Austrian Economics and Scientific Realism

Uskala Mäki is one of the leading philosophers of economics of the past half century; moreover, he is well versed in Austrian economics, though not an adherent of the school. In this week’s column, I’d like to consider some issues he raises in his paper “Scientific Realism and Austrian Explanation” (Review of Political Economy, 1990). Mäki is unsympathetic to what he calls “instrumentalism,” the view that economic theories aren’t true descriptions of the world but rather aim at predictive success. He supports scientific realism, according to which economic theories do…

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Is an Educated Population Really Necessary for Innovation and Growth?

Lamentations that the waves of innovation are receding have engulfed policy circles. Distinguished economist Robert Gordon avers that the days of transformative innovations are over. Like Peter Thiel, he is disappointed at the incremental nature of modern-day inventions. The declinist thesis is predicated on the assumption that groundbreaking innovations like the steam engine, electricity, and the telephone are becoming exceedingly rare. Educing evidence to prove this observation has been quite easy, but we are less astute at understanding why innovation is declining. In his 2012 paper titled “Is U.S. Economic…

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Too Much Inflation? Just Raise the Inflation Target!

In late August, Fed chairman Jerome Powell suggested that the Federal Reserve would begin tapering before the end of the year, an admission that price inflation was rising above the 2 percent target. Nonetheless, the Fed took no immediate action in the following month. This week, Powell again suggested a taper would begin soon, stating it would begin soon enough that the process could “conclud[e] around the middle of next year,” and maybe could begin in November. This, of course, was highly conditional, with Powell noting this taper would only happen if…

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Should War Be Made “Humane”?

Humane: How the United States Abandoned Peace and Reinvented Warby Samuel MoynFarrar, Straus and Giroux, 400 pp. Samuel Moyn is a distinguished intellectual historian who teaches both history and law at Yale. His earlier books were written for an academic audience, but in Humane he has an urgent message that he wishes to convey to the general public. There has in recent years been a movement to make war more humane, especially by minimizing death or injury to noncombatants. Moyn thinks this movement poses a danger: At our stage in the…

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Before a Bust, There Is Always a Boom (and Malinvestment)

For most commentators lending is associated with money. However, is this the case? When a saver lends money, what he/she in fact lends to a borrower is final consumer goods that he/she did not consume. Therefore, what a lender lends to a borrower is savings and not money as such.  Take farmer Joe, who produced two kilograms of potatoes. For his own consumption, he requires one kilogram, and the rest he agrees to lend for one year to farmer Bob. The unconsumed kilogram of potatoes that Joe agrees to lend is his savings.  By…

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Europe Faces a Fragile Economy as the Merkel Era Ends

As Angela Merkel prepares her exit from the chancellery in Berlin, a false alarm is ringing in Europe about an imminent danger of “stagflation.” This phenomenon, like dragons, belongs to mythology rather than real historical or present circumstances.  The noise will prevent any faint alarm being heard about the true danger of post-Merkel monetary deluge in Europe—a French and Italian debt crisis culminating in euro collapse.  The stagflation myth originates from the 1970s experience in the US. Data averages collected over the period as a whole (1973–80)—including a virulent monetary…

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In Defense of the Speculator

It will come as yesterday’s news that the speculator is perennially under attack by the social justice warriors. Yet speculators serve a crucial and valuable role in surviving economic disasters. Original Article: “In Defense of the Speculator” This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack. Source link

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