WorldSys: Austrian Home Study Course, Week 25

READINGS: “Education: Free and Compulsory” by Murray Rothbard

1 How does Rothbard describe a person’s education, starting from infancy?

As a process of maturing into the full stature of a human being, which means developing the powers of reason which are our uniquely human endowment. Especially in infancy and early childhood this happens ceaselessly, every waking hour.

Education is not simply time spent in a school.

2 In what sense is everyone “self-educated”?

All the ideas, values, judgments, and tastes a person acquires are formed through their own mental faculty. They must follow the logic, examine the evidence, perceive facts directly, and assimilate it all into a body knowledge with their own memory and their own reason.

They may have access to teachers and institutions, books, the internet, a scholarly friend network, but learning still happens between their ears and nowhere else. Hence they are ‘self-educated’.

3 What is the use of formal instruction?

To help a child develop specifically intellectual faculties. Social education probably isn’t necessary — a child will learn how to relate to others in the process of interacting with their friends and family. But geometry, history, grammar, and things like that are best learned in an institutional setting where the materials can be gathered and errors corrected by a teacher or peer.

4 In what limited sense is “equality among men” beneficial?

Everyone should have the opportunity to develop themselves to the fullest extent possible in the absence of violence. This does not mean everyone will end up in the same place, or ever close to it, for human beings are radically unequal in their character, intelligence, tastes, talents, and ambition. But an ‘equality before the law’ is the only sensible basis for a social order.

5 What is the problem with imposing uniform curricula for all students of a particular age?

Children differ enormously in their educational requirements, and imposing ‘uniform curricula’ on them belies this fact.

6 How does the State infringe on parental authority?

Even private schools and home schools are forced to conform to what the State considers appropriate educational standards. This infringes upon the right of parents to teach their children as they see fit.

7 Are State schools benign so long as private schools exist as alternatives?

The existence of a private-school alternative does nothing for the children in State schools, and at any rate all the private schools I’m aware of still have to conform to the State-mandate standards. All in all private schools don’t do much to ensure parental sovereignty or justice.

8 What was the role of Luther in European State education?

Luther was one of the driving forces in early efforts to establish compulsory public schools. Because of letters he wrote and arguments he made the first modern public schools were established in Germany in 1524, becoming the model for later such institutions. Luther went on to create the “Saxony School Plan”, which became a kind of blueprint for state schools throughout Protestant Germany and bore many of the hallmarks of their modern ancestors: compulsory attendance, vast records kept on pupils, fines against truancy, etc.

9 Which European State was the first to have compulsory education?

Gotha, in Germany, though Prussia was the first to have a national public education system (NOTE: there is great historical overlap between Prussia and Germany, so perhaps Gotha was in Prussia; I’m not sure, and the text isn’t specific)

10 Did Napoleon favor State control of Education?

He did, and worked to institute a State-wide public schooling system.

11 Why do totalitarian governments wish to control education?

It should be obvious: one could scarcely endeavor to contrive a mechanism of control more total than having a citizen delivered into one’s hands by law as a child and then having near-daily access to them until they reach adulthood.

In my experience the hardest sort of people to reach are not those who have thought deeply about communism, democracy, and capitalism before deciding against the market order; it’s those incredible products of public schooling which are completely, utterly incapable of even beginning to take the first step towards conceiving of a truth besides the one taught them in high school and reinforced on the news. It is passing unlikely that you could even get such a person to consider the possibility that, say, roads could be provisioned by the private sector or that the FDA is a net social and economic negative.

More often than not the words of my thorough, exhaustively-cited arguments have literally not even registered in their minds.

12 Was education always a compulsory affair in the American colonies?

Most of the American colonies embraced a model of private, parental education in the English tradition. The exception was New England; the Massachusetts Bay Colony adopted the compulsory Calvinist school model for the express purpose of breeding good Calvinists. With the passage of a 1642 law that colony made it permissible for the State to seize children whom it judged to not be receiving the education which, in its eyes, they ought to be receiving.

This is the same absolutist government which made church attendance mandatory and church membership a prerequisite for enfranchisement. That such a place furnished the template for future compulsory public schools in the other colonies should give one pause.

13 What was Thomas Jefferson’s (mixed) position on government schooling?

Jefferson believed in having free public schooling provided by the government for the poor but squarely rejected compulsion.

14 Which two groups were the major forces behind compulsory education in the U.S.?

A network of professional societies and advocacy groups coupled to a number of journals pushing compulsory public schooling. In point of fact both were powered by individuals like Calvin Stowe and Horace Mann who constituted a tightly knit group of educationists working towards placing responsibility for instructing children squarely in the hands of the State.

15 What was the role of Horace Mann?

He began as the editor of an educationist journal called “Common School” and went on to become secretary of the Massachusetts Board of Education, where his annual reports began to have more and more influence. He was a prominent figure among advocates for public schooling; though this group did not endorse compulsory schooling they went to great lengths to encourage public schools as the prime equalizing force of Republican society while deliberately disparaging private ones.

16 How could a free market provide effective education for poor children?

It’s important to bear in mind before grappling with this question that, as with all things, schooling on the market would be much cheaper than a public alternative. With that having been said, poor families could take out loans for their children’s educations, investors might back especially promising children in exchange for some percentage of future earnings, there would probably be scholarship programs in place, successful private schools might offer education to poor families at steeply-discounted or even waived rates, or there might be free schools offered in the same way that many hospitals offer free clinics.

WorldSys: Austrian Home Study Course, week 24

READINGS: Walter Block’s “Free Market Transportation: Denationalizing the Roads”.

1 What is the lethal menace that Block describes in the beginning of his article?

The nationalized roadway system.

2 Describe the record of government road management in terms of fatalities?

Abysmal. Block walks through some statistics: 46,700 killed on public roads annually, over half a million in a decade, 960 on each year on Thanksgiving, 2,077 children each year under the age of five, and the macabre record goes back to about 1925.

3 Why has the government escaped opprobrium in spite of this performance?

People blame the statistics on everything except government management. I think the wider problem is a failure of imagination. In all the years I’ve spent advocating the cause of liberty, and in all the times I’ve heard people inveigh against the possibility of private infrastructure, I don’t think I’ve ever met anyone who’d given the matter 100 consecutive seconds of thought.

It simply never occurs to most people to seriously think of non-public alternatives, and when pushed on the matter they confabulate a response on the spot.

4 Aren’t road accidents really the fault of bad drivers?

They certainly bear some responsibility, but if people are routinely murdered at a restaurant we blame both the criminal and the lax security of the establishment’s owners.

5 Why should we expect private owners of roads to act more responsibly than government officials?

Because there is a profit and loss system at play in the market which is absent in government. Though there are plenty of able and intelligent bureaucrats and plenty of incompetent and foolish business people, basic economics operates on the latter in a way in which it doesn’t on the former; namely, if you run your business poorly you go out of business.

So the McRoad company must pass the same tests as every other successful enterprise, giving the consumer what is desired better than the alternative. Governments, being almost by definition a monopoly, do not have to meet this standard.

6 What incentives for safety would exist in a private road system?

The same that exist for parking lots or apartment complexes. Having people die using your product is not only bad because you’re losing paying customers but also bad because of the tremendous damage done to your reputation.

7 Wouldn’t private roads involve thousands of toll booths?

No. This objection seems to assume that sections of road would be owned by different people, each of whom would charge for using their particular section of road. But more than likely there would be road companies, just as there are parking lot companies, which would own miles of roadways and charge at some market-optimal rate.

Even if hundreds of people did own roads piecemeal it surely wouldn’t make sense for them all to try and charge for their little bit, because the road would become unusable in short order. Some entrepreneur would see the opportunity to buy tolling rights from everyone and set up a more sensible, orderly toll system which pays out dividends.

But here in 2018 we needn’t worry about this so much. Electronic payment equipment, installed on all vehicles, would make even the problem of hundreds of toll booths less troublesome, automatically charging $.00001 every time we passed one. The same profit and less mechanisms would be at play here as they are elsewhere, driving prices down.

8 Don’t we need the government tool of “eminent domain” for an orderly road network?

No. It’s worth pointing out that even with eminent domain there are limits to where roads can be built, so it isn’t as though this is a panacea. But this objection seems to hinge on there being a necessity to build a totally straight road through some piece of property. This is almost never the case, and it will usually be possible to build around the homestead of a holdout.

The fact that at some price point it will be cheaper to simply blast a path through the nearby mountains puts an upper bound on how unreasonably high a property owner’s asking price can be. This is especially true when there are several plots of land which are suitable for road-building and the owners must compete with each other for the payout from the road company.

Suppose that someone does in fact own an absolutely essential plot of land and refuses to sell. No matter, build a tunnel underneath or a bridge over the parcel; property rights don’t extend to the stratosphere, or to the center of the Earth.

9 What is Block’s answer to the charge that a road owner could hold a family hostage in their home by blocking the exit?

This isn’t an issue with various analogous situations — landlords don’t blockade tenants’ doors and demand a fee to let them leave. Flea markets don’t rent out table space and then form a barrier around a seller’s wares.

Under a free market system ‘road access’ would be a provision within any property contract, and everyone would know that comes standard when purchasing land or a home.

10 Who would decide the rules of the road?

Whoever owned the road, most likely. Questions of this sort aren’t answerable with any degree of precision beforehand.

11 How would a private system deal with traffic snarls?

As with the previous question, it’s hard to say exactly what solutions would be evolved in advance. What we can say is that private companies have a strong incentive to develop rules which allow the smooth functioning of the system and will go bankrupt if they fail, whereas the public sector does not and will not.

Under the current regime vehicles routinely get stuck in intersections and hold up traffic. Perhaps on a private road the computer monitoring system would simply bill any such infraction to encourage obedience to the rules.

12 How would “green light time” be distributed?

Likely through a bidding/auction system in which roads pay for green light time in proportion to their traffic. If they refused to do so it wouldn’t take long before motorists began to patronize competitor roads. Today something like this could probably be handled by a computer system which optimized green light times behind the scenes, charging the various intersecting roads accordingly.

13 Could road owners compete with each other?

Sure. It is sometimes presumed that they can’t because the conditions of ’perfect competition’ do not and could not prevail in infrastructure. But this is hardly a problem, because those conditions — firms small enough to not be capable of moving the price around, homogeneous and indistinguishable products, perfect information — do not and could not prevail anywhere.

14 What is “double decking”?

Building one road above another road. In various situations such a technique could prove useful.

15 Is it Block’s responsibility to completely predict the features of a private market in roads?

No, nor can it be done. One of the central claims of Libertarians and other free-market sorts is that it is not possible for an individual or a group of individuals to form plans, rules, and schedules which outperform the market. It is inconceivable, therefore, that someone could predict the exact contours of an industry which doesn’t even exist yet.

WorldSys: Austrian Home Study Course, Week 23

The World Systems Project is going to begin with a thorough examination of Austrian economics, starting with Robert P. Murphy’s outstanding “Austrian Economics Home Study Course”. The plan is to blog my answers to the weekly questions, with posts and book reviews tossed in as I go along. 

It should go without saying that the following contains ‘spoilers’, and if you intend on doing the home study course on your own you might not want to read further.

As with week 7 I found these questions especially difficult and beg more than the usual amount of pardon for any inaccuracies and errors. Perhaps some day I’ll return with a fuller understanding and amend what’s written here.

READINGS: “On Certainty and Uncertainty, Or: How Rational Can Our Expectations Be?”, Hans-Herman Hoppe.

1 Would people act if they had perfect certainty?

Probably not, for what would be the point?

2 Why is the notion of perfect uncertainty a contradiction?

Because we must be certain of total uncertainty, which can’t be the case.

3 Why is our knowledge of the physical world ultimately uncertain?

While we can say certain highly abstract things are true — such as that there are objects with properties — learning any of the specifics requires experience, which must necessarily always be imperfect, open to amendment or abandonment.

4 What is the difference between class and case probability?

When an airplane crashes, a glass shatters, or an earthquake destroys a house we may be shocked by the specific case, but as a class of phenomena these events are governed by an often thoroughly-studied probability. So we cannot say “this airplane will crash today”, but we can say that taken as a class a given percentage of airplanes crash every year, and so taken as a case this particular vessel has a given percent chance of crashing.

5 In developing these concepts, Ludwig Von Mises relied upon which mathematician?

Frank Knight and his brother, Richard Von Mises.

6 Under which conditions is insurance feasible?

It must be that the insurer is dealing with a class of physical phenomena which are predictable in the aggregate and over the long term, and it must be the case that there are enough insured to allow the insurer to make money — for there will surely be people who file claims long before their premiums have amounted to the payout for their policy, and this must be offset by people who pay premiums in excess of the payout for their policy.

7 Describe some practical difficulties in implementing this theory of insurance.

There are situations in which disasters occur which are so enormous insurance claims pour in all at once and threaten to bankrupt the insurance company.

We can also turn to the controversy surrounding ‘pre-existing conditions’ to see more examples of the thorny quality of insurance markets. People who suspect they might have some genetic malady which is detectable through testing are likely to be strongly dis-incentivized from taking the test for fear that it will cause their insurance premiums to go up, even though this is information almost anyone would want to have.

8 Can human actions be considered insurable risks?

No, only physical events like tornados or water heater explosions can be subjected to the kind of statistical analysis that makes insurance feasible.

Although I suppose it’s possible to insure against human actions like ‘burglary’, so I’m not sure what to make of this claim.

9 How does rational expectations theory differ from orthodox general equilibrium theory?

The operative model of a human being is that of a machine with perfect knowledge of the probabilities of future classes of action and which periodically breaks down by committing random errors.

10 List three flaws with the rational expectations approach?

It cannot account for the fact that humans learn and thus that their behavior changes; it assumes we can list out all possible actions we might take in the same way that we can list out all possible poker hands, then generating a relative frequency table; in order for the approach to make sense we must assume everyone has the same knowledge, because otherwise someone’s predictions could be better than another’s (but if this were true there’d be no need to point it out because everyone would already know).

11 Why can’t the positivist method be applied to predicting one’s own future actions?

On the Austrian view positivism is shot through with logical contradictions, so of course it wouldn’t be useful in predicting one’s own future actions.

12 Why does Hoppe compare Lachmann to the German historicists?

Hoppe claims that Lachmann is making a similar kind of argument with similar sorts of flaws. In essence Lachmann is saying that because human beings learn from their experience there is no way for us to make sensible statements about the future, because every episode — every bank failure, every episode of hyperinflation, every bad investment — teaches us something such that we don’t behave the same way afterwards.

13 Why are the propositions of praxeology counterexamples to Lachmann’s views?

Hoppe responds with a litany of praxeological propositions which refute this view. Because humans learn can we really not say that voluntary transactions are beneficial for all parties involved, that an overnight doubling of the money supply would lead to spectacular decreases in purchasing power, or that a minimum wage of $1,000 per hour without a concomitant increase in the money supply would engender massive unemployment?

14 Do a priori propositions provide us knowledge of the “real” world?

Sure. If we take a priorism seriously and arrive at a deductively valid claim about money (see the examples in the previous question) then, because every economy on Earth uses some form of currency we have come to understand something about the “real” world.

15 What is Mises’s approach to the singular events of human history?

To treat them as subject to case (not class) probabilities for which we understand some of the factors involved. Each event, being singular, can usefully be distinguished from similar events

Is Mathematics a Young (Wo)man’s Game?

I began giving the titular question a great deal of thought when, 8 years ago, I took my first stab at learning new mathematical concepts since high school. I was 22, and because I had become interested in issues lying at the foundation of artificial intelligence I decided to pick up a textbook on discrete math.

Along with continuous mathematics, discrete math forms one of the two great branches in the Tree of Mathematics. The canonical example of continuous mathematics is calculus, used to model and predict the behavior of continuous systems like fluids or rockets with variable speeds. Discrete math includes subfields like set theory, logic, and combinatorics which are applied to discrete domains like cryptography and probability theory.

You’re likely familiar with the rule that anyone destined to do important work in mathematics has probably done it by their mid twenties. Groundbreaking work does occasionally come from people who have to dye the grey out of their hair, but it’s uncommon.

This used to trouble me. I was only just beginning to discover these topics at an age when most serious mathematicians are at the height of their powers. Would there be any point? Would I prove able to probe the Truth beneath the Greek symbols and braids of deduction, or would this be a Goddess that eluded me?

To properly answer this question we must draw distinctions between 1) being smart enough to invent a field; 2) being smart enough to work in a field; 3) being smart enough to successfully study a field.

These are three distinct levels with three distinct cognitive thresholds.

There’s a big difference between being insightful and prescient enough to invent quantum field theory, to do professional research in quantum field theory, and to grok a book written about quantum field theory.

Or consider an analogous question: is music a young (wo)man’s game? If you’re starting to learn the guitar at 35 you’re probably not going to become the next Eric Clapton. Does that mean it isn’t worth pursuing? Of course not. Does that mean you can’t achieve a significant degree of skill? Not if you’re willing to put in the time.

As I’m approaching 30, there may not be any chance left for me to contribute in a significant way to mathematics or to work in mathematics professionally. I wouldn’t say it’s completely out of the question, but I’d have to end up being more talented than I currently estimate myself to be.

Profiting from the study of mathematics, however, is something anyone can begin to do at any point in their life — I recently learned that Ayn Rand was taking algebra lessons in her 70’s!

And it’s worth saying that you shouldn’t be discouraged by bad experiences in high school math classes. While I do sympathize with the obstacles facing the legions of underpaid and overworked teachers staffing the public school system (I’m an ex-teacher myself — the struggle is real), it’s hard not to feel just a little bitter at how badly they routinely mangle the teaching of mathematics.

I made my first attempt to learn calculus in sixth grade, before I’d entered high school, and picked up Stephen Hawking’s A Brief History of Time at around the age I hit puberty. I took the most advanced physics and math classes I could, several years earlier than usual, to prepare myself for what I was sure would be a career in theoretical physics.

In my case, the same man taught both subjects; the cocktail of boredom and obnubilation he served in lieu of teaching managed to simultaneously strangle every bit of enthusiasm I brought with me and convince me that I just wasn’t cut out for Actual Science. Luck and stubbornness is all that saved me — luck, in that I ended up befriending someone willing to expertly teach me the rudiments of discrete mathematics in his spare time, for free; stubbornness, because I resolved not to let impressions formed by experiences in a school in rural Arkansas drive my decisions on what to learn.

Don’t let your years or your past experiences stop you from studying mathematics. It is the most beautiful, most powerful set of abstractions ever to have been invented. I know of almost nothing that better imparts a sense of the awesome capacity of the human mind and the breathtaking scope of man’s creative vision. It undergirds huge swathes of philosophy, science, and technology, codifying and generalizing them into the tools that will someday dismantle stars, cure cancer, upload minds, and fire the light of the human spirit into the void of space.

Even if you make but modest progress, you’ll be better for it.

I was.

WorldSys: Austrian Home Study Course, Week 22

READINGS: “The Environmentalist Threat” in Lew Rockwell’s The Economics of Liberty

1 How is the environmentalist movement similar to Marxism?

It’s a utopian, absolutist constellation of ideas nestled firmly within Leftism and perfectly comfortable with outrageous violations of basic civil liberties.

2 Whom does Rockwell consider the father of environmentalism?

Jean-Jacques Rosseau.

3 Aren’t extreme environmentalists just a harmless fringe group?

If they bought some territory in Montana and didn’t bother anyone, they might be, but as it stands they aim to use the coercive might of the State to force the rest of us to behave in the manner they deem fit.

This is far from harmless.

4 How is environmentalism a type of religion?

Quite a lot of environmentalism is explicitly religious, conceiving of the biosphere as a kind of integrated system which is Holy in an important way and worth preserving even at significant human cost.

5 What are the alleged sins of Christianity, according to some ecologists?

It provided the foundations for capitalism and industrialism, which you may recall as being two of the most profound forces for material advancement in the history of Earth.

6 What is the acceptable standard of living for humans, according to some ecologists?

Only barely above subsistence.

7 What was Albert J. Nock’s view of Nature?

As a dangerous adversary to be tamed. Most of nature is either inhospitable or actively dangerous to human beings, which might account for why humans have been changing their environments for something like a quarter of a million years.

8 Describe the dangerous legal trends illustrated in the Exxon case.

It suggests a return to the feudal policy of holding the ‘master’ (in this case, Exxon Mobile) responsible for the actions of subordinates (in this case, an employee that violated company policy by getting drunk on the job).

This will put a significant legal onus on companies and make it far easier to go after them in court, even when they have taken all the safety precautions required under any sensible set of rules.

9 Is wetlands policy moderate at least under Republican administrations?

No. Rockwell describes a case in which a Hungarian immigrant bought an old junkyard, improved it by cleaning away the refuse and putting down a layer of topsoil, and was slapped with steep legal penalties as a result because his property was technically classified as ‘wetlands’ under the clean water act.

10 Describe some of the environmentalist warnings that are based on dubious scientific claims.

Environmentalists would have us believe we’re a few years away from living amidst garbage piles towering over us as far as the eye can see. Needless to say, this has never proven true in the many decades since they’ve begun issuing this dire proclamation.

John Holdren, a physicist, claimed in the mid ’80’s that by 2020 climate-change-driven famines would kill as many as a billion people. We’re part of the way through 2018 and nothing remotely like such a calamity appears forthcoming.

11 Which U.S. president does Rockwell associate with the rise of the modern environmentalist movement?

Theodore Roosevelt.

12 How does environmentalism promote world government?

The terrestrial environment is not neatly delineated at the same places national boundaries are; there is simply no way to take seriously the policy proposals of even moderate environmentalists without realizing that their implementation would require something like a powerful world government enforcing supranational standards.

13 How would a free market address environmentalist concerns?

Any number of ways. Steven Cheung’s pioneering work on externalities demonstrated that orchard owners and beekeepers had done rather a nifty job of arranging mutually-beneficial pollination services between themselves, and there’s no reason to think similar such policies couldn’t obtain in the economy more generally.

One of the best ways to protect the environment is with a robust private-property regime. In the 19th century American courts frequently ruled against plaintiffs in cases wherein damages were sought for air or water pollution because it was believed that a healthy manufacturing sector was ‘in the public interest’. Had this precedent not been established it might be easier to sue factory owners when they foul the environment in ways deleterious to the public’s health, and such enterprises might be less inclined to due so.

Better yet, sell the rivers and make them private property. It’s always easier to pollute a thing that no one legally owns.

The Structure of Science as a Gnostic Manifold

Part I

While reading Paul Rosenbloom’s excellent “On Computing” I feel as though I’ve glimpsed the outlines of something big. 

In the book Rosenbloom advances the argument that computing should be counted among the ‘Great Domains’ of science, instead of being considered a mere branch of engineering. During the course of advancing this thesis he introduces two remarkable ideas: (1) a ‘relational architecture’, describing how the Great Domains relate to one another; (2) an accompanying ‘metascience expression language’ which defines the overlap of the Physical (P), Social (S), Life (L), and Computing (C) Domains in terms of two fundamental processes: implementation and interaction. 

Though I’m only a few chapters in I’ve already seen that his methods for generating monadic, dyadic, and polyadic tuples of different combinations of the Great Domains could be used to create a near-comprehensive list of every area of research possible within the boundaries limned by our current scientific understanding.

Let me explain: ‘pure computing’ consists of any overlap of computing with itself (C + C), and subsumes such areas as computational complexity and algorithmic efficiency analysis. ‘Mixed computing’ would be the combination of computing with any of the other great domains: computer hardware would be Computing (C) + Physical (P), a simulation of predator/prey population dynamics would be Life (L) + Computing (C), computer security and AI would be Social (S) + Computing (C), genetics/physics simulations would be Physical (P) + Computing (C), brain-computer interaction would be Computing (C) + Social (S) + Physical (P), and so forth. 

A simple program could make a list of every possible permutation of C + P + S + L (including standalones like ‘P’ and pure overlaps like ‘P + P’), and you might be able to spot gaps in the current edifice of scientific research — there might be certain kinds of C + L + S research that isn’t being done anywhere, for example. With this in hand you could begin to map all the research being done in, say, Boulder CO onto the resulting structure, with extensive notes on which labs are doing what research and for whom.

(Bear in mind that I still haven’t gotten to the parts where he really elucidates his metascience expression language or the relational architecture, so these ideas are very preliminary.) 

Part II

This alone would prove enlightening, but its effectiveness would be compounded enormously by the addition of an ‘autodidact’s toolkit’ of primitive concepts which, when learned together, open up the greatest possible regions of the gnostic manifold [1]. In a post generative science guy-who-knows-literally-everything Eric Raymond briefly explores this idea. In a nutshell, the concepts from some sciences can be used in many more endeavors than the concepts from other sciences. As beautiful as it is, concepts from astronomy are mostly only useful in astronomy. Concepts from evolutionary biology, however, have found use in cognitive psychology, economics, memetics, and tons of other places. So maybe a person interested in science could begin their study by mastering a handful of concepts from across the sciences which are generative enough to make almost any other concept more understandable. 

Eric and I have been in talks for several years now to design and build a course for exactly this purpose. Someday when my funds and his schedule are in sync we are going to get this done. 

This relates to the ideas from section I because a mastery of the autodidact’s toolkit would allow one to dip into an arbitrary point in the gnostic manifold and feel confident that they could learn the material relatively quickly. Imagine being able to look at research being done at a major university and then get up to speed in a month because it’s just variations on concepts 3 – 6 from the toolkit [2].

But I think we can go even further. Based on discussions of hyperuniformity and the unusual places it appears I began to wonder whether or not there might be special branches of mathematics from systems theory, chaos theory, and possibly information theory which might not act as bridges between some of the concepts from the autodidact’s toolkit. The linked article discusses how a certain kind of pattern crops up in places as far away as the distribution of cones in avian retina and the formations of certain kinds of unusual crystalline solids.

My question is: if you had a map of the gnostic manifold, you’d mastered the autodidact’s toolkit, and you understood the relevant math, might you not have been able to hop into a research gap, spend a month or two looking for hyperuniformity, learn about quasicrystals in 1/3rd of the time anyone else would’ve required, and then glimpsed the pattern ahead of the competition? If so you could’ve had a startup in place to exploit the new knowledge by the time the first research papers were coming out. 

Part III

Organizing, representing, gathering, and communicating this wealth of knowledge would be much easier with an ‘acquisition infrastructure’. Here I’m imagining a still-theoretical integration of the best mnemonics systems, a supercharged version of Anki, whatever the best knowledge map software is, matlab/mathematica (or open-source alternatives like octave), all running on a supercomputer with insane amounts of both memory and storage.

Furthermore, I want to develop the concept of a ‘drexler audit’, the baby version of which is advanced by Eric Drexler in how to understand everything. The basic idea there is rather than try to understand the details of a given field you instead use a series of object- and meta-level questions to get a firm grasp on what the goals of the field are, what obstacles stand in the way of those goals, and what gaps remain in the knowledge required to move forward. 

This absolutely does not count as expert-level knowledge but it does give you the kind of overview which can prove useful in future exploration and investment.

With a map of the gnostic manifold you could choose some fields on which to perform a drexler audit and others to explore deeply with the combination of systems math and the autodidact toolkit. With a breakdown of the who/what/where/why of the research community in a given region you’d be in a position to bring the right minds together to solve whatever tractable problems may exist to give a field a jumpstart. And if you understood the economics of scientific research and the basics of investing the resulting machinery might, with a bit of luck, start coughing up wads of money while doing enormous amounts of good. 

(Of course it could also crash and burn, but so could SpaceX — nothing great is accomplished without a healthy dose of risk)

Part IV

I’ve said all of the above because it points to a tremendous opportunity: an amalgamation of Y-Combinator, Berkshire Hathaway, TED, and Slate Star Codex. If it works out the way I think it might, whoever manages the beast could make Elon Musk look like a lazy, sharecropping half-wit. 

The STEMpunk Project helped lay the foundation for the research required. If I can make the necessary contacts and get the funds together, I’d like to flesh this out in the next five years.

***

[1] See this related idea.

[2] Of course I’m likely underplaying the difficulty here. Brian Ziman, perhaps the most technically accomplished person I know, has pushed back on my optimism at this point. My view is that even if it proves orders of magnitude more difficult to construct I think the Gnostic Manifold is a framework worth fleshing out.

WorldSys: Austrian Home Study Course, week 21

READINGS: Chapter 9 of Robert Higgs’s Against Leviathan, ‘Private Law’ chapter of Bob Murphy’s Chaos Theory

1 Is it reasonable to require that a medical product be completely safe?

No, all any certifying agency can hope to do is ensure that medical products are as safe as possible and that the manufacturer is not making bold, erroneous claims about its efficacy.

2 Describe the history of the FDA.

The FDA was established by the Food, Drug, and Cosmetic act of 1938 for the purpose of certifying that food and drugs weren’t dangerous, a mandate which was extended in 1962 to include requirements for proving a drug’s efficacy. In 1976 the agency gained regulatory powers over medical devices in addition to drugs.

3 What are some of the typical activities of the FDA

They approve or deny the performance of clinical trials for new drugs and devices, regulate product information, monitor manufacturing practices, and enforce requirements that companies monitor and report on products after their introduction to the marketplace.

4 Describe the incentives of the FDA when it comes to approving a new drug.

Suppose a new drug is either safe and effective (SE) or isn’t (NSE) and that an FDA reviewer can either approve (A) a drug or not (NA). The only two scenarios in which a problem will arise is NSE/A, in which an unsafe drug is sent to market, or SE/NA, in which a safe drug is restricted from the market.

As far as incentives go the reviewer is much more likely to be nailed to the wall for NSE/A than for SE/NA, because in the former case there will actually be a drug on the market which people can recognize and point to. In the latter case the drug simply never appeared, and it’s much less likely that someone will pore over FDA data and notice that a good product failed review and the public was therefore deprived of its use.

The official, therefore, is better off being very, very cautious about handing out approvals. Rather than using common sense and his best judgement he will instead refuse to approve a product unless there is damn-near no chance at all he can later be blamed for its failure.

5 How does Higgs evaluate the success of the FDA in providing safety?

Very poorly. While no one is sure how many lives have been lost because the FDA held up development of life-saving drugs there is reason to believe it’s a solid order of magnitude greater than the number of lives saved by preventing dangerous drugs entering the market.

An unsafe drug would almost certainly be pulled from the market as soon as it became widely known that it was unsafe. But no one ever knows about the absence of a drug held up in the FDA’s Byzantine regulatory proceedings. Every year that the safe drug is not allowed to come to market the death toll rises and goes on rising.

And this doesn’t account for the fact that human beings are wildly divergent in their appetite for risk. Many people would be fine taking an experimental drug with little or no knowledge of its likely side effects, while others will be reticent until a comprehensive decade-long study on the matter has been published. Every bit of this heterogeneity is simply ground under by the FDA’s blanket protocols.

6 Why does Higgs say that “more than health is at stake” on this issue?

Because the existence of the FDA and the scope its breathtaking powers is tantamount to declaring American consumers to be children not capable of weighing risks and making their own decisions. The moral arrogance of this stance can scarcely be exaggerated.

7 How does name brand recognition allow for safer products?

There will be serious consequences to a company’s reputation if it allows one of its products to kill people. Even if it winds up somehow not being the company’s fault it might never again recover its standing among consumers.

8 Describe the function of intermediaries in providing consumer protection.

Over and above the FDA there are now a number of entities intervening betwixt consumer and drug company, including “…prescribing doctors, health-maintenance organizations, and hospital formularies…” which add extra layers of protection to the consumer.

9 In the present system, how do unions and government licensing restrict service and raise prices? In a free society, how might trade associations offer consumer protection?

Unions are notorious for subdividing tasks in ridiculous spread-work schemes, such as those cases in which plumbers aren’t allowed to remove the tiles around a toilet because that is the province of tile layers. It probably doesn’t take much to see how these redundancies and inefficiencies raise prices. Licensing requirements, while perhaps sensible at first glance, wind up involving vastly more schooling and training than is often necessary.

10 Describe the role of insurance in medical malpractice in the current system.

Insurance in the current system is badly distorted by decades of government meddling and mandating. Insurance companies have to pay for things like routine check ups which would otherwise be more sensibly paid for out-of-pocket after services are rendered, and it is often difficult to get an accurate itemized list breaking down the costs. This means both that people are more careless in their consumption of medical services (because they aren’t paying for them) and also unable to shop around for the best deal (because the prices aren’t easily attainable).

Contrast this with auto body work. If you want an oil change, you walk into an establishment and ask for an oil change, which will usually run something like $40. If you ask the price, you’ll be told, and if it isn’t to your satisfaction you can go elsewhere. This puts a cap on how expensive an oil change can be.

If auto repair were treated like medical care then oil changes would be routed through insurance companies and cost $400 dollars because there’s neither incentive nor mechanism for cost control.

11 Describe the possible role of insurance in air travel in a hypothetical libertarian society.

Passengers, wanting some hedge against the possibility of their plane crashing or malfunctioning in some way, will require their airlines to sign a contract to the effect that if there is a problem the airline will pay some pre-determined amount of money to the claimant.

12 Wouldn’t private safety inspectors be susceptible to bribes by big corporations.

That’s not inconceivable, but the damage to reputation that would ensue should anyone get wise to these maneuvers should suffice to dis-incentivize bribery. It wouldn’t take long for contractors to realize that the inspectors of x agency are being bribed by Big Cement before they’d refuse to use inspectors of that agency.

Worse: bribes are a constant fact of life in the prevailing public-sector system, so this can hardly count as points against the hypothetical system being described.

13 If the entire world became a bastion of private property and free enterprise, would consumer protection standards necessarily be uniform in every area?

No, they would likely vary by region.

14 In the interview, Murphy erroneously referred to “Underwriters Association” and their symbol, “UA”. Which certification organization did he actually have in mind?

Underwriter’s Laboratory.

WorldSys: Austrian Home Study Course, Week 20

READINGS: Chapter 4 of Gene Callahan’s Economics for Real People; Chapter 5 of Holcombe et al.’s Fifteen Great Austrians (a chapter on French economist Frederic Bastiat)

1 What is the law of association?

It was the term given by Mises to the broader application of the ‘law of comparative advantage’ to all human cooperation, on which more below.

2 What is the law of comparative advantage?

David Ricardo’s famous ‘law of comparative advantage’ states that it is still in the best interest of two people to divide labor even if one of them proves better at everything than the other. The superior person should specialize in whatever they are most best at and allow the inferior person to specialize in something else, then trade their effort.

3 If U.S. workers are more productive than Mexican workers in every good and service, will the U.S. be hurt by trade with Mexico?

No, for the reasons detailed above. Even if Americans proved better at manufacturing everything they still can’t actually manufacture everything, so it is in everyone’s best interest to let Mexico handle some of the manufacturing.

4 Suppose U.S. workers can make either 2 TVs or 10 radios per hour, while Mexican workers can make either 1 TV or 7 radios per hour. Which nation has the comparative advantage in radio production?

Mexico. Their comparative advantage lies in whatever they are comparatively best at producing, not absolutely best at producing. In this example U.S. workers are better at making both TVs and radios, but they are comparatively better at making 2 TVs — that is, they are most better at making TVs.

So let the Mexicans make radios and trade with them!

5 Continuing with this example, if we only consider unfettered trade between U.S. and Mexico, describe the likely flow of goods (I.e, describe the pattern of exports and imports for each country with respect to these two goods.)

I imagine that firms in the U.S. would make vastly more TVs than they needed and send them to Mexico in exchange for Mexican-made radios.

6 Should the U.S. government lower tariff barriers only if other governments agree to do likewise?

No, the advantages accrue to freer economies regardless.

7 What was the subject of Bastiat’s The Law?

The proper and necessary role of government in upholding worthy laws. The last adjective is imperative — senseless or outrageous laws cannot be upheld indefinitely without bad consequences. The state should therefore restrict itself to the essential function of defining and enforcing only those laws that prevent force and fraud.

8 What was the subject of Bastiat’s Economic Sophisms?

This work has been described as “…the most complete case for free trade ever constructed up to that time…”, wherein Bastiat applied concepts like the law of comparative advantage to argue forcefully for trade between nations. Drawing a historical connection between barriers to this practice and war Bastiat admonished his readers that one of the best ways to stop armed conflict is to ensure trade is ongoing.

9 What was the subject of Bastiat’s Economic Harmonies?

It was an answer to the claims made by Marx in Das Kapital to the effect that the profits of the capitalists necessarily come at the expense of the workers.

10 Describe Bastiat’s famous essay, “The Candlemaker’s Petition.”

Bastiat ridicules state-mandated protection of domestic industries by describing a fictional account of a Candlemaker’s guild petitioning to have all cracks and windows sealed off to prevent the interference of a ruinous competitor: the sun.

11 Why did Bastiat (satirically) recommend that French ships dump their goods after leaving port?

It would guarantee a ‘favorable balance of trade’ for France because it would prevent the vessel from selling its goods at a profit, buying other goods for the return trip, and then importing them. By sinking the vessel immediately after its left it has frozen the whole economic picture at a rosy frame containing only exports.

WorldSys: Austrian Home Study Course, Week 19

READINGS: Sections from Murray Rothbard’s What Has Government Done to Our Money, Henry Hazlitt’s Economics in One Lesson, and Lew Rockwell’s The Economics of Liberty.

1 What are the functions of a bank?

In Rothbard’s vision banks act as warehouses storing big piles of gold on behalf of depositors. The banks might issue gold-substitute certificates so that large transactions don’t require physically moving gold around, but otherwise they would do little in the way of investing or speculating (except, one assumes, in those cases when the bank makes clear upfront that they intend to do so and gets advance consent from depositors)

2 How does the existence of banks encourage saving and investment?

With banks around you have a safe place to store money long term. If you have to keep piles of gold in your house or buried in your yard, you’ll be less incentivized to accrue large amounts of it because it’s a hassle to guard and organize and also takes up a lot of space. Not so with banks.

By analogy, we can say that banks encourage saving and investment in the way that gyms encourage exercise. There’s nothing stopping people from doing push-ups or even building an entire workout facility in their home basement, but that places hurdles in your way which don’t appear if you just go somewhere else to workout.

3 What is fractional reserve banking?

Fractional reserve banking occurs when banks only retain a small fraction of total deposits in reserve. So if bank A has $1,000,000 in deposits and keeps all $1,000,000 in its vault, it’s just a money warehouse, but if bank B has $1,000,000 in deposits and loans out all but $10,000 of it, it is engage in fractional reserve banking.

The latter approach has all sorts of potential dangers, most obviously being the possibility of many depositors asking for their money simultaneously and precipitating a ‘bank run’.

4 What is central banking?

A system in which an often nominally private bank will be closely intertwined with the government and enjoy state-backed monopoly on issuing currency. In the United States the system of central banking began with the Federal Reserve Act of 1917, which established our central bank and set up various provisions. Among these, for example, is the fact that all banks must keep a fraction of their reserves in deposit at the Federal Reserve — they can’t just keep gold reserves in their own vaults.

Central (and sometimes even private) banks are afforded the privilege of suspending specie payments; that is, they can refuse to redeem bank notes when their depositors come demanding their deposits back. This is a big part of why there were economic crises even prior to the instantiation of the Federal Reserve.

5 Is government oversight necessary to ensure sound banking?

If anything, government involvement in the banking sector just introduces more problems and distortions in the incentive structure. In a truly free banking system each bank would be constrained by a handful of factors: the narrowness of its own clientele, the narrowness of the clientele of the whole banking industry, and the overall confidence of the clients in their banks.

So if a single bank begins drastic inflation it will lose the supports of its patrons, who will then move on to another bank. As with any other business banks would be compelled to provide the product and service most demanded by the public.

Now let’s examine how government oversight has changed this picture. By gradually pulling society away from using gold and silver and toward using paper money the government has made inflation possible at a scale inconceivable before; by allowing for the suspension of specie payments the U.S. government made it possible for a nominally private banking sector to precipitate numerous economic crises throughout the 20th century. Of course the establishment of the Federal Reserve in 1913 was meant to head off these swings, and it has accomplished nothing but to profoundly exacerbate them.

All in all it looks to me as though banking, like most things, should be left to the private sector.

6 Why is the government interested in controlling the banking system?

Such control affords the government a fair bit of power in the form of being able to manipulate both the money supply and the over all level of inflation in the economy. And If a government has enough control over the central banking system it can go off the gold standard, effectively removing the last check on its power.

7 In what sense can banks “create money” by making loans?

They can simply write checks for assets against their reserves. If there isn’t a gold standard this is relatively straightforward — a central bank can buy a $1000 asset by writing a cheque for $1000. Obviously if this is taken too far too fast then the resulting inflation could cause the economy to spiral into depression, but if used judiciously then why shouldn’t a bank simply declare itself to have more of the baseless green pieces of paper floating around?

8 Wouldn’t banks lose money if they held 100 percent reserves?

No, they would charge fees for handling and storing money like any other warehousing operation. It’s conceivable that such banks in the free market might work out some sort of investment vehicle to be funded with depositor money with the depositor’s consent, in which case you’d have <100% reserves without the nightmare of ultra-leveraged fractional-reserve banks.

9 Don’t high interest rates slow economic growth?

In some ways and in some circumstances. The Austrian view of interest rates is that they are a kind of price, an exchange rate between current and future dollars. This price might be prohibitively high and thereby discourage investment in a manner similar to the way in which high startup and overhead costs might discourage someone from opening a capital-intensive business on credit. But the point isn’t simply economic growth at all costs, it’s sound, sensible, sustainable growth which steadily enlarges the pie for everyone.

That having been said it’s hard to know whether or not a high interest rate set by the free market would actually slow economic growth because other things like regulatory burden and regime uncertainty would be less of a problem in the absence of state meddling.

10 Should the government give (or guarantee) low-interest loans to farmers and other important groups?

Look at it this way: almost by definition the government only lends to those whom individuals that had to risk their own funds didn’t think were safe bets. Armed with this insight alone we can probably conclude that the government shouldn’t be providing loans to such people with taxpayer money.

But we can expand this analysis and ponder the consequences of taking from one group of people to loan to another; just as we have to avoid the broken window fallacy, we must avoid the isomorphic ‘awesome government loans to poor farmers whom other people considered an unsafe bet’ fallacy (for which we really need a better title).

When taxpayer funds are diverted to beet farmers to buy tractors they are not loaned to another group, used on public works projects, or (preferably) returned to private individuals with a little note that says ‘sorry I robbed you.’ While we may never see the gap created by these non-ventures, it still exists, and we cannot ignore it for the sake of focusing on the spike in capital-goods ownership in the beet industry.

We needn’t stop at funds, though: the number of tractors is finite, and if the government is taking finite money and loaning it to farmers to buy one of the finite number of tractors no one else can buy that tractor. And government lenders needn’t pass the same rigorous tests as private lenders. A successful private lender must repeatedly exercise his judgement and risk his own funds with each transaction; a civil servant does not.

The distortions keep piling up.

11 Does saving cause business depressions?

No, it is only by saving that one can gain the funds required to invest, and only investments of this sort are what allow businesses to expand their stock of capital goods. It might conceivably be argued that if a large enough fraction of people simply buried their cash in their yards a depression might ensue. But the burden of proof is on them to demonstrate such conditions exist, because as far as I know no one ever saves money in this fashion.

As Hazlitt points out ‘active saving’ — putting your money in a bank, or investing it — is really just another, longer-term form of spending.

12 How does saving lead to capital accumulation?

People saving money and loaning it to businesses so that the businesses can buy capital goods.

WorldSys: Austrian Home Study Course, Week 18

READINGS: Sections two and three of Murray Rothbard’s What Has Government Done to Our Money?, Chapters five and nine of Gene Callahan’s Economics for Real People.

1 What are the disadvantages of barter?

The two biggest are ‘indivisibility’ and ‘lack of coincidence of wants’. If my most valuable possession is a plow and I want to exchange it for several different things I can’t break it into pieces to facilitate the exchanges. I can’t give one handle to a farmer for some eggs, the blade to a tailor for a shirt. The plow is only value in whole, and either I find someone who wants to trade one plow for the five or six things I want, or I go without.

Which leads to the next problem. What if no one wants what I currently have? If I possess more eggs than I need and want to barter some away for oranges, shoes, etc., I have to find someone who has those things and wants eggs. If no such person exists, I am out of luck.

2 What is the definition of money?

A medium of exchange chosen for its marketability. In a direct-exchange economy people will eventually find something which is valuable not just for its actual use but because most everyone will accept it in exchange.

3 Is it possible that a wise king invented money?

No, money as such can only develop out of the free market because the ‘price’ of money (i.e. the demand for some commodity as a medium of exchange) must grow out of people’s attempts to engage in ever-more-complex economic activity. It won’t work to simply have a king suddenly declare something money, unless it already had value as a medium of exchange on the open market.

4 What are some qualities that characterize a good money?

First, it gets rid of two big issues of indivisibility and lack of coincidence of wants discussed above. This allows for a far more complicated structure of specialization and production to emerge, which has wide-ranging benefits.

Perhaps greater still, the presence of objective, (relatively) stable, and widely-agreed-upon prices allows businesspeople to perform economic calculations, which enables all sorts of profitable speculation and entrepreneurship.

The coins themselves are durable, portable, fungible, etc.

5 Do money prices measure subjective value?

No, values are expressed in money prices, not measured by it.

6 Can increases in the supply of money make everyone richer?

Of course not. If we gave everyone on Earth $100, then consequently $100 would not go as far and everyone would be in about the same situation.

7 Can increases in the supply of money be completely neutral?

It’s conceivable — if everyone’s holdings increase by the exact same amount and no-one begins hoarding or panic-selling or anything similar.

8 What is the optimum quantity of money?

Whatever is determined by the typical market forces of supply and demand. There is no static ‘optimum’ that an economist can discover at his computer.

9 Why do people give up valuable goods and services for money?

Because everyone else values money as a medium of exchange, which means that money comes in handy no matter what you want to accomplish.

10 In a free society how would money be measured?

I take this question to mean, ‘how would we know how much money there is in a free society?’. Such a society would be on something like a gold standard, and its total volume of money would be equal to the sum of all its cash balances. That is: the amount of money can be learned by adding up the amount that everyone has available to them.

If I’m purchasing apples then we imagine subtracting $3 from my cash balances and adding it to the cash balances of someone else. This quantity would increase slowly because printing physical coins is a good deal more difficult than printing paper dollars.

11 What is counterfeiting?

Manufacturing something that looks enough like money to be mistaken for it.

12 What is inflation? Why is it harmful?

Inflation is an artificial increase in the supply of money, undertaken for example when a government prints money to stimulate demand and end a recession. It is harmful because it dilutes the purchasing power of each dollar.

13 Should government try to stabilize the price level?

No. It’s true that the purchasing power of money would change as demand for it increased or decreased, but this does not mean that governments should have a hand in stabilizing it. To begin with this sort of meddling reliably has unfavorable consequences, and in the system of fiat money under which we currently live we can see that ‘quantitative easing’ and ‘stimulus packages’, if anything, de-stabilize the money supply more than the free market alternatives.

Moreover the fall of prices is a natural consequence of productivity-boosting investments in capital goods. If the government doesn’t let those prices fall then the benefits of such investment cannot accrue to society at large.

14 Would an ideal money have a constant purchasing power?

No, on a free market the price of money would fluctuate freely in response to demand for it.

15 What is Gresham’s Law?

That ‘bad’ (i.e. artificially over-valued) money drives out ‘good’ (artificially under-value) money. Rothbard illustrates this principle with the following example:

Imagine a set of 1-ounce coins is minted and used for several years, resulting in a bit of wear and tear that means they are only .9 ounces now. Everyone recognizes this and trades them at .9 ounces until the government decrees that all coins trade at 1 ounce.

Seeing this state of affairs people realize that it makes sense to use the .9-ounce coins as full 1-ounce coins because they are essentially getting a .1-ounce bonus, and they simultaneously hoard the full coins to be used later.

The result is that the bad money has chased the good money out of circulation.