Tag: hans hoppe

An Introduction to Time Preference

Jack Parkos | United States

Suppose someone offers to pay you 20 dollars. You have the choice to receive the money today or tomorrow. In choosing the former, you are like everyone else. You would prefer wealth sooner rather than later. This economic concept is Time Preference. Time Preference affirms that current satisfaction is preferred over future satisfaction. People would prefer not to wait for wealth when it is easily achievable now. Wealth could be monetary, assets, experience, etc.

“Satisfaction of a want in the nearer future is, other things being equal, preferred to that in the farther distant future. Present goods are more valuable than future goods” – Ludwig Von Mises

However, the choice is not always equal and simple. Suppose someone offers you 20 dollars today, or 30 dollars tomorrow. The choice becomes a bit more complicated. We see a divide in people with high time preference and those with low time preference. Someone with high time preference puts their focus on their present well being. They would take the 20 dollars today. On the other hand, A person with low time preference puts emphasis on future satisfaction. This person would take 30 dollars tomorrow. A good example would be comparing savers and spenders. Those with low time preference tend to save their money and make wiser investments. Those with high time preference are more likely to blow through cash.

Real World Examples

Criminals tend to have extremely high time preferences. They are not willing to work to obtain wealth as that involves waiting for future wealth (paychecks). They would rather steal to achieve wealth in the present.

Another example of high vs. low time preference is in the context of college students. One who chooses to stay in and study over going out and partying has a lower time preference. The reasoning being, there will be a future benefit; a better chance at a higher grade, meaning better opportunities down the road. On the other hand, one who chooses to go out has a higher time preference; they prefer the instant short term gratification of partying.

Furthermore, different goods could be preferable in the future than in the present. During winter, ice has a low demand and is preferable in future (summer). However, it still is a general rule people value current wealth to future wealth.

Different groups of people tend to have different levels on time preference. Age is one of the biggest factors in determining one’s time preference. Young children tend to have high time preferences as they are not concerned with the future. A child would likely spend all of his money on ice cream. Adults tend to have lower time preference as they need to save for the future. However, The elderly tend to have higher time preference as they have less time for future consumption. Moreover, someone who has (or is planning to have) kids tends to have lower time preference as they need to save for the future.

Relation to Interest

In “Man, Economy, and State”, Murray Rothbard writes

“The time-market schedules of all individuals are aggregated on the market to form market-supply and market-demand schedules for present goods in terms of future goods. The supply schedule will increase with an increase in the rate of interest, and the demand schedule will fall with the higher rates of interest. A typical aggregate market diagram may be seen in Figure 44. Aggregating the supply and demand schedules on the time market for all individuals in the market, we obtain curves such as SS and DD. DD is the demand curve for present goods in terms of the supply of future goods; it slopes rightward as the rate of interest falls. SS is the supply curve of present goods in terms of the demand for future goods; it slopes rightward as the rate of interest increases. The intersection of the two curves determines the equilibrium rate of interest—the rate of interest as it would tend to be in the evenly rotating economy. This pure rate of interest, then, is determined solely by the time preferences of the individuals in the society, and by no other factor”.

The Time Preference Theory of Intrest explains how rates relate to one’s time preference. Demand for capital is driven by investment and the supply of capital is driven by savings. Interest rates fluctuate, eventually reaching a level at which the supply of capital meets the demand for capital.

Relationship to Civilization

In “Democracy the God That Failed”, Hans Hermann Hoppe notions that concern for future wealth is a key to the prosperity of civilization. If the majority holds a low enough time preference for the process of production, civilization would then be able to thrive. When one allows someone to use capital and resources, an economy forms with Division of Labor and private property. As previously mentioned, criminals have high time preference and will steal resources, slowing down production.

Hoppe describes that the state also has a high time preference. The state violates property rights and steals resources to give to others. The recipients in turn usually also have a high time preference. Hoppe describes this as “decivilizing”.

Time preference is arguably one of the most important parts of economic thought. It is the foundation of saving and interest. Furthermore, it distinguishes spending and saving.

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If Everyone is a “Libertarian”, What’s the Point of Being One?

By Mason Mohon | @mohonofficial

In a recent email, Craig Bowden revealed that members of the Libertarian Party are actively trying to recruit Mitt Romney to the Libertarian Party.

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How the State Stole the Minds of the Children

By Mason Mohon | @mohonofficial

Everyone knows the old saying ‘the children are the future.’ The statement has made appearances in books, movies, political messages, and online articles. It is so widespread because it is so obviously true. The children are young right now, and when the rest of us have died off they will remain. Every generation will have its time of influence. This means that if you want to control the future, you are going to want to have control over the children.

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Libertarianism is not Self-Destructive or Unsustainable

By Mason Mohon | @mohonofficial

A recent article by an unknown guest contributor on the Bilan Report suggested that a libertarian society is unsustainable for various reasons. Among these are the ideas that all personal freedom leads to libertinism, individualism is incompatible with the NAP (non-aggression principle), and the supposed libertarian assumption that all governance is bad. The author makes many misconceptions about libertarianism in their article. In response, this piece attempts to set the record straight on libertarian philosophy.

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Is Patriotism a Gateway Drug to Slavery? – Jonny Watt

By Jonny Watt | UNITED STATES

Is patriotism the mere act of loving one’s country, or is this movement detrimental to the wellbeing of society?

This blindly followed movement is extremely contradictory with liberty and self-ownership, and on a praxeological basis, we can deduce that this ideology should have no support amongst freedom-lovers.

That said, patriots will argue that, while it has its faults, America is the greatest country to exist, and without the state, this wouldn’t be possible. While I tend to agree that America is better than most, I see a direct flaw in saying that the state is responsible for this. Rather than America being great because of the intervention of the state, America is great despite it. In fact, just about all of America’s flaws exist due to the government, and saying that it could be much worse, and thus continuing to praise America and the state is both illogical and hurtful for society.

The more leeway we, as citizens, give to our government, the more in control they are, and the more likely a shift to a more coercive and tyrannical government will occur. In fact, this is one area in which a private run (monarchical) government is superior to that of the public run (democratic) government. The very visible and extreme dichotomy between the general populace and ruling class nobles, as seen in democracy, left the former with more discontent and distrust for their government, as they felt completely separated from said government.

Due to this, monarchs had to be mindful of everything they did, as any decision deemed too coercive by the general public could be followed by either a revolution or perhaps simply a less productive society, which would hurt the king and his fellow nobles. While citizens of a democratic government tend to be more trusting of their government, as they feel a sense of involvement, American Patriots take it to the extreme and continue to let the government commit terrible, coercive, right-infringing acts.

With Patriots continuing to stay quiet, how long could it be before an age of total enslavement by the state is upon us?

Conscription, taxes, and jury duty indicate that we’re already in a state of partial enslavement. While patriots tend to be opposed to taxes, they, generally speaking, see no problem in supporting the government when it comes to conscription and jury duty, both of which border onto involuntary servitude.

If the definition of traditional slavery is the state of being the legal property of another, and thus being forced to obey them, then how can anyone justify conscription or jury duty, the legal act of the state forcing you to give them your labor? A patriot would respond that, as we are under state law, and given what the state does for us, we should be willing to give up some of our labor and fruits of our labor in order to “pay back the state.”

The problem with this argument is it completely misses the point, as this exact same argument could be applied to any other instance of slavery (including traditional slavery in America prior to 1865.) Of course, some patriotic Americans will argue that the state is what grants us our rights, and as such, we should thank them for this. While the government cannot give us rights, in rare cases, the state does protect certain God-given, inalienable rights, however, we should not thank an institution prone to infringing on our rights, just because it hasn’t yet infringed on them all.

Living with and preaching this mindset would only lead to further infringement and an overall reduction in wellbeing and freedom.  

The only solution, then, is to be as critical and judgmental of the state as possible, rather than being patriotic and supporting our country at every turn. America was founded by straying away from an overreaching and overly coercive government, and thus, to support the states attempted enslavement of its populace by following the blind path of patriotism is about as un-American as it gets.