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Ep. 118 David R. Henderson Critiques Stimulus Bill and Organizes Protest of CA Lockdown

Mentioned in the Episode and Other Links of Interest:

The audio production for this episode was provided by Podsworth Media.

About the author, Robert

Christian and economist, Research Assistant Professor with the Free Market Institute at Texas Tech, Senior Fellow with the Mises Institute, and co-host with Tom Woods of the podcast "Contra Krugman."

6 Comments

  1. Dusan Vilicic on 05/08/2020 at 5:43 PM

    Does this crisis not have many similarities with the Great Depression? For example the general measures have been kinda similar: forcing a reduced production, pressuring firms not to lay off employees, that sort of thing. The cause is different (price deflation vs a pandemic), but measures are similar, and consequences probably will be. Here in Chile PiƱera, the President, has asked businesses to not lay off people at the expense of profits and dividends and that made me remember that in the US during the GD Hoover or FDR did a very similar thing.

  2. will on 05/11/2020 at 10:02 PM

    Hi Bob,
    Do you have a link regarding Andrew Cuomo complaining about the Covid death predictions?

    • Robert Murphy on 05/13/2020 at 2:02 PM

      Here.

  3. Marko on 05/12/2020 at 4:52 PM

    Dear Bob,

    thank you for this episode. As always, I have more questions for the coming ones. Would you consider an idea to take one of the economic theorems and prove it in the completely nerdy way starting from the economic axioms by using the Austrian method? E.g. the minimum wage theorem. In other words, to make an episode as if you were proving the Pythagorean theorem in math.

    • Robert Murphy on 05/13/2020 at 7:38 PM

      Marko did you listen to this episode?

      • Marko on 05/15/2020 at 6:56 AM

        I re-listened to that episode, and I am not sure I got what I wanted, but it contributed to something equally valuable in my thinking. I am evolving towards the claim that Austrian theorems are not formal enough. They are kind of sloppy. During the episode with Steve, you offered an excellent example of this non sufficiency, when you said that if the minimum wage law set the wage that was already below the market clearing value, employment would not change, because the totality of population was already getting more (1 penny wage example). I can extend your remark by observing other production factors, like the marketing, the rent of the building etc. What if one or all of them were below the market clearing value? Again the employment would not shrink, because the cost difference between the law wage and market cleared wage of other factors would simply spill over the other production factors that were below. So, by saying, all other things being equal is simply not enough for a priori reasoning. There existed other free variables that absorbed the wage imposition therefore invalidated the original claim. Therefore, other caveats need to be added into this Austrian law. This does not increase the value of empiricism against the rationalism, but it showed the rationalist claims need to be more accurate.

        I do not know if this would be the perfect way, but I think, it would be at least better to formulate the minimum wage law like this: the minimum wage law would decreases the employment if and only if its value is above the current market clearing level, the costs of other production factors are at least at the market clearing level and all other things being equal. This bring us to Steve’s observation that a priori thinking is true but not that informative. And in this way, I made the law even more stringent and therefore even less informative about the real world. But it was a logical necessity. In order to make it more true, I had to make it more stringent.

        The equivalent of what I did would be as if someone in the past claimed the original Pythagorean theorem was about any triangle, and then, later, someone realized it was only about the right triangles.

        All this has practical consequences in the debates between the Austrians and others. Without the extra shield I added, the minimum wage law was more attackable.

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