In all introductory courses on logic, students are taught the syllogism, a short logical argument of three lines that contains a major premise, a minor premise, and a conclusion that is derived from these two premises. The classic example of a syllogism is the following:
All men are mortal.
Socrates is a man.
Therefore Socrates is mortal.
However, mortality is an extremely misleading example, for there are very few things that are as invariably true as the fact that all living creatures, and not just men, are mortal. For instance, contrary to many people’s mistaken beliefs, not all roses are red; not all peppers are hot; not all swans are white; not all bees sting; not all knives are sharp; not all rationalists are rational; not all dogs are friendly; not all markets are free; not all economists are stupid; and not all marine creatures have gills, since some fish-like animals such as whales and dolphins are in fact mammals, a fact that was not understood by people in past ages, who grouped these aquatic mammals in the same category as fish.
In the nineteenth century, the mistaken belief in the existence of the universal ether was due to a syllogism of the following sort:
All waves require a medium in order for them to propagate through space.
Light is a wave.
Therefore, light requires a medium in order to travel through space, for example, from the Sun and other stars to the Earth.
However, the major premise in this argument was generalized from a very small number of terrestrial examples, such as water waves and sound waves, the second of which cannot travel through a vacuum. Hence, from this very limited number of examples, it was believed that all waves must travel through some kind of physical medium, and therefore interstellar space must contain some kind of physical substance that vibrates in order for light to be transmitted through the vast distances of the Universe, a belief that was later shown to be wrong.
The naive belief in the universal applicability of the syllogism has led to a general sort of belief about syllogisms:
All arguments which have the form of Aristotle’s syllogism and whose major premise is true are valid.
This is an example of an Aristotelian syllogism.
Therefore, the conclusion which this syllogism derives from its premises is also valid.
Following the formulation of the syllogism, numerous admirers of Aristotle, or those who have received instruction in logic, have gone about searching for major premises that are like the premise, “All men are mortal,” in the sense that they are valid without any exceptions. Science can be considered as the discovery and collection of those major premises that are universally or terrestrially valid. However, there are many individuals, especially those who study human behaviour, who have made the mistake of believing that this or that statement or belief is as generally true as the paradigmatic philosophical premise that all men are mortal.
I have stated elsewhere that the tendency to generalize is not limited to scientists, logicians, and philosophers. Ordinary people and other animals also do so, for this ability is crucial to their survival. But this tendency often leads to false conclusions and beliefs about the world we live in. For example, many people believe mistakenly that
All snakes are venomous.
This is a snake.
Therefore, it is venomous and I should kill it lest it bite and poison me or someone else.
But contrary to popular belief, most snakes are not venomous. Moreover, snakes will usually bite other organisms only in the following two situations: either it wants to eat the animal, or it believes the animal poses a threat to it. Since snakes cannot tear their prey into smaller pieces, as many other predators can, there is no point for a snake to attack an animal that is too large for it to swallow, since this could result in bodily injury or death to itself. Hence, provided humans keep their distance from snakes and don’t disturb or alarm them, such as by behaving in a threatening manner, there is little likelihood that they will be bitten by one.
Although it was certainly not his fault, the long shadow cast by Euclid has caused significant harm in numerous areas of human knowledge by confusing people’s brains, for his book, The Elements, provided a precise, deductive, logical model that has been unwisely imitated and applied by many individuals who have not understood the very limited range of its applicability, which is the domain of mathematics, and those few sciences where mathematics has aided their practitioners in discovering truths about the world we live in. This is only one of countless examples of how our innate human tendency to imitate can beget harmful results.
Just as mortality is a bad example in that there are very few things that are like mortality in the world we live in, Newtonian mechanics has been a bad model for other sciences to imitate, notably biology and economics, since these two disciplines have a fundamentally different structure and methodology from physics. And even the discovery of quantum indeterminacy, which means that Newtonian mechanics is not valid at the atomic and subatomic levels, was not sufficient to discourage other scientists and truth-seekers from continuing to imitate the Newtonian physics model, whose chief feature is rigid, precise, and unvarying determinism. For, like a chicken that continues to run around after its head has been chopped off, the model of classical mechanics continues to influence the goals, objectives, and standards of those who labour in other fields of human knowledge.
Inherent in Socrates’ and Plato’s silly practice of trying to define words precisely is the assumption that all the things that are denoted by the same word share some common properties. In other words, the assumption of universality is implicit in the common practice of trying to define words precisely. This explains why there is sometimes so much disagreement and controversy about the way a word is defined, for in its definition is implicit the debate about a major premise of the sort, “All (this) are (that), or all members of this category of objects possess a particular quality or behavioural tendency.”
There are numerous examples of syllogistic arguments whose major premises, whether they are explicitly stated or simply assumed, have been believed to be true, but in fact are not as invariably true as their credulous adherents believed. In biology, many people believe that Darwin’s Law of Natural Selection is such a major premise: all species developed, or evolved, into their present forms and behavioural tendencies solely from the process of evolution by natural selection. However, as we shall see in the third part of this book, there are many features of living organisms that cannot be explained by this process. In economics, the principle of comparative advantage is an example of a major premise that has numerous real-world exceptions to it. The mistaken conclusion that has been drawn from this false belief is that free trade should be applied everywhere, in all countries and places, occupations, peoples, and so forth. We could formulate the economist’s naive thinking as follows:
Due to the inviolable principle of comparative advantage, free trade always benefits all the participants in an economic exchange.
This is an example of economic exchange.
Therefore, all economic exchanges between different countries should be made as free as possible, meaning that all barriers to free trade should be eliminated.
But economists have completely overlooked the many harmful – and frequently unintended – effects of free trade, which include, due to their very limited and distorted understanding of the world, unrestricted financial and capital flows across borders. Among other undesirable consequences, one consequence of this has been, in the brief period of just a few decades, the reduction of the taxes that are paid by multinational corporations from a relatively high figure to a much lower figure. Today, there are many large multinational corporations that pay no corporate taxes. They have accomplished this accounting trick by transferring their profits from high-tax countries or regions to low-tax or no-tax countries or regions, where they have set up an office or shell operation for precisely this purpose, but where they may not actually conduct any business, or they conduct very little business.
Who is to say that the $20 million loan from the Luxembourg subsidiary [to the parent company] was conducted at the real market rate? It is often hard to tell. Sometimes the prices for these transfers [within the same company to avoid paying taxes] are adjusted so aggressively that they lose all sense of reality: a kilogram of toilet paper from China has been sold for $4,121, a litre of apple juice has been sold out of Israel at $2,052; ballpoint pens have left Trinidad valued at $8,500 each. Most examples are far less blatant, but the cumulative total of these shenanigans is vast. About two-thirds of global cross-border world trade happens inside multinational corporations. Developing countries lose an estimated $160 billion each year just to corporate trade mispricing of this kind.[1]
Inside this [international financial] ecosystem, each jurisdiction struggles constantly to stay abreast of the others. When one [country, province, state, or tax jurisdiction] degrades its taxes or financial regulations or hatches a new secrecy facility to attract hot money from elsewhere, others then degrade theirs, to stay in the race. Meanwhile, financiers threaten politicians in the US and other large economies with the offshore club – ‘don’t tax or regulate us too heavily or we’ll go offshore’, they cry – and the onshore politicians quail and relax their own laws and regulations. As this has happened, supposedly onshore jurisdictions have increasingly taken on the characteristics of offshore [jurisdictions], and in the large economies tax burdens are being shifted away from mobile capital and corporations, onto the shoulders of ordinary folk. US corporations paid about two-fifths of all US income taxes in the 1950s; that share has now fallen to a fifth.[2] The top 0.1 per cent of US taxpayers saw their effective tax rate fall from 60 per cent in 1960 to 33 per cent in 2007, as their income soared. Had the top thousandth paid the 1960 rate, the Federal Government would have received over $281 billion more in 2007.[3]
Whereas the taxes that are collected by governments are distributed to citizens in a relatively equitable manner, such as by being spent on building or maintaining important infrastructure, operating public facilities such as libraries, parks, hospitals, and community centres, and providing universal programs such as health care, education, old-age pensions, unemployment insurance, national defence, the police and law courts to maintain order, and so forth, the taxes that are saved by corporations are largely distributed to a very small number of people – primarily to shareholders and corporate executives.[4] These very different distributions are due to the fact that, while governments are democratic entities, and therefore seek to use their revenues in a fair and equitable manner, corporations most certainly are not democratic entities, and therefore those who own or control them are the ones that receive most or all of the profits or savings which they are able to generate. The steep reduction in the taxes paid by corporations in recent decades is one of the main reasons for the growing inequality that has become a serious problem during this same period. Contrary to what the deluded economists believe, in most cases, the large amounts that many corporations have been able to retain by reducing the taxes they pay are not being used by corporations to invest and create jobs, but as a means of massive wealth expropriation by the rich and powerful.
Nowhere are these important unintended consequences of global financial free trade taught in economics courses along with the standard indoctrination about its manifest benefits based on the simplistic economic gospel of comparative advantage. And yet, these harmful effects of free trade can adversely affect the lives of literally billions of people around the world.
There are many people who continue to laud Aristotle as a great intellectual because of his pioneering development of the field of logic. However, the simplistic form of the syllogism has led a great many people astray, by making them try to fit the heterogeneous complexity of the real world that we live in into its overly narrow confines. The real world is more complex, varied, and inconsistent than most people’s simplistic conceptions of it. We human beings would make fewer mistakes if we ceased trying to impose our frequently mistaken generalizations about reality onto reality, as the rigid rules of Aristotelian logic often lead its practitioners to do.
[1] Treasure Islands: Tax Havens and the Men Who Stole the World by Nicholas Shaxson, chapter 1. Vintage, London, 2011.
[2] The naive calculation that this means that corporate taxes have dropped by roughly one-fifth, or 20%, is wrong, for this figure is the decline in corporate taxes as a percentage of the total income tax paid by all taxpayers, whether individuals or companies. The actual decline in corporate taxes is much higher, being on the order of about 50%.
[3] Treasure Islands, chapter 1.
[4] Although unbridled price competition can force more and more corporations to adopt these and other tax-evading – or, as they would prefer to call it, tax-minimizing – practices, it is not at all true that these considerable tax savings are entirely transferred to consumers in the form of lower prices. The stupid economist, with fanciful visions of perfectly competitive and efficient markets in one’s head, is liable to make this unjustified inference. However, the reality is often very different from the economist’s frequently unreal assumptions and beliefs about human behaviour, for there are numerous opportunities for those with corporate power and control to siphon off a part of these savings for themselves. Without exaggeration, this can be called corporate corruption, for though it is perfectly legal, it is really no different from the corruption that is common in some governments around the world, especially in poorer countries, where those in power siphon off a part of the government revenue or foreign aid that was intended to benefit the people.
Homo Stupidus 