# Think Tank > Austrian Economics / Economic Theory >  Techo-Optimism = Malthusianism?

## helmuth_hubener

Lets say youve read and loved Julian Simon, who stressed mankinds indefatigable power of creation and innovation.  I certainly have.  Simon stressed that the cost of producing real resources likely would fall, thereby spreading wealth across mankind.  The bad news is that probably should make you a Malthusian.

The classical economists understood very well that the wages to labor cannot for very long exceed the cost of production to labor.  And if you are an optimist about the cost of producing copper, tin, and steel, you probably should be an optimist about the cost of bringing more humans into the supply chain for labor.

There is simply no reason for the technological optimist to think the cost of reproducing labor and labor substitutes should remain high forever.  The higher are real wages, the greater the pressures for such innovation!

Markets will create more surplus, but the best default presumption is that will be eaten up by the numbers, and not by your special privileged position as a natural-born North American, or whatever you may be.

Of course the optimists wish to have it both ways, but I say no, if you are an optimist about the cost of producing non-human resources, apply similar analysis to the cost of producing labor/humans.

-- http://marginalrevolution.com/margin...althusian.html

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## dannno

Techo sounds like a derogatory term for tech nerds with neck beards that never really caught on.

And where the hell has Peter Schiff been? You and I haven't had a good argument in a long time.

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## helmuth_hubener

> Techo sounds like a derogatory term for tech nerds with neck beards that never really caught on.


 Whoops, typo.  Techno-. 

I just found this an interesting argument.  As Mises said, Malthus' insight is pretty indisputably correct, however at the same time for the past 250 years the West has been operating and advancing in a pretty decidedly non-Malthusian fashion.  That is: prosperity has been growing much, _much_ faster than population, resulting in an unprecedentedly high amount of resources available per person -- far above the subsistence level Malthusianism would predict.




> where has Peter Schiff been?


 Busy selling his bank to James Turk.




> You and I haven't had a good argument in a long time.


 Yeah, that's true.  We agree on too much, now!

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## osan

> Lets say youve read and loved Julian Simon, who stressed mankinds indefatigable power of creation and innovation.  I certainly have.  Simon stressed that the cost of producing real resources likely would fall, thereby spreading wealth across mankind.  The bad news is that probably should make you a Malthusian.
> 
> The classical economists understood very well that the wages to labor cannot for very long exceed the cost of production to labor.  And if you are an optimist about the cost of producing copper, tin, and steel, you probably should be an optimist about the cost of bringing more humans into the supply chain for labor.
> 
> There is simply no reason for the technological optimist to think the cost of reproducing labor and labor substitutes should remain high forever.  The higher are real wages, the greater the pressures for such innovation!
> 
> Markets will create more surplus, but the best default presumption is that will be eaten up by the numbers, and not by your special privileged position as a natural-born North American, or whatever you may be.
> 
> Of course the optimists wish to have it both ways, but I say no, if you are an optimist about the cost of producing non-human resources, apply similar analysis to the cost of producing labor/humans.
> ...



A serious and centrally salient problem I see with basically all economic theory is the inherent reductionism to be found there.  Economies operate in the totality of the political circumstance.  Economists love to talk in terms of changes in supply and demand, taxation and other economic drags, and so forth, as if each operates on its own in some compartmentalized fashion.  I concede that this is true, but only in small degree.  Economies are multivariate systems, _n_ (number of variables in the system) being very large.  As is commonly known, the linearity of multivariate systems drops dramatically as n exceeds a value of about 5 to 7.  By the time you have ten variables at work, predicting system behavior becomes a stressfully difficult endeavor.  This is why climate models, for instance, are so notorious for their inability to accurately predict outcomes beyond a very short time frame.  There is simply too much going on that is, for all intents and purposes, random.

Why, then, do they speak with such simplistic terms at all times of which I am aware?  When doing my MBA I had several very brilliant economics professors instructing me. For all their theoretical _and_ real-world knowledge, never once did any of them place any emphasis on the broader character of economies and the fact that all their theoretical discussions have been so very reductionist in their nature.

Economies are difficult to model.  That should not be surprising to anyone, much less any economist worth 1% of his guano.  This is why I always advise the greatest of care when attempting to predict what a given set of circumstances will yield in result.  This is why the economists fail like clockwork in their attempts at "fixing" what they think is a broken system.

So far as I can tell, one can but optimize an economy to a desired condition, but never make it "perfect" (as in "flawless", though the definition of the term itself comes into some question).  This is perhaps obvious to some, but I suspect the number is vanishingly small.

If optimal prosperity is the goal, then politically global freedom is the path thereto.  What I mean is not freedom across the globe, though that would perhaps be nice if not realistic, but global in scope relative to the economy in question.  That means not only free markets, but free social architecture where people are at liberty to pursue their interests with no drags placed upon them via "government" and all the other influences that would drive the individual astray of his desired pursuits.  All the bull$#@! demands made by this group and that individual upon the rightful assets of the individual and always justified by "need" of and "obligation" to the whole, yields results that are perforce less-than when compared with the optimizing circumstance of proper freedom.  But the demanders think they can make the world a perfect place if only they steal from the "wealthy" and give to the "poor".

Well, we've been doing that for over 100 years in ever increasing step and the overall circumstance of humanity has only become more dire by the day with even the American standard of living plummeting from one year to the next, not to mention the ever tightening stricture placed upon American wrists and ankles giving rise to ever growing misery, poverty, anger, and resentment.

Force and robbery have yielded nothing but decay, dragging the relatively prosperous ever closer in status to the so-called "poor".  I see no way that this improves the general character of human life.  Quite the opposite.

The assumption that all people can be happy and prosperous is that of a child, dull of wit, blind of truth, and refusing of reality.  These are the hands in which our lives rest.  Theye will be the death of us all with this childishly stubborn ignorance driving so great a proportion of the American political machinery.

Freedom is the optimal solution.  Free society and economy, come what may.  Some people will fail.  Some will even die - just as they do today.  Even if they die in equal or greater proportion, so what?  How is it that I owe it to another to ensure they "succeed", or even survive?  I don't.    The presuppositions upon which the tyrants operate are beyond bankrupt; they bring to that condition a hideousness that words cannot do justice.  Theire purported good intentions represent the greatest of all human evils and the mechanized mass slaughters of the twentieth century not only attest to this, but prove it beyond all argument.  Genuinely good intentions or disingenuous, the results are the same: augmented misery, poverty, disease, and death.  Take from that what you will.

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## Brian4Liberty

> A serious and centrally salient problem I see with basically all economic theory is the inherent reductionism to be found there.  Economies operate in the totality of the political circumstance.  Economists love to talk in terms of changes in supply and demand, taxation and other economic drags, and so forth, as if each operates on its own in some compartmentalized fashion.  I concede that this is true, but only in small degree.  Economies are multivariate systems, _n_ (number of variables in the system) being very large.  As is commonly known, the linearity of multivariate systems drops dramatically as n exceeds a value of about 5 to 7.  By the time you have ten variables at work, predicting system behavior becomes a stressfully difficult endeavor.  This is why climate models, for instance, are so notorious for their inability to accurately predict outcomes beyond a very short time frame.  There is simply too much going on that is, for all intents and purposes, random.
> 
> Why, then, do they speak with such simplistic terms at all times of which I am aware?  When doing my MBA I had several very brilliant economics professors instructing me. For all their theoretical _and_ real-world knowledge, never once did any of them place any emphasis on the broader character of economies and the fact that all their theoretical discussions have been so very reductionist in their nature.
> 
> Economies are difficult to model.  That should not be surprising to anyone, much less any economist worth 1% of his guano.  This is why I always advise the greatest of care when attempting to predict what a given set of circumstances will yield in result.  This is why the economists fail like clockwork in their attempts at "fixing" what they think is a broken system.
> 
> So far as I can tell, one can but optimize an economy to a desired condition, but never make it "perfect" (as in "flawless", though the definition of the term itself comes into some question).  This is perhaps obvious to some, but I suspect the number is vanishingly small.
> ...


Exactly. That is the point that I often make (albeit briefly and probably poorly). The real world is so complex, yet everyone has "the answer".

Take the talk about the Trump tax cut. "It will increase government revenue". "It will grow the economy". "It will increase wages". It is great to know that these people are so sure that tweeking a single parameter will have such fixed results.

The root of wrongness in much economic and social thought is the misapplication of Darwinism (natural selection, survival of the fittest). This process occurs under real world conditions over long periods of time. It is far from perfect. To apply this to the day to day working of the economy and society is ridiculous. "Product A should dominate the market because it is both the best and cheapest!" Wrong. It will probably go no where. So many other factors at play.

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## osan

> Exactly. That is the point that I often make (albeit briefly and probably poorly). The real world is so complex, yet everyone has "the answer".
> 
> Take the talk about the Trump tax cut. "It will increase government revenue". "It will grow the economy". "It will increase wages". It is great to know that these people are so sure that tweeking a single parameter will have such fixed results.
> 
> The root of wrongness in much economic and social thought is the misapplication of Darwinism (natural selection, survival of the fittest). This process occurs under real world conditions over long periods of time. It is far from perfect. To apply this to the day to day working of the economy and society is ridiculous. "Product A should dominate the market because it is both the best and cheapest!" Wrong. It will probably go no where. So many other factors at play.


People want simplistic answers.  They don't want to have to think for themselves, which is why they hand their liberty over to tyrants who tell them the things they want to hear.

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## helmuth_hubener

> A serious and centrally salient problem I see with basically all economic theory is the inherent reductionism to be found there.


 I agree with you and Brian on this. While I know a lot of economics, and while many of its reductionist insights are true and useful, it is certainly that: reductionist. Mises' Austrianism is probably the least reductive, taking into account the complexities and uncertainty of "Human Action" as the core of its method.  That's probably why it's the best. 

People matter. The quality of the people in a society matter. That is, in fact -- and it will seem obvious when I say it, but think about it -- _what matters most_. 

Human life and society is not just an equation. You can't just plug in the right equation elements and get the same results, in any nation and people.  Doug Casey could spend a billion dollars and buy the rulership of Uganda and make it into a libertarian paradise.... on paper. But in reality?  It would still be Uganda.

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## osan

> Human life and society is not just an equation. You can't just plug in the right equation elements and get the same results, in any nation and people.  Doug Casey could spend a billion dollars and buy the rulership of Uganda and make it into a libertarian paradise.... on paper. But in reality?  It would still be Uganda.


Vital truth.  Once again, the most cursory observation of what goes on readily reveals the deep, gut wrenchingly disgusting corruption of the meaner.  He wants all the benefits of his lopsided view of "freedom" without any of the costs.  This is made clearly manifest in all places and groups, the only differences lying in the specific ways and the degrees.  The typical "lefty" seems most concerned about being able to stick his penis wherever he wants, take drugs as he pleases, and have someone else pay for it all.  The "righty" wants to be able to have his guns and hand out flyers for his church.  Neither is willing to give much of an inch to the other and damned nearly all would rather die in a house fire... or perhaps more aptly, see YOU die in a house fire, than have the least thing to do with actual freedom, the demands of which terrify and nauseate him beyond the human ability to take measure.

By jove, I feel a thread coming on.

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