Introduction to Economics – Part 3 – Murray N Rothbard

Part 3.

Introduction to Economics: A Private Seminar with Murray N. Rothbard

Rothbard considers how prices are determined by supply and demand on the free market. All long-run shortages are caused by government interventions. Forecasting is not possible. Economics is not an objective science.

Part three of seven from Introduction to Economics: A Private Seminar with Murray N. Rothbard.

This lecture as a Podcast: http://enemyofthestate.podomatic.com/

Sourced from: https://mises.org/library/introduction-economics-part-3

Source: Introduction to Economics – Part 3 – Murray N Rothbard – YouTube

http://www.readrothbard.com/introduction-to-economics-part-3-murray-n-rothbard

TRANSCRIPT

00:00
a lot of purchase more than was
00:01
available it’s an Italian kind of
00:03
available as soon as one approaches
00:05
500,000 pounds it’s something disappears
00:07
of this shock expending last a couple of
00:09
eight by ten on the mornings gone this
00:12
is a shortage so what happens when the
00:15
market is a shortage of this very
00:17
quickly because if I say hey he’s going
00:18
right back I can raise the price as they
00:20
raise the price in order to get this
00:23
here and this is very fast and again
00:31
because of the motivation as the price
00:33
is free to move motivation is to make
00:36
problems with a boy horses and get them
00:39
to the price which clears the market so
00:41
it’s a client manner exactly where
00:44
people want a 20,000 fan of housing
00:46
teachers pounds of features available
00:47
people want to buy can about sometimes
00:50
exact clearance at the market supply the
00:53
manatee equilibrate and this is the
01:03
higher price later than so you have to
01:06
surplus lower price demanded Raelynn
01:08
supplies we have a shortage and well the
01:12
free price movement doesn’t wait snap
01:14
surpluses shortages assume there appear
01:17
you don’t have never having a free
01:19
market anything like permanent surplus
01:21
are hurting shortage couple days pretty
01:24
quick if you do have a premise of
01:26
several parts orders the government is
01:28
always in there interfering all right so
01:36
this is up oh this is Orthodox
01:41
economists have a similar approach here
01:43
except we know wasn’t just black embers
01:44
burning the Orthodox
01:47
approaches by cameras for some way the
01:51
Austrian do the swipe of its vertical
01:53
dealing with a day-to-day situation how
01:55
much was there and how much from
01:56
people’s how much is there in the supply
01:59
and how many people evaluator and my
02:01
waiting people evaluate up there try new
02:02
scales us to the man so you have another
02:05
words things around resources goods
02:07
various they use of production and
02:10
people evaluating the man and supply now
02:20
these are the only two things are gonna
02:21
affect prices supply the man think
02:25
rapidly
02:27
another reason for equilibrium is an
02:29
analogy with physics physical sciences
02:31
where equilibrium is something which
02:34
something that tends to move toward and
02:36
tends to go back to it was this spot and
02:43
go back to them is displaced so that
02:48
question is it for the next question
02:49
this is we need to preserve the prices
02:51
changing all the time
02:52
how kind of might entertaining why they
02:53
fixed why they stay frozen forever
02:54
energy ordering for obviously for cars
02:57
only and only because either the man
02:59
changes supply changes are both the only
03:02
two ways in which prices can change okay
03:15
then we have the familiar things yeah so
03:17
I guess whatever everybody knows us but
03:20
at any rate as applied change let’s say
03:27
though the famous counter things hit
03:29
Oilers they cover every few years coffee
03:31
freezes of Brazil and big frost coffee
03:35
prop destroyers that they have over this
03:37
appears as having about five years ago
03:40
I’m and the big drop in supply of coffee
03:44
it’s my curve shifts to the left so this
03:50
means of the old market clearing policy
03:52
before this last frost the price is
03:55
probably something that was the market
04:05
clearing price before the straws then
04:06
the fourth time the wipes out a faculty
04:08
problem and these are the old price we
04:10
don’t is no more a market clearing but
04:12
now is a thing the man isn’t very much
04:14
greater than supply shortage of the
04:16
bulbs they price zips off to clearly
04:20
clears that you why not go to hire
04:26
another thing this shows that how price
04:28
performance so-called rational function
04:30
is only aluminum at everything scarce
04:33
there’s not enough coffee for everybody
04:35
drink ten cups of coffee every day the
04:38
world and so somehow it’s the allocated
04:42
somebody’s gonna get the copay somebody
04:43
isn’t free market on case of choices
04:48
preferences as the supply drops from a
04:51
million pounds of coffee their privatize
04:53
whatever it was there’s two ways of
04:57
allocating the stairs ye have a
04:59
government rationing committee so you
05:01
you and you can only drink half of what
05:04
you drank for if you don’t it makes less
05:06
more than half just go reckless an
05:08
amount will shoot you that’s one way to
05:12
do it
05:12
totalitarian evil an efficient
05:15
everything the free market that they’ve
05:18
allocated absolutely anomalies they’ll
05:20
each individual the sign and there are
05:22
on basis those the coffee price starts
05:24
going out those people who most cofee
05:26
will keep either by insane amount or cut
05:28
their pressures on the world but others
05:30
is corby sort of marginal is and how
05:32
about shipping the tea or cocoa or Pepsi
05:36
or whatever and that’s exactly what
05:38
happened
05:38
was the last cookie for us people start
05:41
stripping maximum as he wind up of this
05:44
kind of higher the lower supply
05:47
allocated very smoothly to each
05:50
individual choices come bristly Polly
05:57
know that there’s a better fertilizer or
06:02
whatever we know that our agricultural
06:04
techniques have an opposite situations
06:07
at the old marketing device is now a
06:09
surplus people don’t want that much or
06:12
whatever and so a node induce them to
06:14
buy more you have a cup of price and
06:16
price so this changes on the supply side
06:26
and the free market economy capitalist
06:29
the continent usually a tendency is the
06:31
most visit services the increase in
06:32
supply some a little bit owes a lot so
06:37
the tendencies toward falling prices for
06:43
example in my case x-rated great century
06:46
industrial revolution prices fell all
06:49
the time except during wartime wife Rosa
06:55
Wrangler has another story it’s good for
06:57
that evening the point is without any
07:00
interruptions exogenous forces coming
07:02
over government prices have a full
07:05
dramatic examples are TV calculators and
07:13
computers yeah if I wanted denied my
07:18
less about present good as anybody that
07:19
row properly and unbelievable my keep
07:21
they keep falling every day enormous a
07:23
supply increases productivity increases
07:26
openness explodes
07:28
I remember less than lower tech examples
07:31
wonder the hand calculators come out
07:34
about 12 years now
08:25
this is again this is home ingenious and
09:16
such you have to determine even koala
09:18
mate there was very different measure of
09:20
quality obviously Japanese of you
09:22
comparing prices over time it’s the
09:24
price per unit quality and it’s a
09:27
calculator so anything’s on this thing
09:29
we have much better calculators really
09:30
much lower twice per unit quality in the
09:32
calculator
09:33
it’s nice that’s another example lower
09:37
tech over
09:37
and TV sets the first game ever g-49
09:41
$2,000 at seminary phonology current
09:45
clone a or something for a crummy set
09:47
I’ve been standing there
09:48
rookie course black is like it was a
09:50
great murky and shadowing and only about
09:52
team to program anyway and all stuff and
09:58
also the first family one family each
10:00
neighborhood Attica so everybody who
10:01
thinner right there watching them so now
10:06
you have a situation we have color tell
10:08
us all because that’s what 200 that’s we
10:09
never much instantly better quality
10:11
unbelievable cable everything and see
10:13
everything like plus lots of programs
10:16
with 45 channels or whatever plus
10:18
everybody’s got about eight TV sets
10:22
bathroom just watch TV in anything else
10:24
so even even people were certified a
10:26
little bit of property level welfare
10:28
once the TV sent in so I mean it’s
10:33
totally get in what happens with mass
10:35
production imminent tendency for mobile
10:38
crisis is no beautiful
10:40
Yeah right that so quickly might ask why
10:50
prices will keep going up general but
10:56
yeah the usual doctrine of businessmen
11:09
one of them is men a lot of the late
11:11
person cited pricing to determine my
11:13
cost production this was this was the
11:16
Smith and Ricardo basically said that
11:18
Marshall standard has been British
11:20
comics neoclassical coming down costs
11:25
are higher pricing the higher price of
11:28
course and where’s the course in here
11:31
you’re worth nothing analysis when I am
11:33
spoke about internship in the man forgot
11:35
that it’s pretty clear that the man
11:39
increases you have agreed to twice for
11:42
something the man brought in lower
11:44
prices by the way determines Reese
11:47
appreciate resources forget the course
11:59
okay
12:00
the man can only view if you have
12:03
something’s out there printing money
12:04
more time what’s happening life the
12:07
whole domain curves will rise everyone’s
12:09
got more money in their pocket and so I
12:11
think personals paying more money for
12:12
the same well by mortis any given price
12:16
so you have a general flipping up where
12:18
the main curves aside from that without
12:22
that and ring picture team Emily it’s
12:25
fixed you don’t have think was certainly
12:30
I think how they bind more on one thing
12:32
I thought I lost something else it an
12:34
interval tend to shift around and
12:37
according to Sumer preferences and bang
12:40
change unpredictably the standard
12:46
example back in the 1930s was the people
12:48
shift report with these we get more
12:49
affluent work somehow poor business
12:53
it’ll look tight so there’s people
12:55
getting higher living standards they
12:57
tend this check report the beef a
12:59
proportion of the monthly wine and chips
13:02
so so then you have that would any moral
13:14
kind of nation Republicans anyway so
13:19
then you have a situation where the pork
13:23
fools how much in heaven distantly is a
13:35
the man meaning how much people paid any
13:38
given price nobody knows exactly what it
13:40
is another key point the Austrians
13:43
always make textbooks always say give
13:45
the man carries the cost curve me right
13:47
now homes will be produced the price
13:48
that nobody knows when they are in the
13:49
real world businessman intrapreneurs
13:52
trying to hunt the uncertain world my
13:54
friend governorship trying to ask them
13:55
they kind of find out on the demand
13:56
curve is what the costs are difference
13:59
of the Austrian economics earth while
14:01
reasons are narrowing dominating
14:03
economics profession
14:04
it says they are the textbooks given the
14:07
demand curve given the cost curve this
14:11
isn’t how much will be produced in
14:12
generally would bring to a constant yet
14:15
but the flame is given in the movie
14:17
nobody knows it it’s not giving it all
14:18
have to work in the process of trying to
14:20
find out what’s going on hopefully
14:22
learning and adjusting the changes it’s
14:25
a very great other kind of approach okay
14:28
so so then there’s a higher price for
14:31
beef and what – reporter initially the
14:34
reaction because again the the only
14:38
price much surplus piles up so – the
14:44
full some people will be fine same
14:47
amount of work they did before the beef
14:49
market again people why transitory
15:00
shortage other more modern examples
15:07
since World War two been a big shift
15:09
consumer preference for red wine and
15:11
white wine enormous support of these my
15:16
California wines in that right thing
15:18
because California Reds are not that’s a
15:19
pot coupling your whites this is gonna
15:22
sprint whites
15:22
so as the Preferences shift of a red to
15:26
white he’ll they don’t supposed to bring
15:27
quite much fish and chicken now people
15:30
require everything so the demand curve
15:36
for white wine goes up the banker for
15:37
Eklund goes down also what happens with
15:40
tremendous chip and alcohol preference
15:41
citizen out of bourbon example is what
15:44
buck 1940 Mike Walker to Marsha Emmerich
15:48
raised and now they want an enormous is
15:51
a big ship and they’re both the same
15:52
toward the so-called lightness I guess
15:55
heavy bricks so you have an increase in
15:59
mancora vodka profit maker preferred
16:01
what happens then this brings up a
16:03
production department talking about
16:06
given the given supply supply online how
16:09
much is available we haven’t talked
16:11
about yet so just this size how much is
16:12
going to be available
16:13
who decided maybe 200,000 pounds of
16:15
peaches today or many levels of wonder
16:18
record producer to this item
16:20
you know five years ago two years ago
16:21
ten years are depending on what kind of
16:23
technology and how much how long it
16:24
takes produced any sign of a cynic
16:29
Asians expected the man what they stick
16:31
to the management will be what they
16:33
think the price will be when they think
16:34
the cost will be some has their rights
16:35
and hats are wrong though they were
16:36
right make profits those are wrong
16:38
suffer losses so what happens here is
16:43
the the cases say let’s say for everyone
16:47
it’s more interesting here is the white
16:55
people they say they see there’s a big
16:58
increase in than after white wine broth
17:00
with my infrared one they have to figure
17:01
out that what’s gonna be permanent is a
17:03
transitory the only a couple will only
17:05
last a couple of months because Kennedys
17:08
likes white wine or whatever they have
17:11
to make a decision when this would be
17:12
semi-permanent or transitory they make a
17:15
decision let’s say the size will be
17:16
permanently electronically right they
17:18
start to retool they’re smart they will
17:22
be able to survive it’s like –
17:24
increasing the production of white wine
17:26
and do producing such a regular line or
17:28
increasing production be producing
17:29
partial pork a different technological
17:31
unit something different some things
17:33
take two weeks to be tool something
17:34
takes ten years what you’re producing so
17:37
what happened to the overtime you don’t
17:39
have any creases shipping supply line to
17:41
the right here responsible the Minor
17:43
Prophets
17:44
expected to be may be doesn’t increase
17:47
demand want to price somewhere in
17:53
between and greater production white
17:55
wine and red wine it’s not shipping out
17:59
of a supply lines people going to the
18:01
left and wind up somewhere between right
18:04
here this is a long run responds to
18:12
changes of the man so what happens is
18:15
that this indicates one thing for
18:18
example how the production is a response
18:21
to anticipate or expected the manimala
18:22
consumers consumers the drivers of the
18:24
engine produces branch to figure out
18:27
what consumers going to buy next year
18:29
ten years
18:29
and then you move into the situation if
18:31
they say consumer the one of the one
18:33
white wine heavily he’ll move into that
18:35
moving out of bread and wine yes I make
18:37
each other stinking they lose money
18:39
there correctly making money
18:41
you see on the market enterpreneurs tend
18:44
to be pretty good at they go back drop
18:47
and drop back law of survival offense
18:50
itself it’s not necessarily boo boos but
18:55
basically Tennessee is a successful
18:57
forecaster that repairs and do well they
18:59
might remain in the market and from some
19:01
some ones that robbed back any right if
19:06
you take the locus of any given system
19:12
the man I got that I played take this
19:14
intersection floor one intersection
19:16
point you’ll get some of us along like
19:18
that this is the textbook supply curve
19:21
toward sloping supply curve the reason
19:24
why what’s being stressed that vertical
19:26
supply curve is lost is the lowest
19:27
program something different doesn’t
19:28
belong on the same diagram okay because
19:30
time is involved here there’s a third
19:33
inning news any dimension right and
19:37
different things like apples and peaches
19:39
please demand curve is instantaneous
19:42
freeze-frame situation at any given day
19:44
how much will be but what a different
19:46
priceless and nobody knows exactly what
19:49
they are we do know it’s falling that’s
19:50
what we know you know the people
19:51
consuming we buy less of the higher
19:52
price and we’re a lower price
19:55
supply curve and I need given data
19:57
containing is there it is it stuff was
19:58
there at Sam pounds of peaches over the
20:00
long run this is how much will be he
20:03
bought a vote for the man car keeps
20:05
shifting and prices such and such as a
20:07
comically supply in the long run by
20:09
tonight why manufacturers so that’s
20:17
and it is this thing is philosophically
20:20
slumpy to an F for Islamic macro so two
20:22
different things in from Rossi the
20:24
Austrian position focuses on the melon
20:26
has the correct maxi period
21:03
that’s the locust that’s the we have is
21:06
a little bunch of little ones but that’s
21:09
useful to us yeah it’s useful as surely
21:11
if you pay a higher price to get more
21:15
and more will be produced it’s not to
21:18
afford for Rembrandt’s Weimer has
21:21
affixed frozen forever
21:22
me nobody producing more memorize it
21:24
memorize that I should have a perfect
21:26
forger
21:45
some markets exactly a lot of things in
21:59
a unique they don’t have any great tank
22:01
reference an upper bound and what I am
22:06
willing to pay is what I think I could
22:09
produce another item for given time
22:11
about the same sort and the lower bound
22:14
on what I’m willing to face is my value
22:18
of a nice return over future value of
22:21
the present value of future cash flow
22:23
give them to give them a city but by a
22:28
person when Kobe unwilling to pay more
22:33
what I think I put a similar Department
22:35
building up for on the other hand I’m at
22:39
least willing to pay a price that the
22:41
cash flow will give me a there’s other
22:55
measures of most of these things that
23:01
you’re talking about the red wing wing
23:06
line the port are fairly non business
23:16
decisions
23:54
over the future events and if
24:53
it’s also better than other views of the
24:56
world and predicting future events back
24:59
where you should be valuable for
25:00
business
25:01
more so than somebody that’s incorrect
25:06
we kind of missed insight and economics
25:08
a few more common to say it’s fault if
25:10
so the mantle Bank morning goes up
25:13
sometimes will happen twice will go up
25:15
and then more people participated and I
25:18
think it’s permanent in this permanent
25:20
that’d be more production but we don’t
25:23
know whether why Christ you know
25:24
anything about the man for white wine we
25:26
don’t know we have a formal set of tools
25:29
here and I don’t think the interpreter
25:32
needs I don’t think I mean he knows that
25:34
it’s too late anyway
25:34
those people pay more for it what we’re
25:40
doing is essentially when analyzing
25:41
individual actions and affirmative
25:43
action the way Austrian companies
25:46
promise are now vanity will assess the
25:47
business matter because of government
25:49
dimension we can predict was also gonna
25:51
measure they can totally free market we
25:54
have no role at all and now we can say
25:56
look because price control thinking
25:58
thinking maybe they’re gonna be
25:59
shortened or if the money supply
26:00
increases government inflation let’s
26:02
didn’t even buy that because in a
26:04
totally free market keep it that way
26:05
yeah of course yeah fight so therefore
26:08
this education education we always have
26:11
an educational function i second this
26:13
business if you’re employed by IBM or
26:15
something economist right now to these
26:17
well I’m rather than really important
26:22
but it’s also because they need because
26:25
of this all micros really would wash
26:27
that seems well let’s see I know a great
26:30
needs a problem is the businessman would
26:32
rather have somebody who who says he can
26:34
predict you if you gotta grow up in an
26:36
Austrian is I can’t predict
27:08
mr. Ames countess and you an economist
27:17
would say okay if all people required
27:20
filing the tax returns in a certain way
27:22
then we would provide the service of
27:26
filling out in tax returns more than we
27:28
would limit the number of people who
27:30
come into the market and so on and so
27:31
forth they start with this even more
27:33
than we then to conspire to lure or try
27:36
to achieve the regulation that will put
27:40
that model in place
27:53
business economists first of all they
27:56
might speeches for their chairman or
27:57
presidents that’s an important function
28:01
usually speeches are pretty good we look
28:03
at business I used to economist these
28:06
were Businessweek not too big for busy
28:09
didn’t work before they working the
28:11
speechwriter for their cooperation even
28:13
he says places teachers are great it
28:15
will send more core free market and
28:18
actually the course that’s totally
28:19
different the same people but this
28:21
business speech is usually pretty good
28:22
it’s been so that’s one thing kind of is
28:25
different right speeches but it’s also
28:28
it’s also something PR function I am me
28:32
how many comments to and it does
28:33
something such it looks good to that
28:35
public look since the stockholders is
28:37
also promised Michael was students lots
28:39
of stock I was suing so many who says
28:44
yeah I only see me the cover they cover
28:46
their rear speaker alright we made this
28:48
decision we had the meat of phd’s or my
28:51
designs this has a certain we get to
28:57
take on the mentions of a racket any
29:01
right
29:39
profession was not money forecast if you
29:44
look at the forecast they’ll say about
29:45
the same things and you know GNP is
29:49
going to be the snowflakes on point or
29:52
anything such as such usually they’re
29:54
wrong my second theme the their fuel
29:59
judgment they’re economists estimated
30:02
analyze forecast how good are they every
30:07
every survey that are made forecast is a
30:09
big tools whopper rule
30:10
in other words matter of fact take a
30:15
ruler this is this is time 1972 you
30:21
think whatever is statistic going back
30:23
has been going like that simply horrible
30:25
earn extrapolate Trenton you doing
30:27
better than I could i speak computer
30:29
models then you got metric forecast so
30:34
of course you can’t charge fine $1000 a
30:37
corporation take a ruler over line
30:41
so the and they say I am a bull speak
30:45
journal every once while I’m talking
30:46
about the perils of forecasting as if I
30:48
had one I think last six months ago
30:51
complaining about we could do pretty
30:55
well when trends don’t change that’s the
31:09
whole point
31:10
obviously the problem is forecast
31:12
changes in the traffic can’t do it this
31:15
is Moe and the forecast almost always
31:18
say in a very small range reason is
31:21
where nobody wants to be different the
31:22
other guys in things it’s like running
31:24
in packs if you go higher my corporation
31:28
or your
31:29
their forecasting companies they was the
31:36
biggest one you’re hired by companies
31:38
the forecast if you’re if you’re wrong
31:40
with most them are wrong your almond
31:42
attacks a seventies the state of the art
31:44
I couldn’t help but like everything is
31:46
wrong only time Congress wrong way life
31:49
is
31:49
but if you’re way out of line if you say
31:51
inflation would be two percent I say e
31:53
percent say for something your anything
31:55
finished you’re way out of line of
31:57
everybody else therefore your turn so if
32:01
you’re all along together
32:02
no visual person can be flanked so as a
32:06
result they roll they will first of all
32:08
interact with each other one time it was
32:09
the same model they might have embraced
32:13
someone Ranger the difference of
32:14
breaking for school there’s also an
32:18
interesting problem this thing is the
32:20
drones
32:21
trouble legalize they kept investment
32:24
forecasters all along there’s less the
32:28
newsletters to forecasting stocks
32:32
taking exam Eliot Janeway while most
32:34
famous but this is something wrong out
32:35
about 20 years wait
32:37
I feel predicted Dow Jones average is
32:40
going down a thousand five hundred and
32:42
six months six months arrived and still
32:44
about a family why not everybody my they
32:46
lose all of us customers interesting
32:49
question does he see what the left is
32:51
called status quo market failure only
32:53
and market forecast so while it varies
33:00
I’m sorry what – can people about that’s
33:01
people are in the business of this he
33:05
will make many in this room this isn’t
33:07
warm forecast so what’s the what’s up
33:10
here well turns out really funny when
33:12
the answer is well Lee you’ve got a new
33:13
suckers coming in but it’s not really
33:15
good enough it’s not very satisfying
33:16
because the market supposed to work the
33:18
better people lined up you know is
33:20
forecasted well turns out and the answer
33:24
was given two things correct is
33:26
essentially forecasting backs or
33:28
especially not massage for businesses
33:29
prefer individual bond market letters is
33:32
we need consumer good it’s not really
33:33
it’s not really if the purpose is not to
33:36
find out I’m not a forecast
33:38
that’s why nobody checks up on the floor
33:39
nobody care to be wrong six-month way
33:40
they enjoy looking meeting the forecast
33:43
and jointly listening and I say there’s
33:45
going to be an oppressor in six months
33:47
with a while inflation fix my that’s the
33:49
enjoyment its consumer this is the way
33:52
it’s not they don’t care whether he’s
33:55
right or not there’s like the hero
34:12
and because they because basically the
35:10
Austrian being Austrians coming from
35:12
Italy Rose being don’t take them so
35:14
seriously this is and they do not have
35:18
this scholastic seriousness this
35:21
activism and this is that why they can’t
35:24
come to that conclusion and I say missus
35:26
it the nature of that they don’t take
35:30
them the same serious when they see that
35:32
there are animal conservative everything
35:35
is relative
35:36
I am judging the very
35:53
so they must be hearing all the
36:28
qualitative and I wanna know the clinic
36:32
you know for price price for more people
36:35
buy it anymore will be purchased and is
36:38
shorted sir there’s only guitar my goal
36:39
and tell you how much will be full what
36:42
the shape of the banker is what the
36:45
price will be next week and so forth
36:47
that’s so and it’s considered and this
36:50
is what he gets them really important
36:51
philosophical point about the Austrian
36:53
method which is much more way much more
36:58
in minority nowadays the free market
36:59
this sort of assistance the more or less
37:03
of semi three market economists now so
37:06
the real minority where written is
37:08
methodological philosophical they can’t
37:10
stand the fact we say there’s no
37:11
substantial want Airport can’t predict
37:13
the future c’mon tater can’t say price
37:15
of corn is gonna be such a session six
37:17
weeks ten years is now something and so
37:22
that’s and that’s people believe that
37:26
there are became you can have
37:27
quantitative laws you can say no no
37:29
her visit went to a point three times or
37:32
ever I really determines they really get
37:35
some of the terms of future though
37:36
pretty well and we’re actually doesn’t
37:37
change people like objects are all acts
37:39
you all think it therefore you’re
37:41
therefore it struck them like in short
37:43
message are molecules actual physics are
37:45
quantitative laws right
37:46
yes but the Heather of the missile will
37:49
fall out of being shot and these people
37:52
tended to thinking and something a
37:54
modern scientific method so something
37:57
idea the people that we treated us like
37:58
objects per molecule think it’s short
38:00
their course determining everything
38:02
they’re gonna do so that’s a key
38:04
difference or that’s why we watch things
38:05
are very much in the minority and that
38:06
reason alone
38:08
most most the hard sciences of this
38:11
beginning to stick their my scientists
38:13
when I got the prestige physics I met my
38:15
real science spend four point so because
38:26
now it’s so simple Social Sciences or
38:29
science is a human actually
38:30
Jesus will put it it’s not considered
38:32
the only real science is math numbers
38:35
and all that that’s what science is
38:37
whatever so that’s and that still is a
38:41
radio in the dominant push your point by
38:50
the mic and resistance nothing doing the
38:51
point before you know will be Anna
38:53
Mises needs we fill up great anecdotal
38:55
Vienna and just my mentor and was
38:58
therefore always like until the 1930s
39:01
and so one time I was walking down the
39:03
street no logical positivists were big
39:05
in Vienna
39:11
so max Taylor was distinguished German
39:14
economy I dream a philosopher was
39:17
walking down the street of streets of
39:18
Vienna Mises think so tell me what is it
39:21
why is it what is the climate of me out
39:23
who’s the only damn logical positivists
39:25
Mises structure 27th floor max there are
39:29
six million people in being are
39:30
screaming at you go beyond the only told
39:32
me the okay that’s that’s a one thing
39:46
yeah about forecasting tells us this one
39:48
too this the young outside economists
39:53
again I’m always trying to say
39:55
crystallizing the markets saying it
39:56
should have been more stealing her to
39:57
extortioner than less the bathroom is
39:59
more of that and lead us response with
40:03
only one thing on produces the market
40:05
failure it’s a whole new market event
40:07
the birds as you go out there someone
40:09
gap and forecasting you would say well
40:15
people for example claim that they
40:18
predict the stock market economy market
40:19
T that system if they really couldn’t do
40:22
it they wouldn’t be wasting that time
40:23
producing news that it’ll be making two
40:25
trillion dollars and and one time I saw
40:32
a TV show
40:34
talk show panelist IV was a panel of
40:36
forecasters or sports forecasters people
40:39
baseball basketball and the host was
40:42
talking about forecast each piece of
40:44
them play out weekly letters and and
40:47
funny the talk-show host by accident so
40:51
stumbles in the key question except
40:52
while Percy says yes as these people bet
40:54
on their own predictions
40:55
oh of course we do we we we believe this
40:59
will heartily and we’ve been on those
41:00
before you and usually right yes yes
41:02
we’re quite many great percent of time
41:03
or something and he says then it hits
41:05
the coast he says role in that case you
41:09
know you must be missing you’re making
41:10
millions a lot of money wasting your
41:11
putting
41:12
like everybody on the newsletter and the
41:15
guy who never heard the question before
41:16
baseball casters huh
41:19
I swear you some of these as well I
41:21
think some I think it’s important give
41:23
this information of a public a listicle
41:33
point my point organically so okay so I
41:43
guess we get the cost down the
41:48
tremendous difference that cost theory
41:50
between what straightened everybody else
41:54
the classical Neal casket view as that
41:59
in a long run at least long run prices
42:02
tending towards Worcester production
42:04
theory something like this Wow
42:08
if you have an industry with 8% 1020
42:12
percent profits and others people 2%
42:14
Provost people tend to move out of the
42:17
industry with both profits or losses
42:19
move in the industry or high profits and
42:20
get Equalization so you wind up with
42:23
more less equal profit rates across the
42:24
board zero improper payment Theory going
42:27
with and prices that equaling of course
42:30
the production so act so that in the
42:33
woman’s the marshals famous two blades
42:34
of scissors
42:35
Wow it’s truly the short run there
42:37
somehow they thought is being somehow
42:40
unimportant he’s a real world important
42:42
it’s true in day-to-day life utility
42:46
determines prices subduing my gun
42:48
worthless flying but the only one is
42:51
really cost of the tournament long run
42:54
any fingers metaphor Alfred Marshall was
42:58
the
43:00
like hear me over Cornett importance of
43:13
Marshall was he brought back the
43:15
carboxyl carbon almost doesn’t and the
43:17
water in other words theory without and
43:20
Marshall was born of man of tremendous
43:22
prestige Cambridge University
43:31
so Marshalls famous metaphor without us
43:33
like waves of the ocean if you look at
43:35
the day-to-day prices behind of the one
43:37
age particularly but the long-run the
43:40
price is gonna be there level of the
43:42
oceans that ocean is more important
43:43
individual way so this sets this thing
43:46
so that the kind of thing get interested
43:49
only one warm on which it never exists
43:51
and not into something a short run or
43:54
immediate David a thing of course it
43:56
does exist a long run by some evil
44:00
across the production or determined by
44:03
the most brush worse than that they knew
44:07
a course is very different the ocean
44:08
view is there the only course that those
44:10
just thing is a real cost some kind of
44:12
objective cause without their somehow
44:14
right the man and the ephemeral will
44:17
wind up at a cost level cost is the what
44:20
you give up to get something other words
44:24
in the case of me buying this paper
44:27
price than this paper that’s the value
44:29
to me when I give up as the thirty steps
44:31
of cost to me is three stats in his past
44:33
more importantly if you get done I’ve
44:37
also two choices will say where do I
44:39
spend in the next this evening or
44:40
something you say well this particular
44:43
you say
44:47
I’ve got a movie a BB or a party a party
44:50
VSB okay but they have about ten choices
44:52
outside and you decide to allocate your
44:55
time a movie a I think it’s most
44:57
important my values not too many things
44:59
thing I’ve spent a lot of time happy
45:02
okay I want a movie night what’s pretty
45:05
good I didn’t rector or what I start the
45:08
course of the movie a is to consider the
45:10
places like money which also this cetera
45:13
probably more so as the what you give up
45:15
for it which is probably movie Beach
45:17
don’t go too quickly sacrifice movie
45:20
date and go to movie a and step so of
45:25
course the movie a movie a movie B in
45:30
other cases like the value scale is
45:33
newspaper 30 cents washes 37 in other
45:36
words the cost of doing something of
45:38
taking any action again he sort of
45:39
choice is the highest value but you give
45:42
up to give up 10 different things the
45:44
highest concept is your costs okay so
45:47
conclude from this course the subjective
45:50
each individual only the individual
45:53
knows the course nobody else can have an
45:56
objective like no economist of
45:58
government Burano statistician knows
46:00
your cost I mean you’ve seen hang on to
46:04
a movie to say well he gave up it
46:05
specified all about that’s not going to
46:07
serve in the court you might have one
46:08
second movie a movie and find all the
46:23
worst you stay home not spending money
46:25
goal so in this situation the course
46:28
we’re going to movie egg is not the
46:29
final the highs are higher than that
46:31
this is the second movie give up
46:41
you

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