May 17, 2016

The Obsolete Nature of Austrian Economics: Otto von Bismark Economics. Rand Paul's Illusion.

Applying Austrian Economics in the States would rust out America.
Let's address the obsolete nature of Austrian Economics, being that Rand Paul
followers herald it as the newest and latest thing that will save humanity.

Of course, Rand Paul is one sick joke, from A to Z.  Firstly, he advocated abolish-
ing the Americans with Disabilities Act, in the spirit of an Adolph Hitler who could
only think of sterilizing Germany's mentally disabled, followed by exterminating
its physically disabled.  Rand Paul also hadt on his payroll the "Southern Avenger"
and neo-successionist John Hunter who wrote, John Wilkes Booth Was Right.

Plus, plus, plus, Rand doesn't know economics in the least.  And concenring the
20something-year-olds who follow his dad and him, they're the religious fanatics
of greed, thinking that economic anarchy, aka deregulation, will actually make
them insanely wealthy.  They don't realize that deregulation caused the George
Bush Economic Crisis and that a Rand Paul or Ron Paul presidency will econom-
ically destroy America for all time, guaranteed.

Incidentally, if you'rer smirking at the above-statement, you can write to me about
your smirking if and only if  you had your 100% test score in Ivy League account-
ing testing and were inducted into anyhting similar to the Phi Sigma Iota honors
fraternity.  I can't waster my time on arrogant idiots who can't even draw and X
on a sheet of Cartesian paper.  There are basic rules in automechanics, in order
to get an engine to operate.  The same goes with Economics.  These Rand Paul
types are complete illusionists, giving you the carrot and the stick game which
will leave you on the outside, cold and abandoned.  After all, Ron Paul Econom-
ics is nothing more than Dog-eat-Dog-Wild-West-Economics, wheere workers
will be used, abused, and discarded.  And the Ron Paul followers want to be the
abusers.  Let's review the great Rand Paul Illusion called Austrian Economics:

For the record, Austrian Economics is simply Marginalism, and it was founded in

1871, under the influence of Otto von Bismark.  It's nothing more than an offshoot
of Adam's Smith Superlative Advantage treatise which was blown out of the water
decades later by David Ricardi's Comparative Advantage thesis.  Thus,  Austrian
Econ is older than Keynesian Economics, JFK's economics policies, and Theory Z
which was widely popular in the 1980s.  Anyone who follows Austrian Economics
is the backwards one.

The bottom line is this:  Someone should remind Rand Paul that this is 21st Century
America and that we really didn't appreciate politicians such as he who turned the
United States back into a Frick/Carnegie Oligarchy.

Now, the greatest year of revolution in Europe, for the 19th Century, came in 1870.

And why?  ANS:  Because the Vatican, at Vatican Council I, defined an infallible
church doctrine known as Papal Infallibility, and the northern countries freaked.
Even France.  They did NOT want there to be any moral authority in Europe who
would check and balance their lawmaking decisions.  Thus, Otto von Bismark and
confreres wanted to have established theories that accentuated individualism.  Thus,
Austrian Economics was meant to fit into an already existent prejudice.  It was not
a mathematical discovery.  

Furthermore, if Austrian Economics is the answer to life, then there would not have

been the economics disasters that Europe saw in the 20th Century.  Thus, Austrian
Economics is a proven failure.  There was a time in the 20th Century when you lit-
erally had to take a wheel barrow full of cash to the bakery to buy a couple loaves
of bread.  This gave rise to Hitler.  

There's more.  Just keep in mind that neither Ron Paul nor Rand Paul were econom-

ics students.  Rand is so vicious that he proposed the repeal of the Americans with
Disabilities Act.

Let's Review Economics:

In Econ, the first steps are 1} the circular flow of money and 2} the marginal utility

curve which is simply a visual way to show what price a potential customer is will-
ing to pay for one product, and then what he's willing to pay for two of the same
products, and for three ... so on and so forth. 

To start, I'll call Austrian Economics AEcon for short.  At least for now.  

When you're dealing with Austrian Econ, you're dealing with focus on the marginal

utility curve out of the starting gate.  That's the center of AEcon.  Now, AEcon states
that price is more properly determined autonomously by the individual's personal pre-
ference for a product and not by the state.  This is where AEcon lacks an essential
variable its in general equation.  There is a major determinant in what a person is
willing to pay that has nothing to do with personal preference in how he/she values
something.  And that one thing is:

The person's income, ... in relation to something known as the marginal propensity to

consume (the amount of income that the person spends as opposed to saves) and the
person's sum total of liquid savings (the amount of savings he can immediately spend.)  

Very simply, a poor person has a different valuation system  than does a rich person.

This is why price determination is never subjective.  It has its constraints, because the
consumer has the constraint of a limited money supply.

In addition, another determinant in a person's willingness to pay a certain price for a

product is none other than ... the price of the competition's similar products.  But, this
involves the supply curve ... not marginal utility curve ... not the demand curve.

The other factor in price determination is substitute products.  An example is:  A sub-

stitute for vegetables would be bread or fruit.   The price of the substitute products has
 caused a phenomenon, in times of economic crisis, where the increase in a product's
price doesn't result in a decrease in demand, but rather an increased demand for the
higher priced edition of the same one product.  This occurs simply because the price
of the substitute products, such as steak and fruit, have also risen at the same time.

This shows that price determination is never subjective and never autonomous.

Prices are a dominoes effect.  Thus, the marginal individualism of Austrian Eco-
nomics is invalid.

Now, the difference between Austrian econ price determination and the Keynesian

model thereof is that the Keynesian model deals with the aggregate sum of humanity;
a total society, not merely one individual's personal preference.  The Keynesian model
simply determines how many people can afford to buy the product at such-and-such a
price and how many cannot afford to buy it at that same price.

The very first determinant of the price of product is the cost of the good, in terms of

manufacturing, transporting, warehousing, and insuring.  The cost of the good is the
"benchmark" . . . the index constraint.  You cannot set a price lower than cost of goods
sold divided by the quantity being sold.

Now, original economics was called mercantilism, and in those days, the determinant

of the price was labor costs and a fair markup.  That's the foundation stone.  That part
is not subjective in the least.

Here goes a vague conclusion:  

AEcon attempts to apply micro-economic math to macro-economic models.

Now, I have a lot of explanations of economic functions and phenomenon at 

"Humanity at the 11th Hour."  It's found at:

I wrote those articles so that people will understand the basic motions of economics

which, according to my definition, is the Science of the Flow of Money.