sexy me
  • 1144

The Subprime Mortgage Crisis: Exercise in Politico-Economic Fundamentals

Initial situation (until 1980s):					

Lenders have profit motive 
|                       |
|                       |
|                       V
|       Lenders establish credit ratings
|               |                      \
|               |                       \
|               V                        V
|       Good-credit people      Poor-credit people
|       can get loans           can't get loans	          [Capitalism ends here. -K]
|					|
|					|
|	Meanwhile (1990s): 		|
|					|
|					V
|				Some politicians push		Poorer people are
|				for home ownership		disproportionately
|				and "affordable housing"	racial minorities
|					|				|
|					|				|
|					V				|
|				Gov't changes incentives		V
|				for Fannie Mae and 		Claims that lending
|				Freddie Mac via 		standards are racist
|				bailout insurance		      /	
|				/   	|	\		     /
|			       /     	|	 \		    /
|			      /		|	  V		   V
|			     V		|	Pressure on lenders to 	
|		Lenders can make	|	lower standards for
|		higher-interest loans	 \	poorer-credit people: 
|		to poor-credit people	  \	"Home Mortgage Disclosure Act"
|		and then sell those 	   \	& "Community Reinvestment Act"
\		loans to Fannie Mae	    \				|
  \		and Freddie Mac		     \				|
    \			|		      >	Fannie Mae and		|
      \			V			Freddie Mac officials	|
	\	Higher-interest loans		lobby hard to		|
	  \	to poor-credit people		prevent oversight	|
	    \	become profitable					V
	      \		  |					Higher-interest loans
   		\	  |					to poor-credit people
    		  \	  |				      /	become politically
    		    \     |				     /	necessary
      		      \   |				    /
			\ |				   /
			 V V				  /
Then (mid 2000s):	Lenders make	 <----------------
			many more loans
			to poor-credit people
				|
				|
				V
			Poor-credit people
			begin defaulting on
			loans in large numbers
				|
				V
			Ripple effect: Fannie Mae,
			Freddie Mac, and private lenders
			start losing big money	
					|
	Now (late 2000s):		|
					V
				Some politicians and pundits
				blame "greedy lenders"
				for making bad loans:
				"The free market has failed."
					/
				       /
	The government takes over     /
	Fannie Mae and Freddie Mac   < 


Version 1
Stephen Hicks, 2008
http://www.stephenhicks.org/
rocks
  • 1144

If this be feminism, make the most of it

More on my pet subject of women functioning differently than men. As some of us know, the faculty of reason creates a large percentage of our needs. Subtle differences in thinking style will be reflected in different needs. I don't intend to exclude men from any of the traits where I find differences; I think the differences are quantitative, not qualitative; but the overall combinations can be very different. And yes, individuals differ greatly as such; it would be a category mistake, though, to use this as an argument to ignore gender differences, when the gender gap in positions of power is still extremely obvious. We need to think more subtly, beyond male chauvinism, about what's going on.

I copy here three of the statements from women in power featured in a Newsweek article "What I Learned."

Enjoy the good advice, boys and girls.Read more...Collapse )

(no subject)

This is the fourth formulation of my argument that aims to show how deductive logic is dependent on induction. Prior attempts are posted to Objectivists, The Ayn Rand Forum, and Objectivism, making this a lesson in induction.

I have been reading Introduction to Objectivist Epistemology for around thirty five years. I was reading it before it was published as a separate work having found it in the back issues of the Objectivist. For me, it is the single most important collection of ideas from Rand. Of top importance is Rand's unification of mathematics and epistemology. In accord, Rand uses two terms that are usually associated with mathematics and shows how they are important for concept formation: incommensurable and ordinal.

Mathematics uses incommensurable to describe a number such as pi, that cannot be integrated exactly to the cardinal numbers, 1 2 3..., pi is an ordinal number. All ordinal numbers are incommensurable. It should be obvious that all cardinal numbers are commensurable. Ordinal numbers focus on differences, cardinal on similarities. Rand's first paragraph in IOE says, "Consciousness, as a state of awareness, is not a passive state, but an active process that consists of two essentials: differentiation and integration. By failing to specify the role of incommensurability to differentiation and induction, Rand puts all her epistemologil eggs in one basket. This error is partly rectified in the second edition where in pages 190-196 she actually solves a problem of incommsurability with a calculus method, though without naming this as a solution for induction.

Using Rand's theory that numbers and concepts share some kind of fundamental integration I argue that when the mathematical explanation of incommensurable is applied to epistemology we find a solution to the problem of induction.

So, what is the problem of incommsurability in mathematics? The existence of pi was discovered without knowing its exact value. There is an indirect proof that pi exists, and no direct proof. Since a number was supposed to be the same as its exact value, a question arose. Before Thales, the relation between a number and its value was taken for granted. No one had to be taught that a raised index finger and 'one' were related. The fact that a raised index finger is verified by a method different from the way we verify cardinal numbers had not been addressed. The relation between an index finger and certainty is perceptual, seeing is believing. The relation between a cardinal number and certainty is conceptual, and concepts have to be proved. Because concepts incorporate ordinal data, they are the prime example of ordinal/cardinal integration. The most obvious concepts are numbers, they are inferred in every act of a focused mind.

Rand explains the relation between sensations, perceptions and concepts, noting that perceptions don't involve choice, much less sensations. The process of integrating sensations into perceptions requires a degree of integrity that is absolute and we have no choice in the matter. We can't choose to integrate until the conceptual level. The integrity we enjoy that is pre-conceptual is a gift of nature, pride needs choice.

The discovery that there exist irrational numbers attacked the veracity of both mathematics and epistemology. Mathematics picked up the challenge and developed a calculus as a means of integrating pi with whole numbers. They (mathematicians in general) still don't know that this also supplies the meaning for cardinality. The relation between a cardinal number and an ordinal number is exactly the same as the relation between a concept and its perceptual referents. The relation between ordinal and cardinal reflects the fact of change. The sometimes mystical Newton induced from trial and error the rules for the calculus, which renders pi and all the ordinals, practical. Rand did much the same thing for concept formation except she is misleading on the issue of incommensurability.

The lesson from mathematics is that: 1. there are ordinal and cardinal numbers, the difference being the same as the difference between percepts and concepts. Ordinal numbers are used to measure percepts, cardinals to measure concepts. If a calculus solves the problem of integration (integrity) for numbers then the same has to apply to concept formation, because the process is identical. Remember, in math, the certainty of any cardinal number implies the same certainty as first obtained, ordinally. The same relation exists for concept formation. "A form of measurement, in sum, makes concept formation possible-and concepts in turn make numerical measurement possible." That is Peikoff in OPAR and my interpretation is that an ordinal form of measurement makes concept formation possible and concepts make cardinal numbers possible. Certainty is induced. Sciaberra writes "Rand's theory of measurement omission leads to an interesting paradox." Now my guard goes up when I hear 'paradox'. He then makes the point I made above that ordinal measures are the product of perceptions where choice is not involved. "Rand argued that most people do not realize that they are engaging in any kind of measurement or measurement omission when they are forming concepts. But from the very first moments of abstraction, our ability to differentiate is an ability to distinguish between larger and smaller entities, hotter and colder states, brighter and darker colors, weaker and more intense emotions." Ordinal numbers describe more or less. cardinals give us exactness. "Science and mathematics help to articulate the actual measurements that are involved in this process, but explicit quantification is not typical or necessary." Which is why cavemen could build concepts to begin with.

Just as all cardinal numbers are derived from ordinal, all concepts depend on percepts, both processes depend on seeing why commensurability depends on integrating incomsurables. Both are examples of induction. If you think your bank account is verifiable because of accounting using cardinal numbers, you need my argument.

Rand defines concept twice in chapter two of IOE. At the start with:, "A concept is a mental integration of two or more units which are isolated according to a specific characteristic(s) and united by a specific definition." and pg 13, "A concept is a mental integration of two or more units possessing the same distinguishing characteristic(s), with their particular measurements omitted." The first is general enough to include ordinal numbers, the second narrows to apply only to cardinals. It is important to keep both definitions clear.
White House Brain

Plantinga's Argument for the Rationality of Belief in the Divine

1. By definition a maximally great being is one that exists necessarily and necessarily is omniscient, omnipotent and perfectly good. (Premise)

2. Possibly a maximally great being exists. (Premise)

3. Therefore, possibly it is necessarily true that an omniscient, omnipotent and perfectly good being exists (By 1 and 2)

4. Therefore, it is necessarily true that an omniscient, omnipotent and perfectly good being exists. (By 3 and S5)

5. Therefore, an omniscient, omnipotent and perfectly good being exists. (By 4 and since necessarily true propositions are true.)

The contentious premise is 2 and the contentious inferential move is the S5 axiom (possibly necessary implies necessary). Parodies of reasoning along the lines of a so-called "Invisible Pink Unicorn" or "Flying Spaghetti Monster" can be dismissed as violations of premise 2, that is, they aren't even possible; this can be determined by their properties other than supposedly being necessary.

Premise 2 is contentious because of the argument from evil. According to this argument, a the existence of a maximally great being is inconsistent with the existence of evil. However, this can be countered by the so-called free will defense, that is, that a world in which there is free will is inherently better than a world without free will; therefore, a maximally great being would create a world in which there is free will and infringing upon it is something it refrains from doing, since it is omnibenevolent.

S5 is contentious because some logicians hold that S4 is the proper modal frame for necessity and possibility and "possibly necessary implies necessary" is neither an axiom nor theorem of S4, unlike S5. That is, in S4, the move above from 3 to 4 isn't valid. However, if S4 is taken to be the proper modal frame, one needs an underlying logic that doesn't presume classical negation (as that is also a result of S5, not S4), that is, one needs an intuitionistic logic that doesn't assert bivalency. Independently, this can be argued for by denying prelinearity, that is, that given any two arbitrary (even tototally unrelated) statements, one logically implies the other; one can deny prelinearity by pointing out a myriad of terms that are such that neither implies the other. For instance, that I am at my computer neither implies nor is implied by it being daytime at my location. One could argue that the proper way to conceive of implication is strictly, not materially, but the intuitionistic is free to argue that since his semantics for logical operators is grounded in their introduction rules (and conservatively extended by their elimination rules), that the modality of implication is inherent; that is, implication necessarily brings the meta-linguistic concept of valid inference into the object language: (S -> p) iff (S |- p), symbolically.

So, while one of the premises and one of the inferential moves are contentious, I agree with Plantinga that the above argument is "victorious" in his sense of the word, that is, it shows that belief in a maximally great being is not irrational.

Online Source

What is relative to the absolute

To be able to explain the error of today's world you have to introspect and analyze the concept of 'certainty' down to its cause. Set Hume aside, he has no effect on the thinking of Thales. Set Heraclitus and Parmenides aside, they have no effect on Thales. Zeno is addressing Pythagoras with his attack on certainty. When Zeno equates change and non-change he is attacking Heraclitus and Parmenides equally. The real paradox is the attack on our ability to deduce certainty, thus reversing Thales. Zeno proves with certainty that we have a problem proving with certainty. That can't be.

There are two kinds of proof, direct and indirect and they relate exactly to our ability to prove incommensurable and commensurable numbers and so relates induction to deduction. Starting in experience we relate our ability to wiggle a certain finger with the finger's wiggle. There is a sense that we caused the finger to wiggle. We can also think of this finger as an example of what we mean when we think of a unit. It is one of five on each hand. We are comfortable in equating 'the finger' with the unit 'one'. There is a sense where they are the same. But, change is universal, nothing in reality escapes it. The only variable is time, some things change faster, some slower. Some things change so slowly that we treat them, most of the time, as if they didn't change, (the sixty minute hour). My finger is changing all the time. My fingernail is a tad longer now than when I started the argument. Does it make a difference? Yes and no. It depends on the context. If you choose the non-change context the answer will differ from choosing the changing context. If you want to know the length of a cardinal hour it is sixty minutes. An ordinal hour is some small plus or minus different. Its the same as how we measure the length of a year or any irrational number, if we didn't use a calculus to stop the change we would never be able to predict how a number would affect the future. If at any time someone asked me to hold up the finger I wiggled and I replied that I couldn't because it is no longer the same finger I would be mixing contexts. Similar things can be unified directly, dissimilar things, indirectly. Everything must be verifiable.

Where does Pythagoras stand on the idea of certainty? Since the Pythagoreans never explained the meaning of irrational numbers they end up unable to prove a number's cardinality. There is gibberish about trancendental certainty, but there is neither direct or indirect proof.

What indicates that we have no understanding of the value of Thales and his discovery of deductive reasoning? In today's world deductive reasoning is held either to be about an abstract certainty devoid of existential import or only one of many deductive systems we could make up to prove things with certainty. If either were the case we would still be thinking in the old Egyptian mode and in fact most of the world has reverted to, or never left the subjective mode. Objectivity is implicit in most of our daily activities but the world gives credit for objectivity to things it can't prove, making the defense of objectivity absurd.

To demonstrate how inverted today's world of philosophy is I direct your attention to todays stand on induction and deduction. The Encyclopedia of Philosophy has a long complex article on induction which cites philosophy's inability to explain, (this in the context of an explanation). On the other hand, deduction, which depends on induction for its being, has no defining article, but is only a short sub-topic for something deemed more important. It is clear the modern world has no idea of how to relate the two. An absolute, justified by reason (proof), is neither mystical or whimsical. Modern philosophy has no sense of the absolute

the relation between induction and deduction

When you organize a series of inductions into a generalized set the process begins with the ability to observe and isolate things by their similarities and, implicitly, their differences. Similarity is common-sensical, differences (implications) have to be learned. Science begins when we learn to measure differences. Science is the process by which we unify differences to their implications. It has the effect of making the approximate, exact. You could think of it as a gestalt where any given unit contains similarities and differences. It is commonsense to notice the similarities first. The gestalt of the ambiguous vase/two faces is literally ambiguous. The difference between that which dominates the scene is about 50/50.

Consider any two things that are similar. The length of 1974 and 1975 are similar in that they were both 365 days long. They are different by approximately 1/4 day. How is it possible to integrate these two numbers? Notice that 365 is cardinal while approximately 1/4 is ordinal. If the 1/4 were cardinal, ie, exact, there would be no problem, it is easy to integrate 'exactness'. If we add exact to exact we get exact. If we add exact to inexact we get inexact, however, it is possible to approach exactness as close as we need using a calculus. It is the ability to approach exactness that makes all science possible. Science owes part of its identity to the calculus. Induction can be rendered deductive with the calculus.

The reasoned life

The world of ideas is dominated by theories that subvert reason to faith or whim; that's not being reasonable. The reasoned life lives in a context where reason rules. This is written for any who are curious as to what difference it would make if one tried to be reasonable all the time.

Is it possible to be reasonable all the time? The answer is yes, when understood in the right context. The right context is one where the thinker has determined that reason is his only tool for cognition. If that is the case it would be the height of folly to choose to ignore or violate your cognitive faculty. You essentially automatize your subconscious to never betray reason. You make it a habit. The longer the consistency, the stronger the faculty. In my case I made a sort of pact with a man some five years ago that promised our mutual devotion to reason. This was my first time to make reason explicit. Several times in my life there were implicit devotions to reason that generated an inductive argument pointing to the power of reason, but it wasn't until I made the promise explicit that I was able to understand the full power of the previous implications.

When understood and adopted as a way of life, reason lives up to Rand's highest expectation, it works.

Practical application: Reason refuses to voluntarily promote the irrational. It is irrational to replace an argument with a gun. It is irrational to support a government that violates the rights of its citizens. It is irrational to support a government that uses force as a tool against the innocent (ie, no right has been violated inviting force in retaliation). Consistency requires the reasoner to avoid contact with those who violate reason, as much as possible. I am saddened by the number of people who argue it is reasonable for the government to force us to pay taxes. If you have to force them. you can't claim you are being reasonable.

The more explicit I make my arguments against the variations on subjectivist thinking, the greater my isolation in today's world. My life is literally dependent on winning this argument. Yours is too, if you didn't get that far.

ordinality

The most fundamental conclusion one can make about reality is that it is orderly, ie., it is not magical or whimsical but can be relied upon to provide a consistent context upon which to build. This conclusion is consistent with the axiom of existence. It is also consistent with Carl Boyd's conclusion to his book on the history of the calculus where he says, "The history of the concepts of the calculus shows that the explanation of the quantitative is to be made through the qualitative, and the latter is in turn to be explained through the ordinal, perhaps the most fundamental notion in mathematics." Translating from math to philosophy Boyd is saying that concepts are derived from percepts and percepts are based on experience. Boyd also asserts tha "Thet calculus is not a branch of the science of quantity, but of the logic of relations."

We know from Rand that the base of epistemology and number is equally shared through reliance on the concept "unit". We measure qualities through units of relations. We measure quantities through units of cardinal numbers. It is easy to see where ordinal numbers come from because that merely requires we remember our experiences. "When we (first) conceptualize, we focus on an attribute perceptually, not conceptually." (Peikoff in OPAR pg 86) We just have to be able to relate things in order to compare and contrast them. This describes how our minds function most of the time. It should be the mode of consciousness you are in as you read this because ordinality is the mode of change and approximation. Cardinality is the mode of conceptual exactness and it is important to know how the two modes of consciousness are related.

Introspect and think about some habit of yours that you do without thinking. Driving a car with a clutch comes to mind. If you have become a skillful driver you need not waste you attention on the clutch, it is all mentally automatized. Recall how hard it was to learn the skill. This describes a crucial relation between ordinal and cardinal as well as perception/ conception.

The Greeks were the first to see the relation between the ordinal and the cardinal but it was only for a short time because of the ignorance of Pythagoras. Boyd, again says that the Ionians rearranged knowledge into a deductive scheme based largely on verified experience. That's describing the integration of the ordinal to the cardinal. Verified experience uses a calculus to arrive as close to certainty as we please which is Aristotle's way of describing the potential infinite.

George Cantor is creditied with our mathematical terms: ordinal and cardinal. But though he knew there were problems with using Pythagorean concepts of number he based his theory of the actual infinite on them. Thales gave us mind/body integrity through the integration of ordinal/cardinal thinking. Boyd: "The oriental mysticism of Pythagoras, however, reversed this state of affairs and gave to mathematics a supru-sensuous reality of which the world of appearances was a counterpart." This is what led to the opposites of Heraclitus and Parmenides and the paradoxes of Zeno. Cantor, to give him his due is, it seems to me, trying to accomplish Thales' intgration but fails because of Pythagoras.

The actual infinite is a term that requires one to know how to integrate incommensurables. Thales did it, Pythagoras couldn't. When Cantor attempted to define the actual infinite he was in a sense repeating Thales but with Pythagoras in the way. Cantor took Bolzano's paradox which states that the part is equal to the whole and used a contradiction to make sense of incommensurables. Of course it doesn't work and Canter went through several mental breakdowns, I assume there was a connection.

The major complaint to my last few posts has been my insistence that cardinal number be used united to practical application. My way, this way leads to integrity, Cantors and Pythagoras way leads to contradiction and perhaps madness.

Motivation

Objectivism used with consistency brings about certain results. Among the most important is the sense of pride that develops from recognized success. Reason works, it is efficacious. As with everything, as I learned to make the use of reason automatized for my psyche, I was able to relate the same to my degree of happiness, confidence, general love of life. There comes a point where you recognize that the choice to ignore reason is so stupid as to be properly rejected, on principle. As you consciously choose to be rational, you are, in effect, automatizing reason. The relation between the conscious and the subconscious is thus united.

Once reason becomes 'second nature' to you, you begin to look around for indications that this all makes a difference, ie, the inductive proof. Gradually, the importance of Rands stand on moral compromise began to sink in. Her article on "The Anatomy of a Compromise" is in an early non-fiction and says something to the effect that a compromised principle is a destroyed principle. To compromise on reason destroys the one tool you need to live, so don't do it. From other arguments I integrated the choice to think with the choice not to initiate the use of force and with the refusal not to volunteer help to force initiators. Rand also wrote about how to live free in an unfree society and here I take issue with her advice. I believe she endorses a violation of the 'reason' principle. She endorses the voluntary payment of taxes, and endorses the use of gov programs because we help pay for them. Both stands are wrong because it requires a voluntary unity between the chosen and the coerced. Her hero in the Fountainhead won his court case and so should we if reason is our guide.

The consequences of adopting the above have, over the past several years made me realize just how radical Rand is. Finally I became aware of just how radical I have become. This is what I need to share. My choice to be as free as I can has severe consequences. I have an illness that can be controlled with the proper drugs but they cost me around $1500.00 per month, (It is difficult to generate wealth if those buying your product profess to not want it). If I would compromise my principle on reason I could force my less radical co-citizens to pay for my drugs. I cannot argue that reason is the right answer if I don't practice what I preach, so I have taken the risk that these ideas I'm relating on the net will generate a positive response. I am betting that while on the face of it I am hated by the vast majority of those holding either side of the subjectivist position they will come to see that they really love me, because they really love reason. To disprove me requires a reasoned argument disproving reason.

reason and emotion continued

There is no question that at the base of Egyptian thought there was an acceptance of the arbitrary. How else do you explain the name of their sun god? When a choice includes the arbitrary it destroys order, or more properly, our ability to discover order. It must have been Egyptian disorder that first caught Thale's eye. The ability to apply numbers to real problems requires strict order. The Greeks exemplified mind/body integration, the Egyptians, the opposite. Thales saw the evidence first hand and drew the obvious conclusion. He must have realized that the numbers used by both philosophies were the same and the difference was that the Greeks had figured out a way to apply them. Thales had only to compare and contrast the two cultures to see the difference. What did Thales see? He saw the difference between ordinal and cardinal numbers, that they differentiate between objective reasoning and subjective emotions.

It stands to reason that if a society has incorporated a contradiction (mind/body dichotomy) at their theoretical base it will suffer a severe contraction in that society's creativity. New knowledge requires a free mind; mind/body integration requires a mind free from contradiction and a body free from from coercion (both hallmarks of the Greek tradition). The mark of a free society is defined by their stand on fraud and force. We have an example before us as I write this. The American constitution is based on an objective absolute (the right to life). The issue of what constitutes an objective absolute is very much in question. Its why I am on the net. Bush seems to think that there is an objective absolute in the word 'god'. Secularists say Bush can't prove it and so should renounce the use of force completely to avoid possible mistakes. The result is that you have the two dominant world views fighting over how to keep the peace. There is a lot to fear from both sides because they are both so certain that the other is wrong that they are willing to cheat to have their side win. When I argue that the two dominant world views are grounded on a contradiction this is one way to prove it. For all of you out there that feel I am right: this is an example of how to move that feeling from the subjective to the objective.

The american supreme court has ruled that our constitution is related to the geneva conventions in a way that requires we rewrite our laws to accommodate the conventions. Personally, this means to me that we should immediately renounce any part of of the convention that trumps our constitution and go from there. As the best example of mankind's attempt to define mans relation to force and fraud the US needs to discover the absolute principle upon which that idea rests. A secularist is not looking for it because in their eyes it isn't possible. Bush thinks he has it because of god. Half of us know that's bs. The result is that our concept of the law is up for grabs.

You are all objectivists now and just don't know it. There is an objective relation between shoes that lace up and our lacing up our shoes that has a 100% integrity. It is neither mystical or made up, it is real.