Building Arguments

The Austrian school of economics is unique in the field largely due to its reliance on deductive reasoning over empiricism. This doesn’t mean that empirical evidence has no value, only that it is used to confirm rather than develop hypotheses. The use of deductive reasoning led the early leaders of the Austrian school to develop theories in marginal utility, time preference, and the business cycle.

The advantage to such an approach is consistent, logic based argumentation; it is difficult to counter a contention when it is built on soundly applied logic. With sound reasoning, policy decisions can be prescribed with confidence not in their predictive nature but in the certainty that they are pointed in the correct direction.

Since Ludwig von Mises, Austrian economic theory has been grounded in what he termed “praxeology,” the science of human action. With the individual as the starting point, the tendencies of individual action lead the Austrian economist to develop broader economic theory. The fact that an item possessed today is of greater value than the same item possessed tomorrow, for example, enabled Austrian economists to develop theories of interest as it relates to time. These theories could then further be extrapolated, logically, to show how interference with interest rates creates false signals regarding individual time preferences and ultimately leads to mistakes in investment. These mistakes cause the business cycle. The most complex theories put forth by economists of the Austrian school can all be traced back, logically, to the actions of individuals.

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Discovering Laws

While perhaps understandable, there is a common misconception regarding the origin of laws. In general, people believe that laws are man made. There is no question that the common application of the term refers to legislation enacted to restrict human activities. However, this does not encompass the full spectrum of laws.

There are physical laws discovered through scientific research and observation. Newton’s laws are an example of this. We refer to them as Newton’s laws because he wrote them based on his observation, but they describe physical characteristics following a predictable pattern independent of his discovery. No one was required to write them down or even verbally describe them to make them laws.

Economics similarly has laws that exist independent of discovery. The Law of Supply and Demand or, more accurately, the Law of Demand, is empirically demonstrable: the higher the cost for an item, the lower the demand. This is universally true and discoverable. For example, the difficulty (i.e. cost) of climbing Everest dramatically impacts the demand for such an excursion; if climbing the highest peak were easy (i.e. cost less), more people would demand an opportunity. Similarly, when the price of a commodity like petroleum increases, the demand for that commodity falls; people drive less, take vacations closer to home, and seek alternatives to petroleum use. We also see the law working in reverse: the demand for water remains relatively consistent across all individuals but the cost of securing and maintaining a water supply increases in climates where replenishment is limited.

The Absence of Logic

There are many reasons to dislike the public school system. When the state is involved, the quality of any product or service generally decreases while cost invariably increases. Couple this with agenda driven curricula and the result is people educated poorly in the propaganda which serves state goals. A shining example of this is the near lack of logic being taught in public schools.

As both knowledge and technology increase at accelerated rates, it is not surprising that schools are forced to replace less useful subjects with newer, more relevant studies. However, does logic qualify as less useful? Doesn’t logic form the basis for all computation? Doesn’t it represent a means for individuals to discern fact from fiction? Wouldn’t the application be ever useful for the survival of mankind?

Some argue that logic is excluded to serve the best interests of the state. People better versed in analyzing, questioning, and refuting the flimsy arguments supporting state control represent an obstacle to power. While this implies a coordination and foresight seldom exhibited by state actors, it does seem like sound reasoning. Slave holders in the antebellum U.S., for example, were known to discourage allowing slaves to learn things like reading and math because ignorance improved compliance. The Prussian school model, a precursor for U.S. schools, was known to focus on obedience and state loyalty. Propaganda is a recognized method of enhancing and controlling the masses. Logic provides tools to those in the path of propaganda and indoctrination, enabling them to question the validity of the arguments presented and reject them when they appear unsound.