Wed, Jul 23, 2014 - Page 8 News List


Economics of human action

The Taipei Times’ opinion pieces and letters discussing important economic issues and theories are great. That said, one article by Norman Yin (殷乃平) — allegedly a university professor — is an academic disaster that hopefully will not derail his career (“Economic theory will need some rewriting,” July 5, page 8). Here is some “peer review” for investors in Taiwan.

The myriad neologisms Yin listed makes me wonder what he teaches his students — useless garbage and fake models?

Proper economic concepts were established long ago, so perhaps Yin should return to the classroom to learn about the Austrian economists who developed an importantly different business cycle theory.

Perhaps he has been in the institutional system for so long that he is now a robot, much like [Minister of Culture] Lung Ying-tai (龍應台).

The writing of Mises, Hayek, Bastiat, Hazlett and important others relies largely on the idea of praxeology, or human action, which of course, requires individual liberty.

Essentially, we are all homeless in the sense that we will one day vacate our bodies and humanity would be well-served to leave its hubris behind.

To the concept of “breaking even,” all individual economic decisions are fundamentally based on Maslow’s Hierarchy of Needs. People eat and feed their families, and with increasing incomes, they fill the rest of the pyramid. This is human nature and economic models that ignore this simple truth miss the point.

Every worker bee in our global factory knows we earn to live, thus our onus is to produce more than we consume, which we calculate in terms of fiat currencies, essentially debt with no counterparty, or fake money.

My homeless neighbor explained that he makes enough from recycling bottles, newspapers and cans to stay alive and occasionally have a drink — this is “breaking even.”

I will not discuss “reversion to the mean,” an economic reality that cannot be overlooked and the reason I advocate holding gold and silver coins. My view that the US dollar is doomed as a reserve currency is already online.

I also wrote that all wars are “bankster” wars and, historically, banks sell weapons to both sides. The world we see is a curtain pulled over our eyes, like in The Matrix, as I mentioned in previous letters.

It is important to note that what “neo-Keynesians” say differs dramatically from what Keynes actually said.

He advocated the “seven lean years and seven robust years,” which would lead to any credit bubble being paid off when times were good, advice which has been widely followed, never. He also discussed debt jubilees, as in ancient times.

If Yin requires proof of an economic model that is based in solid foundations through history and capable of accurately predicting the future, he needs to aim his Internet browser at Zero Hedge, where Web site editors collectively blog under the handle Tyler Durden (Fight Club) and have an exceptionally accurate record at forecasting and truth-telling. They rely on the wise words of the authors listed above.

The economy at all times and everywhere is about individual human action amid options. It is as simple, or as complex, as that.

Torch Pratt

Yonghe, New Taipei City

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