Posts Tagged ‘economics’

The Logical Underpinnings Bitcoin

Posted: December 20, 2022 in Economics
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By Richard Martin

Mises and most Austrian economists states that praxeology and, specifically, economics, are purely deductive sciences. On the the other hand, most conventional economists claim that economics is an inductive, empirical science. This is a false dichotomy. It can be both.

In formulating a praxeological law, we can never be certain that we have identified all logical deductions from the axioms. Sometimes, we have to see the results of action to confirm the exhaustiveness of the axioms, inferences, and conclusions. There is always a real world limit to the definiteness of deductions. This is especially the case with new discoveries or inventions, which may have to be implemented in real life to see how they will play out.

The axioms and inferences may be completely valid, but it may nonetheless be necessary to see them in action “in the arena” to see their actual consequences in the behaviour of flesh and blood human beings. Bitcoin is in this category, as it was invented at a definite place and time. It is working itself out in a dialectical manner. We can therefore speak of its eduction from first principles and rules.

© Richard Martin

What Is the Radical Centre?

Posted: July 19, 2020 in Powerful Ideas
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By Richard Martin

What is the radical centre? For most people, the centre is associated with moderation. There is no real way to characterize the conventional centrist position other than to say that it eschews extremes and claims moderation. Unfortunately, most centrists tend to hold non-principled beliefs. They take a smorgasbord approach in supporting various political and economic positions. A bit from this party, a bit from that, some left, some right, maybe more or less of either. This isn’t to imply that centrists are unprincipled. My claim is merely than in most cases they don’t base their positions on well articulated principles and axioms.

There is nothing inherently wrong with that type of centrism. It’s just that it can be vulnerable when the political and social wind changes. Moreover, while conventional centrism draws on left and right policies and beliefs, most centrists would be hard pressed to express why they have decided to believe something in the political or economic sphere. It’s impressionistic and intuitive, based on what seems right at the time. I believe conventional centrists are actually mostly apolitical. They don’t adhere to political, economic and social positions from specific, well-articulated principles, which puts them up for grabs by politicians and activists of the left and right.

Instead of conventional, unprincipled, improvised centrism, I’d like to propose the concept of a Radical Centrism. To call it Radical is to say it articulates positions from clearly articulated principles or beliefs. Radical means “root.” If you have stong principles and they are well articulated with an understanding of how they influence beliefs and actions, this makes one more resilient in the face of changing opinions, political rhetoric, and even brow-beating by activists of all stripes. Furthermore, it provides a counter to confirmation bias, the well-known logical fallacy of seeking evidence to confirm an existing belief, rather than trying to determine the logical implications of one’s principles and axioms.

This is different from conventional centrism which is mostly apolitical, picking and choosing from a menu of options and positions articulated by the political Left and Right (whether moderate or extreme). On the other hand, it is Centrist because it places the Individual at the centre of things. Call it selfishness or egoism, the reality is that everyone is selfish. That’s how we exist and thrive. In other words, Radical Centrism is unabashedly individualistic.

As a matter of fact, Individualism is the number one principle and axiom of Radical Centrism. Only individuals exist. Collectives such as “society,” “race,” “class,” etc., only exist to the extent that they form patterns of behaviour and action of individuals. To quote Margaret Thatcher, “There is no such thing as society.”

This entails methodological individualism in the human sciences, such as economics, politics, ethics, etc. I could go even further and claim metaphysical individualism, but that more extreme stance is not needed to draw useful inferences and conclusions that are relevant to reasoned discourse and action.

I’ll be adding more principles over the next little while. In the meantime, feel free to comment and add your own thoughts. I’d like to get a dialogue and conversation going on this. Please refrain from emotion and rhetoric and try to keep things civil.

© 2020 Richard Martin

#radicalcentre #personalfreedom

Minimum Wages Are Job Killers

Posted: January 4, 2018 in Productivity
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The minimum wage in Ontario jumped from $11.60 per hour to $14.00 as of January 1st 2018. Already, there are reports that small businesses will struggle with this jump. This will lead either to increased demands from the workers to generate the productivity increases to compensate, or layoffs and hiring restrictions, as businesses struggle with the increased labour costs without concomittent productivity increases.

Wages are the price of labour. All other factors remaining equal, a mandated minimum wage rise increases the price of unskilled labour, which lowers the demand for it. In other words, less people will be making a bit more money, but it will likely leave many unskilled or under skilled workers in the cold. These are the people normally hired by many small businesses and they can’t afford the pay rise. They will have to lay off workers, hire less workers, and/or do the work themselves.

Additionally, this affects mostly young workers. Statscan’s Labour Force Survey 2015 shows that two thirds of of men earning less than 15K per year (a proxy for minimum wage employment) are in the 15-24 years-old age category. For women, it’s three quarters. I don’t know what explains the disparity. In any case, you can see it here (incidentally reported on an apparently left-wing website): http://www.progressive-economics.ca/…/who-earns…/ (see last table near end of article).

The article notes that young workers deserve “fair” wages too. My question then is, by what standard? If by government fiat, that only raises the price of labour without necessarily generating increased productivity. If by the free market, then the prices reflect the real marginal productivity of the employees that are hired.

The Bank of Canada is predicting that there could be up to 60,000 job losses by 2019 because of increases to minimum wages. TD Bank is predicting 90,000 job losses due to the same cause. These are obviously just forecasts, so we have to take them with a grain of salt. But the reality is that we can’t ignore basic economics by legislating minimum wages. Businesses pay people what they must in order to survive and thrive. But if they can’t generate sufficient profit by doing so, they have three options:

  1. Hire less people;
  2. Improve their productivity (which requires investment in human and intellectual capital development, as well as physical capital); or
  3. Go out of business or go into a different line of business with their existing capital (which may or may not be convertible quickly.

© 2018 Richard Martin. Sharing and reproduction permitted only for non-commercial use.

The Myth of “The Economy”

Posted: November 3, 2013 in Powerful Ideas
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A few weeks ago I was having lunch with one of the most successful real estate brokers in Canada. At one point, she asked me what I thought of the economy. My instinctive answer was that there is no such thing as “the economy.”

What do I mean by this? Simply that we are fed on a day to day basis by the media, financial advisors, politicians, business leaders, etc., that the economy is growing, or shrinking, or whatever else economies are supposed to be doing. This attitude discounts the particular experiences and realities of individuals and organizations, the fact that for every person and business in a country, economics is a concrete concept. GDP, employment and interest figures represent a highly abstract averaging of economic and social activity; each person and organization has its own particular growth figures, interest rate, and supply and demand curves.

I have come to appreciate that each one of us is our own economy. In Canada there is something like 34 million economies. Add in businesses, corporations, associations, various levels of government, including municipalities and government agencies, and there are millions more. In the US there are probably at least half a billion economies by that measure, and in the world as a whole, perhaps 20 or 30 billion, if not many more.

As an example, Sears Canada has just announced the selloff of the company’s flagship location at Eaton Centre in downtown Toronto, in addition to many other prime real estate locations across the country. The company has been struggling for years in Canada and the US, while other retailers have been expanding and making a killing. Sears is in full retreat in Canada, but Target is expanding here. Two similar companies, two completely different economic realities. There may be some general retail trend in Canada, but how should we interpret it in the face of such different micro-economic realities? The same applies to every specific micro-economy, whether an individual, a small business, or a large corporation.

Gross economic measures are just that—gross averages and metrics that subsume millions of subtle factors, inputs, and outputs that impact on individuals and groups working to earn a living, generate wealth, improve their clients’ conditions, and deliver value. These metrics may be useful for macro-economic management at the political level, but do they really have meaning for people and executives trying to make their way in the world?

One of the limitations of macro-economic measures is that they become a ready excuse for under-performance and lack of productivity, innovation, and customer satisfaction. If someone can’t meet their sales targets, it’s because the economy has slowed, or people aren’t spending, or government policies are hindering growth. These all may be true to some extent, but the overall trend in an economy is just one factor to be considered among many.

The average person and business has much more control over their economic conditions than is conventionally recognized. Employees and job seekers must be willing to upgrade their skills to remain relevant in the job market. Businesses and entrepreneurs must be willing to innovate and take prudent risks to change their products and services, to reach out to new customers and to develop leaner and more effective processes and systems.

Each company and person has its specific credit rating, interest rate, and risk level. We all have different and constantly morphing opportunities and threats. One size does not fit all. We have to be aware of our particular situation and create plans and actions that will help us meet our goals. It’s not enough to blame “the economy,” because in that case you have to look at yourself in the mirror and ask yourself if you’re doing everything possible to create demand for your services and products, and to be economically valuable.

Richard Martin is a consultant, speaker, and executive coach. He brings his military and business leadership and management experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

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War and Economics

Posted: September 15, 2010 in Geopolitics
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It’s a fallacy to think that war can be prevented by having intertwined economies. If it were, there would be no civil wars such as what happened in Yugoslavia in the 1990s. If anything, it can create even more animosity between countries because it can provide an excuse to claim inequality and victimhood, both good excuses for going to war.

© 2010 Richard Martin. Reproduction and quotes authorized with proper attribution.