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Nov. 11, 2022 - Ron Paul Liberty Report
24:47
How To Think About The Economy - with Per Bylund

Per Bylund, Senior Fellow at The Mises Institute, joins the Liberty Report to discuss his new book 'How To Think About The Economy'. Get your copy today on Amazon or from the Mises Store: https://store.mises.org/How-to-Think-about-the-Economy-A-Primer-P11241.aspx Watch the Liberty Report LIVE Every weekday at 12pm EST on Rumble! https://rumble.com/RonPaulLibertyReport Join us on Locals: https://ronpaul.locals.com

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Talking About Austrian Economics 00:15:31
Hello, everybody, and thank you for tuning in to the Liberty Report.
With us today is Chris Rossini as our co-host.
Chris, nice to be with you.
Great to be with you, Dr. Paul.
Okay, we have a special guest today.
He comes from an organization that I talk about all the time, because I can say almost like I was there when it was started.
And that was a couple years ago.
And of course, the Mises Institute has been very important.
And Perry is a senior fellow there.
He participates in education.
And he probably hasn't been there real, real long, but I think I've sent a few people over there because I strongly believe in education, believing that politicians aren't worth much.
And we're just tag along.
Hopefully doing the same thing that people do at the Mises Institute is that introduce ideas, you know, about freedom, especially in economic freedom.
So, Per, welcome to our program today.
We're glad to have you on.
Thank you so much for having me.
Well, good.
Now, you're a senior fellow there, and you deal with the summer scholarship program, and you've recently been there.
Have you been doing this for a while?
Or was this one of your first times?
I know you met Daniel there at that function.
Yes, exactly.
I've been working with, I guess, the Institute for a long time.
I think I published the first couple of columns back in 2001 or something like that.
Good.
But then I went to grad school starting in 2007.
And that's when I had the first chance to actually visit the campus in Auburn as a student first a few years.
And then now as facult at Mises U.
Okay, where did you start that education in economics?
Where you went to a university for this?
Yeah, so I went to grad school at the University of Missouri to study economics.
Okay, the first thing that pops into my mind is that I had a little bit of economic education as I went through high school and college and all, not so much in medical school.
But so I had some basics that the government schools have taught me.
Then after I discovered the wonderful explanations coming from Austrian economics, I was excited about it.
But then I decided I had to, you know, unlearn some of the things I thought I knew.
And it took me a few years.
Do you know what I'm talking about?
Oh, I know exactly what you're talking about, Dr. Paul.
I mean, grad school is even worse because that's where you don't talk at all about the economy.
You just talk about the equations and do the math.
And that's pretty much it.
So it's, you could say that I got the PhD in applied math, but they call it economics.
And then I had to study economics.
That is Austrian economics on the side.
So that's what I did.
I got two educations in one, you could say.
So you have a PhD now?
Or you're still working on it?
Pardon me?
I do, yes.
Okay.
Well, that must give you, you know, from a different position that you went through this.
It makes you see, my immediate reaction is, is, you know, I've looked at some of those equations and, you know, I just go, I don't think I could do it.
Were there times when you said, hey, you know, this is tough.
Were you naturally inclined to play numbers with this, realizing that it doesn't have a whole lot to do with human action?
Well, the problem, I had a shock when I started grad school because of the math.
And I had this very strange experience.
I think it was the very first lecture in advanced microeconomics, which is pure math.
When the professor entered the room, and this was back in 2007, he said, but we all know that value is subjective.
And I was like, whoa, this is starting really well.
And then he said, but let's assume that we can put it in a function and then that we can aggregate everybody's functions.
And then he continued by just filling the blackboard with one big function.
And the rest of the semester was just taking partial derivatives of that function.
So you had to work on straightening him up.
Chris, do you have a question for Per?
Yes.
The reason we invited Per on today is because he wrote a wonderful little book called How to Think About the Economy, a Primer.
And that's available at the Mises Institute store, or you can get it on Amazon.
I bought mine on Google Books and I read it in a few days.
It's very easy to read.
And that's what I like about it.
For the average person, Per breaks down economics, you know, because it's, as Dr. Paul and Per were just discussing, they've really ruined economics and even the perception of it.
Economics is a wonderful science, but in schools, they made it all mathematical, which makes it very unappealing to the average person.
And even when we say Austrian economics, that may sound a little intimidating to the person, but that's really just free market economics.
So, Per, I really enjoyed your book.
And I love how you brought the logic to it.
And because mathematics, you can't aggregate the world because there are an infinite number of variables.
So that's why central planners always fail.
So please talk about the approach that you took in explaining economics.
Right.
So this book is really the outcome of discussing with Jeff Dice, the president of the Mies Institute, that we need a go-to introduction to economics.
And that's probably the most common question I get.
So if I want to learn more about this economics, where do I go?
What do I read?
That sort of thing.
And there are plenty of introductions, but some are academic and usually published by academic publishers, which means they cost a fortune.
They're usually very long.
And it's really hard to ask a beginner to start reading human action.
It's a fantastic book, but most people don't make it through it.
And I mean, even I think Paul Krugman tried once and he said that after 100 pages, he was like, where's the economics?
So, and many people have that reaction, I think.
And then, of course, there is Henry Haslitt's economics in one lesson, which is the go-to, I suppose.
But it is really just one lesson.
It is the lesson of the trade-off or opportunity cost.
And it's over and over again in every chapter that same lesson.
So we wanted something that is more of an overview of how to understand the whole economy and all the parts in it.
So an introduction to Austrian economics more specifically than to economic thinking, and to understand business cycles as well as to individual decision making and entrepreneurship and all those goodies, right, that they're not really part of economics education.
And we wanted it short.
So Jeff put a cap pretty much on it, saying that it should not be longer than half the length of economics in one lesson.
So at that point, I just started writing and trying to make it happen, but it was hard.
It's great.
Now, you've been all involved now for several years, you know, in teaching and studying and all.
But what I'm wondering where you are on this optimism and pessimism, you know, because when I left college and a little bit of economics, I had I was pretty pessimistic.
This is this is terrible.
This is tough.
But then I got very excited about it.
But where do you think we are since you see and talk with young people, you're involved in teaching, you're still involved in learning.
And where do you think we are on the very thing that Chris was talking about?
You know, the teaching of Austrian economics and free markets in your limited experience, but important experience.
Do you think, do you feel good about the headway we're making?
How did you feel about the students you talked with this summer?
Because that's a good insight because a lot of people get very disgusted.
One thing I had to face up to in the campaigns is college kids are a bunch of booms.
They don't care, you know, and all.
And I found it, you know, pretty much the opposite.
And I was always excited when they would get excited about, you know, talking about the Fed.
Matter of fact, my little book and the Fed came from a college crowd from no other place and University of Miskey and all of a sudden started shouting and the Fed and the Fed.
So that is something that I didn't expect.
But do you feel like there's a definite positive movement toward young people accepting the Austrian school?
I think so.
I mean, something definitely happened with the Ron Paul Revolution.
It introduced a lot of people to these ideas.
So it grew very, very quickly through that.
But I think in general, in economics, people don't really get introduced to these ideas and probably are not very interested in these ideas either.
But outside of economics, so I mean, I'm in the department of entrepreneurship, teach entrepreneurship.
And in entrepreneurship, Austrian economics is one of the main frameworks for good reason because Austrian economics explains the economy and the market economy, how it actually is and how it actually works.
So most experienced entrepreneurs, they are Austrian.
They just don't know it.
And the same thing with business students.
Business students, they want to understand how the economy works so they can go out and start businesses.
And for them, Austrian economics is so much more useful than the equations they get in economics.
Chris.
Pair, we live in a world where central planners dominate and the belief in central planners dominates, whether it be the Fed, whether it be through legislation, these international organizations.
And, you know, but economics, and you pointed out in your book, is a process.
There is no equilibrium because our values are constantly changing.
And we see a lot of these central planners, they'll tell you in 2035, we're going to have no more gasoline.
They make all these projections that are years away.
And by the time you get there, so much changes.
So many things happen to just throw their plans out the window.
So can you talk about how economics is a process?
It's not a mathematical formula that you just plug in some numbers.
And then by 2035, we're going to have this type of economy.
Right.
And what I usually do with my students is I ask them, I put the typical starting point for economics, the supply and demand graph, just the big X on the board.
And I ask them, so this is the economy.
Where would you place the entrepreneur?
And here's a marker.
Anyone who wants to just show where the entrepreneur is.
And of course, there's no answer to that question.
There is no entrepreneur.
So economics has sort of forgotten completely about how the market economy is not only inefficient because it's not maximizing anything really, but it's on its way to do glorious things.
And it's trying to figure out all the time how to satisfy consumers.
And who does that?
Well, the entrepreneur does.
So entrepreneurs are really, the way I usually put it is that entrepreneurs are in the business of creating our futures.
And then consumers choose between those futures with goods or services or whatever they might be.
And everybody really realizes this, except for those who study economics, right?
Because if you're thinking about the economy in terms of only equations, you will only get things wrong.
But most people understand that, no, there is competition.
Businesses come and go.
Some businesses grow and then they reduce in size.
Some businesses are really successful for a little while.
There are fads, new products come and go and things like that.
They know about this stuff and they know it's competition to satisfy consumers with new goods and services.
We sort of have an intuition for how it works because we're involved in the economy.
It's just when we turn to study it formally that so many people tend to go wrong.
You know, when I got really fascinated in this subject was back in the 70s.
So I was well aware of Bretton Woods and the Bretton Woods breaking down and then we had stagflation.
I heard the other day somebody on the air said, you know, it could be like the 70s.
We're starting to have a stagnant economy and prices are still going up.
And that confuses, you know, the ordinary economist.
But it is, excuse me, it is frustrating to me for some people constantly.
Matter of fact, a lot of people, all the politicians are always talking about inflation one way or the other, but they never really define it.
And that annoys me because that's what they should start off with, all these debates and all these discussions.
And all the media say, I would like to see the day when we have, you know, about 10 or 15 really good Austrian economists in financial journalism so that ask the right questions.
But no, they never seem to ask the question and they never get the edit right.
Because from my viewpoint, I think that almost every one of them think that inflation, oh, it's not complicated at all.
You know, it's when the CPI goes up.
CPI goes up.
There's inflation, which invites all kinds of mischief and all kinds of attitudes about how you're going to solve it.
And, you know, such things as wage and price control.
Do you recognize what I'm talking about, the frustration with the definition, just definitions, in this case, inflation?
Oh, yes, absolutely.
And I think in now in contemporary economics, most definitions, if they at all use them, are confusing themselves.
So inflation, they define it as prices going up.
But then, of course, it's not always the case.
And I mean, if you want to, if you define it as prices going up, well, then it's really just a price mechanism.
Prices go up and go down all the time.
Inflation's Illusion 00:03:48
Is that inflation and deflation in different goods?
No, it's not.
So they say it's the price level, but no one has ever seen a price level, as far as I know.
And calculating it, of course, is very, very idiosyncratic, too, that they changed how they calculate it as well.
I mean, the way I usually put it, I gave a talk to Oklahoman businesses some weeks ago, and they wanted to know what to do about inflation.
And I said, well, the easiest way to figure out what to do about it is to think about it correctly.
That is, inflation is not prices going up, it is the purchasing power of the money going down.
And if you think about it that way, it's much easier to understand what to do because then, oh, maybe I shouldn't have as much money on hand.
Maybe I should have goods instead.
The solution is so much more obvious.
I agree totally with you, Dr. Paul, that if you have the right definition, the solution is just there.
Of course, me with giving political talks, I usually work that in to say it's actually a tax.
You know, you're taxing the people because they have to pay it, but they don't see it as a tax.
And therefore, they want to look at all these other things.
Some know better, but others just do it for political purposes.
Chris.
Yeah, I have one more question, Dr. Paul.
Perry, you brought up entrepreneurs, and entrepreneurs are really unsung heroes in our society.
And I think the reason is because what we tend to talk about a lot on this program is corporatism that we live with.
There's the political riches that people get, whether it be through vaccines, the military-industrial complex.
You know, there's a difference between getting rich via government contracts and government monopoly privileges versus a free market entrepreneur who has to stand on his own feet and satisfy consumers.
So, can you talk about the difference between those two?
Oh, absolutely.
And I think that the difference is really captured by some work that Mark Thornton has done recently, where he looked at Richard Cantion, the world's first real economist, you could call him, I guess, saying that he flipped the meaning of the word entrepreneur on its head.
So he said that it used to mean that you had a fixed revenue because you were government contractors.
You knew how much money you were going to get, but the only thing that was a variable that you could change is really the cost.
So they were cheaters.
They promised to build all these things and they knew the revenue.
So they tried to cheat as much as possible to lower the cost and then get profits themselves.
But Cantion managed to flip this on its head, saying that no, no, no, entrepreneurship.
And for some reason, the whole world followed him in this.
Entrepreneurship is really about knowing the cost.
It's knowing how much things cost when you start, but you don't know the value of it when you're done.
So you're bearing the uncertainty of that whole endeavor.
And that's what I mean when I say that entrepreneurs create our future.
That nobody knows what the future looks like.
And nobody knows really what people will value either.
And I tell my students that, well, when you start a new business, you have to start with what value are you actually potentially providing to people?
And of course, what people?
Okay, well, if you have an idea of how valuable this might be, you also have an idea of what price they might be willing to pay.
And then your job as an entrepreneur is to figure out how to produce this thing at a cost that is lower than the price that you can earn a profit.
Entrepreneurs Create Uncertainty 00:04:40
See, I think this is really important.
And I approach it a similar way, except I like to make the point that you can't make these calculations.
There's more difficulty if you can't define your unit of account.
And sometimes that's just arbitrary because the government's always manipulating it.
I claim it's like trying to build a skyscraper with a yardstick that changes its measurement every single day.
It's hard to make the planning.
And I think this is important, but and it takes a little.
And I'm always impressed with the things that took a long time for economists to figure things out.
Like the labor theory of value.
Why didn't they think of that a long time ago?
At a time where Marxist and Adam Smith both endorsed this principle.
So that to me is fascinating, but see, it's difficult to change people's attitude.
And I think that's, of course, what's what we're facing right now because, you know, interventionist economic policies have been really pushed down our throats for over 100 years, really.
It's a gradual study, but it keeps going.
And the only answer to a problem is more intervention.
You know, when you think about how many things the Fed creates, the problems it creates, it gives them a chance to regulate.
Oh, I'll take care of that problem.
Then the Congress gets involved.
So it's a big task.
When we stand aside and talk about things, this is not complicated.
They ought to understand this.
But really, for people who have been indoctrinated with misinformation and misdefinitions, it takes time.
Speak to that briefly because we're going to close here in a couple of minutes, but just make a comment about that.
And as you close, tell our viewers where they can go once again, where they can get your book, or if you have a website or something like that, let them know how they can get in contact with you.
Sure.
And I think regulations, that's an area where Austrians can do a whole lot of good because I think that we have overall misunderstood the actual damage caused by regulations.
And it's part of it is what Mises talked about, how a regulation that you don't really get to what you're aiming for.
You don't actually accomplish what you set out to do, and you cause distortions.
So you cause more problems.
And if you take all those things together and see the economy as an ongoing cumulative process where innovations build off of innovations, any little distortion is going to cause a huge distortion and a different type of economy really later on.
So we're going to lose a lot and we're going to be on a lower value trajectory for each regulation.
And of course, it feeds the demand or creates demand for more regulation too.
Because as soon as you see a problem, it sounds like an easy fix to just pass a law or sign a paper or do something like that.
But I think the problem there is that we tend to think of the economy only as what we see around us right now, only those businesses.
So Amazon is too big and powerful.
Well, go back a few years and Amazon was nothing at all.
And go a few years into the future and Amazon might not be anything either because it has been replaced by some new disruptive business.
So we have to think about it in the terms of a flow and a process that is ongoing.
And I think that's hard.
And it requires, it's a new paradigm of thinking about the economy.
So that's something that we need to work on.
and entrepreneurship is one of one way of doing it uh to to show the the complexity of the process itself not necessarily of of of starting a business but what this means for everything we see around us that it was created and that it will be uh disrupted as well i think that's very very briefly can you give us a contact place where other individuals might want to get in contact with you and and make sure they know where to find your book Yeah, absolutely.
So the book is available from the Mises store for five bucks.
And it's also available on Amazon for a little more, but they have the Kindle version as well.
So it's cheaper there.
So that's what I would go.
Anyway, Thank You! 00:00:43
They can find me on, I'm very active on Twitter, and it's my name.
So my handle is just at P-E-R-B-Y-L-U-N-D.
And I have a website too, and it's very easy.
It's myname.com.
So pairbyland.com.
Very good.
Well, I really want to thank you for coming on and your encouragement to us because I like to see individuals your age group being interested and involved very much in education because I find that much more beneficial than becoming a politician.
Anyway, thank you very much for being on and just stay in touch.
I want to thank all our viewers today for tuning in to the Liberty Report.
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