Alan Greenspan presents an incorrect example of a luxury good and defines the common economic term “luxury good” incorrectly. He argues that “wheat is a luxury in underfed civilizations… the term “luxury good” implies scarcity and high unit value.”i”
- There are two necessary conditions for categorizing something as a luxury good which Greenspan omits: 1) A luxury good is not a necessityii. 2) The economic demand for a luxury good is elasticiii. Greenspan’s definition of the term “luxury good” is false through omission.
- The vocabulary of economicsiv classifies food, especially staples such as wheat, as a necessity good, not a luxury good. The economic consequences are well knownv. Greenspan is incorrect.
- Elastic demand for luxury goods means people buy disproportionately less as their income falls. Demand for food is “inelastic”, which means people have to buy a certain amount even if they are poorvi or if the price is high. The high unit value of wheat for the underfed people in Greenspan’s example is due to the necessity of food (demand) and the apparent lack of it (supply). Greenspan’s characterization of wheat as a luxury for underfed people is false and incorrect.
Therefore, Alan Greenspan presents an incorrect example of a luxury good and defines the common economic term “luxury good” incorrectly.
iPg 97, Gold and Economic Freedom by Alan Greenspan in Capitalism, the Unknown Ideal by Ayn Rand, Signet, New American Library
Ayn Rand says, “… the exact meaning and dictionary definition of ‘selfishness’ is: concern with one’s own interests”.
The Oxford Unabridged says selfishness is: “concern for one’s own interest to the exclusion of concern for the interests of others.
The definition provided by Rand is not the exact meaning. That was an untrue statement.
Her claim to present the “dictionary definition” is false. There is no one official dictionary definition of any word.
Her claim to present the “dictionary definition” is unsupported. She does not footnote her claim.
Her claim to present the “dictionary definition” is demonstrably false. Her definition is not the definition in the Oxford Unabridged.
Because her definition provides only half the full meaning, her definition of selfishness is an untruth by omission.
 The Virtue of Selfishness, Intro
 oxford unabridged
Greenspan makes a false equivalency and misuses common economic terms.
1: “Desires for luxuries are unlimited, therefore luxuries are always in demand”i.
Greenspan draws a false equivalency between “desire” and “demand”. “Desire” is an emotional “wish” for something. “Demand” is a technical term of economics which means someone has both desire and the ability to pay a price for something. A person, or society, may desire luxuries and yet not be able to pay, therefore no demand.
2: “Luxuries are always in demand”.
Greenspan’s conclusion contradicts the definition of luxury good. The demand for a luxury good, by definition, is elastic. Poor people don’t buy luxury goods, therefore luxuries are not always in demand. “Always in demand” is the definition of a “necessity good”. It’s as if Greenspan is saying luxuries are necessity goods, which is incorrect.
Alan Greenspan makes a false equivalency between “desire” and “demand”, and misuses the economic terms “demand” and “luxury”.
Pg 97, Gold and Economic Freedom by Alan Greenspan, in Capitalism:The Unknown Ideal by Ayn Rand Signet Books, New American Library
Do you find it difficult to talk to serious Ayn Rand fans, called “Objectivists”? Maybe something Rand wrote explains why.
Here Rand describes the qualities an Objectivist should bring to bear and the type of conversation they are having: “Drop the… ‘open mind’”, she counsels. “An active mind… reaches firm convictions and holds to them…. an active mind achieves an unassailable certainty in confrontations with assailants- a certainty untainted by spots of blind faith, approximation, evasion and fear… . you will learn to recognize at a glance a given theory’s stand… and to reject the attacks without lengthy considerationi.”
The conversation is not a learning opportunity for the Objectivist, for whom she predicts “every challenge you examine will strengthen your convictions”ii and “your ideological enemies will make you invulnerable by providing countless demonstrations of their own impotence.”iii
Rand warns her fans about you. You are an assailant. You are the enemy. You are attacking them, but they are invulnerable; for you are impotent and they hold their firm convictions. Their certainty is untainted. Their goal is to reject your challenge, to not examine your position beyond what it takes to identify it. She reassures them that they are without fear. When the confrontation is over, they expect to be more convinced they are right than when they started.
If that description differs from the conversation you thought you were having, perhaps that is one reason for the difficulty.
i Pg 21, ch 2, Philosophy, Who Needs It? By Ayn Rand. Signet edition, Penguin Books 1984