From: "Perry E. Metzger" <perry@piermont.com>
Date: Thu, 15 Aug 1996 03:05:36 +0800
To: Bart Croughs <bart.croughs@tip.nl>
Subject: Re: National Socio-Economic Security Need for Encryption Technology
In-Reply-To: <01BB88FA.25D2E3C0@groningen16.pop.tip.nl>
Message-ID: <199608141525.LAA21133@jekyll.piermont.com>
MIME-Version: 1.0
Content-Type: text/plain



Bart Croughs writes:
> 
> >Nowhere in the writings of any Austrian economist will you find
> >anything claiming that the wages for a given job are linked to
> >capital investment by the employer.
> 
> I already gave some quotes of Austrian economists in another post, but =
> maybe you didn't read it, so here I go again:
> 
> 	Henry Hazlitt in 'economics in one lesson' (p. 139): "The best way to =
> raise wages, therefore, is to raise marginal labor productivity. This =
> can be done by many methods: by an increase in capital accumulation - =
                 ^^^^^^^^^^^^
> i.e. by an increase in the machines with which the workers are aided..."

You should read your own quotes.

No one claimed that you can't increase productivity and income on
average under some circumstances by increased capital investment. What
was being made fun of was the simplistic misunderstanding of what the
underlying mechanisms are. Prices, including the price of labor, are
set purely by the marketplace. Under some circumstances, incomes will
be determined by investment levels made by employers. Under others,
they will not.  The important feature is the market principle, not the
capital investment. The point of my "green pylons" posting was to note
that it is the market direction of the investment and not the
investment that is important. Impediments to trade create wastes of
capital just as surely as burning cash in the marketplace does. If you
were really an Austrian, and not a confused person, you would know
that all the Austrians and Chicago School people are for completely
free trade, something you don't seem to get in your expositions on
capital flows.

Perry