Sunday, February 8, 2015

NHS Advert Based on Fallacious Reasoning

Someone please let me know if I am making an error here, because it seems to me that the NHS is peddling some pretty weak science.

A public service advertisement put out by the NHS, which is being shown throughout January, graphically shows a tumour growing out of a lit cigarette and states that every 15 cigarettes smoked will cause a genetic mutation that may lead to cancer (view on youtube). This is based on a study which shows no such thing, the science is bad and the advertisement is making a false claim that could badly frighten many people, increasing their stress level and actually harming their health.

The error in statistics made in the underlying study should be obvious to any 1st year statistics student, and could be used as a homework assignment for such a course. It makes the NHS look terrible. (It also makes every newspaper repeating the false claims look bad too).

The claim made in the advertisement is based on a study carried out in 2009 at the Wellcome Trust Sanger Institute in Cambridge in which researchers sequenced the DNA of tumour samples taken from lung cancer patients to determine the number of mutations present. So, they were counting mutations in patients who had cancer, they were not counting mutations found in all smokers.

These sequences were compared to those in normal tissue samples from these patients. More than 23,000 mutations were found in the cancer genome – approximately “one for every 15 cigarettes smoked” they say. What they should have said is that patients who already have lung cancer have mutations for every x cigarettes smoked, assuming that they smoked this much, but it certainly does not show that individuals who do not have cancer have this many mutations, or indeed any mutations.

One could as easily assume that the mutations found in the cancer patient were due to use of hairspray and calculate how many mutations they have for each can of hairspray they used, and then assert that every can of hairspray causes x mutations. If there is a link between the mutations and smoking they have not shown it - it is merely an assumption they brought in and the study did nothing to prove it since they only looked at those who had cancer not at smokers who did not.

The £2.7 million advertising campaign is part of a nationwide crackdown on smoking, which costs the NHS an estimated £2.7 billion every year. This is a waste of taxpayer money and should be removed – and a retraction and apology offered.


Thursday, January 29, 2015

The Third Party Possibility

In the US, as elsewhere, the system is known as a two-party system so nobody wants to "throw away" their vote on some third party candidate who could never win... but is it finally time for this to change, given the internet, social media, and online petitions?

It should be. All that is needed is a decent third party candidate.

The reason that people do not vote for third party candidates is: they have no faith that others, though they may also prefer this candidate, will vote for them because each other person also lacks this faith.

This is why electoral reform is always said to be so important - the only way to break the two-party system. People should be able to vote for first and second choices...and wihout this ability, people say, there is no way out of the two-party prison, and gridlock.

There could be a significant plurality or even majority who would prefer a third party candidate and yet that candidate will win almost no votes because nobody believes anyone else will vote for them; everyone (who bothers to vote) has some preference between the two parties, so they vote for the one they prefer between those two, beliving that if they don't then they might as well vote for the party they despise.

Yet, the internet makes possible the obvious solution: get the proof that the third party candidate could in fact win. Simply start an online pledge - much like the online petitions that so often receive hundreds of thousands of votes within days - and everyone who would like to vote for that third party candidate (but would normally give in to a two-party choice) signs and takes the pledge to vote for that third party candidate if enough others take the pledge. During election season the pledge can spread across the country like a meme, picking up signatories, until many millions have signed. If a third party candidate is truly preferred then this will be clear before voting day and the people can safely vote for him/her, knowing that their vote is not being thrown away or going to their least preferred major party. No need for an alternative voting system.

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Monday, December 15, 2014

Drugs, Racism, and Low Wages

An article I came across recently How Selling Crack is Like Working at Walmart, stresses the low wages which low-level drug dealers actually receive in America and that low-level Walmart workers receive, and the powerless position and extreme divide and inequality between the bottom level and the top, with bosses in both cases raking in millions.

I've read this before about American low-level drug dealers, minimum wage level incomes for many, but I wonder how this compares internationally -- I have a feeling if we had the statistics we'd find a lot of variation, and it would be interesting to know all the factors involved.

Although likely it would be a lot to do with pricing based on importation and the countries' "war on drugs" policies, there also may be a strong component of racism and other cultural factors, including how the people think of drug users and drug suppliers.

It is strange - and sad, a comment on hypermoral-religiosity - that in a country that prides itself on the value it places on right of free voluntary exchange, suppliers of currently-illegal drugs are thought of so poorly.

Of course these various factors all feed into each other, with the war on drugs, prison, income earned in the drugs black market, violence occurring in and culture around - and acceptance or not of drugs suppliers as a group - all interconnect and affect each other.

Anyway, according to what's out there at a glance, it appears that at least in the UK you can do a lot better that $10 / hour ($20k / yr), which is as good as the bottom rung jobs at Walmart are likely to get you. It seems student dealers are earning £500 to £1,000 a week (up to £50k /yr, or easily $75k), top dealers of course making millions, some middle class dealers in-between, and lowest-level street dealers making £19,000 / year ($30k).

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Monday, December 8, 2014

Police Should be Subject to the Rule of Law

A former police officer makes the case that cops need to be punished if we want to prevent the violent police brutality we have seen so much of recently. I agree wholeheartedly.

Indeed, I find it very disturbing that cops are never held to account, and that's not just in the US, it is true in the UK as well, and probably most other countries.

There is always a justification, which the courts - when it even gets that far - always accepts. As the former officer tells us: "Even when officers get caught, they know they’ll be investigated by their friends, and put on paid leave. My colleagues would laughingly refer to this as a free vacation. It isn’t a punishment."

Because of this, cops feel free to do whatever they want. Because they feel free, the culture and the weapons and the other factors send them out of control.  The actual police brutality situation is better in the UK because of the less-militarized police, less racist culture, etc. They are still not held to account, which shows that there are in fact other at least partial fixes, along with other ways to help hold the police accountable, but I agree that punishing police when they break the law is central.

We must punish cops when they break the law. The foundation of rule of law is that we are all subject to the same laws. If the police are above the law, just as if the rich or the government are above the law, we lose the foundation of civil society and, in this case, become a police state - just as if government is above the law we would become a dictatorship.

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Second Largest Welfare System? - A Few Thoughts on the Register Article

There is an article in The Register, which argues that the US "has 2nd largest social welfare system in the world," and makes several points about the measurement of poverty, and social welfare.

Much of it is old news to me -- I wrote an LIS Working Paper Series paper on it in 2005 -- but it's not well known. Also, there are a couple things to keep in mind.

One, the graph on the last page with the "communal" not just governmental social welfare spending includes private health insurance, which is only communal in the loosest sense since in US that means some people have all the frills insurance, allowing them best of the best care and coverage, while others might have the slimmest barest coverage. So take that last graph with a large sprinkle of salt.

Second, although I agree that the US has progressive taxes and that sin and consumption taxes are regressive, there is one thing about the "clawing back" that was not mentioned. As economists and especially free market economists and libertarians should be well aware, if the people are first given transfers and then they will have some control over use of the money, some choice, and can for example try to e.g., smoke less - or choose cheaper or black market tobacco to avoid those claw-back taxes when it is most necessary, or purchase fewer things that have VAT, buy second-hand, etc.

Finally, the sources for the first graph are OECD and the Economist, I'd have to look up where the economist got their numbers and the specifics of the OECD number, but if after-transfer income comes from the LIS or a similar set, it may not include all in-kind transfers (or may have to estimate them quite roughly) such as national health care, and may underestimate the benefit of those transfers, making the US poor look relatively better off comparatively.

Still, there are many good points in the article - many of which I have made often - including the absurd comparison between US poverty levels and European ones, when they are measured in completely different ways.


Sunday, November 23, 2014

The Sound of Silencing

A few weeks ago I read an article that struck a very disturbing chord with me, because it rang true and is so horrific, really. It's about the silencing of women over all time (and most places) from ancient times til now. Worse, the case made in the article has been reinforced recently, again and again, with present-day examples. But, first, let me share examples from the article.

The article tells of this silencing in ancient Rome:

One earnest Roman anthologist of the first century AD was able to rake up just three examples of ‘women whose natural condition did not manage to keep them silent in the forum’. His descriptions are revealing. The first, a woman called Maesia, successfully defended herself in the courts and ‘because she really had a man’s nature behind the appearance of a woman was called the “androgyne”’. The second, Afrania, used to initiate legal cases herself and was ‘impudent’ enough to plead in person, so that everyone became tired out with her ‘barking’ or ‘yapping’ (she still isn’t allowed human ‘speech’). We are told that she died in 48 BC, because ‘with unnatural freaks like this it’s more important to record when they died than when they were born.’

 Nothing is said about the third - history has (for us) silenced her completely. It goes on:
There are only two main exceptions in the classical world to this abomination of women’s public speaking. First, women are allowed to speak out as victims and as martyrs – usually to preface their own death. ...
The second exception is more familiar. Occasionally women could legitimately rise up to speak – to defend their homes, their children, their husbands or the interests of other women. ...Women, in other words, may in extreme circumstances publicly defend their own sectional interests, but not speak for men or the community as a whole. In general, as one second-century AD guru put it, ‘a woman should as modestly guard against exposing her voice to outsiders as she would guard against stripping off her clothes.’
Modern Western societies have made progress on race but sometimes seem to have gone backwards, or at least gone nowhere, on the sexes. In Britain, there is still Woman's Hour on BBC radio - one hour for women's issues, 23 for men's. Women are not silenced in Britain, they are encouraged to speak about "woman's issues," their own sectional interests--such as caring for children and elderly relatives, which should be of no interest to men. Why would men, even those with children, need to know about raising children? It's clearly a women's issue - that is not an issue that should concern fathers, but should for some reason concern women who are not mothers - women who don't have children should listen since it's their role and duty and surely they all care about it. Also, women's rights are only important to women so they belong in this one hour a day where only women will be expected to listen. Of course women are also allowed and even expected to join in the public conversation in Britain, they are not silenced but the idea of an hour for women's issues, which includes those topics, is a way of keeping women "in their place" -- their historical place of silence.

It seems that while we might overcome issues of race, sexism is built into our social system and is going nowhere. We do not even acknowledge it, for example, few people realise - or at least remember or discuss - that black men had the vote well before women of any colour, let alone the extent to which women are still today, as across all time, being silenced.

Anyway, as I said, I have recently seen the silencing discussed in the article: in the past three days I seem to have run into as many cases of it:

When women have spoken out about perceived sexism in the video game industry they were silenced with threats of violence: "misogynistic culture of video games, a culture that exists both in the sexist portrayal of women in video games and in the violent threats that have been made against women who have criticized this culture." (Here)

Speaking out about a convicted rapist being welcomed back into the spotlight, to be a role model for young boys and men earns you rape threats: "Olympic gold medalist Jessica Ennis-Hill and campaigner Jean Hatchet who have both received rape threats following statements they made condemning Sheffield United FC's decision to allow their player, Ched Evans, a convicted rapist, to train with the team." (found on facebook, articles on it here; and here)

Finally, we've been hearing a lot about Uber, the new alternative to taxi cabs, lately, and apparently they are silencing women who make allegations about Uber's drivers--but these women deserve it, how dare they accuse a driver of attacking them while wearing a skirt! That is like patting your head rubbing your tummy at the same time, or driving while black! A Fin 24 Tech article tells us that, along with a culture of sexism: "We've seen it in the company's PR team discrediting female passengers who accuse drivers of attacking them by whispering that they were 'drunk' or 'dressed provocatively'."

In some cases, with the "ever-worsening frat culture" and "smearing and objectification," this would be against the law, no? Obstruction of justice, intimidation of witness - or victim, in this case. There has been some public outcries about Uber's idea for silencing of  journalists too: "Not Cool: Uber Executive Suggests Smearing Female Journalist Who Criticized Company."

It is shocking. Several decades have passed since the show Cagney and Lacey was on the air, with episodes such as "Date Rape" dealing with issues such as the sexist attitude born out of patriarchal culture in which men are given a pass for raping a woman while the woman is blamed for dressing "provocatively," and yet so many men seem still not to get it at all (read all the way down),  despite how f&*king obvious the basic concept is. Instead, people want to be cavemen and try their best to find a way to blame evolutionary psychology.

That appears to be why feminists are so afraid of the science, but it's time to remind folks that when it comes to evolutionary psychology, explanation is not justification! Once we recognize this, we can learn from it, better understanding how our patriarchy came to be, and perhaps then can finally defeat it, as we defeat our immoral barbaric roots and caveman mentality.

Buss (1996) advanced a hypothesis about the origins of one component of patriarchy. Specifically, he suggested that the co-evolution of women’s evolved mate preferences for men with resources and men’s co-evolved mate competition strategies to embody what women want created gender differences in the motivational priority attached to resource acquisition. Men who failed to obtain resources that were part of what ancestral women sought in mates often failed to succeed in mate competition. Men did not place an analogous selection pressure on women. Iterated over time and across cultures, men’s strategies of mate competition led them to vie with other men to acquire the resources needed to render themselves attractive to women. 
This is not about blame (of which there would be enough to go around, and it would certainly be shared) or justification (of which there is none, for any of the above), but is just a possible way that the evolution of culture and society brought us to the first violent, patriarchal social order.

OK, I'll shut up now!

(I don't want to be accused of going on about women's issues again, and of course the only audience would be women, and women don't belong on the internet, especially on an economics blog!)

P.S. There has been one victory. This schmuck, whose very existence - his character and his popularity - is a sign of how bad things are, was successfully banned from entering the U.K. Also, it could be argued that the fact that people need to learn his methods is sort of a good sign too -- in another culture the men may not need lessons to be that sexist and misogynistic...

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Saturday, November 15, 2014

Coming Soon: Individualism and Society

Keep an eye on this space, the second volume of the (informally) two-volume series on Austrian theory is almost in print - here is Palgrave's Coming Soon flyer.

The first volume (here on Amazon) is Austrian Theory and Economic Organization: Reaching Beyond Free Market Boundaries:

The second volume is Austrian Economic Perspectives on Individualism and Society: Moving Beyond Methodological Individualism. The cover will be similar:

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Monday, September 15, 2014

Independence from The City: how Scotland could really break FREE

However unlikely to come to fruition, the idea of Scotland going independent is fascinating for a number of reasons. The little consequences, like representation in the Olympics, would be far-reaching, and the real consequences could be significant for Scotland - and England and Europe - and although they include legislation (with a fully independent parliament) and public (e.g., NHS) and private (e.g., foreign trade) production, and of course military matters (obviously Scotland would decide its policy alone and would enter NATO etc. separately from England et al, and also we already know a 'yes' vote means Scotland must cease its UK nuclear submarine production...), they start with currency.

Arguably, although all the other above issues are all very important, they will take time to change, or may be unlikely to be much affected, and they can all be curbed - sticking closer to the status quo - and on the flipside, even without full independence, with many of the above Scotland can exert its independence, and might very well increase its level of independence as part of the campaign to win the 'No' vote -- the payoff for giving in, and staying in the Union. But, the first, most immediate, and possibly most far-reaching consequence of independence, which would never happen without independence and which is certain to happen with--as promised by David Cameron-- is the currency independence.

Scotland would no longer be a part of the currency union that is the pound sterling (£). It could have its own Scottish pound -- which it kind of already does -- but it would not be backed by the UK government (which of course would no longer exist as such, but only Scotland could back any new currency, London would stay out * ).

According to most interpretations of the history, Scotland had (relatively) free banking from about 1715 to 1850, and Austrians and other libertarians and free-marketers have praised it, and many accounts support the conclusion that it worked better than England's system of the same period. Murray Rothbard has argued that this interpretation is flawed and it was neither free nor successful. However, there has been much (more) scholarship since, generally all favouring the "free banking success story" view.

Perhaps as a remnant of their old free banking system, or as soft Scottish rebellion against the English overlords, or just for good fun Scotland allows its banks to print their own banknotes, and they are of the same legality as the English pound; no printed banknotes:

Up until the middle of the 19th century, privately owned banks in Great Britain and Ireland were permitted to issue their own banknotes, and money issued by provincial Scottish, English, Welsh and Irish banking companies circulated freely as a means of payment. While the Bank of England eventually gained a monopoly for issuing banknotes in England and Wales, Scottish banks retained the right to issue their own banknotes and continue to do so to this day. The Royal Bank of Scotland, along with Clydesdale Bank and Bank of Scotland, still prints its own banknotes
Notes issued by Scottish banks circulate widely and may be used as a means of payment throughout Scotland and ththough e rest of the United Kingdom; although they do not have the status of legal tender they are accepted as promissory notes. It should be noted that no paper money is legal tender in Scotland, even that issued by the Bank of England (which is legal tender in England and Wales).

Scottish pound notes - whoever they are issued by - are accepted in Scotland, most places. Nobody will accept them in England, but they seem to have the confidence of businesses in Scotland -- so perhaps independence would allow Scotland's pound to take over, printed by many banks -- if they can refrain from fleeing down to London -- and free from any government's central bank, monetary and fiscal policy control. What a great chance for an experiment in free banking!

Cameron has said that it cannot keep the Britsh pound if independent, but if it could during the transition toward free banking I am fairly confident that this transition might be relatively easy, assuming all the banks do not in fact flee ~ even if they change hands, even if some individuals flee and others take their place, so long as some banks remain, which I am sure that they would ~ and I am made more confident by the fact that Krugman thinks keeping the pound would be a disaster.

In any case, if the Scottish pound started as it is, based upon the pound sterling value, and made free in tandem as policy was freed from London, perhaps it would thrive, and Scotland would thrive, at least so long as Scotland's Labour Party refrained from taking too much control or bankrupting the newly independent country with too much gusto!

(comments welcome!)

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Monday, August 25, 2014

A concise treatise on the fallacy of aggregation-macro in one short excerpt

Here is a short segment explaining the fallacy of Keynsianism, and of aggregative economics in a little nut-shell, in plain English -read it carefully, simple though it is, it is profound because it is so sensible, and explains why Keynesian answers have been so enticing both in theory and in practice (and please let me know your thoughts) :

Aggregates, such as gross domestic product or gross investment [and changes to them] ... [are] always the cumulative result of other changes in quantities of resources and factor productivity, in relative prices and demand, and so on. Only in a one-commodity world could it be otherwise.

It is therefore impossible to discuss meaningfully policy measures designed to affect the magnitude of such aggregates without also discussing those changes in their composition which must accompany them.

Perhaps an historical example will elucidate what we mean. Policies based on Keynesian macro-economic recipes might have succeeded (had they then been tried) in 1932 and did succeed in 1940 because it so happened that at the bottom of the Great Depression as well as during the Second World War all sectors of the economy were equally affected. In 1932 any kind of additional spending on whatever kind of goods would have had a favourable effect on incomes because there was unemployment everywhere, as well as idle capital equipment and surplus stocks of raw materials. During the war the situation was exactly the opposite, but precisely for this reason the same recipes, but with opposite sign, applied. With millions of men and women in the armed forces everything, not merely labour, was scarce and any reduction in demand anywhere welcome.

These are, of course, abnormal situations. Normally in an industrial economy we find some declining industries (coal mining, cinemas) side by side with rapidly expanding ones. Problems arising here require detailed study and are resistant to macro-economic panaceas. (my emphasis)

There it is. If Austin (or Freddie) concedes where Keynesian policies just might work, can Kenny (or Johnny) concede where it just won't work well at all, because indusries differ and you can't just pretend that the inflation of one set of equipment, people, and other resources can be used to fill and replace the hole made by the deflation of another - like whack-a-mole, you'll just be chasing after layoffs, causing new losses whenever you try to patch the last ones, never able to make a band-aid stick  (and Keynes himself I think might just agree). But, on the flip side, when so many resources are idle, whether people are idle or so many things need rebuilding or producing for emergency needs, then quite obviously borrowing from the future to heal this wound is just the common sense of treating the wounded in the emergency room before worrying about whether they can pay their bill. It's simply the only humane thing that can be done, and only a fool or a knave could possibly deny it.

Who made these remarks? Ludwig Lachmann, Macro-economic Thinking and the Market Economy, online PDF here. One of the better Austrian thinkers, I am thinking. Thoughts?

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Thursday, June 12, 2014

No Reason to Think? Delong vs the Austrians, Evidence vs Ideology

There is an Economic Policy Journal post from last year titled "Horror from Horwitz" which argues that Steve Horwitz has "a jumbled message" because he argues that central banks can be effectively used; policies - including monetary expansion - can help if crafted carefully. Is Horwitz going against Austrian theory, or is EPJ just charicaturing Austrians? I will address this more below, first I must respond to something from Brad Delong.

Delong has a recent piece on the Beveridge Curve in which he asserts that:

There is no reason to think that June 2009 was a magic moment after which “skill–needs mismatch” took a sudden upward leap.

No reason? Actually, Austrians, and those inspired by their theory like Arnold Kling, have argued that in general the greater diversity and specificity of labour and complexity of the economy in in recent decades made recover slower and made government programs less effective.

Delong offers no evidence to support his view, he only says that it seems likely to him, but there is reason to believe that there has been a jump - just look at the evidence. The more complex the economy the more trip-ups policies are likely to face, the harder it is to be enlightened and run an economic plan smoothly. Very small economies with simple homogeneous systems can just about get away with it - think Sweden. Creator of the "Great Stagnation" theory, Tyler Cowen, also sees evidence for a long recalculation in today's complex US economy:
In general, which hypotheses predict lots more short-term unemployment among the less educated, but among the long-term unemployed, a disproportionately high degree of older, more educated people?  This stylized fact seems to point toward search and recalculation ideas, with some zero marginal products tossed in. - See more at:
In general, which hypotheses predict lots more short-term unemployment among the less educated, but among the long-term unemployed, a disproportionately high degree of older, more educated people?  This stylized fact seems to point toward search and recalculation ideas, with some zero marginal products tossed in. 

Although Delong argues that businesses will have been " reconfiguring jobs to make more use of low-wage “unskilled” labor,"  Cowen cites statistics that show that the unskilled are facing 30% unemployment rates, while the skilled face only 3% unemployment. From Kling's very readable and sensible (at least hiss main foundational argument, or "mantra"):

the last 75 years has made labor much more heterogeneous and put greater "distance" between the different kinds of work people do.  More specifically, a far lower percentage of labor is physical in the ways that the WPA and CCC demanded.  And perhaps most importantly:  an economy that is orders of magnitude more complex than that of the 1930s will be one in which it's much harder to figure out what sorts of government make-work programs will match the human capital structure of the unemployed labor.

and, more specifically, he argues that the Great Recession has been experiencing a "jobless recovery" because of this:

Labor markets and unemployment are having trouble recovering perhaps because the very specificity of labor makes the recalculation process more protracted, and the variety of ways in which policy makers are complicating the process with stimulus spending and extended unemployment benefits is not helping.
Contra Delong, Austrians like Steve Horwitz argue the specificity of labour in the highly complex economy makes readjustment more difficult and recovery slow, and this means that there is reason to believe that there was a time in about 2009 (just after the crash) "after which “skill–needs mismatch” took a sudden upward leap." Unless Delong is saying that the moment should have been earlier, one must assume that he has not have read the Austrian arguments that explain why. As one example, Horwitz explains:

As the boom pulls highly specific factors of production into the artificially stimulated areas, it will also increase the incentives for developing very specific sorts of human capital (one need think only of the high-end financial markets here).  Come the bust, this human capital may well have next best uses that are a far cry from the value it had been producing. 
Rather than a more complex, wealthier economy having greater dampening effects on the volatility of cycles, it may well be the case that an economy with a greater division of labor and specialization, and therefore more heterogeneous human and physical capital will actually suffer larger booms and longer and deeper busts from the same bout of inflation than would simpler economies.  There's a reason that red line is so deep for so long.
This also means that the recalculation process will both take more time to sort out and that it will be that much harder for governments to try goose aggregate demand with make work programs.  What exactly government is supposed to do to "directly employ" unemployed folks with these highly specific skills?  I really am waiting for someone to argue government should pay them to build websites and databases and then just delete what they've done.

This was a lesson learned from the Soviet experiment (of course Austrians predicted it beforehand): a more complex economy means a harder time trying to employ workers using public employment schemes; centralized money and centralized employment, production, and distribution are also difficult and dangerous to undertake at the same time (as Trotsky put it: it is like the man who tries to stand and lift both his feet off the ground at the same time).

This brings us back to the EPJ article. Perhaps ironically--if you are of the mind, as one branch of Austrian economics is, that central banks cause misallocations regardless of how they may try (as all central planners do) to be careful and not cause them--the Federal Reserve bank of St. Louis was among those who published on the issue of labour mismatch during the Great Recession. Does Horwitz have a "jumbled message" because he supports central banking? The article says that Horwitz's support for central banks is "is as far from Austrian theory as you can get.  Austrian school economists see central bank monetary expansion as distorting the economy."
Although one Austrian strand takes this point of view--that all central banking must cause misallcoations-- it is not the strand (which some might call less ideological and more "nuanced," and "moderate") of Steve Horwitz, who is a proponent of an Austrian theory of Monetary Equilibrium (ME) using central banking. And, no, this is not a contradiction in terms.

I used to call market socialism a contradiction in terms, and then I was sure that libertarian socialism was a complete contradiction, impossible. Just as a purist view can see socialism as impossible--because it sees complete central planning and the socialist goals as defining socialism, much like one might say true communism is impossible--one might see libertarian socialism as impossible. But it is the black and white of this approach that makes useful discussion between opposing political and economic viewpoints so difficult - impossible, if you will.

To see these - and an Austrian that is OK with central banking - as contradictions is to see them as too pure or perfect, which is to see a complex interconnected society filled with complex humans as something that can be treated as a perfectly uniform system fully represented by a single model. 

Finally, although I think Austrians have the right idea regarding misallocation and labour specificity, I do have some qualms with Kling's arguments. Klng argues that " Jobs like website development and social-media marketing are very far removed from the final stage of production." It is not just capital involved in "roundabout production," and therefore misallocated, as part of the ABCT, it is labour too:
This explains how we can have a “jobless recovery,” meaning a large percentage increase in output without a comparable percentage increase in employment. For firms in today's economy, labor represents an investment. Firms hire workers in order to develop capabilities that will eventually produce output more efficiently.
For firms in today's economy, labor represents an investment. Firms hire workers in order to develop capabilities that will eventually produce output more efficiently. The return on an investment in workers may take as long or longer to realize as the return on investment in a machine. The return on investing in workers may be at least as uncertain as the return on investing in equipment.
 But is it fair to say that website design and social media marketing are long-term investments that would not be cut back easily, and would lead to misallocation of resources? It is not my intention to take on all of ABCT here, but I will note that although Kling suggests that "Real employment in today's economy represents a long-term investment, not short-term make-work," the American economy is far more flexible with the hiring and firing of labour than the UK or European labour markets (thanks to more flexible regulations and labour law), such that forms do lay-off workers quickly when they see profits fall.
In complex free market economies, it is important to experiment and hire for short periods by contract before finally hiring full-time, permanent employees, and this is frequently done. More to the point, many website designers and social network marketing workers work for companies dedicated to those things - so when profits fall, they are indeed laid off right away (I remember the crash!) especially because those companies primarily invested in labour, with few other assets.

Some companies, especially large ones like pharmaceutical companies and large publishing companies, have on-sitef social media marketing (if they have a marketing department rather than outsourcing/contracting this function), will they lay off these staff when hit by drop in sales/ profit? I guess it depends and will be a choice made by the CEO. He or she will have to determine the cause for the drop--if it is the recession and not something the company has done wrong or needs to change to keep up with competition, what should they do? Perhaps the best long-term strategy, given a short-term recession, is to keep these staff, but then if marketing can shrink in the short-term during recession, might it not be cheaper to make layoffs and re-hire, even with training costs?