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April 18, 2006 - Freedomain Radio - Stefan Molyneux
40:35
195 Economics and Subjective Value

Are market prices objective or subjective?

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Good morning, everybody.
I hope you're doing well. It's Steph. It is 9 o'clock in the morning on the 18th of April 2006.
I have to head out of Toronto for a meeting this morning, so I got to sleep into a civilized time this morning, which is quite nice.
So, I hope you're doing well.
I wanted to, I mean, sort of, I'm planning, I'm having a sort of brain flash that might be something of use in terms of donations.
I have received some more, and I certainly appreciate that.
It certainly helps me to understand that nagging is the best form of advertising, really, and that's encouraging to me.
So I appreciate that.
Thank you so much to those who sent some money in.
That's wonderful.
I will be using it for AdWords in Google, and I will be using it for a tasty array of other possibilities for Free Domain Radio to get the word out.
Thank you so much.
And I've decided, sort of thinking back to, I don't know if you ever watched this public television channel out of Buffalo, I think it was Channel 17, W-N-E-D, was the way it worked when I was a wee lad watching Fawlty Towers as a teenager with some friends.
And they used to have these sort of pledge levels, and then with those pledge levels, you would get gifts.
And so I have decided to give gifts.
Now, I know it's going to be disappointing.
I'm not necessarily, as I mentioned on the board, going to be putting something together involving me wearing a tool belt draped over a panther with a seductive smile.
I know it's shocking, and I know it's disappointing, but do your best to manage it as best you can, because I've decided that that would be...
Well, just entirely too erotic for words for you and might just blow your mind.
So let's not do that for many reasons.
Now, the other thing that I have decided to do, though, is to put out Three gifts.
Three gifts to people who donate.
And this, I'm not going to spend half an hour describing the gifts as they used to on that WNED program when I was a teenager, but I will say, I'm not going to sort of say what they are yet, because I'm still sort of working out the levels that I want to give them away at, but you will be getting something pretty unique and something that will engross you for many, many, many hours. And something which is not available anywhere else.
So let's just...
I'm going to put out the teaser.
This is the marketing genius that I am.
I'm going to put out the teaser.
And if you send me in some money, I can guarantee you that whoever sent me money will get a gift.
And the more money you send me, the more gifts or the better gifts you're going to get.
And once I sort of figure out the levels...
Well, first of all, if people just start sending me money, then I don't have to worry about it.
I'll just send you gifts. Send me money and I'll send you gifts.
The other way of doing it, of course, will be to end up with sort of, at this level you get this, at this level you get this, and so on.
And at higher levels you'll get more and you'll also have a choice.
So this kind of stuff will be excellent.
So I just want to sort of put that out there.
I'm going to give better gifts to people who give donations before I end up working everything out in terms of distribution and so on.
So if you get in under the fence, then you will get better gifts.
You know, that's just sort of my teaser.
It's my enticement. So I hope that you will come to freedomainradio.com and donate, and I think that I can give you something that's going to be quite remarkable and quite engrossing and quite positive in return.
I'm sure those of you who know my history will have no particular problem working out what it is, but yes, it's a videotape of me doing Macbeth at the age of 21, and there's a shirtless scene.
I actually did play Macbeth when I was 21, and it was quite a physically challenging role because of the sword fighting and so on, so it really was quite remarkable, and one day when we are out of topics, I will end up giving you some of the funny stories that occurred from my acting days.
They were pretty wild, and I'm very glad that I did them, and I'm very glad that I'm no longer doing them.
So, I had a suggestion this morning, and I was going to start on parental issues this morning, but I had a suggestion which I think makes sense from somebody on the boards, which is to talk about the intrinsic theory of value versus the extrinsic theory of value.
Wait, wait, wake up, wake up!
It's interesting, really! Trust me, it just doesn't sound interesting, but it is!
I'll do my best to make it interesting.
And what this is all about is the question...
I mean, can value be determined ahead of time or is value entirely subjective?
Like the value, the price, the price of something, the amount of shekels that you're willing to part with to get your grubby hands on something.
And the reason that it's important is because if price can be determined objectively or ahead of time or in some, without reference to consumer desires specifically, Well, then centrally planned economies become that much more feasible.
Now I, for one, can't imagine.
I can't imagine, man.
Why? There's any question about centrally planned economies anymore.
I mean, it just is amazing.
To me, it's like people saying, well, you know, slavery had some points.
I mean, if we try this approach to slavery or that approach to slavery, then, you know, I just think it's going to work out for the better.
And I think that's just great.
Well... I just can't imagine why.
It's still a question. But I guess, you know, I mean, I can sort of refer to my podcast yesterday about the people who are these sort of second-rate intellectuals who don't want to put themselves out on the market and so create all these state programs.
That's sort of the answer. And they are...
Anyway, you heard the podcast yesterday, so I don't need to get my blood pressure up and boiling again on that topic.
But... The question about value to me is interesting.
Now, there's lots of arguments on both sides of the fence.
The Chicagoans and the Austrians tend to go on the idea of subjective value.
Which is that you can't predict in advance what people are going to be willing to pay for something and what they want and so on.
And I don't know if they do that and therefore they're against state manipulation of the economy or centralized command and control of the economy or if it's the other way around.
Who knows? I don't really know much about the history of the Chicago School, so if anyone out there knows, please let me know.
So, on the other hand, on the other side you have the Keynesian and so on, the people who are sort of behind big government manipulation of the currency and of the prices and wages and subsidizing and so on, and these people are all claiming to be able to outthink the market, to be able to Outthink the subjective whims, desires and preferences, largely subjective preferences of millions of people.
It's really quite amazing. I can't imagine that if anybody has the ability to be a central planner for an economy, if they have that level of genius that they can utterly, utterly predict, The movements, psychological and economic, of millions of people, why, oh why, oh why do they not just make a killing on the stock market and end up ruling the world?
It's just amazing to me.
It's just amazing to me.
If these people have such what I think Charles Murray calls the vanity of the anointed.
We have anointed ourselves as mankind's keepers and we know what's good for you.
And it's not indirectly in contradiction to what's good for you.
It's just we know what's good for you and what you should do.
And we also can predict what it is that you want and put it there for you.
Well, gosh, why would you want to be in the government?
Why wouldn't you just invest in a company or start a company or just invest in a stock market in general?
I mean, if you can predict what people want in the future, oh my lord, you could be a multi, multi, multi-billionaire within a year or two.
It would be, I mean, starting with like 12 bucks.
But no, these fine altruists don't want the lure of billions of dollars.
What they want to do is to sit in their altruistic way at the levers of society and cause everybody's life to follow a pattern that they themselves determine.
But they don't do it out of any lust for power.
They don't do it out of any greed for money.
And although they could make tens or hundreds of billions of dollars by investing in the stock market because they can outthink the market, they have decided to eschew the riches of Croesus and have decided to sit at the lever and make our lives better by manipulating the very substance that we live on and the money and the goods and the services and the labor and so on.
Of course, it's ridiculous. I mean, it's exactly the same as the people who claim to be psychic, but who don't actually want to submit themselves to the amazing Randy's test of being psychic, and instead end up just talking about how psychic they are to gullible people.
And as somebody who was one of those gullible people at one time, I don't have any stones to throw in that area.
It's completely untrue that, of course, the central planners can do anything, and we can talk about that another time if you haven't already heard me drone on about it already.
To your heart's content, which might be not quite as long as my heart's content, but that's the variety that makes the world so wonderful.
Now, to me, again, this is just, I'm no trained economist, but this is sort of, to me, sort of common sense.
There's lots of stuff about economics that is very complex, but there's some stuff about economics that to me is just common sense.
So I'm going to throw it out there.
And if you are a trained economist, and you want to correct me, by all means, tell me where I've gone wrong.
As is always the case, I put ideas out there and sometimes I appeal to common sense, sometimes I work syllogistically, and sometimes I just sort of blarp out some theories that I'm working on in the hopes that they're interesting to people.
So this is one of the ones where I'm appealing to common sense.
However, what I call common sense may not be common and it may not be sense.
And so, I mean, if only common sense were a little more common, then we wouldn't need to keep talking about common sense all the time.
But this is sort of what, looking at my own economic life, such as it is, this is the way that I deal with things like value.
I basically have two things that I have in my life.
This is sort of the way that my economics works, and I suspect that it's the way that your economics works.
The first thing is the things that I have to have.
The things that, if I don't have them, I don't have, really, an economic life to speak of.
So, the first thing I need is food.
I mean, man's got to eat, right?
The second thing that I need is water.
I mean, I guess those are the first two things.
I mean, this is sort of Maslow's thing, right?
So, I'm sure it's no shock to people out there.
But, what I would say is that the things that I have to have are basically demanded by my biological nature and so on.
And that's fine. That's dandy.
I got no problem with that. Me like to eat.
Me like to drink. Although, not alcohol, really.
I don't really drink much alcohol at all.
But I love a good orange juice and club soda mix.
Oh, it's a juicy citrus bite.
But... So those things, you know, they have some value that is not purely subjective, because if you have a man in a desert who's dying of thirst, and you have a nice bottle of Evian spelt backward naïve,
interestingly enough, Then you hand it over to him, he's not really going to have, I mean, assuming that he wants to live, he's not going to be able to value that good subjectively, because the man's dying of thirst.
So, you know, if a man is hooked up to electrodes that are zapping him in nasty places, and you walk up to him and say, I can stop that for you for 50 bucks, I don't think he's going to haggle.
Even if he doesn't have 50 bucks, he'll find some way to get you 50 bucks if you'll stop it.
Because he is experiencing extraordinary physical discomfort in the absence of your service, just as the man in the desert who's dying of thirst is experiencing extraordinary physical discomfort in the absence of your glass of water.
So when you're in physical agony, it seems to me, there is an objective value to goods and services that relieve that extreme physical pain or discomfort.
You know, extreme discomfort, I gotta tell you, don't really make that much sense together, as I'm sure you're aware, so I'll just talk about real pain.
Badly pain. Pain with badness mixed in.
So, those needs, which are the have-to-haves, are pretty important.
And they involve food, and certainly in Canada, for much of the year, it involves shelter.
And, you know, there's a bunch of things that you sort of have to have, clothing and so on.
And those are sort of the first category.
Now, the second category, I guess you could say there are three categories.
Now, the second category is those goods or services which you need in order to be able to earn your living.
So, if you're a courier, like the guys who bike around delivering messages, if you're a courier and you end up Biking around downtown delivering messages and that's how you earn your daily bread, then you kind of need a bicycle,
right? I mean, that sort of makes sense to me, that you would, in fact, like to have a bicycle in order to be able to deliver your messages, because on foot you're going to be kind of gross and sweaty and you're not going to be very fast, and you're not going to have the excitement of dodging people opening their doors right in front of you, which is what I remember when I used to bike around, not as a courier, but just as a grad student all over Toronto.
So... You are going to need certain goods in order to be able to be a courier.
You're also going to need certain services.
You're going to need to have a relationship with a company that collects packages and gives them to you in order to deliver them and so on.
So, those things are not...
I mean, you can live without them, but then you have to find some other methodology for getting your daily bread.
So, that approach, to me, is sort of a need to have, right?
Like, I have a job that is quite a ways away from where I live.
And isn't that wonderful? Because that just means longer podcasts.
Oh, it's just too lovely for words.
And so in order to be able to earn money in my particular situation, then, I mean, at this job, then I need to have a car.
And if I have a car, then by golly, I get all of the wonder and beauty of being able to drive to work, do a podcast, make some money, come home, do a podcast, and so on.
And there are other things that I need, like I need some fairly formal business wear.
I need a passport so that I can travel to the States on business.
I mean, there's things that I need.
Well, I mean, some of those are artificial, some of those are real.
And I am willing to spend money to buy a car and to pay the private road fees and upkeep and maintenance and gas and oil changes and everything.
I will pay all of that in order to be able to get the money to pay that and a whole bunch of other things.
And so there are things that you need in order to be able to earn your daily bread, right?
So the simple, a farmer needs a hoe.
And I'm not going to make any of the obvious jokes there.
And so there are things that you need in order to be able to earn your daily bread, without which you can still survive, but it really is just sort of bare survival.
Like if I'm out in the woods trying to find berries to eat, that really is, I mean, that's the barest of bare survivals.
So there's not going to be a whole lot in that that is going to allow me to flourish.
So I really do need some additional goods and services in order to be able to make some serious coin.
And then, there's other things.
There's the things that you just kind of would like to have, right?
So, I mean, obviously we can survive without going to see movies, and we can survive without listening to music, and we can survive without MP3 players, and it would be nice if you could survive without these podcasts, but I've actually mixed a fine crack dust into all of these, which is slowly sifting in through your ear canal, causing extreme addiction.
But it'll be pleasurable, trust me.
So... So, those sort of three categories of things, I know we started with two, but it just sort of made sense to me to deliver up to three, have some relationship to value.
So, you really, because we have a body which has requirements like warmth and food and drink and so on, we can't really claim that the goods and services which satisfy those requirements have entirely a subjective value.
I'm not going to experience physical pain if I don't get the latest and coolest MP3 player.
I'm not going to hurt physically.
It's not going to cause me agony.
But, you know, I'm not going to get the pleasure out of having the latest and geeky cool toys.
So, where we have direct physical pain caused by a lack of goods and services, we don't have a subjective sense of value.
I mean, that to me is pretty clear.
Where we have the requirement for a car to drive to work or a hoe to hoe the garden for your vegetables or other such capital goods, which are all designed to help us make money, it's not that subjective.
It's such an obvious cost-benefit analysis.
Like for me to pay a couple hundred bucks for a car in order to earn what I earn at my job makes sense.
It's just such an obvious net plus that people are going to do it.
I mean, if the price goes up, Sure, then you're not going to want the car.
If it's going to cost me 10 grand a month for my car, which I'm going to need in order to be able to make 10 grand a month in salary, that's not so good, right?
So, that particular idea is that there is objective value based on physical requirements and Such obvious cost-benefit advantages that you can't really say that it's really a wildly divergent choice.
If everyone's going to make that choice, right, then there is objective value, I think.
I mean, if every dying person is going to...
If a dying man, a man dying of thirst in the desert, where would we be without the desert and without the drowning man when it comes to analogies about ethics and economics?
Nowhere, baby. Nowhere.
So, if a dying man who has $10,000 in his wallet is offered a drink of water for $1, and every single human being in the universe, except somebody who was completely deluded and dying of dehydration to the point where they're having visions, if every single human being would make that transaction, then we can say, I think, that it has objective value.
However, when it comes to buying an MP3 player, Not everybody in the world is going to want one.
Those who do want one aren't going to want the same one.
For instance, I was interested in the Apple iPod, but most of my music collection is in WMA format, so I had those considerations.
I also wanted to buy an MP3 player which had a voice recorder, for obvious reasons, just in case I didn't have my notebook with me and the podcasting urge struck me in a place which wasn't entirely too public to do it.
Free Domain Radio, coming soon from a bathroom stall near you.
But, hey, what's that echo?
Is he near a stream? So, where everyone's going to make the same decision, I think we can say that there's some objective value.
And where people are going to make different decisions, sorry, objective value.
Where people are going to make different decisions, there's some subjective value.
And that all seems kind of commonsensical to me.
To say that the value of everything is subjective is to say that it's the old mind-body dichotomy, which we can talk about another time, which has sort of plagued Western civilization since the dawn of time, which is the idea that we are either, in the sort of Marxist sense, we are either muscles without a mind and the only value is labor, or we are sort of the other way around, that we are sort of minds without any muscle and the only value is sort of ideas and the only value is abstracts and so on.
And this is a very common thing within society, within thinkers in particular, that they're going to divide things into our mind-body dichotomy.
And the way that the mind-body dichotomy shows up here is that people either think that value is completely made up, in other words, our body does not give us any positive or negative stimuli for the acquisition and consumption of different goods and services, or that everything is completely objective, in which case there are no personal preferences based on history and individual circumstances.
And just sort of individual preferences which can't be calculated in advance.
I mean, if they could, then there would be no such thing as a stock market, right?
No such thing as risk. No such thing as investment that would carry any return.
Investment always carries return because it has risk involved in it.
And the risk is that you misjudge what it is that the market wants.
And that's pretty easy to do, right?
Majority of businesses fail and so on.
So, I mean, the majority of startups, I mean.
So, to me, the idea that there is some sort of Well, I mean, we can talk about centrally planned economics another time in sort of more detail, but...
There's no justification for setting the prices of things within this free market because even base ones can be satisfied any number of ways.
So shelter, for instance, can be anywhere from a tent to the top floor of the Ritz-Carlton Hotel.
So it could be anything from like $100 will get you a tent that will last you for like, I don't know, five years versus $10,000 a night for a penthouse suite at the Ritz-Carlton.
So shelter itself has a wide variety.
Food itself, of course, has a wide variety.
When I took Christina out to one of the, well, if not the most expensive restaurant in Toronto to propose to her, the meal, which was pretty simple, was like jaw-droppingly expensive, but very good.
And then the other option, though, is sometimes after we go to the gym, we will stop off at a falafel place and pick up a falafel, which is like two for nine bucks.
So there's lots of variety around food.
Water, same kind of thing.
You can go with, I don't know, San Pellegrino at like eight bucks a bottle, or you can drink out of a tap in a Starbucks.
So there's lots of options when it comes to water, lots of options about how people want to satisfy those base physical preferences.
That's something that it's important to understand, that even within those base preferences, so many different ways of solving those issues, that even when it comes to things like should you build rental units or should you build condominium units to purchase?
Well, there's no way to tell. I mean, I was making a lot of money, decided to rent, because I wanted to keep my money to spend it on writing novels.
So that is the way that I approached that, and other people would approach it very differently.
If you have kids, you're probably going to approach it, you know, assuming your kids are a little bit older and you don't need all the money to keep them in diapers and drool buckets, then you're probably going to end up with a condo and want to end up owning something for a variety of reasons.
And so those kinds of issues, to me, are very highly varied.
And because they're so highly varied, it seems hard for me to say that there's any time in which central planning can predict it.
Just because you can predict that somebody is going to want shelter, you can't predict with any degree of rationality or predictability...
Exactly what kind of shelter, in what location, what amenities, what circumstances, what financial arrangements do they want to sublease?
Do they want to rent monthly?
Do they want to rent with a lease?
Do they want to buy? There's lots of different options.
Do they want to have roommates?
There's simply no way to be able to predict how people are going to want to satisfy those needs.
So I would sort of say that there's sort of three categories when it comes to value.
The first is that there are needs which we know people are going to have, but we don't know exactly how they're going to be satisfied.
And they have more objective value.
You're going to buy something, but we don't know what you're going to buy, like shelter or food or whatever.
There are other ones which have sort of objective value insofar as in that specific transaction, almost everyone is going to take that transaction.
It's the Maserati for 10 bucks or the bottle of Evian to the man dying of thirst for a buck.
Everyone's going to make that transaction, so there's some objective value, but those circumstances never occur.
They never occur. I mean, they're theoretical, for sure.
But I'll tell you, if a man's got $10,000 in his wallet, And I'm out in the desert with my Evian stand, I'm not going to sell it to him for a buck.
I'm just not. You can call me mean, you can call me cruel, but the man can afford it.
And what does $10,000 matter compared to your life?
I mean, we make those decisions all the time.
If I'm dying and it needs $10,000 for the surgeon to cure me, I'll pay it.
I mean, of course, what the heck is money going to do me when I'm dead?
It's going to do me no good at all.
So... Those situations don't occur, with the one exception, or the minor exception, of course, that things like buying a car to get to a job which is going to pay you many multiples of the price of the car is likely.
But even then, people are going to have many other options, like I could choose to work at home and not have to drive a car, and I just happen to have taken this job for a variety of reasons.
And so even still, there's no way to predict exactly what configuration people are going to want.
Because as soon as a cost-benefit becomes too great, in other words, everyone will choose it, then everyone will choose it, just thus driving the price up.
So if everyone could invest in a $200 bicycle and make a million dollars a year as a bike courier, then everybody would.
And then that would drive down, of course, the profits of the bike courier.
So it would come to equilibrium.
And since the market sort of fine-tunes itself in a matter of nanoseconds, I mean, I think that if I remember reading somewhere...
A stock price upon news coming out into the public is adjusted within 17 seconds because everyone's got these automated buy-and-sell programs or they're watching the stock price like a hawk and screaming in the phone with their forehead, temple veins bulging out like a Klingon.
And so those people will automatically cause the market to adjust.
So you really never end up with these enormously wide disparities of incomes and sort of investments in incomes and so on.
I mean, if everyone could invest in my car and have the wage of my job, then they would probably do it.
I mean, unless they were making a heck of a lot more, which is certainly possible, of course.
So, I think that something like value is a complicated thing, and it has a lot to do with a wide variety of things.
I mean, I had never... And it has to do with changing circumstances that can't be predicted.
So, for instance, how did somebody know that I was really interested in noise-canceling headphones?
Well, there was really no way to predict it.
I'm some guy going to work at a computer company, and nobody knows that I had any kind of interest in doing podcasts.
Nobody would know that I started podcasting.
And so no central planner would be at all conceivably aware that I actually needed a set of noise-canceling microphones and headsets.
And so, you could say that podcasting in general would raise a demand for microphones, as would things like Skype and so on, so maybe the people who make the microphones, but noise cancelling, I mean, not a lot of people are Skyping from their car, or doing podcasts from their car, and so, although I did hear once a very boring, or actually about 20 minutes of a very boring podcast from a guy in Japan on his bicycle, which I thought was kind of cool, but...
Who's going to know that I need it?
Well, certainly no central planner is going to.
If enough people listen to my podcast and say, you know, I could put my whole driving time to so much better use if I could podcast with a noise-canceling head, then of course that would drive that up.
But you can't predict that in advance.
That would take an enormous amount of market research.
And you say, well, the central planners could do the market research.
Well, no. They wouldn't do the market research because they themselves have no cost-benefit analysis.
Their wages are not dependent upon the successful launch of a product called We're good to go.
The problems with pricing before, and so that is not particularly a good argument for central planning.
But when it comes to value, there's just a lot.
A value, wherever there's a great deal of value, the market will close it off so there's just enough value to make you want to do it.
And that is something that is important, right?
So if my car, if this particular car was $1,000 a week, I wouldn't do it.
I would buy a cheaper car and so on.
And if the cars became too cheap that everyone started to buy them, then the requirements would go up.
And so everybody who was in that supply chain would start raising their prices, A, to make money, and B, it would restore equilibrium to the supply and demand situation.
So that's sort of the whole idea for me behind value.
Now, while we're on this topic, and because I have a little bit more time in my driving world, I thought that I might talk about profit.
Profit is something that, oh, I spent years trying to work on this idea, because it's a very interesting question, for me at least.
Which is, why on earth is there such a thing as profit?
Now, and it is a rather vexing question for a lot of people, and we've talked about Marx's answer to it, that it basically is ripping off the manual laborer for the difference between what you're buying and what you're selling.
And after wrestling with the question for many years, and of course I could have looked it up, but I always find it more fun to chew through these things myself.
It's sort of a better exercise.
And what happened for me then...
Was after chewing through it, the only thing that I could come up with that made sense to me, and if you know more about profit, please let me know, was that I could only figure it out that profit would occur when, in the same time frame and with the same resources, you can produce more.
That's sort of all I could come up with, and that may not sound like a lot after years of thought, but this is sort of the way that I ended up spitting the problem out, and I'll sort of throw it out there for anybody who wants to have a go at it, because I'm sure it's not the end result yet.
But if you look at something like Henry Ford, right?
Henry Ford, this bizarre and vaguely totalitarian boss who enjoyed spying on his employees but was a capitalist genius, He took what used to be a whole bunch of guys swarming around one car and getting in each other's way and so on.
He took that model of car production and turned it into the assembly line, right?
This is one of the strokes of genius that looks completely obvious in hindsight, but took Henry Ford to figure it out and put it into practice.
So beforehand, everybody sort of swarmed around one car and got in each other's way, and it took forever to make a car, and it was very expensive.
And then he decided to put the car on a conveyor belt and have each person do, like, one thing, which was enormously efficient.
Now, the Marxists had a huge degree, a huge amount of problem with this, because, basically, they said, you're turning someone from a craftsman into a robot.
Basically, this is the alienation of labor.
This is sort of the basic idea. That if beforehand, let's take an extreme example, beforehand you were a cabinet maker.
And to be a cabinet maker you had to learn all these sorts of things, everything from finding the right wood to lacquering to fine shaving of wood and all this kind of stuff.
And you had to learn how to make a lock and you had to learn how to install it and all that kind of stuff.
You were a craftsman, you learned a whole bunch of stuff.
And then when the evil capitalists came along and they turned these individual craftsmen cabinet makers into these assembly line robotic alienated people, then you would get to like bolt one leg on to a cabinet.
And that was your economic contribution.
And they certainly recognized that it was efficient.
They certainly recognized that it was more productive, and Marx himself even did talk about the economic productivity of capitalism.
They just felt that it was demeaning to the skill set of the carpenter to turn from a guy who could build the whole cabinet to a guy who bolted on one leg of the cabinet over and over and over again, that there was an alienation in that, and there was a problem with that, and that was bad, and so on.
Now, I myself find that entirely disrespectful to the poor or to the people who work in the factories.
I mean, they can still be a cabinet maker if they want.
There's absolutely nothing stopping them from going to be a cabinet maker.
However, I would submit that being a cabinet maker, however much you might enjoy it, is not a very economic, like to do the whole thing yourself, is not economically very productive.
Because to take a sort of silly example, I mean, it's actually not that silly because it's sort of what happens, but To bolt one leg onto the cabinet takes you about five minutes to learn.
And you are immediately productive and you're cranking out 100 cabinets an hour.
Or you're participating in cranking out 100 cabinets an hour.
However, to learn how to make a whole cabinet, top to bottom, to order, to set up the supply chain, to learn everything, everything, everything, to set up how to sell, it's going to take you like a year or two or three.
And you're going to make lots of mistakes, ruin lots of stuff, and have to fund that funeral or whatever.
And so I have a little trouble understanding exactly why it's always and forevermore better to be a cabinetmaker who makes the whole thing rather than the guy who screws the leg up.
Now, even the capitalists recognize that having one guy screwing a leg on for 50 years of his career is going to make him completely insane.
So they rotate people around.
They give them training programs.
They try and move them up into foreman and into management.
Like, there's a progression for people even in factories.
And this was true, of course, even in the 19th century.
The moment that you can provide greater value in management than you can as an employee, then you're going to be moved into management.
And hopefully that's not because you're a really bad employee that you get that.
In England, it's called...
You're kicked upstairs.
Like, instead of being kicked out the door, you're kicked upstairs where you can't do any harm.
As Scott Adams calls it, the Dilbert Principle, which is that you get promoted to one level above what you're competent at, and then you stay there.
And it's also called FUMU, which is Fudge Up, Move Up, with the fudge being something slightly more base in Anglo-Saxon E. And...
So that is, it's hard to say exactly why it would be automatically better for you to take the enormous risk and time consumption of figuring out how to become an entire cabinet maker dude all on your own versus screw the leg on and then learn something else and then learn something else.
In other words, we pay to learn how to make the whole cabinet then move up into management and so on.
But, of course, because these intellectuals have never worked in these kinds of environments, they're looking at them like, as I've mentioned with artists in the free market about three months ago, they're kind of looking at it like, oh my god, if I had to screw the leg onto a cabinet every single day for eight hours, I would go insane. It's like, well, sure, that's because you're an intellectual, right?
So, of course, that would be kind of a problem for you.
But I've worked at those kinds of jobs and they're fine.
Yeah, they're a little boring. Yeah, they're a little repetitive.
But you know what's great? You can really let your mind wander.
Like you go on autopilot and you go off to your happy place and you can think about this or that or you can chat with the guy next to you.
I mean, I had great conversations with a friend of mine.
Who I was working with, and we're still friends, of course.
It was the guy whose mother died recently.
We worked together up north, and we did claim-staking gold panning.
And it was, you know, some of it was really dull work.
But we had great conversations, and you really could go on autopilot for most of this stuff.
So I don't think that that's necessarily that bad a thing.
And there's always room to grow, room to replace us to go, things to learn, and so on.
So these are just, well, you know, I would go nuts with that kind of job, and therefore...
That kind of job is bad and all those people who choose to do it should instead be learning how to become cabinet makers or whatever from the ground up and that would be more satisfying to them.
Well, really, you know, do you really feel that it's okay to make those kinds of decisions for other people and tell them what is the best and most optimal situation for them?
I mean, there's lots of people who just go to work so they can go and do other things.
They work to live and they don't really care that much about the content of their job.
And it's, you know, not a lot of people, if they win the lottery, go back to work and keep working.
I mean, some people do, and some people work past retirement, and they're either workaholics or the, you know, 2% of us who really enjoy their jobs.
But most people, you know, they go to work so they can go and do other things.
And the more they can get paid, fantastic.
They're not entrepreneurs by nature.
They don't want to take all the risks of learning how to make cabinets yourself from top to bottom and whether people are going to buy them and all this, that, and the other.
I mean, that doesn't sort of make sense to me.
So I don't particularly see that you can make an objective judgment about whether somebody should learn how to make a whole cab in order to just screw the leg on as sort of a temporary thing.
It's entirely a personal decision based on your own individual preferences.
It's not a bad thing. It's not a good thing.
It's just what people choose. And why on earth should they not be allowed to choose that if they want to?
It seems kind of presumptuous to me for an intellectual to say to someone, you shouldn't do that.
You should be an entrepreneur. I mean, I don't see that the working class, so to speak, and I actually hate that phrase because...
It implies that managers don't work, which is crazy.
Managers work incredibly hard, usually.
But I don't see a whole lot of people who have those kinds of jobs telling intellectuals what they can and can't do.
That, oh no, you shouldn't be a professor, you should be somebody who works at a think tank.
Or rather, you shouldn't be a professor, you should be somebody who works on the line in a factory.
I don't see that presumption coming from those who actually do those kinds of jobs, but you see it all the time, this absolutely horrible and insulting presumption from intellectuals saying to people, well, the work you do is alienating and degrading.
And it's like, really? Have you seen construction workers?
You know, they seem to enjoy their jobs.
The guys who came to work at my house, who I chatted with, Don't seem to be living in a Marxist hell of alienation.
And so it just seems to me kind of silly to say you should live an entirely different life and what you're doing is wrong and so on.
Assuming that there's no violence or theft or anything sort of involved in that kind of stuff.
So, what Henry Ford did was he took the same 200 guys who were swarming around one car producing like, I don't know, five cars a week, and he put them on an assembly line and was able to produce like 20 or 30 cars a week.
Now, there was some small investment in setting up, I'm sure it wasn't small, but some investment in setting up the...
The conveyor belts like the line and some training and so on.
But once that was paid off, which is pretty quick, then you end up with the same amount of labor and the same amount of time, end up producing two to three times more.
And that's, of course, why he was able to raise the wages to five bucks a day, which was unthinkable in those days.
It was more money than you can imagine.
This is how the middle class gets created.
And so that particular approach is what profit is.
It's when you can produce more for the same amount of time and energy And finally, that optimal investment and what is going to produce more and whether what is produced that is more is what people actually want is all very, very complicated.
It requires the incentives of the free market.
But I think that that discussion around profit is very interesting, so feel free to join in the conversation about that because I think without an understanding of profit and motive, it's very hard to understand exactly why the free market is necessary.
I mean, of course, it's moral, but why it's necessary if you want optimal production of goods and the increase of wealth within society.
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