Yaron Brook on Capitalism, Question 4 - Ayn Rand Institute

[JV031991]

If a man can't see the bars and the chains that enslave him, if all his life everyone has told him he is free this is what freedom is, if everyone around him believes the same thing how would he know the difference? How would any of them know they are enslaved if physically they seem to be free? The first step in breaking free of the enslavement would be being able to see that you are enslaved.

[JV031991]

When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.

Can you trust the things that have been sold to you as the truth? Can you trust the person that gave you this information and can you trust who gave it to them. Think deep on it. Who controls how you see everything? Who controls what you learn and the environment you learn in. Your parents? You? Your pairs?

[JV031991]

@hapspir Send a wise men in a group full of fools and he will be the fool.

I can't not teach to the point where I am learning for you. It will only work if you are seeking knowledge or seeking to trade knowledge.

When a man is shore he is right no one can teach him other wise because he will not listen to reason. He has an answer for way you are wrong already. Anything you say will be filtered through what he thinks he understands. You must always question what you think you know.

[JV031991]

@hapspir Answer not a fool according to his folly, lest thou also be like unto him.

Answer a fool according to his folly, lest he be wise in his own conceit.

Understand I'm not call you a fool it's just a saying that goes real well with this and my other comment.

If you can't already see I can't explain it to you with out bringing myself down to your level of perception but explaining at that level of perception is impossible.

If I don't answer you you will see yourself as being right.

[JV031991]

THIS GUY DOES NOT KNOW WHAT HE IS TALKING ABOUT AT ALL. I WON'T EVEN BOTHER TO EXPLAIN WAY BECAUSE IT WILL BE LIKE TRYING TO TEACH A CHILD ALGEBRA THAT JUST LEARNED 2+2=4. HE'S EITHER AN ASS HOLE OR A FOOL. HE CAN'T BE THAT DUMB. DID HE REALLY SAY CREATE MORE WEALTH! THE HUMAN MIND HOLDS ALL THE POWER. MONEY IS NOTHING BUT PAPER. MONEY IS JUST A MEANS OF CONTROL SO THE PLAN IS TO KEEP YOU IN NEED OF IT. I DON'T WANT TO GET INTO IT. IT WILL TAKE WAY TO MUCH EXPLAINING OF THE MOST SIMPLEST THINGS

[hapspir]

@JV031991 Wealth is the stuff that we buy with the money, not the money itself. A plan to keep me in need of money? Are you suggesting that production and trade are not needed to satisfy our wants and needs? How would you do it otherwise? What is YOUR plan?

[696GaySatan]

... "the more trees you consume the more trees there will be"

Except that many trees take hundreds of years to mature and there is no longterm planning because of shortsighted people like him?

[hapspir]

@696GaySatan Of course there is long term planning of forests. That is why there is no shortage. You can find tons of wood products all over the U.S. You can also find numerous forest hiking trails and parks all over the place. But if the idea of turning trees into paper still bothers you, then I suggest you work on getting industrial hemp legalized. Hemp paper is highly economical and would replace wood paper overnight. Then we would also have cheaper baseball bats.

[bearcolombia]

If Yaron asserts resource abundance, why is there a price for resources in the first place. It's not like I'm going to spend all day long in a car just because oil is free, or eat 40 million donuts just because they're giving them out for free, only 12 to 15 donuts. Furthermore, if we could retrieve certain resources freely, like solar energy then there REALLY shouldn't be a price for energy because you're not even paying people to do it. Mo' money, less problems?

[shmeebegek1]

What other "production process" does she thinks exists? Capitalism has nothing to do with it. Recycling also has nothing to do with it, that's just a way of being more efficient. See scrap metal or Kingston charcoal.

[IHeartDenver]

Am I the only one who cheered when he slammed recycling? Ser

[platinum014]

mmmmm capitalism

[FilipinoObjectivist]

Absolutely brilliant!

[jrmsher33]

So when I look at the landscape of pictures taken in the turn of the century when wood was used as heat, and housing I should see trees right? instead of the barren landscape which is reality. He has a PhD in finance but has little knowledge of how things are made, hand picks history. Oil has a limited life nobody with any real knowledge says it's going to run out tomorrow

[rodeojim1]

What is his Doctorate in? Poetry? Jargon? No such scarcity of resources?? Good LORD! He's discussing "consumption" not "capitalism". He has no idea how wealth is created. Why should he be lecturing? Reuse = recycle, but he doesn't believe in recycling. I hope UCI didn't pay him in full!

[Druwg]

i actually agreed with a few points he made, but i still have the damned humanist strain in me. which dissallows from being temporaly short sighted. "if you consume more trees, there will be more trees" ok i get it. but this is based on the fact that the world is bassically 6 10th domesticated by humans and the trees that are grown are useful, but what happened to beauty in diveristy, oh yeah pure-capitalism would have its diverse interest rates...if it wasn't for the unspeakable federal reserve

[Druwg]

uranium is radioactive...clean...hmm, yeah

[bradmanthethird]

he completely misunderstands ayn rand, unreconcileable. rand was not concerned with solutions, like "oh i know, we can use nuclear power" she was concerned with morals like "if nuclear power doesn't hurt anyone, then let people use it, whether it works or not, because it's a free world"

[worriedaboutlife]

economics is the autistic bastard son of science... It's all just another belief system.. and like a religion it just ignores and sidesteps any information that would make the displine seem anything but.. Capitalism doesn't really exist and eventually it won't.. anyway having said a bit of stuff that was considered.. fuck this ugly JEW

[jstartwo]

u have low self esteem

[worriedaboutlife]

another religious view point - but yes I probably do not value myself very much - why don't you?

[worriedaboutlife]

where the fouck is eorth?

[pllpls]

classy

[painisanillusion7]

haha she asked a question about climate change!

[dumb14wanker]

the problem here is that he sees nature as something that cannot run itself i mean the fact is that if we didnt use trees or cut em down they would spread and by cuttin trees down in their prime and then planting more we are in fact using energy in the land which can in fact completely assfuck the land any farmer can tell u that if u dont regulate and rotate what u plant ull we screwed everything gives something and takes something to their needs hmm i guess that make mother nature a socialist.

[jstartwo]

dumbwanker!

[BioThoughts]

lol, yeah i guess so. I am a complete free-market advocate but i do disagree with what this man says to a slight extent

[jtorresguevara]

This is really making me that the whole environmental movement is fluff!!

I mean, as Yaron says, the more trees we consume, the greater incentive there will be to supply and plant more causing economic growth.

Am I wrong here or does this actually make sense?

[dclewis]

The woman asking the question about finite resources also brings up an implicit idea: environmentalists believe that resources are finite and that finite means "irretrievably lost" instead of "limited in quantity and scope". The simplest argument against this is that E=MC2, and you still can't create or destroy matter or energy, regardless of what enviros or the law says. So...our finite recourses, while finite, won't ever truly be gone.

[Psy500]

Yet but the point is usefulness to inputs of production. Also with compounded growth of capitalism then the required input for production will surpass the mater that exists on Earth.

[Vodka2389]

With innovation, we'll figure out how to use resources more efficiently. We'll also find alternative resources for different uses, or may be different methods to create products for the same uses.

Like Yaron said, human ingenuity is the only scarce resource.

[Psy500]

It is scientifically impossible to have more then 100% efficiency thus there is a finite limit.

You go with talk like "human ingenuity is the only scarce resource" around scientists and engineers you'd be a laughing stock.

[Vodka2389]

Those scientists who would be laughing at me would be admitting that they're not smart enough to come up with solutions to problems.

By the time we'll run out of resources on earth may be we'll be able to travel to other planets for resources. Again, it's a question of human ingenuity.

What are the alternatives? We go back to the stone age? Or may be we wait stop progress and wait until we've run out of resources and then we die. Great plan.

[Psy500]

There is finite matter on Earth. Then there is the issue of running out of resources before we have the technology to colonize space.

[Vodka2389]

I agree, that's an issue for humans. That issue can only be eliminated by humans going back into the stone age, humans being extinct, or by human using their ingenuity to solve problems.

The point is that pure capitalism would provide humans a greater incentive than any other system for maximizing their inginuitive potential.

[Psy500]

The problem is compounded growth that is found in capitalism, it dramatically increase the rate of production thus dramatically increases the rate which resources is consumed.

Eventually you hit a input for production that is all material on Earth and demand still growing, you'd eventually hit the rate that humans have to build huge planet eating factories that process all mater on planets the size of Earth just to maintain capitalist growth.

[Psy500]

It is just much more practical to limit industrial growth.

[Vodka2389]

It's impossible to limit industrial growth without limiting the incentive for people to come up with new inventions and innovations that can and will increase the efficiency of manufacturing products and minimize the amount of resources used on each individual product. Since resources cost money, and the fewer there are, the more expensive they are.

As soon as it doesn't make economic sense to pay a price for something, it creates an incentive to come up with different, cheaper alternatives.

[Psy500]

Increase in efficiency is canceled out by compounded growth.

[Vodka2389]

So what? Humans civilization progresses and we get a better and bigger variety of products. Our knowledge of technology, our health, and life expectancy increase. That's what we all want. We don't care if we have oil or not, we only care if we have the uses of oil, which is where the incentive to create alternatives resources comes in.

[Psy500]

The problem is compounded growth, compounded growth means growth gets faster and faster as time goes on. This means alternatives resources would simply be a stop gap as the rate of use will continue grow at a compounded rate till they are all used up too.

[Vodka2389]

With or without limiting industrial growth, we're still using up resources. The difference is that without limitation there is a bigger incentive to come up with alternative resources. The effect of compound growth is neutral.

[Psy500]

Think of it like a train, the train's rate of acceleration increases at a compounding rate thus the train's speed radically increases.

The point issue is compounding the rate of use of resources.  Mathematically you'd eventually get increases in demand greater the all the resources extracted previously.

[Vodka2389]

"Mathematically you'd eventually get increases in demand greater the all the resources extracted previously."

No, that's not true. Why would demand increase beyond something that anyone can possibly offer? We don't demand a time machine. But even if we did, no businessman would care, and there's nothing we can do about it unless someone would invent a time machine.

[Psy500]

Its simple mathematics, with compounded growth demand for resources increases at a compounded rate.

So you then have to ask can capitalism survive with zero growth.  Well usury within capitalism says no, it is grow or economic collapse.

[Vodka2389]

"Its simple mathematics, with compounded growth demand for resources increases at a compounded rate."

Yes, I absolutely agree. The principle here is that there is an infinite amount resources in the universe. It's only a matter of extracting it. If people are willing to pay enough for businesses to extract it, these businesses will.

Essentially, with our mixed economy, all that's happening is the government slows down our rate of development (not to mention the immorality of collectivism.)

[Psy500]

a)We don't know the universe is infinite, there may be finite matter in the universe for all we know.

b)Eventually we would use more resources faster then we can find them as outer space is mostly empty.

[Vodka2389]

a) Well, there's no possible way for us to know this either way right now. We barely begun exploring other planets and we're not even close to being done with Earth yet.

b) What you said is nonsensical. You can't use something that doesn't exist.

[Psy500]

I said use them faster then we find them, meaning the rate of use is faster then rate of discovery.

[Vodka2389]

Like I said before, it's a matter of human ingenuity. There's no reason to think that humans are incapable of finding something when they have enough incentive, whether it is money or self preservation, or both.

[Psy500]

It is a matter of the material world. Doesn't matter how much ingenuity humans have if we are simply asking too much given our material reality.

[Vodka2389]

All right, so may be humans will not exist forever, and there won't be progress forever.

What are the alternatives? We start from scratch can go back to the stone age and chase deers in our underwear. Putting restrictions and regulations on industry is not going to help anybody, at least not morally.

[Psy500]

Why do you think a sustainable industrial society is immoral? Without compounded growth the problem of finite resources gets pushed much farther into the future, giving society far more time to deal with the issue.

[Vodka2389]

I said government restrictions and regulations on economy are immoral.

By your logic, it would be better to go back to the stone age. That would push back the supposed problem of finite resources even further into the future.

[Psy500]

It is immoral to improve our living conditions by reducing the living conditions of future generations.

For example lets assume all the scientists and engineers agree that further growth would call a new dark age in few years if compounded growth continues and suggest capping growth.

What would be more moral, continued growth and throw human kind into another dark age after that, or capping growth and buying human kind time to look into the problem?

[Vodka2389]

So why not go back to the stone age? Then may be humanity will continue to exist until the sun burns out.

[Psy500]

Because there would be no industrial base to address the problem. You obviously don't understand how much indefinite compounded growth strains resources.  You also obviously are oblivious to studies that prove compounded growth is not making humans any happier, it is making them miserable due to stress, work hours and environmental degradation.

So we are just wasting resources because capitalists suck at planning a society that people want to live in.

[Vodka2389]

First you want an industrial base to address a problem, but then you also don't want to use up resources. Which is it? You can't have your cake and eat it too.

Who is it that you want to plan society for us? George Bush, Hilary, Obama, McCain? You're never going to find anyone perfect and all knowing (unless you believe some imaginary god.)

[Psy500]

You seem to think one needs compounded growth to have a industrial base. The factories will still be able to operate even if there no growth in economy.

"Who is it that you want to plan society for us?"

You never heard of democracy? We let engineers come up with plans and pitch their plans to the people and the people would vote based on projected costs and benefits by engineers.

[Nadow]

"The factories will still be able to operate even if there no growth in economy."

WTF??

Oh yeah...look North Korea. If you dont grow. You have two options.

1- Or you steal stuff from others who grows (because, you know, they are growing , so they have new stuff that the don't actually need (according to your own judgement)

[Nadow]

2- Or you depend on charity from others for living if you think that stealing is wrong, (and you kill all babies because you are asumming that the population won't grow anymore, and that include your family)

And dont forget the poor who want to prospere..

[Psy500]

It is not like as soon as economic growth stops you lose your ability to produce commodities.

[Nadow]

Ok, see whats happening in the world now, specially in Europe. Negative growth,that is, recession. No growth => no credit => no investment => no consumption => no jobs => no factories. Factories are closing everywhere. Its all happening right now around you.

[Psy500]

All that is because capitalists have not bloody choice due to the capitalist system. Just look at the workers in Buenos Aires in 2002 where they formed worker co-operatives from the liberated factories and even during economic hardship the workers proved they didn't need the bosses to run production and even though they didn't have much they volunteerly shared what they could with those even less fortunate.

[Nadow]

I see that too, but you are using here a moral statement, "being your brothers keeper" which would lead to another different kind of discussion. The question is, Who payed for those factories? I don't have any problem if a group of workers join and buy a factory. Thats great. But somebody has to pay, because factories doesnt grow with the rain. In fact the owner could destroy them and say. "I leave you this ground as I found it, now do what you want", like Ellis Wyat does in "Atlas Shrugged".

[Nadow]

(Continuation) Which I recommend you by the way. It changed my vision of life and therefore is also changing my life itself. You could see there what would happen to society if we apply consistenly the altruistic moral code.

[Psy500]

The bigger question is who's labor went into the construction of the factories. The answer is not the owner but a different set of workers. The owner expropriated the value of the factory and in return paid the construction workers a fraction of the full value of their output. The argument of them creating wealth through administrating has been proven wrong in that capitalist are horrible administrators thus the capitalist's labor don't add any value to the end product.

[Nadow]

Sorry but there isn't a bigger question than "Who is gonna pay?" because someone has to pay and the only alternative is stealing. The owner doesnt expropiate and don't create wealth through "administration", in fact he creates wealth spending HIS money in buying the materials, hiring an architect, hiring the machines and the workers who are going to build the factory and then hiring the workers, engineers, and managers who are run the factory. Ownership and management are different things.

[Nadow]

"and doesn't create wealth"

"...and managers who are gonna run the factory". Sorry for the mistakes

[Psy500]

I don't know if my previous post went through but here is the second half with a bit of summery of the first. Since the model Money->Commodities->More Money leads to exploitation this mean a investor wants workers exploited at some level as that is where the More Money comes from as the value of the labor of the workers is equal to the value of product of their labor, meaning the value of collective labor of the workers that build the factory is the value of the factory itself.

[Psy500]

Okay I'm guessing my other post didn't go through.

So like I said in the other post, money does not create wealth and spending it doesn't create wealth either, money distributes wealth that already exists. The capitalists is taking wealth he already expropriated to pay for the labor of workers in which he will expropriate more wealth by not paying the full value of the labor done. This is where the More Money comes from in the Money->Commodities->More Money cycle of the profit motive.

[Nadow]

"the value of collective labor of the workers that build the factory is the value of the factory itself" What happens if the factory is a failure? Are the workers who build it gonna pay all the debts? I guess not. The pure value of a manual worker today is exactly the same as in the middle ages. Put a man who only move a finger to work (the man who push the floor in a elevator) in a desert island...Who has made his productivity rise up through time in a 10000000%? I tell you, capital.

[Psy500]

The workers pays for every mistakes of the capitalist as the workers is a rented slave (with some rights) for the duration of his job.

The mechanization of labor (brought about by engineers) is what has increase productivity. All the capital in world won't be as productive as a single bulldozer.

[Nadow]

"The workers pays for every mistakes of the capitalist as the workers is a rented slave (with some rights) for the duration of his job."

First,I was talking about those who build the factory. They don't pay anything. But How they pay?? I mean, where is the money? Who's gonna pay? Like before: No answer.

[Nadow]

It seems you conceive any worker as a slave. I have a greater standard for every man free work.

And all the workers wouldn't create a bulldozer in a desert island. It was created through investment derived from capital derived from benefits obteined by people who has risk their money throught history. The reward are benefits, because THEY CAN LOSE IT.But "that doesnt matter, because slave workers are gonna be fired". Who hire them? What would be doing now otherwise? And, where is my money?

[Psy500]

I see the worker as a slave since they don't control their labor and their output is expropriated against their will. If the workers produced more value then normally the capitalists gets it not the worker, thus the workers has no incentive to work harder as proletariat never sees any benefit from work. Volunteers actually have more incentive then wage workers as at least volunteers can see their work is doing good for their community (else they would volunteer their labor elsewhere).

[RCWorks]

I control who gets my work. I can deny my services to anyone.

My work has value as I am skilled, I bothered to take the time to make my labor worth more and have a sought after skill. (Now I work for myself. I have also relied on robotics to do what I need done as unskilled "workers" seem to think they need to be paid like rock stars.)

I regard being the proletariat as an insult since I have already left a mark... Having your kids be your most significant contribution is SORRY.

[Psy500]

Workers would create a bulldozer in a deserted island if they saw that it would benefit them. Look at free software like Linux and BSD, without the profit motive people have build better software then those written under the profit motive.

[RCWorks]

"workers" only do what they get directed to do. Mostly they sit on their hands when not watched.

[RCWorks]

See that value of GM's workers...

Highly paid collectivists one and all...

See the company about to die...

Where will these people work next year? Not for me, that's for sure.

This is what you want? Take a large investment and wreck it?

Did you get your knowledge of business from the UAW? Get a better role model. Maybe you have not seen the papers or heard the news lately... Labor unions are dead except for the government... and you see how those employeees work.

[Psy500]

The GM workers didn't wreck GM, GM is failing because of system wide over-production, all around the world production is falling (even in China) because consumers can't afford to consume at a high enough rate to support the current rate of production.

If GM workers earned 1/2 what they did for the past 10 years this crisis would have just occurred sooner as GM workers would have had less ability to consume commodities.

[Psy500]

This is what Karl Marx was getting at, Capitalism is mathematically unstable meaning crisis are inherent to capitalism as it inevitable for production to out grow demand since demand is linked to wages and capitalists have a huge incentive to drive down wages that drives down demand in the long run that crises of over-production were workers can afford enough of the commodities they produces to support the current rate of profit at the current rate of production.

[RCWorks]

GM addmitted that fault was with UAW contracts, you can not run with guys in track shoes wearing cowboy boots and bringing along a bowlingball.

Get it together man. your living in dreamworld.

[RCWorks]

The value of a factory is in the products it produces that sell. If a factory can not produce profit it has no value other than sellable assets. (I.E. the building and property. Last I looked I could not sell the employees.)

[Psy500]

"The value of a factory is in the products it produces that sell. If a factory can not produce profit it has no value other than sellable assets."

Wrong, the value of the factory is it ability to produce, for example a tank factory 100% owned by a army still has value even though it doesn't sell anything and said army would protect the factory from hostile forces (as the army would view its value as its ability to build tanks).

[pllpls]

The value of the factory is in what it produces. If the factory produces tanks (using your example) that cannot destroy other tanks, then the factory is useless. The factory needs to change what it is producing (perhaps to effective tanks) to be a valuable asset.

[Psy500]

Wrong, a factory producing tanks that can't destroy other tanks is simply a waste of the value of the factory since the factory has the capacity to build utility.

[pllpls]

So a factory sitting at idle is valuable simply because it has the capacity to build?

[Psy500]

Right else in war if the enemy bombs a idle factory (even if was because it was night and there was no night shift) it would have been a waste of bombs as the factory would be worthless as at that moment it wasn't producing utility.

[pllpls]

And a factory with the capacity to build but without the tools to produce anything useful? Wouldn't the factory need to be retooled to produce something of use?

[Psy500]

Then it is the value of the structure but more machinery can be used to produce utility

[Nadow]

And if "The owner expropriated the value of the factory and in return paid the construction workers a fraction of the full value of their output" Then why workers dont build their own factories? Any investor would give them the money because its just "a fraction of the full value of their output" Right?

[RCWorks]

Maybe its better to limit those that do not achieve... i.e. the workers as you like to call them. Since for the most part they consume with no relevant contribution.

[Druwg]

"The point is that pure capitalism would provide humans a greater incentive than any other system for maximizing their inginuitive potential"

1. this could be said about almost any system if someone believed in it enough, so its really just an assertion, by which i mean you don't have a point.

2. it is more likely that people who like doing something are gonna do it better, might be less people doing it though than there would be with capitalism, but there is always a trade off.

[Druwg]

like buckminster fullers ephemerilization, who by the way had a much more lucid take on sustainability and progress, than most economists, through his apolitical and a capitalist "comprehensive design science" which was mainly based on giving people the tools to learn and teach.

[RCWorks]

Capitolism grows on ideas and production, Marxism grows on misery and generates plenty to go around.

[Druwg]

yes but this is counter acted by the fact that the amount of resources we need to sustain our population also increases which leads to resources being used up faster. also increase in entropy because of expansion, though this is jumping the gun a bit, leads to a diffusion of energy- because there is a certain amount of energy in the universe-making it ever more useless especially to macro objects like ourselves, you cannot have a perpetual motion machine.

[Oleksandr]

Most awesome!!!

Yaron Brook as always kicks ass with a concise and clear-cut answer.

Damn environmentalists.

[drummergrl225]

as if the tye-dye shirt didn't indicate her question...

[qtronman]

Awesome answer!

[shovelcharge]

every few years people saw oil will run out, but we keep digging deeper and deeper

[SatanicCod]

Well, since the Canadian Oil Sand fields got enough capacity to accommodate the current GLOBAL use of fuel for the next MILLENNIA, it might take a little time to run out of oil.

Everytime the price get higher, drilling for more became bankable.

Is Capitalism such a great thing? ;)