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Jacob Hedegaard
Denmark, Europe
Student of Economics at Aarhus School of Business
Interests: Economics, philosophy, politics
Recent Activity
@ Dan: Because, Rothbards footnote-dissolving of the nation is, as he writes himself, based on the premise of his idea of the free market economy. It's not that I necessarily believe Rothbard is wrong, it is merely that I believe he should separate his preachings about the free market and his writings on economic subjects. On another note, I believe Rothbard in the mentioned footnote dismisses the importance of regions a bit too lightly, but that is another debate.
@ Dan: The specific footnote is No. 12 on page 777 of the Scholars Ed. by LvMI, which states: "The term generally used is “national” income. However, in a free-market economy the nation will no more be an important economic boundary than the village or region. It is more convenient, then, to set aside regional problems for other analysis and to concentrate on aggregate social income; this is especially true since regions do not present a problem to economic theory until their governments begin intervening in the free market."
Regarding who's to blame for the perception of Austrian Economics as being more or less libertarian I would point to Rothbard. Reading MES I got tired that Rothbard mixed his political convictions into his economic writings - especially the footnote where he explains why he uses the term 'total social income'. Honestly, this political self-righteousness blurs what the 'analytical framework' of AE really is and makes it harder to convince moderates of the relevance of the theories.
Becker wrote: "Moreover, if the social interactions explanation is right, bubbles should also happen in a downward direction, so that prices could continue to fall below levels justified by fundamentals. National housing prices have basically never been significantly below levels expected from construction costs and other fundamentals." Is there not something about imputation of prices being overlooked here? If prices of factors derive from expectation of prices from finished goods, then prices would only fall below if producers vastly overrate the value of the finished good. This, I would think, it not necessarily so, even though prices are bit up in a speculative bubble. A better 'fundamental' might be cost of renting, which for a lot of construction companies might be the determinant in bidding up prices of factors. I do not know if this is so, it's merely a suggestion.
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May 19, 2010