"There are no natural resources, because all resources are created by human creativity and effort. Without such creativity and effort, there are no resources."
"Coercive attempts to stop the use of fossil fuels are delivering the same perverse economic consequences as the attempts to close down American saloon bars in the 1920s. The consumers pay more for a substance they choose not to live without, while the producers count the profits... "The attempt to starve coal producers of capital has impeded their attempts to build new coal mines but it hasn’t got in the way of profits. The price of coal has risen to a six-year high, which is good news for the coal business but bad news if you’re living in, say, India’s Bihar state, where three out of four households don’t have electricity. “'Energy prices will need rise to the level at which the marginal consumer of fossil fuels is incentivised not to be a consumer,' Redburn reports. ''In other words, the 1 to 2 billion people on the planet with zero or unreliable access to modern energy would remain priced out of the market.' ... Redburn’s analysts turn the tables on so-called ethical investors by forcing them to confront the consequences of fossil fuel divestment, a phenomenon that has swept university campuses, shareholder meetings and boardrooms, much as anti-alcohol mania did a century ago. “'Given the pernicious consequences of energy undersupply, we would go so far as to argue that the socially responsible investor has a duty to ensure capital is available to the fossil fuel industry, for as long as it is needed'.”
"Karl Marx thought market competition would drive down profits, thus necessitating ever greater exploitation of workers. But in fact, real average global income per person rose by factor of 10 over the last 200 hundred years."
"War is not glorious. It achieves no great goals. It cures no diseases, it bridges no rivers, it builds no great cities, it does not launch people into space, clothe the naked, or feed the hungry. Those are worth celebrating, those sorts of achievements represent mankind at its best. War does quite the opposite thing — it destroys resources and people in bulk, and sets back human achievement, sometimes by years, sometimes by decades. "Nor is participation in war laudable. Sometimes it is necessary to defend oneself, but there is never any glory in it. Dying face down in the mud is tragic, not glorious, and World War I was almost nothing but one tragedy after another, over and over, multiplied by the millions. "So, today is properly a day of mourning -- for a world that was happily growing in population, accumulating capital, and engaging in peaceful trade which was, all of it, rent asunder by a stupid, useless waste of human life."
~ Perry Metzger, posting at Samizdata
Have you noticed that the U.S. president has not tweeted about the caravan “invasion” since before their mid-term election?
Are you surprised? You shouldn't be. As Thomas Sowell once pointed out:
"It is hard to understand politics if you are hung up on reality. Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not."
"To all my American friends: I hope you [got] the outcome you were hoping for [yesterday]! But if not, remember that there are many things in life that are better than politics, such as art, beauty, nature, music, sex, food, exercise, friends, lovers, your kids, your connection with others..." ~ Claire Lehman.
A few hours ago at the Detroit airport a bubbly young woman struck up a conversation with me as we both waited in line to buy coffee. “Where’s your ‘I Voted’ sticker?!” she asked with great enthusiasm as she pointed to the one she sported. “I don’t vote,” I told her. She literally looked as though I confessed to being afflicted with necrophilia.
“This makes me so sad. So sad. Why don’t you vote?,” she pressed, with a tone that revealed that she truly felt pity for me. I really wasn’t interested in having such a discussion then and there with this stranger, but she kept asking. So I eventually answered: “I don’t wish to legitimise politics by participating in its formal ceremonies.”
“But elections aren’t ceremonies; they matter!!!” Her verbally expressed exclamation points grew in number.
I replied that I agree that elections do indeed determine which individuals hold political power. But this fact for me is irrelevant, for two reasons. The first is that even if I did (which I don’t) strongly prefer one group of candidates over another group, because the prospect of my vote swinging an election one way or another is practically zero, I would waste my time if I voted. And my time is valuable. I refuse to waste it on futile activities such as voting.
Second and more importantly, I detest politics and all but a tiny handful of politicians. And so by voting in an election I would play along with the dangerous romantic myth that insists that “leaders” who are chosen democratically thereby legitimately gain the right to order me and other peaceful individuals about. Election winners certainly do gain the power to order me and other peaceful individuals about, but I’ll be damned if I believe that they are ethically entitled to do so. I obey their commands for the same reason that I would hand my wallet and car keys to a thug who presses a knife to my throat.
I’d gotten into the spirit of the conversation and ended by telling her that, while I do not judge her for feeling elevated and proud of herself for having voted, were I to vote I would feel compromised, unprincipled, grimy, and ashamed of myself.
"Planning in our society ... is in essence the attempt to inject a radical technology into a conservative and highly inegalitarian economy. The impact of [town] planning on this society is rather like that of the [state] educational system on the same society: is least onerous and most advantageous to those who are already well off or powerful, and it is most onerous and least advantageous to those who are relatively powerless or relatively poor. Planning is, in its effect, a highly regressive form of indirect taxation."
A new generation is increasingly under the illusion that socialism is simply "big government with lots of handouts financed by class-warfare taxation." Since that’s the common perception however, is that the definition we should use?
The technical definition of socialism is government ownership of the means of production. This requires central planning, price controls, and other forms of force and intervention. So, at the risk of being pedantic, is that how the term should be defined?
A few years ago, I tried to reconcile this definitional conflict by creating a diagram to show that there are several strains of socialism (or statism, leftism, progressivism, or whatever you want to call it).
I also created a 2×2 matrix to show how various nations should be characterised when measuring redistribution and intervention.
The Problem is That Even Socialists Don't Know What Socialism Is
If you think I’m somehow being unfair, check out this recent column in the New York Times. Even an advocate for socialism has a hard time saying what it is:
Public support for socialism is growing. Self-identified socialists like Bernie Sanders, Alexandria Ocasio-Cortez and Rashida Tlaib are making inroads into the Democratic Party… Membership in the Democratic Socialists of America, the largest socialist organisation in the country, is skyrocketing, especially among young people. …what do we mean, in 2018, when we talk about “socialism”?
… Socialism means different things to different people. For some, it conjures the Soviet Union and the gulag; for others, Scandinavia and guaranteed income. But neither is the true vision of socialism. What the socialist seeks is freedom. … when the basic needs of life compel submission to the market and subjugation at work, we live not in freedom but in domination. Socialists want to end that domination: to establish freedom from rule by the boss, … from the obligation to sell for the sake of survival.
If his claim that "socialism is freedom" sounds bizarre, well, that because it is. But it’s not new. It’s the crazy idea of so-called “positive liberty” that was the basis of FDR’s so-called economic bill of rights - that, basically, we should all be “free” to live off of other people (with those "others" having little or any say in the matter).
This cartoon sums up one reason Venezeuelans, for one, are discovering why that approach doesn’t deliver the goods:
Though that’s just the start. Socialism eventually will mean…well, the proletariat will decide at some point. From the New York Times:
There’s not much discussion, yet, of classic socialist tenets like worker control or collective ownership of the means of production. …today’s socialism is just getting started. … In magazines and on websites, in reading groups and party chapters, socialists are debating the next steps: state ownership of certain industries, worker councils and economic cooperatives… Mass action — sometimes illegal, always confrontational — will determine socialism’s final form. … . As Marx and Engels understood…it is workers who get us there, who decide what and where “there” is. That, too, is a kind of freedom. Socialist freedom.
You can either sit and wait and see. Or you can reach for a history book and calculate how long it generally takes a truly socialist society to get there.
The Many Downsides of Socialism
Writing for Bloomberg, the hand-wringing Professor Noah Smith is both sympathetic and worried about the putative resurgence of socialism:
Observing the disaster that is Venezuela, many free-market proponents are inclined to say that socialism always fails. To bolster their claim, they can also point to the Soviet Union, to North Korea, or to Vietnam and China before those countries implemented free-market reforms. Those self-described communist systems generated vast poverty and famine… defenders of socialism have their own historical examples to cite. … Though one can quibble over the definition of the word “socialism,” there’s little question that the so-called social democracies of Denmark and Sweden offer some of the world’s highest living standards.
That being said, even Smith is concerned that advocates of socialism don’t understand the risks of too much government. He cites a couple of examples, including the failure of price controls and how India suffered from statism before initiating reforms in 1991.
But his comments about the United Kingdom and the Thatcher reforms may be the most important because the Brits actually did try real unalloyed socialism, i.e., government ownership of the means of production:
… the U.K. provides a cautionary tale. After World War II, the U.K. nationalised industries like steel, coal, aviation, electricity, rail transport and some manufacturing. But the British economy lagged behind its continental European peers during the midcentury. Manufacturing and transportation especially stagnated. By the time Margaret Thatcher became prime minister in 1979, both France and Italy were richer in per capita terms… Thatcher unleashed a wave of privatisation, along with other free-market policies. Britain…growth accelerated, and by 1997 it had caught up and passed France and Italy.
Here’s a chart from his column showing how the U.K. fell behind when it was socialist, but then regained the lead following pro-market reforms.
Professor Smith’s cautionary words are noteworthy since he (based on having read dozens of his columns) leans to the left.
And here’s another criticism of socialism, this time from an unabashed liberal (in the modern sense of the word, not classical liberalism). Bill Scher has a withering review of a new book by a group of socialists:
Felix Biederman, Matt Christman, Brendan James, Will Menaker and Virgil Texas—of the socialist, satirical podcast 'Chapo Trap House'… make bank by selling you a candy-coated version of socialism, one that may offend real socialists even more than liberal gruel-peddlers like myself. …The indoctrination begins with a condemnation of America’s containment of Soviet communism. …“Who cares?” if the Soviets won the Cold War, they write. … After blaming American-led capitalism for the world’s ills, the authors take aim at their favourite target: liberals. … In their evisceration of liberals and establishment Democrats, we get the usual left-wing criticisms of the Barack Obama and Bill Clinton presidencies… The Chapo crew’s romp through the history of feckless liberalism doesn’t stop with Obama and Clinton. Jimmy Carter is slammed… Lyndon Johnson is excoriated… Not even Franklin Delano Roosevelt escapes.
By the way, I can’t resist interjecting to point out that socialists had good reasons to condemn Bill Clinton’s presidency. After all, economic freedom increased during his tenure, though I suppose they also should be free to criticise other Democratic administrations for the supposed sin of not moving to the left at a faster rate.
The conclusion of Scher’s review however is brutal:
After slogging through 276 of the book’s 282 pages of bad history… the authors finally get around to their grand plan. Spoiler alert! This is literally it, in its entirety:
“After setting everyone on equal footing (by seizing the billionaires’ money, socialising their wealth, and handing the keys of production over to workers), you’re looking at an economy that requires something like a three-hour workday, with machines taking care of most of the drudgery; and—as our public fund pays for things like health care, education, scientific research, and infrastructure—all this technology actually makes work quicker, easier, and more enjoyable.”
The notion that socialism is going to slough off all that annoying labour to our forthcoming legion of robot slaves may come as a surprise to many socialists. …The Chapo hosts’ aversion to hard work extends to this book. Why suffer the details of how this non-workers’ paradise, free of paper pushing and ditch digging, is going to be realised, when you can take in more than $1 million a year by dressing up stale arguments and thin policy ideas with inside jokes? The infomercial socialists of Chapo have exploited the free market expertly, and at least saved themselves from the 9-to-5 prison.
I confess that these clowns were unknown to me until I read this review, but I’m going to take a wild guess that (like Michael Moore) they don’t share their wealth with the masses.
A Serious Critique of Socialism
Let’s close by now perusing a serious economic analysis of socialism -- which is important because, when socialism fails people economically, its leaders invariably pull out the guns to enforce the behaviour they deem economically necessary. Mark Perry explains Why Socialism Fails, from which I'll pull out a short series of excerpts:
Socialism is the ultimate Big Lie. While it falsely promises prosperity, equality, and security, it delivers the exact opposite: poverty, misery, inequality, and tyranny. Equality is achieved under socialism only in the sense that everyone is equal in his or her misery. …Socialism does not work because it is not consistent with fundamental principles of human behaviour. …it is a system that ignores incentives. …
A centrally planned economy without market prices or profits, where most of the property is owned or controlled by the state, is a system without an effective incentive mechanism to direct economic activity. …
The strength of market-based capitalism can be attributed to an incentive structure based upon the three Ps: (1) Prices determined by market forces, (2) a Profit-and-Loss system of accounting, and (3) Private Property Rights. The failure of socialism in countries like Venezuela can be traced directly to its neglect of these three incentive-enhancing features.
The price system is a remarkable means of informational transmission that sets economic activity humming. This system however is non-existent in the socialist nirvana.
The only alternative to a market price is a government-imposed price that always transmits misleading information about relative scarcity. Inappropriate behaviour results from a controlled price because false information is transmitted by an artificial, non-market price. …
The situation in socialist Venezuela provides a current example of the chaos and inefficiencies that are guaranteed to result from government price controls. As could be easily predicted, the widespread price controls imposed by the socialist regime in Venezuela in recent years led to chronic shortages of basic goods like milk, flour, rice and toilet paper, and long lines of customers waiting for hours to buy groceries at stores that frequently have mostly empty shelves.
Just as the price system is rendered non-existent and non-effective, so too are profits. Here are excerpts from Perry's analysis of socialism and profits:
A profit system is an effective monitoring mechanism that continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving consumers are rewarded with profits. … the profit system provides a strong disciplinary mechanism that continually redirects resources away from weak, failing, and inefficient firms toward those firms that are the most efficient and successful at serving consumers. …Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various firms and producers. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. … Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.
And here are portions of what he wrote about socialism and property rights:
The failure of socialism around the world is a “tragedy of commons” on a global scale. …When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. …Public ownership encourages neglect and mismanagement. …Venezuela today is moving in the opposite direction. Under Hugo Chavez, the private property and assets of foreign-owned oil companies from the US, France, and Italy were nationalised and converted to state-owned, state-managed assets. The results were completely predictable: corruption, lack of investment, deteriorating capital assets, mismanagement and a sharp and ongoing decline.
His conclusion is especially powerful:
By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned, socialist economies deprive the human spirit of its full development. Socialism fails because it kills and destroys the human spirit… Programs like socialised medicine, free college, guaranteed jobs, free housing, and living wage laws will continue to entice us… But those programs, like all socialist programs, will fail in the long run…because they ignore the important role of incentives. …
Socialism is being repackaged and recycled by today’s left-leaning politicians including Sanders and Ocasio-Cortez and is being taken seriously by a new young and gullible generation, many who weren’t even alive when the historic events of the 1980s and 1990s occurred including the fall of the Berlin Wall and the collapse of the Soviet Union. But the lessons from history about the defects, deficiencies, and failures of socialism are very clear. As we’ve learned from countless examples throughout history, including now Venezuela, the main difference between capitalism and socialism is this: Capitalism works.
Amen.
The observation that capitalism works and socialism fails is the point of my two-question challenge for my left-leaning friends.
To be sure, my challenge applies to conventional leftists, as well as all varieties of socialists.
The advocates of bigger government surely should be required to show at least one example of how their policies work in the real world. But they can’t.
I’ll close by sharing this wonderful video of Dan Hannan explaining to Jeremy Corbyn and the Oxford Union why liberty is better than socialism -- because socialism's defining characteristic is coercion:
If you enjoyed that video, you can also watch Hannan in action here and here.
P.S. And if you want to laugh at socialism, check out this collection.
[Cartoon by Nick Kim. Guest Post by Daniel J. Mitchell from his post at the Foundation for Economic Education]
"This fact (as well as, by the way, immigrants’ lower propensity, compared to native-born Americans, to commit property and violent crimes) is all the more notable given that Uncle Sam spends enormous amounts of resources and effort to prevent immigrants from working."
"My general view is that our planet is a vast treasure house of resources that, properly used, will take us to the stars. We shall colonise the inner planets, and mine the Asteroid Belt. We shall find cures for every illness and extend our lives. We shall uncover every remaining mystery of the natural world. During the past three centuries, much encouraging progress has been made. The curve is now turning almost vertical. It may be that, now and again, our scientific and technical progress throws up problems. If so, the solution is more scientific and technical progress. The only reasonable fear we should have is that the usual suspects will have their way, and return us to a past that [as a graduate in Ancient History and the Classical Languages] I am fully qualified to describe, and that I assure you was horrible in every respect."
"It's a rare gift, you know, to feel reverence for your own life and to want the best, the greatest, the highest possible, here, now, for your very own. To imagine a heaven and then not to dream of it, but to demand it."
"Human progress is best achieved by offering the freest possible scope for the development of individual talents, qualified only by a respect for the qualities and the freedom of others."
~ Margaret Thatcher .
"But here, as in everything else, we find the day-to-day choice between libertarian and authoritarian solutions. Either we believe in seeking libertarian solutions, or we accept authoritarian ones because it is easier than trying out ways of making authority superfluous.
"I believe in the continual enlargement of the area of human freedom and responsibility. I believe like Kropotkin that the only cure for the abuse of freedom is more freedom. Whether it is a matter of painting council houses [in colours the 'authorities' don't like] or dismembering the colonial empire, people should have freedom before they are 'ready' for it. That is the only way they will ever learn to use it and explore it, and to grow to the stature of free men."
"'Oh, but you are an artist,' she countered, her brush never hesitating, her eyes measuring his jaw line. 'You are the sculptor of your character, the painter of your style, the composer of your attitude, the architect of your future, the writer of the story of your life'."
~ Quent Cordair ...
"But let’s get one thing clear: Contrary to what those fear-filled conservatives are saying, the immigrant caravan is not an invasion....
"Among the darkest of ironies in this nightmarish circus [however] is the fact that while conservatives quiver and quake over the prospect that the illegals are coming to get them, they continue to ardently support a federal program that is a root cause of the violence in Central America and Mexico that is causing people to flee those countries. That federal program, of course, is the drug war, a program that has long been near and dear to the hearts of both conservatives and liberals....
"There are no positive arguments for continuing drug prohibition. And no one can deny that the drug war has ripped Mexico and Central America apart owing to the drug cartels and drug gangs that the drug war has brought into existence...
"Many of the people in the current caravan are fleeing the drug-war violence in their countries in the hope of saving their lives or the lives of their family members. So, wouldn’t you think that conservatives, who are themselves in terrible fear of losing their lives to the illegals, would say, 'Hey, it’s time to end the drug war so that all those people will have less incentive to flee and come to the United States'?
"Alas, no one has ever accused a conservative of being logical."
"The complete architect is master of the elements: earth, air, fire, light, and water. Space, motion, and gravitation are is palette: the sun his brush. His concern is the heart of humanity."
"Religious and medical propaganda to the contrary notwithstanding, I hold some simple truths to be self-evident. One of these truths is that just as the dead do not rise from the grave, so drugs do not commit crimes. The dead remain dead. Drugs are inert chemicals that have no effect on human beings who choose not to use them. No one has to smoke cigarettes, and no one has to shoot heroin. People smoke cigarettes because they want to, and they shoot heroin because they want to." ~ Thomas Szasz, from his article "The Protocols of the Learned Experts on Heroin" in The Libertarian Review
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Friday, 26 October 2018
"Now free trade is not a theory in any sense of the word. It is only a mode of liberty; one form of the assault (and therefore negative) which the expanding intelligence of the present is making on the trammels which it has inherited from the past."
~ William Graham Sumner, from his 1885 book, Protectionism: the -ism Which Teaches that Waste Makes Wealth. Hat tip Don Boudreaux, who adds:
Sumner is exactly correct that domestic citizens’ freedom to trade with foreigners is no more a theory than is women’s freedom to trade with men, or blue-eyed people’s freedom to trade with brown-eyed people.
We can and do use economic theory to better understand patterns and specific effects of international trade, just as we can, and sometimes do, use economic theory to better understand patterns and specific effects of purely domestic changes in the trading arrangements of some groups with others. But the case for a policy of free international trade is no more esoteric than is the case for a policy of free inter-eye-coloured trade or free inter-hair-coloured trade. That voluntarily struck trades between citizens of, say, the United States and citizens of Mexico increase the well-being of all parties to these trades without causing economically relevant harm to anyone should be no more controversial or notable than is the fact that voluntarily struck trades between blue-eyed people and brown-eyed people increase the well-being of all parties to these trades without causing economically relevant harm to anyone.
And yet, of course, the weapons in the protectionists’ arsenal are all aimed at destroying the clarity of vision offered about international commerce by sound economics.
"Conventional economists hold markets to far higher standards than they hold government. Markets 'fail' unless they’re optimal. Governments 'succeed' unless they’re on fire. If this seems unfair, compare the standard definitions of 'market failure' and 'failed state.' Market failure exists whenever markets fall short of perfect efficiency. To be a failed state, in contrast, requires habitual disaster."
"Lying and dishonesty never work -- and it is a great human tragedy that people think dishonesty can work 'for a good motive'.
~ Ayn Rand, in a letter to a cousin contemplating divorce, counselling him to be honest above all to himself .
"The flipping of Wentworth* just marks a the morphing of the two major parties which started long ago.
"The Australian Labor Party now represents the rich and the welfare dependent. The Liberals represent the Deplorable worker and what’s left of the Middle Class and there aren’t many of those in the seat of Wentworth.
"[Former PM] Malcolm Turnbull was the perfect fit for the seat as it transited from being a safe Conservative Seat to a safe Collectivist-Virtue-Signalling Seat. He was the Labor-guy badged as a Liberal. Kerryn Phelps is the 'ideal' replacement — the Labor-Green candidate badged as an Independent. This made it easier for doctors-wives, lawyers and journalists to vote for an option which was essentially Labor-Green, but had the appearance of being 'smarter' and above all the riff-raff.
"So long as men denounce each other as mentally sick (homosexual, addicted, insane, and so forth)—so that the madman can always be considered the Other, never the Self—mental illness will remain an easily exploitable concept, and Coercive Psychiatry a flourishing institution...
"The passion to interpret as madness that with which we disagree seems to have infected the best of contemporary minds."
~ Thomas Szasz, from his book The Manufacture of Madness: A Comparative Study of the Inquisition and the Mental Health Movement
"When government does, occasionally, work, it works in an elitist fashion. That is, government is most easily manipulated by people who have money and power already. This is why government benefits usually go to people who don’t need benefits from government. Government may make some environmental improvements, but these will be improvements for rich bird-watchers. And no one in government will remember that when poor people go bird-watching they do it at Kentucky Fried Chicken."
All the politicians and hangers-on and all the citizens of New Zealand who
vote for them are guilty of forgetting one basic rule of business and life:
When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.
"It is hard to understand politics if you are hung up on reality. Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not." ~ Thomas Sowell .
"We must be careful not to believe things simply because we want them to be true. No one can fool you as easily as you can fool yourself!"
~ Richard Feynman
“The advocates of public control cannot do without [monetary] inflation. They need it in order to finance their policy of reckless spending and of lavishly subsidising and bribing the voters.”
“One day, because they realise for some reason or other that they must stop credit expansion, the banks do stop creating new credit to lend. Then the firms that have expanded cannot get credit to pay for the factors of production necessary for the completion of the investment projects which they have already committed themselves. Because they cannot pay their bills, they sell off their inventories cheap. Then comes the panic, the breakdown. And the depression starts.”
