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Galileo Blogs

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  1. I can't wait to go to space. I will be there. I'm going to wait a few more years before I do it, though; I just want to get more than a few minutes of weightlessness for my $200,000! :worry:

    I remember seeing the Apollo astronauts launch into space when I was in elementary school. It is amazing that I will be able to go into space in my lifetime. I was very inspired by the Indian businesswoman who went into space recently aboard a Russian craft. She paid $20 million for her space experience, where she trained as a real astronaut and spent days on the International Space Station. Now that was worth it!

  2. But I feel that by listening to all that crap, that I'm not doing my part....that I should express my values because I know them to be right...for myself. I don't want to give anyone the idea that I actually agree with any of the stuff we're taught because it makes me sick to my stomach.

    Imagine how Ayn Rand felt attending the University of Petrograd (Leningrad?) a few years after the Communist revolution and having to listen to lectures about the capitalist exploitation of the masses, or when she worked as a tour guide and had to give lectures denouncing the evils of capitalism.

    Or, imagine how she felt during the 1940s and 1950s, as she formulated her philosophy and saw that she was practically the only one who understood and agreed with her ideas.

    In some ways and for some classes, being in school is like Ayn Rand giving the lectures at the museum in Communist Russia. It is something you have to do to achieve your larger goals. The reality is that the Objectivist perspective is a minority perspective, and one that challenges the "received wisdom" of the majority. Also, I have found (through similar experiences as yours) that most people don't think independently, and no matter how hard you try, you cannot convince them of the rightness of your ideas. If they don't listen to what you have to say, it is a result of their limitations, not yours.

    So, I would try to learn as much as you can in school, argue where you can and it is enjoyable (but not where it is painful), and then move on and become a surgeon, or whatever else you decide to do.

    By the way, the world is not as frightening a place as it may seem when you read the Peikoff quote or hear about enormous rates of taxation. America today is the wealthiest country that has ever existed, a plethora of multiplying technologies enrich our lives, and powerful new means of communication (such as Internet blogging!) enable us to be connected and reach a wide group of people who share our views. America is still so free that you can achieve almost anything and live well, even after paying exorbitant taxes. I am not just saying it, I am living it!

    On a separate note, I completely agree with what Sophia wrote. All of it is excellent advice, in my view.

  3. A Cruel Economic Experiment Is About to Begin

    UPDATE 1/16/07: A cruel experiment in economics may be about to happen. The Democrats have agreed to extend the mainland minimum wage to American Samoa and the Marianas Islands. Tuna workers are now paid an average of $3.60 there. Workers in nearby tuna-processing countries such as Thailand and the Philippines are paid $0.67 per hour.

    With the new minimum wage slated to rise to $7.25 per hour in two years, it is highly likely that many of the U.S. island workers will lose their jobs, and the industries they work in will contract. A rump group of workers will get paid the higher wage. Watch some economist cite the existence of those workers in a future study when he claims the minimum wage is working in American Samoa.

  4. As Ludwig von Mises pointed out in "Human Action", the calculation is impossible, in principle, because it involves more than money: it involves having the government decide how much people value the things they stand to lose.

    softwareNerd, that is another profound statement. It contains the essence of why all forms of government redistribution of money from one person to another and all forms of regulation are impractical (and immoral). That is why all attempts to intervene in the economy fail.

  5. Here I consider banking practice qua total economic prosperity rather than qua justice.

    I cannot separate considerations of economic prosperity from considerations of justice. The two go hand-in-hand. It is not possible to have one without the other. To the extent societies are unjust, they impoverish themselves. Conversely, a just society, i.e., a society that enforces and respects individual rights, will grow in wealth.

    Can you provide an example of a society that is unjust, but wealthy, or a society that is just, but poor? Or, to ask the question more precisely, can you provide an example of a society that is unjust and creates its own wealth. Conversely, can you give an example of a society that is just and is not gaining in wealth?

    Capitalism is the system where the rights to life and liberty are protected. And, when these rights are protected, people tend to accumulate capital and become wealthy. Justice and wealth-creation go hand-in-hand.

    Using the example of banking, I cannot conceive of a prosperous, robust banking industry existing in a society that was fundamentally unjust such as, say, Libya or North Korea. In a just society, banking would not be regulated. Therefore, the banking industry would be robust. By robust, I don't just mean stable, but one that is fulfilling in an entrepreneurial and creative manner the banking needs of people.

    All of this exists on a continuum. In a mixed economy, like that of the United States, there is considerable accumulation of wealth. However, to the extent that there is regulation -- i.e., to the extent there is injustice -- a certain measure of wealth is not accumulated.

    Sometimes, it is confusing that mixed economies or economies emerging from statism such as China's, can grow in wealth. However, the confusion only exists to the extent cause and effect are not properly identified. Regulation or statism is not the cause of the growth in wealth. Rather, wealth is growing despite the existence of regulation. It is the existence of freedom, to the extent it is present or growing, that accounts for the growth in wealth of mixed economies. Therefore, if there were more freedom, wealth would be accumulated more easily. Conversely, if new regulations are imposed on the economy, wealth creation becomes more difficult.

    I'll leave aside your other responses. I think my posts have largely addressed them. Rather, I am focusing on this one issue of wealth versus justice, because I think it is the key premise behind your arguments. Do you agree?

  6. I can't imagine that telling the truth in my car selling example would result in any people buying cars. I don't see why banking would be any different if the concept were honestly described.

    That's why it would be wrong to outlaw the practice, or any other particular commercial practice. The only thing necessary is to maintain the prohibition against fraud.

    As to the merits of fractional reserve banking, it makes a lot of sense to me. It operates on the recognition of a statistical fact: not everyone wants to withdraw all of their money at the same time. In fact, over the course of days, only a very small percentage of the bank's funds would be withdrawn by depositors. Therefore, the bank can prudently lend out a multiple of the deposits on hand. How much to lend out would be up to the bank. It would be determined by its knowledge of depositors' behavior, the market for loans, and the existence of back-up plans such as emergency lending agreements between banks.

    The insurance industry operates in a similar manner. An insurer can safely invest a large percentage of premiums it receives in fixed assets such as real estate, knowing that its day-to-day liquidity needs are small, since claims are paid out infrequently. How much it can invest in hard assets, and how much it needs to keep in liquid reserves are determined by the particular type of insurance sold and the insurer's knowledge of claims patterns. The insurer also protects himself financially through mechanisms such as selling a portion of his risk in the reinsurance market. This would be similar to a bank having an emergency lending agreement with other banks.

    Fractional reserve banking allows a bank to make more money by lending out a multiple of deposited funds. By doing so, it also allows a bank to pay more in interest to depositors. It appears that everyone wins. Apart from fraud, which doesn't apply if the laws against fraud are enforced, what is the argument that it hurts people?

    In any case, whether fractional reserve banking is viable should be determined by the market. As long as no one is committing fraud, fractional reserve banks are free to compete side-by-side with 100%-reserve banks. May the best bank win, or may they all win, if there is room for both.

  7. The government cannot be relied upon to make good decisions about risk...

    This is a profound statement and gets to the heart of why so much regulation is economically destructive. Government officials have a different attitude towards risk than customers and producers in the marketplace. Government officials care primarily about not losing their jobs, which means avoiding scandal. They clearly do not have the incentive to encourage risk-taking the way a private citizen does. A private citizen, if he understands the risks correctly, can be induced to take on all kinds of risk because of the benefits it offers. For example, a coal miner will be paid a huge premium to work in the mines compared with an above-ground laborer and takes on the greater risk of death willingly. A financier will finance a risky business start-up because he negotiates a higher interest rate or profit margin, in order to compensate for the greater risk that the firm will not succeed.

    With risk-taking properly priced in the market, things like mining can get done, or business start-ups can get financed, etc. In place of market-determined risk-taking, which is productive and encourages the creation of values, government regulators substitute command-and-control one-size-fits-all dictums into the commercial realm. Miners are prevented from going into the mines because it is too dangerous. Risky new businesses don't get financed because it is deemed inadvisable for investors to take on these risks. Etc.

    Government officials are overly risk-averse compared to the rational risk-taking that market participants willingly choose. That non-market-determined fear of risk retards production.

    (A big area where the government intolerance for risk destroys values is in pharmaceutical research. Because drug companies have to spend hundreds of millions of dollars on unnecessary tests to validate drugs to please the regulators at the FDA, many potential drugs never make it to market. Any drug that requires cutting-edge research with a low probability of success, or a drug that targets a smaller segment of potential customers, will not make it to market. In the case of drugs, the risk-aversion of the regulator kills people.)

  8. Why, then, did banks request federal compensation in order to avoid total bankruptcy and why was it granted?

    I was going by memory; I was unaware of large banks that were brought to the edge of bankruptcy by Hurricane Katrina and needed to be rescued.

    In any case, national banking does spread risks just the same way as reinsurance or securitization does.

    Parenthetically, I might add that Hurricane Katrina isn't such a great example for this discussion, since that disaster was itself man-made. In a laissez faire society, the residents of the city of New Orleans would have built a much stronger wall, or they would have prudently chosen not to build in low-lying areas. Why? Besides being more rational in a laissez faire society (the culture would have to be more rational for such a society to be possible), residents would be encouraged through insurance rates to avoid living in overly risky areas. Also, there would be no such thing as national flood insurance which subsidizes building in those risky, flood-prone areas.

    Katrina was not a natural disaster; it was entirely a man-made disaster.

    ...but it seems to me--qua a purely pragmatic discussion, and not one considering the issue of justice--that it is a trade-off. You can either have an extremely dynamic but vulnerable system in which there is no taxation and banks produce explosive benefits; or you can have a somewhat slower but more stable system in which you tax businesses to create a "rainy day" fund, even though this money would otherwise have gone into great economic investment. I could be entirely off-base, though.

    But it is a moral issue. It is immoral to take from Peter to give to Paul, for any reason at all. You can fill in the blank for the reason. Take from Peter to give to Paul for [blank]. Blank could be: medical care, housing, food, clothing, education, emergency help, or... indemnification against losses from bank failures.

    It is also impractical in every case to take money from Peter to give to Paul, regardless of the purpose. The impracticality of any forcible transfer of wealth is that there is no way to limit its practice. Once government can take from someone for some purpose, there is no way to limit that power. The only way that power can be limited is through inviolable individual rights.

    The impracticality in the specific case of banks is that deposit insurance destroys the incentive of banks to innovate and compete on reputation and soundness of banking practices. Because the cost to banks of failing is socialized by the government, banks will be more willing to lend to risky borrowers. This is exactly what happened during the savings & loan banking crisis of the 1980s. Ultimately, many tens of billions of dollars in losses had to be picked up by the federal government to meet its obligation of protecting depositors from failed banks. This is impractical and inefficient, no matter how you look at it.

    If there had been no deposit insurance, the banks would have had to jealously guard the soundness of their balance sheets, and they could not have made so many loans to uncreditworthy borrowers. Banks would have actually competed on the soundness of their financial practices. This competition for financial reputation would have limited their ability to lend to risky borrowers. Such a competition for financial reputation would tremendously benefit depositors, who could use those reputations as a guide to decide where to deposit their money. Customers could choose the level of risk they want to take of a bank default by choosing a bank with a particular reputation. For example, someone might deposit money with a newer bank because it pays a higher interest rate, knowing that there is some additional risk of the bank failing. Or, a customer could deposit funds with a very safe bank, and be willing to accept a lower interest rate. Banks would have an incentive to earn the best possible reputation in the marketplace so that they could lower the interest rate they have to pay for deposited funds.

    Contrast this with deposit insurance which, by socializing risk, severely undercuts the whole process of competition for financial reputation. Since depositors' funds are "guaranteed" by the government, depositors don't care with whom they deposit their money. Furthermore, banks are encouraged to recklessly offer to pay very high interest rates to depositors knowing that the bank will be bailed out by the government's deposit insurance program if it fails.

    As for stability, a system allowing government intervention in banking has proven itself to be quite unstable. For example, the restrictions on branch banking led to thousands of bankruptcies during the Great Depression, whereas in Canada which had no branch banking restrictions, there were no bankruptcies. Deposit insurance, far from creating stability, led to an unprecedented series of bank failures during the savings & loan crisis of the 1980s. Laissez faire banking, as I describe it above, would be more stable. It would be free from frequent, arbitrary and unpredictable government intervention. Moreover, it would foster competition where stability and prudence was rewarded, not dis-incentivized as it is under a system like ours where deposit insurance socializes risk.

  9. The exemption of American Samoa from the minimum wage is an acknowledgement that the minimum wage forces some people to endure a wage of zero, i.e., far below the "minimum". No one can legislate productivity, and if productivity means some worker's labor is worth less than a minimum wage, that worker will not be hired. His job will essentially be outlawed.

    Productivity in that part of the world is much lower than in the mainland United States, and therefore prevailing wages are much lower. If the U.S. minimum were enforced there, it would cause not just a little unemployment, like it does in the mainland U.S., but widespread unemployment. In fact, it would be completely unenforceable.

    The existence of the American Samoa exemption is an unpleasant reminder to everyone who votes for the minimum wage -- Democrats, Republicans and President Bush -- that it destroys jobs, and that the higher it is set, the more jobs it destroys. Furthermore, the people who suffer the most from the minimum wage are those who are young and beginning their working years, and those with the least education and skills. These are precisely the people the Democrats pontificate about wanting to help.

    The wider issue is that the Democrats don't want to help the poor; they want the poor. In fact, they want as many people as possible to be poor, because it creates a dependent class of modern-day serfs who believe that the Democrats are their salvation. By keeping a large class of people poor, unemployed and dependent on government hand-outs, Democrats corral their votes. It is an ugly form of "vote-buying" that trades on human misery. The minimum wage is part of that.

    As for the hapless Republicans who vote for the minimum wage, they "just don't get it". They think that by placating their opposition, the Democrats, they will somehow keep their grip on political power. In fact, their policy does nothing but strengthen their opposition by endorsing their moral premises, and enacting their laws.

  10. I wonder why the restriction on numbers of branches and locations of banks would cause instability. I can see why it would hinder expansion, but it seems highly non-obvious why it would leave a nation susceptible to recession or depression.

    To clarify, the restriction on the number of bank branches caused financial instability of the banks. I wasn't addressing whether it caused economic recession (*see below). By being restricted to a few branches within a particular state, banks were vulnerable to any bad regional economic event, whether it was a regional economic crisis or a natural disaster such as Hurricane Katrina.

    Contrast this with national banking. If there is a problem in one region, the strength of the rest of the country means that the bank remains solvent.

    The best example of this was the Great Depression, when an enormous number of banks across the United States collapsed, but there were no major bank failures in Canada. At the time, unlike the United States, Canada permitted national banking. Of Canada's five major national bank chains, none collapsed during the Great Depression. In contrast, the United States had a highly fragmented, regionalized, polyglot assortment of thousands of banks. A large percentage of them went bankrupt.

    Today the United States permits national banking. I have heard of no large national bank chain having more than a temporary earnings dip from problems in New Orleans following Hurricane Katrina. No large bank was placed in financial jeopardy because of Hurricane Katrina.

    The best protection against any form of disaster is free enterprise. Free entrepreneurs create financially strong businesses that can withstand natural disasters such as hurricanes. However, when the government intervenes in the economy, for example through branch banking laws, it makes businesses poorer and weaker, and much more vulnerable when catastrophe strikes.

    As an addendum, your suggestions about reputation were my first intuition, but what about extreme situations like Katrina, in which reputation would not have been a sufficient guarantor of ability to repay? The consequence of no government compensation would have been quite tragic--though that's not to say that government compensation was so wonderful in the first place.

    No "magic wand" government program such as deposit insurance can insulate people from natural disasters. All those programs do is take money from the rest of the country to forcibly give to depositors whose bank went bankrupt. However, if the economy is free from any forms of government intervention (which includes deposit insurance), it is as strong and robust as it can possibly be to withstand shocks such as Hurricane Katrina.


    *I agree that branch banking restrictions would have not been a major cause of the Great Depression. Because the banks were weakened by those laws, many banks collapsed which made the Great Depression worse, but I do not think those laws in themselves were a primary cause. Rather, the Great Depression was caused by other major government economic interventions in the 1920s.

  11. Addendum to my post: The book "Breaking the Banks" by Richard Salsman is more on point in addressing the issue of fractional reserve banking. It provides a history of banking from the pre-Civil War "free banking" era to the present, including the formation of the Federal Reserve in the early 1900s.

  12. The issue of fractional reserve banking is similar to the issue of reserves for claims kept by insurance companies. Insurers, over time, gradually determine the proper amount and type of financial and physical instruments to keep for claims. Whether and how much to keep in cash, bonds, stocks, real estate, etc., are determined by the type of risks they are insuring, and the frequency of claims pay-outs.

    Fractional reserve banking would operate in a very similar manner. The type and quantity of reserves would depend on each bank's loan portfolio and the risk of not being repaid. It would also depend on the size of the bank and the degree to which it has back-up lending agreements with other banks.

    Customers would choose their bank primarily on the basis of its reputation. Banks with a lot of branches and that have been around for a long time could only have built that up by responsibly managing their customers' deposits, and by lending to creditworthy people.

    You can still see remnants of reputational competition in the insurance industry, where there are advertisements such as Prudential's "The Rock" symbol, or other ads such as those for Met Life that stress their tradition and reliability. In banking, there is very little reputational competition because of deposit insurance laws. With those laws, depositors know that they are indemnified against their bank failing. Regardless of what happens, they will always get their money back, up to the insurance limit.

    Of course, truthful disclosure is always part of any successful banking or insurance enterprise. However, I doubt people would pay too much attention to different bank lending practices -- i.e., whether banks keep 100% of depositors money or banks lend out multiples of the deposited money. Rather, they would simply look to the bank's reputation and history.

    In terms of safety of fractional reserve banking, it is quite safe. The problems in the United States stem from interventions in the banking market, such as laws limiting banks to a single branch or a single state. That is why many banks in teh United States failed during the Great Depression, but none apparently did in Canada, which had national banks. Canada had no restrictions on the number of branches. Richard Salsman's books "Gold and Liberty" goes into this.

  13. Just a small thing here... Shouldn't that read "negative feedback loop"?

    Yes, I believe you are right. Thank you for pointing that out.

    I haven't seen much discussion of the negative feedback loop of more carbon dioxide resulting in more plant growth, which results in a reduction of that carbon dioxide through photosynthesis. I recall this cycle from high school biology classes (where it also includes animals, who convert oxygen into carbon dioxide), but I have not seen it discussed in terms of the global warming issue. It implies a natural biological check on the level of carbon dioxide in the air. Of course, a natural biological check on carbon dioxide levels would deny the environmentalists the pleasure of imposing widespread controls across our economy in order to reduce combustion. Perhaps that has something to do with why I haven't seen any writing on it. Has anyone seen this discussed? :geek:

  14. You're assuming that the motivations of environmentalists are rational and pro-human. If one drops that assumption, the suggestion becomes besides the point. Why? Because the next environmentalist battle will be against the supposed harm caused by the new technology. If you drop the assumption of environmentalists being rational and pro-human, then technological solutions will not help.

    Yes, yes and yes! This is the key philosophical issue and what I was trying to get at when I addressed the dishonesty of the environmentalists. The environmentalists have no regard for man. In fact, they want man to suffer and die. That is why they are against nuclear energy, even though by simply removing regulations on nuclear energy, it would likely displace more fossil fuel consumption than all of the Kyoto controls they can imagine.

    When windmill generators were seen as the environmentally-friendly technology, they opposed them because they kill birds (or obstruct pristine views). When electric cars are seen as the alternative to combustion-engine cars, they point to the toxic chemicals in batteries that make them hard to dispose. Watch the current ethanol hoopla (which I may address in a future post; it is an enormous boondoggle). We will soon start to see articles talking about the despoliation of nature due to the increased production of corn and and other ethanol crops.

    Don't take anything the environmentalists say at face value. That includes the entirety of the global warming argument.

    If we strip the environmentalists from the debate, and consider this as life-loving rationally-self-interested people, we may develop quite a different attitude about gutting our standard of living now for small, potential benefits that our great-great-offspring may enjoy many decades in the future. But before we can even consider having that discussion, we have to get the facts straight, which we won't get from environmentalists.

  15. If an "unfettered human mind" can deal with the potentialy irreversable effects of global warming, does it not stand to reason that that same mind could devise ways to prevent, or reduce, those effects before they happen, with out reducing our standard of living?

    Perhaps... if the mind remains unfettered.

    The burning of fossil fuels is not the only potential means of producing electricity. It's just the method that is most engrained.

    And it is the cheapest.

    Of course, nuclear energy also is an excellent source of energy, but it is too expensive because it is subject to onerous regulations. Unfetter the nuclear energy industry, and it becomes cheaper, and will displace a good deal of fossil fuel consumption.

    The solution always has to be freedom, never controls.

  16. I stand (largely) corrected. The replicants in "Blade Runner" are not robots, but they are not human, either. Rather, they are genetically modified humanoids. In fact, the story centers around the most recent "model" of replicants called "Nexus-6".

    I got confused because the replicants in the movie are awfully robot-like in some ways, with model names, eye tests to distinguish between human and replicant, and several instances of robot-like behavior. (Three examples: (1) when Decker kills the gymnastic replicant and she thrashes around in a mechanical way; (2) when the lead antagonist shoves a nail into his hand to delay his death; and (3) the super-human strength displayed by the lead antagonist, which is "typical" of science fiction robots).

    In any case, as nearly-human humanoids, with consciousness, etc., they don't serve as a good example for this discussion.

    A long time ago, I read the book upon which the movie was inspired, called "Do Androids Dream of Electric Sheep?" The title of that book leads to the question discussed in this thread: If androids dream, are they human enough to have rights? Or, to state the question more broadly, if a creature had consciousness and other human traits, but it was a mechanical entity created by man, would it have rights?


    If there were robots as depicted in the movie Blade Runner, they would have to have rights. Blade Runner is the story of a very human-like robot, designed with only a 4-year life-span, who seeks out his human creator to find a way to live longer. The job of Harrison Ford's character, Deckard, is to kill the robot and his companions.

    The climactic confrontation scene between Deckard and the robot, played by Rutger Hauer, is one of my all-time favorite movie scenes. The speech by the robot, given before he dies, and Deckard's follow-on soliloquy, artistically make the case for "robot rights".

    However, all of this pre-supposes that robots could display the sentient characteristics that would make them require rights. That is a big supposition, and is really just a matter of speculation given the state of computer and bio-mechanical technology today. However, if such robots were possible, Blade Runner dramatizes why they would deserve rights.

  18. These are my views on global warming. I welcome your comments. (It is a long post.) - GB

    Global Warming: An Economic Case for Doing Nothing

    The complexity of the global warming debate makes it a good one for those who want to use it as a lever to fight modern, industrial capitalism. It is similar to the Marxist critique of capitalism where the proponent takes a few truths and mixes it in with a variety of half-truths and some lies to create a theory that becomes difficult to make heads or tails of, let alone refute. The Marxists did this by taking certain historical facts such as child labor and slavery and weaving them into an argument that these were caused by capitalism. (That is not true, and can be the subject of another post, or I would simply cite Andrew Bernstein's book "The Capitalist Manifesto" for his discussion of those issues.)

    In evaluating any particular global warming claim, we must carefully examine the motive and method of the proponent. Is he honest, does he deal only in facts, or is he dishonest? Most environmentalists, from what I can observe, are dishonest in their motive and method. They have a goal -- the establishment and preservation of a pristine natural environment that excludes man -- and they are willing to use any tactics to achieve it. For example, that could mean citing part of a time-series of data -- the part that supports their claim -- and then ignoring the other "inconvenient" part of the data that would contradict their claim. It may also mean citing a wide variety of anecdotes and then claiming that those anecdotes constitute proof.

    The global warming advocates have used these tactics. For example, the earth appears to have warmed since 1970, but it was cooling in the several decades prior to that. The entire time-series of temperature history may reflect warming due to man's emission of carbon dioxide into the air... or it may not. Going back further in time, there is a correlation between carbon dioxide levels and temperatures. Both of these measures have fluctuated in tandem in a regular cycle going back millions of years. What is the relationship between carbon dioxide and temperature? In which direction is causation, or are they both caused by a third factor? The global warming advocate asserts that carbon dioxide causes the temperature increase, and that the recent man-made emissions of carbon dioxide will cause further global warming. How does he know this?

    These are just a few questions that I would ask regarding the global warming debate.

    However, my main objective here, in addition to encouraging a very healthy skepticism regarding the motive and "facts" of the global warming advocates (and some of their opponents, to the extent they are loose with the facts), is to interject an economic perspective into the discussion.

    * * *

    To start, let us assume that the "global warmers" are correct. The earth will warm a few degrees over the next century because of carbon dioxide emitted into the atmosphere by man. My first economic question is: What will be the cost of abating that carbon dioxide?

    Carbon dioxide is the central by-product of the key life-sustaining activities of man. First, it is the product of respiration, the process that every human and most non-plant life forms use to convert their food into fuel. Obviously, the carbon dioxide that is produced from respiration could not be controlled without killing humans or other living things.

    Carbon dioxide is also the most abundant by-product of combustion. Analogous to respiration in its importance, combustion of fossil fuel is man's number one industrial process, in terms of its importance to our standard of living. For ancient man, combustion of wood, when cavemen learned how to control it, was his key technological achievement. It put man on the path to civilization. Today, combustion of fuels including natural gas, coal and oil is what provides us with heat in winter. Combustion of fuels is the basis of nearly all methods of transportation. Combustion of gasoline powers cars, combustion of jet fuel powers airplanes, and combustion of diesel powers ships and trucks.

    Combustion of fossil fuels provides man with most of the electricity he uses. Electricity is the most useful form of energy man has invented to date. It powers our computers, which amplify the power of our minds and enhance our productivity. It powers our televisions, our power tools, the implements used by surgeons to heal us, and the kitchen appliances that make our lives easier and more enjoyable. The list is extensive; try thinking of more examples of how you personally benefit from electricity.

    The only way to reduce carbon dioxide is to reduce combustion. By reducing combustion we will have less of all of the life-sustaining and life-enhancing processes and products that arise from combustion, including all of those that depend on electricity.

    Let us be clear with examples what is involved in reducing carbon dioxide so that the earth may become a couple degrees cooler and the sea level a couple feet lower a hundred years from now. We are talking about making our homes colder in winter, driving our cars less often, turning on the lights less frequently, and paying more for all goods that are transported by truck, rail, plane or ship. We are talking about increasing the cost of nearly all industrial processes and the cost of almost all manufactured goods. In sum, we are talking about reducing our standard of living.

    The degree to which carbon dioxide output can be reduced is directly proportional to how expensive we can make fossil fuels so that we burn them less often. That is why every plan for reducing carbon dioxide emissions talks about imposing a “carbon” tax, i.e., a tax on fossil fuels.

    * * *

    The second economic objection to the global warming argument is that it ignores the tremendous power of the human mind to solve problems. Even if global warming will result in warmer temperatures and higher sea levels, these effects will transpire over many decades. Will engineers, scientists and entrepreneurs do nothing during that period of time? Of course not. Will man’s technological capacities and ability to solve problems remain static during that time, or will it advance, as it has at an accelerating rate for the past thousand years? The latter is true, as long as the world’s economies remain sufficiently free and unencumbered by regulations, such as those that the global warmers would like to impose. As long as the human mind is free to employ reason, our technological capacity to solve problems will improve.

    Given man’s inventiveness, are we to assume that he will passively do nothing while rising ocean levels submerge some of his coastal lands? Even with 20th century technology (which should be dramatically eclipsed in this century), consider the problems man has been able to solve. Much of Holland lies below sea level. Yet in the middle of the last century, a water control system was deployed that keeps Holland dry and prosperous. Venice, which has been sinking in the mud for hundreds of years, is now in the process of deploying a water management system that is designed to keep not just the magnificent Piazza San Marco, but all of Venice, from flooding.

    In reality, in the vast majority of cases a sea level rise of a couple feet that manifests itself over decades will be handled with much simpler, “low-tech” solutions, such as: building sea walls higher, and putting new buildings and houses on a higher base of earth. Property owners will have decades to incrementally make these changes.

    To worry about a rise in sea level of a couple feet is to assume that people in the affected regions will do nothing. Instead, scientists, engineers, businessmen and property owners will figure out how to prevent flooding, or people will gradually move inland from affected areas, or they will address the problem through simple methods such as building taller sea walls. It will be in their self-interest to do so. The time-frame for action will be stretched out over decades. No one is facing the prospect of an immediate flooding of coastal regions, which is the unstated fear the global warmers want to convey.

    Man’s inventiveness is abundantly capable of solving big problems. When whales disappeared in the seas due to over-fishing in the 1800s, and whale oil prices shot up 10-fold, scientists discovered kerosene, which turned out to be better than whale oil. Not only was it cheaper, but it emitted less smoke and better light. When rubber and oil became unavailable to warring nations in World War II, scientists invented processes for making synthetic rubber (still used today) and processes for converting coal into oil (used extensively by South Africa when it faced a trade embargo). To solve the “problem” of slow travel, engineers invented airplanes to replace ships. To solve the “problem” of slow, hand calculations, scientists invented the calculator and later on the computer.

    The point here is obvious. Man’s ability to solve problems is limitless. That ability requires only one thing: freedom. This means the freedom to size up a problem, investigate it and solve it using his own mind. This means economic freedom: secure property rights unencumbered by taxation and regulation. This means the right to act as he sees fit, without having to gain approval from a governmental authority. This means not facing the type of regulations, such as taxes on carbon, or prohibitions on certain technologies and subsidies for others, that the global warmers advocate.

    In other words, to solve whatever global warming problem may exist, the exact type of controls the global warmers advocate cannot be implemented, for those controls restrict the human mind to solve problems. Introducing those types of controls makes our society one of “command-and-control,” not freedom. Those types of controls breed more controls. By implementing them, we become less free and less able to solve all of the problems we face, including global warming. Therefore, the best defense against potential problems from global warming is the unfettered human mind.

    The first economic point I have made so far is that restricting carbon dioxide emissions will reduce our standard of living. The second is that if the human mind is kept free, it will solve whatever problems may emerge from global warming.

    * * *

    The last economic question I will ask is: What are the benefits of global warming? This question is largely ignored in the debate. Yet, it must be asked. For instance, the earth was warmer during the “Medieval Optimum” and then cooled significantly before the temperature rose again more recently. During the last Ice Age, man discovered how to control fire which, arguably, was the most important technological advance of human history. Man has demonstrated an ability to adapt and even prosper under varying climatic conditions. Why should we assume that global warming will only be bad for him?

    A few examples illustrate the significant benefits from having more carbon dioxide in the atmosphere and from higher temperatures. For example, consider that carbon dioxide is plant food. When there is more carbon dioxide in the air, plants will grow bigger and faster. Therefore, more carbon dioxide in the air may enhance crop yields, and make food for humans more abundant and cheap. (It may also introduce a positive feedback loop whereby more plant mass converts more of the carbon dioxide in the air into oxygen, thereby bringing down the carbon dioxide levels naturally.)

    Warmer temperatures may open up frigid lands in Canada and Siberia to cultivation.

    Less ice in the Arctic may open up the Northwest Passage for ocean-going vessels, thereby reducing the shipping distances between Europe and the Far East.

    Warmer temperatures at northern latitudes reduce the cost of heating homes in winter.

    Of course, all of the standard claims regarding the disasters from global warming counteract these benefits. Pick up any newspaper or magazine to read about those; I will not recount them here.

    An objective analysis, untainted by the environmentalist mission of the global warmers, may show that global warming is a mixed bag. Both good and bad consequences could emerge over the coming decades and centuries. Of course, all of this assumes that global warming is really happening and that it is caused by man.

    The “threat” of global warming provides a convenient scare campaign for those who oppose man’s industrial progress and material comfort on earth. It is a campaign that unites environmentalists, who prefer pristine nature over man, and religious ascetics, who despise material comfort.

    While parts of their argument may turn out to be correct, I skeptically challenge and refuse to accept at face value the claims, conclusions and calls for action made by such a disingenuous group of advocates. For each of their points, the burden of proof is clearly on them. Yet, even if man is causing global warming through his industrial processes that emit carbon dioxide, restricting those processes will harm us enormously today for a small benefit many years in the future, if there is any benefit at all. Ultimately, even if everything the global warmers say is true, the best solution is the unfettered human mind, not the controls they advocate.

  19. Several years ago when a broad-based group of Venezuelans rebelled against Chavez, the Bush administration turned its back on them. In fact, when the reinstalled Chavez accused the U.S. of siding with the "rebels" who opposed him, the Bush Administration took great pains to say that it in no way opposed Chavez.

    Subsequent to the U.S. capitulation, Chavez held a sham-election that was anointed by no less than Jimmy Carter, despite the fact that there was much evidence of manipulation and no way to truly validate its result.

    Now, the chickens come home to roost and Chavez explicitly declares himself a Marxist dictator.

    The bottom line is: Bush is a democrat, and a Christian fundamentalist democrat at that. Given his twin premises -- democracy and fundamentalism -- how can he oppose democratically-elected Muslim fundamentalist Ahmadinejad of Iran?

    Meanwhile, Iran makes rapid progress toward succesfully developing the nuclear bomb. Given that Bush has done nothing as Chavez consolidates his power, what are the odds that Bush will do something to stop Iran before that country develops the Bomb?

    If you need an example of the power of philosophy, look no further than George Bush. Bush is a self-declared Christian, altruist and democrat. He has shown a high level of consistency in his application of those principles, especially in foreign policy.

  20. Henry Ford's contributions to the industrial revolution are legendary. However, his abominous hatreds certainly were not representative of those in the United States during his time. How should he be recorded in history books? Is he any less of a hero of the industrial age because of his views?

    As horrendous as they are, I do not think Ford's anti-Semitism is relevant to judging his business accomplishments. They are what they are, regardless of how good or bad he was in other aspects of his life.

  21. An interesting debate, which I am still evaluating. Emotionally (I was raised Catholic), I detest the name or idea of a "church" to go to for any purpose. The chief characteristic I associate with churches is "mindlessness". In Catholic services, there is repetitive verse-repetition that amounts to chanting. There is ceremonial kneeling and standing and sitting at pre-determined intervals. There are priests standing on a dais wearing colorful robes. The church is designed to make one look up... at Christ on the cross.

    I have had occasion to go to other religious services. I cannot say anything better about a fundamentalist service (which I went to once), which was fully worthy of the adjective "mindless".

    So, I for one cannot abide ever using the term "church" for something that involves Objectivism.

    On the other hand, I share the admiration for Greek culture and how the Greeks worshiped gods that were in the image of man. Strip out any remnants of mysticism and you are left with worshiping man.

    I also recall my wonder at seeing how Japanese worship when I visited Japan. At the temples I saw, the Japanese were solely concerned about this life, on this earth. They would tie little "prayers" to racks of sticks at the temples. These prayers were this-worldly hopes expressed for: a good marriage, money, health, etc. The Japanese also located their temples at locations representing the greatest natural beauty. Kyoto, home to so many of these temples, is a wonder to explore (my favorite one of those I saw there is the Fushimi Inari Taisha shrine).

    Having said all of this, I still cannot see how a "church" can be disconnected from mindlessness, even if there is a sort of this-worldly beauty to it, as in Japan.

    I tend to agree with the arguments that a rational society would have many elements that would reinforce rational principles. Simply by living in such a society, one would be bombarded with rational ideas in school, on television, in movies, in books, at the workplace, etc. Should there be a place for a Temple of Man in such a society?

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