The Source of Economic Growth

Posted by khalling 8 years, 7 months ago to Economics
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No school of economic thought is consistent with Objectivism, which is why Ayn Rand, in the very first sentences of Capitalism: The Unknown Ideal, said “This book is not a treatise on economics. It is a collection of essays on the moral aspects of capitalism.”

Patent attorney and novelist Dale Halling proposes a science of economics that is consistent with Rand’s philosophy. The path to that understanding of economics results from examining the source of real per capita increases in wealth, which puts man’s mind at the center of economics. No other school of economics puts emphasis on man’s mind, which is one reason why Rand had a tenuous relationship with even free market economists, see, for instance, Milton Friedman on Rand and Mises (YouTube) and "Can the Ideas of Mises and Rand be Reconciled?" by Edward Younkins.

Based on Dale's latest non-fiction title "The Source of Economic Growth"
SOURCE URL: https://www.youtube.com/watch?v=HBS7VVsoKg0


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  • Posted by wiggys 8 years, 7 months ago
    i have read or listened to the economists mentioned and while AR was not specifically an economist I believe her reasoning mind is as good a economics guide as one can find.
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  • Posted by term2 8 years, 7 months ago
    I can tell you that my own wealth has come from finding new needs that people have, or didnt realize they had, and then filling those needs- for which they give me money that I can put in my money pit. I try to do it without government preventing competition, such as with patents and crony capitalistic laws. I also do it without direct government help (tax breaks dont count, as that is just a lower level of stealing from me.
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    • Posted by 8 years, 7 months ago
      good points. I think this discussion with cg was on a macro level, however-not individual or even one industry, as in the case of Mackey going into a mature industry and turning it upside down. :)
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      • Posted by term2 8 years, 7 months ago
        I suppose if I took business away from an established competitot, MY wealth increases, but HIS decreases- maybe then its a wash. If I satisfied a completely new need then overall wealth would appear to increase.
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        • Posted by dbhalling 8 years, 7 months ago
          Not appear - it would create real wealth. The steam engine created real wealth by increasing the supply of coal initially. The weaving industry saved millions of people's lives by providing them affordable cotton underwear.
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  • Posted by Herb7734 8 years, 7 months ago
    Question: Is Economics a true science?
    If in economics, A+B=C does A+B always equal C?
    If man is at the center of economics, isn't he a variable? Just asking.
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    • Posted by dbhalling 8 years, 7 months ago
      The history of economics is that it was based on the scottish enlightenment (Hume and Smith). This philosophy explicitly rejected the philosophical basis of science (hard science). This has resulted in economics being divorced from reality. I take economics back to reality, which is the fact that you have to work to live and that man's main survival tool is his ability to reason.

      Most of economics is based on a technologically static world and therefore of little relevance to most people and fails to explain most of what has happened that is interesting in economics. Supply and Demand has nothing to say about creating weaving machines, steam engines, SEMs, microprocessors, etc.
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      • Posted by Herb7734 8 years, 7 months ago
        I get it.
        So, while supply & demand can tell you about existing products, it cannot tell you about new products until they have been put into the marketplace. Enter stage right -- advertising.
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        • Posted by dbhalling 8 years, 7 months ago
          Yes, I talk about an economist who makes the point that most of economics is about a technologically static world, but everything of importance happens is a technologically dynamic economy.
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    • Posted by 8 years, 7 months ago
      his choices are but not his immediate needs. Thus the Robinson Crusoe model.

      I'll let Dale respond, but yes, he would say that we treat it as a social science and it should be treated as a hard science.
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      • Posted by Herb7734 8 years, 7 months ago
        Finally, someone has put it into words I can understand. Treated as a social science but should be treated as a hard science. That both clarifies the mish-mash of the past and points in the direction for the future. That is harder to pull out of an economist than calcium induced constipation.
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  • Posted by bsmith51 8 years, 7 months ago
    I once asked an Obama supporter, "Where does wealth come from?". His answer was, "workers".
    [Sarcasm Loading; Please Wait] ... --- ...
    So, you see, none of this can be true.
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    • Posted by dbhalling 8 years, 7 months ago
      However, most CEOs have no idea how wealth is created and most of economics focuses on reproduction, which does not cause long term increases in real per capita growth.
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  • Posted by $ Abaco 8 years, 7 months ago
    "No other school of economics puts emphasis on man’s mind, which is one reason why Rand had a tenuous relationship with even free market economists..." After decades of economic and finance study I have come to the conclusion that much of our economy relies upon the stupidity of the population. If people ever wise up the models will have to be changed. That's about all I better say on that...
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  • Posted by CircuitGuy 8 years, 7 months ago
    This talk drives home stuff those of us working in technology can take for granted.

    I think of "perfect competition" (discussed starting at 27:30) as being what happens when you cannot differentiate your product. If you're selling something commoditized (i.e. non-differentiatable) like gold coins, you have perfect competition. This is not desirable. The market pushes you to think of some way to differentiate to make something different and better that people will pay more for.

    It reminds me of Clay Christensen's model of a cycle of commoditization/decommoditization from the Innovator's Dilemma. Christensen says technologies are constantly mature and commoditized, and at the same time some other technology decommoditizes.

    This talk is about how that growth and that cycle are powered by invention.
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    • Posted by 8 years, 7 months ago
      I am reminded here of John Mackey's take on economic growth. He calls it "destructive competition." IT feeds into this Christensen's thought process. In fact there is nothing "destructive " about new technologies. For John Mackey he sees his Whole Foods model as a way to create a new market within a mature industry-buying groceries. He could not compete on price with a Walmart so he re-marketed the process of buying groceries by "destructing" my buying at Safeway (ex). In fact, "disruptive" invention happens when something is invented that puts all or most industries on their head. A modern system of manufacturing, the telephone, the light bulb, 3D printing. People aren't choosing between concepts they already choose, they are able to change their lives by the new tech.
      Of course, most economists start arguing from the middle. what is demand? At the most fundamental levels of economics there is no demand. I am reminded of Father Guido Sarducci (maybe someone put the link in here) his 515 minute college degree. "everything you need to know about economics? supply and demand." Disruptive invention changes that completely.
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      • Posted by Technocracy 8 years, 7 months ago
        The "destructive" part of new technology is really how it upsets the crony capitalists, not that the tech is destructive or even distorting, to the market in and of itself.

        And as to that "problem", too bad for the crony capitalists ;P
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      • Posted by CircuitGuy 8 years, 7 months ago
        "People aren't choosing between concepts they already choose, they are able to change their lives by the new tech."
        Yes. I can't think of any examples, but usually the real disruptive innovations are not a better or cheaper version of something already existing but rather a way to meet people's wants/needs approaching them from a new angle.

        "At the most fundamental levels of economics there is no demand."
        No demand? This is completely new to me and probably merits its own thread.
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  • Posted by DrZarkov99 8 years, 7 months ago
    Economics reminds me of gravitational potential theory, and here's why: trying to predict the direction of an object in space isn't possible to an exact degree, because its path is affected by every mass close enough to have even a small influence, and many of the other masses in space are themselves moving, and are likewise influenced by other moving masses. Too many variables, and no precise answer can be derived beyond a simple two-body calculation. Even the two-body problem gets difficult when we realize the Earth isn't a homogeneous mass, and has an irregular gravitational field that distorts the path of an object revolving around it. This drives scientists crazy trying to find exact solutions, while engineers are fine with "close enough" approximations.

    Economics, at the macro level, is influenced by the decisions made by every buyer of an item or service, and those decisions are likewise influenced by the needs or decisions of other buyers or associates, who in turn are influenced in their decisions by a wider population, and that's just the demand side. The flow of wealth is also influenced by decisions of the supply side on what and how many products or services are to be offered. To make this even more complicated, third parties, called regulators, attempt to influence the trajectory and volume of wealth, and they are in turn influenced by economic theory, legal restraints, and political agendas, however impractical. Again, too many variables, and there's even less chance of an exact prediction of the wealth vector between even just one supplier and one buyer, due to the wide variability in human personalities.

    The strength of capitalism is that it makes acceptance of the uncertainty in the flow of wealth an absolute principle (Smith's "Hidden Hand"), which requires willingness to "go with the flow". Most other economic models fail horribly because they either refuse to acknowledge uncertainty, or attempt to control the wealth vector enough to reduce uncertainty. The capitalist is like a gambler who lives by Heinlein's credo: "Of course the game is rigged, but you can't win if you don't play." He bets that his understanding of economics as a shifting field enables him to adapt to unexpected change and win enough to gain profit. The followers of non-capitalist models are like the gambler who believes that a rigid system of betting will unquestionably guarantee him a win. Guess who's best equipped to win more than he loses?
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