Posts tagged ‘socialism’

Happy Holidays

Hope everyone out there has a fantastic Christmas, Hanukkah, Ramadan, Winter Solstice, New Year, etc. (did I get everyone?)  We try to do something different each year for our holiday card.  Here is this year's.


I realized from fellow Arizona blog Speed of Thought, in their link to my post (cool, am I a moonbat?) that I left out Kwanzaa.  Oops, I hope there are not protesters outside my door.  Next week I plan a post on Kwanzaa -- I have zero problem with people making up a new reasons to celebrate, since life is worth celebrating.  However, I will look at the 7 values celebrated by Kwanzaa and consider whether these 7 values are really helping African-Americans (hint:  think socialism).

By the way, Speed of Thought has a very moving image here.

Milton Friedman is Always Worth Reading

New, via Reason, comes this excerpt from an article by Milton Friedman:

After World War II, opinion was socialist while practice was free market; currently, opinion is free market while practice is heavily socialist. We have largely won the battle of ideas; we have succeeded in stalling the progress of socialism, but we have not succeeded in reversing its course. We are still far from bringing practice into conformity with opinion. That is the overriding non-defense task for the second Bush term. It will not be an easy task, particularly with Iraq threatening to consume Bush's political capital.

Reason links to the whole article.  I have said on a number of occasions that as a libertarian, one of the downsides of the Iraq war that does not get discussed much is that it diverted Bush II from promised market reforms, including tort reform and social security.  There appears to be some hope that these can be addressed in the second term.

Pocket Doors and My Manhood

Our bathroom has a pocket door to save space - that's one of those doors that slide on a hidden rail in and out of the wall.  From time to time, usually because my kids go slamming into it, the door comes off its rails and gets jammed, which is a problem as it can bottleneck some very critical facilities.

The first time this happened, I tried to get it back on its track, but I just could not.  The track is up in the wall and it is almost impossible due to the lack of clearance to do anything with it.  I checked in the Yellow Pages and saw there was actually a company that specialized in pocket door repairs, so I called them out.  Well, Joe (or whoever) shows up with his little tool kit, looks at the door for a second, grabbed it in a certain way, and then gave it a quick jerk - kabam - and it was back in its tracks.  It took him like 5 seconds. 

Well, there I stood, completely unmanned, right in front of my laughing wife and family, by Joe the visible butt-crack guy.  Bummer.

Since that time, I have had the door come untracked two or three times.  Thinking to save me further embarrassment, my wife tends to ask any passing stranger to come in and fix it.  I can sit there for hours fighting the thing, and then my wife brings in the guy painting the house - kabam - fixed.  Next time she brought in the 60+ year old sales guy who happened to be there - kabam - fixed.  I swear, if Paris Hilton was dropping by for a visit she could probably fix that damn door.  It is humiliating.

Well, this time I would not allow my wife get someone else to fix it.  Every night, for about 10 minutes, I would take my innings with the door, struggling to do what everyone else seemed to have learned at birth.  I actually suggested to my wife that we should call out a contractor and tear the thing out and install a real door.  She suggested instead that she could have our 13-year-old baby sitter come in from the other room to fix it.  Finally, tonight, when I was about to give up, I tried holding it in a slightly different way and - Kabam - fixed.  God I feel great.  My manhood is restored and I am at the top of the world.

WELCOME Carnival of the Vanities!  My post this week is a little more whimsical than usual.  If you need to chew on something more serious, check out a 60 second refutation of socialism while sitting at the beach.

60 Second Refutation of Socialism, While Sitting at the Beach

Last week, there were several comments in Carnival of the Capitalists that people would like to see more articles highlighting the benefits of capitalism.  This got me thinking about a conversation I had years ago at the beach:

Hanging out at the beach one day with a distant family member, we got into a discussion about capitalism and socialism.  In particular, we were arguing about whether brute labor, as socialism teaches, is the source of all wealth (which, socialism further argues, is in turn stolen by the capitalist masters).  The young woman, as were most people her age, was taught mainly by the socialists who dominate college academia nowadays.  I was trying to find a way to connect with her, to get her to question her assumptions, but was struggling because she really had not been taught many of the fundamental building blocks of either philosophy or economics, but rather a mish-mash of politically correct points of view that seem to substitute nowadays for both.

One of the reasons I took up writing a blog is that I have never been as snappy or witty in real-time discussions as I would like to be, and I generally think of the perfect comeback or argument minutes or hours too late.  I have always done better with writing, where I have time to think.  However, on this day, I had inspiration from a half-remembered story I had heard before.  I am sure I stole the following argument from someone, but to this day I still can't remember from whom.

I picked up a handful of sand, and said "this is almost pure silicon, virtually identical to what powers a computer.  Take as much labor as you want, and build me a computer with it -- the only limitation is you can only have true manual laborers - no engineers or managers or other capitalist lackeys".

Yeah, I know what you're thinking - beach sand is not pure silicon - it is actually silicon dioxide, SiO2, but if she didn't take any economics she certainly didn't take any chemistry or geology.

She replied that my request was BS, that it took a lot of money to build an electronics plant, and her group of laborers didn't have any and bankers would never lend them any.

All too many defenders of capitalism would have stopped here, and said aha!  So you admit you need more than labor - you need capital too.  But Marx would not have disagreed - he would have said it was the separation of labor and capital that was bad - only when laborers owned the capital, rather than being slaves to the ruling class that now controls the capital, would the world reach nirvana.  So I offered her just that:

I told her - assume for our discussion that I have tons of money, and I will give you and your laborers as much as you need.  The only restriction I put on it is that you may only buy raw materials - steel, land, silicon - in their crudest forms.  It is up to you to assemble these raw materials, with your laborers, to build the factory and make me my computer.

She thought for a few seconds, and responded "but I can't - I don't know how.  I need someone to tell me how to do it"

And that is the heart of socialism's failure.  For the true source of wealth is not brute labor, or even what you might call brute capital, but the mind.  The mind creates new technologies, new products, new business models, new productivity enhancements, in short, everything that creates wealth.  Labor or capital without a mind behind it is useless.

From the year 1000 to the year 1700, the world's wealth, measured as GDP per capita, was virtually unchanged.  Since 1700, the GDP per capita in places like the US has risen, in real terms, over 40 fold.  This is a real increase in total wealth - it is not money stolen or looted or exploited.  Wealthy nations like the US didn't "take" the wealth from somewhere else - it never even existed before.  It was created by the minds of human beings.

How?  What changed?  Historians who really study this stuff would probably point to a jillion things, but in my mind two are important:

  1. There was a philosophical and intellectual change where questioning established beliefs and social patterns went from being heresy and unthinkable to being acceptable, and even in vogue.  In other words, men, at first just the elite but soon everyone, were urged to use their mind rather than just relying on established beliefs
  2. There were social and political changes that greatly increased the number of people capable of entrepreneurship.  Before this time, the vast vast majority of people were locked into social positions that allowed them no flexibility to act on a good idea, even if they had one.  By starting to create a large and free middle class, first in the Netherlands and England and then in the US, more people had the ability to use their mind to create new wealth.  Whereas before, perhaps 1% or less of any population really had the freedom to truly act on their ideas, after 1700 many more people began to have this freedom. 

So today's wealth, and everything that goes with it (from shorter work hours to longer life spans) is the result of more people using their minds more freely.

Look around the world - for any country, ask yourself if the average person in that country has the open intellectual climate that encourages people to think for themselves, and the open political and economic climate that allows people to act on the insights their minds provide and to keep the fruits of their effort.  Where you can answer yes to both, you will find wealth and growth.  Where you answer no to both, you will find poverty and misery. 


While it is not exactly a direct follow-on to this article, see my post Progressives are too Conservative to Like Capitalism for an analysis of some of capitalism's detractors.  For yet another way to explain capitalism, at least libertarian philosophy, here is a new-agy approach that is actually pretty good.  Finally, Spontaneous Order has an interesting post comparing religious creationism in the physical world with progressives' statism in the economic/social realms.

Update #2:  Here is my more recent statement covering similar ground, focusing on the mistaken assumption that economics are all zero-sum.

Please Don't Let the Government Invest Funds in the Stock Market, part II

I am all for restructuring the whole social security system, but, as I have written before, we cannot let the government invest social security funds in private equities.  The potential for manipulation and creeping socialism are astronomical.  Its easy to picture fights over whether the social security funds should be invested in tobacco makers, gun makers, hospitals that conduct abortions, Domino's Pizza (that donates funds to oppose abortion), Haliburton, etc. etc. 

I have always used government-funding of universities as an example -- the government uses the leverage of this funding (and the threat of its withdrawal) to force all kinds of regulations on universities.  Today, we have a good case example that is even more directly applicable. 

Over the past several years, Calpers (the California state workers retirement fund) has been a great example of how government control of equity investments can be a disaster.  In the case of Calpers, their huge pension investments automatically make them one of the largest investors in each company in their portfolio.  Calpers has used that power wisely at times, promoting improvements in corporate governance, but has also used it astronomically poorly. 

Under Sean Harrigan, Calpers portfolio has been unbelievably politicized, up to and including having the portfolio use its ownership in several grocery chains to support striking members of the grocery union run by... Sean Harrigan.  Professor Bainbridge has a couple of good roundups here and here.

If we are change how social security funds are invested, let individuals make their own investment choices. 

Socialism and the Nobel Committee

Congratulations to Edward Prescott, our hometown hero from Arizona State, who shares this years Nobel Prize in Economics.

Why is it that the Nobel committee gives its highest economics prizes to people who consistently put more intellectual nails in the coffin of socialism, then go out of their way to give the "soft" prizes, such as literature and peace, consistently to communists, socialists, and enablers of totalitarianism?


Marginal Revolution has a good roundup on what exactly this economics prize was won for. I should have been more specific when I said "more intellectual nails in the coffin of socialism". The link explains it better, but one argument against free markets is that recessions are proof of market failure and a "better" system would not have them. Prescott and Kydland, among other things, show how:

Recession may be a purely optimal and in a sense desirable response to natural shocks. The idea is not so counter-intuitive as it may seem. Consider Robinson Crusoe on a desert island (I owe this analogy to Tyler). Every day Crusoe ventures out onto the shoals of his island to fish. One day a terrible storm arises and he sits the day out in his hut - Crusoe is unemployed. Another day he wanders out onto the shoals and finds an especially large school of fish so he works especially long hours that day - Crusoe is enjoying a boom economy. Now add into Crusoe's economy some investment goods, nets for example, that take "time to build." A shock on day one will now exert an influence on the following days even if the shock itself goes away - Crusoe begins making the nets when it rains but in order to finish them he continues the next day when it shines. Thus, Crusoe's fish GDP falls for several days in a row - first because of the shock and then because of his choice to build nets, an optimal response to the shock.


This is very timely. Our new Nobel Laureates did a lot of work on short term / long term economic paradoxes. For example, they work a lot with problems such as prescription drug regulation, where people can be made happy in the short term (lower prices) but really unhappy in the long term (via forgone research and therefore fewer new drugs). Interesting given that Kerry/Edwards are advocating just such a short term fix that would lead to long-term disaster. The press made a big deal out of how the Nobel Committee slapped Bush in the face with its Peace Prize to Jimmy Carter. Don't hold your breath waiting for anyone to point this one out.