Three debatable questions

[2046]

Hi. I am new to Objectivism and like to be armed with information. Please consider the following and answer rationally.

Private Property

What are the origins of private property? How is private property obtained? What about scarcity? (ie if there is only one oil field remaining and it is on unclaimed land, who can lay claim to it, and how?) Who defines arbitrary geographical borders? If a new continent is discovered and several boat-loads of people migrate there, what's to keep someone from claiming the entire continent or a large portion of it for himself?

Market Failure

Is there such thing as market failure and how/why?

New Deal

Didn't Roosevelt's New Deal end the Great Depression in the United States? If 1933 was the lowest point of the Depression, how can one argue (as I was taught in school) WW2 was responsible for ending the Depression? And, even if WW2 helped, isn't war itself an ultra massive Keynesian stimulus on the economy (federal spending as a percentage of GDP tripled)? Thus, wouldn't it be better to do the same now, except on public works and infrastructure instead of warfare? As far as the recession of 1937, the statist would argue that clearly this was only because the conservative coalition forced FDR to suspend New Deal policies temporarily.

[softwareNerd]

New Deal

Didn't Roosevelt's New Deal end the Great Depression in the United States? If 1933 was the lowest point of the Depression, how can one argue (as I was taught in school) WW2 was responsible for ending the Depression?

Roosevelt did not end the depression in the sense of enacting laws that would let the economy snap back to life. Instead, he enacted laws that prolonged things, slowing the recovery. Roughly, Hoover is responsible for making it deep, and Roosevelt for making it long. Unemployment, for instance, remained extremely high -- around its 1931 level of about 15% all the way to the war. As for WW-II, moving 11 million young folk into an army and sending them off to war will do wonders for an unemployment rate, but such an employment rate is meaningless if we're using employment as an indicator of well-being.

A few more points about Roosevelt though:

• some of the most destructive things that Roosevelt did were declared unconstitutional a couple of years after they were enacted. The NRA and the AAA were two acts that were extremely fascist in taking control of the economy
  
• just as one can send folk off to war to improve one's numbers, one can also "solve" unemployment by simply putting people to work on... whatever. One can pay them by simply taking the money from other people. The WPA put people to work; the money came from sky-high taxes, and devaluation
  
• even while unemployment came off its worst numbers, the business climate was terrible. In essence the economy was eating into its seed corn. New capital investment had dried up. In some European countries, it began to return in the early 1930's; not so in the U.S.
  

I highly recommend the book "Economics and the Public Welfare", by Benjamin M. Anderson

Also check out this blog-post, including the comments.

I think the bottom-line is this: figures on GDP are meaningless if people are producing things they don't want and figures on unemployment are meaningless is people are being employed to be shot at because nothing else is available. (Of course, it is never that 100% of what people are producing are things they don't want.) One can tax the rich and use the money to employ people, but then the rich might reduce the people they employ. So, you can curtail the ability of the rich to fire people and to reduce wages, and then tax them and use the money to employ people. Or, you can be less blatant and "print" money and use that, which lets the taxation-effect make its way more slowly/indirectly. The bottom-line, though, is that you are doing is simply making people spend on things they do not want and do things they do not want: that is simply mis-allocation of resources, using them in ways that the owners did not want.

Edited April 18, 2009 by softwareNerd

[sanjavalen]

Private Property

What are the origins of private property? How is private property obtained? What about scarcity? (ie if there is only one oil field remaining and it is on unclaimed land, who can lay claim to it, and how?) Who defines arbitrary geographical borders? If a new continent is discovered and several boat-loads of people migrate there, what's to keep someone from claiming the entire continent or a large portion of it for himself?

Assumptions: That you know the metaphysical and epistemological base of Objectivism, as well as at least a smattering of the ethics.

Man has a right to his own life. If he does, he has a right to the things he has produced - or the things he has agreed to take in compensation for what he produces. For example, I have a right to 100% of my paycheck - I work for someone in an agreement with a person who pays me money for it.

Private land is included under that, but the application of the principle is slightly different, and should answer all your subsequent questions. Since you have the right to keep what you produce, if you make improvements to land (ie build a house on it, make an oil field, grade a road,) you have the right to that land. The extent to which you have a right to it is dependent on the exact context (deals with current landowners, homesteading, etc.) Specifically with regards to unclaimed land, once you improve a plot of land it is yours, but defining what a "plot of land" is, is a complex legal question to which there are many viable answers. You could define it by the amount of property you fence in to keep wandering animals/people out. The Supreme Court, I believe, in the old homestead acts simply picked a number of acres around your improvement based on figures of how much land a man could reasonably use in a ranching/farming situation. Both of these seem like acceptable standards to me. The land is distributed on a first-come, first-serve basis.

Market Failure

Is there such thing as market failure and how/why?

You're going to have to clearly define this term before anyone can answer that question.

[Steve D'Ippolito]

The usual examples of market failure would be things like failure of some products to be available because only a very small number of people need them (and therefore it's not profitable to produce) such as drugs for rare diseases, etc. Of course the real problem here is the expense of developing the drugs--an expense artificially inflated by the FDA's absolutely insane mandates.

And no, market failures don't exist. Since you are new, it's possible that you have not read "Capitalism: The Unknown Ideal" and I strongly recommend it. I am sure whatever your question is, it will be addressed in there somewhere. I do know that Chapter 5 (Common Fallacies About Capitalism) has a section discussing the great depression. (I do wish she had spent more time highlighting what Hoover did, and OBTW Roosevelt campained on repealing the controls Hoover put into place. These two men deserve a *special* circle of Hell.....)

[NotCrazyDan]

I talked to a psychiatrist about this once. He mentioned that there are certain drugs that have been formulated that only benefit individuals with extremely rare conditions, and that it would never profit a pharmaceutical company to produce them. These drugs are produced, however, at a loss by the companies themselves, and the burden of the expense is divvied up between them voluntarily.

I'm not saying that such a thing as a 'market failure' doesn't exist anywhere, but people do right by other people without anyone holding a gun to their heads a lot more than people realize, or would hear about.

[Jake_Ellison]

I talked to a psychiatrist about this once. He mentioned that there are certain drugs that have been formulated that only benefit individuals with extremely rare conditions, and that it would never profit a pharmaceutical company to produce them. These drugs are produced, however, at a loss by the companies themselves, and the burden of the expense is divvied up between them voluntarily.

If that is really the case, those losses affect not only the pockets of the companies' shareholders (which is wrong in itself), but also progress in other areas, leaving far more common diseases untreated. (thus, in the end more people will die or suffer than if the companies worked to maximize their profits)

What you are describing is an act of altruism, and as a rule, altruism is anti human life and values.

The solution to the problem Steve raised would be, I suspect, for cures to rare diseases to be sold at a price which makes it profitable to develop them. The drug companies should simply let the insurers take over the risks from patients who may potentially need those expensive drugs, and aren't millionaires: that is what insurance companies are for. In fact a free market is the only way to have an optimal solution to the question "Which diseases should be cured first?".

Edited April 19, 2009 by Jake_Ellison

[Steve D'Ippolito]

Again a huge part of the cost is the bullshit the FDA requires. Government, not market, failure.

[2046]

You're going to have to clearly define this term before anyone can answer that question.

Anything that would require or justify a government intervention for any reason ranging from efficiency to unemployment to social justice (vague I know, but you get the point) and the current popular charge of a "if we don't act now, the economy will get worse" and "only government can break the cycle where a lack of spending leads to lost jobs, which leads to even less spending, where an inability to lead and borrow leads to lost growth and leads to even less credit." [b. Obama]

@softwareNerd good post, thanks.

[softwareNerd]

Anything that would require or justify a government intervention...

Doesn't that beg the question?

Doesn't it comes down to asking: when do we say a market "fails"? and answering: "when I say it does".

The Wikipedia tries to make the idea a little more specific.

[NotCrazyDan]

Is it altruism? If it's in the owner of that company's personal value, or people who own that company's personal value to incur added expense to do what they perceive to be valuable, how is that altruism? Where's the denial of self?

They're trading a value for a value aren't they?

I think I probably just think of altruism in a different way than you do. As far as the "What diseases should be cured first" question, the drugs in question that have been produced for rare diseases are in many cases accidental spin offs from drugs that were developed for other things. The cost lies in the production of them, not in their development. Just a clarification.