Archive for category Economics

Straw-man con man

David Simon, television producer of The Wire and a noted economic philosopher (but I repeat myself), has something to say about the evils of capitalism, which is the sole source of all the evils of society today.

Evil capitalist, as portrayed by David Simon

Evil capitalist, as portrayed by David Simon

In a recent rambling presentation, he tells us his solution to the “horrors” of society is a mixture of capitalism and socialism/Marxism, which makes about as much sense as you might expect. Here’s a snippet:

Mistaking capitalism for a blueprint as to how to build a society strikes me as a really dangerous idea in a bad way. Capitalism is a remarkable engine again for producing wealth. It’s a great tool to have in your toolbox if you’re trying to build a society and have that society advance. You wouldn’t want to go forward at this point without it. But it’s not a blueprint for how to build the just society. There are other metrics besides that quarterly profit report.

As if, in a capitalist society, people only care about the bottom line to the exclusion of all else. A straw-man argument if there ever was one.

I discovered Simon’s diatribe on the Facebook page of an old friend, a Rhodes Scholar, proving once again that one would have to be highly educated in order to believe something so stupidly incoherent.

I’d say read the whole thing, but I am not a cruel man.

Instead, the antidote comes from this must-read post by Roger Kimball:

As F. A. Hayek points out in Capitalism and the Historians, an extraordinary collection of essays he edited and published in 1954, “The widespread emotional aversion to ‘capitalism’ is closely connected with this belief that the undeniable growth of wealth which the competitive order had produced was purchased at the price of depressing the standard of life the weakest elements of society.” This picture of economic depredation, notes Hayek, is “one supreme myth which more than any other has served to discredit the economic system [capitalism] to which we owe our present-day civilization”…

Not a day goes by without lamentations about the evils or limitations of capitalism emitted by some of capitalism’s most conspicuous beneficiaries. Barack Obama, for example, speaking in Kansas a couple of weeks ago, chided the “certain crowd in Washington” that believed “the market will take care of everything.” Of course, that is rhetorical overstatement; we all know what he means. Do we want big government, high taxes, and intricate regulation, or do we want lean government, low taxes, and the minimum regulation consistent with public safety? Or consider Does Capitalism Have A Future? a collection of essays by “a global quintet of distinguished scholars,” published by Oxford University Press, arguing that the capitalist system is teetering on the brink of collapse and it’s a good thing, too, because the socialist system that may ensue will be far better. It’s an hysterical (not in the sense of “funny”) volume, full of tired Marxoid clichés about the “internal contradictions” of capitalism and impending ecological crisis, but it is also a thoroughly typical product of the comfy intellectual caste that has enjoyed all the benefits of capitalism without bothering to understand what has made those benefits possible.

Despite this anti-capitalist narrative, however–a narrative we hear repeated by “progressive” politicians and iterated in more barbaric, polysyllabic strains by academics everywhere–the capitalist system has made possible over the last century, and especially in the last several decades, the greatest accumulation of wealth in the history of the world. England was the crucible of this modern prosperity in part because of the freedom of economic activity that it, unlike the states of continental Europe, enjoyed. And that freedom, in turn, and again unlike the continent, was underwritten by the limited government England also enjoyed. “The rapid growth of wealth” in England in the early nineteenth century, Hayek observes, “is probably in the first instance an almost accidental byproduct of the limitations which the revolution of the seventeenth century placed on the powers of government.” We’ve been working diligently in this country to remove those limitations. How far will we have to sink before the people once again rise up and repudiate the elites who wish to fetter them in manacles forged by statist overreach?

Kimball quotes T.S. Ashton on the Rev. Philip Gaskell, saying he is someone “whose earnestness and honesty are not in doubt, but whose mind have not been confused by any study of history.”

Which we could easily apply to Simon.

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Dormez-vous, France?

"Allons enfants de la Patrie, Le jour de gloire est arrivé !"

“Allons enfants de la Patrie, Le jour de gloire est arrivé !”

The most brilliant minds of France are escaping to London, Brussels, and New York rather than stultify at home. Walk down a street in South Kensington – the new Sixth Arrondissement of London – and try not to hear French spoken. The French lycee there has a long waiting list for French children whose families have emigrated.

I grimly listen to my French friends on this topic.

From a senior United Nations official who is now based in Africa: “The best thinkers in France have left the country. What is now left is mediocrity.”

From a chief legal counsel at a major French company: “France is dying a slow death. Socialism is killing it. It’s like a rich old family being unable to give up the servants. Think Downton Abbey.”

From a French publisher: “In the past 10 years, the global village has become a reality. The world economy has become so important that a nation-state can no longer play the role that it did 10 years ago. The French have not woken up to that.”

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Horrible economic decisions

Jordon Cooper links to your typical defence of mercantilism in the business section and concludes with despair:

I read this and I can’t help but think that the United States is going through a massive societal reordering because of horrible economic decisions made because of globalization…

I am not sure if the payroll tax increase is that big of deal but you get the point that stagnate wages are hurting America’s middle class who are leaving behind middle class stores in favour of deals online and in retailers like Wal-Mart which in turn hurts them even more as more and more of their products are made elsewhere. It’s a vicious cycle that could take decades to run its course.

Cooper works to help the poorest of the poor in this city, and he’s a great resource in highlighting the struggles found on the streets.

Unfortunately, it comes as no surprise, however, that he sees these great economic changes as being a problem rather than a net benefit to society, particularly to the poor.

Yes, the traditional business model is changing, and those who are not able to adjust effectively will lose business. But the consumer is the beneficiary, particularly the poor. With the changing business model comes lower costs, better quality, increased choice, more convenience or some combination of these.

There have been some horrible economic decisions made, but globalization isn’t one of them. It is the increased level of trade from around the world which has insulated our economy from being even more disastrously damaged by narrow, myopic government decision-making than we would have endured otherwise.

The alternative to this is economic stagnation. Does he truly believe that change is inevitably for the worse?

The cliche is worn, but Cooper might as well lament the demise of buggy-whip manufacturers.

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Freedom vs. Force

Harry Binswanger:

The question is: in the messy mixture of government controls and remnants of capitalism, which element caused the Great Depression and the recent financial crisis?

By raising that question, we uncover the fundamental: the meaning of capitalism and the meaning of government controls. Capitalism means freedom. Government means force.

Suddenly, the whole issue comes into focus: Obama is saying that freedom leads to poverty and force leads to wealth. He’s saying: “Look, we tried leaving you free to live your own life, and that didn’t work. You have to be forced, you have to have your earnings seized by the state, you have to work under our directions–under penalty of fines or imprisonment. You don’t deserve to be free.”

As a bit of ugly irony, this is precisely what former white slave-owners said after the Civil War: “The black man can’t handle freedom; we have to force him for his own good.” The innovation of the Left is to extend that viewpoint to all races.

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Deep Optimism

Matt Ridley learns you a lesson:

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A Clockwork Envy

As the earth swings around the sun, so the anti-capitalist grievance-mongers drum up yet another predictable “report” on “inequality” from the Canadian Centre for Policy Alternatives.

I wrote about this annual report a couple of years ago, so I won’t go into great detail here because it’s just as stupid now as it was then.

The numbers in this report have annual compensation at roughly 177 times that of the “average” worker, while the 2012 report was at 189 times. Therefore, according to this highly objective and passionless reporting metric, inequality has actually gone down. But there is no mention of the year-over-year trend of these results found here.

Why do supposedly reputable journalists repeat this gossip-column trash without any, you know, actual journalism?

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Regulation, Government and Instutitions

In which I critique Andrew Sullivan’s critique of Rush Limbaugh’s critique of Pope Francis’s critique of capitalism:

Limbaugh has obviously never read the Gospels. He has never read the parables. His ideology is so extreme it even trashes, because it does not begin to understand, the core principles of capitalism, as laid out by Adam Smith. Market capitalism is and always has been a regulated construction of government, not some kind of state of nature without it. Indeed without proper regulation to maintain a proper and fair and transparent market, it is doomed to terrible corruption, inefficiency, injustice, and abuse.

Sullivan, the supposed conservative, makes the same mistake all Big Government advocates make, namely assuming “regulation” has to come from “government.”

Capitalism is regulated through institutions, which may or may not be the domain of governments. For example, where government has had a role in expanding the capitalistic free market, it has been more to do with preserving the fundamental rights of the individual — property rights, freedoms of expression and commerce, protection from physical harm or theft, etc. — than it has in actually instituting these successfully.

In fact, it was those those institutions which evolved in order to restrain government control which also enabled free markets to flourish and benefit the great mass of its participants. The Magna Carta and similar documents found in other European nations are good examples of this.

Furthermore, corruption in the free market is self-correcting in that those participating soon learn if another is acting without scruples and cannot be trusted. Investors need merely to place their capital into investments which are more trustworthy and better serve the demands of the market.

Corruption in government, which Sullivan claims would prevent “doom” to capitalism, is actually much more harmful as government compels taxes, controls the courts, distorts market signals, and monopolizes via fiat the means of violence. These days, a business is rarely corrupt for very long unless enabled or empowered to be so by the government. It is government which institutionalizes corruption.

As for evidence of inefficiency, injustice, and abuse, go no further than your nearest parliament.

(h/t Mytheos Holt)

 

UPDATE: Sullivan also mocks Limbaugh, a supposed fan of Pope John II, by quoting the past pontiff in Centesimus Annus:

The Marxist solution has failed, but the realities of marginalization and exploitation remain in the world, especially the Third World, as does the reality of human alienation, especially in the more advanced countries. Against these phenomena the Church strongly raises her voice. Vast multitudes are still living in conditions of great material and moral poverty. The collapse of the Communist system in so many countries certainly removes an obstacle to facing these problems in an appropriate and realistic way, but it is not enough to bring about their solution.

Indeed, there is a risk that a radical capitalistic ideology could spread which refuses even to consider these problems, in the a priori belief that any attempt to solve them is doomed to failure and which blindly entrusts their solution to the free development of market forces.

QED?

Nope. More people have left extreme poverty in the past decade than ever before, in large part thanks to “free development of market forces”:

 Never has so much wealth been generated — but, importantly, never has growth been shared more evenly. While the rich world is wallowing a mire of debt, the developing world is making incredible progress. The global inequality gap is narrowing – and thanks not to the edicts of governments, but to the co-operation of millions of people, rich and poor, through international trade. Or, as critics call this system, ‘global capitalism’.

As a result goals that once seemed fantastical are now within reach: from the end of Aids to the end of famine. To understand the speed of this progress consider the  United Nations’ Millennium Development Goals,  drawn up in 2000. The plan then was to halve the number of people living on $1 a day by 2015. This target was reached five years early. This amazing achievement passed with almost no comment, perhaps because it had been achieved by the market rather than foreign aid. People, when free to trade with each other, are succeeding where decades of government schemes failed.

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