Leading the Revival of Individualism & Self Reliance

Who Will Make The Case For Capitalism. It Certainly Won’t Be The Republican Party (Or The Wall Street Journal).

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Peggy Noonan recently wrote a Wall Street Journal column under the title Republicans Need To Save Capitalism. She is right that someone needs to take on the role of making the case for capitalism, but wildly, spectacularly, crazily wrong to identify a political party as a potential source of an intellectual argument.

In The State, Anthony de Jasay states his belief that capitalism has never succeeded in effectively asserting the moral worth and social utility of the right to private property. This, he says, explains why

in the face of an essentially adversary state and its accompanying ideology, capitalism has shown so little intellectual vigor in its own defense, and why such defenses as it has managed to muster have been poor advocacy, lame compromises and sometimes offers of honorable surrender.

The consequence, according to de Jasay, has been the “mute defeatism” of the capitalists, and submission “to the role of political underdog”.

There is no excuse for this defeatism. Private property, entrepreneurship and the creation of value for others in an economy of consumer sovereignty – where the consumer controls what is produced by demonstrating their preferences through buying or not buying – creates the most beneficent society. It is far preferable to state capitalism, where the interventions of the state are not only inefficient, but unjust: favoring the interests of its own employees, dependents and partners over those of the citizenry.

As F.A. Hayek points out in The Intellectuals And Socialism, governments recruit the schoolteachers, university professors, journalists and media producers, think tank scribblers and assorted talking heads to make The State’s case for socialism. Under the terms of this case, capitalism is evil exploitation of the majority of the populace, via depressed wages, diversion of resources into capitalist profit, and misuse and malinvestment of financial flows. The State surrounds us with this anti-capitalist case from the time our children enroll in schools (where content and meaning are carefully controlled to produce submissive, dependent, ideologically aligned subjects), through higher education, to 99% of media outlets (all of which are effectively state-licensed). All of these content platforms become regulated utilities, carefully controlled, licensed, and supervised by The State. We can easily see how Google, Amazon and Facebook are moving towards this regulated utility status. For example, imagine the Stalinist intent of the House Of Commons Digital, Culture, Media And Sport Committee. This committee, in an official report, referred to these companies as “digital gangsters”, which tells us all we need to know about the level of self-restraint they will exert when considering their regulatory scope.

In fact, the “regulated utility” image is probably applicable to most of our big companies, including those who serve the government directly (like the military-industrial complex companies), those who depend on regulation for their permitted profits (like the energy and transportation sectors), and those who seek to benefit from various government protections (like the automobile companies who live under the 25% tariff against imported pick-up trucks, to mention just one of many interventions).

If the intellectuals and chattering classes are fully employed in attacking capitalism, and the capitalists themselves have been captured, who is going to make the positive case? It certainly won’t be the Republican Party or any other political entity. All political entities and actors – among which we may include Ms. Noonan – are the enemies of capitalism. Politics is opposed to both capitalist economics – the system that elevates the living standards and quality of life for billions over time – and the capitalistic individuals who dedicate their lives to serving others by creating new economic values for them, enhancing lives one at a time.

The only source of energy for this case is from the entrepreneurs themselves. It’s the entrepreneurs who are the heroes of the free market system, whose innovations raise the standards of health, nutrition, safety, productivity, education and art for everyone. They do so because they see a profit opportunity: profit is the signal from the customer that there is value in an innovation that they are willing to pay for, and that it’s a better use of society’s resources than was the case before its invention. The entrepreneur who puts society’s resources to more productive use is rewarded by consumers. But not immediately. The entrepreneur makes sacrifices, defers income, invests his or her own money, works hard, takes risk and grapples with uncertainty that has deterred or baffled others. Finally, they bring the fruit of their labor and capital investment to market and receive their verdict. That verdict encourages them to produce more or to go back to the drawing board / lab / incubator to try harder. They’re high achievers because they try hard and refuse to give up in their quest to create new value.

They won’t be writing elegant op-eds, and most of them won’t be book authors, and they’re not penning academic white papers. They’re not producing movies celebrating entrepreneurship. (The movies that are made about entrepreneurs are usually made by intellectuals, like Steve Jobs, written by Aaron Sorkin from the book of the same name by Walter Isaacson. Being intellectuals, they had to skewer the hero.)

There are exceptions like Ken Langone (who bravely wrote a book called “I Love Capitalism!”) and Andy Puzder, who are willing to write and talk on camera about the merits of capitalism. John Tamny is a media entrepreneur who is a reliable defender of capitalism.

But the greatest service the entrepreneurs can give to the defense and celebration of capitalism is to continue to do the great work that they do. Every instance of a profitable entrepreneurial transaction is a bell rung loudly for a better society: for empathy, for collaboration, for aspiration, for morality, for the highest and best use of human talent, for creating new knowledge, for sharing, for making excellent use of technological innovation, for purpose and meaning, for giving a fellow human being a needed service, for delivering a value that was previously denied to them.

Let the entrepreneurs do what they do, and let customers celebrate by buying what they produce. If we are able to interconnect – not just transactionally, but intellectually – the world of customers with the world of entrepreneurs, the people who are the creators of new value in society, we will be able to raise the understanding of how entrepreneurs change the world for the better in accordance with customer wishes. If all these customers and all these entrepreneurs share their learning and experiences, then we’ll arrive at a new horizon of appreciation for capitalism. We’ll understand spontaneous order, the driving dynamic of entrepreneurial human action, the never-ending process that constantly spreads and furthers the advancement of civilization

And we’ll render the anti-capitalist intellectuals and anti-capitalist politicians irrelevant and obsolete.

Billionaires Already Gave Their Fair Share.

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It is becoming increasingly fashionable to agitate against the very existence of billionaires. Recently, for instance, Business Insider summarized a statement of Congresswoman Alexandria Ocasio-Cortez as follows: “[she] said a society that “allows billionaires to exist” while some Americans live in abject poverty is “immoral.” Echoing this sentiment, Elizabeth Warren repeated a very popular sentiment among the mainstream and far left; namely, that it was time that billionaires pay “their fair share in taxes.”

While both of these narratives are commonly held and frequently expressed, they are completely wrongheaded and misunderstand the role that billionaires actually play in society.

Government-Made Billionaires vs. Market-Made Billionaires

We must be clear in our analysis that the State often has a hand in the creation of billionaires; not because it “allows” billionaires to exist, but because the western world suffers from a framework that actually redistributes resources — via taxation and monetary expansion — from the poor and middle class to the well-connected. These recipients of State redistribution, often called “crony capitalists” are excluded in our praise of billionaires and to whatever extent a billionaire (or millionaire) is a net recipient of government redistribution, to that extent we are critical of them.

Given the complexities of the owners of big business and their relationship with the state, the consideration of whether a wealthy CEO of a company is to be criticized or praised becomes a difficult exercise. Nevertheless, the libertarian position on this is to eradicate the confusion by unraveling the involvement in industry that characterizes the modern United States Federal Government (and most other western governments). Any positive subsidies that are transferred, via the government, from the taxpayers to the capitalists must be eliminated if we are to benefit from the role of the billionaire capitalist, as discussed below.

Now that we have that out of the way, we can analyze the existence of billionaires who have achieved such a status on the market. Far from being the cause of inequality and poverty, it is actually the billionaire who has contributed, in one way or another, to the well being of society. It is the billionaire, who has bestowed upon his fellow man the goods and services that raise their standard of living.

On the market, the source of the billionaire’s billions is the hundreds of thousands, perhaps even millions, of people who have decided that whatever the billionaire was offering was more important to them than the money it cost to obtain it. But even before the consumers made this judgement, the billionaire had to anticipate their preferences and he had to risk the prospects of a loss in order to bring forth the goods and services that the people desired.

The Role of the Billionaire in the Marketplace

On the market, there are no guarantees. As Ludwig von Mises once noted, the consumers do not offer assurances as to their commitment to the goods and services that the billionaire produces— they change their minds, they shift their preferences, and they choose goods of alternative quality at their own whim. The billionaire then, before he makes his billions, faces the prospects of a loss; that is, the market has a built in set of financial consequences as a penalty to the capitalists who choose unwisely in their allocation of resources.

Capitalists either succeed in providing things that people want or they do not. If they do, then not only are they rewarded, but by definition other people’s lives are improved. This improvement is not politically determined and judged, but determined by actual and demonstrated preferences of the consumers. If the capitalist does not succeed in making people better off, he is penalized and suffers the financial and other consequences of his poor decisions.

In this way, those politicians and commentators who push the idea that billionaires need to “give back” or pay their fair share do not understand that there is nothing to “give back” and that the “fair share” has already been contributed to society. There is nothing to “give back” because an exchange took place; value for value, with the capitalist giving a good or service and the consumer reciprocating with a transfer of funds. There was an even exchange such that there is no deficit or surplus in what one party continues to owe the other.

Further, the idea that billionaires must pay their fair share via taxation is similarly interpreted. The fair share, the wealth that the capitalist created on the path toward his billions, has been bestowed upon society in the course of his receiving the reward for his accurate anticipation of the wants and needs of consumers he has likely never even met.

If a capitalist earns billions of dollars in the course of his investment and subsequent selling of the goods and services he produces, he paid out his fair share in the form of the very goods and services he sold! If the capitalist earns a billion dollars, he contributed a billion dollars worth of goods. If he earns a million dollars, he contributed a million dollars worth of goods. If he earns a negative return (a loss), he has contributed nothing and is therefore penalized for this.

Thus, a wealth tax, by its very coercive nature is not only a breach of the private property rights that a capitalist has in his wealth, but it is also definitely not about “fair share.” It is an additional obligation above the fair share and diminishes the future investment capabilities that the capitalist has. And to diminish the capital stock is literally to undermine the potential wealth-creating activities of the capitalist billionaires.

The future of western civilization depends on the socio-economic framework of capitalism and free markets. It depends on people understanding that the wealth we see around us is a result of capitalism– of the “rich” seeking profits by investing their capital into the structure of production to produce goods for people and profit as they do it. In the words of George Reisman, “the protesters and all other haters of capitalists hate the foundations of their own existence.”

Thus, to launch an attack against the capital stock of capitalists of all wealth levels, is to undermine the very tool that mankind has in fighting impoverishment long term. If we want to overcome poverty, nothing is more important than investment into the structure of production; this is how goods are made more affordable to more people that have never before been to attain them. To siphon capital in preference for consumption is to siphon the very goods that bring mankind out of its natural state of impoverishment. In order to address the eternal struggle over scarcity of resources, we need capitalists and billionaires. They are the providers of a better tomorrow.

This article appeared in mises.org. C.Jay Engel  is the creator and editor of AustroLibertarian.com.

The Poetic Justice Warrior Society Manifesto

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We propose to formalize a Poetic Justice Warrior Society, one that has existed in ethereal form since the dawn of man, in ideological form since the time of Aristotle, and in gradually tangible form since the late Middle Ages. The Poetic Justice Warrior Spotlight series has focused on people who have lived lives of reason, purpose, and pride. This Statement of Purpose will demonstrate that the individuals highlighted so far have merely shed light on the innate abilities, aspirations, ideals, and perseverance that we all possess.

What Poetic Justice Warriors Believe

If you believe that your capacity for reason is your only tool for survival; and if you believe that rational ideas, purposeful behavior, and confidence in your abilities are essential for thriving, then you have an active mind.

If you believe that everyone owns their own life, not some tribe; and if you believe that your success and happiness are the result of your vision, attitude, and determination, not the favors of others, then you are an individualist.

If you believe that every child has their own unique emotional and intellectual glidepath; and if you believe that your ideals will help pave the way for the next generation of artists, scientists, philosophers, educators, and entrepreneurs, then you are a romantic.

If you believe that entrepreneurs best anticipate the needs and desires of the greatest number of human beings, that they create markets, consumers, unlimited choice, and prosperity; and if you believe that consumers ultimately pick the winners through voluntary trade, without unity of purpose, then you are a capitalist.

If you believe that the proper role of government is to protect its residents from the threat of violence and fraud; and if you believe that the greatest threat to the natural rights of man is government itself, then you are an American. It doesn’t matter what country issued the passport you carry.

If you believe that the unifying force for human flourishing is trust, which comes from commonly shared values and beliefs; and if you believe that reason, individualism, and equal justice under law are the integrated system of values that maximizes trust, then you are a civilized human being.

If you believe that the ideals of Western Civilization such as freedom of speech, individualism, and equal justice are being undermined by speech codes, identity group tribalism, and the Mirage of Social Justice, all of which breed distrust; and if you are willing to defend reason, self-creation, and peaceful human flourishing, we say congratulations, you are a Poetic Justice Warrior!

Why Poetic Justice Warriors

An eclectic group of men and women have been spotlighted as Poetic Justice Warriors because of their enduring contributions to personal liberty and the unimaginable prosperity enjoyed everywhere there is capitalism. All of them have overcome obstacles thrown in their path by the established hierarchies of monarchy, religion, education, politics, and socioeconomic class traditions.

The scientists and inventors have proven that existence exists. Their application of reason to reality has raised the human condition for generations into the future, each generation building on the knowledge of these pioneers.

The philosophers have proven that human life will flourish only when human beings are free to act on their own judgment; free from mystical belief systems, government oppression, and anarchy. Self-determination has overcome the determinism of the premodern and postmodern eras, and will always do so.

Our inspirational leaders have proven that one-size-fits-all government indoctrination manufactures too many lives with little purpose or confidence in their futures. Our educators respect and nurture the potential of each client’s human mind.

Free market economists have proven the efficacy of individual human action. Entrepreneurs are the essential ingredient for blending compassion with rational self-interest. Benevolence cannot be nationalized. With their vision and ingenuity, they provide more, better, and cheaper while earning a profit. This is the basis for the economic way.

Our radicals for freedom have taken the achievements of the Enlightenment and enshrined them in the US Declaration of Independence and Constitution. Its separation of powers and focus on the natural rights of man is a singularity in human history. This is why America is the magnet for capital and people of all cultures. America is the triumph of the economic way over the political way.

The Poetic Justice Warrior Society Declaration

We have the self-discipline and self-respect to postpone gratification when it will benefit our futures, our families, and our constituents.

Our lives are spent accumulating knowledge, learning from mistakes, and establishing principles for living that can only be altered through rational consideration, empirical evidence, and solving contradictions.

We respect and defend the classical liberal ideals of natural law, tolerance of innate differences, unchanging human nature, and everyone’s right to peacefully pursue their rational self-interest.

We understand the threat of collectivism including the government currency, compulsory education, global climate, equality activism, and Keynesian economic policy scams. Crisis after crisis, all for the sake of more centralized political power and unearned enrichment.

We believe in the economic way – providing for the material and spiritual needs of our families, friends, employees, customers, stakeholders, and strangers through earned trust and voluntary human action; and we reject the political way of pandering to envy and guilt by the political class and their puppet masters.

We are optimists who are grateful for the personal liberties and leisure we enjoy today, and we know from whence it came. Today, the future we desire can be won through the self-reliance of individualism. We are producers who sanction the well-being of all, but not our own victimhood.

 

 

 

 

Economic Illiteracy Is Behind The Call For “Paycheck Fairness”.

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News media has been buzzing lately about the “Paycheck Fairness Act” sponsored primarily by Democratic elected officials in Congress. The rhetoric is exactly what one would expect: there is discrimination in the job market, observable in the “wage gap” between men and women workers (and other gender identities). So we need a law to fix this problem. As usual, any and all problems arise due to some mystical shortcoming in people’s voluntary choices — and they can always be corrected by glorious government.

However, the driving force behind this and other similar reforms is not the apparent desperate urge of their proponents to use the one tool they find effective — and then hammer away on all the disturbing “nails” they see. If we are to take these politicians at their word, we conclude that their motivation is one of social justice: the passionate dislike for — often even hatred of — unfair, unjust, discriminatory, if not oppressive, behavior. Wherever someone is unfairly or unjustly treated, it is a symptom of a disease — and requires a call for action.

To put this in more familiar terms, the driving force behind these reforms is a passion for justice.

Political Power vs. Economic “Power”

Granted, the means chosen by these policymakers are highly unlikely to lead to the desired ends. The inequality of some getting paid less for the same work, or the inequality of some being rich while others are poor, is hardly solved by instituting arbitrary power among men to redistribute from the haves to the have-nots. Indeed, if money is power, which is the common claim and the assertion on which the immorality of inequality rests, then how can a “right” to use political power over life and death of others be a solution?

For progressives, political power is not a problem in the sense that economic influence is. The former is only, and strangely, a matter of the “wrong” people having it. With good people in government — goes the myth of the selfless public servant — there is no problem. The latter, however, is different. Apparently it is a problem that someone has something while others do not.

In some sense, they are right to see a difference: political power is very different from economic power, as Franz Oppenheimer famously noted. An important difference is that political power suggests a promised ability – wherever there is political power, a person who is good-at-heart (and, it should be added, wise) could bring about justice. This power is indeed “given” to certain individuals in order to change society for the better.

Economic influence, in contrast, is not granted others in seemingly controlled manner. There is no formal election where willing economic actors are appointed as stewards of ‘society’s’ riches. Instead, some people are rich as a result of actions that they themselves took, supposedly beyond anybody else’s control. It is easy to see that a lack of economic understanding — and thus the inability to see the value that some provide to others and as a result accumulate personal wealth — would lead one to erroneously conclude that wealth must always be unjust.

Such economic illiteracy is a major problem of our time, and is augmented by popular democracy as voters at seemingly no cost to themselves can place immense power in the hands of some who seek it.

The Unfairness of Government Intervention

But illiteracy about the economic workings of a market is neither better nor worse than illiteracy about the actual working of an economy. While market forces are at play, they are hampered, restricted, and contained within artificial boundaries by supra-economic political means. The workings of any modern economy is severely distorted, and thus the outcome necessarily unfair and unjust.

Those who have accumulated enormous wealth have often, of not always, to a significant extent been able to do so because they have been favored at someone else’s expense. Of these, some are directly in bed with government and make fortunes dealing with and offering services to politicians; others benefit from barriers to entry of all kinds.

It is in this sense not wrong to say that “you didn’t build that,” as then-president Barack Obama put it. To the extent anyone accumulates wealth based on the fact that others have not been able to compete because of political restrictions, that wealth is unearned and unjust. That wealth is accumulated not as a result of providing valuable goods and services, but because others could not do the same — or do better.

This has nothing to do with starting a business that employs others to “do the work.” Such contracts can be fully legit. To say that a business owner “didn’t build that” business because he or she hired others is nothing short of insane. Those who say such things are blinded and misguided by their ideology.

But to say that a business owner “didn’t build that” business to the extent that he or she benefited from regulations that kept others from competing with it, certainly is not. The same is true to the extent wages were offered by the employer, and accepted by the employee, below what would be the open market rate as though they were the actual market rate.

Whoever benefits from the arbitrary restriction of market forces certainly “didn’t build that” – it was built on the shoulders of others: those who would have competed had they been allowed, those who would have innovated in that market industry had they not been prohibited or penalized by artificially high costs, and consumers who did not have the options they otherwise would have had.

And it was also built on the relative exploitation of employees, whose alternative occupations remain unavailable because of the dysfunctional economy under the yoke of government. Labor would earn much higher wages overall, and have many more opportunities at hand, were it not for the fact that regulations are a wet blanket suffocating the economy and thus keeping opportunities from appearing.

The true extent of government’s effect on the economy lies in the opportunities that remain unrealized, not in the observable limitations.

It’s Time for Truly Just Wages

In a sense, there is truth to the words of Alexandria Ocasio-Cortez, America’s new face of economic illiteracy, commenting on the Paycheck Fairness Act: “It is time that we pay people what they are worth and not how little they are desperate enough to accept.”

Indeed, it is time for just wages. Those are not wages set by politicians such as Ms. Ocasio-Cortez, however, but by an actual market where one is paid according to one’s actual contribution to satisfying consumers’ varied wants. The only way of figuring out that real worth of work is to allow everyone to try to find the best use of their abilities, to pursue whatever opportunities they see or believe that they see, and thus through their actions satisfy wants and generate opportunities for others.

True “paycheck fairness” is only possible in a market that is open to all, and where participation is both voluntary and unrestricted. That is, in Oppenheimer’s words, where the economic means prevail and the political means have been abolished and forgotten.

Per Bylund is assistant professor of entrepreneurship & Records-Johnston Professor of Free Enterprise in the School of Entrepreneurship at Oklahoma State University. Website: PerBylund.com.

Why The Market Is The Only Reliable Pollster.

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Under the heading “What People Really Want,” an issue of The Economist reported results of a British poll. Among the allegedly genuine desires of British citizens are higher taxes (“to keep down inflation”) as well as greater government expenditures on health, education, and welfare. Most Britons apparently also want to ban fox hunting, but few wish to legalize marijuana.
Hogwash. Even the most scrupulously conducted poll cannot discover “what people really want.” I don’t doubt that this Economist poll is as sound a poll as has ever been conducted. But polls by their nature cannot uncover what people want in an economically relevant sense.

The verb “to want” has two different meanings. This difference is linguistically slight but economically weighty, and insensitivity to this difference in meaning causes confusions—including being misled into thinking that polls elicit reliable information on what people want.

Let me illustrate this dual meaning of the verb “to want” with a personal example.

I want a new Lexus automobile. No lie; I really want a new Lexus. As used here, the verb “to want” means nothing more than a fancy or a whim. If I tell you in idle conversation that I want a new Lexus, all this pronouncement means is that if I could acquire a Lexus at little or no cost to myself, I’d happily acquire one.

This first meaning of the verb “to want” refers to unconstrained wanting. It refers to the wishes and dreams that we each have, not only for material possessions, but for all manner of worldly and spiritual outcomes. (In addition to wanting a Lexus, I also genuinely want world peace, universal free trade, an end to human suffering, good weather, a Super Bowl victory for the New Orleans Saints . . . . . my list is endless.) We all want lots of things if they are available to us personally at a zero or near-zero price that is, if there are no constraints on our acquiring these things. Similarly, we all want lots of good things that are simply unobtainable in unlimited quantities.

While linguistically sound, using the word “want” in its unconstrained meaning risks profound economic misunderstanding. The second and more reliable meaning of “to want” is its economically relevant meaning. To want something in an economically relevant sense is to be willing to pay full price for that something. I’m unwilling to pay the $50,000+ necessary to acquire a new Lexus. Under the economically relevant (“constrained”) definition of the verb “to want,” I do not want a Lexus. While I (like most Americans) could afford a Lexus if I dramatically reduced my spending on food, clothing, entertainment, etc., I prefer to drive a less luxurious car so that I can eat something other than cabbage soup at every meal. In fact, I actually want a 1992 Toyota Camry—for that is what I drive. The Camry is not as nice a car as the Lexus, but it is priced right for me and my family.

What has all this parsing of the meaning of “to want” to do with citizen polls? Plenty.

When someone is asked by a pollster if he wants, say, more welfare payments, this person responds free of charge. No matter what response he gives, he bears no material consequences of that response. Of course, the person might understand that greater welfare payments would mean higher taxes for him, but he also understands that his response to a poll question does not alone determine government welfare policy. Because government’s welfare policy is not determined by the opinion of any individual, no individual incurs any personal cost in answering a question about such policies one way or another.

In other words, polls uncover only unconstrained wants—wants that people have independent of the costs of expressing these wants.

Compare the following two scenarios. First, you’re asked in a poll whether or not you want your city to build a subway system. Second, you’re asked by a Lexus dealer if you want to purchase a new Lexus. Your answer to the first question changes nothing. Whether or not the subway system is built is independent of your answer. Therefore, you will likely be much more cavalier in answering such a question. Your answer is without consequence.

But you bear significant personal consequences when answering the question posed by the Lexus dealer. If you say “yes, I’d like to buy this new Lexus,” you commit yourself contractually to buy an expensive automobile. If you say “no,” you do not commit yourself. Either way, your answer has immediate and personal consequences for you. Your answer matters; it determines directly whether or not you purchase the car. As a result, you answer the Lexus dealer’s question carefully and prudently. If you’re not wealthy, you likely will say “no.” You might tell the Lexus dealer that you really like the car, and that if it were less expensive you might buy one. But at its current high price, you do not now want a new Lexus.

So when British citizens claim in a poll to “want” such things as greater welfare disbursements and continued police efforts to prevent adults from smoking pot, these answers do not mean that British citizens “want” these things in the same way that I want my 1992 Toyota or the bag of groceries that I just purchased. Such poll results reveal only Britons’ unconstrainedwants, not their economically relevant (“constrained”) wants.

Because opinion polls do not reveal people’s constrained wants, it is illegitimate to use polls to guide government policy-making.

But what are elections if not polls? In elections as in polls, no individual’s vote determines policy outcomes. Therefore, voters typically vote with far less prudence and shrewdness than they use when buying groceries or choosing a plumber, what people really want—in an economically meaningful sense—is revealed only through private market transactions where each person directly confronts the full costs of expressing his desires. In contrast, no poll or election reveals genuine wants constrained by costs. Only the market reveals genuine wants; therefore, only the market can be trusted to respond to people’s real demands.

This article originally appeared at fee.org

Amazon’s NYC Exit Is A Big Win For Private Enterprise And Property Rights Against Progressive Government.

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Amazon recently announced that it is withdrawing its offer to develop a second headquarters in New York City. Prior to this announcement, Amazon had been “negotiating” with state and city politicians about the economic conditions of locating its new center. While Amazon thought it had arrived at an agreement it could accept, the progressive left continued to attack the company for its “corporate greed”, threatened politically-assisted unionization (NYC Mayor Bill De Blasio himself threatened to bring unionization pressure), and raised the specter of a veto on any and all agreed negotiating points by nominating Democratic State Senator Mike Gianaris to the State’s Public Authority Control Board.

Any negotiation between private enterprise and government over the economic conditions that the government sets as a condition of a firm’s operation is doomed to failure. Government is the enemy of private enterprise. Private enterprise creates, produces, enhances lives and brings economic betterment. Government confiscates, regulates, taxes, restricts and strangles business. Even if it were to agree to temporarily reduce the pressure of the strangulating action, it would be unwise for any enterprise to trust in the promise. In fact, the New York progressives did the opposite: they negotiated an agreement and then, once it was signed, immediately repudiated it.

Amazon’s wisdom in cancelling its deal is a blessed reinforcement for capitalism and private enterprise. The current direction of left-wing sentiment in the US towards a greater acceptance of socialism and a repudiation of capitalism and entrepreneurship can not be airily dismissed as merely a passing fad; it is potentially an existential threat to civilization.

As Professor of Economics Dom Armentano writes:

The current wave of extreme progressivism has a far more nefarious goal than simply higher taxes on the super-rich or carbon taxes to scrub down the environment.  Indeed, the long-run objective of the new socialists and the gang of social justice warriors (SJW) is to gradually delegitimize the very foundations of modern capitalism by obliterating conventional notions of property rights, fairness and justice.

The capitalism that has raised the living standards of every American citizen to the great heights enjoyed today is based on a legal system of individual property rights.

Take, for example, the most obvious and essential capitalist institution:  the private stock corporation. It is solidly rooted in the notion that individuals have rights; that these rights include the right to incorporate; the right to instruct managers of corporations to maximize profits; and the right of owners to sell their shares. 

These individual rights are the moral foundation for the existence and operation of all modern business organizations. It is morally appropriate for individuals to own property; to exclusively determine its use; and to enjoy the benefits earned from production or exchange.

Modern progressives and socialists reject individual property rights.  They reject the legal system that upholds these rights. They reject the moral status of property rights. They want government to have the power to alter property arrangements of which they disapprove, and to redistribute income and privileges to anyone they nominate, in the name of “fairness” and “social justice”.

Ludwig von Mises wrote that it is the characteristic of capitalism that the efforts of a small minority of savers, technologists and entrepreneurs compound for the benefit of the majority, who enjoy the high standard of living and material comfort that result. Yet the majority, while enjoying the outcome of capitalism, do not understand its mechanisms. They believe economic progress is some kind of inevitable trend, which benefits them by right. Because they don’t comprehend, they allow envy – the failure to enjoy what you have because another person has something you don’t – to fog their vision and twist their mind. That’s how the words capitalism and capitalists become derogatory insults, rather than celebrations of achievement. Or, as Alexandria Ocasio-Cortez put it: “…New Yorkers and their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.” They also, of course, relinquished the jobs, income, revenue, health care benefits, neighborhood redevelopment and corporate earnings reinvestment that would have accompanied Amazon’s HQ2.

The anti-capitalist mentality certainly seems to be in the ascendancy at the moment. But this perception may be inaccurate, a fiction of the left-wing media and a phenomenon of the social media manipulation skills of the progressive left, who seem to be more adept with this technology than the capitalists who invented it for them. A recent Fox News poll indicates that, in their words, “Capitalism Buries Socialism”. Specifically, 55% of poll respondents favor the libertarian position about government, “Leave Me Alone”, compared to 34% who take the socialist position, “Lend Me A Hand”. According to Fox News,

Fifty-seven percent of voters have a positive opinion of capitalism.  That’s more than twice the number who feel the same about socialism (25 percent).

We may take some relief from these overall numbers, but underneath them is a clear “us versus them” divide:

By a 25-point margin, more Republicans (72 percent) than Democrats (47 percent) have a positive view of capitalism.  Moreover, Republicans (54 percent) are three times as likely as Democrats (17 percent) to have a “strongly” favorable view. More than twice as many Republicans (68 percent) as Democrats (30 percent) think the way capitalism is working is fair.  Six-in-ten Democrats (60 percent) say capitalism does not give them a fair shot.

In The Anti-Capitalist Mentality, Ludwig von Mises wrote:

The most amazing thing concerning the unprecedented change in earthly conditions brought about by capitalism is the fact that it was accomplished by a small number of authors and a hardly greater number of statesmen who had assimilated their teachings.

In other words, the thought-leadership for capitalism is in just a few minds. The benefits of capitalism are more likely to be embraced by the majority than the structure of thought behind those benefits. The problem faces us that the politicians, professors, schoolteachers, journalists, authors, filmmakers, and media producers who dominate communications – especially communications to young people – are capable of shaping the anti-capitalist thought patterns through which the benefits of capitalism are processed. This is what allows American citizens to enjoy the material comfort of the entrepreneurial economy that works ceaselessly to improve their living conditions, while at the same time condemning the entrepreneurs as exploitative if they happen to be successful.

Amazon did the pro-capitalists a great favor by exiting their NYC deal when the progressives threatened more economic extraction. The company demonstrated belief in their own purpose of economic betterment, and adherence to the principles of contract based on property rights. Let’s cheer them on.

Beware! You Are Being Spied Upon Right Now By One Or More Of These Techniques.

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If you ever wondered if someone has been spying on you on the internet, or if your government has a secret program to watch over your browsing activity, you might be right.

How do they do it and what makes you vulnerable to spying? Let’s look at four key techniques which are used by third parties to snoop on your online life and what you could do to protect yourself.

#1- Eavesdropping attacks

Some of you might have secured your computers and your own networks with a firewall or security software. Some might also have a connection that is authenticated to their ISP. But can you be sure that your data is taking the safest path when it’s transmitted over the internet?

You may as well answer “no” if you are not using a VPN.

Indeed, you will know when you send your data packets online if they have reached their destination, just like when you receive them. However, you probably cannot tell which networks your data is going through on the way to its final destination and if someone has made some copies of it along the way. So, it is very possible for third parties, or even governments agencies such as the NSA, to be spying on your internet traffic right now if you have an unsecured internet connection.

#2 – Collecting cookies

Every time you open your browser and see an ad, a cookie will be gathered by the web advertising distribution network. Unfortunately, the cookie will provide information like your browser’s unique identifier as well as your IP address which can be used to identify you.

You might see a lot of ads from the same big distributor as they have the budget to put them on many different sites. Therefore, they are more able to gather larger numbers of your cookies which they can use to target their ads more effectively based on your browsing activity.

Nowadays, most commercial websites will give you a warning if they use cookies, usually stating that it’s to improve their users’ experience. However, whether this counts as spying or not depends on your own perspective. But, at the very least tracking cookies is as a sneaky attack on privacy.

#3 Malicious software (malware)

Third parties could be spying on you if your device has a malware infection. Some types of malware can steal your data, such as the following:

  • Adware: this type of malware can track the websites that you visited and send the data of your browsing history to third parties which will use the data to help them to better target their ads at you.
  • Spyware: the CoolWebSearch download was spyware which posed as an add-on for your browser. This is typical of spyware which seeks to mislead you into thinking it serves a useful purpose while it is actually stealing your data. This could include valuable and personal data such as chat logs, bank information, account credentials, and more.
  • Keyloggers: with this malware, every keystroke that you make will be recorded and sent to third parties. This data can be used to track your online activity and even steal your crucial information like credit card numbers.

#4 Government Surveillance

Governments are most likely spying on you right now. For example, the National Security Agency (NSA) from the U.S. has legal permission to collect private data in the following ways:

  • By collecting the locations of the people’s cell phones in some countries outside of the US. Typically, they collect 5 billion records in one day.
  • By working in collaboration with other government across the world to tap people’s internet traffic when it is passing through undersea fiber optic cables.
  • By collecting messages, emails, and other data from personal accounts like Google, AOL, Apple, Skype, Facebook, and more.

The same issue is also present in the U.K., as the Tempora Program is legally intercepting people’s internet traffic under surveillance purposes while also partnering with the NSA and local telecom companies.

And even more scarily, these examples have only become public knowledge from leaked information. So, there is the possibility that you are being spied on with other new and secret programs we don’t yet know about.

Innovations can protect us from spies

The technology race will always exist between the government and those who are not working for the government. Some people have created new technology which could protect us from government surveillance, like Blockchain technology.

This innovation offers anonymity in asset exchange which gives us more secure transactions, and the ability to use private digital currencies which are not issued by governments like fiat currencies.

This gives people the opportunity to be free from depending on banks and governments who watch over their financial activities. People can now store their funds in cryptocurrency wallets, such as a mobile or hardware wallet, and send or receive them from people all over the world in private and with lower fees.

Simple steps to protect you from a spy

It’s likely that you are not happy with the secret surveillance techniques being used to watch over you. Therefore, you can follow these simple steps to help protect you from them.

  1. Protect your computer or any device that you use with security software. Besides from protecting you from malware infections, security software can also protect you from hackers.
  2. A simple thing you can do on your web browsers, such as Chrome, Firefox, and Internet Explorer, is to disable third-party cookies.
  3. Encrypt your traffic on the internet with a VPN. Then, no one will be able to open your packets of data even if they manage to intercept them.

How 100% Economics Points You To The Life Well-Lived.

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Here at the Center For Individualism, we have consistently encouraged the idea of 100% economics and zero percent politics. What does this mean to an individual aiming to design a life that’s well-lived?

Focus your life on value creation.

Creating value is the what the science of economics is all about. You, your family, your community, your country and your civilization all thrive when you create new value that didn’t previously exist. There’s a simple-to-comprehend process of value creation:

  • You find something that needs to better: someone is dissatisfied, someone is sad, someone is disappointed, someone doesn’t like the quality of a product they bought or the experience of a service they received. By exercising empathy, you can understand how they feel.
  • You imagine a future in which this dissatisfaction is removed. In this future, you comfort the sad person, you restore the faith of the disappointed, you design a better product, you deliver a better service.
  • You implement what you imagine. The recipients of your action feel better – they are more grateful, happier, more trusting, more satisfied, and better served.

If you make this your life, you too will feel better, feel purposeful, and find meaning. Follow this process all the time. It’s called economics.

Do it entrepreneurially.

So far, our process might sound like altruism. The difference between altruism and economics is that, in economics, you get paid for creating value. You aim to get paid as much as you possibly can, because that means you are constantly creating more and more value for others. In fact, you create much more value than you get paid for, because people pay you less (usually in the form of money) than the value they receive from you. That’s why they make the deal – they get more value than they pay for. If they pay $10 to buy your home-made beef jerky, it’s because they’d rather have the beef jerky than the $10, which means they value the beef jerky at more than $10.

You only make the deal (if your economic calculation is correct) because the beef jerky cost you less than $10 to make (and to package and to deliver). It also cost you less than any other alternative activity you could have undertaken. You have made an entrepreneurial profit. And you can use the $10 to create more value by making more beef jerky.

Both parties are happy. One, the entrepreneur, has created the possibility of a lifelong stream of beef jerky earnings.

But you don’t have to start a business or run a side hustle to create value. Make it a principle of your life if you’re a job holder in a firm, or a parent at home, or a volunteer at a 501c3. Your reward can be non-monetary: make a psychic profit rather than a financial one. But always create value. The only places you can’t do this are working for the government or working for a political campaign. These are value destruction activities.

Collaborate.

If you enjoy the beef jerky gig, you’ll collaborate with others to expand and grow it. If you enjoy parenting, you’ll collaborate with neighbors and educators and coaches to create more value for your child. Economics is entirely collaborative. Collaboration creates more value. Forget everything you’ve read about competition. Entrepreneurship is sharing information – when you learn what is dissatisfying to some potential customers, they’ve given you useful information. When you return with a superior product or service, you’ve repaid that information with interest.

You’ll observe others who are doing a good job of creating value and you’ll try to learn from them and adopt their practices and techniques, and then try to improve on them to create even more value. This collaborative, adaptive learning is what advances individual achievement and social progress. It never stops. When we are collaborating, we are always advancing. We are co-creating value.

Go local, go community.

The best way to build an empathic, entrepreneurial, collaborative system with you at the center is to start small and local. First, make sure your family feels like you are creating value for them. Then turn your attention to your nearest group. This could be your customers, co-workers, or neighbors. Make sure you are delivering value to them. Widen that group when you can, but don’t reach further than those you can please. Don’t disappoint anyone to whom you’ve promised value.

Self-reliance, self-resourcing, lifelong learning.

Try to be dependent on no-one. Every one of us is unique and we all have practical knowledge and skills that no-one else can match or reproduce. Everyone’s different and everyone is their own species. Put this uniqueness to work. When you do so in a collaborative team with others who are equally different and unique, you create a dynamic where no-one’s in charge, but everyone is advancing.

Self-resourcing means examining what you know, who you know and what’s at your disposal to utilize in value creation: what knowledge, which relationships, which assets that you own, including your own thinking processes as well as productive resources like computers, phones, and software. We’ve all got immense resources at our disposal. There’s a supercomputer in every pocket, and a super idea in every mind. There is never any justification to feel short of resources.

One of the greatest resources, and the number one source of competitive advantage, is lifelong learning. Connect to knowledge, ask questions, try out new sources and techniques, always be learning. Be different and better tomorrow than you are today.

Eschew politics.

If you think and act this way, you are thinking and acting economically. Economics is the discipline of creating new value, advancing knowledge, increasing personal productivity and bringing success to as many people as you can. It’s collaborative, friendly and the ultimate force for good. Economics embraces everything you do in life, and everything you need in life.

Most especially, there is no need and no room for politics in the life of economics. Politics is everything that economics opposes. It’s antagonistic, negative, and destructive. It creates nothing new. It either constrains innovation, or seizes the productive output of innovation in order to redistribute it. Politics hates individual initiative, while economics consists entirely of individual effort, imagination and productivity.

Choose the life you prefer. The economic life is the best choice.

 

The Titan Among The Enlightenment’s Giants.

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Poetic Justice Warriors represent many disciplines of human endeavor – philosophers, inventors, entrepreneurs, economists, writers, statesmen, educators, publishers, self-made men, and defenders of the natural rights of man, but no one has led his peers in all of them except Poetic Justice Warrior Benjamin Franklin. However, one of Franklin’s notable attributes, one that is unique to him, was that of a humorist.

Poor Richard Saunders

In the early days of mass publication, pamphleteering was a common way to communicate political ideas, and the newspaper industry was in its infancy. At the time, many articles were published under the byline of fictitious names, or pseudonyms. Franklin was no exception, and he used this technique to his advantage. This didn’t happen on its own; as a young boy Franklin was a voracious reader who would borrow books in the evening, read all night, and return them early the next day. And he taught himself creative writing techniques by rewriting the essays of others from sparse notes, and converting his own prose into poetry, and then back to prose, all to improve his vocabulary.

At age 15 Franklin created his first pseudonym, Silence Dogood, and secretly contributed a column to his older brother’s paper because it never would have been published otherwise. In it he would poke fun at various contradictions and injustices, and in one such article Silence explained,

I am naturally very jealous for the rights and liberties of my country, and the least appearance of an encroachment on those invaluable privileges, is apt to make my blood boil exceedingly.

A few years later Franklin created two other pennames, Martha Careful and Celia Shortface, and wrote a series of letters to the editor of a Philadelphia paper that were humorously critical of another paper’s abortion articles. Franklin was eventually able to buy the rival paper and shortened the name to The Pennsylvania Gazette.

At the age of 26, in 1732, Franklin began the publication he is most famous for, Poor Richard’s Almanack, and again used humor and wit to best his rivals in the publishing business – they were no match. But there was more to his writing than a humorous turn of phrase. Franklin was best known for inspiring others in behaviors for living well, especially among America’s rising entrepreneurial class, or as columnist Jon Hersey explains:

These proverbs helped make Franklin a symbol of the self-made man: he who helps himself by helping others. Franklin’s focus on mutual benefit proved to be another aspect of his tremendous success.

By the time Franklin was 42 years old he was wealthy, retired from his printing empire, and a philosopher whose inspiration was known and felt throughout the colonies, and he literally had the second half of his life ahead of him.

The Poetic Justice Warrior

In June 1775, the Continental Congress established a network of post offices in order to ensure the rapid transmission of information throughout the colonies, and appointed Franklin, America’s Interconnected Individual, its first Postmaster General,  In December 1776, Franklin arrived in Paris as America’s ambassador to France, for the express purpose of winning the French over as an ally in the war with the British. Of course, this was not going to be easy, and Franklin was the only man in the world up to the task. He was already a world renowned scientist, journalist, and philosopher. Or as President John Adams relates:

There was scarcely a peasant or a citizen, a valet de chambre, coachman or footman, a lady’s chambermaid or a scullion in the kitchen, who was not familiar with Franklin, and who did not consider him as a friend to human kind.

In France, Franklin was a charming conversationalist who could speak with natural elegance in a straightforward manner. The man was a scholar who had taught himself five languages, started America’s first volunteer fire department, and city police force. With the successful prosecution of the war for personal liberty, Franklin returned to America to join another campaign, one that would eventually extend natural rights to all Americans. In 1787, he was elected president of the Pennsylvania Society for the Abolition of Slavery. In 1789 it issued a statement:

Slavery is such an atrocious debasement of human nature, that its very extirpation, if not performed with solicitous care, may sometimes open a source of serious evils. The unhappy man, who has long been treated as a brute animal, presents a serious duty incumbent on us, to instruct, to advise, to promote in them habits of industry, to furnish them with employments suited to their circumstances, and to procure their children an education.

The Constitutional Conventioneer

With the failure of the Articles of Confederation, delegates from every state except Rhode Island convened in Philadelphia, in 1787, to fix the problem. Pennsylvania’s delegate was the 81 year old Benjamin Franklin, who along with George Washington, James Madison, and Alexander Hamilton, would have the greatest impact on the Convention. In fact, Thomas Jefferson had previously commented on both Washington and Franklin by saying that he “never heard either of them speak ten minutes at a time, nor to any but the main point. They laid their shoulders to the great points, knowing that the little ones would follow themselves.”

What the Convention ultimately constructed was a Constitution using Madison’s Virginia plan as its foundation. Historian Donald T. Phillips explains:

It was a completely new idea. A simple proposal that, when presented to the convention at large, caught all the other delegates by surprise. It was imaginative, creative, audacious, and almost radiant in its artistic balance and symmetry.

This achievement was characterized by John Adams as “The greatest effort of national deliberation that the world has ever seen.” George Washington simply declared the Constitution “a miracle.” During the signing ceremony, Franklin gazed upon a painting behind Washington’s desk, it was of the sun low on the horizon, and mentioned that painters “often found it difficult to distinguish in their art a rising sun from a setting sun. But now at length, I have the happiness to know that it is a rising not a setting sun.”

Common Sense Inspiration

Poetic Justice Warriors inspire people to act, they give people a sense of purpose. Prior to the American Revolution, Franklin inspired the British commoner Thomas Paine, who was a failure at everything he tried, but a passionate writer, to become a pamphleteer in America. The first of many editions of Common Sense was an immediate sell-out. After the Revolution began, he inspired General Washington to hire the Prussian Baron von Steuben as Inspector General of his army at Valley Forge, and turn a ragtag, ill equipped group of volunteers into a formidable fighting force.

But most importantly, Franklin was an inspiration to every strata of society. In the 18th century, it was commonly believed that aristocrats and commoners would live and die as such, but Franklin worked to erase this distinction. He was a commoner who became a wealthy self-made man, who lived a life of reason, purpose, and pride, and fought for all Americans, including the children of slaves, to be able to do the same. Upon learning of Franklin’s death in 1790, the National Assembly in France called for three days of national mourning in homage to –

The rights of man and to the philosopher who has most contributed to extend their sway over the whole earth. Antiquity, would have raised altars to this mighty genius, who, to the advantage of mankind, was able to restrain alike thunderbolts and tyrants.

Poetic justice served. Poetic Justice Warriors wanted.

Government Control Of Business Fails Because Government Has No Clue About How Business Works.

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As is well known now, Venezuela’s economic situation is dire. There’s no mystery as to what’s happened. Whether one reads the New York Times or the editorial page of the Wall Street Journal, the story is the same: nationalization of industries (oil, most notably) has resulted in an economic crack-up.

That Venezuela’s economy imploded in response to the state expropriating vibrant businesses shouldn’t surprise anyone. Business nationalization is the professional football equivalent of Barack Obama or Donald Trump showing up one day in Foxboro, only to tell New England Patriots owner Robert Kraft that the federal government is relieving him of ownership along with Bill Belichick of his job as head coach. The Patriots are good, by all accounts Belichick designed a masterful game plan on Sunday night, so imagine if either Trump or Obama were to force out football’s greatest mind in order to foist their own visions on the Patriots’ defense.

Government control of business leads to failure not just because those who replace the original owners don’t need to respond to market signals. It mainly fails because the individuals taking over by force generally have no clue about the business they’re taking over.

The Patriots/PdVSA comparison sounds extreme, but it’s really not. The Patriots are the NFL’s gold standard franchise, and PdVSA was at least once one of Venezuela’s most important companies, if not THE most important. In the above imaginary scenario, Obama or Trump take over play calling and personnel for the Patriots (Trump replacing Tom Brady with Don Jr. at QB?), while in the true-to-life scenario of PdVSA, members of Venezuela’s military were handed power. That Venezuela struggles in consideration of what’s taken place (this leaves out the tragic devaluation of the country’s currency, the bolivar) is elementary. Of course it struggles. When you hand over precious resources to individuals lacking any basis for overseeing them, and who will oversee them without having to adhere to market signals, the near, mid and end result is disastrous.

All of which brings us to a recent New York Times opinion piece by Grant Thornton chief economist Diane Swonk. It would be easy to say her rather unfortunate op-ed (“To Avoid a Recession, Start Spending Now”) was a disappointment, but such a comment would ignore that she belongs to a profession that broadly thinks prosperity causes inflation, that the killing, maiming and wealth destruction that is war actually stimulates economic growth, not to mention that the profession is nearly monolithic in its belief that government spending boosts prosperity.

In Swonk’s case, she’s convinced a recession is on the way. Without commenting on whether a downturn is in the offing (most of us can’t measure economic growth on the street we live on, yet Swonk laughably thinks she can divine the growth prospects for the world’s largest economy….) or not, Swonk’s fix for the alleged trouble ahead is government spending. Oh my….

Ok, it should be said up front that an economy is but a collection of individuals, and many of those individuals work for businesses. This matters simply because wise individuals and business generally rush toward their individual “recessions” as a way of fixing bad habits, labor mismatches, shuttering bad investments, bad ideas, etc. This all rates mention as a way of saying that even if our federal minders couldavert a downturn, doing so would be extraordinarily damaging to the U.S. economy. It would be when we remember that recessions are generally the painful but necessary process whereby individuals and businesses fix what they’re doing wrong. That’s why recessions untouched result in booms. The recession is the cure.

Swonk’s economy-sapping cure becomes even more puzzling when it’s remembered why the federal government has trillions at its disposal to begin with. To state what’s rather obvious outside the economics profession, federal spending power (whether the money is taxed or borrowed) is a certain effect of private-sector productivity. Unless Swonk can prove that Congress has access to resources from another planet, its spending power springs from economic growth that already happened. In short, Swonk’s economic prescription, one that would make even the strongest believers in Santa Claus blush, presumes that growth that already took place can be doubled (or more….!) if politicians spend the fruits of it. Swonk’s analysis brings new meaning to double counting, which is odd when we remember that she works for an accounting firm.

To all this, Swonk might respond that government spending can force into action idle economic resources, but to make such a remark would be for the economist to pretend that unspent wealth is generally parked in underground vaults as opposed to bank, savings, and brokerage accounts, not to mention with all manner of other financial intermediaries. This is a long way of saying that contrary to Swonk’s analysis, there’s no such thing as idle resources. Precisely because banks, brokerages and financial intermediaries can’t sit on unspent wealth, so don’t resources remain idle. The effect of “money” that we save is a constant push of resources to their highest use. Government spending logically can’t stimulate, it just signals government stepping in to allocate resources over the market-disciplined private sector.

Which brings us back to the situation in Venezuela. The economy there staggers simply because government has very much usurped the role of private actors when it comes to the allocation of precious resources, and the management/oversight of same. The results, as previously mentioned, were and are easily predictable. Much as father and son might wish otherwise, replacing Bill Belichick and Tom Brady with Donald and Donald Jr. would be disastrous for the Patriots.

Applied to the U.S., it broadly doesn’t have an economy that resembles Venezuela’s mainly because the federal government, while way too big, doesn’t control all the resources always and everywhere produced in the private sector. Still, our federal government does spend $4 trillion per year, and unseen is how much larger and vibrant the economy would be absent this massive mis-allocation. It should boggle the mind. Venezuela expropriates resources very aggressively, and its people starve. Congress expropriates resources in much greater amounts, but as a fraction of the total U.S. economy. Still, imagine where we’d be if the Belichicks of the private economy had more control over what’s precious, and the federal government less thanks to a smaller spending burden. One can fantasize.

For now, let’s just be clear that the government spending Swonk innocently and naively calls for would by definition dampen economic growth for it empowering politicians to replace market actors in directing what’s precious to its highest use. What’s been written should not be construed as an alarmist rant predicting the U.S. morphing into Venezuela anytime soon, but it is meant to convey what’s true: politicians can’t be investors or managers; Venezuela merely an extreme example of what happens when politicians aim to manage the vast majority of an economy.

Rest assured that what doesn’t work in total similarly doesn’t work partially. Swonk owes her employers an explanation. The accountants and auditors in Grant Thornton’s employ could never be as careless toward their clients as their chief economist was toward readers in what is the world’s most important newspaper.

John Tamny is editor of RealClearMarkets, where this article first appeared. 

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