JDN 2457552

After several long, intense, and very likely controversial posts in a row, I decided to take a break with a post that is short and fun.

You have probably already heard of a “strawman” argument, but I think there are many more “materials” an argument can be made of which would be useful terms to have, so I have proposed a taxonomy of similar argument “men”. Perhaps this will help others in the future to more precisely characterize where arguments have gone wrong and how they should have gone differently.

For examples of each, I’m using a hypothetical argument about the gold standard, based on the actual arguments I refute in my previous post on the subject.

This is an argument actually given by a proponent of the gold standard, upon which my “men” shall be built:

1) A gold standard is key to achieving a period of sustained, 4% real economic growth.

The U.S. dollar was created as a defined weight of gold and silver in 1792. As detailed in the booklet, The 21st Century Gold Standard (available free at http://agoldenage.com), I co-authored with fellow Forbes.com columnist Ralph Benko, a dollar as good as gold endured until 1971 with the relatively brief exceptions of the War of 1812, the Civil War and Reconstruction, and 1933, the year President Franklin Roosevelt suspended dollar/gold convertibility until January 31, 1934 when the dollar/gold link was re-established at $35 an ounce, a 40% devaluation from the prior $20.67 an ounce. Over that entire 179 years, the U.S. economy grew at a 3.9% average annual rate, including all of the panics, wars, industrialization and a myriad other events. During the post World War II Bretton Woods gold standard, the U.S. economy also grew on average 4% a year.

By contrast, during the 40-years since going off gold, U.S. economic growth has averaged an anemic 2.8% a year. The only 40-year periods in which the economic growth was slower were those ending in the Great Depression, from 1930 to 1940.

2) A gold standard reduces the risk of recessions and financial crises.

Critics of the gold standard point out, correctly, that it would prohibit the Federal Reserve from manipulating interest rates and the value of the dollar in hopes of stimulating demand. In fact, the idea that a paper dollar would lead to a more stable economy was one of the key selling points for abandoning the gold standard in 1971.

However, this power has done far more harm than good. Under the paper dollar, recessions have become more severe and financial crises more frequent. During the post World War II gold standard, unemployment averaged less than 5% and never rose above 7% during a calendar year. Since going off gold, unemployment has averaged more than 6%, and has been above 8% now for nearly 3.5 years.

And now, the argument men:

Fallacious (Bad) Argument Men

These argument “men” are harmful and irrational; they are to be avoided, and destroyed wherever they are found. Maybe in some very extreme circumstances they would be justifiable—but only in circumstances where it is justifiable to be dishonest and manipulative. You can use a strawman argument to convince a terrorist to let the hostages go; you can’t use one to convince your uncle not to vote Republican.

Strawman: The familiar fallacy in which instead of trying to address someone else’s argument, you make up your own fake version of that argument which is easier to defeat. The image is of making an effigy of your opponent out of straw and beating on the effigy to avoid confronting the actual opponent.

You can’t possibly think that going to the gold standard would make the financial system perfect! There will still be corrupt bankers, a banking oligopoly, and an unpredictable future. The gold standard would do nothing to remove these deep flaws in the system.

Hitman: An even worse form of the strawman, in which you misrepresent not only your opponent’s argument, but your opponent themselves, using your distortion of their view as an excuse for personal attacks against their character.

Oh, you would favor the gold standard, wouldn’t you? A rich, middle-aged White man, presumably straight and nominally Christian? You have all the privileges in life, so you don’t care if you take away the protections that less-fortunate people depend upon. You don’t care if other people become unemployed, so long as you don’t have to bear inflation reducing the real value of your precious capital assets.

Conman: An argument for your own view which you don’t actually believe, but expect to be easier to explain or more persuasive to this particular audience than the true reasons for your beliefs.

Back when we were on the gold standard, it was the era of “Robber Barons”. Poverty was rampant. If we go back to that system, it will just mean handing over all the hard-earned money of working people to billionaire capitalists.

Vaporman: Not even an argument, just a forceful assertion of your view that takes the place or shape of an argument.

The gold standard is madness! It makes no sense at all! How can you even think of going back to such a ridiculous monetary system?

Honest (Acceptable) Argument Men

These argument “men” are perfectly acceptable, and should be the normal expectation in honest discourse.

Woodman: The actual argument your opponent made, addressed and refuted honestly using sound evidence.

There is very little evidence that going back to the gold standard would in any way improve the stability of the currency or the financial system. While long-run inflation was very low under the gold standard, this fact obscures the volatility of inflation, which was extremely high; bouts of inflation were followed by bouts of deflation, swinging the value of the dollar up or down as much as 15% in a single year. Nor is there any evidence that the gold standard prevented financial crises, as dozens of financial crises occurred under the gold standard, if anything more often than they have since the full-fiat monetary system established in 1971.

Bananaman: An actual argument your opponent made that you honestly refute, which nonetheless is so ridiculous that it seems like a strawman, even though it isn’t. Named in “honor” of Ray Comfort’s Banana Argument. Of course, some bananas are squishier than others, and the only one I could find here was at least relatively woody–though still recognizable as a banana:

You said “A gold standard is key to achieving a period of sustained, 4% real economic growth.” based on several distorted, misunderstood, or outright false historical examples. The 4% annual growth in total GDP during the early part of the United States was due primarily to population growth, not a rise in real standard of living, while the rapid growth during WW2 was obviously due to the enormous and unprecedented surge in government spending (and by the way, we weren’t even really on the gold standard during that period). In a blatant No True Scotsman fallacy, you specifically exclude the Great Depression from the “true gold standard” so that you don’t have to admit that the gold standard contributed significantly to the severity of the depression.

Middleman: An argument that synthesizes your view and your opponent’s view, in an attempt to find a compromise position that may be acceptable, if not preferred, by all.

Unlike the classical gold standard, the Bretton Woods gold standard in place from 1945 to 1971 was not obviously disastrous. If you want to go back to a system of international exchange rates fixed by gold similar to Bretton Woods, I would consider that a reasonable position to take.

Virtuous (Good) Argument Men

These argument “men” go above and beyond the call of duty; rather than simply seek to win arguments honestly, they actively seek the truth behind the veil of opposing arguments. These cannot be expected in all circumstances, but they are to be aspired to, and commended when found.

Ironman: Your opponent’s actual argument, but improved, with some of its flaws shored up. The same basic thinking as your opponent, but done more carefully, filling in the proper gaps.

The gold standard might not reduce short-run inflation, but it would reduce long–run inflation, making our currency more stable over long periods of time. We would be able to track long-term price trends in goods such as housing and technology much more easily, and people would have an easier time psychologically grasping the real prices of goods as they change during their lifetime. No longer would we hear people complain, “How can you want a minimum wage of $15? As a teenager in 1955, I got paid $3 an hour and I was happy with that!” when that $3 in 1955, adjusted for inflation, is $26.78 in today’s money.

Steelman: Not the argument your opponent made, but the one they should have made. The best possible argument you are aware of that would militate in favor of their view, the one that sometimes gives you pause about your own opinions, the real and tangible downside of what you believe in.

Tying currency to gold or any other commodity may not be very useful directly, but it could serve one potentially vital function, which is as a commitment mechanism to prevent the central bank from manipulating the currency to enrich themselves or special interests. It may not be the optimal commitment mechanism, but it is a psychologically appealing one for many people, and is also relatively easy to define and keep track of. It is also not subject to as much manipulation as something like nominal GDP targeting or a Taylor Rule, which could be fudged by corrupt statisticians. And while it might cause moderate volatility, it can also protect against the most extreme forms of volatility such as hyperinflation. In countries with very corrupt governments, a gold standard might actually be a good idea, if you could actually enforce it, because it would at least limit the damage that can be done by corrupt central bank officials. Had such a system been in place in Zimbabwe in the 1990s, the hyperinflation might have been prevented. The US is not nearly as corrupt as Zimbabwe, so we probably do not need a gold standard; but it may be wise to recommend the use of gold standards or similar fixed-exchange currencies in Third World countries so that corrupt leaders cannot abuse the monetary system to gain at the expense of their people.