Hoffer on the Importance of Time Preference

While looking over recent posts of Terry Teachout's blog About Last Night, I came across a quotation from Eric Hoffer Teachout posted:

“One wonders whether a generation that demands instant satisfaction of all its needs and instant solution of the world’s problems will produce anything of lasting value. Such a generation, even when equipped with the most modern technology, will be essentially primitive—it will stand in awe of nature, and submit to the tutelage of medicine men.”

Eric Hoffer, Reflections on the Human Condition

Hoffer does not use the term time preference, but that is what he is talking about. If someone is not willing to forego present gratification, he will not be willing to save, but spend all his income on consumption. Without savings there can be no investment in capital maintenance let along accumulation. Productivity and incomes will fall, along with the standard of living.

On the other hand, if we have social institutions that foster the accumulation of capital and if people have low enough time preferences, capital accumulation and prosperity will follow. As Mises puts it in Human Action (p. 562):

The characteristic mark of economic history under capitalism is unceasing economic progress, a steady increase in the quantity of capital goods available, and a continuous trend toward an improvement in the general standard of living.

William Easterly as the Anti-Bill Gates

A recent Wall Street Journal interview of William Easterly is highly recommended. It is sort of a brief review of his work.

Sample excerpt:

Mr. Easterly faults the development community’s tendency to favor “benevolent autocrats” because they can stifle dissent and quickly implement Western experts’ solutions. The United Nations—“a very ineffective club of dictators”—is particularly bad about this. “Paul Kagame, leader of Rwanda, was on this [U.N.] commission and said broadband is the answer. Let’s just wire everybody,” Mr. Easterly says. An “irreverent researcher,” Kentaro Toyama, “pointed out young men are playing videogames and watching porn after they get connected to broadband”—which, Mr. Easterly dryly notes, is “not exactly what we had in mind for launching prosperity."

Leland Yeager Has Passed from This Earth

Sad News: Leland Yeager has passed away at the age of 93. David Gordon has a nice brief obituary at Mises.org.

Dr. Yeager taught me graduate macroeconomics (out of Patinkin!) and Money and Banking. He also very kindly recommended me for my position here at Grove City College. While I did not always ultimately agree with him, he taught me a lot of economics as well as a number of nuggets of valuable economic wisdom including:

1.  The first job of the economist is to get the analysis straight, before discussing whether any policy is politically feasible.
2. A good economist must be an economist, not an ideologue. We should by social scientists, not cheerleaders.

Austrian Economics as Common Grace

I was blessed to present the Lou Church Memorial Lecture in Economics and Religion at this year's Austrian Economics Research Conference. My lecture was entitled "Austrian Economics as Common Grace." My goal in the lecture was to demonstrate how Austrian economics is one of the blessings God gave to mankind to assist in human flourishing. As such, the Mengerian economic tradition is a manifestation of God’s common grace. Because Austrian, causal-realist economics is a social science that is derived from realistic human action as the cause of all economic phenomena--a foundation that is congruent with the Christian view of man--it can be drawn upon with confidence by those who desire to promote human flourishing. There is no ultimate conflict between Christian doctrine and Austrian economic analysis. You can watch the whole lecture below:

Credible Committments in Columbus

Grove City College Assistant Professor of Economics Caleb Fuller tells the story of J. Irwin Miller, then-CEO of Cummins Engine Company who in 1954 launched the Cummins Foundation which transformed the architecture of Columbus, Indiana. Fuller writes that in 1957, the Foundation

began paying the architectural fees of world-renowned architects should they design a public building in the small town. The result was that between the mid-1950s and the mid-1980s, the town averaged two new architectural masterpieces annually. Today, the town is home to more than 90 buildings and parks designed by internationally renowned architects and attracts some 50,000 tourists annually.

Fuller explains that potential benefits of entrepreneurial commitment.

The Law of Demand Applies to Nutella

. . . Even in France!  In Chapter Five of my book Foundations of Economics I explain that what economists call the Law of Demand is an implication of the Law of Marginal Utility. Because the marginal utility of a good decreases as the quantity we have increases, in order for people to demand a larger quantity, the price must be lower. I write, therefore that the Law of Demand tells us that "there is an inverse relationship between the hypothetical price of a good and the quantity of that good a person will buy."

A manifestation of this law played itself out earlier today in Intermarche stores throughout France. The BBC reports:

Intermarché supermarkets offered a 70% discount on Nutella, bringing the price down from €4.50 (£3.90) to €1.40. But police were called when people began fighting and pushing one another. "They are like animals. A woman had her hair pulled, an elderly lady took a box on her head, another had a bloody hand," one customer told French media. A member of staff at one Intermarché shop in central France told the regional newspaper Le Progrès: "We were trying to get in between the customers but they were pushing us."

Sometimes if the price falls significantly for something people really like, bedlam can ensue. This is what an increase in quantity demanded looks like:

Bettina Bien Greaves, RIP

Bettina Bien Greaves has died at age 100. She was an important figure at the Foundation for Economic Education and later a supporter and friend of and contributor to the Ludwig von Mises Institute. She attended Ludwig von Mises's seminars at New York University and became a valuable assistant to Mises for the rest of his life. She also made scholarly contributions of her own, including the important Mises Bibliography.

You can read an important an interview she did for the Austrian Economics Newsletter in 1998 by clicking here.