Thursday, June 02, 2016

We are enslaved to a Leftist elite

We work.  They swan around, congratulating themselves on their righteousness and superiority

Thomas Lifson argues that Bernie Sanders presents "a mortal danger to not only the presidential campaign of Hillary Clinton, but the continued viability of the party’s strategy of mouthing populist rhetoric while practicing crony capitalism. Too late, they now realize he actually means what he says."

In an age where truth is the worst policy, socialism -- like Santa Claus -- is something no adult should believe in. That Sanders might actually have illusions lies at the heart of his appeal. To a cynical public a politician who doesn't calculate in explicit monetary terms is the nearest thing to secular sainthood. Hans Gruber, the villain in Die Hard, disappointed the industrialist he kidnapped by confessing: "Mr Takagi, ... I am far more interested in the 100 million dollars in negotiable bearer bonds hidden in your vault."

Takagi: You want money? What kind of terrorist are you?

We expect revolutionaries to be indifferent to money. Yet in reality the Left thinks about nothing but money as the Venezuelan socialists who have stolen $350 billion from the treasury, according to the Basel Institute on Governance, should have proved to the world. If it's any consolation to the Democratic Party, Bernie Sanders is not as indifferent to lucre as he seems. Sanders' filings show he's received money from Super PACs and donors with links to Wall Street -- so he may be normal after all.

Perhaps the first major 20th century writer to realize that the ambition of all true Communists should be to become billionaire revolutionaries was Hilaire Belloc. In his 1912 book, The Servile State, Belloc argued the then-burgeoning Communist movement would find more success ditching Leninism in favor of an alliance with Crony Capitalists to reinstate Slavery. "Slavery, or a Servile State in which those who do not own the means of production shall be legally compelled to work for those who do, and shall receive in exchange a security of livelihood."

This modern form of slavery would address not only the concerns of the revolutionaries by fixing job insecurity and guaranteeing retirement on a plantation basis, but also assuage the monopolists, who stay up nights worrying about preserving market share in the face of competition. An alliance between socialists and crony capitalists would solve both problems at once. The only price to pay for this convenience is the loss of public freedom and that is readily paid.

As for the rest, it would be sustainable. The crony capitalists would underwrite the projects of the collectivists. The ant-heaps of each would be so similar to the other that only a few changes in signage would be needed to turn regulated capitalism into the workers' paradise. It was a tremendous insight. Belloc realized Bolshevism was was too obviously destructive to last and anticipated the rise of what we would now call the Blue Model. F.A. Hayek paid tribute: "Hilaire Belloc ... explained that the effects of Socialist doctrine on Capitalist society is to produce a third thing different from either of its two begetters - to wit, the Servile State." Regarding the Servile State, George Orwell realized whatever name it gave itself, such an unholy alliance would be much the same quantity.

Many earlier writers have foreseen the emergence of a new kind of society, neither capitalist nor Socialist, and probably based upon slavery ... A good example is Hilaire Belloc's book, The Servile State ...  Jack London, in The Iron Heel ... Wells's The Sleeper Awakes (1900) ... Aldous Huxley's Brave New World (1930), all described imaginary worlds in which the special problems of capitalism had been solved without bringing liberty, equality, or true happiness any nearer. More recently, writers like Peter Drucker and F.A. Voigt have argued that Fascism and Communism are substantially the same thing. And indeed, it has always been obvious that a planned and centralized society is liable to develop into an oligarchy or a dictatorship.

The crucial point would be that this proposed Third Way would be more secure than the traditional Leninsim which rested upon the unholy Troika of Party, Army and Cheka. Paychecks would actually be met, courtesy of the crony capitalists. It's not surprising that after the collapse of the Soviets, the next collectivist social project was the much more "responsible" EU. But Larry Elliott, arguing in the Guardian for a British exit from Brussels, realized that distinction was more a matter of degree than substance. He characterized the EU not as "the US without the electric chair; it is the USSR without the gulag."  The correspondence with Belloc's 1912 prediction is eerie.

Belloc argued that the only two exits from the evils of crony capitalism were an expansion of property holdings to the great majority of the people (the classic conservative program) or collectivism. Of the two alternatives, the elites would find collectivism far the easier path. He wrote, "if you are suffering because property is restricted to a few, you can alter that factor in the problem either by putting property in the hands of many or the hands of none ... a trust or monopoly is welcomed because it 'furnishes a mode of transition from private to public ownership.'" Crony capitalism furnishes collectivism so well that the Servile State becomes indistinguishable from the Workers' Paradise and its leaders equally interchangeable. Thus we have billionaires who become men of the people and men of the people who become billionaires. Who could have foreseen this in 1912?

The so-called Socialist ... has not fallen into the Servile State by a miscalculation ... he welcomes its birth, he foresees his power over its future ... it is orderly in the extreme ... and the prospect of a vast bureaucracy wherein the whole of life shall be scheduled and appointed to certain simple schemes deriving from the co-ordinate work of public clerks and marshaled by powerful heads of departments gives his small stomach a final satisfaction.

Best of all, the socialist agitator was free under the arrangement to engage in his favorite project of remaking mankind to free him from "the ravages of drink: more fatal still the dreadful habit of mankind of forming families and breeding children." Belloc's Servile State anticipated the carnival at Davos with its weird hodgepodge of moralism, pseudo-scientific causes and economic diktat precisely because it understood what the power coalition of the future would look like.

Where both Belloc and Orwell may have erred was in assuming the Servile State could fix the sustainability problems that doomed Leninism. The hope of finding a lasting formula for collectivism lies at the heart of the USSR's reboot and the EU and Hillary's socialism in words but crony capitalism in deeds strategy, in contrast to Bernie Sanders' hair-on-fire socialism. Nobody argues with the collectivist goals, just about how to pay for them.  Both the EU and its American imitations are attempts at finding a socialism which can pay the bills. Unfortunately the present political crisis raises the  possibility that the Servile State itself is inherently unsustainable.

The issue which dogs Hillary and which no cosmetic distancing from Sanders will solve is that the middle class is losing faith in the platform. The political turmoil threatening to break apart the EU and the American Blue Model is rooted in the fact that both are broke and have no prospect of meeting obligations as manifested in the stagnation of wages in the West and also in the collapse of the "security" safety nets for which the present-day slaves have traded away their freedom. The progressive campaign is essentially predicated on the assumption that a sufficiently resolute government can defy the laws of financial gravity. There is now some doubt on that point.

Collectivism cannot even pay its pensions. "The present value of unfunded obligations under Social Security as of August 2010 was approximately $5.4 trillion. In other words, this amount would have to be set aside today such that the principal and interest would cover the program's shortfall between tax revenues and payouts over the next 75 years."  One of the culprits, ironically, is that the socialists have succeeded all too well in changing mankind's dreadful habit of forming families and breeding children.

It's not just the Government that's broke but also its political partners. Recently the Teamsters' Central States Pension Fund announced that it was bust. Unless it gets an infusion of taxpayer money, pension benefits for about 407,000 people could be reduced to "virtually nothing." Orwell famously said that "if you want a picture of the future, imagine a boot stamping on a human face — forever." What he and Belloc failed to anticipate was that the boot might rot to pieces and fail to fulfill its function to oppress.

What Belloc left out of his model, very oddly for him especially, was God. (Those who object to the word can substitute one of their choosing: reality, consequences or arithmetic, it makes no difference.) God can't be fixed and shows up at the most inconvenient moments. Teamsters who are able to intimidate everything find they are finally helpless against addition and subtraction. At the end of it all they, like everyone else who has mismanaged their pensions, can pay their retirees "virtually nothing."

In the face of this failure perhaps it is time to revisit Belloc's alternatives. If the only remaining path is to encourage a return to the popular ownership of property and making markets freer as opposed to cutting deals with monopolists -- then so be it. Technology may be working in favor of the path not taken. As intellectual property becomes the dominant means of production, every human is automatically born with a certain amount of capital, provided Planned Parenthood doesn't get to him first.

Lincoln Steffens thought he saw a future that worked but it was cruel fraud. Why not try property this time instead of slavery? We've tried being slaves. Let's try being free. Belloc points out this idea is so revolutionary that anyone who espouses it will almost certainly be suspected of mental incapacity.



The Economically Illiterate Fear Successful Companies, Pine for Failures

It Fundamentally Confuses the Meaning of Profit and Loss

Donald J. Boudreaux

My 19-year-old son, Thomas — of whom I’m as proud as any parent can possibly be of a child — is a budding astrophysicist. His professional interests reside purely in the hard sciences and in mathematics. Yet his understanding of economics runs deeply. (Yes, I’m bragging. Or is it bragging if it’s true?)

Thomas naturally understands the inevitability of trade-offs; he understands that there is no such thing as a free lunch (or a free anything); he understands spontaneous order; he is realistic enough to realize that for every one perverse incentive at work in the private sector there are 1,001 perverse incentives at work in the “public” sector; and Thomas understands that firms that profit in the private sector serve the public — and that the greater the service, the higher the profit.

Thomas is also naturally a libertarian: he has no wish to butt into the affairs of others and he is appalled at the prospect of anyone butting into his affairs. He is, indeed, a civilized and decent man.

This afternoon Thomas and I were driving back from lunch and our conversation turned to McDonald’s. Thomas correctly noted that McDonald’s has suffered some difficult times in recent years. My son and I agreed that he — and possibly even I — will live to see the day when McDonald’s either declares Chapter 7 bankruptcy, is ignominiously absorbed into some other thriving firm (possibly a firm that doesn’t now even exist), or is transformed into an enterprise very different from what it is today. Thomas and I agreed also that the same fate awaits Wal-Mart and, likely further down the road of time,, Apple, Google, and almost all of the other of today’s thriving commercial successes.

Thomas knows enough history to know that today’s commercial behemoths — the firms that today seem destined to survive forever, unbeatable, blessed with the touch of Midas — are tomorrow’s pathetic also-rans. That’s the nature of market competition. Think Pullman, Western Electric, Woolworth’s, K-Mart, Sears, Kodak, PanAm, RCA, and General Foods — to name only a few, and only national American, once-giants. (Investors in these firms somehow missed out on the miraculous “capital-grows-automatically-and-all-by-itself” formula that features so prominently in Thomas Piketty’s work.)

Anyway, Thomas and I predict that the day will come when leftists rise up to lament the demise of McDonald’s and of Wal-Mart. My son and I expressed to each other our bemusement at the fact that leftists are as predictably nostalgic for dying firms as they are apoplectic with hostility to whatever firms are today thriving and most profitable.

Then, simultaneously, it struck both Thomas and me that leftists — by applauding and praising only firms that are currently in decline while despising and criticizing firms that are currently at their peak — applaud and praise only firms that use resources inefficiently (which is what accounts for these firms’ current decline) and despise and criticize only firms that use resources efficiently (which is what accounts for these firms’ current success).

To criticize the success of private firms in competitive markets is to display a failure to understand that these firms’ high profits reflect their unusual success at improving the lives of countless input suppliers (including workers) and consumers. And to seek to use government force to prevent the demise of firms being driven into bankruptcy by market forces is to seek to use government force to enable firms to continue to use resources inefficiently — that is, to use resources in ways that worsen the lives of many input suppliers (including workers) and consumers.



For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated),  a Coral reef compendium and an IQ compendium. (Both updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten. I also put up occasional updates on my Personal blog and each day I gather together my most substantial current writings on A WESTERN HEART.

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