Examining Ayn Rand's Paper: Part 2

Now, let's continue dissecting Ayn Rand's paper regarding her philosophy. We pick up the pace starting from my refutation of her solving the is-ought problem.

Now in what manner does a human being discover the concept of “value”? By what means does he first become aware of the issue of “good or evil” in its simplest form? By means of the physical sensations of pleasure or pain. Just as sensations are the first step of the development of a human consciousness in the realm of cognition, so they are its first step in the realm of evaluation.

Oh, I see Ayn Rand acknowledges the philosophy of hedonism, which determines good and evil through pleasure and pain. I'm willing to tag along for the time being.

The capacity to experience pleasure or pain is innate in a man’s body; it is part of his nature, part of the kind of entity he is. He has no choice about it, and he has no choice about the standard that determines what will make him experience the physical sensation of pleasure or of pain. What is that standard? His life.

Okay, I agree. The ability to experience pleasure and pain is innate in our physiology; there is nothing we can do about it. Although what confuses me is how Ayn Rand suddenly inserted the notion of life as a standard. What did she exactly mean by that? All I can say for sure that life is a prerequisite for the experience of pleasure and pain, Perhaps this is what she meant.

The pleasure-pain mechanism in the body of man—and in the bodies of all the living organisms that possess the faculty of consciousness—serves as an automatic guardian of the organism’s life. The physical sensation of pleasure is a signal indicating that the organism is pursuing the right course of action. The physical sensation of pain is a warning signal of danger, indicating that the organism is pursuing the wrong course of action, that something is impairing the proper function of its body, which requires action to correct it. The best illustration of this can be seen in the rare, freak cases of children who are born without the capacity to experience physical pain; such children do not survive for long; they have no means of discovering what can injure them, no warning signals, and thus a minor cut can develop into a deadly infection, or a major illness can remain undetected until it is too late to fight it.

I agree that the pleasure-pain mechanism serves as a signal that can help an organism preserve its own life (biological existence). Although I must clarify that feeling pleasure does not necessitate that you're pursuing the right course of action (it must be specified that this action is aimed towards self-preservation). Same goes with feeling pain. An example of pleasure which does not help self-preservation is getting high from drugs. Meanwhile, receiving booster shots can be painful, but they're good for you. I agree with her illustration; not being able to feel pain does not help you survive; in fact, it puts your life in constant danger.

Consciousness—for those living organisms which possess it—is the basic means of survival.

This is a pretty problematic statement. Simply staying awake... staying conscious, won't ensure your survival. You can say that consciousness for those--living organisms which possess it-- is the prerequisite for survival. A conscious organism must be, well, conscious for it to start surviving, but that is also not true. After all, we need to sleep, which is a state of unconsciousness. Does this mean we're killing ourselves when we sleep?

The simpler organisms, such as plants, can survive by means of their automatic physical functions. The higher organisms, such as animals and man, cannot: their needs are more complex and the range of their actions is wider. The physical functions of their bodies can perform automatically only the task of using fuel, but cannot obtain that fuel. To obtain it, the higher organisms need the faculty of consciousness. A plant can obtain its food from the soil in which it grows. An animal has to hunt for it. Man has to produce it.

I'll be lenient with this paragraph and let this slide. It seems pretty okay, anyway.

A plant has no choice of action; the goals it pursues are automatic and innate, determined by its nature. Nourishment, water, sunlight are the values its nature has set it to seek. Its life is the standard of value directing its actions. There are alternatives in the conditions it encounters in its physical background—such as heat or frost, drought or flood—and there are certain actions which it is able to perform to combat adverse conditions, such as the ability of some plants to grow and crawl from under a rock to reach the sunlight. But whatever the conditions, there is no alternative in a plant’s function: it acts automatically to further its life, it cannot act for its own destruction.

Given the fact that plants have no brains, we can safely assume that they are incapable of making conscious decisions; actions which require the existence of a mind. Thus, it can also be said that its physiology only acts for its self-preservation, without being conscious of such an act.

The range of actions required for the survival of the higher organisms is wider: it is proportionate to the range of their consciousness. The lower of the conscious species possess only the faculty of sensation, which is sufficient to direct their actions and provide for their needs. A sensation is produced by the automatic reaction of a sense organ to a stimulus from the outside world; it lasts for the duration of the immediate moment, as long as the stimulus lasts and no longer. Sensations are an automatic response, an automatic form of knowledge, which a consciousness can neither seek nor evade. An organism that possesses only the faculty of sensation is guided by the pleasure-pain mechanism of its body, that is: by an automatic knowledge and an automatic code of values. Its life is the standard of value directing its actions. Within the range of action possible to it, it acts automatically to further its life and cannot act for its own destruction.

I can agree to this paragraph, although counter-instances might exist, which I have no knowledge of. Feel free to share me some if you have them. 

The higher organisms possess a much more potent form of consciousness: they possess the faculty of retaining sensations, which is the faculty of perception. A “perception” is a group of sensations automatically retained and integrated by the brain of a living organism, which gives it the ability to be aware, not of single stimuli, but of entities, of things. An animal is guided, not merely by immediate sensations, but by percepts. Its actions are not single, discrete responses to single, separate stimuli, but are directed by an integrated awareness of the perceptual reality confronting it. It is able to grasp the perceptual concretes immediately present and it is able to form automatic perceptual associations, but it can go no further. It is able to learn certain skills to deal with specific situations, such as hunting or hiding, which the parents of the higher animals teach their young. But an animal has no choice in the knowledge and the skills that it acquires; it can only repeat them generation after generation. And an animal has no choice in the standard of value directing its actions: its senses provide it with an automatic code of values, an automatic knowledge of what is good for it or evil, what benefits or endangers its life. An animal has no power to extend its knowledge or to evade it. In situations for which its knowledge is inadequate, it perishes—as, for instance, an animal that stands paralyzed on the track of a railroad in the path of a speeding train. But so long as it lives, an animal acts on its knowledge, with automatic safety and no power of choice: it cannot suspend its own consciousness—it cannot choose not to perceive—it cannot evade its own perceptions—it cannot ignore its own good, it cannot decide to choose the evil and act as its own destroyer.

I'll leave the majority of this paragraph to the scrutiny of zoologists, but I must object to this sentence:

But an animal has no choice in the knowledge and the skills that it acquires; it can only repeat them generation after generation.

Not all animals learn to survive by rote. Countless scientific experiments demonstrated that some animals actually think of something new. They can use their memory to suit their purposes. They can devise new ways of catching food, given specific parameters and obstacles. Experiments showed that some animals, to some degree, are capable of reason. 

Objectivists can check out Kanzi, the bonobo. I have also watched documentaries in my philosophy class about dolphins who can follow commands even if the order's been jumbled up; they followed the commands in a different order, without learning it by rote. Science has shown that, while not as sophisticated as humans, some animals are also capable of analysis.

Man has no automatic code of survival. He has no automatic course of action, no automatic set of values. His senses do not tell him automatically what is good for him or evil, what will benefit his life or endanger it, what goals he should pursue and what means will achieve them, what values his life depends on, what course of action it requires. His own consciousness has to discover the answers to all these questions—but his consciousness will not function automatically. Man, the highest living species on this earth—the being whose consciousness has a limitless capacity for gaining knowledge—man is the only living entity born without any guarantee of remaining conscious at all. Man’s particular distinction from all other living species is the fact that his consciousness is volitional.

Huh? But a while ago Ayn Rand said that man can know good and evil in their simplest forms through pleasure and pain? The pleasure-pain mechanism is innate in us humans. What does Ayn Rand mean when she said that man's senses do not automatically tell him what will benefit his life or endanger it? What about a newborn who instinctively looks for his or her mother's breast for milk? We humans, like animals, also have built-in survival mechanisms. What I also don't understand is the last part of this paragraph.

"...man is the only living entity born without any guarantee of remaining conscious at all. Man’s particular distinction from all other living species is the fact that his consciousness is volitional."

What does she exactly mean by man being the only organism born without the guarantee of being conscious? Well, maybe a human baby might die while a mother is giving birth, but this also happens to animals. But that's also the cornerstone of my other objection; a baby, just like any human being, has no choice of living or dying. We all die. We have a choice of speeding up our deaths or slowing them down. That's all. Consciousness isn't entirely volitional; it's true we can choose to sleep and be unconscious, wake up and be conscious, but we can't choose to be conscious when we die. This is a major hole in Ayn Rand's epistemology.

Just as the automatic values directing the functions of a plant’s body are sufficient for its survival, but are not sufficient for an animal’s—so the automatic values provided by the sensory-perceptual mechanism of its consciousness are sufficient to guide an animal, but are not sufficient for man. Man’s actions and survival require the guidance of conceptual values derived from conceptual knowledge. But conceptual knowledge cannot be acquired automatically.

This is not true. While we're higher than animals in terms of mental acuity, there is a choice for us to live like animals and still survive, although the effectiveness is dramatically lower. But we didn't do such a thing; why? Is it because we inevitably need a higher form of knowledge to survive? Not really; we can just imitate the animals and live in the woods or something, although, as I've said before, the effectiveness is lower. We progressed to become more intelligent because we can; our physiology provided us with the opportunity to become what we are today.

A “concept” is a mental integration of two or more perceptual concretes, which are isolated by a process of abstraction and united by means of a specific definition. Every word of man’s language, with the exception of proper names, denotes a concept, an abstraction that stands for an unlimited number of concretes of a specific kind. It is by organizing his perceptual material into concepts, and his concepts into wider and still wider concepts that man is able to grasp and retain, to identify and integrate an unlimited amount of knowledge, a knowledge extending beyond the immediate perceptions of any given, immediate moment. Man’s sense organs function automatically; man’s brain integrates his sense data into percepts automatically; but the process of integrating percepts into concepts—the process of abstraction and of concept-formation—is not automatic.

Goodness, too much jargon. Anyway, as I understand it, a "concept" according to Ayn Rand is putting together a bunch of concrete things (things observable in one's surroundings), analyzing them with your mind and coming up with a united set of ideas based on existing definitions. For example, you can formulate your concept of beauty by observing a bunch of ladies and analyzing whether they are viable mates. In the process, you come up via analysis that you consider specific characteristics as "beautiful," and so you end up with a set of ideas, or characteristics that satisfies your concept of "beauty." Although it's obvious that not everyone gets the same sample of ladies, which is why the concept of "beauty" differs from culture to culture. 

Ayn Rand says that it is through the formation of concepts that man is able to acquire knowledge. She also emphasizes that concept-formation is not automatic. 

The process of concept-formation does not consist merely of grasping a few simple abstractions, such as “chair,” “table,” “hot,” “cold,” and of learning to speak. It consists of a method of using one’s consciousness, best designated by the term “conceptualizing.” It is not a passive state of registering random impressions. It is an actively sustained process of identifying one’s impressions in conceptual terms, of integrating every event and every observation into a conceptual context, of grasping relationships, differences, similarities in one’s perceptual material and of abstracting them into new concepts, of drawing inferences, of making deductions, of reaching conclusions, of asking new questions and discovering new answers and expanding one’s knowledge into an ever-growing sum. The faculty that directs this process, the faculty that works by means of concepts, is: reason. The process is thinking.

I guess I can agree with this. Seeking knowledge is an active action. You must be aware of what you are doing when seeking knowledge. And the faculty that is responsible for seeking knowledge via analysis and concept-formation is reason.

Reason is the faculty that identifies and integrates the material provided by man’s senses. It is a faculty that man has to exercise by choice. Thinking is not an automatic function. In any hour and issue of his life, man is free to think or to evade that effort. Thinking requires a state of full, focused awareness. The act of focusing one’s consciousness is volitional. Man can focus his mind to a full, active, purposefully directed awareness of reality—or he can unfocus it and let himself drift in a semiconscious daze, merely reacting to any chance stimulus of the immediate moment, at the mercy of his undirected sensory-perceptual mechanism and of any random, associational connections it might happen to make.

I guess this is where Ayn Rand begins to divulge on her so-called epistemology, which is reason. Her definition of reason is acceptable. Rational thinking is indeed not automatic. You have a choice to think things through or just stay dumb at your own risk. So far, so good.

When man unfocuses his mind, he may be said to be conscious in a subhuman sense of the word, since he experiences sensations and perceptions. But in the sense of the word applicable to man—in the sense of a consciousness which is aware of reality and able to deal with it, a consciousness able to direct the actions and provide for the survival of a human being—an unfocused mind is not conscious.

I must stress that reason, as shown earlier, is not exclusive to man. This is to challenge this part of the paragraph: "But in the sense of the word applicable to man—in the sense of a consciousness which is aware of reality and able to deal with it, a consciousness able to direct the actions and provide for the survival of a human being--"

The rest, I suspect, is a matter of semantics. An unfocused mind is not conscious? It depends on what Ayn Rand meant by "unfocused" and/or "conscious."

Psychologically, the choice “to think or not” is the choice “to focus or not.” Existentially, the choice “to focus or not” is the choice “to be conscious or not.” Metaphysically, the choice “to be conscious or not” is the choice of life or death.

My comment is best demonstrated by mathematical logic. 

~ = Not

⊃ = Implies

T = Thinking

F = Focusing

C = Conscious

L = Life

D = Death

Premises:

(T v ~T)⊃(F v ~F)

(F v ~F)⊃(C v ~C)

(C v ~C)⊃(L v D)

Applying the principle of hypothetical syllogism to the first and second premise, I can conclude that (T v ~T)⊃(C v ~C); thinking or not thinking implies being conscious or not conscious. Applying this principle again to my new information with the last premise, I can conclude that (T v ~T)⊃(L v D); thinking or not thinking implies life or death. Given how Ayn Rand worded her paragraphs, I can say that she meant this; thinking means life; not thinking means death. Therefore, by Ayn Rand's argument, you die when you sleep. (Note that Ayn Rand meant thinking in a volitional sense, not the constant brain activity).

I just wanted to point out the absurdity that arose from this particular argument.

Consciousness—for those living organisms which possess it—is the basic means of survival. For man, the basic means of survival is reason. Man cannot survive, as animals do, by the guidance of mere percepts. A sensation of hunger will tell him that he needs food (if he has learned to identify it as “hunger”), but it will not tell him how to obtain his food and it will not tell him what food is good for him or poisonous. He cannot provide for his simplest physical needs without a process of thought. He needs a process of thought to discover how to plant and grow his food or how to make weapons for hunting. His percepts might lead him to a cave, if one is available—but to build the simplest shelter, he needs a process of thought. No percepts and no “instincts” will tell him how to light a fire, how to weave cloth, how to forge tools, how to make a wheel, how to make an airplane, how to perform an appendectomy, how to produce an electric light bulb or an electronic tube or a cyclotron or a box of matches. Yet his life depends on such knowledge—and only a volitional act of his consciousness, a process of thought, can provide it.

I have contested the first sentence in the earlier part of this article. I also challenge the sentences that followed. Man can survive by imitating animals, because we're also animals in a biological sense. Also, man does not need to identify the concept of "hunger" to do something about hunger. We living organisms have a built-in survival mechanism that addresses discomfort. Moreover, it's true that man cannot survive without thinking, but this is the same for animals. They are not programmed to automatically find food regardless of environmental conditions. They are also capable of cutting back on food should the need to do so arise, looking after their young, and hunting. 

Also, Ayn Rand makes it look like our progression as a civilization is solely born out of a necessity to survive. I'm not a primitivist, mind you, but while there was a need for creativity for man to better adapt to nature, much of our technology today has been driven by curiosity and scientific accomplishment, not just the desire to survive, rendering Ayn Rand's argument contingent; it may be true in some cases, but not true in all cases. Was the invention of the wheel a matter of life and death? Not really, ancient people can suck it up and withstand the hardships of having no wheels. Yet we invented the wheel, and this is because our physiology provided us with the chance to become smarter creatures, and the chance to discover things not just to survive but simply for the sake of discovery. We can live without computers, although we'll be more primitive beings; but we'll still be able to live. Then why invent the computer? Perhaps money, but there is an element of the pure desire to discover.

--To be continued--

Examining Ayn Rand's Paper: Part 1

I've come across a pretty interesting letter delivered by Ayn Rand at the University of Wisconsin Symposium. The talk was entitled "Ethics in Our Time," held at Madison, Wisconsin in February 9, 1961.

As we all know, Ayn Rand is the founder of the Objectivist philosophy, which espouses the morality of rational self-interest and free market capitalism. This paper is interesting, in a sense that this details quite succinctly (although the paper itself is miserably long) how Ayn Rand managed to come up with Objectivism in the first place. As a skeptic of this controversial philosopher, I found it imperative to scrutinize this paper, in hopes of digging some dirt or something.

Check this link to read the whole thing without my comments. I'll just proceed to contentious parts. Basically, the paper argues that the world is corrupt because of the wrong moral code, and that an objective and rational moral code must be pursued; Objectivism. The paper criticizes that the world's philosophers weren't able to define an objective and rational moral code, and instead concluded that morality is beyond the reach of logic, and that it is governed by human whims. Ayn Rand begs to differ.

Scrutinizing Rand's philosophy

To challenge the basic premise of any discipline, one must begin at the beginning. In ethics, one must begin by asking: What are values? Why does man need them?

I'll reserve my judgment for later, but... what did Ayn Rand mean by "values"? We'll see later.

“Value” is that which one acts to gain and/or keep. The concept “value” is not a primary; it presupposes an answer to the question: of value to whom and for what? It presupposes an entity capable of acting to achieve a goal in the face of an alternative. Where no alternative exists, no goals and no values are possible.

Okay, so Ayn Rand meant "value" as something or someone to be treasured. So far, so good; without a valuer, no one can treat anything as a "value": thus, a sentient being is required for values to technically exist.

I quote from Galt’s speech: “There is only one fundamental alternative in the universe: existence or nonexistence—and it pertains to a single class of entities: to living organisms. The existence of inanimate matter is unconditional, the existence of life is not: it depends on a specific course of action. Matter is indestructible, it changes its forms, but it cannot cease to exist. It is only a living organism that faces a constant alternative: the issue of life or death. Life is a process of self-sustaining and self-generated action. If an organism fails in that action, it dies; its chemical elements remain, but its life goes out of existence. It is only the concept of ‘Life’ that makes the concept of ‘Value’ possible. It is only to a living entity that things can be good or evil.”

Precision is important in philosophy, so I think I'll nitpick a little here. I think it's okay to leave the "existence or nonexistence" part alone, but what I don't quite understand is the part that this principle only applies to living entities. How can John Galt (Ayn Rand) say that the existence of inanimate matter is unconditional? They are un-caused? We can cause an inanimate matter to exist; we humans make toasters. Rain erodes soil, which is carried into the river to settle down and become sedimentary rocks. Inanimate matter is caused. The laws of nature caused inanimate matter to exist.

Furthermore, it is equally fallacious to bluntly assert that a living organism has a choice between life and death. This is because we will all die. It's an inevitable consequence. So technically, a living organism has no choice but to die. But it does have a choice of speeding up its death or slowing it down. This is the precise choice of an organism. But a crucial assumption must be made; that organism must have a brain. The human cell has no brain, but it is an organism. Yet I haven't seen a cell that only divides when it feels like doing it.

Furthermore, I suspect an equivocation in the word "life." On this sentence:

The existence of inanimate matter is unconditional, the existence of life is not:

Life is used to simply mean "biological existence." However, at the latter part of the paragraph:

Life is a process of self-sustaining and self-generated action.

Life is used as the word "living" or "surviving." The consequences of equivocation in this part is most probably minimal, but it does make things a bit confusing. Then again, I agree with the last two sentences. Life must exist for values to exist. Only a living being can discern good or evil. However, if we are talking about moral good or evil, an assumption must be made; that living being must be intelligent enough to even recognize such a thing; like humans. However if we're talking about carnal good or evil, then animals and even some primitive life forms count.

To make this point fully clear, try to imagine an immortal, indestructible robot, an entity which moves and acts, but which cannot be affected by anything, which cannot be changed in any respect, which cannot be damaged, injured or destroyed. Such an entity would not be able to have any values; it would have nothing to gain or to lose; it could not regard anything as for or against it, as serving or threatening its welfare, as fulfilling or frustrating its interests. It could have no interests and no goals.

Only a living entity can have goals or can originate them. And it is only a living organism that has the capacity for self-generated, goal-directed action. On the physical level, the functions of all living organisms, from the simplest to the most complex—from the nutritive function in the single cell of an amoeba to the blood circulation in the body of a man—are actions generated by the organism itself and directed to a single goal: the maintenance of the organism’s life.

I completely agree.

An organism’s life depends on two factors: the material or fuel which it needs from the outside, from its physical background, and the action of its own body, the action of using that fuel properly. What standard determines what is proper in this context? The standard is the organism’s life, or: that which is required for the organism’s survival.

A more precise term for that standard is the physiology of the organism, but okay. We're good.

No choice is open to an organism in this issue: that which is required for its survival is determined by its nature, by the kind of entity it is. Many variations, many forms of adaptation to its background are possible to an organism, including the possibility of existing for a while in a crippled, disabled or diseased condition, but the fundamental alternative of its existence remains the same: if an organism fails in the basic functions required by its nature—if an amoeba’s protoplasm stops assimilating food, or if a man’s heart stops beating—the organism dies. In a fundamental sense, stillness is the antithesis of life. Life can be kept in existence only by a constant process of self-sustaining action. The goal of that action, the ultimate value which, to be kept, must be gained through its every moment, is the organism’s life.

Okay, I agree with what this paragraph has to say until the last sentence. Note that the world "value" is used to mean "something to be treasured," and that life is used to mean "biological existence."

The word "action" must be clarified, because not every self-sustaining action is volitional. You don't will to keep your heart beating; it just happens. While you must eat healthy stuff to keep your heart beating which will keep you alive (that is a willed action), it must be clarified that not every self-sustaining action in an organism is willed. An action that is not willed cannot value something. Heartbeat is a self-sustaining action, and it occurs in an organism; but it does not value anything.

An ultimate value is that final goal or end to which all lesser goals are the means—and it sets the standard by which all lesser goals are evaluated. An organism’s life is its standard of value: that which furthers its life is the good, that which threatens it is the evil.

I'm okay with how Ayn Rand defined "ultimate value," although I must ask; what is the moral attribute of something that neither furthers nor threatens an organism's life? My hunch is that it's amoral. I do have a more pressing inquiry though; what makes Ayn Rand say that an organism's life is its standard of value? If value in terms of self-preservation, then she is correct; however, she has not in any way provided any argument to support life as the absolute standard of value.

Without an ultimate goal or end, there can be no lesser goals or means: a series of means going off into an infinite progression toward a nonexistent end is a metaphysical and epistemological impossibility. It is only an ultimate goal, an end in itself, that makes the existence of values possible. Metaphysically, life is the only phenomenon that is an end in itself: a value gained and kept by a constant process of action. Epistemologically, the concept of “value” is genetically dependent upon and derived from the antecedent concept of “life.” To speak of “value” as apart from “life” is worse than a contradiction in terms. “It is only the concept of ‘Life’ that makes the concept of ‘Value’ possible.”

First sentence: It's true that you can't have lesser goals without an ultimate goal, but only in an absolute sense. You can compare goals relative to each other. Take the number system. We can't say that 3 is absolutely the least number, since there are numbers that stretch to negative infinity, but 3 is a lesser number relative to 4 and above.

Second sentence: Ayn Rand has not shown any proof that life is the ultimate value, or an end in itself; simply saying that life is a value kept by a constant process of action is not proof.

Third and fourth sentence: Sound. Although I must clarify that while you can't discuss values as separate from life, its inverse does not follow; it's not necessarily true that you can't discuss life as separate from values.

In answer to those philosophers who claim that no relation can be established between ultimate ends or values and the facts of reality, let me stress that the fact that living entities exist and function necessitates the existence of values and of an ultimate value which for any given living entity is its own life. Thus the validation of value judgments is to be achieved by reference to the facts of reality. The fact that a living entity is, determines what it ought to do. So much for the issue of the relation between “is” and “ought.”

This is a major point of dissent on my part, since Ayn Rand claims to have bridged the is-ought gap... without proof. It's true that since living beings function and require sustenance, they should have something to treasure (under aforementioned assumptions); they should have "values." However, Ayn Rand has not in any way provided any concrete proof that life is the ultimate value, let alone a standard of morality. This is being subjective.

"The fact that a living entity is, determines what it ought to do... to live."

Ayn Rand forgot that part. Ayn Rand hasn't bridged the is-ought gap. In fact she did nothing of the sort. The is-ought problem is concerned in determining whether there is a way to bridge facts to morality. Ayn Rand's musings logically led to the above statement; the nature of a living entity determines how it can preserve itself... that's it. Ayn Rand did not solve the is-ought problem.

The paper is pretty lengthy, so I'll come up with another article (as a continuation) as soon as I have free time.

Euro Crisis Haunts Spain and the World

The recent euro crisis that shook the international community, of which Greece arguably gained the most attention, seemed like a distant, yet, horrifying memory. However, it looks like the haunting is just getting started, and is sure to bring more shivers down economists' spines.

In order to partially mitigate the full effects of the monetary crisis, the European Central Bank (ECB) has decided to lend as much as it can to the affected countries in, well, Europe. The ECB flooded borrowers quite literally with money to withstand the blow of the crisis, conducting what could be the most massive money-lending spree to date. It was so massive, some analysts consider it massive to a fault; after all, too much lending is risky business; what if the ECB runs out? This is pure and unadulterated doom to our European friends.

Still, the ECB couldn't stand idly while debt-stricken countries teeter on the edge of bankruptcy. the central bank boldly conducted two long-term refinancing operations to support the ailing nations. However, the future seems bleaker and bleaker.

THE high is over. The European Central Bank’s two long-term refinancing operations (LTROs) in December and February saw commercial banks borrow over €1 trillion ($1.3 trillion) of three-year money at the ECB’s main interest rate, which it had cut to 1%. Ostensibly a scheme to keep euro-area banks afloat, the LTROs also boosted flagging public-debt markets in the zone’s southern periphery, as banks used some of the cash to buy high-yielding bonds. That effect has faded.

(Source: Link)

The good news; the European bonds are steadily yielding. We turn our attention to how Spain is holding up.

Spain’s ten-year government-bond yield has been rising since the second tranche of three-year ECB cash was doled out. This week it reached almost 6%, the highest level since November (see chart 1). The U-turn owes a lot to the shifting dynamics of the euro-zone bond markets, which have also affected Italy. 

The bad news; time is running out. First, we have the delicate bond market:

Start with the bond-market dynamics. With tacit support from regulators, the stock of government bonds held by Spanish and Italian banks rose by €122 billion between November and February. Prices surged and yields fell. Hedge funds which had sold borrowed bonds in the hope that prices would fall were forced to buy them back. The rally lured others in.

Coupled with the futile attempts of hedge fund managers to mitigate inflation in bonds is a horrific revelation; the ECB may not be able to lend again. 

“The minute the ECB says ‘no more,’ the bank bidder is lost,” says a hedge-fund manager.

So far, the bond market is riddled with anxieties about buying and selling. 

Brokers are less willing to take bonds off sellers’ hands in the hope that buyers eventually turn up, says Andrew Balls of PIMCO, a fund manager. In thinly traded markets, bond prices can suddenly shoot up if only a few investors take fright and start selling.

Despite the possibility of salvaging the bond markets in a quicker time, brokers, bond sellers and buyers, as well as investors are afraid to take the risk in fear of losing more than what they can afford. This does not help the case of Spain, especially when Spain is so dependent on bond yielding to get by its huge debt. To make things worse, however, the government isn't exactly up to the task of keeping Spain together.

The clumsy handling of Spain’s 2012 budget may have persuaded some to sell. The newish Spanish government delayed it until after local elections in March; it also announced that its deficit target would be 5.8% of GDP, not the 4.4% agreed with European leaders (the compromise was a goal of 5.3%). The budget minister, Cristóbal Montoro, and the economy minister, Luis de Guindos, “contradict each other all the time”, complains a Spanish economist.

Yet Spain has deeper problems than muddled messages. The 2011 budget deficit was 8.5% of GDP, not the goal of 6%, in large part because of overspending by Spain’s autonomous regions. The economy is in recession—industry shrank by 5.1% in the year to February according to figures released on April 11th. Attempts to cut the deficit by 3.2% of GDP in a year will make things worse. Reforms to the jobs market, making it cheaper to fire workers and easier to set pay locally, will benefit Spain’s economy in time but not now.

The Spanish government just can't stop overspending which adds extra debt on the huge one they owe already. Aside from internal conflicts between politicians, the key sectors in the Spanish economy are starting to dwindle, with the hopes of reaching the target deficit percentage getting slimmer and slimmer. It can be argued that the government might be responsible for wasting the money lent by the ECB, forcing the Spanish economy to race against time; bond yields versus increasing debt, with the possible inclusion of interest rates from creditors.

As if things couldn't get any worse, it was discovered that Spain's net investment deficit, comprises 93% of its Gross Domestic Product (GDP).

To complicate matters, much of Spain’s huge private debt is owed indirectly to foreigners via its banks. Spain’s net investment deficit—the sums owed to foreigners by firms, householders and the government, less the foreign assets they own—comes to 93% of GDP, the cumulation of a long series of current-account deficits. 

This seems to be a perfect storm of debt for Spain, something that can seriously hurt the credibility of the said country in repaying what is due. In all likelihood, Spain couldn't hold up on its own, and so several economic figures came up with suggestions.

Spain and Italy could not live with today’s borrowing costs for long unless the outlook for their economies were to improve dramatically. So they may have to look to outside help. But it would be hard for the ECB to sanction another LTRO so soon, reckons Laurence Boone of Bank of America. The ECB could restart direct bond purchases: Benoît Cœuré, a member of the bank’s six-strong executive board, suggested on April 11th that it might, which helped push Spain’s bond yields down a bit. But that would make existing investors worry more about subordination to the ECB in the event of a restructuring. In any case Mario Draghi, the bank’s president, has recently said high yields are the bond markets’ way of asking governments to implement promised reforms.

The Economist speculated that Spain can turn to the benefits the other affected countries receive, but the bailouts might not able to cover another ailing country. The article ended with an ominous prediction.

A more likely outcome is that Spain is eventually forced to draw on the shared rescue fund to recapitalise its banks, which might in turn take pressure off its sovereign-borrowing costs. Meanwhile, some have turned to the next trouble spot. “France is our cheapest and biggest short,” says one hedge-fund manager.

The way I see it, the efforts of the government and key investors might not be enough; otherwise, it might take a long while for Spain to get back on its feet. The plausible choices of actions are quite limited, given the possible consequences of reckless decisions.

Perhaps it's time to let out the daredevil in the private sector. Right now, the best bet Spain has to stay upright is the yields from government bonds. However, the bond market isn't looking so pretty because people are afraid to take risks. However, if people just sit still, then Spain is left at the mercy of altruists willing to lend a hand. I believe the Spanish people can make a difference here. They can try purchasing bonds and holding on to them. The last thing the bond market needs is stagnancy. Even small bonds count; as long as many citizens are willing to participate. Make the bond market look healthy, and maybe, just maybe, more foreign investors might gain the incentive to join the fray.

I won't recommend that ECB conduct another LTRO. They should maintain their reputation as lender of last resort and so must recover for the time being. It can also participate in direct bond purchasing to pump oxygen to the gasping bond market. The private sector, with rational risk-taking, can turn out to be Spain's savior, and who knows, the rest of Europe.

Meanwhile, the Spanish government must ensure one thing, and it's quite obvious; they must do something about their overspending habits. There is a need to implement stricter auditing and sound fiscal policies to maximize what remains of the government funds while keeping borrowing at minimum. If the government is feeling up to it, it can apply its diplomatic skills and ask creditors to temporarily freeze the accumulation of interest rates as they accelerate the accumulation of bond yields. They can even go so far as to ask some creditors to cancel debt, but, given the dismal state of the affected parties, this scenario isn't likely to happen.

Undoubtedly, Spain, together with the rest of the world, is being haunted by the euro crisis. However, just like how lore has come up with weapons against ghosts and creepy crawlies, there are always solutions available if countries are willing to withstand this economic crisis, provided that they are willing to take a few risks every now and then.

Hot Springs: Paving Way For New Energy

Ever since I was a kid, I've admired Japanese culture. The well-preserved temples, colorful kimonos, unique celebrations, ghost stories, a lively economy, advanced technology, the girls, perhaps even anime; these are some of the factors that got me interested in the Land of the Rising Sun. I made it a point to do my best to give the country a visit before I die. Oh, and there's another thing that made me want to go to Japan.

Hot springs. Referred to as onsen in Japanese, hot springs constitute the distinct image of Japan to the rest of the world. When asked about Japan, most people tend to picture steaming hot springs with Japanese people chest-deep in the water. My grandmother says hot springs can be really hot; one can even die of heat stroke if he stayed on the spring for too long. Still, my desire to give hot springs a try cannot be deterred by heat strokes and similar things.

And now, recent events showed that hot springs can be used beyond the common purposes of relaxation of death by heat stroke. Japan, which is still recovering from the nuclear tragedy at Fukushima, considers tapping on the hidden energy stored in these waters.

It's almost a no-brainer for engineers that hot springs are potential sources of geothermal energy, which, given enough time, can gradually replace the staples in our energy industry; coal, fossil fuel, and nuclear energy. However, onsen owners expressed concern about the side effects of using hot springs as energy sources. But then, the need for alternative energy becomes more and more urgent as time passes.

For decades, onsen owners have stifled development of a huge potential source of clean energy: geothermal power. They argue that the tapping of heated aquifers in volcanic Japan will drain the onsen dry, increase pollution and ruin a cherished form of relaxation. With Japan on the verge of running out of nuclear power, however, the demand for new sources of energy is becoming harder to resist.

Three Japanese companies—Toshiba, Mitsubishi Heavy Industries and Fuji Electric—control more than half of the global market for geothermal turbines, yet Japan itself gets a mere 0.3% of its energy, or 537 megawatts, from its own steam. The industry’s promoters say that Japan sits on about 20,000 MW of geothermal energy, or the equivalent of 20 nuclear reactors, though not all of this could be developed. Since the disaster at Fukushima last year, all but one of the nation’s 54 nuclear reactors are now temporarily suspended, reducing Japan’s power-generating capacity by about a third. That has accelerated the search for alternatives.

(Source: Link)

The Japanese government announced that its electricity companies are set to purchase renewable energy at certain prices, which are yet to be determined. Meanwhile, the environment ministry confirmed that it will now allow projects for the development of geothermal energy in national parks.

The need for a persuasive government to convince the hot spring owners to step aside has been raised, given the close-to-nature disposition of the locals. This issue was raised by Tetsunari Iida, head of Institute for Sustainable Energy Policies, who also emphasized the need to go beyond what Japan's geothermal turbines can provide, hinting on the necessity to use the springs. Meanwhile, companies plan to construct a geothermal plant on Fukushima, which also has hot springs.

Cultural tensions might arise from this revolutionary project, but at least a friend can lend a hand. For instance, Iceland is also leading the march towards the utilization of geothermal energy.

To speed things up, Japan could also look overseas for help. Iceland, for instance, generates the same amount of geothermal energy as Japan, though Japan has 400 times more people. A Japanese expert, Hirofumi Muraoka, calculates that one mid-sized northern city, Aomori, with a population about the size of Iceland’s 318,000, could save enormously on imported fuel bills and heating costs by tapping geothermal springs nearby. Besides generating electricity, it could use the hot water from the springs to heat houses, as Iceland does.

Furthermore, Ambassador Stefan Stefansson stated that Japan can handle geothermal energy without government subsidies; all it needs is proper management. Finally, as a counter to protesting hot spring owners from Japan, Stefansson argued:

“Go to your computer and type in “Blue Lagoon”. There you will find the biggest onsen in the world and we have them all over Iceland. How’s that for pollution?”

Given the facts, there is hope for the rise of clean energy from our favorite hot springs. However, the issue is still riddled with government bureaucracy and cultural barriers. Although Iceland is eager to cooperate with Japanese efforts to pursue alternative energy sources, to get rid of every obstacle can prove to be quite a challenge.

I must agree with Stefansson in saying that Japan can succeed without state subsidies. After all, subsidization is a dubious source of funding, especially when Japan is pursuing a terra incognita; a new project to be tested (not to mention subsidies bear bureaucratic implications). It can be argued that the government ought to keep its funds safe while the private sector works it out. Of course the state can subsidize a fraction of the project just to absorb possible screw-ups, but I firmly believe that this project shouldn't solely depend on the government.

I laud the decision of the environment ministry's decision of opening up the parks as possible sources of geothermal energy. Of course, to preserve the beauty of the parks (which also serve as income for tourism), it is advisable that environmental compensation contracts be signed, although I'm confident Japan has this covered. 

The onsen owners won't be left our in this. Given the fact that their springs are potential energy sources, it is possible that they will find another source of income; they can opt to be shareholders of companies that will utilize their springs and have a say on the matter. After all, it's their springs that will be put into use.

In the midst of these events that inspire optimism, it's quite safe to say that we might be closer to finally utilizing clean energy on larger scales. Before I end this article, I'd like a separate endeavor of South Korea to pursue the widespread usage of clean energy. It's old news, but still worth mentioning.

My sincerest thanks to Nikola Tesla for this one.

I might sound cheesy for saying this but, onward the march for clean energy!

P.S: My engineering senses are tingling. 

Winter in Chinese Real Estate

China has made quite a name for itself these past few years by coming up with some sort of an economic "miracle"; from being in shambles during the end of Mao Zedong's Cultural Revolution (which also ended the reign of Chinese communism), China rose from the ashes and became one of the most promising economies to date, providing the world with cheap products by maximizing its export industry. Almost every individual in the world has handled or used at least one Chinese product; this is how influential China has become.

However, despite China wooing the world with its staggering volume of exports, several economists are highly skeptical regarding the sustainability of China's major economic boom. Some of them speculated that it's only a matter of time before this boom turns against the Chinese people, immersing them in an economic slump for an indefinite amount of time. For a while these pessimistic remarks generally went unnoticed as the world continued to shower praise on China for bringing itself back on track, and even managing to surpass the performance of most export-oriented countries.

Unfortunately, the economists' doubts about China weren't without merit. In fact, in all probability, they nailed it, because China is currently finding itself in a tough situation; something that can sabotage the rapidly rising Chinese economy; the cooling of its housing market.

Signs of the wintry real estate in China become more and more pronounced, as shown by Also Sprach Analyst Founder and Managing Editor "Zarathustra" in his articles.

The cooling real estate market are not only making previous home buyers unhappy.  Agencies who are probably more concerned about transaction volume than prices have been struggling with the collapse of transaction volume.  Centaline (whose boss is a completely incompetent man as far as property market forecast is concerned) China division has closed 60 branches (or 15% of all branches) in Shenzhen according to Mingpao and fired about 1,000 employees, and 40 branches in Beijing according cnyes.com.  Again, this is not new, as Midland (1200.HK) has closed all their Shanghai branches in May, even though they bizarrely opened 11 new branches in Nanshan district of Shenzhen according to Sina News.  We wish them best of luck. 

(Source: Link)

FT Beyond Brics flagged a report from Bloomberg Businessweek on the rather pessimistic outlook from Zoomlion Heavy Industry Science and Technology’s (1157.HK) boss Zhan Chunxin, saying that “Demand for construction machinery has shrunk drastically and growth will no doubt continue to slow next year”.

(Source: Link)

Finally, Bei Fu from Standard and Poor's explained in her March 7, 2012 report how developers are forced to significantly drive prices down to attract buyers.

More price cuts are likely, even for top developers 

We expect property prices to decline by 10% between June 2011 and June 2012. According to the National Statistics Bureau, average selling prices fell by 3.5% across the country from July to December 2011. Sales volume is likely to remain flat or slip in full-year 2012. Discounting is becoming increasingly common, even among leading developers. For some developers and in some cities, prices have already slumped–particularly for new launches.

(Source: Link)

As of today, the general protocol of the Chinese government is convincing developers to keep housing prices at minimum in hopes of countering the looming real estate winter. Several developers disagree with the proposition, and a couple of them raised interest rates to compensate for diminishing profits. However, the central government's tactics are well likely to be futile, as one real estate company actually went bankrupt.

Apparently, one unknown real estate developer in Hangzhou has just gone bust.  Hangzhou Jinxing Property's (some sources translated its name as Venus real estate company) application for bankruptcy protection has been accepted by the court, according to sources including ifeng.com.  Jinxing Property is owned by Zhejiang Zhongjiang Holdings, which is also in the process of going bust now, apparently.

(Source: Link)

Although it shouldn't come as a surprise that the government's actions hardly touch the center of the issue. In the process, all the government does is fight with the real estate developers. The government wants prices down and wait out the winter; the developers do not in fear of going bust like the one in Hangzhou. If this is the case, then why exactly is there a real estate winter in China in the first place?

This brings us back to why the economists doubted China's boom in the beginning.

China's boom is miraculous, in a sense that it was rapid, and that the whole world cooperated with China's export-oriented stratagem to rake in the dollars. How did China do this? If you think about it, it should be quite simple; China devalued its currency, the yuan. 

In the abandonment of the gold standard, the world's currencies are now, essentially, fiat currencies; meaning the value of money is practically determined by government caprice. The Chinese central bank, as a part of China's goal to make a quick economic boom, proceeded to drive down the price of the yuan, making it cheaper relative to the US dollar. China then maximized the efficiency of its export industry, essentially flooding the world with Chinese products.

With so many Chinese products to choose from at a very cheap price (due to the devalued yuan), the world was more than willing to tag along. And so the historic boom was born. China stimulated global economic activity like never before. However, beneath this seemingly utopian trading spree, lies at least two dark factors; one of which is purely theoretical.

1. Devaluation, then inflation

China has indeed produced an impressive economic boom for the world to enjoy. However, this doesn't automatically mean prosperity for the locals. In fact, as recent events demonstrated, the "miracle" of China is slowly proving itself to be a "curse" for the Chinese people. 

This is because of the inevitable consequence of currency devaluation. Since the yuan is cheaper than before, it would require more yuan to purchase stuff in China. Therefore, the Chinese actually had less purchasing power in the onset of the boom, and now need more bills to cope up with the devaluation. In effect, China has triggered its own inflation. But then, not only Chinese consumers are affected. 

Real estate developers are affected as well. And since the housing market of China is relatively new, its far more susceptible to economic imbalances than the other markets. Developers, faced with less valuable yuan, had to raise their prices to cope up with the expenses. The purchasing power of the Chinese consumer went down, while the young housing market prices went up; the worst of both worlds, all in the name of the Chinese boom.

Needless to say, people cut back on buying houses. At the same time, real estate developers are going nuts because nobody's buying their products. This brings us back to the current situation at China. The government is forcing the developers to cut down prices in hopes of winning customers back; however, developers are also afraid of incurring losses, so some of them are adamant in keeping prices high, while some of them actually increase their interest rates. The dollars received from exporting yield less value than the value of the products exported; China is selling at a loss.

To add insult to injury, it would seem that the foreigners take the bacon for the Chinese boom, while the locals take the trash. The importers had more products to choose from, and at a very cheap price to boot, while the locals have to deal with low income and high prices. This is nothing short of a tragedy.

Here we stand witness to a roller-coaster of economic mess-ups of China, which, ironically, seems to stem from the boom that made it the talk of the town in the first place. At least we know something; in all likelihood, the Chinese government holds the blame for this colossal mess.

(To know more about the yuan devaluation, you can check this link.)

2. A subtle US-China beef?

We know how China flooded US with Chinese products. Also, the world knows how scared US is of a phenomenon called "trade deficit," where the amount of imports exceed the amount of exports (a trade surplus is the other way around; exports exceed imports). Steve Forbes, among others stressed that US shouldn't worry itself over trade deficits, since they are a natural part of the international business cycle. However, the US is still skeptical; professor Paul Krugman even suggested that US adopt protectionist policies against Chinese goods via quotas and tariffs. 

Is China, somehow, for some reason, bent on scaring the US into triggering its own imbalance? Whatever the answer is, it must have failed to consider the implications of this export-oriented boom on its own economy, as shown by its clumsy responses to the cooling real estate market. Furthermore, it must have failed to consider that the importers are the actual winners in this unsound boom. Or China might just be going berserk or something. This whole proposition of course, is highly theoretical, but not without merit; after all, political tensions between US and China is but common knowledge to the global community.

So what can be done to put an end to China's real estate winter? Given how the government became a crucial factor to the onset of the crisis, it is a plausible solution to relax its grip on the yuan; let its value be more determined by the law of supply and demand; in other words, let foreign exchange do its job. Also, it would be wise for China to put less pressure on its export industry and start working on its internal economy. 

China can also manage its liquidity to temporarily convert cash into tangible assets. Moreover, it can convince foreigners to hold yuan bonds for future use; right now, an important goal of China is to stabilize its inflated money supply. China must contract it at just the right level.

However, there is a fair chance that China might not have the time to pull all of these off before undergoing a slump of some sort. This turns our attention to possible long-term solutions.

I might write an article that will extensively tackle this issue, but, given the series of troubles fiat currency has caused the world, it might be time to revisit the past; China, together with the rest of the world, might have to anchor their currencies not to the whims of the government, but to something of intrinsic economic value. Perhaps, the world should go back to pegging paper money to an actual treasure. Perhaps, for the sake of monetary stability, the world should reconsider the gold standard.

Objectivism in Boromir's Words

It seems my personal tirade against Objectivism is becoming more and more pronounced, but trust me when I say that this is nothing personal. I am merely flexing my rusty philosophical muscles to address the problems I find in the philosophy books that I read. It's just that most of these problems are found in Objectivism.

I'd like to say a few more words, but Boromir from Lord of the Rings summed everything up quite nicely for me.

Addressing the way Objectivists essentially 

establish their ethics on the phrase "man is man."

Refuting the notion that Ayn Rand resolved David

Hume's dilemma. Treating life as a standard of value 

from which you can derive oughts isn't being objective; on 

the contrary, it's still subjectivist thinking.

This is to question Ayn Rand's ethics of ethical egoism. Philosopher

G.E. Moore in his Principia Ethica described the contradiction of ethical egoism.

"What egoism holds, therefore, is that each man's happiness is the sole good - 

that a number of different things are each of them the only good 

thing there is - an absolute contradiction!"

This is to summarize my previous article, "Life and Value in Objectivism"

where Ayn Rand and the Objectivists may have committed the fallacy

of equivocation in relating life to value.

Finally, we have this:

This is to summarize my sentiments regarding the Objectivists'

contempt of a priori knowledge, when they themselves are 

guilty of applying it.

Of course I'm nowhere near covering the entirety of Ayn Rand's works, which contend the Bible in terms of utter thickness. So I guess people can expect more philosophical memes in the future. In the meantime, I intend to temporarily abstain from posting more anti-Objectivist logic, lest I risk accusations of being too monotonous. I might come up with an economics article or two. Stay tuned, I guess.

A Priori: Peikoff's Misconception

Classical philosopher Immanuel Kant theorized two types of knowledge; a priori and a posteriori knowledge. Basically, a priori knowledge is something that we can know intuitively, one that does not require experience. Meanwhile, a posteriori knowledge is something we can obtain by observing reality with our senses. A pretty harmless conjecture, but then, the rise of the Objectivist movement, eager to prove itself in the philosophical realm, boldly challenged the philosophies of old. Leonard Peikoff, the so-called intellectual heir of Ayn Rand, contested Kant's theory about the nature of knowledge. 

In the Ayn Rand Lexicon, a priori knowledge as explained by Peikoff is as follows:

Any theory that propounds an opposition between the logical and the empirical, represents a failure to grasp the nature of logic and its role in human cognition. Man’s knowledge is not acquired by logic apart from experience or by experience apart from logic, but by the application of logic to experience. All truths are the product of a logical identification of the facts of experience.

Peikoff claims that logic cannot be separated from experience, and that truth can only be attained by applying logic to experience. A bold assertion, but a dangerously flawed one. 

Yes, knowledge can be gained by applying logic to experience. This is called induction. Scientists have applied induction in their scientific research. Thanks to Francis Bacon and Galileo Galilei, induction from its primitive form (applied by Ancient Greeks like Aristotle) developed into a highly systematic methodology, something we now call the scientific method.

But Peikoff's argument fails to acknowledge another manner of acquiring knowledge; deduction. And as most philosophers would know, knowledge (or truth) from induction is probabilistic, while the knowledge (or truth) acquired from deduction is necessary. Take the mathematical form of modus ponens for starters. 

P ⊃ Q

P

∴ Q

This is read as: P implies Q; P, therefore Q.

This is a standard logical syllogism in mathematical logic. But how did we come to know this? How do we know it's valid? By Peikoff's argument, we knew this because we applied logic to experience.

But then proving this by induction would be a heavily arduous task, since deduction is known to produce necessary truths. This means that modus ponens must be true for anything, and must have no counter-instance. So, should we examine every causal relationship that occurs in this universe? Can you even do that? If we can't do this, then we fail to establish Peikoff's argument that knowledge is attained only by applying logic to experience.

So what becomes of Peikoff's definition?

Well, how about we disregard deduction altogether, since it doesn't fit with Objectivism? Why, that would be disastrous. Recall that inductive reasoning is obtaining a generalization from a specific data. Meanwhile, deduction is defined as obtaining a specific data from a generalization. If we disregard deduction as a body of knowledge, then what would become of all the scientific predictions our civilization has come up throughout the years? 

To illustrate this cataclysm, consider this simple scientific knowledge we have gathered from our early years. This is one of my professor's favorite examples.

So a caveman observed the sun every morning, and noticed that every time he sees the sun rise, it rises from the east. Months have passed and he sees the same thing; the sun always rises from the east. The caveman then made a leap of faith (or reason), and asserted this thing; the sun always rises from the east. He has successfully applied inductive reasoning; from a set of specific data (he sees that the sun rises from the east everyday), he was able to formulate a generalization (the sun always rises from the east). 

However, another thing can be done from this generalization; prediction. The caveman can assert that tomorrow, if the sun rises, it will rise from the east. This is deductive reasoning; from a generalization, he was able to formulate a specific data; a prediction. We also know that mankind has been able to predict countless things by deductive reasoning.

However, by Peikoff's definition, what the caveman did is wrong. He hasn't experienced tomorrow yet, therefore his prediction is not true knowledge. He was able to relate an unseen to the seen, an immaterial to the material, a potential to the actual; this is intuitive knowledge at work... an a priori knowledge, but then Objectivism asserts that a priori is not true. So how do we settle this dilemma?

How about we assert that knowledge from deduction is not necessary, but probabilistic, just like induction? Since knowledge is either inductive or deductive, such an assertion gives us an interesting conclusion; all knowledge is probabilistic. What then, becomes of arithmetic?

I'd love to have Objectivists say that 1 + 1 = 2 is probabilistic.

Oh, and besides that, I'd love to have them assert that man is man is probabilistic. Oh, but they can't; man is man, that is their ethical axiom! 

Perhaps, in the Objectivists' zeal to demolish Kant's philosophy (they seem to hate Kant very much), they have walked into a subtle trap; self-contradiction. They themselves are guilty of using necessary truths and knowledge to prove their points, but then they accuse someone who points that out of being evil and dishonest.

Perhaps the administrators of Ayn Rand Lexicon should take a look at how they define Kant's theory of knowledge. After all, for a group who claims to despise intellectual dishonesty, for a group who claims to uphold objectivity, such an action is, needless to say, expected.