C.W.

Banks are also trying to build up their capital and reserve accounts from the losses of the credit bubble. Even with the hand in glove position they are forced into by the Fed and the Comp of Currency, they are pretty conservative. The one sector of the economy that has high demand for loans but has been having trouble is commercial real estate. One thing that is so obvious and ignored is that in the same day Obama is demanding more loan activity and demanding more regulations because of risk-taking!! This nation is so blind!

Well, I've asked twice. I'm sorry, this one line does not add to my understanding. If someone can explain Grames' point I would appreciate it. From reading the last several entries more than once I don't see where the disagreement ocurrs or why.

If I understand this thread correctly, you critized Dr. Buechner because he maintained that there wasn't a true subjective thing, because the mind was always connected to reality. The "value-meter" was his idea as an example of the subjective, but then denied that it was, saying that it connected to the emotions which are connected to the values whcih are connected to the ideas which are connected to reality all of which could be wrongly put together and wrong, but are still not completely subjective. This is why I asked for two examples, because I don't see that your reference to emotionalism is different from Dr. Buechner's. You are right that emotionalism is subjectivism, as an individual's policy. But, I think that Dr. Buechner is suggesting that the mind cannot be actually cut off from reality, and that complete subjectivity cannot exist. You disagreed, I thought, and I wanted examples to understand what you regarded as truely subjective. As a practical matter, a person who functions on his emotions is cutting himself off, consciously. How does that contradict Dr. Buechner's point?

To understand your argument it would be helpful to see a couple examples of truely subjective values that don't fit Dr. Buechner's approach, please.

I think that your statement was well put. I would have stated this somewhat differently, but the difference is along the lines of the apparent circularity of "it is rational to be moral (a man-centered, reality based morality) vs. "it is moral to be rational". Which is to say that I would have talked about the need of the economist to recognize the importance of rational behavior. At this point I need to spend some time thinking about any epistemological advantage one emphasis might offer over the other for the economist. I am certain that neither perspective could be excluded. (The dinner comment was only meant to be funny. Really.)

Austrian economics, as a science, does not suggest either what metal would be best as a currency or if there should be only one. It describes what money is and how it functions within an economy, first a free economy and then the consequences of government interference. Still speaking from an Austrian viewpoint, the government may try to force people to regard the currency it has produced as money, but what people actually do may be different. Von Mises argues that what becomes a money will depend entirely upon what people are willing to accept. Even now there are stores in the U.S. that will accept foreign currency. I think that what gives power to the dollar has a lot to do with the manner in which it moved from a gold backed currency to fiat. The story includes the depression, the creation of the Fed, the fact that legally it was a gold backed currency when de facto, in terms of actually functioning, it was manipulated as a fiat currency, the fact that it became the international reserve currency, and that people all over the world accept dollars as a currency. There is a lot supporting its continued existence as an important and real money. Maybe someday some real historian will do a good history of the dollar. All that needs to happen in converting the dollar to a real currency is for it to become gold backed. If by legislation it is announced that dollars are henceforth worth, say, $1400 to an Troy oz. of gold (selecting the right level of gold convertibility would be intricate), and the Fed is stripped of its ability to create funds in reserve accounts, the dollar would settle at a reasonable level, inflation would end, and business would proceed. I don't think that part of establishing a free economy would be difficult.

ZS, the problems that you describe for gold are true of any real, physical thing, especially something like Visa bucks (since there is nothing stopping the multiplication of electronic based stuff). The history of the gold standard shows sudden increases in the supply, e.g., the gold imported from the New World was ultimately harmful to Spain; and then there was the California gold rush. Von Mises discusses this kind of event in The Theory of Money and Credit. In the long run, gold discoveries do little to cause real problems because big increases are short lived and do not happen very often. Plus, there are other uses and these days those uses are growing. Normal gold production is a very minor part of the gold supply. The total amount of gold available today is nearly all of the gold ever discovered. It stays around. Let's say that a supply of gold was discovered that promised to double the amount of gold available every year for a decade. In that case, we, mankind, would have to find another currency, and quickly. Probably, twenty, a hundred years later, we might go back on a gold standard, because it would have stabilized and it would again be our best option.

Having taken a degree in undergraduate economics years ago, I do not envy your situation. Fortunately for me, I had read a lot of von Mises prior to school. I have always said that I forgot more economics in school than I learned. One problem is that today's observers, with computers and the information on the internet, get bogged down in details, and often miss the forest. It is interesting that in your comments your mention the Fed only in passing, but in the U.S., when you are talking about money and credit, you are talking the Fed. I don't care what money is coming into the country, the fed controls bank credit and the interest rate structure (the later indirectly). I wonder what your course work in world capital markets has to say about the Fed? Further, since the U.S. dollar is the world reserve currency, what it does has a big impact on the money in the rest of the world. So, keep in mind that in the last decades the circulating money in the U.S. (MZM) has gone from $1 T to $11 T and the dollars outside the country has done the same exact thing, $1 T to $11 T. You also have to add into the massive money expansion all of the "assets" lost in the tech-stock and residential real estate mortgage busts, and you have more than enough dollars floating around to smother the U.S. This "flood" of money was mostly our own coming home. If the Fed had allowed the market to raise interest rates, things might have been different. But as long as they were as low as they were, money was available to all takers. I recently talked to a econ grad (I think he had a graduate degree) who said that he was never taught how money was created in the U.S., which is to say, how the Fed creates money. It is really important to know. One point in your comments that I didn't understand is how the increased production of goods in other countries led to large amounts of money showing up in the U.S. capital market. Generally, to increase production savings, i.e., capital will need to be invested. Hopefully, you will generate more profits, but it would take years to build back the capital that was used. This problem is the result of fiat currencies and government controls such as "pegging" their currency. There is no problem with a gold standard, since countries inflating their currency (inflation meaning expanding their money supply, not just price issues) will see their currency drop in value compared to gold and other gold backed currencies. Free markets and the gold standard protect you from this kind of fraud.

PajamasTV has a survey about ClimateGate that has some good questions. Best of all, at the end, when it is asking about your philosophical inclination, it has an "Objectivist" option. A first, in my experience. Take the survey and tell them we are here! Survey or PajamasTV

The one thing you said that you hadn't said before was that "the book's words can be wrong...." And we all agree on that, well, maybe. I mean that the words are what the author had to say, they aren't wrong that way. They may be wrong in regards to their description of reality (which you meant). But when considering the truthfulness of the words, we are not considering the author. We don't care who the author was. We know there was an author, but who it was adds nothing to the truthfulness of the words, i.e., no appeal to authority, even Ayn Rand does not get a free pass. The truthfulness of the words is independent of the author (which is not to deny that it is the author that has either been correct or has made a mistake, we don't consider the author in our own process of evaluation). The truthfulness of the words depends solely on their connection to reality. That is why I say that it is independent of the author. This is sort of like the process of conceptualizing, in which measurement is omitted. We know a book has an author, we know that the author is responsible for the content of the book, we just do not regard who that was as important when analyzing the truthfulness or value of the book.

Agreed

John, I don't want to go to dinner with you, or at least, I want to get you a copy of the menu prior to my arrival so that I don't have to watch your moralizing over your dinner selection. No, I am not trying to trivialize morality, and yes, the general pricipal for a rational man is as you mention. By your answer, however, you are projecting that moral view over the entire population. Now it should be. Is it? As an economist, are you assuming that every decision each actor in the economy is making every decision on the dictates of his own morality? And, even if that were true, what difference does it made to the economic consequences, not the political ones?

Sorry, I jumped the gun. That is something that I am critical of others for doing, so my "sorry" is a big one. I look forward to reading that section. From this I don't think that we have any significant issues to carry on about. The interplay of politics and economics (and other disiplines) is complex. I am not trying to set up some rationalistic limit. I just wanted to make the distinction between the vital, personal task of understanding what one's values should be and the scientific task of learning the economic consequences of the choices that people do make. Which is to say that there is a difference between politics and economics. I wasn't sure that the others who were arguing with me agreed. Maybe I should have asked them that. C.W.

Plasmatic, I agree with all of those quotations. I agree with the derivation of value in ethics and I obviously agree with George Reisman's statement on economic goods, since I am the one who introduced it. What I do not see is how you have intended to connect the two. I had hoped that you would notice that George did not include any standard with regard to the economic good. Yes, it does say that “goods whose existence or beneficial relationship to his well-being he needs to cause in his capacity as a thinking being”, but any altruist or irrational person will say that statement is true of their purchases. George was not laying out a moral statement regarding economic value. See also his entry in the Ayn Rand Lexicon under “Economic Value”. Remember that ethics is concerned with what a person should do, while economics is concerned with what people as economic actors do. Economics as a science does not consider how the buyer decided to buy, or the producer decided to produce. Any actor in an economy can make good or bad decisions. On the level of personal consequence, the decisions that have the most significant impact are the investment decisions, i.e., what goods to produce, how, or what career to pursue. When we act as buyers nearly all of our decisions are not moral decisions. Go over your last month's spending and point out the ones in which you needed to consider the moral consequences. Certainly when a person makes large purchases he had to analyze how that purchase would fit into his value hierarchy, and that might have included moral issues, e.g., buying a car vs. other goods he might need. Yet, even there, after he decided that he would buy the car, the rest of his considerations are primarily expressions of taste. The economist recognizes that the individual has to go through these considerations, but he is only concerned with the consequences on the market, prices, and resulting effects on production, or vise versa, when the changes relate to production issues. One of the consequences of the market is that we generally do not know the person we are trading with. We do not know if the producer is generally rational or the buyer uses reason. In a free society, we can conclude that in so far as the business activity is concerned, the producer we buy from was rational in regard to his production activities and the buyer in regard to his having the money to buy, but that is it. We know no more about their values and their legitimacy. Nor do we care. Besides, a rational man can fail in business, just as a stupid or irrational man. The consequences as far as the economist is concerned are the same. Capitalism, since it is a reality based political system, does require its inhabitants to face reality. They cannot force someone to face it for them. They must face the reality of making a living and competing with others who wish to enjoy life. Capitalism, you can say, supports objective values, absolutely. Yet, unfortunately, there will be plenty of self-destructive, or at least, less than rational people within a capitalist social system. They will get alone as best they can. Some in Objectivism have suggested that the number of "second-hander" will be very large, perhaps a majority. I don't know. I do know that an economist cannot ignore these people. They will be actors in the markets, and their activities accounted for within economics. Supposing that all actors are rational and make life-affirming choices all of the time would be scientific folly, and unnecessary.

Thought that I would add a quotation from George Reisman, Capitalism, p. 39

Man is outside nature? Man is unnatural? You ignore the statement about the distinction between the man-made and the natural? You are easy to amuse Grames.

Very simply put, Plasmatic, you must be aware of the facts. We are not discussing values. We are discussing economics. We are talking about economic goods or values. It is not a moral issue when one prefers bread over iron. It is not a moral issue when one decides that they prefer furniture over a new suit. It is not a moral issue if one prefers a GameBoy over an Ipod. (You aren't gaining ground to suggest special circumstances. I am talking everyday, normal evaluations. Certainly, there would be bad decisions, including ones that would be immoral for that individual.) It is these decisions that determine purchases by people and the price structure. It is these decisions that determine what is imported and what is sold. It is the decisions of people that determine what industries should expand and where savings should be spent. It is the price structure and the allocation of assets among competing wants and interests that economics works to explain. And it is how these decisions, allocations, and markets in general get screw up when the government interferes that economics works to explain. George Reisman, in "Revolt Against Affluence: Galbraith's Neo-Feudalism" (Lexicon, p. 135) He doesn't say anything about morality. I suggest that you read economists. I have read all of Dr. Peikoff. The context is different. Plasmatic, tell me about the relation of philosophy to physics, please. For comparison, briefly, my understanding is that, like all knowledge, understanding physics is an important value to man, for many reasons, which I am sure you and I can agree about. So, there is an ethical underpinning for science. How does that ethical underpinning have a consequence on the content of the science? Then, for the scientist, in the process of research, as in every other part of his life, morally, he should practice the virtues, all of them, most importantly, reason. That is to say, he will want to identify the nature of the entities he is studying, including his process of differentiation, integration, concept formation, definition, and integration with other knowledge, including laws, etc. (I am not trying to be exhaustive here.) The end result of his activities would be a body of knowledge that is fully grounded in reality. That is my understanding of "the foundational hierarchy of philosophy and its relation to the special sciences" or knowledge in general (are the rules somehow different for the "special sciences"?).

You have to learn how not to jump to conclusions. It does not advance even a conversation to put words into someones mouth. It could even be considered creating a straw man. Stupid thing to say, "Poli-Sci". Nor have I called you names, i.e., pragmatist. Calling someone a name when they don't agree with you isn't helpful either. I would really like to respect people with whom I have a discussion. You are making it difficult. Another error. In every statement I "considered" the origin of the book. There was no intrinsicism or evading that the book was created by someone. You use the same mental processes to study a rock or a building or a book. Artifacts are natural. As is the building. When you study the building or the book you are accessing the results of the mind of man, but not that mind. The book or building has an identity of its own. It can tell you something about that mind. You do not ignore that the book or building was created by that mind. But you study the book or building for what it is. You work to identify the nature of the content of the book. If you are studying physics, you don't care much about the mind behind it, you want physics. This is not particularly controversial. Capitalism, as I am sure you know, is a political system. It has a specific type of government, it has individual rights, it has free markets. It is the complete expression of Objectivist politics. It is the only moral political system. Anyone who does not accept Objectivist politics can actually be fully in favor of capitalism. Capitalism, however, is not the whole of economics. For example, not all of the people living in a completely capitalist society would be rational or even partly rational, or moral. Even the rational inhabitants would have widely divergent interests and desires. Economics studies the results of their activities regardless of their rationality, wants, or morality. To be valid, it has to study everything going on within an economy, any economy. You have evidenced no understand what I might be "hung up" over. It is not appropriate to attack someone by declaring what you have decided they believe. I have not suggested anything about "counting". My view, for the record, is that mathematical economics is like any other "scientific modeling", garbage in, garbage out. Keep to the facts, which is what someone actually says. So history and anthropology are politics. So when we look at art in the past we are looking at politics. And the development of science, and cosmology, and sex, and fashion and clothing, and technology, and engineering, and all of the other human activities outside of areas of legal issues. You know, a definition would be nice. AR said in "Philosophy, Who Needs It" that politics "defines the principles of a proper social system". Can we agree on that? If so, what about the part of history and anthropology that are not about social systems?

John, I have been working on a comment on the portions of your book that you posted. It is taking me a while. The thrust of my comments does come close to this issue, namely what I see as your (and Grimes) confusing economic goods with values. (I will leave my expostition to the comments I am working on - I can't promise I will finish them, but I want to.) Now, the statement "principles of interaction with others beyond one's immediate circle of frequent associates and into the concept of society at large" is amorphus. I think that it will carry you into relationships that you do not want to include in politics. Politics does deal with "social system" (Lexicon) but in the context of the use of force and laws. The political system you have impacts mightly on how commerce functions. However, the laws of economics apply to all political systems. Supply and demand, prices, choices of goods, and so on, are indifferent to your moral system or the political choices you make. You cannot legislate supply and demand, you can only screw it up. Economics has implications for politics, at least a politics that is reality oriented. Politics has no implications for economics. Economics just studies the consequencs of politial decisions. Just as psychology has implications for politics. Politics has nothing to say about psychology. Economics, the science, studying human action, has no such dependency. An economy does, a properous economy depends upon a good government. Economics studies the consequences in the economy of the different governments and their actions on economic activity and pricing. What it learns would certainly have implications for the best government and the better laws under a good government, regarding the efficiency of the market and production. Good government is an ethical issue. Studying the nature of the world (requires the virtue of reason) requires that it study trade and production in good governments, bad governments, and (if it is possible or only a momentary aberation) no government.

This is just equivication. A body of knowledge available to you in those books of potential is still independent of the minds that produced them. To acquire the knowledge you still must treat it as an objective thing, independent of yourself, just as you would treat a rock or other thing that you wanted to know about, or a building you wanted to understand. When you look at your bookshelf and see the works of Ayn Rand, you don't say or think, look at that potential philosophy or potential knowledge. It is the work of AR. When you talk about Atlas Shrugged you don't refer to the content of someone's mind, you refer to something that is a separate existant, not a potential. It is not a good idea to speculate about someone's understanding. It is also not a good idea to write something that has a confused meaning. An "application" is something more than an hierarchy. But that is not important. No, actually, economics and politics are not in the same hierarchy. Politics is a subject based upon ethics. Economics is the study of trade and production without regard to ethics or political systems per se. They co-exist as subjects and have implications for each other. But economics has things to say about stuff unrelated to politics and politics encompasses lots that have nothing to do with economics. There is an Objectivist politics, but not an Objectivist economics. There are actually lots of subjects "about men acting consciously", including anthropology, archeology, psychology, etc. Are you saying that they are all applications of politics and areas of special study? I agree that truths about man form a "framework" for economics. I also agree that "politics is ethics in a social context", except that there are a lot of other things going on in a social context besides politics. Perhaps that is what you are forgetting. The associations that a man chooses that have productive purposes are not made because of politics but the reality of being human. Being human is a situation that does not lead to only politics. Actually, he wants a government in part because of the productive associations he wants to have, not the other way around.

I don't know much about Trump except that he is a real estate investor. On the scale that he operates it takes someone with courage and a confidence in his own judgment. He has to fight the government on so many levels, not just his competitors. I can understand his frustration right now. Banks have stopped lending. I have heard other commentators and observers say that we are facing a wave of commercial real estate bankruptcies because existing building owners will not be able to roll their debt, even on buildings that have excellent cash flows. This situation exists because of the residential mortgage collapse. Bank reserves were eaten up by bad loans and without the recapitalization of bank's resources, they cannot make loans, no matter how much the Fed pushes them - which it is doing. Banks are conservative institutions and are going to be very cautious now. We are a long way from getting out of our mess. The Fed did set up this mess by the expansion of bank credit, which it is trying to expand even more now.

After looking at George Reisman's book, Capitalism, I think that I see where we have our problem. I think that your rejection of the division is correct. I would say that I think that the classical economists up through the Austrians would argue that large scale economics is the sum of the actions of individuals. This is along the line of there not being a "society", just people. P. 7-8 I don't think that either one of us want to be associated with either school. I am not excited by the prospect of examining the consequences of "how various factors interact in a mixed-economy, and how they interact globally across multiple mixed-economies with various mixes of bad politics." as you put it. How about studying how to wind down mixed-economies and how they fail when having to compete with a free economy?

Not true. Science is written down and is objectively identifiable. The current state of a science is what ever it is at the time, independent of even the minds that created it. This applies to the any of the creations of man, e.g., Atlas Shrugged is a completely separate thing that will live on by itself for as long as there is some means of reading it. It is not dependent upon anyone's consciousness. Once it was created, it was. It is, now. Ah, no. Wrong. Economics may study the consequences of certain political actions or government actions of policies, but trade and production occur independent of government, that is, these activities do not depend upon each other. Trade and production occur because man needs certain physical things to survive and prosper. He also needs a government, but that is in part because he needs to be able to produce and trade. He doesn't need to produce and trade because he needs government. Economics applies regardless of the type of government he has. The kind of government you have will impact trade and production, and it is economics that will tell you how. It is a science, established just like any other science, because there is in reality something that needs to be understood.

Henry Hazlitt wrote a novel about a similar situation. His person was the son of a monarch, so he didn't have the "how did he get elected" problem. Nor was he an Objectivist. The character wanted to be something other than a monarch so he tried to free his country. The novel went on about the problems he experienced weaning citizens from being dependent on the government. I think that there is an important question here. How do we go from the mess we are in to where we should be without a collapse? I think that the assets are there for a change. But convincing people that they can live through it will be difficult.

These are all ethical qualities and are the basics for a free society/government. I agree entirely that they are important. But that does not make them important for a science. The science of economics wants to know what happens when men produce and trade. It doesn't really care what attitude they have or what their values are. It will note that they have attitudes and values, but the science must work regardless what they are. Thus the consequences of trade and production will be the same in a society of altrutists and people who are rationally selfish. Of course, the rationally selfish will be more productive and tolerate no government intervention. A philosophy would explain why that is so. It is that the laws of economics apply to all, regardless of their understanding and philosophy. Just as a science of psychology would explain what is happening in a human's brain, and would be true regardless of the intelligence or rationality of the subject. (It would certainly note the consequences of irrationality, but would do so on grounds derived from induction from the world, and not from a philosoply. That is why there isn't an Objectivist phychology.)