Thursday, October 6, 2011

Tribute to Steve Jobs

Why in a sense what Keynes mischaracterized Say as saying is right and Keynes is wrong:

A lot of times, people don't know what they want until you show it to them.

-- Steve Jobs, 1998

This is as true of the arts as of technology. In fact, so is the following:

Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn't really do it, they just saw something. It seemed obvious to them after a while.

The success of the artist of genius, the success of the person with the new idea -- how different are they?

Because the people who are crazy enough to think they can change the world are the ones who do.

R.I.P., Steve Jobs. You are the best example of the best free markets can offer. What you did is what spontaneous orders of all sorts are all about. The artist, the critic, the inventor, the entrepreneur can all learn much from you. Thank you for making our lives better, for making the world a better place.


  1. OK... at the risk of a tongue lashing...

    What does this have to do with Keynes?????

  2. OK... at the risk of a tongue lashing...

    What does this have to do with Keynes?????

  3. You are aware that Keynes argued that his economics was the opposite of Say's, since Say argued that making new things is what drove the economy while Keynes argued it was demand which drove it. Keynes was apparently unaware that there cannot be demand without supply, and that demanding the same stuff could never, ever result in economic growth.

  4. What are you talking about Troy? When did he say that supply didn't drive growth? Got evidence?

    What he disputed in Say was the idea that income was always spent - that production was always consumed. Brad DeLong and others have argued that Say was actually closer to Keynes than Keynes gave him credit for, but that was the argument.

    Keynes never said supply didn't drive growth. Indeed he POINTED to supply factors like innovation and technological development as drivers of growth.

    I get your argument a little better after reading your comment on Coordination Problem, but as Steve pointed out to you there - you are misapplying Say to entrepreneurial discovery. And you are certainly not accurately presenting Keynes's disagreement with Say.

    But at least I understand the claim now.

  5. To be clear, I should have said that Keynes’ mischaracterization of Say’s Law was more accurate to reality than Keynes’ “refutation” of it. This is what Keynes says is Say's Law in Chapter Two of his General Theory: "The classical economists have taught that supply creates it own demand, meaning by this in some significant, but not clearly defined, sense that the whole of the costs of production must necessarily be spent in the aggregate, directly or indirectly, on purchasing the product." Keynes summarized Say's law as “supply creates its own demand.” We can see in what Ludwig von Mises had to say about Keynes and Say, Lord Keynes and Say’s Law, that what Keynes said Say said is a bit of a mischaracterization. Nevertheless, as I said above, this mischaracterization is still more accurate to reality than Keynes’ argument that the problem lies with demand. Cash for Clunkers, deficit spending, and bailouts is Keynesianism in action; Apple is Say’s Law in action. Keynesian policies have resulted in an economy stagnant at 9-10% unemployment; Say's Law at work is demonstrated in the fact of that rapidly growing company during that same recession.

  6. re: "Nevertheless, as I said above, this mischaracterization is still more accurate to reality than Keynes’ argument that the problem lies with demand."

    This is where you are regularly wrong, Troy. One problem that he discussed at length had to do with demand. Keynes never said that demand was what drove the economy. In fact in many places he talked about supply driving the economy for the same obvious reasons that every single economist that I'm aware of thinks supply side factors grow the economy.

    You can't just make up things that people say Troy.

    re: "Apple is Say’s Law in action."

    No. Take Steve Horwitz's word for it if you don't trust me. It's not. Say's Law deals with the reliability with which production meets expenditures. Say's law in almost every definition of it that's been put forward is wrong... certain simplistic interpretations of course being more wrong than more nuanced interpretations. But it has nothing to do with Apple.

    You really don't understand what you are talking about. I think you'd be better served sticking with literature than making things up about economics. I know I would just be making things up about literature, so unless I'm expressing a subjective opinion I pretty much stay quiet about it.

  7. So the quote by Keynes means nothing, and neither does Mises' analysis. Got it.

  8. Say argues that one cannot understand a recession having come about by overproduction, since ovrproduction makes no sense. Keynes argued that Say's Law could be summed up as "Supply creates its own Demand," which is clearly a mischaracterization if not a misunderstanding of what Say actually said. I did, in my above comments, admit that I was using Keynes' mischaracterization rather than what Say said. But even that mischaracterization is truer than Keynes' reversal of it, as Jobs indicated in his observation that people don't know what they demand until and unless you supply it. Supply of new things drives demand and, thus, the economy. Demand is only demand of what currently exists. It can maintain a certain kind of equilibrium, but it cannot create economic growth. That's why Keynesian policies will always fail miserably, and always have.

    The General Theory is so full of utter nonsense, that I can't imagine anyone ever took it seriously. One can start with the utter nonsense of the aggregates, but why not get more specific, which I also do here?

  9. Finally, I may not have the detailed knowledge of an economists -- such that I can properly state what Say's Law is, for example -- about which I am still learning, but the real skill needed to understand economics, economic reasoning, I would be willing to put up against anyone. I know economic nonsense when I read or hear it, and I know sensible economic reasoning when I read or hear it. I can state why bailouts will necessarily fail to get the economy on track, or why government spending will also fail in this realm. I know that the Broken Windows Fallacy is precisely that, and why. And I can read any work of economics and understand what is going on in it (notwithstanding the fact that I could stand to improve in the math area, I also consider reliance on math a signal you really don't understand how a real economy works anyway).

  10. re: "So the quote by Keynes means nothing"

    The quote from Keynes is not saying what you're saying it is - and we've been over this particular passage NUMEROUS times Troy.

    re: "But even that mischaracterization is truer than Keynes' reversal of it, as Jobs indicated in his observation that people don't know what they demand until and unless you supply it."

    Jobs is refering to demand for products in a single or a few markets. You need to understand the difference between relative demand and aggregate demand. I'm no marketing guy. I have to take Jobs's success at face value (although I'm sure there are many successful strategies - it's not like there's one way to sell an innovative product). But what I'm trying to tell you is that that really has nothing to do with macroeconomics - with the aggregate level of expenditures.

    re: "Demand is only demand of what currently exists."

    Well that's patently untrue. I demand lots of things that don't currently exist.

    re: "That's why Keynesian policies will always fail miserably, and always have."

    You need to explain this claim. What in that paragraph explained "why" this is, Troy?

  11. Now, as I understand it, Say’s Law essentially states that general gluts – supply of large quantities of goods increasing for no reason whatsoever – do not occur. Now, unless we deny the law of causality, and unless we accept that producers manufacture things based on no information from the market whatsoever regarding how much to produce, and that they will all overproduce in a collective fashion, there is little question that Say is right that a general glut is impossible. And Keynes is wrong.

    Even ABCT argues that easy money results in sector-specific gluts, based on where that extra money is going. And, thus, Keynes is wrong.

    Aggregate supply is utter nonsense. It tells you nothing about supply. It tells you nothing about the economy. To the extent that macroeconomics is dependent on aggregates, macroeconomics is utter nonsense. And Keynes is wrong.

    Further, Keynes mischaracterizes Say. Keynes says it is wrong that “Supply creates demand.” Of course, as anyone who has taken Econ. 100 knows, if you create more supply than there is demand at that price, the price will decrease, and thus demand will increase. In this sense, supply does create demand. And Keynes is wrong.

    Of course, Keynes is using “aggregate supply,” but aggregate supply is utter nonsense. The other sense in which the statement “supply creates demand” is correct is in the specific case of a new product being created, whose supply necessarily creates demand for it. Unless you have your head in the aggregate swamp, this is how any sensible person would understand “supply creates demand,” other than in the Econ. 100 sense. Thus, Jobs is right and Keynes, as usual, is wrong.

    Now, since Keynes says that the entire basis of his General Theory is on this mischaracterization of Say and its reversal, and since we have seen that both what Say actually said is right, and even Keynes’ mischaracterization of Say is right, precisely because aggregates is completely and utterly wrong – is in fact worse than useless, considering the damage it has done and continues to do – then The General Theory itself is wrong, as one cannot come to true conclusions based on false premises. And The General Theory is thus proven to be based on false premises.

    As for "Demand is only demand of what currently exists," let me me rephrase that to make it a true statement (as I see why it is clearly wrong): "Demand is only demand of what is perceived to actually be able to exist." In 1990, an iPod was not perceived -- or even conceived -- as possible to exist. Thus, no demand for it.