David R. Henderson  

Arnold Kling on Money

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In his post today on money, Arnold writes:

However, as you know, I prefer to think of money as designed top down, to serve the needs of government.

But shouldn't what you "prefer to think" count for literally zero? What if I prefer to think that taxation has no deadweight loss and that the government will spend our money more efficiently than we would? Shouldn't people object that my preferences about x have nothing to do with what's true about x?

A better way to pursue truth on an historical issue is to check the history.


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COMMENTS (13 to date)
Ben Staleman writes:
Dan writes:

Wasn't the point of Arnold's post that Selgin's historical evidence supports Arnold's priors?

RL writes:

David,

THANK YOU! EXACTLY what I was thinking. It's not as if there isn't a large literature on the topic. Arnold often writes as if he's completely unaware of it.

Fenn writes:

I believe Dan is correct.
And if you disagree with Kling's opinion, why not rebut it with evidence of your own?

A snarky post like this is more fit for the comments section (though I realize it may just be a placeholder until there's another televised police procedurals aired that demands commentary).

John writes:

I think in this context that "I prefer to think..." simply means: "I think story A is a better filter than story B here." Arnold's explaining that he prefers one framing device rather than another.

For example, take the sentence "I prefer to think that the political opposition is misguided, rather than evil." The statement isn't about the empirical claim, although of course it includes one. The real point of the statement is that, if we tell ourselves the story that the opposition is evil, we'll filter out a lot of worthwhile data.

I may be wrong about the use of the phrase, but that's the way I've typically heard it used.

Gu Si Fang writes:

Here is one post where Arnold Kling mentionned the warlord story. The claim is offered without much proof or evidence :
http://econlog.econlib.org/archives/2008/11/lectures_on_mac_4.html

RL writes:

John: "I prefer to think that the political opposition is misguided, rather than evil" refers to a hope rather than a belief. It expresses an evaluation of the political opposition's MOTIVATION, not an evaluation of any facts.

Kling is making an historical claim, presumably one based on historical FACTS, yet (as Gu Si Fang properly notes) without any effort to reference history.

Zdeno writes:

Semantics.

Of the two models of currency being evaluated, Arnold "prefers" to use one over the other because he believes it to do a better job of explaining reality, and I agree with him.

Consider: In the anarchic land of savages, currency is of no value. The determinant "prices" in any given exchange interaction will be the balance of coercive ability between the two individuals/parties. Currency is useless without some higher sovereign authority maintaining order and enforcing implicit contracts.

Cheers,

Zdeno

Ryan Vann writes:

Are you invoking any particular anarchic land of savages Zdeno?

John writes:

RL: Sorry, I wasn't clear enough, so perhaps the meaning of the phrase isn't all that clear at all...

But as for my example: I meant the statement "I prefer to think that the political opposition is misguided, rather than evil" not as a hope, but as a way of framing reality. That is, as a conservative libertarian, I resist the urge to think of left-wing types as evil not because it is false or because I hope it is false. Rather, I resist the urge because believing it will damage me by making me more likely to toss out left-wing arguments solely because their proponents are "evil."

In general I think of the phrase in question ("prefer to think") as meaning that the author is suggesting a particular way of framing the world. No simple story or framing mechanism can explain the complexities of the real world with complete accuracy, so we have to pick our frames carefully (we can hope to live our lives without framing or ideology, but complete unbiasedness is impossible and undesirable). Otherwise we'll filter out valuable information while keeping the useless noise. So I just thought Arnold preferred one frame over another because he thought it filtered out more junk and less substance.

RL writes:

John, do you think framing is completely arbitrary? Can we choose to frame the history of the Soviet Union as a free market society filled with people who had bizarre preferences?

Bob Murphy writes:

Zdeno wrote:

In the anarchic land of savages, currency is of no value. The determinant "prices" in any given exchange interaction will be the balance of coercive ability between the two individuals/parties. Currency is useless without some higher sovereign authority maintaining order and enforcing implicit contracts.

Zdeno, you are confusing fiat currency with money. Money can and did arise on the market without anyone designing it. Historically, gold and silver were money first, and then governments moved in. First they made the government paper simply claims on the real money, and only gradually did they wean the public off commodity money so that now we've reached the point where many people apparently think the State created money itself.

I'm not being a wiseguy; are you familiar with the POW story of how cigarettes became money spontaneously? The guards certainly weren't enforcing contracts.

Jeffrey Rogers Hummel writes:

Dan writes: "Wasn't the point of Arnold's post that Selgin's historical evidence supports Arnold's priors?" But a reading of Selgin's review, let alone a look at the body of Selgin's writings, reveals little support for Kling's position. The one line in Selgin's review that offers a slight concession to Kling's theory of money's origin is: "Numismatists, for instance, are no longer convinced that Lydia's first coins were privately struck," a slim concession indeed, especially in light of Selgin's recent, serious historical research into the importance of private coinage in England. Nor is there much overlap between Kling's views and the Steil and Hinds book that Selgin was reviewing. Steil and Hinds are objecting to the State's co-opting of money, not arguing for State creation of money. In fact, despite all of Selgin's legitimate and important caveats about the book, it would be more accurate to describe Steil and Hinds as overlapping with Rothbard, rather than with Kling.

Kling has frequently repeated his a priori view of the Statist, militarist origins of money with seeming scant attention to the historical evidence or scholarly literature on the subject.

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