25 Aug 2012

My Challenge to Max Keiser + Sandeep Jaitly Has Been Forced to Resign From the Gold Standard Institute + Bizarre Attack on Ludwig von Mises

By Thomas Woods:  On LRC today (August 23) I respond to the bizarre Keiser Report segment that tried to claim Ludwig von Mises was a deviationist from the pure Austrian economics of Carl Menger, the founder of the school. Kind of inside baseball, you might think, but so full of the most preposterous errors that I had to smash it, politely.
Keiser now has a post called "Tom Woods' Blunders." For a split second I wondered if maybe I had overlooked or misstated something. Then I saw his post.
It begins:
Tom Woods ramblings are lengthy....
Translation: I haven't the foggiest idea how to answer Woods. If I say his reply to me is "lengthy" and "rambles," that will cover for the fact that I can't reply to 95 percent of it. Oh, and 15 minutes of bashing Mises and libertarians on the most uncomprehending grounds is not rambling or lengthy.
but I wanted to zero in on this bit:
In the following passage, taken from Tom Woods response to Sandeep Jaitly’s interview on “Keiser Report,” Tom Woods rationalizes the failure of his fundamentalist ideology and ‘economic calculation’ by wedging a lot of intellectual dishonesty into this quote: “Private ownership, which is precluded by state intervention, would encourage the preservation of the capital value of resources.”
The idea that private interests preserve the capital value of resources (‘unless they are interfered with by the state’) produces a superior economic outcome over the public interests preservation of capital value of resources is the type of pseudoscience, faux-Austrian claptrap that gives rise to economic dictatorialism, completely blind to the actual consequences of its actions.
What Woods is advocating here is in effect central planning, but the ‘right kind’ of central planning by the ‘right people’; the complete opposite of what Austrians say they are supposedly in favor of and a complete contradiction of what Menger was trying to elucidate before the Mises crowd came along and poisoned the water.
I'll be a sport and overlook the lack of any argument or analysis here; we are evidently expected to accept Keiser's ex cathedra pronouncement without demanding such coarse elements as reason or evidence.
Here are Keiser's points, stripped of the viciousness that was absent from the tone of my own piece, along with my replies:
(1) It is silly and "fundamentalist" to think private owners might take better care of resources than the state.
Evidently the whole "tragedy of the commons" problem has been solved by Max Keiser; with such contributions to the human race, it almost seems petty of me to continue the exchange.
I think, though, he hasn't really solved this problem. Max would have to believe that people who rent cars treat those cars just as well as they treat their own cars. In Keiserland, people take rental cars for oil changes and maintenance, and repair dings and scratches.
On my planet, people do not take the same care of things they do not own as they do of goods they do own. The same goes for any resource: what private owner would want to destroy the long-term capital value of a mine, or a herd of animals, in order to enjoy one fleeting year of profits? Who would kill all the animals this year, leaving none for next year? What incentive exists to do such a thing?
(2) He thinks private ownership is a form of “central planning.” (This guy has his own show?) Central planning involves (1) the direction of resources in the absence of property rights, or (2) orders handed down to resource owners by non-owners. Neither applies in the case of the ownership and use of a resource owned by someone with legitimate property title.
It of course is not a question of having the “right people” in charge. I am not saying that my people would do a better job of managing resources than Max’s people; that Max even thinks in these terms makes him appear juvenile and uncomprehending.
The issue is that only private owners can operate within the realm of economic calculation, and only private owners have an interest in keeping the resource generating a stream of returns over time. Why would a politician, serving a two-year term, care at all about such a thing? You’ll note how politicians, having no particular reason to care about future prosperity and interested only in immediate electoral returns, have looted a certain resource called the population of the United States. Keiser wants these people in charge of more resources.
(3) Without acknowledging that on every point I overturned his guest’s bizarre and unsupportable claim that Mises was a non-Austrian deviationist from the plumb-line Menger, he closes with further reference to this alleged difference between the two.
Max, here’s my challenge to you. Where does Menger say the state, with its politicians’ limited time horizons, is better able to preserve the capital value of resources than legitimate property owners? Where does Menger say that economic calculation within the division of labor is not a good way for society to economize?
You are saying Mises has deviated from Menger in holding the position he does. I call b.s. You have no idea what you are talking about. Give me chapter and verse from Menger. If you can’t, then admit you’re in over your head, and apologize to your viewers for that ridiculous segment and for this crazy claim about Menger and Mises. Source


Sandeep Jaitly Has Been Forced to Resign From the Gold Standard Institute

Kevin Killinger has done some leg work to confirm directly from Sandeep Jaitly that he has been forced to resign from the Gold Standard Institute after his bizarre attack on Ludwig von Mises during an interview on the Max Keiser show. Source

Bizarre Attack on Ludwig von Mises 
I have been inundated this morning with emails with a link to a Max Keiser show interview with "Sandeep Jaitly of FeketeResearch.com about the real Austrian economics of Carl Menger versus the fake Austrian economics of Ludwig von Mises"

The interview is totally off the wall with Max in way over his head explaining why the Austrian economic views of Ayn Rand and Paul Ryan are wrong, implying that they are wrong because they are linked to Mises.

First, although Rand supported capitalism on a moral basis, she never wrote about capitalism from an economic perspective and it is not clear how deep her understanding of Austrian economics was.

As for linking Ryan with Austrian economics, it is totally absurd, there is no indication from his political career that he understands Austrian economics.

As for Sandeep, this is one confused  dude. He charges that Mises broke away from the thinking of Carl Menger. He states that Menger held that "value is not outside your consciousnesses."  By this he means that values are subjective and not objective.

Here is Mises on the subject:
Value is not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment.
In other words, like Menger, Mises' views value as subjective.

Sandeep then goes on to another bizarre charge, that Mises did not believe that interest rates were set in the market (when there is no government intervention).  He explains the Mises view of time preference, as to why there are interest rates, but this has nothing to do with the Mises view on how interest rates are set. In the same way we may say there is demand for Coca Cola because we are thirsty, one can say time preference is behind interest rates, but this does not rule out the fact that the price for Coca Cola or the interest rate are set on the free market.

Here's Mises discussing market interest rates:
 On a market, which is not disturbed by the interference of such an "inflationist" banking policy, interest rates develop at which the means are available to carry out all the plans and enterprises that are initiated. Such unhampered market interest rates are known as "natural" or "static" interest rates.
There is much more nuttiness from Sandeep such as his definition of money as "an extinguisher of debt," as opposed to the correct view that it is a medium of exchange, but you should get the picture, Sandeep has an amazing ability to mix up reality and come up with total absurdity. Salvador Dali would be proud.


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