I often get into conversations about how it's a great time to buy homes because of the historic low interest rates. It's an excellent time to buy under the right conditions though. Unfortunately, many of my friends don't know what they are because they don't understand the role interest rates play in the economy. I bought a home recently but I put no money down and view the house as a place to live rather than as an investment. But before we get any further into the discussion, let's first establish our definitions.
First of all, we'll divide the acquisition of assets or durable goods in the market based on the purpose of their usage. In other words, are we buying something for consumption or production? To explain the difference, imagine walking through Costco and looking at all the people shopping. Most of the people are buying things to take home and use. Then every once in a while you see that guy who has 20 cartons of milk, stacks of water and other staples. That guy is buying the stuff at Costco for productive purposes. The rest of us are buying for consumption. The productive purpose is to take the low prices at Costco and reselling it in an area where the prices are high enough to generate a spread wide enough to warrant the work necessary. Consumption is any act that satisfies the needs of the person consuming the product. So a house can be 'consumed' in the sense that it provides shelter because shelter is the desired use from a house just like a Snickers bar satisfies the desire that is created from hunger. Production, on the other hand, is any act that creates value in the market. So that guy at Costco buying 20 gallons of milk is creating value because there is demand for milk that isn't being satisfied. Just like a house can be productive asset if value is created (e.g. generates a positive return on investment or ROI).
Now that we've differentiated production from consumption, we need to understand the difference between an investment and speculation in any given asset class. Most people speculate. They speculate in stocks, bonds, precious metals, real-estate, etc. Very few are investors. Here's the difference. Speculators hold a position in an asset class, either by going long or by going short (I'll describe this in a minute), with the belief that the asset price goes up or down, resulting in a profit. The term 'going long' is what most people understand as 'buy and hold.' When people 'go long' they hope for price appreciation. 'Going short' is the opposite of going long. Going short is when you borrow an asset and then selling it. The way you make money in this fashion is to hope the price of the shorted asset goes down in price and you buy the asset back at the lower price and return the asset back from who you borrowed it from. So if you shorted Apple stock (APPL), you would borrow, say 100 shares, and then sell at $200 a share. So you immediately get $200,000. But you also owe 100 shares of APPL. Then if and when the share price drops to $150 you buy it back. That cost you $150,000. So you subtract the $150,000 from your initial $200,000 and you just netted $50,000 and now return the 100 shares of APPL back. It should be obvious that when shorting, you want the price to go down, not up. In either case, the only way to make money is to exit out of your position in a way that generated a profit.
Investing is different in that you are chasing a yield or a ROI. Many will argue that there isn't a big difference between speculation and investing because you can calculate ROI from buying and selling. True, but what they forget is you can only calculate ROI after you have exited your position. Investments generate income simply by holding onto an asset. You can't do that by flipping stocks. You only get paid at the end of the transaction, not during. So real-estate investors buy and hold real-estate and hope to get paid rent. The idea is (Rent - Mortgage - Property Taxes - Maintenance fees - other costs to owning a rental property > 0). In fact, to calculate your annual ROI, you would take the result of that equation, multiply it by 12 (because rents are monthly) and then divide it by the down payment for the house. The down payment is your initial investment. The rent is not only your return but your income for holding on to the property. In other words, you are getting paid, or rewarded, for holding onto this asset.
Now that we've thoroughly defined consumption, production, speculation and investing, we can finally move on to the meat of this blog....interest rates.
We need to first understand what interest rates really are. In order to do that, we need to start by understanding money. So money is, as I have defined before, a commodity that allows indirect exchange (direct exchange being bartering). Since exchanges come in all different forms, the commodity needs to be flexible enough to handle them all and so commodities that are transportable, divisible and durable were the ones most demanded.
A good way to think about money is each person is like a gear in an engine where each gear wants to interact with other gears and money is like the oil or lubricant to make the whole thing run smoothly. Once we understand the role of money, in this sense, we can focus on an important truth. And that is, you cannot spend money and save it at the same time. You are either in an exchange or you are not. Austrian economics talks about 'time preference', which is the general preference in society to either save or to spend. A high time-preference refers to a preference of present-day consumption over future consumption. A low-time preference refers to a preference of future consumption over present-day consumption.
These time-preferences have huge implications. In order to consume today, you must spend money in the present to purchase goods and services for consumption purposes. What that also means is that money being spent cannot be saved. It also means when people prefer to defer consumption to a later date in the future, more money is being saved in the economy.
So now we come to the point where we can imagine a pool of savings in a society that can expand and shrink based on society's general attitude about the future. On one extreme, if we new an asteroid would hit the planet and destroy the earth, there would be virtually no savings. We would have extremely high time-preference. Another way to look at it is on an individual level. If someone told you that you would die tomorrow you'd probably go out with a bang.
Back to the pool of savings in an economy. We can now measure the supply of savings at any given time and as we can now add a new element to this: demand. Once an economy gets off its feet, it is savings that allow people to engage in new activities. To show this, imagine where you lived hand-to-mouth and picked and ate only berries. Your only activity is really searching for and eating berries. Now if you were able to save excess berries, you could either enjoy leisure from picking berries or try your hand at hunting game while you existed on your savings. The point is, you are freed up from picking berries to "invest" in other activities. In a more complex economy though, the general savings allows some people to borrow it in order to engage in new economic activity such as starting a new business. And so the demand for savings is the willingness for others to borrow it. Some people may borrow for the purposes of consumption and others borrow for productive purposes.
Thus the supply and demand for savings creates a price for savings, e.g. interest rates. However, there isn't just one main interest rate. There are different amortization periods. You would charge someone who wanted to borrow $100 for a day a different rate than someone who planned on paying you back in a year. The longer the term, the higher the interest rate because you forego spending the money for a longer period of time and there is less certainty you'll even be around in a year compared to tomorrow. This is where the 'yield curve' gets is shape from.
Problems arise in the economy when interest rates are manipulated by a central bank. Remember that interest rates reflect society's attitude regarding spending today versus spending tomorrow. By lowering the interest rate artificially, it's sending an artificial signal that the supply of savings is high and/or demand for savings is low. Thus the low interest rates attracts people to borrow but since it is artificial, there isn't enough real savings so the central bank must print the difference. But this isn't how it really works. Interest rates are artificially pushed down by printing money thus spreading the value of the existing savings over a larger number of monetary units. Then the borrowing begins. The problem is the investments from the borrowing cannot all yield positively because the people preferred to spend in the past, which was the present when the interest rate was artificially lowered, over today. They collectively lack enough purchasing power in their money to keep the new investments afloat.
It's the printing of money to purchase government bonds that drive interest rates down. Government bonds are just IOUs they use to borrow money. As that might spur people to borrow in the private sector, it also stimulates government spending in the short term. The IOU must be paid back so ultimately that falls on the shoulders of the taxpayer to do so. Not only does it create an atmosphere to get people to borrow money, it also precipitates an ensuing bust in the economy. Let's not forget the obvious - that printing of more money is inflation.
Inflation is a lot like opening up a brand new bottle of OJ, opening it up, take a glass and then filling it back up full with water. Each subsequent glass becomes less real OJ and more water. Repeat the process enough times, all you'll end up is funny tasting water. The rate of inflation refers to how fast money is being depreciated simply by holding onto it. Since we live in a world where interest rates are manipulated, we must discount the rate of inflation to get real interest rates.
For a 30-year mortgage, borrowers can get anywhere in the mid-to-high 3 percent range today. Considering the real rate of inflation is well above that (I don't trust the CPI), many people will be benefitting from buying a home at a fixed rate, in the form of depreciated future dollars to pay their mortgage in 30 years. Of course, the banks get screwed because they have to hold on to the paper for 30 years earning no real interest. But they have an ace up their sleeve. A government bailout paid for by 'you-know-who.'
But it's also not such a great deal for anyone who plans to put down the 20% a lot of banks are now requiring because of the tightening of lending standards. Not only are they putting their present-day dollars into a depreciating asset that requires constant maintenance, they will also be losing money, as with the rest of us as taxpayers, in the form of bailing out the banks in the future for the artificially low interest rates for today. Sure, the nominal value of their homes may increase but their purchasing power will have declined. What good is living in a million dollar home if the average car costs $50,000 and a tank of gas costs $200?
It's much better to find something that will return something above the rate of inflation for your 20% down payment than to put it in as equity into a home. Even though home prices, in the past year, have appreciated to almost 11%. After discounting for inflation, you're only looking at a few percentage points of real gain. You can try your hand in flipping homes but what happens if your timing is off and you're left holding the bag? Will it be worth those few percentage points?
It's perfectly fine to buy a home and put your 20% down if you what you want is a place to live but don't fool yourself in thinking it's an investment.
Friday, May 31, 2013
Sunday, May 26, 2013
The IP debate
It seems today that either Apple, Google or Samsung is suing each other for patent infringements. Some design or how a corners of a phone are patentable is beyond me. I remember when Microsoft got caught with its pants down by not jumping on the Internet bandwagon early enough and allowed Netscape to get head start in the Internet browser market. Microsoft responded with a complete integration of IE into its OS to which Netscape, Sun Microsystems and others cried foul and the government got involved. At the time, I was wide-eyed, young and impressionable and thought Microsoft was being unfair and leveraging their monopoly status to push out competitors.
It turned out integrating IE to the Windows operating system caused more headaches for Microsoft than it was worth. It exposed too many OS vulnerabilities to the unregulated data traffic of the Internet. They paid the price by constantly patching the OS. In the end, they still lost a majority of the browser market share to Firefox and now Chrome. Performance benchmarks consistently put IE well below the competition and it shows up in marketshare.
The thing is, the free market will always find ways to keep seemingly out-of-control companies in check. Natural monopolies are difficult to find and when they exist, they only do so by keeping margins too low to attract competition. What people fear about monopolies is the lack of competition to keep prices and margins in check. They think once a company achieves monopoly status, it can raise prices to whatever they want. In the short-term that may be true. But let's consider what would happen if I suddenly told you I was making a fortune making banana-nut-bread muffins using a secret ingredient. People just loved them and I was charging $10 a slice for something that only cost me 50 cents to manufacture. Now wouldn't you be interested in learning how? People who aren't rich always want to know how rich people got to be rich. And this is my point: High profit margins always attracts competition because people want the same margins - low inputs and high outputs. Certainly it would be worth paying the $10 to obtain a slice and then taking it to some chemist to figure out exactly what the chemical composition of my proprietary 'secret ingredient.' In fact, you'd spend enough money to the point where the returns on future business would yield a positive return.
But let's not stop there, let's say you figure out my specific recipe and now there are two players in the market for the same banana-nut-bread muffin. At this point, there is no reason for you, the second entrant in the market, to lower your price as long as you can reach at least 50% of the market share. This is the other problem people have with the free market. They think collusion will occur and that government must step in. But in reality, collusion is more difficult to maintain in a free market than it is for a monopoly. Collusion, in concept, is no different that a monopoly except that you have not one, but two 'competitors' setting prices the way they want. Colluding companies still face the same problem the monopoly did because the high margins keep attracting more competition into your market except the collusion, or now cartel, must equally share the same market. As each new competitor enters the market and is included into the cartel, it diminishes the profitability of the existing members thus putting pressure on them to lower prices to gain market share. The other alternative is to continually raise prices so that it cancels out the effect of dividing the market into smaller and smaller pieces due to increasing the cartel membership. Either way, it becomes increasingly more difficult to maintain the cartel. Either the members break rank and slash prices or the rising price of the commodity create market demand for an alternative. U.S. Steel was a natural monopoly but had competition because it knew if steel became too expensive, people would simply turn to other metals like aluminum.
What does this have to do with IP, copyrights and patents? Well, these are all tools to maintain a monopoly status artificially. It hurts the free market in that the person looking for such government protection is trying to maintain a high profit margin and to set their own prices. Supporters of IP will make the argument that lots of research and resources go into patentable ideas. That is true. However, what these people are ignoring is the risk factor involved. Most ideas are no good. If you don't believe me, go watch 'Shark Tank' and see how many stupid ideas are presented. Now the argument is usually made that since the inventor is the first to market with an unproven idea, it should be rewarded with the IP. The fact is, they will always be rewarded for being first regardless of IP protection.
Back when musicians like Mozart and Beethoven were around, there were no recording devices. But that didn't stop some knock-off artist to attend a concert performed by the original artist, write up the score and then perform their own concert playing the same music. All that did was allow the original composer to charge more to hear an 'authentic' version of the concert.
It makes no difference whether it's a book, prescription drug or a song. There is no a-forehead knowledge of its profitability in the free-market. The first-to-market is taking the risk. Only after it's wide acceptance and profitability will copiers enter the market and drive the price down at which the whole market benefits. But the copiers will forever be the copiers and only capture the residual profitability as the market saturates. The real entrepreneurs will still be rewarded for their risk-taking.
From a philosophical standpoint, IP, is a non-tangible thing. It is simply an idea. I always say, 'IP really stands for Idea Profiteering.' IP is not the result of any discernable action. It is the result of thinking or imagination. It's until you physically engineer the idea into reality that you actually own anything. So the concept of property rights cannot apply to 'intellectual property' because it fails to fit the definition of: You own the effects of your actions. You are not acting and there are no effects.
It's all about definitions. I've heard the argument a million times that thinking is acting but I believe that's a fail and here's why. If I'm standing in front of you and doing jumping jacks, you can see that I'm doing jumping jacks but more importantly you also know that I'm not doing sit ups. When someone is thinking of an idea, they can just sit there motionless. There is no way one can tell when someone is thinking about a topic and when they are not.
There is also no effect from thinking about an idea. The effect of thinking is having thoughts and while that is obvious, it is also a irrelevant to the matter. Everything, at this point, only exist in the mind and while you may own your brain and the contents in it, both real and abstract, if someone else physically does work to make your idea into a reality, then the effects of their actions belong to them, not you. One cannot simply think things into existence. One must act.
It turned out integrating IE to the Windows operating system caused more headaches for Microsoft than it was worth. It exposed too many OS vulnerabilities to the unregulated data traffic of the Internet. They paid the price by constantly patching the OS. In the end, they still lost a majority of the browser market share to Firefox and now Chrome. Performance benchmarks consistently put IE well below the competition and it shows up in marketshare.
The thing is, the free market will always find ways to keep seemingly out-of-control companies in check. Natural monopolies are difficult to find and when they exist, they only do so by keeping margins too low to attract competition. What people fear about monopolies is the lack of competition to keep prices and margins in check. They think once a company achieves monopoly status, it can raise prices to whatever they want. In the short-term that may be true. But let's consider what would happen if I suddenly told you I was making a fortune making banana-nut-bread muffins using a secret ingredient. People just loved them and I was charging $10 a slice for something that only cost me 50 cents to manufacture. Now wouldn't you be interested in learning how? People who aren't rich always want to know how rich people got to be rich. And this is my point: High profit margins always attracts competition because people want the same margins - low inputs and high outputs. Certainly it would be worth paying the $10 to obtain a slice and then taking it to some chemist to figure out exactly what the chemical composition of my proprietary 'secret ingredient.' In fact, you'd spend enough money to the point where the returns on future business would yield a positive return.
But let's not stop there, let's say you figure out my specific recipe and now there are two players in the market for the same banana-nut-bread muffin. At this point, there is no reason for you, the second entrant in the market, to lower your price as long as you can reach at least 50% of the market share. This is the other problem people have with the free market. They think collusion will occur and that government must step in. But in reality, collusion is more difficult to maintain in a free market than it is for a monopoly. Collusion, in concept, is no different that a monopoly except that you have not one, but two 'competitors' setting prices the way they want. Colluding companies still face the same problem the monopoly did because the high margins keep attracting more competition into your market except the collusion, or now cartel, must equally share the same market. As each new competitor enters the market and is included into the cartel, it diminishes the profitability of the existing members thus putting pressure on them to lower prices to gain market share. The other alternative is to continually raise prices so that it cancels out the effect of dividing the market into smaller and smaller pieces due to increasing the cartel membership. Either way, it becomes increasingly more difficult to maintain the cartel. Either the members break rank and slash prices or the rising price of the commodity create market demand for an alternative. U.S. Steel was a natural monopoly but had competition because it knew if steel became too expensive, people would simply turn to other metals like aluminum.
What does this have to do with IP, copyrights and patents? Well, these are all tools to maintain a monopoly status artificially. It hurts the free market in that the person looking for such government protection is trying to maintain a high profit margin and to set their own prices. Supporters of IP will make the argument that lots of research and resources go into patentable ideas. That is true. However, what these people are ignoring is the risk factor involved. Most ideas are no good. If you don't believe me, go watch 'Shark Tank' and see how many stupid ideas are presented. Now the argument is usually made that since the inventor is the first to market with an unproven idea, it should be rewarded with the IP. The fact is, they will always be rewarded for being first regardless of IP protection.
Back when musicians like Mozart and Beethoven were around, there were no recording devices. But that didn't stop some knock-off artist to attend a concert performed by the original artist, write up the score and then perform their own concert playing the same music. All that did was allow the original composer to charge more to hear an 'authentic' version of the concert.
It makes no difference whether it's a book, prescription drug or a song. There is no a-forehead knowledge of its profitability in the free-market. The first-to-market is taking the risk. Only after it's wide acceptance and profitability will copiers enter the market and drive the price down at which the whole market benefits. But the copiers will forever be the copiers and only capture the residual profitability as the market saturates. The real entrepreneurs will still be rewarded for their risk-taking.
From a philosophical standpoint, IP, is a non-tangible thing. It is simply an idea. I always say, 'IP really stands for Idea Profiteering.' IP is not the result of any discernable action. It is the result of thinking or imagination. It's until you physically engineer the idea into reality that you actually own anything. So the concept of property rights cannot apply to 'intellectual property' because it fails to fit the definition of: You own the effects of your actions. You are not acting and there are no effects.
It's all about definitions. I've heard the argument a million times that thinking is acting but I believe that's a fail and here's why. If I'm standing in front of you and doing jumping jacks, you can see that I'm doing jumping jacks but more importantly you also know that I'm not doing sit ups. When someone is thinking of an idea, they can just sit there motionless. There is no way one can tell when someone is thinking about a topic and when they are not.
There is also no effect from thinking about an idea. The effect of thinking is having thoughts and while that is obvious, it is also a irrelevant to the matter. Everything, at this point, only exist in the mind and while you may own your brain and the contents in it, both real and abstract, if someone else physically does work to make your idea into a reality, then the effects of their actions belong to them, not you. One cannot simply think things into existence. One must act.
Monday, May 20, 2013
The misapplication of concepts in exactly the wrong ways...
Most mornings I check my FB News Feeds. Sometimes it's a great source for news. But today I found in my feed one of my friends posted the following quote and their full support of such a view:
"You have your way. I have my way. As for the right way, the correct way, and the only way, it does not exist.” – Friedrich Nietzsche
She went on to say how perspectives are just subjective and we don't see the world the way it really is. Her basic message that every person is entitled to their perspective and we shouldn't judge others and practice tolerance.
People will read this and give it the 'Like' thumbs up on this post. Unfortunately, this is just more subjective, relativistic bullshit being spewed and a mis-interpretation of Nietzsche. This is not to say I agree with his philosophy. On the contrary, if you read the source of this translated quote in Chapter 55 of 'Thus Spake Zarathustra', he speaks a lot of the individual and exalts the subjective perspective but the precise context of the meaning for the quote is actually in man's search for self-actualization, or what he calls the 'super-man'. In that context, Nietzsche is correct. Each person must travel their own path to self-actualization because they carry their own 'baggage' which weighs them down which he refers in that chapter as 'Gravity.' The message is correct but placed in the wrong philosophical framework.
The absence of an absolute morality since his famous quote "God is dead" has been a pivotal inflection point for Nietzsche and his works. However, since an absolute morality had been demolished by him, a vacuum was created and what we replaced with God was the State, specifically democratic socialism.
Understanding philosophies is a lot like watching an optical illusion. Whatever you mind doesn't actually see, it fills in to make the illusion appear correct. And that's what a lot of people, like my facebook friend did. They pour their own ideas, biases into the gaps of a philosophy she doesn't fully understand.
How far would she practice tolerance? How about the Boston bombers? Or the the brothers who held captive those girls for 10 years raping them over and over? Are they not allowed to find their path to self-actualization? She shouldn't judge these societal predators any more than someone who disagrees on what color bedsheets to decorate their beds with.
My guess is she would draw that line. But exactly what defines that line? Most people would unknowingly recite the non-aggression principle "You are free to do whatever but just don't force it on me." How is this concept lost at the voting poll?? It floors me.
Nietzsche's missing puzzle piece is exactly how each individual person achieves 'super-man' status? Yes, they may have their own path but what happens if you believe, in the absence of a secular ethic, that impeding someone else's path to self-actualization is the path to your own? Without a secular ethic, his vision becomes an impossibility.
The other contradiction my facebook friend doesn't realize is if there is no right way or wrong way and everything is subjective then there is no such thing as "...the world the way it really is." The world the way it really is implies there is an objective truth, which the quote dismisses as non-existent. If that's what she believes, then by definition, all perspectives are incomplete and therefore even her quote and interpretation of it would also be incomplete and appear hypocritical for posting her incomplete perspective above others.
The problem is most people don't see a dichotomy where they should and create one when they shouldn't. There is a difference between personal preferences (vanilla vs. chocolate, straight vs. gay, Atkins diet vs. The Zone) and morality (good and evil). Yes, good is preferred over evil but that doesn't make it fall in the Preferences category because evil isn't voluntarily picked over good like chocolate would be picked over vanilla. Evil is picked over good because in the mind of the person, evil appears good to them. As a segue, a false dichotomy is created - Subjectivity. However, like my last post, evil only appears good as a result of faulty understanding of reality.
Morality isn't about preferences since good is always preferred over evil. However, most people cannot resolve this rubik's cube so they fill in the gaps with their own biases like moral relativism or another misapplication of another concept like the Aristotle's Doctrine of the Mean (Everything in Moderation as the misinterpretation). I don't think Aristotle meant a moderation of rape or slavery would create an ideal society. When I point this out, I get the usual, "You take everything to extremes", which isn't an argument at all. It's simply a reaction to the exposure to the truth. That truth being "Everything in moderation" or "all perspectives are equally valid" is simply the illusion of universality. I'm just being Bruce Lee and shattering these illusions.
If every opinion is equally valid then we must accept an 'anything goes' society. This doesn't sit well with these people because they need to maintain the appearance of having principle. So their last gasp of any kind of resolution to moral universality is the 'majority rule' mantra. They admit it's not perfect but it's the best we have got. If that were true, why do so many people express their horror when bad things happen in society? After all, if this is the best we got and if that means a moderate amount of evil must exist, then why act surprised when it happens? It is the price we pay to avoid a universal secular ethics.
People will read this and give it the 'Like' thumbs up on this post. Unfortunately, this is just more subjective, relativistic bullshit being spewed and a mis-interpretation of Nietzsche. This is not to say I agree with his philosophy. On the contrary, if you read the source of this translated quote in Chapter 55 of 'Thus Spake Zarathustra', he speaks a lot of the individual and exalts the subjective perspective but the precise context of the meaning for the quote is actually in man's search for self-actualization, or what he calls the 'super-man'. In that context, Nietzsche is correct. Each person must travel their own path to self-actualization because they carry their own 'baggage' which weighs them down which he refers in that chapter as 'Gravity.' The message is correct but placed in the wrong philosophical framework.
The absence of an absolute morality since his famous quote "God is dead" has been a pivotal inflection point for Nietzsche and his works. However, since an absolute morality had been demolished by him, a vacuum was created and what we replaced with God was the State, specifically democratic socialism.
Understanding philosophies is a lot like watching an optical illusion. Whatever you mind doesn't actually see, it fills in to make the illusion appear correct. And that's what a lot of people, like my facebook friend did. They pour their own ideas, biases into the gaps of a philosophy she doesn't fully understand.
How far would she practice tolerance? How about the Boston bombers? Or the the brothers who held captive those girls for 10 years raping them over and over? Are they not allowed to find their path to self-actualization? She shouldn't judge these societal predators any more than someone who disagrees on what color bedsheets to decorate their beds with.
My guess is she would draw that line. But exactly what defines that line? Most people would unknowingly recite the non-aggression principle "You are free to do whatever but just don't force it on me." How is this concept lost at the voting poll?? It floors me.
Nietzsche's missing puzzle piece is exactly how each individual person achieves 'super-man' status? Yes, they may have their own path but what happens if you believe, in the absence of a secular ethic, that impeding someone else's path to self-actualization is the path to your own? Without a secular ethic, his vision becomes an impossibility.
The other contradiction my facebook friend doesn't realize is if there is no right way or wrong way and everything is subjective then there is no such thing as "...the world the way it really is." The world the way it really is implies there is an objective truth, which the quote dismisses as non-existent. If that's what she believes, then by definition, all perspectives are incomplete and therefore even her quote and interpretation of it would also be incomplete and appear hypocritical for posting her incomplete perspective above others.
The problem is most people don't see a dichotomy where they should and create one when they shouldn't. There is a difference between personal preferences (vanilla vs. chocolate, straight vs. gay, Atkins diet vs. The Zone) and morality (good and evil). Yes, good is preferred over evil but that doesn't make it fall in the Preferences category because evil isn't voluntarily picked over good like chocolate would be picked over vanilla. Evil is picked over good because in the mind of the person, evil appears good to them. As a segue, a false dichotomy is created - Subjectivity. However, like my last post, evil only appears good as a result of faulty understanding of reality.
Morality isn't about preferences since good is always preferred over evil. However, most people cannot resolve this rubik's cube so they fill in the gaps with their own biases like moral relativism or another misapplication of another concept like the Aristotle's Doctrine of the Mean (Everything in Moderation as the misinterpretation). I don't think Aristotle meant a moderation of rape or slavery would create an ideal society. When I point this out, I get the usual, "You take everything to extremes", which isn't an argument at all. It's simply a reaction to the exposure to the truth. That truth being "Everything in moderation" or "all perspectives are equally valid" is simply the illusion of universality. I'm just being Bruce Lee and shattering these illusions.
If every opinion is equally valid then we must accept an 'anything goes' society. This doesn't sit well with these people because they need to maintain the appearance of having principle. So their last gasp of any kind of resolution to moral universality is the 'majority rule' mantra. They admit it's not perfect but it's the best we have got. If that were true, why do so many people express their horror when bad things happen in society? After all, if this is the best we got and if that means a moderate amount of evil must exist, then why act surprised when it happens? It is the price we pay to avoid a universal secular ethics.
Friday, May 17, 2013
The bitcoin phenomenon
I got my chops on economics learning from the Mises institute and more specifically from the mind of Murray Rothbard. If you haven't read any of his stuff, I highly recommend downloading a bunch of his more popular works in audiobook format. Once you read and digest the content from him, you'll have a good idea of what money really is and understand my skepticism around bitcoin.
Just to quickly summarize what money is and why it exists and how it came about we have to start at the beginning. An economy first starts off as not an economy but as man as he was thousands of years ago where his standard of living was basically no different than that of animals. It was a hand-to-mouth existence. Property rights at its most raw form - you pick a berry, you eat a berry; you hunt game and you consume it. However, at some point in our history, we discovered that we could directly exchange with each other. I would venture a guess it happened when mankind learned to settle down and not be so nomadic in order to survive. Probably when we discovered agriculture or something. Either way, with more respect for property rights, people started to accumulate savings and then with those savings, we could begin bartering, or another word for direct exchange. Barter quickly started to hit its limitations one of which is a 'double coincidences of wants.' If I had corn and wanted blueberries, I would have to find a person who harvested blueberries who also wanted corn. Otherwise the trade cannot occur. So before money came on the scene, a person would need to find an alternate commodity in the market that they could have confidence in that would facilitate the trade. So maybe if I knew the blueberry harvester wanted wheat, then I could confidently trade my corn for wheat and then trade the wheat for the blueberries I wanted. It's very important to note at this point why wheat works. It's not because I simply have confidence in it. To simply stop there is to ignore a very important point regarding bitcoins. You have to ask yourself where the confidence comes from. The confidence comes from the fact that it has existing marketability due to the fact that it can already be exchanged for any other commodity in the market. We'll be touching on this later regarding bitcoin.
The emergence of money came out of a market demand for indirect exchange to overcome this 'double-coincidence of wants' obstacle. However, in both direct and indirect exchange, both parties create value in the marketplace and both walk away from the transaction having gained in their minds. Now as we fast forward through the gold standard and then paper receipts for gold and then fractional reserve banking and then a pure fiat money standard, we have to remember that this erosion of the money took place very gradually where confidence was never broken insofar as the market perception within the economy. Clearly if one day we're on a gold standard and the next day we're on a pure fiat standard, the transition would never work. The free market wouldn't accept it.
So now let's examine bitcoin. Basically bitcoin is a computer-generated 'coin' very much like a virtual coins you might collect playing some Facebook game. They can be collected, used and handled very much like how you would handle real coins. There were some other things to make this project work. Unlike the Facebook coins, that could be created out of thin air by some hacker, there is a way to make it nearly impossible to make copies of bitcoins thus limiting their supply. So basically, the creator of bitcoins made it possible to "discover" bitcoins by solving a problem that gets more difficult to solve with each new bitcoin discovered. This is called mining....sort of like mining for gold. A lot of labor has to be put into finding more. Then the programmers decided to create a hard limit of 21 million possible bitcoins that could come into existence.
What these programmers were trying to do was create a competing currency and they almost did it. They satisfied many criteria for what makes a good money: Limited quantity, divisibility (bitcoins can be divided up into smaller entities that retain its value; like gold will not lose any of its properties even if you cut it in half unlike say a shovel), and portability. The one thing bitcoins didn't have that gold did was 'utility value' or 'intrinsic value.' I know people out there will call out the whole 'There is no such thing as intrinsic value...blah blah blah" argument but that is just semantics, IMO. I find that this group of people do not strictly adhere to the definition of 'value.' Strict adherence to the definition would render the words 'utility' and 'intrinsic' redundant and so to correct 'adherence' for 'utility' makes no sense. If you don't know what I mean, go look up 'value' in how Austrian economics defines it. Value, according to this school of thought, exists simply in the mind of the exchanger.
So my main issue with bitcoins is it they have no value, period. There is no regression to tie them to anything that had or has value. From what I can tell, they spontaneously existed and due to the other properties of money, were valued. So what could you get for a bitcoin way back when they were in their infancy? How did the first bitcoin users use them? How did they know the transactions back then were equitable? I would contend that they didn't. This early period of bitcoin has been described in a very muddled fashion. No one has a very clear answer. I read only things that go like, '...it's value was determined by the transactions it allowed..." Huh? What does that mean?
Some people tried to use the regression theorem saying they have value because bitcoins can be exchanged for dollars and dollars ultimately got their value to gold and so this chain maintains its continuity. Not really. If that was true, then the very first bitcoin would have been worth in the tens of trillions of dollars. Then as the second bitcoin was minted, the value would have been cut in half, then into a third, into a fourth, etc. But if you see a chart of bitcoin, the graph doesn't look like an asymptotic function showing extreme deflation going left to right as a function of time.
You have to remember that paper gold reciepts had a one-to-one mapping to gold for anyone who wanted to hold their gold in a goldsmith's vault. That's what gave the paper its value and was the source of the confidence. Bitcoins didn't have this from its origins. There was no one-to-one mapping to anything!
The other thing some bitcoin advocates use to argue its valuation is the time and "labor" to mine bitcoins. Fair enough. You can have a computer use its CPU cycles and resources like RAM and whatnot to solve this math problem and voila..a bitcoin generated. Unfortunately, this is also a economic fallacy. This employs the concept of the Labor theory of value. Funny, because I thought these were the same people who advocated Austrian economics and tout the Subjective theory of value. Just because I spend hours on a Civilization game and then save that game on a file, that file doesn't necessarily have market value. Could I trade it? I don't know....maybe. Does it instill confidence in me to trade it? Obviously not. So this argument fails.
The last argument I see is bitcoins have value because other people want bitcoins. Okay, that's a fair argument since many people want gold for no other reason than other people want it. However, like I said before there is a chain of value via monetary regression and history that show gold has value. Bitcoins is still trying to make its case. To spontaneously to gain confidence is extremely difficult and without a lot of guns like the government does for fiat, I have my doubts. In order to do so, you have to demonstrate redeem ability to anything of value from the very beginning like the gold paper receipts To already claim value due to network effects is no different than real-estate investing is good investment because someone else will buy it from you. Bubbles burst in exactly this way. Ponzi schemes unravel exactly this way. Things running on confidence alone will never last.
Perception only appears like reality until reality sets in. Feeling full alone will never keep you from ever needing to eat again.
Just to quickly summarize what money is and why it exists and how it came about we have to start at the beginning. An economy first starts off as not an economy but as man as he was thousands of years ago where his standard of living was basically no different than that of animals. It was a hand-to-mouth existence. Property rights at its most raw form - you pick a berry, you eat a berry; you hunt game and you consume it. However, at some point in our history, we discovered that we could directly exchange with each other. I would venture a guess it happened when mankind learned to settle down and not be so nomadic in order to survive. Probably when we discovered agriculture or something. Either way, with more respect for property rights, people started to accumulate savings and then with those savings, we could begin bartering, or another word for direct exchange. Barter quickly started to hit its limitations one of which is a 'double coincidences of wants.' If I had corn and wanted blueberries, I would have to find a person who harvested blueberries who also wanted corn. Otherwise the trade cannot occur. So before money came on the scene, a person would need to find an alternate commodity in the market that they could have confidence in that would facilitate the trade. So maybe if I knew the blueberry harvester wanted wheat, then I could confidently trade my corn for wheat and then trade the wheat for the blueberries I wanted. It's very important to note at this point why wheat works. It's not because I simply have confidence in it. To simply stop there is to ignore a very important point regarding bitcoins. You have to ask yourself where the confidence comes from. The confidence comes from the fact that it has existing marketability due to the fact that it can already be exchanged for any other commodity in the market. We'll be touching on this later regarding bitcoin.
The emergence of money came out of a market demand for indirect exchange to overcome this 'double-coincidence of wants' obstacle. However, in both direct and indirect exchange, both parties create value in the marketplace and both walk away from the transaction having gained in their minds. Now as we fast forward through the gold standard and then paper receipts for gold and then fractional reserve banking and then a pure fiat money standard, we have to remember that this erosion of the money took place very gradually where confidence was never broken insofar as the market perception within the economy. Clearly if one day we're on a gold standard and the next day we're on a pure fiat standard, the transition would never work. The free market wouldn't accept it.
So now let's examine bitcoin. Basically bitcoin is a computer-generated 'coin' very much like a virtual coins you might collect playing some Facebook game. They can be collected, used and handled very much like how you would handle real coins. There were some other things to make this project work. Unlike the Facebook coins, that could be created out of thin air by some hacker, there is a way to make it nearly impossible to make copies of bitcoins thus limiting their supply. So basically, the creator of bitcoins made it possible to "discover" bitcoins by solving a problem that gets more difficult to solve with each new bitcoin discovered. This is called mining....sort of like mining for gold. A lot of labor has to be put into finding more. Then the programmers decided to create a hard limit of 21 million possible bitcoins that could come into existence.
What these programmers were trying to do was create a competing currency and they almost did it. They satisfied many criteria for what makes a good money: Limited quantity, divisibility (bitcoins can be divided up into smaller entities that retain its value; like gold will not lose any of its properties even if you cut it in half unlike say a shovel), and portability. The one thing bitcoins didn't have that gold did was 'utility value' or 'intrinsic value.' I know people out there will call out the whole 'There is no such thing as intrinsic value...blah blah blah" argument but that is just semantics, IMO. I find that this group of people do not strictly adhere to the definition of 'value.' Strict adherence to the definition would render the words 'utility' and 'intrinsic' redundant and so to correct 'adherence' for 'utility' makes no sense. If you don't know what I mean, go look up 'value' in how Austrian economics defines it. Value, according to this school of thought, exists simply in the mind of the exchanger.
So my main issue with bitcoins is it they have no value, period. There is no regression to tie them to anything that had or has value. From what I can tell, they spontaneously existed and due to the other properties of money, were valued. So what could you get for a bitcoin way back when they were in their infancy? How did the first bitcoin users use them? How did they know the transactions back then were equitable? I would contend that they didn't. This early period of bitcoin has been described in a very muddled fashion. No one has a very clear answer. I read only things that go like, '...it's value was determined by the transactions it allowed..." Huh? What does that mean?
Some people tried to use the regression theorem saying they have value because bitcoins can be exchanged for dollars and dollars ultimately got their value to gold and so this chain maintains its continuity. Not really. If that was true, then the very first bitcoin would have been worth in the tens of trillions of dollars. Then as the second bitcoin was minted, the value would have been cut in half, then into a third, into a fourth, etc. But if you see a chart of bitcoin, the graph doesn't look like an asymptotic function showing extreme deflation going left to right as a function of time.
You have to remember that paper gold reciepts had a one-to-one mapping to gold for anyone who wanted to hold their gold in a goldsmith's vault. That's what gave the paper its value and was the source of the confidence. Bitcoins didn't have this from its origins. There was no one-to-one mapping to anything!
The other thing some bitcoin advocates use to argue its valuation is the time and "labor" to mine bitcoins. Fair enough. You can have a computer use its CPU cycles and resources like RAM and whatnot to solve this math problem and voila..a bitcoin generated. Unfortunately, this is also a economic fallacy. This employs the concept of the Labor theory of value. Funny, because I thought these were the same people who advocated Austrian economics and tout the Subjective theory of value. Just because I spend hours on a Civilization game and then save that game on a file, that file doesn't necessarily have market value. Could I trade it? I don't know....maybe. Does it instill confidence in me to trade it? Obviously not. So this argument fails.
The last argument I see is bitcoins have value because other people want bitcoins. Okay, that's a fair argument since many people want gold for no other reason than other people want it. However, like I said before there is a chain of value via monetary regression and history that show gold has value. Bitcoins is still trying to make its case. To spontaneously to gain confidence is extremely difficult and without a lot of guns like the government does for fiat, I have my doubts. In order to do so, you have to demonstrate redeem ability to anything of value from the very beginning like the gold paper receipts To already claim value due to network effects is no different than real-estate investing is good investment because someone else will buy it from you. Bubbles burst in exactly this way. Ponzi schemes unravel exactly this way. Things running on confidence alone will never last.
Perception only appears like reality until reality sets in. Feeling full alone will never keep you from ever needing to eat again.
Monday, May 13, 2013
Evil and immorality doesn't exist...
I love playing poker. There was a time I thought I could have turned pro. Just needed the balls to go out there with my life savings and just believe in myself. I had a pretty good run for many years and even entered in the 2006 Main Event at WSOP. Made it through day 1 and halfway through day 2. Not bad for my first go-round. Even as a cash player I was good. Made a consistent positive ROI but as I played in higher limits, I couldn't adjust my game to newer knowledge. Every good player is constantly learning to improve their game and often times it's to fix what they've been doing wrong for such a long time. During this adjustment period, you can often feel frustrated because as you're learning to plug holes, your play is negatively reinforcing the new behavior. I often times compare it to fixing a faulty, but functional, golf or tennis swing. You could make it work at a certain level of play but to advance to a higher level play, you have to do away with the bad habits and adopt new ones. So as you're changing your golf swing or tennis serve, you get a little worse in the transition. That's what happened to me in poker.
What I got out of poker is many life lessons including the intent of this posting. Morality and the philosophical discussion about good and bad is about uncovering misconceptions and "fixing" faulty methods. This is what sort of got me thinking about the subject.
No sane, rational person deliberately picks the wrong or immoral decision. What I mean is typically no murderer or thief accepts that the actions they chose were immoral or a choice at all. There's usually a reason that every criminal will use to justify their actions. So what they do is they paint a picture or some type of context in which to judge the content of their actions. At the end of the story or when the whole painting is complete, it is supposed to look "correct."
This uncovers what I think is the central conflict when discussing philosophy or more specifically the concepts of good and evil. Evil is never deliberately picked. The only chance Evil has is to appear Good. Only in the sheep's clothing of "good" can "evil" be chosen. So how does Evil get picked over Good? This can only be accomplished through a faulty understanding of what is to believed as true.
So let me illustrate with an example. I like to draw on things from personal experience and what comes to mind is taken from the world of fitness. Most women who work out, including my wife, really shun working with free weights or even any kind of real strength training. Why? Because they don't want to look like "her." Of course, "her" is either some girl at the gym who takes steroids or they refer to a female bodybuilder. This is a faulty understanding of reality. The reality is muscle size is largely due to the presence of the hormone, testosterone. Most women naturally have some testosterone but nowhere nearly enough to illicit a training response to grow enough muscle to look like a body builder. At the same time, these same women want to lose body fat and get slimmer. No matter how many articles I show or the science behind it all, I cannot convince my wife or her friends to start training with weights seriously. Is this immoral? No, but it is the incorrect choice because of a misconception about reality, which is analogous to making an immoral decision.
Somewhere along the way of how someone thinks, there is a misconception of something they thought was true. Now it is certainly very possible that our misconceptions arise out of sheer ignorance. We simply do not have the knowledge yet and we are still operating on a wrong hypothesis. But another possibility is that our misconceptions are due to being lied to. In other words, someone with knowledge is deliberately passing off a falsehood as truth.
Since no one would pick falsehood as truth, the falsehood has to be marketed as truth and then one could only hope that the poor victim will simply trust or accept the falsehood as truth. This is how successful poker is played.
The markings of a poor poker player is Consistency. If you always bluff, you will lose money. If you never bluff, you will lose money. Inconsistency is the winning formula. Gaining power over your opponents can only be achieved through inconsistency. When they think you're zagging, you're zigging and vice versa. But the only way to get them to make the wrong decision is to first appear to be one thing but in reality be the other. So in order to win the maximum amount, they have to think you're bluffing when you're not bluffing and also think your not bluffing when you are. The facade has to always appear like it's real.
This is how power and evil still persist in the world. Lies are perpetuated and passed off as good knowing that rational people consciously choose good. The normally successful player's strategy wouldn't work if he knows his opponent's objective is to lose money. Then you wouldn't need to play poker. Through the lies, the people peddling the stuff remain in power and that is their objective.
Just like in the movie, 'Enter the Dragon' : "The enemy only has images and illusions to hide behind, where he hides his true motives. Destroy the illusion and you destroy the enemy."
What I got out of poker is many life lessons including the intent of this posting. Morality and the philosophical discussion about good and bad is about uncovering misconceptions and "fixing" faulty methods. This is what sort of got me thinking about the subject.
No sane, rational person deliberately picks the wrong or immoral decision. What I mean is typically no murderer or thief accepts that the actions they chose were immoral or a choice at all. There's usually a reason that every criminal will use to justify their actions. So what they do is they paint a picture or some type of context in which to judge the content of their actions. At the end of the story or when the whole painting is complete, it is supposed to look "correct."
This uncovers what I think is the central conflict when discussing philosophy or more specifically the concepts of good and evil. Evil is never deliberately picked. The only chance Evil has is to appear Good. Only in the sheep's clothing of "good" can "evil" be chosen. So how does Evil get picked over Good? This can only be accomplished through a faulty understanding of what is to believed as true.
So let me illustrate with an example. I like to draw on things from personal experience and what comes to mind is taken from the world of fitness. Most women who work out, including my wife, really shun working with free weights or even any kind of real strength training. Why? Because they don't want to look like "her." Of course, "her" is either some girl at the gym who takes steroids or they refer to a female bodybuilder. This is a faulty understanding of reality. The reality is muscle size is largely due to the presence of the hormone, testosterone. Most women naturally have some testosterone but nowhere nearly enough to illicit a training response to grow enough muscle to look like a body builder. At the same time, these same women want to lose body fat and get slimmer. No matter how many articles I show or the science behind it all, I cannot convince my wife or her friends to start training with weights seriously. Is this immoral? No, but it is the incorrect choice because of a misconception about reality, which is analogous to making an immoral decision.
Somewhere along the way of how someone thinks, there is a misconception of something they thought was true. Now it is certainly very possible that our misconceptions arise out of sheer ignorance. We simply do not have the knowledge yet and we are still operating on a wrong hypothesis. But another possibility is that our misconceptions are due to being lied to. In other words, someone with knowledge is deliberately passing off a falsehood as truth.
Since no one would pick falsehood as truth, the falsehood has to be marketed as truth and then one could only hope that the poor victim will simply trust or accept the falsehood as truth. This is how successful poker is played.
The markings of a poor poker player is Consistency. If you always bluff, you will lose money. If you never bluff, you will lose money. Inconsistency is the winning formula. Gaining power over your opponents can only be achieved through inconsistency. When they think you're zagging, you're zigging and vice versa. But the only way to get them to make the wrong decision is to first appear to be one thing but in reality be the other. So in order to win the maximum amount, they have to think you're bluffing when you're not bluffing and also think your not bluffing when you are. The facade has to always appear like it's real.
This is how power and evil still persist in the world. Lies are perpetuated and passed off as good knowing that rational people consciously choose good. The normally successful player's strategy wouldn't work if he knows his opponent's objective is to lose money. Then you wouldn't need to play poker. Through the lies, the people peddling the stuff remain in power and that is their objective.
Just like in the movie, 'Enter the Dragon' : "The enemy only has images and illusions to hide behind, where he hides his true motives. Destroy the illusion and you destroy the enemy."
Friday, May 10, 2013
The libertarian vote is a fail in both idea and in practice...
I think my political ideologies spanned from confused liberalism to anarchism all in the span between the election years of 2008 and 2012. Although I voted for Obama because he did a great job making McCain look like Bush, I've always been skeptical and distrustful of government. I just couldn't put my finger quite on it.
My first major dive into libertarianism started with trying to understand the financial crisis of 2008 and I remember that year coming home everyday to watch the news to get the latest goings on about the economy. Then a viral video hit me titled "Peter Schiff was right." And suddenly here's this guy who was warning about the shit hitting the fan and I immediately bought every book he had written on Amazon. I finished both books in one week and it all made sense. Who knew economics could be explained in plain English?!!?? I read every word.
I then learned about Ron Paul and the Mises Institute and learned that Austrian economics was just a branch of a political philosophy called Libertarianism. As I learned more and swam deeper into that pool, I realized that the most consistent view were labeled as 'anarcho-capitalism.'
I suppose I could have stopped at understanding Ron Paul's message and the whole 'End the Fed' campaign and this whole idea of Ayn Rand's limited government (minarchism) and the Constitution and that it should be defended. I suppose if I did that, I would have been on facebook during campaign season posting things about Ron Paul and been a big Paul supporter. But I couldn't.
Being the way I am, I need to know as much as possible and love uncovering root causes and what it is about us as humans that drive us to do certain things. I guess in the Misesian world, I'd consider myself the ultimate praxeologist.
The typical libertarian is the minarchist. They believe in limited government and in the Constitution. I'd agree that if government remained forever bound by strict adherence to the Constitution, then I doubt I'd be an anarchist today. Fortunately, the minarchist ideas are flawed and government, as bound as it was, has grown and any limits are really illusory since any liberties and individuals can be sacrificed for the sake of 'national security.'
The core flaw in libertarian minarchist is the belief that voting can reverse the natural growth of government. In fact, voting, in concept, goes completely against the ideas and ideals of libertarianism. One core tenet of libertarianism is voluntary relationships as another one is individualism. I will examine the voting process and expose the contradiction in its usage to preserve individual rights.
What is a vote and why vote? So let me clearly define voting and its purposes. But let me first start this off with a scenario. Five friends are out and about and want to go eat dinner somewhere. Each person makes a suggestion and invariably, do not come to a consensus insofar as where they really want to eat. So what do they do? They vote. Five votes and the candidate that receives the most vote will be where the group eats.
So let me define the word vote: Vote - the act of individually choosing a course of action over another option with the intention to affect a group choice.
The act of voting isn't to decide where YOU want to eat. It's to decide where the GROUP eats. You vote because you accept that you are part of the group. Therefore, if the group of friends decide to eat Indian, then you eat Indian and Indian food is in your stomach. However, if not part of a group, the only way Indian food would end up in your stomach would have been an individual choice on your part to eat Indian food.
As part of the group, the effects of the group's actions, through the voting process, are experienced by each member of the group. So in the Indian food example, the group's actions is the group going to eat Indian food, which was decided by voting. The effects of the group is every single member in the group has Indian food in their stomachs.
What voting does is it relinquishes individuals' preferences in favor of the group's with the acceptance of owning the effects of the group's action. So if a person in that group of five really wanted Chinese food and voted for Chinese food and lost, by accepting the voting process and then voting, he must accept the reality that there is Indian food in his stomach and not Chinese.
People who vote seem to not understand this and yet have a sense of nationalism. What I mean is the average voter always seems to say, "Don't blame me...I didn't vote for that!" Uh...yes you did! Libertarians are no different in this way over Democrats or Republicans. They vote and when things don't go their way they want to deny the effects of the voting population. The very act of voting removes any personal preferences in the hopes of changing the group's preferences. The attempt is really to affect the group's preferences to match your own so you can benefit from the effects of the group's actions because you are part of that group.
The paradox of nationalism is everywhere as well. Palestinians hate Americans. Why? Because American troops are in their backyards and with good reason. Americans voted for a president and that president put troops there. It's not just the Americans that wanted troops there, but all Americans because that's how the vote works. You sacrifice your preferences and accept the consequences of the group's actions.
So on one hand, each individual voter doesn't want to accept the consequences of the group's actions but with the other hand, express general prejudice towards an entire country for their government's actions. You can't have it both ways. But people, in general, are like that...private profiting but socialized losses.
This is why any libertarian who votes is really a hypocrite. Voting is socialism in practice. But they want to use it for their purposes to end socialism. That's a fail.
The only real choice is to either vote or not vote. The only consistent libertarian position is to not vote.
My first major dive into libertarianism started with trying to understand the financial crisis of 2008 and I remember that year coming home everyday to watch the news to get the latest goings on about the economy. Then a viral video hit me titled "Peter Schiff was right." And suddenly here's this guy who was warning about the shit hitting the fan and I immediately bought every book he had written on Amazon. I finished both books in one week and it all made sense. Who knew economics could be explained in plain English?!!?? I read every word.
I then learned about Ron Paul and the Mises Institute and learned that Austrian economics was just a branch of a political philosophy called Libertarianism. As I learned more and swam deeper into that pool, I realized that the most consistent view were labeled as 'anarcho-capitalism.'
I suppose I could have stopped at understanding Ron Paul's message and the whole 'End the Fed' campaign and this whole idea of Ayn Rand's limited government (minarchism) and the Constitution and that it should be defended. I suppose if I did that, I would have been on facebook during campaign season posting things about Ron Paul and been a big Paul supporter. But I couldn't.
Being the way I am, I need to know as much as possible and love uncovering root causes and what it is about us as humans that drive us to do certain things. I guess in the Misesian world, I'd consider myself the ultimate praxeologist.
The typical libertarian is the minarchist. They believe in limited government and in the Constitution. I'd agree that if government remained forever bound by strict adherence to the Constitution, then I doubt I'd be an anarchist today. Fortunately, the minarchist ideas are flawed and government, as bound as it was, has grown and any limits are really illusory since any liberties and individuals can be sacrificed for the sake of 'national security.'
The core flaw in libertarian minarchist is the belief that voting can reverse the natural growth of government. In fact, voting, in concept, goes completely against the ideas and ideals of libertarianism. One core tenet of libertarianism is voluntary relationships as another one is individualism. I will examine the voting process and expose the contradiction in its usage to preserve individual rights.
What is a vote and why vote? So let me clearly define voting and its purposes. But let me first start this off with a scenario. Five friends are out and about and want to go eat dinner somewhere. Each person makes a suggestion and invariably, do not come to a consensus insofar as where they really want to eat. So what do they do? They vote. Five votes and the candidate that receives the most vote will be where the group eats.
So let me define the word vote: Vote - the act of individually choosing a course of action over another option with the intention to affect a group choice.
The act of voting isn't to decide where YOU want to eat. It's to decide where the GROUP eats. You vote because you accept that you are part of the group. Therefore, if the group of friends decide to eat Indian, then you eat Indian and Indian food is in your stomach. However, if not part of a group, the only way Indian food would end up in your stomach would have been an individual choice on your part to eat Indian food.
As part of the group, the effects of the group's actions, through the voting process, are experienced by each member of the group. So in the Indian food example, the group's actions is the group going to eat Indian food, which was decided by voting. The effects of the group is every single member in the group has Indian food in their stomachs.
What voting does is it relinquishes individuals' preferences in favor of the group's with the acceptance of owning the effects of the group's action. So if a person in that group of five really wanted Chinese food and voted for Chinese food and lost, by accepting the voting process and then voting, he must accept the reality that there is Indian food in his stomach and not Chinese.
People who vote seem to not understand this and yet have a sense of nationalism. What I mean is the average voter always seems to say, "Don't blame me...I didn't vote for that!" Uh...yes you did! Libertarians are no different in this way over Democrats or Republicans. They vote and when things don't go their way they want to deny the effects of the voting population. The very act of voting removes any personal preferences in the hopes of changing the group's preferences. The attempt is really to affect the group's preferences to match your own so you can benefit from the effects of the group's actions because you are part of that group.
The paradox of nationalism is everywhere as well. Palestinians hate Americans. Why? Because American troops are in their backyards and with good reason. Americans voted for a president and that president put troops there. It's not just the Americans that wanted troops there, but all Americans because that's how the vote works. You sacrifice your preferences and accept the consequences of the group's actions.
So on one hand, each individual voter doesn't want to accept the consequences of the group's actions but with the other hand, express general prejudice towards an entire country for their government's actions. You can't have it both ways. But people, in general, are like that...private profiting but socialized losses.
This is why any libertarian who votes is really a hypocrite. Voting is socialism in practice. But they want to use it for their purposes to end socialism. That's a fail.
The only real choice is to either vote or not vote. The only consistent libertarian position is to not vote.
Friday, May 3, 2013
The role of ethics, philosophy in real life...
Maybe I have a little too much time on my hands but my last post had me thinking about this whole idea of presenting a proposition and then in order to evaluate whether it is true or false, we go through rigorous testing in an attempt to falsify or verify the proposition. I mentioned my reference to the 'It only takes one' idea that a counter-example is all it takes to refute a proposition.
I always find it interesting discussing ethics and philosophy with others and they unknowingly change the rules mid-argument.
I once had a debate with a coworker on whether it is "right" to never lie to your children. I said it's never right to lie to anyone which would include children. You may have reasons to lie to your children but you still have to accept that what you are doing is a conscious action of doing something that is wrong. Then, predictably, he employed the 'It only takes one' stance to say something like "Well, what do you do if your children's lives are in danger and the only way to get them to comply and listen to you is to lie?" My answer to that is, "Why would your children's lives be in danger and why would lying be the only option to save them?" Of course, he's like "Forget about why they're in the situation in the first place.... blah blah blah."
So, since he thinks he has found a counter-example to my "rule" and therefore concludes that the rule is not valid. However, the statement "It is wrong to lie or to pass off something that is false as true" is a moral statement. Therefore, the scope of morality only applies when choice and free will is involved. To present a situation where all choices have been removed and then claim victory over a person who presents a moral rule is simply someone who is fooling themselves. This is the same tactic the subjective-relativistic camp bullshit you hear from most people today. They don't want to accept any "black and white" rules because "You don't know my situation" or "Walk a mile in my shoes before you judge someone." People don't like to be judged and I understand that but what these defense mechanisms do is keep people from conducting self-reflection on why they got into their situation in the first place or where they got their "shoes" from. Things happen for a reason.
So then the question becomes does your debating partner believe in free will? See, the whole point of ethics is predicated on the fact that there is free will. If one doesn't believe in free will, then the whole conversation of ethics goes out the window since determinism is how they see the world and every cause is an effect of another cause. But of course any true determinist would be a very stoic, robotic-type person since there is no reason to get emotionally upset about events, good or bad, since they're incapable of accepting conscious choices as variables. So this "emergency ethics" isn't really ethics at all. All the choices have been taken off the table except for "immoral" one. It's all about managing the situation and discussing things as good or bad shouldn't exist.
Most likely though, most determinists aren't like that. And consistency is really the only true test if a person really believes in what they say. And that circles back to why I titled this posting the way I did. Philosophy is not about the abstract or a basis for utopia. It's about real life. It's about understanding why you do the things you do. The only way to start that journey is to accept that you have choices in life and then you take ownership of those choices. This goes back to my definition of property rights. It all integrates quite nicely.
I always find it interesting discussing ethics and philosophy with others and they unknowingly change the rules mid-argument.
I once had a debate with a coworker on whether it is "right" to never lie to your children. I said it's never right to lie to anyone which would include children. You may have reasons to lie to your children but you still have to accept that what you are doing is a conscious action of doing something that is wrong. Then, predictably, he employed the 'It only takes one' stance to say something like "Well, what do you do if your children's lives are in danger and the only way to get them to comply and listen to you is to lie?" My answer to that is, "Why would your children's lives be in danger and why would lying be the only option to save them?" Of course, he's like "Forget about why they're in the situation in the first place.... blah blah blah."
So, since he thinks he has found a counter-example to my "rule" and therefore concludes that the rule is not valid. However, the statement "It is wrong to lie or to pass off something that is false as true" is a moral statement. Therefore, the scope of morality only applies when choice and free will is involved. To present a situation where all choices have been removed and then claim victory over a person who presents a moral rule is simply someone who is fooling themselves. This is the same tactic the subjective-relativistic camp bullshit you hear from most people today. They don't want to accept any "black and white" rules because "You don't know my situation" or "Walk a mile in my shoes before you judge someone." People don't like to be judged and I understand that but what these defense mechanisms do is keep people from conducting self-reflection on why they got into their situation in the first place or where they got their "shoes" from. Things happen for a reason.
So then the question becomes does your debating partner believe in free will? See, the whole point of ethics is predicated on the fact that there is free will. If one doesn't believe in free will, then the whole conversation of ethics goes out the window since determinism is how they see the world and every cause is an effect of another cause. But of course any true determinist would be a very stoic, robotic-type person since there is no reason to get emotionally upset about events, good or bad, since they're incapable of accepting conscious choices as variables. So this "emergency ethics" isn't really ethics at all. All the choices have been taken off the table except for "immoral" one. It's all about managing the situation and discussing things as good or bad shouldn't exist.
Most likely though, most determinists aren't like that. And consistency is really the only true test if a person really believes in what they say. And that circles back to why I titled this posting the way I did. Philosophy is not about the abstract or a basis for utopia. It's about real life. It's about understanding why you do the things you do. The only way to start that journey is to accept that you have choices in life and then you take ownership of those choices. This goes back to my definition of property rights. It all integrates quite nicely.
Proving negatives
A friend of mine has been having issues with one of his neighbors because their daughter is good friends with my friend's daughter and go the the same school. The daughters are around 8 years old and the neighbors are devout Christians and my friend, like me, are atheists.
The crux of the issue is the neighbor's daughter is inescapably Christian out of no coincidence that her parents are also Christian. And she is always asking my friend's daughter to engage in her Church's activities but she doesn't want to. Now it's creating some friction in their friendship now and recently it blew up where the Christian girl, upset after another attempt to invite, got rejected and threw out my friend's daughter of her house. Of course my friend's daughter was also upset and cried about it.
After hearing this story from my friend, I told him it's been a really long time since I've debated anyone regarding Christianity or God or the concept of religion. I have no problems with anyone who believe in that stuff as long as they understand that it has nothing to do with what is true and understand what it means to believe in something. Predictably, these are the people who employ the "let's change the definitions of some key terms mid-argument and create a straw-man argument."
What these people do is first start of a debate over God with the implicit acceptance that the definition of "true" is what is experienced as sensory perception. What I mean by that is when we physically debate, we speak and there are sound waves traveling that carry the ideas of the speaker and the debating partner also hears the sound waves and accept the fact that what they hear is true. What they are doing is in order to enter into a debate, they must accept that sensory perception is valid.
What I'm getting at is until people can accept a framework in which things can be allowed to be true or false, communication is pointless. The only framework we have is sensory perception. We must implicitly accept that what is perceived is a valid experience. Now, I know what everyone will come out of the woodwork and say, "Well, how about if someone looks at the sky and says the sky is green?" The sky isn't green, it's blue and how can you resolve that their experience of seeing the sky is a valid experience? It can be a valid experience if they also agree on a spectrometer that the frequency that is called blue by me is also called green by him. The words 'blue' and 'green' are no different than the word 'blue' and 'azul' in the Spanish language. They're just labels that attach to something that can be objectively measured. Now, if that person is inconsistent between the spectrometer reading for blue and the color of the sky, then that person is rejecting the framework because he wants to be in a position to be never wrong, or more precisely, to pass along what is knowingly false as true. Again, communication with such a person is pointless since there is a rejection of a methodology of evaluating what is true or false.
This is basically what Christians do with God. If it is true that God exists, then we must first define what existence is. Everything that exists, outside of God, must be perceived. So to include God in the set of objects that can be perceived (the realm of existence), God must also be perceived. But after thousands of years, there has been no evidence of God. Yes, dinosaurs don't exist today, but at least there is evidence of their remains that they did exist at one time. I'll leave it up to the paleontologists to explain it in detail that dinosaurs did exist.
So the main problem for those who claim God exists is they lack any evidence. They'll try to make the argument that the evidence of God is everywhere (e.g. the sun, mountains, clouds in the sky, green pastures, etc.) but that is just a red herring. All those things, including rape, murder, and all things considered 'bad, which also should be included in the theists' evidence of God, can be perceived without the knowledge of God. We already have scientific explanations on the origins of the Earth, Sun and the galaxy.
Usually, the 3rd and last desperate attempt to cling go their faith is 'You can't prove there isn't a God.' This is what I call 'Prove a negative' argument. These are difficult to do because in science, because there is always the possibility that new evidence could come along and disprove an existing theory. I call it, 'It only takes one.' What I mean is if you make a proposition about something, all it takes is one counter-example as evidence that the proposition is false. This leads to the inherent problem with proving a negative.
In an attempt to evaluate a statement, like "God exists" as true or false, the correct starting position is to assume the statement is false and then collect evidence and reason and logic in an attempt to discover that it could be true. The Christians do not do this. Their starting position is to assume the statement is true and then leave it up to someone else to do the hard work.
Once this 'stalemate' occurs, the believers incorrectly conclude that their stance is equally valid as the non-believer. In other words, "I can't prove God exists but you can't prove He doesn't exist. So there! We're both the same." Wrong. They are not equally valid statements. Using that logic, I can simply make up anything like "My Flying Purple Rhombus" and tell them to prove it doesn't exist.
The 'Prove to me it doesn't exist' argument actually gives everyone the same pass to make up something and claim victory over the non-believers.
The crux of the issue is the neighbor's daughter is inescapably Christian out of no coincidence that her parents are also Christian. And she is always asking my friend's daughter to engage in her Church's activities but she doesn't want to. Now it's creating some friction in their friendship now and recently it blew up where the Christian girl, upset after another attempt to invite, got rejected and threw out my friend's daughter of her house. Of course my friend's daughter was also upset and cried about it.
After hearing this story from my friend, I told him it's been a really long time since I've debated anyone regarding Christianity or God or the concept of religion. I have no problems with anyone who believe in that stuff as long as they understand that it has nothing to do with what is true and understand what it means to believe in something. Predictably, these are the people who employ the "let's change the definitions of some key terms mid-argument and create a straw-man argument."
What these people do is first start of a debate over God with the implicit acceptance that the definition of "true" is what is experienced as sensory perception. What I mean by that is when we physically debate, we speak and there are sound waves traveling that carry the ideas of the speaker and the debating partner also hears the sound waves and accept the fact that what they hear is true. What they are doing is in order to enter into a debate, they must accept that sensory perception is valid.
What I'm getting at is until people can accept a framework in which things can be allowed to be true or false, communication is pointless. The only framework we have is sensory perception. We must implicitly accept that what is perceived is a valid experience. Now, I know what everyone will come out of the woodwork and say, "Well, how about if someone looks at the sky and says the sky is green?" The sky isn't green, it's blue and how can you resolve that their experience of seeing the sky is a valid experience? It can be a valid experience if they also agree on a spectrometer that the frequency that is called blue by me is also called green by him. The words 'blue' and 'green' are no different than the word 'blue' and 'azul' in the Spanish language. They're just labels that attach to something that can be objectively measured. Now, if that person is inconsistent between the spectrometer reading for blue and the color of the sky, then that person is rejecting the framework because he wants to be in a position to be never wrong, or more precisely, to pass along what is knowingly false as true. Again, communication with such a person is pointless since there is a rejection of a methodology of evaluating what is true or false.
This is basically what Christians do with God. If it is true that God exists, then we must first define what existence is. Everything that exists, outside of God, must be perceived. So to include God in the set of objects that can be perceived (the realm of existence), God must also be perceived. But after thousands of years, there has been no evidence of God. Yes, dinosaurs don't exist today, but at least there is evidence of their remains that they did exist at one time. I'll leave it up to the paleontologists to explain it in detail that dinosaurs did exist.
So the main problem for those who claim God exists is they lack any evidence. They'll try to make the argument that the evidence of God is everywhere (e.g. the sun, mountains, clouds in the sky, green pastures, etc.) but that is just a red herring. All those things, including rape, murder, and all things considered 'bad, which also should be included in the theists' evidence of God, can be perceived without the knowledge of God. We already have scientific explanations on the origins of the Earth, Sun and the galaxy.
Usually, the 3rd and last desperate attempt to cling go their faith is 'You can't prove there isn't a God.' This is what I call 'Prove a negative' argument. These are difficult to do because in science, because there is always the possibility that new evidence could come along and disprove an existing theory. I call it, 'It only takes one.' What I mean is if you make a proposition about something, all it takes is one counter-example as evidence that the proposition is false. This leads to the inherent problem with proving a negative.
In an attempt to evaluate a statement, like "God exists" as true or false, the correct starting position is to assume the statement is false and then collect evidence and reason and logic in an attempt to discover that it could be true. The Christians do not do this. Their starting position is to assume the statement is true and then leave it up to someone else to do the hard work.
Once this 'stalemate' occurs, the believers incorrectly conclude that their stance is equally valid as the non-believer. In other words, "I can't prove God exists but you can't prove He doesn't exist. So there! We're both the same." Wrong. They are not equally valid statements. Using that logic, I can simply make up anything like "My Flying Purple Rhombus" and tell them to prove it doesn't exist.
The 'Prove to me it doesn't exist' argument actually gives everyone the same pass to make up something and claim victory over the non-believers.
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