Logic Discussions: Praxeology

Praxeology - What is it?

Praxeology is the study of human activity, specifically the actions we take and consequences that occur as a result. It is not the same as psychology, which attempts to determine the "why" of an action based on biological and personality factors. Instead, it focuses on the "why" of the consequences, attempting to predict the unforseen implications of an action via logic and reason. It studies all the choices that are made, and determines what can be learned from them. It teaches us to look for both the consequences that can be foreseen, and those that can be inferred by surrounding events.

Okay... Why should I care about this?

Understanding the logical consequences that result from an action (or praxis) , both the good and bad, is necessary to determine if such actions are beneficial to society or the individual. It also helps in determining the logical real world motivations for an action as well, mainly because every action is predicated on previous ones.

This is particularly true in the sphere of politics. Politicians get funding for campaigns from lobbyists and corporate enterprise. This funding then drives their legislative decision making, as they will seek favourable laws and regulations for their backers. This is the main reason why the elite in society can dictate the rules governing that society.

One could claim the personality traits of politicians can be used to predict such behaviour, which may be true. Unfortunately, such analysis is somewhat speculative because the study of the mind is still an ongoing process, one that is heavily reliant on statistical modelling & theoretical interpretations, and less on logical thought. This isn't to say that psychology is not a worthwhile field of study, but it's a field which not everyone can easily comprehend.

One can definitively claim through Praxeology, however, that x action, regardless of the psychological makeup of an individual, can lead to y results. To study it requires an understanding of what actions were taken historically, what results occurred, and whether or not other attempts to take the same actions produced those results again. As such, it is far more intuitive and predictable a system of analysis.

Praxeology, Politics, & Economics

In politics, praxeology is useful for understanding the potential unintended outcomes of policy decisions, the physical motivators for each politician's choices, and the rationales as to why people voting. For instance, a person struggling to make ends meet on $10/hr will likely vote for someone promising $15/hr minimum wages. Conversely, applying a $15/hr minimum wage will logically cause one or more of the following for companies that use cheap labour: job losses, increased prices, or restricted growth, all because of the costs associated with increasing minimum labour costs by 50%.

Extend it further - what can we infer?

If every business knows they can expect more money to be paid out, what stops any business charging even more? The proportion wage benefits get swallowed up by the inflating prices. This can be seen over time, as the price floor adds to inflation. Companies get subsidises to compensate for these differences, which means more money spent, more national debt, and eventually taxes to fund it (or the interest on the debt at least).

Then there are the negative effects on those above minimum wage before the change. If they were already at the proposed new rate, their labour has been effectively devalued to a low paying job. This is another disincentive to productivity, though it can increase demand for higher wages in other sectors in the future. This drives the cost of business up over time, as logically any price floor will do.

Raising the price floor does another odd thing - drives companies to automate everything. Once technology becomes a cheaper solution (as it has at McDonalds), the price floor has eliminated the job market in a company, and eventually that will spread across the industry. All because it became too expensive to give a person the job.

People have a funny way of presuming because something sounds like a good idea, it must be a good idea. Unfortunately, if this were true, the term unintended consequences would be an oxymoron instead of something people have to consider. The PATRIOT act sounded brilliant to many, as does the NSA seeking terror practitioners online. Unfortunately the unintended consequences include access to every single compromising picture on your phone & PC, the ability to blackmail people in power, and provides the means to access all data online if anyone can break into it (don't presume they can't either, it's been done many times in the past).

Praxeology & Real World implications

Here is a different example, from the private sector - ponzi schemes. That's right, the government isn't the only conman out there. These schemes can be enticing, promising huge returns on investment, but they often lead people into a trap, where only the first ones in can get the biggest payouts. This is why it is important to consider any investment carefully. It's like purchasing fruit at a farmers market - sometimes a perfect looking apple has a worm in it.

So assuming you decide to invest in anything, you should consider the consequences of what you decide to put in. Never spend more than you can afford to lose when investing. That way if the worst happens, you haven't ruined your future. It would be like a day at the races (with a fixed budget) when all your horses went lame - incredibly painful to watch, but you'll survive it. And of course if the investment succeeded you'd still make a return, but a less rewarding one. This way, at worst you have a null set impact. It's money you have already assumed you've lost, so to get more back will be a bonus.

Conclusion

Understanding logic is crucial to understand why things have turned out the way they have, instead of how they were intended to turn out. Intentions mean nothing in reality. What matters in the end are consent and understanding the risks inherent in an action. Praxeology provides a means of identifying those risks, and helps us determine if they are actually worth taking in the first place.

For more information visit praxeology.net