Some loopholes I see with Objectivism

[Zip]

You may not be understanding what I am saying...I'm not talking about sacrifice at a personal level. I mean sacrifice at the systemic level...as in... "In order to achieve freedom for all men, we understand that there will be some who use their intellectual/financial/political/charismatic power to harm others, but putting in an inordinate number of rules to control these abuses is a larger evil than the abuses themselves, so the system must be willing to sacrifice the suffering of a few less powerful individuals in order to achieve the most perfect system..."

You are dropping something here. The very instant someone uses force or fraud to achieve "power" then that person has violated other peoples rights and will be subject to such punishment as the law prescribes.

You seem to find an inherent evil in the fact that men are unequal in the amount of "power" they have over others. Like the power a company has to sell its product, or that an employer has over the wages he pays his workers. But this is a smokescreen. The only power a person can exert legally over anyone is the power that person willingly gives. As a businessman in a laissez faire economy I would be free to pay my workers what I decide even if it was $1.00 an hour. That is my right, and that is a valid use of my "power" as the owner of a business. However, I can not make people work for me. I can not force them to accept that pay, nor can I fraudulently trick them into accepting it.

If a company develops a product it has the right to demand that it be paid what it considers to be the right price. It can not force anyone to buy its product.

In the case of your medicine/medicine company their rights do not change based on the perceived need of others.

*It is a falsehood that if the medicine could cure some terminal disease that the company is complicit or guilty of murder for every person unable to get the medicine. You see this argument a lot from people like Michael Moore who blames gun companies and Wal Mart for the Collumbine massacre, or your mother blaming you not eating your peas for the deaths of small children starving in Africa.

I won't get in to the economics of why charging too high of a price will cost the company in the long (and short) run or that development will no doubt be undertaken by another company to produce the same or a very similar medicine leading to competition because those arguments, though valid, are a distraction from the fundamental question. That fundamental question is not really morality but a deeper fundamental, a question of rights.

Objectivists recognize individual rights. The right to life, the right to liberty and the right of property. Without these rights there can be no moral action, without these rights man can not live as a man.

I think you are jumping the intellectual que here by beginning with Objectivist morality and skipping right over the more fundamental question of rights.

[DougW]

You are dropping something here. The very instant someone uses force or fraud to achieve "power" then that person has violated other peoples rights and will be subject to such punishment as the law prescribes.

You seem to find an inherent evil in the fact that men are unequal in the amount of "power" they have over others. Like the power a company has to sell its product, or that an employer has over the wages he pays his workers. But this is a smokescreen. The only power a person can exert legally over anyone is the power that person willingly gives. As a businessman in a laissez faire economy I would be free to pay my workers what I decide even if it was $1.00 an hour. That is my right, and that is a valid use of my "power" as the owner of a business. However, I can not make people work for me. I can not force them to accept that pay, nor can I fraudulently trick them into accepting it.

If a company develops a product it has the right to demand that it be paid what it considers to be the right price. It can not force anyone to buy its product.

In the case of your medicine/medicine company their rights do not change based on the perceived need of others.

*It is a falsehood that if the medicine could cure some terminal disease that the company is complicit or guilty of murder for every person unable to get the medicine. You see this argument a lot from people like Michael Moore who blames gun companies and Wal Mart for the Collumbine massacre, or your mother blaming you not eating your peas for the deaths of small children starving in Africa.

I won't get in to the economics of why charging too high of a price will cost the company in the long (and short) run or that development will no doubt be undertaken by another company to produce the same or a very similar medicine leading to competition because those arguments, though valid, are a distraction from the fundamental question. That fundamental question is not really morality but a deeper fundamental, a question of rights.

Objectivists recognize individual rights. The right to life, the right to liberty and the right of property. Without these rights there can be no moral action, without these rights man can not live as a man.

I think you are jumping the intellectual que here by beginning with Objectivist morality and skipping right over the more fundamental question of rights.

I apologize if I am jumping ahead...I have ordered a copy of "The Virtue of Selfishness" and will read it immediately. However, I want to be clear, I am not talking about anyone using force or fraud to achieve power. I am talking about people using their inherent talents, intellectual power, charisma or creativity to play the capitalist game waaaaayyyy, waaaaaaayyy past the point where it has any real effect on them other than as a comparison of their power to the power of others playing the game at that level. I am asking a very basic fundamental question: Is it EVER....EVER....immoral to choose a minor pleasure for yourself when denying yourself that minor pleasure could alleviate the suffering of many people?

I have always been a believer in the concept that morality must work at every level in order to be valid. If an act is moral, it should be moral on a deserted island populated by 10 people, or in a country with 300,000,000 citizens. On the island, if one energetic citizen runs over to the far side of the island and discovers a grove of banana trees, is it moral for him to 'claim' them as his property, and then using his 'rights' can he dole out teh food as he sees fit? By the same token, is it moral that someone born into a family with hundreds of millions of dollars produces nothing of significance over the course of his life, but increases his fortune greatly by being better at playing the zero-sum-gain game that is the stock market (and no, I'm not attacking the stock market, I compeletely understand it's value as a supply of cash to business to grow, I'm simply pointing out that it allows for monetary gain by speculators who have an 'edge' over common investors, whether that edge is their placement in the system, their intellect, or the influence of their capital...).

Anyway, I just wish someone would engage on this topic in a way other than saying 'You don'[t understand...." Please....help me understand! If there is a tacit understanding that the road to a world of perfect Objectivism may run into some potholes when it comes to suffering among the less fortunate (I mean, wasn't that one of the primary plot points of Atlas Shrugged?), but that those potholes are insignificant when compared to the suffering that will be caused by any alternative system, then please, let's get that stated, so we can better decide for ourselves if we agree or disagree. Saying that Objectivism has no potholes, or that we who question 'simply don't understand' without providing more rational arguments isn't a very satisfying answer....

Anyway...I am done..... no more posting until I get the book and read it..... I will be back then...... (I'll continue to read here though, so blast me back if you want....I just don't want to add any more because I'm afraid I'll be making everyone angry. Plus, it's disingenuous for me to continue the discussion without learning all I can first....)

[Zip]

I apologize if I am jumping ahead...I have ordered a copy of "The Virtue of Selfishness" and will read it immediately. However, I want to be clear, I am not talking about anyone using force or fraud to achieve power. I am talking about people using their inherent talents, intellectual power, charisma or creativity to play the capitalist game waaaaayyyy, waaaaaaayyy past the point where it has any real effect on them other than as a comparison of their power to the power of others playing the game at that level.

False premise #1 "Inherent talents" - People use this concept to wipe out the fact that the people who they are accusing of having inherent talents have worked for those talents. Here is, of all things, a Micheal Jordan commercial that explodes that perverse myth.

All those other things you mention have to be worked on just as much as any physical talent. Even the confidence game of the politician is something that must be honed and built by work, a different type of work for sure but work none-the-less.

False Premise #2 "play the capitalist game waaaaayyyy, waaaaaaayyy past the point where it has any real effect on them" So when these rich and powerful people "play" the game it has no effect on them? So when Donald Trump looses millions of dollars in a failed real estate deal that means nothing? When you fail does it mean nothing to you? Or is it the fact that he has so much you believe that it is meaningless?

So what really happens when someone like that fails? What would he/she have done with all that money had she/he not failed? How many other people would have had jobs, improved their skills and so on? How many others who rely on that mans hard work and sweat and tears genius end up loosing when he looses? Still think that it doesn't matter? Even if the rich person won't miss the money (which is ridiculous because no matter how much he has he could have used use those millions to fund other projects) do you think that failure means nothing to them?

I am asking a very basic fundamental question: Is it EVER....EVER....immoral to choose a minor pleasure for yourself when denying yourself that minor pleasure could alleviate the suffering of many people?

I have always been a believer in the concept that morality must work at every level in order to be valid. If an act is moral, it should be moral on a deserted island populated by 10 people, or in a country with 300,000,000 citizens. On the island, if one energetic citizen runs over to the far side of the island and discovers a grove of banana trees, is it moral for him to 'claim' them as his property, and then using his 'rights' can he dole out teh food as he sees fit?

Good, were dealing with absolutes... That is a good start.

However, you are dropping the context again. It isn't about pleasure, we are not hedonists. It is about value, and it is never ever moral to give up something that is of a higher value to you for something that is of a lesser value to you.

Lets get to those absolutes though...

Objectivism does not prescribe choice. You decide what is a greater value to you. From what I have read of you postings so far, you would consider it a much, much higher value to use your miracle medicine to heal everyone regardless of profit. Heres the thing... As long as that is your value no one here will tell you it is wrong. Some may disagree with the decision but no one would tell you you were wrong to make your personal value choice. Why? Because it is moral. By making that decision you are not violating anyones right to life, liberty or property.

By the same token if a man decided he wanted to make a bucket load of money off of his medicine and price it out of the reach of all but the wealthiest people that too is his right. The possibility that someone who has the mystery disease may die because he can not afford the medicine is no more the developers responsibility than it is your responsibility that people are dying of thirst in Africa while you bathe in cleaner water than they have ever known.

Lets compare that to altruism... *Remember we are dealing with absolutes, the absolute morality, and the absolute end game of where Objectivist morality leads, versus the absolute morality of altruism and where it leads in the extreme.

Altruism would demand that you surrender your magic medicine no matter your opinion, no matter your choice. You have no right to it whatsoever, the need of others (any others) outweighs your wants, needs, even your rights.

Your right to property is removed. You have no right to hold on to your property (the medicine you created with your hard work) if others need it.

Your right to your life is removed. If you were the only one who could produce this medicine you must make it. Never mind that you have decided to leave the medicine business and that there is something else you would rather be doing. You are not allowed. You must produce the medicine.

Your right to liberty is removed. Would you rather see your family than produce the next batch of medicine? You selfish bastard... What gives you the right to think of yourself when others are still in need?

Notice the difference here?

Altruism in the end resorts to force to produce a "common good". Totally ignoring the simple logical fact that one can not produce a right or create a common good by removing a right or denying one person that same common good.

Objectivism denies the use of force, full stop. No question, no compromise. Society is not a collective, it is a collection of individuals. History shows that the productivity, the freedom and the happiness of a "society" increases exponentially with respect for individual rights. That is because there is no such thing and can be no such thing as a collective right.

By the same token, is it moral that someone born into a family with hundreds of millions of dollars produces nothing of significance over the course of his life, but increases his fortune greatly by being better at playing the zero-sum-gain game that is the stock market (and no, I'm not attacking the stock market, I compeletely understand it's value as a supply of cash to business to grow, I'm simply pointing out that it allows for monetary gain by speculators who have an 'edge' over common investors, whether that edge is their placement in the system, their intellect, or the influence of their capital...).

Anyone who has ever played the stock market will tell you just how much knowledge and skill (earned through hard work) it takes to be successful at it. You dropped the context of that work again. Just because Biff was born into a rich family that does not mean that he would have a clue about investing had he not worked long and hard at learning how to do it,or to hire those that do. As the Madoff ponzi scheme aptly illustrates when the investor chooses to be ignorant of who he hires he can loose it all.

Anyway, I just wish someone would engage on this topic in a way other than saying 'You don'[t understand...." Please....help me understand! If there is a tacit understanding that the road to a world of perfect Objectivism may run into some potholes when it comes to suffering among the less fortunate (I mean, wasn't that one of the primary plot points of Atlas Shrugged?), but that those potholes are insignificant when compared to the suffering that will be caused by any alternative system, then please, let's get that stated, so we can better decide for ourselves if we agree or disagree. Saying that Objectivism has no potholes, or that we who question 'simply don't understand' without providing more rational arguments isn't a very satisfying answer....

Anyway...I am done..... no more posting until I get the book and read it..... I will be back then...... (I'll continue to read here though, so blast me back if you want....I just don't want to add any more because I'm afraid I'll be making everyone angry. Plus, it's disingenuous for me to continue the discussion without learning all I can first....)

Well I'm sorry to read this last bit. I don't think any claimed that you had to know it all before you came in here. You have not resorted to ad hominem attacks and you have made your arguments clear. Yes, we've run in to these questions before but, as JS Mill said

But the peculiar evil of silencing the expression of an opinion is, that it is robbing the human race; posterity as well as the existing generation; those who dissent from the opinion, still more than those who hold it. If the opinion is right, they are deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error.

[kainscalia]

Doug, you are making one particular mistake in expecting morality to be non-contextual. You said that whatever had to be moral must be moral in a city as well as in a desert island. It seems to me you are not looking for moral principles but rather Moral Commandments. Let's examine this: Lying is considered to be immoral.

- Is lying to a tyrant just as immoral as lying to an honest person? Why? Can you explain why this is so?

One thing you will need to understand is that a great deal of Objectivist thinking is:

a) Elaborating logical principles based upon conclusions gathered from observations and knowledge tested through epistemology, related to observable reality

Thinking and acting on those principles

Moral commandments do not permit you to act on principle: They are absolute orders that do not take any variables into consideration, are imposed upon you by some moral 'authority' and are upheld by no other force than the weight of the 'authority', and neither questioning or reasoning as to why are permitted. Thinking on principles does not hold an unquestionable moral authority as the generator of moral edicts, but rather it holds reality and all that is knowable about it as a guideline through which employ observation, induction, deduction and concept-formation.

You spoke of the need for Honesty. You'll be surprised to find out that Objectivism has what it considers virtues (a virtue is an action you employ in order to obtain a value), and among them is Honesty. Honesty is the virtue of communicating and acting with a truthful manner, as best one is able. It includes both honesty to others, and to oneself and about ones own motives and thought process.

However, a very specific point is that you do not owe honesty to those who use force against you, either to harm you or coerce you into doing something that goes against your own rational self-interest and against your individual rights. Why? The answer depends on another virtue, the virtue of Rationality: using reason to identify reality. Those who initiate violent force renounce the virtue of rationality and instead seek to coerce others through force instead of persuading or dialoguing with them through argument and logic. To such people, you have no obligations whatsoever as they are the antithesis of any rational existence, and it is therefore good and moral to lie and deceive them in order to save yourself or neutralize their threat.

Compare that to a non-contextual moral commandment such as "Thou shalt not lie" and you will begin to see what the difference is between a moral commandment and thinking on principle.

I've written about this in this article at Aristotle's Lighthouse.

[brian0918]

Objectivism does not prescribe choice. You decide what is a greater value to you. From what I have read of you postings so far, you would consider it a much, much higher value to use your miracle medicine to heal everyone regardless of profit. Heres the thing... As long as that is your value no one here will tell you it is wrong. Some may disagree with the decision but no one would tell you you were wrong to make your personal value choice. Why? Because it is moral. By making that decision you are not violating anyones right to life, liberty or property.

You're mixing up ethics with politics, as the original poster has been this entire time. A decision may not violate any rights, but it may still be an immoral decision - the wrong one to make. That you have the power to decide your highest value doesn't alleviate you from rationally deciding, understanding, and explaining why it is your highest value. Objectivism absolutely prescribes choice in the matter. A value that is irrationally chosen as your highest value is wrong, and any promotion of that value over your other, rationally-chosen, values is a sacrifice.

[Zip]

You're mixing up ethics with politics, as the original poster has been this entire time. A decision may not violate any rights, but it may still be an immoral decision - the wrong one to make. That you have the power to decide your highest value doesn't alleviate you from rationally deciding, understanding, and explaining why it is your highest value. Objectivism absolutely prescribes choice in the matter. A value that is irrationally chosen as your highest value is wrong, and any promotion of that value over your other, rationally-chosen, values is a sacrifice.

Please give me an example of an immoral decision that does not violate rights.

[Clawg]

What?!? Our society DOES set the maximum price that can be charged for the drug, and DOES put other limitations on the ownership of the intellectual property! You may not like those regulations, but they exist, right now! And yet, somehow, the research goes on.... the drugs DO exist....so clearly evidence suggests that restricting profit at some level does NOT stop invention/creation...

What about those drugs that were never produced because of those limitations?

Let's say someone has an illness and little money. He can now vote for party A who promises to put limitations on what drug companies can demand for their research and party B who promises to put no limitations on drug companies.

With party A the drug he needs will never produced (but he would be able to afford it if it were), with party B the drug would be developed but he wouldn't be able to afford it.

Anyway, by coming back with more economic arguments, you are failing to address the real question. Once all the costs are covered, and the factories paid for and the Maseratis all have a new coat of wax, and there are apartments in South Beach loaded with strippers, EVEN THEN is it not immoral to play the capitalism game to squeeze a few more pennies out of the system, since after all, we're just talking it from completely replaceable workers anyway?

Depends.

The 'goal' of Objectivists is not to make as much money as possible. A moral life means a life which you can enjoy yourself and which you plan long-term. As a producer you should encourage rationality because in the long run your company and your life depends on other people not going crazy. For example there is a long-term gain in donating money to certain charities.

I like the idea that Objectivism says "Freedom First", because I believe we could very easily end up with a planet where a few hundred people make ALL the rules, and that would not be good....

We are very far from having an Objectivist state but we are closer to your scenario than ever. As soon as you allow government to play a role in economics you end up with a scenario where you secure monopolies. Political power will be used by participants in the market place to gain an advantage over their competitors. That is a very bad thing.

Please give me an example of an immoral decision that does not violate rights.

Giving money to a dictator / criminal / corrupt politician/party to support their cause.

Edited September 30, 2009 by Clawg

[whYNOT]

There is one subtle and often overlooked point on morality (overlooked because it is so obvious to Objectivists) that I'd like to add to the above excellent posts.

To a thinker newly emerged from a background of religion or normal societal strictures -'morality'-, all morality is for the benefit of the "other."

We are all taught from early on to consider the others in every way possible, even and especially at expense to oneself. The Judaic/Christian influence runs so deep that obeying proscribed tenets and commandments for the sake of God and other people is a hard one to shake.

This is what morality was comprised of until Ayn Rand came along. No one else - apart from Friedrich Nietzche to a degree- has ever stated that you are moral for your own sake, AND you are the total beneficiary of your own ethics.

This is how the very concept of morality (even its definition) has become tainted : morality can only be about how one treats and responds to, other people, they told us. Who is this other, we ask? No answer.

Objectivism shows that it is a primary that morality be of, and for, oneself, irrespective of others.

The secondary (as has been illustrated in these posts) is that others might benefit from ego-driven actions; further, that a rationally moral person will often display a high degree of respect and good will to others.

As I say, all obvious, until we are talking with someone new to O'ism, and we may recall our own early struggle to grasp this critical shift. It seemed that Doug was getting a bit stuck there.

[brian0918]

Please give me an example of an immoral decision that does not violate rights.

Any choice or action that advances a lesser value over a higher value or a non-value, or any decision to place a value higher than is rational - e.g. drug abuse.

The list is really endless. When you stop confusing politics and ethics, you'll realize that Objectivism has more to offer you in guiding your personal decisions.

Edited September 30, 2009 by brian0918

[SapereAude]

It seems to me you are not looking for moral principles but rather Moral Commandments.

Thanks for that.. I couldn't quite put my finger on it.

[Thales]

Others have answered, but I want to point out that anyone who invents a life saving drug deserves to be wildly wealthy! If I were provided with such a drug, I'd want to pay that guy handsomely for it and so should everyone! This is the other side of the coin that you are missing.

[softwareNerd]

I apologize if I am jumping ahead...I have ordered a copy of "The Virtue of Selfishness" and will read it immediately. ...

Anyway...I am done..... no more posting until I get the book and read it..... I will be back then...... (I'll continue to read here though, so blast me back if you want....I just don't want to add any more because I'm afraid I'll be making everyone angry. Plus, it's disingenuous for me to continue the discussion without learning all I can first....)

That's a good decision. After reading the first essay in "Virtue of Selfishness (VoS)", you'll probably be able to frame questions in that context. Also, some of the other chapters in that book answer some FAQs that arise from the first essay.

[Zip]

Any choice or action that advances a lesser value over a higher value or a non-value, or any decision to place a value higher than is rational - e.g. drug abuse.

The list is really endless. When you stop confusing politics and ethics, you'll realize that Objectivism has more to offer you in guiding your personal decisions.

I've never considered the rights to life, liberty and property to be political rights. I will have to consider this more.

[JMeganSnow]

Hi DougW! Welcome to the forum. I'd just like to comment on something I noticed here which might assist you in rooting out a serious error.

By the same token, is it moral that someone born into a family with hundreds of millions of dollars produces nothing of significance over the course of his life, but increases his fortune greatly by being better at playing the zero-sum-gain game that is the stock market (and no, I'm not attacking the stock market, I compeletely understand it's value as a supply of cash to business to grow, I'm simply pointing out that it allows for monetary gain by speculators who have an 'edge' over common investors, whether that edge is their placement in the system, their intellect, or the influence of their capital...).

The stock market isn't a zero-sum game any more than life is. A zero-sum game is one in which, for someone to win or gain, someone else *has* to lose. But this isn't how wealth works. Wealth is not a static quantity that has to be *taken from* other people, it is created constantly by the efforts of productive men. A man who has invested his money wisely in productive ventures has created vast amounts of wealth that didn't exist before, and he rightly earns a reward for doing so.

The millionaire who keeps working when he doesn't have to should be celebrated for his continuing productive achievements which increase the wealth in the world, not damned because he doesn't "need" that money. The fact that he has the money out there *working* means that he's providing jobs for hundreds of people who are creating thousands of products that would otherwise have never seen the light of day. Everyone who buys those superior products has their lives enriched, which grants them extra time/money that they didn't have before to spend on other products/services, which creates more jobs . . . it's a wonderful circle whereby everyone benefits.

Your example with the bananas was erroneous, too, because that's not how you claim unowned resources, either. (Well, in a fully mature society with statutory claims set up, you might be able to do that, but you couldn't get that kind of a society with 10 people on a desert island). In order to claim "unowned" stuff as property, you have to put some kind of work into it. If you pick the bananas and bring them into the camp, yes, those are YOUR bananas because you put some effort into them and you have every right to say "these are mine, go get your own". If you plant some trees and put up a fence around them to keep animals out, those are YOUR trees and you have every right to tell people to stay away. But if you just find some trees, you have no basis for claiming that they belong to you.

There are a lot of complex subtleties involved here that I think you would do well to examine more closely.

[DougW]

Hi DougW! Welcome to the forum. I'd just like to comment on something I noticed here which might assist you in rooting out a serious error.

The stock market isn't a zero-sum game any more than life is. A zero-sum game is one in which, for someone to win or gain, someone else *has* to lose. But this isn't how wealth works. Wealth is not a static quantity that has to be *taken from* other people, it is created constantly by the efforts of productive men. A man who has invested his money wisely in productive ventures has created vast amounts of wealth that didn't exist before, and he rightly earns a reward for doing so.

The millionaire who keeps working when he doesn't have to should be celebrated for his continuing productive achievements which increase the wealth in the world, not damned because he doesn't "need" that money. The fact that he has the money out there *working* means that he's providing jobs for hundreds of people who are creating thousands of products that would otherwise have never seen the light of day. Everyone who buys those superior products has their lives enriched, which grants them extra time/money that they didn't have before to spend on other products/services, which creates more jobs . . . it's a wonderful circle whereby everyone benefits.

Your example with the bananas was erroneous, too, because that's not how you claim unowned resources, either. (Well, in a fully mature society with statutory claims set up, you might be able to do that, but you couldn't get that kind of a society with 10 people on a desert island). In order to claim "unowned" stuff as property, you have to put some kind of work into it. If you pick the bananas and bring them into the camp, yes, those are YOUR bananas because you put some effort into them and you have every right to say "these are mine, go get your own". If you plant some trees and put up a fence around them to keep animals out, those are YOUR trees and you have every right to tell people to stay away. But if you just find some trees, you have no basis for claiming that they belong to you.

There are a lot of complex subtleties involved here that I think you would do well to examine more closely.

Megan,

I respectfully have to disagree with your assessment of the stock market (and I apologize to the forum for coming back and commenting when I said I wasn't going to, but this isn't so much about objectivism as it is about the details of our economy, and anyway, I got halfway through "virtue of selfishness" last night, so just one comment... )

'Playing' the stock market, as I was describing, does not actually contribute anything to job creation, funding of corporations, or really anything significant except pehaps through the taxation of profit derived therein. You are listing the attributes of initially buying a stock offering when it is issued by a corporation. Of course I would never argue that investors who purchase stock offerings as they are released are not contributing to the economy. They are....absolutely. But if you know how the market works, you realize that 95%+ of the activity of the market is about what happens to the stock AFTER that point. In theory, and ONLY in theory, the stock would be traded from investor to investor as the company gains or loses fortune through it's actions, and investors who purchase the stock from other investors would be weighing the price they pay for the stock against future dividends they might receive on the profits the company will or will not create in the future. In FACT, however, dividends are rarely paid by corporations, and I would even go so far as to say that payment of dividends has become a very distant second in importance to growth of the company revenues in the marketplace....and that's 'revenues'...not 'profit'. Playing the stock market in this way has in essence become a form of legalized gambling that has almost no correlation whatever to anything valued by Objectivism. Those who are 'successful' in making money by day trading in the stock market don't work hard...they don't create jobs, they DO absolutely participate in a zero-sum-gain game, they often rely on methodologies that even the most fervent Objectivist would have problems with in order to achieve an edge in the game, from clearly illegal acts such as having inside knowledge of documents that will be released to the public and thereby influence the market, to the simple (and perfectly legal) advantage that they hold a seat on the exchange and can act on the released information faster than the 'average' investor.

Anyway, if you still disagree, please let me know very specifically how an investor paying $100 per share for a block of stock on a given morning and then selling that stock for $110 a share that same afternoon creates jobs, or contributes to the economy in any way that is different from how a casino would contribute to the economy (i.e. the workers involved in the actual 'trading/gambling' process, building the trading/gambling infrastructire, taxes on trading/gambling, etc.)

[softwareNerd]

Anyway, if you still disagree, please let me know very specifically how an investor paying $100 per share for a block of stock on a given morning and then selling that stock for $110 a share that same afternoon creates jobs, or contributes to the economy in any way that is different from how a casino would contribute to the economy (i.e. the workers involved in the actual 'trading/gambling' process, building the trading/gambling infrastructire, taxes on trading/gambling, etc.)

This class of stock-buyer provides liquidity and "makes" a market in the stock. If we take your $100 - $110 range, we can assume this person thinks the stock is worth something in the $105 ballpark within the context of the time for which he intend to hold it. So, when it is selling at $100 he stands ready to buy it. If he (and others like him) did not, the person who wants to sell this stock would be able to get less for it. Again, when it is at $110, he stands willing to sell it. If he did not do so, an investor wanting to buy the stock would have to pay more for it. If we assume that this day-trader is right about his evaluation, then what he is doing is making a market available around that evaluation.

BTW: This has been discussed in some more full-fledged topic.

Edited October 1, 2009 by softwareNerd

[DougW]

This class of stock-buyer provides liquidity and "makes" a market in the stock. If we take your $100 - $110 range, we can assume this person thinks the stock is worth something in the $105 ballpark within the context of the time for which he intend to hold it. So, when it is selling at $100 he stands ready to buy it. If he (and others like him) did not, the person who wants to sell this stock would be able to get less for it. Again, when it is at $110, he stands willing to sell it. If he did not do so, an investor wanting to buy the stock would have to pay more for it. if we assume that this day-trader is right about his evaluation, then what he is doing is making a market available around that evaluation.

BTW: This has been discussed in some more full-fledged topic.

OK, but how is that NOT a zero-sum-gain?? And how does it create jobs other than those directly involving the trading/analysis process? Are you assuming that the 'seller' would then use his gains to buy new-issue stock which would in fact create jobs, etc., or create some new company? The question is what aspect of this kind of trading is different from casino gambling...one could argue that the winners in the casino would use their gains to create jobs and stimulate the economy too....

I get the mechanism...I understand that the marketplace is in fact a marketplace, but so what....a slave trading marketplace is also a marketplace, and 'monetary value' can be created there as well...but I wouldn't argue that it creates any value by objectivist standards. I'm sorry if this has all been discussed before, but in the end, at the very base of this argument, if you can't show that post-offering trading of stocks actually impacts the productivity/profitability of a corporation in a way that is 'real' (in other words, you can't say that the bad publicity from a stock price dropping will cause a company harm, etc, because it's either the underlying real information that caused the price of the stock to drop in the first place that is the root cause, or the impact is an irrational reaction to a change in price that has no root cause...either way there is no valid cause/effect...)

What is NOT debatable is that a lot of people make a lot of money participating in this process...and in my mind that means that these people have a huge, vested interest in not wanting us to 'look behind the curtain' of the stock market, because it would interrupt the flow of billions of dollars into their pockets. I am frankly amazed that even after the revelations of the recent past about how dishonest so many of the major corporations in this country are, that Objectivists ALWAYS seem to believe that anyone involved in business is sacrosanct, and should never be questioned or criticized!

[themadkat]

What is NOT debatable is that a lot of people make a lot of money participating in this process...and in my mind that means that these people have a huge, vested interest in not wanting us to 'look behind the curtain' of the stock market, because it would interrupt the flow of billions of dollars into their pockets. I am frankly amazed that even after the revelations of the recent past about how dishonest so many of the major corporations in this country are, that Objectivists ALWAYS seem to believe that anyone involved in business is sacrosanct, and should never be questioned or criticized!

I would not say this is the case. Depending on the type of dishonesty, either civil or criminal penalties may be called for. I'm not sure if you've run across the "looter" terminology yet in your readings of Rand but understanding the Objectivist concept of "looter" might put your mind at ease about the attitude towards some of these businessmen.

To give a more relevant and timely example, just about everyone here is against "healthcare reform" and the public option as Obama is currently presenting it. Does this mean we love the insurance industry and think they're saints? Of course not. They're largely part of the problem. A lot of them lobbied for exactly the broken system that we have now, and are lobbying to keep it that way, to maintain something close to a state-sanctioned oligolopoly. Remember in Massachusetts it's basically illegal to not have insurance. Who do you think asked for that? A free market in health insurance would eventually help the good companies but it's understandable why industry groups as a whole feel threatened by it - it would open them up to competition and they want the easy way out. But do keep in mind that this would not be possible without government manipulation of the market, and that's the point that Objectivists work so hard to point out.

Compare, say, John Allison of BB&T vs, say, Ken Lewis of Bank of America and you'll get a good idea of the difference between a virtuous businessman and a looter.

[softwareNerd]

Doug, In the second part of your post, it sounds like you're responding to something you're read outside this thread.

Good capital markets create value by ensuring the allocation of money appropriately.

There is no implication here that the capital markets as we have them today are ideal. Nevertheless, even in the markets as we have them, it is not traders who are distorting things.

[Eiuol]

"they often rely on methodologies that even the most fervent Objectivist would have problems with in order to achieve an edge in the game, from clearly illegal acts such as having inside knowledge of documents that will be released to the public and thereby influence the market, to the simple (and perfectly legal) advantage that they hold a seat on the exchange and can act on the released information faster than the 'average' investor. "

I wouldn't say any of those things are bad. Nothing wrong with "inside knowledge". Nothing wrong with having first-hand knowledge and being able to use it. If you think there is too much uncertainty involved, then don't do the stock market. I'm not sure if discussing the stock market matters too much. A stock market doesn't *have* to exist in a free market. Capitalism isn't defined by a stock market. The successes and failures of capitalism don't need to revolve around stock markets.

[SapereAude]

Those who are 'successful' in making money by day trading in the stock market don't work hard...they don't create jobs, they DO absolutely participate in a zero-sum-gain game

You are still missing a point- to HAVE that money to DO the trading in the stock market they had to MAKE the money to begin with. The making of money IS the creation of jobs. While I personally do not approve of the way the stock market works to look at it objectively.. how can you say that even if you consider stock market investment/trading to not be hard work that it doesn't create jobs?

Traders, secretaries, janitors in the buildings of the trading houses and so on and so forth... When you create one job you also create more jobs due to the spending power that one job creates for the one employee.

One could argue that even sucessful trading isn't hard work. But what work created the money that is being invested? And if the investments are successful then someone did the hard work of knowing in whom to invest. If the investor themselves did the research then they worked for their goal. If the investor hired someone tmore skilled to make the decisions for them then a job was created.

[DougW]

Quo -- No, I have to disagree with almost every point here....

You are still missing a point- to HAVE that money to DO the trading in the stock market they had to MAKE the money to begin with.

This point in the thread started with me reflecting on someone who inherits their money, and then produces nothing other than increasing their wealth by playing the market. If someone actually earns their money through production of real value, I have no issue with them investing it...though again I don't believe there is any significant difference between day-trading on the stock market and betting on horse races...

...how can you say that even if you consider stock market investment/trading to not be hard work that it doesn't create jobs?

Traders, secretaries, janitors in the buildings of the trading houses and so on and so forth... When you create one job you also create more jobs due to the spending power that one job creates for the one employee.

I specifically said I understood that jobs were created to support the process of trading itself, but that that is no different than saying a casino contributes to the economy because of the jobs it creates to run itself... What exactly were Rand's views on gambling anyway, I haven't seen that....can't believe she thought it a 'rational' part of an economy...

One could argue that even sucessful trading isn't hard work. But what work created the money that is being invested? And if the investments are successful then someone did the hard work of knowing in whom to invest. If the investor themselves did the research then they worked for their goal. If the investor hired someone tmore skilled to make the decisions for them then a job was created.

So, are you telling me that Ayn Rand would have thought it OK for a man to have no job that produces actual value, but instead makes a living at a near-gambling level zero-sum-gain process which is arguably not hard work.... No way! Rand would have called the decision that this person made to avoid using his talents to help produce real value 'irrational', would have called him a leech or moocher for sucking cash from the fountain produced by 'real producers', etc...she would have crushed this guy! I mean, the stock market existed in the 1920s, 30's and 40's....I would hazard a guess that there is an actual real reason why Rand didn't include any smart speculators as heroes in any of her stories...instead her heroes were all involved in the creation of something real, something that had actual value....Hell, she didn't even include any 'middlemen' traders as heroic...I'm sure her opinion of them is that while they aren't necessarily an evil in the system (as long as they obey rational logic...) they also weren't anything to get excited about...

Finally, I am absoluetly NOT anti-capitalism.... I am pro-pro-pro capitalism! I just believe, from my experience in business, that most of the people in the higher levels of the business community today fall into the category that Rand would have labeled 'Looters' or worse, and I was commenting that it seems like Objectivists give those guys a pass more often than not...and this seemed illogical to me in light of Rand's adamant view that anything but 100% acceptance of the rational lifestyle was unacceptable (and I'm not talking about making miscalculations in what is rational, I'm talking about businessmen who knowingly attempt to circumvent rational rules of fairness, or who knowingly inflate the value of their contribution to production by an absurd factor...)

[Thomas M. Miovas Jr.]

So, are you telling me that Ayn Rand would have thought it OK for a man to have no job that produces actual value, but instead makes a living at a near-gambling level zero-sum-gain process which is arguably not hard work.... No way! Rand would have called the decision that this person made to avoid using his talents to help produce real value 'irrational', would have called him a leech or moocher for sucking cash from the fountain produced by 'real producers', etc...she would have crushed this guy!

I think you are quibbling. So long as a man trades value for value and earns money, then he is productive. Maybe Miss Rand didn't say much about the stock market or gambling (which aren't the same) because she didn't know much about it, just as Miss Rand didn't say much about evolution or physics or mathematics. The man who can put his money into a company (which is what he does when he buys stocks) and can earn money from that is not a looter. Looters are those people who run to the government to get hand-outs when their business goes bad, such as GM and AIG. They are the one's getting money from looting the rest of the population. I'll grant you that these guys had to deal with regulations and were taxed enormously, but the government shouldn't have bailed them out, they should have fought for more freedom in the markets -- instead, they used force to get a bail-out, which is either looting or mooching, depending on how you look at it. The man who inherits wealth and knows how to invest it is earning money, even if he personally doesn't make any real asset himself. Insofar as day traders or other speculators can predict the markets and make a profit buying and selling stocks, they are being productive -- they are earning money. And that is all you really need to know about how to judge them morally. So long as they are not using force or advocating force to govern the markets, they are clean morally.

[Eiuol]

Finally, I am absoluetly NOT anti-capitalism.... I am pro-pro-pro capitalism! I just believe, from my experience in business, that most of the people in the higher levels of the business community today fall into the category that Rand would have labeled 'Looters' or worse, and I was commenting that it seems like Objectivists give those guys a pass more often than not...and this seemed illogical to me in light of Rand's adamant view that anything but 100% acceptance of the rational lifestyle was unacceptable (and I'm not talking about making miscalculations in what is rational, I'm talking about businessmen who knowingly attempt to circumvent rational rules of fairness, or who knowingly inflate the value of their contribution to production by an absurd factor...)

I think I may be confused on what you're trying to figure out. I would not say people who earn a living at the stock market are necessarily the most productive people, but they are still productive to some extent nonetheless. I should also note that "rules of fairness" are immoral and not rational. I would agree that most people in the business community (or at least at 'big business' level) are looters and use the government for special favors.

[D'kian]

I specifically said I understood that jobs were created to support the process of trading itself, but that that is no different than saying a casino contributes to the economy because of the jobs it creates to run itself...

A casino "contributes" to the economy the same way movie theaters, TV stations, bowling allies, etc do: by offering a service or product in exchange for money. Gambling is a form of entertainment. the only difference with most other forms is that sometimes the provider has to pay the customer.

So, are you telling me that Ayn Rand would have thought it OK for a man to have no job that produces actual value, but instead makes a living at a near-gambling level zero-sum-gain process which is arguably not hard work....

Midas Mulligan scolds someone in a flashback in AS, telling him he'll never get rich while he thinks what Mulligan does is gambling. Do not confuse high stakes with gambling. Gambling is a game, sometimes played for high stakes, in which the result is determined by some random means. True, if you understand the odds presented by different types of bets, you stand a better chance of winning, but the result is still random.

Trading stocks, or for that matter trading commodities and futures, is NOT gambling. The outcome is not determined by chance, but rather through a complex combination of factors (one of which may be chance). Yes, sometimes high stakes are involved.

There are a handful of people who make a living out of gambling. There many thousands more, if not hundreds of thousands more, who make a living out of stock trading. the reason is quite simple: even using the best gambling strategies, thus minimizing chance, the best you can expect in the long term is to break even. The House always has an edge (thus it makes money). The best you can do is neutralize the edge and make the game even.

Those who can live by gambling either can overcome the House edge so as to make the game uneven in their favor (such as counting cards; which is a rare talent and not nearly as profitable as the movies make it seem --casinos guard against card-counters); or they play games such as poker as sport. The latter are equivalent to pro athletes in league sports, if with a smaller fan base and audience (the World Series of Poker is broadcast on sports networks).

The one sure way of making millions at gambling is to own the casino, the sports book or the racetrack.

So a stock trader is a productive person, even if he inherited the money he uses to trade stocks.

There are times when the stock market is akin to a casino: when the ignorant make "investments" in stocks hoping for a quick and very large return. Amateur hour, so to speak. It's ok to invest with a trading firm, but unless you know what you're doing you shoulnd't invest on your own. It's like flying. You go into a plane with a pilot in the cockpit, you do not attempt to fly yourself without any formal training.

Finally, there are risks in trading as there are risks in any other kind of business. A clothing designer may missjudge public tatses and wind up with a very expensive pile of what are, in essence, worthless rags. A promising oil field may be smaller than previously thought (witness the thousands of exploration wells left abandoned). Or just look at the New Coke disaster back in the 80s, or the Ford Edsel. All business is fraught with risk. But that doesn't make it gambling.