part 2 of 7

part 3 of 7

part 4 of 7

part 5 of 7

part 6 of 7

part 7 of 7

Here are a few interviews with the man himself:

Swedish reporter interview

Alex Jones interview

part 1

part 2

part 3

The reason people enjoy moneyless events like Burning Man is likely because those who attend are those most likely to find meaning in its message. Obviously, people are attracted to things they like and pursue positive re-enforcement of ideas they already hold. It’s called the confirmation bias, and its the same reason actors uproot their lives for a chance at glory in Los Angeles, or high-tech entrepreneurs network in San Jose, or retirees gather in Florida. People with means are willing to re-locate (temporarily or permanently) to areas more suitable to the lifestyles they wish to live and values they hold dear. It’s usually counter-productive trying to convert an actor into an engineer, or convince a committed socialist to accept libertarian principles, or force a square peg through a round hole, let people discover and explore, let them be.

The field of economics can be a science with laws, the existence of which do not govern our values. Milton Friedman once said he could teach anybody to create inflation, but that doesn’t mean they should adopt those policies. Economics can be used to build or destroy and the results largely depend on our willingness to accept and have confidence in policies and institutions. It’s time we realize the spectrum of options and opinions is too wide to bridge, and will forever be so.

I reject socialism, but I acknowledge many people are perfectly willing to work and exist in a socialist society despite those barriers and risks. If that makes them happy, who am I to interfere with their choices? Similarly, they should respect my desire for freedom and stop trying to impose their choices on me.

If I had the option to selectively choose which taxes I no longer wish to pay and be banned from participating in those programs, I would do it. Or better yet, why not localize these services and let people choose where they wish to live. If people are happy in a high-tax socialist system move to state A, if they are happy in a low-tax libertarian system move to state B, if they are happy in a moneyless Venus Project system move to state C. Leave only the issues of national importance (like foreign policy, national defence, inter-state relations, etc) at the Federal level and let the people be.

I wish someone could explain the reason socialists are not satisfied with state solutions, why must every program be federal? Will they eventually go global? The issue is not whether I’m right or wrong, but whether I can disagree with you without being imprisoned or shot. Power must be de-centralized for the benefit of everyone.

Even if a government managed to create the conditions required to encourage most people to work without compensation, it wouldn’t last forever and it wouldn’t convince everyone. As Abraham Lincoln once said, “you can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.”

Human behavior is almost never universal. In my opinion, generally speaking, there are two kinds of people — those who walk, and those who talk. Those with ambition, and those with excuses. Those with energy, perseverance and ability to initiate productive actions, and everyone else. The ambitious people among us will not change in a society without money, they will simply look for alternate means to achieve their goals. If there are no legal means for them to satisfy their appetite, they will not conform to “social norms”, many will either withdraw from society, rebel against it or descend to the black market and fight their way to the top with covert, corrupt or violent means. How should the government react to such people? Does the Gulag sound familiar to anyone? In which category do you suspect reside the captains of industry, those responsible for creating our most productive institutions and useful products? How would society advance without them? When people realize family members are disappearing in order to preserve ideology will they ignore the atrocities or lose faith in their utopia? How many people love an idea more than their children? You can’t impose duty, loyalty, responsibility and a sense of debt towards a dis-respected institution.

Whatever you present to people as reality, whether it’s true or not, will eventually be resented over time. With repeated exposure minor inconveniences can evolve into major intolerable failures. People tend to hate what they have and desire what they dream. Too much simplicity makes us long for challenging work, too much work makes us long for leisure, too much leisure makes us long for stimulation, too much stimulation makes us long for simplicity, rinse and repeat. The only question is who will be blamed for our frustration. When people nominate themselves to positions of perceived importance, even if the facts don’t justify the label, they may benefit undeservedly from any victories, but also suffer unnecessarily from any defeats — the same holds true for a government. The more they try to solve our problems, the more they’ll be blamed for causing our problems.

Which brings me to the benefit of de-centralized power and self-selection — next part on the way.

For example, if you ask a friend to help move your couch, he will probably say yes. If you offer him $2 for the effort he will feel insulted and say no. Presumably, he will calculate how much he earns per hour and determine his time is more valuable than the offer. But if he was willing to do it for free any compensation is greater than nothing, you would think if he were rational the $2 would be a good thing. Another example is a charity that asked for lawyers to help underprivileged clients for $30/hour, an offer that was declined. The same charity then asked for lawyers to help the underprivileged clients for free, an offer that was accepted (the book doesn’t say if they asked the same lawyers). The point is that people are either operating in a social or market mode, and the two never mix. Introducing money overwhelms the social norms and often causes people to act in irrational ways. Removing money from the equation magically converts everyone into charitable people willing to donate their time and skills towards a worthy cause, sounds marvelous!

Here’s the problem, let’s swap the roles slightly. Imagine someone walking down the street finds a homeless man outside his regular coffee shop. He decides to drop a bunch of quarters in his cup. A few minutes later the man realizes he no longer has enough cash to buy his morning coffee and the store doesn’t accept plastic for orders below $10. What to do? Should he get some of those quarters back from the homeless man? Even if he retrieved a few coins the total number of quarters donated will still be greater than nothing. Do you think he would feel worse donating 6 quarters and retrieving 2 or not giving anything at all? Obviously, despite his net-donation, taking from the homeless man will cause him a great deal of anxiety and embarrassment, he probably won’t do it. In this case, social norms overwhelmed market norms and caused an irrational decision (judged by self-interest, which is how Dan judged rational decisions in his book). Don’t get caught up in the details of how he would retrieve the quarters, the analogy works just as well with a tip jar. Let’s extend the analogy even further and assume he gave the homeless man two granola bars only to discover he didn’t have enough cash for a sandwich, should he retrieve one of those granola bars to feed himself?

What’s my point:

(1) The path to irrationality is not always “good” social norms contaminated by “bad” market norms, as indicated by all the examples in his book. Next time, the man in my analogy may remember his coffee-less morning and not donate anything. The damage caused by social norms actually reduced his desire and willingness to give charitably out of fear of more personal loss.

(2) People are willing to help, but not to the extent it damages their own interests, therefore you can’t organize a society around the concept of social norms. If people do not have excess something (stuff, time, whatever) they won’t be so charitable and nobody will have excess anything unless society has savings (ie. somebody, something, somewhere, must be producing for compensation that exceeds costs). No compensation, no savings, no excess, no charity. The lawyers may be willing to apportion some of their time to pro bono cases, but not all of it.

(3) In the book Dan concludes gifts do not initiate the same shift from social norms to market norms. But I believe in some cases the distinction between gifts and money is irrelevant. In the absence of money, gifts can act like commodities and commodities can act like money. As with everything else it’s entirely dependant on context. In my analogy, the man had no less difficulty retrieving his granola bar.

(4) Underlying Dan’s entire argument is the assumption that only self-interest in the form of acquiring more stuff is rational. Even Ayn Rand doesn’t buy that, if helping someone you love gives you joy, that’s also rational self-interest. But in the spirit of Tom Sawyer, if people can derive joy from helping move a couch, why doesn’t anybody pay their friend to help move the couch? If you derive equal pleasure from ice cream and helping your friend, what’s the difference between spending $3 on ice cream and $3 moving the couch? Wouldn’t that be even more rational than accepting payment? Obviously nobody does that, because there are several other forces at play here, not just utility. Some people may help out of duty or pride. Getting paid for something you feel a responsibility to do anyway is insulting because it infers the “payer” has a lower impression of your qualities than you have of yourself, it’s an admission the “payer” doesn’t recognize (or has no faith) in your sense of loyalty (to a cause, person, organization, whatever). Getting paid to show loyalty is like repenting without remorse, it makes no sense. Some people may help as an emotional repayment of debt for past comfort, favors or fond memories. Getting paid to repay a debt makes no sense, even if it’s a virtual debt. In my gut, it seems obvious this violates the natural laws of something. Rather than cleansing the debt, it almost increases it. In a strange parallel universe of logic, such actions are actually quite rational, and it has nothing to do with social vs. market norms.

So I guess the conclusion is that should you create a sense of duty, loyalty, responsibility and debt people will work for free. But there’s another problem with this analysis, stay tuned…

For example, there’s a chapter in which he describes our innate sense of fair prices, but only as they relate to other prices on comparable items. If you introduce a product with no obvious substitutes you can inject almost any price into our subconscious by manufacturing an appropriate value attribution — an emotional response to the product in question. This process is called “anchoring” a price; all future purchases of similar products will be compared to that original anchor price regardless of market conditions.

Certainly the implications are huge, producers can increase profits through psychological techniques. But if you believe Dan Ariely’s prescription it would seem producers are rampantly “tricking” poor helpless mindless sheep into buying any Gucci purse peddled on TV, thus government is required to protect the herd from exploitation by capitalist wolves. I’m not sure what role he had in mind, does he expect the government to regulate propaganda by legislating a “beautiful girl per square inch” ratio on TV commercials? Or perhaps, the government should ban music in radio advertisements? Or perhaps, instead of market forces finding a balance between a price consumers are willing to spend (regardless of how that number is determined) and a price producers are willing to accept, he would prefer a government bureaucrat determine the appropriate level of profitability for each product and impose sweeping price controls? Or perhaps, instead of people allocating their disposable income as they choose, the government will compel everyone to submit sales receipts to a regulator and ensure nobody spends more than 1% of their annual income on a purse? What about the producers who anchor a price below the market value (accidentally, or deliberately trying to disrupt a competitor), should there be a special tax to recover lost profits? He indicates a preference for government regulation with no details, that’s not a tenable position.

Acknowledging that freedom has risks or that markets are sometimes imperfect does not by definition prove or even suggest that government interference will add positive value. In fact, in my estimation the world has just witnessed the consequences of a move from free market to over-regulation, which is a move from imperfection to mediocrity. Instead of isolated and short lived crises, we now have enormous and systematic crises. The government is not a living being with more knowledge and intelligence than ordinary people, it’s a bureaucracy run by ordinary people. If we are irrational, so too is the government. The difference — irrational decisions made by individuals result in consequences with limited scope, irrational decisions made by powerful government agencies or corporations protected by government regulatory firewalls result in consequences that proliferate throughout the entire economy.

Should excess spending be directed towards clever producers using psychological techniques to increase sales beyond what people can bare, less money will flow to other companies and industries, forcing them to change their strategy (lower prices, improve service, introduce new products) or go out of business. If the losing companies actually add value to the world as they disappear consumers will suddenly realize the $2000 Gucci purse isn’t more important than food. So much for the anchor, we regularly go through these generational long wave cycles. If on the other hand clever producers can introduce products with an unjustifiably high value attribution without destroying the world, why should I care? We don’t buy goods to save the rain forest, we buy goods to increase our utility (unless saving the rain forest gives us pleasure). What difference does it make if that sense of utility is with us before or after a commercial? We bought, we enjoyed, we move on.

The government can not legislate away irrationality or stupidity.

More coming soon…

Although I’m glad the government has protected me from unscrupulous producers, it should be well understood that regulations are not needed to prevent something that is already illegal. If a product is deliberately and materially mislabelled, put the producer in prison. Problem solved, no regulation needed. It’s also important to note that food isn’t made from magical pixy dust, government regulation doesn’t prevent impurities from entering the food supply, it merely imposes standards. Meaning, a reasonable level of bacteria in drinking water, an acceptable level of mercury in tuna and a minimal amount of mold in ketchup.

But assuming this story is true, should people choose rotten ketchup because they are unable to afford an alternative, and it’s not hurting anyone, why should I care? People eat mold all the time, it sounds scary, but look at blue cheese. And besides, there’s a big range between ripe and moldy, at what point is it considered bad? Who is the judge? How do we know the smaller competitors weren’t libeled and targeted by corrupt regulators, shut down by 1 bad tomato out of a million? Why were there so many rancid tomatoes to begin with, where did they come from and where did they go — pizza sauce or the garbage? How many people went hungry during the depression while we threw out bruised tomatoes? How many people were priced out of enjoying ketchup by the monopoly? How many people lost their jobs? Was there any noticeable improvement in health after this regulation? Nobody ever talks about the hidden costs. The story is incomplete. For all I know this legend is propaganda and Heinz’s ketchup was no better than the competition.

But assuming the story is true, those same people who knowingly bought rancid ketchup 100 years ago are the same people eating lunch at KFC and Burger King today. Fried chicken, fried potatoes and soda pop: 1500 calories, 700mg of sodium, 50g of sugar and saturated fats, in a bun. Mmmm. You can’t legislate away stupidity. There are many people who believe there’s no level of fast-food consumption considered safe, it’s all junk. So let’s ban McDonalds. Let’s make it illegal to sell 3% milk to anyone above the age of 5, it’s too fatty. While we’re at it, let’s ban chocolate and re-define child abuse to include a lack of physical exercise. Cigarettes, alcohol, cheeseburgers, ice cream, soccer head-butts, skiing… all gone. These bans would save lives and improve health.

The government can’t and shouldn’t protect us from everything. We may or may not be better off with Heinz ketchup, but the existence of a problem does not prove the need for regulation and a failed attempt to regulate does not prove the need for even more regulation. Even if you found an example of government regulation that worked, it’s a logical fallacy to extend that result to include all the others. In the middle of these ideological debates people forget to think, we must take these things case by case.

When the government chooses to ban a product, like marijuana, they often create black markets and fuel organized crime and violence. When they choose to legalize and regulate a product they create an implicit assumption it’s safe for consumption and people stop thinking, we have too much faith in beaurocrats. Government regulators crowd out private watchdogs. Look at aspartame, a dangerous neuro-toxin proven in many independent studies to cause tumors. I never touch it, but it’s in everything labeled “diet”. Do you drink aspartame? What’s more dangerous, mold or cancer? What about high fructose corn syrup, there is evidence currently pointing to HFCS as the cause of our obesity and diabetes epidemic. I do my best to avoid it, but many people don’t even know its name because the government said it’s safe. Do we need a regulator to regulate the regulator? (That’s Bernanke’s recommendation for the financial system, a new regulator to regulate the Fed).

Furthermore, the blog refers to the FDA, people like to mention the thousands saved by banned drugs, but nobody ever mentions the thousands who died waiting for drugs to be approved. Which number is bigger?

Nothing in this world is clear cut, there are hidden costs everywhere. The world is suffering from a lack of sophistication.