Free Market Thinking Beyond the Model

I had a very enjoyable and edifying extended lunch today, which was so mainly because one of the people at the table was an Objectivist, and like many followers of Ayn Rand whom I’ve met, he was determined to win arguments… and converts. Taken in such an extended and proselytistic dose, his points guided me toward a better understanding of something that has long bothered me vaguely.

One apparent contradiction that didn’t become clear until almost the end of the lunch was that he continually beat back any notion that it’s reasonable to rely on ideas of the supernatural — doing so was the decisive marker of having gone off the intellectual track and should be meticulously kneaded out of a personal philosophy. And yet, when it came to practical history, much of his own worldview rested on the “power of ideas.”

I don’t know by what right he claims ideas as something natural, rather than supernatural. To the extent that an idea is not simply a fact (and even then), it’s not something that manifests in the physical world. An idea acts through us, as sentient beings, and like the metaphysical, the fact that it’s beyond the scope of physics to measure doesn’t mean that it doesn’t exist as a natural thing. God, I’d proposed, is arguably the most natural of things.

This all got me to thinking about the RI-STAMP model that the RI Center for Freedom & Prosperity has been using to project the likely effects of eliminating or reducing the state sales tax. In brief, the model is constructed of some economic observations (the data of RI’s economy) mixed with some equations meant to capture the economic behavior of human beings.

Since the model seeks to provide a single answer among myriad possibilities that could match the data to the equations, it has to pick a goal of some kind, and STAMP’s creators picked personal income. This means that the model assumes that, as people make decisions, they’ll do so in such a way as to maximize the money that they make.

In a simplified sense, Objectivism builds a belief system around pretty much the same assumption as STAMP, but with all of human society as the model. It takes what the model thinks people will prioritize and makes it a moral principle of what people should prioritize.

The assumption is reasonable, it seems to me, as an accounting of motivation within the limited scope of a model, but it must be limited. The very possibility of the government’s allowing the sales tax to be eliminated would arguably conflict with the assumption.

Similarly, the model is limited inasmuch as it assumes an underlying stability. It can’t estimate the likelihood that, three years out, the people of Rhode Island will rebel and overthrow their government. It wouldn’t predict that eliminating all sources of government revenue and redistribution might lead the people to say, “Hey, no, forget your capitalism; we’re taking your money by brute force.”

That isn’t the only possibility, of course. The people could also say, “Hey, no, we believe it’s our duty to take care of each other, so we are going to take the money that is no longer collected as taxes and give it away to help our neighbors.” So, in a fundamental sense, STAMP assumes that a $300-million-something reduction in government spending will not lead to such destitution that people will stop trying to maximize their income and, instead, find it necessary to spend more money caring for their neighbors.

More precisely, the assumption is that the increase in need and charitable giving will not cross any thresholds that change behavior. Stated in reverse, the model holds constant the Judeo-Christian values that undergird our economic system as they apply right now.

That, I think, is a large part of what the Randians get wrong. I heard repeatedly, today, that conservatives’ failure to articulate Objectivists’ moral arguments (by which they mean the notion that free-market capitalism is moral by definition) is why we have been losing.

The proposition’s laughable on its face, but put that aside. What Randians thereby set up is a sort of societal Russian roulette. If people cannot be sold on the idea that the Golden Rule is the root of all evil, that we are not our brothers’ keepers, then big government is the only option that remains. As with any group, there are degrees of belief among Objectivists, but those who make conservatives their bêtes noires kill off the notion that capitalism and big government are both mere strategies toward achieving our social ends.

In practical terms, the question is whether the Randian Eden of prosperity will manifest itself before a mass of highly motivated poor people decides that the big government route looks more promising for their own best interests.

This line of thought extrapolates to deeper philosophical disagreements. In addition to socialism versus capitalism, another grand bifurcation that I heard repeatedly, today, was reason versus faith. I’d suggest that, just as you are not a socialist because you don’t take capitalism to be a moral first principle, you do not turn your back on reason just by accepting faith.

Extremes exist, but on the whole, among religious people who seek explanations for natural phenomena at all, the tendency is not to declare them the pure work of the divine and leave it at that. Rather, religious faith and belief in the supernatural, the metaphysical, is really an estimation that we create from intuition and logic. You might call it “revelation.” Revelation applies to reality by way of reason, and where reason conflicts with it, if one gets to the point of being able to explain a particular thing rationally (creating a consistently reliable model), one should do so.

That doesn’t mean that God is just an explanation for things we don’t know (the god of the shrinking spaces), but that a theology that doesn’t jibe with what we observe is not likely to be true. Either we are misapplying reason or we are mistaking the nature of the theological truth — perhaps mistaking a symbolic truth for a literal one.

There are, moreover, things we can never know. There are some questions that cannot be rationally answered except within a limited system, in which we make ourselves woefully blind to our circumstances and how much they rely on things we don’t understand. And some of those questions must be answered.

At lunch, I used the analogy of a ship. We’re looking out across the unbroken blue trying to determine in which direction to head, and the Objectivist points to the bowsprit for direction because it is the most forward thing that we are able to see, and because going forward must be assumed to be inherently good.

Obviously, that requires a great deal of faith.  Though superstition it may have been to say it was the bird “that brought the fog and mist,” it does not inherently follow that it was not the bird “that made the breeze to blow.”

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