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 | Tuesday, November 25, 2008 at 7:17:42 mst
Comment ID: #1
Name: Flibbert
E-mail: junk(at)treygivens.com
URL: http://flibbertigibbet.mu.nu/
See, I just don't think flinging around billions of dollars is all that creative. Stopping a landslide by leveling the mountain just isn't. |
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| Tuesday, November 25, 2008 at 7:40:41 mst
Comment ID: #2
Name: Q
The moral defence seems a bit idle for the reason that:
A depression is bad for most egoists; if fiscal stimulus would avoid a depression (B) then it would be generally preferred by egoists becuase the benefit to their lifes is much greater than the cost.
So a moral argument based on egoism seems to reinforce the argument for B provided you believe B to be true. |
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| Tuesday, November 25, 2008 at 7:48:59 mst
Comment ID: #3
Name: Ryan
E-mail: rmulkerin(at)gmail.com
Q: You are ignoring a lot of other options besides fiscal stimulus which could be done to avoid depression. There are many options in line with free market thinking which could help the situation. As for whether fiscal stimulus, I'm not an expert, but from what I've read it will just put off the problem a bit into the future. |
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| Tuesday, November 25, 2008 at 7:54:20 mst
Comment ID: #4
Name: Ryan
E-mail: rmulkerin(at)gmail.com
That should be "whether fiscal stimulus could help". Sleep deprivation is making me type like English is my second language. |
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| Tuesday, November 25, 2008 at 8:24:44 mst
Comment ID: #5
Name: seaslate
E-mail: seaslate(at)msn.com
URL: http://www.cosmicdogma.com
I guess the question is looking at the last Great Depression, did the government intervention work? Are the policies that are in place to avoid another huge meltdown actually doing that or are we faced with a paradigm shift in which those regulations no longer fit. And it may seem terrible, but as a free market society, should we be careening into socialism to avoid a second Great Depression? It would seem that now is the most important time to stoke the flame of freedom and capitalism because Joe Schmo isn't thinking about a quantum shift in our political structure, he just wants a job. Now it appears that will be a government job. We are setting up for a battle between the private and public sectors and the opposition is building an army. We have to work to stop government expansion or the last great hope for Capitalism on the Planet could be snuffed out. |
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| Tuesday, November 25, 2008 at 9:28:24 mst
Comment ID: #6
Name: Rob Abiera
URL: http://moralitywar.blogspot.com
Q: Umm, just how rational are these egoists of yours? |
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| Tuesday, November 25, 2008 at 10:24:09 mst
Comment ID: #7
Name: Kreso
E-mail: kresimir.cvitanovic(at)gmail.com
A couple of months ago I was at a camp where Libertarian ideas were being discussed. The coordinator in charge had invented a logo for this event. At that time she was working at CATO and delivering libertarian ideas to an audience who never heard of libertarianism, or heard them, but only casually. The logo for the camp was the coyote from the cartoon Road Runner with a sign saying: "help!". When I asked her why did she choose this logo for the camp she explained: "We (libertarians), are always trying something and we scarcely succeed. In much ways we feel like that coyote - he's trying to catch the Road Runner and accomplish something but he never succeeds. So do we, and that's what 'help!' stands for". I remember thinking to myself at that moment - how sad to devote your time and life to something that you don't think will work. I wouldn't want that for myself anyway. And it also made me think about one more thing - the people listening to her - how did they assess her presentations after knowing that she doesn't truly believe in them? I guess, normally, people would get driven of feeling that she is going to con them.
This girl I am talking about here is not the only one who is trying to explain libertarian ideas and not succeeding. That made me think what is the prerequisite for people understanding these kind of ideas?
What kind of people would like to: learn how to treat other people in a more fair way, have more freedom and less control over their lives? People with a high level of self-esteem. As opposed to people with low self-esteem who are closed inside their worlds and trying to struggle for survival. People of low self-esteem don't see value in ideas which promote freedom because they are too concerned about what other people think, what majority of people think is true etc.. They are not in control of their own life and freedom (less control) means little to them. Saying to someone who doesn't appreciate freedom and independence "but you'll be able to spend more money on yourself and live life as you want to" simply doesn't seem interesting.
Size of the economic crisis doesn't concern people with low self-esteem as they don't see 'the big picture', that is - they don't think about it longer than 2 minutes. They see no value in looking at it because of their everyday struggles. If however, they would attain high level of self-esteem, they would feel free to look at the world and judge by themselves what works or not. Not much interpretation or convincing them in free market ideas would be needed. Explanations would be enough.
It seams only natural that after people gain control over their lives (by that I mean self-esteem) they will want to know ways to practice their freedom in as much detail as possible. They will have the incentive.
This is why I happily decided to start a Self-esteem club, not the Objectivist or Libertarian club. This way, I think, I can deal with the problem at the root. |
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| Tuesday, November 25, 2008 at 10:33:32 mst
Comment ID: #8
Name: Q
Rob Abiera: Given that B is true, ie. that fiscal stimulus is the most efficient way to fend of a depression, then they are perfectly rational in the sense that they opt for the alternative which is most beneficial for thier wellbeing and survival. |
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| Tuesday, November 25, 2008 at 12:56:51 mst
Comment ID: #9
Name: Jim May
E-mail: seerak(at)gmail.com
Well Q, B is not true. As the Fram oil guy used to say, you can pay me now -- or you can pay me later. The issues we are having now occurred because the Fed sought to avoid a far smaller recession back in 2001. If we'd endured that rather ordinary recession then, we'd not be having this conversation now.
So, when government acts immorally, disasters result. Disasters are not to anyone's rational interests.
So what is the use of imagining some alternate universe where up is down, freedom is slavery and government interference "works"? |
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| Tuesday, November 25, 2008 at 14:23:11 mst
Comment ID: #10
Name: Q
Jim May: "So what is the use of imagining some alternate universe where up is down, freedom is slavery and government interference "works"?"
The question is how you determine whether this is an alternate universe. I claim the moral argument is idle. Why should anyone be convinced that government interference doesn't work by a moral argument? That seems entirely rationalistic. It's the other way around, what the egoist ought to prefer hinges on the outcome of government interference (since egoism is in the end consequentialistic), and to determine the outcome of government interference is the job of the economists, not the philosphers. I would rather trust an expert like Larry Summers than an Objectivist philospher on this particular matter. |
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| Tuesday, November 25, 2008 at 16:00:49 mst
Comment ID: #11
Name: Jeff
"Experts" in economics are only capable of observing trends. They are impotent to control them and barely better at predicting them. The rational problem here is that the solution of bail-outs is not proven to be better than just leaving the economy alone. Thus the moral problem of whether to redistribute wealth or let free market forces decide becomes the cornerstone of the argument for economic policy. |
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| Tuesday, November 25, 2008 at 17:17:53 mst
Comment ID: #12
Name: Jeff
To Q,
"I claim the moral argument is idle. Why should anyone be convinced that government interference doesn't work by a moral argument? That seems entirely rationalistic. It's the other way around, what the egoist ought to prefer hinges on the outcome of government interference (since egoism is in the end consequentialistic), and to determine the outcome of government interference is the job of the economists, not the philosphers."
Morality is itself derived from the facts of reality. Knowledge in one realm cannot contradict knowledge, with respect to the same object, in another realm. Morality tells us, based upon the nature of man, that government coercion destroys the capacity for human reason and development. Economics tells us, based upon measurements of wealth, that government interference has always had a long term negative economic effect.
Ethics, a branch of philosophy, hierarchically precedes economics, a specialized science. If we are to grant that both of these things are collections of knowledge, then we must also admit, since contradictions cannot exist, that both must come to the same conclusion. |
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| Tuesday, November 25, 2008 at 17:55:49 mst
Comment ID: #13
Name: Jeff Montgomery
E-mail: jamontgom(at)hotmail.com
URL: http://funwithgravity.blogspot.com/
Sounds like the CPGC is just an altruist brainwashing society.
I'll take a crack at the points made by "David Wessel, Pulitzer-prize-winning Economics Editor":
"Federal Reserve interest rates" - TRUE. Too low.
"the across-the-spectrum failure of economic checks and balances by rating agencies and regulators" - FALSE. So the problem is we were chained properly?
"the "democratization of credit" for homeownership" - TRUE. This refers basically to acts like the CRA, which put a gun to the head of banks and force them to make high-risk loans. This will inevitably cause more defaults.
"the "morally criminal" predatory lending practices" - FALSE. Banks have an *absolute moral right* to charge any non-fraudulent rate they choose.
"faulty assumptions about ever-increasing housing prices" - FALSE. Assumptions mean nothing if the credit is not available to indulge in unrealistic plans based on those assumptions. Not a factor.
"unsecured lending by investment banks" - FALSE. The problem is *too much* security. Bank managers have an absolute moral right to overextend credit if they choose, and they need to be allowed to fail if they do stupid things like overextending credit.
"the under-appreciated connection between the housing market and banking system" - File under DUH. Things have a causal relationship. It's the *particular cause* that matters: loose credit.
As usual, the writer does not recognize our moral right to engage in peaceful voluntary conduct, or the role of government as the primary cause of the crisis. This uh... diminishes his utility as a writer on economics, to say the least. |
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| Tuesday, November 25, 2008 at 17:58:51 mst
Comment ID: #14
Name: Jeff Montgomery
E-mail: jamontgom(at)hotmail.com
URL: http://funwithgravity.blogspot.com/
>See, I just don't think flinging around billions of dollars is all that creative. Stopping a landslide by leveling the mountain just isn't.
No kidding. How innovative: following a several-thousand-year-old tradition of plundering the wealthy.
Let's try the truly innovative 200-year-old idea of protecting individual rights. Because it hasn't been tried yet (fully). |
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| Tuesday, November 25, 2008 at 22:53:00 mst
Comment ID: #15
Name: Wayne
The cause was "the "democratization of credit" for homeownership" and "the "morally criminal" predatory lending practices". Doesn't that refer to the same practice of artificially low interest rates? It just demonizes the business for doing what the government wanted! How unfair is that? |
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| Thursday, November 27, 2008 at 20:13:43 mst
Comment ID: #16
Name: Anthony
"A depression is bad for most egoists"
In a mixed economy, yes, it's bad for most egoists, because when depressions come along government regulations go up. But in a capitalist society, it's hard to see how depressions would occur in the first place, and even if they did, the rational egoist wouldn't be hurt by them, because he would have diversified himself so as not to be dependent on a particular economy in the first place. In the current mixed economy of the United States, it's very hard to maintain your independence. Businesses are required by law to accept US dollars as payment for debts, they are required to maintain their books in terms of US dollars, they are required to pay minimum wages denominated in US dollars, they are required to pay taxes in US dollars (including taxes on the supposed "capital gains" they make simply by maintaining a flat purchasing power). On that last point, did you know that if a US citizen living in Europe gets paid in Euros and then buys food in Euros, and the US dollar falls in value between the time they got paid and the time they bought the food, they are considered to have made a capital gain in the interim? Same thing if you got paid in gold, except then of course you'd have to worry about government investigations and maybe even government confiscation (like what happened during the great depression).
Anyone who 1) holds accounts (assets) denominated in US dollars or 2) owes debts denominated in US dollars, is heavily dependent on the federal reserve for his financial well-being. A rational person wouldn't get into such a situation unless the government had basically forced him to, but that is pretty much what the US government currently does. |
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| Saturday, November 29, 2008 at 0:55:50 mst
Comment ID: #17
Name: William H Stoddard
E-mail: whswhs(at)mindspring.com
URL: http://whswhs.livejournal.com/profile
The whole idea that an egoist might rationally choose to favor government intervention for some such purpose as making the economy work better, and thus making it a better environment for egoists to live in, rests on viewing "economics" as a kind of separate, autonomous reality, where "economic" events such as inflation, depressions, and growth occur on their own, like weather or floods, and where government can step in to try to affect those "economic" events, bringing them under control, in somewhat the way a civil engineer might try to bring floods under control by building a dam.
But economists themselves don't view this as the whole of economics. Rather, they see economics as also including individual actions and transactions, such as exchange and production. The large-scale events emerge out of vast numbers of individual actions and transactions. And in the best versions of economic theory, the large-scale events can be understood by examining the individual actions and transactions that give rise to them.
When you look at that level, ethics implies constraints on economics at a much more basic level than choosing to have the government maintain one or another monetary regime. An egoist choosing a set of legal rules and governmental institutions for a society will want rules that are designed for nonsacrificial relationships; that is, for relationships that make both (or all) the participants in them better off. Once you change to a set of rules that accept sacrificial relationships, in which person A can be hurt for the greater benefit of B, or for the lesser benefit of a sufficient number of b1, b2, . . . , bN, the egoist has no guarantee that they will not end up being the A who is sacrificed, for the enrichment of a dictator (a single B) or a democratic majority (a lot of b's). A society with rules that permit some people to be sacrificed is a threat to everyone, including all rational egoists. And thus the egoist wants a society where no transaction is legally permitted that does not make everyone involved in it better off.
But this kind of society is well known in economic theory, where a transaction that makes some people better off and no one worse off is called a Pareto improvement. A free market is an economic system where all transactions are required to be Pareto improvements.
And if you accept a free market as embodying the principal of nonsacrificial relationships, the rules of a free market themselves prevent the kinds of government intervention you are recommending. The egoist does not need to examine the empirical, pragmatic consequences of violating the free market standard through this or that intervention; they can see the violation and recognize that it's going to enrich some people at the expense of others, and thus create a society where anyone can be sacrificed, and where instead of working to make other people better off, people either work to hide their own suitability as sacrificial victims, or work to have the government direct the benefits of other people's sacrifices to them. This latter process is what the public choice theorists call a "rent-seeking society" (though "rent" does not mean what it means in everyday English; the idea is more akin to the royal monopoly grants of the 16th, 17th, and 18th centuries, under mercantilism), and Ayn Rand gave us a vivid picture of how it works in "Atlas Shrugged," in her portrayal of corrupt businessmen such as James Taggart and Orren Boyle.
You might suppose that an egoist would be fine with a sacrificial society, as long as they were the one receiving the sacrifice. But this is comparable to suppose that an egoist would not choose to be a slave, but would choose to be a master and have other people be slaves. And that's actually not a choice that a rational egoist would make, for a variety of reasons, starting with the much superior work done by people who are pursuing their own profit than by people who are trying to escape punishment by their masters. |
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| Saturday, November 29, 2008 at 5:27:09 mst
Comment ID: #18
Name: Q
William H Stoddard: "But this kind of society is well known in economic theory, where a transaction that makes some people better off and no one worse off is called a Pareto improvement. A free market is an economic system where all transactions are required to be Pareto improvements."
Two things, in a depression most people are worse off wehther the depression takes place in a free market or not, so the Pareto argument doesn't really seem to apply here. Furthermore, from an egoistic point of view Pareto effiency isn't that important beacuse there are Pareto optimal outcomes where a majority suffers, which means that a majority of egoists suffer. To see this, consider the rather extreme situation where one person, who is niether rational nor nice, owns all land.
William H Stoddard: "You might suppose that an egoist would be fine with a sacrificial society, as long as they were the one receiving the sacrifice. But this is comparable to suppose that an egoist would not choose to be a slave, but would choose to be a master and have other people be slaves."
Imagine two countries, Austria and Kenya. They both suffer from a depression. The Austrians abstain from Keynsian solutions which makes them endure a long and painful depression that benefits no one but a small minority of debt collectors, while in Kenya they endure a rather brief downturn due to Keynsian policies. In Objectivist terms it is obvious that the policies of Austria is far more sacrifical since a sacrifice is to give up a higher value for a lower which in this case is to abstain from actions that benefit most egoists.
In Kenya we have the situation that the debt collectors did benefit from the downturn but would have been even better off if the depression were longer lasting, while the rest of the people benefited vastly. Why would it be rational for anyone to argue against the Keynsian policy? The only egoistic case for the Austrian policies I can think of is to make the claim that Government interference can never ever work. But that is an economical argument, not a moral one. |
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| Saturday, November 29, 2008 at 9:33:09 mst
Comment ID: #19
Name: Anthony
"in a depression most people are worse off [whether] the depression takes place in a free market or not"
Two problems with that. 1) It presumes that a depression can take place in a free market. 2) It talks about "most people". The ethics of egoism rejects the concept that it is acceptable to make "most people" "better off" at the expense of other people. Rational egoists do not consider it moral for "fifty-one percent of humanity enslaving the other forty-nine; nine hungry cannibals eating the tenth one; a lynching mob murdering a man whom they consider dangerous to the community." (see http://aynrandlexicon.com/lexicon/utilitarianism.html)
"Furthermore, from an egoistic point of view Pareto [efficiency] isn't that important [because] there are Pareto optimal outcomes where a majority suffers, which means that a majority of egoists suffer."
First of all, you seem to be confusing egoism and utilitarianism. Secondly, while it's certainly possible for a majority of egoists to "suffer", they would suffer the least in a free-market.
"To see this, consider the rather extreme situation where one person, who is [neither] rational nor nice, owns all land."
How do you propose that this irrational individual would legally gain and maintain ownership of all land in the first place? And don't you agree that such an individual would quickly meet his own demise? The rational would refuse to trade with him, and the irrational would outright steal from or murder him. |
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| Saturday, November 29, 2008 at 9:41:23 mst
Comment ID: #20
Name: William H Stoddard
E-mail: whswhs(at)mindspring.com
URL: http://whswhs.livejournal.com/profile
Q,
Addressing just your first set of comments, I don't see that the imaginary situation where one malevolent person owns all the land is of any significance. That's as much a fantasy as Descartes' "What if a malevolent demon is making me hallucinate, and everything I think I perceive exists only in my own delusions?" We don't have that situation. Under low-tech conditions, one malevolent person might own all the land in the local village, but he couldn't extend his reach to hundreds of miles around, and under Pareto optimality rules he couldn't prevent his tenants from "voting with their feet" to move to another village, or to the nearby city, or to uncleared land. Indeed, in the real Middle Ages all three processes took place steadily, despite the efforts of feudal lords to stop them, and gave the peasants a small measure of freedom that the official rules denied them. And under high-tech conditions, with worldwide travel, everyone in societies that aren't harshly collectivist has the choice of many different landowners. So objecting to Pareto optimality because you can make up imaginary situations where it doesn't work strikes me as pointless.
As for depressions, even if we suppose that a depression could occur in a free market, and that it would make most people worse off, that's not a problem with the Pareto criterion. Pareto did not suppose that no events could occur that made people worse off; he proposed that no one would be forced into a transaction that made them worse off for someone else's benefit or gratification. Suppose, for comparison, that in a free market, some new illness emerged, making large numbers of people sick, and killing many of them. That would make most people worse off. But no one would be deliberately spreading the illness, either for supposed gain or for spite. And even under those bad conditions, people could engage in transactions that were Pareto improvements, buying medications, hiring doctors, taking out insurance against the plague, and so on, which would make them better off *relative to the new, bad conditions*. And the consequences of dealing with the plague in this free-market way would be both ethically and economically better than the consequences of letting some people make the widespread illness as an excuse to inflict economic injuries on other people over and above the injury of the plague itself.
But beyond that, if you look into the Austrian economists' theory of depressions, which is founded on methodological individualism in economics, you will find that major depressions, as opposed to short-term contractions, are not the result of free markets, but of massive state intervention in the form of central banking and compulsory deposit insurance. And Austrian methodological individualism is a conceptual strategy of interpretion economic phenomena, including large-scale fluctuations, in terms of individual choices and transaction, which is thus congruent both with the Pareto criterion that defines a free market, and with rational egoism. Legal rules compatible with a nonsacrificial ethic would not allow the government interventions that lead to depressions in the first place. And while it's more problematic to decide what to do about depressions that do occur in contexts where bad legal rules are already in place, a case can be made that it's best to refrain from further interventions, repeal the interventions that have already taken place, and rebuild on a sounder basis. Just as, if you have become addicted to a drug, and you're going through withdrawal, a case can be made that the best thing is to endure the suffering that results and get it over with . . . and you certainly don't want to take bigger doses! |
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