Isn't Ian Harper the Howard acolyte who had no moral issue with keeping wages down to inflate dropped profits?

No doubt for the greater good of the 'trickle down' effect on 'the poor folk'.

A generous soul.

Wasn't he appointed to the job primarily for being a Xtian? And for supporting that great Howard moralism, 'fambly values'?

And who has ever heard of economics being an ethical area?

Oh yes, the great Adam Smith who gets quoted all the time by moralising economists.

Ian Harper supports capitalism, as do most of his ilk, and that needs booms and busts, low wages, high profits, wars, and 'the poor folk' to make it all work.

Remember that poor old duffer, Santamaria, who, just before he died, finally realised he'd been wasting his life fighting the Commo scourge as 'globalisation' unfolded in front of him and he suddenly realised that he had been promoting 'the enemy within' for all those years?

Capitalism, he decided, was a bigger scourge than any bunch of Commo's ever were.

And there is a comment somewhere here from someone about our environment... capitalism has done this, state or otherwise, the search for constant growth of the form we have will undo us all.

And let's not pretend that the Rudd crocodile tears will turn up any changes. He STILL wants a return to massive growth of the order we had prior to the GFC. As do all world leaders.

If Ian Harper were the least bit serious, he'd denounce the current form of capitalism outright, and admonish all industry leaders and al politicians who call for 'more of the same'.

He won't, of course, and will continue to present the fibs of religion as being the way out of the folly of the system.

An empty article from a flawed starting point

I hesitate to venture here, but who can resist such parabolic prose; not just the article, but the respondents as well! Considering the moral bankruptcy of capitalism, the passions are certainly inflamed. I do (did?) hope medical practitioners are not so objective as economists!
This is a very “economical” view of human morality you take btw, Ian Harper (and a hyperbolic view of human credulity!), whose predicate is that “the life-blood of the financial system is trust”—I never worshipped at the ANZ, CBA or Westpac in my life! Nor anywhere else come to think of it. Sorry, but lenders were never my priests—not since Shylock, whose usury is instructive of both morality and economics!
However, we do have common ground; I agree that the problem lies in the human breast (Smith was an enlightenment optimist to have ever put such faith in it—the human breast).
Ultimately, I think redemption is a personal thing, worthless in a cultural context. What I mean is that capitalism exacerbates innate human propensity; conversely, a more ethical system might awaken the human capacity for love, compassion etc., that the likes of Smith, Hume and Hutcheson naively assumed to be dominant. But let’s not conflate the Enlightenment with Christianity; they were at odds then and its anachronistic to try to meld them now.
The point is that if morality can be so easily fashioned, en masse, what’s the use of it? Who takes the credit/blame for a following? History’s hero’s were all individuals. Integrity is compromised in a crowd.

Pericles, “But exactly how do we move away from a system that has for centuries been built upon borrowing, to a system where capital is only available from existing stock?”
By keeping the money in circulation; piling it up ‘incurs’ interest.

No-one is saying that people should not be able to lend or borrow money, nor that we should live off our savings. The Austrian argument is merely that the ordinary law against fraud should apply to money and banking.

“If there are to be no borrowings other than from existing available physical stock, how does it get there in the first place”

It gets there the same way all physical capital gets there: people produce more than they consume. The savings goes into capital equipment, which, if employed at a profit and not a loss, increases output per unit of input ie productivity.

(Note that inflation doesn’t change this: it doesn’t really create physical capital out of thin air.)

“… how do we move away from a system that has for centuries been built upon borrowing, to a system where capital is only available from existing stock?”

Lending and borrowing still go on. It’s just that you can’t take money on terms to give it back on demand, and then lend it out to someone else at interest.

So a depositor has two basic options. He can choose to deposit money redeemable on demand. This has the advantage of security. It has the disadvantage that, as it must be repaid on demand, it is not available for lending out at the same time, and therefore pays no return.

Or he can choose to lend money to the bank for interest. The bank lends it out on terms that it be repaid at such and such a rate. When and *if* the borrower repays it, the lender gets his interest payment. Higher risk, higher return, and all that.

That’s it.

Rights and responsibilities are aligned with each other. The moral solution is also the economic solution.

What would it look like? Instead of wild upswings and depressing downswings, there would be an ongoing and compounding increase in wealth. The buying power of money would go steadily up, not down. Wages would go steadily up, just as they did in the west compared to the socialist countries.

Government would have to pay for all its expenditures either by tax, or by borrowing. No more inflating to pay for bombing the moon and bombing the Afghans. Investment would go into things that people actually want and need instead of war and privileges for politicians’ pets and animal farms. Failed businesses would go broke. Their capital would go to businesses that serve the consumer better.

All the utilitarian arguments for the “benefits” of inflation disregard the fact that they are advocating fraud. And they still turn on the fallacy that we can create real net wealth, like roads and hospitals, by stamping pieces of paper.

We can’t. What causes the general rise in wealth and wages, is the general increase in output per unit of input, which is caused by capital accumulation.

This wealth is what the redistributionists are trying to get their hands on. Yet inflation and booms retard capital accumulation. Redistributionists think that the way to a general rise in the level of wealth for the poor and the workers, is by a process that destroys capital, and robs the poor to give to the rich. The *means* they are using are not expedient to the *ends* they are trying to achieve. But they don’t understand so, because they don’t understand the economics.

All Quickresponse’s suggestion would do is enlarge the fraud to include the whole world.

No-one ever refutes the argument. They just dream of a society in which productivity is improved by legalised stealing, and everyone can get paid what they think they deserve, while no-one has to produce anything that the consumers are actually willing to pay for.

It is not a coincidence that the arguments of socialists like mikk, bluecross and squeers, consist of passionate invective and bitter sneering. That is all they have.

In 1924 Mises definitively exploded Marx’s jumble of fallacies in “Socialism” http://mises.org/books/socialism/contents.aspx .

mikk, bluecross and squeers, after you have refuted Mises, and not before, you will be in position to re-run the arguments from socialism. Go ahead: try. As it is, you are only displaying your sniveling ignorance.

Peter Hume (Mises' obstreperous representative on Earth?),
perhaps you should wipe the slobber from your gob and read my post again. I threw in a few axioms I suspect Mises would have applauded. With only one hand, perhaps; nevertheless my comments would sound like heresy in the ears of a socialist!
Just because your own thinking (or Mises') rests on unwavering conviction, it doesn't follow that the rest of us are similarly constituted. My attitude to the article was equivocal; some of Harper's points are worth pondering, just as some of yours (Mises') no doubt are. But to paraphrase Emerson, consistency (for you {and Mises}, read 'dogmatism') is the hobgoblin of small minds.
You begin and end with a prejudice that creates its own ferocious content---hence it's being devoid of method, as well as parabolical, as I allude above---and you set-off like a rabid dog at anyone who doesn't hold the same convictions.
You and Harper stick to your respective Bibles and I'll continue on without one.

Aye, there's the rub, Peter Hume.

>>It [surplus capital] gets there the same way all physical capital gets there: people produce more than they consume. The savings goes into capital equipment, which, if employed at a profit and not a loss, increases output per unit of input ie productivity.<<

But how was the original capital created, from which the profits are made? If you track back along the line of "only existing capital may be used", the only place you can wind up is back in the feudal system, where landowners exploited the labour of the masses to generate their own personal surpluses.

Which was, of course, why I mentioned Marx.

The vast majority of twentyfirst century businesses have their foundations in borrowed money. The system may not be perfect, and it does indeed suffer from the various diseases that Mises and others attribute to it, but it has been going on for a very long time now.

This doesn't make it any more "right", just infinitely more difficult to wean onto another system.

Your proposed "solution" demonstrates this beautifully.

>>a depositor has two basic options. He can choose to deposit money redeemable on demand... as it must be repaid on demand, it is not available for lending out at the same time, and therefore pays no return. Or he can choose to lend money to the bank for interest. The bank lends it out on terms<<

The first - using the Bank as a form of mattress under which to store money - is both impractical and pointless. The cost of servicing your virtual mattress would slowly but surely drain your account dry.

Think about it.

The second has the basic flaw that it can only operate in theory, not in practice.

For example, how do you kick-start such a process, given the significant amount of debt presently sloshing around the system? And how can you tell whether the money lent to the Bank has not itself been borrowed?

Apart from that, reducing the money flow in such a manner would kill 95% of Australian businesses within a year.