Capitalism Is Not Racist; Capitalism Undermines Racism

From Mises.org (May 31, 2022):

Anticapitalist intellectuals have infused mainstream discourse with the idea that racial discrimination is baked into the DNA of capitalism. Usually, evidence of racial disparities in professional quarters is cited to buttress the narrative that capitalism is penalizing minority groups. Though it has become commonplace to argue that disparities constitute racism, the issue is more complex.

Racial discrimination is not an entrenched feature of capitalism, yet businesses must discriminate to remain competitive. Failing to reward the right competencies will result in failure. Therefore, discrimination is a legitimate policy that only becomes objectionable when done for nonmarket reasons. Even consumers discriminate on a daily basis, although they might not recognize it as such.

When parents insist that their children attend schools managed by capable educators, this is a form of discrimination because they are rejecting inferior schools. Secondly, other consumers prefer employing the services of formally educated workmen in contrast to their self-taught peers and are willing to pay a premium to obtain that labor. An unwillingness to discriminate is tantamount to incompetence, since the costs of inaction are detrimental to one’s business and well-being.

Using this pragmatic model of discrimination, it becomes easier to appreciate why some groups are less likely to be employed in white-collar jobs. Robert J. Morris presents data showing that the paucity of minorities in white-collar jobs is possibly a consequence of the achievement gap:

Black students made up less than three percent of the approximately 330,000 students from the graduating class of 2020 who took the ACT and were considered to be ‘‘STEM ready’’ students based on their Science and Math scores. Hispanics made up eight percent of the “STEM ready” students, whereas white students and Asian students made up 64 percent and 11 percent respectively.

Mediocre scores automatically disqualify minority students from attending elite colleges and becoming white-collar professionals. Likewise, in reading, the performance gap between whites and minority groups is abysmal. In Florida’s Alachua County public school district white pupils are reporting 72 percent achievement in reading and black students are reporting a paltry 25 percent.

Activist Tia Leather in an interview viscerally explained the implications of inept reading skills:

The reading level can mean that there are certain jobs, you can’t apply for. Certain levels of life, you just will never get to…. And as we know, through the research, it could mean jail time. And that’s how they’re building our prisons based on how well you’re reading by … third or fourth grade. So, the issue is there’s so many layers to unpack.

Moreover, Wells Fargo CEO Charles Scharf was recently vilified for observing that reaching diversity targets might be impossible due to the shortage of qualified minority talent. If the intellectual achievements of some minority groups are too meagre for them to join the ranks of the elite, then this is a problem to be solved by minority communities. Sociologists have penned compelling narratives linking the fortunes of students to family stability, and others assert that equivalent family patterns would narrow the racial wealth gap, but despite a treasure trove of evidence contradicting the racialist theory of capitalism, it continues to wield enormous clout in policy circles.

However, the sharpest evidence against the theory of racial capitalism is the preference for black workers during an era shaped by virulent racism. If capitalism is judging people on the basis of race, then in an environment where racism is acceptable, racist businessmen should refrain from conducting business with blacks. But this is not what we observe when studying the history of slavery.

Unsurprisingly, entrepreneurs are motivated by money, so even when they are racist, the pressure to accumulate wealth propels them to engage blacks. On slave plantations, overseers were responsible for executing important tasks requiring managerial competence. They supervised junior staff, disciplined slaves, and reported to planters. Overseers had to possess intimate knowledge of plantation management to reap success, hence planters selected for highly intelligent people.

Yet in the American South, black overseers were favored due to the deficiencies of their white peers, as Laura Sandy points out in a research article:

When compared with white overseers, the enslaved were not simply viewed as equivalent, and publicly advertised as “known to be equal to the management” capabilities of their white counterparts, but they were frequently considered to be superior.

Sandy’s account is corroborated by primary sources:

In 1784, Alexander Rose posted an advertisement in the Gazette of the State of South Carolina, which praised an enslaved man named Jonathan as having “more general or better knowledge of planting” than the majority of “White Men” in the state. Later in the decade another planter, who claimed to have purchased “perhaps one of the most valuable Negroes” in the Lowcountry, broadcasted the use of an enslaved man to manage his plantation without a white overseer present. With the enslaved at the helm, “any manager or overseer” was unnecessary; the enslaved overseer could direct plantation operations very profitably, independent of white supervision.

Relying on incompetent whites to manage estates was a losing strategy for planters, so to avert the demise of their plantations, they eagerly employed the services of blacks. Other than managing estates, enslaved workers were so competent at the trades that by the eighteenth century they were outperforming white men. Such findings are not peculiar to the American South: in Bridgetown, Barbados, free blacks dominated the market for skilled labor to the detriment of white artisans.

Irrespective of ideological positions, employers will prefer quality labor to inferior substitutes. Racist planters chose competent blacks over incompetent whites to the chagrin of their colleagues when racism was tolerable, so why would employers in an age where racism is perceived as deplorable penalize employees because of race?

Luckily, we don’t need to belabor the debate because the issue is indeed simple—some minority groups fail to attain parity with whites due to lower levels of human capital. In short, only lagging groups and their leaders can correct the achievement gap but a fixation on dubious theories of racial capitalism is sure to distract them from achieving worthwhile goals. [source]

Sad to say, the Left will still say the free-market system is racist.

Why Do Some Countries Stay Poor?

From Peter Jacobsen on FEE.org (Aug. 23, 2023):

Accounting for "The Wealth of Nations."

This week for Ask an Economist, I have a question from a reader named Mark. He says,

“I’ve worked with immigrants that recently moved to the US, and workers still living in their native country and working for me remotely.

My experience is that they’re on average, much harder working and more skilled (even in technical fields) than my American colleagues. The foreigners work hard, making no excuses, grateful for the work, and take every opportunity to better themselves. Americans, on the other hand, demand much higher wages, complain about the work, and make little effort to improve themselves.

Since the people from many of these poor countries are better workers, why are their home countries so poor? Immigrants on average start more businesses and do better in the US than US born citizens. With all their skills and ambition, it seems their home countries ought to be significantly richer than the US cities, yet this isn’t the case. What’s the cause of these countries’ poverty?”

Mark asks perhaps the single-most important question in the history of economic thinking. Why do some countries grow rich while others stay poor?

A Long History of Answers

In 1776, Scottish philosopher Adam Smith published perhaps the most influential work in the history of political economy: An Inquiry into the Nature and Causes of the Wealth of Nations.

This book, usually referred to as “The Wealth of Nations,” tries to answer the question Mark poses. Since then, wealthy countries have grown much wealthier, some poor countries have grown wealthier, but there are a substantial number of countries lagging behind.

Before we get into the right answer, we should spend some time talking about some popular wrong answers.

Economist Bill Easterly has done a great job chronicling some of these wrong answers in his book The Elusive Quest for Growth.

Easterly’s point in the book is simple. Throughout the late 20th century and into the 21st century, the United States and other countries have attempted to trigger economic growth in poor countries. These attempts have failed.

Easterly discusses three failed panaceas which experts believed would trigger development: investment, population control, and education. Before looking at each once, though, consider the unifying theme here. Developed countries tend to have higher levels of investment, lower birth rates, and more education. From this, experts have tried to infer that if these conditions are replicated in poorer countries, then development will follow.

This strategy has failed. It turns out these factors are more a consequence of growth than a cause. Let’s look at each failed panacea.

1. Investment

In the 1950s, experts began to believe that simply having machines and financial capital to take on big projects would make countries rich. This belief, ironically, was based on the (false) success of the Soviet Union. Soviet production numbers were going through the roof, and for decades economists believed they would overtake the US. Why?

The Soviet Union was industrializing through forced savings. By reallocating private resources to large industrial investments, it appeared the USSR was able to shock the economy into early industrialization. It turns out that this growth was illusory, as economist Murray Rothbard rightly predicted, leading to the collapse of the Soviet Union.

But the Soviet Union fooled many economists in the 1950s, so the model of centrally planned growth via investment took off. The belief was that because poor countries were in such dire situations, citizens had no ability to save. Without saving there is no growth. A vicious cycle was preventing growth.

So developing countries could fix this by giving the required investment for countries to have sustained growth. This investment would increase incomes, which would increase savings, and spur on permanent natural growth. Easterly calls this the financing gap approach.

The approach failed, though. Models failed to live up to their predictions, and poor countries were not made rich via air-dropped investments. The reason for the failure is the same reason noted by Rothbard in his analysis of the Soviet economy. Production is a means to the ends of consumption. If your production is not linked meaningfully to the well-being of consumers via the knowledge of prices, profit, and loss, then it will not lead to any sustained growth.

Central planners attempted to create production for its own sake, leading to the misallocation of capital and natural resources. Investment alone is not enough—you must have the right investments.

2. Education

A natural next plan for development experts was education. If increasing production via physical capital was not enough, maybe increasing knowledge or human capital would do the trick. Easterly chronicles how education development policy dominated from the 1960s to the 1990s.

The results did not bear out on this either. Easterly chronicles how study after study finds little to no correlation between education and economic growth. One study shows that as the education explosion happened in poor countries, the growth rate of income in these countries actually fell. This is exactly the opposite of what we’d expect if education theories were true. Another study found that for countries that grow 1% faster than average, education could only explain 0.06% of that in terms of growth in human capital.

Easterly points to several other types of studies which show a simple, consistent result: education does not create economic growth.

……

The Best Answer

So if all these answers are wrong, what is the right answer? Let’s go back to Adam Smith, and take a look at his famous conclusion. Why do countries become rich according to Smith?

“Little else is required to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.”

Smith is arguing that the ultimate cause of growth in a country stems from its institutions. In other words, the rules that govern your daily economic activity are at the bottom of the different growth outcomes we face in our world.

Another way to frame this is that in order for a country’s economy to grow, the citizens need economic freedom or access to private property rights.

When people have private property, they can use, sell, or rent out their property. This leads to a few results. First, people have an incentive to maximize the value of their property. If you own a house, you want to keep it in good condition because letting it fall apart means you lose some money. Private ownership incentivizes responsibility.

Furthermore, when people are able to sell their goods, prices form for those goods. Prices reflect the value of a good or service relative to other things, and embody societal knowledge about the good. When an oil rig breaks down in the ocean, oil becomes more scarce. We don’t have to be told oil is more scarce to curb our consumption. The rising price causes us to curb consumption whether we know it or not.

Prices also allow firms to do accounting to determine their profit or loss. If a firm makes a profit off of a sale, this tells them consumers valued the final product more than the value of the inputs used to create it. This process of transforming less valuable inputs into more valuable outputs is at the center of economic growth. To paraphrase the economist Peter Boettke: without ownership of the various goods used in production, there can be no markets for them. Without markets for these goods, there are no prices. Without prices, there can be no economic calculation.

So institutions which are economically free are the cause of economic growth. The data bear this out. Economists James Gwartney and co-author Robert Lawson pioneered the Fraser Institute’s “Economic Freedom of the World Index.” The Index measures how free the economies of different countries are and uses that information to examine the connection between freedom and flourishing. What they find fits perfectly with the theory here. Economically free countries are richer and healthier than unfree countries.

Economist Peter Leeson also examines the evidence in a paper titled “Two Cheers for Capitalism?” His conclusion?

“According to a popular view that I call ‘two cheers for capitalism,’ capitalism’s effect on development is ambiguous and mixed. This paper empirically investigates that view. I find that it’s wrong. Citizens in countries that became more capitalist over the last quarter century became wealthier, healthier, more educated, and politically freer. Citizens in countries that became significantly less capitalist over this period endured stagnating income, shortening life spans, smaller gains in education, and increasingly oppressive political regimes. The data unequivocally evidence capitalism’s superiority for development. Full-force cheerleading for capitalism is well deserved and three cheers are in order instead of two.”

In The Elusive Quest for Growth, Easterly has one other insight that merits our attention on this question. Easterly points out how much of the United States government’s focus on development in the late 20th century was really an attempt to win allies against the Soviet Union.

This is extremely ironic, considering that the US government was essentially incorporating Soviet style central planning to attempt to bring about growth in these developing countries.

Instead, it would have been better to follow a US-style pursuit of economic growth. Institutions which enable economic growth are the true driver of wealth creation. Once you enable individuals to freely compete and cooperate, the power of human ingenuity does the rest. [read more]

Food for thought. Lessons the Left never gets--especially the "easy taxes" part.

We Need More Inequality, Not Less

From Mises.org (July 15, 2022):

We are bombarded regularly with narratives touting the ravaging effects of income inequality in capitalist societies. For many, inequality is the signature economic story of the twentieth century and must be averted at all costs. But inequality is only problematic when it’s the culmination of corrupt policies that grant favors to privileged groups. In reality, market-driven inequality is the source of unbridled progress.

By vetting the quality of ideas, markets reward talented and insightful individuals for responding to consumer demands. Unlike government-mandated privileges, markets are impartial observers of value. Political connections are unnecessary for players to succeed in the free market; only a willingness to employ one’s talents to serve consumers will reap success.

However, since some people are more talented than others, markets will invariably produce inequality. Yet inequalities are likely to result in positive outcomes due to talented individuals’ ability to improve average people’s living standard. Most people lack the ability to revolutionize society, but luckily for ordinary people, gifted individuals’ pursuits set off economic and technological changes that boost long-term economic growth and create opportunities for average people to join elite circles.

Amazon made Jeff Bezos a wealthy man, but the entity has also transformed thousands of small businesses into lucrative ventures by providing a place for them to market their products to the globe. In fact, through its store, the company has launched forty thousand millionaires. Amazon’s ripple effect is so significant that it has even made its affiliates’ customers widely successful, as Celinne Dacosta points out in her feature on Rasmus and Christian Mikkelsen:

Rasmus and Christian Mikkelsen are twin brothers who quickly became pioneers in the Amazon book and Audiobook publishing space, having collectively released over 150 books. The growing industry motivated the twins to co-found PublishingLife.com, an online education business that helps ordinary people escape their 9-to-5. With the use of the twins’ Amazon book publishing business model, hundreds of people have been able to achieve life-changing results. To date, their students have made a combined $20 million dollars in verified earnings.

Without talent inequality, supercompanies like Amazon and Google would not exist, and there would be fewer outlets for average people to create wealth. Inequality is beneficial to society, because if we were all equal, the world would be remarkably mediocre. Culturally, this world would be bereft of artistic and literary wonders, since people would be incapable of rising to the level of William Shakespeare or Pablo Picasso.

Our understanding of science would equally be warped in the absence of minds like Galileo Galiei, Isaac Newton, and Albert Einstein. Unfortunately, life in this realm of mediocrity would be nasty, brutish, and short. Dying from simple ailments would be the order of the day, considering that society would lack people with the curiosity and talent of men like Louis Pasteur and Alexander Fleming, who revolutionized our approach to treating diseases.

Even more sinister is that the absence of extraordinary people would fail to trigger the benign envy that usually motivates people to improve their circumstances. Without inequality, there can be no progress, since its absence suggests that we are all equally talented. And if this is the case, then the creativity required to advance society cannot emerge.

Never forget that when all men are equally competent, no man can be excellent. As such, a truly equal society is one where we are all similarly mediocre and living a life that’s below humanity’s potential. [source]

I concur. Without inequality, you have a potential for group think.

The Competing Ideologies for the Collectivist Mind

From Mises.org (July 25, 2022):

Competition creates service from businesses, and competition produces benefits for everyone. Neither are politics and ideologies exempt from competition, with Republicans and Democrats going door to door for their candidates, having political rallies, or even fighting in the streets. Despite this, these two parties aren’t as different as their supporters may realize. When Ukraine was invaded by Russia, they jumped on the opportunity for possible defense contracts.

Ideologies or parties that may seem completely opposite can be “bipartisan” in many aspects. Fascism, National Socialism, and Marxian socialism are three such ideologies: different enough to compete, but similar enough to attract the same type of person, that person being of the collectivist mindset that the group is more important than the individual.

Frederick Hayek in The Road to Serfdom states:

It is true of course that in Germany before 1933, and in Italy before 1922, communist and Nazis or Fascist clashed more frequently with each other than with other parties. They competed for the same type of mind and reserved for each other the hatred of the heretic. But their practice showed how closely they were related.

The person of the collective mindset is more prone to fall into such groups, they may want the well-being of the class or the race over the individual. To ensure the success or domination of either, the state must be used as a tool of power. This is the danger of the collective mind. Adolf Hitler, Benito Mussolini, Oswald Mosley, and Karl Marx all fell into these mindsets.

Hitler: The Nazi Competitor

After the end of World War I, the German royal family was dethroned and the November Revolution saw the creation of the People’s State of Bavaria, run by Kurt Eisner, a socialist Jew. It’s worth mentioning there was a split between the communists and socialists at this time, as the communist parties wanted to be connected to the Soviet Comintern, while the socialist parties wanted to be more independent.

Either way, Hitler participated in this new Bavarian state, according to the Holocaust Encyclopedia; Hitler was elected to be a soldier’s council representative to civilian authorities. After Kurt Eisner was assassinated, Hitler attended the funeral. Benjamin Hett in his book Death of Democracy states:

There is film footage and a still photograph showing him [Hitler] marching in a funeral procession of the Bavarian Independent leader Kurt Eisner, wearing a black mourning armband and another red one in support of the Socialist government.

Max Levien, who was a communist, took charge and created a Soviet republic; once again, Hitler was elected to the soviet council for battalion representatives.

A soviet is a workers’ council. The USSR was a union of workers’ councils from all the socialist republics. So, when Hitler abolished private trade unions, the DAF (Deutsche Arbeitsfront, German Labor Front), a large state-run public union, absorbed them just as the USSR did.

In my previous article “How the Nazis Waged War on Private Property,” you will find that economically the Nazis were very similar to their Soviet counterparts (land and business confiscation along with price controls). Socially however, the Nazis were a bit different. the Marxian Socialists were more concerned with class-based conflicts, while the Nazis were more race based.

Hitler’s unreleased Second Book showed his belief in a united race:

I am a socialist. I see no class and no social estate, before me but that community of the folk made up of people who are linked by blood, united by language and subject to the same general fate.

This is where the separation of the Nazis and communists comes to fruition. Both had different immediate priorities, and Hitler considered communism a Jewish ideology; but Hitler also considered capitalism Jewish, as he considered it to be “international Jewish finance.” But one only needs to read Karl Marx’s article “On the Jewish Question” to find out Marx’s beliefs on race; he states:

As soon as society succeeds in abolishing the empirical essence of Judaism—huckstering in its conditions—the Jew becomes impossible because his consciousness no longer has an object. The social emancipation of the Jew, is the emancipation of society from Judaism.

While both often fought and even killed one another, when you’re competing for the mind of an individual to gain power, those things often happen. Fascism is another competitor for both the national and Marxian socialists.

Mussolini and Mosley: The Fascist Competitors

Before the assassination of Archduke Franz Ferdinand, the communist and socialist parties were more or less united and had one clear goal: to unite the workers of the world through international revolution. But after World War I started, many of these leftist parties actually supported their countries instead of maintaining an antiwar stance, except for the Italian Socialist Party, which maintained the idea of international peace between the workers.

Benito Mussolini, who was at this time head of the socialist newspaper Avanti, saw the appealing effect nationalism had on the masses. Mussolini became a war advocate within the party and was expelled from it the same year. Mussolini, defending himself before his party, said:

I tell you you’re wasting your breath, you will be forced into the war. You can get rid of me, because I am, and will always be, a socialist. You hate me. You hate me because you still love me! What divides me from you is not a small question, it is a big question which divides all socialism.

Mussolini, along with the help of intellectuals such as Gentile Enrico Corradini and Ugo Spirito rebranded and created a new political movement. It was meant to benefit the Italian worker but was made for Italians. This new ideology was called fascism, it was syndicalism or trade unionism that was made to benefit the Italian worker but left out the international worker. In Reflection on Violence, Georges Sorel states that Fascist planning to gain control of the economy would work something like this:

Through strikes it intended to bring capitalism to an end, replacing it not by state socialism, but by a society of producers.

This is the same thing as Karl Marx calling for the workers to unite and seize the means of production, only in this case it is the national (Italian) workers uniting. Oswald Mosley, a British aristocrat and founder of the British Union of Fascists, would try to spread fascism to England. Mosley joined the Independent Labor Party, which was a politically left-leaning party, in 1926 during the general strike; he paid striking miners from his own pocket, he also visited America, where he spent time with Franklin Roosevelt. Mosley also believed in what he called “industrial democracy,” where all workers are stakeholders (co-owners of sorts) in their companies and all profits go to them.

Conclusion

The collective mind, while many consider it noble for its want to improve lives, has caused great suffering in the world. While each ideology discussed, such as national socialism, Marxian socialism, and fascism, each stem from a similar tree and promote economic regimentation, they are different enough socially to compete for someone with a collectivist mindset. But these people will always need the state and its power to wipe out the successful and usher in a utopia. [source]

It seems that birds of feather not only flock together but compete with one another. The far-Left will never acknowledge that socialism, communism, fascism, and Nazism are basically the same ideology.

Malcolm McLean: The Unsung Capitalist Hero Who Changed the World One Container at a Time

From Mises.org (Aug. 25, 2022):

Ask the average person what they believe to be the most economically important innovation of the twentieth century, and they’ll probably point to the internet. The internet has certainly disproved Paul Krugman’s prediction that it would have no greater impact on the economy than the fax machine, but even this transformative technology may only warrant a silver medal when compared to something much more banal: the intermodal shipping container.

The shipping container was the brainchild of Malcolm McLean. A twentieth-century rags-to-riches story, McLean began his foray into the transportation business with only a high school education. Working as a gas station clerk, he’d saved up $120 to purchase a used truck by age twenty-one, and in 1944, he founded his first company, McLean Trucking. In the booming postwar economy, McLean was able to expand his business in an increasingly integrated global economy.

McLean’s business primarily involved shipping freight to and from ports for overseas exchange, and he was bothered by a transportation bottleneck that had impeded foreign exchange since the ancient world: every piece of freight had to be unloaded from the truck and reloaded onto ships, dramatically increasing the overall cost of long-distance trade.

McLean had the idea to simply ship the truck itself, but this traded the freight-transfer bottleneck for an inefficient use of space. McLean’s next idea was to load only the truck’s container.

Unfortunately, the Interstate Commerce Commission stood in his way. McLean owned a trucking business, and federal regulations would not allow somebody to own both a trucking and shipping company. McClean sold his trucking company in 1955, which by then had grown to 1,770 trucks, for $25 million dollars.

With the capital he received from the sale of his company, he secured a loan for $22 million and purchased a pair of World War II tanker ships to carry his patented containers, which he designed to stack on top of each other for overseas transportation. The containers could easily be transferred to eighteen-wheelers or railroad cars. By the 1960s, McLean’s new venture was turning a profit, and shipping costs were dropping rapidly. In 1969, he sold his company for $530 million, which he reinvested in further ventures to improve containerization. By the end of the 1970s, he owned a fleet of forty-four hundred container ships.

McLean also realized that his business did not depend on the monopoly protection of his design, so he released the patent for his container to the International Organization for Standardization, royalty-free. He understood that holding jealously to his patent would only slow trucking, railroad, and shipping companies’ adoption of his technology, and he had nothing to fear from competition.

The effects of McLean’s innovation are hard to capture in mere numbers, as it helped entire economies—such as Singapore and Hong Kong—leapt from preindustrial to modern seemingly overnight (coupled, of course, with the freest markets in the world, as even the most transformative technology cannot overcome the barriers imposed by a controlling state).

McLean received his flowers in the business community, taking his place in the Forbes Business Hall of Fame in 1982. But he remains largely an obscure figure, despite being perhaps the single most important force behind the explosive growth in global wealth of the second half of the twentieth century. Thanks to McLean’s seemingly simple idea, the cost of loading a ship fell from nearly $6 per ton in 1956 to only 16 cents by 2006 (adjusted for inflation, that would be a reduction from nearly $60 to roughly a quarter)!

McLean is the unsung hero of containerization, the revolutionary economic change that, as Marc Levinson put in the subtitle of his book The Box, “made the world smaller and the world economy bigger.” [source]

American innovation at its best.

19 Black Americans Explain Why They’re Conservative

From The Daily Signal.com (June 22, 2020):

These are difficult times, and Americans are looking for guidance on how to make sense of the most divisive issues we face. When it comes to race in America, Heritage President Kay C. James says that conservatives should be leading the civil rights movement.

That’s why The Daily Signal reached out to African American conservatives to ask why they are conservative. Here are their responses.

1. W.B. Allen: Good Sense Needs No Explanation

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My political conservatism is an effect or consequence, not a cause.

I am an American patriot, informed by a deep appreciation of the human significance of the advance in human affairs occasioned by the founding of the United States. For the first time in human history, the idea that mankind in general was capable of self-government had been realized.

Moreover, the fulfillment of the promises attending that realization have been made manifest in the consistent progress of civilization in the United States, in which the power of the individual and the value of self-agency, informed by the security of religious conviction, have steadily reinforced real material progress and the opportunity for moral progress.

For those reasons, it is a matter of prudent judgment that one’s political exertions should ever be careful to reinforce and not to undermine the foundations of the hopes invested in the political constitution of this nation.

The United States was formed as a lamp unto the world, and whatever undermines the power of the United States to perform that role constitutes an impediment to human happiness.

If it is conservative to wish to preserve the “last best hope of man” on earth, then such conservatism is the effect of devotion to liberty. No one could do otherwise, if guided by good sense and a due appreciation of the values of faith, freedom, and responsibility.

W. B. Allen, Ph.D., is the chief operating officer of UrbanCURE.

2. Brian Bledsoe: Most Fair for All

As a conservative who happens to be Black, I’m typically asked why I am a conservative. So here’s why.

I’m a conservative because the most innocent among us should be given the chance to live.

I’m a conservative because you shouldn’t be punished for being successful.

I’m a conservative because securing our borders against those who seek to come here illegally should be as commonsensical as securing our residences.

I’m a conservative because we need to defend the Second Amendment more than ever from the constant and vicious attack on our right to bear arms.

I’m a conservative because speech should be free whether I agree with it or not.

I’m a conservative because I stand against the deceptive allure of an all-controlling government by way of socialism, which threatens everything that made this country great.

I’m a conservative because we should remain forever vigilant in advocating limited government.

Leftists will argue that being conservative goes against what they perceive is in my self-interest. I’m a conservative because the principles of conservatism are the most effective, realistic, and fair for all—regardless of individual outcome.

Brian Bledsoe is a Heritage Action Sentinel from Texas.

3. The Rev. Arnold M. Culbreath: Not Sellouts, but Solutions

We are living in turbulent times. Racial tensions run high, and intensified feelings, conversations, shouts, and pressure reverberate across the land. And in the midst of all this, a wide variety of perspectives abound.

Being Black in America is not easy. However, I remain hopeful and work to make America better every day. As a pastor, Army veteran, business owner, and national ministry leader, I strive to model what being a Christian, socially conscientious, Black man in America looks like, while frequently facing racism and exclusion in the process.

In spite of the odds, I have labored long and participated in initiatives that help hopeless and hurting people, and programming that moves past rhetoric to get real resources to people in need. Things like after-school feeding programs, grocery giveaways, the First Step Act, opportunity zones, free help to women in crisis pregnancies, and more.

These principles need not be defined or confined by polarizing labels such as left or right, conservative or liberal. The question is: Does an initiative strengthen and lift impoverished and disenfranchised people and communities that need it most?

If so, collaboration is desperately needed to serve those ravished by a pandemic, shaken by injustices such as the brutal killing of George Floyd and many others at the hands of police, racial upheaval, and socio-economic disparities, and we need it now.

In order for this to occur, name-calling and marginalizing of viewpoints must stop. It’s much more helpful to stop viewing me and others like me as “Uncle Toms,” but as fellow team members. Not as sellouts, but as solutions to the problems.

This is our country, and our world, so let’s work to make it the absolute best that we can together.       

The Rev. Arnold M. Culbreath is the director of ministry engagement at the Douglass Leadership Institute.

4. Michael E. Kerridge: Reasonable Human Imperative

If anyone is willing to step away from the noise and cacophonic discourse that now compromise political discussion, we can begin to see that conservatism is not just an opposing or competing ideology. It is a human imperative wrought in the will and psyche of every reasonable person.

I am a conservative because personal initiative favors personal economic freedom. I oppose excessive government control of business and the subversion of the traditional family structure. I fully endorse and favor a free-market economy and the rule of law.

The values inherent in the individualism of my grandmother that spawned four generations of conservative thought and action embodied the sentiment that “all are created equal,” and that government does not bestow anything on anyone.

The entrepreneurship, individual effort, and hard work that made all of my grandmother’s efforts and her life rich and full have influenced and spawned generational success. This makes me a “reasonable man,” a reasonable person.

The family is a microcosm of what works best for all of mankind. We realize that God created us male and female, that we are to train up our children and equip them with self-confidence, discipline, and respect for all that is good and right.

This fortifies our society with reasonable people who think critically about their impact and legacy for their families, their fellow citizens, and their society.

Only this actually works for all concerned.

Michael E. Kerridge is a Heritage Action Sentinel from Florida. [read more]

Science Has a Major Fraud Problem. Here’s Why Government Funding Is the Likely Culprit

From FEE.org (Jan. 9, 2024):

President Biden’s 2024 budget includes over $210 billion directed toward federal research and development, an approximately $9 billion increase from 2023 funding. That might not sound particularly bad—after all, who doesn’t like science and innovation?

But, although seemingly noble, the billions pumped into the US government’s National Science Foundation don’t always translate into finding cures for debilitating diseases, or developing groundbreaking technologies.

In recent years, although technology and peer-review techniques have become more widespread, fraud has remained a consistent issue. The problem has gotten so out of hand that world-class researchers and medical ethics analysts believe the public should be aware of the widespread inaccuracies plaguing medicine.

Dr. Richard Smith, the former editor-in-chief of the BMJ and cofounder of the Committee on Medical Ethics (COPE), details,

Health professionals and journal editors reading the results of a clinical trial assume that the trial happened and that the results were honestly reported. But about 20% of the time, said Ben Mol, professor of obstetrics and gynecology at Monash Health, they would be wrong. As I’ve been concerned about research fraud for 40 years, I wasn’t as surprised as many would be by this figure, but it led me to think that the time may have come to stop assuming that research actually happened and is honestly reported, and assume that the research is fraudulent until there is some evidence to support it having happened and been honestly reported.

Independent analysis done by J. B. Carlisle confirms Dr. Smith’s suspicions. As Carlisle analyzed dozens of government-funded control trials, he found a staggering 44% contained false data. These findings are swept under the rug by most mainstream news outlets, which is a problem in itself. If government-funded research produces such sloppy results, the taxpayers funding it at least deserve to know the outcomes of the experiments they paid for.

Getting to the Root of the Problem

To understand why government-funded research tends to be so inaccurate, it’s crucial to look at history and remember how government involvement in research started.

It all ties back to the National Science Foundation (NSF), one of the first government agencies built for funding science. In the late 1940s, one of the most outspoken supporters of the NSF was Democratic Senator Harley Kilgore. His motivations were clear: the NSF was to provide the government with a pool of educated researchers that could be used for strategic purposes during the Cold War. Scientific inquisition was never the primary purpose of the NSF.

In addition to this, the system of “checks and balances” in scientific research is completely off-kilter. Private journals risk damage to their reputation if it is revealed that they have published fraudulent research. Privately funded journals compete to be the best among pools of hundreds of other publications. To maintain legitimacy in the eyes of future researchers and funders, publishing high quality research is in the private journal’s self-interest.

Academic institutions funded by governments, on the other hand, are motivated to shield their researchers, as researchers play a crucial role in securing substantial grant funding for the institution, often reaching into the millions of dollars. Government exists in a playing field outside the private sector—they aren’t competing against other specialized journals. Because they aren’t specialized and fund a wide array of projects, they can often afford to let “a few bad apples” through (unfortunately, at the expense of taxpayers).

The source of funding also undoubtedly (at the very least subconsciously) sways the research outcomes. There are several ways the government introduces bias into research. For one, the state often ignores certain scientific queries, forcing researchers to adopt different hypotheses or study different questions to gain any funding. Without any market forces guiding research and development, study objectives start aligning more with the interests of bureaucrats and less with the interests of patients.

Government agencies also don’t want to fund proposals that contradict the agency’s political ideas. If the research’s outcome even slightly threatens the government’s power, funding is likely to be cut off, often for extended periods. These outcomes are clearest when it comes to funding regarding the social sciences and economics, but also occur with life science research. 34% percent of scientists receiving federal funding have acknowledged engaging in research misconduct to align research with their funder’s political and economic agenda. Moreover, a mere 24% of these researchers have disclosed these ethically questionable research practices to their supervisors.

This incentive structure also explains why there is a limited amount of research into the accuracy of government-funded research. Many researchers are simply too afraid of the funding and reputational consequences that come with revealing problems with government funding. When there is research into federal funding bias, it is often concentrated on very specific and politically divisive topics (such as the use of stem cells). A team of researchers at the CATO Institute found just 44 Google Scholar articles from 2010-2014 that dealt with this type of government bias influencing research.

The Private-Sector Alternative

The government’s overpowering role in science simultaneously crowds out private sources of funding. Despite this, there is some good news: the private sector is getting more and more involved in scientific funding by the day.

Globally, 70% of science is financed privately. Charities like the American Cancer Foundation and Howard Hughes Medical Institute collectively contribute billions of dollars to spurring innovation in their respective fields.

For example, renowned neurologist Dr. Helen Mayberg’s research into deep brain stimulation as a depression treatment wasn’t supported by government grants. Instead, private sources funded her research. Yet, her discoveries led to additional trials and eventually breakthroughs in the way depression is treated.

Most Americans treat government-funded science as the holy grail of scientific research, but it truly isn’t. Without proper market signals guiding the direction of research, millions of tax dollars are lost, and thousands of hours of scientific research are wasted. As Milton Friedman explained regarding government funding of science, “The scientific ability of really able people is being diverted from the goals they would like to pursue themselves to the goals of government officials.” It’s up to the next generation to decide who they trust more: scientists, or the state? [source]

12 Principles of Economic Wisdom

From Economic Wisdom.org:

Our vision of economic wisdom is summarized in twelve “elements” that provide starting points for thoughtful, biblically informed understanding of contemporary opportunities and challenges.

……..

Stewardship and Flourishing

We were given stewardship over the world so our work would make it flourish for his glory.

1. We have a stewardship responsibility to flourish in our own lives, to help our neighbors flourish as fellow stewards, and to pass on a flourishing economy to future generations. (PDF) (one-pager)

2. Economies flourish when people have integrity and trust each other. (PDF) (one-pager)

3. In general, people flourish when they take responsibility for their own economic success by doing work that serves others and makes the world better. (PDF) (one-pager)

Value Creation

Through economic exchange, we work together and create value for one another.

4. Real economic success is about how much value you create, not how much money you make. (PDF) (one-pager)

5. A productive economy comes from the value-creating work of free and virtuous people. (PDF) (one-pager)

6. Economies generally flourish when policies and practices reward value creation. (PDF) (one-pager)

Productivity and Opportunity

Economic systems should be grounded in human dignity and moral character.

7. Households, businesses, communities and nations should support themselves by producing more than they consume. (PDF) (one-pager)

8. A productive economy lifts people out of poverty and generally helps people flourish. (PDF) (one-pager)

9. The most effective way to turn around poverty, economic distress and injustice is by expanding opportunity for people to develop and deploy their God-given productive potential in communities of exchange, especially through entrepreneurship. (PDF) (one-pager)

Responsible Action

Economic systems should practice and encourage a hopeful realism.

10. Programs aimed at economic problems need a fully rounded understanding of how people flourish. (PDF) (one-pager)

11. Economic thinking must account for long-term effects and unintended consequences. (PDF) (one-pager)

12. In general, economies flourish when goodwill is universal and global, but control is local and personal knowledge guides decisions. (PDF) (one-pager) [read more]

Nice. H/T: “12 Principles of Economic Wisdom” table podcast from voice.dts.edu.

Scarcity Is about More Than the Market

From Robert Bellafiore on The Public Discourse.com (July 10, 2023):

Behind the dry equations and supply and demand curves of modern economics lies an entire anthropology. Humans, it posits, are fundamentally acquisitive beings, seeking to satisfy infinite wants in a finite world, directing our limited resources toward the satisfaction of unlimited demands. As economist Lionel Robbins put it, “We have been turned out of Paradise. . . . Everywhere we turn, if we choose one thing we must relinquish others. Scarcity of means to satisfy given ends is an almost ubiquitous condition of human behavior.”

But however intuitive this view feels today—it really does seem correct when I have to decide whether my paycheck will go toward attending a concert, or seeing a movie, or buying a new economics book—it’s far from the only way to conceive of humans and their environment. Modern economists’ conception of scarcity has such a monopoly on our imagination, Fredrik Albritton Jonsson and Carl Wennerlind argue in Scarcity: A History from the Origins of Capitalism to the Climate Crisis, only because we’ve forgotten the many competing approaches out there. By revealing alternative ways of thinking about scarcity, abundance, and growth over the last 500 years, Jonsson and Wennerlind—intellectual historians at the University of Chicago and Barnard College, Columbia University—hope to show how “scarcity itself can and should be liberated from its connotations in modern economics.”

carcity offers a crash course on the many musings that philosophers, artists, theologians, and economists have had on the topic. And despite their hostility to modern economics, Jonsson and Wennerlind reveal one deep similarity between it and rival accounts: in every case, the seemingly mundane topic of scarcity raises some of the most foundational questions one can ask. Jonsson and Wennerlind’s historical investigations helpfully illustrate how tawdry matters of getting and spending have always been underlaid by questions about man, nature, technology, and their relations.

Unlimited Desire vs. Limited Nature

Jonsson and Wennerlind identify two broad schools of thought that have taken shape across the centuries. The Cornucopian ideology calls for “an active mastery of nature together with a dynamic and expansive notion of desire.” It optimistically envisions people’s ability to reap the bounties of nature so that it can provide for our many, indeed insatiable, wants, and it sees the expansion of knowledge and technology as the surest way to do so. Such figures as philosophers Francis Bacon and David Hume and economists Adam Smith and Paul Samuelson celebrated people’s ability to push back the boundaries of ignorance and poverty and advance learning and commerce for, as Bacon put it, “the relief of man’s estate.” For them, science enables us to uncover nature’s secrets, while technology and trade allow us to put those secrets to good use, raising our standard of living and continually improving our lot.

In the other corner is the Finitarian ideology, which emphasizes “the limits to human power over nature and the need for constraint and moderation of human desires.” The Finitarians generally see nature as altogether more mysterious, but also more fragile, than the Cornucopians do—a subject more fitting for stewardship than for domination. Because nature’s resources can be depleted or disturbed, society must learn to curb its wants, aim for “good enough” rather than “always more,” and thereby strike a stable balance between means and ends. From the Romantic meditations of Jean-Jacques Rousseau and John Ruskin, through the bleak visions of David Ricardo and Thomas Malthus, and culminating in the warnings of modern environmentalists such as E. F. Schumacher, Finitarians tend to be a more dour bunch, exhorting us to keep our demands in check, and cautioning against the hope that new technologies will solve perennial problems.

Are these groupings simply another way of listing capitalism’s champions and critics? Not quite; for Jonsson and Wennerlind, scarcity forces us to think through questions far more expansive than simply whether free markets are good or bad—for example, whether man is a part of, or above, nature, and how the deployment of technology transforms both. Theologians such as Thomas More and François Fénelon and novelists such as Daniel Defoe and Joris-Karl Huysmans had weightier questions on the mind than how exactly government should or shouldn’t regulate economy. Scarcity’s exposition of such a wide array of thinkers compellingly conveys the range of thought given to matters that are today cordoned off in the economists’ province (although the summaries are sometimes given too summarily—can one really learn anything about Martin Heidegger in two pages?).

Scarcity also reveals many surprising ironies and affinities that a mere debate over capitalism would obscure, such as the tension between thinkers’ premises and their predictions. The Cornucopians might celebrate the ability to achieve our many desires, but only because they start from bleak convictions about how, in our postlapsarian state, we can never be satisfied. For them, one choice always forecloses another—just look at the glee with which economists will ruin a good meal with the reminder that there’s no such thing as a free lunch. The pessimistic Finitarians, in contrast, while somberly calling attention to our, and nature’s, limitations, just as often find themselves daydreaming, as do Karl Marx and Charles Fourier, of the frabjous day when we will attain all we need, and want no more than that. [read more]

Are Markets Immoral?

From Peter Jacobsen on FEE.org (Apr. 5, 2023):

Ask an Economist #12

This week for Ask an Economist, I have a question from AJ who asks (edited for clarity),

“This isn’t entirely about economics but rather the morality of capitalism. How do you reconcile the fact that the free market sometimes creates products that hurt the users and the people around them? For starters there is social media which sows division and there are news reporters who do the same thing. I am not saying that the government would do it better, just that you claim capitalism in of itself is moral.”

AJ is up front about the fact that this is not strictly an economics question. It’s a question about morality. Nonetheless, a good understanding of economics can at least aid in exploring this sort of question. But, to be clear, in answering a question about morality I’m stepping out of my role as merely an economist and drawing on my worldview.

So how can I reconcile an appreciation for free markets with the immorality that exists in human exchange? To begin, let’s sort out exactly what we mean when we talk about “free markets.”

The Market as a Process

It’s tempting and sometimes useful to think of free markets as a result. Some quantities of goods are available right now at the store. This is a result. It’s tempting to think of this result as equivalent to the free market. But that’s not exactly right.

The free market is a process. It occurs over time. Simply put, when individuals are free to own and exchange property and enforce contracts without someone hurting them or taking their property, they are engaging in the market process. This relates closely to FEE founder Leonard Read’s support for “anything that’s peaceful.”

The reason it’s important to distinguish the process from the results is that we can easily think of good processes that lead to bad results. Think of medical processes. We could imagine a scenario where an unidentified patient is brought to a hospital unconscious and bleeding. Imagine that, in order to stop the bleeding, doctors use some sort of clotting medicine.

Let’s say 99 out of 100 times, this clotting medicine saves the patient from dying. But in 1 out of 100 cases, the unidentified patient is allergic to the clotting medicine and dies.

Is this process immoral? If there is no alternative that saves all 100 patients, the answer seems to be certainly no. We dislike the result of one death, but that is not, by itself, a condemnation of the process.

Likewise, the morality of the market process is not necessarily contingent on perfect results.

But what results exactly does the market process select for?

The Customer Is Always Right?

If you’ve been employed in the US at all, you’ve probably heard a collection of tropes about the importance of customers such as, “the customer is always right” or “the customer is king.”

These sayings communicate the fact that in order to beat competitors and earn a profit, businesses must offer the best value to customers. Economists call this idea consumer sovereignty.

Will consumer sovereignty always lead to good or moral results? I certainly don’t think so. So long as consumers have preferences that are immoral, this will mean some of the goods and services produced by the market will be used in immoral ways. For example, I think it’s immoral for people to drink themselves to death. As a Christian, I believe we’re called to be good stewards of our lives and gifts.

So is it bad when people choose to put their health at risk to maintain an endless drunken stupor? Absolutely.

But the question is, is this result the fault of the free market? Absolutely not. Consider this related analysis by economist Ludwig von Mises:

“It is not the fault of the entrepreneurs that the consumers, the people, the common man, prefer liquor to Bibles and detective stories to serious books, and that governments prefer guns to butter. The entrepreneur does not make greater profits in selling bad things than in selling good things. His profits are the greater the better he succeeds in providing the consumers with those things they ask for most intensely.”

There is nothing inherent in markets that require consumers to demand an excess of alcohol. The desire, and associated immorality, exists in the person rather than the process.

In this way, the market acts as a sort of “mirror” for morality. A mirror doesn’t make someone ugly or beautiful. It reflects what is there. Likewise, in this sense markets do not make us good or evil, they merely reflect what is there.

In fact, some economists even argue markets are better than a mirror and that they improve our morality on several margins.

I still believe that evil is a problem. In fact, I believe human nature is corrupted by evil and nothing earthly will ever change that completely.

That doesn’t mean I’m hopeless, either. There are some systems which curb the negative impact of evil better than others.

But, in general, I think the rush to blame social institutions for a perceived lack of morality often is, consciously or unconsciously, an attempt to avoid having a conversation about personal responsibility.

So I do not blame capitalism for the immoral results that sometimes occur in the market process.

There is no perfect system out there where all results are good and beautiful—at least not on this side of heaven. Using an imagined perfect world like this as the benchmark for capitalism (or any system) will lead us to condemn capitalism by definition. But the perfect world does not exist. This sort of thinking is an example of the Nirvana fallacy. [source]

All social systems are imperfect as the author says. But to say free markets are inherently evil is to say garage or yard sales are evil since both are free market systems.

What is truly evil is socialism and communism because they force or even coercive you to give your goods away to someone else—wealth redistribution in other words. This goes against the Ten Commandments which means socialism/communism/collectivism are unholy. Then again Marxists don’t care about what God thinks. They have their own religion.

Excerpts from the book Skin in the Game Part 2

Beware of the person who gives advice, telling you that a certain action on your part is “good for you” while it is also good for him, while the harm to you doesn’t directly affect him.

……..

Laws come and go; ethics stay.

……..

No person in a transaction should have certainty about the outcome while the other one has uncertainty.

…….

The more confined our ethics, the less abstract, the better it works.

……..

Society doesn’t evolve by consensus, voting, majority, committees, verbose meetings, academic conferences, tea and cucumber sandwiches, or polling; only a few people suffice to disproportionately move the needle. All one needs is an asymmetric rule somewhere—and someone with soul in the game. And asymmetry is present in about everything.

…………

The underlying structure of reality matters much more than the participants, something policymakers fail to understand.

Under the right market structure, a collection of idiots produces a well-functioning market.

The researchers Dhananjay Gode and Shyam Sunder came to a surprising result in 1993. You populate markets with zero intelligence agents, that is buying and selling randomly, under some structure such that a proper auction process matches bids and offers in a regular way. And guess what? We get the same allocative efficiency as if market participants were intelligent.

……….

Leave people alone under a good structure and they will take care of things.

Source: Skin in the Game: Hidden Asymmetries in Daily Life (2018) by Nassim Nicholas Taleb.

Why Socialism Does Not Work

From American Thinker.com (Dec. 16, 2021):

The resurgence of socialist ideology is curious given the unpleasant history of that doctrine.  The historical evidence is that socialism does not work as claimed.  Moreover, when socialism has been tried, it has all too frequently been accompanied by catastrophe and atrocity.  It is not unfair to say that history has not been kind to socialism and vice versa.  It is not hyperbole to note that the results of socialist government have been evil.  It is also reasonable to conclude that many of the failures of socialism were due to inherent weaknesses in its doctrines and philosophies.  Stated simply, the history of socialism as a large-scale governing principle is one of misery and failure.

Some of the appeal of socialism is due to its proponents’ selectively disavowing past socialist failures while also adopting successes that are not socialist.  It is common to hear that the mass deaths that accompanied the socialist enterprises of the 20th century and the ongoing economic catastrophe that is Venezuela were not socialist per se but rather artifacts of circumstance.  It is also claimed that public financing of roads, schools, and public services are species of socialism when they are, in fact, methods of allocating the benefits of private enterprise to public purposes.  Much of the appeal of socialism is a semantic artifice.  The socialism that is promised in current politics will always work in the imagination and fail in reality.  There are very simple reasons for why this is so.

Socialism, as an economic and political doctrine, is not social safety nets or paying taxes to fund public services.  It is government control of capital.  All economic systems, whether in the United States, or North Korea, or Zimbabwe, require capital. The difference lies in who controls the capital, and consequently, who profits from it.  The fundamental flaw of socialism is that it contains no optimizing mechanism for selecting those who will manage capital most efficiently.  Capitalist systems rely on the optimizing mechanism of competition.  Fair competition selects those who make the most effective use of capital and who are most suited to contend with risk.  Socialists do not deny this fact, rather they substitute the irrelevant argument that competition produces "unfair" outcomes, and that efficiency ignores empathy.  The appeal of socialism is almost entirely emotional.  It implicitly disparages efficiency but in fact all progress, all improvements in human life, are the result in improvements in efficiency of one sort or another.  

Socialism lacks objective processes of optimization and improving efficiency.  Instead, it seeks to determine relative merit and improve processes by planning and resort to "experts." This creates an endless regression of shortcomings in that there is no optimizing mechanism for planning or choosing experts.  More particularly, there is no optimizing mechanism for choosing who should be given control of the process, and those who attain such positions often do so because of abilities largely irrelevant to the claims of the socialist ideal. Capitalist systems, through competition, tend to select managers of capital who have competence in using it.  Socialist systems, lacking any other type of optimizing mechanism, tend to select on the basis of political skills, which may be entirely unrelated to economic competence, or even interest in economic progress.  It is no accident that many of the socialist experiments of the 20th century resulted in authoritarianism and the predictable calamities to which authoritarianism is prone.  

It should not escape notice that many of the socialist regimes that were associated with mass death and economic calamity had leaders whose terms were limited only by their deaths or removal by force.  This reveals another flaw in socialist theory.  Once a leader ascends to a position of power, he becomes interested in maintaining power and is decidedly hostile to any mechanism that may identify a more capable leader.  Socialism thus tends to discourage finding those most capable of using capital, with the result being North Korea, Venezuela, and other economic invalids. [read more]

Other articles on socialism:

• Socialists Claim Their System Is Morally Superior. They're Wrong.
• Socialism Sucks, If You Need Proof, Here It Is
• Our Corporate Oligarchy and the Road to National Socialism
• Covid-19 and the Socialist Calculation Problem

What Tommy Boy Teaches Us About Entrepreneurship and the Regulatory State

From FEE.org (Oct. 30, 2021):

Regulations attempt to manage and control complex systems according to what has been deemed as appropriate behavior – and therein lies the problem. Complex systems are complex and what is “appropriate” is subjective and tends to be situationally dependent.

For regulatory bodies that are on the outside looking in, data can be misleading and algorithms can be misconstrued, and this was depicted in a recently released policy report by the Consumer Choice Center. Regardless of whether they concern talcum-based baby powder or crop-protecting pesticides, the report explains how blanket bans and one-size fits all approaches overlook the idiosyncrasies present within industries and the long-term implications of imposed restrictions.

Standardized systems and rigid rules create a culture of conformity rather than one that promotes improvisation and risk-taking – and this is to the detriment of both consumers and producers. So, let’s explore why that is with reference to a well-known problem child prone to inappropriate behavior and hazardous situations: Tommy Boy (and for anyone unaware of this 1995 comedy classic, it was released just this month on Netflix).

Regulations Rein in Action

Movie Depiction: In Tommy Boy, the namesake character is clearly a less than ideal candidate for going on what is to become one epic sales trip. Yet despite the apprehensions of some board members, Tommy Callahan (played by Chris Farley) is granted the opportunity to set off to save the family business. He is joined by a colleague, Richard (played by David Spade), and the two serve as a support mechanism for each other and for the shenanigans that ensue. As the movie plays out, it is clear that both Tommy and Richard will do whatever it takes, regardless of the adversity they face, to get the contracts they need to save Callahan Auto Parts.

Real Life Application: Experimentation and diversification are the best combination for promoting advancement, according to the economist Ludwig Von Mises, but the go-get-em attitude seen in Tommy Boy seems to be fading within the US. This cultural shift was a primary topic of concern in an Oxford debate (now roughly a decade old) where Peter Thiel voiced that new motivations for innovations are desperately needed. Fast-forward to the present day and the risk-averse mentality has become pervasive as the desire to confront challenges is replaced by desires for simplified solutions concocted by those on high. Rather than receiving support for venturing onward, there is the inclination to stay put to stay safe.

Regulations Restrict Learning by Doing

Movie Depiction: Farley and Spade face resource constraints, unforeseen externalities, and competitive pressures, yet trial and error allow for their progress on a path that is far from predetermined. Just as a guarantee label was missing on the product Tommy was selling, so too was a guarantee missing for how things would play out. And although a warning label would have been more applicable for Tommy’s tactics, he leveraged what he learned along the way and challenged himself to pursue what could be rather than settling for what is. Maya Angelou once said “I did then what I knew how to do. Now that I know better, I do better” – and this was true for Tommy.

Real Life Application: Miss Frizzle from the Magic School Bus would likely have been proud of Tommy and Richard given her motto of “Take Chances, Make Mistakes, Get Messy,” but it is hard to imagine such freedom and flexibility in today’s workplace environment given assessment measures and benchmarks for best practices. Even the mottos of Silicon Valley to “Fail Forward” or “Fail Better” seem to be proclaimed more than practiced and red flags should be raised given that some of today’s tech giants are kowtowing in favor of government interference. Specific standards and verification mechanisms create bottlenecks for production processes and entry barriers for new entrepreneurs since anything new or different will need to receive approval first. Learning by doing has been overtaken by doing what one is told.

Regulations Reduce the Role of Individuals and Ingenuity

Movie Depiction: The protagonists approach each day and each client differently; and they are both proactive and reactive according to the situations they encounter. Spade is knowledgeable about the firm while Farley tries to embody his father’s sales techniques, but the main message is that they are both left unrestrained and unchecked with what they do and how they do it. In the end (spoiler alert), they win out by not completing their sales trip but by taking down a top competitor, which was not even a consideration when they first set off on their adventure.

Real Life Application: Just as personal pursuits and lifestyle choices should be determined by individuals, so too should the voluntary business dealings of producers and traders who are most closely connected to the matters at hand. Everyone is capable of reason and self-direction according to the philosophical and traditional view of the law (as per the Anglo-American model), which is why innocence must always be presumed until proven guilty. This same consideration should be granted to entrepreneurs and organizational change agents who desire to take calculated risks and defy the status quo.

External expectations and limitations are known to curtail personal agency and delay creativity. And once one form of regulation is put in place, it is likely that more will follow suit.

Take for example the washing machine. Despite technological advancements, washing machines are less effective today and cost just as much due in large part to the proliferation of regulations. A 2007 YouTube campaign by the Competitive Enterprise Institute told viewers to "Send Your Underwear to the Undersecretary" in defiance of new rules that would lessen cleaning power while raising costs.

Although mitigating risk is important, it is also important to realize risks can lead to rewards. Thank goodness the Wright brothers weren’t grounded by safety concerns or compliance measures, since we’d never have the gift of flight.

When rules are applied, experimentation and exploration are sidelined, as the values and visions of regulators supplant those of the creators, and opportunities for regulatory capture will also occur (as seen in the airline industry today).

Indeed, one of the many issues of regulatory oversight is that it requires enforcement. An agency must be tasked with monitoring, while firms must be tasked with reporting, and the whole system wreaks of rent-seeking.

When incentives and interests collide, there is no denying that those with power will wield it in their favor and according to their own dispositions – which is why Big Tech has a big interest in playing a part in regulatory agenda setting.

So in the spirit of Tommy Boy, it is good to remember that some rules are meant to be broken (legalization of cannabis), and some expert advice should be ignored or questioned (such as fat taking the blame for a “weight problem”), and some regulations are simply in need of a full reset.

America fell in love with Chris Farley for his comedic genius and hilarious improvisations, and so entrepreneurs should take note while regulators should step aside. After all, nothing ventured, nothing gained. [source]

Good points, but the regulatory state doesn’t care. They see business and entrepreneurship as evil and needs to be regulated unless it benefits the Ruling Class on the Left somehow.

More articles on the regulatory state:

• Joe Biden Wants to Regulate Your Computer Chips, Too
• Biden's EPA set to run small Texas oil refinery out of business with big gov't regulations — even as energy prices skyrocket over Russia conflict
• Biden Wants to Regulate Everything -- Even Your Air Conditioning
• Report: Facebook Fought Against Regulation by Manipulating the News

If you’re really against fascism, repeal the New Deal root and branch

From Tom Mullen.net (May 2, 2021):

If there is one thing the American political right and left agree on, it’s that the other side is fascist. The left thinks Trump is Mussolini; the right points to Big Tech suppressing political dissent. We even have an organization that styles itself, “AntiFa,” its chief means for fighting fascism being to dress all in black and beat its political opponents with clubs.

We live in interesting times.

But for all the accusations of fascism, justified or not, no one ever makes mention of the overtly fascist institution that dominates a large part of our lives: the New Deal.

No, I don’t mean the Green one, proposed by democratic socialist Alexandria Ocasio-Cortez and others. I mean the now hoary, 88-year-old New Deal inspired directly by Mussolini’s fascism and praised both by Adolph Hitler and Il Duce himself.

This isn’t to equate the whole of Roosevelt’s governance to Hitler’s or Mussolini’s. But in economic terms, Roosevelt was in lockstep with the fascists.

Fascism rejected socialism’s government ownership of the means of production. For this reason, the left imagines fascism to be an extreme form of capitalism. It isn’t. Fascism was more anti-capitalist than it was anti-socialist, according to Mussolini himself.

As Mussolini wrote, “Fascism is definitely and absolutely opposed to the doctrines of liberalism, both in the political and the economic sphere…The Fascist State lays claim to rule in the economic field no less than in others.”

Fascism left business ownership in private hands, but at state direction. Business owners may have retained title ownership, but they largely produced what the state told them to produce, sold at prices dictated by the state, and made future plans based upon the needs and dictates of the state, rather than their individual interpretation of market signals.

FDR did precisely the same things under the pretense of fighting the Depression. The Supreme Court struck down a few of his worst abuses, but the fascist regulatory structure he built not only remains in place to this day; it continues to metastasize.

Fascism was also anti-democratic. It was “opposed to that form of democracy which equates a nation to the majority,” wrote Mussolini. Thus, the rules governing society, including economic activity, were made by an unelected bureaucracy taking its direction from a supreme leader who embodied the state and therefore the spirit of the nation.

The New Deal is similarly anti-democratic. Not only does it transfer myriad decisions previously made by private business owners to the government; it allows those decisions to be made by unelected bureaucrats in the executive branch.

This unconstitutional transfer of legislative power from Congress to the executive was rationalized away by New Dealers and their SCOTUS enablers by drawing an arbitrary distinction between legislation and “regulation.” This is dishonest. Whenever government officials write enforceable directives that either require or prohibit human action, they are legislating, no matter what those written directives are called.

These regulations are presented to the public with benign motivations like safety and fairness, just as Mussolini posited his fascist state, “concentrates, controls, harmonizes and tempers the interests of all social classes, which are thereby protected in equal measure.”

In effect, they amount to the government dictating the minute details of business operations to the owners.

This has several deleterious effects. First, it stifles creativity. Enforcing compliance with hundreds of thousands of regulations naturally tends towards all businesses being run the same way. Revolutionary improvements like the assembly line and mass production could never have occurred under the New Deal.

Who knows what innovation has been stifled since?

Second, all this compliance has a cost, which is much more easily borne by large firms than small ones. As time goes by and the regulatory burden gets heavier, the advantage of large firms over small widens. This has the effect of promoting consolidation and elimination of marginal producers.

In a laissez faire market, there is always a natural tension between large firms with economies of scale and smaller ones that can adapt more quickly to changing market conditions. Both the cost burden of regulation and its stifling of innovation neutralize the strengths of smaller firms and tilt the playing field dramatically towards large ones.

Yet, ironically, the New Deal is most staunchly defended by progressives who claim to oppose big business and support “the little guy.”

Third, the New Deal inevitably leads to what we now call, “regulatory capture,” meaning the large corporations themselves writing the regulations that govern them. When the government’s job is merely to prosecute crimes and referee civil actions, it can be accomplished by competent attorneys. But when the government aspires to regulate the minute details of business operations, it requires in-depth knowledge of the regulated industries, including understanding of sophisticated machinery and other technologies, supply chains, specific market conditions, etc.

Only an industry insider can provide that level of expertise. And so, the government must go to these insiders for recommendations on how to make their own industries “safer,” “fairer,” etc. Naturally, the government will turn to the largest firms, understood to be the most efficient, and who also have the money to lobby.

Anyone truly committed to ridding America of fascism should concern themselves less with what politicians they don’t like say or post on social media and instead support repealing the New Deal root and branch. [source]

Sounds good to me.

More articles on fascism:

• What Is Fascism? It's the System We've Been Living under for Decades.
• The Fascist Threat
• There's No Denying the Socialist Roots of Fascism
• Surprise: Mussolini Was Not the First Fascist

The Case for Optimism: 10 Reasons Why the Pro-freedom Right Will Defeat the Anti-Liberty Left

From No Q Report.com (Oct. 25, 2021):

J.B. Shurk’s motivational Case for Optimism made the important point that the freedom community on the right side of the political spectrum has to be optimistic simply because the anti-liberty left cannot win this fight.

Note the dual meaning. The leftist enemies of freedom and civil rights are such that it makes it impossible for them to win, and while it would be a disaster if that were to befall the planet, it is still hard to be positive when it’s been a steady diet of doom and gloom. Each day brings yet another attack on freedom and progress from people falsely labeling themselves “liberals” who want to implement collectivist ideas that can be traced back to ancient Greece.

Many of these reasons for optimism of the pro-freedom right are because they are directly contrasted with the negative characteristics of the anti-liberty left. While it may seem they have the upper hand at the moment, it is only a temporary condition.

Far-leftist liars can only play their little games of wholesale word re-definitions and projection for a little time, then factual reality has shown them for what they are and the lies no longer work. Recent events of ‘Let’s go Brandon!’ have shown us that the false façade is failing. These “advantages” will soon be reasons why the anti-liberty left is reviled. We’re only going to put up with the woke insanity for so long, after that, it’s as Newt Gingrich stated the other night, that those people are playing with fire and there are a lot more of us than there are of them.

While we have many reasons to be down, these here are 10 reasons to be optimistic:

1. We are on the side of freedom, the anti-liberty left is on the side of authoritarianism.

Let’s begin with these basic facts. No matter how many times the luminaries of the anti-liberty left try to gaslight everyone, they are the ones forcing people to wear virus spreader face masks, impose draconian vaccine mandates, set up Nazi pass systems, suppress free speech, censor the press, unconstitutionally confiscate guns, destroy privacy, and put in place secret police administrations all of which are among a growing number of impositions on liberty – typical of authoritarian regimes from around the world down through history, ranging from Nazi Germany to China. Pro-freedom patriots oppose all of those anti-freedom measures, regardless how they are spun as being necessary to save lives or democracy.

………….

2. We have timeless advantages, the anti-liberty left has short-term tactics and tricks.

We of the pro-freedom right can be confident in the fact that we are standing on the shoulders of the original philosophers of true liberal democracy. Thus, this is a prime reason we are differentiating the two sides of the political spectrum; as the pro-freedom right and the anti-liberty left – with the latter being a small segment of that side of the spectrum.

Compare our rock-solid foundation to the shifting quicksand of tyranny that lies beneath the anti-liberty left’s socialist national agenda. While ours is based on liberty, theirs is based on societal slavery. The problem for them is that they have to hide this behind false labels and the projection of their tyrannical desires on us. These tactics only work for a limited time, then people question their integrity and their Potemkin Village falls apart. These are an illusionary advantage in the sense that they have to rely on them. It also means there is a cascade effect in that this makes them take other actions, such as suppressing free speech or the right of self defense. They can’t easily give up lying or cheating in elections because that would be catastrophic for them.

3. While we can be honest, the anti-liberty left has to lie to survive.

Aside from being consistent in labelling, we have nothing to do but state who we are and what we believe. We stand for liberty, limited government and individual civil rights. Stating that the political spectrum is a measure of governmental power means that the pro-freedom right favors liberty over control. This is contrasted with the other end where control is favored over liberty with our old friends, the anti-liberty left.

Plus, it’s important to note that the basic definitions of the various political terms – anarchist, libertarian, conservative, liberal on the right, and socialist, fascist, communist on the left bear out this metric in the political spectrum. Anti-liberty leftists have to incessantly lie about these basic facts to maintain their warped view of the political world – to the point that they tried to define Left and Right as nearly meaningless unless talking about who they want to demonize.

…………….

4. We believe in civil liberties and they don’t.

The appeal to a false sense of safety will only go so far for the anti-liberty left. Even now, many are waking up to the danger of letting an unelected elite ruin our lives with virus spreader and vaccine mandates. The fact is that these have done nothing to keep anyone safe. Meanwhile, the ruling oligarchy of the anti-liberty left is still making more demands and decreeing what we can and cannot do. Our default position is the defense of liberty, the anti-liberty left’s position is to destroy it.

It should be evident that our ideology is based on freedom, while the anti-liberty left’s ideology is based on control. It should also be evident that the former is far more popular than the latter. We only have to refer to the fact the enemies of liberty on the authoritarian far-left incessantly cloak themselves in the false label of liberal. While pumping out propaganda screeds that simply try to project their authoritarian tendencies on us when that doesn’t make any sense whatsoever, except in the fevered minds of the anti-liberty left.

5. We love the country, the anti-liberty left hates it.

We’re setting this out as a separate reason because it is distinct in that civil rights and liberty are distinguishable from the country. Anti-liberty leftists will on occasion try to claim they are defending freedom or democracy. They of course are lying through their teeth. Nevertheless, they will rarely feign patriotism as they did a few years ago. They’ve dropped many false pretexts and patriotism is one of them.

We on the other hand are proud of our country, warts and all. We know that no one is perfect, but the founding fathers created a unique and special system that is holding up to the left’s unfair assaults and incessant propaganda. We can wave our flag with pride, what can they do? Wave the Blutfahne or a picture of Che Guevara? [read more]

I hope the author is correct.

The other five reasons are:

1. We believe in individual rights, the anti-liberty left believes in collective rights.
2. Economic liberty has always worked, the societal slavery of socialism has never worked.
3. We’re productive in society, anti-liberty leftists are the parasites of society.
4. The Pro-Freedom right outnumbers the anti-liberty left.
5. The authoritarians of the anti-liberty left are forced to use cancel culture to magnify their numbers.