By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.
Simulposted at The Distributist Review
This is the fifth installment of a six-part interview. For the previous parts, see Part 1, Part 2, Part 3, and Part 4. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”
ANDREW: In the last interview, you told us how GLOs in the Middle Ages were noblemen, publicly recognized as being a cut above the ordinary person. Have the rich people and corporate leaders of today also risen to the top by being natural leaders?
CODE NAME CAIN: No. Rich men still exist today, but more frequently than not they owe their fortune… directly or indirectly to the state. Hence they are often more dependent on the state’s continued favors than people of far lesser wealth… Their conduct is not marked by special virtue, dignity, or taste but is a reflection of the… proletarian mass culture of present-orientedness, opportunism, and hedonism. [73-74]
ANDREW: How did this happen?
CNC: Unfortunately, democracy has succeeded… in the ultimate destruction of the natural elites. The fortunes of great families have dissipated, and their tradition of culture and economic independence, intellectual farsightedness, and moral and spiritual leadership has been forgotten. [73]
ANDREW: It’s the fault of democracy? The noble families themselves bear no responsibility for their decadence?
CNC: Maybe the noble families should have tried harder to resist democracy, but yes – Hans-Hermann Hoppe proves in his book that democratic government always leads to welfare state socialism. The United States of today is a case in point.
ANDREW: Libertarians are in general very critical of modern democracies. Still, many think that a legitimate government could exist, provided that it is very small and only does things that libertarians think are good.
CNC: Ayn Rand, Robert Nozick, Milton Friedman, and even the sellouts at the Cato Institute have all worked hard to defend the rights of producers. However, they naïvely imagine that democratic government can be tamed: transformed into a reliable machine that will safeguard property and contracts without getting other ideas about its proper role in society.
ANDREW: Are you sure that they are wrong?
CNC: Completely sure. As I just told you, the destructive nature of government is a theorem, proven by applying the rules of elementary logic.
ANDREW: Can you explain the theorem to us?
CNC: The proof is best explained using the concept of “time preference” from Austrian economics. Draw a downward-sloping time preference curve for a given individual in the beginning of humanity…
ANDREW: Even though you might find a technical approach more elegant, you will reach a bigger audience if you explain the idea in ordinary language.
CNC: Some precision will of course be lost, but I can try… The idea is simple, yet profound. Begin by assuming that a government official is rational, and therefore acts in order to use the government apparatus to his personal advantage… [Since] he does not own [the government]… [h]e cannot sell government resources and privately pocket the receipts from such sales, nor can he pass government possessions to his personal heir… [Consequently, a] president… will use up as much of the government resources as quickly as possible, for what he does not consume now, he may never be able to consume. [24]
ANDREW: Past presidents like George W. Bush and Bill Clinton are millionaires. If your theory was correct, they would have plundered so much of the country’s resources that they would be richer – more like billionaires.
CNC: Ahh… That’s what I thought when I first read Hans-Hermann Hoppe’s book. But you see, Dr. Hoppe thinks at the level of abstract theory. You have to understand how to apply his categories to the real world.
Although Dr. Hoppe uses “president” as an example of a government official, there are many government officials, and they are all trying to plunder the government. What is more, there are official government officials, and there are also unofficial government officials, like lobbyists and campaign contributors and the presidents of too-big-to-fail (i.e. government-sponsored) banks. The plunder tally is too small if you don’t count the booty of both official and unofficial government officials.
ANDREW: Is this just your interpretation, or is it Dr. Hoppe’s, too?
CNC: Well, he could maybe have been a little clearer. But he definitely understands. For instance, he points out that it is not likely that dullards, even if they make up the majority, will systematically outsmart and enrich themselves at the expense of a minority of bright and energetic individuals… frequently it will actually be the better-off who succeed in being subsidized by the worse-off. [97] In other words, he agrees that welfare states mainly end up subsidizing “unofficial government officials.”
ANDREW: I see. Anyway, you were explaining why you think other libertarians are chasing a mirage when they strive for a government that is as small as possible…
CNC: Right. As I was saying, Dr. Hoppe’s theory is strikingly accurate. Even professors from the mainstream like Tom Ferguson and Simon Johnson admit that Dr. Hoppe is right and that U.S. government decisions are, in reality, made by lobbyists and large campaign contributors. There is also broad agreement that any given unofficial government official is not sure when “the party” will be over for the interests he represents, and so he tries to plunder as much as possible now, with no thought for the future.
Now let’s take those pro-government libertarians I just mentioned. They know that the masses are not intelligent, they know that democracy is just a theater where the unofficial government officials use coercion to steal from productive people – and then they forget it all and mindlessly accept and repeat nonsense such as that democracy is self-rule and government is of, by, and for the people [92]. They foolishly think that they can use the democratic process to redirect the unofficial government officials! Or that they can persuade the unofficial government officials to give up the benefits of lobbying and move toward a free society!!
ANDREW: So you’re saying that lobbyists run the government, the corporations they represent don’t want a libertarian-style small government – so it won’t happen.
CNC: Exactly.
ANDREW: I’d like to prove a theorem, too. Can I try?
CNC: Sure – but keep in mind that it takes a lot of practice to reason correctly about economic affairs.
ANDREW: I’ll never learn unless I try… Begin by assuming that CEOs are rational, and therefore act in order to use the corporate apparatus for their personal advantage. Since they don’t own the corporation, their incentive is to use up the corporation’s resources as quickly as possible – what they don’t consume now, they might never be able to consume.
CNC: Your amateurism is showing. The behavior you describe is impossible, since stockholders only allow a CEO to run a corporation if they are confident that the CEO will act in their best interests.
ANDREW: I thought there was lots of evidence that CEOs have been extracting much larger payments from their corporations than in the past. Are you sure you aren’t mindlessly accepting the myth that corporate governance is of, by, and for the stockholders?
CNC: Sophistry.
ANDREW: But think of how well your theory generalizes from democratic governments to GLOs! For example, bank traders at European banks like UBS deliberately bought lots of risky securities so that they could manipulate their own accounting rules and get paid large bonuses. We could call the traders “unofficial corporate officials” who cooperated with the official corporate officials in consuming the banks’ resources.
CNC: If this was really happening, then stockholders would have stopped investing in the bank in question. Unless, of course, there was government interference. That’s why it’s so important to concentrate on the flaws of democratic government.
ANDREW: Hmm… If you and Dr. Hoppe think that the problem with democracy is that government decisions are bought and sold with money, why don’t you try to fix the democracy so that it is less about money and lobbyists?
CNC: Try to stop productive people from influencing elections using their money? That’s a terrible idea – it means stifling individuals and organizations with large sums of money. It means suppressing their views about politics.
ANDREW: Is it that you want everyone to be able to express their views about politics, or is it particularly important for some people to do so?
CNC: The latter, of course. [I]magine that… the right to vote were expanded to seven year olds. [The resulting government’s] policies would most definitely reflect the “legitimate concerns” of children to have “adequate” and “equal” access to “free” french fries, lemonade, and videos. [95] Similarly, if we had democratic decision-making on a global scale, the government would probably find that the so-called Western world had far too much wealth… With these “thought experiments” in mind, there can be no doubt about [95] the negative consequences of “one-person, one-vote.”
ANDREW: So the problem is that the wrong people will end up voting. But what if only the right people vote? Would you support turning the U.S. into a dictatorship ruled by the Chamber of Commerce? Or if you prefer, you could put Grover Norquist and Americans for Tax Reform in the top spot.
CNC: The result would certainly be more farsighted, future-oriented decisions than we have today… However, you have forgotten that libertarians do not make compromises when defending liberty. My principles would compel me to oppose a government of the sort you describe, no matter how economically sensible its policies might be.
And to set the record straight, I am confident that Grover shares my idealism.
ANDREW: Since you think the role of money in democracy should not change, that must mean that you accept lobbying as a necessary evil linked to the existence of a government.
CNC: There are certain dark realities that we have to deal with while living in an unfree society.
ANDREW: Do you lobby governments?
CNC: Personally, I wish only to work, produce, and enjoy the fruits of [my] labor. However, if politics… is permitted, even [people like me are]… affected. In order to defend themselves against attacks on their liberty and property by those who have fewer moral scruples, even… honest, hardworking people must become become “political animals” and spend more and more time and energy developing their political skills. [275-276]
ANDREW: You are sometimes forced to engage in lobbying.
CNC: Yes. For example, the current meme in the investment community is that the combination of climate change and population growth will make it almost impossible to have enough food for the world by the year 2050. Farmland is soaring in price.
My hedge fund discovered uncultivated land in the African country of ***. The land did not belong to anyone, and so we tried to buy it from the relevant government. Outrageously, certain officials from *** insisted on…
ANDREW: Bribes?
CNC: … arrangements before they would agree to sell the land at a fair price.
ANDREW: Was this farmland unoccupied?
CNC: No one owned the land before we bought it.
ANDREW: But was someone living there?
CNC: There were some local tribesmen who claimed that they had a vague traditional “right” to the land. Decisive action was necessary before they stopped squatting on our land.
ANDREW: Involving trucks of men carrying machine guns…. Has it ever occurred to you that this success for your hedge fund was achieved at the cost a lot of real coercion of real people?
CNC: It has occurred to me – an unruly band of people aggressively trespassed on my land. My rights were violated and I was forced to make a substantial financial sacrifice in order to defend myself from coercion.
ANDREW: It must have been terrible… One thing that I have been wondering about – it sounds like you do not have much respect for many GLOs of today. You believe that few of them are led by productive geniuses – instead, many business leaders are instead disreputable people who lobby governments and owe their fortunes to the State.
CNC: I criticize immoral behavior whether the perpetrators are government officials or businessmen. If CEOs spend their time lobbying and being political entrepreneurs, that is bad. You need to remember that …competition is not always good. Competition in the production of goods is good, but competition in the production of bads is not. [275] As a result of “open political competition” the entire character structure of society [becomes] distorted, and more and more bad characters [rise] to the top. [275]
ANDREW: But then why are you trying to help these people dominate the world of the future?
CNC: You ask an interesting question. It’s true that a lot of current GLOs are actually looters and moochers. But trying to sort out which GLOs are legitimate and which are illegitimate would be complicated and ultimately impossible – and so why not create a society in which at least some of the GLOs in charge will be people who have earned their wealth by engaging in productive activities?
ANDREW: People like you?
CNC: Yes, like me.
In the concluding part of this interview, Code Name Cain tries to delve deep into the cognitive biases that prevent his interviewer from having a mature understanding of libertarian principles.
Note:
“bank traders at European banks like UBS deliberately bought lots of risky securities”
Yves Smith’s ECONNED, Chapter 9
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Dwight Schrute for (Assistant to the) President!
“With these “thought experiments” in mind, there can be no doubt about [95] the negative consequences of “one-person, one-vote.”
Very clever. The value word negative is presented as though it was objective. Just ask the simple question – negative for whom?
“Their conduct is not marked by special virtue, dignity, or taste but is a reflection of the… proletarian mass culture of present-orientedness, opportunism, and hedonism.”
Hoppe really was a nasty snob, wasn’t he.
Correction: Hoppe ‘is’ a nasty snob. Dude is still alive.
I’d go one further. I think he’s completely over-the-moon. I mean clinically insane.
Yes,
I sort of thought he must have been guillotined by now, but Wikipedia told me otherwise.
I’d say Hoppe lives in a hopelessly romantic, nostalgic mish mash of Euro royal/aristocratic obsession.
There is a type of personality that does this. He is unusual that he has managed to also conflate this with some sort of academic career.
The fetish probably arose while simultaneously studying Plato and falling in love with his teacher.
Boy’s just looking for that Philosopher King.
He’s a James Bond villain in the making, and one of the ones from the older movies like Doctor No or Ernst Stavros Blofeld.
In my experience, libertarians always try to claim the high moral ground by claiming that they adhere to the principle of non-initiation of force. That is, they will only use force in self defence. This sounds really good and if everyone abided by such a principle, society would indeed be a nicer place.
However, as I discovered in practice, this just means that libertarians spend a lot of time and ingenuity in coming up with ways of defining other people’s actions as somehow constituting the initiation of force to which they are only responding in defence of themselves and their rights. I know CNC is only a fictional libertarian, but I think Andrew Dittmer has caught this style of thinking very well with the example of CNC having to make a substantial financial sacrifice in order to defend themself from coercion.
See, the violence is always someone else’s fault.
I also like the way this installment captured the libertarian notion that it’s only bad when the government does it. Doesn’t matter what it is, if a government official or department does it, it’s bad; if a private individual or private company does it, it’s good.
I don’t know if CNC is up to answering questions, but in the early parts of this series it was explained how insurance/security companies would exile criminals to areas such as the Poles or the Sahara Desert, but it was never explained how it would be determined who was or was not a criminal.
I assume people who violate contracts would be criminals, but what if the two parties to a contract have legitimately differing interpretations as to what a portion of the contract means? One party may well believe that they have lived up to all the obligations, while the other believes they are in default. What happens then?
Also, I assume, criminals would be defined as those who initiate the use of force, but what happens when one party argues that they are simply responding to some apparently non-aggressive action of the other party which they have defined coercion or as the initiation of force. Continuing to live on land they have always lived on, for example? What then?
I genuinely curious as to how this libertarian society would handle such questions and who would decide. Or would all these things just be mandated by the Terms-of-Service issued and periodically up-dated by the insurance/security company – kind of like the way that software companies currently work. And wouldn’t such entities have an economic motive to define “criminal” as simply any action of behaviour which requires them to expend resources they would rather not expend? How would that be prevented and/or ameliorated?
However, as I discovered in practice, this just means that libertarians spend a lot of time and ingenuity in coming up with ways of defining other people’s actions as somehow constituting the initiation of force…
It’s even worse. Non-action I.E. less-that-optimal utilization is grounds for agression.
I hate to point people to such a place, but mises.org has answers to your questions. They are not logical or workable answers… they are libertarian answers.
According to itself, Rome never engaged in a war of aggression.
I wish I could remember where, but I recall reading in one of the Roman historians works about a ceremony which the Romans performed whenever their armies crossed a border to invade a country. They complained in a symbolic way about the bad behavior of people they were about to invade and about their misbehavior. They also invited the invaded ones to negotiate a settlement. Often, noone was actually on the other side, but that did not matter. The lack of negatiations was a sufficient reason to continue with the invasion. (It might be Suetonius, but I can’t find it now. It’s in a history of the early Roman Republic.)
Better yet, what happens when someone destroys a common resource? How do you stop fishers from completely ruining fisheries? Many species have been hunted to extinction in a completely voluntary, rights-respecting manner. Who can I petition if the bluefin tuna goes extinct?
Or say a company pollutes the river I live next to. I have no particular contract with this company, so I have no form of redress. Will my insurance company step in and do something, assuming I bought “polluted river” insurance? They can simply deny a claim since it’s not in their interest to pay out. They could “test” the water and say it’s fine. What would they do about it, anyways, even if they wanted to? Shoot the owner of the company? What if he has a better, badder insurance company?
Absurd nonsense.
Absurd nonsense. ScottS
True. I spent years trying to develop a consistent libertarian viewpoint. I finally gave up.
I finally decided that if the NEED for government could be reduced then the government would shrink to its proper size and scope.
And what has caused the need for so much government?
ans: Banking, particularly government backed banking.
Banking is not the only culprit. Every business that makes a profit by externalizing pollution should be on the list.
As ScottS correctly notes, GLOs aren’t in business to protect the commons. They’re in business to exploit it for maximum (short-term) profit.
Banking is not the only culprit. Justicia
Banking is the root of very much evil.
Every business that makes a profit by externalizing pollution should be on the list. Justicia
Without the counterfeiting cartel to borrow from, it is likely that the corporations would be broadly owned and thus far more accountable to the population.
I’ve aften said that if we eliminated the limited liability structure of corporations, we could have a much smaller government.
Who do you need to police more, a person who only has to pay the money they have already put into a corporation, or a person who you can hold completely liably for whatevr damages they cause to you.
Suddenly, most libertarians lose thier principles, and argue for ‘limited liability’ for capital.
So you see, government provided risk management for working people is called ‘socialism’, but goverment risk management for business owners is called ‘capitalism’.
I was forced to defend my 401K by lynching the investment bankers who caused the Great Meltdown of 2008. This was very expensive, so I am forced to sue their estates for compensation.
Just look at what they made me do!
Kukulkan: “insurance/security companies would exile criminals to areas such as the Poles or the Sahara Desert, but it was never explained how it would be determined who was or was not a criminal.”
It was never explained how the people at the Poles or in the Sahara Desert would countenance being left with all this human detritus. Until today’s instalment. Clearly they are nomadic tribes with no title to the land in question, which henceforth becomes the property of the Gulag Management Corporation.
“… adhere to the principle of non-initiation of force. ”
This can’t possible work. Sometimes self-defence has to be pre-emptive. You can’t possibly defend yourself by waiting until the other person shoots first. And (more relevantly) we can’t protect ourself ourself against the air we breath being poisoned, by suing after we’ve been poisoned.
What is this I don’t even
finish my sentences?
Try to stop productive people from influencing elections using their money? That’s a terrible idea – it means stifling individuals and organizations with large sums of money. It means suppressing their views about politics. CNC
But Mr. CNC,
That money was largely acquired unethically via the banking system which any true libertarian knows is a government backed and enforced counterfeiting cartel.
So why should ill-gotten money have a say?
Hmm?
– and so why not create a society in which at least some of the GLOs in charge will be people who have earned their wealth by engaging in productive activities? CNC
By using stolen purchasing power?
As I endlessly point out, the Federal Government in the US was very small UNTIL the Fed was established in 1914.
Beard,
You gloss over so much history in that sentence, I know not where to start. So I’ll try to keep it simple here. Policy trumps_size_… any day. Just look at the far right wing, a small demographic that operates far beyond its size would suggest.
Also the population to government ratio, the complexity of the modern world, etc, must be pointed out.
Skippy…lobotomytarians are not even free in their own minds….shezzzz. When will the dark ages end????
“You gloss over so much history in that sentence, I know not where to start.”
The Great Depression and WWII, maybe? It was then that the US federal government grew very large.
You can almost see the growth spurts by tracking how much the federal government was spending:
http://3.bp.blogspot.com/_H2DePAZe2gA/SukRQd5O2gI/AAAAAAAAKJ8/KPWKFvvBbJY/s400/us-federal-debt-chart.gif
Yep, the Great Depression (caused by the Fed) and WWII (caused by the Great Depression) were major causes for the growth of the US Federal Government.
Also US entrance into WWI which itself was a major cause of WWII was financed by the Fed.
Wow. That is one reductionist historiography!
Ben Bernanke admitted the Fed was the cause of the Great Depression. As for the causes of WWII:
The main causes of World War II were nationalistic tensions, unresolved issues, and resentments resulting from the World War I and the interwar period in Europe, plus the effects of the Great Depression in the 1930s. from http://en.wikipedia.org/wiki/Causes_of_World_War_II [bold added]
Incredible, is it, that a system based on counterfeiting, usury, government privileges and secrecy should be so troublesome?
F.Beard: Read Guido. He says the great depression was caused by Montagu Norman. And everybody knows that WWII was caused by the jimmying around of the Versailles Treaty. The US wasn’t the major instigator of WWII. But it was the major beneficiary.
Your thinking needs a shave; I suggest Occam’s Razor.
And unlike CNC, I am not calling for eliminating the socialist aspects of the US Government since that would hurt the poor. I am calling for eliminating the fascist aspects of the US Government so the need for government will “wither away” over time.
Got a problem with that?
F.Beard: But the fascist eliminating aspects of the US government do need to be created and maintained in good repair, in perpetuity.
We need a Constitutional Amendment separating government and banking and private money creation. The government has no need for banks and as for the private sector, some, the so-called “credit-worthy”, should not be allowed to steal purchasing power from everyone else.
THREE PHASES OF HUMAN DEVELOPMENT
Cogent reasoning but it fails to account for three very distinct “phases” in the development of mankind based upon significant paradigm-shifts; namely the present and last two.
For thousands of years, the Agricultural Age dominated our existence on earth. The principle of labor-specialization allowed a (non-nomadic) sedentary people to develop an excess in production of crops – which they exchanged for artisan manufactured goods that bettered their lives.
The political regime was aristocratic and monarchic by Divine Right. European – and later American history – is noteworthy for its agglomeration of land, which was the primary element for producing wealth, both agricultural and mineral. Starting first with the expansion of Rome, the second millennium was characterized by the land-lord battling to seize and occupy land, then allowed vassals to farm it in return for his protection, which was necessary.
The advent of the Industrial Age ended that phase, where Marx’s observations had led him to pronounce the exploitation of the proletariat by the land-owners. (And therefore conceive of the axiom that all the means of production must belong to the state.) The Industrial Age and its technological innovation largely extended mankind’s ability to build higher content-level products.
The fact that people left the land to find better paying jobs in industrial cities also created mass-production for mass-marketing of consumer products to the masses. The expansion of the Industrial Age thus brought about the Robber Barons who were the first to influence politics in America. The rise of socialism in Europe produced an effect that was smothered and crushed by police-action (encouraged and financed by vested-interests) in the US.
The two economic entities, the US and Europe, thus developed on intrinsically different political paths.
America has yet to become a Social Democracy, where government policy and legislation intend to maximize the well-being of its citizens. Our society (and thus economy) remains fixated upon profit and therefore the accumulation of income into wealth. (Whereby the “1-percenters”.)
However, we are exiting the Industrial Age as we transit paradigms to the Information Age. If Americans do not correct the imbalance of Income Unfairness by taxing the exaggerated riches that are being generated, it could very well revert to the highly segregated class-ridden societies of Europe prior to the 20th century.
There is no hedonism amongst the abject poor. There is, however, crime and delinquency as many of that class try to obtain – however they can – the means to emulate a middle-class existence. It would be far more effective (and far cheaper when one considers the Cost of Crime) if we afforded better this class the means to take the escalator to a middle-class existence. Which, for them, largely means the ability to obtain by means of a decent education the skills/competencies that lead to decent jobs and decent salaries.
“Which, for them, largely means the ability to obtain by means of a decent education the skills/competencies that lead to decent jobs and decent salaries.”
Yeah, it’s magic. (Hence, I guess, the otherwise inexplicable popularity of Harry Potter).
” …if we afforded better this class the means to take the escalator to a middle-class existence. Which, for them, largely means the ability to obtain by means of a decent education the skills/competencies that lead to decent jobs and decent salaries.”
Pay anyone otherwise not employed a livable wage to educate themselves.
Lafayette: “For thousands of years, the Agricultural Age dominated our existence on earth. The principle of labor-specialization allowed a (non-nomadic) sedentary people to develop an excess in production of crops – which they exchanged for artisan manufactured goods that bettered their lives.”
But you’re missing the proximate instrument of the establishment of the subsequent aristocracies, monarchies and empires. The first use of the labor liberated by agricultural surplus was the formation of large armies to “buy” more productive lands and peoples with opportunist sponsored violence. The opportunists then establishing themselves as the aristocracies and monarchies.
Oh?? Are you implying the 5000 years before FDR wasn’t a Producers’ Paradise??
If you are trying to make a reference between now and then, yes, I agree.
There’s not much difference in the ends, though the means are only slightly different. I do not see how we have evolved much since monarchic rule, except to have supposedly democratically elected a “king” whose rule is limited to 4 years.
In fact, a Potus is little more than a surrogate monarch, who, however, did not have unlimited powers. At the time of Divine Right monarchies, the rule of a kingdom was also limited by its ability to project power by means of knighted cavalry and vassals.
if we afforded better this class the means to take the escalator to a middle-class existence. Which, for them, largely means the ability to obtain by means of a decent education the skills/competencies that lead to decent jobs and decent salaries.
Which would then increase the supply of skilled workers therefor driving down middle class wages and sending more people down into poverty.
Now that’s magic!
Which just goes to my point that most American “liberals” and libertarians are equally classical liberals beyond the rancorous disputes that erupt on the surface. (Some may be nuttier than others).
They agree on the most fundamental point, which is their definition of “property”.
“…increase the supply of skilled workers therefor driving down middle class wages and sending more people down into poverty.”
Only if we keep the present failed economic system.
agree
Yes, I noticed that after the World War II G.I. Bill vastly increased the number of educated Americans, wages and prosperity in America sank.
Well yeah, but come on! Back then CEOs only made 25x the average worker’s salary. We’re up to 250x and counting now. Spreading around some of that money would lose us the productive class C-level execs!
I just saw somewhere the the multiplier is 300x now…..and I am sure so deserved as puppets for the puppet masters.
Piffle and ignorant economic theory.
The opposite happens since skilled workers earn more money spent on maintaining a higher standard of living and therefore an economy that promotes even more skilled workers earning higher salaries.
Upon the condition that berserk “professionals” managing finance do not implement fraudulent practices that provoke a Credit Seizure (as happened in the fall of 2008) that prompts an Economic Recession.
The ignominy of what transpired in the US – as a consequence of Toxic Waste – is a shame upon us. Not because it was clever, but because it was amazingly stupid.
Like adolescent boys playing with matches.
Oh, how lovely it is to see someone regurgitating economics 101 verities! Might I humbly suggest that this economic law of yours doesn’t quite hold in the real world, where workers in different countries get different wages for the same type of work, and where the labor force has been growing like mad for decades? The outsourcing of work happens precisely because those workers can demand lower wages, which means they can spend less than workers elsewhere, which means you get aggregate demand drops. Meanwhile, the fact that these cheaper laborers exist abroad allows certain people in the higher cost-of-living countries to start talking about how domestic workers are “unrealistic” in their expectations, and that there is “simply no way” (because the world simply must continue globalizing) to defend the cost differences. In other words, the “ignorant economic theory” you so happily decry (and I do love the exceedingly subtle Serious-People-Know-Better-style put-down) is a large part of the reason why workers in most mature economies have been experiencing wage stagnation since the ’70s-’80s.
How I love the “irresponsibility” meme. “If only people acted responsibly, then they wouldn’t be criminals.” (Was Socrates an apologist?) After all, who could have predicted that systemic-scale fraud would lead to systemic instability. Certainly nobody would’ve acted this way had they only realized the implications of their actions!
So you are entirely right — looting hundreds of billions of dollars is exactly as bad as little boys playing with matches.
“can demand lower wages” <- my meaning would probably have been clearer if I had written "are in no position to demand higher wages".
You are up to your usual tricks of quoting out of context.
The above is so obvious that it does not bear rebuttal. And it is the reason that all these countries aspire to the sort of economies into which the developed world has evolved.
If they have not been able to do so, then there are clearly other factors impeding them. Most often they are cultural barriers, as in Africa.
Do yourself a favor and pick up David Harvey’s The Enigma of Capital.
UNBRIDLED CAPITALISM
Finally we have common ground. Who wuddha thot?
Santayana: Those who refuse to learn from history are condemned to repeat it.
If one looks at the Roaring Twenties, one sees almost identical factors in play up to and including the denouement (the Crash of ’29). Are Americans stupid to not have learned from the past? It certainly seems so.
We are certainly paying for the consequences, though (fortunately) with lesser unemployment. Nonetheless, with what we know about long-term recessions, after Keynes, we should know how to get out of them more quickly. And given the repetition of financial scandals in the past two decades, our oversight agencies evidently have their index finger up the wrong place.
Unless, of course, a nation is laden with a population so politically apathetic they think that staying away from elections has no consequence. But this last one did, by letting in the T-Party (T for Troglodyte) who have stonewalled any conventional solution proposing stimulus spending.
We have only ourselves to blame for the mess because we were looking the other way whilst dunderheads were playing silly but dangerous games.
Now we feel indignant at what has happened? It’s the fault of the banksters! OK, but not entirely. That excuse is just too easy. Like telling the teacher that the dog ate your homework.
MY POINT
America is proud of its “freedoms”. Just look were Unbridled Capitalism has brought us when manipulated by people without sufficient surveillance.
As I said, like adolescents playing with matches.
Piffle and ignorant economic theory.
The opposite happens since skilled workers earn more money spent on maintaining a higher standard of living and therefore an economy that promotes even more skilled workers earning higher salaries.
So if we double the supply of Ph.Ds, the cost of employing Ph.Ds is not going to go down?
The Ph.D. and wages
Can we solve that partly by mandating a shorter workweek, spreading the work around as we have spread the wealth? Mandate that wages/week remain the same. I imagine that would be inflationary, but so what?wan
ANDREW: But then why are you trying to help these people dominate the world of the future?
CNC: You ask an interesting question. It’s true that a lot of current GLOs are actually looters and moochers. But trying to sort out which GLOs are legitimate and which are illegitimate would be complicated and ultimately impossible…
=====
ME: Is it? Only so long as they keep their records hidden. TRANSPARENCY! Who watches the watchmen? The people, of course. That’s the only way the system will ever work — if you both trust but verify, as the old dead bastard rightly said, I must admit.
Note however, that this current evaluation impossibility none-the-less does not stop these very same organisations from being evaluated for honesty and reliability later by suddenly magically omniscient consumers.
Looks like we have another David Brin fan here.
Which corporations have broken the law and should be disbanded? We can never know. It’s just too hard, so no point in trying.
Which people have broken the law and should be exiled to Siberia? That one’s easy.
You nailed it TK421. A libertarian is someone who prefers to be dominated by a faceless corporation rather than an at least somewhat accountable government. They are dumber than a lampost putting their faith in the corporation and wealth as if it were mommy and daddy. I mean, with a republican government, at least the principles its based on are morally compelling. Libertarian “principles” deny the social nature of humanity completely. It is hard to say there is any morality at all to them.
Even assuming some libertarians are not idiots, this guy CNC or whatever, is a completely antisocial fool. Only in this particular time in this particular nation could someone so inherently ignorant with regard to history, society and social and religious morals and ethics, become “successful”.
The libertarian is held aloft by a complex foundation and superstructure of a society of human beings that he is sociopathically (or conveniently) incapable of perceiving. The ones I have met are chronic bedwetters and pedants. Something is missing in there…
THE GOD OF MAMMON
Well put.
Throughout this sordid tale (of corporate duplicity and government connivance) lies the thread of ethical behaviour and morality. It seems that America may have Christian Values but before the temptations of the God of Mammon they are quickly forgot.
Which is why it is worthwhile repeating the essence of Social Justice the foundation of which is set upon moral principles. Principally those of fairness and egalitarianism that give a framework to both policy making and its execution.
We may be all “created equally” but a free-market economy distributes incomes disproportionately – especially in a country fixated on “the sky’s the limit” and “winner take all” mentalities. We cannot make Income Distribution “equal” but we can make it “equitable” – which have very different meanings.
This Present Mess, the object of OWS, is due to a very broad suspension of business ethics (if there ever were any) in a mindless rush-to-riches gone awry prompted by very low marginal and capital gains taxes.
Fix that mistake and we will have repaired the greed that manifests itself when money is too easily gained by too few as a return for too little.
MY POINT
Where, pray tell, is found the morality of Social Justice in an economy driven by the labor and consumption of all the people that derives an out-sized proportion of wealth for a select minority of only 20% of the people?
Permit me to repeat that sharing once again. Only 20% of households own 93% of the nation’s wealth, whilst the other 80% of households obtain the remaining 7% of wealth. (See the origin of that fact here.)
“[… It seems that America may have Christian Values ..]”
erm.. no; those “values” have been entirely co-opted.
“[.. essence of Social Justice ..]”
that is an entirely “humanistic” ideal. Non-Providential, i might add.
“.. suspension of business ethics .. “
Actually it has a real name; it’s called the Gramm-Leach-Bliley Act circa 1999, during a lame duck session (and/or some nonsensical consumerism name to it), which repealed the Glass-Steagall Act of 1933.
heh;
“.. Fix that mistake ..
Imagine that; God Almighty made a mistake via bestowing se7en deadly sins upon us, ..huh.
I sincerely hope you don’t think i’ve taken, nor quoted you out of context… really; but i have deep philosophical positions about from where ‘moral and ethical’ behaviour come from .. and the terms (morals/ethics) are not even close to being interchangeable.
thanks
..and if nobody replies to this (comment of mine); it’ll reveal the true surveillance nature of a free internet–since nobody will have ever read it, and nobody will have been even mildly provoked by it, especially due to its ‘old hat’ reply nature.
So old, yet so young at heart … what to do .. but pray and never give up Hope!
sincerely
Apologies .. but i was trying to say;
If nobody reads, nor responds (given my post was a week late, and that not many people might ever even read it, or even glean the original poster’s points) — What use is it for me, or others intended, to display my thoughts openly? .. other than .. possible nefarious infringement and abrigation of sovereign u.s.a constitutional authority, and a declaration of independence ideals?
I know why,.. but do you?
.. and no; only the Almighty is addressed so; in CAPS ;-)
I like what you say Kukulkan about Libertarians that in practice they always think the coercion is somebody else’s fault so they have to put a stop to it. Getting pretty close to paranoid schizophrenia here and whereas the guillotine would sound appropriate empathy suggests involuntary commitment would be better. Oops that would imply government spending as I suppose would providing guillotines which leaves Hobbesian Perpetual Revolution. Hmmm…. glad I’m not a Libertarian!
Dr. Martha Stout writes that the surest sign of a sociopath is the “pity play”: demanding sympathy for the results of misdeeds they commit themselves. For instance, “poor me! people keep calling me a liar just because I sometimes lie!” Nothing is ever the anti-social’s fault.
Yves, you just make my day with these! They are so freaking funny. Like so much that is funny it’s because of the resonnance of it. It really does show us what the libertarian vision really amounts to-not more but less freedom and choice for those who are not white, Christian, Male and rich.
Thank you to the MMTers who have respopnded. I think we are closser to the meeting of the minds I had in mind!
http://diaryofarepublicanhater.blogspot.com/2011/12/scott-fullwiler-mr-mmt-drops-by.html
As a white male Christian I resent your racist categorizing.
With your relentless demonizing of whites, why do you on the left think that the white lower/middle-class shuns you so. Your call to them is “Come over here creeps. We are your natural allies. Lick the dirt off of everyone else’s boots for an undetertermined time and you will be made whole again.”
You fail on reading comprehension. He didn’t demonise white males. And I say that as a white male myself. In fact he didn’t even demonize rich white christian males (which was the category mentioned), he just suggested that the Libertarian world view seems to be a view designed to exclude all who are not currently privileged.
The behavior you describe is impossible, since stockholders only allow a CEO to run a corporation if they are confident that the CEO will act in their best interests.
Libertarianism = Star Trek Vulcanism = patent absurdity.
CNC’s species of libertarianism seems to reject the very foundation/exploitation of modern advertising, in that human beings are far from rational especially when it comes to compounded abstractions (value over time, etc).
“The behavior you describe is impossible, since stockholders only allow a CEO to run a corporation if they are confident that the CEO will act in their best interests.”
This is just standard double standard
Markets always work as intended, Governments never. Some liberals of course do it EXACTLY the other way around. The answer is somewhere in between – you need both to watch each other.
Its creepy that we do have a bankster class of – by Hoppe’s definitions – closet libertarians who do actually jet off to Africa and buy up 40-thousand-acre farms and hire caravans of goons with machine guns to protect them. Or maybe its a working mine they purchase and nevermind that someone is already working the mine because they are clearly trespassers. Any organization that can operate above the law is at liberty to be a total libertarian. Modern day imperialists.
Here’s a creepy guy (Singer) for you: http://www.gregpalast.com/uber-vultures-the-billionaires-who-would-pick-our-president/
There are lots of investors who are lining up to re-colonize Africa. Sovereign wealth funds (Saudi, Emirates, China) and even “socially responsible” investment funds are grabbing arable land where ever they can get their hands on it.
We’ll see if their goon squads will be sufficient to repress the masses of hungry landless peasants outside the gates. They learn nothing from history.
might i just add;
pop “To Cook A Continent durban south africa” into your favorite search engine
I have now learned the true definition of “sophistry”. Sophistry is the action of pointing out what is happening in reality. This action is inherently evil. Here is Andrew engaging in this evil:
“ANDREW: I thought there was lots of evidence that CEOs have been extracting much larger payments from their corporations than in the past. Are you sure you aren’t mindlessly accepting the myth that corporate governance is of, by, and for the stockholders?
CNC: Sophistry.”
Like others here I do notice a general disconnect from reality. People were on the land he wanted to buy. He rid the land of these people. It was their fault because they were on the land he wanted to buy. Furthermore, this “ridding” cost the poor man a lot of money. It is the also the fault of the lower orders that our betters are stealing and pillaging. Glad to get that out of the way!
Under the Dictatorship of the Globatariat all will be happy and swell!
What interested me was he did move a little in his position on the GLOs. He could accept a great deal of corruption if there were a “few good men”. That movement invalidated his claim that it would be impossible to have bad CEOs of the GLOs.
Not quite — when (some interpretation of) what is happening in reality can serve as support for some position this fellow holds, it must most certainly not be denied. However, to the extent that reality interferes or contradicts his normative theory of how reality should be organized in order to be “perfect” — this is due to governmental/democratic interference.
(Having said that, the latter — the disregard for how things actually work — is primary)
Foppe,
You’re right! I stand corrected.
It is strange to read this because of what you pointed out. At some points Cain gives an accurate description of what is occurring. His remedies never seem to line up with reality.
the demise of capitalism is being hastened by the actions and behaviors of capitalist.
government is not the destructive force to be concerned with, capitalism is by its very nature a destructive force as it proceeds to seek profit at any cost including self destructive behaviors.
a government owned by corporations, acting on behalf of corporations and staffed by corporations employees and officers cannot be seen as an independent force or actor.
Corporations have no national identity, no quaint notions of patriotism or respect for a nation’s Constitution, Bill of Rights or rule of law.
nun yerbizness,
I am going to disagree with you in a rights respecting manner. I do not disagree that capitalism is an unsustainable system. Any system which relies on unending growth in a world of finite resources has little chance of success. But I think we must look carefully at the govt. as well. It is currently a creature of the ruling elite, they own it, they run it. So, we must understand how that occurred or we will keep getting a govt. which is buy for and of the incompetentcenti.
IMO, this traces back to our founding fathers. Our Constitution is failing to protect our rights as humans beings because our founders wrote a flawed document based upon their own racism, classism and sexism. They were protecting wealthy, white, male land owners from encroachment by the govt. Because they did not really write in protections for all of us, this allowed exploitation of others from the beginning of our govt.
I honor the many fine ideas that were put into our nation’s charter, but it was flawed. Today, we the people must write a charter that protects all the people and the rights of the earth.
“I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government; I mean an additional article taking from the Federal Government the power of borrowing. I now deny their power of making paper money or anything else a legal tender. I know that to pay all proper expenses within the year would, in case of war, be hard on us. But not so hard as ten wars instead of one. For wars could be reduced in that proportion; besides that the State governments would be free to lend their credit in borrowing quotas.” –Thomas Jefferson to John Taylor, 1798. [bold added]
Jefferson quote from: http://www.famguardian.org/Subjects/Politics/ThomasJefferson/jeff1340.htm
As for legal tender, inexpensive fiat is the ONLY ethical money form for government debts so Jefferson may be off here. Certainly there should be no legal tender laws for private debts.
Jill,
I give the founding fathers way more credit than the current scum bags that tout themselves leaders of the free world.
My example in support is the ORIGINAL motto of America, replaced in the 1950’s
E PLURIBUS UNUM
The current bought congress critters just recently reaffirmed the CHANGED motto “In God We Trust”. It represents the deadly embrace between the global inherited rich and the fundies of the world…….The grand solution is to just have more FAITH, right F.Beard?
The grand solution is to just have more FAITH, right F.Beard? psychohistorian
Please don’t put words in my mouth. My own faith, such as it is, is based on a growing appreciation and knowledge of the Bible as I continue to read it.
In god we trust since ’56 and on the paper dollar since ’57. This seems big actually. The thing here is not whether you should trust god. They want you to trust the government and the dollar. And of course the moment when they explicitly brainwash for the trust is the moment they know they no longer deserve it. The forces at play here are beautiful in their scary way actually:
*replacing god with money
*replacing your moral compass with government
*asking you to forget that the one of the government is supposed to be for the all of the country
You made more sense when you didn’t finish your sentences. The “government” is a multi-headed beast – and each head has its own ideas. It just is not possible for it to act in such a concerted and conspiritorial fashion – parts of it can, yes – but not the government as a whole. And all that “in God we trust” junk was to do with anti-communist paranoia – it has nothing to do with inflation (well except indirectly in that the anti-communist paranoia diverted a lot of resources in to useless military expenditure).
Of course it is possible for the government to act in a concerted way. It is called governing, thats what it does. You know, an interested party gathers support to put a proposal on the table and all that. It doesn’t just happen on the hill, it happens over the hill too, between the multiheadedness.
Now on the ‘trust’, I was thinking more about the rise of the consumer society, which we know was deliberate policy, than the inflation, which yes borders on conspiratory. Either way, both did get their PR on the dollar I guess.
” Any system which relies on unending growth in a world of finite resources has little chance of success”
Nope – Bacteria in a Petri Dish?
Add one word and it might be correct
…. little chance of LASTING success
And what if we equate each stage of technological advance as a new petri-dish? ;^)
so Mr. Cain admits his security fees were jacked by the need to protect his land investment from vandals.
but he still won’t acknowledge how much he pays for security and what sort of equipment his team uses.
How can somebody afford to be a libertarian unless they’re already rich?
I’d figure a bodyguard like in Lawrence of Arabia and a chopper or two for the quick escape. Maybe even a personal jet pack for the even quicker escape, espeically from the security team itself when there’s an unpaid invoice.
It’s offical the MMTers win-LOL http://diaryofarepublicanhater.blogspot.com/2011/12/what-i-like-about-mmt.html
Mathematician, heal thyself.
Cain describes capitalism in this installment, blaming it’s ills on the government. Hayek made a similar mistake blaming forms of government on outcomes when describing the simple case of the minority attempting to rule the majority using propaganda, which always results in totalitarianism.
The fundamental driver behind capitalism is maximizing return on investment. Corporate capitalism is a structure that pyramids resources and capital under a central ruling body. Today, shareholders don’t count because they trade on price not value. If central control ruins the company and the share price rises, shareholders are happy.
Corporate capitalism goes through four phases. The innovative phase, the growth or market share phase, the maintenance or manipulative phase and the decline phase. It is during manipulative phase that ROI is maximized by buying the government. Government workers don’t plunder government, capitalists do. The government does not maximize ROI although it should bear it in mind when spending. The big government is a non-profit that is tasked by the citizens to perform certain functions for the common good.
During the manipulative phase, there isn’t much more that can be squeezed out of the product or service so capital is used to eliminate the completion creating combinations and monopolies and price fixing. At this point, the citizens rebel and create professionally managed public utilities. Small waste, water, and power utilities if it is a local problem and government run national utilities like Medicare and Social Security. The more wages are suppressed, the more immediate are the demands for public utilities to maintain standards of living. If wealth and income disparities are acute, income and wealth re-distribution takes place. Unemployment exacerbates the demand for action.
If the wealthy want to live in peace then wealth disparity must decrease, unearned income minimized, interest replaced by lending rules and other capital controls, prices must remain as low as possible, employment must be maximized to provide cash flow to the citizens, wages should be generous enough to provide a small but steady increase in the standard of living, capping the size of corporations would prevent the unpleasant and corrupting use of capital as they would not reach the manipulative phase, citizens would make fewer demands for public utilities. The libertarians can then start their Utopia in the wilderness, as Libertarians are basically Mormons without a leader to resolve community disputes.
Definitions of the future:
“Licentiatariansm:” a diabolically absurd brand of political thought propounded by Hans-Hermann Hoppe and certain members of the hedge fund class, whose cult-like and tyrannical styles of leadership, now known as “hedgemony,” called for the political rule of wildly ambitious, stupidly wealthy sociopaths.
Oh, and Mr. Hoppe, it is not democracy that has failed but fascism.
Yves, I have suggested that you occasionally post a book review, given that the financial crisis has spilled almost as much ink as money. This lengthy satire was a tad more than a book review – it was an ideology review. I liked it. Thanks.
Now I offer up two more – a pair that could not be more naturally disparate – yet oddly similar. Your fellow blogger Karl Denninger has written a book about the crisis, title Leverage. Haven’t yet read it, but judging by his columns, I suspect it is an amusing if not downright vitriolic read – and right up your alley – Karl strongly agrees that markets do not behave as economist think they should. Karl is an avowed libertarian. The other is Michael Hudson who stands well to your left. What I find interesting is that these two men could hardly be more different, they espouse ideologies that are galaxies apart, yet their descriptions of the problem and their proposed solutions are very similar. I guess the old essay question of compare and contrast Denninger’s Leverage to Hudson’s Monster would be a bit much. But I would read it.
BTW – almost any ideology can be ridiculed. In fact, much like religion, the best ideologies are those that make room for others. Even a cynic enjoys a good shot of whiskey. Most Libertarians are not steeped in the Leo Strauss school.
ANY ideology can be ridiculed, but even more important is that ANY ideology is FALSE. This is because an ideology is a model of the world. This model is then again based on another model of the world – language. Any modelling will by definition omit or misrepresent some phenomena in order to make it possible to think of and understand the whole. A 2nd level model will therefore contain big errors concerning the real world that it claims to solve all problems of. This is what happened when you got run over by bureaucracy, the libertarians went full-on stupid or the economy went under.
The problem with ideology is not that it is wrong, but that it is mostly right. Therefore people get careless in their success and do not notice when they wander into error territory. Furthermore, since ‘right’ territory is already maxed for profit, you have incentive to take on more new territory, which will end up being more and more ‘false’. In the end, the right will no longer be able to sustain the wrong. You get a new start. Problem is, people suffer.
From understanding the modelling nature of ideology we also get some interesting results. Libertarianism does not recognise or tries to do away with the need for a monopoly on violence. It is thus sociopathic, darwinian and materialistic in nature. It is not even important to solve the chicken-egg problem here. Important is that lacking the empathic dimension, libertarianism fails to understand the viewpoint of a human being, and should therefore be made subject to some serious freudian potty-training, for a start that is.
Another favourite of mine is the meta-ideology, the welfare state. This being the ideology (model) that starts from the reasonably left idea of trying to help those that do not fit into the model. Thus it is in a constant state of cleaning after itself. As we saw in Europe, it ended up spending more on cleaning/welfare than it was able to pull in as profits. While starting from the fine idea of caring about people, it couldn’t make priorities in the end and died the same death as any other ideology.
A morning and a new day.
Where do you want to go today?
I tend to go towards the left. The right is oblivious to the modelling nature of ideology, and just spawns different ‘all-solving’ universal formulas like your favourite infomercial channel. The left acknowledges the modelling at least in theory. It gets more difficult when you bring values into the equation. It seems that the right is more focused on the means (capital), and the left more on the ends (people). Of course you need both. And here lies the biggest problem of ideology: it is easy to take any side, but what must be done is the hardest – a balancing act. Our thought process is made entirely of taking sides. Balancing therefore needs thinking outside the box. It needs hard work.
And most of the GLOs will die before doing actual work.
“As we saw in Europe, it ended up spending more on cleaning/welfare than it was able to pull in as profits.”
Sorry this is crap. Each country in Europe has different problems and the welfare state as such is not the source of any of them.
I give you that, I did not think this one through.
Please check out Pete Stark in action-one Congressman who understands the national debt
Thank you Clonal for making me aware of this video. It is the funniest thing I’ve seen since reading Yves great “Libertarian Future” series. can’t wait for tomorrows. Too bad that’s the last one
http://diaryofarepublicanhater.blogspot.com/2011/12/vote-for-pete-stark-he-has-right-stuff.html
LLibertarianism boils down to the following principles:
All government is oppressive.
All oppression is a consequence of government.
Corollary 1: Freedom is freedom from government.
Corollary 2: Without government there is no oppression.
Sometimes the following two principles get thrown in to argue for the economic superiority of libertarianism:
All the failing of government are due to government.
All the failings of the private sector are due to government.
Plaudits for this presentation. A line from Jill’s comment on Part I bears repeating:
“Libertarianism is life conceived without children.”
Yes,
that seems a line of questioning that is missing here. Anybody who has raised children can see so much that is wrong with this.
I want to express my deepest gratitude to Andrew for putting himself through this insanity.
I am curious what sort of mental cleansing you had to do after these interviews to restore your human balance….?….grin