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Why defend advertising?
While the abundance of advertising is usually viewed as a sign of the vitality of capitalism, it is nevertheless under a near-universal assault by intellectuals. Because advertising "blatantly and unapologetically appeals to the self interest of consumers for the blatant and selfish gain of capitalists"1, attacks on advertising are an assault on capitalism and ethical egoism. Arguments against advertising usually take two forms: the argument is that advertising is economically inefficient and the argument that advertising is somehow coercive. 2
The myth of "perfect competition"
Most economic arguments against advertising derive from the theory of "perfect competition, " which is an ideal state against which markets are to be judged. This state is characterized by homogeneous products, relatively small sellers without monopoly power, prices which approach the cost of goods, consumers who have perfect information about all products and prices, and no entry costs to markets.
Advertising violates all these conditions, mainstream economists argue. Advertising seeks to establish product loyalty, and therefore to make certain brands more valuable than others. This creates barriers to entry by giving companies monopoly privileges, and allows them to price goods above cost. Furthermore, advertising is an imperfect and biased way of communicating product information to consumers. Finally, advertising retards progress by making it more expensive for new producers to enter the market.
In the real world, markets work quite differently: the essential characteristic of capitalism is the entrepreneurs who invest capital in new services, products, technologies, and businesses models. When their predictions are right, they gain a temporary advantage over their competition and turn a profit; when they are wrong, they take a loss. Success in business require continual insight into which investments will prove profitable.
Rather than being a barrier to entry, advertising makes competition possible. New businesses and products stimulate demand by announcing their benefits to consumers. Expanding demand makes goods cheaper by creating economies of scale. While advertising is often attacked for creating demand for shoddy goods, it is not sufficient to advertise to gain consumer loyalty - only positive customer experience and continued positive goodwill can do that. Advertising is what allows new market entrants to capitalize on consumer dissatisfaction and dislodge established firms, as Japanese auto makers did when they demonstrated the superior value and quality of their cars over American ones.
The perfect competition model assumes that competing companies automatically lower prices to match their competitors. In reality, no business wants to lower prices unless consumers expect them - and it is advertising which performs that role by educating consumers about the competition. Advertising itself is a check on high advertising budgets: as consumers become more educated, competitive pressure creates price wars which force businesses to minimize expenses. 3
Yet another criticism is that advertising is a biased method of consumer education. Yet the continued importance of advertising as an influence on buyers proves that the creator of a good is the party most qualified to communicate the value proposition it offers, whether directly or through an intermediary. While word-of-mouth reports and independent product testing organizations are essential sources of consumer education, competitive pressure through advertising provides the claims whose veracity they evaluate.
Advertising is non-coercive
Opponents of "consumerism" often claim that advertising creates its own demand. But a commercial cannot simply implant a desire in the viewer. Rather, advertising tells consumers how their existing values can be satisfied in a particular concrete form. Some advertisements seek to meet well-defined values: toothpaste for clean teeth. Others educate consumers about products which fill a specific need: sports drinks for athletes, or died colas for the health-conscious. Some advertising functions much like art, and present a concretization of highly abstract or subconscious values. For example, a sports car commercial may appeals to consumers who seek independence and efficiency, while a luxury sedan commercial might appeal to those who value comfort and elegance. Attacking advertising solely for appealing to emotions is as silly as criticizing a painting or a movie for appealing to the viewers’ emotion rather than presenting a dry, factual account.
Ultimately, advertising is a public appeal to the mutual self-interest of the seller and buyer. Movements to silence or limit advertising seek to regulate the freedom of the individual to voluntarily interact with others, and therefore are an assault on both freedom of speech and the right of association.
References:
- Google Books: Jerry Kirkpatrick: In Defense of Advertising: Arguments from Reason, Ethical Egoism, and Laissez-Faire Capitalism.
-
The Five (Wrongheaded) Complaints against Advertising by Jerry Kirkpatrick
- Persistently high advertising budgets are indications of high barriers to entry, usually due to government interference. For example, in the case of drug companies, the FDA forces drug makers to spend up to a billion dollars to deliver a single drug to market. This limits the drug market to all but the largest companies and most profitable medicines. Prescription drugs have large advertising budgets because the legal barriers to entry make it prohibitively expensive to compete on price or quality, or to appeal to smaller markets such as rare diseases.
Further reading:
-
Advertising is Good Medicine by Wayne Dunn
-
A philosophic defense of Advertising by Jerry Kirkpatrick
- Google Books: Jerry Kirkpatrick: In Defense of Advertising: Arguments from Reason, Ethical Egoism, and Laissez-Faire Capitalism.
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There is no right to healthcare
The United States was founded with the declaration that all men have the right to “life, liberty, and the pursuit of happiness.” The Founders recognized that all men have a moral right to be free from the coercion of others, as long as they allow others the same freedom. They believed that rights do not impose a positive obligation on others, but only the negative obligation to restrain from the initiation of force.
The claim that there is a “right to healthcare” violates the principle of individual rights because it requires that the liberty of doctors and the property of taxpayers be violated to provide for others. When the New Deal and Great Society programs forced doctors and taxpayers to become sacrificial offerings to the “common good”, the current “healthcare crisis” was born.
The myth of “free” healthcare
It is a common belief that when government provides something, it is free or cheap. But politicians cannot create wealth – they can only redistribute it. Money for all government spending comes from business – whether by entrepreneurial investment, the wages of patients, or taxes.
Whether by price controls of outright nationalization, when governments make prices artificially low, demand skyrockets, and shortages result. Politicians respond by passing ever more regulations to control costs. These regulations stifle innovation, drive up costs, and force healthcare providers out of business. The end result is to replace capitalism, the greatest wealth-generating system known to man, with an onerous system of central planning.
Capitalism cannot guarantee that all our medical needs will be provided for – no system can do that. But it does give entrepreneurs the incentive to compete to provide the best possible service they can. Centralized socialized systems have no incentive to improve service or to try bold new techniques. Politicians can force prices to be artificially low, but they cannot lower costs – they can only drive doctors, hospitals, and drug companies out of business.
The victims of “universal” healthcare
The waiting time for treatment in Canada varies from 14 to 30 weeks. Waiting lists for diagnostic procedures range from two to 24 weeks. Some patients die while waiting for treatment. To stop sick people from circumventing the “free” system, the government of British Columbia enacted Bill 82 in 2003, which makes it illegal to pay for private surgery. Patients waiting for critical procedures are now forced to seek procedures in the U.S. and doctors are abandoning Canada in droves. Cleveland, Ohio is now Canada’s hip-replacement center. Ontario is turning nurses into doctors to replace some of the 10,000 doctors who left Canada in the 1990’s. 1 2
What will patients do when it is illegal to seek private medical treatment in the U.S.? Politicians are already working towards that goal. State and federal regulation impose onerous regulations which forbid insurance companies from offering services such as basic coverage for emergencies by requiring coverage of many types of procedures. Medicare forces doctors to follow 130,000 pages of regulations. Critics often attack the “capitalist” nature of American health care system. The reality is that the government now pays for 50% of health care, and closely regulates the rest.
Healthcare is only affordable under capitalism
If a society is not wealthy enough to afford healthcare, health socialism will not make it richer. Cuba, a poster child of socialist healthcare schemes, spends $229 on healthcare per person each year, while the U.S. spends $ 6,096.3 Premium services are available only to paying foreigners, while natives must bribe doctors for timely treatment and bring their own towels, bed sheets, soap, food, and even sutures.4
A government can decide to replace individual choice with state-mandated decisions of what goods and services are more important for the “common good.” But it can only spend on one area at the expense of another. If Cubans are not totally deprived of medical treatment, it can only be at the expense of all other goods. A doctor’s salary in Cuba is 1.5 times the median at $15-20 per month. 5 A telling sign of their deprivation is the Cuban suicide rate, which is the highest in Latin America and among the highest in world. Cubans in Miami on the other hand, kill themselves less often than other Miamians.6 When they risk their lives in leaky boats to escape to the U.S., the right to make their own decisions regarding their health is among the freedoms they hope to gain.
References:
- “Free Health Care in Canada” by Walter Williams
- “Do We Want Socialized Medicine?” by Walter Williams
- Reuters: Health care in Cuba more complicated than on SiCKO
- BBC: Keeping Cuba Healthy by John Harris
- “An Evaluation of Four Decades of Cuban Healthcare” by Felipe Eduardo Sixto (PDF)
- Miami Herald: “Study: Suicide epidemic exists under Castro” by Juan O. Tamayo
Further reading:
- Moral Health Care vs. “Universal Health Care” by Lin Zinser and Dr. Paul Hsieh
- Health Care Is Not a Right by Leonard Peikoff, Ph.D.
- Health Care Is a Business—or Should Be by Richard E. Ralston
- Video: Unisured in America (Free Market Cure Documentary Series)
- Americans for Free Choice in Medicine
- FIRM: Freedom and Individual Rights in Medicine
-
The “Cost” of Medical Care by Thomas Sowell
- Michael Moore’s Shticko by Michael C. Moynihan
- NY Times: “As Canada’s Slow-Motion Public Health System Falters, Private Medical Care Is Surging“
- The One Minute Case for Individual Rights
-
There is no right to health care
The United States was founded with the declaration that all men have the right to “life, liberty, and the pursuit of happiness.” The Founders recognized that all men have a moral right to be free from the coercion of others, as long as they allow others the same freedom. They believed that rights do not impose a positive obligation on others, but only the negative obligation to restrain from the initiation of force.
The claim that there is a right to healthcare violates the principle of individual rights because it requires that the liberty of one person be violated to provide for another. When the New Deal and Great Society programs forced doctors and taxpayers to become sacrificial offerings, the current “healthcare crisis” was born.
The myth of “free” healthcare
It is a common belief that when government provides something, it is free or cheap. But politicians cannot create wealth – they can only redistribute it. Money for all government spending comes from business – whether by entrepreneurial investment, the wages of patients, or taxes.
Whether by price controls of outright nationalization, when governments make prices artificially low, demand skyrockets, and shortages result. Politicians respond by passing ever more regulations to control costs. These regulations stifle innovation, drive up costs, and force healthcare providers out of business. The end result is to replace capitalism, the greatest wealth-generating tool known to man, with an onerous system of central planning.
Capitalism cannot guarantee that all our medical needs will be provided for – no system can do that. But it does give entrepreneurs the incentive to compete to provide the best possible service they can. Centralized socialized systems have no incentive to improve service or to try bold new techniques. Politicians can force prices to be artificially low, but they cannot lower costs – they can only drive doctors, hospitals, and drug companies out of business.
The victims of “universal” healthcare
The waiting time for treatment in Canada varies from 14 to 30 weeks. Waiting lists for diagnostic procedures range from two to 24 weeks. Some patients die while waiting for treatment. To stop sick people from circumventing the “free” system, the government of British Columbia enacted Bill 82 in 2003, which makes it illegal to pay for private surgery. Patients waiting for critical procedures are now forced to seek procedures in the U.S. and doctors are abandoning Canada in droves. Cleveland, Ohio is now Canada’s hip-replacement center. Ontario is turning nurses into doctors to replace some of the 10,000 doctors who left Canada in the 1990’s. 1 2
What will patients do when it is illegal to seek private medical treatment in the U.S.? Politicians are already working towards that goal. State and federal regulation impose onerous regulations which forbid insurance companies from offering services such as basic coverage for emergencies by requiring coverage of many types of procedures. Medicare forces doctors to follow 130,000 pages of regulations. Critics often attack the “capitalist” nature of American health care system. The reality is that the government now pays for 50% of health care, and closely regulates the rest.
Healthcare is only affordable under capitalism
If a society is not wealthy enough to afford healthcare, socialism will not make it richer. Cuba, a poster child of socialist healthcare schemes, spends $229 on healthcare per person each year, while the U.S. spends $ 6,096.3 Premium services are available only to paying foreigners, while natives must bribe doctors for timely treatment and bring their own towels, bed sheets, soap, food, and even sutures.4
A government can decide to replace individual choices with state-mandated decisions of what goods and services are more important for the “common good.” But it can only spend on one area at the expense of another. If Cubans are not totally deprived of medical treatment, it can only be at the expense of all other goods. A doctor’s salary in Cuba is 1.5 times the median at $15-20 per month. 5 A telling sign of their deprivation is the Cuban suicide rate, which is the highest in Latin America and among the highest in world. Cubans in Miami on the other hand, kill themselves less often than other Miamians.6 When they risk their lives in leaky boats to escape to the U.S., the right to make their own decisions regarding their health is among the freedoms they hope to gain.
References:
- “Free Health Care in Canada” by Walter Williams
- “Do We Want Socialized Medicine?” by Walter Williams
- Reuters: Health care in Cuba more complicated than on SiCKO
- BBC: Keeping Cuba Healthy by John Harris
- “An Evaluation of Four Decades of Cuban Healthcare” by Felipe Eduardo Sixto (PDF)
- Miami Herald:<a href="http://www.fiu.edu/%7Efcf/suicidepidemic.html"> “Study: Suicide epidemic exists under Castro” by Juan O. Tamayo
Further reading:
-
Health Care Is Not a Right by Leonard Peikoff, Ph.D.
-
Health Care Is a Business—or Should Be by Richard E. Ralston
-
Americans for Free Choice in Medicine
-
The “Cost” of Medical Care by Thomas Sowell
-
Michael Moore’s Shticko by Michael C. Moynihan
-
The One Minute Case for Individual Rights
- “Free Health Care in Canada” by Walter Williams
-
Affirmative Action is racism
Affirmative action refers to a collection of policies intended to promote access to education and employment for minorities and women. In an attempt to guarantee such opportunities, government enforced and voluntary programs impose an assortment of racial criteria on businesses, public offices and universities. Compliance with these programs can often cost hundreds of thousands of dollars in legal and consultant fees as well as significant opportunity costs when organizations are forced make decisions based on race and gender instead of merit.
The underlying evil of all affirmative action programs is that individuals are categorized by their race. This principle inevitably prolongs racism. This is why an anxiety of appearing racist amongst white males is very common in the United States compared to their European counterparts, and why corporations desperately seek to present themselves as non-discriminating and careers are shattered by unjust accusations of racism.
Affirmative Action hurts employers
There are two kinds of jobs affected by affirmative action policies. The first are employment opportunities which seek individuals who possess a minimum set of skills. Some examples include factory workers, cashiers and food service workers. Such affirmative action policies make it more difficult for individuals from non-protected groups to be considered for a position.
Another kind of employment opportunity seeks the best possible candidate for the job. This category includes professorships, managerial and engineering jobs. In order to avoid the appearance of racism, consultancy groups may reluctantly employ an analyst who they know will not produce as many great ideas, hospitals may reluctantly employ a surgeon who they know will not be as effective in the ER, and universities will admit students who they know will not be as diligent.
Affirmative Action hurts employees
Because employment opportunities are given to less qualified, there will be less remaining opportunities awarded to the most qualified. Thus, applicants who don’t belong to a legally protected “under-represented” group compete for fewer positions and therefore face more exclusive standards for selection. As many high school graduates know, SAT scores and GPA requirements for admission to the most competitive of universities are seemingly higher for students of East Asian or East Indian descent. 1
Affirmative Action hurts minorities
A high school student with a below average academic record is likely to be a below average college student. Thus, students admitted through minority recruiting programs often end up in remedial classes with mediocre academic performance. Through simple cause and effect, affirmative action programs prolong the stereotype of minority students finishing near the bottom of their class by encouraging enrollment in universities beyond an appropriate level of difficulty. According to a federal study, just 39% of enrolled black students finish their degrees compared to 54% of white students. 2 Attending a university where the pace of learning is too difficult is just as counterproductive as attempting to lift too much weight at the gym.
The insistence on relaxed admission standards for minority students insinuates that such students are incapable of succeeding without such programs. This insult casts a permanent doubt on the real achievements of high-achieving minorities.Affirmative Action must end
Dr. Martin Luther King Jr. dreamed that one day we would live in a society where individuals would be judged by their character and not the color of their skin. The affirmative action policies of today are both unnecessary and detrimental to minority success. Moreover, they are significant barriers to the establishment of a racially-blind meritocratic society. Justice for all requires the end of affirmative action.
References:
- Syracuse University - Office of Multicultural Affairs
- MSNBC: U.S. college drop-out rate sparks concer
Further reading:
- Inside American Education by Thomas Sowell.
- Individualism–The Only Cure for Racism by Edwin A. Locke
- ARI: Racism and Diversity
- Reason vs. Racism
-
Affirmative Action is racism
Affirmative action refers to a collection of policies intended to promote access to education and employment for minorities and women. In an attempt to guarantee such opportunities, government enforced and voluntary programs impose an assortment of racial criteria on businesses, public offices and universities. Compliance with these programs can often cost hundreds of thousands of dollars in legal and consultant fees as well as significant opportunity costs when organizations are forced make decisions based on race and gender instead of merit.
The underlying evil of all affirmative action programs is that individuals are categorized by their race. This principle inevitably prolongs racism. This is why an anxiety of appearing racist amongst white males is very common in the United States compared to their European counterparts, and why corporations desperately seek to present themselves as non-discriminating and careers are shattered by unjust accusations of racism.
Affirmative Action hurts employers
There are two kinds of jobs affected by affirmative action policies. The first are employment opportunities which seek individuals who possess a minimum set of skills. Some examples include factory workers, cashiers and food service workers. Such affirmative action policies make it more difficult for individuals from non-protected groups to be considered for a position.
Another kind of employment opportunity seeks the best possible candidate for the job. This category includes professorships, managerial and engineering jobs. In order to avoid the appearance of racism, consultancy groups may reluctantly employ an analyst who they know will not produce as many great ideas, hospitals may reluctantly employ a surgeon who they know will not be as effective in the ER, and universities will admit students who they know will not be as diligent.
Affirmative Action hurts employees
Because employment opportunities are given to less qualified, there will be less remaining opportunities awarded to the most qualified. Thus, applicants who don’t belong to a legally protected “under-represented” group compete for fewer positions and therefore face more exclusive standards for selection. As many high school graduates know, SAT scores and GPA requirements for admission to the most competitive of universities are seemingly higher for students of East Asian or East Indian descent. 1
Affirmative Action hurts minorities
A high school student with a below average academic record is likely to be a below average college student. Thus, students admitted through minority recruiting programs often end up in remedial classes with mediocre academic performance. Through simple cause and effect, affirmative action programs prolong the stereotype of minority students finishing near the bottom of their class by encouraging enrollment in universities beyond an appropriate level of difficulty. According to a federal study, just 39% of enrolled black students finish their degrees compared to 54% of white students. 2 Attending a university where the pace of learning is too difficult is just as counterproductive as attempting to lift too much weight at the gym.
The insistence on relaxed admission standards for minority students insinuates that such students are incapable of succeeding without such programs. This insult casts a permanent doubt on the real achievements of high-achieving minorities.Affirmative Action must end
Dr. Martin Luther King Jr. dreamed that one day we would live in a society where individuals would be judged by their character and not the color of their skin. The affirmative action policies of today are both unnecessary and detrimental to minority success. Moreover, they are significant barriers to the establishment of a racially-blind meritocratic society. Justice for all requires the end of affirmative action.
References:
- Syracuse University - Office of Multicultural Affairs
- MSNBC: U.S. college drop-out rate sparks concer
Further reading:
- Inside American Education by Thomas Sowell.
- Individualism–The Only Cure for Racism by
-
Reason vs. Racism
View the full post. -
The cost of software patents
One prominent form of patent abuse is “submarine patents” – patents which lie dormant until someone discovers their similarity to a popular technology. The patent on the GIF image format surfaced a decade after its widespread adoption on the web. The Eolas patent on web browser plug-ins cost Microsoft $521 million and forced tens of millions of web pages to be crippled or redesigned. The RIM patent cost Blackberry $612.5 million and nearly shut down service to millions of people despite the patent itself being invalidated.
Software patents are becoming a major threat to the software industry. The risk of software patent lawsuits forces software companies to obtain defensive patents in order to obtain cross-licensing agreements and discourage patent lawsuits through the threat of counter- suits. An entire industry of patent trolls extorts businesses with bogus patents by taking advantage of the fact that many businesses prefer to pay licensing fees than go to court.
The problem of software patent enforcement
A software algorithm is an abstract description of a general way to solve a problem, such as a mathematical formula. Many algorithms are popular because programmers have found them to be useful in different fields. Algorithms, such as sorting lists and organizing shopping carts are widely recognized as non-patentable. But how can one distinguish obvious ideas from patentable ones? Does the application of an existing algorithm to a new field deserve a patent?
Software patents cripple software development
Software patents make software development risky because it is so difficult to know whether an idea has been implemented before. Over the years, millions of software programs have been written using billions of algorithms. Is it not feasible to have to study thousands of patents to make sure one does not violate the rights of others, while at the same time designing an integrated product. As a consequence, innovative companies are faced with the constant threat of discontinuing products or paying enormous amounts.
The success of companies such as Microsoft, Oracle, SAP, and Apple was not due to monopolizing certain features, but on continually improving on each other’s innovations. In a 1991 memo, Bill Gates wrote
If people had understood how patents would be granted when most of today’s ideas were invented and had taken out patents, the industry would be at a complete standstill today…The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high. Established companies have an interest in excluding future competitors.
Copyrights are a superior alternative to software patents
The same legal principle that protects a book, song, or painting, automatically protects computer programs by forbidding copying or close paraphrasing of the code. Copyrights are straightforward to enforce because it is easy to identify what is being protected: a particular implementation of a set of algorithms to solve a problem, rather than the algorithm itself. They have the advantage of being automatic, free, and only useful against criminals. Copyrights allow the abstract ideas behind a software problem to be created by anyone, but protect an implementation of those ideas in concrete form, so developers who implement their own ideas do not have to worry that someone will put them out of business.
The protection of property rights requires standards that can be objectively enforced. Attempts to protect rights without the guideline of objective criteria will only violate real rights and nullify the benefit of protection.
Further reading:
- Microsoft takes on Linux
- Wikipedia: Arguments against software patents
- League for Programming Freedom: software patents
- The Letters of Thomas Jefferson: 1743-1826 No Patents on Ideas
-
The cost of software patents
One prominent form of patent abuse is “submarine patents” – patents which lie dormant until someone discovers their similarity to a popular technology. The patent on the GIF image format surfaced a decade after its widespread adoption on the web. The Eolas patent on web browser plug-ins cost Microsoft $521 million and forced tens of millions of web pages to be crippled or redesigned. The RIM patent cost Blackberry $612.5 million and nearly shut down service to millions of people despite the patent itself being invalidated.
Software patents are becoming a major threat to the software industry. The risk of software patent lawsuits forces software companies to obtain defensive patents in order to obtain cross-licensing agreements and discourage patent lawsuits through the threat of counter- suits. An entire industry of patent trolls extorts businesses with bogus patents by taking advantage of the fact that many businesses prefer to pay licensing fees than go to court.
The problem of software patent enforcement
A software algorithm is an abstract description of a general way to solve a problem, such as a mathematical formula. Many algorithms are popular because programmers have found them to be useful in different fields. Algorithms, such as sorting lists and organizing shopping carts are widely recognized as non-patentable. But how can one distinguish obvious ideas from patentable ones? Does the application of an existing algorithm to a new field deserve a patent?
Software patents cripple software development
Software patents make software development risky because it is so difficult to know whether an idea has been implemented before. Over the years, millions of software programs have been written using billions of algorithms. Is it not feasible to have to study thousands of patents to make sure one does not violate the rights of others, while at the same time designing an integrated product. As a consequence, innovative companies are faced with the constant threat of discontinuing products or paying enormous amounts.
The success of companies such as Microsoft, Oracle, SAP, and Apple was not due to monopolizing certain features, but on continually improving on each other’s innovations. In a 1991 memo, Bill Gates wrote “If people had understood how patents would be granted when most of today’s ideas were invented and had taken out patents, the industry would be at a complete standstill today…The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high. Established companies have an interest in excluding future competitors.”
Copyrights are a superior alternative to software patents
The same legal principle that protects a book, song, or painting, automatically protects computer programs by forbidding copying or close paraphrasing of the code. Copyrights are straightforward to enforce because it is easy to identify what is being protected: a particular implementation of a set of algorithms to solve a problem, rather than the algorithm itself. They have the advantage of being automatic, free, and only useful against criminals. Copyrights allow the abstract ideas behind a software problem to be created by anyone, but protect an implementation of those ideas in concrete form, so developers who implement their own ideas do not have to worry that someone will put them out of business.
The protection of property rights requires standards that can be objectively enforced. Attempts to protect rights without the guideline of objective criteria will only violate real rights and nullify the benefit of protection.
Further reading:
- Microsoft takes on Linux
- Wikipedia: Arguments against software patents
- League for Programming Freedom: software patents
- The Letters of Thomas Jefferson: 1743-1826 No Patents on Ideas
View the full post. -
What is “net neutrality?”
To borrow Senator Ted Stevens’s infamous analogy of the Internet to a series of tubes, imagine a network of pipes connected by switching stations. The width of a pipe (bandwidth) determines the volume of messages (packets) than can be sent through it. Packets arriving at a switching station wait in a queue until they can be forwarded to their destination. The pipe’s diameter and the volume of traffic determines the total time (latency) that messages take to reach their destination.
Advocates of “net neutrality” argue against the right of the owners of the pipes (Internet Service Providers) to discriminate between different messages or to charge recipients of messages. So for example, an ISP would not be able to favor telephone calls sent over the net over movie downloads, or charge Google extra for the traffic sent their way, or to block a business if it competes with their own services, or to block malicious or illegal websites. Implementation of such regulations would require government surveillance of Internet traffic and FCC approval of new technologies and services which might violate “neutrality.”
Regulation stifles innovation
The limitations of the original Internet protocols became apparent as it transitioned from a monopoly network designed for government use to a competitive and decentralized marketplace. One limitation is the lack of ability to prioritize certain kinds of traffic. Different kinds of communications have different bandwidth requirements. Watching movies over the web is bandwidth-intensive, but not time-critical. Teleconferences are both bandwidth intensive and time critical. Some applications like remote surgery and other time-critical services are simply impossible over the public Internet with current technology.
Advances in technology are beginning to allow traffic to be analyzed in the process of transmission, so certain traffic, such as real-time video can be prioritized, while other traffic such as file sharing or spam can be given a lower priority or dropped. Along with dramatic increases in speed and performance, technological innovation is making entirely new kinds of services possible.
Net neutrality advocates want the government to regulate how ISP’s may and may not route traffic. Pressure groups such as consumer activist groups, major websites, small ISPs, and Internet backbone providers are fighting for controls that favor them. Once the precedent of regulation is established, competition will shift to passing the most favorable legislation rather than providing the best technology and service.
Regulations breed more regulations
While communications technology has experienced exponential growth, heavily regulated and monopolized consumer phone and cable providers have been slower to improve services. Consumers fed up with expensive cable and DSL services are demanding more government controls over the pricing and behavior of their ISP’s. They argue that regulations are necessary because telecommunications companies receive monopoly privileges and other benefits from the government. But the lesson they should learn is the opposite – regulations create the need for more regulations. The solution is to abolish coercive monopolies for cable and phone service providers and allow free and open competition.
The Internet is possible because many private networks find it in their mutual self-interest to cooperate and share traffic loads. When inequalities arise, networks compensate each other for the extra load. “Neutrality” regulations force companies to act against their self-interest, inevitably leading them to complain to Congress to impose ever more detailed controls to maintain “fairness.”
The Internet is private property
The Internet is not public property. Telecommunications companies have spent billions of dollars on network infrastructure all over the world. They did so in the hope of selling communications services to customers willing to pay for them. The government has no right to effectively nationalize ISP’s by telling them how run their networks.
Proponents of net neutrality love to invent hypothetical scenarios of ways companies could abuse customers. It is true that a free society gives people the freedom to be stupid, wrong, and even malicious. The great thing about capitalism is that it also gives people the freedom to decide whom they want to do business with. A socialized Internet takes away that freedom and turn it over to politicians and lobbyists. Why do “net neutrality” advocates ridicule politicians for comparing the Internet to a “series of tubes,” and then trust them to regulate it?
Further reading:
- “A rational debate on Net Neutrality” by George Ou
- “Who Owns the Internet?” by Tim Swanson
- HandsOff.org: Hands Off the Internet
- NetCompetition: Debunking Net Neutrality Myths: A Series of One-Pagers
-
What is “net neutrality?”
To borrow Senator Ted Stevens’s infamous analogy of the Internet to a series of tubes, imagine a network of pipes connected by switching stations. The width of a pipe (bandwidth) determines the volume of messages (packets) than can be sent through it. Packets arriving at a switching station wait in a queue until they can be forwarded to their destination. The pipe’s diameter and the volume of traffic determines the total time (latency) that messages take to reach their destination.
Advocates of “net neutrality” argue against the right of the owners of the pipes (Internet Service Providers) to discriminate between different messages or to charge recipients of messages. So for example, an ISP would not be able to favor telephone calls sent over the net over movie downloads, or charge Google extra for the traffic sent their way, or to block a business if it competes with their own services, or to block malicious or illegal websites. Implementation of such regulations would require government surveillance of Internet traffic and FCC approval of new technologies and services which might violate “neutrality.”
Regulation stifles innovation
The limitations of the original Internet protocols became apparent as it transitioned from a monopoly network designed for government use to a competitive and decentralized marketplace. One limitation is the lack of ability to prioritize certain kinds of traffic. Different kinds of communications have different bandwidth requirements. Watching movies over the web is bandwidth-intensive, but not time-critical. Teleconferences are both bandwidth intensive and time critical. Some applications like remote surgery and other time-critical services are simply impossible over the public Internet with current technology.
Advances in technology are beginning to allow traffic to be analyzed in the process of transmission, so certain traffic, such as real-time video can be prioritized, while other traffic such as file sharing or spam can be given a lower priority or dropped. Along with dramatic increases in speed and performance, technological innovation is making entirely new kinds of services possible.
Net neutrality advocates want the government to regulate how ISP’s may and may not route traffic. Pressure groups such as consumer activist groups, major websites, small ISPs, and Internet backbone providers are fighting for controls that favor them. Once the precedent of regulation is established, competition will shift to passing the most favorable legislation rather than providing the best technology and service.
Regulations breed more regulations
While communications technology has experienced exponential growth, heavily regulated and monopolized consumer phone and cable providers have been slower to improve services. Consumers fed up with expensive cable and DSL services are demanding more government controls over the pricing and behavior of their ISP’s. They argue that regulations are necessary because telecommunications companies receive monopoly privileges and other benefits from the government. But the lesson they should learn is the opposite – regulations create the need for more regulations. The solution is to abolish coercive monopolies for cable and phone service providers and allow free and open competition.
The Internet is possible because many private networks find it in their mutual self-interest to cooperate and share traffic loads. When inequalities arise, networks compensate each other for the extra load. “Neutrality” regulations force companies to act against their self-interest, inevitably leading them to complain to Congress to impose ever more detailed controls to maintain “fairness.”
The Internet is private property
The Internet is not public property. Telecommunications companies have spent billions of dollars on network infrastructure all over the world. They did so in the hope of selling communications services to customers willing to pay for them. The government has no right to effectively nationalize ISP’s by telling them how run their networks.
Proponents of net neutrality love to invent hypothetical scenarios of ways companies could abuse customers. It is true that a free society gives people the freedom to be stupid, wrong, and even malicious. The great thing about capitalism is that it also gives people the freedom to decide whom they want to do business with. A socialized Internet takes away that freedom and turn it over to politicians and lobbyists. Why do “net neutrality” advocates ridicule politicians for comparing the Internet to a “series of tubes,” and then trust them to regulate it?
Further reading:
- “A rational debate on Net Neutrality” by George Ou
- “Who Owns the Internet?” by Tim Swanson
- HandsOff.org: Hands Off the Internet
- NetCompetition: Debunking Net Neutrality Myths: A Series of One-Pagers
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Public schools are immoral
The title “public schools” is misleading. In almost all cases, these schools are run by the government, taught with government mandated curricula and run in a top-down fashion from state and local bureaucrats. “Government schools” is a more appropriate title.
All citizens are forced to contribute thousands of dollars towards government education through taxation regardless of their usage. Parents who home school or send their children to a private institution must pay for education twice. Because the government maintains a coercive monopoly in the education market, it is extraordinarily difficult for private institutions to compete when children can be enrolled at a government school at no marginal cost.
Furthermore, parents have the right to choose a school based on its overarching philosophy and its academic focus. Instead, parents must contribute to institutions that teach sexual harassment to primary school children, present creationism alongside with evolution or pledge to leave “no child left behind” even if it stunts the education of the more motivated children.
Government schools don’t work
By financially crippling their competition, government schools can afford to offer a lackadaisical education. A shocking number of high school graduates are illiterate and an embarrassing number struggle to write complete, coherent sentences. Worst of all, students do not learn how to think. Graduates typically have strong opinions on political and moral issues but are unable to offer a cogent argument for their convictions.
Government schools can’t hire quality teachers
Government schools can also afford to maintain a sub-standard workforce. Tenure is a system that rewards teachers who have seniority and play office politics. Tenured educators have an enormous amount of job security regardless of their competence. Terminating a tenured teacher’s contract is an elaborate, costly process as teachers’ unions invariably litigate the decision. Not only does this encourage retention of mediocre teachers but this also removes the incentive for educators to continue to develop new skills.
Moreover, the current near monopoly also cripples employment opportunities for educators. Not only are positions limited, but salaries are also dictated by bureaucrats and lobbyists, not the market. Public schools cannot offer merit-based salaries to attract more qualified professionals.
Government schools can’t compete with private school
Because they are immune from market pressures, government schools can also afford to allow costs to balloon to inexcusable proportions as costs of education are included in taxes and inflation. Washington DC spends over $12,000 per student each year - the highest cost in the nation. It also happens to have the lowest public school test scores of any state in the nation. A good private school will start at $8,000- $10,000 per year - so the median income DC resident would have to pay $22,000 to send one child to private school. Nationwide, public school teachers are almost twice as likely as other parents to choose private schools for their own children, a study by the Thomas B. Fordham Institute found.
Privatizing education benefits everyone
A common misconception is that privatizing education will only benefit the wealthy. This is wrong. Removing government controls on schools will raise the standard of education for everyone.
Even if one insists on government subsidized education, children from impoverished backgrounds will be immeasurably better off if given a voucher to attend a private academy of their choice. This is portended by the successful programs in Milwuakee, Cleveland and Washington D.C. Although vouchers are an improvement, a direct tax credit for education would be far superior as it requires even less interference on the economy.
Further reading:
- Market Education: The Unknown History by Andrew Coulson
- Leonard Peikoff. “The American School: Why Johnny Can’t Think” in The Voice of Reason: Essays in Objectivist Thought. (Also on CD)
- Tax Credits for Education by Ayn Rand, The Voice of Reason: Essays in Objectivist Thought.
- Inside American Education by Thomas Sowell
-
Public schools are immoral
The title “public schools” is misleading. In almost all cases, these schools are run by the government, taught with government mandated curricula and run in a top-down fashion from state and local bureaucrats. “Government schools” is a more appropriate title.
All citizens are forced to contribute thousands of dollars towards government education through taxation regardless of their usage. Parents who home school or send their children to a private institution must pay for education twice. Because the government maintains a coercive monopoly in the education market, it is extraordinarily difficult for private institutions to compete when children can be enrolled at a government school at no marginal cost.
Furthermore, parents have the right to choose a school based on its overarching philosophy and its academic focus. Instead, parents must contribute to institutions that teach sexual harassment to primary school children, present creationism alongside with evolution or pledge to leave “no child left behind” even if it stunts the education of the more motivated children.
Government schools don’t work
By financially crippling their competition, government schools can afford to offer a lackadaisical education. A shocking number of high school graduates are illiterate and an embarrassing number struggle to write complete, coherent sentences. Worst of all, students do not learn how to think. Graduates typically have strong opinions on political and moral issues but are unable to offer a cogent argument for their convictions.
Government schools can’t hire quality teachers
Government schools can also afford to maintain a sub-standard workforce. Tenure is a system that rewards teachers who have seniority and play office politics. Tenured educators have an enormous amount of job security regardless of their competence. Terminating a tenured teacher’s contract is an elaborate, costly process as teachers’ unions invariably litigate the decision. Not only does this encourage retention of mediocre teachers but this also removes the incentive for educators to continue to develop new skills.
Moreover, the current near monopoly also cripples employment opportunities for educators. Not only are positions limited, but salaries are also dictated by bureaucrats and lobbyists, not the market. Public schools cannot offer merit-based salaries to attract more qualified professionals.
Government schools can’t compete with private school
Because they are immune from market pressures, government schools can also afford to allow costs to balloon to inexcusable proportions as costs of education are included in taxes and inflation. Washington DC spends over $12,000 per student each year - the highest cost in the nation. It also happens to have the lowest public school test scores of any state in the nation. A good private school will start at $8,000- $10,000 per year - so the median income DC resident would have to pay $22,000 to send one child to private school. Nationwide, public school teachers are almost twice as likely as other parents to choose private schools for their own children, a study by the Thomas B. Fordham Institute found.
Privatizing education benefits everyone
A common misconception is that privatizing education will only benefit the wealthy. This is wrong. Removing government controls on schools will raise the standard of education for everyone.
Even if one insists on government subsidized education, children from impoverished backgrounds will be immeasurably better off if given a voucher to attend a private academy of their choice. This is portended by the successful programs in Milwuakee, Cleveland and Washington D.C. Although vouchers are an improvement, a direct tax credit for education would be far superior as it requires even less interference on the economy.
Further reading:
- Market Education: The Unknown History by Andrew Coulson
-
The American School: Why Johnny Can’t Think by Leonard Peikoff, The Voice of Reason: Essays in Objectivist Thought. (Also on CD)
- Tax Credits for Education by Ayn Rand, The Voice of Reason: Essays in Objectivist Thought.
-
Inside American Education by Thomas Sowell
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Environmentalism versus humanity
The premise behind the environmentalist movement is the belief that nature untouched by human influence has inherent moral value, and therefore the influence of man, and especially that of industrial civilization, is immoral. What leading environmentalists oppose is not the threat to human life posed by environmental destruction, but man’s exploitation of nature to improve its ability to sustain human life.
In the words of popular environmentalist Bill McKibben, “The problem is that nature, the independent force that has surrounded us since our earliest days, cannot coexist with our numbers and our habits. We may well be able to create a world that can support our numbers and our habits, but it will be an artificial world. . . .” The environmentalist attack on the “artificial” extends to all human manipulation of the environment. While few advocates of environmentalism recognize it as such, the ultimate goal of the environmentalist movement is the total destruction of industrial civilization, and the vast majority of the human race whose existence is made possible by it.
Environmentalism versus the mind
Human beings have evolved over millions of years to survive by using their reasoning mind. There is nothing “unnatural” about this. It is human nature to think and use technology to enrich our lives. We are as much a part of the “natural world” as any other creature. Instead of claws, fangs, or the heightened senses of animals, we have our minds and hands. The difference between our comfortable lives and the short, dangerous, and miserable existence that our ancestors eked out in trees, caves, and caverns is continually made possible by application of reason to the problem of survival.
Shackling man’s mind by preventing him from applying it to improve his condition would ultimately lead to our extinction. The genetic and biochemical tools which made the Green Revolution possible feed billions of people today. Farming machinery feeds billions more. Undoing the industrial revolution would eliminate the vast majority of productivity improvements in agricultural production and distribution. To the extent that we cripple technology, we cripple our ability to exist as human beings.
Capitalism is the solution to environmental destruction
The usual response to environmental destruction is a call for more government controls of industry. However it is the lack of property rights, not capitalism which is responsible for environmental destruction, as the history of socialist states aptly demonstrates.1
According to Roy Cordato2,
Environmental problems occur because property rights, a requirement of free markets, are not being identified or enforced. Problems of air, river, and ocean pollution are all due to a lack of private property rights and/or protection. Since clarifying and enforcing property rights is the basic function of government in a free society, environmental problems are an example of government failure, not market failure.
In a free society, environmental problems should be viewed in terms of how they impinge on human liberty. Questions should focus on how and why one person’s use of resources might interfere with the planning and the decision making abilities of others. Since, legitimately, people can only make plans and decisions with respect to resources that they have “rights” to, environmentalism that has human wellbeing as the focus of its analysis, must center on property rights.Even if some environmental dangers are real, we would be much better equipped to deal with them by embracing prosperity and technological progress than surrendering to the indisputable danger of nature to those who give up their primary means of survival. As Ayn Rand put it,3
City smog and filthy rivers are not good for men (though they are not the kind of danger that the ecological panic-mongers proclaim them to be). This is a scientific, technological problem—not a political one—and it can be solved only by technology. Even if smog were a risk to human life, we must remember that life in nature, without technology, is whole-sale death.References:
- Thomas J. DiLorenzo. “Why Socialism Causes Pollution” The Freeman: Ideas on Liberty, March 1992.
- Roy E. Cordato. “Market Based Environmentalism vs. the Free Market” June 4, 1999
-
Ayn Rand. “The Anti-Industrial Revolution,” Return of the Primitive, 282. 1971
- The One Minute Case Against Global Warming Alarmism
- The Objectivism Wiki: Environmentalism
- The Ayn Rand Institute: Environmentalism and Animal Rights
- “Environmentalism as Religion” by Michael Crichton
- Earth4Man: Save The Earth From The Environmentalists
-
JunkScience.com
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“Price gouging” is a derogatory term for “unfair” prices on goods, typically in an emergency. The problem is that the perception of “unfairness” is totally arbitrary and stems from an ignorance of basic economics. Rather than create “fair” outcomes, “price gouging” regulations create the very problems they are supposed to solve.
What are prices?
A price is the value demanded by a seller in exchange for a good. The money paid for goods makes production of more goods possible. When the demand for a good suddenly goes up or the supply goes down, sellers raise prices to avoid a shortage. Higher prices cause consumers to limit their consumption. Higher profits pay for money to be invested in expanding production, and encourage other producers to redirect production from other uses to the goods most urgently demanded.
The deleterious effects of price controls
Consider what happens when politicians attempt to control a run on gas precipitated by an imminent hurricane:
When price controls are imposed, the market’s ability to respond to an emergency is hamstrung. Rather than distributing gas to those who value it the most, products are distributed to those who buy it first. This encourages those with political pull, the time to wait in endless lines, or simply the most cautious and panicky individuals to rush to fill up their cars at the first sign of trouble. Runs begun whenever a minority of people expects a rapid increases in demand, and the entire stock is quickly consumed by a few. To recoup the higher costs of delivering gas in emergencies and offset the risk of a run, gas stations keep prices at a higher overall level for a longer time.
Price gouging saves lives
Absent price controls, gas stations raise prices in an emergency to a level where everyone who is willing to pay the new price is able to buy gas. Badly needed resources are delivered to those who need them most. Rather than buying out stocks, consumers ration usage of expensive goods. Those in the most vulnerable areas are able to pay a higher price for the gas they desperately need, while individuals who are less vulnerable wait until stocks are replenished.
Price gouging remedies shortages
In addition to distributing existing stocks more efficiently, high profits pay for the higher cost of delivering supplies to a dangerous area. They also encourage stocks in other locations to be redirected to where they are most needed. The market’s natural response to shortages is far superior to government planning of how much of everything is needed and where. This was aptly demonstrated after Hurricane Katrina, when FEMA paid truckers exorbitant amounts to ship thousands of tons of badly-needed ice around the country before finally throwing it out.
Price gouging is the best solution to price gouging
A rapid price increase in anticipation of an emergency reassures buyers that supplies will be needed if necessary, resolving the problem of runs caused by false alarms. In the long run, a high price on gas during an emergency encourages consumers to be better prepared for emergencies and find alternate means of transportation and encourages and pays for suppliers to increase production. Rather than face dry pumps during emergencies, consumers in vulnerable regions will pay a slightly higher price for fuel stations and stores to maintain higher reserves. Ultimately, the market’s natural response to shortages dampens price increases and shortens waiting lines.
Further reading:
- Defining Gasoline Price ‘Gouging’ by Thomas Sowell
- Price Gouging Saves Lives by David M. Brown
- Real World Economics by Ed Lotterman
- The Myth of “Price-Gouging” by Alex Epstein
-
Who Is Gouging Whom? by David Holcberg
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Iran is the global leader of Islamic Totalitarianism
During the Iranian Revolution in 1979 a group of militant university students stormed a United States embassy, taking 52 United States citizens hostage for 444 days. These students were not a violent, autonomous faction but a group that received the whole-hearted support of the post-revolution Islamic regime of Ayatollah Khomeini.
Ever since, Iran’s financial, ideological and political sanctions of terrorism have been numerous. Iran supports Hezbollah who, amongst many other attacks, have been responsible for the bombing of the U. S. Marine Corps barracks in Beirut in October 1983, the detonating of the Khobar Towers apartment complex in Saudia Arabia and the 1994 blasting of a seven-story building in Buenos Aires.1 Furthermore, Iran offers passionate ideological, political and in many cases economic support of both Hamas and Islamic Jihad, two Islamic militant organizations whose stated goal is the destruction of Israel.
Does the current Iranian President distance his administration from this recent history of fanatical bloodshed? Quite the opposite; President Ahmadinejad proudly identifies himself as a child of the (Iranian) revolution and has publicly rejoiced “God willing, with the force of God behind it, we shall soon experience a world without the United States and Zionism.” 2 Moreover, the Islamic Revolutionary Guard Corps (IRGC), the largest branch of the Iranian military, has been providing deadly weapons to radical Shiite insurgents in Iraq. 3
Iran’s motives are not peaceful
After taking office, President Ahmadinejad immediately transferred Iran’s nuclear program under military control and his administration has continued the clandestine relocation of nuclear technologies to fortified underground complexes. Furthermore, there are numerous, recently unearthed top-secret nuclear weapons components in Iran that are all simultaneously progressing. This includes a beryllium program, a metal commonly used in missiles and other aerospace products, an acquiring of a series of hot isostatic presses, which are commonly used to shape atomic weapons and a CMC production program, a graphite material commonly used in heat shields for nuclear weapons. 1 In addition, Iran has recently purchased 18 smuggled nuclear-capable cruise missiles on the Ukrainian black market. 4 Lastly, Iran has sought to bolster its defensive capability after agreeing to purchase 29 anti-missile defense systems from Russia. 5
Iran has also uniformly rejected all diplomatic approaches that involved any significant delay in their accelerated pursuit, including proposals to have their uranium enriched in Russia, which would have given the Islamic state access to a nuclear fuel cycle while the Russians would ensure the program is peaceful. 6
Power to weapons is just a matter of enrichment
Low-enriched uranium (LEU) is the fuel that is needed to run nuclear power reactors and high-enriched uranium (HEU) is what is needed for nuclear weapons. It is important to recognize that it takes significantly more resources to enrich uranium to LEU levels than it does to subsequently proceed to enrich uranium to HEU levels. By the time Iran can successfully mass produce LEU, it will have done 80 percent of the work in producing HEU for use in nuclear weapons. 1
Rights are forfeited after threatening to initiate force
A nation who protects, finances or endorses terrorists is a nation that encourages the violation of the inalienable rights of others. Such a nation has absolutely no right to any technology that will enhance its offensive capability.
The evidence that the Iranian Government has no respect for individual rights is undeniable. President Ahmadinejad has issued repeated unabashed threats to eradicate Israel and has insinuated that Iran will take appropriate military action if their pursuit of uranium enrichment technology is blocked. Iranian schoolchildren are taught to chant “Death to America” and are indoctrinated with anti-Western propaganda. Tehran is decorated with murals encouraging the destruction of the United States. Apostates are still threatened with the death penalty from the state.
If the Iranian government wishes to receive the right to uranium enrichment technology, it must issue a total renunciation of Islamic Totalitarianism, including a political condemnation of the activities of Hezbollah, Hamas and Islamic Jihad. In addition, Iran must impose a strict separation of mosque and state and it must embrace a constitution that protects individual rights. Until such overhauls are honestly completed, Iran has no rights to uranium enrichment technology.
References:
- The Iran Threat: President Ahmadinejad and the Coming Nuclear Crisis by Alireza Jafarzadeh
- Mahmoud Ahmadinejad threatens Israel with destruction. CNN, October 27, 2005
- Bush: Iran Involved in Sending Weapons to Iraq. ABC news, February 14, 2007.
- Cruise missile row rocks Ukraine. BBC News, March 18, 2005
- Russia Fills Iran’s Air Defense Missile Contract. Fox News, January 23, 2007
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Iran rejects Russia nuclear plan. BBC News, January 1, 2006
Further Reading:
- “Iran attack debate raises nuclear prospect” BBC News, April 10, 2006.
- “No Substitute for Victory”: The Defeat of Islamic Totalitarianism by Dr. John Lewis, The Objective Standard, Volume 1, Number 4.
-
In the Path of God: Islam and Political Power by Daniel Pipes
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What is technology?
Technology is the sum of material entities created by the application of mental and physical effort to nature in order to achieve some value. Technological progress is made possible by engineering, the field which applies scientific knowledge to solve practical problems by developing and applying new tools, machines, materials and processes.
The history of technology.
The evolution of technology has been a progression from reliance on physical effort to a growing role for the mind. The first tools, such as chisels and hammers, augmented raw muscle power. The creation of powered machines eliminated the reliance on muscle and allowed much more powerful mechanisms to be built than with human or animal power alone. The introduction of the automaton in the twentieth century embedded human knowledge in machinery. The trend continues as human beings improve their ability to exploit nature to meet their values through the use of automation and achieve more and more material values by mental effort.
Does technological progress cause unemployment?
In 1811, the Luddites became alarmed that technological innovations introduced by the Industrial Revolution threatened their livelihood. In a sense, they were right - most jobs that existed in 1811 have made superfluous by technology, this process continues today. Yet outside of wage and price controls and other forms of interventionism, large-scale unemployment has never been a threat. Technology has not made most people permanently idle because it not only eliminates dreary, labor-intensive jobs, but also frees us to pursue more activities. The tremendous improvements in productivity that came with the Industrial and Information Revolutions gave us more free time and created opportunities to allow us to discover and pursue new passions. Highly repetitive agricultural and manufacturing jobs have been replaced by service industry and technical jobs. Entirely new institutions, such as professional and amateur sport leagues, museums, and online multiplayer clans have evolved as the public’s free time has grown.
Is technology good?
While the industrial revolution greatly improved the quality and longevity of human life, war and threat of nuclear annihilation have demonstrated the destructive power of technology. Rapid technological progress makes it likely that future inventions will increase both its creative and destructive potential. Yet there is reason to be optimistic that technology will be used for good.
While technology can be subverted and copied to serve evil, societies which enslave the human mind cannot sustain the capital stock or the intellectual base necessary for progress. Technological progress requires a society which values rationality, initiative, and voluntary cooperation. Most important is the need for freedom: inventors must be free to propose new ideas, and entrepreneurs must be free to turn them into reality. The failure of Fascism and Communism, and the success of the United States in the 20th century is a powerful testament to the power of a free society.
What is the future of technology?
Technological evolution follows two trends: the replacement of physical labor with more efficient mental labor, and the resulting greater degree of control over our natural environment, including our ability to transform raw materials into ever more complex and pliable products. This process culminates with man’s ability to achieve all of the material values technologically possible to him by mental effort. (It is unlikely however, that we will want to do this, since we enjoy some forms of physical labor – such as gardening, weaving, driving, or brushing our hair.)
The growing importance of intellectual activity implies that intellectual property will become increasingly more important relative to material labor and physical goods. The current system of patent laws and copyrights will evolve dramatically as intellectual transactions evolve to meet the requirements of a civilization with rapid innovation on a global scale.
Further reading:
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Science is an epistemological method
Science is the field which applies reason to the study of nature. Science is necessary because knowledge of how nature works is not self-evident, but requires a systematic method to collect evidence and correctly interpret it. Science is different in degree from informal empirical methods such as “trial and error” and in kind from non-empirical methods such as revelation, astrology, or emotionalism.
Science is the application of philosophy to specialized fields
Science is made possible by the acceptance of certain philosophical axioms in metaphysics and epistemology. In metaphysics, science requires recognizing that all entities behave in a causal manner according to their nature. In epistemology, it recognizes that man is capable of perceiving and understanding reality by the use of his senses, and because his consciousness is fallible and not automatic, he needs to actively adhere to reason and logic to reach the right conclusions.
Science is empirical
The scientific method is a formal methodology for using reason to study nature. Proper application of the scientific method can produce a scientific theory — a unifying and self-consistent explanation of fundamental natural phenomena derived from the evidence. Some essential principles of science are:
- Observation: scientists attempt to sample and describe the full range of observed phenomena, ideally including the use of controls which counterbalance the risk of empirical bias.
- Causal explanation: a scientific theory must provide a causal identification of the underlying processes of particular phenomena.
- Prediction: scientific theories must explain nature in a replicable way, so that hypothesized causes correlate with observed events.
- Falsifiability: the ability to eliminate plausible alternatives by repeated experimentation of observation. This requires scientific theories to be formulated in a way which can be independently tested and corroborated by others.
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Integration: new theories must integrate with the existing body of scientific knowledge. When a contraction is found, the theory must be amended or discarded if not compatible with the evidence.
Science is hierarchical
Scientists build on existing work to form a hierarchical body of knowledge. Sometimes new evidence disproves existing theories. In other cases, new evidence may show that an existing theory is not a complete explanation in all contexts. For example, Einstein’s relativity theory did not prove Isaac’s Newton classical mechanism wrong. Classical mechanics is valid in the context of non-relativistic speeds, whereas general relativity theory explains for a wider range of behavior. Quantum mechanics provides evidence that a new theory is necessary on the sub-atomic scale. As scientific knowledge delves ever deeper into the fabric of the universe, new theories build on existing knowledge.
Pseudoscience versus science
The tremendous success of science in learning about the material world and applying that knowledge to benefit mankind has encouraged some anti-scientific movements to adopt a facade of scientific verbiage to mask an anti-scientific, anti-reason ideology. Some indicators of non-scientific reasoning are:
- Use of vague and untestable claims which cannot be independently corroborated.
- Reliance on testimonials and anecdotes rather than carefully structured, large scale studies.
- Argument of ignorance: placing the burden of proof on skeptics.
- Evasion of peer review combined with claims of institutional conspiracies to suppress results.
- Lack of progress beyond the initial theory. For example, in the case of astrology and religion, claims can remain unproven for thousands of years.
Further reading:
- Steven D. Schafersman: An Introduction to Science: Scientific Thinking and the Scientific Method
- Wikipedia: Philosophy of science
- Wikipedia: Scientific Method
- Wikipedia: Francis Bacon
-
Wikipedia: Pseudoscience
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The opposition to sweatshops
Opposition to “sweatshops” originated with the socialist movement and the first labor unions, and these groups remain their most vocal critics today. For labor unions, sweatshops are both competition and evidence that unions are not needed to raise wages and improve working conditions. For socialists, sweatshops are their last, best hope, that somewhere, somehow, capitalism is causing suffering. Here are some of the loudest arguments against sweatshops:
Sweatshops pay low wages and subject workers to harsh conditions
It is ignorant and misleading to hold businesses in the developing world to the same standards as those in the West. Multinational companies face entirely different challenges and expenses than in the West: oppressive, unpredictable, and corrupt governments, long distances, language and cultural barriers, lack of a skilled or educated workforce, primitive infrastructure, and labor activists back at home.Consider the condition of third world countries before the multinationals arrival. The majority of people live in the same state as they have for all of human history – in a permanent state of near-starvation, with no jobs and no future to look forward to other than the backbreaking labor of subsidence farming. Everyone works from almost from the time that he or she can walk, and most children die young from starvation or malnutrition. If they are lucky, they find work as scavengers, farm hands, prostitutes, beggars, petty criminals, or trash collectors.1
Sweatshops” offer a considerable improvement from this state: Sweatshop wages are more than double the national average in Cambodia, Haiti, Nicaragua, and Honduras. In Honduras, where almost half the working population lives on $2/day, “sweatshops” pay $13.10/day.2
Sweatshops use child labor
Child labor is necessary in the developing world because given the low productivity of their parents, the alternative is starvation. According to a 1997 UNICEF study, 5,000 to 7,000 Nepalese children turned to prostitution after the US banned that country’s carpet exports in the 1990s, and after the Child Labor Deterrence Act was introduced in the US, an estimated 50,000 children were dismissed from their garment industry jobs in Bangladesh, leaving many to resort to jobs such as “stone-crushing, street hustling, and prostitution.” The UNICEF study found these alternative jobs “more hazardous and exploitative than garment production. The only way to eradicate child labor is the same as in was eliminated the West – by raising the productivity of adults sufficiently to feed their families.
Sweatshops are coercive environments
Workers in sweatshops are free to quit or look for another job anytime, but they remain because they consider it the next best alternative. Their pay and working conditions seem low to us, but they are an economic step forward compared to subsistence farming. Real slavery exists today not due to economic development, but due to totalitarian regimes that do not recognize basic human rights such as North Korea, Cuba, and the Islamist militias of Sudan.
Sweatshops destroy local cultures
One criticism with a kernel of truth, is that globalization obliterates local cultures by exporting Western values. Capitalism does encourage certain values such as productivity, rationality, independence, and equality of opportunity, which are incompatible with the fatalism, tribalism, caste-based discrimination, and misogyny of most primitive societies. Rather than condemn these values, we should recognize that they are responsible for the tremendous material success of Western civilization and urge their adoption worldwide.
References:
- UNICEF: State of the World’s Children 1997
-
Ben Powell and David Skarbek: Sweatshops and Third World Living Standards: Are the Jobs Worth the Sweat? Journal of Labor Research; Spring 2006.
Further Reading:
- Robert W. Tracinski: The “Sweatshop” Scam
- Thomas DiLorenzo: How “Sweatshops” Help the Poor
- Benjamin Powell and David Skarbek: Don’t get into a lather over sweatshops
- Wikipedia: Sweatshop
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Why not be self-sufficient?
Do you make your own shoes? If you invested some time learning shoemaking, you could save the money you regularly spend on new shoes. What about butter - why not churn your milk? If, like cavemen, everyone was entirely self-sufficient, our monthly spending would be zero. That would be fortunate, because our income would be zero as well, since no one would buy anything from us either.
Everyone outsources
We don’t make everything ourselves because we don’t have the time to produce everything we want. Humans learned long ago that it is beneficial to trade our specialized labor in one field for the labor of others in another, with money as the means of exchange. The difference between the short hardscrabble lives of a hunter-gatherer society and our relatively luxurious existence is due to the gains in efficiency made possible by voluntary exchange.
Everything is outsourced
In “I, Pencil”, Leonard Read writes that there isn’t a single person on earth who knows how to make a pencil. The process of acquiring and assembling the cedar, lacquer, graphite, ferrule, factice, pumice, wax, and glue that compose a pencil are performed by thousands of people all over the world. No one individual is capable of understanding all the processes involved or arranging all the transactions that deliver the necessary supplies to the right step. Voluntary exchange between individuals who know only their immediate trading partners makes possible a process that no central planner could design. None of the participants engage in it because they need a pencil, but because they want the goods and services others produce in order to buy a pencil.
A policy of free trade is beneficial even when it is unilateral
Some isolationists argue that foreigners have “unfair” advantages due to lax labor or environmental regulations, industry subsidies, or restrictions on imports abroad. But such arguments miss the whole point of trade. Capitalism is not a zero-sum game where profits are redistributed from one producer to another. Consumers who buy cheap foreign goods make their money available to buy other products, increasing everyone’s living standards. Domestic producers who lose sales to cheaper foreign goods benefit from increased consumer spending at home, and foreigners with dollars clamoring to spend them.
Governments who subsidize export industries only rob their taxpayers to pay foreign buyers. When France subsidizes steel exports, American steel foundries lose money, but Americans get cheaper consumer goods, and “free” Euros to buy goods that would have belonged to French taxpayers. Ultimately, restrictions on trade based on international borders are arbitrary and just as destructive as internal barriers.Trade deficits and surpluses are natural states of economic development
The U.S. has a trade deficit when foreigners accept more U.S. dollars for their products than vice versa. If a deficit were to continue indefinitely, Americans would have a permanent supply of “free” foreign goods, since dollars are worthless if they are never spent. Foreigners trade at a deficit with America because they are confident that the we will have products they want sometime in the future. Likewise, we accumulate foreign currency in the belief that foreign goods will be valuable. Surpluses and deficits are natural states that every nation experiences as it varies between being a net recipients of investments or a net investor.
Further reading:
- Mark Brandly: A Primer on Trade
- Harry Binswanger: ‘Buy American’ is UN-American
- Leonard Read: I, Pencil
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The origin of apocalyptic overpopulation theory
In his 1798 Essay on the Principle of Population, Thomas Malthus argued that the growth in the food supply is linear, whereas the growth in the population rate is exponential. Whenever the population exceeds the food supply, social turmoil erupts until drastic checks such as famines, wars, and epidemics lowered populations down to sustainable levels. The only way to avoid periodic disaster is to implement a strict population controls, which have historically included both voluntary restraints, as well as coercive measures such as limits on family size and mass sterilization of “undesirable groups.”
Malthus was wrong
Malthus predicted a population crash by the middle of the 19th century. In reality, living standards have increased over sixty times since 1820 despite a tripling of the European population in the 18th century.1 Meanwhile, family sizes fell naturally without the need for coercive measures.
Nevertheless, modern Malthusians perpetually extend the date of the inevitable apocalypse to the near future. Faced with the astounding growth of agricultural yields which virtually eliminated hunger in the West, environmentalists are continually discovering new resources to run out of, whether fossil fuels, metals, land, or water.
The discrepancy is explained by two errors in the Malthusian model: the population growth rate is not exponential, while the potential growth in human productivity is.Family size is subject to individual cost/benefit analysis.
The reason for the natural decline in population growth rates is that children are much more expensive in industrial countries. Increasing productivity levels in the developed world mean higher standards of living, lower child mortality, and a higher opportunity cost of having children. Child labor is no longer necessary for families to survive, and children have become expensive in terms of both direct expenses and lost economic opportunities for parents. Rather than working in farms or factories to keep younger siblings alive, a smaller number of kids can take care of parents in old age. Welfare programs for seniors have actually tipped the balance below equilibrium levels in most developed nations.
Capitalism allows unlimited productivity improvements
Malthusian scenarios assume that the resources available to meet human needs are fixed — that each new human being requires a fixed amount of land, metal, and fossil fuels to live. But human values are ever-shifting, and so are the means to provide those values. Each baby born not only creates new demand for the products of civilization, but also provides new resources and insight for meeting those needs.
Our living standards are rising because we are finding more efficient ways to harvest existing resources, and improving the technology to produce the goods we consume. We are also exploiting new resources to create those goods. Whale oil, rubber trees, and native forests for paper and fuel have been replaced by petroleum, plastics, tree farms, and coal. This is possible because a free society allows a growing capital and knowledge base to be multiplied by entrepreneurs who find new methods to improve human life, resulting an exponential growth in wealth.
Malthus’s model applies to animals and collectivists
The Malthusian population model is not entirely without merit. Charles Darwin realized that it applies to the animal kingdom because animals lack the capacity to volitionally control reproductive rates, and their productivity is fixed by biology. Whereas humans adopt to environmental changes, animal populations can crash rapidly when the carrying capacity of their environment changes.
Human society experiences the same pattern in preindustrial and totalitarian societies. Whether it is the crushing mold of tradition or stagnant socialist states, when the potential of human beings to apply their mind to improve their quality of life is stifled, humans are reduced to survival on the animal level, and suffer similar cycles of periodic famines.
Further reading:
- Our Techno-Utopian Future: Fallacies and Predictions
- The Malthusian Trap by Benjamin Marks
- Wikipedia: Thomas Malthus
- Andrew Bernstein: Global Capitalism: The Solution to World Oppression and Poverty
References:
Press, 1982), pp. 4-7.
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Man is the rational animal
Like all living things, man requires certain values to survive, but he is unique in that he must choose the values necessary for his life because he has no automatic means of doing so. His ability to experience the world around him and comprehend it by the use of reason gives man the capacity to understand the values his life requires, and then achieve them. Every value we enjoy in our civilized, comfortable, existence is the product of the application of man’s mind to reality.
There is no “collective mind”
All creative effort, every invention in history, was created by the mental effort of individual men and women. Sometimes they worked together, and their knowledge was increased by the work of predecessors, but each advance they made was their own. The mind cannot be received, shared, or borrowed.
Man requires freedom to live
To live, man must achieve the values necessary to sustain his live. To achieve values, man must be free to think and to act on his judgment. Restrictions on freedom force man to focus not on the absolutes of reality, but on the arbitrary ideas of others. In a free society, a man can choose to not associate with those who do not respect his judgment – by finding a new job, new friends, or a new lover. Even if there is no one to share his ideas, every man is still free to present his own vision – by publishing his ideas or becoming an entrepreneur. However, as soon as he faces the threat of physical force, the possibility of any such alternatives becomes irrelevant. The initiation of force renders the mind useless as a means of survival.
Freedom requires rights
Rights are moral principles defining freedom of action in society. The purpose of establishing individual rights is to protect man from man – to define the basic conditions necessary for social existence. All rights derive from a man’s right to his own life, including the rights to life, liberty, property, and the pursuit of happiness. Whether it is by a theft, force, fraud, or government coercion, man’s rights can be violated only by the initiation of force.
Rights are inalienable and non-conflicting
Rights are not guarantees to things or obligations placed on others, but only guarantees to freedom from violence (the right to life), freedom of action (the right to liberty), and the results of those actions (the right to property). The only obligations one’s rights impose on other men is to respect the same and equal rights of others – the freedom to be left alone. A man may have his rights violated by a criminal or a corrupt government, but morally he remains in the right, and the criminal in the wrong.
Further reading:
- “Man’s Rights” and “The Nature of Government” in Capitalism: the Unknown Ideal by Ayn Rand
- “What is Capitalism?” by David Veksler
- “The" target="_blank">http://www.rationalmind.net/writing/55Init...Force.html">The Initiation of Physical Force As Evil” by David Veksler
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The cosmological, or “first cause” argument, is a metaphysical argument for the existence of God.
St. Thomas Aquinas stated it as:
- Every finite and contingent being has a cause.
- Nothing finite and dependent (contingent) can cause itself.
- A causal chain cannot be of infinite length.
- Therefore, there must be a first cause.
The stylized “proof from the big bang” is:
- Whatever begins to exist has a cause.
- The universe began to exist.
- Therefore, the universe had a cause.
Both proofs contain several problematic claims:
A causal chain cannot be of infinite length.
Imagine two indestructible balls in space. The balls begin in a stationary position some distance apart. From a standstill, gravity will bring them together until they bounce apart. They will gradually slow down, appear to pause, and then bounce again. If the system is closed, the balls will bounce off each other indefinitely. Each ball is the cause of the other’s motion — yet the system does not have a cause. If we passively observe the balls bouncing, we will only be able to view them for an arbitrary length of time, yet the series stretches back to infinity.
The universe is an entity.
This is an equivocation known as the fallacy of composition. The universe can be defined as “the set containing all entities in existence.” The universe is not itself an entity, but a collection of entities. All entities in the universe may be finite, but the set of entities need not be.
There is a cause “outside the universe.”
For there to be a cause, there must be an entity doing the causation. If the universe is the set of all existing entities, that entity must be part of the universe. An entity cannot be its own cause, so it cannot have created the universe.
The universe began to exist.
The cosmological argument defines “universe” as the set of events since creation, and places the first cause “beyond” our timeline. But time is a relative measure of the rate of change between entities, not an absolute linear constant. It is a contradiction of the concept of time to speak of a “time before time.” There cannot be such thing as a “timeless” entity because time includes all causal interactions, including the initial one. It is meaningless to speak of a time before the existence of entities, because time is a property of entities itself.
The universe has always existed — but this means only that as long as the universe has existed, so has time.
The first cause is God.
Even if we accept that the universe has a cause, it does not follow that that cause is God. Why should the first cause be a complex and conscious entity conforming to a particular religion? It is more logical to conclude that the origin of the universe is the simplest one possible, since all higher-level causes derive from it. The difference between science and religious dogma is that science is falsifiable, whereas dogma is not. How could one prove that the universe created by a personal, Christian God, and not a Hindu deity, a computer hacker in another dimension, or the flying spaghetti monster?
Further reading:
- Stanford Encyclopedia of Philosophy: Cosmological Argument
- The One Minute Case For Atheism
- Wikipedia: Cosmological Argument
- Wikipedia: Time in physics
- Meetup.com post which expands on the last point.
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Earth’s climate is complex and constantly changing
Earth’s climate is an enormously complex system with thousands of variables in constant flux. Natural cycles of warming and cooling have existed as long as earth has had a climate. We only began to make large-scale measurements in the last 100 years, so this system is poorly understood.
Attempts to manipulate climate are limited by the complexity and inertia of the system. Dr. James Hansen of NASA, the father of the global warming theory, estimates the Kyoto protocol would only affect temperatures by .13°C by 2100, and it would take 30 Kyotos to have an “acceptable” impact on climate change. “Should a catastrophic scenario prove correct”, states Dr. Richard Lindzen, an MIT climate expert, “Kyoto will not prevent it.”
No single indicator can provide proof of a global change. The thinning of the Greenland ice sheet may be due to human causes, natural variations in snow snowfall, changes in ocean currents, a long-term warming of the planet since the transition from the last glacial period, continued warming since the end of the Little Ice Age following the Medieval Warm Period, or all of the above.
Politicians and the media are eager to embrace the latest crisis
Climate changes during the twentieth century were often accompanied by widespread panic, only to be quickly forgotten when dire predictions failed to materialize. Intellectuals, the media, and political institutions find it profitable to capitalize on emergencies which focus public attention away on the issues they champion. Often their predictions go far beyond the most alarmist of scientific bodies. Science writer David Appell, who has written for such publications as the New Scientist and Scientific American believes that global warming will “threaten fundamental food and water sources. It would lead to displacement of billions of people and huge waves of refugees, spawn terrorism and topple governments, spread disease across the globe.” It would be “would be chaos by any measure, far greater even than the sum total of chaos of the global wars of the 20th century.” This doomsday certainty hardly follows from the hesitant predictions of a 1.1 to 6.4°C temperature rise and 18 to 59 cm sea level rise by 2100 predicted in 2007 by the IPCC.
Wealth, technology, and human ingenuity are our most powerful tools for dealing with change
The focus of environmental movements is usually on reversing anthropogenic causes of ecological change. But such a perspective leaves out the cost of the large scale economic destruction caused by environmental restrictions on human productivity. A genuine cost-benefit analysis should weight the costs of wealth destruction and long term inhibition of technological progress against the highly uncertain costs of adjusting to environmental change. Adjustment costs are uncertain because human beings do not passively resign themselves to change, but adapt their society to make optimum use of their environment. Global warming may cause Africa to become more arid – but it will also open up a huge expanse of permafrost to human settlement.
Perhaps the most significant element in this dynamic is the exponentially rapid creation of wealth and technological change experienced by most of humanity during the twentieth century. This change has almost doubled the life expectancy and quadrupled the standard of living in the developed world – and is now transforming the developing world. Disrupting the global economy would have a snowball effect on future living standards, as well as retard future technologies will help us adapt to a constantly changing world.
Further reading:
- U.S. Senator James M. Inhove: The Facts and Science of Climate Change
- Global Warming on the Objectivism Wiki
- Channel 4: The Great Global Warming Swindle (2007)
- CEI: Inconvenient Truths for Al Gore
- Monte Hieb: Global Warming: A closer look at the numbers
- Environmentalism.com: On “Global Warming”
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Driver safety is not a special prerogative of the state
Seat belt laws are enforced “for our own good.” But traffic accidents are not leading causes of injury and death, nor is buckling seatbelts the most beneficial thing you can do for your health. Daily exercise, nutritious meals, intellectual enrichment, and regular sexual activity have all been shown to have a positive impact on mind and body. The issue is not whether seatbelts are beneficial, but whether the state has the right to coerce us for our own good.
You own yourself
The Thirteenth Amendment to the United States Constitution officially prohibited the ownership of another human being. To own something is to exclusively control and use it for one’s own purposes. We recognize that control is ownership, even when property nominally belongs to another party. Thus, under the regime of the National Socialist German Workers Party, industry belonged neither to the original owners, nor to the workers, but to the Nazi party, and in the Soviet Union it belonged to the Communist Party, not “the people.” Joseph Goebbels, Hitler’s chief propagandist, explained it thus: “To be a socialist, is to submit the I to the thou; socialism is sacrificing the individual to the whole.” If the state controls every aspect of the individual’s life for the “common good,” then individuals become property of the state.
Safety regulations lead to reckless behavior
Common sense indicates that individuals are more likely to be concerned with their safety than politicians. Even when they aren’t, safety laws may have a counterproductive effect. According to studies cited by the Independence Institute,
When subjects who normally did not wear seat belts were asked to do so, they were observed to drive faster, followed more closely, and braked later.In other words, people who are naturally cautious voluntarily choose to wear seat belts, and voluntarily drive safely.When reckless people are forced to wear seat belts, they “compensate” for the increased safety by driving more recklessly. Furthermore,no jurisdiction that has passed a seat belt law has shown evidence of a reduction in road accident death.Externalized healthcare costs are only a problem under socialism
Those who support outlawing risky behavior argue about the “social costs” of medical treatment for accidents. But this is only a problem for a socialist state. In a free society, a person is injured due to their own recklessness is responsible for their own treatment. However, in a socialist economy, everyone is responsible for paying for everyone else’s health. It’s not a coincidence that advocates of seatbelt laws are supporters of socialized healthcare as well.
“Click it or Ticket” is a step towards totalitarianism
There is no logical end to laws that replace individual judgment with politically-mandated notions of what risks we are and are not allowed to take. If it desirable to the state to control individuals while driving, eating, working, and seeing the doctor, it follows that the state should regulate every other aspect of their lives as well. Without a principled and uncompromising defense of the individual’s right to own his life, we are reduced to being property of the omnipotent State, being permitted to live only at the mercy of a bureaucrat’s decision that we contribute to the “common good.”
Further reading:
- “Click it or ticket” by Walter E. Williams
- “Mandatory Seat Belt Laws Cause Dangerous Driving, and Invade Privacy” by Dave Kopel
- N.H. Safety Chief Opposes Mandatory Seat Belts
- Stick It to Click It or Ticket!
-
SeatBeltChoice.com
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Profit is the engine of production
Restraining profit by taxing it or limiting it has the effect of limiting production. Restraining profit means an economy will produce fewer goods, of less variety, and at higher price. Innovation suffers. As a result, to the extent profits are restrained, all consumers suffer. Profit drives production in several ways:
Profit is the incentive for production
The profit motive is the supreme motivator of productive business activity. The creativity of scientists, the entrepreneurship of businessmen, and the resourcefulness of financiers are all motivated, in whole or part, by the pursuit of profits.
Profit provides the means of production
Profits and savings are the ultimate source of the investment capital (money) that finances construction of factories, research laboratories, distribution centers, ships, warehouses, and all of the equipment that is used to invent, produce and distribute the goods that we consume. To restrict profits is to deny a source of capital necessary for production.
Profit directs capital to the production of goods most urgently wanted
The highest profits are earned by the businessmen who can supply the goods most wanted by customers. iPods, portable generators after a hurricane, personal computers, fashionable clothes, and all of the goods consumers want most, are made by those who make the greatest profits. The profitability of an enterprise is the ultimate measuring stick of how well it has satisfied its customers. A money loosing business is either making products consumers do not want or charging too much for them.
Profits result in everyone’s gain
Profits do not come from the net loss of anyone. On the contrary, profit results from the creation of goods that people voluntarily buy in the marketplace. A businessman who makes a huge profit makes things that are good enough that many people want them and willingly buy them from him.
Profit is property
Profits are the property of the shareholders and other investor/owners of the business. Restricting or taxing profits is not just impractical, but is theft.
Honest profits are an essential feature of capitalism
A profit honestly earned in a capitalist society is beneficial and good for all. Profits must be distinguished from the money a businessman might get because of special governmental favors, such as tariffs, regulations or subsidies. These interventions are contrary to capitalism and allow some businessmen to gain at other people’s expense. Their gain is not profits, but a form of theft.
Further reading
- Capitalism: The Unknown Ideal by Ayn Rand
- Atlas Shrugged by Ayn Rand
-
“Profit and Loss” by Ludwig von Mises
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The One Minute Case For Advertising
in The One Minute Case
Posted
Why defend advertising?
While the abundance of advertising is usually viewed as a sign of the vitality of capitalism, it is nevertheless under a near-universal assault by intellectuals. Because advertising “blatantly and unapologetically appeals to the self interest of consumers for the blatant and selfish gain of capitalists”1, attacks on advertising are an assault on capitalism and ethical egoism. Arguments against advertising usually take two forms: the argument is that advertising is economically inefficient and the argument that advertising is somehow coercive. 2
The myth of “perfect competition”
Most economic arguments against advertising derive from the theory of “perfect competition, ” which is an ideal state against which markets are to be judged. This state is characterized by homogeneous products, relatively small sellers without monopoly power, prices which approach the cost of goods, consumers who have perfect information about all products and prices, and no entry costs to markets.
Advertising violates all these conditions, mainstream economists argue. Advertising seeks to establish product loyalty, and therefore to make certain brands more valuable than others. This creates barriers to entry by giving companies monopoly privileges, and allows them to price goods above cost. Furthermore, advertising is an imperfect and biased way of communicating product information to consumers. Finally, advertising retards progress by making it more expensive for new producers to enter the market.
In the real world, markets work quite differently: the essential characteristic of capitalism is the entrepreneurs who invest capital in new services, products, technologies, and businesses models. When their predictions are right, they gain a temporary advantage over their competition and turn a profit; when they are wrong, they take a loss. Success in business requires continual insight into which investments will prove profitable.
Rather than being a barrier to entry, advertising makes competition possible. New businesses and products stimulate demand by announcing their benefits to consumers. Expanding demand makes goods cheaper by creating economies of scale. While advertising is often attacked for creating demand for shoddy goods, it is not sufficient to advertise to gain consumer loyalty - only positive customer experience and continued positive goodwill can do that. Advertising is what allows new market entrants to capitalize on consumer dissatisfaction and dislodge established firms, as Japanese auto makers did when they demonstrated the superior value and quality of their cars over American ones.
The perfect competition model assumes that competing companies automatically lower prices to match their competitors. In reality, no business wants to lower prices unless consumers expect them - and it is advertising which performs that role by educating consumers about the competition. Advertising itself is a check on high advertising budgets: as consumers become more educated, competitive pressure creates price wars which force businesses to minimize expenses. 3
Yet another criticism is that advertising is a biased method of consumer education. Yet the continued importance of advertising as an influence on buyers proves that the creator of a good is the party most qualified to communicate the value proposition it offers, whether directly or through an intermediary. While word-of-mouth reports and independent product testing organizations are essential sources of consumer education, competitive pressure through advertising provides the claims whose veracity they evaluate.
Advertising is non-coercive
Opponents of “consumerism” often claim that advertising creates its own demand. But a commercial cannot simply implant a desire in the viewer. Rather, advertising tells consumers how their existing values can be satisfied in a particular concrete form. Some advertisements seek to meet well-defined values: toothpaste for clean teeth. Others educate consumers about products which fill a specific need: sports drinks for athletes, or died colas for the health-conscious. Some advertising functions much like art, and present a concretization of highly abstract or subconscious values. For example, a sports car commercial may appeals to consumers who seek independence and efficiency, while a luxury sedan commercial might appeal to those who value comfort and elegance. Attacking advertising solely for appealing to emotions is as silly as criticizing a painting or a movie for appealing to the viewers’ emotion rather than presenting a dry, factual account.
Ultimately, advertising is a public appeal to the mutual self-interest of the seller and buyer. Movements to silence or limit advertising seek to regulate the freedom of the individual to voluntarily interact with others, and therefore are an assault on both freedom of speech and the right of association.
References:
Further reading:
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