Notes – The 2014 Rothbard Graduate Seminar (#economics, #gradstudies)

Last year I attended the Rothbard Graduate Seminar at the Ludwig von Mises Institute in Auburn, AL as an observer. The following are notes I typed while listening to lectures and discussions between faculty and graduate students. They have been edited for clarity, organization and in some cases privacy.
Lecture 1, Praxeology, David Gordon
Praxeology is the science of human action, uses deductive methodology, begins with axiom of man acting, deduced with supplementary postulates (Rothbard uses action axiom, Mises never refers to “Man acts”, he refers to the concept of action)
Supplementary postulates: leisure is desired over work, there are a variety of economic resources
Economics is the best-developed branch of praxeology: Crusoe economics (isolated human action), catallactics (economics of exchange) including barter and money
The study of violent intervention in the market, socialism and interventionism, are also part of praxeological analysis, as well as “games”, but these have not been well-developed (no systematic treatises?)
Examples of praxeological reasoning— every action uses means to achieve an end; every action is a choice between alternatives; the actor always chooses his highest valued alternative
Methodological individualism— only individuals act, not groups or societies or nations or classes, however this doesn’t imply that nations and classes don’t exist
On Austrian Methodology” by Robert Nozick, an interesting article
Methodological Individualism has been used to deflate various ideologies such as nationalism, statism, etc.
Why should we do economics this way (praxeology)?
Popular objection: principles of praxeology are supposed to be synthetic (truth about the world) and a priori (knowable by simply thinking about them), but you can’t learn about the world just by thinking about it, the meaning of concepts is conventional, people just decide to use words a certain way, you can’t make something true about the world just by defining words, other a priori truths are logical and tautological that say nothing new about the world
Rothbard’s answer: concepts come from experience, action isn’t an arbitrary construction but rather an abstraction from experience, if we get the concept from experience we know action exists, then anything we deduce from that applies to the world, deduction transmits truth from premises to the conclusion, if the premises are true the conclusion is true
Tautology objection: rests on an equivocation
Rothbard’s objections to the mainstream: they construct mathematical models and then test predictions derived from the models; math substitutes functional relations for causation, also introduces the false assumption of continuity but human action occurs in discrete steps, he objects to the testing because there is no way to perform controlled experiments as all phenomena are occurring simultaneously, and there are no quantitative laws of human action, human action is the product of choice
Questions:
1.) In property rights theory, how can joint ownership (or government ownership) of a resource be explained if “only individuals act”?
2.) How do we know the experience of action is true? Don’t we need a prior theory to interpret the empirical experience of action as action?
3.) Can Austrian economics be translated into math? If not, does this suggest it is not rigorous or coherent?
4.) Why is the Austrian ERE a useful abstract tool for studying elements of reality in isolation, but the “equilibrium” economy of mainstream thought is not?
Discussion session:
Rothbard’s book (Economic Controversies) had great depth, not just covering epistemology and economic theory but historical commentary, etc., this book is also digestible, repetitive so you get the same concept dissected from different angles, straight to the point, challenges the mainstream orthodoxy, accessible to the layperson, Rothbard starts with realistic premises and deduces from there which makes this approach even more empirical (econometric models falsify the real world), his criticisms are very thorough and you want to smile after you read them which is unique in reading academic papers. Rothbard isn’t ashamed to say there is meaning and truth.
Methodological individualism applies only to the concept of action, it does not exclude the idea of something like a “cosmic consciousness”, there is a difference between ontological and methodological claims; praxeology is not a metaphysical system, it simply takes the world as we find it
Mathematical annotation is more precise than verbal logic, but one problem is how do you convert initial premises into mathematical annotation (and back when a conclusion is reached)?
“Academic choice”, public choice analysis applied to the incentive structure of academia and how this influences their search for truth
Lecture 2, Methodological Debates, Jeff Herbner
Every academic discipline is defined by its method and scope (boundaries).
Rothbard— Each subject matter has a proper method; neoclassical approach— there is only one scientific method.
Praxeology’s divisions:
  1. Theory of Isolated Person (autistic exchange)
  2. Theory of Voluntary Exchange
    1. barter
    2. medium of exchange (catallactics)
      1. unhampered market
      2. violent intervention
      3. violent abolition of market
  3. Theory of Games
  4. Theory of War
  5. Unknown
Neoclassical divisions:
  1. Rational choice model
    1. Market participants
    2. Political participants
    3. Social participants
  2. Behavioral economics
Economics— voluntary associations w/ economic calculation (UME, HME)
Sociology— voluntary associations w/o economic calculation (family, church)
History— contingent, concrete conditions of action blended w/ theory
Ethics— personal action, interpersonal action, voluntary and involuntary
Politics— involuntary associations (gangs, states)
Praxeology— logic of action, economizing, underneath all 5
Praxeology and Ethics— public policy (economic science is value free, but economic policy is value laden and requires assumptions or principles about ethics and what is desirable to make conclusions), critique of ethics, political philosophy, welfare economics
Misesian Economics— a.) economic theory b.) economic history (understanding economic action in the past) c.) applied economics (predicting economic effect in the future based on proposed economic cause, i.e., policy)
Neoclassical Economics— economic model and empirical testing
Questions:
1.) Is the division in economics between calculating and non-calculating, or financial calculation and non-financial calculation? How are non-calculating actors choosing if not by some form of calculus?
2.) Who has best developed Games and War theories of praxeology?
3.) Why aren’t Austrians trying to develop comprehensive treatises in these fields?
4.) What is the application of game theory?
5.) How do you know when a circumstance is new and requires an extension of the existing theory, or when it is “unoriginal” and can be explained by the previous body of theory? How do we know when existing theory can’t explain a new phenomenon or historical incident? How is this explanation different from the pragmatist argument about a lack of common principles?
6.) Who, if anyone, is worth reading right now outside of the Austrian tradition, and why?
7.) How can “proportionality” be administered in a judicial punishment setting without treading into utilitarianism or other non-subjectivist value systems?
Lecture 3, Austrian Microeconomics, Peter Klein
Price theory, production theory, the theory of the firm, some parts of capital theory, etc., constitute “Austrian micro”
It is not mainstream micro minus calculus and some graphs plus “spontaneous order” and “radical subjectivism”, etc.; this is a misconception of the contribution of Austrian econ
Mengerian economics— focused on mundane topics, not esoterica; shares subjective utility and marginal analysis of Walras and Jevons; not simply verbal version of neoclassicism, emphasized cause and effect real market behaviors and thus “causal-realist”
Fundamentals of Austrian micro— economics as the analysis of action (praxeology); teleology, means and ends; economic goods which are concrete (real prices of real goods, not abstract prices of conceptual entities) and are limited and desirable, split into consumer and producer goods (direct and indirect serving of human needs); time, implied by action, itself a scare means and the notion of time preference; production is rearrangement, not creation ex nihilo, takes time and uses stages
General insights on valuation include emphasis on discrete, marginal units, not abstract categories, as well as attention to demonstrated preference
Menger’s utility theory— the value of particular means, marginal utility being the value of the highest-ranked end that cannot be achieved if a unit is lost, law of diminishing marginal utility (not a psychological concept, a logical concept focused on individual use of each unit not the benefit)
Contrasts with neoclassical utility theory— consumers in NCM are choosing among heterogeneous bundles, choosing between total utility of each bundle; marginal rate of substitution is rate at which consumer substitutes unit of good X for unit of good Y (slope of indifference curve) vs. causal-realist where substitution occurs at the margin and demonstrates that the marginal utility of X is greater than the marginal utility of Y w/ no separate income or substitution effects; indifference can not be demonstrated in action and is therefore not a scientific concept (focus is on explaining actions, not states of being)
Price determination— analysis of the marginal pairs (see Greaves, paper by Egger) states that prices are set by pairs of buyers and sellers; characteristics of the equilibrium price, determined exclusively by individuals’ subjective valuations, subjective valuations of buyers and sellers matter, not set unilaterally by sellers, the real prices actually paid in market transactions
Prices and knowledge— buyer and seller valuations can include speculative demands (they don’t need to know in advance what equilibrium price will be), prices as signals (Hayek)
Factor pricing— Austrian theory of imputation, rental prices imputed backwards to the ???
Applications and extensions— no distinction between production and “distribution” (Piketty), wealth is “distributed” in the act of production, it is not produced and then arbitrarily distributed by capitalists, government, etc.; rent = unit price of services of any good (Fetter); production functions, but no cost curves; firm as an organization, not a productive unit
Discussion section:
Kirzner and Schumpeter restrict entrepreneur to nothing but alertness, the Misesian approach is more expansive and includes everyone in some capacity acting as an entrepreneur
Mises in Human Action talks about the entrepreneur as a leader, who is far-seeing, comes from Weiser, who also mentored Schumpeter; Mises was uncharacteristically fuzzy and unclear on his writings on the entrepreneur, occasionally he refers to the “promoter” (ideal type) involving leadership, having a quicker eye than the crowd, etc., but typically he refers to the function of entrepreneurship
Kirzner is talking about alertness to opportunities for profit, but entrepreneurs create goods, capital, companies, etc., not “opportunities for profit”, opportunity implies objective configurations of resources that allow for a decision or action or take place, but is this analogous in the business world? Or is “opportunity” a metaphor? Do we need the construct of “opportunity” to explain what entrepreneurs do?
Kirzner’s equilibrium is the condition under which no unfound profit opportunities exist
Mises vs. Knight on judgement— Mises never refers to Knight in this context, judgement is more of a black box for Mises than for Knight
Questions:
1.) If Austrian econ is not distinct, why do mainstream thinkers argue so violently with Austrians?
2.) Did the anglo-American Austrians, etc., self-consciously identify with the “Austrian school” or did we lump them in post hoc? If so, what did they refer to themselves as?
3.) When challenging Keynesianians and other mainstream opponents, Austrian critics often accuse them of “not understanding economic calculation”. Is this criticism accurate? Why or why not?
4.) Would it be better to distinguish between “offers” and “prices”, where “offers” are ratios of exchange advertised but not consummated, hypothetical, whereas “prices” represent historical data of consummated exchanges between buyers and sellers?
5.) Is Kirzner’s “capital-less entrepreneur” really a description of professional managers, and if it is, is it a legitimate analysis or does it still lack connection to reality?
6.) Is “public choice” an analysis of entrepreneurship in socialism, or in privatization within socialism?
Lecture 4, Taxation and Public Finance, Mark Thornton
Rothbard’s approach: nature of taxation; technical corrections to mainstream analysis; theories of “just” taxation; neutrality of taxation; approaches to tax reform
Interventionism: autistic (ruler tells the ruled what to do); binary (e.g., taxation, transfer of property from owner to intervener); triangular (ruler tells two ruled how they can interact with each other, e.g., prohibitions and regulations)
Impoverishment caused by taxation is in proportion to the amount of taxation, not the form the taxes take
Taxes can not be passed on to consumers because of competitive pricing of supply and demand
Taxation distorts market outcomes in two ways: the withdrawing of resources from the economy, and the redistribution of those resources across the economy
“Benefit principle”— pay taxes in accord with the benefits you receive
“Ability to pay principle”— pay taxes in accord with your relative wealth
There are no scientifically valid principles of taxation, there is no conceptually possible neutral tax
Discussion section:
How to explain countries where majority of taxes are paid by a minority of people, as Calhoun’s analysis suggests the majority bear the costs for a small minority to benefit from? The answer could be additional implicit subsidies such as protections from the State in terms of liability or regulation that they see taxation as payment for
Can the State make investments? Rothbard is writing against the idea of “social investment” such as infrastructure spending, and he is writing in terms of capital structure— they’re not integrated into economic calculation, they’re not part of the capital structure; counter-example, State-owned oil production
Questions:
1.) Why doesn’t taxation create business cycles due to mass misallocation of resources?
2.) When taxes are “shifted backward” to suppliers through lowered net revenue, aren’t consumers STILL paying the tax due to lower supply and lower quality of remaining supply versus free market outcome?
3.) Why can employers shift taxes to employees if businesses can’t shift taxes to consumers?
4.) In the marketplace, how is price discrimination explained in reference to the benefit principle?
5.) Does the lack of scientificness of taxation principles imply the irrationality and injustice of government in general?
6.) “Over” and “under” exploitation of a government owned resource… relative to what? How do we know how much the free market would exploit it?
Lecture 5, Monetary Theory, Joe Salerno 
Money as a medium of exchange— trade requires barter in the absence of money, creating high search costs due to the double coincidence of wants
Money as unit of account— used to express prices and record debts, simplifies relative price comparisons
The value of money— measured as the inverse of the price level measured against an arbitrary basket of goods (i.e., 1/P), what does one unit of money buy?
The (neo-)classical dichotomy— the theoretical separation of nominal and real variables; Hume and classical economists suggested monetary developments affect nominal variables but not real variables; if money supply doubles, for example, all nominal variables, such as prices, will double; in the short run, supply and demand determine the value of money, in the long run cost of production determines the value of money
The neutrality of money— proposition that changes in the money supply do not affect real variables
Purchasing Power Parity (PPP)— relies on the “law of one price” which establishes that arbitrage opportunities eliminate differences in value of common goods in different markets; exchange rates are supposed to be ratios of price levels between two economies
Discussion section:
What Has Government Done To Our Money?” is Rothbard’s explanation of how an economy “progresses” from commodity to fiat money, because Mises said that a true fiat money is a historical question given that every episode in the past has been a form of “credit money” based on expectations about an eventual return to a commodity money that predated it
Questions:
1.) For a relative price to be a useful data, wouldn’t it have to be collected from a real exchange (i.e., barter exchange)?
2.) Do mainstream models explaining fiat money violate Occam’s Razor?
3.) If velocity of money is increasing, isn’t the “velocity of hoarding” increasing at the same rate because all money balances must be held by somebody at some time?
4.) If IEOR policy is causing banks to “hoard” bank balances and this is non-expansive, is this money “neutral” to the economy or what effect is it having? What role does it serve? (Compare to Jingjing’s question on corrupt Chinese official cash balances)
Lecture 6, Professional Strategies, Career Advice and Current Research Topics, Peter Klein
 [I did not take any notes during this discussion.]
Discussion section:
[I did not take any notes during this discussion.]
Questions:
1.) What about pursuing a career as a “private lecturer” by establishing yourself as an authority on Austrian economics with a crisp website?
2.) How can Austrian economist career hopefuls improve their career by thinking in terms of their “personal brand”?
Lecture 7, Monetary Policy, Jeff Herbener
Monetarists— micro efficiency, but macro instability caused by monetary regime; optimal monetary regime would create stability in the price level; requires an elastic money supply to offset forces causing price inflation or deflation to keep price level roughly stable; avoid trade imbalances w/ flexible exchange rates
Monetary Disequilibrium Theory (MDT)— micro efficiency, macro inefficiency; means of payment must accommodate changes in money demand; avoid price deflation from excess demand for money; separate unit of account from general medium of exchange, supplant general medium of exchange with means of payment; competitive issue of means of payment adjust to accommodate changes in money demand;
Banking school FB— micro efficiency, macro inefficiency; money stock and credit supply must accommodate the needs of trade; avoid price deflation from excess demand for money; competitive issue of fiduciary media adjust to accommodate changes in money demand
Currency school FB— micro efficiency, macro efficiency; production of money and money substitutes should be integrated into the social economizing process of economic calculation by entrepreneurs
“Free banking” in Scotland— Rothbard suggests using Vera Smith’s schema of 4 groups (free vs. central banking Banking School, free vs. central banking Currency School) rather than Larry White’s 3 groups; there was no Banking School free banking in Scotland, and the system didn’t work well, numerous bailouts, pyramiding credit on top of Bank of England notes;
Free Market Monetary reform— separate money from the State; abolish fFed, dollar redeemable in gold, legal enforcement of 100 percent reserve on money substitutes;
Ancillary roles for the State— Hayek (Sennholz), abolish all legal disabilities on private enterprise production of money and money substitutes; Yeagar (Timberlake), state defines the unit of account in terms of market-basket of goods, the general medium of exchange is eliminated, private enterprise provides means of payment
Central role for the State— Fisher, state defines a market-basekt of goods for the unit of base money, currency is redemption claim for base money, supply of currency managed to keep price level stable; Friedman, Fed conducts non-discretionary monetary policy to keep the price level stable
Discussion section:
 [I did not take any notes during this discussion.]
Questions:
1.) What “problem” did the MDT respond to? Similarly, did the Monetarist framework develop in response to existing statist monetary regimes or was it to address perceived problems with a theoretical free market monetary regime?
2.) Does the existence of taxation in general complicate or prevent the possibility of private production of the money supply?
3.) Is “balance of payments” thinking by mainstream economists an anachronistic way of thinking in a non-commodity standard money world?
4.) Why do socialist countries have money? How does money function in these economies?
5.) How can the crash and then explosion in the price of gold since ~2000 be explained in Austrian monetary theory?
Lecture 8, Mark Thornton, Comparative Economic Systems
Hoppe’s A Theory of Socialism and Capitalism (1988)— systematic, offers a theory of comparative economic systems, based on the concept of private party
Capitalism— based on property rights; property is the result of scarcity; provides non-violent mechanism for resource allocation; Garden of Eden, property right to your body; original appropriation; contractual exchanges; wealth; absence of systematic aggression; no unemployment (idle resources) problems
Russian-style socialism— socialism par excellence; State owns the means of production; equality vs. anarchy of production; aggression and democracy; less investment, appropriation (black market); calculate the structure of production = waste; Mises (1920) complete vs. relative; East vs. West Germany
Social democratic socialism— “reform”, taking steps at the ballot box; “commanding heights” (the sectors deemed essential by socialist planners for control such as education, utilities, transportation networks, etc.); owners remain caretakers with partial ownership; property owners taxes for redistribution; dominant form in Europe; Sweden
SDS vs. Russian-Style and Capitalism— solves the calculation problem; compared to Russian, less impoverishment, less over utilization of resources, more leisure, more incentive to work, save and invest; but it’s still poor compared to capitalism; both reduce production of talent and skills, increase the production of aggressive and political skills, both increase barter and black market activities
Conservative-style socialism— supports status quo, old order; private property, commanding heights; sin taxes, not income taxes; price controls, unions, prohibitions, not redistribution; regulations and cartels; Nazi Germany, Fascist Italy, Imperial Japan (Prussian social monarchy?)
Similarities between conservative and social-democratic socialism— both have private property and commanding heights; both infringe on private property; both have negative effects on labor, savings, investment, innovation; SDS stresses egalitarianism, CS stresses nationalism; both underperform capitalism
Socialism of social engineering— American pragmatism, technocracy; positivism and empiricism; reality must be verifiable or falsifiable by experience, “socialism might work”; however, empiricists must implicitly assume the existence of non-empirical as knowledge of reality, i.e., logic, math, geometry
Empiricism— must assume some sort of existence of cause and effect; must presume the constancy principle in order to proceed in its investigation, but the constancy principle (there are relationships to be found empirically) is not established, confirmed or falsified empirically, it is a given a priori; life proceeds on the basis of cause and effect; social engineering via empiricism is a giant contradiction
Discussion section:
Crony capitalism is the modern day equivalent of mercantilism
Old wine in new bottles, people can intellectually reject an idea like mercantilism as an historical phenomenon but if it is repackaged in a new brand they might adopt it as sensible
Are many of the distinctions of totalitarian regimes explained by the path to power? IE, Hitler came to power through the ballot box, Mao led a peasant rebellion, Lenin was elected by the army
Democracy is one of the most stable forms of the State; democracy involves participation of the population, and has a process for slowly implementing policies vs. unitary or limited participation and the ability to make drastic, sudden changes via emperor or dictatorship; democracy tends to hand out favors to large groups of people so it is hard to create an opposition coalition to overturn it
Mises’s three pre-conditions of the division of labor and economic specialization: private property in the means of production, free exchange (for price formation) and ???
Questions:
1.) There seem to be an endless variety of “socialisms” reflecting the unique cultural and historical factors of each society that has suffered them; what are some UNIVERSAL elements of socialism that must be or always are present to be declared a socialist system?
2.) Does technological innovation and economic “evolution” allow for political change or does it work in the opposite order?
Lecture 9, Property Rights and the Public Sector, David Gordon
Ethics and economists— one of Rothbard’s most original contributions is his criticism of the way mainstream economists deal with normative issues; economists want economics to be value free, economics is a science, normative judgments are mere subjective preferences; Rothbard agrees that economics is value free, but he doesn’t think that ethical judgments are mere subjective preferences; mainstream economists are caught in a dilemma, they want to make normative judgments that do more than express their preferences, how can they do so?
Concealed value judgments— some economists think that they can escape the dilemma by endorsing a value-free statement that still leads to normative recommendations; if everybody prefers something, then it should be done (strong Pareto criterion), if at least one person favors something and it makes no one worse off, it should be done (weak Pareto criterion), these principles still involve value judgments; what if everyone has wrong views about what is desirable, or the starting point involves violating someone’s rights?
Unanimity principle— Rothbard thinks that the unanimity principle has had bad results in practice; because unanimous agreement can’t in practice be reached, Buchanan and Tullock settle for less than full unanimity
Rothbard on the State— it is a fundamental mistake to view the state as a voluntary organization; it is a parasitic, predatory gang that seizes resources from the productive; Rothbard follows Oppenheimer and Nock
Public sector— if the State is predatory, then the productivity of the public sector is problematic; the State takes resources by force, thus, its activities cannot be considered productive; government expenditures should be subtracted from, not added to, production statistics; Rothbard’s definition of productivity is intertwined with an understanding of demonstrated consumer preference on the market
Statistics— Rothbard is suspicious of statistics collection; they are not value neutral but are essential to government control
Utilitarianism and property rights— many economists take some version of utilitarianism for granted; it’s argued that recognition of property rights makes nearly everybody better off; this isn’t a value-free claim, but it’s defended as non-controversial; Rothbard objects that this position doesn’t consider the justice of property rights, any stable system of property rights is accepted;
Escape from the dilemma— Rothbard believes the dilemma of the economists can be escaped by developing an objective ethics based on natural law; self-ownership, Rothbard defends the concept by rejecting alternatives, slavery and a system where everyone owns part of everyone else; if you own yourself, then by mixing your labor with unowned resources you own them as well; once you own something you can exchange it and give it to anyone you want, including the right of bequest;
Externalities—
Discussion section:
[I did not take any notes during this section.]
Questions:
1.) Can any philosophical principle be established simply by rejecting alternatives? (Last man standing philosophy?)
2.) What criteria are sufficient for “mixing labor” and taking ownership? If mixing labor with factors of production, why doesn’t this mean workers own them? What makes “mixing labor” effective in one circumstance and not effective in another?
3.) Walter Block claims that it’s okay for libertarians to take from the State, but no one else. Is there any logic to this?
4.) Maybe there is a Coaseian solution for the dismantling of the State— it doesn’t really matter HOW it is privatized, it just matters that it IS privatized?
5.) When your money is taxed, it is stolen, and your money is fungible and spent, so what legitimate claim do you have to fungible, disposed assets that can not be traced?
6.) What about when government functionaries in “marketable” positions are part of unions or agitate for State privilege?
Lecture 10, Current Debates and Critiques, Joe Salerno
[I did not take any notes during this section.]
Discussion section:
Is the term “Austrian” valuable as a marketing concept? “Capital Based Macro”, “Causal Realism”
You don’t want to be the kid at camp who picked their own nickname, names come from the outside
Is there rhetorical value in labeling opponents in sensational ways (“Friedman is a socialist”) or does that hurt your cause more than it communicates information?
Questions:
1.) What might have happened to the Austrian school’s influence if WW2 had never occurred?
2.) What critical lessons have we learned (as a “movement”) from the Salerno/Hulsmann theory of the decline and rebirth of Austrian economics?
3.) Why aren’t there more applied economic works in the Austrian tradition? What would be some priority applications?
4.) What is “Austrian economics in a nutshell” or the Austrian elevator pitch? Why Austrian?

Books – Summer Reading Hit List (#reading #education #economics #philosophy #business)

The following is a list of books I’m trying to get through from now until Fall (July-September) in order of current priority. Strike through text indicates the book has been read and likely blogged:

  1. Becoming A Manager by Linda A. Hill
  2. Human Action by Ludwig von Mises
  3. The Great Deformation by David A. Stockman
  4. The Entrepreneurial Mindset by Rita Gunter McGrath
  5. Civilization & Capitalism, 15th-18th Century, vol. 1, The Structure of Everyday Life by Fernand Braudel
  6. Baby Catcher by Peggy Vincent
  7. The Six Pillars of Self-Esteem by Nathaniel Branden
  8. The Beginnings of Western Science by David C. Lindberg
  9. The Theory of Money and Credit by Ludwig von Mises
  10. An Introduction to Logic and Scientific Method by Morris R. Cohen
  11. The Generalissimo by Jay Taylor
  12. The Mystery of Capital by Hernando de Soto
  13. Max Stirner: His Life and His Work by John Henry Mackay
  14. Asian Godfathers by Joe Studwell

Book Blog – Real Food For Mother And Baby (#fertility, #nutrition)

Book Blogs are notes about books I’m reading, as I read them. They may or may not be followed up by wholesale reviews in traditional format.

Real Food For Mother And Baby, by Nina Planck published 2009 (buy on Amazon.com)

For me, reading this book simply resulted in confirming a lot of biases I already have regarding ideal nutritional practices. Those confirmed biases could be reduced down to:
-make most of what you eat yourself
-when eating animals, use as much of the animal as you can (including bone, skin, organs, etc.)
-when eating fruits and vegetables, use what is in season when possible
-focus on organics and other traditionally raised and cultivated foods
-avoid eating things that were not regularly consumed 100 years ago
-avoid anything processed, “packaged” sweetened or artificially preserved
-eat more fat than you’re “supposed to” and don’t get your nutritional advice from headline news or the government

There’s more to it than that, but that’s a good start to revolutionizing the way most moderns/Americans eat in the West.

The book is essentially 200pgs of these broad outlines and a few more specific guidelines, along with basic scientific information on why this is the right way to eat and how various research agrees. The advice is good for women (and men) planning to conceive, women in pregnancy, nursing mothers and babies ready to eat things besides breast milk.

In other words, the “best” diet for fertility, childbirth and infancy, is also the best diet for children and adults in terms of achieving optimum health outcomes and maximizing genetic fitness and expression.

The weakest part of the book is the author’s condoning of various “cheats” and nutritional oversights based on the arbitrary logic of “a little poison now and then won’t kill you”, and it was a let down to learn that after following these nutritional practices she still ended up getting drugged out and giving birth by c-section during her own pregnancy.

Mothers to be will probably find the affirmative tone and validative diction of the book enjoyable. And for some this will be a revelation. For me, I didn’t get a lot new. It did get me to think about how hopeless health (and intelligence?) outcomes must be for generations of people in communities without the knowledge, incentives or resources to eat this way. It also got me thinking about how easy it is to overdo good nutrition, to obsess about it and give it undue consideration. It’s important, yet spending your life on feeding yourself doesn’t leave time for much else which to me is like luxurious primitivism.

This Is Personal

[Editor’s note: one more post rescued from the e-trash bin. I wrote this almost 3 years ago. How true it rings, even now. And still incomplete.]

For a blogger on the internet I suppose this is a good “problem” to have– I’ve received a lot of emails lately from people who follow my blog (strangers and acquaintances alike) asking me if I’ve given up blogging and noting that my last post was in November, about two months ago.

I was planning to write a little something along the lines of a response to “Where the hell have you been?” anyway, but there’s a bit more urgency now as more and more keep chiming in with sounds of confusion and dismay. Yes, I am a unique product in apparently high demand.

To start, I wanted to offer three general excuses for why in the recent past, or any other time in the distant past or future, my blogging output may have been/may be inconsistent to nonexistent:

  1. Lack of enthusiasm, inspiration or both
  2. Short-term priorities and time-use choices which interfere with contemporaneous blogging
  3. Long-term priorities, etc…

With regards to the first item, I’ll give a little bit of a background on myself that might serve to establish some contrast in illustrating the point. When I was a younger man, I blogged quite often on personal issues, sometimes two, three, four times a day (or night). I felt I had no end to my desire to share my thoughts, and an almost endless variety of subjects upon which I saw fit to opine.

I consider myself a thoughtful person (meaning full of thoughts, not necessarily beneficially so) and certainly I can’t deny being opinionated (in the sense of deriving great satisfaction from expressing my views, not simply in possessing them or strongly defending them). Combine this with a youthful experience with general alienation from my peers because I did not understand them and they didn’t understand me and I had no one to talk to out there but myself. I blogged a lot seeking release. I blogged a lot to practice thinking and reasoning. I blogged a lot because I found my former self — one week, one month, one year earlier — endlessly entertaining.

As I grew older, but not necessarily wiser or more mature, I came to realize I wasn’t as alone as I always thought I was. I found the virtue of patience and adherence to particular standards and eventually came to understand how to find and connect with the kind of people that got me (and vice versa) in the great sea of global society. I started seeing the impropriety of sharing my thoughts on everything that crossed my mind with anyone who crossed my path. I settled down a bit, too. I blogged less. In other words, as everyone else began entering the Facebook Era of 24/7 trivialization, I had finally found a pair of running shoes that fit and was in the process of hauling ass in the opposite direction.

But it is a process, not a destination, and sometimes I stumble. I can’t claim to be without flaws in my execution of this process, only that I am committed to always trying to improve it. So, if anything I’ve written here has come across as not quite sacrosanct in accordance with these principles, I make no apology.

And in conclusion, I try to police myself as best I can in this regard and that’s why many things I would publish to the blog in fact go still born. Oftentimes I experience a disconnect somewhere between the “I should write about this” thought and the “Publish” button which results in sufficient disillusionment with the value of the whole ordeal that I end up throwing my hands up in the air, shouting something along the lines of “Oh, who gives a shit? I know I don’t!” and then giving up.

I was born with a savior mentality but I’ve slowly purged myself of that. When it momentarily gets the better of me the result is usually an aborted blog post when I catch myself and realize I don’t want to live the life of a crusader and I’m not about to try to change the world with a blog post. Better just to record some observations as I have them, keep myself honest as best I can and shuffle along.

As far as short-term priorities go, my personal circumstances regarding family, friends and relationships over the Thanksgiving-New Year’s holidayfest period left me singularly unable to tend to any personal pleasures and upkeep, which included this blog. This excuse isn’t much more detailed or interesting than this fact. I let a lot of things go by the wayside with the limited free time I perceived myself to possess during this time and the blog got heaped in the pile.

The final excuse, regarding long-term priorities, is perhaps the bone with the most consequential meat on it and so if you’ve read this far I encourage you to nibble and see how you like it.

Right around the beginning of January, 2012, a personal friend whose company and judgment I value immensely sent me an e-mail encouraging me to visit the blog CS Investing. Were it anyone else, I probably would’ve taken a look, briefly, weeks later, if that. But because I respect this person I decided to take his recommendation seriously and I visited the site immediately.

The timing on this was nothing short of fortuitous. I happened to be taking a brief respite from anything resembling adulthood responsibility for a period of three weeks, visiting a friend on the other side of the country and prepared to spend most of my days busying myself with reading and web browsing and cooking. I was at a place in my life where I was nearly perfectly situated to let the message of this blog resonate within me in a profound way.

The message of CS Investing was, on the surface, taking a case study-based methodological approach to studying the principles of value investing. The tone of the site was collegial and ancient academy-like: the students gathered around the teacher to receive a lesson, but in the context of all discussing, debating and learning (versus the standard model today of authority-to-servant). The resources were vast and high quality.

But the thing that hit me the most was the attitude of individual self-improvement and growth, of which I had already been a fan. John Chew, the proprietor of the site, made it clear that one could have an intense education in business and investing without going to business school and that maybe even this choice was antithetical to the stated aims! A bold claim that people with and without MBAs seem to fall on either side of, but one which sparked my imagination regardless of the consensus surrounding it.

My best personal friend was himself engaged in an intensive experiment he called his “personal MBA in entrepreneurial farming” in which he had committed to learning what it took to create a small-scale organic, local farming enterprise from scratch. Using his efforts and organization as a model, and considering CSInvesting.org as my primary resource, I decided to commit myself to a year-long “personal MBA in investing and business analysis”. My plan was to follow the case study methodology as well as read and digest as many authoritative texts, articles, interviews, etc., as I could on the subject of value investing, financial analysis and business management in the space of a year.

This decision took me in a number of directions over the course of the year that I could not and did not predict before I made the commitment.

One result of my commitment was the making of a lot of social connections with other talented, intelligent value investors and business thinkers who I originally came across through their blogs. I’ve mentioned a number of them at various times on this blog but I’ll list some of my favorites just in case, though this list is by no means exhaustive or comprehensive:

These relationships have been invaluable in a number of ways. I have learned a lot from these people, many who have mentored me a bit at times which I always enjoy even if such relationships remain informal and ad hoc. They have inspired me in various ways, helping me to tease out ideas buried deep in my mind and psyche, or giving me entirely original motivations. Some have become partners in activism on various investment ideas while others have explored more formal business partnerships with me. All lent me encouragement and support through various crises of thought and existence, minor and major, along the way.

Warren Buffett Investment Process Commentary

[This post is incomplete, and was intended as a collection of Buffett investment process remarks along with my own commentary. It is instead a disjointed collection of Buffett investment process remarks and nothing more.]

Forecasts usually tell us more of the forecaster than of the future

There is nothing at all conservative, in my opinion, about speculating as to just how high a multiplier a greedy and capricious public will put on earnings.

our unwillingness to fix a price now for a pound of See’s candy or a yard of Berkshire cloth to be delivered in 2010 or 2020 makes us equally unwilling to buy bonds which set a price on money now for use in those years. Overall, we opt for Polonius (slightly restated): “Neither a short-term borrower nor a long-term lender be.”

the auction nature of security markets often allows finely-run companies the opportunity to purchase portions of their own businesses at a price under 50% of that needed to acquire the same earning power through the negotiated acquisition of another enterprise.)

we evaluate single-year corporate performance by comparing operating earnings to shareholders’ equity with securities valued at cost.

However attractive the earnings numbers, we remain leery of businesses that never seem able to convert such pretty numbers into no-strings-attached cash.

Small portions of exceptionally good businesses are usually available in the securities markets at reasonable prices. But such businesses are available for purchase in their entirety only rarely, and then almost always at high prices.

For personal as well as more objective reasons, however, we generally have been able to correct such mistakes far more quickly in the case of non-controlled businesses (marketable securities) than in the case of controlled subsidiaries. Lack of control, in effect, often has turned out to be an economic plus.

Logically, a company with historic and prospective high returns on equity should retain much or all of its earnings so that shareholders can earn premium returns on enhanced capital. Conversely, low returns on corporate equity would suggest a very high dividend payout so that owners could direct capital toward more attractive areas.

Beware of “dividends” that can be paid out only if someone promises to replace the capital distributed

we regard the most important measure of retail trends to be units sold per store rather than dollar volume

Any unleveraged business that requires some net tangible assets to operate (and almost all do) is hurt by inflation. Businesses needing little in the way of tangible assets simply are hurt the least.

Asset-heavy businesses generally earn low rates of return – rates that often barely provide enough capital to fund the inflationary needs of the existing business, with nothing left over for real growth, for distribution to owners, or for acquisition of new businesses.

In contrast, a disproportionate number of the great business fortunes built up during the inflationary years arose from ownership of operations that combined intangibles of lasting value with relatively minor requirements for tangible assets. In such cases earnings have bounded upward in nominal dollars, and these dollars have been largely available for the acquisition of additional businesses.

During inflation, Goodwill is the gift that keeps giving. But that statement applies, naturally, only to true economic Goodwill.

The buying and selling of securities is a competitive business, and even a modest amount of added competition on either side can cost us a great deal of money

we think an all-bond portfolio carries a small but unacceptable “wipe out” risk, and we require any purchase of long-term bonds to clear a special hurdle. Only when bond purchases appear decidedly superior to other business opportunities will we engage in them. Those occasions are likely to be few and far between.

In many businesses particularly those that have high asset/profit ratios – inflation causes some or all of the reported earnings to become ersatz. The ersatz portion – let’s call these earnings “restricted” – cannot, if the business is to retain its economic position, be distributed as dividends. Were these earnings to be paid out, the business would lose ground in one or more of the following areas: its ability to maintain its unit volume of sales, its long-term competitive position, its financial strength. No matter how conservative its payout ratio, a company that consistently distributes restricted earnings is destined for oblivion unless equity capital is otherwise infused.

Unrestricted earnings should be retained only when there is a reasonable prospect – backed preferably by historical evidence or, when appropriate, by a thoughtful analysis of the future – that for every dollar retained by the corporation, at least one dollar of market value will be created for owners

you should wish your earnings to be reinvested if they can be expected to earn high returns, and you should wish them paid to you if low returns are the likely outcome of reinvestment.

Since the long-term corporate outlook changes only infrequently, dividend patterns should change no more often. But over time distributable earnings that have been withheld by managers should earn their keep. If earnings have been unwisely retained, it is likely that managers, too, have been unwisely retained.

Only by committing available funds to much better businesses were we able to overcome these origins. (It’s been like overcoming a misspent youth.) Clearly, diversification has served us well.

You must first make sure that earnings were not severely depressed in the base year. If they were instead substantial in relation to capital employed, an even more important point must be examined: how much additional capital was required to produce the additional earnings?

retirement announcements regularly sing the praises of CEOs who have, say, quadrupled earnings of their widget company during their reign – with no one examining whether this gain was attributable simply to many years of retained earnings and the workings of compound interest.

Many stock options in the corporate world have worked in exactly that fashion: they have gained in value simply because management retained earnings, not because it did well with the capital in its hands.

No owner has ever escaped the burden of capital costs, whereas a holder of a fixed-price option bears no capital costs at all. An owner must weigh upside potential against downside risk; an option holder has no downside

First, stock options are inevitably tied to the overall performance of a corporation. Logically, therefore, they should be awarded only to those managers with overall responsibility

owners are not well served by the sale of part of their business at a bargain price – whether the sale is to outsiders or to insiders. The obvious conclusion: options should be priced at true business value

all Berkshire managers can use their bonus money (or other funds, including borrowed money) to buy our stock in the market. Many have done just that – and some now have large holdings. By accepting both the risks and the carrying costs that go with outright purchases, these managers truly walk in the shoes of owners

Berkshire’s strong capital position – the best in the industry – should one day allow us to claim a distinct competitive advantage in the insurance market

we prefer to finance in anticipation of need rather than in reaction to it

Tight money conditions, which translate into high costs for liabilities, will create the best opportunities for acquisitions, and cheap money will cause assets to be bid to the sky. Our conclusion: Action on the liability side should sometimes be taken independent of any action on the asset side

The primary factors bearing upon this evaluation are:

1) The certainty with which the long-term economic characteristics of the business can be evaluated;

2) The certainty with which management can be evaluated, both as to its ability to realize the full potential of the business and to wisely employ its cash flows;

3) The certainty with which management can be counted on to channel the rewards from the business to the shareholders rather than to itself;

4) The purchase price of the business;

5) The levels of taxation and inflation that will be experienced and that will determine the degree by which an investor’s purchasing-power return is reduced from his gross return.

The might of their brand names, the attributes of their products, and the strength of their distribution systems give them an enormous competitive advantage

Thirty years ago, I bought silver because I anticipated its demonetization by the U.S. Government. Ever since, I have followed the metal’s fundamentals but not owned it. In recent years, bullion inventories have fallen materially, and last summer Charlie and I concluded that a higher price would be needed to establish equilibrium between supply and demand. Inflation expectations, it should be noted, play no part in our calculation of silver’s value.

If the choice is between a questionable business at a comfortable price or a comfortable business at a questionable price, we much prefer the latter.

Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag.

Truly great businesses, earning huge returns on tangible assets, can’t for any extended period reinvest a large portion of their earnings internally at high rates of return.

It’s far better to have an ever-increasing stream of earnings with virtually no major capital requirements

The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money.