Millennials: Business is More Than Domination

In the last post we looked at the two remaining mega-fauna on Earth: big government and big business.  Both are monstrous systems and the purpose of systems, the German neo-Marxists tell us, is domination.

But business seems to be something more, because in the last two centuries, the age of business, the per-capita income of humans within the boundaries of capitalism has gone up by 20 times.  There has been nothing like it in human history, ever.  Remember those Robber Barons?  Steel magnate Andrew Carnegie made a fortune -- by cutting steel prices by two-thirds.  Oil monopolist John D. Rockefeller made billions by cutting the price of illuminating oil, the stuff they used in those cute oil lamps in Hollywood westerns, by 90 percent.  Today the Bill Gates and Steve Jobs are doing the same thing with computers and devices.

But what is it?  Matt Ridley in The Rational Optimist calls it the collective mind.  Humans, unlike chimpanzees understand barter and exchange.  This means that humans can specialize and get really good at one thing, exchanging for the other things of life.  And that creates wealth, enormous wealth.

David Graeber in Debt: The First 5,000 Years confirms this idea.  There's an idea that the modern economy is founded upon money, he writes.  But really it's founded upon debt, and debt is founded upon the exchange of favors.  If I do you a favor then you owe me one in return.  People keep a rough balance of favors given and received, and it eventually gets formalized in debt and credit and money.  Credit, of course, means belief, the belief that the other guy will return the favor.  In The Righteous Mind, Jonathan Haidt calls this "equality matching" that gets formalized into "market pricing."

And that's the point.  Big business may be monstrous and terrifying, but it is based on the exchange of favors and trust.  Nobody forces me to go to Walmart; it's the low prices that attract me.  Nobody forces me to buy at Whole Foods, but if I believe in buying local and organic food and sustainability and Fair Trade it makes me feel better to pay a little more to John Mackey.

But what about banksters and insurance companies and overpaid CEOs?  What about the hard-hearted private equity guy Mitt Romney that laid off steelworker Joe Soptic?  There's a chicken-and-egg problem to ponder here.  Who dances to whose tune: are bankers the dupes of the political ruling class or are politicians the bribed apologists of the corporate plutocrats.

It comes down to this: Does Warren Buffett call the tune for the Obama administration or does wily Warren contribute money and support (for tax increases) in order to curry favor with the Obamis in the hope that they will leave him and his trains alone?  Obviously it is important to get it right.  Because if you get it wrong then you have completely misunderstood the economic and political reality of the modern era.

Here's my take on this.  My take is that modern political power is founded upon a strong and vibrant economy. A politician cannot cut a dash on the world stage unless he is backed by a vast economy that can yield vast revenues with which the politician can project national power.  On this view businessmen are pets to be encouraged and fed so they will dutifully generate huge wealth.  But it is the political ruling class that calls the shots.  Of course, if the politicians come down too hard on the businessmen and loot the productive sector so badly that they wreck the economy -- hey, it happens -- then they lose everything.  And so do you and I.

I have developed a simple notion to illustrate what I mean.  It's the difference between Dutch Finance and French Finance.  In the 16th century the Dutch developed, for the first time, a national debt, money that they borrowed from the Amsterdam merchants, and they used that debt in a rebellion to free the Dutch people from the empire of Spain.  The Dutch debt was a "funded" debt meaning that taxes were specifically earmarked to service the debt.  The British were impressed by the results, so when they invited Dutch stadtholder William of Orange to come over in 1688 and run things as King William III, they set up the Bank of England and started a funded national debt of their own.  It worked so well that in a century later the Brits defeated the French in the Battle of Waterloo at the end of the Second Hundred Years War and the French have never amounted to much in the world since.  The Brits defeated the French because French national finance was all screwed up.  They used the state's power to exploit the economy; they spent more money than the economy could afford; they defaulted on their national debt several times.  The French Revolution, after all, began with a mess in the French government finances.  My point is that the government has the power to encourage business and grow the economy; it also has the power to wreck the economy.  The banksters and Matthew Josephson's Robber Barons are all hostages to the government's economic policy.

The US started out with the economic policy of Alexander Hamilton.  As a kid, Hamilton had run a merchant's office in the West Indies.  As the nation's first Secretary of the Treasury he set up a funded national debt just like the Brits and the Dutch.  America's economy took off like a rocket.

Of course, if a businessman is smart he can make a fortune out of the government's mismanagement.  I am thinking of John Paulson who made billions betting against sub-prime mortgage securities in the run-up to the Great Crash of 2008.  But does John Paulson have political power?

Of course, I don't expect you to believe all this crazy stuff right off the bat.  But suppose it's true.  Suppose the politicians are in charge and the banksters are just their dupes.  What does it mean?  What does it tell us about the proper relationship between government and business, not to mention government and people?  That's what we'll look at in the next post.

Millennials: Is There a Difference Between Business and Government

In the last posts we looked at my radical assertion that government is force and that governments therefore are always interested in war --  not necessarily a shooting war, but some conflict with an enemy that needs to be subdued.

But what about business?  What about banksters?  What about corporate greed?  Aren't CEOs and used car salesmen just as bad as government?

The short answer is: yes, of course.  The modern market economy is a behemoth, and we are all helplessly yoked to it.  It is easy to see that the 19th century critics of capitalism were on to something when they complained about its terrifying force.  If Marx had been right in his prophesy that capitalism would "immiserate" the working class and the middle class his remedy, to smash capitalism, would have been modest and prudent.

But an amazing thing happened in the 19th century, and Marx's critique came out at just about the last moment when the idea of Capitalism = Disaster was credible.  It turned out by the end of the 19th century that capitalism's profits were trickling down to the working class.  And by the end of the 19th century thinking German Marxists had to admit that the immiseration thesis, that the working class would be reduced to a bare existence on the edge of starvation, had been exploded.

Indeed, the working class was thriving, building its own authentic social institutions like the labor union and the friendly society.

In consequence the story of the last century has been about a great contradiction.  All the best people had committed to a doctrine based on the idea that the economic institutions of the industrial revolution were leading straight to disaster; but the facts on the ground showed that the opposite was happening.  As transsexual economist Deirdre McCloskey writes in her Bourgeois Era books, the last two hundred years has seen, in the developed countries, a rise in income from $1 to $3 per capita per day to something over $100 per capita per day, using constant dollars. And any country -- think China -- that switches to the capitalist model repeats the story  There has been nothing like this in human history, ever.  We are talking about per capita income that has increased by 20 times in 200 years!

So the fact of our existence is that we are yoked to a merciless monster, the global market economy, from whom there is no escape.  But that monster keeps making us richer and richer.

And who has been affected more than the rich?  At the turn of the 20th century the poor were thin and the rich were fat, as they had since time immemorial.  Now, a century later, the poor are fat and the rich are thin.  Think about the deprivation this means for what Tom Wolfe called "social X-rays."  These days rich women have to starve themselves to show that they are different from the fat and disgusting poor. (Don't tell this to your liberal friend: they hate being told that the poor are as fat as butterballs.)

Let us stipulate (that's a fancy legal term meaning that we'll agree not to disagree) that government is force and capitalism is not much better.  My guy Jurgen Habermas calls it "system."  Government is a system and so is the market economy.  The thing about system is that it is set up for domination.  People in government and people in business act "strategically."  He means that governments and businesses act to manipulate the world, to "use" it, rather than to interact in a social manner.

We said earlier that governments are always interested in war, because since government is force it stands to reason that the people in government are always looking for a job that needs force or compulsion, whether it's ridding the world of Commies or ridding the nation of sugary soft drinks.

But what about business?  Businessmen talk all the time about capturing market share and burying the competition. But businesses are different when it comes to their customers.  They want customers to like them.  They want them to trust them.  That is why, when a corporation is discovered lying or making defective products the whole world descends upon them.  General Motors is the butt of every joke because of defective ignition switches that they tried to cover up.  But government?  Well you tell me how the VA and the IRS have reacted to recent scandals.  Lots of people are talking about "fake scandals" in the Obama administration.  But nobody is making excuses for General Motors.

So what is the difference between the monster of government and the monster of capitalism?

In the next piece I'll try to persuade you that it's government that calls the shots, not the banksters and the CEOs.

Millennials: Government Turns Everything into a War

In my last post I proposed the radical idea that "government is force."  Government is not, as President Obama has said, "simply the name we give to the things we choose to do together."  That is rubbish. As social animals just about everything we humans do is done together.

The significance of government is that it is the name of things we do together under the shadow of force or, as the neo-Marxists say, under a system of domination.

I know that you won't yet be convinced of this.  How could you?  We have all been carefully taught since we were babies to reverence and honor our political leaders.  Government protects us from robbers and commies; government runs the safety net that protects us from hunger and homelessness; government provides pensions, health care, and education.  And one of the key requirements for any politician running for office is to be likable, so that the voters think he "cares about people like me."

But now I'm going to proceed on the basis that "government is force," and I'm going to up the ante, by suggesting that "government turns everything into a war."

What I mean by this is that if government is force it will be looking for things to do that "obviously" require force.  After all, the time for talking is over.  We must fight against injustice, and force the oppressors to meet our just demands!  There is a word for operations that require force for their execution: war.

I don't mean by that a shooting war.  I mean a war in the definition of chaps like Sun Tzu, the Chinese strategist.  The best way to win a war, on his view, is without an actual battle: "To subdue the enemy without fighting is the acme of skill."  And the point of war is to subdue the enemy, by fair means or foul.

Have you ever noticed that in politics there always has to be an enemy?  If you are a conservative, the enemy used to be the Soviets; now the enemy is the Muslim terrorists.  Domestically, the conservative enemy is "big-spending liberals" and the ACLU.  If you are a liberal, you sneer at the idea of foreign enemies: that's just neo-colonialism.  But liberals make up for that with a superabundance of domestic enemies: right-wing Christians, right-wing gun nuts, the patriarchy, the racists, the homophobes.  And that says nothing about the banksters, insurance company profits, corporate greed, and Wall Street plutocrats.

I'd never really thought through all this until I started to study Marx.  Why did Marx have such a special animus for the bourgeoisie and capitalism, I wondered?  He might have said: Look, things look pretty ratty right now in the 1840s, but look at the amazing things that capitalism has brought us, from steamships to railways that have transformed the economy.  Sure, things look nasty, but they'll probably work themselves out.

Instead he said that even though the bourgeoisie had invented all these amazing things disaster lay ahead through "immiseration" of the working class and the petty bourgeoisie, and so the whole thing had to be destroyed and utterly dominated by a new political elite.

Of course he did.  Otherwise there would be no need for chaps like Marx.  Marx needed a war on someone, otherwise the Communist Manifesto would just have been a damp recommendation for a few practical reforms.  So, as a revolutionary, Marx instinctively built a case for all-out war on capitalism which could only end in the utter subduing of the capitalists and, even more important, the capitalist spirit (see Sun Tzu, above).

My point is that unless you prophesy a war you don't need politics.  And if you don't need politics you don't need activists and politicians to mobilize the people for "political struggle."  And what would the politicians and activists do then, poor things?

Now take a look at the domestic political landscape in America.

We are just mopping up after the war for "marriage equality."  Notice that the victory cannot stop with merely enacting gay marriage.  It has to continue with the subduing of individuals that don't agree with the avant garde.  They must be shamed and shunned.

Obamacare was sold to us as the remedy for the injustice of the uninsured. This injustice required not just a few cozy subsidies but the complete reworking of the individual insurance market.  Why would that be?  Because to tinker with the system is unsatisfying for political activists.  They want a great cause, and they want to transform America in the process.  They must have enemies like insurance companies and mean-spirited Republicans, and the enemies must be made to bow the knee to the new dispensation.  That's what the Hobby Lobby flap was all about.

What's Social Security?  A war on poverty in old age.  Education?  A war on ignorance.  Welfare?  A War on Poverty.

Now when it comes to foreign wars our liberal friends are all agreed that war never solved anything.  Give Peace a Chance, they say.  But what about on the domestic front?  Couldn't we find another way to educate our children than forcing them to attend government child custodial facilities?  Could we take care of our seniors without a comprehensive and mandatory program that sequesters the savings of workers in so-called government trust funds?

Of course, the advocates of big government counter that, in this dangerous world with big corporations and big banks that can crush the little guy you need a tough guy in your corner.  You need tough regulations to tame the corporate monsters.

Good point.  Corporations are astonishingly powerful, especially when with "creative destruction" a new kid on the block like Steve Jobs can turn the computer world upside down.  The only thing is that government regulation usually operates to prevent the Steve Jobs of the world from turning things upside down.  There is even a word for it: "regulatory capture."  Looking over the past century, the great age of regulation, the public choice theorists argue that it usually happens that the regulated corporations learn how to flatter the regulators and bribe the politicians into protecting them rather than regulating them.

But let's take a look at the corporations.  How powerful, and how problematic are they?

Millennials: Why Government is Force

In my last post I took a look at a recent poll of millennials, and determined to open a conversation with my millennial friends.  Now we get down to serious business, the radical idea that government is force.

Congressional candidate Dave Brat caused a bit of a ruckus recently when some oppo researcher uncovered a paper the professor had written.  He wrote that "The government holds a monopoly on violence."

To our liberal friends this is shocking, but Charles W. Cooke isn't impressed:

Who among us genuinely doubts this to be the case? Only those, I would venture, who are so uncomfortable with the consequences of their philosophy that they seek the dull refuge of lazy euphemism and collective myopia. It is, it seems, decidedly easier idiotically to repeat that “government is the only thing we all belong to,” or that “government is simply the name we give to the things we choose to do together” than to acknowledge that, whether one is advocating a small government that takes care of the basics or a Leviathan that seeks to meddle in the smallest recesses of the human heart, one is invoking Thomas Hobbes.

Actually, I would argue, all ruling classes like to elide the truth about government.  That is why Russian peasants were taught to think of the Czar as their "Little Father."  That is why we symbolize the US government as Uncle Sam. Remember Soviet dictator Stalin as "Uncle Joe?"  The truth is that every government maintains power by the unspoken power of its force, whether it is led by a patriarchial feudal lord, an absolute monarch, a revolutionary leader or a democratic president.

The modern state is worse than most, and its power begins with its ruthless tax bureaucracy.  Try and mess with the IRS and see where it gets you.

Guess what?  The modern tax bureaucracy is not an invention of big government liberals, or the evil bourgeoisie but the absolute monarchs.  Back in the 1600s kings found that they needed more money, a lot more money, to prevent takeover by the neighboring monarch, so they invented the tax bureaucracy to drill down through the guilds and the lords so they could tax individuals and extract the money they needed for their armies.

In due course along came the modern democratic revolutions.  But the tax bureaucracy stayed and flourished, because the first thing a government needs is money.  Indeed, a democratic government needs much more money than an absolute monarch.  It needs money not just for armies, but money for its supporters, money to buy votes, money even for old-age pensions and vital infrastructure.

Moreover, every government we know of was founded on force.  Our own US government was founded on a successful rebellion, and the land we love was taken by force from the "native Americans."  Modern Russia was born in a coup against the Kerensky government.  Modern France was born in a bloody revolution.  Modern Germany was born through a couple of wars.  Modern Britain was born in a convenient Dutch invasion in 1688, known today by the lazy euphemism of Glorious Revolution.

Every government works overtime to show that it's not really all about force.  That's why every government works to show it "cares about people like me" and does everything "for the children."  And that's why our Democratic friends are always going on about Republicans being "heartless" when they want to cut spending.  But what about the heartless payroll taxes that take money out of the pockets of ordinary workers before they even see the money in their paychecks? What do you call that?

Put it this way.  Back in the days of Watergate and the Bush years, it wasn't hard to find a political writer worrying about whether Nixon or Bush was planning to cancel the next election.  Today we have conservatives worrying about Obama's illegal administrative actions.

It's pretty obvious what is going on. When you are in the opposition you are always worrying about whether the government will jump the tracks and start ruling by decree rather than the rule of law.  Instinctively, people know that behind its pretty words, government is force.  That's OK when our guys are in charge, because they have their hearts in the right place.  But when the other party is in power, every patriotic citizen should be eternally vigilant, watching for abuses of power and ready to protest against injustice.

I know this is all pretty radical.  So let's amp it up with the idea that government always wants a war, foreign and domestic.  Because, if government is force, it stands to reason that government will look for things to do that require force.

Millennials: Let's Talk!

The folks at Reason-Rupe just released a poll about Millennial political opinions.  Not surprisingly, you Millennials are confused.  A majority, 59% are in favor of tax cuts, but 66% percent think that raising taxes on the rich would help the economy.

57 percent of millennials want wealth distributed according to achievement, but 68 percent say government should ensure that everyone makes a living wage.

You can see what is going on here.  You millennials have been buffeted around by everyone's political talking points, and so you want plenty of things that are mutually incompatible.  Join the club!

It would be nice to have a consistent view of the world of politics, although, of course, Ralph Waldo Emerson warned us that a "foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers".

Let us be clear about this: "foolish consistency" only applies to other people.  For you and I a consistent view of the world is nothing less than common sense, or even the sophisticated German idea of a world-view, a Weltanshauung.  Everybody has one, but not everyone has thought about it, or tried to resolve the inevitable inconsistencies.

I'm going to talk about my world view in this and subsequent pieces.  I believe that the current system is reaching the end of its useful life.  It may have been a good idea, a century ago, to build a government welfare state state featuring government furnished, government administered benefits like old-age pensions and health care and education and welfare, but today I think we can see that reform is needed.

The trouble is that ideas that seemed pretty good a century ago can be totally out of place a century later.  It seemed like a good idea to provide a basic pension to old people back in 1900, especially since few people lived as long as 65 years old.  But the problem is that the funding mechanism set in place for Social Security back in 1935 -- a mere 2 percent of wages -- becomes a monster in 2014 at over 12 percent of wages.

The point is: how can we, as a society, provide decent safety nets for our people without breaking the bank.  For make no mistake, the burden falls heaviest on you guys, the millennial generation.  The way that Social Security and Medicare are set up the only flexibility is on the payment side.  Try to reduce benefits on the baby boomers and see what happens to you.  But saddle Millennials with student debt and a lousy job market and who cares?

Then there are the social issues.  Everyone wants to be free, but where does freedom turn into license?  Conservatives don't much like gay marriage.  But liberals don't much like sugary soft drinks.  They hate to bow to other peoples' morality.  Yet everyone is mad to "legislate their morality" on the rest of America.

At least everyone hates those evil banksters. Except that nobody seems to do anything about them.  What gives?

Let's start at the beginning, with the idea that government is force.  A little extreme, you think?  Well, it's my belief that you can be a patriotic American and support your government, and still be radically suspicious of every politician and activist.  Because when you come down to it, government not about the things we do together, as President Obama has said.  It is about things that we authorize the government to do with force, from the IRS and taxes to the EPA and environmental regulation.  The government does not say you may pay your taxes.  It says you must pay your taxes or go to jail.  The whole idea is for a majority in Congress or in the Supreme Court to force its ideas on the minority.

So let's take a broader look at government.  There's nothing wrong with government being force; it's just that I think that it's important to be clear about it.  People like to think that government that implements their idea is nothing less than justice.  I want you to think twice about that.

Will Obama's Cloward-Piven Actually Work?

Back in the Sixties, lefty professors Richard Cloward and Frances Fox Piven proposed a political strategy to crash the welfare system to force the Democratic Party to introduce a guaranteed minimum wage.

Ever since, conservatives have been terrified that liberals are always trying to crash the system and flood activists into the street so that they can stampede us into some new comprehensive and mandatory new program on the whole nation that makes government bigger and increases liberal domination.

Today, many conservatives suspect that the southern border crisis is a deliberate Cloward-Piven-type effort by the Obama administration to force a comprehensive amnesty bill down the throats of the American people.

Perhaps we should ease off the conspiracy theory stuff and relax a little.

First of all, governments know that it always takes a crisis to push through a change.  That's the meaning of the old chestnut from H.L. Mencken:

Civilization, in fact, grows more and more maudlin and hysterical; especially under democracy it tends to degenerate into a mere combat of crazes; the whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, most of them imaginary.

 OK H.L.  But you are missing the truth that the whole point of government is to rally the people against an existential threat.  Politicians instinctively know that.  So politicians are always trying to turn a national hang-nail into the Second Coming.  Thus the crisis of the uninsured means we need a comprehensive health insurance program.  Rising global temperatures require an anti-carbon crusade.

Conservatives have their own longing for crisis.  We know, or we think we know, that there isn't a hope of reforming the welfare state and its middle-class entitlements until there is No More Money.  So we sometimes wonder if the best strategy is to pile on new entitlements, as Sen. Elizabeth Warren (D-MA) wants to do, and so advance the day when the middle-class entitlements go broke.

But the real problem with a crisis is that it doesn't just empower the government to act.  It creates a revolutionary situation when anyone may grab the reins of state and change things.  It may be true that there isn't a hope of reforming entitlements until they go broke, but it is also true that the American people, as mobilized by various interests, may demand reform that makes things worse.

Just today there's an article by Steve Malanga about the state and local government pension crisis.  It's pretty obvious what needs to be done, but don't tell that to the government unions and the state judges.  There's a good case to be made that the government unions should make a good deal now rather than wait until voters get really pissed off by collapsing government services.  But, really, they won't.  The unions represent existing employees and retirees; most of them will get through their retirement before the crash comes, so why worry?

That's why I don't think that President Obama has some fiendishly cunning plan up his sleeve on immigration.  He has just been doing what the liberal activists groups have wanted, and he has lazily assumed that as things got worse they would create a crisis that would grease the skids for a comprehensive immigration bill.  But it looks like popular opinion is trending away from an elite cramdown as militia groups mobilize and blacks complain and protest about immigration.

There's nothing remarkable about all this.  It's the political analog of military strategy.  Do you seek the decisive battle or do you march around and avoid battle?  Democrats have tended to assume that they will win the decisive battle.  And maybe they are right.  Until they are wrong.

Death to the Moderates!

Everyone agrees that politicians win elections by appealing to the moderates.  Because they hold the balance between the partisans of the Democratic and the partisans of the Republican Party.

But now comes liberal enfant terrible Ezra Klein to argue that this is all wrong.  And the reason is that moderates aren't really moderate.  Instead they tend to hold a range of opinions on political issues all over the political map.  They only look moderate when you balance their opinions out!

What happens, explains David Broockman, a political scientist at the University of California at Berkeley, is that surveys mistake people with diverse political opinions for people with moderate political opinions. The way it works is that a pollster will ask people for their position on a wide range of issues: marijuana legalization, the war in Iraq, universal health care, gay marriage, taxes, climate change, and so on. The answers will then be coded as to whether they're left or right. People who have a mix of answers on the left and the right average out to the middle — and so they're labeled as moderate.

Now, to be honest, I usually don't give Ezra Klein the time of day, but here I think we should pay attention.

In reality, Klein writes, partisans of the political parties tend to be more moderate than the moderates, because the partisans tend to take up the ideas advanced by their parties.  Political parties are afraid of extreme positions that might not have broad support, for obvious reasons, and so their political partisans follow suit.

The rubber hits the road on all this when states start passing laws like open primaries to encourage the supposed moderate voters.

These reforms include open primary elections, nonpartisan redistricting, and public funding of elections. But "the bulk of studies on these reforms finds little evidence that they improve moderate candidates' fortunes."

The answer, Ahler and Brookman realize, is simple: these voters don't want moderate candidates because these voters aren't actually moderates.

The reason that "moderates" are so immoderate is that they are detached from the political public square, so they don't feel any pressure to moderate their views or make them consistent so that they could enter into a political coalition with a hope in hell of getting their ideas implemented.

On Klein's argument we should encourage party voting and identification because it encourages voters to develop a consistent set of political beliefs.

Klein shows a set of graphs showing the spread of opinion on 12 issues from very liberal to very conservative. He notes that on only two issues is the moderate position the "modal" position.  But, in bad news for conservatives, public opinion is skewed towards the liberal position on Social Security, Medicare, and taxes.

Which explains why nobody is interested in reforming them.