In the US, the common enemy chosen to deflect blame and attention from failed policies and economic collapse is capitalism.
Question: How does con man Bernie Madoff differ from the state of California?
Answer: Bernie's victims surrendered their life savings voluntarily. In California, the victims' money was taken under threat of force by the IRS.
As pundits, politicians and the media focus America's wrath on Bernie Madoff for conning willing dupes out of over $50 million bucks, the same scam carried out by elected government officials in both Kansas and California goes virtually unnoticed.
California, home to 37 million people and a $1.8 trillion economy, recently informed taxpayers that the state will be unable to issue taxpayers their tax refunds. An IOU will take its place. Translation: Anyone who overpaid their 2008 taxes will not receive their money back from the state until, well, until the state figures out how to find more of other people's money to redistribute. Hey, isn't that what Madoff is accused of?
Likewise, the taxpayers of Kansas are plumb out of luck, as political battles are forcing the state to withhold the refunding of taxpayers' money. "We are out of cash, in essence," state budget director Duane Goossen said last week.
If an individual fails to return investor's cash, it's called fraud. If a private business defaults on its obligations, it is forced into bankruptcy. If a government entity runs out of cash, it's called business as usual.
Business as usual also requires quick action to find and/or manufacture a scapegoat to deflect blame and focus attention away from the problem.
Third world countries, decadent dictators and savvy politicians have long known that a common enemy is a powerful and unifying tool, especially when it comes to providing a scapegoat for their own failed policies. As long as Iran, Korea, Cuba, etc. are able to focus the blame for their failure on a common enemy, say the rich, decadent United States, they themselves remain immune from both the blame and the consequences of their failed policies.
So it is with the the United States. In our case, the common enemy chosen to deflect blame and attention from failed policies and economic collapse is capitalism. "It's capitalism that's to blame," politicians claim. "It's unfettered free markets," the media echo. "And, by the way, we'll fix it for you," the Obama administration promises, as they rush to make an example of Bernie Madoff.
In the supreme irony, capitalism is the very engine of wealth that allowed state and federal government to spend virtually unlimited amounts of our money on whatever pet projects they deemed necessary or politically profitable. Now that the money has been spent and the coffers are bare, capitalism has been chosen as the "common enemy" and assigned the blame that rightfully belongs to profligate politicians and reality-challenged bureaucrats. (And to be fair, the Americans who trusted them.)
As millions of Americans, myself included, are being forced to economize, cut back and re-adjust priorities and expectations, our elected officials remain immune. In California, despite a $42 billion deficit, the legislature continues to impose costly regulations and mandates.
The federal government continues to approve trillions of our dollars to "invest" and "stimulate" (code words for welfare and taxes), while continuing to pass legislation that enables key Democratic allies to gain power and impose higher costs of doing business on all Americans. But hey, the unions are ecstatic, the trial lawyers are happy and the environmentalists are placated.
It's "we the people" who pay the tab for government. It's capitalism and the free market system that enables us to do so. Yet, so far, Americans seem willing to let government kill the goose that lays the golden egg.
By demonizing and undermining capitalism in favor of the totally discredited, tried and failed system of socialism, Americans are being forced to buy into yet another unrealistic version of utopia that common sense and history tells us will fail, big time. And, once again, we will be left to pay the very real costs of the decisions being made daily by our elected officials.
Just as Ronald Reagan looked at the Soviet Union and plainly saw that their system could not support itself and was bound to collapse, so too, do I look at the new path America is on. I wonder how so many Americans have been fooled into not challenging, and actually made complicit, in the assisted suicide of capitalism. And of our great country.
The only “demonizing” of capitalism I see going on is from the usual cluster of conceited commentators and obnoxious antiestablishmentarians to whom the right-wing forums regularly take exception. But there are well-deserved pejoratives aplenty being ladled out regarding individual big-name rip-off artists like Madoff and Stanford, and there are sure to be others named who, like Fuld at Lehman, habitually played fast and loose with the rules and enabled a pandemic of financial recklessness. Moreover, in the face of a governmental response now collectively bordering on economic hyperintervention, it is not unreasonable to consider the roles played by not only the unscrupulous by also by proponents of market fundamentalism buttressing their positions with arguments of moral hazard. All of these behaviors are not so much a critique of capitalism as they are in indictment of selfishness and greed.
The base issue is that some level of greed is needed to drive markets and individuals to their highest level of output. I haven’t seen the ability of an army of the homeless to generate jobs except in bleeding heart social services areas. On their own the homeless help no one.
What about those that do not work? Do they contribute? The reasonable answer is not a lot unless government has stolen from others to give them the ability to spend.
So, where do jobs and growth really come from?
Maybe with those that have a lot and want more? And those that have little but are striving to have more? And that vast pool of those in the middle striving to move to the top? Hmmm didn’t see government in this mix.
Now we come to the question on the role of government. What should it do? Steal from the accomplished to buy votes from the malingerers? How is the government different from the mugger downtown?
Have there been any successful communes of any size? How about true communist countries and economies? Drawing a zero so far?
As imperfect as our system may be it can be vastly improved by removing government from the equation. Look carefully at the root cause of the current financial decline and government fingerprints and other forensic clues abound.
I have some hope in this stimulus bill. It has the power to revive… the Supreme Court. The bill is a blatant abuse of power by the government which is giving Congress free pass to step all over the states (as long as they take the money). Some Republican governors have already declined the money for this reason, but I would like to see a Supreme Court challenge, to see how far things have fallen or if there is hope that perhaps the Constitution means something. Otherwise, get ready to see a wave of stipulation-filled stimulus bills and the economy stagnate.
“In California, the victims’ money was taken under threat of force by the IRS.”
A minor point: The IRS does not collect state taxes. A state agency does, and in the case of California it is the Franchise Tax Board.
The officials that naive people have placed in charge of this great country are robbing us blind. We currently seem to be in the fast lane on the road to socialism. Government programs like welfare are the prime example. By making person A responsible for person B, person B begins to gain an entitlement mentality. Therefore, person B’s descendence will more than likely feel the content with some one else footing their bill. That along with a combination of indoctrination through the media as well as teachings at educational institues brainwashes the younger members of society. As that group of people age, a new group of young gullable minds are transformed. The end result is a rapidly dwindling population of true conservative beliefs. I’m an 18 year high school student, during the election time many of my peers were discussing why they thought Obama was a better choice. Many reasons they listed were completely assanign, “I’m voting for him because he’s black”, “I’m voting for him cause he cool.” Also there tended to be a lot of negative comments about President Bush which, is okay as long as you have some logical reason why you feel the way you do. Out of curiousity, I asked why they disliked Bush so much. The answers I usually received were “Bush just sucks”, and “Bush is retarded”. Of course these are nothing more than opinions with no factual substance to them what so ever. The point is simple, by hearing so much negativity about Bush from the media, these individuals actually adopted those same views, when in reality they know not what they speak of. In conclusion, somebody needs to wake up the uneducated voting population so they realize that they are losing their personal rights by politicians looking at us as a society rather than a group of individuals.
RightisRight:
Re: “…somebody needs to wake up the uneducated voting population…”
You are new here, so I’ll re-post a previous quote:
“…Because voters are rationally ignorant (the costs of gaining particular kinds of information are greater than the benefits since one vote is essentially meaningless), politicians must employ a language designed to evoke emotion – enough emotion to motivate the right people to turn out and vote. Thus, politicians rarely speak with precise meanings, marginal calculations, or logical reasoning; instead they manipulate affect, raw emotions, group identifications, and even hatred, envy, and threats. Because premature commitment to an issue can cause one to end up in a minority position, successful politicians equivocate, hint, exaggerate, procrastinate, ‘straddle fences,’ adopt code words, and speak in non-sequiturs. Understanding the politician is therefore extremely frustrating for those who value precise statements. But note that this problem is not the fault of the politician; it is rooted in the rational ignorance of voters, the distribution of conflicting sentiments among voters, and the nature of collective endeavor. What all this means is clear: Political communication is rarely conducive to rational or efficient allocation of scarce resources. This does not mean that the individual politicians are irrational in their choice of language and symbolic activities. Waving the flag and kissing babies are practiced because of their tactical value in an activity that is at once a rational game and a morality play; in that conjunction lies the endless fascination and frustration of politics.”
Beyond Politics, Mitchell & Simmons
“Madoff and Stanford…”
They are thieves, not capitalists.
Sedonaman, I must say that you are absolutely correct. The irrational logic of the public vote is definetly the cause of our situation. However, I have to place part of the blame on the politicians as well. While their might be an ignorance shown in the people who vote them in office, it is ultimately the politicians who abuse their power and continue to shred our constitution as if it were insignificant. The politicians should have to completely master our founding documents in order to serve in office. Since the elected officials are the ones who are making the final decisions, they are just as accountable as the people who put them there.
RightisRight:
Re: “… it is ultimately the politicians who abuse their power and continue to shred our constitution as if it were insignificant.”
What constitutes “shredding” the constitution, of course, depends on your point of view. To liberals it was the Patriot Act, to us it is liberals reading words that are not there [google "The Invisible Ink Award"].
Mickey G:
If “removing government from the equation” were the only requisite to preserving freedom and opportunity in this country, then perhaps a written Constitution could have been dispensed with at its inception. Yet even Jefferson recognized that “governments are instituted,” with “just powers” relying upon the consent of those governed. I suspect that most of modern history reflects a continuous vying for control between wealth, labor, and coercion. Unbridled, unprincipled capitalism can, in my view, regress society into a feudalistic state; ideologically-driven, collectivistic government intervention can also drive us toward a totalitarian existence similar in its effect. Until a new historical paradigm replaces the existing one, I do not see how being devoted exclusively to accumulation of power on behalf of one economic interest at the expense of the other two will succeed in securing the objectives for society that the Founders sought.
michaelbp,
You get today’s award for completely ignoring the substance of mickey’s post. No where did he suggest eliminating government. Go back and read it again.
“Unbridled, unprincipled capitalism…” There is no such thing. Capitalism is self correcting, therefore it is not unbridled. Capitalism cannot be unprincipled, because it would cease to be capitalism.
Mountain Man,
Per Mickey, “As imperfect as our system may be it can be vastly improved by removing government from the equation.”
In the absence of further elucidation from Mickey himself, my inference is that the “equation” in question is a standing economic system; whereas that system minus government is what he proposes.
There is truth in what you say. To the extent that Capitalism encourages or restrains economic behaviours among its participants through competition, it is indeed “self-correcting.” Perhaps that is its greatest virtue and its indispensable,instrinsic principle of operation: that of mutually beneficial exchange, the efficient fulfillment of need, and provision of service. But the sustainability of that system, however reliant upon competition, also depends upon morally principled behaviour among its participants. In the absence of such restraint, it falls upon the external power of coercion to restore individual rights where they have been demonstrably injured at the expense of the greater commonwealth. We are not speaking of an ideology in the abstract, but a system put into practice and bounded by our imperfections.
C’mon, michaelp. Mickey DID elucidate.
You are moving the goalposts. You suggested that he was proposing the equivalent of doing away with the Constitution, which I disputed.
Now you are talking about the role of government in finance, which is the original context.
I don’t want to speak for Mickey, but I’m pretty sure he wasn’t advocating that all laws in the financial world be done away with. Stealing is and should remain illegal. Same with misrepresentation and tort liability, for example. That is not coercion, that is enforcing the law. And it isn’t about rights, it’s about the unencumbered free market.
What is being discussed is government intervention into the private lawful exchanges of consenting parties. That government intervention is corrupting the free market, it is picking winners and losers, it is modifying and voiding private, legally binding contracts (motgage agreements), it is redistributing wealth from those who earned it to those who did not.
Any time the government intervenes, it influences outcomes and unbalances the system. The system is failing because government is meddling. It’s a failure of government, not capitalism.
Mountain Man,
I reiterate my inference from his comment: if government were never required, then the Constitution would be unnecessary; meaning that men’s dealings with one another were always honorable, perfection of their faculties more widely realized, and the necessity of government being thereby being dispensed with.
Certain forms of governmental intervention may indeed displace private interests and distort markets. But at times such intervention may be the only recourse sufficient in its scope to re-establish a relevant range of financial stability within which private capital can resume its flow for the benefit of stakeholders. That recourse may require enforcing law, which, to my mind, is the nature of government, i.e., coercion.
This discussion began with a column defending Capitalism against those seeking to discredit it in the face of a financial implosion built upon a widespread absence of integrity. I stand by my orginal contention that while such criticisms of the system may indeed be pervasive, the cause of the implosion lies in the drivers of selfishness and greed, operating, moreover, in an absence of inegrity. I would concur that the pervasive criticisms of the system are indeed unwarranted, whereas the liars and the cheats should be held to account.
Failure of a firm or enterprise based on bad decision making (“greed” “avarice” “lies” “cheating” and “theft” all qualifying) is a failure of actors to behave rationally, which is a key underlying assumption of a free market. It is not a failure of the system of free market capitalism, it is a failure of the actors participating in the system to behave consistently with the precepts of the system and therefore failing. Left to its own, the market would eliminate these failures naturally by punishing failure with loss and thereby removing the capacity of bad actors to participate in the market. It is only government intrusion that interrupts this natural market regulation by removing the element of failure selectively (for, say, certain privileged banks, or automobile manufacturers) and allowing bad actors to continue to participate in the market, alongside the government. Government is necessary to meed out punishment when bad actors violate the rights or property of good actors. It is not necessary to change market dynamics by applying force or coercion or by manipulating factors to try and change market equillibriums from their natural levels.
Bear in mind that the constitution and our federal system of government were designed for far more than regulating markets. In terms of markets, government’s role should be minimal, and a market could indeed function without any government whatsoever (in fact, markets are spontaneously created anytime that people need to come together and exchange goods, including where no governments exist, or where government-controlled markets are dysfunctional, like in the former Soviet bloc).
In the interst of clarity though, the original article references Bernie Madoff ripping of 50 million dollars from investors. The number is actuall 50 billoin, with a “b”.
Excuse the typos.
“If government were never required, then the Constitution would be unecessary.” This is a nonsense statement. The Constitution limits government, i.e., it tells us where government is not allowed. It the way we know when government is not required.
“…intervention may be the only recourse…” There is no Constitutional provision which justifies this statement. There is no real world event that has ever validated this statement.
The Constitution contains absolutely nothing about controlling, intervening, or guiding the economy. Therefore, government has no authority to act in any way regarding it.
Mountain Man,
Could intervention exist as new laws? A real world event that comes to my mind would be when use of common resources (air or water for example) are utilized poorly by one entity for their market profit. Would intervention “by the people” be justified here?
Robinwalnut,
Interesting question. My opinion: If laws are judged by the Constitution, then unconstitutional laws must be voided, no matter how good and noble their intent might be. Most of the problem we have is laws with good intention. Good intention, however, is not a test of constitutionality.
Does that mean that we have to live with a polluting corporation, like your example? No. First, a coporation can only exist if people buy its product. There are numerous examples of corporations being brought to their knees by the actions of advocacy groups. Government action is not needed.
Second, we have a free press in this country, which is a disseminater of information. People can thus learn of polluters and not patronize them.
Third, the Constitution is about about the power of the federal government. It has been improperly applied to the actions of state and local governments. The authority of state and local governments can and should be different.
We have grown so accustomed to going to government to solve every little problem. We are exchanging our liberty for this.
The government has yet to solve a problem of society. Has poverty been eradicated? Did the bailout work? Are senior citizens still choosing between food and medicine? The list goes on and on.
I think that more and more people are getting weary of government “help.” We will see in the next couple of years as trillions of wasted dollars leave us stuck with the check.
Patrick,
Good call on the $50B vs. million. I hadn’t noticed it and was originally awed by the sheer magnitude of the Madoff scam when first reported.
Many of the good points made here express sentiments and ideas held in common by all who have participated in the discussion.
Pursuant to the column’s original theme, a persistent target of some misdirected (and in some cases demagogic) public attacks is Capitalism itself. CEOs of large companies, banks in particular, are being blamed for economic calamity, and clearly, in some cases the allegations of malfeasance are warranted. It is apparent that there is now greater general awareness of the immense influence that the financial industry, banks in particular, exert on the economy, and this is due in no small measure to the much publicized expedited requisition and transfer of vast sums of public wealth into the hands of hitherto privately held banking institutions. But momentarily suspending further discussion concerning the allegations of malfeasance and the media focus on the “evils of Capitalism,” there remains a singular, unequivocal reality behind the financial measures being taken: namely, that the banking system is governed by a private monopoly. In view of free market arguments offered here and elsewhere in defense of Capitalism, and in view of the enormous impact of the banking system upon the U.S. economy, therefore, it would appear incumbent upon defenders of free market Capitalism to examine the role played in the American economy by its banking system by (1) describing the nature of its operation, and (2) determining the compatibility of its operation with the principles of a free market economy.
Others have elsewhere questioned the legitimacy of the federal banking system in light of perceived inconsistencies with American political ideals and Constitutional principles. To the extent that the political system is designed to facilitate and preserve the operation of a market economy, there is ample relevance of their arguments to our discussion. And if indeed economic freedom and free market capitalism are a Constitutional intent of the American system, then there would appear to be a striking incongruity in defending it in an environment where a private corporate franchise is allowed to exercise dominion (by its being granted a monopoly) over the collection and transfer of funds as well as the regulation of credit. Indeed, to what extent can the principle of market rationality truly operate in such an environment? Can “natural levels” and “market equilibriums” be truly operative therein? Or are we to dispose of the inconvenience of an incongruity by resorting to an argument of relativism?
As a consortium of private banking institutions granted monopolistic control over the currency, the underlying rationale of the federal banking system is preservation of its interests and continuation of its existence at the expense of all other considerations. It is instructive to follow the typical progress of its transactions in order to detect the underlying rationale:
(1) the taxpayer, through the U.S. treasury, borrows money for government expenditure
(2) for which the taxpayer pays interest through the income tax which in turn
(3) goes to the parties that buy interest-bearing bonds financing the notes. Meanwhile,
(4) the taxpayer, in the normal course of business, applies for credit at a bank, and, if qualified
(5) receives a loan for which the bank is required to maintain a mere 10 cents on hand per dollar loaned. Next,
(6) the bank loaning the money assesses the taxpayer interest on the face amount of the loan obtained.
Note that the taxpayer is already paying interest on the loaned dollars through the income tax.
In other words, the taxpayer is charged interest to be loaned his own money and to create assets for the bank.
An intermediary for the legal banking monopoly essentially collects the interest on the debt thus incurred.
This describes the most fundamental operation of the American banking system.
In addressing compatibility of this system with free market principles, one comes to confront squarely von Mises’ contention that sound economic development relies upon production rather than proliferation of fiduciary media, and that credit extended purely on the basis of banknotes and deposits must eventually collapse an economic system based upon such credit. To the extent that the scheme of money creation enumerated above prevails in America it is antithetical to free market operation as defined by the Austrian School; and to the extent that the present monopolistic federal banking system controlling American currency and regulating credit reinforces operation of the antithetical model, it too facilitates economic collapse.
Next there is the small matter of the Federal Reserve System’s assumption of risk on behalf of private lenders and placing the responsibility for fulfillment upon the taxpayer. Surely no one will maintain that the moral hazard thus created is compatible with operation of a free market economy. The governmental deficit spending, which inevitably follows default, confiscates private wealth through taxation and/or inflation of the currency.
Free market principles are demonstrably sound. Using free market principles to argue on behalf of the current economic system is not. Free market ideals may or may not be embodied in American Constitutional objectives. But in light of widespread economic consequences which the country now faces, and which are a direct result of actions taken by the consolidated banking interests which have been sanctioned to act therein with near impunity, free market arguments which endorse preservation of the system as presently configured are indefensible and expose the ideals upon which they are based to disrepute and their proponents to attacks as apologists for a corrupt regime.
Mountain Man,
To the extent, then, that government should be limited, then a Constitution is necessary that defines those limits.
In those instances where private interest, however, must be limited lest harm come to the commonwealth who the government serves, then assertion of the commonwealth through its government is indeed Constitutionally valid. Failure of the government to so act where required is as valid a reason for overthrowing the government as would be a persistent “train of abuses” inflicted by the government itself.
As far as the government’s “having no authority to act in any way regarding the economy,” it has certainly exercised already such authority by empowering a private banking cartel for many years to control its currency, regulate credit, and fund the government through issuance of paper backed by taxes.
michaelbp,
“To the extent, then, that government should be limited, then a Constitution is necessary that defines those limits.” Precisely. It is almost oxymoronic that we need a Constitution (law) to define the proper absence of government (no laws).
However, “government” and “law” are not synonymous. There are laws that forbid stealing, murder, and speeding. Government isn’t the law. Government simply enforces the law according to the power delegated to it by the people.
You seem to be mixing the two concepts. It is when government becomes a law unto itself (i.e., whatever government says is the law) where abuse results.
There is no such concept as “commonwealth” in the constitution. The “commonwealth” is a political term, not an entity that can be damaged. Individuals are the highest authority constitutionally. “The people” is not the collection of people operating in concert, it is the elements (individuals) whose interests happen to concide.
Lastly, since the government has no constitutional authority to intervene in the economy, what it has done is exercise illegitimate power in creating a central bank and dictating monetary policy. This is not the exercising of authority, it is instead a manifestation of tyranny.
I would hesitate to allow that only advocacy groups are enough to stop bad practices in the marketplace. Do you feel they are enough? People can be persuaded (bought) and money is, well, power. Those with the most can buy control. Who is to speak for the people when advocacy doesn’t work? The free market principles as I have understood them, and our current banking system being one and the same thing, as Michaelbp has pointed out here, are elucidating. Are our constitutional laws enough to hold greed in check? Are advocacy groups strong enough to counter the damage in time that could be done?
Robinwalnut,
I mentioned advocacy groups as only one of many things that have power. The point is, people have a lot of power when they make their buying choices. And that is quintessentially a free market process.
Consider Walmart. Many people complain that Walmart is too big and powerful. But if enough people decided not to shop there, it would be out of business tomorow. Therefore, it has no power beyond its ability to sell me things I want. If other considerations begin to outweigh that, my business goes elsewhere.
es, money can be power, of course. Actually, the concentration of money is power, whether in the hands of a single rich individual or in many small sums wielded by multitudes. Either way there is power, but the latter doesn’t seem to want to exert its power and instead have been convinced that they are powerless and helpless, usually by those who are in government. Not coincidentally, people in government want power, too.
“Those with the most can buy control.” My first instinct to to say, “so what?” My second instinct is to point out that government has lots of money and therefore lots of control. So why should they be trusted any more than a rich person?
Advocacy does work. Powerfully. Efficiently. People aren’t stupid. They are not sheep who cannot fend for themselves. They don’t need government rescuing them. Government enslaves, oppresses, and controls. Government spends as much money in a single week as Bill Gates’ net worth. We have much more to fear from it.
Greed is a sin, not a crime. It is not a matter for government or the Constitution. Greed is a character flaw that needs redemption, it is not a social defect that government programs can correct. Incidently, greed is rampant in government, isn’t it?
You know, this is about limited government, but not for its own sake. It’s for the sake of our liberty, or ability to choose for ourselves how we lead our lives. The worst that Walmart can do to me is sell me a defective product. However, government can take my house, take my kids from me, garnish my wages, or even throw me in jail. Without due process.
I’ll tell you what: If the people can rein in government and return it to its constitutional boundaries, I will gladly join with you in the fight to eliminate greedy corporations afterwards.
michaelbp,
I’m not really sure what your point is. You’re saying that since we’re operating under a fiat money central banking system, free market capitalism doesn’t exist in a true sense anyway, and therefore free market principles don’t apply here and we should resign ourselves to socialist demagoguery of capitalism?
Free market mechanisms still function, even with a central bank in place. “Greed” and “selfishness” are not something to be eliminated by government intervention in private enterprise, even if the means of exchange used in the marketplace are fiat dollars created and lent by the federal reserve.
Trade is one of the things free people do because we each have things that others want. This is illustrated in “The Economic Organization of a P.O.W. Camp” by R.A. Radford
Economica, November, 1945. http://facstaff.uww.edu/kashianr/POWCampRadford.pdf
Even though the prisoners were not free to leave the camp, they were “free” in the sense that their captors let them engage in trade without interfering.
Some of the observations made by the author are 1) that money comes into existence even when there is no official currency, 2) the fact that people do not want economic equality, and 3) the important role that middlemen play.
Banks evolved over the history of capitalism and are just another part of a free market.
I agree with Mountain Man, that greed is a human failing, part of human nature. The idea that government can coerce people out of their greed and into being good is a Leftist notion that human nature can be changed. And I don’t think Leftists even believe it themselves; they use it as a ploy to get control of wealth; otherwise, why do so many Leftists go to college, get advanced degrees, and become professors with minimum work and high salaries? They should be happy to finish a basic education that permits them to do a minimum wage job for 40 hours a week.
“If incomes are equalized, they will be equalized at a low level.” – Vilfredo Pareto.
sedonaman,
That is precisely what I was trying to convey in post 15 when I said:
…markets are spontaneously created anytime that people need to come together and exchange goods, including where no governments exist, or where government-controlled markets are dysfunctional, like in the former Soviet bloc).
Patrick,
Please read #21 more carefully. I have acknowledged the sort of economy in which we operate. I have not said that free market rules don’t apply (although they do operate in a distorted way); only that their use to argue on behalf of the status quo is damaging to the cause of free market principles. The uninformed continue to attack Capitalism, according to Nancy Morgan. But, of course, the attack is misdirected, and should be aimed at those who have corrupted the capitalist system in this country; i.e., statists in Big Government and their partners in Big Business.
You suggest the following inference:
“…therefore free market principles don’t apply here and we should resign ourselves to socialist demagoguery of capitalism.”
The first half of your statement is partially correct. But I said nothing of resignation, nor is that my conclusion. You haven’t asked, but I am not a fatalist nor do I believe in that kind of resignation. Moreover, I totally agree with your statement that
“‘Greed’ and ‘selfishness’ are not something to be eliminated by government intervention in private enterprise”
No one in his right mind would advocate that those vices can be thus eliminated, nor have I anywhere so claimed. We don’t live in a theocracy (not that theocracies are any better at eliminating vices despite their delusional self-serving claims to the contrary). But certainly destructive behaviours resulting from those vices to the extent that they harm others can and should be controlled. Unfortunately, there is now widespread economic harm created by the behaviors of some. Where possible, they should be held accountable. I include Congress in my short list, through their acquiescence to interests of the Federal Reserve banking system and their complicity with the large mortgaging authorities and securities firms.
“But certainly destructive behaviours resulting from those vices to the extent that they harm others can and should be controlled.”
How exactly?
Sedonaman,
Again,per my comments to Patrick, we keep coming back to the idea of coercing people out of their vices: I have no illusions that it is undesirable and unworkable, nor have I suggested as much. Governments should ideally only coerce the cessation of harm (which, of course, can be motivated by greed).
While I may agree with you that “Banks evolved over the history of capitalism and are just another part of a free market,” I would not agree that the present banking system in this country simply “evolved” like some new biological feature, nor is it an instrinsic aspect of the theoretical “free market.” It was deliberately installed by certain individuals to achieve predominance by their financial interests.
In that context, your POW camp reference is instructive, but hopefully not prescient. This one in particular comes to mind:
http://en.wikipedia.org/wiki/Theresienstadt_concentration_camp
As far as Leftists entering into this and being “happy to finish a basic education that permits them to do a minimum wage job for 40 hours a week,” the characterization sounds rather collectivistic. Would you also suggest that they submit to a program re-education?
“No one in his right mind would advocate that those vices can be thus eliminated, nor have I anywhere so claimed.”
“But the sustainability of that system, however reliant upon competition, also depends upon morally principled behaviour among its participants. In the absence of such restraint, it falls upon the external power of coercion to restore individual rights…”
So, coercion brought to bear on vices is acceptable, but eliminating them is not the goal?
Mountain Man,
Comment:
“But certainly destructive behaviours resulting from those vices to the extent that they harm others can and should be controlled.”
RE:
How exactly?
Depends on the behaviour.
Pick one.
michaelbp:
“Governments should ideally only [sic] coerce the cessation of harm (which, of course, can be motivated by greed).”
Would a politician’s coercing the banking system to engage in heretofore imprudent lending practices for political gain be included in your definition of “greed” on the part of the politician?
“I would not agree that the present banking system in this country simply “evolved” like some new biological feature…”
I don’t normally like to quote wikipedia, but since you did, and it appears to agree with what I’ve read before, I offer this history of fractional reserve banking:
“Prior to the 1800s, savers looking to keep their valuables in safekeeping depositories deposited gold coins and silver coins at goldsmiths, receiving in turn a note for their deposit (see Bank of Amsterdam). Once these notes became a trusted medium of exchange an early form of paper money was born, in the form of the goldsmiths’ notes.
“As the notes were used directly in trade, the goldsmiths observed that people would not usually redeem all their notes at the same time, and they saw the opportunity to invest their coin reserves in interest-bearing loans and bills. This generated income for the goldsmiths but left them with more notes on issue than reserves to pay them with. A process was started that altered the role of the goldsmiths from passive guardians of bullion, charging fees for safe storage, to interest-paying and interest-earning banks. Thus fractional-reserve banking was born.
“However, if creditors (note holders of gold originally deposited) lost faith in the ability of a bank to redeem (pay) their notes, many would try to redeem their notes at the same time. If in response a bank could not raise enough funds by calling in loans or selling bills, it either went into insolvency or defaulted on its notes. Such a situation is called a bank run and caused the demise of many early banks.”
If the above is not an evolutionary process, what is? People [in this example, the goldsmiths] naturally take advantage of economic opportunities. The present banking system in this country is based on fractional reserve; no one created it out of thin air in one swell foop. It evolved. However, like all human inventions, any banking system will have its flaws. Having said that, I agree with your statement that “government should coerce only the cessation of harm.” But as [I think it was] Adams said, “All the armies in the world cannot stop me from committing evil,” and it was religion [not to get off on that topic] that society depended on to fill part of the gap.
“nor is it an instrinsic [sic] aspect of the theoretical ‘free market’.”
Why not?
“…your POW camp reference is instructive, but hopefully not prescient. This one in particular comes to mind:
http://en.wikipedia.org/wiki/Theresienstadt_concentration_camp”
What a concentration camp has to do with a POW camp escapes me, unless some free trade went on there too. I think you missed my whole point of the Radford article. Radford admits that POWs do not engage in the full range of economic activity, However, “Everyone receives a roughly equal share of essentials; it is by trade that individual preferences are given expression and comfort increased.” [You don’t have to read very far; see top of page 190 of the publication] Individual preferences thus create inequality, an inequality desired by the members. Inject a bombastic Leftist into this scene, and it won’t be long before he will be haranguing for “equality”. This is why Pareto is correct; forced egalitarianism results in a lowering of the overall well-being of society.
“As far as Leftists entering into this and being ‘happy to finish a basic education that permits them to do a minimum wage job for 40 hours a week,’ the characterization sounds rather collectivistic. Would you also suggest that they submit to a program re-education?”
Again, you missed the point, which is that Leftists should live according to their own convictions by not bettering themselves. Here is an example of Leftist thought in this area:
“‘All students should be treated equally,’ Latino parents said in a letter to the board and district administrators. ‘We believe that the school should not create differences between students who know more and students who know less.’”
Ref: “GATE-closing plan stirs parental debate at Lincoln Middle School”, by Adam Klawonn, Union-Tribune Staff Writer, May 19, 2005
http://www.signonsandiego.com/news/education/20050519-9999-1mi19vusd.html
Correction of my last:
“‘All students should be treated equally,’ Latino parents said in a letter to the board and district administrators. ‘We believe that the school should not create differences between students who know more and students who know less.’”
Mountain Man,
“So, coercion brought to bear on vices is acceptable, but eliminating them is not the goal?”
Your #32 hits one on the head by focusing on two elements of the discussion at hand, i.e., (1) the ideal purpose of government (collective defense) and (2) individual responsibility.
As an instrument of collective defense, government is authorized to coerce. When behavior occurs that threatens the community served by government, the community can mobilize to defend itself with or without government, but the second option is considered acceptable recourse only where government is proven to be either ineffectual or the source of the threat itself, in which latter case the instrument of coercion becomes whatever force the community summons to overthrow it. As you have pointed out, constitutions exist to limit the actions that the community authorizes government to take. The essential point, however, is that the threatening action occurs which necessitates the collective response, and under such a circumstance the coercion brought to bear upon the threat is indeed acceptable.
My presumption in the foregoing is that such a threat originates in the perpetrator’s vice (although it need not: e.g., the threat posed by a hostile community previously unjustly harmed by the defenders). Once the threat has been removed through the defensive action of the community, coercion has effected the desired result. Has it eliminated the vice that motivated the threat? Perhaps, in the event that the person or persons who threatened the community have been killed. But I see vice as a potentiality that exists in all human beings and which the individual will either empower or restrain, regardless of how worthy the goal may be to eliminate it; and I do not see government/coercion as the legitimate power to displace it, only the force to restrain it where empowered to act.
michaelbp,
You tend to use terms and concepts with just enought twist on them to cause me to contest your ideas.
Coerce: To force to act or think in a certain way by use of pressure, threats, or intimidation.
Government has no authority to coerce. Government only has the authority to enforce the just law of the land. Coercion involves fear, and it is the government that ought to fear its citizens.
Vices are attitudes and behaviors disapproved of by society. Only when the pursuit of vices ventures into the realm of law breaking does government have a role: Prosecution of crime.
So, offensive speech is a vice, but it cannot be illegal. Selfishness is a vice, but government has no authority to act. Lust is a vice, but government must stay out.
The crux of all this is that as more and more people reject self control and indulge in their lesser natures, and government is being called upon to externally come to bear. The failure here is the lack of desire to be self-governed. As a result, government illegitimately rushes in.
Founder John Adams perfectly expresses this: “Our constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”
The purpose of government is to provide self-defense, to be the repository of the legal use of force, which by the way is in retaliation against those who initiate its use. To be activated, an individual must call upon it to act on his or her behalf. Government must be put back in its proper place and must cease being a sanctioned criminal in its manner and method. So, we must commit from this day forward to the principle that taxation is an improper method of funding such proper government services as are involved in providing defense for the country.
And by defense for the country I mean all individuals who abide by the new Law of the Land, which is that no-one, neither an individual nor a group or groups of individuals may initiate the use of force. Civilization is born this day, the day a big enough group of us signs on to be a country of individuals who do not resort to initiating force to achieve their goals in life.
Proper methods of non-coercive funding include registering oneself as having paid protection money. What does each person consider the value to be? This is where Court Insurance could come in, and instead of asking people to vote the core of their being, ask them to describe just one facet of themselves and select which kind of litigant they see themselves as. Are they keen to have a Day in Court, or would they prefer the negotiations and a settlement arranged as quickly as possible?
It is usually more expensive to want a day in court, and such a policy starts at an Insured Sum: $30,000, premium annually $300.
The Negotiator’s Special starts at $500, enough to register a claim, pay for a motion and pay for filing of judgment.
$5.
Ask for $5 for protection money. Multiply that times the number of people capable of earning $5, and you could get a bigger vote turnout than has ever been received before. Any and every one who understands this message is invited to vote to be a member of the First True Civilization on the face of Planet Earth, Milky Way Galaxy, No-Name Brand Solar System.
which is the funds needed to see through a court case on the fastest track possible ($5000). Such a policy requires very little in terms of initial outlay to buy the policy, topped up with penny (one cent) additions to the fund. The number of one cent additions (and tenths of a cent and hundredths, etc. will create money for us when we need it. At the moment, a gold-based economy is where to start while allowing the tangible product of choice by which the value of money is calculated still keeps the idea of tying the value of money to a tangible product that costs time, money and sacks of grain to create new actual physical supplies. Which by the way is why such hard-to-find, lovely metals are useful as money and as holders of great value. Gold, platinum, nickel, copper, and copper rose to be of greater value for electronic applications, thus freaking out some people because now a penny was worth more than a nickel. What ought to happen in such a situation?
Mountain Man,
“Government has no authority to coerce.”
coerce: 1. to restrain or constrain by force, especially by legal authority; curb. 2. to force; compel. 3. to effect by force; enforce. (Webster’s NWD, College ed., 1968).
Possibly the definition has changed since I acquired the dictionary.
But philosophically and by your definition, I agree with you concerning the government’s lack of authority. Unfortunately, and in practical terms, the authority has indeed been conveyed to government to coerce (my definition), whether through legal intimidation or force of arms.
“Vices are attitudes and behaviors disapproved of by society.”
vice: 1. a serious fault of character; grave moral failing; 2. evil or wicked conduct; corruption; depravity. 3. a particular immoral, depraved, or degrading habit.
Society’s disapproval is not the sole requisite for identifying grave moral failings. Society’s standards for moral behaviour cannot rely upon society itself as the yardstick by which to measure moral progress.
“Only when the pursuit of vices ventures into the realm of law breaking does government have a role: Prosecution of crime.”
On this we can both agree, so long as we concur that that a vice is not also an illegal conduct. In my use of the term “vice” I have relied upon its character aspect as potential or motivator.
“The crux of all this is that as more and more people reject self control and indulge in their lesser natures, and government is being called upon to externally come to bear.”
Historically we can see this as a phenomenon with recurring rendition, can’t we? The issue then becomes to what extent government is authorized to intervene when the indulgence in lesser natures pervades society and it sinks to a nadir of depravity.
I appreciate your clarity and welcome your challenges.
“Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it, but downright force: Whenever you give up that force, you are inevitably ruined.” — Patrick Henry, Speech before the Virginia Ratifying Convention, 05 June 1788
Coercion, in political terms, has a different meaning than the dictionary. The social compact (in the case of the US, the Constitutional basis of government built on the principles embodied in the Declaration of Independence) cedes certain authority to the government to “compel” behavior in the common good. Setting speed limits is one example. A tax code is another.
The word coercion itself carries another meaning, namely “force”. Criminals convicted under the law are coerced/forced into prison sentences, as one example. This does not mean that people are picked up off the streets and forced into prison, but again relates to the social compact that allows for certain public laws, arrived at through a Constitutional process, to restrict or compel individual behavior. Again, this is different imagery than the police breaking into your house without a warrant and confiscating your property without a court order. It’s why we have the 4th amendment.
Using the word “coercion” in a political discussion to imply simple force without placing it in the proper political and historical context is simply playing games with words.
Phil,
You are quite right. Michaelbp has been subtly redefining terms in such a way as to make things take on different meanings.
Coercion is a term that really should never be applied to government except to describe a government that is engaged in tyranny. Like ours right now.
Sedonaman,
“Would a politician’s coercing the banking system to engage in heretofore imprudent lending practices for political gain be included in your definition of ‘greed’ on the part of the politician?”
Certainly there would be greed involved on the part of the politician where he perceives the prospect for profit from his coercion. I believe someone elsewhere on this site has enumerated the political contributions collected by various politicians to act on behalf of FannieMae. We should appreciate those politicians’ stupidity in accepting the bribes and posting them so that we can follow the trail of influence.
“If the above is not an evolutionary process, what is?”
The reference you cite (re the banking system) may indeed describe an evolutionary process. But what I refer to in my comment (#31) is the present system, which includes the Federal Reserve, and which I prefer to consider an engineered coup on the part of financial interests wishing to control the government. The “evolution” of such a feature imposed on the system is a fatal flaw.
“’nor is it an intrinsic [sic] aspect of the theoretical ‘”free market.”’’
Why not?”
The present banking system is intrinsic (sorry for the previous typos) only in the sense of its operation within the framework of explicit legal charters as a historical development; it is not intrinsic to the operation of a theoretical free market, unless one considers the current state of affairs in America as one such “free market.” I personally do not, and therefore would refrain from describing it as such.
The point of my reference to Theresienstadt was its role as a facade, a deliberate hoax upon those from whom the jailers wished to receive favorable reviews in order to perpetrate their fraud upon a wider audience. Interestingly, even at that camp, pursuit of economic activity on the part of captives took place although the officially sanctioned, printed, and circulated dole currency of “crown notes” was eventually consigned by inmates scheduled shortly for incineration to the role of card game counters.
“Inject a bombastic Leftist into this scene, and it won’t be long before he will be haranguing for ‘equality.’”
Bombastic leftists are annoying. On the other hand, publicly agitating in order to call attention to social defects has never been considered a hallmark of conservatism, although conservatives may indeed have been instrumental, historically speaking, in implementing measures to correct those defects in various ways. British sympathizers with French liberty (a cause whose historical progress and eventual outcomes have become the archetype for leftist ideology run amuck) who at the time spoke out on behalf of greater liberties for their own countrymen (and who eventually did so at their lives’ peril) did not fail to take notice of the extremes of ostentation and poverty residing concomitantly in rapidly industrializing England. Notwithstanding their incomprehension of where the path would eventually lead in France and their own gradual disillusionment with that cause, many of the societal reforms, which they advocated, were indeed adopted over time. The point is, there’s no need to be generally dogmatic about “left or right” as though it were a religious conflict.
Your reference to the situation at the Vista middle school doesn’t typify leftists as much as it exemplifies illiteracy and stupidity. Take the quote down one notch intellectually and it translates: “We no want other no other stoopids not like us.” Sheesh. As personal observation, having some firsthand knowledge of ethnically mixed public classroom experiences, it is always interesting to note the diversity of expectations which shows up, both on the part of parents as well as the students, even among the first generation immigrant non-English speaking students. Some truly strive and excel at astonishing speed, some struggle persistently yet eventually overcome the obstacles, while others choose to simply languish until the rude awakening.
Philip, you are making excuses for the use of coercion by government against its own citizens to achieve some alleged good. There is no real difference “in political terms” from what is in the dictionary. Confiscatory taxation and expropriation of land and assets are both examples of the taking of property “by law”, where one’s consent is not required. It is immaterial whether you are in favor of them taking that property – they do so anyway. I thought the point here was to figure out why the system is such a mess. This is why: the government has sanctioned itself and been sanctioned “by the people” to act just like a criminal. This is what needs to change if there is to be real peace & prosperity. End of.
Mountain Man,
Reports of my subtlety have been greatly exaggerated.
Phil,
“Using the word “coercion” in a political discussion to imply simple force without placing it in the proper political and historical context is simply playing games with words.”
Perhaps one can simply play games with words yet still place them in the proper historical context. Would that we might always aspire to find the true subtlety in our own distinctions.
Trivialities and subtleties . . .
Thank you for your elucidation regarding historical and
. . . political contexts.
michalbp: as has your scholarship.
AMAI: Laws passed in accordance with the rules established by the social compact are not “coercion” in a dictionary sense of the word, no matter how strongly one opposes them.
There is room to debate whether a law is constitutional or not, whether taxes are confiscatory or not, etc. This is what the political process is all about. But using popular slang to describe what the government does as “coercion” does not further the debate. Rather, it plunges the entire discussion into a battle of simple opinions.
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