Category Archives: Polemics

Polemics

Jay Richards: eight common myths about wealth, poverty and the free market

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Have you read Jay Richards’ book “Money, Greed and God?” Because if you haven’t, he’s written a series of articles that summarize the main points of the book.

The index post is here.

Here are the posts in the series:

  • Part 1: The Eight Most Common Myths about Wealth, Poverty, and Free Enterprise
  • Part 2: Can’t We Build A Just Society?
  • Part 3: The Piety Myth
  • Part 4: The Myth of the Zero Sum Game
  • Part 5: Is Wealth Created or Transferred?
  • Part 6: Is Free Enterprise Based on Greed?
  • Part 7: Hasn’t Christianity Always Opposed Free Enterprise?
  • Part 8: Does Free Enterprise Lead to An Ugly Consumerist Culture?
  • Part 9: Will We Use Up All Our Resources?
  • Part 10: Are Markets An Example of Providence?

Parts 4 and 5 are my favorites. It’s so hard to choose one to excerpt, but I must. I will choose… Part 4.

Here’s the problem:

Myth #3: The Zero Sum Game Myth – believing that trade requires a winner and a loser. 

One reason people believe this myth is because they misunderstand how economic value is determined. Economic thinkers with views as diverse as Adam Smith and Karl Marx believed economic value was determined by the labor theory of value. This theory stipulates that the cost to produce an object determines its economic value.

According to this theory, if you build a house that costs you $500,000 to build, that house is worth $500,000. But what if no one can or wants to buy the house? Then what is it worth?

Medieval church scholars put forth a very different theory, one derived from human nature: economic value is in the eye of the beholder. The economic value of an object is determined by how much someone is willing to give up to get that object. This is the subjective theory of value.

And here’s an example of how to avoid the problem:

How you determine economic value affects whether you view free enterprise as a zero-sum game, or a win-win game in which both participants benefit.

Let’s return to the example of the $500,000 house. As the developer of the house, you hire workers to build the house. You then sell it for more than $500,000. According to the labor theory of value, you have taken more than the good is actually worth. You’ve exploited the buyer and your workers by taking this surplus value. You win, they lose.

Yet this situation looks different according to the subjective theory of value. Here, everybody wins. You market and sell the house for more than it cost to produce, but not more than customers will freely pay. The buyer is not forced to pay a cost he doesn’t agree to. You are rewarded for your entrepreneurial effort. Your workers benefit, because you paid them the wages they agreed to when you hired them.

This illustration brings up a couple important points about free enterprise that are often overlooked:

1. Free exchange is a win-win game.

In win-win games, some players may end up better off than others, but everyone ends up better off than they were at the beginning. As the developer, you might make more than your workers. Yet the workers determined they would be better off by freely exchanging their labor for wages, than if they didn’t have the job at all.

A free market doesn’t guarantee that everyone wins in every competition. Rather, it allows many more win-win encounters than any other alternative.

2. The game is win-win because of rules set-up beforehand. 

A free market is not a free-for-all in which everybody can do what they want. Any exchange must be free on both sides. Rule of law, contracts, and property rights are needed to ensure exchanges are conducted rightly. As the developer of the house, you’d be held accountable if you broke your contract and failed to pay workers what you promised.

An exchange that is free on both sides, in which no one is forced or tricked into participating, is a win-win game.

On this view, what you really need to fear as a consumer is government intervention that restricts your choices in the marketplace.

Economists agree on the benefits of free trade

Who could possibly disagree with free trade? Well, many people on the left do. They favor imposing restrictions on free trade. For example, people on the left favor making those who import goods pay tariffs, which makes it harder to trade with other nations. People on the left want to pass rent control laws to block landlords and tenants from trading more freely. People on the left want to pass minimum wage laws that block employers and workers from trading wages for labor more freely. But economists generally don’t agree with any of restrictions on free trade. In fact, even across the ideological spectrum, the majority of economists view free trade as a wealth creating policy, and restrictions on free trade as a wealth destroying policy.

Harvard economist Greg Mankiw explains what most professional economists agree on.

Excerpt:

Here is the list, together with the percentage of economists who agree:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
  2. Tariffs and import quotas usually reduce general economic welfare. (93%)
  3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
  4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
  5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
  6. The United States should eliminate agricultural subsidies. (85%)
  7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
  8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
  9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
  10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
  11. A large federal budget deficit has an adverse effect on the economy. (83%)
  12. A minimum wage increases unemployment among young and unskilled workers. (79%)
  13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
  14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

Now when you are talking to a Democrat, you are talking to someone who disagrees with most or all of those common sense economic policies. For example, Obama’s backers in the labor movement inevitably endorse higher import tariffs, which discourage free trade between countries. No economist supports these tariffs on imports, because history has shown (e.g. – Smoot-Hawley Act) that tariffs destroy economic growth and reduce wealth creation. And that’s what I mean when I talk about economic illiteracy – I mean ignoring what we know from economics and our past experience with bad policies.

Democrat economic policies don’t work because they are making policies that are based on economic myths. We know that these myths are myths because of economics is a mathematical science, and because we have tried good and bad policies in different times and places. We have calculations and we have experience to know what works and what doesn’t work. If you want to help the poor, you have to respect what economists know about how wealth is created. The solution is not to “spread the wealth around”, it’s to encourage people to create more wealth by inventing things that people freely choose to buy.

Polemics

Is silicon-based life a possible alternative for carbon-based life?

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In a recent debate, atheist philosopher Alex Rosenberg responded to the cosmic fine-tuning argument presented by William Lane Craig by asserting that complex life could be other than it is. He specifically mentioned silicon-based life.

Let’s see what scientists think of his speculation, using this article from Scientific American.

Excerpt:

Group IV of the Periodic Table of the Elements contains carbon (C), silicon (Si) and several heavy metals. Carbon, of course, is the building block of life as we know it. So is it possible that a planet exists in some other solar system where silicon substitutes for carbon? Several science fiction stories feature silicon-based life-forms–sentient crystals, gruesome golden grains of sand and even a creature whose spoor or scat was bricks of silica left behind. The novellas are good reading, but there are a few problems with the chemistry.

Indeed, carbon and silicon share many characteristics. Each has a so-called valence of four–meaning that individual atoms make four bonds with other elements in forming chemical compounds. Each element bonds to oxygen. Each forms long chains, called polymers, in which it alternates with oxygen. In the simplest case, carbon yields a polymer called poly-acetal, a plastic used in synthetic fibers and equipment. Silicon yields polymeric silicones, which we use to waterproof cloth or lubricate metal and plastic parts.

But when carbon oxidizes–or unites with oxygen say, during burning–it becomes the gas carbon dioxide; silicon oxidizes to the solid silicon dioxide, called silica. The fact that silicon oxidizes to a solid is one basic reason as to why it cannot support life. Silica, or sand is a solid because silicon likes oxygen all too well, and the silicon dioxide forms a lattice in which one silicon atom is surrounded by four oxygen atoms. Silicate compounds that have SiO4-4 units also exist in such minerals as feldspars, micas, zeolites or talcs. And these solid systems pose disposal problems for a living system.

So, first of all, it makes SAND. Second of all, it is so attracted to oxygen that it can’t easily join to make any other polymers that could be used in the chemistry of the minimal functions of a living system.

More:

Also consider that a life-form needs some way to collect, store and utilize energy. The energy must come from the environment. Once absorbed or ingested, the energy must be released exactly where and when it is needed. Otherwise, all of the energy might liberate its heat at once, incinerating the life-form. In a carbon-based world, the basic storage element is a carbohydrate having the formula Cx(HOH)y. This carbohydrate oxidizes to water and carbon dioxide, which are then exchanged with the air; the carbons are connected by single bonds into a chain, a process called catenation. A carbon-based life-form “burns” this fuel in controlled steps using speed regulators called enzymes.

These large, complicated molecules do their job with great precision only because they have a property called “handedness.” When any one enzyme “mates” with compounds it is helping to react, the two molecular shapes fit together like a lock and key, or a shake of hands. In fact, many carbon-based molecules take advantage of right and left-hand forms. For instance, nature chose the same stable six-carbon carbohydrate to store energy both in our livers (in the form of the polymer called glycogen) and in trees (in the form of the polymer cellulose).

Glycogen and cellulose differ mainly in the handedness of a single carbon atom, which forms when the carbohydrate polymerizes, or forms a chain. Cellulose has the most stable form of the two possibilities; glycogen is the next most stable. Because humans don’t have enzymes to break cellulose down into its basic carbohydrate, we cannot utilize it as food. But many lower life-forms, such as bacteria, can.

In short, handedness is the characteristic that provides a variety of biomolecules with their ability to recognize and regulate sundry biological processes. And silicon doesn’t form many compounds having handedness. Thus, it would be difficult for a silicon-based life-form to achieve all of the wonderful regulating and recognition functions that carbon-based enzymes perform for us.

The troubling thing I find about atheists is that they seem to be under the impression that an alternative speculative explanation is a refutation of an argument that is based in evidence.

So it goes like this:

  • origin of the universe? I can speculate about a naturalistic alternative cosmology which is falsified by observations
  • cosmic fine-tuning? I can speculate about an untestable multiverse
  • origin of life? I can speculate about unobservable aliens who seeded the Earth with life
  • Cambrian explosion? I can speculate about intermediary fossils that have not yet been discovered
  • habitability? I can speculate that habitable planets exist just outside the boundary of the observable universe
  • resurrection of Jesus? I can speculate that Jesus had an unknown, identical twin brother who showed up when he died and took his place

I think that if we are going to make a worldview, we should ground it in the evidence we have today. We should not have faith in speculative theories that we heard about on Star Trek. Seriously.

Polemics

The connection between our moon, plate tectonics and habitability

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I found an interview with Peter Ward (atheist) and Donald Brownlee (agnostic) discussing astrobiology in Forbes magazine. They were asked about how important plate tectonics are for a planet to be able to support complex life.

Excerpt:

Astrobiologists often cite the sheer numbers of stars and galaxies as evidence that complex life elsewhere must surely have evolved somewhere. But is probability enough?

Without a moon, we don’t have any idea of how commonly a planet could have the long-term stability needed for complex life. Until we “get” that, going to the sheer numbers argument is useless. Without that moon-forming collision, we wouldn’t have plate tectonics. Without plate tectonics, we might have microbes but we’d never get to animals.

What about the rarity of earth’s crustal dichotomy of oceans and continents?

If you can’t make granite, you’re not going to have continents. But granite formation is a consequence of our moon-forming collision. That scrambled the entire density of our crust. Mars doesn’t have granite; all it’s got is this volcanic basalt. To build granite you need a planetary subduction [or plate tectonic] process.

In triggering complex life, how important were plate tectonics’ role in the continual recycling of earth’s atmosphere?

It’s this recycling that allows for a very rich planetary atmosphere with an extended life. Photosynthesis gets you oxygen, but how do you get enough photosynthesis to get oxygen at 10 to 20 percent? You’ve got to have a shoreline next to a rich sea with rocks eroding into it in order to provide the nitrogen and phosphates for [plant] photosynthesis.

This article from Astrobiology explains more about the importance of plate tectonics.

Excerpt:

Plate tectonics is the process of continents on the Earth drifting and colliding, rock grinding and scraping, mountain ranges being formed, and earthquakes tearing land apart. It makes our world dynamic and ever-changing. But should it factor into our search for life elsewhere in the universe?

Tilman Spohn believes so. As director of the German Space Research Centre Institute of Planetary Research, and chairman of ESA’s scientific advisory committee, he studies worlds beyond our Earth. When looking into the relationship between habitability and plate tectonics, some fascinating possibilities emerged.

It is thought that the best places to search for life in the Universe are on planets situated in “habitable zones” around other stars. These are orbital paths where the temperature is suitable for liquid water; not so close to the star that it boils away, and not so far that it freezes. Spohn believes that this view may be outdated. He elaborates, “you could have habitats outside those, for instance in the oceans beneath ice covers on the Galilean satellites, like Europa. But not every icy satellite would be habitable. Take Ganymede, where the ocean is trapped between two layers of ice. You are missing a fresh supply of nutrition and energy.”

So planets and moons that lie beyond habitable zones could host life, so long as the habitat, such as an ocean, is not isolated. It needs access to the key ingredients of life, including hydrogen, oxygen, nitrogen, phosphorous and sulphur. These elements support the basic chemistry of life as we know it, and the material, Spohn argues, must be regularly replenished. Nature’s method of achieving this on the Earth appears to be plate tectonics.

Spohn found that the further he delved into the issue, the more important plate tectonics seemed to be for life. For example, it is believed that life developed by moving from the ocean to the kind of strong and stable rock formations that are the result of tectonic action. Plate tectonics is also involved in the generation of a magnetic field by convection of Earth’s partially molten core. This magnetic field protects life on Earth by deflecting the solar wind. Not only would an unimpeded solar wind erode our planet’s atmosphere, but it also carries highly energetic particles that could damage DNA.

Another factor is the recycling of carbon, which is needed to stabilize the temperature here on Earth. Spohn explains, “plate tectonics is known to recycle carbon that is washed out of the atmosphere and digested by bacteria in the soil into the interior of the planet from where it can be outcast through volcanic activity. Now, if you have a planet without plate tectonics, you may have parts of this cycle, but it is broken because you do not have the recycling link.”

It has also been speculated that the lack of tectonic action on Venus contributed to its runaway greenhouse effect, which resulted in the immense temperatures it has today.

Most planets don’t have a moon as massive as ours is, and the collision that formed the moon is very fine-tuned for life. This is just one of the many factors that needs to be present in order to have a planet that supports complex, carbon-based life.