Goodkind and Mises

Two books I have been reading lately, Soul of the Fire and Human Action.

Soul of the Fire is the 5th book the fantasy series by Terry Goodkind. Terry describes himself as an Objectivist, which you can catch glimpses of in his writing. My wife, who has completed the series, informs me that some of later books in the series are far more obviously written by an Objectivist mind. Overall, I really like the series. His first two books kept me riveted throughout. And my wife spent a little of 2 months reading all 11 books (I bought her the first three for Christmas and she purchased the other 7 almost immediately). However, books 4 and 5 have become bogged down in minutiae of the story at points and bored me into speed reading over a couple of chapters (not a usual occurrence for me).

Human Action I picked up again after reading portions of it 2 years ago. Mises is a man I either cheer for or scream at, depending on the chapter I'm reading. One of the lone economists who was critical of communism, socialism, Keynesism, and a starch supporter of Capitalism, Mises is often dismissed from academy because he seemed reject empirical evidence in his methodology of praxeology. This leads to Mises to some rationalistic explanations of economics. For example, he claims it was only the advent of birth control that leads to higher standards of living (p. 667-672). This is only a partial truth because an increasing population also, over the long run, allows for greater division of labor, resulting higher standards of living as well. If it weren't for this striking resemblance to naked rationalism, I would definitely sing the praises of Mises. I'm sure fans of his won't like to hear me say he's rationalistic, but how else can you explain praxeology? But given this fault, the book is loaded with excellent discussion of economics and a throughly effective critic of the failures in planned economies and all socialistic endeavors. When he does start with the correct assumptions, his analysis is dead on.

Human Action is a weighty book, just shy of 1000 pages, but I'd like to study it in more detail along with George Reisman's book on economics. I am sure between the two of them, they could provide a foundation in economics unlike any class I could receive in school.

Technology, wealth, and the myth of unemployment

It amazes me that so many people fall for the myth that new technology leads to unemployment. It flies in the face of some very simple mathematics.

Suppose someone agrees to pay you $10 for every 1 foot of ditch you dig. In one day you can dig 20 feet, for $200 per day.

$10 x 20 = $200

Now let's say you hire some unemployed down on his luck worker to dig the ditch for you at $5 per foot. In one day you will have earned $300. Right?

$10 x 20 x 2 - $5 x 20 = $300

Now suppose you like this ditching digging enterprise and find other people who want ditches dug. So you hire more workers to help you dig. You find that maximum number of people you can keep hired and continue to work full time yourself is around 5 workers. In one day you earn $700/day.

$10 x 20 x 6 - $5 x 20 x 5 = $700

Now you get smart and decide that you could probably manage a whole lot more ditch diggers if you weren't pre-occupied with digging yourself, so you stop digging and spend all of your time finding new ditches to dig and finding new ditch diggers to employ. Now you learn you can manage 10 workers by yourself for $1000/day.

$10 x 20 x 10 - $5 x 20 x 10 = $1000

Not too bad for one day's work. Now let's consider if you learn about a new mechanical technology, that can dig 200 feet of ditches in one day using only one man to operate. It costs $200/day to lease. If now you agree to hire one employee for rough the same amount they were making before, plus ten percent for learning the new tool, you total return will be

$10 x 200 – ($200 + $110) = $1690

The addition of this one piece of technology has increased the value of the business by $690 dollars per day. Certainly you could spend it on frivolous things, like a bikini wax or a nose hair trimmer. But a better idea is to use this money to improve your business. The digger machine allows you to expand into other digging projects to include swimming pools, ponds, holes for new home constructions, etc. With the extra liquidity you are eligible to lease 9 diggers and hire back all the employees you laid off earlier, each with a 10 % higher salary.

In order to increase the number of projects that your customers can afford you drop the day's price for digging to around $500, increasing the amount of work your current customers can afford and increasing the number of other customers that can afford digging services. This dramatic price decrease allows you to acquire 10 times the number of jobs, making each days' earnings roughly $1900/day

$500 x 10 – ($200 x 10 + $110 x 10) = $1900

Amazing! This new technology has allowed you to increase you profits, increase the pay to your employees and decrease the cost to your customers.

By why stop there with direct benefits. As with all new technologies, the indirect benefits often balloon into 10 times the amount of wealth directly created. How? Let's look at some possible ways.

Because of the price decrease, one of your customers saved $28000 dollars on the 20 days of digging. With that savings, they were able to hire one more person to manage their business operations. Because of that new employee, the company was able to save them $50000 more that year, allowing them to hire even more employees.

Another major customer saved $50000 dollars in digging a hole for the foundation of a new apartment building. Because of the savings, they hired a more skilled construction crew, allowing the building to last an additional 20 years without major repairs.

Another customer, a poor farmer, had just enough money to irrigate his field and increase his crop production by 10% and increasing his net profit by 5%. The increase in profits allowed his wife to eat better during her pregnancy, giving birth to a beautiful and healthy baby, which may have otherwise died of malnutrition.

One of your employees saved the extra $20/day for the entire year till he had $5000 dollars in his account. With that money, he was able to put a down payment on a mortgage for his first home.

The truth is new technology and efficient business practices lead to wide spread wealth creation. Simply put, it creates value. It simply does not create squalor or poverty. Nor does it create disparities in wealth. Rather it allows more people access to wealth. The next time you hear someone decrying how new technology will hurt humans or make us poorer, would you kindly tell them to shed their SUVs, their cell phone, their doctors, their attorneys, their computers, their bug zappers, their symphonies, and their houses made with tile roofs and Pella floors and go live in a grass hut for the remainder of their short lives?

While my examples may seem simplistic, they accurately capture the essential attributes of economics and the effects of technology on the world. That is why we have increasing standards of living today.

My understanding of Kelley's error

With clarity, I finally understand the major error in David Kelley's approach to moral judgment. And oddly enough, the integration came from re-reading my systems analysis and design book. My goal in this post is to outline my thought process that lead to this understanding.

In systems development and design, their are different methodologies for understanding an information system. Traditionally, these have been through either data-driven methodologies and process-driven methodologies. In data-driven methodologies, analysts attempt to understand reality by identifying things (entities) that have properties. These things have specific states that may change over time, but not through any identifiable force. These things are only weakly related to other entities through relationships. In process-driven methodologies, analysts attempt to understand reality by identifying actions that must be performed. These actions refer to work that must be done, but are only weakly tied to people or data. In each of these cases, there is an implicit division between what is and what should be done. A division between consequence and motive. A division between facts and values. While it is true that these two methodologies attempt to cover both sides of data-process dichotomy, each is weak and requires an enormous amount of effort on the part of the analyst to tie them together. This effort has been manifested in my students who have attempted put them together for my class.

A similar dichotomy exists in types of programming languages. Some languages are procedural (Fortran, BASIC in its original form, C) while other languages are state-oriented (RPG, HTML, XML). While both styles of language have purpose in creating information systems, they both fall short in their ability to do so efficiently and effectively. Few people today still use a procedural or pure state-oriented languages (HTML was soon augmented with JavaScript for processing after a pages had loaded).

Today, there exists programming languages called object-oriented languages with a related analysis and design technique called Unified Modeling Language (UML) that rejects the implicit state-process dichotomy. Object-oriented programming emerged back in the 70s with the invention of SmallTalk, where inventor Alan Kay explicit tried to model human thought with a programming language that focused on objects that contained both attributes and methods (measurements and actions). Objects (which are real instantiations of a class of things, just like an object in reality is an instantiation of a concept) could "inherit" attributes and methods from broader abstractions and apply them where appropriate.

In a comparison between Ayn Rand's Objectivist epistemology with object-oriented methodology, Adam Reed discovered that there are a number of striking similarities (as a warning, this article is posted on the Atlas Society's website. The irony is that Reed's article helped me to understand why Kelley is wrong). While I haven't had time to throughly compare and contrast Reed's findings with my own understanding of reality, my brief read leads me to support his basic comparison.

While there are some striking similarities, the analogy only goes so far. Procedural languages and process-oriented methodologies are not inherently better or worse than object-oriented languages and methodologies. It depends on context. Objectivism's epistemology and ethics, however, are fundamentally "better" than other philosophies because it is true in all contexts.

What was important to my understanding of Kelley's error however is that an object-oriented approach to programming is a fundamentally different way of thinking about information systems and a fundamentally different approach to logic when designing applications. You simply can not combine procedural and state-oriented languages to get object-orientation languages. Just like you cannot combine process-oriented and data-oriented methodologies to get UML. An IT friend of mine, Jeff, showed me to some code that perfectly demonstrated this fundamental mistake from a new programmer who, while programming in Java, created a class that contained over 20 nested if-statements. Although he was using object-oriented language, he was thinking in terms of procedural languages. The vast number of if-statements gave evidence of an inability to understand inheritance (abstraction in philosophic terms). By adopting the procedural mind-set he was unable to use an object-oriented language appropriately.

While re-reading Diana's post about Kelley introducing the mind-body dichotomy into his analysis of moral judgment, I thought about this new programmer. Kelley, by starting with the mind-body dichotomy became stuck in that mind set and could not reconcile it with Objectivism, no matter how much fancy foot-work he attempted. This is what leads Kelley to reject the fact-value relationship, embrace the mind-body dichotomy, and evaluate motive and consequences differently. As Diana shows, this is fundamentally at odds with Objectivism. You can't understand Objectivist ethics if you start with the wrong mind-set, in his case from the mind-body dichotomy.

Transistors in the future

Now this is cool technology.

Net neutrality = egalitarianism

This article by Capitalism Magazine perfectly captures my thoughts on net neutrality. When I first heard about this concept several years ago, it immediately became obvious who would be the winners of such a law. And it certainly isn't the ISPs. Google, much to my dismay, was strongly advocating for a law defending net neutrality. Of course, they would reap the benefits of such a law, because ISPs would be unable to limit traffic to their sites. But why should ISPs not be able to control the data sent over their networks. It is their networks after all. They spent billions of dollars creating that network, they should be able to profit handsomely from it. That's what the right to property is all about.