Socialism must always fail 0

Yet another socialist state – Greece – finds itself insolvent. When will they ever learn?

Quotations from Socialism: An Economic and Sociological Analysis, by Ludwig von Mises –

Wherever Europeans or the descendants of European emigrants live, we see Socialism at work to-day; and in Asia it is the banner round which the antagonists of European civilization gather. If the intellectual dominance of Socialism remains unshaken, then in a short time the whole co-operative system of culture which Europe has built up during thousands of years will be shattered. For a socialist order of society is unrealizable. All efforts to realize Socialism lead only to the destruction of society. Factories, mines, and railways will come to a standstill, towns will be deserted. The population of the industrial territories will die out or migrate elsewhere. The farmer will return to the self-sufficiency of the closed, domestic economy. Without private ownership in the means of production there is, in the long run, no production other than a hand-to-mouth production for one’s own needs.

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All rational action is economic. All economic activity is rational action. All rational action is in the first place individual action. Only the individual thinks. Only the individual reasons. Only the individual acts.

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The average man is both better informed and less corruptible in the decisions he makes as a consumer than as a voter at political elections.

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When we call a capitalist society a consumers’ democracy we mean that the power to dispose of the means of production, which belongs to the entrepreneurs and capitalists, can only be acquired by means of the consumers’ ballot, held daily in the market-place. 

Posted under Capitalism, Commentary, Economics, liberty, Socialism by Jillian Becker on Monday, July 6, 2015

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Hayek the Great and the invisible hand 5

Today is the 116th anniversary of the birth of F. A. Hayek. (Friedrich August von Hayek.) 

He is one of the greatest defenders of liberty in the history of the enlightened West.

His work as an economist is enormously important.

Milton Friedman said of him:

No person had more of an influence on the intellectuals behind the Iron Curtain than Friedrich Hayek. His books were translated and published by the underground and black market editions, read widely, and undoubtedly influenced the climate of opinion that ultimately brought about the collapse of the Soviet Union.

An article at Townhall by David Boaz lists some of the plaudits and honors he received:

Who was Hayek? He was an economist born and educated in Vienna. After the Nazi conquest of Austria, he became a British citizen and taught there [in Britain] and at the University of Chicago for most of his career.

He was awarded the Nobel Prize in Economics in 1974.

President Ronald Reagan called him one of the two or three people who had most influenced him

President George H. W. Bush awarded him the Medal of Freedom.

Margaret Thatcher banged his great book The Constitution of Liberty on the table at Conservative Party headquarters and declared “This is what we believe.” …

He is the hero of The Commanding Heights, the book and PBS series on the battle of economic ideas in the 20th century.

His most popular book, The Road to Serfdom, has never gone out of print and saw its sales explode during the financial crisis and Wall Street bailouts.

John Cassidy wrote in the New Yorker that “on the biggest issue of all, the vitality of capitalism, he was vindicated to such an extent that it is hardly an exaggeration to refer to the 20th century as the Hayek century”. 

If only! No Western country, even under leaders that held him in the highest esteem, put his theory into practice. Every one of them is a welfare state to some degree. In all of them government is an agency that redistributes wealth. Hayek believed the business of the state is to protect liberty with the rule of law, not to plan the economy, or intervene in the working of the free market. He taught that only the free market can provide the signals that make for the most efficient use of resources. Central planning is socialism – and socialism, Hayek explained, tends towards totalitarianism.

Here is Hayek, champion of free market capitalism, talking about Maynard Keynes, advocate of government intervention in markets and the economist whom Western states have preferred to follow:

In The Wealth of Nations, Adam Smith wrote:

“Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it … He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”

Hayek (we quote from here) “called the free market system a ‘marvel’ because just one indicator, the market price of a commodity, spontaneously carries so much information that it guides buyers and sellers to make decisions that help both obtain what they want. The market price of a product, a component of the invisible hand, reflects thousands, even millions, of decisions made around the world by people who don’t know each other or what the others are doing”.

Hayek’s most popular and least technical books The Road to Serfdom and The Constitution of Liberty ought to be prescribed reading in every high school and every university in the world.

We doubt they will be. The socialists have won. The decline of the West may be irreversible.

Free to choose 2

Today, July 31, is the 98th anniversary of the birth of the great free-market economist, Milton Friedman. He died four years ago.

This is how he and his co-author wife Rose conclude their book Free to Choose, first published in England in 1980 [when and where they both signed a copy for me, of which I am still the proud owner – JB].

The two ideas of human freedom and economic freedom working together came to their greatest fruition in the United States. Those ideas are still very much with us. We are all of us imbued with them. They are part of the very fabric of our being. But we have been straying from them. We have been forgetting the basic truth that the greatest threat to human freedom is the concentration of power, whether in the hands of government or anyone else. We have persuaded ourselves that it is safe to grant power, provided it is for good purposes.

Fortunately, we are waking up. We are again recognizing the dangers of an overgoverned society, coming to understand that good objectives can be perverted by bad means, that reliance on the freedom of people to control their own lives in accordance with their own values is the surest way to achieve the full potential of a great society.

Fortunately, also, we are as a people still free to choose which way we should go – whether to continue along the road we have been following to ever bigger government, or to call a halt and change direction. [Emphasis mine]

That could have been written today, and needs to be remembered always.

The choice is still with us. May the American electorate use it well in November and with every election to come.

Burn, socialism, burn 1

Obama says there should be a limit to how much money anyone should make. He and the “progressive” majority in Congress are trying, step by step, to turn America into a European-style socialist state. Only the state, they believe, can be extravagant, taking money from people who’ve earned it and will earn it in the future, and using it to extend and tighten the power of government. Austerity must be imposed on the people. Let them eat less, feel colder, do without cars. Let them have only the medical treatment and the education government will allow them to have. Limit the amount of wealth any individual may acquire. Profit is a dirty word. Tax, tax, and tax again.

It is a recipe for disaster.

Europe is experiencing the disaster. It is seeing its socialist dream go up in flames on the streets of Athens.

What cannot work, won’t work. Socialism, like all Ponzi schemes, can seem to be working for a time, but must fail. In a favorite word of the Left (applying it where the Left would not) Socialism is “unsustainable”.

Capitalism is sustainable. Capitalism is beautiful. A cornucopia. “The incredible bread machine”.  It’s what Adam Smith called “the natural order of liberty”. It could also be called “the system of mutual benefit”.

You want the means to keep yourself alive? Provide something – goods, labor, services, ideas – that others want to buy. You want to live comfortably? Provide more of it. You want to live luxuriously? Provide it better than anyone else does. Both a seller and a buyer you will be. A buyer wants the thing he buys more than he wants the money he pays for it, just as the seller wants the money more than the thing he is parting with.

How can you know what others want? Put what you have to offer on the market and see if it sells. The right price for it is the best price you can get. The free market signals what traders need to know. As the great free-market economists, most notably von Mises, Hayek, and Milton Friedman have explained over and over again, government interference with price controls, minimum wages, rationing, compulsory purchase, bailouts, distort the signals and harm the economy.

Whether idealists and moralists like it or not, human nature is selfish. It has to be. If we were not selfish we would not eat when we’re hungry, warm ourselves when we’re cold, acquire what we need, protect ourselves from enemies. Without selfishness, the human race would not have survived. (It is not only or purely selfish. Individuals can and do choose to act unselfishly too – once they have seen to the needs of their survival.)

The Marxist idea of “from each according to his ability and to each according to his need” ignores human nature. Any attempt by government to put the formula into effect by creating the welfare –  or “entitlement“ – state invariably handicaps, suppresses, and impoverishes the nation.

Capitalism is the reverse of that idea. It is a system that encourages each to contribute according to his self-determined need, to be rewarded according to how ably he does it. From each according to his need and to each according to his ability would be a fair description of how the natural order of liberty works.

To satisfy bare need is a poor political aim. It reflects a pinched, narrow, joyless, life-quelling mentality. “O, reason not the need!” King Lear pleads, “our basest beggars
are in the poorest thing superfluous.” Generally speaking, in practice, the only way to be sure of having enough of anything is to have too much of it. Profit is a very good thing. It is only when people have extra money and extra time that they can invent new things. And those who produce things that improve the lives of multitudes, things that millions of people want to own and use, are doing far more for the general good than the most generous philanthropist could ever possibly do. Bill Gates with his Microsoft (though he seems not to realize it but to hold some silly lefty views) has actually done more for mankind than all the charities that have ever existed put together.

That is why it’s reasonable to propose that there is no sin of greed. There is a sin of envy. Envy is the raw material of socialist idealism. But wealth, Mr Obama, is not a problem. Poverty is a problem. And your socialist policies will cause it on a massive scale. Let us be free to work for our own maximum profit. Let us have abundance. Let us have feasts, fatness, generosity, might, novelty, and splendor.

Jillian Becker   May 11, 2010

The president’s un-American world view 3

Although the president said in his State of the Union speech last night that ‘The true engine of job creation in this country will always be America’s businesses’, which seems to be a pro-free market view, Erick Erickson at REDSTATE finds convincing evidence in the speech that Obama is against the free market, and probably does not understand how it works.

He quotes this passage:

To make college more affordable, this bill will finally end the unwarranted taxpayer-subsidies that go to banks for student loans. Instead, let’s take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants. And let’s tell another one million students that when they graduate, they will be required to pay only ten percent of their income on student loans, and all of their debt will be forgiven after twenty years – and forgiven after ten years if they choose a career in public service. Because in the United States of America, no one should go broke because they chose to go to college. And it’s time for colleges and universities to get serious about cutting their own costs – because they too have a responsibility to help solve this problem.

And he comments

Barack Obama wants to create a new entitlement that will drive the costs of collegiate education through the roof. If a student knows that only ten percent of their income will be used to pay their student loans and no matter what those students loans are they will be forgiven after 20 years, neither the student nor the college has any incentive to save money. It is basic free market economics.

That the President of the United States would say such a thing and think it a good, responsible idea suggests the man is truly ignorant of or an enemy of the free market.

Beyond that, note the preference for government work. Job creators are given a disincentive. Job regulators are given an incentive. This is both perverse and noxious.

One cannot read through the State of the Union address and come to any other conclusion than that Barack Obama is declaring war on the free market. It is more and more clear that Barack Obama does not have an American world view.

A transcript of the whole SOTU speech can be found here.

Posted under Commentary, Economics, government, Progressivism, Socialism, United States by Jillian Becker on Thursday, January 28, 2010

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Liberty or equality 0

We enjoy reading Mike Adams, and see eye-to-eye with him on many political issues.

Where we do not agree with him – as with the otherwise admirable Ann Coulter – is on religion.

Well, we’re atheist conservatives and they are Christians, so that’s no surprise.

Today in an article in Townhall titled ‘Liberty and Tyranny’ – well worth reading in full – Mike Adams criticizes statism, progressivism, and the left’s ideal of equality. We share his views on them. Then he comes to the question of ‘rights’.

He asks ‘a serious question: If rights are not bestowed by a Creator, then under what conditions do they exist? In other words, who bestows them?’

The answer is nobody unless the state. A right can only be granted in law. Because we do not believe in a supernatural lawmaker, a Creator of our universe and us, we do not accept the idea of ‘human rights’ at all, or of ‘natural rights’.

We prefer to say that we human beings are – or ought to be – FREE to do whatever we choose provided we break no laws. Law sets limits on our freedom, and should do so rationally and equally.

Nobody’s ‘right’ whether in sentiment or law should ever impose an obligation on another person, except the obligation of restraint. Whoever it was who said, ‘the freedom of your fist ends where my nose begins,’ expressed it perfectly. A list of rights according to Franklin Roosevelt – as quoted by Adams – includes: a right to a useful and remunerative job and a wage adequate to provide food and clothing and recreation; a farmer’s right sell his produce for enough to give him a decent living; everyone’s right to a home, medical care, pensions, education and more. It is an endorsement of the Marxist notion: ‘to each according to his need’. Those who hold to that creed believe that a man should receive in exchange for something he sells – his labor, an artifact, or whatever he offers – the payment that he wants.

But our wants are limitless, while the value of what we have to sell is not.

Only the free market can determine value. A buyer will pay as much as the thing he is buying is worth to him. The more buyers who want the thing on offer, the higher the price will be.

The only alternative to economic freedom is distribution by tyrannical government. A government that arbitrarily distributes the wealth of the people is by definition a tyranny.

You can never have liberty and equality. The choice is between freedom and equality. (By which we mean economic equality: equality before the law is essential to freedom.)

In freedom, if an individual wants to earn more, he can do so by providing more and better goods and services. That is to say, we assess our needs for ourselves and work as well as we can to get the money to pay for them: which could be summed up as ‘from each according to his need’.

Will we get as much as we want? That will depend on our individual ability.

So we reverse the Marxist tag ‘from each according to his ability and to each according to his need,’ and make ours, ‘from each according to his need and to each according to his ability.’

The market will decide the reward. All we can do is our best. We have no ‘right’ to demand handouts from others on the grounds that we ‘need’ what they have.

To put it another way, socialism is theft.

Posted under Articles, Commentary, Judaism, Muslims by Jillian Becker on Wednesday, May 6, 2009

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Dead man talking – warns Obama 0

 In the speech he made on receiving his 1974 Nobel Prize, the great, free-market, anti-Keynes economist Friedrich von Hayek warned: 

To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm. In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims. We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based – a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed.

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants. There is danger in the exuberant feeling of ever growing power which the advance of the physical sciences has engendered and which tempts man to try, "dizzy with success", to use a characteristic phrase of early communism, to subject not only our natural but also our human environment to the control of a human will. The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society – a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

Posted under Commentary by Jillian Becker on Saturday, February 14, 2009

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The road to prosperity 3

 Jonah Goldberg writes in Townhall:

‘Capitalism is the greatest system ever created for alleviating general human misery, and yet it breeds ingratitude.

People ask, "Why is there poverty in the world?" It’s a silly question. Poverty is the default human condition. It is the factory preset of this mortal coil. As individuals and as a species, we are born naked and penniless, bereft of skills or possessions. Likewise, in his civilizational infancy man was poor, in every sense. He lived in ignorance, filth, hunger and pain, and he died very young, either by violence or disease.

The interesting question isn’t "Why is there poverty?" It’s "Why is there wealth?" Or: "Why is there prosperity here but not there?"

At the end of the day, the first answer is capitalism, rightly understood. That is to say: free markets, private property, the spirit of entrepreneurialism and the conviction that the fruits of your labors are your own.’

Read the whole thing here – it’s very good. 

 

Posted under Commentary by Jillian Becker on Friday, August 1, 2008

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