Wednesday, March 29, 2017

ROBOTS Domino's Pizza Fights the Minimum Wage in Europe

Starship Technologies, the London-based company that has created six-wheeled self-driving delivery robots, will begin taking customers Domino’s pizzas in Germany and the Netherlands, reports Bloomberg.

"With our growth plans over the next five to 10 years, we simply won’t have enough delivery drivers if we do not look to add to our fleet through initiatives such as this," Domino’s Pizza Enterprises Chief Executive Officer Don Meij said in a statement.




 -RW

Hey Ivanka, The Problem with Paid Parental Leave

By Xiong Yue


A Chinese fable called "Three in the Morning and Four in the Evening" relates this story: An old man in ancient China wanted to reduce his pet monkeys' food as he can't afford the previous amount any longer. He first told them that he would reduce the monkey's ration to three acorns in the morning and four acorns in the evening. Thereupon, his monkeys protested angrily. Then the old man said, "How about four in the morning and three in the evening?" Knowing that he would get four acorns the next morning, the monkey became ecstatic.
We may laugh at the monkey in this story, but when actress Anne Hathaway gave a speech at the United Nations this month arguing for paid parental leave for all parents — both mothers and fathers — she is no wiser than the monkey. 
In a capitalist economy, the labor market, as well as other sectors of the market, is made possible by the entrepreneurs who attempt to make profits. After an entrepreneur conceives a profit opportunity in his mind, he starts to organize the production according to his plan. Entrepreneurs pay for the factors of production in advance to get the finished goods and services in return. He or she must also be able to deliver these goods or services at a price lower than what customers are willing to pay. Otherwise, the business will fail.
In other words, since the entrepreneur wants to make sure that the sale price of outputs exceeds the cost of inputs, he or she "will attempt to employ a factor at the price that will be at least less than its discounted marginal value product," as Murray Rothbard writes in Man, Economy, and State
Like the prices of other factors of production, the upper limit of the rent of labor — what we usually call wages — follows the same rule. Entrepreneurs would hire an employee only if doing so brings a larger return. Meanwhile, the lower limit of wages is determined by the bids of competing entrepreneurs.
Supporters of paid parental leave, such as Anne Hathaway, fail to understand that a so-called paid parental leave would not be a gift to the worker. When entrepreneurs consider whether they should hire a worker, they consider how much they would pay for this worker in total, not just the nominal wage.
Thus, compared to unpaid parental leave, paid parental leave only means a reduction in the regular wages, as Ludwig von Mises writes in Human Action,
In weighing the pros and cons of the hiring of workers the employer does not ask himself what the worker gets as take-home wages. The only relevant question for him is: What is the total price I have to expend for securing the services of this worker? In speaking of the determination of wage rates catallactics always refers to the total price which the employer must spend for a definite quantity of work of a definite type, i.e., to gross wage rates. If laws or business customs force the employer to make other expenditures besides the wages he pays to the employee, the take-home wages are reduced accordingly. Such accessory expenditures do not affect the gross rate of wages. Their incidence falls entirely upon the wage-earner. Their total amount reduces the height of take-home wages, i.e., of net wage rates.
 The above originally appeared at Mises.org.

The Knives Are Out for Cohn

The knives are out.
New York Times White House correspondent Maggie Haberman tweets that the knives are out for Trump's  director of the National Economic Council Gary Cohn (former Goldman Scahs CEO)

No doubt it is Steve Bannon leading the knife attack. Cohn is a big dog and the way Bannon sees it there is room for only one big dog in the White House and that spot is for him.

But, remember, the more in fighting the less time they have to harass us.

Cohn, btw, is pro-trade, Bannon is a crazed protectionist. It's not the only issue between the two but the opposing stances between them on trade probably grates on both of them on a daily basis.

 -RW 

VIDEO Britain's Prime Minister: "There is No Turning Back"

This is How Trump's Trade Adviser Wants to Negotiate Trade Deals



White House National Trade Council Director Peter Navarro recently delivered to Congress a list of model trade agreement elements.

Sen. Pat Roberts (R-KS), a Finance Committee member and the chairman of the Agriculture Committee last week entered the list into the record during the confirmation hearing for Robert Lighthizer, President Trump's nominee for U.S. Trade Representative. In doing so he said Navarro “read to us the administration's marching orders for trade. They had four goals and 13 policy objectives. Since that meeting, the list has now grown to 24.”

Here's the list (via World Trade Online). I have highlighted the elements that are obviously free trade restrictive.

1. Rules of Origin Percentages & Loopholes
2.Trade Deficit Reduction
3. Dumping, Diversionary Dumping, and Evasion of AD/CVD Duties
4. Currency Manipulation
5. Strict Environmental and Labor Standards
6. Intellectual Property Protection
7. Restrictions on State-owned and State-financed Enterprises.
8. Investor State Dispute Resolution
9. Chapter 19
10. Non-Tariff Barriers
11. Government Procurement
12. Joint Cooperation on Issues Related to the WTO
13. Enforcement, Monitoring, and Compliance
14. Corruption
15. Country of Origin Labeling
16. Evasion of Antidumping and Countervailing Duties
17. Forced technology transfer
18. Geographical indications to restrict trade
19. Quotas
20. Phytosanitary standards
21. Processed foods
22. Stumpage
23. Tax rebates on exports
24. Technology transfers

The highlighted elements should play no role in trade agreements. There really shouldn't be any government trade negotiations but the highlighted areas are the most intrusive. And, for starters, should be taken off the list.

-RW 

DONE Theresa May Sends Brexit Letter to the European Union (But the Germans Want an "Exit Fee")

On Tuesday, British Prime Minister Theresa May signed the letter triggering Article 50.
British Prime Minister Theresa May signed on Tuesday evening the historic letter that starts Britain’s exit from the EU.

The official Article 50 exit process will begin on Wednesday at just after 1.30pm (BST) in Brussels when Sir Tim Barrow, Britain’s ambassador to the EU, presents Prime Minister May’s letter of withdrawal to Donald Tusk, the European Council president.

But the letter will not immediately separate Britain from the EU. It is not an FU letter with Britain going on its merry way. The letter will launch two years of "negotiations."

Indeed, Downing Street said on Monday that the Prime Minister would not use the Article 50 notification to announce the immediate cessation of full citizens’ rights for new EU arrivals in Britain. The European Parliament insists full rights must apply until Brexit is complete.

Meanwhile, in Germany, Chancellor Angela Merkel has adopted a tough position on issues such as the UK’s exit bill (The EU wants 60 billion euros from the Brits as an exit fee)and the sequencing of negotiations,

“We have no interest in punishing the UK, but we also have no interest in putting European integration in danger over the UK,” Wolfgang Schäuble, the German finance minister and Merkel’s close ally, said in a recent FT interview.

“That’s why our priority must be, with a heavy heart, to keep the rest of Europe — without the UK — as close together as possible.”

-RW

Tuesday, March 28, 2017

Under Socialism, All Life Becomes Politicized

With President Trump's top adviser Steve Bannon dissing Austrian school economics, it's time for a little Murray Rothbard, a great Austrian economist.



-RW 

Consumer Confidence Hits Highest Level Since 2000; Home Prices Up 5.9%



Consumer confidence surged to a new 16-year high in March.

The Conference Board Consumer Confidence Index jumped to 125.6 – highest since December 2000.

Meanwhile, US home price gains reached a 31-month high in January, according to the S&P/Case-Shiller U.S. National Home Price Index.

The index, which measures all nine U.S. census divisions, found that home prices rose 5.9 percent year-over-year in the month, up from December's 5.7 percent annual gain.

Of the nation's 20 largest cities, three reached their all-time highs in January: Seattle, Portland, and Denver. And 12 cities reported greater price increases in the year ending January 2017 versus the year ending December 2016, the report said.

This, of course, has occurred despite 3 Fed rate hikes and Austrian-lites warning of an imminent crash in the economy after the first hike more than 2 years ago.

This is not what a recession looks like.

-RW 

David Rockefeller as an Economist


By Mario Rizzo
David Rockefeller, grandson of John D. Rockefeller, died recently at the age of 101. He was known for many things. But perhaps the least known of his accomplishments was his dissertation for which he was awarded a Ph.D. in economics from the University of Chicago in 1940. This dissertation was published by the University of Chicago Press as a book in 1941 entitled Unused Resources and Economic Waste. Although the book is hard to find, I was able to secure a copy and read it. I include here the Preface from the book (Rockefeller, Preface).
The book is very heavily influenced by Frank H. Knight. This means that there is much subtlety, self-critical reflection and, above all, caution in the claims made. It also shows the less beneficial influence of Abba P. Lerner insofar as Rockefeller buys the market-socialist idea that under a form of socialism the attributes of pure competition might be approximated. Nevertheless, this idea is of quite minor importance in the book. The topic of the dissertation (and hence the book) was suggested by F.A. Hayek when Rockefeller was at student at the London School of Economics for one year in the mid-1930s.
The book, as the title indicates, is about unused resources and whether or not they constitute waste from an economic perspective. The topic was a major concern during the Great Depression and thereafter. Unfortunately, Rockefeller does not deal with the business cycle issues that may have been foremost in the reader’s mind (both then and today). Nevertheless, there is a good deal of valuable analysis regarding the connection – or lack thereof – between unused resources and waste.
Read the rest here.

Jeff Deist Responds to Steve Bannon About Austrian School Economics

Trump's top strategist Steve Bannon

Steve Bannon Dismisses Austrian Economics

By Jeff Deist

Writing in The New York Times Magazine about last week’s stillborn RyanCare bill, Robert Draper recalls a conversation he had with White House strategist Stephen Bannon earlier this year. Bannon, lamenting the ability of both congressional Democrats and Republicans to get things done, contrasts the identity-obsessed progressives with the one-trick pony conservatives:
What’s that Dostoyevsky line: Happy families are all the same, but unhappy families are unhappy in their own unique ways?” (He meant Tolstoy.) “I think the Democrats are fundamentally afflicted with the inability to discuss and have an adult conversation about economics and jobs, because they’re too consumed by identity politics. And then the Republicans, it’s all this theoretical Cato Institute, Austrian economics, limited government — which just doesn’t have any depth to it. They’re not living in the real world.
 There’s quite a lot to consider in these few sentences. For starters, Bannon clearly is not as familiar with the mindset of congressional Republicans as he imagines. They are primarily concerned with how the whole “repeal and replace” debacle plays back home. Bannon seems wholly unaware that incentives matter, that his only carrot or stick with regards to individual members is getting them reelected or un-elected. While Trump is likely to remain popular in deep red counties and states, it’s doubtful Bannon can leverage this to create an effective “enemies list” of GOP recalcitrants. For the majority of congressional Republicans the only existential threat to their jobs comes from their right flank in a potential primary, and supporting a watered-down version of the ACA may well hurt them worse than Bannon’s wrath. The only incentive that matters is reelection, not having “adult conversations or governing.” Is the wizened Bannon, architect of the brilliant Trump campaign, really so naïve about Congress?

Second, Republicans in Congress hardly are under the spell of the Cato Institute or Austrian economics (undoubtedly Bannon sees these two things as synonymous, although they are not). We know Bannon has read Sun-Tzu and Aristotle, but has he read the Austrian literature he dismisses so casually? His notion that the GOP conference is full of ideologues, much less libertarian ideologues, is just flat false. The GOP is the party of trillion dollar military budgets, the party that wants to protect Social Security and Medicare-provided prescription drugs, the party that won’t even kill an openly cronyist program like the Export-Import Bank. The House Freedom Caucus, which arose from the remnants of Ron Paul’s liberty caucus, shows occasional libertarian tendencies. It has a worthy role to play as spoiler for bad bills like RyanCare, but it’s hardly an ideological driver in Congress. And Bannon, like so many political observers in the media, fails to understand how little think tanks influence policy in the Beltway. Organizations like the Brookings Institute, the American Enterprise Institute, and the Heritage Foundation are orders of magnitude larger than Cato, yet few in Congress really read their material more than superficially. The real game in DC doesn’t involve think tanks and public policy, it involves lobbyists quietly putting language into authorization and appropriations bills at the committee level. An anti-establishment maven like Bannon should know this.
Third, Bannon’s use of the word “depth” belies a progressive longing for merging the nation with the state. And of course he’s right: Austrian economics per se, or any brand of economics, has very little to say about blood, culture, soil, language, and nationhood. Social science, at least honest social science, is not prescriptive. Economics can’t provide  a normative system, political science can’t Make America Great Again. But the libertarian response to this is simple and direct — nation is not state. Greatness, even goodness, is outside the purview of government. Culture is beyond the realm of politics. Work, family, markets, and civil society are the foundations of a robust civilization, not the state. The deeper the state, the shallower the civilization — and vice versa. To the extent Bannon sees “limited government" and laissez-faire economics as abstractions that fail to provide a satisfactory worldview, it’s because he sees government as the organizing principle for society. It’s a grandiose view of statecraft that libertarians reject.
Finally, there’s the old “not living in the real world” chestnut. How many times have libertarians heard this one? All around us are the almost unimaginable benefits of markets, cooperation, and technology, yet somehow we’re naïve if we don’t want to funnel human activity through government cattle chutes. The vast material and digital abundance we enjoy every day is provided without any state apparatus, in fact in spite of that apparatus. Is this private world not part of reality? Government is the artifice, and statists are the utopian dreamers who imagine that individuals acting under the magical banner of government can plan, coerce, and coordinate millions of lives. Realpolitik, Bannon’s idea of real-world governance, created a pile of several million bodies in the 20th century. If that’s the real world, perhaps it’s time to give libertarian theory a try.
Jeff Deist is president of the Mises Institute. He previously worked as a longtime advisor and chief of staff to Congressman Ron Paul. 

Monday, March 27, 2017

Thanks, Obama: Average Wait Time to See a Doctor Up 30 Percent in Three Years



By John R. Graham

Merritt Hawkins, a physician-staffing firm, has published its periodic survey of waiting times for appointments with physicians in 30 metropolitan markets. The results:
  • Average new patient physician appointment wait times have increased significantly. The average wait time for a physician appointment for the 15 large metro markets surveyed is 24.1 days, up 30% from 2014
  • Appointment wait times are longer in mid-sized metro markets than in large metro markets. The average wait time for a new patient physician appointment in all 15 mid-sized markets is 32 days, 32.8% higher than the average for large metro markets.
Of the 15 major markets surveyed, Boston has the longest waiting time (52.4 days) while Dallas has the shortest (14.8 days). This is not surprising, because queuing is a symptom of a system where resources are allocated by central planners exercising government privilege. Massachusetts has long been at the forefront of efforts to guarantee universal access to care through government planning, whereas Texas has no interest in such a program.
Of the 15 major markets surveyed, slightly more than half of the physicians (53.0 percent) reported they accept patients on Medicaid, the joint state-federal welfare program for low-income residents. This is an “improvement,” of sorts, from 2004, when only 49.9 percent of physicians accepted Medicaid patients.
However, 84.5 percent of physicians accepted patients on Medicare, the federal program for seniors, an increase from 77.0 percent in 2014. It is not clear why this changed. Although, given the dramatic increase in waiting times, it is not clear the increased rate of Medicare acceptance signifies overall improvement.
Obamacare significantly increased federal control of patients’ access to medical care, and it appears to be having the impact we would expect from more central planning.
The above originally appeared at the Independent Institute.
For the pivotal alternative to Obamacare, see Priceless: Curing the Healthcare Crisis and A Better Choice: Healthcare Solutions for America, by John C. Goodman.

Is Trump Going to Call for Medicare For All?



Dr. Murray Sabrin, Professor of Finance, Ramapo College, emails:
Cornell economics professor Robert Frank writing in today's NYT business section suggests Trump may propose "Medicare for all" in light of the failure to repeal and replace Obamacare last week. I would not be surprised. Trump is not a limited government advocate.
Frank writes:
Now that Republicans have withdrawn Mr. Ryan’s bill from consideration, attention shifts to what comes next. In an earlier column, I suggested that Mr. Trump has the political leverage, which President Obama did not, to jettison the traditional Republican approach in favor of a form of the single-payer health care that most other countries use. According to Physicians for a National Health Program, an advocacy group, “Single-payer national health insurance, also known as ‘Medicare for all,’ is a system in which a single public or quasi-public agency organizes health care financing, but the delivery of care remains largely in private hands.” Christopher Ruddy, a friend and adviser of the president, recently urged him to consider this option.

Many Republicans who want to diminish government’s role in health care view the single-payer approach with disdain. But Mr. Trump often seems to take pleasure in being unpredictable, and since he will offend people no matter which way he turns, he may want to consider why liberals and conservatives in many other countries have embraced the single-payer approach.
Sadly, this is what may actually occur. A socialist healthcare system in America. It certainly seems to mesh with Trump's Führer Principle personality and his complete lack of understanding of the problems with central planning.

-RW 

Trump's Top Adviser: Austrian Economics Doesn't Have Any Depth



Well, this is rich.

New York Times Magazine correspondent Robert Draper reports on what President Trump's top adviser, Steve Bannon, said at a dinner meeting in January of this year hosted by House Speaker Paul Ryan at his Capitol office with members of Trump’s inner circle (my highlight):
I think the Democrats are fundamentally afflicted with the inability to discuss and have an adult conversation about economics and jobs, because they’re too consumed by identity politics. And then the Republicans, it’s all this theoretical Cato Institute, Austrian economics, limited government — which just doesn’t have any depth to it. They’re not living in the real world.
I hasten to add this is coming from a guy that holds one of the most superficial theories about how the economy and history develop. SEE: Steve Bannon’s Bizarre Documentary “Generation Zero”.

This is a guy who displays no understanding of the role that the economic basic principle comparative advantage plays in trade and how it relates to international trade. A theory that was developed more than 200 years ago and destroyed at that time Bannon's current trade view!

It is doubtful this guy could recognize the difference between the Misesian regression theorem and a Hebrew National hot dog.

That this man. who is also a Churchillian-style warhawk, is so close to the President should be a serious concern to all who appreciate sound economic and foreign policy.

-RW 



ALERT Trump is Going Full Keynesian


Earlier this month, New York Times Magazine contributor Robert Draper spoke to President Donald Trump by phone.

He has reported for the magazine on the conversation. Here's the key insight (my highlight):
When I spoke with Trump, I ventured that, based on available evidence, it seemed as though conservatives probably shouldn’t hold their breath for the next four years expecting entitlement reform. Trump’s reply was immediate. “I think you’re right,” he said. In fact, Trump seemed much less animated by the subject of budget cuts than the subject of spending increases. “We’re also going to prime the pump,” he said. “You know what I mean by ‘prime the pump’? In order to get this” — the economy — “going, and going big league, and having the jobs coming in and the taxes that will be cut very substantially and the regulations that’ll be going, we’re going to have to prime the pump to some extent. In other words: Spend money to make a lot more money in the future. And that’ll happen.” A clearer elucidation of Keynesian liberalism could not have been delivered by Obama.
"Priming the pump" is one of the scariest economic programs you can hear promoted by a president. It is nothing but the promotion of rotund government expansionism justified by confused Keynesian theory.

Investopedia explains:
Pump priming relates to the Keynesian economic theory, named after noted economist John Maynard Keynes, which states that government intervention within the economy, aimed at increasing aggregate demand, can result in a positive shift within the economy...

 The phrase originated with President Hoover's creation of the Reconstruction Finance Corporation (RFC) in 1932, which was designed to make loans to banks and industry. This was taken one step further by 1933, when President Roosevelt felt that pump-priming would be the only way for the economy to recover from the Great Depression. Through the RFC and other public works organizations, billions of dollars were spent priming the pump to encourage economic growth.

The phrase was rarely used in economic policy discussions after World War II, even though programs developed and used since then, such as unemployment insurance and tax cuts, may be considered forms of automatic pump primers. However, during the financial crisis of 2007/2008, the term came back into use, as interest rate reduction and infrastructure spending were considered the best path to economic recovery, along with tax rebates issued as part of the Economic Stimulus Act of 2008.
And thus another problem for Trump supporters who view him as somehow different from typical big government politicians. Trump is not different. No shrinkage of the government role in the economy is going to occur when a president is talking about priming the pump---enthusiastically talking about priming the pump.

  -RW 

Sunday, March 26, 2017

A Response from the Idaho Representative on His Incoherent Argument on Gold as an Inflation Hedge

 Mat Erpelding
David Mueller writes as a follow-up to my post, OMG An Idaho Politician Just Said This About Gold:
I wrote to the Idaho representative, Mat Erpelding, who made the comments about gold.

I looked up his email address and wrote to him.  I snagged your comments (as they were better than anything I would have had time or energy to come up with) and threw it into the letter and sent it off.

Surprisingly, he wrote back.  See below.

---

Dear Sir,

I read your remarks about gold.

“If we say that gold is going to protect us from inflation, I want to point out that in 1868, gold was $27 an ounce, and today gold is $1,218 an ounce. So, we can’t say that gold is going to protect us from inflation when you have that type of a price range over the last hundred years. So, I just want to point out that facts are important."

Rep. Erpelding, please understand that if the price of gold has climbed from $27.00 per ounce in 1868 to a present value of around $1,218.00 an ounce, it means that gold has maintained its purchasing value in the face of the declining purchasing value of the Federal Reserve controlled U.S. dollar.

Kind Regards,

David Mueller

---

Yep. I messed up my argument.

Sincerely,
Rep. Mat Erpelding
House Democratic Minority Leader
District 19
PO Box 1697
Boise, ID 83701
 RW note:

Since receiving Mueller's email, I also have written to Rep. Mat Erpelding:

Dear Rep. Mat Erpelding,

It has come to my attention that you have admitted your mistake with regard to your comments on gold as an inflation hedge (A Response from the Idaho Representative on His Incoherent Argument on Gold as an Inflation Hedge). 

It is really rare to see a politician admit a mistake. Bravo! I was fully expecting you to blame it on Adam Smith, the Russians or, perhaps, Roger Stone.

Under separate cover, I have sent you a copy of my book, The Fed Flunks: My Speech at the New York Federal Reserve Bank. I hope it proves informative about money and the Federal Reserve, for what I suspect will be a long political career for you.

Best regards,


---
Robert Wenzel
Editor & Publisher
San Francisco, CA

UPDATE

Rep. Erpelding's response to me: 
Thank you. We all make mistakes and I made a big one! I will read your book!Mat

On Kirzner's Decision-Making Room and the Nature of Questions



By Robert Wenzel

During a lecture at the Mercatus Center Academic & Student Programs, the Austrian school economist Israel Kirzner brought up in contrast dynamic decision making versus the economic mainstream view of decision making.

He correctly points out that mainstream decision making is largely calculation from known facts. He said it is as if all the facts are known which you can deliver to a "decision-making room" and the answer will be provided to you.

Kirzner is correct here, much of modern day mainstream economics is this view that we are searching for equilibrium.

He then contrasted this with what he saw as the Misesian view of decision making. However, the examples he used to portray Misesian decision making I believe fall short of the true richness of the Misesian view. He used examples I have seen him use before in other lectures.

He used as an example a man considering whether he should marry a particular woman. And then speculated that such a man might wonder what the woman might look like in 10 years time. He suggested this question is one that can not be solved in the decision-making room, but I wonder if this is fully the case. Many a man has looked at a mother to get a sense for what a daughter might look like down the road, and there are certainly computer programs these days that can age a picture of someone to give us a rough idea of what they will look like in the future.

So Kirzner's example here could be put into the decision-making room and a rough answer could be provided.

I believe the Misesian view rests more on the idea that we may not know what questions to ask in the first place, not the degree to which they can be satisfactorily answered once we have the question.

Approximately 45% of marriages in the United States end in divorce, I would venture to guess that a majority of those divorces come as a result of the couple not asking the correct questions about the future spouse in the first place.  "Oh, you had me several years ago. When I was still quite naive."

This is the Mises and Hayekian problem with simply solving for equilibrium. Further, Mises and Hayek would recognize that the distribution of knowledge is such that not everyone would have the same series of questions in front of them to know what to ask. How many of us have not seen a couple about to get marry where we know full well "It won't last." In this case, we are operating (when we are correct) with a greater knowledge spectrum than the couple actually getting married.

Kirzner goes on to use as an example of  a decision about a dining room set, and talks about the inability to take into the "decision-making room" the answer to the question, "What will this dining set look like in 10 years?"

But again, the question is understood here, There may be some vagueness about the answer (although I doubt much) but the real problem can be much more complex if we do not know the questions to ask.

Consider this situation, the dining set is being bought by a single woman living in a studio apartment in New York City. She knows enough to contemplate the question, "What will this set look like in 10 years?' The set is made out of sturdy wood, is a type of wood she has always loved and so she buys the set,

A month later she learns she is pregnant and decides she will keep the baby and raise it herself but because of the expense of apartments in New York City, she has decided to stay in the studio apartment she has and the crib will have to go in the spot where the new dining set now is. In 8 months, up on Craig's List goes the dining set at a discount.

Clearly, she did not think to ask when she bought the set, "What happens if I get pregnant next week?"

Kirzner uses a third example of a student considering whether to be a heart surgeon and he brings up more complex questions where estimates need to be made, but again,the bigger point should be that we don't always know what questions to ask.

It's the questions we are not aware that we should ask that make Mises and Hayek suspicious of equilibrium models. Further, Mises and Hayek are fully aware that some people have better, more thorough, questions for different situations.

In other words, Mises and Hayek understand that the world is  a very complex place and a central planner, with a whiz-bang computer, who thinks he knows all the answers is way off. He may have answers for the limited questions he asks but it is impossible to have all the questions.

One very important secret about free markets is that there are many people asking all kinds of different questions.The more different people we have asking different questions the better the shot that we have at different problems being solved.

The lecture by Kirzner is here. His discussion of the decision-making room starts at 32:30.

Robert Wenzel is Editor & Publisher of  EconomicPolicyJournal.com and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics, on LinkedIn and Facebook. The Robert Wenzel podcast is on  iphone and stitcher.

Watch Out Puerto Rico, They Just Put a Major League Deep State Crony in Charge

Natalie Jaresko
Chicago-born Natalie Jaresko, the former finance minister of Ukraine has just announced she has been made chief executive of the Financial Oversight and Management Board for Puerto Rico.

In a Facebook posting, she wrote:
I am honored and humbled to be taking on a new, critically important position to put Puerto Rico back on a path to fiscal stability.
The Board is tasked with assessing and certifying annual budgets and a fiscal recovery plan presented by the island’s government and facilitating debt restructuring talks on the island.
Puerto Rico is suffering from years of fiscal deficits and the related debt burden. Yet, the opportunities are equally great based on the steps foreseen in the certified fiscal plan to restore liquidity and debt sustainability.
Implementation of this plan will be a first step in returning stability and confidence to investors and Puerto Rico’s 3.5 million U.S. citizens.
This is a second stint for her running a country's finances.

Between 2005 and 2010 Jaresko was a member of Ukrainian President Viktor Yushchenko's Foreign Investors Advisory Council and the Advisory Board of the Ukrainian Center for Promotion of Foreign Investment.

She managed to survive all kinds of turmoil. Nine months after the 2014 U.S. instigated Ukrainian revolution which resulted in the ouster of President Viktor Yanukovych, Jaresko was offered the post of Minister of Finance, which she accepted. She left the government in 2016 after another change in Ukranian leadership.

But the firm she had co-founded in 2006, Horizon Capital, scored big off Ukraine in 2016. It managed to increase its capital stake, at a bargain basement price, in Datagroup, to over 70%. Datagroup controls 85% of the telecom traffic in Ukraine.

Of note, Jaresko served as the Chief of the Economic Section of the U.S. Embassy in Ukraine from 1992-1995, and in various economic positions at the State Department in Washington, D.C. from 1989-1992.

 At one point she sat on the board of the George Soros-aligned Open Ukraine Foundation

In May 2016, Jaresko became chair of the Board of Trustees of the Aspen Institute unit in Kyiv.

Watch out Puerto Rico, you have a major deep state crony operative about to take over the running of your government's finances.

-RW 

Sources: The Financial Times, Wikipedia,  Datagroup, EPJ, Aspen Institute, The New American