Category Archives: Videos

On Gas Prices

Two neat, funny, and interesting videos on gas prices.

This first video goes through some common explanations and reasons why these aren’t true. The speaker talks about tension in the Middle East, speculation,1 greed, and rising demand in developing countries. He blames money expansion. I can see the merits of his criticisms of the other positions, but the money explanation has really never persuaded me — very few people can explain the causal mechanism, which is usually a sign that their conceptualization of their explanation is incomplete. Here is the first video,


This second video goes in a different direction. Here the speaker discusses gas prices, taxes, and the actual amount that petrol-industry firms actually earn per gallon. I’m sure there are some methodological issues, but the point he makes is probably more-or-less true. (An example of issues people might have — and are probably justified in having — is that these firms also enjoy tax loopholes, which may reduce the burden of taxes on their revenue. But, I don’t know the tax structure well, or how it impacts oil companies.)



1. “Speculators” do form part of the causal mechanism of price changes. The problem with blaming speculators is that by overemphasizing their role we can forget about other factors which, more often than not, provide speculators with a sense of direction. Speculators should be seen as people seeking to reveal the “true” price; changes in the “true” price aren’t caused by speculators, but they do tend to follow it. I realize that this might be an inadequate way of explaining the role of speculators, but I think it holds as a general principle.

Private Security and Violence

This summer, Bob Murphy gave a talk on the “market for security” at Mises University. The video:


I want to comment in response to something Murphy says early on, “I think, in general, using violence should be shunned.” I think he talks about it a little more later on, but he essentially suggests that there are alternative means of dealing with criminals other than violence. He gives a brief example of the power company shutting off a criminal’s electricity.

In developed countries, with extensive division of labor, most people live in large communities — cities — where large companies have tens of thousands, or even hundreds of thousands, of clients. The theory of being able to “shun” or ostracize criminals from the market is a bit unrealistic given these conditions. Indeed, utility companies, and any business, could deny service to a suspected criminal even in our world of a State-run justice system. But, they don’t, and there’s no reason to suspect that they would if the justice system were privatized.

Neither is peaceful arbitration an option for all kinds of crime. It might work for someone who is a known criminal — and I use the term extremely loosely, for anybody who has broken the law, contract, et cetera — and can’t move, or whose business depends on public relations. For instance, a big company has an incentive to arbitrate with clients or others who feel that an injustice has been committed by part of the firm. Murders, and other violent criminals, don’t share the incentive.

So, in a world where the criminal actively evades the justice system and where the division of labor is too large to exclude the agent from the market, what options does private law and security have? I see two obvious choices: (i) prevention (the threat of force) and (ii) forceful detainment. Both involve the willingness to respond to violence with violence. What’s more, I think there is the possibility that there could be a free market variant of the death penalty (and, to be clear, I oppose the death penalty): deadly retribution — and this can be a form of prevention.

To put it all into perspective, I do think there is (and would be) a huge market for arbitration, just like there is today. But, arbitration and other forms of peaceful methods of justice don’t work for those who are able and willing to evade these mechanisms. What does work is the armed arm of the law.

A Nobel Winner and Two Spaniards in Madrid

Here is the video of the lectures given by Paul Krugman, Pedro Schwartz, and Manuel Conthe.  Although it begins in Spanish, much of the video is actually in English.


(HT ZeroHedge)

Edit:  Krugman complains that Schwartz tries to pull credentials.  That’s not entirely correct (and Schwartz is right to be offended).  Schwartz claimed that oftentimes people put too much weight on opinions only because these opinions were given by Nobel laureates.

Fraud: Why the Great Recession (Spanish)

This video, sponsored by the Instituto Juan de Mariana, talks about the recession from a predominately Austrian angle.  Some of it is a bit too exaggerated for my tastes (like the idea that “there are no free markets anymore”), but it is nice to see that Austrian theory is circulating more and more around a Spanish-speaking audience.


Keen, Minsky, and Endogenous Money

Here is Steve Keen’s lecture at April 2012 INET conference,


HT “Lord Keynes;” here is Keen on his presentation.


On Twitter, I ask what differences there are between modern Post-Keynesians and those who came between the late 1930s through to the early 1980s.  But, almost immediately after asking, I realized my question is both unfair and uninformed.  My introduction to Post-Keynesian economics is through Lachmann (apart from what I read on the different Post-Keynesian blogs I visit), but Lachmann’s own interest in Post-Keynesian economics was selective.

Take, for instance, two economists he cites in The Market as an Economic Process: Shackle (13 citations, according to the index) and Hicks (19 citations).  Both were students at the LSE — and, to one degree or another, influenced by Hayekian capital theory — during the 1930s, during which time Lachmann was a research assistant to Hayek.  Kaldor (3)  was also at the LSE, and at one time also supported Hayekian capital theory.  I am not as familiar with the economics of Victoria Chick, another post-Keynesian Lachmann cites (twice) in his third and last book, but it seems to me that he accepts her ideas when they support his (that production takes place over time) — the second citation is about her interpretation of Keynes in light of the topic of fixprice systems, but he does not really elucidate (he just says that Chick and Hicks are on “opposite sides of the spectrum”).  In fact, where Lachmann is the most post-Keynesian is where he endorses their “fixprice” theory of price setting.  Otherwise, he uses post-Keynesian references to back up ideas that are broadly compatible with Austrian theory (disequilibrium, uncertainty, expectations, et cetera).  (Other Post-Keynesians and Neo-Ricardians he cites are Pierangelo Garegnani [once — on the “normal rate of profit,” of which Lachmann is critical, considering it an exercise in “objective,” not subjective, economics], Jan Kregel [twice — on expectations and their use in The General Theory; in the case of the latter, in support of Lachmann’s critical observations of their use in Keynes’ 1936 book], Joan Robinson [4 — one of which is used to support his criticism of Garegnani], and Piero Sraffa [4].)

My point — the above digression aside — is that Lachmann’s presentation of Post-Keynesianism is not comprehensive, and I deduced from it the idea that at first Post-Keynesians were closer to Austrians during the 1960s and 1970s.  It follows, from my error, that modern Post-Keynesianism deviated from those of the 1970s.  This was my mistake: Shackle and Hicks do not represent the entirety of the Post-Keynesian school.

Second Update:

If you watch the Keen video closely, I think you can see a number of similarities between the Minskyite theory of instability presented by Keen and Austrian theory.  There are, of course, important differences: such as the Post-Keynesian emphasis on the importance of effective (aggregate) demand, for one, and price theory.  But, it goes to show that Post-Keynesian economics warrant a very close look.

Some broad similarities that I caught: (1) the idea that “debt-based” money economies require a constantly increasing volume of debt (credit or fiduciary media) to maintain; (2) that most income is spent on consumption and investment is financed out of debt (seems to support the “great stagnation” thesis, to some degree); (3) that the monetary aggregate most affected during recessions is M1, or credit.

Normative Economics

Jacob Roundtree points us to this video,


I have been meaning to comment on the video, but just have not found time yet.  I will publish my thoughts tomorrow.

What do you think about Sanjay Reddy’s argument?

If I make on quick observation, it is that Reddy’s view of what an economist does represents, I think, the result of the move away from serious, widespread discussion on epistemology.  There are epistemological discussions, but these are mostly on the margins.  Amongst the mainstream, it seems to me that the general sentiment is that if there was an epistemological discussion it was settled a long time ago and that the economic discussion should move forward (progress).  The result is epistemological confusion — each person has their own idea of what they are doing and how they should do it (although, if you generalize enough, each approach is similar enough).