Grandfather Marcus

Speaking of footnotes and grandfathers, I also came across this paragraph and footnote in the book I’m editing:

The report [on Mises’s heavily-accented English and subdued teaching style] highlights one of the reasons why he did not produce any outstanding students during his years in Geneva. An even more important reason was the typical mindset of the students at the Institute, who were eager to obtain employment in an international organization — that is, in a government organization. It is safe to assume that such students were not especially receptive to Mises’s message. His two best-known students from these years became experts in the economics of war: Stefan Possony and Edmund Silberner.[1]

[1] Haberler later singled out J. Marcus Fleming and Alexandre Kafka. See Gottfried von Haberler, “Mises’s Private Seminar” in “Erinnerungen an das Mises-Privatseminar, Wirtschaftspolitische Bl�tter, vol. 28, no. 4 (1981), p. 123.

[links and emphasis added]

J. Marcus Fleming was my Scottish granddad. For some non-obvious reasons, he is the Marcus in BK Marcus. I have very fond memories of him. He died in 1976.

After Geneva and London, he worked for the evil International Monetary Fund in Washington, DC, and was the Fleming in the Nobel Prize-winning “Fleming-Mundell Model” which you can read about here (in PDF format).

Granddad was the “Establishment Keynesian” I refer to in the About Me of this blog.

He was certainly one of those students in Geneva “who were eager to obtain employment in an international organization — that is, in a government organization.” It’s safe to assume that he was “not especially receptive to Mises’s message.”

But still, that’s only 2 degrees of separation — and through family!

When I reported this to my mother, she told me that Haberler and granddad were friends and that she’d had dinner with Haberler when she was a girl.

And yet she’d never heard of Mises before I discovered Austrian economics…

Grandfather Willcke

I came across a footnote that said Mises’s first paid editorial for the New York Times had the curious title “Grandfather Willcke” — and said nothing more about it.

I searched for anything by Mises and didn’t find it. But if you search for that title, it’s right there.

(In the spring of 1942, Mises published 3 more editorials, which dealt with the logistical problems of Germany’s war effort. In 1943, he published the last 4 editorials, which dealt primarily with problems of postwar reconstruction, especially monetary problems. The Mises Institute has copies of the payslips.)

happy (one-twenty-)fourth

Four years and six score ago today, Ludwig Heinrich Edler von Mises was the first in his family to be born a nobleman.

For Mises’s 124th birthday, my beloved missus gave me this T-shirt. Ain’t she great?

Today also turns out to be our 4th wedding anniversary.

Wikipedia is growing on me.

First anarcho-capitalism and now Miles Davis?

Today’s featured article

Cover of Davis's album 'Kind of Blue'

Miles Davis was one of the most influential and innovative musicians of the twentieth century. Davis was a jazz trumpeter, bandleader, and composer. Davis was at the forefront of almost every major development of jazz after the Second World War. He played on some of the important early bebop records, the first cool jazz records were recorded under his name, he was largely responsible for the development of modal jazz, and jazz fusion arose from Davis’s bands of the late sixties and early seventies and the musicians who worked with him. Davis was in a line of jazz trumpeters that started with Buddy Bolden and ran through Joe “King” Oliver, Louis Armstrong, Roy Eldridge, and Dizzy Gillespie. Many of the major figures in postwar jazz played in one of Davis’s groups at some point in their career. Some authorities consider Davis to have been the first person really to understand the difference between live and recorded music.

househusband updates

Now that I’m a big celebrity, I feel a certain responsibility to my fans, especially those of you who follow my endorsements, recipes, and general advice.

househusband update #1: cleaning toilets

In my second LRC article “House Husbandry” I wrote the following:

My favorite cleaning products:

1. Swiffer Duster

2. Swiffer WetJet

3. Clorox ToiletWand — “No more dirty brush!”

They store easily, work extremely well, and I take satisfaction in throwing away the dirty end afterward.

I must withdraw my endorsement of the Clorox TioletWand. While it’s definitely better than the traditional toilet brush, I didn’t like the fact that I had to throw away the dirty end — I’d rather just flush it.

Now take a moment to remove the preceding images from your mind before I move onto …

househusband update #2: wrapped chicken

One of our favorite home-cooked meals this past year has been stuffed chicken breast. I brine the breasts, butterfly-cut them before they’re fully thawed, stuff with baby spinach, mozzarella, and prosciutto, wrap in butcher’s string, and bake.

Three problems:

  1. I overbrine;
  2. butterflying and tying are kind of a pain in the ass;
  3. untying is yet more hassle and also quite messy.

The solution to problem #1 is to let the chicken breasts thaw in cooking wine instead of home-made brine. In Pennsylvania you have to buy wine at a state store. Fascisti. Cooking wine you can buy in any supermarket or grocers. To keep you away from the temptation to drink the cooking wine, it turns out that they salt the hell out of it. It’s important to keep this in mind if you’re ever stuck with only cooking wine — tone down any other salt there might be in your recipe! I prefer to cook with real wine, but it occurred to me that salty cooking wine might be just the thing to soak the chicken in before baking.

(By the way, I’ve been buying chicken breasts about the size of my hand, but recently I found a different brand that must use the Dolly Parton of poultry! Bigger breasts turn out to make moister and more delicious meals.)

The solution to problems #2 and #3 is to wrap the prosciutto around the chicken rather than vice versa. I end up using twice as much spinach and twice as much prosciutto, and I can pin the whole thing down with toothpicks rather than tying it up with butcher’s string. The toothpicks come out easily when the whole thing is baked, and the prosciutto is nice and crispy. Much easier to make, and more delicious.

Gregory's Law

“As an online discussion commences, the probability of someone invoking ‘Godwin’s Law’ approaches certainty. Whoever invokes this ludicrous ‘law’ must concede his error in doing so, forfeit the argument, and walk away in shameful defeat.”

— Anthony Gregory, “Against Godwin’s Law”, LRC blog

Followup from IM:

Anthony Gregory (12:54:05 PM): There have been times, however, that I didn’t invoke Hitler since I thought it would be an ineffective tactic, even though it was a logically sound point to make.

bkmarcus (12:54:12 PM): I’m going to end up quoting you on my blog so much that people will think I’m applying for a job or something.

Gregory’s Law

“As an online discussion commences, the probability of someone invoking ‘Godwin’s Law’ approaches certainty. Whoever invokes this ludicrous ‘law’ must concede his error in doing so, forfeit the argument, and walk away in shameful defeat.”

— Anthony Gregory, “Against Godwin’s Law”, LRC blog

Followup from IM:

Anthony Gregory (12:54:05 PM): There have been times, however, that I didn’t invoke Hitler since I thought it would be an ineffective tactic, even though it was a logically sound point to make.

bkmarcus (12:54:12 PM): I’m going to end up quoting you on my blog so much that people will think I’m applying for a job or something.

You wanna talk about tragedy?

(Click to Enlarge)

peace AND prosperity, you pinko morons!

I wish I had Lew Rockwell’s patience:

I was invited to speak at a peace march and rally in Birmingham, Alabama, sponsored by the Alabama Peace and Justice Coalition, and gladly accepted the offer to speak against the war in Iraq.

Yes, as you might guess, the program was dominated by leftists who rightly oppose the war but want big government to run the economy. I accepted for the same reason I would accept an engagement to speak against taxes even if sponsored by a right-wing group that also favored the war and militarism.

I’m not sure how well I could handle doing either one. He goes on:

Those who want free markets domestically typically want central planning and socialism when it comes to war and peace, while those who see the merit of diplomacy and minding one’s own business in foreign policy can’t reconcile themselves to capitalism as the only economic system that lets people alone to live happy, prosperous lives.

After the Cold War, Lew Rockwell (and Murray Rothbard) showed a willingness to “cozy up to the Right” that still makes me uncomfortable. I find it difficult to go back and read some of their stuff from the early- and mid-1990s. I’m a lot more tolerant toward social conservatism than I used to be, but I’m definitely a paleoliberal (by the way, here is how the word is pronounced) not a paleoconservative, nor even a paleolibertarian — even though all 3 share a rejection of both the welfare state and the warfare state. Some questions are really just about nuance, reflex, and aesthetic, and some questions go beyond the legitimacy of coercive government.

But here we are, a decade later, and Lew Rockwell seems to have no problem forming strategic alliances with the enemies of prosperity and freedom, so long as they fight the evils of the warfare state. I see the power in that, but I don’t think I’d have the decency to contemplate diplomacy:

There are two potential failings in such a venue: kowtowing to the audience or, the opposite error, ungraciously rubbing their noses in their inconsistencies.

Yeah, see? I’d definitely have wanted to do me some serious nose-rubbing.

Lew Rockwell is a better man than I am. He found the perfect wedge:

By what ethical standard should we judge the state?

circularity and regression

The conversation with my Lovecraftian friend continues:

Another question. Why does gold have the value it does?

So what does it mean for something to have value? I try to address that in the Gilligan article and more specifically here:

Gold has exchange value because people want it, and people want it for all the reasons it made such a good money: (1) its stable supply makes it a convenient store of wealth (i.e., hedge, in an inflationary context); (2) it’s fungible, which means, for example, that a half an ounce of gold has approximately half the exchange value of an ounce of gold; (3) it’s scarce enough that a little bit of weight represents a lot of wealth, compared to other metals (see comment on silver and platinum above); it’s marketable and easily liquidated, meaning that people will acquire it from you readily.

I’m still not sure I understand “value”, though. To me, value means that some item is good for some use. Gold’s value, as you’ve described it, seems somewhat circular to me.

Excellent. You’ve identified the circularity paradox of monetary theory. I currently work for the Ludwig von Mises Institute as a “publications assistant”. Ludwig von Mises was the man who solved the circularity paradox with his regression theorem.

I have a different concise definition of value than you do: an item has value if you are willing to take action to acquire it. I prefer this for two reasons: (1) it makes explicit the fact that value comes from the subjective preferences of the evaluator and not from any inherent characteristic of the object, and (2) economists distinguish between use value and exchange value, and I think my definition covers both.

When you say “To me, value means that some item is good for some use,” you are defining use value. (Although you have to have a very open understanding of use: I use a piece of music to give myself pleasure or elicit a particular mood; the addict uses heroin to get high; etc.)

Brief digression: Among goods with use value, we need to distinguish between consumer goods, where the use is a direct satisfaction, and capital goods, where the use is the creation of other goods. Some capital goods help produce consumer goods and some capital goods produce other capital goods. Think of the ladder I use to pick the apple I want to eat, and then think of the hammer and nails that I use to build the ladder. Then think of the machine someone used to produce those nails, and on and on. This is called the structure of capital. Thus endeth the brief digression.

Some things are valued not for any direct use, but because we predict that someone else will exchange the goods we want for it. For instance, I see something on ebay that has been mislabeled or misidentified and I suspect I can get Jack [a collector and auction maven the Lovecraftian and I have in common] to pay me twice what I bid for it. That thing has exchange value for me because it has use value for Jack. (It might also have exchange value for Jack, but let’s keep it simple.)

Different things can have use- or exchange value depending on the evaluator.

Money, uniquely, has only exchange value. This is what appears circular: money is valuable because other people value it, but other people value it because it has exchange value.

Mises broke the circle by introducing time into the description. I value a dollar today because I expect its exchange value tomorrow to be close to its exchange value yesterday. Its exchange value yesterday was based on its exchange value the day before. No circularity.

But then we have a new problem: infinite regress. Almost as bad as circularity.

No, said Mises. The exchange value of money originally arose out of the use value of a bartered commodity. In my “Pocket Tanks and value theory” post, I link to a famous article on the use of cigarettes as money in POW camps. This is a good microcosmic demonstration of how a commodity becomes money. All the prisoners get identical care packages from the Red Cross. I like the canned pineapple, but not the canned peas. You hate the sweet syrup that the pineapple comes in so we trade. This sort of thing goes on throughout the camp. I don’t smoke so I’m willing to trade away my monthly carton of cigarettes from the Red Cross. I quickly notice that it’s much easier to trade cigarettes than it is to trade the canned peas. Eventually everyone notices this. Cigarettes are the most marketable commodity in the POW camp. At this point, I’m less anxious to trade away my cigarettes because even though I don’t smoke (i.e., they have no use value to me), I know that they are easy to trade for the things I want (i.e., they have exchange value). Smokers start smoking less because the cigarettes now have an additional use as money. Notice that the cigarettes had to start with a use value in this scenario, and that their exchange value is originally based on their use value. But over time, their exchange value goes up — not because of an increase in their use value, but because of an increase in their exchange value. Sounds circular, but remember the regression theorem: today’s exchange value is based on yesterday’s exchange value … back through time until we can link it to original use value.

(You might find it interesting to see how many of my 4 criteria for money apply to cigarettes in the POW context.)

So gold is so well known for its exchange value — and has been for centuries and millennia — that we forget it also has use value as a soft metal, especially for decorative purposes.

I hope I’ve explained the demand for gold. And I hope my previous email explained the relevance of the supply of gold. The combination of a relatively stable supply and a relatively stable demand are what make gold a good hedge. They’re also what made and would make gold such a good money, but I’ve tried not to focus too much on that question here.