An Implication of The DIM Theory for Activism

One important element of the philosophy of Objectivism is that it has a purpose: that of living as a human in this world. Each insight of Objectivism has implications about what a man should do to achieve happiness and prosperity.

The DIM Theory is an excellent application of philosophy, and, in the breath of its reach, it is fundamental in understanding how philosophy underlies a culture. I think that it has implications for us.

I want to expand the response I have seen to Dr. Peikoff’s book. From what I have seen, the idea is that LP has given us a prediction and we now sit and watch to see if it proves out. LP makes clear in the book’s closing pages that he isn’t suggesting giving up and that his prediction isn’t a mathematical certainty, but other than clarifying who our ultimate enemy is, people have acted as if there is nothing more to say.

I disagree. I think that the book, in its identifications of fundamental movers of cultural change, has given us a greater understanding of what we should be doing. Our actions to mold our culture should be amended by what we learned from LP. Our activism needs to include a specific purpose to be more effective.

By activism I mean action (meaning attempts to persuade) taken to change the culture, which I think should include actions taken to keep things together long enough for cultural change to occur.

Dr. Leonard Peikoff’s (LP) theory is that the fundamental fact of a culture is its attitude towards integration, i.e., concept formation and the structure of knowledge. Consequently, to change a culture, one has to change its mode of integration.

The approach to integration is in turn based upon the culture’s intellectual leaders position on two philosophic issues: the nature of reality and how man acquires knowledge. If one understands correctly these two issues, one will be lead to a rational, i.e., reality based, method of integration.

It follows then that the direct approach to changing a culture is to address these issues: integration, existence, and reason.

The proof for this conclusion is in The DIM Hypothesis and the writings of Ayn Rand and LP. I do not look at my reasoning as deductive despite appearances.

To apply the implication of LP’s insight requires much thought. I regard what I have to say as a small beginning.

In most cases, addressing the fundamental questions isn’t beneficial. In other words, don’t preach. It is often enough to push rational integration, LP’s I mode, by example, i.e., by referring to reality, facts, and at least implying that thought, a process is necessary to understand an issue. It won’t help to be too subtle. The implication has to be clear.

One way to do this that comes to my mind is to always concritize. Refer to facts connected with an abstraction, and point out that one without the other is meaningless.

My thought is that one should include some aspect of the fundamental issues in every written or spoken statement. You need not always refer to integration. Including the independence and absoluteness of physical reality or the requirement of a rational thought process would also be valuable.

I do not mean to say that addressing issues of rights, morality, government activities, and irrationality in general aren’t worthwhile. I am saying that the more the issues affecting cultural change are included in your arguments, the more impact our efforts will have.

Misallocation Leads to Training for the Wrong Jobs

I will be pointing at various excellent observation made by John Allison in his recent book, The Financial Crisis and the Free Market Cure. There are many. Several provide expanded insights into the effects of government intrusion into the economy. A favorite of mine is that one of the elements of the misallocation of investment in a welfare state is the training of people for the wrong jobs. The example in the crisis discussed in Allison’s book is the people trained in house construction. Way too many houses were constructed, meaning we had way too many people employed in that sector. They should have been employed and trained in some other occupation. Instead, we have lots of carpenters, bricklayer, etc., who then found themselves unemployed. When they looked for work, they tried to find a job doing what they were trained to do, but few if any employers needed those skills. To find a new job they need new skills, new training, somehow. Possibly many of these people are the ones who have given up in finding work and are no longer counted as part of the labor force.

The worker who choose to become a construction worker because of the plentiful work (at the time) choose to do so because government policy and manipulation of the economy gave him false information. You can’t expect someone in this country to see through all of the mess and realize that being in construction was a bad idea. Further, seeing that it was a bad idea and looking at things in the correct light does not provide the information necessary to decide what a good course of action would be. (This would be the context of someone who has not yet decided on a personal goal and career. Even then, the amount of earnings one’s goal could achieve is a rational consideration, and the welfare state economy does not provide good information.)

As Ayn Rand said, the government is the cause of unemployment, and one of the ways the result occurs is by the misallocation of investment.

The DIM Hypothesis is an Example of Philosophy as Science

Ayn Rand often called philosophy a science. We know that when she did not use allegory in her writing about fundamental ideas. When she said science she meant science, not “science,” or science like. She called physics and biology “special” sciences. They studies selected, well-defined aspects of reality. Philosophy studies reality and man in the broadest respect, but with the same cognitive framework, tools, and criteria of proof as any science. Philosophy is knowledge, and is acquired like all knowledge is: by a specific process called induction, i.e., using reason on the material provided by our senses.

Dr. Peikoff’s methodology is explicitly as rigorous as any, rational scientist. When one takes into account the context within which he is working, he is as exact as one could be.

His aim in the book is to demonstrate that there is evidence for his hypothesis and that his conclusion is warranted, i.e., is proven, as much as existing evidence allows.

He then states that his theory could be disproved if the results resulting from the theory do not occur. If a prediction fails to occur, the error is in the theory or the proof, not reality. (There are potential events in the real world that could prevent the prediction of an M2 dictatorship, but they would be consistent with the theory and its recognition of man’s free will.)

The DIM Hypothesis is a scientific book. To think about it any other way is to miss the point and not understand the power of its conclusions. Being scientific, being objective, using reason is a process of acquiring knowledge. Specific applications that use more precise tools applicable for the subject matter aren’t more scientific or have conclusions with any more significance or intellectual power than other branches of knowledge. They are merely a different context and allow greater precision.

Philosophy sets the standards for all branches of knowledge, including applied philosophy. There are few books or arguments recognizing or using philosophy as a science. It is a sign of man’s failure to grow and his willingness to accept nonsense.

Objectivity and Knowledge: So Vital

Nothing like stating the blindingly obvious, right? It is to me, and, hopefully, to my readers. Of course, it also depends if you understand objectivity as a connection to reality and knowledge as the integration of what is provided by that connection, which is known by very few today.

I am reminded of the importance of objectivity and knowledge in considering the relative virtues of three of my favorite books on the 2007 financial crisis. I recommend all three. Each has its own virtue and benefits to the reader. But, one book is in a different class because of the objectivity and knowledge of the author. He is an accomplished businessman and a serious student of Ayn Rand’s philosophy, Objectivism.

The difference between the books written by economists and journalists and a banker can be huge. The difference is especially large when neither the economist or the journalist actually understands what it means to understand and know a subject, i.e., to know it objectively – tied to reality. This is the difference, in today’s culture, between a person whose method of thinking is objective, subjective, or intrinsic (the corresponding order would be a banker who understands their subject, the journalist who thinks anything goes and there is no actual truth, and the economist who thinks that laws themselves are part of reality and thus his ideas float). Obviously, only one of these three has a sound grasp of the morality of the individuals they write about.

The book by the journalists, Reckless Endangerment: How Outsized Ambition, Greed, and Corruption led to Economic Armageddon by Gretchen Morgenson and Joshua Rosner, does offer a well-researched account of some parts of the crisis, which is to say that they are trying to be objective. But they have no clue about several issues: how banking functions, how regulators function, how a functioning economy works and why, and what is morality. Consequently, at times they make wildly impossible accusations, misrepresent events, and hold the innocent accountable (they do point at some truly guilty people, too, which is one reason the book is worth reading). If you don’t have a better understanding than they do, the book may lead to some poor conclusions. (You could recommend this book if it was read after the other two books.) In that the book offers a lot of information that wasn’t published before, you do learn important details.

Then there is Meltdown by Thomas Woods, who is an economist with a foundation in modern Austrian economics (post-Hayek, libertarian). He also makes many very good points. His understanding is better than that of the journalist, and although he has some obvious intrinsicist leanings, he makes no real bloopers. He is known to be religious and believes in self-sacrifice, which results in a rather flat support for the capitalist economy that he sees as better than the command economy. His justification is the benefit of the consumer. He tends to ignore the businessman. It is also worth reading because of the details he offers of the crisis and his decent understanding of the economics. But when compared with someone with an objective understanding of the crisis, it is obviously deficient.

So, the place to begin, and the one to read whether you have or have not read any other book on the crisis, is John A. Allison’s The Financial Crisis and the Free Market Cure. Mr. Allison has done the work to understand what objectivity means, i.e., connecting one’s ideas to physical reality. He also has years in the banking industry. Thus, he offers a fact based, conceptual analysis of what happened, why, what the consequences are, what the supposed cures are that Congress and the regulators imposed, and what we should actually do about it. This is what real explanation and analysis should look like.

Allison concretizes important points: the impact of regulation; the attitude and style of regulators; the destruction of independent action by the banker; the elevation of political pull over the blindingly obvious; etc. Ayn Rand and her followers have been asserting the destructive nature of government controls for decades. In this book are some specifics.

In future posts I will mention some of John Allison’s observations.

A Suggested Perspective on the DIM book

I expect that most people read The DIM Hypothesis and come away focused upon LP’s conclusion, his prediction on the direction of U.S. culture. Certainly, LP does himself center the book on the goal of reaching a prediction. The force of his prediction is magnified by the fact that the book is closely reasoned and objective, i.e., it is based in the facts of the reality of human history and human nature. The book is itself an excellent example of the scientific method.

I, however, want to focus your attention on a different perspective, what I perceive as an implication. I want you to think about what LP has to say about how cultural, philosophic change occurs. I want to examine the implications and proscriptive insights we can gain. What does the book mean for our own actions? Can we do things, our attempts to achieve our own view of a proper culture, better, based upon what LP has to teach us about cultural change? What do we do differently? What are we doing that is effective?

I have one specific idea in mind, which I will present here in the next few days. But I want you to think about this perspective first.

A Return to Writing

This blog has been quiet for over six months. My economy updates were beginning to sound fairly repetitious. All I was doing was waiting for something to happen. I could not be like the people who expected massive price raises at every turn. And if you read anything that I had written you already knew that I didn’t think that the government was doing anything good.

Having read some very good books recently, I am ready to get back to writing. To do so I have decided to widen the blog’s focus. I am not going limit my comments to only economic issues. I will slightly expand my range of issues to include cultural change.

I will also change my tactics a little, no longer publishing huge articles, but will be often content with short pieces and breaking up longer pieces into parts. I hope by this to publish more often.

One of the books that I have read is Dr. Leonard Peikoff’s The DIM Hypothesis: Why the Lights of the West are Going Out. (“Reading” being a term that also includes intense study.) I cannot understate how highly I regard the book. It is a must read/study. I have some thoughts about the book which I will include in the blog.

I welcome any comments about DIM and my interpretations and derivations. I also would welcome and seriously consider other essays on the subject. If you want to write something to include in my blog project, send it or some ideas about it to me. My email address is krazy.economics@gmail.com.

The Fiscal Cliff and the Whole Context

These days we are swamped with TV and internet coverage of the fiscal cliff scheduled to occur on January 1st. What the cliff amounts to is a reduction in government deficit spending, which in itself is a good thing. But, since the deficit would still be astoundingly and disastrously large, the cliff isn’t as big a deal as one would wish. That the “cuts” are in fact just reductions in the rate of spending increases and not reductions in spending, it is clear that the whole thing is mostly a sham (e.g., see).

On the other hand, since the reduction in the deficit would be mostly tax hikes, the pain would fall on the productive population. In the context of the economy, it is spending that needs to be reduced. An increase in taxes would be an additional drag on the economy, increase the rate of the decline of our standard of living, and enhance the movement toward destruction of rights and the importance of the individual in our society. What happens with the fiscal cliff could hasten the slide toward a fate like Greece or Spain. We really don’t want that to happen. Of the options that Obama seems to accept, i.e., no deal or higher tax on high incomes levels and no spending cuts, I find it hard to choose. There is some indication that BO wants a limited increase in taxes and increases in spending, which could be worse.

But the fiscal cliff is just part of the problem: the hoopla over the “fiscal cliff” provides a smoke screen covering additional pending disasters for our economy, namely, the beginning of the implementing of ObamaCare taxes and regulations, and the coming tidal wave of Dodd-Frank and other anti-business regulations.

Quite possibly the impact of Dodd-Frank will dwarf the fiscal-cliff. It has already drastically restructured parts of the financial community. There are many regulations still to be issued from Dodd-Frank (many are already late) and they all are intended on reducing the range of options of a financial institution, which will lower its profitability, more tightly limit its decision making capability, and reduce its ability to fund American production.

ObamaCare has many elements (some still little known) that will be instituted in 2013 that will raise business costs, lower employment, and cause further problems with health insurance and medical costs. All of these together, including whatever nonsense ends up as the “solution” to the fiscal cliff, will mean slower growth, or possibly recession for the US economy (which won’t be good for the world economy either).

Think what that will mean for the federal deficit and budget.

We have seen many projections as to when the federal revenue will equal the sum of interest payments on debt, Social Security, and Medicare, in other words, severe problems with funding the government and retaining the appearance of the safety of government debt. If you look closely at each, I expect that you will see that the assumptions include some growth in the US economy and that there will be a significant number of people paying the Social Security and Medicare taxes. But, with four more years of BO and the total number of people employed remaining low (as opposed to actually producing; and as opposed to the unemployment figures that are meaningless), tax revenue, including FICA, is not going to grow while the interest on federal debt, even at today’s absurdly low levels, Social Security and Medicare demands will grow rapidly. The only way to pay for defense and the astounding number of programs the federal government supports, is to constantly grow the deficit. It is also possible that Obama will try to raise taxes, but that may be too obviously destructive for today’s population.

The federal deficit will be the tipping point, but the real cause of death for our economy is the restrictions on doing business and producing. The arguments about spending and deficits need to begin including emphatic emphasis on the disaster of regulation.

For us, the unwilling and resisting passengers on this train into the tunnel of death, it means that we need to arrange our thinking to prepare personally and philosophically. I will leave to you the personal preparations (I am thinking about a potential blog post on this topic.)

Philosophically, we need to emphatically tell anyone we can that the coming mess is not the result of capitalism or selfishness (maybe we can equate blaming the Jews in Germany after WW1 with blaming capitalists). That is in addition to the stuff we are already doing, e.g., focusing on helping ARI and other similar activities and aiming at the destructive educational system we have.

And now for a final comment that is going to be a theme for me:

Understanding the Objectivist philosophical method is vital to anyone concerned about his freedom, as well as his life in general, of course. Recently I have been getting my own intense reminder. I have been reading Understanding Objectivism and The DIM Hypothesis. I want to emphatically recommend these books. If you want to understand an individual’s mental functioning, UO is the book to read. It is also helpful in leading up to the other one. To better understand the trends and conflicts in our own situation here in the US, The DIM Hypothesis is absolutely necessary. It is very philosophical. But philosophy matters, and our conflicts today are philosophical. For your own sake, read them.