3 Economic Misconceptions That Need to Die

 

 

 

3 Economic Misconceptions That Need to Die

By The Motley Fool Posted 3:35PM 02/13/12 Economy

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By Morgan Housel
At a conference in Philadelphia last October, a Wharton professor noted that one of the country’s biggest economic problems is a tsunami of misinformation. You can’t have a rational debate when facts are so easily supplanted by overreaching statements, broad generalizations, and misconceptions. And if you can’t have a rational debate, how does anything important get done? As author William Feather once advised, “Beware of the person who can’t be bothered by details.” There seems to be no shortage of those people lately.
Here are three misconceptions that need to be put to rest.

Misconception No. 1: Most of what Americans spend their money on is made in China.


Fact: Just 2.7% of personal consumption expenditures go to Chinese-made goods and services. 88.5% of U.S. consumer spending is on American-made goods and services.
I used that statistic in a recent article, and the response from readers was overwhelming: Hogwash. People just didn’t believe it.

The figure comes from a Federal Reserve report. You can read it here.

A common rebuttal I got was, “How can it only be 2.7% when almost everything in Walmart (WMT) is made in China?” Because Walmart’s $260 billion in U.S. revenue isn’t exactly reflective of America’s $14.5 trillion economy. Walmart might sell a broad range of knickknacks, many of which are made in China, but the vast majority of what Americans spend their money on is not knickknacks.

The Bureau of Labor Statistics closely tracks how an average American spends their money in an annual report called the Consumer Expenditure Survey. In 2010, the average American spent 34% of their income on housing, 13% on food, 11% on insurance and pensions, 7% on health care, and 2% on education. Those categories alone make up nearly 70% of total spending, and are comprised almost entirely of American-made goods and services (only 7% of food is imported, according to the USDA).

Even when looking at physical goods alone, Chinese imports still account for just a small fraction of U.S. spending. Just 6.4% of nondurable goods — things like food, clothing and toys — purchased in the U.S. are made in China; 76.2% are made in America. For durable goods — things like cars and furniture — 12% are made in China; 66.6% are made in America.

Another way to grasp the value of Chinese-made goods is to look at imports. The U.S. imported $399 billion worth of goods from China last year, which is 2.7% of our $14.5 trillion economy. Is that a lot? Yes. Is it most of what we spend our money on? Not by a long shot.

Part of the misconception is likely driven by the notion that America’s manufacturing base has been in steep decline. The truth, surprising to many, is that real manufacturing output today is near an all-time high. What’s dropped precipitously in recent decades is manufacturing employment. Technology and automation has allowed American manufacturers to build more stuff with far fewer workers than in the past. One good example: In 1950, a U.S. Steel (X) plant in Gary, Ind., produced 6 million tons of steel with 30,000 workers. Today, it produces 7.5 million tons with 5,000 workers. Output has gone up; employment has dropped like a rock.

Misconception No. 2: We owe most of our debt to China.


Fact: China owns 7.6% of U.S. government debt outstanding.
As of November, China owned $1.13 trillion of Treasuries. Government debt stood at $14.9 trillion that month. That’s 7.6%.

Who owns the rest? The largest holder of U.S. debt is the federal government itself. Various government trust funds like the Social Security trust fund own about $4.4 trillion worth of Treasury securities. The Federal Reserve owns another $1.6 trillion.

Both are unique owners: Interest paid on debt held by federal trust funds is used to cover a portion of federal spending, and the vast majority of interest earned by the Federal Reserve is remitted back to the U.S. Treasury.

The rest of our debt is owned by state and local governments ($700 billion), private domestic investors ($3.1 trillion), and other non-Chinese foreign investors ($3.5 trillion).
Does China own a lot of our debt? Yes, but it’s a qualified yes. Of all Treasury debt held by foreigners, China is indeed the largest owner ($1.13 trillion), followed by Japan ($1 trillion) and the U.K. ($429 billion).
Right there, you can see that Japan and the U.K. combined own more U.S. debt than China. Now, how many times have you heard someone say that we borrow an inordinate amount of money from Japan and the U.K.? I never have. But how often do you hear some version of the “China is our banker” line? Too often, I’d say.


Misconception No. 3: We get most of our oil from the Middle East.

Fact: Just 9.8% of oil consumed in the U.S. comes from the Middle East.

According the U.S. Energy Information Administration, the U.S. consumes 19.2 million barrels of petroleum products per day. Of that amount, a net 49% is produced domestically. The rest is imported.

Where is it imported from? Only a small fraction comes from the Middle East, and that fraction has been declining in recent years. Last year, imports from the Persian Gulf region — which includes Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates — made up 9.8% of total petroleum supplied to the U.S. In 2001, that number was 14.1%.

The U.S. imports more than twice as much petroleum from Canada and Mexico than it does from the Middle East. Add in the share produced domestically, and the majority of petroleum consumed in the U.S. comes from North America.

This isn’t to belittle our energy situation. The nation still relies on imports for about half of its oil. That’s bad. But should the Middle East get the attention it does when we talk about oil reliance? In terms of security and geopolitical stability, perhaps. In terms of volume, probably not.

A Roomful of Skeptics
“People will generally accept facts as truth only if the facts agree with what they already believe,” said Andy Rooney. Do these numbers fit with what you already believed? No hard feelings if they don’t. Just let me know why in the comment section below.

 

This article is shared by M.A. Wahid

What is Philosophy & other related Questions by Ayn Rand

 

Ayn Rand’s views on Philosophy

& other related Questions

 

Questions by  William R Thomas

Answers by Ayn Rand

Question: What is philosophy? 

Answer:  Philosophy studies the fundamental nature of existence, of man, and of man’s relationship to existence. … In the realm of cognition, the special sciences are the trees, but philosophy is the soil which makes the forest possible.” —Ayn Rand, Philosophy, Who Needs It (p. 2)

 

A philosophy is a comprehensive system of ideas about human nature and the nature of the reality we live in. It is a guide for living, because the issues it addresses are basic and pervasive, determining the course we take in life and how we treat other people.

 

The topics that philosophy addresses fall into several distinct fields. Among those of fundamental concern are:

  • Metaphysics (the theory of reality).
  • Epistemology (the theory of knowledge)
  • Ethics (the theory of moral values)
  • Politics (the theory of legal rights and government)
  • Aesthetics (the theory of the nature of art)

The most widespread systems of ideas that offer philosophical guidance are religions such as Buddhism, Christianity, Judaism, and Islam. Religions differ from philosophies not in the subjects they address, but in the method they use to address them. Religions have their basis in mythic stories that pre-date the discovery of explicitly rational methods of inquiry. Many religions nowadays appeal to mystical faith and revelation—modes of belief that claim validity independent of logic and the scientific method, at least for the biggest questions. But most religions are in their origins pre-rational rather than anti-rational, a story-teller’s account of philosophic issues rather than a scientist’s.

 

In Greek, “philosophy” means “love of wisdom.” Philosophy is based on rational argument and appeal to facts. The history of the modern sciences begins with philosophical inquiries, and the scientific method of experimentation and proof remains an instance of the general approach that a philosopher tries to bring to a question: one that is logical and rigorous. However, while today the sciences focus on specialized inquiries in restricted domains, the questions addressed by philosophy remain the most general and most basic, the issues that underlie the sciences and stand at the base of a worldview.

 

Philosophy raises some of the deepest and widest questions there are. Addressing the issues in each branch of philosophy requires integrating everything one knows about reality (metaphysics) or humanity (epistemology, ethics, politics, and aesthetics). Proposing reasonable positions in philosophy is therefore a difficult task. Honest philosophers have often disagreed about key issues, and dishonest ones have been able to slip their own positions into the mix as well. For this reason, there is not one philosophy worldwide, as there is one physics. Instead, there are many philosophies.

 

Over the course of history, philosophers have offered entire systems that pulled together positions in each of the branches of philosophy. Aristotle, the father of logic, authored such a system in ancient times, teaching that we could know reality and achieve happiness. In more modern times, philosophers such as John Locke and Immanuel Kant have written systematic accounts of their thought. Most modern philosophers, however, have specialized in one area or another within philosophy, although some schools of philosophy have emerged that are marked by the general positions of their members on a variety of issues and the members’ shared admiration for a chain of historical figures. These schools have included Pragmatism, Logical Positivism, and Existentialism, but are little-known outside of university classes in modern philosophy.

 

Today philosophic issues often enter public life through political or social movements, some religious in inspiration, such as Christian conservatism, and others secular, such as left-wing environmentalism and socialism. The ideas of such movements are often called ideologies. That term, “ideology,” is another name for the systems of ideas we have been talking about. Though the focus of ideological movements is political, their political beliefs tend to be rooted in shared conceptions of reality, human nature, and values.

Why Does Anyone Need a Philosophy?

Question: Why does anyone need a philosophy?

Answer:  “You have no choice about the necessity to integrate your observations, your experiences, your knowledge into abstract ideas, i.e., into principles. Your only choice is whether these principles are true or false, whether they represent your conscious, rational convictions—or a grab-bag of notions snatched at random, whose sources, validity, and consequences you do not know, notions which, more often than not, you would drop like a hot potato if you knew.” (Ayn Rand, Philosophy: Who Needs It, p. 5)

Everyone has a philosophy, even if we cannot express it in words.

We either act as if our eternal salvation depends on following the mandates of scripture, or we don’t. We feel the need to believe in something and search for understanding, or we adopt the cynical view that the search is useless. We all have some sense of what is right, and what is wrong. We can see ourselves as noble beings worthy of happiness or as guilty transgressors against the environment, social justice, or God. We will all decide often what it is that constitutes our duty. We think we know art when we see it. And we adopt political principles and support politicians and parties.

All of these are philosophical issues.

 

We need to know whether what we believe is really true.

 Philosophical convictions are often subconscious or inarticulate. We experience them emotionally in what Ayn Rand called a “sense of life.” Your sense of life reflects the fundamental ways you relate to the world and other people; it is your intuitive feeling of how things are and how they ought to be. Each of us needs to understand his own convictions consciously, to be able to put his sense of life into words. Otherwise we don’t really have a clear idea of what we believe or what is motivating us to make our biggest decisions—or whether it is true. We need to know what we think on philosophical questions, because our answers can affect the course of our lives. And the sense of life that dominates nations or cultures can determine their fates.

 

We need a metaphysics (a theory of reality) because we need to know whether the material world of daily life is the only one that exists—which makes a difference between living for this life or some heavenly hereafter. We need to know whether the universe is lawful, or chaotic—which makes a difference between trying to improve things or viewing life as absurd and meaningless.

 

You take your car to a mechanic because the engine misfires in damp weather. Wouldn’t it be strange if he were to shrug and say “Well, cars just do that sometimes?” But what’s wrong with that? Why shouldn’t you take that attitude to your own problems at home or at work? You need a philosophy to know the answer.

 

An epistemology is a theory of knowledge. It may seem that if you know anything, then you know it, so what’s the issue? To have a clear grasp of one’s own life and context, one needs to be able to sort out the mass of information, claims, and ideas we receive from others; that skill is based in epistemology. After all, at root, we need to know whether what we believe is really true. How do you know when someone has proven a point? That can be terribly important when the truth of a scientific theory, a doctor’s diagnosis, or the outcome of a trial is at stake. Some people say that words are arbitrary and mean whatever we like. Does that mean it doesn’t matter if someone uses words he can’t define in down-to-earth terms? Should we worry if we don’t feel like we have mystic intuitions, or should we worry if we do?

 

A neighbor comes to your door with a petition: Pesticides from nearby farms are appearing in trace quantities in the town’s drinking water. The neighbor wants them removed at all costs. “Nobody has proven that these chemicals won’t ever hurt anyone,” he says. But the farmers send around a flyer saying the chemicals have been scientifically tested and are proven to be safe. Both are talking about proof, but they don’t seem to mean the same thing by it. How could you tell who is right? You need a philosophy to know the answer.

 

Ethics is the science we use to judge good from evil. We don’t want to do evil, and we would like to do good if we can. But to do that, we need to know what it means to be good, and what kind of actions tend to achieve it. People make demands on us: What do we owe to others and what do we deserve for ourselves? To organize our moral views and take the right course in life, we need to avoid being torn apart by contradictory goals and principles.

 

You are working for a company and rising up to positions of greater responsibility. You try to work efficiently and you hope to make a lot of money, both in bonuses for yourself and in profits for the company. But you feel a little uneasy, and you wonder: Are you doing good there, or are you just playing the game of life and going with the flow? After all, your religion teaches you that the best people live simply and serve others. Should you feel guilty about trying to make money, or feel morally proud of your success? You need a philosophy to know the answer.

 

We all know about practical politics, because we have to choose whom to vote for, and in which causes to invest our time and money. But though we argue about it, few people take the time to sort out their fundamental convictions about political issues. Is there a conflict between the social good and what’s good for individuals? Is society responsible for supporting the poor? For inculcating character and values? For regulating the economy? In part, our ideas will depend on our ethical beliefs, but we also need a clear idea of what government is for and what kinds of activities it should be engaged in, if any.

 

It’s election time. One party promises to ensure that every person has a decent job by passing a law setting fair minimum wages and restricting layoffs. The other promises to make sure we are all free, and says we will all be better off in the end even if there are layoffs and wages are set in the labor market. Which one is best? What do political slogans like “fairness” and “freedom” really mean, anyway? You need a philosophy to know the answer.

 

We all spend time and money on art: reading books, attending films and shows, listening to music, and so on. But unless we reflect on aesthetics, we can’t understand clearly why we have this need and what it is about art that fulfills it. What is the difference between good art and bad art? Art provides the spiritual fuel we all depend on, and trying to consume it without knowing anything about its basic purpose and the standards of judging it is like trying to run a car on any old liquid.
A new object has appeared in front of a prominent building in your city. It consists of slabs of metal arranged to make a large and angular shape. The newspaper says it is a great new piece of art, but you wonder, if that is art, what isn’t? What is a piece of sculpture supposed to be like? You need a philosophy to know the answer.

 

People often think of philosophy as a highly abstract and technical field, full of conundrums of interest only to academics. But, in fact, all of us depend on philosophic conclusions, and identifying one’s own philosophy is a highly practical activity. We don’t all need to be philosophers, any more than we all need to be mathematicians. But we all learn to add in school, and we all need to be able to do some basic philosophizing as well. That’s how we know where we stand in the world and what we ought to do in life.

 

 Why is Objectivism a System of Ideas

By William R Thomas

Question: Why is Objectivism a system of ideas?

Answer:  “I am not primarily an advocate of capitalism, but of egoism; and I am not primarily an advocate of egoism, but of reason. If one recognizes the supremacy of reason and applies it consistently, all the rest follows.” (Ayn Rand, “Introducing Objectivism,” The Objectivist Newsletter Vol. 1 No. 8, August 1962, p. 35)

Philosophies are systems of ideas because their theories are connected in a hierarchy. Beginning with the most fundamental issues, the conclusions one reaches in one field of philosophy have profound implications about what one can consistently conclude in another.

Metaphysics is the most basic field. It tells you what reality is, which obviously sets the terms for other fields. If the world we see is an illusion, as the Buddhists teach, then epistemology must explain how we acquire knowledge by some means other than sense perception. And if there is an after life, and an eternal reward awaiting us in heaven or hell, as the Christians teach, then ethically we ought to do whatever we can to reach eternal bliss.

 

Epistemology is also basic in a different respect. All our theories and ideas depend on the standards we have for knowledge. We cannot have ethical, political, or aesthetic knowledge except by the terms set by epistemology. Religions depend on being able to appeal to faith as a basis for knowledge of ultimate reality.

 

Ethics establishes the difference between right and wrong. Its positions depend on a view of reality, on facts about human nature, and on the standards of knowledge. It establishes a code of values and explains the difference between virtue and vice. This provides basic and fundamental guidance for human choices, including the paths we take in our own lives, what we expect from others, and the direction of institutions and even whole cultures. All areas of human endeavor depend on ethical premises about what is valuable and what purposes are worthy.

 

Aesthetics depends on ethics because ethics establishes what valid human needs are and what is good for humans as opposed to the bad. These are premises that any explanation of the value and standards of art must employ.

Politics depends on ethics because ethics sets the goals of government and the aims, more generally, of social organization.

 

A philosophy that does not address all the major issues is incomplete. A philosophy that is inconsistent in its positions is indefensible. We can see the importance of consistency by seeing how the lack of it affects political ideologies.

 

Most American conservatives, for example, are Christians who attempt to be champions of industry and the free market, while advocating for their religion at the same time. But as most Americans sense, the two are not consistent. Jesus, after all, taught that the rich should give away all their possessions. And the core Christian virtues of faith, hope, and charity suit a St. Francis far better than a Bill Gates. So conservatives are torn between the two tendencies of Christianity and capitalism. Some, choosing capitalism, emphasize American traditions of freedom, local government, and tolerance. Others, choosing Christianity, attack our “materialist” culture, advocate paternalistic government programs like welfare, and push for greater government support for religion.

 

American liberals, for their part, are torn between valuing freedom and personal happiness (which they advocate in regard to freedom of speech and abortion rights) and valuing equality (which they seek to promote through codes that restrict choice and restrain speech, such as the laws banning racial discrimination or sexual innuendo in private business contexts).

 

Many formal philosophies suffer from similar contradictions. Immanuel Kant, for example, was an advocate of political freedom and peace, but his followers often supported dictatorships and war, because they tried to live by his morality of pure adherence to duty.

 

Objectivism is a full system of thought that stakes out positions in all the major fields of philosophy. It is a consistent system of thought in which each position is supported by more basic positions beneath it and supports derivative positions that follow from it. Objectivists find that what they know about one field of philosophy supports what they know about the others, so they do not have to choose between contradictory tendencies as modern conservatives and liberals do. And their conclusions, being based in the facts, follow logically from the most basic ideas to the most derivative.

 

By William R Thomas

Question: What is the Objectivist view of reality?

Answer: “Reality exists as an objective absolute—facts are facts, independent of man’s feelings, wishes, hopes or fears.” (Ayn Rand, “Introducing Objectivism,” The Objectivist Newsletter Vol. 1 No. 8, August 1962, p. 35)

Objectivism holds that there is one reality, the one in which we live. It is self-evident that reality exists and is what it is; our job is to discover it. Objectivism stands against all forms of metaphysical relativism or idealism. It holds it as undeniable that humans have free will, and opposes metaphysical determinism or fatalism. More generally, it holds that there is no fundamental contradiction between the free, abstract character of mental life and the physical body in which it resides. And so it denies the existence of any “supernatural” or ineffable dimension for spirits or souls.

Let’s consider each of these points in turn.

 

Relativism and Objective Reality

Today, especially in university departments of literature, there are some fashionable “postmodernists” who claim that we create reality with words, in our own minds. This view is an instance of a position that has frequently reappeared in philosophy: metaphysical relativism or idealism. It is the view that, ultimately, nothing is real except in relation to our perceiving it or thinking of it.

 

But reality is not a function of our ideas. It exists, and it is what it is, regardless of whether we want it to be or not. Denying this is the intellectual equivalent of closing one’s eyes while driving down the highway. Car crashes do not happen just because one believes they do; they often happen even when we wish them not to. Facts are facts, independently of us. This is why things happen that surprise us. It is why science has been the process of establishing the truth about nature without regard for our preconceptions. It is why babies have to learn; they are discovering the world “out there.” Things in reality have real properties and exert causal powers without regard for us and our knowledge of them. Ayn Rand summed up this attitude to reality as the principle of the primacy of existence.

 

Objectivism holds that there is one reality, the one in which we live.

 As Ayn Rand wrote in “The Metaphysical Versus the Man-Made” (Philosophy: Who Needs It): “The primacy of existence (of reality) is the axiom that existence exists, i.e., that the universe exists independent of consciousness (of any consciousness), that things are what they are, that they possess a specific nature, an identity.

The epistemological corollary is the axiom that consciousness is the faculty of perceiving that which exists—and that man gains knowledge by looking outward.” Consciousness (i.e., the mind) is in essence a faculty of awareness. We are aware of the world around us through sense-perceptions, of course, but even in our abstract and theoretical knowledge we function primarily through identification of how things are. To give a simple example, we decide whether to say “that is a yellow house,” but we know that what makes that statement knowledge, rather than hot air, is whether or not it identifies a house that really is yellow.

 

Free Will vs. Determinism

Through our senses we see and feel a material world. It has physical characteristics such as form and mass. But our thoughts seem free: We choose by our own lights what we should do, even how we should move our bodies, and we can rove with our minds into worlds of fantasy and imagination that never existed. Our legs can be made to flinch by the tap of a hammer on our knees. But we can make up our minds unflinchingly to do whatever we must, even if it costs us our lives.

Many philosophers and scientists believe in metaphysical determinism. This is the idea that everything in existence proceeds ineluctably from cause to effect, like a computer program, the orbits of the planets, or the motion of billiard-balls on a pool table. According to determinism, the universe was set in motion somehow, perhaps in a Big Bang, perhaps by God, and everything that has happened since has had to happen; nothing else was possible, the outcome is determined.
In this view, we may feel like we make choices, but underneath our choices there lies some process that proceeds like clockwork: our genetic development, social and environmental factors, or perhaps something else or all of the above. Whatever the causal story given, in this view our actions and even our thoughts happen in the one and only way they can.

 The fact of free will is self-evident

Objectivism holds, in contrast, that man has free will. We have the ability of choice, not over every aspect of existence, of course, but over a range of actions within our power. Every day we do things that we might have done differently. Our freedom to choose our actions is of the essence of what it means to be human: It underlies our need for moral guidance and is a major cause of our fallibility, but is also at the root of our ability to progress by imagining and creating improvements on the brute forms of nature.

 

The fact of free will is self-evident; each of us knows we have the ability to control our own minds, to focus our thoughts on one issue or another, and to direct our own actions. Some fear that admitting we have free will amounts to denying causality, thereby rejecting the scientific worldview. After all, science has ably demonstrated that most things in reality function deterministically. Mechanistic theories of physics and chemistry, for example, work brilliantly because they are true; planets do not choose their orbits, and DNA molecules do not recombine out of delight in making life.
But the idea of free will doesn’t deny causality or science, it just points out that for at least some of the things you do, you are the cause. We may not yet understand scientifically how the chemicals in the brain and nervous system give rise to this capacity, but science can no more explain away the fact of free will than the germ theory of disease could explain away diphtheria. Science doesn’t eliminate real features of existence, ones that we experience in every moment; it explains them.

 

Mind and Body

Free will is just one way in which the mind seems quite different from physical matter. The spiritual realm of thought, imagination, values, and aspirations seems far removed from the realm of material objects, physical forces, and biological need. Many philosophers have puzzled over questions such as whether a thought has weight or what the size of the mind is. One simple way to answer to these questions is to suppose that the mind is somehow radically distinct from the body: that there is a dichotomy between the two.

In different forms, the mind-body dichotomy underlies many traditional ideas about human nature. Religious thinkers, for example, see the mind as an immortal soul that transcends the mortal husk of the body. They posit a spiritual life that is higher, freer, and better than material existence. This dichotomy has led to the tradition of asceticism, i.e., abusing the body for the sake of spiritual purity, and to the ideal of chastity, the experience of love unconnected to sex and the other lusts of the body. It also exists in secular forms, such as the division between reason and emotion symbolized by Star Trek’s unemotional Vulcans; the rational self is the mind, in this view, which must struggle to be free of the irrational passions that arise from our physical nature. In sum, it projects a view of man at war with himself, an angel imprisoned in the body of a beast, at once both Dr. Jekyll and Mister Hyde.

 

Like many classical Greek philosophies,  including  Aristotelianism, Objectivism rejects this entire conception of man. There is a difference between the mind and body, to be sure, but no dichotomy or conflict. They are both aspects of human nature. We are living organisms, and all our faculties, mental as well as physical, work together to keep us alive.
What we call the mind is the set of capacities to be aware, to perceive the world, to think about it, to feel, to value, to make choices. How do these capacities arise? In many respects, the answer to that question must come from science, not philosophy. But everything we know indicates that they are the product of biological evolution and that they depend on our physical sense organs and brain, as well as on the many other support structures that the body provides.
What we call our spiritual needs, moreover, are not in conflict with our physical or biological needs. They are rooted in the same basic need to maintain our lives through purposeful action. Human beings lack sufficient instinctive drives to survive without thinking, learning, and making choices. Reason is our most important tool for survival. But it is a complex and highly demanding tool. According to Objectivism, our spiritual needs for values, principles, ideals, aesthetic experience, and love are requirements for the healthy functioning of a rational, volitional mode of cognition.

 

In the course of life, we all encounter specific conflicts between our spiritual and our physical values (as well as conflicts within each category), but there is no inherent, global conflict between these aspects of our nature. Indeed, our most important activities serve the needs of body and soul, together. We live best when our reason and emotion are in harmony, for example. We know true love when we combine mental esteem with physical passion. Productive work is both a means of earning our daily bread and an expression of our creative powers.

 

Natural vs. Supernatural

The idea of exalting the spirit over the material existence of the body has long been tightly connected in religious thought to the idea that there exists some reality beyond the material world we know through our senses, a world our spirits long for as an escape from the needs of the body and the constraints of physical reality. In many traditions, this is a heaven, a place beyond all physical law to which the spirit can travel and in which many or even all things are possible. Many religions attribute this supernatural kind of existence, this existence beyond nature, to their God or gods.

Objectivism holds that it is simply nonsense to speak of anything “supernatural”—literally beyond or above nature. The term “nature,” in the broadest sense, refers to the world we perceive, the world of objects that interact in accordance with causal law. If we discovered some dimension or universe that had radically different properties from the environment we live in, it would still be part of nature. If we could discover it or it could affect us, it would have some real, specific properties and would interact with our world in some way. However strange it might be, its characteristics could be compared in meaningful ways with things we already know, and it could be measured somehow. In fact, science has already explored some very weird and alien realms, as compared with the level of reality we see and hear. To pick just one example, light functions in ways so strange that we are not sure how to describe it: wave or particle? But even so, we know a tremendous amount about it, and use it to banish the night and communicate around the globe in the blink of an eye.

 

The supernatural is supposed to be beyond human comprehension, to exist in no particular way, to affect our reality miraculously, beyond any and all physical laws. And indeed, supernaturalists make great hay out of the areas where science is silent either because the question is not really scientific or because the scientific jury is still out. It is as if they resent science for not yet explaining every single issue to their satisfaction, and yet insist that their most precious beliefs be immune to rational scrutiny.

 

In effect, the supernaturalists want to have their cake and eat it too. They claim that gods, angels, and devils exist, but are not anything in particular. They hope to go to a heaven by some means, but not any specific means. And heaven must be a real place (some even say it is a lush garden stocked with virgins or a cheerful land in the clouds), but it isn’t anywhere real. The Buddhists even go so far as to deny that the realm beyond—nirvana—is any place at all. In fact, supernaturalism amounts to a brazen advocacy of contradictions. But, as  Ayn Rand pointed out over and over, contradictions can exist only in the human mind, not in reality as such. No fact is essentially contradictory.

 

So there is no world beyond nature, nor any life beyond this one. But in contrast to the super naturalists’   view of nature as a vale of tears, an oppressive prison for the soul, Objectivism holds that we live in a “benevolent universe.” We are beings well-adapted to the real world in which we live, with the free will to carve our own path and the ability to achieve happiness and even exaltation. Reality does not watch out for us, and there is no reason to think any deity does so either. In fact, we must watch out for reality, as Ayn Rand recognized when she summed up her metaphysics with Francis Bacon’s dictum “Nature, to be commanded, must be obeyed.” But command nature we can, and this is what makes the universe essentially benevolent: It is propitious to beings like us.

By William R Thomas

Question: What is the Objectivist theory of knowledge (epistemology)?

Answer:  Reason is the faculty which… identifies and integrates the material provided by man’s senses. Reason integrates man’s perceptions by means of forming abstractions or conceptions, thus raising man’s knowledge from the perceptual level, which he shares with animals, to the conceptual level, which he alone can reach. The method which reason employs in this process is logic—and logic is the art of non-contradictory identification.”
Ayn Rand Faith and Force: The Destroyers of the Modern World,” in Philosophy, Who Needs It? p.

 

Objectivism holds that all human knowledge is reached through reason, the human mental faculty of understanding the world abstractly and logically. Aristotle called man “the rational animal” because it is the faculty of reason that most distinguishes humans from other creatures. But we do not reason automatically. We are beings of free will and we are fallible. This is why we need the science of knowledge—epistemology—to teach us what knowledge is and how to achieve it.

 

The basis of our knowledge is the awareness we have through our physical senses. We see reality, hear it, taste it, smell it, feel it through touch. As babies, we discover the world through our senses. As our mental abilities develop, we become able to recall memories and we can form images in our minds.

 

 Objectivism holds that all human knowledge is reached through reason.

Other animals are also capable of perception and memory. What most obviously sets humans apart is our bountiful use of language. The difference is more fundamental, though: at root, language is a means of formulating and expressing abstract thoughts.

Abstractions are ideas that correspond to an unlimited number of things at once. When you say or think “horse,” for example, your mind focuses on an idea—a concept— that refers to all the horses that ever have been or will be. Concepts allow us to consider the past and the future, things that are, things that might be, and even things that can’t be. Using concepts together, we can formulate general principles, like the laws of nature, that apply to many situations.

 

The ability to grasp reality in the form of abstract concepts and principles is the essence of reason as a human capacity. But thinking abstractly is often a difficult process and each person must undertake it for himself in the solitude of his own mind. Because abstract thinking is not automatic, people can easily make mistakes and end up believing in false ideas. The only way to ensure the objectivity of one’s thinking is to use a deliberate logical method.

 

Logic is the art of non-contradictory identification,” wrote Ayn Rand. Because there are no contradictions in reality,two ideas that contradict each other cannot both be true; and any idea that contradicts the facts we can observe through our senses is necessarily false. Logic gives us standards we can use to easily judge whether an argument makes sense. The scientific method is an advanced form of logical reasoning. Through it, reason has unlocked the secrets of nature and made our industrial civilization, with all its wealth and comforts, possible.

 

Objectivists defend the efficacy of reason against all critics. Skeptics say that because we are fallible, we must doubt all our beliefs. But this claim is a self-contradiction: the skeptic is claiming certainty at least for his belief in our fallibility. Religious mystics often claim that God or the supernatural is so different from everything we know that it is beyond reason’s ability to understand. But since whatever exists has identity, i.e. definite and delimited properties, it is always possible to contrast it with other things, conceptualize it, establish standards of measurement, and thereby begin to reason about it. At a time when mathematicians explore the properties that even infinite spaces and processes must have, it underestimates the human mind to think it incapable of plumbing deep or complex phenomena.

 

Anyone who claims insights that do not derive from sensory evidence and logical reasoning is, in effect, asking you to abuse your mind. Someone who claims, skeptically, that no real knowledge is possible is asking you to abandon your mind entirely. Objectivism holds that it is possible to be certain of a conclusion, and that there is such a thing as truth. But being certain depends on scrupulously following a logical, objective process of reasoning, because it is only that kind of thinking that allows us to formulate true ideas. To be objective, people must know how to define the terms they use (so they know what they mean), base their conclusions on observable facts (so their beliefs are anchored in reality) and employ the principles of logic (so that they can reliably reach sound conclusions).

 

Question: What is the Objectivist position in morality (ethics)?

Answer: 
My morality, the morality of reason, is contained in a single axiom: existence exists—and in a single choice: to live. The rest proceeds from these. To live, man must hold three things as the ruling values of his life: Reason—Purpose—Self-esteem. Reason, as his only tool of knowledge—Purpose, as his choice of the happiness which that tool must proceed to achieve—Self-esteem, as his inviolate certainty that his mind is competent to think and his person is worthy of happiness, which means: worthy of living. These three values imply and require all of man’s virtues
Ayn Rand, Atlas Shrugged.

For thousands of years, people have been taught that goodness consists in serving others. “Love your brother as yourself” teach the Christian scriptures. “From each according to his ability, to each according to his need” preach the Marxists. Even the liberal Utilitarian philosophers, many of whom defended free market capitalism, taught that one should act always to attain “the greatest good for the greatest number.” The result of this code has been a bloody trail of wars and revolutions to enforce self-sacrifice, and an endless struggle in society to achieve equality among people.

 

Meanwhile, like the barnyard revolutionaries of George Orwell’s Animal Farm, the advocates of uniformity and self-sacrifice strain to prove themselves “more equal than others,” so that they may determine how much love is enough, or what your ability is and what your needs should be. It seems loving our fellow man is a fine way to hate him.

 

The Objectivist ethics rebuilds morality from the ground up. “You cannot say ‘I love you’ if you cannot say the ‘I’,” wrote Ayn Rand. According to Objectivism, a person’s own life and happiness is the ultimate good. To achieve happiness requires a morality of rational selfishness, one that does not give undeserved rewards to others and that does not ask them for oneself.

 

Traditional moral codes have taught that social life is a war of dog-eat-dog and that people must restrain themselves through self-sacrifice and self-abnegation. “Live simply, that others may simply live,” is their slogan. It is a doctrine suited to a world of peasant villages and rapacious conquerors.

 

Objectivism, on the other hand, was made for the era of industrial capitalism. It teaches what became plain as the West got rich: that a harmony of interests exists among rational individuals, so that no one’s benefit need come at the price of another’s suffering. Because one person’s happiness does not come at the expense of another’s, a life of mutual respect and benevolent independence is possible for all. It is the doctrine of “live and let live,” to the full and in every way.

 

 

 Because one person’s happiness does not come at the expense of another’s, a life of mutual respect and benevolent independence is possible for all.

Now how can such a harmony of interests exist? Aren’t our interests really in conflict? Aren’t we each at the other’s throat? The answer is that human beings are not vampires, feeding on each other, nor need we live as hunter-gatherers, simply feeding on limited natural resources. Where animals graze the land, humans can cultivate it. The human mode of living is production: the creation of value from the raw materials around us. Human beings see a rock, and we invent tools, smelting techniques, stone buildings, steel girders, paved streets, and so on and on. We see a tree, and we make furniture, fuel, papers, books, construction materials, medicines, and so on and on. The application of reason to our problems allows us to create solutions. Thus we are not like dogs squabbling over meat or children sharing a pie; we are each creators, making new goods through our productive work, materially and morally.

 

Material well-being is possible for everyone, and no one needs to make others poor to get rich. Consider the fact that the richest people in America are entrepreneurs who created products that millions of people were glad to use. And since knowledge, ideas, and other non-material goods can be shared as widely as need be, we are not in fundamental competition with others for our spiritual needs, either. So, because reason is our means of survival, we stand to benefit from every discovery others make, every image or story they share, and every dollar they earn by production and trade.

 

Objectivism holds that the purpose of morality is to define a code of values in support of one’s own life, a human life. The values of Objectivism are the means to a happy life. They include such things as wealth, love, satisfaction in work, education, artistic inspiration, and much more. We choose many of our values, such as what work we enjoy and who are our friends and lovers. But we cannot choose the need for material goods or for friendship, if a happy life is what we seek. The ultimate choice open to us is whether we want life or not. Life is a choice we must make consciously and seriously, argues Rand, or else we may find that, by default, we have chosen the alternative: suffering and death.

 

The cardinal values of Objectivism are Reason, Purpose, and Self. Reason, because it is our means of gaining knowledge, and, through production, our means of survival. Purpose, because each of us has free will and must direct himself toward chosen goals, through a chosen course of life. Self, because without self-esteem, a self-motivating being cannot find the means to continue. Just as one’s own needs lie at the heart of the Objectivist ethical code, so should respect for them lie at the heart of one’s values.

 

The Objectivist ethics is a code that honors achievement and counsels the celebration, not the envy, of greatness. It honors the creativity not only of artists and scholars, but of the producers on whose shoulders civilization rests: industrialists and engineers, investors and inventors. It holds that any work is spiritual that is well and thoughtfully done, no matter what the scale of achievement, from the factory line worker to the corporate CEO, and from the most unknown clerk to the most celebrated movie star.

 

The virtues of Objectivism, then, define principles of action that lead to the achievement of objective values, considered in the full context of human life. The key principle of the Objectivist ethics is rationality, as against mysticism and whim. The ethics is a code of benevolence and justice toward other people: holding evil-doers to account for their vices, but treating rational and productive people with good will and generosity. It entails integrity, allowing no breach between our principles and our actions. A rational being practices honesty, loving the truth more than deception; and he lives first-hand, on the basis of his own judgment and effort, so independence is a virtue. The Objectivist ethics places industry and productivity in one’s chosen work at the center of life’s concerns. It is the code of a person who holds his head up with pride, in an objective appreciation of his merits and in aspiration to improvement in the future.

 

Traditional ethics contrast the image of man as an animal with the ideal of man as an otherworldly monk. Man is by nature a ravening beast, on this view, and he must be taught self-denial and self-sacrifice to be angelic and meek. Objectivism holds that man lives best as a trader, acting rationally for his own sake and dealing with others by exchanging value for value. Traditional ethics extol courage in the face of death as a virtue; Objectivism counsels integrity in the long-term pursuit of happiness. Traditional ethics extol charity as the mark of nobility; Objectivism extols productive achievement, because no one exists merely for the sake of others. It is an ethic for those who want all life has to offer, consistently, over the full course of life.

 

By William R Thomas


Question: What is the Objectivist view of law and government?

Answer: “Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned. The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control.” (Ayn Rand, “What is Capitalism?” Capitalism: The Unknown Ideal, poage 19)

The Objectivist political theory has three main elements, all of which draw upon the classical liberal political tradition. First, the foundation of the political system should be the fundamental right to live free from physical force. Second, government has the strictly limited function of protecting rights. Third, government power should be exercised in accordance with objective laws. Capitalism is the politico-economic system implied by these principles.

 

Individual Rights

The Objectivist ethics holds that each person can live and flourish through the independent exercise of his rational mind. Economically, humans flourish through production and trade, as is evident from the fact that the freest countries are either the richest countries or are getting rich most quickly. Socially, trade is the model for how people can best deal with one another.

Trade is voluntary exchange to mutual benefit. We trade money for the goods we need. But we form friendships and join clubs and associations as a kind of trade, too, investing our time, money, and energy in a relationship, for mutual enjoyment or the advancement of a shared cause. Independent people are traders because they give value for the values they receive from others. They do not mooch off of their friends and relatives, and they do not loot the resources of strangers.

 

It is possible to live independently only if one is allowed to do so. One’s choices must be voluntary if they are to be freely made. Fundamentally, only the threat of deadly force can undermine one’s ability to reason and choose. Assault, murder, theft, fraud: All these are examples of the use of force to deprive someone of freedom, of goods, or even of life.

 

Normally, one employs one’s mind to support one’s well being. The threat of force makes one accept someone else’s dictates, rather than one’s own judgment. This was the way the totalitarian systems such as Soviet Russia, Nazi Germany, or Maoist China treated their citizens, and that is why the effect of those systems was a gray, uniform style of life, faltering production, and periodic bouts of mass imprisonment and slaughter. Because force is a fundamental threat to the independent life of production and trade, there is one fundamental principle of social organization that a just society must secure: the principle that no one may initiate the use of physical force against any other.

 

The principle of non-initiation of force does not prohibit its use in self-defense. Objectivism is not a pacifist philosophy. A trader does not seek to profit from the use of force, but he is able and willing to defend himself, his friends, and his goods if they are threatened or attacked. The pacifist is right to recognize that violence is not the best way for rational beings to deal with one another. But when the rational and good fail to defend themselves from those who attempt to live irrationally through force, they are surrendering all that is decent to all that is not. Those who choose the life of the animal, the life of tooth and claw, deserve a response in kind, if that is what will eliminate the threat.

 

The individual rights to life, liberty, property, and the pursuit of happiness—mentioned in many American political documents—identify different dimensions of freedom and prohibit the corresponding types of force. “A ‘right’ is a moral principle defining and sanctioning a man’s freedom of action in a social context,” wrote Ayn Rand. “There is only one fundamental right (all others are its consequences or corollaries): a man’s right to his own life.” To live, one must be able to take action, by one’s own choice, in support of one’s life; that is the right to liberty. We are material beings, and so we need the freedom to keep the fruits of our labor and use or dispose of them as we see fit; that is the right to property. And we live as ourselves, for ourselves, so we have a right to pursue our own happiness.

 

Limited Government

The power of government is the power of the gun. It has the power to enforce a set of rules in the territory it controls, a power that is often turned against freedom. Objectivismtherefore advocates a strictly limited form of government: a republican system that has only those powers and takes only those actions required to secure our rights to freedom from force. There must be a military force for defense against external enemies. There must be a system of legislation and law courts to establish the law and to adjudicate disputes in which force might be used. And there must be a system of enforcement of the law such as the police, to make sure the law is a social rule, not empty words.

 

No country today scrupulously respects rights, and indeed many people do not understand what rights really are. A limited, rights-respecting government would have no welfare system and no forced pension-paying system like Social Security in the U.S. It would not have agencies with open-ended and vaguely defined regulatory powers. There would be no anti-trust law, nor zoning laws, nor anti-drug laws. This does not mean that a free society would not have unemployment insurance or pensions, or that it would not have distinctive neighborhoods or public campaigns to reduce the use of dangerous narcotics. But if people wanted any of these things, they would have to organize and undertake them voluntarily, through individual contracts and free associations. And no one would have the right to enforce his preferences on someone else through violence. Free debate and rational persuasion would have to be the means a social organizer would use, and the result would be a system of freedom, in which each person would choose for himself the best course in life and would suffer or enjoy the consequences of his choices.

 

Objective Law

Civil law (primarily contracts, property, and torts) is government’s main positive service. Civil law provides objective, just, and peaceful means of resolving disputes among producers and traders. In so doing, it provides the context needed for reliable long-term planning and contracting, which in turn are necessary conditions for the prodigies of global capitalist production and the wonders and conveniences of modern life. Police and the armed services, by contrast, serve in a negative role: They protect citizens from threats by criminals and foreign aggressors. In both civil and criminal realms, law functions by providing clear standards for determining which actions and interactions among people are consistent with individual rights. Without these legal institutions, society collapses into warring camps; each interaction invites violent dispute; and life becomes more inconvenient, less productive, and more brutal—at best.

Objectivity in the law is crucial to its function. The laws must be clearly expressed in terms of essential principles. The highly detailed, programmatic laws so common today violate this principle, as do the vague standards under which many regulations are issued. The law must be intelligible to the people on whom it is enforced. The law courts must be structured so that objectivity and impartiality are the hallmarks of any legal decision. And the law must always be grounded in principles of rights.

 

Capitalism

Thus capitalism is not merely a system of economic freedom, much less an economic system favoring big businesses. In its pure form, capitalism is a social system characterized by individual freedom, diversity, and dynamism. It is a system that treats people as individuals, with no ethnic, religious, or other collective principle enshrined in the law. It is the system under which each of us makes his own choices and must take responsibility for his own life and happiness. It is the system in which long-term peace and unbounded prosperity are possible, if people will work for them. As Ayn Randsaid, it is the system of separation of economy and state, just as there is separation of church and state, and for the same essential reason: because each person has a right to think and to live as his own conscience dictates, and because we all benefit from everyone having that freedom.

 

Question: What does Objectivism consider to be art?

Answer: “Art is a selective re-creation of reality according to an artist’s metaphysical value judgments. Man’s profound need of art lies in the fact that his cognitive faculty is conceptual, i.e., that he acquires knowledge by means of abstractions, and needs the power to bring his widest metaphysical abstractions into his immediate, perceptual awareness. Art fulfills this need: by means of a selective re-creation, it concretizes man’s fundamental view of himself and of existence. It tells man, in effect, which aspects of his experience are to be regarded as essential, significant, important.” (Ayn Rand, “Art and Cognition,” The Romantic Manifesto, p. 45)

 

Just as language is distinctively human, so is art. Every human society has imagined and recreated its world in stories and music, in pictures and sculpture, and in derivative forms of art such as theater and dance.

 

Many people think art is an indescribable, almost mystical aspect of human existence, that it is a self-contained realm, indefinable except in terms of itself. This has given license to those who want to turn making art into play, who say that art is anything one wants it to be and who reject objective standards for the arts. This view is standard fare among art promoters, philosophers of art, and many self-proclaimed artists. The result is that today the average person does not know what is art and what isn’t, and believes that the only basis for aesthetic preferences is subjective opinion and personal taste.

 

The artist’s function is to interpret the world and present it as he or she re-envisions it.

 

In fact, art is a distinctively human institution because it fulfills a vital need of human consciousness. And aesthetic issues can be analyzed objectively, like any aspect of reality.

 

The Objectivist epistemology teaches that humans are conceptual beings. We are aware of the world directly and immediately through sense-perception, but we do much of our thinking at the conceptual level, using abstractions, language, and logic. Our concepts and theories have meaning only insofar as they are grounded in reality, but one cannot see a theory or feel an idea, nor can one perceive, in a single glance, all the facts of reality that validate a theory or idea. The wider and more fundamental the abstraction, the harder it is to experience it as having the reality of the concrete things we can see and feel in perception.

 

The unique and vital function of art is to present, in concrete form, what is essentially an abstraction. We can use artistic techniques like pictorial representation or metaphor to show what an idea looks like; this is what a graph of economic growth does, for example. Art as such performs this function for the most fundamental abstractions: the elements of a worldview. And because a person’s worldview, his deepest values, are experienced most clearly in the emotional form of a sense of life (see FAQ “What is Philosophy?”), a work of art can touch the deepest places in us, feelings we often have trouble defining and making explicit.

 

The different forms of art do this by re-creating reality, selectively representing things, sounds, or events either directly to the senses (as do pictures, sculpture, theater and cinema, music, and dance), or through the vividness of directed imagination (as with literature). The artist does the selecting, stylizing the scene or the world and presenting it in a certain light, with some things emphasized and others taken away. Journalistic and historical narratives, audiovisual recordings of an event, and museum displays are, like artworks, representations, but they are representations that attempt, in so far as possible, to convey the actual facts of a matter. The artist’s function, by contrast, is specifically to interpret the world and present it as he re-envisions it, using particular concrete elements to capture a deeper, more universal truth.

 

An artwork must therefore be accessible to comprehension at the level of perception. It must be recognizably representative of something. A painting that presents a figure or scene is art. Paint splotches are not. A composition of recognizable tones is music. Random noise is not. A fictional narrative of sufficient length is a novel. A collection of sentences with no narrative structure is not. So it goes for every form of art: It must present something accessible to the senses, in the ways appropriate to connecting with those senses as forms of awareness.

 

Saying that something is not art does not mean it is not a pleasant decoration, nor does it mean it is worthless. It simply means that it cannot be used for the function of concretizing our deepest values and experiencing directly the equivalent of a sense of life. For instance, because architecture has significant structural and functional obligations (a house must have a roof, bathrooms, kitchen, and so on), Ayn Rand concluded that it was not a pure form of art. Yet anyone who has read The Fountainheadknows how passionately she cared about the artistic dimension of architecture and what worth she attached to it.

 

Part of what makes art “good” is the artist’s skill at capturing his worldview and essential concerns in his art. This has many aspects. It includes making an engaging and clear presentation, which requires drawing skill in the visual arts, for example, and talent with plot, character, and dialogue in drama and the novel. It also requires skill in organizing and integrating ideas. This is vital to choosing thematic elements of a work and for making it rich in symbolism and inner structure.

 

Some of these are skills that make for good decoration and design. In this sense, works of design, such as a fine Persian carpet, can be lovely and well-made, even though they are not art. Many conventional accounts of aesthetics confuse decoration with art because they center aesthetics on the question of “what is beauty?” Objectivism regards this as a secondary issue, and because one’s idea of beauty is inevitably informed and affected by one’s sense of values, it is an issue that, like art in general, depends for its explanation on the fact that man needs philosophical principles.

 

In addition to the artist’s skill, art can be judged in terms of its meaning. One may find a piece of work to be skillfully realized, yet be repulsed by what it says at the level of values and sense of life. This was Ayn Rand‘s reaction to Tolstoy’s novels. Similarly, one may be greatly pleased by an artist’s sense of life while not being entirely enamored of his skill in conveying it. This appears to have been Rand’s reaction to the detective novelist Mickey Spillane, for example.

 

Ayn Randenvisioned a school of art called “Romantic Realism.” Romantic realist artists would, like Rand, combine a commitment to presenting believable scenes set in something like the real world with the ideals of a new romanticism, one that shaped scenes, melodies, and stories to present the essentially heroic character of man. In her own novels, Rand developed a style of “slanted realism” that wrapped rich characters around plots centered on key principles and ideas. Thus the world of her novels is not merely a report of the world as it is, but as it “might and could be

 

©2012 The Atlas Society. Washington DC Web Design by Gravitate.

This article is the research result of Syed Imtiaz Bokhari