Sunday, June 9, 2013

What do people think of the quality of this argument by Don Boudreaux?

Posted by dkuehn at 4:04 PM
Here.

The fact that I ask gives you a hint of my opinion, but I was curious what you all think.

8 comments:

  1. CurrentJune 9, 2013 at 4:46 PM

    Don's right. Except for the case of commodity money like gold, which can be used directly, though only in limited ways. All of money's uses are indirect.

    If many countries are on the same commodity standard then some of the things he talks about are a bit different. I don't expect anyone to be thinking about that though.

    I'm sure the argument Daniel is pointing at here is something else though. Having net exports and an inflow of foreign currency can be useful. For example, during a war or a period of economic crisis it can form a buffer (though that's more an argument for governments and people to buy foreign currencies in case of emergencies). There are lots of other arguments that can be made for Merchantilism, such as Frederick List's or Keynes'. I have no clue what you're hinting at here though.

    ReplyDelete
  2. LordJune 9, 2013 at 7:30 PM

    Do you want us to make equally lame arguments about exports impoverishing us so we should ban them, as rising exports signal mercantilism instead of growth and trade. Or confusing consumption with wealth so debt is the path to wealth? Or since money isn't wealth he should send us his?

    ReplyDelete
    Replies
    1. LordJune 9, 2013 at 7:35 PM

      Or shame him for his lack of concern for the well being of our trading partners who accept this money of no value?

      Delete
    2. CurrentJune 10, 2013 at 9:05 AM

      > Do you want us to make equally lame arguments about exports
      > impoverishing us so we should ban them, as rising exports
      > signal mercantilism instead of growth and trade.

      Don is saying that money procured from exports is primarily used to buy imports. Though it may also be used for foreign direct investment too. He's not saying the rising exports signal merchantilism.

      > Or confusing consumption with wealth so debt is the path
      > to wealth?

      Don is making a differentiation between direct and indirect wealth. Consumption goods and consumer durables make us wealthy directly. Financial assets only do so indirectly because they may be exchanged for other things.

      Delete
    3. LordJune 10, 2013 at 9:45 AM

      That is the problem though when it is not. It is routine bait and switch to proclaim consumption makes us wealthy. Why have a real discussion when straw men are so much easier and fun?

      Delete
    4. CurrentJune 10, 2013 at 12:12 PM

      I don't understand what you're saying. Are you saying the running a trade surplus permanently is useful because it allows a nation to buy assets in foreign countries?

      Delete
  3. Squarely RootedJune 12, 2013 at 4:14 PM

    He's exactly right in two key respects, but I think he confuses them:

    1) Money is a social system based on trust, and has no "desert island" value.

    2) Wealth is dependent on other people.

    The second is more key. Money is the tool we use to denote wealth, and wealth is the ability to command goods and services, ie, to command the use of the time of others. Bill Gates' money entitles him to get people to drive or fly him wherever he wants, to serve him whatever meal he wants, to build him iPads and iPhones and tailor him nice suits, etc.

    This is, though, where I think some of this libertarian stuff starts to fall down, and it's what he confuses. Even in a magical barter society equally as productive and commercial as our own, wealth is still dependent on other people. Money, while a necessary part of the system and one that impacts the nature of the system itself, is fundamentally how we denote with precision who has what claims on the time and production of others.

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