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Muda69

Capitalism (aka Self-Ownership) Is the Only Moral Economic System

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https://mises.org/wire/capitalism-aka-self-ownership-only-moral-economic-system

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With all the “turn that over to the government, too, so someone else will have to provide it for you” proposals that have come from Democrat Presidential hopefuls already, candidates are actually being asked if they are a “socialist” or a “capitalist.”

Bernie Sanders, who has called for “economic rights” guarantees to be treated as Constitutional rights, admits being a socialist. Representative Alexandria Ocasio-Cortez, who may want even more people to live at everyone else’s expense, is on the same bandwagon: “Capitalism is an ideology of capital--the most important thing is the concentration of capital and to seek and maximize profit.” Consequently, “capitalism is irredeemable.”

However, other candidates, proposing or supporting very similar changes, have claimed they are (modified) capitalists.

Elizabeth Warren has said “I am a capitalist to my bones…I believe in markets. What I don’t believe in is theft.” Along the same lines, she has said, “I love what markets can do. I love what functioning economies can do. They are what make us rich; they are what create opportunity. But only fair markets, markets with rules. Markets without rules is about the rich take it all…And that’s what’s gone wrong in America.” Kamala Harris offered a similar complaint that “the rules aren’t applying equally to all people.” Joe Biden asked, “What happened to a moral responsibility, to a moral capitalism?” Beto O’Rourke followed up his claim to be a capitalist with “Having said that, it is clearly an imperfect, unfair, unjust and racist capitalist economy.”

Unfortunately for these candidates (and for Americans if voters don’t understand better), every one relies on false assumptions about markets and governments.

Senator Sanders fails to see that his call for more positive rights to things, from education to health care, must violate Americans’ negative rights (prohibitions laid out against others, especially government, to prevent unwanted intrusions). The Declaration of Independence, echoing John Locke, asserts that all have unalienable rights, including liberty, and that our government’s central purpose is to defend those negative rights, which is further reinforced in our Bill of Rights. Each citizen can enjoy them without infringing on anyone else’s rights. Negative rights impose on others only the obligation not to invade or interfere. But when the government creates new positive rights, extracting the resources to pay for them necessarily takes away others’ unalienable rights. That is, you cannot add new positive rights to existing negative rights, you can only do so by destroying some of the negative rights that define the idea that became America.

AOC, as she is now typically called, shows that she “learned” things that contradict what she should have learned in her economics major. She subscribes to what Marx intended in naming capitalism—making it seem that the owners of capital gain and others are hurt. But capitalism is better defined as a system of private ownership of resources, including one’s labor, not simply ownership of capital, coordinated by solely voluntary arrangements. Private property prevents the physical invasion of a person’s life, their liberty, or their property without their consent. By preventing such invasions, private property is an irreplaceable defense against aggression by the strong against the weak. No one is allowed to be a predator by violating others’ rights. In such a system, capitalists need the voluntary consent of laborers in their arrangements, preventing capitalists from exploiting laborers. In Herbert Spencer’s words, “far from being, as some have alleged, an advocacy of the claims of the strong against the weak, [capitalism] is much more an insistence that the weak shall be guarded against the strong.”

Elizabeth Warren’s supposed endorsement of markets, but opposition to markets without rules is senseless. There are no markets without rules in capitalism. The core rule is that of private property, which requires arrangements to be voluntary, which in turn rules out the possibility of the theft she supposedly objects to. If there is theft, or fraud that allows it, that represents a government failure to defend someone’s property rights or a piecemeal violation of equal property rights by government, neither of which justifies still more government intervention to fix, unless it is to better defend private property rights now being violated or stop violating them itself. And Kamala Harris’ complaint that “the rules aren’t applying equally to all people” is subject to the same criticism.

Joe Biden’s “What happened to a moral responsibility, to a moral capitalism?” reflects a similar confusion. The most basic moral or ethical basis for any human relationship is to not violate others’ rights, which Cicero called “giving each his own,” over two millenia ago. Or, as Adam Smith wrote in his Theory of Moral Sentiments, “The man who barely abstains from violating either the person, or the estate, or the reputation of his neighbors…does everything which his equals can with propriety force him to do, or which they can punish him for not doing. We can often fulfill all the rules of justice by sitting still and doing nothing.” Yet Biden seems to think that policies that require the violation of unwilling Americans’ rights is more moral than one that does not.

Beto O’Rourke’s endorsement of capitalism, then described as “imperfect, unfair, unjust and racist,” seems to reflect a similar view, but mainly reflects serious confusion. What American would endorse something that meets his description of capitalism, unless he was a sadist?

For each of these candidates, even a rudimentary understanding of private property rights and voluntary arrangements eviscerates their evaluations of capitalism, and sweeps away any reliable basis for their proposed “solutions.” In fact, both logic and history attest to the damage their proposals can create. As Ludwig von Mises explained it, private property is the basis for “joint action and cooperation in which each participant sees the other partner’s success as a means for the attainment of his own,” in sharp contrast to any “us versus them” zero- or negative-sum view of social interaction which treats someone’s gains as others’ losses. In capitalism (which is actually inconsistent with the government- created or enabled crony capitalism we see all around us), even those who would be tyrants, if given the opportunity, must focus their efforts on providing willing service to others to induce their voluntary cooperation. In contrast, the drive for power that animates these politicians who condemn a capitalism they plainly don’t comprehend would increasingly turn others into their unwilling servants.

Agreed.  These "democratic socialists" or just plain socialists want to turn American citizens into unwilling slaves for the state.

 

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Posted (edited)
On 4/5/2019 at 8:33 AM, Muda69 said:

https://mises.org/wire/capitalism-aka-self-ownership-only-moral-economic-system

Agreed.  These "democratic socialists" or just plain socialists want to turn American citizens into unwilling slaves for the state.

 

C’mon, it just takes a “better person” to run a communist regime.

I could have done a better more benevolent job than Stalin (being a good person).....bet I could have killed 5-10 million less citizens.

Edited by Lysander

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On 4/5/2019 at 8:33 AM, Muda69 said:

FTA:

"In capitalism (which is actually inconsistent with the government- created or enabled crony capitalism we see all around us),...."

Perhaps AOC, Biden, Beto et al are referencing the version of capitalism we actually have, not the fantasy capitalism Mises and the article's author are describing?

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1 hour ago, Wabash82 said:

Perhaps AOC, Biden, Beto et al are referencing the version of capitalism we actually have, not the fantasy capitalism Mises and the article's author are describing?

And how do we reduce or eliminate crony capitalism?  By reducing the size and scope of government, and the power that it holds over the lives of it's citizens.

 

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7 hours ago, Muda69 said:

And how do we reduce or eliminate crony capitalism?  By reducing the size and scope of government, and the power that it holds over the lives of it's citizens.

 

Eliminate cronies. 

Seriously, how is guv'ment responsible for crony capitalism? I'd say that, here in the U.S.,  private schools and college fraternities and sororities have contributed a lot more to the development of crony capitalism that the guv'ment has. 

The real truth is that the whole concept of "private property" rests upon the shoulders of functioning government. Without it, you can "own" anything only until someone bigger and stronger decides that he now "owns" it. 

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To be clear, we are all down with 100,000,000 or so dead folks (maybe more...certainly not less) murdered in the name of "well intended" socialism/communism/egalitarianism/equity in comparison to the world ending sin of crony capitalism?

Okay.  God forbid I'd look vaguely askance at those of you really cool with it. 

Personally, just trying to stumble along on my own personal bourbon and chewing tobacco path to an early grave without assistance from the "well intended".

Looks like its a race these days....plus I probably need to pay Reparations too.  Go figure.

I am so f*ck*d.

Sucks for me.  I actually like most everyone.  Well...there is Cathedral…..

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15 hours ago, Wabash82 said:

Seriously, how is guv'ment responsible for crony capitalism?

https://dukespace.lib.duke.edu/dspace/bitstream/handle/10161/18113/Munger and Villareal Published version 2019.pdf?sequence=2&isAllowed=y

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...

Crony capitalism is a by-product of big government because the more government is involved in an economy, the more the profitability of business depends on government policy. Even entrepreneurs who prefer to avoid cronyism are pushed into it because they must become politically active to maintain their profitability.

..

As I said before, reduce the size and power of government over many aspects of the economy  (regulations, licensing, etc.)  and you will reduce the size and power of crony capitalism.

 

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1 hour ago, Muda69 said:

https://dukespace.lib.duke.edu/dspace/bitstream/handle/10161/18113/Munger and Villareal Published version 2019.pdf?sequence=2&isAllowed=y

As I said before, reduce the size and power of government over many aspects of the economy  (regulations, licensing, etc.)  and you will reduce the size and power of crony capitalism.

 

Maybe you and I have a different idea as to what "crony capitalism" means. While having cronies in government positions is one aspect of how it has tended to work in the U.S., it is certainly not an inherent aspect of crony capitalism as I understand it.  To me, that term primarily refers to a "corrupted" system of capitalism in which many financial and business opportunities and outcomes are controlled by social and family connections, and not by market forces, and in which such connections largely override the Darwinian-like notion of "survival of the fittest" that is often applied to the concept of free market capitalism. 

Crony capitalism may include governmental cronies intervening in markets to benefit their cronies, but it much more often involves rather mundane things like Fred's fraternity brother's rich dad throwing less-than-a-go-getter Fred a nice piece of a "deal",  because he also went to the same elite boarding school as Fred's dad.  

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2 minutes ago, Wabash82 said:

Maybe you and I have a different idea as to what "crony capitalism" means. While having cronies in government positions is one aspect of how it has tended to work in the U.S., it is certainly not an inherent aspect of crony capitalism as I understand it.  To me, that term primarily refers to a "corrupted" system of capitalism in which many financial and business opportunities and outcomes are controlled by social and family connections, and not by market forces, and in which such connections largely override the Darwinian-like notion of "survival of the fittest" that is often applied to the concept of free market capitalism. 

Crony capitalism may include governmental cronies intervening in markets to benefit their cronies, but it much more often involves rather mundane things like Fred's fraternity brother's rich dad throwing less-than-a-go-getter Fred a nice piece of a "deal",  because he also went to the same elite boarding school as Fred's dad.  

As long as that "deal" doesn't require or depend on some exiting or new government regulation/law/etc.  I don't see that issue.    So if this "deal" requires say,  that a local government body grants a tax-abatement (a popular thing these days),  to me that is crony capitalism.  

 

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How established businesses use government to limit competition.: https://reason.com/reasontv/2019/04/09/enough-crony-capitalism

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Once, Microsoft had zero lobbyists. The company focused on innovating.

"Microsoft in the early 1990s was the largest company in the world. Incredibly successful ... They had no presence in Washington, D.C. Not a single lawyer," Yaron Brook of the Ayn Rand Institute tells John Stossel.

But things changed.

Brook explains how Microsoft's CEO was "literally brought in front of Congress ... Orrin Hatch from Utah ... said, 'You guys need to get involved here in Washington, D.C. You need to build a building here. You need to hire lawyers here.'"

Microsoft, courageously, didn't. Instead, Brook recounts, "Microsoft walked out of the meeting and said, 'You know what? You leave us alone, we will leave you alone ... We're busy. We're running the biggest company in the world. There's a lot to do.'"

But soon after that, Attorney General Janet Reno announced that the Justice Department was charging Microsoft with "engaging in anti-competitive and exclusionary practices designed to maintain its monopoly."

Brook says the government was essentially saying, "we're here to prosecute yo u because you're offering the American public ... a product for free. This is Internet Explorer, at a time when we were buying Netscape and paying money for it—they offered it for free, and that was deemed bad business practice."

"For 10 years they had to fight that lawsuit," he adds. "They lost, they got regulated, they got controlled. Guess how much Microsoft spends today in Washington, D.C.? … Tens of millions of dollars."

Stossel calls that "sad."

Now, even worse, Facebook's Mark Zuckerberg asks government for more regulation. He wants Congress to "require companies to build systems for keeping harmful content to a bare minimum".

Wouldn't that violate the First Amendment?

Stossel says it also, conveniently, would protect Facebook from competitors who don't restrict content. It also makes it harder for them to innovate in ways that might challenge Facebook.

Stossel and Brook's solution? Smaller government: separation of economy and state.

 

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More Crony Capitalism:  https://arstechnica.com/tech-policy/2019/04/congress-is-about-to-ban-the-government-from-offering-free-online-tax-filing/

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Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.

Last week, the House Ways and Means Committee, led by Rep. Richard Neal (D-Mass.), passedthe Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis (D-Ga.) and Mike Kelly (R-Pa).

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In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.

“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center.

Experts have long argued that the IRS has failed to make filing taxes as easy and cheap as it could be. In addition to a free system of online tax preparation and filing, the agency could provide people with pre-filled tax forms containing the salary data the agency already has, as ProPublica first reported on in 2013.

The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible US taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option, and that it leaves consumer data open to privacy breaches.

The congressional move would codify the status quo. Under an existing memorandum of understanding with the industry group, the IRS pledges not create its own online filing system and, in exchange, the companies offer their free filing services to those below the income threshold.

....

 

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Saw this on Leland Conway's FB page, I thought it was pretty spot on. 

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Socialism is a moral copout. It attempts to lay the blame for humanity's inevitable moral failures at the feet of capitalism. In reality, an economic system has no moral values - only humans do. Destroy capitalism and immorality will simply change currency. Leland Conway

 

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Ray Dalio's Hollow Lament: https://mises.org/wire/ray-dalios-hollow-lament

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Hedge fund titan Ray Dalio is just the latest billionaire to call for government to save us from guys like him.  

It's not pretty. Dalio's recent article titled "Why and How Capitalism Needs to be Reformed" is a mess, though to be clear it's a thoroughly well-intentioned and heartfelt mess. It's a mix of self-effacement (I'm just a lucky guy with good parents who went to good public schools!), dubious statistics concerning the non-problems of wealth and income inequality, and utterly unoriginal, counterproductive proposals for government action. But approving journalists can't get enough of it, or him, because nothing beats a billionaire's mea culpa for capitalism. So Dalio, fantastically rich and successful at age 69, finds himself a media darling on financial talk shows after a recent kickoff appearance on CBS's 60 Minutes.

The article, in two parts, is fairly long. It spends several pages discussing the author's own background, wage and income inequality, bad schools, lack of child care, lack of health care, and a host of other standard left-liberal complaints. But we can summarize Dalio's bottom line, as he does in a section called "What I Think Should be Done." It's an exercise in bland, meaningless jargon and lack of specifics:

  • Leadership from the top. People with their "hands on the levers of power" (yikes!) need to make inequality a priority. Obviously he means politicians and corporate leaders, and does not intend to lessen the "power" of either. But if bad politicians and greedy corporate types got us into this mess, how will they get us out? More importantly, and left unaddressed, is any suggestion of their incentives to do so. After all, the present system made them rich, powerful, and unaccountable.
  • Bipartisan policy makers working together to "divide and increase the economic pie better." More politics, which doesn't work and can't work. Whose policy? What makes a policy good? Why hasn't this supposed policy consensus already emerged on its own?
  • Clear metrics and accountability for the "people in charge." This doesn't work, and can't work, in politics. We have centuries of "data" to show how the worst rise to the top of the political world. Government by definition acts outsider the market, and is unaccountable by its very nature as a monopoly. Politicians don't have a P& L; private businesses do. Again, why does Dalio seem so oblivious to incentives?
  • Redistribution of resources. This doesn't work and can't work, except by market processes. Taxes. regulations, economic intervention, and state ownership of industry always reduce total wealth in society. A total nonstarter of a tired and thoroughly debunked idea, especially considering we already have a heavily interventionist economy. We also have the entire history of 20th century collectivism to demonstrate why "third way" interventionism can lead to outright socialism.

Many billionaires—Mr. Dalio, Warren Buffett, and Bill Gates among them— like to call for higher taxes on people such as themselves. But this raises a compelling question: would they have become rich in the first place under the kind of  tax system they now advocate? Would they have accumulated a critical mass of investment capital if taxes had consumed more of their profits along the the way? Would they have been able to maintain sufficient capital expenditures in their respective businesses to stay dynamic? Or would revenue, capital, and personal wealth lost to the IRS have relegated these super achievers to the status of merely successful? 

Well-heeled tax hikers never mention the diminishing marginal utility of money. A billionaire could lose 90% of his/her wealth to the state and remain an elite centimillionaire. Higher taxes for billionaires are simply a cost of doing business, like paying 20% more for an acquisition. But for a "rich" American family making $200,000, or even $40,000 by global standards, a 20% higher tax bill might prevent them from ever reaching their own critical mass of savings and wealth. Just as dominant corporations welcome new regulations, financial elites welcome new taxes as a form of protecting their status from upstarts.

Furthermore, there is no indication Mr. Dalio or other wealthy advocates for wealth redistribution ever practiced this idea in their own businesses. Dalio voluntarily could have paid higher taxes, much higher taxes, both to the federal government and his home state of Connecticut. He could have argued for higher capital gains tax rates, and refused to accept "carried interest" treatment of his firm's income for management services. After all, to paraphrase Warren Buffett, why should Dalio's secretary pay a higher tax rate than him?  

He also could have equalized pay and ownership among his employees, and hired low-income and low skilled victims of the bad public schools he identifies. He could have run his hedge fund as an employee-owned cooperative. He could have opened his funds to ordinary people with $500 or $1000 to invest.

Perhaps most of all, he could have called for the Federal Reserve to end its practice of keeping interest rates artificially low. Cheap money and credit are the lifeblood of hedge funds, making it possible to buy companies with less equity and more debt—less skin in the game. Leveraged acquisitions allow for fewer shareholders receiving (nondeductible) dividends, along with the tax benefits of deductible interest payments. Cheap leverage made Mr. Dalio billionaire he is today. 

But low interest rates cause tremendous harm to average people who simply want to save money in simple, low-risk vehicles, and they distort the entire economy by producing malinvestment, encouraging consumption over saving, and rewarding high time preference. While Dalio admits the Fed favors rich guys by crafting policy that inflates asset prices instead of wages, he remains blind to the central bank's role as the primary driver of the wealth inequality he laments.

Mr. Dalio is by all accounts a brilliant and hard-nosed businessman. Hedge funds, at least successful hedge funds, make money by ruthlessly identifying untapped value in organizations, replacing board members and management with fund executives, and selling when the selling is good. So why on earth would he pledge to donate $100 million to Connecticut public schools, a system he admits is failing?  Would he invest in a company with a similar track record of spending more and more each year for worse results? A company where he would have no say in management, board governance, operations, or how it spends his investment? Will he maximize, or even measure, the "return" on his investment in Connecticut public schools? Will he seek to minimize risk, in the form of his $100 million being irretrievably wasted?

The answer to these question is "No", because he's not buying a company or making a financial investment. He's buying goodwill, a form of insurance for billionaires against the growing tide of populist resentment. The infamous Reverend Bacon from Tom Wolfe's Bonfire of the Vanities comes to mind: Dalio is buying "steam control," and he's getting "value for money" as Bacon puts it. He's buying relief, an indulgence for his sin of getting too rich.

Dalio played the game, by the rules of the game. Now he appears to say, "I've got mine, let's change the rules."

Yep, sounds like a Baby Boomer.

 

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