Stephen Hicks, Ph.D.

Profiles in Liberty — series trailer

Forthcoming in January 2012.

Profiles in Liberty main page.

Subprime mortgage crisis — history flowchart

Here is a simplified flowchart, developed for my business ethics courses, reflecting my understanding of subprime mortgages’ contribution to the crisis.

Let me emphasize that this is only about the subprime contribution of the overall crisis. Fannie Mae and Freddie Mac enabled much spillover into non-subprime mortgage sectors, government-set capital requirements and other regulations enabled the AAA ratings of mortgage-based securities that encouraged speculators, and there were plenty of imprudent and unscrupulous characters in the private sector too.

Click on the image for a larger size or here for a PDF version.

Suggestions for improvement welcome. Thanks to Christopher Vaughan for the flowchart’s visual design. [Return to the StephenHicks.org main page.]

Seminar: Philosophy and the Evolution of the Mixed Economy

One of my talks at Francisco Marroquín University was on making sense of our mixed economy–an unwieldy combination of market and socialist elements. The 28-minute talk integrates themes from my intellectual heroes–Smith, Mill, Mises, Hayek, Rand, Popper, Friedman, Buchanan, and Tullock–and connects market economics, politics, ethics, history, and public choice to explaining our semi-coherent mixed economy. The flowchart worked through is online here.

Related:
The above talk at UFM’s site.
The flowchart: Pathologies of the mixed economy (or, How we got into this frackin’ mess).
The previous talk referred to at the beginning: Seminar on entrepreneurial ethics.
Interview with UFM’s Luis Figueroa on Business Ethics and Corporate Social Responsibility.

Victor Hugo on the power of the mature writer

From a later preface to Hans of Iceland, originally published anonymously in 1823:

“When a man’s prime is past, when his head is bowed, when he feels compelled to write something more than strange stories to frighten old women and children, when all the rough edges of youth are worn away by the friction of life, he realizes that every invention, every creation, every artistic divination, must be based upon study, observation, meditation, science, measure, comparison, serious reflection, attentive and constant imitation of Nature, conscientious self-criticism; and the inspiration evolved from these new conditions, far from losing anything, gains broader influence and greater strength. The poet then realizes his true aim. All the vague revery of his earlier years is crystallized, as it were, and converted into thought. This second period of life is usually that of an artist’s greatest phase, the intermediate and culminating point, the warm and radiant hour of noon, the moment when there is the least possible shade, and the most light. There are supreme artists who maintain this height all their lives, despite declining years. These are the sovereign geniuses. Shakespeare and Michael Angelo left the impress of youth upon some of their works, the traces of age on none.” (Victor Hugo, Paris, May, 1833)

Two nineteenth-century riots

A watershed event in American business history was the Homestead Riot of 1892. At the Homestead Steel Works near Pittsburgh, union leaders and workers rejected wage cuts proposed by owner Andrew Carnegie and plant manager Henry Frick. Negotiations failed, a strike began, the plant was closed, workers armed themselves, the Pinkertons were called in, and a battle ensued, killing three Pinkertons and nine workers.

But did you also know about the riot at New York’s Astor Place Opera House in 1849, in which angry factions clashed over the proper theatrical interpretation of Shakespeare’s Macbeth? One faction preferred the “ruggedly masculine” and “forceful acting style” of Edwin Forrest, while the other advocated the “more restrained” approach of William Macready. Critics pronounced, insults were slung, tempers flared, one night the crowd went wild, the state militia was called in, and twenty-two people were killed.

So: Twelve people were killed over a wage dispute, while twenty-two were killed at the theatre. Interesting times when riots over Shakespeare can be more deadly than riots over money.

Michael Strong on Socratic teaching

I like this paragraph from Michael Strong’s The Habit of Thought:

“The effort of Socratic Practice is to develop students’ own standard of intellectual judgment by means of placing the onus of responsibility for understanding entirely on them and providing them with the tools and experiences necessary to develop their intellectual judgment. ‘Does it make sense to you?’ is the central question to students whenever we are working to understand a text. As long as the student knows that, whether by didactic instruction or by subtle conversational manipulation, she will ultimately be led to the ‘right’ answer, she will never rely on her own judgment in the deepest sense. In order to come to rely on her judgment, and to feel a need to refine it, she must continually be put in situations where she is completely on her own.” (p. 15)

This semester Marsha Enright and I are experimenting with Socratic Seminars in my Philosophical Foundations of Education course. So far we have done sessions with selections from Plato’s Allegory of the Cave [pdf] from The Republic, John Locke’s Some Thoughts Concerning Education [pdf], and John Dewey’s Democracy in Education [pdf] .

Populist capitalism in literature

I’ll be giving a talk at the 2011 APEE conference in April. My title is “Cameron Hawley, Henry Kitchell Webster, and Populist Capitalism in Literature.” Here is the abstract:

In the early and middle part of the twentieth-century, Hawley and Webster were strong-selling authors of novels that dramatized themes of business ethics and political economy. Webster was the author of A King in Khaki and co-author (with Samuel Merwin) of Calumet “K.” Hawley is most known for his two books, Executive Suite and Cash McCall, which were developed for television and the big screen. While both authors are generally pro-business-as moral-and-capitalism-as-good, their writings also show ambivalence and occasional suspicion about the emerging innovative, high-tech aspects of capitalism such as corporate raiders, financial instruments on Wall Street, and arbitrage. In this paper, I discuss briefly the two novelists’ plots and themes and explore the ongoing issue of understanding and communicating effectively the economic and ethical value of innovations in business and free markets.

My talk is part of the “Philosophy of Business” session on the program.

Marcel Duchamp and Lillian Rearden

Marcel Duchamp’s urinal was named most influential work of modern art of all time, according to a vote by 500 critics. Duchamp named it Fountain.

It was initially rejected for display at the Society of Independent Artists exhibit in 1917, whereupon Duchamp’s allies argued that it was a worthy work of art along four lines:

“First, Fountain represented everyday American street culture. … Second, it is a work of art because an artist chose it, placed it in a gallery, and as a result made us see it differently. … Third, Fountain is an appropriate work of art in a country whose greatest art forms are, not painting and sculpture, music and literature, but ‘plumbing and bridges.’ … And finally—Duchamp’s American friends agreed—Fountain was beautiful in its chaste surfaces and sculptural form, reminding several commentators of a traditional Madonna or Buddha. (‘Buddha of the Bathroom’ was the title of one apologia.)”

The quotation is from Wanda M. Corn’s The Great American Thing: Modern Art and National Identity, 1915-1935 (Berkeley: University of California Press, 1999, pp. 48-49). Corn’s book is a good art history with an occasionally distracting postmodernist overlay.

(My interpretation of Fountain is toward the end of this short piece: “Post-postmodern Art” [pdf].)

Incidentally, Jerry Saltz, a senior art critic for New York Magazine, makes a strong connection between Duchamp and Immanuel Kant’s theory of the sublime in art. Writing in the Village Voice, Saltz says: “Fountain brings us into contact with an original that is still an original but that also exists in an altered philosophical and metaphysical state. It is a manifestation of the Kantian sublime: A work of art that transcends a form but that is also intelligible, an object that strikes down an idea while allowing it to spring up stronger. Its presence is grace.”

Which connects us to these two challenging intellectual history questions: What is the connection between Kant and modern art? and Is modern art too complicated for us?

But here’s the sideways connection to the character Lillian Rearden, prompted by the “plumbing and bridges” reference in the quotation from Corn’s book. When we first meet Lillian in Chapter Two of Atlas Shrugged, the first words out of her mouth, as her steel magnate husband Hank Rearden arrives home, are “– but it’s just that a man of culture is bored with the alleged wonders of purely material ingenuity. He simply refuses to get excited about plumbing.” Of course, Hank Rearden produces much of the plumbing that Lillian disparages, and he is the designer of an innovative bridge over a Colorado chasm.

So: plumbing and bridges. Is it a coincidence that — of the thousands of items of modern technology that could have been mentioned — Rand chose the two Duchamp’s defenders chose?