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    (Original post by AnarchistNutter)
    The bust period is a red herring; focussing our attentions on trying to solve the bust period is a red herring. By austrian economic theory, it is the boom period that causes the entire cycle in the first place.
    The difficulty with this theory (and most of Austrian economics) is that it's based very much on a priori hypotheses - that is, hypotheses created to fit what you've found, usually unfalsifiable too. It's all very pseudo-scientific and doesn't have a lot of credibility either.

    Edit: Actually addressing the point itself, there's no reason that the malinvestment you describe won't happen in a completely unregulated state-free system. Indeed empirical evidence suggests that boom and busts have been occurring long before governments were 'interfering' with the economy.
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    (Original post by AnarchistNutter)
    There are plenty of other substitutions as well, including personal transport, tram and so forth. If a rail wants to start charging ridiculously high prices then the option is always there for people to use a different service. In some ways, I think buses are more convenient since they stop at wider plurality of locations, meaning less walking distance depending on where you live and there are more places you can go as well (whereas with train there are less places you can stop).

    Despite inconvenience in certain situations (I'd rather get on the train to travel longer, more direct routes for instance) the option is still there for people to use those services (and they would, if pushed), so keeping the trains under thumb. Substitutes aren't the same but I'd still rather private competition than government monopoly.

    That said, I think personal transport acts as an effective substitution, since you can stop where you like and petroleum companies would take all the business away from the trains (which are fueled by a different form of petrol, I believe).
    My home town (quite sizable at 10,000+) has a single train link to Leeds, the nearest city. Buses have long since stopped going from there to Leeds and taxis are £30 a pop to go there. The train fare to Leeds is £5. If they were to increase it to say £7 or even £10 what real alternative would I have other than stump up, especially if I and the hundreds of other commuters on the train need to get to Leeds to work?
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    (Original post by Captain Crash)
    My home town (quite sizable at 10,000+) has a single train link to Leeds, the nearest city. Buses have long since stopped going from there to Leeds and taxis are £30 a pop to go there. The train fare to Leeds is £5. If they were to increase it to say £7 or even £10 what real alternative would I have other than stump up, especially if I and the hundreds of other commuters on the train need to get to Leeds to work?
    ...live in leeds?
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    (Original post by Quady)
    ...live in leeds?
    So I can't even afford a car and am living with my parents but I can afford to buy/rent a house in Leeds?

    Or even if I did own a house, would a £2 increase in train fare worth the cost of moving house, paying stamp duty etc?
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    (Original post by Captain Crash)
    The difficulty with this theory (and most of Austrian economics) is that it's based very much on a priori hypotheses - that is, hypotheses created to fit what you've found, usually unfalsifiable too. It's all very pseudo-scientific and doesn't have a lot of credibility either.
    We touched on AE in another thread and as I seem to recall, asides from citing 'the laissez-faire Victorian Era' as proof against the AE, you did little to address the theory.

    Having said that, I can see epistemological problems with the action axiom that I remain sceptical of, so I will not further the discussion here though I maintain AE valid nonetheless.

    Actually addressing the point itself, there's no reason that the malinvestment you describe won't happen in a completely unregulated state-free system. Indeed empirical evidence suggests that boom and busts have been occurring long before governments were 'interfering' with the economy.
    But why will an unregulated economy have boom and bust periods and what empirical evidence 'proves' this.

    (Original post by Captain Crash)
    If they were to increase it to say £7 or even £10 what real alternative would I have other than stump up, especially if I and the hundreds of other commuters on the train need to get to Leeds to work?
    I think personal transport is the ultimate substitute that keeps rail companies in check. You might not own a car but plenty of people would be willing to think 'ah screw it' and find a different way of transport. Companies just can't get away with simply jacking up prices.
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    (Original post by Captain Crash)
    So I can't even afford a car and am living with my parents but I can afford to buy/rent a house in Leeds?

    Or even if I did own a house, would a £2 increase in train fare worth the cost of moving house, paying stamp duty etc?
    Workers can't afford rent in Leeds?

    If you owned a house a £2 rise in train fares shouldn't hurt you at all, or if it did then you'd be serious ill prepared for a 3% rise in interest rates...
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    (Original post by AnarchistNutter)
    We touched on AE in another thread and as I seem to recall, asides from citing 'the laissez-faire Victorian Era' as proof against the AE, you did little to address the theory.

    Having said that, I can see epistemological problems with the action axiom that I remain sceptical of, so I will not further the discussion here though I maintain AE valid nonetheless.
    Apologies, you'll have to excuse me that sometimes I get sidetracked away from discussions - my current line of work is quite time consuming at the moment.

    The epistemiological problems are important though. If I claim that rain is created by invisible pixies sprinkling water everywhere, my hypothesis may explain rain, but is impossible to falsify. This becomes important if we are discussing how to prevent rain and I suggest investing in invisible pixie food....
    (Original post by AnarchistNutter)
    But why will an unregulated economy have boom and bust periods and what empirical evidence 'proves' this.
    Well, as I mentioned in the other thread, boom and bust were a key characteristic of the industrial revolution in a largely laissez-faire UK. And why wouldn't it be? To use your analogy of the house builder, the guy ordering the bricks could make the malinvestment quite independently of any government interfering (either mistakenly, or perhaps deliberately to jack the value of his shares up so he can sell them....).

    This is also where the epistemiological difficulties come into play. It is very difficult to disprove that the axiom of the Business Cycle. If Boom & Bust happens, it will always claim that it is due to government interference as there will never be none. To turn the question back at you, is there any empirical evidence that lack of government led malinvestment removes the boom and bust cycle.
    (Original post by AnarchistNutter)

    I think personal transport is the ultimate substitute that keeps rail companies in check. You might not own a car but plenty of people would be willing to think 'ah screw it' and find a different way of transport. Companies just can't get away with simply jacking up prices.
    The cost of a car is substantial though and is a huge barrier to entry to an alternative form of transport.

    As for the last sentence, based on recent years, the companies can and do jack their fares up.
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    (Original post by AnarchistNutter)
    I think personal transport is the ultimate substitute that keeps rail companies in check. You might not own a car but plenty of people would be willing to think 'ah screw it' and find a different way of transport. Companies just can't get away with simply jacking up prices.
    But learning to drive and running a car is just too expensive for a large number of people. Especially for young people.

    And yes, companies can get away with simply jacking up prices, because many people simply do not have a choice. If I want to go from home to Cardiff, I essentially have to get the train (I do not drive, my parents do not drive, a taxi is way way too expensive, the bus is way way too slow and a fair bit more expensive than the train and requires changing buses). If I want to go from home to uni (in Bath) I have to get the train. Etc etc.
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    (Original post by TheFatController)
    Your points are very, very sound in terms of economic theory. The problem is that getting the people who cause congestion to pay for it doesn't solve congestion (unless you are speaking purely in economic theory terms) - it just punishes them for causing it. The problem is that pure economic theory is not always the way to set government policy, because it focuses on market equilibrium and not necessarily what is best for the country.
    What is 'solving' congestion? Certainly it's just as bad to have roads that no-one uses and remain empty just as it is to have roads so clogged that no-one can use them. There is a 'right' level of congestion between the two, and by internalising the costs of congestion into the cost the driver faces, then you reach that socially optimal level. You seem to have a conception that solving congestion means having empty roads, it certainly does not. Unused capacity is as bad as being beyond capacity.

    Also, you say that it would be beneficial for rural car users - but we've already established that in this free market system there wouldn't necessarily be rural bus services. Couldn't road companies recognise that effectively cars are the only way to travel around remote areas, and impose horrendous fees to use them? I presume a society with such a free market system would not have measures in place to prevent monopolies or cartels from emerging, because this would be 'interventionalist'.
    Surely, though, if roads did become that expensive, then train and bus services would become more profitable, since they could enter the market and make a profit. There's competition from other forms of transport, but even if you don't wish to privatise them, but wish to run a toll road system, then I'd probably be happy with that (provided we didn't use gov't subsidy) - if you're scared of abuses of monopoly power.
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    (Original post by Captain Crash)
    Well, as I mentioned in the other thread, boom and bust were a key characteristic of the industrial revolution in a largely laissez-faire UK.
    Any evidence? Having studies the industrial revolution I know how difficult it is to establish growth rates over 20-30 year periods, never mind in enough detail to study the business cycle with any credibility and see if there were fluctuations in output.
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    (Original post by WelshBluebird)
    To me remote means far away from other places, or difficult to get to. Wells certainly doesn't fall into those categories.
    Also, I'd say a population of 10,000 is more like town than a village
    Certainly a small town, but even so, if 10,000 people in a place isn't enough to justify a bus route, so be it. It certainly pertains some of the other advantages of less crime, while indeed being enough to ave some amenities nearby - my point is that different size settlements have different advantages and disadvantages and you let society be best off by letting individuals weigh up the pros and cons for themselves (they might care much more about clean air than transport) and having that diversity allows more people to live in a place they'd rather like. I'd much rather do that than force others to stump up the costs because a certain place isn't perfect.
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    (Original post by jesusandtequila)
    Any evidence? Having studies the industrial revolution I know how difficult it is to establish growth rates over 20-30 year periods, never mind in enough detail to study the business cycle with any credibility and see if there were fluctuations in output.
    There may not have been any reliable measure of GDP etc, but if you studied Industrial Revolution history to any level you would appreciate that cycles of boom and bust had been occuring with regular timing from 1820 onwards, particularly with crises in 1825, 1847, 1866, 1890 not to mention the long depression of 1873-1896.
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    (Original post by Captain Crash)
    There may not have been any reliable measure of GDP etc, but if you studied Industrial Revolution history to any level you would appreciate that cycles of boom and bust had been occuring with regular timing from 1820 onwards, particularly with crises in 1825, 1847, 1866, 1890 not to mention the long depression of 1873-1896.
    Funny though, all of those can be attributed to central banking, which supports, not refutes the Austrian Business Cycle Theory. It seems little else in a fairly laissez-faire environment causes boom and bust periods.
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    (Original post by jesusandtequila)
    Funny though, all of those can be attributed to central banking, which supports, not refutes the Austrian Business Cycle Theory. It seems little else in a fairly laissez-faire environment causes boom and bust periods.
    Which just backs up my view that ABCT is a pseudo-scientific unfalsifiable piece of crock. I find evidence that the most laissez faire economy in human history still has boom and bust cycles, and it gets blamed on government interference (of course central banking wasn't set up until 1844....)
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    (Original post by Captain Crash)
    Which just backs up my view that ABCT is a pseudo-scientific unfalsifiable piece of crock. I find evidence that the most laissez faire economy in human history still has boom and bust cycles, and it gets blamed on government interference (of course central banking wasn't set up until 1844....)
    The Bank of England had significant influence over the money supply in that time. Manipulations in the money supply distort the price signal. Indeed, Austrian Business Cycle Theory focusses generally not on government interference but the money supply and interest rates - it is monetary intervention that causes these booms and busts, not fiscal.
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    (Original post by jesusandtequila)
    The Bank of England had significant influence over the money supply in that time. Manipulations in the money supply distort the price signal. Indeed, Austrian Business Cycle Theory focusses generally not on government interference but the money supply and interest rates - it is monetary intervention that causes these booms and busts, not fiscal.
    But Sterling was linked to the gold standard until 1933. Before this, the Bank of England's role in money expansion was limited. Indeed, isn't this what the Austrians say the situation will be if we go back to the gold standard?
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    (Original post by Captain Crash)
    But Sterling was linked to the gold standard until 1933. Before this, the Bank of England's role in money expansion was limited. Indeed, isn't this what the Austrians say the situation will be if we go back to the gold standard?
    The Austrians don't support the gold standard as the preferred system of currency. The money supply must be responsive to other changing factors in order to allow the price signal to work properly, if we were to remain at a level point, then the price signal would change partly because of an ever decreasing price level (since the same amount of money is chasing more stuff as we experience economic growth), and it's trying to separate these two factors that could lead to systematic malinvestments (indeed single malinvestments aren't necessarily a bad thing - the worst that happens in the initial starting capital of the failed investment is dissipated into the market and used by different people - however it is when there is systematic malinvestment that causes bad ideas to look profitable, at least in the short-run that causes the problems). Some Libertarians argue for a return to the gold standard, but they are wrong to.

    Indeed, Austrians argue for a free-market in currency operation, through free banking operations whereby different currencies compete, and the best ones survive - the fact that there is competition stops huge manipulation of the currency (debasing it, for example) as people will move to a different currency as they find it debased. This allows for a responsive, optimal currency solution.
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    (Original post by jesusandtequila)
    The Austrians don't support the gold standard as the preferred system of currency. The money supply must be responsive to other changing factors in order to allow the price signal to work properly, if we were to remain at a level point, then the price signal would change partly because of an ever decreasing price level (since the same amount of money is chasing more stuff as we experience economic growth), and it's trying to separate these two factors that could lead to systematic malinvestments (indeed single malinvestments aren't necessarily a bad thing - the worst that happens in the initial starting capital of the failed investment is dissipated into the market and used by different people - however it is when there is systematic malinvestment that causes bad ideas to look profitable, at least in the short-run that causes the problems). Some Libertarians argue for a return to the gold standard, but they are wrong to.

    Indeed, Austrians argue for a free-market in currency operation, through free banking operations whereby different currencies compete, and the best ones survive - the fact that there is competition stops huge manipulation of the currency (debasing it, for example) as people will move to a different currency as they find it debased. This allows for a responsive, optimal currency solution.
    Really? I was distinctly under the impression that Austrians very much favoured the gold standard, with free banking being a more general libertarian idea.
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    Not this again..
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    (Original post by Captain Crash)
    Really? I was distinctly under the impression that Austrians very much favoured the gold standard, with free banking being a more general libertarian idea.
    I think people ought to be able to use whatever damn money they want
 
 
 
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