| | Jordan, here are some answers ...
I.
Objectivists are cool with outlawing fraud, but tell me which of the following are okay to outlaw and why:
1. Snake oil with a claim that it can cure cancer. No studies have been done on this subject.
2. Snake oil with a claim that it can cure cancer. Studies show no effect in snake oil on curing cancer.
3. Snake oil with a claim that it can cure cancer. Studies show that instances of cancer actually increase with injestion of snake oil.
I'm a self-acclaimed expert at the interface of science and marketing. These 2 scenarios require qualification for law to enter into the picture, though. Part of the answer to why we need qualification has to do with a lack of standardization of the term "studies." It's harder to qualify than you might think. With proper qualifications, here's how and why it would be okay to outlaw these:
1. Snake oil with a claim that [studies have been done on it and] it can cure cancer. No studies have been done on this subject.
The fraud here is beyond reasonable doubt. Cancer is a tricky disease with documented "spontaneous remissions." If someone had a spontaneous remission while taking snake oil, then the original (general) claim is not fraudulent "beyond reasonable doubt"
**In cases 2 and 3, fraud that's beyond reasonable doubt would require study citations within the claim.
II.
Next, does it matter whether the claim is about cancer rather than, say, making shinier fingernails? No.
III.
Next, Objectivists are typically not okay with restricting the market, so I'm wondering how that will play into answering the above questions.
I'm also wondering how much the old ideas of "buyer beware" and "you can't cheat an honest man" play into this.
Should be sufficiently answered above. These old ideas -- as long as the 1st Amendment holds -- are still central.
IV.
Last, and perhaps related to III, what do Objectivists think of the idea that it's wrong to capitalize on goods that succeed by way of people's irrationality. The Objectivist view of the market is that it "teaches" rationality to us. In a truly free market, pandering to irrationality is self-limiting and, therefore, inconsequential. Here's Rand on that:
By "philosophically objective," I mean a value estimated from the standpoint of the best possible to man, i.e., by the criterion of the most rational mind possessing the greatest knowledge, in a given category, in a given period, and in a defined context (nothing can be estimated in an undefined context). For instance, it can be rationally proved that the airplane is objectively of immeasurably greater value to man (to man at his best) than the bicycle—and that the works of Victor Hugo are objectivelyof immeasurably greater value than true-confession magazines. But if a given man's intellectual potential can barely manage to enjoy true confessions, there is no reason why his meager earnings, the product of his effort, should be spent on books he cannot read—or on subsidizing the airplane industry, if his own transportation needs do not extend beyond the range of a bicycle. (Nor is there any reason why the rest of mankind should be held down to the level of his literary taste, his engineering capacity, and his income. Values are not determined by fiat nor by majority vote.)
Just as the number of its adherents is not a proof of an idea's truth or falsehood, of an art work's merit or demerit, of a product's efficacy or inefficacy—so the free-market value of goods or services does not necessarily represent their philosophically objective value, but only their socially objective value, i.e., the sum of the individual judgments of all the men involved in trade at a given time, the sum of what they valued, each in the context of his own life.
Thus, a manufacturer of lipstick may well make a greater fortune than a manufacturer of microscopes—even though it can be rationally demonstrated that microscopes are scientifically more valuable than lipstick. But—valuable to whom?
A microscope is of no value to a little stenographer struggling to make a living; a lipstick is; a lipstick, to her, may mean the difference between self-confidence and self-doubt, between glamour and drudgery.
This does not mean, however, that the values ruling a free market are subjective. If the stenographer spends all her money on cosmetics and has none left to pay for the use of a microscope (for a visit to the doctor) when she needs it, she learns a better method of budgeting her income; the free market serves as her teacher: she has no way to penalize others for her mistakes. If she budgets rationally, the microscope is always available to serve her own specific needs and no more, as far as she is concerned: she is not taxed to support an entire hospital, a research laboratory, or a space ship's journey to the moon. Within her own productive power, she does pay a part of the cost of scientific achievements, when and as she needs them.--CUI, 24
... the intellectual criteria of the majority do not rule a free market or a free society—and that the exceptional men, the innovators, the intellectual giants, are not held down by the majority. In fact, it is the members of this exceptional minority who lift the whole of a free society to the level of their own achievements, while rising further and ever further.
A free market is a continuous process that cannot be held still, an upward process that demands the best (the most rational) of every man and rewards him accordingly. While the majority have barely assimilated the value of the automobile, the creative minority introduces the airplane. The majority learn by demonstration, the minority is free to demonstrate. The "philosophically objective" value of a new product serves as the teacher for those who are willing to exercise their rational faculty, each to the extent of his ability. Those who are unwilling remain unrewarded—as well as those who aspire to more than their ability produces. The stagnant, the irrational, the subjectivist have no power to stop their betters …
The mental parasites—the imitators who attempt to cater to what they think is the public's known taste—are constantly being beaten by the innovators whose products raise the public's knowledge and taste to ever higher levels. ...--CUI, 25
The "philosophically objective" value of a new product serves as the teacher for those who are willing to exercise their rational faculty, each to the extent of his ability. Those who are unwilling remain unrewarded—as well as those who aspire to more than their ability produces …
A given product may not be appreciated at once, particularly if it is too radical an innovation; but, barring irrelevant accidents, it wins in the long run. It is in this sense that the free market is not ruled by the intellectual criteria of the majority, which prevail only at and for any given moment; the free market is ruled by those who are able to see and plan long-range—and the better the mind, the longer the range.--CUI, 26
Ed
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