Tuesday, September 17, 2013

An Ultimate Realization

"A government which robs Peter to pay Paul can always depend on the support of Paul."

George Bernard Shaw (1856-1950)

It might be unusual to quote a committed socialist like Mr. Shaw in a free enterprise blog, but he did finally come to this realization later in life.

His life was spent writing novels and plays about the wonders of socialism, and the inexorable rise of the proletariat as the masses march toward utopia.

Shaw's disappointment grew however as he saw how history unfolded.  He was particularly affected by World War I.

In a play written just following that war, Heartbreak House, the line was uttered, "It is said that every people has the government it deserves.  It is more to the point that every government has the electorate it deserves."

And later, following the dictatorships that ushered in World War II, the protagonist of his 1946 play Bouyant Billions says, "Why appeal to the mob when ninety five percent of them do not understand politics, and can do nothing but mischief without leaders?  And what sort of leaders do they vote for?"

The utopia he believed in and longed for had vanished.  Utopia would not be. 

The end result of socialism is the creation of a voting majority composed of a multiplicity of Pauls.  The Pauls can be counted on to vote for those who will rob Peter!  Why work when the gubment takes and transfers the ill-gotten gains of the bourgeoisie?  The entitled transfer is what ends up getting voted for.

No, the masses are not lifted toward utopia.  The specious "hope and change" they vote for, whatever in the world that means, dissipates.  The tide has not been lifted for these fabled and loved masses.  An ultimate accounting follows.

But that accounting was known from the start by the gubments that got the electorate they deserved!  But they are exceptionally good at masking their deceit with misconception and blame.

What history has shown does lift the masses is free enterprise and free-market economics!  All boats are lifted.  The lifestyles enjoyed by much of the "poor" in capitalist societies are the envy of the proletariat who basks in the glow of the dictatorships or theocracies that govern most people of the world.

But alas, the socialist cannot allow such as this to continue!

Marx said it takes gubment edict, and taxes, regulations and force to bring down a capitalist society.  And he was right.  As society slides downward toward the promises of utopia (is that counter intuitive?), all end up basking in the equality of growing misery, complexity and difficulty.  The majority becomes the obedient Four Legs in the farmyard, very much under control.

Did I say that "all" end up basking in misery?  All, that is, except the gubment ministers of the edict, the taxes, the regulations and the force.  Those ministers are above the rest in the farmyard because, after all, they have learned to walk on Two Legs.

Tuesday, September 10, 2013

Factor In The Entrepreneurs!

"So long as entrepreneurs are considered parasites and the beneficiaries of their efforts seethe in indignation, the poverty of the envious classes can only deepen."

Michael Levin
Foundation for Economic Education

That's a pretty strong statement!

Entrepreneurs are as essential to the economy as the other factors of production - land, labor and capital!  When the economic system does not allow and promote each factor's contribution, the system is not in sync and cannot produce efficiently.

And when one of the factors of production is trashed by the Two Legs, and the class-envy flames are stoked, well, good luck to it and to its contribution.

A reward is just that.  A better mousetrap is just that.  Profit is a brilliant or ear-splitting signal that one's product or service is appealing to the market.  Nothing more, nothing less.

Entrepreneurship is not parasitical!  And what it gleans from the market should not create indignation or envy!

And when gubment tries to stultify product or service introduction into the market with unending regulations or taxes, it further complicates what should be the balanced interaction of all the factors of production. 

How come gubment promotion or encouragement is not the rule?  Gubment is most encouraging when it considers a factor of production to be "politically correct!"

But that is NOT economic policy!

Are abundant natural resources considered parasitical?  Are people envious when there are lots of minerals or forests or rich farmland in their country?

Or is it parasitical when there are a lot of educated people eager to work and contribute?  The opposite (uneducated and lazy) truly is parasitical, but that is a topic for another post.

How about great capital development making ever-increasing productivity the thing that spurs more employment?  Full employment is something to envy, perhaps, but not in a negative way.

So, why is it that the entrepreneurs get demeaned?  Or are set apart as less than vital?  Or create an indignant class when their idea or service is rewarded?


Tuesday, September 3, 2013

Are These Dueling Quotes?

As regards what even the least desirable person enjoys in a developed society, "We consider what a variety of labour is employed about each of them, we shall be sensible that without the assistance and cooperation of many thousands, the very meanest person in a civilized country could not be provided for."

Adam Smith (1723-1790)
from The Theory of Moral Sentiments
Ayn Rand suggests that only a few really contribute to the development of society, "The innovators lift the whole of a free society to the level of their own achievements.  The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time.  The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributing nothing to those above him, but receives the bonus of all their brains."

Ayn Rand (1905-1982)
from What Is Capitalism?

One of Adam Smith's most well-known thoughts was that free-market economies are led by an "invisible hand" which guides production and distribution of goods and services in their most efficient means, weaving zillions of people together, most unknown one to another, to provide the means.  Many provide and all receive.

And here Ayn Rand suggests that those zillions contribute little to the development of society overall, and receive the benefits of the entrepreneurs and thinkers in the world.  Few provide and all receive.

But what are the factors of production?  Only the thinking and idea development?  Or is it the utilization of land, labor, capital and entrepreneurship all interacting to make things happen and grow economies?

Each of those people who received and now rely on the most recent ideas, say all of the electronic Wifi devices on the market, may not have come up with the idea!  But each, in their own ways have somehow contributed to the economy as a whole, providing in their own ways the land, labor and capital that made a free, capitalist economy such that ideas could come to fruition.  And maybe even with a little entrepreneurship of their own to help bring those products to market in different ways.

Yes the innovators contribute!  Yes the rest of the population contributes!  And all receive.  Even Adam Smith's meanest people receive!  But the meanest of people can only receive if they had contributed something enough to the economy to have been rewarded with the ability to pay for those things they enjoy.

The innovators may not have their brains lifted to new levels by those below them.  But they live in the society as well and receive from others all the goods and services that make their lives comfortable, buying what things they want with the "material payments" they have earned to pay for them!

Free-market economies, capitalism itself, is the interaction of so many things they are unidentifiable.  Billions and billions of interactions happen on many continents to bring the simplest of things into our lives, things we rely on and take for granted.  And these things are brought efficiently, and for the most part cheaply.  Each good or service we enjoy has in itself created many, many jobs, to bring it to market.  Each of those jobs contribute to the efficiency and cost of everything economies do.


Why is it that when the gubment gets involved with providing this or that, history shows, things become more inefficient and expensive?  Because gubment cannot instigate all the billions of interactions it takes for economies to work!

When a politician says he will "create" jobs or "provide" this or that "benefit," it is only bloviating and smoke blowing!  It's economic ignorance on display!  Tell that politician to take an economics class!  Learn from economic history!  And to get out of the way!

The best way gubment can create jobs and provide this or that is by getting out of the way of economic development and growth, and create instead legislative tax and regulatory mechanisms to encourage the efficient use of land, labor, capital and entrepreneurs.

Adam Smith and Ayn Rand are not economists from different centuries dueling at all!  They are merely saying the same thing, from different perspectives!