no third solution

Blogging about liberty, anarchy, economics and politics

Considering Redistribution of Property

March 9th, 2009

I’m inclined towards the argument that it would be extremely unlikely (although probably not impossible) for an individual to amass vast fortunes, or even come to ‘own’ something like a factory in a free market, but the only arguments that I’ll entertain seriously, contra “capital” (defined as “non-trivial” means of production like factories, etc.) is the argument that in a free market, these phenomena would be unnecessary or unlikely from an economic viability point-of-view.

A while back, Brad Spangler wrote the following about the redistribution of property, with regards to the homestead principle.

With regard to property claim conflicts between owners and workers, let me say that I envision the revolutionary process as the bootstrapping of a non-state system of law and security. The nature of that law would tend to favor selective redistribution of property from state-allied plutocrats to the workers, but redistribution would be an affirmation of property rights (of the workers) rather than their negation. On the other hand, just because someone is rich wouldn’t make it okay to take their stuff. Rather than wealth being judged on amounts, its ownership would be evaluated methodologically (e.g. “How was this acquired?”) with state-granted privilege being regarded as criminal means of acquisition, thus negating the fake state-granted property title.

In other words: Although he may not have a perfect claim to his house, the tenant has a claim far superior than does the bank which relies entirely on government support to remain legally “solvent,” and that the employees of a highly leveraged firm in bankruptcy have a far superior claim than the lenders who “loaned” the corporations money over the years. I have no idea whether this is enough to appease the communists, the mutualists, the uber-left libertarians. I hope it would be, primarily because I’m simply not sold on the idea that individuals shouldn’t have the right to own and acquire productive assets, at least not on any moral grounds. I refuse to listen to any more commie arguments like “Socialism doesn’t permit individuals to own something like a factory.”

At what point along the continuum of production, consumption, and savings, do you draw the line: A man can own an axe and a saw, but not a lumber mill? He can own a lathe and a press, but he cannot own a building to shelter them? Nor can he employ others to use them? Oh, they scream that capital breeds exploitation! or that the freedom to amass capital is what causes human suffering, or some other nonsense that’s contradicted by centuries of history. But in a freed market, the only way that any man can ever acquire anything valuable, is by producing it with his own labor, and/or exchanging it with others. The latter implies that he’s been able to do something extraordinary for the “common good”, even if that was never his unique intention.

Not everyone who has is guilty of violating someone who has not and a great deal of even those who have not, are in-fact guilty themselves.

Is there a lot of unjust inequality, because of massive amounts of State interference (and church interference, and whatever) over the last few thousand years? Indeed all property has clouded title, if we look back far enough in time. Are there a lot of people sitting on fortunes that amount to essentially stolen property? To be sure, of course a tremendous amount of inequality exists in the world today, the result not of free markets and peaceful, voluntary exchanges, but rather is the result of state-sanctioned extortion, profiteering, rent-seeking, and monopolization. And although I think it’s a stretch, we could even potentially argue that all inequality in the world today is due to these factors.

But, extrapolating from Brad’s argument above, even if we could eliminate all of these injustices, we can’t assume that all inequality is exploitation; not all inequality is evidence of injustice. Because people are different, some are smart and others dull, some are apt and others clumsy, some are capable and others incompetent, some frugal and others spendthrifts, because they think differently and value things differently, a certain inequality is destined to exist. It may be more palatable, more tolerable than what we’ve got now, but it will still be inequality.

The fact of the matter is that no matter what “we” do in order to equalize the distribution of property, it’s extremely unlikely that this new distribution is sustainable for even a very short amount of time, without the assistance of a massively totalitarian force. For the record, I don’t give a damn whether this force is the communist Internationale, or the State’s Army. They both believe that might makes right.

Preserving Culture and Economy, an Extended Reply to Marohl

March 7th, 2009

Yesterday afternoon I replied to Joseph Marohl’s post about the profit motive. FSK says I should stop wasting my time “debating with idiots.” I’m not so quick to brand people; perhaps my “idiot detector” is more finely calibrated than his, or perhaps I just like to give people the benefit of the doubt. There was in this case, something in Marohl’s post that resonated with me, in spite of the fact that I agreed with very little of what he had written. In any event, I also left my concluding question as a comment for Marohl, which began a brief but thorough and civil discussion the culmination of which was my offer to loan him my copy of Wilhelm Roepke’s A Humane Economy.

I did want to respond further to some of his comments, so read on if you will:

But I don’t yet understand how the profit motive can continue its promise of higher and higher returns, given the exhaustibility of the natural world and the satiability of human nature.

I think what he means is the insatiability of human nature. Every generation has its naysayers, those who believe that the end of humanity is nigh. And every generation prior to the present has been wrong in this regard. According to the historical record, the only vector that rivals human desire, is human ingenuity. This is not to say that mankind could never destroy itself — of course this is possible, but like Marlowe’s Dr. Faustus, salvation is possible until the bitter end.

Yes, a previous comment that I left suggested that human desires are boundless, yet it is competition for scarce (exhaustible, so-to-speak) limited resources, and the varying subjective values individuals ascribe to the myriad resources at their disposal, that gives rise to “profit.” Consider: why do you buy your bread from the baker, your cutlets from the butcher, and your candles from the candle-maker, rather than make them on your own? Is it not because you profit from the transaction, if even in the simplest of terms, by not having to bake your own bread, or breed, slaughter, and package your own meats, dip your own wicks?

Surely, you recognize a benefit from the division of labor in a relatively free economy. This is “profit”.

Also, the profit motive, if defined purely in capitalist (not spiritual, affective, or humanitarian) terms, while doing some good, perhaps even a great deal of good for individuals and groups, does not appear (to me, anyway) to have served the common good.

Assuming through the context ouf our brief discourse, the colloquial definition of “capitalism,” to be sure, there is a great deal wrong with it. This much is certain, and I would be among the first to object to the status quo. Has General Motors served “the greater good”? How about Citigroup? AIG? Bear Stearns? The list is endless, yet the answer is the same. In the short- to medium-run, these entities which are for the most part oligopolies, have provided a concentrated benefit to a select group of fortunate insiders, who may have been stockholders, executives, or perhaps assembly-line workers, depending on the specifics.

When I talk about profit, I mean “profit” in it’s purest sense — not in a “capitalist” sense, but in a truly freed market sense. Profit is a realized economic gain (it need not be monetary) which is the consequence of alleviating some amount of human suffering, discomfort, or inconvenience. In other words, providing more-or-less, for the “greater good.”

This is not profit. This is rent-seeking.

Throughout the decades, these organizations have succeeded at suckling the government’s teat in order to extract their own benefits, at the expense of everyone else. In addition to bleeding the rest of us through higher prices, taxes, tariffs and other restrictions on trade, this is a process which has wrought irrevocable damage to the nation’s economic foundation.

Several generations of people grew up believing that there would always be a good-paying Union job for them at General Motors or Ford or Chrysler: no need to try hard in school, no need to apply oneself, no need to become something more — take that gig at the stamping plant, put in your 25 or 30, and if you’re lucky and you play your cards right, you can retire with two houses and three cars. More recently, the best and brightest at Universities were looking to score big with a job in finance or banking.

So many exhaustible resources went down the drain at these companies, because the union got its way, or the stockholders got their way, or the bankers got their way, and not merely the material resources of land and capital goods, factories and assembly lines, by far the largest misallocation was the misallocation of human capital: several generations who contributed to “the common good” far less than they were capable, far less than they would have, if only the incentives hadn’t been so distroted.

Dogmatic? In a sense, perhaps. But no moreso than the belief that mortal humans, when entrusted with nearly omnipotent power over others, will not abuse same as they have in every time and place before us.

The greater monuments of our civilization and culture–from Notre Dame cathedral (constructed over a span of 182 years – just try to fly a 182-year building plan with stockholders today–even for a building that will outlast the average Vegas hotel-casino by several centuries) to American democracy (still under construction 233 years after its inception)–were built on the altruistic or visionary expenditure and risk of vast fortunes with (as far as I can tell) no foreseeable or substantive capital returns.

Although I appreciate the cathedral at Nôtre Dame (much less so than Sacre Cœur, from which the view of Paris at nightfall in June is unrivaled), and the pyramids at Gaza, both as eternal monuments to the capabilities of human ingenuity and labor, I’m under no delusions as to how they came to be built.

Yes, these are magnificent structures, but at what cost were these monuments to human bondage constructed? What did future generations forfeit in exchange? In the end, despite their aesthetics, despite their longevity, they’re just one more big god damned building, and the fact of the matter when taken objectively, is that throughout the millenia, the sum of these epic monuments and thousands of others long since destroyed, have not in-fact added anything substantial to the “greater good.” There was a very real opportunity cost.

I’d urge caution when cherry-picking examples of “civilization.” The great Egyptian pyramids were neither a product of altruism, of humanity, of benevolence: they are the product of a sociopathic delusion, that a man can be a god, melded with the wonders of feudalism and/or outright slavery. The monuments of our civilization, like the cathedral at Nôtre Dame are the product not of altruism, but of the nearly omnipotent power wielded by the Roman Catholic church in the middle ages. Their “capital returns” are called tithing in some cases, and taxes or tribute in another. One needn’t worry about capital returns, when he’s spending other people’s money, and breaking other people’s backs.

Marohl concludes with his greatest concern, which is the preservation of culture…

At this point in our nation’s history, my greater concern is the culture, not the economy.

But culture can’t be divorced from its economy. Again, I’d like to reiterate, that I don’t mean “economy” in any vulgar sense, I don’t mean “Wall Street” or “The City”, rather I mean “economy” in the classical sense: human action. I agree with Marohl’s earlier rant: I don’t believe it’s true that General Motors seals the fate of the nation, and I agree with his earlier comment that this widely-held belief was likely never true.

But what is true, is this: as goes the economy, so goes the culture.

Can the Profit Motive Save Us?

March 6th, 2009

At the Smoking Argus, Joseph Marohl inquires about the profit motive, in which he’s “never believed”:

How long have I heard it said that the profit motive is what makes the world the wonderful place it is? No, I don’t believe it.

Why must everything the U.S. government proposes, for the past two decades at least, be filtered through the beneficial effects of someone making a profit from it?”

I’d like to answer these questions. If enterprises are not profitable, they are destructive. If they are not creating wealth, they are consuming and destroying wealth. And the more wealth they destroy, the harder we work, the more we suffer, and the less we have. To clarify, I don’t mean “wealth” in a purely monetary sense. I mean real wealth: an abundance of goods and services that are available to alleviate some of the infinite inconveniences, pains, and discomforts that are present in a world where all resources are in limited supply.

Setting aside for the moment, the myriad problems I have with “the government” in general, it certainly makes sense that government propositions, like all purposeful human action, ought to aim at creating wealth of this sort, rather than destroying it. It is my understanding, however, that governments usually perform poorly at this task, because government failure rarely has severe, personal consequences for the decision-makers.

And I don’t know why so many people think it’s a good idea to funnel government funds into gigantic corporations

In a very limited regard, I agree with Marohl: I don’t want to see money being funneled through government to corporations, large or small. I don’t want to see money going to, or through government, period. But as long as the government is going to spend my money, our money, I’d prefer it be spent on food and housing for the homeless, than on bio-fuel or green energy subsidies. I’d prefer it be spent on roads and school buses, than on bombs and bullets.

The only people I know of who actively support these ideas, are people in the government, and the rent-seekers that intend to benefit thereby. All of the opinion I’ve heard, seen, and read of late, suggests that most people think the current bailout, for example, is a damn lousy idea; perhaps one of the few times in history when “most” people were right.

Marohl makes some solid critiques of modern capitalism, railing against the “what’s good for GM…” and the problems presented by corralling employees in to stock purchase plans and 401k programs that are also going belly-up. But he also refuses to view public school teachers, the quality of whose product over the past 40 or 50 years has been in measurable decline, as part of the problem, indeed he seems to argue that Teacher Unions are the last bastion of salvation, preventing schools from turning “into a mere training post for cheap, acquiescent labor,” despite the fact that most kids these days graduate high school with nary a marketable skill, trade, ability or experience.

Although his derision of the profit motive alludes to his hatred of free markets, this fundamental belief is buried deep in the essay:

No, I don’t believe. I’m an unbeliever in free enterprise, free market, laissez-faire, trickle-down, all of it.”

Let me get this straight… He doesn’t believe in free markets (we’re about a million fucking miles from a free market, FYI, and he doesn’t believe (or has lost all faith) in governments. Profit and productivity can’t save us, nor can Papa Government. I’m going to take the rare opportunity to invoke my blog’s title: there isn’t another way. There is no third solution.

A comment I left there asked him just what the f*ck he does believe in?

This is a serious question. If the language or the tone strikes anyone as rude, it’s because the notion that humankind can benefit, can advance, can thrive or even merely survive without actually increasing wealth from one period of time to the next, is so fantastically ignorant as to warrant nothing more than ridicule.