the production of every good and service, people understood the beauty and potency of the market process then all of humankind would greatly benefit – nay – the difference would be so monumental that it is almost incomprehensible. The human potential is immense but since we are living in the Dark Ages of economics that potential is miniscule in comparison to what is our inherent birthright. In that sense the people in the future will look back at these times and see the pervasiveness of economic ignorance.

What the entrepreneurial spirit has produced and what can be discovered by those who are entrepreneurial is the theory that can infuse a higher degree of purposefulness into human action. As a result of entrepreneurial discovery a new economic theory based on new economic models (which represent a new economic technology) has dawned on the horizon. Those entrepreneurs who alertly seek a better understanding of the market process will discover this theory. As this new theory is applied at each and every step the degree of social cooperation will improve almost exponentially.

This is the reason why entrepreneurship is in the early stages, but also, as this heightened understanding of the economy is applied to all stages – including the early stages – the miracles of the economy that were highlighted in the “I, Pencil” video will transform the actors (all humans), the activators (the entrepreneurs), and the economy. That is part of the reason the difference will be exponential.

Are you tired of Visionless Economics? See what else is out there.

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