Where's the beef (with capitalism)?

Over at Arm Your Mind for Liberty, a recent article takes issue with capitalism. I read this article with great interest because (I assume) it grew out of a discussion between myself and the author as well as some others regarding capitalism. When I read it, though, I couldn't find that the "beef" is really with capitalism at all. Before going too much further, we should probably start with a (common) definition of capitalism, but I'm not going to attempt to define capitalism in great detail. It seems that if you ask ten different people, you'll get ten different answers about what capitalism means to them as the linked article states:

‘Capitalism’ is a funny word. It means so many different things to so many different people, that it’s become entirely useless as a basis for any kind of rational or constructive communication. [...] Some will mention wage labor, others exploitation and yet others will talk of free trade. But I think the defining feature is the ability to accumulate lots and lots and lots of stuff (capital).

Fair enough. The ability to accumulate lots (and lots and lots) of stuff, or capital, is most assuredly a characteristic of capitalism and, as we will see, the article's main problem with it, so let's focus our attention there. Before we do so, the original article takes a slight detour:

And then, most importantly, [a characteristic of capitalism is] to have a third party protect your ability to control that stuff even when you’re not using it. That third party, of course, is the state (the government). [...] Without this ability to accumulate and have your title to said stuff protected at little to no cost to yourself, things like wage labor, exploitation and managed trade could not happen. These all depend on the power imbalances that stem from the state protecting capitalists’ control of their property.

Whoa, wait just a minute! Now, we're not talking about capitalism any more. We're talking about a state-directed ("managed trade") and state-enforced ("stuff protected at little or no cost to yourself", presumably via taxation on the whole population and "power imbalances" in the form of state-chartered police and enforcement mechanisms) economic system, our current system, what many call crony-capitalism. So, we can already see that the author's problem is not with capitalism, per se, but with crony-capitalism and the state enforcement of it. The author continues by stating that he doesn't "think capitalism would survive without the state".

But we're not talking about capitalism any more. We're talking about the state. The author offers no evidence or theories as to why capitalism cannot or will not exist without a state other than to say, "I don’t think a non-aggressive organization will go to the same lengths as the state to protect property". This is demonstrably false, however:

Just think for a moment about the following:

• Who is responsible for protecting you at most major shopping centers? Ever see a private mall cop? I bet you have.
• How about casinos? Almost all casinos have private armed security.
• What about at the dance club? Ever see a bouncer throw out a belligerent drunk?
• What about at the university? You’d be hard pressed to tell the difference between a public safety officer and a cop. Many universities have private police forces.
• How about warehouses, ports and apartment complexes? It is not uncommon to have private security guards protecting all of those. My apartment complex has its own security.
• Airports used to be entirely protected by private security – and guess what? No one was complaining about being molested. Further, after 9/11, it was the airlines who made real improvements to security by putting in steel cockpit doors and arming the pilots.
• Banks? - Almost all bank cash transfers are dealt with by way of private armored car, and many banks have private armed security as well.

Now I've been drawn into a digression about capitalism on a larger scale. Let's return to the accumulation of stuff in the original article and look at an example provided by the author describing his issue with it: "if someone fences off 1,000 acres of land but consistently uses only 2, I don’t consider that legitimate". This situation draws its basis from the Lockean idea of homesteading, that one becomes an owner of land by "mixing" his labor with it. I'm not going to argue whether fencing 1,000 acres constitutes a mixing of labor. A debate on such a matter is not likely easily resolved.

Instead, what if we arrived at this situation differently, voluntarily? Let's assume two people and call them A and B. Each of them own 501 acres (via legal means, homesteading or otherwise) and farm the entirety of their respective plots. A and B both consume only what they need to survive and sell the rest of their produce into the marketplace. A saves the proceeds from his sales under his mattress while B spends his money on vacations and house keepers and other consumable goods and services. (One has to wonder, at this point, if B has a claim to A's money since storage under A's mattress is not "productive" use in B's mind.) At some point, bad weather conditions befall A and B. A, having saved his money, is able to buy what he needs from the marketplace, but B has nothing. Seeing B's plight, A offers to use some of the rest of his savings to buy 499 acres of B's land. B, needing to feed himself and his family, reluctantly agrees. Now A owns 1,000 acres, and B owns 2. We've arrived at the evil capitalist situation described by the author in the original article, but we've arrived by completely legal and voluntary means.

Let's assume that A, having just bought the land and exhausting much of his savings, does not have the capacity to expand his farming operations into his newly acquired 499 acres. When the weather improves, does B have a legal right to reacquire the land, via homesteading? What if B had kept the land but sold his farming equipment to A to pay for his food? Now that B is incapable of farming his land (and has no reasonable prospects for doing so since he has no farming equipment and no savings with which to buy any), can A also freely acquire B's land under the homesteading principle?

The author of the original article seems to think so: "If someone needed land and had a solid intention to use it to sustain his life, I would support that person in any attempt to homestead a reasonable parcel out of the 1,000 acres". B, in our example, has every "intention to use [the land] to sustain his life" as well as others'. The author goes so far as to suggest that force is an appropriate means to affect this outcome:

In a stateless society, people would be freer to rise up against people who attempt to control more property than they actually use. Acting in concert, great numbers of people could, in the worst case, purchase arms, form a defense force and fight capitalists on a more level playing field. Squatters, worker-owned cooperatives and similar direct actors would take control of more of the capitalists’ property. In the process, their power would be eaten away.

In fact, A has saved B's life as well as his family's, and in return B should have the right to use violent force to take back from A what was voluntarily given/traded (by B himself!) to A? What the author is suggesting is either a clear violation of the non-aggression principle or will require a state, with a legal monopoly on the use of violence, to forcibly give A's land to B.

The only other argument in favor of what the original author is suggesting hinges on the word "reasonable". Perhaps 1,000 acres is an "unreasonable" amount. Much like the hypothetical debate about homesteading to which I alluded earlier, a common definition of what is "reasonable" is not easily resolved. As an example, here are a bunch of pro-gun people on a pro-gun forum disagreeing about what "reasonable" gun laws would look like. At any rate, the example I gave above works with any sized parcel of land. In fact it becomes even more difficult to reason out on a smaller scale. Consider if A and B each owned two acres and A bought 1 acre from B. A is in a much better position to farm an additional 1 acre than he is an additional 499. What if A incrementally continues the process, voluntarily acquiring parcels from C, D, E, etc. in a similar manner? When does the amount of land that A owns become "unreasonable"? Does the situation change if A rents the land back to B, C, D, E, etc.? Who makes that decision and who enforces it? What authority does this entity have when A can show that his property was acquired legally? None, according to the author of the original article: "If a person prospers legitimately, I have no basis to challenge any accumulation of wealth." Wait, what? Does B have a claim to A's legitimate accumulation of wealth (in the form land) or not?

In short, capitalism, true capitalism, is not an economic system that is imposed on anyone. It is an economic system that arises from, or rather is the result of, voluntary interactions in a truly free society. In fact, the economic system proposed in the original article is not only incoherent but, in the author's own words, requires violent enforcement. I suggest that the author's "beef" is not with capitalism but with a free and voluntary society.

Just... hold on a second

I came across a number of weird/wacky news stories this morning, and since I didn't really feel like writing very much, I was going to just post a few links with some commentary to accompany them. Then a friend of mine posted a link to an opinion piece entitled "Just Stop" over on the Mesa Democratic Club's website. Well, I loves me some politics, so I went over to read it. The article started out well enough (read: I agreed with it), but then it lost me. Since this friend of mine and I have agreed not to discuss politics over our social network of choice, I decided to write this post.

The article starts out pointing out that Sarah Palin is not a "political outsider", that the Tea Party is not an independent group, and that John McCain no longer has any discernible political positions outside of whatever it takes to get elected. These are all excellent points with which I could not agree more. It's at this point that our respective positions diverge.

Stop pretending that the deficit we’re all facing is the fault of President Obama and the Democratic Congress. During the Bush administration, we went from a surplus to a massive deficit, largely thanks to two wars that were never (until Obama) added to the federal budget—wars, in other words, fought entirely on credit. We compounded the problem with tax cuts that largely benefited the wealthy, and a huge Medicare increase, and all those were also on credit. When the economy tanked in fall 2008, Bush quickly pushed through the TARP bailout, adding to the deficit (but pulling the economy back from the cliff).

President Obama is not entirely responsible for the deficit. He is quickly adding to it, though. Yes, Obama added the wars to the federal budget, but that does not change the fact that they (along with the much of the rest of the budget) are still paid for on credit. And while Bush may have pulled the economy back from the cliff, he did not change it's direction; it is still headed that way under Obama.

Stop pretending that the near-ruinous economic crash that we’re still reeling from was Obama’s fault, too. The root causes stretch back decades, to a continued process of deregulating financial institutions, allowing them ever more leeway to prey on the vulnerable, to sell mortgages to people who couldn’t afford them, and to manipulate financial products that were ultimately guaranteed to fall apart.

And stop pretending that Obama and the current Congress should have been able to fix the two above problems in 18 months, when it took eight years to create the first one and literally decades of foxes guarding financial henhouses to create the second.

Again, the author is correct that the economic crash was not caused by Obama, and that it is unrealistic to think that the government would be able to fix it (I would argue, in any amount of time). The author implicitly places the blame on the private sector, however, when he talks about mortgages and financial products. Those mortgages that people couldn't afford were promoted and backed by the government in the form of Fannie and Freddie and FHA and VA loans. Obama has continued this process with the homebuyer tax credit and the HAFA and HAMP programs. For non-mortgage related financial instruments, look no further than the Federal Reserve serving as the "lender of last resort". Even though the Fed is nominally a private entity, it's ludicrous to think that they really are, and when banks get into trouble, the Fed bails them out via the power of "printing" money, a power that Congress abdicated to it long ago.

Stop pretending that saying “No” is the same as governing. We pay our legislators good money to go to Washington and make difficult decisions that keep the country moving. By voting “No” on every bill, by refusing to negotiate in good faith, by deciding that short-term political advantage was more important than the everyday lives of Americans, the Republicans set back our recovery, made needed reforms fall short, and put our lives and our economy at unnecessary risk.

I hate the idea that governing means "doing something". Saying "no" is a legitimate act, one in which all politicians engage because nobody can agree on the exact role of government. In this way, saying "no" is doing something. That is not to say that Republicans are not being obstructionist for political gains; however, the author would be better advised to point out Republican hypocrisy on things like expanding Medicare under Bush but railing against the PPACA, now.

Stop pretending that the economy is magic. You can’t continue to give millionaires and billionaires huge tax cuts, make tiny, cosmetic cuts at the margins of things, and still reduce the deficit. You can’t create jobs without spending money. Tax cuts for millionaires and up are not stimulative because those people don’t spend the money from the cut—it’s not like you’re giving them a wad of cash and sending them to the store. When you put an unemployed person to work or give a tax cut to a poor or middle class family, that’s exactly what it’s like—they go buy things they need and those dollars flow through the economy, creating jobs and wealth everywhere they go.

I'm not sure anyone is pretending that the economy is magic; however it is far more complex than most imagine. Not only that, but the government via regulation or the Fed often arbitrarily moves the market in ways that could only be predicted by magic. The author is correct that tax cuts (to anyone) won't balance the budget. He is mistaken, though, if he thinks that tax increases will do the job, either. Federal spending is out of control, and the only way to save this country's economy, over the long term, is to start cutting Social Security, Medicare, the military, everything.

And stop talking about stimulus. It's too bad that people believe that Keynesian economics preaches deficit spending. Keynes, mistaken as I believe his theories to be, spoke of stimulative spending out of savings. Yes, it takes money to create jobs, but it also takes money to keep those jobs. To think that the government (or anyone) can throw a one-time bucket of cash at the economy to "unstick" it is ridiculous. It will only lead to the government having to throw ever increasing amounts of money at the economy. It's amazing to me that most people agree that easy credit was the proximate cause of the economic conditions in which we all now live and at the same time believe that if the government just borrows more from China that that will fix the problem. We will end up back in this very situation again, only it will be much, much worse.

The things that Pelosi and Reid have supported these past 18 months have been programs that will help America move into the 21st century. Health care reform, in spite of great efforts at pretending, is not a “government takeover” of health care—it institutionalizes, in law, the presence of the health insurance industry, and gives that industry millions of new clients.

Whoa! Stop right there! Did you catch that? The government, under Democratic control, via the coercion of law, just delivered millions of customers to the health insurance industry. It's not just the Republicans that are in bed with big business.

It will, in the long run, reduce the deficit and create a healthier nation, by allowing more people to get preventive care and long-term care and keeping the sick and impoverished from turning to emergency rooms when there’s a crisis.

This entire problem was created by the government in the first place, though.

Stop pretending that “lifelong politician” is some kind of curse. Most people who hold public office do so because they genuinely want to help people, they genuinely want to make government responsive to the needs of their fellow Americans, and they’re willing to put themselves on the line every few years to get the chance to do so.

Here's a thought experiment: If "most" people who hold public office genuinely want to help people and make government better, why hasn't it happened?

Stop pretending that “big government” is the problem. When’s the last time you were seriously inconvenienced or injured by something that big government did?

Gay rights, TSA body scanners, highway checkpoints, the PATRIOT Act, warrantless wiretaps, extra-judicial assassinations, indefinite detentions, inflation, etc. Don't tell me that (some of) these don't affect me. When one person's rights are trampled, everybody's are, and that's just at the federal level. Not only that, but all of this ignores the fact that every year I have to fill out a number of forms figuring out, on the government's behalf, how much money they want from me, and then send them that amount under the threat of force if I either figure wrong or don't send the right amount.

Stop pretending that anybody’s going to come and take your guns away. [...] There’s no truth to it, there’s never been any truth to it, and if you actually believe it, you just might be so simple-minded that you shouldn’t be trusted with a firearm.

They may not be trying to take them away, per se, but the laws (at least in CA) are clearly not conducive to gun purchases or ownership. One must wait 10 days to purchase any gun, even if one already owns one or one hundred of them. AB962, once in effect, will make the mail-ordering of handgun ammunition illegal and require fingerprints be taken of law-abiding citizens when they do purchase ammunition. It is illegal to actually carry one's gun in a manner that would actually allow it to be used effectively in self-defense, and many counties around the state deny CCW applications to all but the wealthy and connected.

Perhaps the author can explain to me why the BATFE and the state of CA keep records of gun sales if not to retain the possibility of rounding up guns in the future. I realize that that has a bit of a "tin foil hat" sound to it, but it is a legitimate question.

The author goes off the rails at this point with a lot of name calling. He tries to bring it home at the end, though.

Finally, stop pretending that voting doesn’t matter, and don’t let the 2010 Class of Crazy take office and convince you otherwise.

A variation on the previous thought experiment I proposed is apropos here: If voting mattered, why is government the way that it is? Perhaps it's because we've gotten the very government for which we voted. Voting doesn't matter and arguably does more harm than good. A voter is statistically more likely to be killed going to or coming from his/her polling place than to cast the deciding vote in an election. I refer the reader my previous posts on voting and the nature of government.

Wealth distribution

I came across the following image here a few days ago:

The above referenced link is to a story about the disconnect between Americans' belief(s) about wealth distribution in the U.S. and reality. Specifically, it says:

It's fine if reasonable people have different ideas about whether we should extend the Bush tax cuts for people making more than $250,000. Or think estate taxes are unfair. But when we have those debates, it's critical that everyone has a clear understanding of how things really are. We're becoming a plutocracy.

I'm not going to argue against that last sentence. Debating the merits of tax cuts for certain brackets or in certain situations in an effort to stave off a plutocracy, in my mind, though, ignores the bigger picture.

It seems to me that the dangers of a plutocracy lie, not necessarily with those that control the wealth, but with the government that can be controlled via that wealth. Specifically, there is very little that the U.S. federal government currently does not regulate. Under such a system, the aforementioned wealth can be very dangerous as it can be used to steer that regulation, which carries all the force of law, in directions that benefit only those controlling the wealth.

Contrast that with a government under which there is very little or even no economic regulation. In this system, plutocrats are not able to influence regulation to protect their wealth. They must simply produce goods and services that consumers are willing to buy; they must actually compete on the merits of their wares and business methods. The risk is that if they don't, other businesses will spring up in their place and eat their lunches, so to speak. Under such a system, consumers hold all of the power, and the "problem" of unequal distribution of wealth may work itself out.

I say "may" because, if we remove government from the equation, it's not immediately clear to me that the wealth distribution in the chart above is necessarily a problem. For example, the chart does not give the reader any indication that those in the lower quintiles do not have enough money to sustain their needs. Note that I'm not arguing that they currently do have sufficient money. Assuming for a moment that they do, though, and that there is no government to be influenced in economic matters, is there a problem?