Building Bridges

It must have been three or four years ago I saw this wonderful video Keynes vs Hayek the second round. You can YouTube it its very good stuff, if I figure it out I’ll embed it below. Anyway the video works well to describe part of something I really have no love for; economics. I don’t hate the researching of how human nature and finances nor the moshing of them together works, what gets me uncomfortable about economics is that it incorporates so many schools of thought that it can never be right or wrong on its face, there is just always something that wasn’t accounted for. Don’t get me wrong people can be wrong however no one can turn around and say economics as a whole needs to be thought about differently. For instance we can say Christianity or Islam or Business and so on even Philosophy can be approached from new ways but such a paradigm shift has to my knowledge never happened in economics.

The damage of zero accountability is made manifest in today’s age with the teachings of two dead men. One was John Maynard Keynes who observed that society was interconnected; his idea was a work on how the revenue habits of the wealthy ultimately spread across the field. To back track a little, I will be measuring success and failures based on freedom; the more freedom the less historical evidence shows either such ideas leading to totalitarianism and massive death tolls and the less freedom the more historical evidence shows such ideas lead to totalitarianism and massive death tolls. For clarity sake my position is that all things ultimately lead to totalitarianism and that is because there are always opportunists, it is up to the vigilance of free folk to sustain their freedom but there are certain ideologies that not only instigate but promote and propagates totalitarian means and ends. To wrap up the point Maynard identified and encourages the idea that an elite class is needed to maintain a free society. Maynard was wrong but his ideology was based on economics and economics can never be wrong only that something wasn’t accounted for. In this case why Maynard was wrong and what he never accounted for was the previous observations of Adam Smith that wealth can be created by individuals at any level of society.

   

The other is Fredrik Von Hayek who came from the Mises School of economics which means that a default position for him was free markets. He also believed that while growth was production to satisfy demand you needed demand. This for me is where economics stops short and business explains the rest. Demand makes the world grow, without demand there would be no need for invention or innovation. Commodities do the things that people would do in a less convenient way, the effort to satisfy demand is called business but from the economic perspective it’s also entrepreneurship. When people talk about business and say “the consumer or the market” what they are saying is “you and me”. From the Mises school came a “what to do” about Adam Smith’s observations of how people deal with exchange. The answer was less than nothing; we just let the market do what it pleases. Of course there are criminal elements so we need government, but the role of government is always to be a counter balance to criminality, not as incentive against criminals but as a punitive force in other words the thoughts of government should be about what it ought not to do.

Before I go further I feel this area is always glossed over so I’ll elaborate on it: Criminal behavior is not a business trait, if it was then it wouldn’t be criminal. Capitalism is about voluntary exchange, if I hold a gun to someone’s head and say give me your money, that exchange is not voluntary. It is possible for someone to play a word game here to confuse people who haven’t learned the contextual history of the phrase “voluntary exchange.” Some politicians like Michael Steele who is a former chairman of the Republican National Committee believes that in the above scenario the person who gives their money doesn’t have to and that the exchange is voluntary.  Partially he is correct since a person may then put a price tag on their life as worth more than what is on them at that time and give up their money. However there is in lays the partiality; if such people as Mr. Steele thought that logic through, a person who didn’t hand over their goods would possibly lose their life and if not they could have seen harm to themselves done. A person who walks into an electronics store should not have to give up their money or else they get electronics. If that last supposition seemed absurd then you’re still sane and the Michael Steele’s of the world are well… politicians.

Today we have an America where members of both political parties act out legislation that supports the Keynesian views of economics, despite Keynes’ himself retracting those views the views themselves are convenient to politicians for many reasons. We the people demand our politicians take actions that best suit out demands; this creates incentive for law makers to craft laws that give them more tools to do the things we demand. This isn’t a one dimensional thing, law makers rely heavily on polling to stay in office and for good reason. You see Keynesian economics is from the perspective of government a method of taking money and giving it to government, because the economics is broken the government applied a patch job to it, that patch job is called income tax, corporate tax, excise tax and we can’t forget regulations and anti-trust laws. Each one of those systems had been in place before Keynes but after Keynes they all have been employed with a ridiculous level of animosity towards the general public’s personal wealth.

Income taxes and regulations respectively for example were made for government to do things with our money that only government can do and regulations were made to prevent people from doing harmful things. The thing about Income tax and regulations is that they place glass ceilings over the average man. The normal person who wants to start a business has to add a third or more time to build a capital and the risk is greater. The government now has subsidies to help small businesses, but that really amounts to government giving you back a portion of what you already had paid and if not then it gets even more insidious as that means they are taking money from consumers to pay for your business.  Regulations are in most cases legislative overkill, individuals have civil courts where the burden on the plaintiff is much lower than in criminal court. Pursuing each case individually has always been more effective in resolving an issue, but excessive all reaching regulations came about because other companies were being disrupted by smaller companies and so the larger companies hire lawyers and lobbyists to win legislation in their own favor. In a previous post I mentioned the Marketplace Fairness Act, this is one such legislation with broad range that hits all fifty states and can in effect end online sales for small businesses. This limits competition for people like Amazon who won’t be affected by the legislation in any meaningful way.

How this election goes could decide if and how the Marketplace Fairness Act will be carried out but it’s too late now for a repeal since the bill received little uproar from the average American and as a result has bipartisan support (meaning Keynesian Republicans are no longer afraid to support the bill because they see no reprisal for enacting it.) I would prefer a third party honestly, but not enough Americans want small government for varying reasons but ultimately it boils down to a lack of faith in “other people” to do the right thing that cultivates the belief that government can do things individuals cannot.

And there we have it, the root of the problem with younger American’s, we were taught that cynicism was a lens that displays reality and somewhere along the road to objectivity we lost a few of the things that helped create modern society and one of them was; solidarity.

Each political member party isn't solid left or solid right, for example a Neocon can be considered either a Republican or a Democrat, the Neocon can have progressive ideals but share ideals that Neocons do. At the same time a conservative can and usually are anti-war which has been a moniker perhaps unfairly monopolized by the Progressives. But in modern day America the way to identify how politicians view out fiscal policy and what they ideology is-is to understand either Hayek's or Keynes' economics.