web analytics
December 28, 2014 / 6 Tevet, 5775
 
At a Glance

Posts Tagged ‘capitalism’

The End of Competition

Monday, May 20th, 2013

The American Dream does not actually require a red, white and blue flag or a dream. What it requires is a willingness to accept messiness.

Messiness is another word for chaos. And no one likes chaos. Chaos means that in the richest country in the world some people will be illiterate, others will be homeless and some will accidentally set themselves on fire because the fireworks don’t come with enough safety warnings.

Those aren’t good things. They’re not things that governments and the squeaky wheels who make governments what they are think should be tolerated. They’re messy.

Messy is all those things that people say someone should do something about, by which they don’t mean themselves. What they really mean is that we should be living in a more orderly society. And an orderly society is one where things don’t just happen. You have to file eight forms, duck six committees and debate four non-profits to have any chance of getting things done. And even then you probably won’t.

Orderly societies have nailed down all the loose ends. There are fewer homeless people, mainly because they are now living in sixty thousand dollar per inmate shelters designed by progressive architects, but there are also fewer errand boys becoming Andrew Carnegie. What is really being lost is social mobility. The ladder up.

Meritocracy requires chaos. An orderly society isn’t chaotic, it’s stratified. The power has been parceled out to all the people who should have it. And there’s only so much to go around. Newness is a threat because new things are unpredictable. They’re chaotic. They disrupt the power structure.

The liberal argument is largely an argument for a society consolidated around government in service to progressive ideals. It’s a tidy world in which governments and non-profits consume an always increasing share of everything else until there isn’t anything else because it’s been consolidated. The end result of that process however isn’t progressive. It’s tribal.

Power naturally consolidates along personal lines, not political lines. A society may begin by consolidating power so that all the non-profits can help the homeless and the people who can’t read fireworks instructions, but, in a peculiar phenomenon, the homeless never seem to get helped much and fireworks accidents keep happening.

The phenomenon isn’t really peculiar at all. Humanitarian work is a job that exists to eliminate itself. The only way to keep a job dedicated to solving the problem is to perpetuate the problem. Or to redefine the problem on a larger scale. All that is familiar enough from any number of non-profits and government agencies that exist to remind people to care about a problem that they don’t care about.

Redefining the problem on a larger scale means more money, more power and more control. Any problem, whether it’s homelessness, illiteracy or crime is a social problem and can only be solved by taking a holistic approach to everything. A city, a country and a world become a giant puzzle that can only be solved by manipulating all the pieces into place in the right order. The only way to solve the problems that never get solved is through total control over every human being on earth.

Power can only be consolidated ideologically for so long. Both the Russian and Chinese Communist revolutions eventually collapsed into familial profiteering. China’s Princes and Russia’s KGB clans brought down Communism in both countries and resurrected it as profiteering oligarchies eager to live the good life.

To some measure, Capitalism beat Communism, but more accurately tribalism beat internationalism,  powerful men built systems that lock in privileges for their friends and families while tossing out the lefty ideologies that allowed their grandfathers to get close to those privileges. It’s an old story and it’s how the progressive experiments in the ideological consolidation of power will end here.

Power is personal. As is wealth. A system that consolidates enough power turns tribal as fathers look to pass on their privileges to their children until, like so many social services agencies, the system exists for the sake of the system.

Tribal systems are not meritocracies. They aren’t interested in talent, but in a sense of order that derives from the consolidation of power. Their idea of civilization does not lie in their arts or sciences, only in the orderliness of power. Only when chaos assails them, is talent released out into the wild where unpredictable things happen. But the chaotic period passes and the old patterns assert themselves again strangling the wildness and consolidating it.

Capitalism and the Jews

Wednesday, May 1st, 2013

Is there a connection between capitalism and the Jews, or is this just an anti-Semitic canard? In the second part of this week’s Goldstein on Gelt show, Douglas Goldstein meets Professor Jerry Z. Muller of the Catholic University of America, who answers this question and more when he discusses his new book “Capitalism and the Jews.”

What if Israel Were on the Gold Standard?

Wednesday, April 17th, 2013

Imagine for a moment that I want to buy a car for 100,000 shekels. I’d rather not work and save, so instead I decide to simply print 100,000 shekels in cash so I can buy the car. I print it, I hand the pile over to the car dealer and the car is now mine.

What just happened here? I counterfeited 100,000 shekels and increased the money supply by 100,000 when I handed those shekels over to the car dealer. The average person, the kind that has to work for his money would say that I stole 100,000 shekels. But today’s economic experts like Stanley Fischer and Ben Bernanke and Paul Krugman would say that I gave “economic stimulus to the automobile industry.” So what really happened?

When an average person works in the private economy and saves money to buy a car, he produces more than he consumes, hence savings. In other words, he puts more into the economy than he takes out, the difference represented by the money he saves. There is now more value in the economy, more stuff because he worked harder, and he takes that real value represented by the money saved and buys a car for 100,000 shekels.

The car dealer now has 100,000 shekels of real value to invest in expanding his business, and thanks to the value that the saver added to the economy through saving, there is now more value in the economy with the same money supply. The value of the shekel goes up and prices drop just a little bit, and everyone owning shekels gets a bit richer thanks to the saver. The car dealer can now expand his business and safely assume the demand is there to match his increase in supply. The economy grows.

Now, if I simply print up 100,000 shekels and give it to the car dealer, I added zero value to the economy. There is no more useful stuff. Just paper. I did not save a thing. All I am doing is taking from the economy without adding anything to it. Worse, the 100,000 shekels I added to the money supply makes the value of the shekel go down a little bit, since more shekels are now chasing the same amount of goods. Prices go up. Everyone gets poorer, except for me of course, because I got to buy the car before the money supply went up. The act of me buying the car was itself the action that made the money supply go up in the first place. I, the money printer and the first new money user, am up one car. Yay for me. But everyone else besides the first person to use newly printed money loses.

Now, let’s say I stop printing money and the car dealer expands his business with the new shekels. Since everyone is now poorer, there is no new demand to match his new supply. The signal he got of new demand for his cars was wrong, because the 100,000 shekels I printed did not represent added value to the economy through saving. Demand is not there, his business overexpands and he has to cut back and contract by selling cars for cheaper and taking a loss. His business shrinks or “goes into recession,” but cars get less expensive for everyone else.

But let’s say I keep printing 100,000 shekels every day and buy another car with it day after day after day. The car dealer will keep misinterpreting the sales as new demand that doesn’t actually exist. He will keep expanding. It will look like the economy is growing and growing, the statistics the government puts out on car sales will skyrocket. But really, only I and the car dealer are benefiting. Everyone else is suffering inflation and getting poorer and poorer every time I print. At some point I will have to print more than 100,000 to buy each car since the money supply is expanding so rapidly, but that’s no big deal for me. It takes the same effort to print 150,000 as it does to print 100,000. I keep getting richer. Inflation doesn’t bother me. The car dealer keeps expanding and cars become so expensive that no one can buy them. Then let’s say suddenly I stop printing shekels and stop buying cars. The car dealer’s business totally crashes, and he goes out of business in a bankruptcy sale. All the cars get sold to the public for ultra cheap. His business “goes into depression,” but cars are suddenly cheap for everyone else.

Cyprus: When the Law Prescribes Theft

Sunday, March 31st, 2013

Who will shoulder the pain from the Cyprus bailout deal?

The first-order sufferers will be small businessmen (mostly Russian) and upper-middle Cypriots and foreign residents with their money in Cypriot banks.  But the whole region will take a longer-term blow from the loss of Cyprus as a place for upstart businesses to park capital.  Capital that can’t be parked cheaply in the E.U. won’t be invested in the E.U. – at least not by the smaller, less financially “connected” entrepreneurs who drive economic dynamism and growth.

The big Russian firms that bank with the Russian Commercial Bank in Cyprus have protection in the deal, although they will have more trouble moving capital around under the “capital controls” to be implemented, which hwill keep depositors from draining their accounts.  Russia has been relatively quiet and mild on the terms of the Cyprus deal, largely because the biggest Russian depositors in Cyprus bank with the Russian Commercial Bank and won’t be hit with the 40% “amputation” tax on their accounts.  For the average traditionally-autocratic government, smaller entrepreneurs are always easier to accept as roadkill.  They may create jobs and revenue, but they aren’t in a position to line politicians’ pockets and they’re not easy to marshal as a means of geopolitical leverage – unlike, say, Gazprom.

It will hurt the E.U. for Russians to flee Cyprus; it will hurt equally for only the biggest, most state-connected Russians to remain in Cyprus.  All the Russians won’t necessarily flee,  but if nothing else changes, and the bank deal defines the future, the dynamism of the Russian economic presence in Cyprus will be bled off.  The economy of Cyprus will become more of an elephants’ dance than a coyote squabble, even with the gas eventually coming up from the ocean floor.  Cyprus will go further down the road taken by too much of the E.U., discouraging entrepreneurship and overserving itself on the future obligations.

Italy and Spain are obvious others to bring up, of course, and everyone is doing that.  Besides serious debt and bank-solvency problems, they have already gone further down the controlled-economy road than Cyprus has (which is the main reason for their debt and solvency problems).  Their big-name companies, the international giants, are incapable of growing the economy, because it doesn’t work that way.  The big firms aren’t the future.  Small entrepreneurship is always and everywhere the future, and in Italy and Spain, engaging in it openly is discouraged by regulation and the tax code.

There is a regional aspect to this, of course; a difference among points of the compass, inside both countries, and between city and hinterland.  Such differences are creating fault lines throughout the E.U.  Those gaps aren’t going to narrow any time soon.  Now is a good time for the E.U. to take stock and recognize that the entire Cyprus problem, like the Greece problem, was created by the actions of government.

Left to their own devices, people coming together for economic activity don’t do this to themselves.  Failure is liquidated; it is not enshrined in policy.  But governments do the opposite, propping up and enabling failure for as long as they can, because they insist for political reasons on the policies that make it inevitable.  Government’s perspective is always political, and therefore inimical to economic efficiency.  The more government is chartered to control, the richer a society has to be to afford it.  And unfortunately, there’s a kind of “peak government” rule to this: a society in which government controls too much cannot stay rich.

The U.S. is headed down this path too, but most of the E.U. is already further down it.  The E.U. and its individual nations created this problem through policy.  There’s a political relief-valve aspect to making “the Russians” pay for it (although the FT article linked to above points out that at-risk Russians expect to find ways to get their money away from the amputator’s saw).  But the Cyprus crisis illustrates nicely that the cost of over-regulatory government will lead to outright theft from the people.  Policy as cosmically comprehensive as that in the E.U. model will indebt everyone, until theft seems to be the only option left.

This isn’t a condition for stability.  Moscow hasn’t given up on Cyprus, which still sits enticingly athwart Turkey and Europe.  The Cyprus deal won’t last very long – not while Cyprus and the E.U. remain in the vise of the E.U.’s negative, defensive policies.  (If the Russians sneak enough of their money out, the Cyprus deal won’t last long enough to auction off the office supplies with the Laiki logo).

If I Were Prime Minister: the Gov’t of an Anarcho-Capitalist

Sunday, March 24th, 2013

Note: This is satire, but does accurately reflect my feelings towards the Israeli government.

While I do not believe in the legitimacy of any government to exist at all, if I were forced to be Israel’s prime minister at gunpoint (it could happen any day now) and I had to name ministers, what would my government look like, and who would be in it?

I started thinking about this for more than a fraction of a second when I saw who got what in the divvying up of ministerial positions. So-and-so is minister of “strategic affairs.” Some other guy is minister of “agriculture.” Another idiot is in charge of “water,” because after all, if some politician who knows nothing about water supplies is not in charge of all of our water, we’ll all thirst to death and the Kinneret will turn into sewage overnight. This has already happened twice back before politicians were in charge of water.

And agriculture. Thank goodness a politician who knows absolutely nothing about how to grow food is in charge of the entire agriculture sector so he can tell us what we can import, export, buy, sell, when and where and how. Otherwise no one would be able to grow any food and we’d all starve.

But, OK, let’s assume I had to build a government and name ministers. Who would they be? First of all, I’d build a coalition of 120 MK’s and include everyone in my government by promising everyone a ministerial position. First, I would name Yair Lapid Minister of Male Grooming. He will be responsible for training all men in the state who can’t groom themselves and look like shlubs, how to look decent, improve their smiles, and generally look kempt. I will pay him $500 a month and give him a budget of $20 all out of my own pocket, and if he goes over that amount, I will fire him and give his job to Ahmed Tibi.

Instead of only one agriculture minister, there will be 5 ministers of one lima bean plant. These 5 people will be Liberman, Silvan Shalom, Tzipi Livni, and two of the smartest apes I can find in the Jerusalem Biblical Zoo. They will all fight over how to regulate the lima bean plant and can pass whatever ministerial orders they want on how to restrict, tax, and at what age to draft the lima bean plant into the army, but nothing else. If they start fighting, they’re all fired, except for the apes, who can continue regulating at will.

There will be an Interior Minister, but he will only be in charge of regulating the interior of his Knesset office. In fact, everyone in my government can be an Interior Minister. They can all decorate them with lima beans they get from the Lima Bean Plant ministers on the off chance that the 5 lima bean plant ministers haven’t regulated and taxed the lima bean plant to death. I’ll give them each a shekel to buy some gum for their offices from my own pocket.

There will also be a Culture and Sport minister. (Yes, in Israel, there actually is a politician in charge of “culture and sport”. Because without politicians, we’d forget how to play soccer and be cultural.) The culture and sport minister will be Gidon Sa’ar, who word has it likes to go to night clubs. His job will be going to night clubs once a week and writing a report about the number of flies on the ceiling of the night club. If he doesn’t write the report every single week and submit it to my desk (This Week: Eight Flies), he will be fired and his position will not be filled.

The foreign minister will be nobody, as I’m not interested in talking to other state leaders.

The education minister will be nobody, as I’m not interested in telling parents how to educate their kids.

The housing minister will be nobody, as I’m not interested in telling people where they can and can’t build and live.

The communications minister will be nobody, as I am not interested in telling people how they can communicate and what cell phones they can buy for how much.

How the Free Market Redistributes Wealth Vs. How the Government Does

Monday, January 14th, 2013

Back in 2008 when I was still a Bill O’Reilly fan and a mainstream “neoconservative” type guy who loved the idea of spreading freedom with very powerful explosive devices throughout the world, I still didn’t like Barack Obama. It was on the Glenn Beck Program, who I am also no longer a fan of at all, that I heard some recordings of Obama talking on some radio show in Chicago about the failures of the Civil Rights movement in how they did not go far enough when they backed off from demanding court-ordered “redistributive measures” or something to that effect.

I specifically remember the word “redistributive” rolling off Obama’s silver tongue like a drop of glue-based dew on a glistening fake house plant shining in Vaseline basking in the artificial light of a sun lamp. It sounded so seductive and scary.

Go Glenn! I’d say.

Here’s how government redistributes wealth:

Government, benevolent and friendly and wanting to help the poor, seizes money by force from anything productive. Politicians take the money and start a welfare agency. The welfare agency provides paychecks for its bureaucrats, all of whom are friends of the politicians who seized the money. The benevolent welfare agency with the big heart runs out of money providing paychecks to all the bureaucrats running it before it hands out any stolen money to poor people, so the welfare agency lobbies for more money, which they use to expand the welfare agency and give more paychecks to more buddies of legislators, all of whom have huge hearts and went into the business of government bureaucracies to help poor people because they are so selfless. They run out of money again before they start doing anything, so they lobby Congress to steal more money from anything productive so they can do their job of eating paychecks more effectively, with huge big hearts of love and giving and benevolence.

With production down, there’s less stuff, making everything more expensive and hurting everyone’s standard of living. Then we are told that in order to increase our standard of living, the government needs more money.

A few months later, a welfare agency bureaucrat flips a quarter to a beggar on Capitol Hill, quintupling the amount of money given to the poor by the welfare system. The bureaucrat goes home all proud of himself for being such a selfless and giving human being and cashes his next paycheck.

The government runs out of money again, so they call on Ben Bernanke to print it, in the name of stimulating the economy.

Government thereby redistributes wealth from productive people to Congress’ best friends who out of the goodness of their souls, got jobs at a government welfare agency.

Here’s how the free market redistributes wealth:

Rafi and Natasha are paying 115 shekels a month in internet bills. Rafi and Natasha, those money grubbing selfish bastards with nothing but their own wallets on their minds all the time, look for a way to save money. All 115 shekels are going to the private money grubbing selfish internet company, which does nothing but think about how it can squeeze more money out of their greedy, miserly customers all day, every day.

In a fit of pure selfishness and miserliness, Natasha calls Angloprotekzia, a selfish miserly money grubbing company that thinks about nothing but itself all day. This company, purely in order to extract money from its customers, not thinking of the poor at all, provides a service of private negotiation with other private companies, and promises to lower Rafi and Natasha’s internet bills. In exchange, Angloprotekzia gets half of the savings.

In other words, they lower your bills in return for a commission.

Angloprotekzia, smelling the opportunity for money, cash-register heart beating and dollar signs filling its greedy eyeballs, calls the internet company and gets them to lower the bill from 115 shekels a month to 24 shekels a month, saving Rafi and Natasha 91 shekels a month that they can now use to sit there and count again and again, reveling in their money. Or invest. Or buy something with, whatever.

Previous score: Netvision 115, Rafi and Natasha 0.

New score: Angloprotekzia 45.5, Rafi and Natasha 45.5, Netvision 24. Total = 115 shekel.

Printed from: http://www.jewishpress.com/blogs/settlers-of-samaria/how-the-free-market-redistributes-wealth-vs-how-the-government-does/2013/01/14/

Scan this QR code to visit this page online: