It’s Where You Start That Determines Where You Finish

I enjoy articles on economics. The first thing I attempt to determine however is the writer’s starting point.

If a writer  starts from the premise that “government planners” can successfully control the allocation of scarce resources better than free markets, then I know that the author isn’t living in reality. He instead lives in a daycare world.  His “finish”, no matter how sophisticated his thinking, can be summed up as all us children nicely sharing our little resources like Tonka Toys.  Of course those who write from this perspective see themselves as the grownup women watching over us selfish children and our resources with a keen eye on who gets to play with what.

Many “economists” still live in such a world.  Because resources like, say, food, simply appeared on their tables at dinner time, and cars appeared in their driveways at 16, and a full government or daddy-funded education just appeared, seemingly from nothing, experience has conditioned them to feel that resources simply appear from nothing and the driving question then is not how to create more but rather how can what already exist be fairly distributed. That homes, medical care, education, or food are not a right that can be guaranteed by one man to another is utterly unfathomable to those who start with such thinking.  Such starting points determine the finish; though like all Utopian dreams, that finish must ever be in the future requiring patience from those who suffer interminably from the inevitable hardships that come with them.

On the other hand, writers whose starting point is the realization that resources are the result of risk, work, and production, not to mention human factors such as self-interest and motivation, are much more trustworthy.  Good thinking must necessarily be aligned with reality.

As for me, I’m much more confident in the economics of one whose thinking was forged in making payroll and successfully competing for business in a hostile world while simultaneously thwarting greedy lawyers, and power-hungry politicians and their bureaucrat dogs.  I’m much more inclined to think this person’s economics more insightful than those of tenured theorizers whose circumstances insulate them from the consequences of their stupid “ideas”.

Marxism, Capitalism And Their Politics, Explained

Why can’t government use its power to force equality?

What are some real problems with Marxism’s idealistic theories?

Does Capitalism really exploit the weak?

This video is a great short lesson in answering these questions:

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See also:

Bob And His Apples

Free The Slave? Not So Fast!

The prominence of slavery was a reality for all but the tiny slice of recorded history we call the present.  But mankind appears to have rejected this practice  in modern Western Civilization, which, given the stock from which I come myself, probably saves me from being one… which is good.

But fortunately for us lazies and unfortunates another kind of slave has emerged.   This new slave is cheap, works hard day and night, never complains, and separates us by leaps and bounds from the toils, cares, and harsh realities that were ever present in the lives of our ancestors.  But, best of all, this slave is willing to be enslaved, and needs no crusader on his behalf… until lately.

The slave of which I speak is “energy”.  This slave looks like a washing machine, a dishwasher, air conditioner, automobile and so on. And for those who in the past needed armies of slaves for building pyramids and harvesting crops and so on, those armies now look like bulldozers, cranes, and combines.

Also, we generally associate slavery with back-breaking labor.  But this slave does much more than that. It will take us 2000 miles in a few hours, or pump blood through our bodies while another heart is installed, and much more. Let’s see our mental image of a slave do that!

There’s an old Chinese proverb that supposedly goes like this: “If you want to know about water, don’t ask a fish”. Everyone alive today has benefited so much from this slave, and in so many ways,  we now take “him” for granted.  It’s almost as if this slave is as sure to us as tomorrow’s sunrise, and as plentiful and certain too.

Perhaps life immersed in a world filled with the benefits of energy explains why so many, who daily depend on this willing slave for life as we know it, also believe that it can be done away with, and life as only we few humans in history have experienced it, will continue unchanged.

Static Snapshots Reveal Nothing About Economics.

A young man went to a grocery store one night to buy food.  He left with a loaf of bread and a stack of bologna, because, well, that was all he could afford.  He then went home to his apartment which was furnished with aluminum lawn furniture.  His bed was a cushion from an outdoor lounge chair as well.  He kept it on the floor of his closet where he slept.  He worked at night, you see, and couldn’t afford curtains.  Needless to say, he was poor.

But this true story is only a snapshot.  To examine only this snapshot tells us virtually nothing except for those “present” circumstances.   In this case for example, the young man had done poorly in school.  But his poor performance had nothing to do with any of the usual culprits that are trotted out.  It was because he thought it more important to “hang out” with his friends.  By his own later-in-life admission, his meager circumstances were not the result of something so vague as rich white men’s greed, but of his own laziness.

The story also says nothing of his future.  In time this person managed to get his act together and buckle down.  He went to school, read, and worked hard.  In time his fortunes changed.  He learned a skill that paid well, got married, had children, and is now living a comfortable middle-class life.

This is why snapshots aren’t worth much beyond fueling emotional “causes”.  Life, economies, fortunes, circumstances; they are all dynamic, not static.  The vast majority of young people fortunate enough to live in free-market systems begin their lives with very modest means, which actually build character.  Left alone, with equal opportunity and the right mindset, they will find their way out of those circumstances if they are willing to make sacrifices, work hard, roll with the punches that are certainly coming their way, and live ethically… and the sooner one starts the better.

The young man in this story, if you haven’t guessed, is me.  I suppose I could have blamed my circumstances on social injustice, or the 1%, or some other shadowy boogie man meant to send me cowering into the arms of the socialist.  But my real enemy resided in my own skin.  It still does.

“Words Are Wise Men’s Counters… But They Are The Money Of Fools”

In the post before last I excerpted a passage from “The Road To Serfdom” concerning the redefining of “words”. Below is a short video that builds on that idea.  It also explains how the words “social justice” are “money of fools”.

H/T Right From Yaad.

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Also check out this series on social justice:

Part 1

Part 2

Part 3

Part 4

Part 5

Part 6

The Egalitarian Pipe Dream, Social Justice part 5

Two conflicting economic goals involving “equality” are often confused.  One is of equal outcome (which I will discuss today) and the other is equal opportunity.

The vague ideas upon which “Social Justice” are constructed all involve, in one form or another, the goal of equal outcome.  The dreams of such “justice” envision a world that functions much like a global commune in which the outcome for every inhabitant’s effort is the same in terms of resources.  In this global commune, rich and poor would be blights of the past.

But entertaining such visions is just one of the luxuries enjoyed by affluent societies.  Prosperity allows the affluent to dream of their Utopia without having to actually engage the harsh realities of man’s existence such as the true condition of man himself.  But the harshest reality is the means by which a diverse group of people, with diverse ideas of happiness, goals, strengths and weaknesses must be oppressed to effect equal outcome. It necessarily requires the loss of freedom, and of the concept of private property; two things which the advocates for social justice unfortunately take for granted.  It also requires a heavy handed and totalitarian government in order to ensure and enforce the “fair” allocation of resources; a government, by the way, which historically has always exempted itself.

In reality the equitable distribution of resources is not much more than a feel-good idea that is a source of meaning and purpose for those who advocate for it.    Bright people sit in their comfy homes and faculty lounges discussing it as an abstract thing that will not touch them.  But the reality of it is by no means abstract, for history is replete with ruinous and nightmarish examples of real attempts of “social justice”.

The Price Of Utopia? You Can’t Afford It

When a person buys a loaf of bread he probably has no idea how the price of that bread came to be.  He notices when it is different from last week.  Some may have a vague idea that it is being impacted by inflation, whatever that is.  Yet prices, and how they are set, are central to economics.

While it wouldn’t make economic sense to drive around comparing bread prices to save 2 cents, it would make sense on something that saved, say, hundreds of dollars.  And, as one might suspect, people do generally drive around looking for the best deal on a new car. Consequently, the lowest priced dealership sells more cars.

We experience the same thing as sellers.  We must offer what we are selling for a competitive price or no one will buy it.  However, most don’t see themselves as sellers even though that is exactly what’s happening  when someone’s looking for a job.  He is offering to sell his back or brains.  That’s also why someone who can do brain surgery is able to sell his services for much more than someone who can cut your grass.  If brain surgery knowledge and skill were as easy to come by as lawn mowing knowledge and skill, why you could probably have that tumor removed for 30 bucks.

But what if a politician sets prices on bread, cars and brain surgery?  What would he set them at?  How would he be able to know the intricate and myriad details of availability, want, and how his price will affect both?  The answer is that he can’t.  But that won’t stop him from trying because he’s a politician, and as such he’s selling you something in his own right, which is a line.  It’s much easier to legislate the illusion of wealth than it is to create it, and sadly, man never tires of buying the line that such can be done.

You Will Always Be In Chains

Being in chains is a metaphor, of course.  Chains depict restraint of a physical sort, but the reality of economics depicts restraints of a different sort.  One person might be restrained from eating T-bones due to the lack of a few dollars, or a politician might be restrained from buying those last few votes because he couldn’t produce the millions required for handouts.  But regardless of circumstances, the slack eventually takes out of everyone’s chain.

But this is why economics is such a hot topic isn’t it?  No one likes restraint, especially when they see their neighbors living lives with much less restraint.  It just doesn’t seem fair.  Perhaps that’s because it isn’t.  Worse, a different sort of chain, “human nature” will keep anyone from fixing it.  Oh, not that it won’t be tried over and again, but man’s selfish nature will always intervene in his vain  attempts at instituting equality.  This truth is simple to see, and clearly demonstrable with a cursory glance at history, but while man is clearly not capable of producing a “fair” society, apparently he is exceedingly apt at self-delusion.

Every person’s chains could be loosened if the efforts to loosen them were judged by results.  But unfortunately history is generally marked by the burden of unnecessarily tight chains because man’s tendency to judge efforts according to intentions rather than results.  Failure, therefore, is gain for the “fixers” because it results in shorter chains that the “fixers” are eager to address if only the enslaved would grant them more power.  The result?  More chains.

Cause Old Joe Ain’t Never Seen A Wreck Like We Fixin Ta Have

The title comes from an old joke.  A truck driver in a job interview is given a scenario.  “You’re headed down a long grade  and your brakes fail.  At the bottom is a one-lane bridge across a ravine with a bus stalled on it.  Quick, what would you do?”

The driver answers slowly, “Well… what I’d do, is Id wake up old Joe.”

Surprised, the interviewer asks “What!?  Why in the world would you do that?”

“Cause old Joe… he hain’t never seen a wreck like we fixin t’have.”

A friend asked me to explain the so called “fiscal cliff”.  This story works as good as any I suppose.  The American voter just cut the brake lines on runaway spending and OK’ed economy-suffocating tax increases, ostensibly on the rich.  We’ll see yet how that works out for the voter.

Here’s the break down.  January will bring scheduled tax increases.  These increases are coupled with unassociated spending cuts agreed to in the last debt-ceiling show debacle.   The spending cuts are the real cliff according to many because the economy is largely dependent on Government spending.  For others it’s the tax increases that have them worried.  For still others it’s the cuts and taxes both because more people will have less money due to confiscation while less will have jobs due to cut-backs.

My guess is that it will probably get “fixed”.  The fix however will be focused on stopping the spending cuts; and the Republicans can be expected to fold like cheap lawn chairs of course.

Regardless of what happens we can take one thing to the bank.  Whatever is done to avert the “cliff”, the root problem of being fiscally irresponsible will not be “fixed”.  Why not you ask?  America, it seems, just told its government to keep the gravy flowing, responsibility be damned.

Can’t We All Just Have A Utopian Style Economy?

Some time back I told a group of ten year olds that I had hidden a bag of candy.  I passed out maps that I assured them would lead to the treasure, but I purposely withheld the beginning point.  They began walking around, turning this way and that, counting their steps, as they each dutifully followed the map .  Not one of them asked for that key piece of information that would have unlocked it.  This surprised me for some reason.  In the end no one found the candy. So I ate it myself… In front of them.

There is a lesson here in economics.  Where one begins in the study of economics will determine where he ends up.

When most hear the word “economy” they think of the availability of jobs, money and so on.  But the starting point of economics is man, namely, answering the question, how will he act, good or not so great, under given circumstances?  With this answer in hand it then attempts to answer another question, how do we enlist our fellow man to participate in our own benefit?

While capitalism begins with the more negative view that man is only interested in himself, and from selfish motives will work, improvise, innovate, trade, think, risk, explore and other things that make for a good economy, communism is based on an assumption that man is more altruistic. It assumes he will do these same things with the same zeal in return for his fair share of resources, however much some wealthy, innately-benevolent leader decides that is.

That this hasn’t ever worked is a testament to the faultiness of communism’s premise.  That it will ever be attempted  is a testament to the validity of capitalism’s premise regarding man’s condition… well, that and his resilience to the truth regarding that sad condition.