{ "episodeId": "SLP416", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "per_bylund": { "name": "Per Bylund", "role": "guest", "tag": "PER" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 8.57, "text": "Hi, you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today my guest is Per Bylund, senior fellow of the Mises Institute. Per re-joins me on the show to talk about his new book, How to Think About Economics. This is a great new first book on economics, think of it like a primer, and it's done especially in the Austrian tradition. So we talk about how this project came about. About various concepts and ideas mentioned in the book, as well as comparison with other books for learning about economics. This show is brought to you by Swan Bitcoin, and Swan is organizing a fantastic conference coming up in November. It's called Pacific Bitcoin. It'll be on the tenth and the eleventh in November in LA, California, and we've got an awesome range of bitcoiners coming, people like Michael Saylor, Lynn Alden, Pierre Rochard, Alex Epstein, Preston Pish, Jeff Booth, Greg Voss, Alex Gladstein, Mark Moss, and so many more. There are going to be three In terms of multiple stages going, there'll be workshops and side events, and for premium ticket holders, there will be a VIP party. Michael Saylor has said he thinks this will be the event of the year, so don't miss out. Go get your tickets over at pacificbitcoin dot com, use code livera for a discount. Are you still using a plain old block explorer? Bitcoin has grown beyond a single layer into a fully fledged multi-layer ecosystem. Mempool dot space is a comprehensive Bitcoin explorer exploring and covering this ecosystem from the mempool to the blockchain to second layer networks like Liquid and recently The Lightning Network with Mempool dot space, there's no need to trust a third party. It's free and open source software that you can easily host yourself using one click on some of the full node distros like Umbrel, Raspiblitz and more. For enterprises, Mempool dot space now offers customized mempool instances with your company's branding, increased APR limits and more. Go and learn more over at mempool dot space slash enterprise. Brains are a Bitcoin mining product and service company offering a full stack to offer a complete platform to give miners what they need. Whether that is a mining pool, auto-tuning firmware to optimize hardware performance, as well as farm monitoring and management. Brains also offer openness and standardization across the full stack. Brains products can be used standalone and without locking you into Brains, but at the same time, they're offering products that go together and work together seamlessly to create a one-stop shop if that's what you want. Miners should be able to purchase hardware they control, and it should be easy to configure and operate. So if you go to brains dot com, you can use Brains OS Plus, which is custom firmware, Your Bitcoin mining machine, you can also get Brain's Farm Proxy to manage your farm, and you can point your hash rate towards Brain's pool. That's all available over at b r a i i n s dot com. And now on to the show with Per Bylund. Per, welcome back to the show. Thanks so much for having me. So Per, you've got a new book out, and I was keen to chat with you about it. It's called How to Think About the Economy. So, as I read it, as I understand, this is, an intro book to economics and particularly in the Austrian tradition. So, do you wanna just tell us a little bit about, the story behind this book, like how did this project come up? Yeah," }, { "speaker": "per_bylund", "time": "03:06", "start": 185.98, "text": "sure. it's one of those things that people always ask, \"What Something about it? What do I do? What do I read? And the problem there is that there are a bunch of introductory books, but there's not really a, a good one. I mean Several authors are gonna hate me for saying that, but, but, I mean, there's the classic one, Henry Hazlitt's, Economics in One Lesson. But it's really just one lesson. It is opportunity cost, and it, it goes over that over and over again and applies it in all these different types of policies and everything. It's, it's a great book. So it's, but it's, it is just one lesson. So if you wanna understand the whole economy, well, I mean, it's an important lesson, but it's the whole, not the whole They can be a little technical, and they can be very expensive, as is often the case with academic books. So the point of this book was to write a, a sort of really punchy, pithy introduction that is short, easy to read for just the general population, a-and make them sort of get them up to speed in terms of economic literacy. So, I mean, the, the task that I had was to write a book that was half as long as Hazlitt's classic But covers all of the economy, which of course is sounds a little, little impossible. So there's a, a lot that I had to cut out, but I think I get the, the, the, the, the important" }, { "speaker": "stephan", "time": "04:34", "start": 273.89, "text": "parts in there. Of course. And I think the other important point to note is even though Henry Hazlitt is known for writing, I guess as an Austrian, let's say, or being influenced by Austrian econ-economics, that book, you know, Economics in One Lesson, there are certain points where you would say it's not necessarily teaching the Austrian specific way of thinking. Thinking, it's, it's sort of teaching a general economic lesson about opportunity costs, whereas I think one other key point I did pick up, from your book, reading it, it was, it's a short read, so listeners don't, don't be afraid. but one thing I did pick up from your book is that there is a specific focus on some of the, let's say, the quintessentially Austrian components, things like subjective theory of valuation, things like, even in the section around money, it's, it's sort of that idea of money" }, { "speaker": "stephan", "time": "05:24", "start": 323.75, "text": "A little bit there in terms of, in this book, some of the, let's say, Austrian specific concepts in, in economics that you touch on." }, { "speaker": "per_bylund", "time": "05:31", "start": 331.33, "text": "Absolutely. and, I mean, in, in a sense, it's a crash course in Austrian economics. And Austrian economics was one of three main streams for a long time in economics, so it's, it's not strange that it has a lot of sort of connections with economics in general. And of course, has its opportunity cost, which is the, the basis for all economics. So that's part of there too. But I do go Three parts. The first one is on how to do economics, and it's really short, but I introduce the how Austrians do it, which is probably the most consistent sort of, deductive way of, of, of deriving laws of how the economy functions. It's not about understanding exact magnitudes or statistics or anything like that, but it's the logic of how the marketplace works, how the economy evolves and things like that. And then after that, I go into looking at, at specific Austrian things that you don't- Learn in economics like entrepreneurship, because entrepreneurship isn't part of economics for some strange reason. We all know that it is sort of the driving force of the market economy, it's what everybody knows, drives economic growth, but in mainstream economics, it's simply not part of the theory. So you never learn anything about entrepreneurship, in economics courses, but in this book, it's, it takes sort of center stage as it should, should do. And then I, I focus on the process that isn't really about production management, as, as many have- It and as many see the economy, they look at the businesses out there and they try to, in, in equations or in diagrams, figure out how it could be more efficient. Well, I mean, that's assuming that it's not part of a sort of constant flow. Whereas in Austria, we said, \"No, that the economy is a process. So what we're seeing now is part of a much longer process that preceded what is now, and it's really what survived the weeding out of generations of businesses and entrepreneurs and innovations and things like that, right? And what will be the economy tomorrow and a year from now will be the outcome of that weeding out process that is-- that is underway now, right?\" So I focus on, on those things." }, { "speaker": "stephan", "time": "07:37", "start": 457.4, "text": "Yeah, I really like that point. As well, because it-- I think a lot of people have this idea of economics as just being this sort of technical production management, just how do you maximize the outcomes given the inputs, and that, I think, does a disservice to actually, the broader understanding of economics and understanding that those entrepreneurs and those firms that exist in the market are themselves a result of the selection processes that happened over time because consumers chose this technology over Over another, right? The world chose VHS over Betamax, or the world chose DVD over Blu-ray, or, oh, sorry, Blu-ray over o-others stuff, and, and it just over time it selects various things, and then the market, I guess collectively speaking of it, chooses some of these things, and that in turn sh-shapes which entrepreneurs will be profitable, and then it's not just like this kind of steady state production machine where, let's say, in some economics textbooks, they sometimes simplify it down or oversimplify it down, I think Into that view of, oh, just production management." }, { "speaker": "per_bylund", "time": "08:42", "start": 521.55, "text": "Yeah, no, I, you're absolutely right. I mean, I usually put it to my students in, in terms of the, the economics gang sign, and I do it, I cross my arms and show that that's supply and demand, right? Everything is in there. But I also ask them, okay, if, if that is the economy, just the supply, curve and the demand curve and they intersect here in the middle, where do you put entrepreneurship in there? And, and the, the point is that there is no entrepreneurship It's not in the snapshot, right? It, it, it is exactly the production management, and that's, that's the unimportant part of" }, { "speaker": "stephan", "time": "09:16", "start": 555.83, "text": "economics, really. Yeah, that's fascinating. And, one other thing that I really wanted to hit on is, I think the methodology stuff, and of course, you touch on some of this as well, it's like this idea that we need a theory to be able to understand and make sense of some of these things. And so could you just explain for some listeners, or maybe let's say the listener is new to Austrian economics and they're The hands around this thing, and I understand why is it that we have to get the theory right first, whereas let's say, again, from that new person's perspective, they might be thinking, \"Oh, isn't it just about like running statistics and trying to understand the world that way?\"" }, { "speaker": "per_bylund", "time": "09:53", "start": 592.97, "text": "Right. And, and, and that's, that's a common problem, and we really want to think that data are like objective sources of, of truth that can't be interpreted in any other way, right? They're, they're arbiters of what is the true state of, of the world in a Natural sciences, that's not a big issue. I'm not saying it's not an issue, but it's, it's not a big one 'cause you can measure the, the weight and density of, of whatever materials, and you can, you can measure the distance between two planets or between two cities or what have you. Those things are objective. The problem with the economy is that we're creating things that people subjectively value. And what do they subjectively value? Well, we don't really know. The only thing we do know is that, that every time they act on something, they're trying to attain some kind of value that they personally see, that we might disagree with, that we have no clue what that, what it might be. We simply can't read their minds, right? So in order to understand the economy, to even understand what data points should we look at to understand what the heck is going on, we need a theory, 'cause everything is, is Everything affects everything else in the economy, right? In, in, in the natural sciences, you can, you can have a controlled experiment where you only have a couple of variables that, that, that vary each and every time you run the experiment. The economy is a lot of people making decisions on their own personal valuations and their own understanding of the world and all this stuff, and then they interact, and the outcome of this interaction is what we see in terms of unemployment or economic growth or products available and cities that flourish and cities that just implode. I mean, all, all of these things, they're just outcomes of this process So we can't really collect data, collect all the data, 'cause we don't know what data to look at, so the selection is a problem. We also don't know what the data represent Unless we already have a theory. So we better make that theory explicit first and, and know, and understand how people act and why they act in a certain way, so that we then can use that as a lens to look at the world. And Mises has this, statement that I really like, that part of the, the problem with economics, both its, its benefit and, and its curse, is that it uncovers the, the processes and the mechanisms mechanisms behind what we actually see, and it's typically the opposite of what we might assume. So when we-- typically when, when we, we look at some economic phenomenon, we just assume that it is there for some reason, but if you think about it, using economic reasoning, you realize that, whoops, it's probably exactly the opposite that made this happen. And that means, of course, that if, if you just sort of blindly or without a theory, go out in the world and start collecting data, you're gonna end up with all kinds of just arbitrary- contrary conclusions that don't help you at all. So we, we need this framework just to make sense of it all." }, { "speaker": "stephan", "time": "12:59", "start": 779.4, "text": "Yeah, right. And so I, I think as I read the Austrians, there's, there's discussion, and we can almost think of it like there's economic law that applies in different situations, and it can be the same law, it can be the law of diminishing marginal return, as an example. And I know one of my favorites on this whole topic is Hopper's book, Economic Science and the Austrian Method, which I noticed you put in the, you I think that book really helps outline this idea of how do we understand if something happened in spite of a government law or because of that government law? And I think that's, like, when you start thinking in those terms, then you start to realize more about, I think, this, let's say, this Austrian approach of understanding what was the economic law and starting from this particular principle or this idea that, you know, man acts purposefully, as, you know, Mises puts." }, { "speaker": "per_bylund", "time": "13:48", "start": 827.8, "text": "Right. Yeah, yeah, exactly. I mean, the, the, the problem now really with this reliance on data And economics has data mining, just look at the last few years of Nobel prizes, so called in economics, and all this, it's all this data manipulation and data, data mining bullshit basically. And, if you, if-- and we all, we even had a, a Nobel Prize for showing that minimum wage laws don't affect unemployment. But what this paper did was look before and after. If you, if you reason about it, and I use this example in, with my students and with people who sort of think that economics has nothing to contribute At all, that, well, okay, what if in this little town you i-impose a high minimum wage, like a hundred dollars an hour or something like that, and then you measure how many people have a job before and how many people have a job after, and you find that there are more people after. Well, then first of all, shouldn't you then raise the minimum wage to like a thousand or ten thousand dollars an hour, 'cause obviously this worked? Well, couldn't, couldn't it also be that, say, to this little town, suddenly Apple moved its headquarters And they, of course, hired people at much higher salaries than they had before. Well, that affected the results too, and maybe there was, a business in the next town over that went bankrupt, so a lot of people moved away from there, and their most highly productive workers moved to our town and got jobs in really highly productive positions that raised the salaries. I mean, all of these things, a lot of things happen between two points in time in the economy, and they all affect- Affect each other. So what-- the only thing you can do in economics is really compare what happened, and where are we at, and where would we have been at had this not happened? The counterfactual, and this is super hard to figure out, right? I mean, you can't really measure that, and, and, and they're trying in, in all kinds of data studies and statistical, studies and analyses to, to sort of create an alternative world where everything plays out except for this thing we're studying. Of course, there's a lot of guesswork, so you, you need a theory to figure out, okay, what would be the effect on how people actually act from, from this sort of thing. And if you raise the minimum wage, say that That basically means you can't hire anyone, you can't have anyone employed at a rate of a wage rate that is lower than X, a hundred dollars an hour. Well, that means whoever isn't a job that doesn't produce more than that isn't gonna have a job anymore. It doesn't really tell us whether there's gonna be more jobs or, or fewer jobs, because that depends on all o-- all kinds of other things. But it does mean that whoever made ninety-nine dollars before might not have that job anymore, because that person didn't produce value enough for anyone to be able to afford paying that guy a" }, { "speaker": "stephan", "time": "16:40", "start": 1000.09, "text": "hundred" }, { "speaker": "per_bylund", "time": "16:40", "start": 1000.35, "text": "dollars." }, { "speaker": "stephan", "time": "16:41", "start": 1001.19, "text": "I see. And, and yeah, so that's, you know, dealt with in, I guess, a lot of economics textbooks where they use the word, the term \"satus paribus,\" right? And so that's the idea that we're trying Only isolating for this one thing, but then the reality, what, what seems to happen is that, some of these studies come out and perhaps there's an ideological alignment or something going on that perhaps, you know, convinces people to accept the results even if it actually wasn't truly satoris paribus. And I think that's, that's potentially what, what we-- what you're sort of getting at in that argument there. And one other point I really wanted to ask you about is, as well, is this idea of homo economicus, right? So there's- Perhaps, this argument that you hear people make where they say, \"Oh, look, see, in the, you know, this person was just not being rational, and actually if they were rational, they would have done X, Y, and Z.\" So how do Austrians like Mrs. and yourself answer that kind of question, or at least how would you explain it differently?" }, { "speaker": "per_bylund", "time": "17:39", "start": 1059.37, "text": "Well, I think in general people have the, the right impression of homo economicus that it's complete bull, that it's, is this hyper-rational type of actor that only cares about money, at least in a And that has basically all information. It's perfect information, so this is some kind of god creature that is walking around amongst us and making these-- I mean, solving these equations, figuring out how to maximize in every se-- every second of, of his or her life. And therefore, if, if everybody acts like this, it's gonna be efficient. We're not gonna have anything that is a waste. I mean, that, that's-- I guess that could be fun in the same sense that it's, it might be fun to try to calculate how many angels fit on the head of a pin. That sort of thing. But in terms of being a social science, trying to figure out how the world actually works, it doesn't really have any relevance at all. I mean, you, you can construct a model of the world that, \"Oh, if everybody knew everything and everybody was sort of an automaton and only maximized, what would it look like?\" Yeah, okay, but even if you compare the real world with this sort of maximum It, it doesn't mean anything. It doesn't mean that the, the world as it is is inefficient or bad, 'cause this, that you're comparing it with is impossible. We're not gods. So, so that's, it's just inhuman in some sense, right? So I mean, Austrians look at the economy the way the economy actually is, and we look at, at people the way people are. People have all kinds of flaws and shortcomings and weaknesses, and, and there are a lot of things that we don't understand, there are a lot of things that we get wrong, there are a lot of things that we don't know, all of these things, we're affected by other people, there's groupthink, there's group pressure Pressure, all these things. And that's why we focus on what is action itself, like you mentioned the action axiom, which just means that I, when I act, it means that I'm-- I expect to be happier with the outcome of my action than I am right now. That's why I'm acting. I don't know that I'm gonna get there. I might be wrong, I might do something wrong, someone else might get, get there before me, whatever it might be. But that's the structure of how I act and how we act, and that's a very human thing, 'cause we act every day trying to sort of make our lives better in some personal sense. And using that, we can derive such things as you mentioned, diminishing marginal utility. That's necessarily true based on how we value things and how we act on it. And from there, we can also derive that demand curve slope downwards and all these other economics things, that they, they have to be true. There's no other way it could be. And then from, from this framework, we can easily use it as a lens to make sense of what the heck is going on around us, even though it looks very messy, and it is messy. But we, we need this framework to just see the structure in it." }, { "speaker": "stephan", "time": "20:38", "start": 1238.01, "text": "Yeah, that's a really good way to put it. And I think it just brings it back to this idea, and actually you mentioned this idea, economics as a social science, because there are others who, who might be more skeptical on that idea. They may say, \"Oh, look, you know, I hear on the news these economists, and they come out and they say all these things, and they just get it wrong, you know, and maybe they're thinking they're, you know, quote-unquote, And that and so on. What would you say to that? How, how would you argue that, yes, economics is a science? Well, it is a science" }, { "speaker": "per_bylund", "time": "21:12", "start": 1271.9, "text": "'cause, 'cause economic law is, is more reliable than the laws of, of physics. 'Cause the laws of physics are, are derived from a mass of data and running experiments and running measurements over and over again. But there's always this uncertainty, are we actually measuring what we think we're measuring? Maybe there was something else. I mean, we've rather recently discovered that, oh, look at- That light bends around black holes. Oops, so things weren't where we thought they were, right? That's just one example of how measurements go wrong. And of course, in, in the economy, measurements go even more wrong because they're based on people's valuations, based on whatever it is that they value and how they understand it. But economic law is based on how we understand the structure of action itself, and since that is the same for everyone, and we can easily recognize what, what that is. Whatever laws that we derive from that logically, unless we do something wrong with the logic itself, they must be true as well. It's not like in the natural sciences that, oh, this, this isn't yet a falsified, hypothesis. We tried to falsify it a number of times, but we didn't, so we're just gonna assume that it's sort of accurate, and then we're gonna use it. And it's accurate enough 'cause we can still fly to the moon and things like that, right? So, so it is pretty accurate. But is it perfect? Is it accurate? Is it true? Well, we can't really say that. In economics, we can say that e-economics law is true because there is no way of, of debunking the starting point and the logic. Well, no one has found a flaw in the logic. So unless s-someone finds a flaw, I mean, it's, it has to be true, there's no other way. And in that sense, it's definitely a science, or you might even say that, well, it's, it's scholarship in a different way than natural sciences are. is, is more reliable than what we would call the hard sciences." }, { "speaker": "stephan", "time": "23:08", "start": 1388.11, "text": "Back to the show in a moment. If you're looking for Bitcoin hardware security, CoinKite dot com is the place to go. My favorite Bitcoin hardware signing device is the Coldcard, and they've recently released the MK4. It's got a range of new features. It has two secure elements, it has NFC support, it offers more RAM and a faster CPU, which gives you faster signing of transactions. It's a very versatile and reliable performer, and you can even initialize this device without Not plugging it into a computer, you can just plug it into power or use the cold power device to power it through a battery. CoinKite also offer a range of other devices such as the TapSigner and SatsCard. These are cheaper devices designed for the developing world, and they offer NFC support, so the TapSigner can be used with wallets like Nunchuk. CoinKite also offer metal backup products such as the SeedPlate. You can find all of this over at coinkite dot com, and you can get a discount on your cold cards using the code Livera. Have Signature security with your Bitcoin. Unchained Capital can make this easy with their concierge onboarding program. Now with their multi-signature vault, you bring two keys and they hold the third key. This allows you to keep your keys in different locations and give yourself that additional peace of mind for your coins, knowing that you can still make one mistake and still not lose all your coins. So with Unchained Capital, they've got a concierge onboarding program where you can sign up, they can ship you the hardware if you need that, and then they will do a call with you to tell you Teach you how to do this and also help you withdraw your coins from an exchange or from a single signature wallet into your multi-signature vault. They also have some ongoing webinars and ongoing education as well, so this can keep you up to date on what's going on in the world of Bitcoin and security. So if you're interested, go to Unchained dot com slash Concierge, use code Livera for a discount on your package. Bitbo dot io is a great site to keep track of the Bitcoin ecosystem. You can see things like the price, blockchain statistics, things like block height, average Block time, difficulty statistics, fee estimates, lightning nodes, and all kinds of numbers that are useful just to keep an eye on the ecosystem. I use it periodically just to check on things during the day. You might find it handy for yourself to bookmark this one or set it as a homepage so that you can regularly check on the ecosystem. That website is bitbo dot io, b i t b o dot io. And now back to the show with Per. Yeah. And I think it also comes down to, yeah, I think it, it comes down to, I guess, the correct statement of what economics is and what we can predict. And so I guess perhaps you might argue, or we might argue, that, that guy on, the talking head on the financial TV show talking about what he thinks, you know, the macroeconomics will be, he's not necessarily doing economics in, in that, at that time, when he's trying to say, like, that's a different function from the role of an economist." }, { "speaker": "per_bylund", "time": "25:57", "start": 1557.24, "text": "Yeah, exactly Since, since we have, si-- since economic laws tell us about the structure of things and the mechanisms, it doesn't really tell us about the outcome because it ex-- it depends on how, on the magnitudes of things. So when we can say, for instance, if you and I exchange things, we know for a fact that I expect to become better off exchanging what I have for what you have, and you ex-- you expect to be better off exchanging what you have for what I have, because otherwise you wouldn't do it. So that's, that's, that's an obvious example of a Right? And, and it has to be true. We can't say how much you're going to gain or how much I'm going to gain, and we also can't say how much are you going to bid for what I have to offer. Which means we, we can say that, well, if we trade, we both expect to be better off. True. What will the price be? Well, it depends on who's the better negotiator. Where do I randomly perhaps start in the bidding? How much money do I have in my pocket right now? Do I offer money? In combination with something else. I mean, do I, do I offer a hundred dollars and I will clean your house, or will I offer two hundred dollars? I mean, all of those things are decisions that people make themselves based off whatever they're feeling in the moment. So we can't really say the magnitudes, but we can say that the price will be between our valuations. And if there's a third person, we can say that, well, then the price will be between the two top va- valuations and so forth. But we can't say exactly what the price will be, which means to some people that it's sort of imprecise. In terms of prediction, it is imprecise because we can't give exact out- comes, right? You can't say that, \"Oh, this law will change the unemployment rate by point four percent.\" Whoever says that is just making stuff up basically, or relying on data, assuming that whatever happened before in this dataset is gonna happen in the real world now. That's, that's a pretty big assumption because people can change their behavior, and they always do to some sense, right? I mean, there's something to I think it's a joke in sociology that if you ask an economist, not an Austrian economist, but a mainstream economist, you'll always get a really precise answer, and the only thing you know about that answer is that that's not gonna be it." }, { "speaker": "stephan", "time": "28:22", "start": 1701.52, "text": "Yeah, well, I think that's right. And so I think perhaps there is a confusion there, like the average person will see someone marketed on TV as an economist, and they'll come out and say, \"Oh, look, whatever thing that Biden has done or someone else has done, oh, it's gonna cause three hundred thousand more jobs to be lost or gained.\" And there are times where, let's say, they're not being quite precise about that, or at least they're not doing economics at that time, they're doing something else, they're doing maybe a prediction, or they're, economic law as deductively reasoned out, let's say." }, { "speaker": "per_bylund", "time": "28:55", "start": 1735.05, "text": "Yeah, and un-unfortunately, most economists who, who are referred to as economists today are failed statisticians in some sense, right? I mean, they're not good enough statisticians to be statisticians. Instead, they do it in economics, right? So they use economics terms and then they run statistical tools and whatnot else. But of course, there are limitations, and they don't really understand the depths of it, so they, they can't be real statisticians. I mean, that's-- it's not a nice way of putting, putting it, but they're also not economists in, in the, in the classical sense, right? Or in the Austrian sense, 'cause they're, they're just running numbers on economic things and they're running statistical analysis on these things." }, { "speaker": "stephan", "time": "29:37", "start": 1776.57, "text": "Yeah, of course, of course. and I think that also helps outline, at least for people who are unclear, that's the, let's say, the distinction between someone who's thinking in an Austrian economics way or like an Austrian economist would, as opposed- Those to other schools of thought or other things that aren't even economics, let's say, that maybe that's just investing or just kind of being a talking head on financial TV or whatever, right? Also, I think on that point around the a priori, right? So let's say you and I were doing an exchange a priori, we, you know, I think I'm gonna profit from that exchange, you believe you're gonna profit from that exchange. Now, I think one thing that some people bring up is this idea that, oh, post facto, like afterwards, let's say, you Over, you know, I oversold this product that I was selling to you, and you thought it was gonna solve the problem for you, but actually it didn't. So how should we think about that then? Does that undo Austrian economics, or how would you, how would you answer that?" }, { "speaker": "per_bylund", "time": "30:34", "start": 1834.37, "text": "Right, exactly. And, and Austrian economics is trying to explain what's going on in the economy. So we had the example of the ice cream, salesman selling ice cream to two children, and the one chil-- one child chooses one ice cream, and then the other child chooses another one, and the first child becomes really upset because then the other child suddenly wants what the other, wanted, that kind of ice cream. Well, changing your mind like that doesn't change the fact that this transaction took place, right? And in the economy, this-- the ice cream salesman sold the ice cream to the first child, that's the transaction. So, ice cream moved from the salesman to the child, and money moved from the child to the salesman. Whether they then choose to go back on, on this deal because the child cries or whatever, that's another transaction. That this transaction already happened. So it doesn't really change anything, that, that people change their minds or they wanna roll something back. That happens all the time, and, and, I mean, we're only human. There are all kinds of reasons why we would choose something differently. And, and when, when we learn that what we bought wasn't what we thought it was, then we might wanna have a replacement to get our money back or something like that, right? And, and sometimes if it is fraud, like you mentioned in the question, well- Well then we might have a good case to get it rolled back because they actually lied to us. We, we had expectations on the product that weren't based on fact, but were based on lies. So, so that's a, that's a, Whether it's market law or, or legislative law, that's, that's an unsound non-market transaction because it's, it's one party taking advantage of the other, right? And, and now we're sort of into the third, part of the book, which is about regulations and interventionism, right? Where I, I talk about, business cycles and also what are the true costs of regulations? I think it's one, one thing that I think is very important with, when we're talking about, giving someone their money back, something that I, I, I think Austrian economics sheds light on here is, is a problem for many business owners in a sense that, that they think that they sell something and they offer a money back guarantee to sort of lower the threshold to go through with the, the, the exchange, which is perfectly fine. But the thing is, if they buy something and that thing doesn't work or they change their minds or whatever. The reason they buy it is because they expect to be better off from the product than the money that they have in their pocket, right? So if you roll back the transaction, you don't actually make the customer whole again. You set the customer back to where they were before the transaction, and they chose to go through with the transaction because they wanted to become better off. So in a sense, offering a hundred percent money back guarantee, I mean, it makes sense. But it doesn't make the customer whole. The customer might still be basically pissed off, or at least not very happy with what happened, because they were, they are now in the position they were before the transaction, and they expect it to be better off." }, { "speaker": "stephan", "time": "33:45", "start": 2025.06, "text": "Right, they're expecting some sort of gain." }, { "speaker": "per_bylund", "time": "33:47", "start": 2027.42, "text": "Yeah, right. And it's these little things that, if you think about it correctly, you realize this. But if you take an economics course, then the price in terms of money goes one way and the product goes the other way. And you just think about it in terms of indifference, because it's the same. Well, it's not, because it's based on subjective valuations. So you go through with the transaction because both parties expect to be better off. And then if you roll it back, both parties are worse off. They're in the situation they were before the transaction. So it's not ex-exactly the same. The transaction happens because of different" }, { "speaker": "stephan", "time": "34:22", "start": 2062.09, "text": "valuations. I see. and, one other area I wanted to ask you about, and I think it's quite topical right now Now is this discussion about rationing versus production, because I think you, you spelled this out in the book that there are two main ways, there are two pathways that we can go, and I think it's, it's quite relevant for us now. Obviously, we're living in this world where there's discussion about energy rationing in some parts of the world, particularly in the EU. So could you just outline how is an Austrian economist thinking about, how, how would they compare this idea of rationing and the outcomes for that and try and do produce more?" }, { "speaker": "per_bylund", "time": "34:58", "start": 2097.77, "text": "Well, I mean, I can, I can outline how I think about it as an Austrian, not necessarily how o- other Austrians think about it. But the, the thing is that rationing-- it, it seems like if you have a fixed supply of something, rationing means you use as little as possible to sort of have some left. So if, if you, if you have a limited supply of food and you can't produce more food, it makes sense to eat less and be a little hungry every day because then maybe if there is more food in the future, at least you can hang in Then, right? So if you're on a deserted island and you don't have a whole lot of food, well, then you ration it, you eat as little as possible while staying alive so that if someone comes and rescues you, you're still alive. You don't have a feast the first day and eat everything, and then, whoops, I mean, that's, that's, that's not very smart. On the other hand, the economy isn't really about rationing what is already there. The economy is about the process of production, it's about producing new and better ways to satisfy our wants. So it's not really about rationing what is there, which is what politicians always talk about with, with power and, and such things, right? They just assume that well I mean, right now that we have this much power being produced every day, well, that is part of the process of producing power plants and all this other stuff throughout history. This is why we have this power output. Well, the economy in the future isn't about just maintaining this power output and using it in the best way possible, it's also about figuring out how to produce more power and to make pe- people better off. And you have to keep both in your mind and production Production is much more important and much more, effective in changing things than rationing is, 'cause rationing is always looking backwards, right? That's just trying to, to us stay alive and, and, and try to use as little as possible what there is, whereas production, the whole concept of production is to get more out of less. And this also economic growth, right? That's increasing our standard of living. So of course, we should focus on that rather than focusing on, on just using as little as possible what we have. Of course, there's, there's, there's a, a confusion here, 'cause very often we think of natural resource and there's a, there's one planet only and all these weird statistics that we're using two and a half planets or whatever it is. Which doesn't make any sense, 'cause in, in, in economics what we're talking about is value, we're not talking about physical resources. And an, an example of this, which I think, your listeners or viewers, would appreciate it, is oil. And I, I use this, i-in my teaching this as well, that if someone found oil on their land in, say, eighteen hundred, they wouldn't-- they wouldn't definitely not be rich. They would be poor because it would probably poison the well, it would make the land infertile, it would kill the cattle, it would be horror. They would have this black sludge all over the place and nowhere to, to put it, and it would just destroy everything. Well, if you would, in the year 1900 instead, do exactly the same thing Suddenly you're rich because we've innovated both petroleum and the internal combustion engine. So suddenly we can run trains and cars and ships and whatever else with this sludge that used to kill your farm, and now instead you're super rich. So it's not really about the, the sort of natural resources or the physical things, it's about what we can do with it. And it's important to keep in mind that economics is truly a social science in that That sense, it's about human beings and our wants and what we value. It's not about" }, { "speaker": "stephan", "time": "38:48", "start": 2328.06, "text": "things really. Right. And that's another, let's say, a criticism in of economics in some ways, that sometimes people crit-critic economists saying, \"Oh, you're just focused on this kind of technical material wants,\" when actually, I think if you actually read the Austrians, you'll find it is, as you said, it's actually more about the way we interact in an interpersonal way, that, okay, I'm selling you some goods and you're- Selling this other person some goods, and it's actually that, it's actually about that social interaction, and it's not just kind of, the homo economicus or the automaton who's just merely focused on the maximizing the production, and I think even, to that example earlier on the island, I think, you know, people, and some of this is like English language as well, right? Because we might say, \"Oh, that man on the island who's trying to slow his produ-consumption of food, he's economizing,\" right? Like heard, but that's not necessarily what economics is about, is it?" }, { "speaker": "per_bylund", "time": "39:47", "start": 2386.62, "text": "Right. It, it's about economizing with what we have given the wants that we have. So the, the whole issue with production is that we don't have to economize as much on our ends, because we're suddenly able to satisfy a whole lot of more wants. So we can travel faster and more effectively with this sludge that we suddenly can use in a certain way, right? So we, we find-- I mean, in a sense, it's, it's the ultimate resource, right? It's human ingenuity. We figure out how to use things in different ways and how to use less energy, less natural resources and get much more out of them. And that's economic growth, and that's, that's increasing our standard of living. And I saw some statistic now that, that, in terms of pollution and emissions and things like that, much of the developed world is now, on a negative trend, that we're actually emitting less and less Even though our standard of living is higher and higher, and that's where you, you would expect us to be too, because with innovations, with competition, with all this new technology and all this stuff, we would need to use less of What the, what the Earth actually gives us for free in a sense, because we can make it so much more powerful and so much more productive ourselves through technology and, and labor and, and ideas, so we wouldn't have to use as much. But where, where we are instead, not very highly developed economically speaking, we would need to use a whole lot more. So we would cut down a whole forest because what we use for heating is timber. And then we wouldn't cut down all those trees. Well, I mean, now we can have nuclear power plants instead, or we can use all kinds of efficient ways of producing a whole lot of energy. So we don't need to cut down the whole forest, we can use the forest for something else, or we can just keep the forest and let animals lead their lives there and, and go there to watch them or whatever. But we don't have to use as much natural resources to get even more, valuable outcome." }, { "speaker": "stephan", "time": "41:53", "start": 2513.01, "text": "Right. And I think that's a really important point, it's that if People aren't willing to use new technologies, or they don't have the right ideas about the free market, let's say. We as humanity are poorer, and we're less able to access the benefits of that. So for example, as you said, if the population are very strictly anti-nuclear power, well, we can't access that. Or if there was the shale gas revolution, which recently, you know, over the last ten, fifteen years, we've seen this happen, especially in the US, but we can't access that because a lot of people have these ideas about, \"Oh, no They're sort of going towards a more central planning direction, we are materially worse off for that, and I think that's probably a, an important reason to try to spread economic awareness. Yeah," }, { "speaker": "per_bylund", "time": "42:40", "start": 2560.05, "text": "exactly. And I mean, one example of this is when I grew up in Sweden, the government banned doing research on nuclear power. Well, okay, so they were afraid of nuclear power and, well, especially nuclear bombs, not actually nuclear power. But why would you ban doing research on that? thing to produce even better, more effective power plants. That doesn't make any sense whatsoever. I mean, the, the best way to not produce uranium and whatever products you have from nuclear power plants that are dangerous is to do research on them, to discover better ways of using it, right? And, and so, so often we are, we are stuck in our ways, whereas looking at the economy, we should really look at the flow. I mean, another example from nuclear power plants is, is how we take, whatever is left From the uranium after we've used it for power, we say, \"Oh, well, considering the half time of this thing, we need to bury it somewhere for a hundred thousand years, a hundred million, whatever it is.\" Well, no we don't, because since we have it, someone is bound to discover that you can use it for something productive. So if you drill a really, really deep hole somewhere and you fill it up with concrete so that no one can ever touch it because they might make a bomb out of it, that means we can't do any research, we can't figure out what can we actually use this for productively? So there are all these, just because we're thinking about it in terms of only the status quo and in terms of production management, rather than as a flow and unfolding really of the economy and learning more about how we can satisfy our wants and how we can become better in everything. We, we, we lose so much, and we, we create all" }, { "speaker": "stephan", "time": "44:20", "start": 2659.96, "text": "these problems for ourselves. Fantastic. Well, I think, we're probably just about to run out of time, but let's just have some closing thoughts and, listeners, make sure you, you know, check out The, this book. I think it's a really good book and, perhaps Per, if you could tell, everyone where to find it and I guess the importance of spreading economic education out there so that, you know, we can all benefit. Sure. I" }, { "speaker": "per_bylund", "time": "44:42", "start": 2681.99, "text": "mean, in, in a sense, policy is sort of the negation of economics very often, 'cause they promise things, that they can't ever hold. it's not that they're, they're necessarily lying, it's, it's that they don't know better either. but people fall for Have basic economic knowledge. Had they instead understood how the economy works, which is sort of the reason for this book, then we would have much better policy, and probably less of it too, but that's a different matter. But we would have better policy and a better society, a better functioning society, and a much, much more prosperous society. So that's, that's the reason for this book is really directed towards people in general rather than a sort of a professional or even academic audience. So, and it's, it's available on Amazon, throughout the- So all, all across the globe, I guess. But you can also get it from the Mises Store, and you can get it at mises dot org slash primer, where you can download the PDF and the EPUB versions for free, and then the paperback is there for five bucks." }, { "speaker": "stephan", "time": "45:46", "start": 2746.0, "text": "Fantastic. Well, Per, thank you very much, and I hope, listeners, you do take a look at this book and perhaps share it with your family and friends. Obviously, listeners of my show tend to be more into Austrian economics, but perhaps it's-- This is a good book to recommend for our So that they can also improve their knowledge as well. and of course, guys, follow Per Bylund on Twitter at p e r b y l u n d. Per, thank you for joining me today. Thanks so much. Find the show notes and the links over at stephanilivera dot com. Thanks for listening, and I'll see you in the citadels." } ] }