Category: Economics

Hong Kong, Baby!

Yes. Hong Kong baby. This small island was nothing more than a fishing village not that long ago. When the Island of Hong Kong was given back to China from the British, China took a “hands off”(translation: laissez-faire) approach — what happened is pictured below. With near laissez-faire Capitalism, there is no government safety net, or very little, and regulation is almost non-existent. Yet people flocked to this little fishing village in droves. But, for what? Certainly not to live under socialist or statist policies — there were none. They went there because it was economically free. And the results are difficult to ignore, even if predictable.

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Taking a look around the world, you see that countries and economies are successful to the degree that they have freedom(Capitalism), and are free from government coercion, regulation, taxation, etc. All first world countries today are a mixed economy, and consequently, they produce mixed results.

It is consistently clear that Capitalism delivers the goods, even to the passive observer. No reasonable person would or could argue that it doesn’t. So why is it that the major general trend is to continuously move towards more and more statism??

People reject Capitalism(with their votes, contrary to their best interests) based on the ethics and morality that Capitalism necessarily requires.

Free markets are all about self-interest. People view self-interest as unseemly, or worse. When you trade, you only do so if it benefits you — both people believe they will benefit from each exchange in a free market, or they would not do it. That, as ridiculous as it sounds, is the reason people reject Capitalism. People are convinced of an altruist and collectivist morality, which glorifies self-sacrifice and requires that individuals sacrifice themselves to the “greater good,” and preaches that they are not entitled to live for themselves, that they must sacrifice and live for others to be considered moral.

The archaic “morality” of altruism and the communist/socialist/leftist ethics of collectivism is what people reject Capitalism based on.

But I just have just one question for altruists and collectivists. One teeny tiny question. …Why?? Why shouldn’t people live to pursue their own values? Why should they live for other people and not themselves? There is no rational answer to that question. 

The ethics of self-interest are the only way to rescue Capitalism from the left. A culture which upholds sacrifice/altruism and collectivism as its highest values can only end one way — totalitarianism, communism, national socialism, fascism(all essentially the same extreme left political system, slight variances). It is profoundly moral to live to pursue your own values, not someone else’s.

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Fascism, by any other name…

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…is still Fascism.

They will try to dumb you down, they will try to steal and corrupt language for their own purposes, they will try to erode the level of discourse down to where they need it to be — don’t let them do it. Professional leftists and progressives, big-government types, the academe, the media, union leaders, whose livelihoods depend upon the huge machinery of the state, will confuse corporatism(or “cronyism”) with Capitalism, and they do it on purpose. They do it to destroy the impeccable record of the free market for creating vast amounts of wealth, for raising the standard of living of all those in economically and politically free nations(to the degree that Capitalism exists anywhere), for civilizing the planet, even greatly benefiting those not living under it.

Let’s be crystal clear in defining the terms we’re working with. Laissez-faire Capitalism(real Capitalism) necessarily requires the complete and total separation of state and economics — which makes corporatism impossible in the literal sense of the word. One of the preferred strategies of opponents of Capitalism is the straw-man technique described above, whereby they criticize cronyism/corporatism(which is, strictly speaking, Fascism), while framing it as Capitalism. The most ironic part being that they are advocating for more of the fascist/socialist policies that actually caused whatever ailment they are blaming Capitalism for.

Among other, totalitarian social aspects, for which fascism is known for, is perhaps the most important aspect of it: the economic posture of fascism makes it perhaps more insidious and destructive than socialism or communism, which requires state ownership of all industry and business, while fascism only requires state control. Private ownership is retained, but totalitarian centralized control is achieved through regulation by the state, which allows failures of policy to be blamed on private ownership and free markets, and which allows them to demand more government regulation and control. This process may be repeated until the inevitable collapse of the entire facade, as has been the result of all nations who progress to achieve complete statist/leftist tyranny.

A quote, from Benito Mussolini himself: “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.” He is describing two different types of power — corporate power(economic), and political power(guns, force, violence, coercion). The two could not be more different in nature. But that’s another discussion.

A Moral Case For Capitalism

This is a great interview with Yaron Brook of the Ayn Rand Institute on the morality of Capitalism. Given that the economic argument is so drastically one-sided in favor of freedom and Capitalism… why is it that we continually move towards more government, more statism, more leftist intervention in the lives of individuals and the economy?? The moral argument has been conceded, by even the most avid and skilled defenders of Capitalism — and that’s why political ground is lost, has been lost continuously for over 100 years, and will continue to be lost until we finally have complete statism and it collapses under its own weight, as it always does. Defenders of Capitalism must re-claim the moral high ground, which is rightfully ours.

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Marxists Are Not Your Friends

Marxists define a ‘capitalist’ as he or she who owns capital or means of production.

Marxists have worked very hard to convince the uninterested, unthinking majority that the “capitalists” are the unfeeling cold-hearted exploiters of the “non-capitalists”(non-owners of means of production or capital) — aka the employed. They’ve worked very hard to place the two in direct moral opposition to each other, with the Capitalist playing the role of the bad guy. They advocate exorbitant high taxes and crippling regulations on the owners of capital/means of production. They claim that since the employed are being exploited for their labor by the Capitalists, a third party must step in to “keep them in line” and re-distribute their wealth. Of course the third party is… who else? The government.

Besides the moral/ethical questions this raises, the question is… who does this benefit? Who does it hurt? According to my calculations, the only ppl to benefit from this arrangement are the sociopaths that sit in their cushy state jobs, and union thugs.

To advocate exorbitant high taxes and regulations on employers(aka capitalists) is, in essence, the same as saying that the cleaning lady who cleans your house should be forced to use a washboard and clothesline to do your laundry, a toothbrush to scrub your floor, and wash all dishes by hand instead of having the use of a dishwasher, because she “has it too good” and is exploiting you by charging too much for her services, which she owns. If you think this analogy doesn’t work, consider this: capitalists, even as defined by marxists, satisfy a need for a fee — they trade their value(money) for your service — just like your cleaning lady serves your need, and you pay her — like you pay McDonalds, Apple, or WestJet Airlines. They are serving you. If they don’t serve you, you simply don’t pay them, you pay someone different.

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In the end, if you take 30% of your cleaning lady’s wages, and place restrictions on the methods she uses to clean your house, you will receive less for your money — it becomes more expensive and takes longer for the same result. Besides which, there will be less and less cleaning ladies offering their services in the marketplace, simply because it’s not profitable to be a cleaning lady. Now imagine every single aspect of life hampered in this regard, from your grocery store to your car to your mechanic to your home builder to the restaurants you visit, on and on… yeah.

Try this simple math excercise: if it costs ‘Capitalist A’ $1000 to produce a computer, and the profit needed to keep the business running at a profit and pay employees is $500, the price you pay is $1500. If Capitalist A is taxed $350(35%), and complying with regulation costs them $400, and union thugs use state power to force them to pay workers $10/hr more than they’re worth and provide a month of paid sick days per year, adding another $500 to the cost… they don’t/can’t/won’t simply bend over and take the losses — first of all, they would go bankrupt. So this leaves them little choice but to pass the cost on to you, the consumer. You pay $2750. There’s no magical fairy dust way around this, reality doesn’t bend to the wishes of government regulators or lazy marxists. They can cut quality, in which case you get a computer that is significantly lower quality, for the same price of $1500, or they can pass the cost onto the consumer. Consumers then have less disposable income to spend on other things, like a new coat, or baseball cap, and those businesses suffer as a result. Remember — pay attention to what is not immediately seen as well as what is.

Considering all the different applications and implications this principle has in a complex marketplace, ask yourself… who is it that suffers because of government intervention in the market?? The answer is that everyone suffers, but the relative poor suffer the most — the employees, the non-owners of means of production, the non-owners of capital suffer the most when marxists and statists interfere in the marketplace.

The next time some liberal is squawking about soaking the rich, remember that you can’t soak the rich without double or triple soaking the poor.

And, this is only one aspect in which the “non-capitalists” lose(as a consumer). They also suffer directly as an employee due to regulation and other intervention.

The reason I specified the marxist definition of capitalist is that everyone who takes part in the market is a Capitalist, not just owners of capital — we all benefit immensely from it. You own your labor, your talents, your time, your effort, your ingenuity, and you trade them for money that you then exchange for goods and services to make your life better. Or you may own a factory, lending firm, etc — they are essentially no different — they have value, and you trade them for stuff you want. The difference to marxists is, if you own anything more than your labor and time, they define you as the enemy of everyone who doesn’t.

Ridiculous! Not to mention, an obvious and transparent attempt at hijacking unearned wealth and power — at an inconceivable, incalculable cost to everyone else.

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The Economic Argument Isn’t Enough

It occurs to me that most people think North America is already Capitalist. The perpetrators of that little slight-of-hand are many, but mostly the blame is with intellectuals, politicians, and the media, who are advancing an agenda. In fact, what we have today in North America is a mixed economy. It’s impossible to quantify, but just to throw a number out there, I’ll say North America is 50/50, capitalism and socialism. Antitrust, bailouts, the enormous entitlement and welfare states, and the pervasive intervention in the lives of individuals, the denial of individual rights, are all un-Capitalistic and anti-freedom on a fundamental level.

After watching a video of John Stossel and David Boaz from the Cato Insitute at a Students For Liberty Q&A at George Washington University, I’m pleased to see 500 Libertarians all in one place, and more pleased that they seem to be extremely well-informed.

But I’d like to present an argument that Rand made against Libertarianism, and the Libertarian political party of the 70’s.

First, though, for everyone still inside the matrix: If you support Liberalism, you support force-backed plunder. There is no two ways about it. It may not be full blown communism, but it is based upon the same destructive ideas, and no amount of government plunder, for any reason, is moral — yes, even to help the poor.

If you support Conservatism, you support oppressive social authoritarianism(and force-backed plunder but traditionally to a lesser degree). There is no way around that. Arbitrary social “rules” in the name of some “good” chosen for someone else is authoritarian and anti-freedom. The drug war, for example. Or laws against prostitution.

The reason for this note, however, is to address Libertarians. If you support Liberty, based on the ineffectiveness of big government and statism, centrally-planned economies, etc, OR based on the economic up-side of free markets, you may be failing to grasp the real problem. Efficacy arguments have never stood up to altruist morality arguments, and there’s no reason to believe they ever will. In fact, the economic argument is so one-sided, so clearly on the side of freedom and Capitalism that it’s not really a debate. The other side — the moral argument — is where the war is won or lost. And the moral argument is not even being fought, it’s been conceded to the left. The altruist and collectivist morality of the culture literally ensures that we will continue on the same trend as the last 100 years — towards the left, towards statism.

Indeed the only proper defense of freedom, and Capitalism, is a moral defense — laissez-faire Capitalism is proper to human beings, because everything else is slavery, in the true sense of the word. It is not enough to show that Capitalism improves everyone’s standard of living, or creates an environment for business, religions, races, and all social groups to co-exist peacefully, or any number of the other great things Capitalism does — those things are historically, factually and demonstrably true, however they do not make a proper defense of laissez-faire Capitalism. Why?? They are an argument, sure, but they are not the argument. They are corollary arguments, but they are secondary.

Material gain is not an effective defense and those arguments have always failed against the inhuman “morality” of altruism and collectivism, as they have in the past, and as they still do today(slowly but surely, we move ever more to the left).  People want to do what they think is right — if they’re convinced that self-interest and profit are immoral, and “evil”… convincing them that Capitalism achieves self-interest and profit better than socialism or communism, is actually counter-productive. The real debate is whether or not self-interest(what markets are based on — trade is, for both parties, based on self-interested gain) is moral or immoral. Proponents of Capitalism must make the argument that self-interest is moral — and it is — because people don’t vote their pocketbooks. They vote their conscience, because they want to be moral. The problem is, they’ve been convinced of a backward, anti-life, upside down morality, one that says it is immoral to live for your own sake.

These points addressing Libertarians are perhaps more important than the ones directed at Liberals and Conservatives, because as Rand said, Capitalists supporting freedom because it “works,” may actually do more damage to the cause of freedom than the worst big-government liberals, or the most socially authoritarian conservatives, because they fail to defend freedom properly — they undermine the real justification for a free society, which is that a free society is the only moral society.

Non Libertarians: I don’t mean to say that it is a bad idea to hear out the the arguments for the “effectiveness” of laissez-faire Capitalism(Capitalism is: the absolute separation of economics and state, like the separation of church and state), because those ideas are true, and can be persuasive, and they demonstrate an important fact: that the moral is the practical — however these ideas have never been enough against the destructive and irrational altruist morality presented by Marx, by the bible, by the left, by virtually everyone — even many Libertarians.