SLP416 Per Bylund – How To Think About Economics

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Per Bylund, Senior Fellow of the Mises Institute rejoins me on the show to talk about his new intro book on economics, “How to Think About Economics”. This is a great new ‘first book’ on economics, especially in the Austrian tradition. We discuss:

  • How this book project came about
  • Austrian methodology
  • Comparison with other books 
  • Rationing vs Production
  • Educating family and friends on Austrian econ

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Sponsors:

Stephan Livera links:

Podcast Transcript:

(Note: There are some errors in the transcript that have not been corrected)

Stephan Livera – 00:00:00:

Per, welcome back to the show.

Per Bylund – 00:00:02:

Thanks so much for having me.

Stephan Livera – 00:00:04:

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 doing or just tell us a little bit about the story behind this book, like, how did this project come up?

Per Bylund – 00:00:22:

Yeah, sure. It’s one of those things that people always ask, what is this Austrian economics and where do I start? If I want to learn 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 good one. I mean, several authors are going to hate me for saying that, but, I mean, there’s the classic one, Henry Hazlett’s Economics and One Lesson. But it’s really just one lesson. It is opportunity cost, and it goes over that over and over again and applies it in all these different types of policies and everything. It’s a great book, but it is just one lesson. If you want to understand the whole economy. Well, I mean, it’s an important lesson, but it’s not the whole thing. And then you have several other introductory texts that are they can be a little long, 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 sort of really punchy, pithy introduction that is short, easy to read for just the general population and sort of get them up to speed in terms of economic literacy. The task that I had was to write a book that was half as long as Hazlett’s classic, but covers all of the economy, which, of course, sounds a little impossible. So there’s a lot that I had cut out, but I think I get the important parts in there, of course.

Stephan Livera – 00:01:52:

And I think the other important point to note is, even though Henry Hazlett is known for writing, I guess, as an Austrian, let’s say, or being influenced by Austrian economics, that book Economics in One Lesson, there are certain points where you would say it’s not necessarily teaching the Austrian specific way of thinking, 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’s a short read, so listen, 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 sort of that idea of money as a bottom up phenomenon. So perhaps you could just outline a little bit there in terms of, in this book, some of the, let’s say, Austrian specific concepts in economics that you touch on.

Per Bylund – 00:02:48:

Absolutely. 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 not strange that it has a lot of connections with economics in general and of course Halett’s opportunity cost, which is the basis for all economics. So that’s part of there, too. But I do go into, I mean, the book has three parts. The first one is on how to do economics, and it’s really short, but I introduced how Austrians do it, which is probably the most consistent sort of deductive way of deriving 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 specific Austrian things that you don’t learn in economics, like entrepreneurship, because entrepreneurship is not 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 is simply not part of the theory. So you never learn anything about entrepreneurship in economics courses. But in this book, it takes sort of center stage, as it should do. And I focus on the process that it’s not really about production management. As many have it and as many see the economy, they look at the businesses out there and they try to 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, where an Austrian would say, no, the economy is a process. So what we’re seeing now is part of a much longer process that preceded what it 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 underway now. So I focus on those things.

Stephan Livera – 00:04:54:

Yeah, I really like that point as well, because 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 another. Right? The world chose VHS over Betamax, or the world chose DVD over Blu-ray or sorry, Bluray over other stuff. 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 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 just production management.

Per Bylund – 00:05:58:

Yeah, no, you’re absolutely right. I mean, I usually put it to my students in terms of the economics gang sign and I do it across my arms and show that’s supply and demand, right, everything is in there. But I also ask them, okay, if that is, the economy gets the supply curve and the demand curve and the intersection here in the middle, where do you put entrepreneurship in there? The point is that there is no entrepreneurship in the entrepreneurship is what happens before and what happens after this snapshot. But it’s not in the snapshot. It is exactly the production management. And that’s the unimportant part of economics, really.

Stephan Livera – 00:06:34:

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 trying to get their hands around this thing and 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, isn’t it just about running statistics and trying to understand the world that way?

Per Bylund – 00:07:10:

Right, and that’s a common problem. And we really want to think that data are like objective sources of truth that cannot be interpreted in any other way. They’re arbiters of what is the truth state of the world, in a sense. Right. And in the natural sciences, that’s not a big issue. I’m not saying it’s not an issue, but it’s not a big one because you can’t measure the weight and density of whatever materials and 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 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 it might be. We simply cannot read their minds. 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 because everything affects everything else in the economy, in the natural sciences, you can have a controlled experiment where you only have a couple of variables 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 in cities that flourish, in cities that just implode. I mean, all of these things, they’re just outcomes of this process. So we can’t really collect data, collect all the data because we don’t know what data to look at. So the selection is a problem. We also don’t know what the data represents unless we already have a theory. So we better make that theory explicit first 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 problem with economics, both its benefit and its curse, is that it uncovers the processes and the mechanisms behind what we actually see. And it’s typically the opposite of what we might assume. So typically when 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 you just sort of blindly or without a theory go out in the world and start collecting data, you’re going to end up with all kinds of just arbitrary conclusions that don’t help you at all. So we need this framework just to make sense of it all.

Stephan Livera – 00:10:16:

Yeah, right. I think as I read the Austrians, there’s discussion, and we can always 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 Hoppe’s book Economic Science and the Austrian Method, which I noticed you put in the further reading section. And 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, let’s say, this Austrian approach of understanding what was the economic law and starting from this particular principle of this idea that man acts purposefully as Mises puts it.

Per Bylund – 00:11:04:

Right, yeah, exactly. I mean, the problem now, really with this reliance on data and economics as data mining, just look at the last few years of Nobel Prizes, so called, in economics, and it’s all this data manipulation and data mining bullshit, basically. And we even had a Nobel Prize for showing that minimum wage laws do not affect unemployment. But what this paper did was look before and after. If you read about it. And I used this example with my students and with people who think that economics has nothing to contribute at all. That. Well. Okay. What if in this little town. You impose a high minimum wage. Like $100 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 $10,000 an hour? Because obviously this worked. Couldn’t it also be that, say, to this little town, suddenly Apple moved its headquarters between these two points where you measured the data, 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 each other. So the only thing you can do in economics is really compare what happened? Where are we at, and where would we have been had this not happened. The counterfactual. And this is super hard to figure out. Right. I mean, you can’t really measure that. And they’re trying in all kinds of data studies and statistical studies and analysis to create an alternative world where everything plays out except for this thing we’re studying, because there’s a lot of guesswork. So you need a theory to figure out, okay, what would be the effect on how people actually act from this sort of thing? And if you raise the minimum wage and say that basically means you cannot hire anyone, you cannot have anyone employed at a wage rate that is lower than x $100 an hour. What it means is whoever is in a job that doesn’t produce more than that is not going to have a job anymore. It doesn’t really tell us whether it’s going to be more jobs or fewer jobs, because that depends on all kinds of other things. But it does mean that whoever made $99 before might not have that job anymore because that person did not produce value enough for anyone to be able to afford paying that guy $100.

Stephan Livera – 00:13:58:

I see. And yeah, so that’s dealt with in, I guess, a lot of economics textbooks where they use the word the term setter is paribus. Right. And so that’s the idea that we’re trying to assess things in terms of only isolating for this one thing. But then the reality of 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 convinces people to accept the results, even if it actually wasn’t truly ceteris paribus. And I think that’s potentially what you’re sort of getting at in that argument there. And one other point I really wanted to ask you about 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 Mises and yourself answer that kind of question? Or at least how would you explain it differently?

Per Bylund – 00:14:56:

Well, I think in general, people have the right impression of homo economicus, that it’s complete bull. It’s this hyper rational type of actor that only cares about money, at least in the money economy, and that has basically all the information there’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 second of his or her life. And therefore, if everybody acts like this, it’s going to be efficient. We’re not going to have anything that is a waste. I guess that could be fun in the same sense that 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 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? But even if you compare the real world with this sort of maximum, it doesn’t mean anything. It doesn’t mean that the world as it is is inefficient or bad, because that you’re comparing it with is impossible. We’re not gods. So that’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 the people the way people are. People have all kinds of laws and shortcomings and weaknesses, 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 is group think, there is group pressure, all these things. And that’s why we focus on what is action itself. Like you mentioned, the action axiom, what just means that I when I act, it means that 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 going to get there. I might be wrong, I might do something wrong, someone else might get there before me, whatever it might be. But that’s the structure of how I act and how we act and this very human thing, because 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 economic things. But they have to be true. There is no other way it could be. And then 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 need this framework to just see the structure in it.

Stephan Livera – 00:17:55:

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 might be more skeptical on that idea. They may say, oh, look, I hear on the news these economists and they come out and they say all these things and they just get it wrong. And maybe they’re thinking there are macroeconomists on the news, on the financial television, and say, look, I project inflation with this and that and so on. What would you say to that? How would you argue that, yes, economics is a science?

Per Bylund – 00:18:28:

Well, it is a science because economic law is more reliable than the loss of physics, because the laws of physics 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 rather recently discovered that, oh, look at that. Light bends around black holes. Oops. So things were not where we thought they were right. That’s just one example of how measurements go wrong. And of course, in the economy, measurements go even more wrong because they are 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 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 this is not yet a falsified hypothesis. We tried to falsify it a number of times, but we didn’t. So we’re just going to assume that it’s sort of accurate and then we’re going to use it. And it’s accurate enough because we can still fly to the moon and things like that. Right. So it is pretty accurate. But is it perfectly accurate? Is it true? Well, we can’t really say that in economics. We can say that economic law is true because there’s no way of debunking the starting point and the logic. Well, no one has found a flaw and the logic so unless someone finds a flaw, I mean, it has to be true. There’s no other way. And in that sense, it’s definitely a science or you might even say it’s scholarship in a different way than natural sciences are. So, I mean, it’s more reliable than what we would call the hard sciences.

Stephan Livera – 00:20:24:

Yeah, and I think it also comes down to yeah, I think 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 you that guy, the talking head on the financial TV show, talking about what he thinks the macroeconomics will be, he’s not necessarily doing economics at that time when he’s trying to say, like, that’s a different function from the role of an economist.

Per Bylund – 00:20:53:

Yeah, exactly. I mean, since economic laws tell us about the structure of things and the mechanisms, it doesn’t really tell us about the outcome because it depends on the magnitude of things. So 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 expect to be better off exchanging what you have for what I have because otherwise I wouldn’t do it. So that’s an obvious example of a law. Right, 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 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 is 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 offer $100 and I will clean your house, or will I offer $200? All of those things are decisions that people make themselves based on whatever they’re feeling at 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 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 outcomes. Right. We can’t say that, oh, this law will change the unemployment rate by .4%. Whoever says that is just making stuff up, basically, or relying on data, assuming that whatever happened before in this data set is going to happen in the real world. Now, there’s a pretty big assumption because people can change their behavior and they always do to some sense, right, so, I mean, there’s something too,  think it’s a joke in sociology that if you ask an economist, not an Austrian economist, but an instrument economist, you’ll always get a really precise answer. And the only thing you know about that answer is that that’s not going to be it.

Stephan Livera – 00:23:17:

Yeah, 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, it’s going to cause 300,000 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 not necessarily relying on economic law as deductively reasoned out, let’s say.

Per Bylund – 00:23:51:

Yes, unfortunately, most economists who are referred to as economists today are failed statisticians in some sense. I mean, they’re not good enough statisticians to be statisticians. Instead they do it in economics. So they use economic 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 can’t be real statisticians. It’s not a nice way of putting it. But they’re also not economists in the classical sense, right, or in the Austrian sense because they’re just running numbers on economic things and they’re running statistical analysis on these things.

Stephan Livera – 00:24:32:

Yeah, of course. And I think that also helps outline, at least for people who are unclear, that’s let’s say the distinction between someone who’s thinking in an Austrian economics way or like an Austrian economist would, as opposed to other schools of thought or other things that aren’t even economics. Let’s say that maybe there’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 would do an exchange a priori. I think I’m going to profit from that exchange. You believe you’re going to profit from that exchange. And I think one thing that some people bring up is this idea that post facto, like afterwards, let’s say I scammed you or I gave you a product I sold you, I oversold this product that I was selling to you and you thought it was going to 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 answer that?

Per Bylund – 00:25:30:

Right. Exactly. Austrian economics is trying to explain what is going on in the economy. So we have the example of the ice cream salesman selling ice cream to two children, and 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, 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 this deal because the child cries or whatever, that’s another transaction. This transaction already happened. So it doesn’t really change anything that people change their minds or they want to roll something back. That happens all the time. We’re only human. There are all kinds of reasons why we would choose something differently. And when we learn that what we bought was not what we thought it was, then we might want to have a replacement to get our money back or something like that. Right. And sometimes if it is fraud, like you mentioned in the question, well, then we might have a good case to get it rolled back, because they actually lied to us. We had expectations on the product that were not based on fact, but were based on lies. Whether it’s market law or legislated law, that’s an unsound non market transaction because it’s one part of taking advantage of the other. Now we’re sort of into the third part of the book, which is about regulations and interventionism, where I talk about business cycles and also what are the true costs of regulations. One thing that I think is very important when you’re talking about giving someone their money back, something that I think Austrian economics sheds light on here is a problem for many business owners in the sense that they think that they sell something and they offer a money back guarantee to lower the threshold to go through with 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 and 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 100% money back guarantee, 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 are now in the position they were before the transaction, and they expected to be better off.

Stephan Livera – 00:28:41:

Right. They’re expecting some sort of gain.

Per Bylund – 00:28:43:

Yeah. Right. And these are 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 the 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 exactly the same. The transaction happens because of different valuations.

Stephan Livera – 00:29:19:

I see. And one other area I wanted to ask you about, and I think it’s quite topical right now, is this discussion about rationing versus production, because I think you spell this out in the book, that there are two main ways, there are two pathways that we can go, and I think 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 would they compare this idea of rationing and the outcomes for that and trying to produce more?

Per Bylund – 00:29:54:

Well, I mean, I can outline how I think about it as an Austrian, not necessarily how other Austrians think about it. But the thing is that rationing, 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 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 there until then. Right. So if you’re on a dessert 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 not very smart. On the other hand, the economy is not 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 power 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. While the economy in the future is not 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 people better off. And you have to keep both in your mind and production is much more important and much more effective in changing things than rationing is, because rationing is always looking backwards, just trying to stay alive, and try to use as little as possible of what there is, whereas production, the whole concept of production is to get more out of less. And that’s also economic growth. It’s increasing our standard of living. So of course we should focus on that rather than focusing on just using as little as possible. We have, of course, there’s a confusion here, because very often we think of natural resource, and 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, because in economics, what we’re talking about is value. We’re not talking about physical resources. And an example of this, which I think your listeners or viewers would appreciate, it is oil. And I use this in my teachings as well, that if someone found oil on their land in, say, 1800, they would 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 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 sort of natural resources or the physical things. It’s about what we can do with it. And that’s important to keep in mind that economics is truly a social science in that sense. It’s about human beings and our wants and what we value. It’s not about things, really.

Stephan Livera – 00:33:45:

Right. And that’s another, let’s say, criticism of economics in some ways that sometimes people critique economists saying, oh, you’re just focused on this kind of technical material wants. 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 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 people. And some of this is like English language as well because we might say oh, that man on the island who’s trying to slow his consumption of food, he’s economizing, right? Because again, that’s the English language word. But that’s not necessarily what economics is about, is it?

Per Bylund – 00:34:43:

Right, it’s about economizing with what we have given the ones that we have. So 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. In a sense, 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 resource and get much more out of them. And that’s economic growth and that’s increasing our standard of living. And I saw some statistics now 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 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 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 labor and ideas. So we wouldn’t have to use as much, but where we are instead not very highly developed, economically speaking, we would need to use a whole lot more. So we would cut down the 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 force or something else or we can just keep the forest and let animals live their lives there 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, right?

Stephan Livera – 00:36:49:

And I think that’s a really important point is that if people are not 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 are less able to access the benefits of that. So for example, as you said, if the population are very strictly antinuclear power, well, we can’t access that. Or if there was the shale gas revolution which recently over the last 10, 15 years we’ve seen this happen, especially in the US. But we can’t access that because of a lot of people have these ideas about oh no. Fossil fuels are bad and they’re sort of going towards a more central planning direction. We are materially worse off for that. And I think that’s probably an important reason to try to spread economic awareness.

Per Bylund – 00:37:36:

Yeah, exactly. 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, 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 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. And so often 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 how we take whatever is left from the uranium after we’ve used it for power. We say oh well, considering the halftime of this thing we need to bury it somewhere for 1000 years, 100 million or 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 no one can ever touch it because they might make a bomb on 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 or an unfolding really of the economy and learning more about how we can satisfy our wants and how we can become better in everything. We lose so much and we create all these problems for ourselves. Fantastic.

Stephan Livera – 00:39:18:

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 check out this book. I think it’s a really good book and perhaps if you could tell everyone where to find it and I guess the importance of spreading economic education out there so that we can all benefit.

Per Bylund – 00:39:38:

Sure. In a sense policy is sort of the negation of economics very often because they promise things that they cannot ever hold. It’s not that they’re necessarily lying, it’s that they don’t know better either. But people fall for it because they don’t 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 more prosperous society. So that’s the reason for this book. It’s really directed towards people in general rather than a sort of a professional or even an academic audience. It’s available on Amazon throughout all across the globe, I guess, but you can also get it from the Mises store, and you can get it at mises.org/primer, where you can download the PDF and the EPUB versions for free. And then the paperback is there for $5.

Stephan Livera – 00:40:42:

Fantastic. 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 this is a good book to recommend for our family and friends if they so that they can also improve their knowledge as well. And of course, guys, follow Per Byland on Twitter at perbylund per. Thank you for joining me today.

Per Bylund – 00:41:05:

Thanks so much.

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