Advocates of Reason: 14 March 2012

Man has only one tool to fight error: reason.

Ludwig von Mises

1.  Phil Izzo, “Number of the Week: Most Borrowers Not Paying Down Student Loans.”  At $867 billion in total student loan debt, student debt has surpassed both car loan and credit card debt.  Izzo notes that this should not be as hard to deal with as the subprime loan crisis, because the government guarantees a large percentage of outstanding loans and because this is the one kind of debt that bankruptcy does not clear.  The burden of the debt, clearly, is either externalized to the taxpayer or internalized by the debtor.  What this really means is that we are going to see a rise in a generation of debtors, and this is not just because of job prospects (as Izzo claims), but because oftentimes the price of the degree is higher than the value of the skills the degree represents.

2.  Gavin Kennedy, “Erasing the Invisible Hand: Essays on an Elusive and Misused Concept in Economics.”  Kennedy reviews Warren J. Samuels’ recently published book, Erasing the Invisible Hand (which seems a tad bit overpriced, at $87 for the hardcover edition — which seems to be the rule, rather than the exception, for Cambridge University Press books).  Kennedy discusses how Adam Smith used the metaphor of the invisible hand (which Smith used twice, according to the review), and how this may differ with how it has been popularly utilized.

3.  Chidem Kurdas (“Politics of Oil Prices“) blames rising oil prices on regulations on the seaborne transportation industry.  Evan Soltas (“Speculative Understanding“) blames them on the expectations of supply shocks stemming from unrest in the Middle East.  I feel that the issue is a bit more complicated than both posts suggest, although I am sure that the who problem incorporates elements of both of these explanations.  On this note, Howard Gleckman believes (“Gas Prices are Too Low“) that gas prices ought to be higher (private costs ought to equal social costs).

4.  Economist Justin Lin discusses his new book, New Structural Economics, published by the World Bank.

5.  Angel Martin points us to a video lecture by Karol Boudreaux on the role of the entrepreneur in raising the standard of living in third world countries.

6.  Blogger “Lord Keynes,” “Keynes on Mises’ The Theory of Money and Credit.”  A very good post that fights the idea that Keynes did not “get” Mises’ book because of sub-standard German language skills.  I do not know the history well, but LK makes a good case.  It all points that Keynes simply rejected Mises’ application of value theory to money.  It should also be remembered that some of the arguments made by Mises, such as points on the business cycle, were very subtle and underdeveloped, and so it makes sense that Keynes did not engage these specific theories at the time.  Certainly, a superior understanding of Mises would not have driven Keynes to change his mind on the bigger things.

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