LIKE SOMETHING OUT OF ATLAS SHRUGGED

Ayn Rand kept a "Horror File" of current news reports validating the worst aspects of her fictional universe in Atlas Shrugged. She said that she did that because often, in casual discussions at social occasions, someone would assert, "No one really believes those things!" or "No really says that." Well, yes, someone does and not just a random person but someone with social capital and personal status. 

Personally, I believe that from both an engineering standpoint and a market perspective, newer energy sources will eclipse oil and coal just as those outshone hardwood and charcoal. At the same time, I also believe in spontaneous order very well enucniated in Leonard E. Reed's essay, "I, Pencil" (Foundation for Economic Education here). 

Furthermore shutting off the oil that supplies you with heat and light and transportation will not deliver to me a solar-powered car, or a plasma power plant for my home.

More to the point, I believe that the people who oppose the production and delivery of oil today do not care if you have heat, light, and transportation (or food). They have them. So, they are satisified. And they have the leisure time to engage in an anti-industrial revolution. 

PREVIOUSLY ON NECESSARY FACTS

Jerry Emanuelson's Algebraic Proof of Ricardo's Law of Association

What is Legal Tender?

Money is Speech

Debt: The Seed of Civilization

Not Conned by Sehgal’s Coined

A degreed economist (LSE) who works for J. P Morgan, Kabir Sehgal is the author of Coined: The Rich Life of Money and How Its History has Shaped Us. By its title, it is obviously a book with a great breadth of scope for its 257 pages of narrative. However, every story that I already knew was arguable. This is a scissors-and-paste effort, quickly assembled without deep reflection, insight, or questioning. In truth, throughout the book, the author does present the facts approximately. He gets almost all of it almost right. But as we say, “close only counts in horseshoes and hand grenades.” 

As this is a book about the history of money, the origins of money are important. His narrative is incomplete, coming from secondary sources. Sehgal apparently failed to grasp the central facts of the event. The same is true for the invention of coinage. Sehgal does correctly understand the fact that seems curious to us today, that promissory money, “soft” money, preceded precious metals as hard money by thousands of years. That said, the story of ancient Sumer and the creation of promissory notes (pg. 86) is wrong in so many details that it is wrong in substance. His deepest misunderstanding is the claim that clay balls containing tokens were a form of proto-currency (page 104). They may have been a harbinger or foreshadowing of that, but he completely misses the significance of the contemporaneous invention of writing. For the correct accounting see “Debt: the Seed of Civilization” on this blog, which points to the works of Denise Schmandt-Besserat.  

On the invention of coinage, he again relies on secondary popularizations, rather than the best academic research. And he fails to ask delving questions. He claims (as many do) that coins were invented in Lydia before 630 BCE. But he also identifies the famous hoard of the oldest known coins and coin-like objects, from the Temple of Artemis at Ephesus. Why were the oldest known coins and proto-coins not uncovered within the excavation of Sardis, the royal site of Lydia?  Ephesus, Miletos, and Kolophon have been suggested as possible candidates for the first cities to strike coins, not for commerce, but as bonus payments to mercenaries.

Sehgal never questions the economic motive for the origin of coinage. But if they were invented to facilitate commerce, they would have originated at a center of commerce. And they would have been commercially convenient. In fact, the first coins came from a cultural hinterland, the Turkish coastline of archaic Greece. And they were worth more than anything you could buy with them, as if today, the smallest bills were $1000 and relatively rare, while $10,000 bills were common. And Sehgal completely misunderstands electrum, the naturally occurring alloy, nuggets of which the first coins were struck. Lacking anything like an atomic theory, gold, electrum, and silver were three distinct metals, even though the ancients knew that electrum could be made by alloying gold and silver; and that electrum gold could be parted from electrum silver.  

Seghal never stops to ask why but just keeps going with a facile, though interesting, narrative.  He correctly identifies the fact that coinage is closely tied to the development of democracy, but he misplaces the origin of democracy at Athens.

It does not get any better with his stories about Nero, Diocletian, Lincoln’s greenbacks, or Bretton Woods. 

Kabir Sehgal lavishes praise on the deep knowledge base of the numismatic auction house, Stack’s (pgs 247-249) and rightfully so, but simply cites Q. David Bowers as “David Bowers, legendary numismatist and business partner of Harvey Stack.”  Harvey Stack gets all the credit. And he is worthy, indeed. But everyone in the know calls Q. David Bowers “the dean of American numismatics.”

So, as much as I would like to believe that a cash economy created niche employment for the beggars of Jakarta as extra riders to validate a taxi cab’s right to the high-occupancy high-speed traffic lanes, I have to remain doubtful that Sehgal actually understood what was happening.

PREVIOUSLY ON NECESSARY FACTS

Money as Living History  

Numismatics: History as Market   

Numismatics: The Standard of Proof inEconomics  

Scripophily 

Ten Most Popular Page Views

Since, I opened this blog on January 2, 2011, these articles have tallied the most readers.

What (if Anything) Did Dorothy Learn? 

(3600 pageviews. January 6, 2012)

At the end of the 1939 movie version of The Wizard of Oz, Glinda the Good Witch says that Dorothy could have gone home any time, but she had to learn that for herself.  Scarecrow asks Dorothy what she learned.  …  Clearly, what begins as a cliché ends as a contraction.

Contradictions in the Constitution 

(2721 pageviews. August 13, 2013)

This grew out of a discussion on Galt’s Gulch Online.  Ayn Rand suggested that as admirable as the Constitution is, not having been based on a consistent philosophy, it contained the seeds of its own destruction.

Alongside Night to Run in Austin; Author to Appear  

(1800 pageviews. May 27, 2014)

With help from my anarcho-capitalist comrades here in town, we brought a screening of this movie and its author here for a weekend.

With a cameo by Ron Paul, Alongside Night is the story of the final economic collapse of the United States. We see it through the eyes of 16-year-old Elliot Vreeland.  Elliott searches for his father, a Nobel laureate economist who was targeted for arrest because he consulted with the Europeans to create a gold-based currency that effectively destroyed all confidence in the U.S. dollar. 

Bob Swanson and Genentech 

(689 pageviews.  July 3, 2013)

Bob Swanson was 29 when he provided the money for Prof. Herbert Boyer to start Genentech.  Like all overnight successes, the real story is more complicated, with deep roots.  Bright, accomplished, and motivated, Swanson had obvious potential – and a string of failures to show for it.

William Sheldon: Psychologist,Numismatist and Thief  

(603 pageviews. September 1, 2013)

Dr. William Herbert Sheldon, Jr., (1898 – 1977) came from a privileged family. The philosopher William James was his godfather. Sheldon created the 70-point grading scale that is the standard in modern American numismatics.  He also pioneered the study of Early American Copper, the Large Cents and Half Cents struck until 1857. He also stole coins from the American Numismatic Society; and he defrauded other collectors.

Debt: the Seed of Civilization 

(555 pageviews.  December 28, 2011)

In these days of anti-capitalist protest, it is important to know that keeping track of debts led to the inventions of counting and writing, and eventually gave voice to art.

There is no John Galt: And That’sWorse

(359 pageviews. September 13, 2014)

What you tax you get less of; and what you subsidize you get more of.  The brightest people in the world are making video games; and no one is on the Moon.  It did not take a genius to figure this out: it is a universal law of human action

Supplies and Demands

(342 pageviews. November 25, 2011)

In Economics 101, the Supply curve and the Demand curve are displayed.   The point where they intersect is called “equilibrium” where the most efficient allocation of resources is claimed to occur.  This ignores the fact that the other choices do not disappear. People are still demanding and supplying all along both curves.

Scripophilly

(337 pageviews. August 10, 2013)

Scripophily is the study of stock certificates, bonds, and related fiduciary instruments. It is a subset of numismatics, the art and science that studies the forms and uses of money. Like coins, banknotes, checks (drafts), and tokens, stock certificates reveal the daily life and work of the times. And like other numismatic items, they can be highly artistic.

Republicans for Voldemort

(323 pageviews.  May 20, 2014)

In point of fact, such a claim would be unnecessary, as for instance, "Republicans for Bush" or "Republicans for Palin."  Logic demands that we accept Voldemort as a Democrat and allow that some Republicans favor his reign.

POPULAR THIS WEEK

In addition to those above, these were among the other posts that recently gained some attention.

Against Gulching

(88 pageviews. December 25, 2016)

The defining attribute of fans of the Atlas Shrugged movies is that they are people who want to set themselves apart in a separate, isolated and hidden community of like-minded people. Many dream of a physical locale. Most enjoy online communities. In those discussions, the occasional reports of attempts at a “Galt’s Gulch” receive close attention. Although the plot element of “Galt’s Gulch” served a poetic purpose, it was not a call to action.

Short Snorters

(14 pageviews. September 26, 2016)

A short snorter is paper money, signed by people who share a common experience. During World War II, with 16 million men and women in the American armed forces, the custom spread rapidly. After the war, it faded just as quickly.

Art and Copy

(7 pageviews. January 23, 2013)

Products become icons because of the insightful and compelling work of advertising.

Art & Copy (2009) is a film by Doug Pray.  “Everything that was done to launch that product is now done differently because of that product. ... Every computer company on the planet does their ads on a Mac.” – Lee Clow, creator of the Macintosh “1984” ad.

The Weatherman Songbook

(5 pageviews. February 5, 2014.)

"Some of the best things in life are free / If you can steal them from the bourgeosie!" When Bill Ayres and Bernadine Dohrn came to Eastern Michigan University to speak to the New Students for a Democratic Society in 2010, I was there. Bill did not recognize me even though I was at the Flint War Council, December 27-31, 1969.

Peace is More Powerful

(4 pageviews. May 31, 2105)

Imagine a successful protest in Berlin 1943 against the Holocaust.  Between February 27 and March 6, about 200 German women stood outside a detainment center, demanding the release of their Jewish husbands. …  "Researchers used to say that no government could survive if just 5 percent of the population rose up against it," Chenoweth says. "Our data shows the number may be lower than that. No single campaign in that period [1900-2000] failed after they'd achieved the active and sustained participation of just 3.5 percent of the population." She adds, "But get this: every single campaign that exceeded that 3.5 percent point was a nonviolent one. The nonviolent campaigns were on average four times larger than the average violent campaigns."

JUST TO NOTE

I found a mirror site in Sweden:  http://necessaryfacts.blogspot.se/  I did not set it up; someone else unknown to me did that.  I also found that many readers come here via a Russian site, yandex.ru, which I have never visited because my personal protection is not strong enough for me to go gallivanting.

PREVIOUSLY ON NECESSARY FACTS

Open Secrets   

Science in the Middle Ages  

Money is Speech  

Laboratory Misconduct in the Courtroom  

India Two Point Oh: Amita and Raj 

Impossible Usually is Not

Oil at $100 a barrel is “impossible” the headlines said. But I remember Tom Peters in the early 1990s warning us that we would never again see oil at $35 a barrel. And today’s dollars are even smaller than they were in 1992. In terms of 1992 purchasing power, we are living with oil at about $15 a barrel right now.

 “If true, that could also eliminate the threat of $3 a gallon gas. In an interview with the Middle East Economic Survey, an oil industry newsletter, Ali al-Naimi responded "we may not" when asked if oil markets would ever lift prices to $100 a barrel again.”  (The Middle East Economic Survey website requires a login. The news was widely reported on CNN, Reuters, CNBC, etc.)

“Impossible” is an absolute claim. Physical absolutes are primaries. As Ayn Rand pointed out in Galt’s Speech in Atlas Shrugged whether you have your cake or eat it – or whether your neighbor eats it – is an absolute. Either-or, the excluded middle of logic, is an absolute. Whether the price of crude oil can never again be below $35 or above $100 is not an absolute. 

Calculators at Walmart cost
a fifth or a tenth of their prices
in 1976 when the dollar was
three times as large as ours.

It is pretty easy and common to create a list of statements of impossible outcomes that are now integral to our lives. No steamship could carry enough coal to cross the Atlantic. Heavier-than-air transport was a pipe dream. The world only needs five computers.

Most events and circumstances that are open to human action are objective. “Objective” means rational-empirical: at the same time both logically consistent and evidentiary to the senses. 

A better explanation, a better theory, is better logic. Cartesian geometry is an example. It does not contradict Euclidean geometry, but subsumes it under a wider set of truths. Epigenetics improved upon Darwinian evolution. Statistical mechanics completely replaced phlogiston as an explanation of “heat.” 

New discoveries  – the atom, the chromosome, distant planets, accelerating galaxies – lead to new inventions: stainless steel, Kevlar, rayon. Those are the new facts that require and validate new theories.

I forget where I read it, but it has been pointed out that physicists have no Journal of Phlogiston, but philosophers still have peer-reviewed periodicals for Aristotleanism, Platonism, and other archaic collections. Another expression is, "The news is always the same. It just happens to different people." Researching 19th century America from newspapers in order to write about numismatics, I found many stories that could be reprinted (almost) verbatim today. 

Previously on NecessaryFacts

Harriman’s Logical Leap 

Greg Browne’s Necessary Factual Truths 

Browne on Kuhn 

Numismatics: the Standard of Proof in Economics

America Pawned is America Pwned

Rod Steiger in The Pawnbroker. 
It does not matter which side
of the counter you stand on.

Pawn shops have taken one or two thousand years of criticism.  The bottom line is that they are resources for the community.  If you want to go into business, which would offer the best opportunity: a pawn shop or a lending library? That said, the fact that pawn shop have proliferated in the suburbs is a stark narrative not captured in government statistics about gross domestic production and unemployment claims.

A new suburban tradition

The fact is that the Reagan-Clinton years were the longest period of economic expansion in American history because America was involved in no large wars and no strong government programs.  Moreover, the House and Senate majorities were close and changed frequently, denying an "imperial presidency" to the White House.  All of that changed with the 21st century.  From the Dot.Com Meltdown to 9/11 and the subsequent wars in Iraq and Afghanistan, the so-called Mortgage Crisis and the Bush/Obama Bailouts - protested by Occupy and Tea Party alike - America and the world have suffered a long recession.

Can't tell a pawn shop from a bank.

Recessions are not necessarily bad.  The last "long recession" ran from the "Crime of '73" to the Panic of 1907.  Workers formed unions and agitated for the eight-hour day while farmers called for cheap silver money to pay off their debts.  In fact, prices fell because of increased productivity from industrialism, just as our "information age" lowered transaction costs.  Back then the new technologies were the railroad, telegraph, telephone, and typewriter. That did little to assuage the farmer or factory worker who found their incomes falling faster than the prices of the things they wanted to buy.  So, too, today, are suburbanites ready customers for pawn shops because their own real incomes have fallen because  the federal government tripled the money supply.

ALSO ON NECESSARY FACTS

Supplies and Demands

Employee Theft

The Pretense of Sociology

Supplies and Demands

From "Inspired Business" 
http://www.inspiredbusiness.eu/

In Economics 101, the Supply curve and the Demand curve are displayed.   The point where they intersect is called “equilibrium” where the most efficient allocation of resources is claimed to occur.  This ignores the fact that every point on either curve represents a choice, an exchange of a lower valued good (or service) for one of higher value. 

On each curve, the quantity demanded (or supplied) changes. But where they intersect is only one such point. The other choices do not disappear. People are still demanding and supplying all along both curves.

The danger – the tragedy – is that claiming that the intersection of these two curves indicates a special equilibrium. This causes those in political control to believe that they should or must force all supplies and demands to be at this point.  Interest rates are raised or lowered; money is created (rarely destroyed); tax laws are written or rewritten. In some societies criminal penalties are enacted and enforced for prices other than the approved one.

At the very least, and as the foundation of the wrongs cited above, economists teach that any other price except the equilibrium is inefficient and thus markets are not perfect. 

The curves should be called "Supplies" and "Demands" and their intersection should called the "modal point."  This is where "most" trades take place.  But nothing else is special about it. 

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