Showing posts with label free market. Show all posts
Showing posts with label free market. Show all posts

Tuesday, October 29, 2013

Obamacare: The Mother Of All Market Distortions (Updated)

Market distortion occurs when government imposes artificiality on markets through regulation. Such distortions always - always - always - cost the economy and individuals. I am not talking about laws of contract and fraud which set the parameters of the playing field for the operation of the free market, but rather regulations limiting free market decisions. Some are simply corrupt - i.e., the protection of vested interests. Others are more insidious and derive from the penultimate deceit of the left - that they are more intelligent than millions of individuals making their own decisions on how and what to purchase and sell.

Its hard to top the left's subprime housing crisis that brought our economy to its knees for market distortion. But that was a distortion that took fifteen years to bear its poisonous fruit. The biggest market distortion we are likely to see in our lifetimes and this side of the Soviet Union - one that is already bearing immediate fruit - is Obamacare. Healthcare is one sixth of our entire economy, and Obamacare is just starting to explode it.

The left has taken over our healthcare industry, mandating vastly expanded mandatory areas of coverage, from pregnancy, mental health, pre-existing conditions, "free" wellness checks, and "free" contraception, including the "morning after" abortion pill. They have mandated universal coverage - for supposedly an additional 30 million people - as well as subsidized coverage for lower and lower middle economic class. For this to work without adding to government debt, the middle and upper class are going to have to pay much more for their coverage, the young need to buy into the plans so as to subsidize the old and sick, and there is going to have to be a lot of new tax revenue to take up the slack for subsidies.

There is zero chance that this plan will work as advertised by Obama and the left. It will not save people money. It will not bend down the cost of health care. It will not provide universal coverage. It will not reduce the deficit. And of course, people who like their coverage will not be able to keep it at their choosing.

Some of these claims were knowing falsehoods.



Others seem to be attributable to the supreme conceit of the left, that they are smarter than the free market.

Because Obama has unilaterally put off the employer mandate to 2015, we are going to have to wait one more year to be able to take full stock of the near term impact of Obamacare in all of its 'glory.' But my full expectation is that it will add steeply to the deficit, that it will send the economy into even greater stagnation, if not outright recession, and jobs will further contract. It will be a far left trifecta.

The only good thing about this is that the far left owns this monstrosity. Whatever the right does, it should not agree to anything as a fix. Any attempt to put a band aid on this cancer will only extend out the pain. There is one answer only - repeal.

There will likely never be a greater experiment in socialist and Keynsian economic theory than the Obama administration policies in virtually all areas of government. The only question is whether the American people will ever take realistic stock of the outcomes.

Additional Updates: From Powerline on the higher costs of insurance under Obamacare:

For a succinct explanation of why Obamacare is making health insurance more expensive for millions of Americans, check out this short interview with Aetna CEO Mark Bertolini. Bertolini identifies three main factors: 1) Obamacare imposes a requirement that, on an actuarial basis, insurance cover at least 60% of health care costs. Currently, more than half of Americans who buy individual coverage are below 50%. 2) Obamacare imposes 4% to 5% additional cost in the form of new taxes and fees. Aetna alone will pass on $1 billion in Obamacare taxes and fees to its policyholders. 3) Obamacare mandates many coverages, whether customers want them or not, and requires insurers to provide subsidized coverage to those who are already sick.

And via Hot Air, there is Charles Krauthammer:







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Tuesday, February 21, 2012

A Turning Point In History - Feb. 21, 1848: Marx Publishes The Communist Manifesto

Reposted From Feb. 21, 2011:


On this day in 1848, socialist philosopher Karl Marx and his collaborator, Friedrich Engels, first published their magnum opus, The Communist Manifesto. In it, Marx advocated for a complete reworking of society, starting with the formation of labor unions, building into socialism and then to communism. It marks the single most destructive and distorting philosophy ever put forth in history, bringing untold misery to the world and working destruction upon the fabric of Western civilization to this day. Its promise has always been that society can be perfected by government and utopia achieved on earth. And while it has done some societal good in the West, the overarching reality has been economic misery and massive bloodshed.

I. Background, Philosophy & Goals

At the time Marx wrote his book, he was responding to very real problems in European society during the Industrial Revolution. Sweat shops, dangerous work places and slave wages were only a few of those problems. Moreover, European society tended to be very stratified, with many obstacles to moving between economic and social classes. Marx was also responding to Europe's colonialism as a similar evil of "oppression." And indeed, colonialism of the era, as practiced by all but the British, at least in retrospect, could be so characterized. His solutions, as expressed in The Communist Manifesto and other works, were well intentioned, but as explained below, his basic assumption about the regulation of economic markets was wildly false and his analytical framework of history was both superficial and grossly distorting.

All of that is to say that Marx's socialism is not an inherent evil. Some aspects or legacies of socialism that have found their way throughout Western society since 1848 are quite legitimate. As Bookworm Room states in a very informative post on the topic, protections for workers and a safe workplace are some of those legacies. The great weakening of the class system and the rise of the welfare state are others. And while the latter has gotten wildly out of hand, the proposition that society should provide a minimalist, temporary safety net is quite legitimate. Unfortunately, for what good Marx's socialism has done for society at large, the harm it has done has been exponentially greater.

Marx did not invent socialism, but he greatly stengthened its philosophical underpinnings, as well as describing and agitating for the final stage of socialism, communism. As I described it previously:

Steeped in the philosophy of Jean-Jacques Rousseau and born in the crucible of the French Revolution, socialism was meant to wholly rework society. Socialist philosophers, most notably Karl Marx, rejected class and religion as the bases for societal structure and advocated remaking society under the watchful eye of a central government that would redistribute the nation's wealth and mandate social equality. At the center of the socialist revolution was the Marxian belief that all events could and should be analyzed in terms of the oppressor and the oppressed, the victim classes and the victimizing class - a simplistic and distorting theme that makes up such a large part of our political discourse today. It creates, in its myopic view, a world of demons and perpetual victims. As Marx wrote in the opening lines of the Communist Manifesto:

The history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary re-constitution of society at large, or in the common ruin of the contending classes.

Inherent in that proposition is a rejection of Western values, history and norms and, in its stead, an embrace of militant secularism, moral relativism and, [in modern form], multiculturalism.

II. The Process:

Marx envisioned a multistep process to communism. The very first step, as he pointed out in The Communist Manifesto, was for workers to create unions:

. . . [T]he workers begin to form combinations (trade unions) against the bourgeois; they club together in order to keep up the rate of wages; they found permanent associations in order to make provision beforehand for these occasional revolts. Here and there, the contest breaks out into riots.

Now and then the workers are victorious, but only for a time. The real fruit of their battles lie not in the immediate result, but in the ever expanding union of the workers. This union is helped on by the improved means of communication that are created by Modern Industry, and that place the workers of different localities in contact with one another. It was just this contact that was needed to centralize the numerous local struggles, all of the same character, into one national struggle . . .

From there, Marx envisioned society passing into socialism, with the state owning the means of production, and then into finally into full communism:

The Marxist conception of socialism is that of a specific historical phase that will displace capitalism and precede communism. The major characteristics of socialism (particularly as conceived by Marx and Engels after the Paris Commune of 1871) are that the proletariat [workers] will control the means of production through a workers' state erected by the workers in their interests. Economic activity would still be organised through the use of incentive systems and social classes would still exist, but to a lesser and diminishing extent than under capitalism.

For orthodox Marxists, socialism is the lower stage of communism based on the principle of "from each according to his ability, to each according to his contribution" while upper stage communism is based on the principle of "from each according to his ability, to each according to his need"; the upper stage becoming possible only after the socialist stage further develops economic efficiency and the automation of production has led to a superabundance of goods and services.

III. Application Outside Of The West

A. Economic Model


As an economic model, neither communism nor socialism has ever succeeded in comparison to capitalism. This is because the central assumption of the socialist model - that governments can be a more efficient regulator of economies than free markets - has been proven false beyond any iota of rational argument. Related thereto, communism and socialism have failed because they look upon the fiscal self interest motivating the capitalist class as the penultimate sin.

"Greed" is not a dirty word, despite what our Commander in Chief might say in his attacks on capitalism. When fiscal self interest has been championed and combined with free market competition, it has massively lifted the standard of living for all in its ambit, including the lowest economic classes. And it should be noted that, in a free market economy, being a member of the lowest economic class at any given point is, for the vast majority, a transitory state. But when the opportunity to pursue one's fiscal self interest has been denied to the populace at large, as happens under socialism and communism, history has shown the result to be misery.

Those nations that have embraced socialism, with the government owning the means of production, are - or were before their collapse - economic basket cases. The Soviet Union fell apart in the 90's as a result of economic collapse. Communist China was well on their way to following the Soviet Union until Deng Xiaoping become the leader of the country and replaced communist economics with free market economics, starting China's economy on the road to what has been decades of rapid expansion. Cuba, North Korea, and Burma maintain full blown socialist economic systems, and all three have some of the lowest standards of living in the world today. In South America, Chavez is still in the midst of moving Venezuela into socialism, and its standard of living is tanking with stagflation and food rationing.

Similarly, in the Middle East, socialism and its closely related variant, crony capitalism, abound. Neither have worked there. For example, Iran, where government clerics own - and get rich off of - the major industries, is an economic basket case. Egypt is another example of a state with dominant socialist economics - and indeed, economic conditions were the motivating factor behind the recent revolution.

B. Social/Political Model

As a political and social model, Marx's philosophy has been even more destructive than its economic model. Marx's utopian world required an all powerful central government to enforce the distribution of wealth, to perfect society, to enforce equality of outcome, and to motivate people to produce in the absence of a profit motive. Marxism further rejected Judeo-Christian morality, leaving the state as the unchecked final arbiter of what is right and wrong, and thus prioritized individual human life below political goals to benefit the "proletariat" and the state. The end result has been slaughter on a scale never before seen in history. Well over 100 million people were murdered by their own communist regimes in the 20th century.

In China, "official study materials published in 1948 [show that] Mao envisaged that "one-tenth of the peasants" (or about 50,000,000 [people]) "would have to be destroyed" to facilitate agrarian reform." In the end, between the agrarian reform, the Great Leap Forward, and the Cultural Revolution, Mao actually exceeded that total by several million. The Soviet Union purged at least as many of its citizens, if not far more, from its inception through the end of Stalin's regime. China and the Soviet Union were not anamolies. Virtually every country that has seen the imposition of communism has also seen government sponsored mass murder on a wide, if not industrial scale. For example, in Cambodia, the Khmer Rouge slaughtered roughly 20% of its population. In North Korea, somewhere between 710,000 and 3,500,000 of the populace have been slaughtered by the Kim dynasty.

IV. Marxism In The West

A. Europe

Britain is a casebook study in the experimentation with Marx's socialist ethos, both economically through the 1980's and, in social policy, through today. In the aftermath of World War II, Britain embraced socialism, voting in 1945 to reject their war-time leader Winston Churchill, in favor of Labour's Clement Attlee. Attlees's first orders of business were the creation of the welfare state, the nationalization of major industry, the creation of nationalized medicine, and the divestiture of the empire. Tremendous power was placed in the hands of labor unions, and Britain suffered economically for decades. It took Margaret Thatcher to turn things around:

She entered 10 Downing Street determined to reverse what she perceived as a precipitous national decline. Her political philosophy and economic policies emphasised deregulation, particularly of the financial sector, flexible labour markets, and the sale or closure of state-owned companies and withdrawal of subsidies to others. . . She took a hard line against trade unions.

Perhaps most important in the turn from economic socialism, Thatcher significantly weakened the political power of Britain's labor unions, reforming them in a manner not too dissimilar to what we see occurring in Wisconsin today. Such was Britain's economic rebound under Thatcher that the Labour Party ultimately dispensed with the idea of promoting socialism as an economic model, withdrawing the infamous "Clause IV" of its plank calling for nationalization of industry and wide-scale redistribution of wealth. In addition, Labour has continued Thatcher's union policies.

Much of Europe is incrementally trying to follow Britain's lead. Decades of European experimentation with socialism and the welfare state have given Europe moribund economies with slow growth and high unemployment. But that is changing. In the words of the NYT, "socialism is collapsing in Europe."

And socialism is not merely collapsing economically in Europe, it is also collapsing as a driver of society. Multiculturalism is a natural outgrowth of Marx's deeply distorting view that all of society should be analyzed in terms of the "oppressed and oppressor," and that, within that rubric, Western societies, with a history of colonialism and imperialism, are uniquely sinful oppressors. It is a belief system wholly detached from historical reality.

Euorpean multiculturalism encourages minorities to define themselves by the culture of their nationality or by their religion. And because Marxism holds indigenous Western culture to be irredeemably sinful, multiculturalism requires that non-indigenous cultures be accepted non-judgmentally and, indeed, seems to hold them to be superior to indigenous culture. It deliberately balkanizes society and it is particularly insidious as regards to Islamic minorities in Europe. Yet today, it is widely being acknowledged across Europe that multiculturalism has failed utterly. So says French President Sarkozy, Britain's David Cameron, and Germany's Angela Merkel. Hopefully this rejection of multiculturalism is sufficiently timely to cure the toxin Marxian multiculturalism has released into European society.

B. U.S.

Even as Europe moves away from socialism, Obama is trying to drive the U.S. towards the failed European economic model. Obama has set us on the road to nationalizing one sixth of our economy with Obamacare. Our government is today the majority owner of GM and Chrysler. Obama nationalized the student loan industry, ostensibly for greater efficiency. Moreover, Obama is insinuating the government deeply into our economy with a tsunami of new regulations, particularly in the areas of the environment and finance. Then there was the recent power grab to regulate the internet. Obama is ideologically committed to punishing the rich through taxes and redistributing their wealth for the 'greater good' of society. And lastly, Obama is showing a penchant for crony capitalism, picking winners and losers in the marketplace. If that is not incremental economic socialism, then nothing is.

It is not just Obama that is infected with the Marxist philosophy - it pervades the entire left wing in the U.S. The left in America today is not a monolith, but rather a mosaic of pigeon holed permanent victim groups - a toxin directly derived from Marx's oppressed / oppressor analytical framework. It is the maintenance of these 'oppressed' permanent victim groups - be they minority groups, gays, women, or public sector employees - that is the raison d'etre of the modern Democrat party. And indeed, the central financial foundation of the Democrats is taxpayer money laundered through public sector unions, the essential building block of Marx's march toward a communist utopia. This is not to say that a majority of Democrats are agitating to establish full blown socialism in America today. But it is to say that to understand our modern left and their trajectory, the first step is to read Marx. Step two is to study history in order to understand what will happen to our nation if they are allowed to pull our nation along that trajectory.

V. The War On Religion

Central to Marx's goal to entirely remake society was to drive Judaism and Christianity from society. Western culture, morality, history and societal structures are inextricably intertwined with the Judeo-Christian religions. Indeed, one could say that, at least until the Enlightenment, the history of Christianity, and to a lesser extent Judaism, were one and the same as the history of Western civilization. Thus Marx became an implacable enemy of these religions and started a war on them that the left continues to this day:

. . . [S]ocialists have warred against Christianity and Judaism for over two centuries. Indeed, when socialism was born in the crucible of the French Revolution, one of the first acts of the Revolutionary government was to initiate a systematic and brutal war on the Catholic Church and its clergy.

The left has waged this war against Christianity and Judaism ever since. Karl Marx, socialism's greatest philosopher, famously wrote in his Critique of Hegel’s Philosophy of Right that religion is the "opium of the people" and that "[t]he abolition of religion as the illusory happiness of the people is required for their real happiness." The British socialist party wrote in their 1911 manifesto that "it is a profound truth that Socialism is the natural enemy of religion." In America, the socialist left has used activist Courts as an a means of removing all aspects of Christianity from the public square while in Britain, the Labour Party is demoting Christianity and deconstructing the Anglican Church. . . .

With the left's partial success in their war on Christianity has come an interesting phenomena - the search for something to replace Christianity among the newly secularized. It would seem that we humans are hard wired to look for what amounts to a religion to give ourselves a moral mooring and a greater purpose in life. Socialist governments recognized this. Indeed, the first socialists in France substituted government sponsored cult movements in place of the Catholic Church. In Communist countries, where raw police power was used - not wholly successfully - to crush Christianity and Judaism, socialism itself was raised to the level of a religion complete with a sainthood - the quasi-deification of communist leaders as part of a cult of personality. Catholics had the Shroud of Turin; Soviets had the mummy of Lenin.

On an individual level, the same search for a substitute is happening in the West. Many of the secular left today embrace environmentalism as a religion - and indeed, it was but a few months ago that UNEP explicitly called for the global warming movement to be pushed as a religious alternative to Christianity. Still others embrace the airy spiritualism of New Age thought.

All of this has existential ramifications for Western society. For the better part of two millennium, the Judeo-Christian ethic has provided a rock solid framework for morality at the heart of Western society - one that puts maximum value on each individual human life and one that provides moral clarity in such things as Christianity's Golden Rule and Judaism's "Great Commandment." Take that mooring away from the ancient expressions of our deity and all morality then becomes dependant on what any particular person or government defines as the greater good.

When governments and individuals can define by their whim what is moral or immoral, what is desirable and what is punishable, human life is almost inevitably devalued. Certainly Stalin, Hitler, Mao, Castro, and Pol Pot, between them responsible for the murder of well over a hundred million people in the 20th century, held to socialist belief systems that devalued human life and elevated in its stead political ideology. Many in the green movement argue that man is a parasite on the world and call for strictly limiting his impact using authoritarian means - including population control, forced sterilization and other such methods. . .

The bottom line is, regardless whether one believes in Judaism or Christianity, we will pay a very heavy price indeed for jettisoning them as the bedrock of Western society. Yet that is precisely what the left has sought for over two centuries, promising in their stead a secular heaven on earth. Ironically, should they fully succeed, history teaches us that their promised earthly heaven will be far more likely to resemble biblical hell.

VI. Conclusion

The allure of Marx's socialist philosophy, despite its utter failure as an economic model and its evil, bloody history as a social and political model, is very much alive. People embrace its utopian ideals wholly irrepsective of historical reality. It is fair to say that, since Marx first published the Communist Manifesto, the clash between Marxist social and economic ethos on one hand and traditional Western freedoms and capitalism on the other has been a reoccurring and often predominant theme across all sectors of society and culture. And indeed, what we see happening in Wisconsin today, pitting democracy against labor unions, is simply one more event in the history of that conflict. Marx may be dead, but his ghost still very much haunts us today.







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Monday, February 21, 2011

Marx & The Communist Manifesto, From Feb. 21, 1848 To Today


On this day in 1848, socialist philosopher Karl Marx and his collaborator, Friedrich Engels, first published their magnum opus, The Communist Manifesto. In it, Marx advocated for a complete reworking of society, starting with the formation of labor unions, building into socialism and then to communism. It marks the single most destructive and distorting philosophy ever put forth in history, bringing untold misery to the world and working destruction upon the fabric of Western civilization to this day. Its promise has always been that society can be perfected and utopia achieved. And while it has done some societal good in the West, the overarching reality has been economic misery and, in terms of communism, massive bloodshed.

I. Background, Philosophy & Goals

At the time Marx wrote his book, he was responding to very real problems in European society during the Industrial Revolution. Sweat shops, dangerous work places and slave wages were only a few of those problems. Moreover, European society tended to be very stratified, with many obstacles to moving between economic and social classes. Marx was also responding to Europe's colonialism as a similar evil of "oppression." And indeed, colonialism of the era, as practiced by all but the British, at least in retrospect, could be so characterized. His solutions, as expressed in The Communist Manifesto and other works, were well intentioned, but as explained below, his basic assumption about the regulation of economic markets was wildly false and his analytical framework of history was both superficial and grossly distorting.

All of that is to say that Marx's socialism is not an inherent evil. Some aspects or legacies of socialism that have found their way throughout Western society since 1848 are quite legitimate. As Bookworm Room states in a very informative post on the topic, protections for workers and a safe workplace are some of those legacies. The great weakening of the class system and the rise of the welfare state are others. And while the latter has gotten wildly out of hand, the proposition that society should provide a minimalist, temporary safety net is quite legitimate. Unfortunately, for what good Marx's socialism has done for society at large, the harm it has done has been exponentially greater.

Marx did not invent socialism, but he greatly stengthened its philosophical underpinnings, as well as describing and agitating for the final stage of socialism, communism. As I described it previously:

Steeped in the philosophy of Jean-Jacques Rousseau and born in the crucible of the French Revolution, socialism was meant to wholly rework society. Socialist philosophers, most notably Karl Marx, rejected class and religion as the bases for societal structure and advocated remaking society under the watchful eye of a central government that would redistribute the nation's wealth and mandate social equality. At the center of the socialist revolution was the Marxian belief that all events could and should be analyzed in terms of the oppressor and the oppressed, the victim classes and the victimizing class - a simplistic and distorting theme that makes up such a large part of our political discourse today. It creates, in its myopic view, a world of demons and perpetual victims. As Marx wrote in the opening lines of the Communist Manifesto:

The history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary re-constitution of society at large, or in the common ruin of the contending classes.

Inherent in that proposition is a rejection of Western values, history and norms and, in its stead, an embrace of militant secularism, moral relativism and, [in modern form], multiculturalism.

II. The Process:

Marx envisioned a multistep process to communism. The very first step, as he pointed out in The Communist Manifesto, was for workers to create unions:

. . . [T]he workers begin to form combinations (trade unions) against the bourgeois; they club together in order to keep up the rate of wages; they found permanent associations in order to make provision beforehand for these occasional revolts. Here and there, the contest breaks out into riots.

Now and then the workers are victorious, but only for a time. The real fruit of their battles lie not in the immediate result, but in the ever expanding union of the workers. This union is helped on by the improved means of communication that are created by Modern Industry, and that place the workers of different localities in contact with one another. It was just this contact that was needed to centralize the numerous local struggles, all of the same character, into one national struggle . . .

From there, Marx envisioned society passing into socialism, with the state owning the means of production, and then into finally into full communism:

The Marxist conception of socialism is that of a specific historical phase that will displace capitalism and precede communism. The major characteristics of socialism (particularly as conceived by Marx and Engels after the Paris Commune of 1871) are that the proletariat [workers] will control the means of production through a workers' state erected by the workers in their interests. Economic activity would still be organised through the use of incentive systems and social classes would still exist, but to a lesser and diminishing extent than under capitalism.

For orthodox Marxists, socialism is the lower stage of communism based on the principle of "from each according to his ability, to each according to his contribution" while upper stage communism is based on the principle of "from each according to his ability, to each according to his need"; the upper stage becoming possible only after the socialist stage further develops economic efficiency and the automation of production has led to a superabundance of goods and services.

III. Application Outside Of The West

A. Economic Model


As an economic model, neither communism nor socialism has ever succeeded in comparison to capitalism. This is because the central assumption of the socialist model - that governments can be a more efficient regulator of economies than free markets - has been proven false beyond any iota of rational argument. Related thereto, communism and socialism have failed because they look upon the fiscal self interest motivating the capitalist class as the penultimate sin.

"Greed" is not a dirty word, despite what our Commander in Chief might say in his attacks on capitalism. When fiscal self interest has been championed and combined with free market competition, it has massively lifted the standard of living for all in its ambit, including the lowest economic classes. And it should be noted that, in a free market economy, being a member of the lowest economic class at any given point is, for the vast majority, a transitory state. But when the opportunity to pursue one's fiscal self interest has been denied to the populace at large, as happens under socialism and communism, history has shown the result to be misery.

Those nations that have embraced socialism, with the government owning the means of production, are - or were before their collapse - economic basket cases. The Soviet Union fell apart in the 90's as a result of economic collapse. Communist China was well on their way to following the Soviet Union until Deng Xiaoping become the leader of the country and replaced communist economics with free market economics, starting China's economy on the road to what has been decades of rapid expansion. Cuba, North Korea, and Burma maintain full blown socialist economic systems, and all three have some of the lowest standards of living in the world today. In South America, Chavez is still in the midst of moving Venezuela into socialism, and its standard of living is tanking with stagflation and food rationing.

Similarly, in the Middle East, socialism and its closely related variant, crony capitalism, abound. Neither have worked there. For example, Iran, where government clerics own - and get rich off of - the major industries, is an economic basket case. Egypt is another example of a state with dominant socialist economics - and indeed, economic conditions were the motivating factor behind the recent revolution.

B. Social/Political Model

As a political and social model, Marx's philosophy has been even more destructive than its economic model. Marx's utopian world required an all powerful central government to enforce the distribution of wealth, to perfect society, to enforce equality of outcome, and to motivate people to produce in the absence of a profit motive. Marxism further rejected Judeo-Christian morality, leaving the state as the unchecked final arbiter of what is right and wrong, and thus prioritized individual human life below political goals to benefit the "proletariat" and the state. The end result has been slaughter on a scale never before seen in history. Well over 100 million people were murdered by their own communist regimes in the 20th century.

In China, "official study materials published in 1948 [show that] Mao envisaged that "one-tenth of the peasants" (or about 50,000,000 [people]) "would have to be destroyed" to facilitate agrarian reform." In the end, between the agrarian reform, the Great Leap Forward, and the Cultural Revolution, Mao actually exceeded that total by several million. The Soviet Union purged at least as many of its citizens, if not far more, from its inception through the end of Stalin's regime. China and the Soviet Union were not anamolies. Virtually every country that has seen the imposition of communism has also seen government sponsored mass murder on a wide, if not industrial scale. For example, in Cambodia, the Khmer Rouge slaughtered roughly 20% of its population. In North Korea, somewhere between 710,000 and 3,500,000 of the populace have been slaughtered by the Kim dynasty.

IV. Marxism In The West

A. Europe

Britain is a casebook study in the experimentation with Marx's socialist ethos, both economically through the 1980's and, in social policy, through today. In the aftermath of World War II, Britain embraced socialism, voting in 1945 to reject their war-time leader Winston Churchill, in favor of Labour's Clement Attlee. Attlees's first orders of business were the creation of the welfare state, the nationalization of major industry, the creation of nationalized medicine, and the divestiture of the empire. Tremendous power was placed in the hands of labor unions, and Britain suffered economically for decades. It took Margaret Thatcher to turn things around:

She entered 10 Downing Street determined to reverse what she perceived as a precipitous national decline. Her political philosophy and economic policies emphasised deregulation, particularly of the financial sector, flexible labour markets, and the sale or closure of state-owned companies and withdrawal of subsidies to others. . . She took a hard line against trade unions.

Perhaps most important in the turn from economic socialism, Thatcher significantly weakened the political power of Britain's labor unions, reforming them in a manner not too dissimilar to what we see occurring in Wisconsin today. Such was Britain's economic rebound under Thatcher that the Labour Party ultimately dispensed with the idea of promoting socialism as an economic model, withdrawing the infamous "Clause IV" of its plank calling for nationalization of industry and wide-scale redistribution of wealth. In addition, Labour has continued Thatcher's union policies.

Much of Europe is incrementally trying to follow Britain's lead. Decades of European experimentation with socialism and the welfare state have given Europe moribund economies with slow growth and high unemployment. But that is changing. In the words of the NYT, "socialism is collapsing in Europe."

And socialism is not merely collapsing economically in Europe, it is also collapsing as a driver of society. Multiculturalism is a natural outgrowth of Marx's deeply distorting view that all of society should be analyzed in terms of the "oppressed and oppressor," and that, within that rubric, Western societies, with a history of colonialism and imperialism, are uniquely sinful oppressors. It is a belief system wholly detached from historical reality.

Euorpean multiculturalism encourages minorities to define themselves by the culture of their nationality or by their religion. And because Marxism holds indigenous Western culture to be irredeemably sinful, multiculturalism requires that non-indigenous cultures be accepted non-judgmentally and, indeed, seems to hold them to be superior to indigenous culture. It deliberately balkanizes society and it is particularly insidious as regards to Islamic minorities in Europe. Yet today, it is widely being acknowledged across Europe that multiculturalism has failed utterly. So says French President Sarkozy, Britain's David Cameron, and Germany's Angela Merkel. Hopefully this rejection of multiculturalism is sufficiently timely to cure the toxin Marxian multiculturalism has released into European society.

B. U.S.

Even as Europe moves away from socialism, Obama is trying to drive the U.S. towards the failed European economic model. Obama has set us on the road to nationalizing one sixth of our economy with Obamacare. Our government is today the majority owner of GM and Chrysler. Obama nationalized the student loan industry, ostensibly for greater efficiency. Moreover, Obama is insinuating the government deeply into our economy with a tsunami of new regulations, particularly in the areas of the environment and finance. Then there was the recent power grab to regulate the internet. Obama is ideologically committed to punishing the rich through taxes and redistributing their wealth for the 'greater good' of society. And lastly, Obama is showing a penchant for crony capitalism, picking winners and losers in the marketplace. If that is not incremental economic socialism, then nothing is.

It is not just Obama that is infected with the Marxist philosophy - it pervades the entire left wing in the U.S. The left in America today is not a monolith, but rather a mosaic of pigeon holed permanent victim groups - a toxin directly derived from Marx's oppressed / oppressor analytical framework. It is the maintenance of these 'oppressed' permanent victim groups - be they minority groups, gays, women, or public sector employees - that is the raison d'etre of the modern Democrat party. And indeed, the central financial foundation of the Democrats is taxpayer money laundered through public sector unions, the essential building block of Marx's march toward a communist utopia. This is not to say that a majority of Democrats are agitating to establish full blown socialism in America today. But it is to say that to understand our modern left and their trajectory, the first step is to read Marx. Step two is to study history in order to understand what will happen to our nation if they are allowed to pull our nation along that trajectory.

V. The War On Religion

Central to Marx's goal to entirely remake society was to drive Judaism and Christianity from society. Western culture, morality, history and societal structures are inextricably intertwined with the Judeo-Christian religions. Indeed, one could say that, at least until the Enlightenment, the history of Christianity, and to a lesser extent Judaism, were one and the same as the history of Western civilization. Thus Marx became an implacable enemy of these religions and started a war on them that the left continues to this day:

. . . [S]ocialists have warred against Christianity and Judaism for over two centuries. Indeed, when socialism was born in the crucible of the French Revolution, one of the first acts of the Revolutionary government was to initiate a systematic and brutal war on the Catholic Church and its clergy.

The left has waged this war against Christianity and Judaism ever since. Karl Marx, socialism's greatest philosopher, famously wrote in his Critique of Hegel’s Philosophy of Right that religion is the "opium of the people" and that "[t]he abolition of religion as the illusory happiness of the people is required for their real happiness." The British socialist party wrote in their 1911 manifesto that "it is a profound truth that Socialism is the natural enemy of religion." In America, the socialist left has used activist Courts as an a means of removing all aspects of Christianity from the public square while in Britain, the Labour Party is demoting Christianity and deconstructing the Anglican Church. . . .

With the left's partial success in their war on Christianity has come an interesting phenomena - the search for something to replace Christianity among the newly secularized. It would seem that we humans are hard wired to look for what amounts to a religion to give ourselves a moral mooring and a greater purpose in life. Socialist governments recognized this. Indeed, the first socialists in France substituted government sponsored cult movements in place of the Catholic Church. In Communist countries, where raw police power was used - not wholly successfully - to crush Christianity and Judaism, socialism itself was raised to the level of a religion complete with a sainthood - the quasi-deification of communist leaders as part of a cult of personality. Catholics had the Shroud of Turin; Soviets had the mummy of Lenin.

On an individual level, the same search for a substitute is happening in the West. Many of the secular left today embrace environmentalism as a religion - and indeed, it was but a few months ago that UNEP explicitly called for the global warming movement to be pushed as a religious alternative to Christianity. Still others embrace the airy spiritualism of New Age thought.

All of this has existential ramifications for Western society. For the better part of two millennium, the Judeo-Christian ethic has provided a rock solid framework for morality at the heart of Western society - one that puts maximum value on each individual human life and one that provides moral clarity in such things as Christianity's Golden Rule and Judaism's "Great Commandment." Take that mooring away from the ancient expressions of our deity and all morality then becomes dependant on what any particular person or government defines as the greater good.

When governments and individuals can define by their whim what is moral or immoral, what is desirable and what is punishable, human life is almost inevitably devalued. Certainly Stalin, Hitler, Mao, Castro, and Pol Pot, between them responsible for the murder of well over a hundred million people in the 20th century, held to socialist belief systems that devalued human life and elevated in its stead political ideology. Many in the green movement argue that man is a parasite on the world and call for strictly limiting his impact using authoritarian means - including population control, forced sterilization and other such methods. . .

The bottom line is, regardless whether one believes in Judaism or Christianity, we will pay a very heavy price indeed for jettisoning them as the bedrock of Western society. Yet that is precisely what the left has sought for over two centuries, promising in their stead a secular heaven on earth. Ironically, should they fully succeed, history teaches us that their promised earthly heaven will be far more likely to resemble biblical hell.

VI. Conclusion

The allure of Marx's socialist philosophy, despite its utter failure as an economic model and its evil, bloody history as a social and political model, is very much alive. People embrace its utopian ideals wholly irrepsective of historical reality. It is fair to say that, since Marx first published the Communist Manifesto, the clash between Marxist social and economic ethos on one hand and traditional Western freedoms and capitalism on the other has been a reoccurring and often predominant theme across all sectors of society and culture. And indeed, what we see happening in Wisconsin today, pitting democracy against labor unions, is simply one more event in the history of that conflict. Marx may be dead, but his ghost still very much haunts us today.

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Tuesday, August 17, 2010

A Conservative Economic Narrative

At City Journal, The Free Marketeers Strike Back. It is a long and probing look from the perspective of conservative economists at free markets, regulation, and the origins of our current fiscal crisis. I highly recommend the entire article. To summarize the conclusions:

- Keynes was demonstrably wrong.

- Rising costs of energy were implicated in our economic meltdown and are the looming challenge for our future economy. Our government is not moving to meet this challenge, it is moving in the opposite direction.

- Don't underestimate the importance of monetary policy. Keep interests rates high enough so that prices remain stable but sufficient currency and credit are available to finance steady growth. Interest rates set too low for too long are a major factor in causing spectacular bubbles. That is what happened with Greenspan and the housing bubble.

- Market bubbles are an inevitable part of capitalism. You can't kill bubbles without killing capitalism. It is only when bubbles are combined with a very cheap money supply that they become truly dangerous in size.

- Recessions, as a part of the business cycle, are an intregal part of capitalism. Recessions are necessary for our system to correct market imbalances. You can't stop recessions without killing capitalism.

- The much maligned derivative market brought tremendous financial benefit, particularly to the world's poor. They allow for the efficient allocation of risk, thus increasing the availability of cheap credit. Some have recommended greater transparency for the market by funneling them through a clearing house that would create a record of the swaps.

- Big banks do not bring any economy of scale and, therefore, we should consider limiting the ability of banks becoming "too big to fail."

- Big banks should not enjoy taxpayer protection because that harms free competition, putting smaller banks at a disadvantage

- Reasonable regulations are necessary to efficient markets, and that includes requiring sufficient reserves. Banks become far too overleveraged, leaving them vulnerable during the economic downturn.

- Republicans need to stand up more forcefully for markets.

- Ballooning American and European debt poses a huge threat to long-term prosperity.

- By increasing taxes and imposing the wrong regulations, Western governments are hindering entrepreneurship and hence growth, that is the path to long-term prosperity.

The one thing Guy Sorman touches upon in his article does not go into any great detail about is the dismantleing of traditional lending standards. It is critical to note that Democrats dismantled our lending standards in the 1990's on a now discredited assertion that racism was endemic in the mortgage and loan industries. Even though now fully discredited, the race based standards remain in our laws and have actually been strengthened by Obama as part of the financial regulatory overhall recently passed into law.

Sorman does make one interesting point in addressing this issue. That is that, in comparing U.S. to Canadian home ownership, the Canadians fared better because of higher down payment requirements, yet the overall home ownership percentage between the U.S. and Canada are the same, suggesting the final irony, that Democrats destroyed our credit system for nothing. Here is how Sorman addressed the issue:

. . . [E]asy money helped expand a massive credit bubble. And that credit helped fund a wild proliferation of risky subprime mortgages, often issued with little or no money down, thanks to relaxed mortgage-lending laws and to Fannie Mae and Freddie Mac, the now-infamous “government-sponsored enterprises” that busily bought mortgages from lenders to keep homeownership expanding. The bursting of the bubble in 2008 brought the U.S. banking system, which had invested extensively in the subprime mortgages, to its knees. Given the enormous scale of the crisis, Taylor says, it’s clear that the private sector could not have caused it on its own. “Distorted incentives encouraged private speculation,” he says. “Central banks should return to their former global targets against inflation and be less erratic and more predictable.”

Taylor’s analysis draws support from a comparison of the financial crisis in the U.S. and Canada. Canadian banks, it turns out, weathered the financial storm much more effectively than American banks did. The reason: Canadian mortgages, unlike American ones, legally required robust guarantees, usually a 20 percent down payment. That helped keep homeowners from running away from their mortgage payments when things turned south, as happened in the United States. Canada and the U.S., it’s worth noting, still have the same percentage of homeowners—roughly 67 percent—meaning that the American incentives that favored risky bank behavior failed to increase ownership levels.

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Tuesday, May 11, 2010

The Left & Economic Illiteracy

This from the Volokh Conspiracy on the "startling" lack of economic literacy as one moves further to the left along the political spectrum:

Some of the results in this new article by Zeljka Buturovic and Dan Klein in Econ Journal Watch (a peer-reviewed journal of economics) are startling:

◦ 67% of self-described Progressives believe that restrictions on housing development (i.e., regulations that reduce the supply of housing) do not make housing less affordable.

◦ 51% believe that mandatory licensing of professionals (i.e., reducing the supply of professionals) doesn’t increase the cost of professional services.

◦ Perhaps most amazing, 79% of self-described Progressive believe that rent control (i.e., price controls) does not lead to housing shortages.

Note that the questions here are not whether the benefits of these policies might outweigh the costs, but the basic economic effects of these policies. Those identifying as “libertarian” and “very conservative” were the most knowledgeable about basic economics. Those identifying as “Progressive” and “Liberal” were the worst.

I wrote in a post below about a recent poll showing that a significant percentage of young Americans are coming out of our schools imbued with a positive view of socialism and a negative view of capitalism. The above study described by the Volokh Conspiracy certainly goes a long way to further explaining those results. Only a lack of a fundamental grasp of basic economic reality can possibly explain the economic fantasies and arrogance of the socialist left. And as I wrote in What In The World Are They Teaching Our Children:

I have long thought that no child should graduate from high school without an understanding of free market economics, basic accounting and business law. It would seem we are a long way indeed from that reality.

I think that we fail to teach those topics at fundamental, long term risk to our nation.

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Wednesday, December 23, 2009

Seraphic Secret On Utopianism and Big Government

From Richard Avrech at Seraphic Secret, an insightful essay on utopianism versus reality and Big Government statism versus capitalism that appears as part of a post on the Health Care bill. He captures in a few paragraphs what I struggle in far more to say:

Seraphic Secret believes in the power of the individual, the power of free markets to effect positive results for a majority of the people.

There is no such thing as a solution for everybody.

That is called utopia and utopian models always end in tyranny if not outright genocide.

Seraphic Secret strongly believes in religious charities such as The Jewish Health Care Foundation of Los Angeles.

Charities flourish when government is least intrusive. But when government assumes control of private initiative charity declines because high taxes drain wallets and people assume that, y'know, the government is taking care of everything.

Remember when computers and other innovative electronics cost the earth? Private industry and competition drove prices down and quality up. The same free market model should and could be used for health care reform.

But Obama and the Democrats have no faith in free markets, no faith in a free American citizenry.

Obama and the Democrats believe in big government, they believe in, well, themselves—a ruling elite.

But big government does not innovate.

Big government does not create new jobs or new markets.

Big government is a cumbersome beast that is concerned, primarily, with maintaining and expanding its own power.

And Big government is the enemy of freedom and decency. Because when you relinquish control of your life to government, you relinquish free choice, you give up on the American dream.

And that is the plague called socialism/communism/collectivism, recast by modern liberals as, ahem, social justice.

You—yes you—are about to sink into a world of new taxes and a grim swamp of government health care.

G-d help us.

Do read Robert's entire post. Robert's essay is a good compliment to one of my favorite Thomas Sowell essays: The Prejudices Of The Elite. If you don't already read Seraphic Secret on a daily basis, I would highly recommend you start doing so.

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Sunday, September 28, 2008

Barney Frank's Fingerprints


One of the few sure things in this world is that we as Americans are all better off when Barney Frank is leaving his fingerprints anywhere other than on our economy. Exhibit 1 in support of that truism is the subprime crisis driving our economy to the brink of depression. If you dust the subprime crisis for prints, you will find Frank's all over them. But to listen to Barney Frank today, capitalism and free markets are the cause of the current fiscal crisis. This turns reality on its head. Jeff Jacoby at the Boston Globe notes Barney Frank's bald faced falsehoods.

This from Jeff Jacoby at the Boston Globe.

'THE PRIVATE SECTOR got us into this mess. The government has to get us out of it."

That's Barney Frank's story, . . . As the Massachusetts Democrat has explained it in recent days, the current financial crisis is the spawn of the free market run amok, with the political class guilty only of failing to rein the capitalists in. The Wall Street meltdown was caused by "bad decisions that were made by people in the private sector," Frank said; the country is in dire straits today "thanks to a conservative philosophy that says the market knows best." And that philosophy goes "back to Ronald Reagan, when at his inauguration he said, 'Government is not the answer to our problems; government is the problem.' "

In fact, that isn't what Reagan said. His actual words were: "In this present crisis, government is not the solution to our problem; government is the problem." Were he president today, he would be saying much the same thing.

Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits they weren't the ones who "got us into this mess." Barney Frank's talking points notwithstanding, mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

As long as housing prices kept rising, the illusion that all this was good public policy could be sustained. But it didn't take a financial whiz to recognize that a day of reckoning would come. . . .

Frank's . . . fingerprints are all over this fiasco. Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he'll find one suspect in the nearest mirror.

Read the entire article. Unfortunately, its the narrative being articulated by Frank and his fellow Democrats in Congress that is being shouted far louder and with greater repetition. Yet again, Republicans are ceding the narrative. It is obscene.


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