Protests Against Capitalism Often Fail to Understand It
Today I was referred to an article in The Times (London) by Matt Ridley titled “Yes, capitalism failed. It’s just too cosy.” What Ridley was criticizing is the “crony capitalism” that reflects our current economic systems in the US and Europe. The Solyndra failure and the housing bubble are archetypical examples of the failure of crony capitalism, where politics and capital investment are too cozy.
Matt Ridley, like many neo-classical economists reminds us that this is not the economics of Adam Smith who was for a free market. Ridley concludes by stating that “capitalism represents the interests of the rich, whereas the market represents the interests of the poor.”
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The culture war in the United States can be compared to one big labor dispute between employers and workers. When the 20th Century began, the United States was in the middle of a great growth of industry, and there were many industrial labor disputes. These disputes occurred in the private sector, between capital and labor. These disputes were settled by governors and courts and eventually legislation was passed that legalized private unions and placed limits on the use of power of both parties, so that labor disputes could be settled peacefully. Government served its proper role of creating rule of law and serving as a referee.
Today the situation has changed. The big labor dispute is between government unions and taxpayers. They battle it out between political parties that represent factions, with Democrats shouting “the rich need to pay their fair share,” and the Republicans repeating the phrase “no new taxes.” If a member of either party gets elected as a governor or president, he (she) is expected to represent the partisan position of the party that elected them. In no case will the government get a leader in the position to settle the dispute, one that sees both the vices and virtues of both sides. We have to ask, “Where is the referee?”
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The corruption in US regulatory agencies has reached a new milestone as the FDA gave URL Pharma the sole right to sell Colcrys (colchicine), a drug used to treat gout for thousands of years. Now the price of the drug has increased from $34.83 for 60 tablets to $306.86 for 60 tablets. This problem, exposed by CBS 60 Minutes, exemplifies the ever more urgent need for US regulatory agency reform that I wrote about in April 2010. We are heading down a road that can lead the FDA to authorize one company to sell all drinking water.
This blatant conflict of interest between a corporation and the agency supposed to regulate it has turned the FDA into a pipeline for favors to friends that turns US citizens into their unwitting slaves. Ending such conflicts of interest created by regulatory agencies can greatly reduce the cost of health care in the United States, in this case nearly 10 times. Ironically, many of the proposed “solutions” provided in Obamacare rely on creating similar agencies lacking proper checks and balances that will only increase prices and divide the spoils of such a corrupt system among a few more foxes. Continue reading →
Its easy for politicians to believe promises of lobbyists.
When a referee of a football game starts choosing sides he gets fired, and Washington’s attempt to become a player rather than a referee in the U.S. economy should cause the same outrage as we would see against a football referee choosing sides. The Solyndra scandal shows how easy it is for governments to back the wrong horse when attempting to become a player, wasting millions of taxpayer dollars and creating unviable jobs when market forces are defied. The entry of the government into the rental market after it foolishly backed private home mortgages is another example of government destruction of the economy when it becomes a player.
The proper role of government vis-a-vis the economy is that of referee, not a player. Government, by its very nature, creates and enforces rule of law. The basic principle underlying governance is power. However, the basic principle that underlies an economy is the market. A market is governed by the principles of production and exchange. These are not the principles that drive a government.
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A Radical Overhaul of Welfare
Growing Vegetables on a Modern Collective Farm
This article proposes the radical overhaul of government welfare in the United States to solve many social ills the present system creates. Instead of cash payouts and food stamps that cause social dependency, despondency, and ghettos where the poor are jammed together in cities, it is proposed that the government provide a social safety net through living on collective farms. This is a type of communism, but not communism for the entire population, only the welfare class. While providing a safety net, it would put people in a constructive setting where they could work for their sustenance or be cared for largely by others who are not employed by the private economy.
This type of system would be a modern version of the Babylonian system of temple welfare that lasted over 1,000 years and was discussed on this blog on August 16. It would dramatically reduce taxes and crime, and provide self-esteem and personal life skills necessary for employment in the private economy. It would provide a path for those who wanted to join the private economy in a productive capacity. These collective farms could both produce healthy organically-grown fruits, vegetables, and eggs and provide places for social security and long-term care for those too old or ill to work who had not adequately saved or have family who can care for them. They could be modern facilities.
This system is not a foreign concept in the United States, in fact this pretty much describes the social function of the Shaker communities that were often places of refuge for the unemployed and widowed in 19th century New England. The Shakers not only cared for their members without state funds, but were also known for their fine hand-crafted furniture. In ancient Babylon the temples may have taught basket weaving and pottery skills and earned some income from the sale of such items.
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The term extremist is used to incite fear
We hear the words “extreme” and “extremist” used constantly in political discourse in the media. This word is used like swear words when people want to vent an emotional release but are unable to provide rational descriptions of what they are referring to.
He told the group to make sure they label the GOP spending cuts as “extreme.” “I always use extreme,” Schumer said. “That is what the caucus instructed me to use.”—Washington Examiner
“Extremist” is a deprecatory word to slur a political opponent, but it carries no content, only an emphasis. It does not paint an accurate description of what an opponent may think; it is not a term that can be used in scientific research; and, it is a term used to blindly scare the reader or listener away from an opponent without cause. It is a term used by liberals and conservatives alike. You might hear people say “left-wing extremist” or “right-wing extremist” when running a negative campaign against the opposing party. Continue reading →
Hilaire Belloc is considered a distributist
Distributism is a term commonly associated with Catholic economic theory. It seeks economic justice by promoting the widest distribution of property to the largest number of people possible. Distributism also relates to the principle of subsidiarity, which means the greatest responsibility to the lowest possible level of society. Distributism seeks to provide everyone with the means of shaping their own welfare and economic destiny.
Distributism is a form of Economic Justice the Opposite of Concentration of Wealth and Redistribution
Distributism, in its widest sense, could also apply to government and to knowledge. With respect to government, it would mean that political power is distributed widely throughout the society. The US founders championed this principle and established a constitution for the purpose of distributing and protecting the distribution of political power to all citizens. With respect to knowledge, this would mean that knowledge is distributed widely. The principle of transparency, widespread education of children, and access to knowledge through publications, books, or the internet is important for the distribution of knowledge. Distribution of power, wealth, and knowledge are all important for underpinning a republican form of democracy.
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The Women's Suffrage Movement. Will the internet provide new enfranchisement of voters?
The End of Politics as Usual
US political parties have controlled Washington politics for a long time. But with the passage of the Wall Street bailout and Obamacare they are seen to increasingly bankrupt the country at the expense of the citizens. The rise of the Tea Party was the first widescale sign of citizen distaste for the agendas of special interests being promoted by the Republican and Democratic political parties. Republican presidential candidates Michelle Bachmann and Ron Paul catapulted themselves to the top of Iowa straw poll by identifying with Tea Party concerns. Now we have another option: internet candidates.
Americans have been waiting a long time for a way to get around party politics. George Washington lamented the formation of political parties in his Farewell Address. In Life, Liberty, and the Pursuit of Happiness, Version 4.0, I traced the history of legal reforms that have allowed special interests to control Washington through the political parties and constitutional amendments. Now the internet, which has been a great equalizer by bringing a vast array of knowledge to citizens’ fingertips, is being seen as a method of going around the party system by getting large numbers of internet “signatures” for non-party candidates to go on the ballot.
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A portrayal of welfare as the Road to Hell
Welfare is an important topic that has become divisive in Western politics. In the name of compassion, liberals are supporting the need for social welfare. However, many of the welfare programs they have created have encouraged social dependency and family breakdown, undermining the long-term sustainability of society. Conservatives have reacted with attempts to defund these programs, but they often sound harsh and uncompassionate when they advocate leaving the problems to voluntarism.
In the nineteenth century, before the development of public poor houses and welfare programs, many people who were unchurched received no help from the churches. Immigrants flooding through Ellis Island and concentrating in poor ethnic neighborhoods were too large in number for the churches in established communities to care for. Social compassion demanded that something be done to help these people in need.The problem is that a system developed that became a road to hell paved with good intentions.
The real question is how to provide welfare in a way that promotes growth and maturity of the recipients rather than social dependency. When the government pays women to have out-of-wedlock children, you get more out-of-wedlock children. Statistically, these children enter the world with less opportunity for success. When you provide subsidized food and housing adequate for a subsistence lifestyle, you get more people living a subsistence lifestyle, and the government buys a growing underclass that costs more to support each year. If you pay bureaucrats based on the headcount of the number of people in a welfare program, you motivate them to keep more people on welfare. These are perverse incentives structured into programs rooted originally in compassion: it is just poorly directed compassion, the type that paves a road to hell with good intentions.
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