A brief selection from Economics in One Lesson, by Henry Hazlitt

Economics in One Lesson is a 218 page book by Henry Hazlitt; my wife has an early edition of it.  (http://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232)   I've never read it, because I've never had to get past the initial premise, which is adapted from an essay by Frédéric Bastiat written in 1848: What Is Seen and What Is Not Seen (http://www.econlib.org/library/Bastiat/basEss1.html).  Also 218 pages doesn't strike me as one reasonably sized lesson.  (My wife found her copy and I flipped through it:  "The lesson" is only about 15 pages; the rest of the book is examples of bad policy.)

I would argue that a major goal of systems programming is finding the unseen behaviors in the code; the obvious stuff is easy.  The unseen stuff is hard.  I think you can replace "economist" with "programmer" and "policy" with "module" in the following.


A letter to a friend about intellectual property

 What is property?  Let's say, simply, it's something you own, and we can tell you own it because you control it.  For someone else to take it, they have to take it by force.

Can ideas be property?  Sure, but not because the state says so.  Only because you can control them.


First, you can keep your ideas secret.  So you have control until you disclose them.


You can disclose them contractually, and try to keep control that way.  That works a fair bit of the time if you're dealing with fair minded people, which is generally a good idea.


Suppose you invent free energy.  It converts sand into energy without any pollution.  This has huge value!  You can donate your idea humanity if you want, or you can try to keep control of your idea.  If you donate the idea to humanity, terrorists also get it.


If you manufacturer your device, or work with a trusted partners to manufacture your free energy device, then you can try to keep control.  You can only sell it with contractual restrictions against disclosure.  Still, a bad guy would be highly motivated to steal your idea, since for very little work, he would get free energy.


You can increase the cost of stealing the idea by protecting the idea with physical restrictions such that stealing the idea for the formula involves breaking and entering and possibly destruction of physical property.  That will give you an excuse to go after him.  Still, say he passes it to a third party before you catch him, and the cat is out of the bag.  Well, that's pretty much going to happen eventually, but ideally, by applying your entrepreneurial spirit, you're already cashing in.


If I figure out how to light the first candle ever, that has huge value, even though other candles can be lit from mine without lessening my candle.  Does that mean you can light your candle from mine without permission?  No, it does not - that would involve force.  And I can contractually restrict you from lighting other people's candles with the fire that originated with mine. And I can even make it economically to your advantage to send them to me, by sharing some of my income from my candle lighting business.  Or you can steal the light from my candle, sell it, and cash in, but in so doing you have labeled yourself a thief, so you better decide if it is worth it, since as word spreads, no one will trust you again. And if your candle burns out, and you don't understand how to restart it except by stealing the light from someone else, you're screwed.


It's really not fair to talk about ideas as property in a solely abstract way, just as it is not fair to talk about physical property in a totally abstract way. "Property is theft", say the Marxists, but that doesn't mean anything.  "Ideas can be copied without harming anyone" also doesn't mean anything.  It strips away authorship and credit which are hugely valuable to people, and people who appreciate that, respect it.  Other's don't, but they are uncivilized.


That's my $0.02 on intellectual property.  Patents are crap, but that doesn't mean there is no such thing as intellectual property.


What is money? Nobody knows

From:  Too Different for Comfort, by Louis-Vincent Gave, which you can read here: 


(This post is also about robots!)


The question of what constitutes money has pre-occupied much finer minds than ours. For example, a wall display in the Bank of England museum notes on the debate on the nature of money between William Pitt the Younger and Charles James Fox that: “Fox argues, quite rightly, that every note issued by the Bank should be backed by gold. Pitt, on the other hand, maintains that the Bank should issue as many notes as are needed.” 

Obviously, times have changed and the “quite rightly” seems somewhat at odds with the philosophy currently prevailing at the Old Lady. The fact that the Bank of England could, two centuries later, feel so differently about the core issue at the very center of its own existence than the faith professed on its own walls is a revelation in itself. By comparison, we doubt that there will ever be a Pope in the Vatican who will state publicly that perhaps Jesus-Christ did not multiply bread, or that he was not born from the Virgin Mary. This illustrates how difficult it is to define the nature of money. For centuries, we have used money to measure value, to store wealth, and to exchange goods, but no-one can really say why money has any value at all; a paradox which has trumped the greatest minds in Western civilization.

Aristotle was the first to try and tackle the topic and expressed the view that money had to have a high cost of production in order to make it valuable, and to allow it to represent a lot of value in a small physical format. He also argued that everybody had to accept money as a means of payment, as a store of value or as a standard of value. This drew Aristotle, the first famous gold-bug of sorts, to the conclusion that only gold and silver could be accepted as money. But even a gold standard leaves us with the quandary of a farmer selling his wheat for something that is essentially useless? Aristotle also does not explain why it would make sense, and generate wealth, for people to spend resources and time to dig up holes in mountains, and then take the proceeds of their efforts to bury them in another hole somewhere else? Even more alarmingly, it seems that the core of the Aristotelian argument is that gold/silver have value because they take a lot of effort to extract; in other words, at another time, Aristotle might have been a paid-up subscriber to the Marxist labor theory of value, a theory that we now know to be an intellectual dead-end.

Indeed, as the Austrian school amply demonstrated, the labor theory of value (the idea that the price of things should be determined by the amount of effort that was put into producing them) is not worth the amount of time that the classical economists and later Marx spent on the topic. Incidentally, this makes it ironic that so many people who claim to be Austrian economists also happen to be gold bugs. Indeed, one can be a disciple of Aristotle, Ricardo or Marx and be a gold bug; but one cannot claim to be a follower of Ludwig von Mises and argue that gold is the answer. Indeed, the founding stone of Austrian economics is that value is totally subjective. So how can we have a world in which all values are subjective—except one, gold, which would be objective?

The Aristotelian explanation thus falls short. The reality is that gold and silver do not have a value because of the time, resources and cost involved in producing them. Instead, gold and silver have value because everybody believes they do.  This is not at all the same thing and leads us to the second view, namely that of Plato.

For Plato, money is just a social convention and has no intrinsic value except the one that people ascribe to it. This is a lot more acceptable, and very close to the marginal theory of value. Thus, for Plato, money is little more than a social convention and money itself need not have value, except the one that people wish it to have; which only brings us back to the debate between Fox and Pitt immortalized on the walls of the Bank of England and quoted above.