This is Avram Colak's Typepad Profile.
Join Typepad and start following Avram Colak's activity
Join Now!
Already a member? Sign In
Avram Colak
Recent Activity
Barkley, You can also produce more machine tools that produce more machine tools that produce more housing, and you can always produce more tools that create these machine tools that produce the machine tools required to create housing. When do you stop going up this chain? Its sorta like asking which came first the chicken or the egg? When you look at the amount of "home" you have a day with no new housing being produced you have some constant amount lets and it never changes. Similarly, if you look at how many consumable apples you have a day considering no new orchards are produced you have some other constant amount (assuming all apples made are consumed). Now with houses being produced at a rate of 1/day you will have the amount of "home" consumable increasing daily by one. If you have the amount of apple orchards increasing by one a day you'll have the amount of consumable apples/day increase as well. Sure you can say "well if we produced the tools required to make houses we'll be able to make more houses a day, leading to even more home/day/day" and that's true, but you're just sorta saying the second derivative of home/day should be increased before the first. You could similarly say yeah well the real capital goods in apple production aren't the orchards but that goods that produce the orchards. However I think this is silly I like to think of capital goods as anything that first requires the actor or some group of actors to engage in a temporary reduction in present consumption, in order to enjoy greater consumption in the future. I think this is a good simple definition that entails the Austrian time dimension of capital. Houses, for the reasons I explained above, fit this bill.
Toggle Commented Nov 3, 2009 on The Battle of the Toms at Coordination Problem
Barkley, You said "keep in mind that building a house does not have the same impact on the growth of the economy as producing goods that can produce other goods" I maintain that a house is a good that produces other goods. Namely the other good of a "home" A more traditional example of a good that produces other goods may be a toy factory. To make a toy factory you have to divert resources away from present consumption and into factory creation so you can enjoy more toys in the future. Similarly to make a house you have to divert resources away from present consumption and into the creation of a house to enjoy more of the satisfaction a home provides in the future. You could always alternatively not build a house and enjoy whatever home you have out in the wild in the same way you could not build a factory and enjoy whatever toys may currently be in your possession. The creation of both houses and toy factories have similar impacts on the availability of the respective consumer satisfactions they are responsible for. Creating more houses means there is a higher production/day of the consumer satisfaction of "home" creating more toy factories means there is a higher production/day of the consumer satisfaction of "playing". Notice too that eventually these same toy factories that once produced "playing" might, due to a shift in consumer preferences, no longer be able to produce that. Just as the same building that once provided the satisfaction of a "home" might do the same. In the sense that all creating more houses and factories results in is the creation of more of some kind of consumer satisfaction/day than previously, I think saying "creating more houses doesn't have the same impact on the growth of an economy" isn't necessarily correct. More houses provide more people with more of their wants than less houses. And the more houses accumulate (providing that technological or demand shocks don't make them non productive goods, just as technological or demand shocks can do to any tool, material or factory) the wealthier society is in much the same way as if more tools and equipment were accumulated.
Toggle Commented Nov 3, 2009 on The Battle of the Toms at Coordination Problem