Category Archives: Class-Warfare

Eat Once, Don’t Die?

      People so regularly like to spout off about the evils of capitalism and the depravity of the profit motive. Perhaps we should take a moment to gain some perspective on the matter. Human history has been dominated with periods of anti-capitalistic activities and economic structures. From the feudalist periods to the monarchies to just plain subversion to an eminent leader supposedly “ordained by God” (all three exhibit stunning similarities) and finally to an aristocracy (today we call this socialism or communism) there has been a constant throughout history when the rights of property were not identified and the profit motive was denied to the average individual.

     This constant in a world without property rights and capitalism was the motivating factor of human daily activities—eat once, don’t die. This could have been the daily motto for much of humankind throughout history—eat once, don’t die.

      Imagine this world without capitalism as people seem to fantasize about so regularly. Just imagine losing your car, your microwave, your smart phone, your internet, your air conditioning, your refrigerator, your television, your house, your job, running water, your toilet, the medicine you take to feel better (or, worse yet, the one you take to stay alive)…imagine losing your clothing and shoes in favor of animal hides to stay warm and more animal hides for your feet…imagine losing loved ones in their late twenties or early thirties, if you or them are lucky enough to live that long…imagine every day when you wake up your goal is not to merely be a pretentious ass that wishes a lack of luxury for others to make yourself feel equal, but instead you must struggle just to scrounge enough food for one meal for your family…imagine portioning that food out to your family not on the basis of fulfilling hunger, but on the basis of which family members would be more beneficial to survival if they have energy…imagine laying your head down at night being glad if nobody in your family died or not being surprised if one had.

      Imagine your daily motto was eat once, don’t die. This is the reality of the world before capitalism (and exists today outside of capitalisms reach); the human condition was that of strife, struggle, and immense physical and emotional pain. Is capitalism perfect? If by perfect you mean we all get to have what everyone else has regardless of effort, talent, or sacrifice…then no, it certainly is not. However, it is unambiguously clear throughout history that no economic system has ever brought more (or, I would argue any) people out of true poverty and complete squalor than capitalism.

P.S. By the way, capitalism and cronyism are in no way similar and the terms should not be used together, it makes people sound absurd to those of us who know better.

 

Trump is clearly no economist.

       There are a lot of Republicans these days embracing the anti-trade rhetoric of Donald Trump and, simultaneously, screaming about the ineffectiveness and unfairness of wealth redistribution through the welfare state. Interestingly enough, these two positions are equivalent to one another. You cannot be for trade protection (such as tariffs) and against wealth redistribution; they are fundamentally the same thing. Let me illustrate how.

   Wealth redistribution operates under the principal that government takes (forcibly, mind you) money from Susan and gives it to Tom. Susan is guilty of no crime besides being in an electoral minority, but nevertheless she incurs the wrath of Tom’s jealousy and greed of her accomplishments and higher earnings. Tom’s greedy vengeance is carried out by elected officials who are able to send men with guns to Susan’s house (if she doesn’t pay) to do what would be illegal for Tom to do himself, which is to steal from Susan.

     Now, this redistribution is all based on the premise that Tom should be allowed to do as he wishes (i.e. work less hours, invest less effort in his own skill set, and engage in more recreation) and still be provided with all the basic needs that life requires (including many that life does not require like cell phones, etc).   In effect, the welfare state makes inefficiency a right, one that can be subsidized. Productive capability is discounted in favor of lifestyle choice.

       This brings us now to trade protection and why the two things are indifferent. Let us imagine that Susan is now a consumer and Tom is a worker at an auto plant. We are told that tariff’s on foreign auto makers will “help” our economy (incidentally, zero of this claim is backed up by well-established economic principals or any evidence) so that Tom can keep his job and manufacturing will not be “shipped” overseas. Instead our government will place a 10% tariff on those evil foreign automakers that, for some reason or another, can supply us vehicles at a fraction of the price of Tom’s employer. If the foreign car is $20,000 and Tom’s car is $22,000 before the tariff, this new 10% tax (tariffs are taxes on consumers, by the way) will make them essentially the same price[i].

      So, now Susan (and everyone else) must pay $2,000 more per vehicle for Tom to remain employed (not to mention increased sales taxes, etc.) in his current occupation. If Susan chooses to purchase the foreign car, the government will profit after placing no value into the production of said vehicle much like the mobster running a protection racket. If Susan chooses to purchase the car Tom makes, she will pay a greater price to subsidize Tom’s relative inefficiency; because, if Tom were as efficient as the competition, his autos would be priced accordingly. Tom gets to keep his job that he is not as good at as the competitor is while everyone that purchases a car pays more to ensure this. The government has then taken money from every consumer (a tax) and given it to Tom to subsidize his inefficiency (we could just as easily call this welfare…see paragraph 3, sentence 2).

       If 50,000 people buy a car in a given year, the result is $100M that cannot be spent elsewhere or saved for the future (either choice is an investment in economic growth). Incidentally, this most adversely affects those families making relatively less money—that is right, the much maligned middle class and poor; rich people are not concerned with trivial little tariffs and will buy the foreign car anyway if they want to.

       If you think (rightly) that a redistributive tax hurts the economy by reducing consumption, which in turns reduces the amount of production required, and thus lowers employment you cannot simultaneously think a tariff—which accomplishes the same thing at an even greater cost—will not hurt the economy. Well, you can…but it is no less fantasy than unicorns or Bigfoot. Holding this belief would have led the government to ban the car to protect the wagon builder or ban the light bulb to protect the candle maker. Mass production of food through technological advances would have been outlawed so we could maintain the same volume of farmers, plow makers, and ox breeders (a decision which would have increased the likelihood of starvation due to poor conditions, a concern we no longer carry as humans in the U.S.).

       We must resist the urge to fall into emotional, unsupported arguments—such as those being made by Donald Trump—that tariffs will help the American worker and engaging in trade is bad. I know what you may be thinking now: “we want trade, but fair trade.” Did I get that right? That is hogwash, too. In no way, does us buying goods at a cheaper price—enabling us to consume more and thus produce a wider array of products ourselves—ever, never , never, ever hurt us. If this principle is true, why not only buy things from within your town, or county, or state and really help your local economy boom? If you think unemployed people in your town just need a chance, quit buying things from the mall, Walmart, or Amazon. The reason you do not do this is that you know deep down it is malarkey. Politicians like Trump can use nationalistic hubris to motivate an adverse response that goes against your own best interest. History has known another politician who was effectively able to do this…Adolf Hitler.

Welfare Recipients: Moochers or Rational Actors?

      Often, people who accept and stay on welfare are accused of being mere moochers. To some extent, they do exhibit the primary characteristic of greed: the desire for something that belongs to someone else by compulsion or collusion instead of a trade of value. However, to leave it as simply as that fuels the lack of understanding as to how to remedy the welfare state problem that exists in America today.

      First, let me state it rather directly: people who seek out and stay on welfare for seemingly indefinite periods are rational actors. This may shock some people, baffle others, and even irritate a few; however, that does not diminish the fact it is true. A rational actor is someone who is concerned about their own prosperity and makes choices with the goal of maximizing this objective. In fact, all people are rational actors; we just do not always quantify what prosperity means in the same way as others do.

    The hazard at this point is to be side-tracked by a lengthy discussion that dispels the idea that humans are altruistic (which is the alternative to rational choice), but I will (mostly) avoid that for the time being. Instead, I will use a commonly cited example of altruism and explain briefly why it is incorrect. Fire fighters are often used as examples of altruistic actors; however, they get paid (rather well in many cases), have excellent work schedules, girls tend to like them, and society often idolizes them. Is there risk involved? Of course, but they face great risk—as we all do—by getting in their cars to drive to work. This idea that fear is a primary factor in all people’s decision-making is driven by those who place increased value on personal safety. To a person that is a natural thrill seeker or one that loves accomplishing things others may not dare, being a fire fighter is not altogether frightening or discouragingly risky. It is, instead, a rather rational choice.

       How does this relate to the welfare state? In a very important way, it highlights how people value things differently, some place great value on safety, some on personal “glory,” and others place increased value on wealth accumulation. People who accept being on welfare for extended—or indefinite—periods of time clearly have a high value on security. Additionally, it is likely they place a high value on rest or recreation. When we value recreation over wealth the ability to be free of the burden of work is much more important than having things or money. Conversely, those who value wealth are happy to trade hours of the day for success.

      Here is a scenario to illustrate why welfare recipients are rational actors. Let’s imagine a man named Jim—and his family—are on a myriad of assistance programs that net him the cash equivalent of $26,000/yr and he is offered a job making $32,000/yr. Will he take it? Let us look at the considerations that enter into this decision. First, Jim will have to take 40 hours of his week and trade it for $6,000/yr (that is $500/mth or $2.88/hr). On top of that Jim will have to pay payroll taxes and possibly (unlikely at that income level) income taxes. Would you do that? Ahhh, I can hear the ethical argument now…an argument that I fully sympathize with. So, let’s put it in different terms, if you made $30,000/yr working part time and got offered a full time job for $36,000/yr and this job entailed increased costs, would you take it? It is highly unlikely that you would, unless other considerations enter into your decision such as entry into the job of your dreams.

      People stay on welfare perpetually because they literally cannot afford to get off of it. Things like poor education, increasing minimum wages for entry level occupations, and an increasing menu of programs make this problem worse all the time. Individuals make choices based on individual circumstances, as they well should. What we must do is avoid continuing to lash out at people making a perfectly rational choice; instead, we would be much better served by actually trying to remedy the circumstances which drive these choices. Expanding the welfare state perpetuates the (relative) poverty it intends to cure and reduces the alternatives people have to staying mired in the muck of our burgeoning welfare state. And to completely answer the title question, they do qualify as moochers as well.

The primary factors of production: the relationship between capital and labor.

       In a capitalistic, free market economy there are, generally speaking, two basic factors of production: labor and capital.  Of course, in the US we have a “blended economy” where some of the economy is free (or relatively so) and the other portion is centrally controlled to varying degrees.  As a whole this can be either through direct ownership and operation (e.g. socialists and fascists) or through regulation and a fiat control structure (the US, etc.).  In a blended economy a third major factor of production emerges: the politician.

       However, it seems prudent to focus on the free market version for now.  Too often, labor and capital are viewed as being antagonistic to one another; this could not be further from the truth.  In fact, the two are largely compliments; however, they can at times be substitutes.  Most young, developing economies have one characteristic they all share which is an abundance of labor.  Likewise, most developed (advanced) economies share a characteristic which is an abundance of capital (although to varying degrees).  So, what are these things called capital and labor?

• Labor: Productive contributions of humans who work, involving both mental and physical activities. In other words, the things we do.
• Capital: Money, land, or assets used in the production of goods and services. In other words, the things we have done.

       One clearly begets the other.  Far too often it is assumed that capital is merely money.  Instead, it is simple tools such as a hammer, complex machines such as a tractor, or even a piece of land.  Even “human capital” represents an act or work to increase future production.  We might fairly characterize this as delayed gratification; when someone puts off current period consumption creating a surplus that can be used or leveraged to increase future production and consumption.  A great example of this might be when a small business owner “reinvests” his/her profits into the business.  They are putting off consumption until a (hopefully) later date.  The increase in the level of consumption at the later period merely represents the “interest” that delayed consumption earned.

       So, capital is the product of labor in all cases; however, not all labor results in capital—the determination is based on how the laborer spends their earnings.  If I am a fence builder and have an extra $200 over my budget and choose to spend it on personal consumption, I am less likely to increase my profits in the future without some other change in circumstance.  Conversely, if I spend it on a nail gun, I have increased the likelihood that my future profits will increase due to growth in efficiency and productivity.

       Capital is an enhancement of labor, not a diminishing factor.  Now, does increased mechanization sometimes result in a reduction of labor required to produce a given product?  Yes. However, that labor potential is not destroyed it just requires a refocus on its next best use; this is similar to the principle of comparative advantage in trade economics.  The last time I checked, the US had the second highest worker productivity in the world, behind Japan.  This is largely due to the increase in productivity caused by capital inputs like machines, etc.

       The ability for us to have the luxuries we enjoy is due in large part to that wonderful relationship between labor and capital.  It is unfortunate that cheap politics encourages the idea that one factor is subordinate to the other in all cases; thus people tend to look at owners of capital and laborers as being in a position of competition with each other.

Is government absolution?

It has often been said that government is required to help the poor and disabled; however the evidence consistently shows that government’s involvement has not reduced poverty levels. Seeing that government has never (to my knowledge) cured a societal ill like poverty, why then does there remain so much confidence in it for future success? Could it be that support for government welfare programs stems not only from those who directly benefit from being on it, but also as a path to absolution by those who advocate for it?

So, what do I mean by absolution? First, let us discuss the idea that our government has a responsibility to the poor. Milton Friedman wisely pointed out that governments cannot have a responsibility to people…instead, only individuals can have responsibility. We often hear advocates of government welfare say that we are “our brother’s keeper,” a clear reference to the book of Genesis in the Bible; however, the verse is talking about an individual’s (Cain’s) responsibility to his own brother (Abel) and not society’s responsibility to a person or people. This is a blatant misuse of a Bible verse with the intent of misleading people who, by faith, feel an obligation to fulfill Biblical mandates (at least to some extent).

The question then is how does the brother’s keeper example contrast with government welfare and where does the concept of absolution come in? Let us assume that people do feel an innate obligation to help others; which is arguable, but for the sake of this discussion we must accept it generally. What is the easiest way for people to meet that obligation to others? One could work harder and produce more so that they may transfer (via donation) some of that excess production for the consumption of others. Or, one could spend a few minutes every couple of years voting for a group of people who will give money (that is largely not theirs) to others. Both seems to meet the goal of “helping others” yet one of the two options entails significantly less hardship on the individual choosing to vote instead of donate. It is certainly much easier to vote charity to others than it is to actually provide it. Particularly when a good segment of society pays nothing to fund these programs; the estimated percentage of people in America who file tax returns and owe $0 (or less) is 43% (as of 2013).

In the case of this group of people, a vote for welfare is not only costless and potentially beneficial, but also absolves them totally of any further responsibility to be their “brother’s keeper.” In fact, an IRS analysis of the 2012 tax year showed that the most generous states (by percentage of their income donated) were “red states” that voted for Mitt Romney. This implies that those people that believe government should not engage in coerced charity (to as great of an extent) are much more likely to give of their own money while people who see government as a reasonable and righteous source of charity (albeit at the point of a gun, a fact they often ignore) sees little reason to give of their own money when they can instead vote for “charitable” actions.

Therefore, a vote for government welfare represents a much cheaper way (for the voter) to donate largely because others pay the bill. Individuals can then fulfill their sense of obligation from the pockets of others and still gain the sense of giving that usually motivates people to actually give. This leaves people who preach an obligation to the poor and disabled from actually having any responsibility for meeting that obligation personally. Thus, the individuals that choose the voting method over the donating method have effectively been absolved of their responsibility to others. Effectively, those people do not practice what they preach; instead they demand others serve as their brother’s keeper, while they hold the moral high ground through their mere demanding of action by force.  This reminds me of the brilliant words of Ayn Rand who said:

“It stands to reason that where there’s sacrifice, there’s someone collecting sacrificial offerings. Where there’s service, there’s someone being served. The man who speaks to you of sacrifice, speaks of slaves and masters. And intends to be the master.”

Interestingly, the people most hurt are the ones who do, most significantly, need the help. For the real crime is not that everyone does not have access to “assistance”; instead, the real crime lay in the reality that those who truly cannot do for themselves are left in poverty so as to satiate the majority who wishes to forgo their own personal responsibility for their own monetary gain. Simply put the absolution through government costs the absolved little, while that release from obligations is paid for dearly by those they claim to be helping. This is the danger of idealism rooted in greater good terms; for the actual good is left subjected to the eye of the beholder while the intent of actions is weighted far greater than actual outcomes. I close with the definition of absolution: “the formal release of guilt, obligation, or punishment.”

The Fallacy of Greed

       Greed…what a fun word! It is that invisible cause of all of society’s problems, right? Have an older car or smaller house than your neighbor? Don’t beat yourself up, they are obviously greedy. Textile manufacturing is now (predominantly) overseas? Duh…just a greedy capitalist. Walmart not forking over that mythical thing called a “living wage?” They are blatantly exhibiting their own greed. She has too much; he has too little…all byproducts of American greed, right?

     Effort is good, the old college try they used to say; but don’t you dare actually succeed because clearly you have morphed into just a common greedy piece of trash. Here is an interesting question then: If, in fact, a person who develops a product for which millions wish to pay for is greedy; what do we call a person who is willing to live for nothing off the labors of others? Ah, I remember now, we call them victims of American greed. Instead might I suggest we call them greedy victimizers of Americans; merely a semantic difference, I am sure.

     The convenience of greed lay in its ability to be arbitrarily blamed for anything. Those on the left have made careers playing on peoples’ petty jealousy through use of the word greed. People have justified the taking of others’ property because of greed; however, greed cannot be proven and, perhaps more importantly, cannot be disproven. How does one combat an accusation of greed? They cannot, which is why it is such a powerful tool of the politician to ensure support from those who Bastiat noted “wish to live at the expense of others.”

     Legalized theft and redistribution gains its mandate from this notion of greed, but how do we define greed exactly? If greed is to be defined as the desire and effort to take something from people which is not theirs, then who is greedy? Can we rightfully call Steve Jobs greedy because he created things which many were willing to trade money for? Or would that title be more properly attributed to the 23 year old which, instead of practicing responsibility, decides to live off the welfare system? I would say the latter; our president would likely say the former. A person who makes a living at the point of a gun is, in my estimation, greedy. There is little difference between someone who is able-bodied and living (almost) exclusively off the taxpayer than there is a common gangster. Both prey off of those unable to defend themselves from their oppressors, the only difference is the mobster at least has the courage to do their own dirty work.

Government is Force: The Uncomfortable Truth People Wish to Avoid.

It stands to reason that where there’s sacrifice, there’s someone collecting sacrificial offerings. Where there’s service, there’s someone being served. The man who speaks to you of sacrifice, speaks of slaves and masters. And intends to be the master.

—Ayn Rand

     Our society speaks of things like social justice as if it were a victimless activity. As though giving to someone deemed “less fortunate” entails only the act giving without the taking. Where then does this magical manna come from if not from another citizen? Clearly it comes from someone who is rich or simply has what some deem to be “too much,” right? Let’s assume it does, is the moral righteousness of theft based on the size of the victim’s bank account? If that is in fact the case, should not most white collar crimes be considered righteous?  Or, for example, if you carjack a Maserati are you not merely taking what is not deserved by the owner of that car?

       The rich are hardly the only ones who are victims of our entitled society; anyone who falls into some sort of minority can find themselves targets of our burgeoning tyranny of democracy. If the limits on individual rights to property are up for a vote, then where do the limits of the state lay? In a society which justifies activity by a majority (more aptly, plurality) opinion, no limits exist; instead, the law is a shifting tide dictated by mob behavior and “popular” ideas. I can take your money, your property, and (more poignantly accurate) your very life as long as I can convince enough of my fellow citizens to direct the government to forcibly remove those things from you at the point of a gun.

          You say that no one is taking another’s life, but only their money; excess money at that? How is it exactly that we earn money? Time! Time of our life spent producing, thinking, building, growing, and teaching; and by endorsing the government confiscation and redistribution of people’s money we are very much endorsing the taking of people’s lives; one hour at a time. You cannot ask another for $10 without considering that the money you ask for represents a portion of their life spent earning (assuming they have earned that money). Likewise, you cannot empower government to separate them from that same $10 by force without considering that government has taken the time that money represents from them.

      The cold reality that people wish to ignore is that if that person gets paid $10/hr. then your government has exercised your desire to steal that hour from them; forcibly take those minutes, those breaths, and those heartbeats from them as if they rightfully belong to you or someone else. That activity relegates that producer to the role of slave and you take on the role of slave owner. What gives us the right to prey on our fellow citizens? Nothing! Still, we try to justify it with absurd notions of social justice and fairness. Those who are comfortable voting the confiscation of other’s money are no different than the pimp on the street corner preying on their hookers or the mobster running a protection scheme on businesses. Try as we may to justify our actions as assistance or some altruistic heroism; we are merely common thieves who ply our trade at the ballot box because we lack the courage to steal from others in person.

 

The fallacy of class-warfare: An illusion designed to keep people in want.