Arnold Kling has rediscovered another Hayek insight:

“Most unoccupied houses have close to zero marginal value to the vast majority of consumers, just as most unemployed workers have zero marginal product to the vast majority of firms.”

The distinction between economic and non economic goods seems lost on any economist who has not read Menger, but this conceptual insight stands as the very first building stone of economic science.

A YouTube video.

A new working paper from Steven Ealy.

Eamonn Butler’s excellent short study of Hayek’s economics and social philosophy is now available on the internet as a pdf document.  The book is Hayek:  His Contribution to the Political and Economic Thought of Our Time.

F. A. Hayek page.  Of particular interest — “Key Concepts in Hayek’s Thought”.

ht Molivam42.

Housing production* is exactly the kind of thing Hayek identified as a time delayed production good which can absorb credit, capital, and leverage in a bandwagon of false expectations, only revealed as structural malinvestments at the end of the artificial boom when credit, inputs, and leverage unavoidably become scarce — and false promises are revealed as impossible to fulfill expectations about the price and supply of inputs, outputs, leverage, and credit.

So Vernon Smith’s account of the American trade cycle 1920-2010 (pdf) as a housing cycle cashes out like a hand in the glove with the conceptual categories of Hayek’s trade cycle theory.  A general point I’ve made before.

Want shorter Vernon Smith?  Read it here.

*On housing as a long period production good, see F. A. Hayek, The Pure Theory of Capital.

A basic understanding of the price mechanism exposes the pseudo-science of Keynesian economics:

It was John Maynard Keynes .. who ultimately succeeded in rehabilitating a view long the preserve of cranks ..  He had attempted by a succession of new theories to justify the same, superficially persuasive, intuitive belief that had been held by many practical men before, but that will not withstand rigorous analysis of the price mechanism: just as there cannot be a uniform price for all kinds of labour, an equality of demand and supply for labour in general cannot be secured by managing aggregate demand.  The volume of employment depends on the correspondence of demand and supply in each sector of the economy, and therefore on the wage structure and the distribution of demand between the sectors.  The consequence is that over a longer period the Keynesians remedy does not cure unemployment but makes it worse.

It’s your Hayek Quote of The Day courtesy of Economic Thought.

Angelo Codevilla on America’s Ruling Class.

I take up the question here.

The Entrepreneurial Mind vs Ben Bernanke.

How the leftist elite uses dependence to caponize rivals to their power.

Martin Chren has been appointed state secretary of the Economy Ministry in Slovakia.

From Tom Palmer. And well deserved.

If you are one of the 100,000 who purchased a copy of Hayek’s The Road to Serfdom in the last month or so, and you’re cruising by here for a look, please consider taking a moment to let the world know what you thought of Hayek’s book and argument.  The New York Times and gum flappers in the blogosphere have invented all sorts of reactions from those who are now reading the book, on the basis of talking to no one.  Let’s give those folks something to read.

(bumped)

Hong Kong Shue Yan University, August 6-7, 2010.

The main theme of the conference this year is “The Relevance of F.A. Hayek on China’s Economy and Society” .

Topics: F.A. Hayek on economics, law, politics, psychology and social philosophy – China and the international community - China’s 60 years review and prospect - The China economy after international financial crisis – Macroeconomic policies and monetary regulations in China - Economic development and Environmental planning - The economy of Taiwan after liberalization - Social problems and cultural issues in China – Psychology of Chinese people – Urban and rural disparity in China – Minority issues in China – Chinese entrepreneurship - China business and management – China’s laws and politics – Cross Strait economic relations- Pearl River Delta and regional cooperation- Hong Kong and Macau after 1997 Both theoretical and empirical papers on mainland China, Taiwan, Macau and Hong Kong in broader relation to the global economy are accepted.

Perhaps he would have saved hundreds of hours spent writing risible tripe about Hayek and “neo-liberalism” — and saved Australians billions of wasted dollars and perhaps his job.

Two top economists talk about ideas and economic personalities.  Part 1.  Part 2.

Quotable:

One point which deserves mention in this connection is that Keynes knew appallingly little about nineteenth-century economics, or about nineteenth-century history.  He hated the nineteenth century for aesthetic reasons [laughter].  While he was a great expert on Elizabethan history, he just disliked the nineteenth century so much that beyond Marshall and just a little John Stuart Mill and Ricardo, he knew nothing of the literature and very little about the history of the period.

“For persons entering economics in the 1940s, ‘Keynesian’ economics was shockingly ‘revolutionary’ because it was shockingly activist by comparison with all earlier, other than Marxian, economic teaching. Laidler’s book brilliantly traces the ‘fabrification’ of a textbook revolution in activist economics which in one generation replaced thoughtful Marshallian courses in economic inquiry with courses in soapbox oratory about economic fluctuations.  Laidler’s scholarship is impeccable; even the most knowledgeable professional has much to learn from reading his book.”  — Robert Clower on David Laidler’s Fabricating the Keynesian Revolution.

They are all here, full length, streaming on the internet.  Every one of them.  These are the interviews organized by Armen Alchian and Robert Chitester in 1978 and recorded as part as the UCLA Oral History project.  Conversations with Axel Leijonhufvud, James Buchanan, Robert Bork, Leo Rosten, Jack High, Thomas Hazlett, Armen A. Alchian, Robert Chitester, and Earlene Graver.

I first read the transcript of these interviews at UCLA in the late 1980s, and then watched them in the 1990s in a side room at the Hoover Archive at Stanford.  It’s an amazing world where these interviews are now available to anyone around the world who has a computer or smart phone and an internet connection.

Everyone will have their own favorites, but for economists I might recommend in particular Hayek’s conversations with Armen Alchian, Alex Leijonhufvud, James Buchanan, and Jack High.

From Armen Alchian’s introduction to the interviews:

A series of conversations with Hayek was conducted in a television studio ..  An integral part of Hayek’s recorded oral history, indeed the most interesting, are the videotapes. Seeing the man gives a reliable picture of his personality and traits: calm, imperturbable, systematic, questioning, uncompromising, explicit, and relaxed. It is the personality of the man that was sought, and the video and audio record helps capture it faithfully ..

So, here is the man, alive and influential, whether this be read in 1984 or in the inscrutable future years of 2034, 2084, or, hope of hopes, 2984. Here are represented the visions and beliefs of a group of people in 1978. See and hear their manner of expression, their subtle prejudices and misconceptions, fully apparent only to people a century from now. Perhaps we in 1983 will be envied, perhaps we will evoke sympathy. Whatever it may be, if not both, here is the personality, appearance, and style of Friedrich von Hayek, a man for all generations, who believes mightily in the freedom of the individual, convinced that the open, competitive survival of diffused, decentralized ideas and spontaneous organizations, customs, and procedures in a capitalist, private-property system is preferable to consciously rational-directed systems of organizing the human cosmos a judgment that distant future viewers and readers may more acutely assess.

Armen A. Alchian

May 1983

(bumped)

“Hayek is a better and more profound writer than most who write about him. So if you are unfamiliar with Hayek’s works, you are better off skipping the commentary pro and con and going directly to his “The Road to Serfdom,” or even better “The Constitution of Liberty.””

– Montaigne’s Correspondent