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Tuesday, July 22, 2014

The Resentment Of The White-Collar Workers

Besides being harassed by the general hatred of capitalism common to most people, the white-collar worker labors under two special afflictions peculiar to his own category.
Sitting behind a desk and committing words and figures to paper, he is prone to overrate the significance of his work.  Like the boss he writes and reads what other fellows have put on pa­per and talks directly or over the telephone with other people.  Full of conceit, he imagines himself to belong to the enterprise’s managing elite and compares his own tasks with those of his boss.  As a “worker by brain” he looks arrogantly down upon the manual worker whose hands are calloused and soiled.  It makes him furious to notice that many of these manual laborers get higher pay and are more respected than he himself.  What a shame, he thinks, that capitalism does not appraise his “intellectual” work according to its “true” value and fondles the simple drudgery of the “uneducated.”
In nursing such atavistic ideas about the significance of of­fice work and manual work, the white-collar man shuts his eyes to a realistic evaluation of the situation.  He does not see that his own clerical job consists in the performance of routine tasks which require but a simple training, while the “hands” whom he envies are the highly skilled mechanics and technicians who know how to handle the intricate machines and contrivances of modern industry.  It is precisely this complete misconstruction of the real state of affairs that discloses the clerk’s lack of insight and power of reasoning.
On the other hand, the clerical worker, like professional people, is plagued by daily contact with men who have suc­ceeded better than he.  He sees some of his fellow employees who started from the same level with him make a career within the hierarchy of the office while he remains at the bottom.  Only yesterday Paul was in the same rank with him.  Today Paul has a more important and better-paid assignment.  And yet, he thinks, Paul is in every regard inferior to himself.  Certainly, he con­cludes, Paul owes his advancement to those mean tricks and ar­tifices that can further a man’s career only under this unfair sys­tem of capitalism which all books and newspapers, all scholars and politicians denounce as the root of all mischief and misery.
The classical expression of the clerks’ conceit and their fan­ciful belief that their own subaltern jobs are a part of the en­trepreneurial activities and congeneric with the work of their bosses is to be found in Lenin’s description of the “control of production and distribution” as provided by his most popular es­say.  Lenin himself and most of his fellow conspirators never learned anything about the operation of the market economy and never wanted to.  All they knew about capitalism was that Marx had described it as the worst of all evils.  They were professional revolutionaries.  The only sources of their earnings were the party funds which were fed by voluntary and more often involun­tary—extorted—contributions and subscriptions and by violent “expropriations.”  But, before 1917, as exiles in Western and Central Europe, some of the comrades occasionally held subaltern routine jobs in business firms.  It was their experi­ence—the experience of clerks who had to fill out forms and blanks, to copy letters, to enter figures into books and to file pa­pers—which provided Lenin with all the information he had ac­quired about entrepreneurial activities.
Lenin correctly distinguishes between the work of the en­trepreneurs on the one hand, and that of “the scientifically edu­cated staff of engineers, agronomists and so on” on the other hand.  These experts and technologists are mainly executors of orders.  They obey under capitalism the capitalists; they will obey under socialism “the armed workers.”  The function of the capitalists and entrepreneurs is different; it is, according to Lenin, “control of production and distribution, of labor and products.”  Now the tasks of the entrepreneurs and capitalists are in fact the determination of the purposes for which the factors of production are to be employed in order to serve in the best pos­sible way the wants of the consumers, i.e., to determine what should be produced, in what quantities and in what quality.  However, this is not the meaning that Lenin attaches to the term “con­trol.”  As a Marxian he was unaware of the problems the conduct of production activities has to face under any imaginable system of social organization: the inevitable scarcity of the fac­tors of production, the uncertainty of future conditions for which production has to provide, and the necessity of picking out from the bewildering multitude of technological methods suitable for the attainment of ends already chosen those which obstruct as little as possible the attainment of other ends, i.e., those with which the cost of production is lowest.  No allusion to these matters can be found in the writings of Marx and Engels.  All that Lenin learned about business from the tales of his comrades who occasionally sat in business offices was that it required a lot of scribbling, recording and ciphering.  Thus, he declares that “accounting and control” are the chief things necessary for the organizing and correct functioning of society.  But “accounting and control,” he goes on saying, have already been “simplified by capitalism to the utmost, till they have become the extraordi­narily simple operations of watching, recording and issuing re­ceipts, within the reach of anybody who can read and write and knows the first four rules of arithmetic.”*
Here we have the philosophy of the filing clerk in its full glory.

Monday, July 21, 2014

The Anticapitalistic Bias Of American Intellectuals

The anticapitalistic bias of the intellectuals is a phenomenon not limited to one or a few countries only.  But it is more general and more bitter in the United States than it is in the European countries.  To explain this rather surprising fact one must deal with what one calls “society” or, in French, also le monde.
In Europe “society” includes all those eminent in any sphere of activity.  Statesmen and parliamentary leaders, the heads of the various departments of the civil service, publishers and edi­tors of the main newspapers and magazines, prominent writers, scientists, artists, actors, musicians, en­gineers, lawyers and physicians form together with outstanding businessmen and scions of aristocratic and patrician families what is considered the good society.  They come into contact with one another at dinner and tea parties, charity balls and bazaars, at first nights, and varnishing days; they frequent the same restaurants, hotels and resorts.  When they meet, they take their pleasure in conver­sation about intellectual matters, a mode of social intercourse first developed in Italy of the Renaissance, perfected in the Parisian salons and later imitated by the “society” of all impor­tant cities of Western and Central Europe.  New ideas and ide­ologies find their response in these social gatherings before they begin to influence broader circles.  One cannot deal with the history of the fine arts and literature in the nineteenth century without analyzing the role “society” played in encouraging or discouraging their protagonists.
Access to European society is open to everybody who has distinguished himself in any field.  It may be easier to people of noble ancestry and great wealth than to commoners with modest incomes.  But neither riches nor titles can give to a member of this set the rank and prestige that is the reward of great personal distinction.  The stars of the Parisian salons are not the million­aires, but the members of the Académie Française.  The intellec­tuals prevail and the others feign at least a lively interest in intel­lectual concerns.
Society in this sense is foreign to the American scene.  What is called “society” in the United States almost exclusively con­sists of the richest families.  There is little social intercourse between the successful businessmen and the nation’s eminent authors, artists and scientists.  Those listed in the Social Register do not meet socially the molders of public opinion and the harbingers of the ideas that will determine the future of the na­tion.  Most of the “socialites” are not interested in books and ideas.  When they meet and do not play cards, they gossip about persons and talk more about sports than about cultural matters.  But even those who are not averse to reading consider writers, scientists and artists as people with whom they do not want to consort.  An almost insurmountable gulf separates “society” from the intellectuals.
It is possible to explain the emergence of this situation his­torically.  But such an explanation does not alter the facts.  Nei­ther can it remove or alleviate the resentment with which the in­tellectuals react to the contempt in which they are held by the members of “society.” American authors or scientists are prone to consider the wealthy businessman as a barbarian, as a man exclusively intent upon making money.  The professor despises the alumni who are more interested in the university’s football team than in its scholastic achievements.  He feels insulted if he learns that the coach gets a higher salary than an eminent profes­sor of philosophy.  The men whose research has given rise to new methods of production hate the businessmen who are merely interested in the cash value of their research work.  It is very significant that such a large number of American research physicists sympathize with socialism or communism.  As they are ignorant of economics and realize that the university teachers of economics are also opposed to what they disparagingly call the profit system, no other attitude can be expected from them.
If a group of people secludes itself from the rest of the na­tion, especially also from its intellectual leaders, in the way American “socialites” do, they unavoidably become the target of rather hostile criticisms on the part of those whom they keep out of their own circles.  The exclusivism practiced by the American rich has made them in a certain sense outcasts.  They may take a vain pride in their own distinction.  What they fail to see is that their self-chosen segregation isolates them and kindles animosi­ties which make the intellectuals inclined to favor anticapitalistic policies.

Saturday, July 19, 2014

CBO Predicts a Hangover of Economic Proportions

 By Anne Hobson

According to the CBO, the Clairvoyant Bureaucratic Office, “federal debt will be growing faster than GDP, a path that would be ultimately unsustainable.” Our national debt is already bigger than our economy.
The key source of upward pressure on the federal debt is expanded federal spending in the form of Obamacare, its gluttonous siblings Medicare and Medicaid, and its senile cousin Social Security. Because of government encroachment into the health care industry, health care spending will double over the next twenty-five years to 14 percent of GDP.
In order to stop the Social Security trust fund from defaulting and return to sustainable levels of unfunded liabilities by 2025, future and current Americans will have to incur a 25 percent cut in their benefits.
The CBO hearing had the tone of a doctor’s appointment for a self-destructive addict. The doctor says, “You know you can’t keep overspending like this, America,” and the government nods sheepishly and then scampers off to print more money.

This news arrives in the same week congressional investigators revealed that the federal government made about $100 billion in “improper payments” to people who do not qualify for government services. The largest offender? The Department of Heath and Human Services. 
Such hemorrhaging of cash would be unacceptable for a business held accountable by its shareholders, but waste has become an acceptable part of government’s redistributive techniques. With all this talk of the “cost-saving benefits” of Obamacare, it’s easy to forget that it costs money to redistribute money.
During the Great Depression, President Roosevelt mandated that the current workforce pay for the older financially devastated population by promising workers they would get paid by future generations of workers, and so on and so forth. However, because the overall population is aging, there aren’t enough young workers to pay for old workers. The pyramid scheme has to collapse at some point. Whether it collapses gradually, in the form of less return on investment for each of us, or collapses all at once, is what remains to be determined.
Workers are forced to pay into the system in the form of FICA taxes withheld automatically from paychecks. Any excess money in the Social Security system is applied to buying Treasury bonds. In this way the government loans this surplus to itself, pushing the economic hangover further down the road.
“Isn’t this socialism?” Senator Gore asked Secretary of Labor Frances Perkins during a Senate Finance Committee about Social Security in 1935. When Perkins rebuffed him, Gore asked again, "Isn't this a teeny-weeny bit of socialism?"
Our $17 trillion debt is roughly equivalent to the combined GDPs of New York and D.C. times ten. We could start by selling both cities—comprising many of our financial and political miscreants—to the highest bidder as a way out of this mess. If we are going to be irrational, let’s at least be rational about our irrationality. That will kill two birds with one stone—or should I say “with one loan.” We can keep the Statue of Liberty.

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Friday, July 18, 2014

The Resentment Of The Intellectuals

The common man as a rule does not have the opportunity of consorting with people who have succeeded better than he has.  He moves in the circle of other common men.  He never meets his boss socially.  He never learns from personal experience how different an entrepreneur or an executive is with regard to all those abilities and faculties which are required for successfully serving the consumers.  His envy and the resentment it engenders are not directed against a living being of flesh and blood, but against pale abstractions like “management,” “capital”, and “Wall Street.”  It is impossible to abominate such a faint shadow with the same bitterness of feeling that one may bear against a fellow creature whom one encounters daily.
It is different with people whom special conditions of their occupation or their family affiliation bring into personal contact with the winners of the prizes which—as they believe—by rights should have been given to themselves.  With them the feelings of frustrated ambition become especially poignant because they en­gender hatred of concrete living beings.  They loathe capitalism because it has assigned to this other man the position they them­selves would like to have.
Such is the case with those people who are commonly called the intellectuals.  Take for instance the physicians.  Daily routine and experience make every doctor cognizant of the fact that there exists a hierarchy in which all medical men are graded according to their merits and achievements.  Those more eminent than he himself is, those whose methods and innovations he must learn and practice in order to be up-to-date were his classmates in the medical school, they served with him as internes, they attend with him the meetings of medical associations.  He meets them at the bedside of patients as well as in social gatherings.  Some of them are his personal friends or related to him, and they all behave toward him with the utmost civility and address him as their dear colleague.  But they tower far above him in the appre­ciation of the public and often also in height of income.  They have outstripped him and now belong to another class of men.  When he compares himself with them, he feels humiliated.  But he must watch himself carefully lest anybody notice his resent­ment and envy.  Even the slightest indication of such feelings would be looked upon as very bad manners and would depreciate him in the eyes of everybody.  He must swallow his mor­tification and divert his wrath toward a vicarious target.  He in­dicts society’s economic organization, the nefarious system of capitalism.  But for this unfair regime his abilities and talents, his zeal and his achievements would have brought him the rich re­ward they deserve.
It is the same with many lawyers and teachers, artists and actors, writers and journalists, architects and scientific research workers, engineers and chemists.  They, too, feel frustrated be­cause they are vexed by the ascendancy of their more successful colleagues, their former schoolfellows and cronies.  Their re­sentment is deepened by precisely those codes of professional conduct and ethics that throw a veil of comradeship and col­leagueship over the reality of competition.
To understand the intellectual’s abhorrence of capitalism one must realize that in his mind this system is incarnated in a defi­nite number of compeers whose success he resents and whom he makes responsible for the frustration of his own far-flung ambi­tions.  His passionate dislike of capitalism is a mere blind for his hatred of some successful “colleagues.”

Thursday, July 17, 2014

The Resentment Of Frustrated Ambition

Now we can try to understand why people loathe capitalism.
In a society based on caste and status, the individual can as­cribe adverse fate to conditions beyond his own control.  He is a slave because the superhuman powers that determine all becom­ing had assigned him this rank.  It is not his doing, and there is no reason for him to be ashamed of his humbleness.  His wife cannot find fault with his station.  If she were to tell him:  “Why are you not a duke? If you were a duke, I would be a duchess,” he would reply:  “If I had been born the son of a duke, I would not have married you, a slave girl, but the daughter of another duke; that you are not a duchess is exclusively your own fault; why were you not more clever in the choice of your parents?”
It is quite another thing under capitalism.  Here everybody’s station in life depends on his own doing.  Everybody whose ambitions have not been fully gratified knows very well that he has missed chances, that he has been tried and found wanting by his fellowman.  If his wife upbraids him:  “Why do you make only eighty dollars a week?  If you were as smart as your former pal, Paul, you would be a foreman and I would enjoy a better life,” he becomes conscious of his own inferiority and feels humiliated.
The much talked about sternness of capitalism consists in the fact that it handles everybody according to his contribution to the well-being of his fellowmen.  The sway of the principle, to each according to his accomplishments, does not allow of any excuse for personal shortcomings.  Everybody knows very well that there are people like himself who succeeded where he himself failed.  Everybody knows that many of those whom he envies are self-made men who started from the same point from which he himself started.  And, much worse, he knows that all other peo­ple know it too.  He reads in the eyes of his wife and his children the silent reproach:  “Why have you not been smarter?”  He sees how people admire those who have been more successful than he and look with contempt or with pity on his failure.
What makes many feel unhappy under capitalism is the fact that capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by a few.  Whatever a man may have gained for himself, it is mostly a mere fraction of what his ambition has impelled him to win.  There are always before his eyes people who have succeeded where he failed.  There are fel­lows who have outstripped him and against whom he nurtures, in his subconsciousness, inferior­ity complexes.  Such is the attitude of the tramp against the man with a regular job, the factory hand against the foreman, the ex­ecutive against the vice-president, the vice-president against the company’s president, the man who is worth three hundred thou­sand dollars against the millionaire and so on.  Everybody’s self-reliance and moral equilibrium are undermined by the spectacle of those who have given proof of greater abilities and capacities.  Everybody is aware of his own defeat and insufficiency.
The long line of German authors who radically rejected the “Western” ideas of the Enlightenment and the social philosophy of rationalism, utilitarianism and laissez faire as well as the policies advanced by these schools of thought was opened by Justus Möser.  One of the novel principles which aroused Möser’s anger was the demand that the promotion of army offi­cers and civil servants should depend on personal merit and abil­ity and not on the incumbent’s ancestry and noble lineage, his age and length of service.  Life in a society in which success would exclusively depend on personal merit would, says Möser, simply be unbearable.  As human nature is, everybody is prone to overrate his own worth and deserts.  If a man’s station in life is conditioned by factors other than his inherent excellence, those who remain at the bottom of the ladder can acquiesce in this out­come and, knowing their own worth, still preserve their dignity and self-respect.  But it is different if merit alone decides.  Then the unsuccessful feel themselves insulted and humiliated.  Hate and enmity against all those who superseded them must result.*
The price and market system of capitalism is such a society in which merit and achievements determine a man’s success or failure.  Whatever one may think of Möser’s bias against the merit principle, one must admit that he was right in describing one of its psychological consequences.  He had an insight into the feelings of those who had been tried and found wanting.
In order to console himself and to restore his self-assertion, such a man is in search of a scapegoat.  He tries to persuade him­self that he failed through no fault of his own.  He is at least as brilliant, efficient and industrious as those who outshine him.  Unfortunately, this nefarious social order of ours does not accord the prizes to the most meritorious men; it crowns the dishonest, unscrupulous scoundrel, the swindler, the exploiter, the “rugged individualist.”  What made himself fail was his honesty.  He was too decent to resort to the base tricks to which his successful ri­vals owe their ascend­ancy.  As conditions are under capitalism, a man is forced to choose between virtue and poverty on the one hand, and vice and riches on the other.  He, himself, thank God, chose the former alternative and rejected the latter.
This search for a scapegoat is an attitude of people living under the social order which treats everybody according to his contribution to the well-being of his fellowmen and where thus everybody is the founder of his own fortune.  In such a society each member whose ambitions have not been fully satisfied re­sents the fortune of all those who succeeded better.  The fool re­leases these feelings in slander and defamation.  The more so­phisticated do not indulge in personal calumny.  They sublimate their hatred into a philosophy, the philosophy of anti-capitalism, in order to render inaudible the inner voice that tells them that their failure is entirely their own fault.  Their fanaticism in de­fending their critique of capitalism is precisely due to the fact that they are fighting their own awareness of its falsity.
The suffering from frustrated ambition is peculiar to people living in a society of equality under the law.  It is not caused by equality under the law, but by the fact that in a society of equal­ity under the law the inequality of men with regard to intellectual abilities, will power and application becomes visible.  The gulf between what a man is and achieves and what he thinks of his own abilities and achievements is pitilessly revealed.  Day­dreams of a “fair” world which would treat him according to his “real worth” are the refuge of all those plagued by a lack of self-knowledge.

Wednesday, July 16, 2014

Status Society And Capitalism

Before answering this question it is necessary to put into better relief the distinctive feature of capitalism as against that of a status society.
It is quite customary to liken the entrepreneurs and capital­ists of the market economy to the aristocrats of a status society.  The basis of the comparison is the relative riches of both groups as against the relatively straitened conditions of the rest of their fellowmen.  However, in resorting to this simile, one fails to realize the fundamental difference between aristocratic riches and “bourgeois” or capitalistic riches.
The wealth of an aristocrat is not a market phenomenon; it does not originate from supplying the consumers and cannot be withdrawn or even affected by any action on the part of the pub­lic.  It stems from conquest or from largess on the part of a con­queror. It may come to an end through revocation on the part of the donor or through violent eviction on the part of another con­queror, or it may be dissipated by extravagance.  The feudal lord does not serve consumers and is immune to the displeasure of the populace.
The entrepreneurs and capitalists owe their wealth to the people who patronize their businesses.  They lose it inevitably as soon as other men supplant them in serving the consumers better or more cheaply.
It is not the task of this essay to describe the historical con­ditions which brought about the institutions of caste and status, of the subdivision of peoples into hereditary groups with differ­ent ranks, rights, claims, and legally sanctified privileges or dis­abilities.  What alone is of importance for us is the fact that the preservation of these feudal institutions was incompatible with the system of capitalism.  Their abolition and the establishment of the principle of equality under the law removed the barriers that prevented mankind from enjoying all those benefits which the system of private ownership of the means of production and private enterprise makes possible.
In a society based on rank, status or caste, an individual’s station in life is fixed.  He is born into a certain station, and his position in society is rigidly determined by the laws and customs which assign to each member of his rank definite privileges and duties or definite disabilities.  Exceptionally good or bad luck may in some rare cases elevate an individual into a higher rank or debase him into a lower rank.  But as a rule, the conditions of the individual members of a definite order or rank can improve or deteriorate only with a change in the conditions of the whole membership.  The individual is primarily not a citizen of a na­tion; he is a member of an estate (Stand, état) and only as such indirectly integrated into the body of his nation.  In coming into con­tact with a countryman belonging to another rank, he does not feel any community.  He perceives only the gulf that sepa­rates him from the other man’s status.  This diversity was re­flected in linguistic as well as in sartorial usages.  Under the an­cien régime the European aristocrats preferably spoke French.  The third estate used the vernacular, while the lower ranks of the urban population and the peasants clung to local dialects, jargons and argots which often were incomprehensible to the educated.  The various ranks dressed differently.  No one could fail to rec­ognize the rank of a stranger whom he happened to see some­where.  The main criticism leveled against the principle of equality under the law by the eulogists of the good old days is that it has abolished the privileges of rank and dignity.  It has, they say, “atomized” society, dissolved its “organic” subdivi­sions into “amorphous” masses.  The “much too many” are now supreme, and their mean materialism has superseded the noble standards of ages gone by.  Money is king.  Quite worthless people enjoy riches and abundance, while meritorious and wor­thy people go empty-handed.
This criticism tacitly implies that under the ancien régime the aristocrats were distinguished by their virtue and that they owed their rank and their revenues to their moral and cultural superiority.  It is hardly necessary to debunk this fable.  Without expressing any judgment of value, the historian cannot help em­phasizing that the high aristocracy of the main European coun­tries were the descendants of those soldiers, courtiers and courte­sans who, in the religious and constitutional struggles of the six­teenth and seventeenth centuries, had cleverly sided with the party that remained victorious in their respective countries.
While the conservative and the “progressive” foes of capital­ism disagree with regard to the evaluation of the old standards, they fully agree in condemning the standards of capitalistic so­ciety.  As they see it, not those who deserve well of their fellowmen acquire wealth and prestige, but frivolous unworthy people.  Both groups pretend to aim at the substitution of fairer methods of “distribution” for the manifestly unfair methods prevailing under laissez-faire capitalism.
Now, nobody ever contended that under unhampered capital­ism those fare best who, from the point of view of eternal stan­dards of value, ought to be preferred.  What the capitalistic democracy of the market brings about is not rewarding people according to their “true” merits, inherent worth and moral emi­nence.  What makes a man more or less prosperous is not the evaluation of his contribution from any “absolute” principle of justice, but evaluation on the part of his fellowmen who exclu­sively apply the yardstick of their own personal wants, desires and ends.  It is precisely this that the democratic system of the market means.  The consumers are supreme—i.e., sovereign.  They want to be satisfied.
Millions of people like to drink Pinkapinka, a beverage pre­pared by the world-embracing Pinkapinka Company.  Millions like detective stories, mystery pictures, tabloid newspapers, bull fights, boxing, whiskey, cigarettes, chewing gum.  Millions vote for governments eager to arm and to wage war.  Thus, the en­trepreneurs who provide in the best and cheapest way all the things required for the satisfaction of these wants succeed in get­ting rich.  What counts in the frame of the market economy is not academic judgments of value, but the valuations actually mani­fested by people in buying or not buying.
To the grumbler who complains about the unfairness of the market system only one piece of advice can be given:  If you want to acquire wealth, then try to satisfy the public by offering them something that is cheaper or which they like better.  Try to supersede Pinkapinka by mixing another beverage.  Equality un­der the law gives you the power to challenge every millionaire.  It is—in a market not sabotaged by government-imposed restric­tions—exclusively your fault if you do not outstrip the chocolate king, the movie star and the boxing champion.
But if you prefer to the riches you may perhaps acquire in engaging in the garment trade or in professional boxing the satis­faction you may derive from writing poetry or philosophy, you are free to do so.  Then, of course, you will not make as much money as those who serve the majority.  For such is the law of the economic democracy of the market.  Those who satisfy the wants of a smaller number of people only collect fewer votes—dollars—than those who satisfy the wants of more people.  In money-making the movie star outstrips the philosopher; the manufacturers of Pinkapinka outstrip the composer of sym­phonies.
It is important to realize that the opportunity to compete for the prizes society has to dispense is a social institution.  It cannot remove or alleviate the innate handicaps with which nature has discriminated against many people.  It cannot change the fact that many are born sick or become disabled in later life.  The bio­logical equipment of a man rigidly restricts the field in which he can serve.  The class of those who have the ability to think their own thoughts is separated by an unbridgeable gulf from the class of those who cannot.

Tuesday, July 15, 2014

The Urge For Economic Betterment

Under capitalism the common man enjoys amenities which in ages gone by were unknown and therefore inaccessible even to the richest people.  But, of course, these motorcars, television sets and refrigerators do not make a man happy.  In the instant in which he acquires them, he may feel happier than he did before.  But as soon as some of his wishes are satisfied, new wishes spring up. Such is human nature.
Few Americans are fully aware of the fact that their country enjoys the highest standard of living and that the way of life of the average American appears as fabulous and out of reach to the immense majority of people inhabiting non-capitalistic countries.  Most people belittle what they have and could possi­bly acquire, and crave those things which are inaccessible to them.  It would be idle to lament this insatiable appetite for more and more goods.  This lust is precisely the impulse which leads man on the way toward economic betterment.  To content one­self with what one has already got or can easily get, and to ab­stain apathetically from any attempts to improve one’s own ma­terial conditions, is not a virtue.  Such an attitude is rather animal behavior than conduct of reasonable human beings.  Man’s most characteristic mark is that he never ceases in endeavors to ad­vance his well-being by purposive activity.
However, these endeavors must be fitted for the purpose.  They must be suitable to bring about the effects aimed at.  What is wrong with most of our contemporaries is not that they are passionately longing for a richer supply of various goods, but that they choose inappropriate means for the attainment of this end.  They are misled by spurious ideologies.  They favor poli­cies which are contrary to their own rightly understood vital in­terests.  Too dull to see the inevitable long-run consequences of their conduct, they find de­light in its passing short-run effects.  They advocate measures which are bound to result finally in general impoverishment, in the disintegration of social coopera­tion under the principle of the division of labor, and in a return to barbarism.
There is but one means available to improve the material conditions of mankind: to accelerate the growth of capital accu­mulated as against the growth in population.  The greater the amount of capital invested per head of the worker, the more and the better goods can be produced and consumed.  This is what capitalism, the much abused profit system, has brought about and brings about daily anew.  Yet, most present-day governments and political parties are eager to destroy this system.
Why do they all loathe capitalism?  Why do they, while en­joying the well-being capitalism bestows upon them, cast long­ing glances upon the “good old days” of the past and the miser­able conditions of the present-day Russian worker?

Monday, July 14, 2014

The Sovereign Consumer

The characteristic feature of modern capitalism is mass pro­duction of goods destined for consumption by the masses.  The result is a tendency towards a continuous improvement in the av­erage standard of living, a progressing enrichment of the many.  Capitalism deproletarianizes the “common man” and elevates him to the rank of a “bourgeois.”
On the market of a capitalistic society the common man is the sovereign consumer whose buying or abstention from buying ultimately determines what should be produced and in what quantity and quality.  Those shops and plants which cater exclu­sively or predominantly to the wealthier citizens’ demand for re­fined luxuries play merely a subordinate role in the economic setting of the market economy.  They never attain the size of big business.  Big business always serves—directly or indirectly—the masses.
It is this ascension of the multitude in which the radical so­cial change brought about by the Industrial Revolution con­sists.  Those underlings who in all the preceding ages of history had formed the herds of slaves and serfs, of paupers and beggars, became the buying public, for whose favor the businessmen can­vass.  They are the customers who are “always right,” the patrons who have the power to make poor suppliers rich and rich suppli­ers poor.
There are in the fabric of a market economy not sabotaged by the nostrums of governments and politicians no grandees and squires keeping the populace in submission, collecting tributes and imposts, and gaudily feasting while the villeins must put up with the crumbs. The profit system makes those men prosper who have succeeded in filling the wants of the people in the best possible and cheapest way.  Wealth can be acquired only by serving the consumers. The capitalists lose their funds as soon as they fail to invest them in those lines in which they satisfy best the demands of the public.  In a daily repeated plebiscite in which every penny gives a right to vote the consumers determine who should own and run the plants, shops and farms.  The con­trol of the material means of production is a social function, subject to the confirmation or revocation by the sovereign con­sumers.
This is what the modern concept of freedom means.  Every adult is free to fashion his life according to his own plans.  He is not forced to live according to the plan of a planning authority enforcing its unique plan by the police, i.e., the social apparatus of compulsion and coercion.  What restricts the individual’s freedom is not other people’s violence or threat of violence, but the physiological structure of his body and the inescapable na­ture‑given scarcity of the factors of production.  It is obvious that man’s discretion to shape his fate can never trespass the limits drawn by what are called the laws of nature.
To establish these facts does not amount to a justification of the individual’s freedom from the point of view of any absolute standards or metaphysical notions.  It does not express any judgment on the fashionable doctrines of the advocates of totali­tarianism, whether “right” or “left.”  It does not deal with their assertion that the masses are too stupid and ignorant to know what would serve best their “true” needs and interests and need a guardian, the government, lest they hurt themselves.  Neither does it enter into a scrutiny of the statements that there are supermen available for the office of such guardianship.

Saturday, July 12, 2014

Too Many Bureaucrats in the Kitchen

Government is obese. In the 1980s the number of pages in the federal tax code was 26,300, according to the CCH Standard Federal Tax Reporter. Now that number is over 73,954 pages. Add to that the cost of planning, time, and paperwork, and the cost of tax complexity is an estimated 6.6 billion hours per year.

The Federal Register, dubbed the “Ten Thousand Commandments” by the Competitive Enterprise Institute, results in a total federal regulatory burden of $1.8 trillion a year, over half the size of the federal budget. If the pages of the Federal Register were stacked, the pile would exceed Washington, D.C.’s height limit for buildings.

Government debt has skyrocketed from 30 percent of GDP in the 1980s to over 100 percent of GDP in 2013, topping $17,587,325,000,000. That number has more digits than you have fingers.
The Federal Reserve’s inflationary practices, caused by injecting more money into the system in an inflationary spiral, have resulted in higher prices for food and gas. The price of a barrel of oil has increased from $26 in 2002 to $110 today. This is government crowding out your purchasing power.

According to the Office of Personnel Management, the total number of federal employees has declined from 5 million in 1984 to 4.3 million in 2012. However, this is not the complete story. The federal workforce includes over 10.5 million government contractors.
President Obama doesn’t appear able to keep up with his burgeoning administration. He seems overwhelmed and constantly surprised by the news, as Brit Hume acknowledged: “The border, he's surprised at, surprised at the VA, surprised at Putin, surprised on Iraq. It's just—it's amazing.”
Maybe it’s time to cut down on the size of government and take Obama off of benzo.
Cato has recorded that special interest spending in the federal budget is on the rise. The number of federal subsidy programs has grown 44 percent since 1990. There are currently 1,696 of these programs, with the most recent growth occurring in agriculture, health care, and homeland security. Total federal spending has increased 47 percent since 2001.
Predictably, the total lobbying spending aimed at garnering special exemptions, subsidies, and favors from the growing government has increased from $1.46 billion in 1998 to $3.23 billion in 2013—a dangerous doubling of cronyism.
The evidence is overwhelming. Government is bloated. If we continue on this path, we can expect a slow death by debt and bureaucratic diabetes.

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Saturday, July 5, 2014

The Paradox of Social Justice


A recent satirical article titled “What I learned about capitalism by walking into a Starbucks and screaming ‘capitalism!’ at the Barista over and over until they had to call the police" was written in jest, but it spoke to a frightening trend. First-world activists have redefined themselves as anti-capitalist proponents of “social justice.”
Social justice is not justice in the traditional sense, but rather a fancy pseudonym for what liberal activists deem to be “fair.” Traditional justice means equality of opportunity, not the equalizing of economic classes.
In his book The 100 Greatest Americans of the 20th Century: A Social Justice Hall of Fame, Peter Dreier glamorizes what he calls “practical idealists,” a group of people who confuse fairness with equality of outcome, and hide their Marxist intentions behind the word “social justice.”
It's true that, as Hayek argued, treating people as equals politically, under the law, leads to different economic outcomes for those individuals. Social justice seeks exactly the opposite—to equalize economic outcomes by treating “classes” differently with regards to politics.

This paradox is apparent with modern day activists. They rage against capitalism, the very system responsible for raising the standard of living for the most people in the shortest amount of time.
Social justice is Marxism, socialism, and collectivism reborn and repackaged into the idea that Americans are owed health care, a job, a college education, and financial peace of mind. However, the cost imposed on all citizens to those things largely outweighs the benefit to some. In effect, taxpayers are paying government a transactional fee to redirect wealth in a way that is necessarily inefficient.
Advocates of social justice set out to fix society; however the assumption that one person (the activist) knows what is best for society is exactly the presumption that endangers it. No one person has the knowledge to create a pencil, much less a functioning society.
Our most apparent systemic problems have come at the result of “well-intentioned” social and economic tinkering. Think federal student loans, run-away entitlement programs, and clean energy subsidies. The Great Depression, like the 2008 financial crisis, stemmed from overzealous speculation and a cheap credit boom that prompted unsustainable investments, a result of money manipulation at the federal level.
True justice means fighting for increased access to goods and services, not making those goods and services more expensive for the majority of Americans, as Obamacare, minimum wage laws, and anti-fracking protests do.
Dreier’s so-called progressive heroes of social justice are actually villains to progress.

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Friday, July 4, 2014

A New Political Blockade for Cuba

The half-life of rage against Fidel Castro is roughly fifty-three years, give or take a generation and then some.
An annual poll released this morning by Florida International University revealed that the majority of Cuban Americans now favor an increase in economic involvement in Cuba. For decades, policy analysts have blamed the importance of the Cuban-American vote in swing-state Florida as the reason politicians refused to touch the Cuban embargo. Now that the key voting bloc is leaning toward a more free-market approach to Cuba, opposition to the embargo is no longer a politically unviable position to take. Right?
Wrong. A new political blockade has arisen. Senators Marco Rubio and Robert Menendez, both Cuban-Americans, still cling to the notion that lifting the embargo will make achieving democracy in Cuba more difficult and cede more money and legitimacy to the Castro regime.

Observing China, it seems more likely that an influx of free enterprise will force a slow shift to a regulated mixed-market economy, which is communist only in name. Furthermore, the standard of living for Cubans would rise as more economic choices are afforded to them in the form of new consumer goods, increased tourism, and foreign investment.
Of the 1,000 Miami-Dade Cubans surveyed, 70 percent said they favored lifting all travel restrictions. However, the poll found that older Cubans do favor more sanctions.
Interestingly, 63 percent of Cuban Americans favor keeping Cuba on the U.S. terror list with Iran, Syria, and Sudan. This suggests that while Cuban Americans are unwilling to let Castro off the hook as a human rights abuser, they are frustrated by the ineffectiveness of the embargo and Castro’s stubbornness and ostensible immortality. Yet countries on the terrorist list are still subject to paralyzing financial sanctions.
If President Obama wants to leave one good mark on the world, here’s his chance. The political stars have aligned. Obama’s foreign policy is as consistent as D.C.’s swamp-style weather. Given his bungled track record with Syria and Ukraine, he has nothing to lose.
There is no good political or economic reason to continue the embargo aside from pride and ignorance. But in our government, those are powerful and ubiquitous forces.

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Saturday, March 1, 2014

The Impossibility Of Socialism

BESIDES THE CALCULATION/knowledge problem, there are other hurdles to be faced in attempting to organize a socialist society, such as the problem of motivation. In a market society, people are motivated to increase the satisfaction of their fellows because that is how they get paid. While Mother Teresa or Albert Schweitzer may perform their work on purely humanitarian grounds, most people choose socially useful work because they profit from it. If a mason works hard at his trade and becomes eminent in his field, he can expect to directly reap much of the benefit of his hard work. But in a socialist society, the rewards for his hard work would be spread across the entire society. The mason could expect to receive only a minuscule part of the extra value that his effort generated.

Historically speaking, we can certainly see that motivation has been a problem in every society that has attempted socialism. On that basis, we might decide that it is highly unlikely that any socialist society could overcome that handicap. But, we must admit, there is no basic principle of human action that says that people couldn’t all place the good of the society as a whole, as seen by the central planners, first on their list of values, however implausible we might think that might be in reality. Socialists could argue that in the yet unachieved glory of the socialist paradise, all people will direct their actions solely toward the good of the commonwealth. One of Mises’s greatest accomplishments was to show that, even if everyone acted that way, socialism still could not achieve a rational allocation of resources.

A race of socialist saints could not engage in meaningful economic calculation in the absence of market prices. Even if each such saint sincerely did his best to meet the most urgent needs of society, he could not determine what means should be used to fulfill those needs, nor even what the most urgent needs were. While the problem of motivation makes it highly unlikely that a socialist society could support the billions of humans who are alive today, Mises demonstrated that it could not possibly do so.

Some people have been vexed by Mises calling socialism “impossible.” “Aren’t there,” they ask, “many historical examples of socialist societies? Maybe we wouldn’t want to live in any of them, but surely we must admit that socialism is possible.”

However, what Mises meant is that it is impossible that any large society, beyond the size of a small, family-based tribe, could fully implement the socialist agenda without plunging into economic chaos. Certainly, some societies have called themselves “socialist.” But all attempts to really follow the socialist blueprint have been quickly abandoned. Sheldon Richman, in his essay “To Create Order, Remove the Planner,” notes:
Immediately after the Russian revolution in 1917, the Bolsheviks under Lenin and Trotsky tried to carry out the Marxian program. They got planned chaos. Trotsky said they stared into the “abyss.” Chastened by that experience, Lenin enacted the New Economic Policy, which was a reintroduction of money and markets. No Soviet leader ever tried to abolish the market again. That is not to say that the Soviet Union had a free market. It is to say that the Soviet Union’s economy was a government-saturated market. There was no actual central plan. In truth, the plan was revised to reflect what was happening outside the planning bureau.

As George Mason economist Peter Boettke points out in his book Calculation and Coordination:
. . . the actual operation of the Soviet economy bore little resemblance to the predictions of these optimal planning models. Soviet “planning” seemed to mostly occur after-the-fact. With the break-down, and finally the collapse, of the Soviet state, it has become increasingly apparent that central planning authorities had little real power to manage the Soviet economy. . . .

We argue that the mature Soviet system was not a hierarchical central planning system at all, but was really a market economy heavily encrusted with central government regulation and restrictions. The Soviet state employed these various interventions to extract revenue from the economy, as an alternative to collecting revenue via the use of taxation.

The goal of most socialist movements has been to establish a worldwide socialist society. Many apologists for socialism have, in fact, blamed the troubles encountered by past attempts at socialism on the continued existence of capitalist countries. Mises demonstrated that the exact opposite is true-if the dream of worldwide socialism is ever realized, the result will be complete social disintegration.
Historical examples of nominally socialist states, such as the Soviet Union, operated within a worldwide market order. They mimicked the more market-oriented countries’ methods of production, their products, and their technologies. Soviet planners even copied commodity prices out of The Wall Street Journal to use in their calculations. Lew Rockwell told a wonderful story about Gorbachev’s press secretary. When asked about his dream for mankind, the secretary replied that he hoped to see all of the world embrace socialism, except for New Zealand. “But why not New Zealand?” a reporter wondered. “Well,” the secretary responded, “we will need someone to get the prices from.”