Thursday, January 7, 2016

Review: The Essential Bernie Sanders and His Vision for America, byJonathan Tasini

Published: September 8, 2015, $14.00 retail

Title: Those Who Want Slavery Should Have The Grace To Name It By Its Proper Name

This review is broken into two parts: Form & Content

Form:
Jonathan Tasini does a very good job elucidating the essentials of Bernie Sanders and what he stands for. He breaks the book down into 20 different categories, gives a short summary of Bernie's view, and then uses Bernie's own words (via speeches, writings, and interviews) to tie it all together. Within this context, the book is very well done. It does just what it intends to do: it gives you a quick way to understand the essentials of Bernie.

Content:
After reading the book, I was very surprised at how Bernie frames nearly ALL of his arguments. Almost  everything he presents and stands for is explicitly rooted in morality. Rhetorically, this is an INCREDIBLY strong (and proper) way to discuss politics. Philosophically speaking, politics is a derivative of morality; politics is an application of morality to social questions. Bernie Sanders is a master at framing his messages in a way that puts morality at the forefront. He argues from a moral base saying that we should do X politically because it is MORAL to do so. This is seen in every chapter of this book- in all of his speeches, writings, and interviews, etc.

I wish more politicians would argue things at the moral level rather than superficially, as most politicians today do (see Donald Trump and Hillary Clinton). Even more though, I wish Bernie Sanders would question his own moral code. He should ask: Is the moral code that I hold valid? Is it consistent with human life and prosperity? Or, does it lead to suffering, sacrifice, and death?

For the rest of this review, I will be focusing on (and challenging) Bernie's moral code. At its essence, I argue that Bernie looks at human sacrifice and human enslavement as a moral ideal. This is a strong claim, and I will use various chapters and his own words to show this to be the case.

Two (Faulty) Moral Premises:
Throughout the entire book, I saw two moral premises that I disagree with (and that are completely antithetical to human life and prosperity):
1. Your life doesn't belong to you; your life belongs to others, you exist to serve others, and Bernie has the "right" to use government to force you to serve others.
2. Bernie does not see people as individuals; he sees only groups. In every chapter, he puts people into one of two groups: one that he views as vulnerable/weak and one as strong/able. He then uses moral premise #1 (your life doesn't belong to you) to justify destroying, sacrificing, hurting, and punishing the group he views as strong/able (without caring if they are innocent or not, without caring if their interactions with others are free associations done by mutual and voluntary consent, and without caring what repercussions it has on society, on human life, or on human prosperity).

How do these faulty moral premises translate into politics for Bernie? Well, Bernie holds that government should be used to treat people unequally. How you are treated will depend on whether you are deemed part of a vulnerable group or a healthy, strong, successful group. He holds that there is virtue in sacrificing the strong for the sake of the vulnerable. Given this moral premise, freedom of association should be outlawed (you have no right to think and act on your own judgment). An ever-increasing amount of interactions need to be done by government force and require giving dis-favor to the able group because the vulnerable group is in need of something. For Bernie, the needs of the vulnerable and sacrifice of the able are the primary standard of value and virtue, respectively. The act of sacrificing the able to the needy is an end in itself. It is his purpose; it is his goal.

Bernie points to the strong, the affluent, the rich, the wealthy, the independent, the able, and the healthy and says, "These people exist to serve the needs of the vulnerable. Their lives don't belong to them, and the government should act accordingly."

I have issues with Bernie's ideas across every chapter in this book (from economics to environmentalism to inequality to the differences between economic power & political power). However, the quotes below (and subsequent critiques) have been limited to the theme of morality as noted above.

Chapter 1- Economy
Here, Bernie distorts what he is actually advocating for by blurring the difference between asking and forcing: "We should be asking [emphasis added] the very wealthiest people in this country to start paying their fair share of taxes." You aren't "asking"; you are ordering at the point of a gun. According to Bernie, the moment you become wealthy, your life no longer belongs to you. The wealthy exist to serve the needs of others and "we" have a right to be forced to do so.

Bernie goes on in his speech to pit two groups against each other (wealthy versus the vulnerable) and wants to use government to treat them unequally, giving favor to the vulnerable by hurting the wealthy. "From both a moral and economic perspective, we must not balance the budget on the ... most vulnerable." Which indicates that we should balance it on the backs of the most able. His goal is sacrifice- the sacrifice of the able to the vulnerable because he has identified a "need". His goal explicitly requires enslaving some people to serve the needs of the others. Again, according to Bernie, as soon as you make a certain amount of money your life no longer belongs to you; it belongs to others.

Chapter 2- Health Care
"What the United States should do is join every other major nation and recognize that health care is a right of citizenship." Bernie "...proclaim[s] that health care is a right of all people..."
Claiming you have a right to a man-made product (like healthcare) means that you have a "right" to force someone else to provide that product for you; you have a "right" to put people into forced servitude to provide things for you. Let me be clear: there is no such thing as the "right" to enslave. Again, he pits two groups (healthy versus the vulnerable) and says, morally, we must sacrifice the healthy to the needs of the vulnerable, while totally blanking out the fact that he is calling for human enslavement as a moral ideal. Other people's lives don't belong to you and they don't exist to serve you.

Chapter 3- Education
Bernie believes there should be ".. free tuition at every public college and university..." As to the question of "... how are we going to pay for it?" Well, Bernie "... would impose a Wall Street speculation fee..." Again, saying you have a right to a man-made product or service (like education, free of charge to you) means that you have a "right" to force someone else to provide that product or service to you; that you have a "right" to put people into forced servitude to provide things for you. And again, Bernie needs to understand there is no such thing as the "right" to enslave. Other people's lives don't belong to you and they don't exist to serve you. Sacrificing someone's life and liberty to provide you with things free of charge is NOT a moral ideal.

7- Workers
In this chapter, Bernie holds that it is a moral imperative that we raise the minimum wage, calling it a "failure" that it hasn't been raised until just recently. He follows that up by stating employees should be allowed to exercise "their constitutional right of freedom of association... the right to come together to form a union is a constitutional right." The chapter wraps up by Bernie describing Finland, a country where "day care is free to all citizens" and where "workers are guaranteed 30 days of paid vacation and 60 days of paid sick leave."

Bernie is right, employees have a right to freely associate. However, Bernie's goal is to deny this very right to employers. The right that both employees and employers have is the freedom of association (that is, the right to mutual and voluntary transactions). Again, Bernie wants to destroy this right by using government to force employers to pay higher wages or increase benefits (including time off and daycare) against their will. He explicitly says to employers: "Your life doesn't belong to you; you belong to those who have needs (those that need higher wages or better benefits or time off or daycare), and I have a "right" to force you to provide those things."

8- Family Values
In Chapter 8, Bernie uses the same one-sided technique as in Chapter 7 (claiming that workers have rights, but employers do not). He begins by identifying the needs of various employees ranging from a "husband [that] cannot get time off of work" to a mom being "forced to send her sick child to school" to a family "unable to spend any time together on vacation". He then says we should use government to force employers increase benefits to make sure "that workers in this country have access to paid family leave, paid sick time and paid vacations".

According to Bernie, there is no right to freely associate if you are an employer; unions, wages, benefits must be forced upon employers because employees are in need. Normally, a company is free to offer you a job or not. Normally, if you have an offer from a company- you are free to take it or leave it. The choice to hire (and what to pay) is up to the free choice of the employer. The choice to accept the offer (including pay, benefits, etc.) is up to the free choice of the employee. Bernie says no to both of these and will use a gun to force employers to pay more than they are freely willing to offer.

Again, Bernie doesn't object to "force" as such. He just wants to be the one doing the forcing. Freedom of association is what he wants to destroy. He is willing to sacrifice the lives and liberties of some human beings because his standard of value is the needs of a vulnerable group. According to Bernie, it is virtuous to sacrifice the able to fulfill the needs of the vulnerable; he truly believes it is moral to put some human beings into forced servitude in order to alleviate the needs of others.

9- Society
The theme of sacrifice of the able to the vulnerable, of pitting groups against each other, and of using government to treat people differently is just as prevalent in Chapter 9 where Bernie states proudly that he agrees "that deficit reduction is a real issue and I think we have got to deal with it. But we are not, if I have anything to say about it, going to deal with it on the backs of the elderly, the children, the sick, the poor and the hungry." So, here he has identified vulnerable groups; now, all he needs to do is identify a group as strong and able, and get that group to sacrifice their life and liberty to fulfill the needs of others. And he does just that: "the way you deal with deficit reduction in a responsible way, in a fair way is you say to the billionaires in this country, who are doing phenomenally well... [you] have to ask the wealthiest people in this country to start paying their fair share of taxes." [emphasis added]. He reiterates that "we're not going to balance the budget on the backs of the vulnerable."

According to Bernie, we ARE going to deal with budget deficits on the backs of the strong and able. Again, sacrifice as a virtue is at the forefront. He doesn't accept free association (non-sacrificial interactions) as moral. Not once, in any of his speeches, does he realize that when transactions are done by free and voluntary trade, that both parties win. He only thinks of transactions as one group gaining and another losing, and he is adamant about making sure he gets to decide which group "wins" and which one "loses".

He seeks to identify things that people "need" ["Well, we've got 50 million people without any health insurance at all. We've got people paying huge deductibles."] and then says they have a "right" to it because they need it. He then follows that up with having a "right" to force other people to pay for it. Why is this moral and why do you have a "right" to do it?

14- Immigration
Here, I just wanted to point out that Bernie rightly looks at "slavery in the 21st century in the United States of America" as abhorrent. However, his very own political policies enslave some people to others. He wants people to have free healthcare (and free college tuition and better wages and better benefits and free daycare) while forcing others to provide these things against their will. This is slavery- forced labor- and he is advocating for it as a moral ideal.

Bernie also rightly describes undocumented workers being allowed to come "to the United States to escape economic hardship and political persecution." However, Bernie is a very strong advocate for political persecution towards businessman and the rich and the healthy. He fully believes government should be used to persecute you, oppress you, and treat you unequally if you are part of an "able" or "wealthy" or "strong" group.

15- Civil Rights
Similar to Chapter 14, Bernie states he is against something: "...we say no to all forms of racism and bigotry" while completely blanking out the fact that he is an active and vocal bigot toward the wealthy: "it's a lot harder to stand up to the billionaire class and say, 'You know what? You're going to have to pay some taxes. ... we need that money to create millions of jobs..."

He recognizes "the growth of extremist groups in this country, who are motivated by hatred..." while blanking out how much he hates people who are rich and healthy and able.

He oddly goes on to remind his listeners "of those great words in the American Declaration of Independence. 'We hold these truths to be self-evident that all men are created equal [unless you are an employer or rich or healthy], that they are endowed by their creator with certain unalienable rights [except they can be taken away if Bernie wants them to be taken away], that among these are life, liberty and the pursuit of happiness." He completely blanks out the fact that his entire political career has been directed and motivated by the goal of destroying these rights.

This book has repeatedly shown that Bernie fully believes that your life and liberty and the pursuit of your own happiness are NOT inalienable rights and that they are NOT even rights; instead, he has repeatedly and explicitly stated that you exist to serve any group that he identifies as "in need" or as "vulnerable", and he has a "right" to force you to do so. Rather than you having a right to your life and liberty and happiness, someone else has a right to healthcare and education and better wages and better benefits. Either you have a right to your life and to your liberty or you have a right to man-made products and services. If you have a right to man-made products and services, then you have a right to force others to provide them for you, which means they no longer have a right to their own life and their own liberty.

Summary
The title of this review is a quote from Ayn Rand's introduction to Anthem, and I believe it is appropriate to restate it here: "Those who want slavery should have the grace to name it by its proper name."

Bernie advocates for human sacrifice and human enslavement (and does so as a moral ideal). He is wrong; he is morally wrong, corrupt, evil.

Jonathan Tasini did a very good job organizing this book, but I strongly suggest he check his premises and decide if he really wants to support this man. I would strongly suggest you do the same. Ask yourself why sacrifice should be seen as a moral ideal. Ask yourself if the political policies you advocate for put someone else into forced service to provide you things for "free" and, if so, why these political policies are noble.

Instead of Bernie's moral view that puts sacrifice at the forefront, how about every human being is an end in him or herself? How about don't sacrifice people to one another and don't pit groups against each other? How about be a consistent advocate against forced labor, against sacrifice, and against enslavement (from any person or any group)? How about advocating for all interactions between human beings being done by mutual and voluntary consent? How about proudly declaring that every human being has a fundamental, inalienable right to their own life, their own liberty, and to pursue their own happiness?

The proper moral standard is one that puts human life and human prosperity as the standard to judge what is good/moral versus bad/evil.

The fundamental requirement of human life (what leads to a human being living and flourishing;
i.e. our means of survival) is, overwhelmingly, our ability to think. Look at your computer, the building you are in, think about agriculture, automobiles, hospitals, anything. It is ALL a product of our capacity to think. Thinking (also called reason) IS our means of survival. So long as human life is the standard to judge good versus bad, it is moral to use your means of survival- to think- and it is moral to let people be free to think and act on their own judgment - to live free of force (physical interference) from others.

There is connection between physical force and our means of survival. The use of physical force (or fraud) is what takes away your means of survival. Forcing someone at the point of a gun (whether held by your neighbor, a criminal, or a government official) gets that person to act while rendering their thinking irrelevant; force separates a person from their means of survival. Given this context, the initiation of physical force against others is immoral (i.e. it is antithetical to the requirements of human life). A proper political system is one that is consistent with the requirement of human life; a moral political system is one that protects our ability to think and act on our own judgment- one that REMOVES the initiation of force from society so that all interactions are done on a mutual and voluntary base. This applies to employees, employers, unions, corporations, students, government officials, moms, dads, any and all people in any and all groups.

In the history of humanity, there have always been and will always be people that want to control you and dictate your actions. The only way to stop them is to NOT give them political power.

In America, the separation of church and state prevents theocratic dictators that want to force you to follow their religion from ever taking power (i.e. from ever actually being able to legally force you to follow their religion). You are free to follow their religion, or not; the choice is yours (not theirs).

The goal should be the same in the economic realm (separation of state and economics) to prevent economic dictators (like Bernie) who want to force you to follow their economic orders from ever taking power (i.e. from every actually being able to legally force you to follow their dictates). You can never get rid of people that want to enslave or control you; you can only separate them from having the legal power to do so.

The way to do this is to explicitly state every human being has an inalienable right to their own life, their own liberty, and to pursue their own happiness. Again, inalienable means that these rights cannot be taken away (not by your neighbor, not by a mob, not by a majority, and not by a government official). You are free to think and act on your own judgment, so long as you don't use force against others (i.e. leave others free to think and act on their own judgment). These rights make legal only interactions that are done by mutual and voluntary consent.

This is why the Declaration of Independence is such a profoundly moral document; it is consistent with the requirements of human life as it legally removes force from human interactions. Look at the whole of human history: when individual rights are upheld and protected by government, human beings flourish because these rights are consistent with human life; to the extent these rights are denied by a government, human beings stagnate (at best) or die (at worst) because these rights are consistent with human life.

Wednesday, August 26, 2015

Economics Versus Morality


Any Economics 101 course could have told you that this would happen. As you artificially increase the price of something, fewer quantities of that good will be purchased. If you raise the price of milk, people will buy fewer gallons of milk. If you raise the price of televisions, people will buy fewer tv's. If you raise the price of labor, employers will buy less labor. In other words, unemployment will result. Yet, people still vote for increases to the minimum wage.

What does this tell us?

It tells us something very important. It is direct evidence that the political motivation of most people is something other than economics. In other words, economics is NOT the primary driver of people's political decisions. Rather, morality drives political decisions. If policies like artificially increasing the cost of labor are to be changed, you need to challenge the moral root that drives them.

Look at Medicare or Obamacare or social security. People KNOW these are economically destructive, but they still vote for them; they still support them BECAUSE they hold them as a MORAL ideal. If you want to change these economically destructive policies you have to challenge them at their moral root.

To challenge the prevailing moral code you must first be able to state clearly that your life belongs to you (the morality of egoism). This is a moral code that is congruent with the requirements of human life. What is currently held, unchallenged, is the premise that your life belongs to others and that your moral duty is to serve others (the morality of altruism). So long as altruism is held unopposed, political policies that are destructive to human life will continue.

The two videos below both really drive home this point. Check them out:

Yaron Brook's lecture at Clemson:

Leonard Peikoff's lecture on the Philosophy of Objectivism:

Monday, September 19, 2011

Death From Taxes


When it comes to taxation, it is all about who gets to spend the money. Politicians want the money because they feel they have better ways to spend it. They want to take the money away from the people that have proven they can generate wealth and prosperity and then determine its use themselves. Keep in mind these are politicians who are influenced almost exclusively by political whims and lobbyists. These bureaucrats will inevitably take the land, labor, and capital resources from prosperous businesses and combine them in ways that actually destroy wealth. It’s immoral to take the property in the first place, but to use a, “It’s for the greater good” mentality to justify it is also irrational. The greatest good that the money could do is going to come from individuals who actually have the ability to generate wealth, not in the hands of those who cannot.

Take Solyndra, for example. Our government took more than $500 million from its citizens saying they were investing the money in our future. They did this even with warnings from PricewaterhouseCoopers, who said that the Solyndra’s business model was not only problematic, but unsustainable. Politicians, with their, “I can use this money in a better way than you can” mentality lost the nation’s entire investment in the company. They had no right to take the money or to spend it in the first place, but taking it also led  to the destruction of half a billion dollars in savings and wealth. Obviously not the greatest good.

It is completely incorrect to assume that government can be a better investor of wealth than the individuals that had actually earned the wealth. In addition, by taxing extra investment money in general, you are effectively taking that capital out of the business sector entirely. You end up using taxation to fund excessive government spending and therefore disallow that money to be reinvested into the profitable business you are taxing. Investments in the private sector by definition will diminish, which is counterproductive to economic growth.

It’s also incorrect to assume that the government needs more money. Our country quite literally declared its independence by stating that every individual has the right to life, liberty, and the pursuit of happiness. More specifically, our nation’s declaration stated that these rights are unalienable. These rights are rights to act free of coercion from others. Therefore, the only proper role of government is to protect individuals from coercion- as in the taking property by force (no matter how noble you think your ends are). Because they are unalienable, they are rights that cannot be taken away. You don’t lose them the moment you make over $1,000,000. It also means that the use of democracy must be limited by each individual’s unalienable rights; you don’t lose these rights simply because a majority vote says so. Bottom line, every individual has a right to the property they have justly acquired because our rights to life, liberty, and the pursuit of happiness are unalienable.

Increased taxes, which transfers investment choices from successful businesses with proven ability to generate wealth over to politicians, will lead to death of the United States.

"If I had not known that my life depends upon my mind and my effort, if I had not made it my highest moral purpose to exercise the best of my effort and the fullest capacity of my mind in order to support and expand my life, you would have found nothing to loot from me, nothing to support your own existence. It is not my sins that you're using to injure me, but my virtues - my virtues by your own acknowledgement, since your own life depends on the, since you need them, since you do not seek to destroy my achievement but to seize it." –Hank Rearden, Ayn Rand

Friday, September 16, 2011

Stimulus Plans Versus Exchanging Value for Value


Some will say that a stimulus plan creates jobs because they have seen it; they have witnessed the new jobs firsthand. Whether it’s a relative, a friend, or neighbor, there are people that have benefited directly from the stimulus. But, as Frederic Bastiat and Henry Hazlitt have said, you have to keep in mind both, “That which is seen and that which is not seen.”

Every stimulus plan gives money directly to an industry or group of people and more often than not, for the length of the stimulus, that group has some level of prosperity. These “benefits” are generally easy to see, but what about the stuff that is not seen? What most people don’t see are the effects on other industries. The stimulus money given to the fortunate industry had to come from somewhere. When the government gives money to a group, they take it away from other citizens. These citizens now are unable to spend the money in other industries. They can no longer use the money to buy clothes, food, cars, iPods, etc. Every one of these industries now is worse off because government forced taxpayers to spend their money in places politicians (and lobbyists) deemed more important.

Looking at both what is seen and what is not seen shows that stimulus packages simply take money from one person and give it to another. They create nothing and instead merely divert funds from one industry to another. Specifically, from more efficient and productive industries to less efficient and productive industries. To quote Peter Schiff, we took, "land, labor, and capital (all the factors of production) and combined them in ways that actually destroyed value."

Using government to force people to purchase things they wouldn’t voluntarily use their money for is not efficient and does not lead to an increase in prosperity. It may lead to a stimulus in a particular industry, but overall we are all less wealthy because we are operating less efficiently than we could in a free market. Through government:

  1. People are forced to buy things they don’t want (by giving money to an industry, product, or service they wouldn't voluntarily use).
  2. People are forced to buy more than they want of something (like healthcare plans that cover things they don’t want or don't need).
  3. People are forced to buy less than they want (through things like rationing and regulations).

Goods and services are produced and offered to give people what they want. Therefore, letting people voluntarily buy what they want- by definition- leads to the most efficient market. In other words, the goods and services being offered in a free market are exactly what people are looking for. The needs of consumers are being met in the best way possible (at least until someone can find a better way to meet an individual's needs). Using government to force people to contradict and to go against their own free choices will never lead to better prosperity or a more efficient economy. It will only move resources from goods and services that are wanted to goods and services that are not wanted.

To quote Frederic Bastiat:
"The moment the satisfaction of a want becomes the subject of a public service, it is withdrawn, to a great extent, from the domain of individual liberty and responsibility. The individual is no longer free to procure that satisfaction in his own way, to purchase what he chooses and when he chooses, consulting only his own situation and resources, his means, and his moral appreciations, nor can he any longer exercise his discretion in regard to the order in which he may judge it reasonable to provide for his various wants. Whether he will or not, his wants are now supplied by the public, and he obtains from society, not that measure of service he judges useful, as he did in the case of private services, but the amount of service the Government thinks it proper to furnish, whatever be its quantity and quality. Perhaps he is in want of bread to satisfy his hunger, and part of the bread of which he has such urgent need is withheld from him in order to furnish him with education or with theatrical entertainments, which he does not want. He ceases to exercise free control over the satisfaction of his own wants, and having no longer any feeling of responsibility, he no longer exerts his intelligence. Foresight has become as useless to him as experience. He is less his own master; he is deprived, to some extent, of free will, he is less progressive, he is less a man. Not only does he no longer judge for himself in a particular case; he has got out of the habit of judging for himself in any case. The moral torpor which thus gains upon him gains, for the same reason, on all his fellow-citizens, and in this way we have seen whole nations abandon themselves to a fatal inaction." (Bastiat Collection Pocket Edition , p. 919).

You can argue, possibly, that some programs that people don’t want to pay for are still “needed,” but don’t ever say that it will lead to job creation or more prosperity than would exist in a free market. It won’t. There is no such thing as a free lunch. If you force people to have goods and services they don’t actually want, the trade off is a less efficient market with less growth and less prosperity. People are being forced to buy things they don’t want- things they get no utility from. Time and energy are being spent creating goods and services that will never be used. Workers time and effort should be going into things that people will actually use and that will make their life better and easier.

Because better, more valuable and useful goods would be produced (and at cheaper prices), the free market would result in people having more of their time free and more of their money to spend on other things. The free market is where prosperity comes from. If you want to promote stimulus packages and give subsidies and special privileges to certain groups and industries, then you have to sacrifice efficiency and growth in the overall market. To say otherwise is to deny economic reality.

Freedom leads to prosperity.

A good example of this is Henry Ford (it's also mentioned in Part II Peter Schiff video below. In his time Henry Ford made the best automobile available for the cheapest price with the highest paid workers with no regulations, no unions, and very limited government. As Peter Schiff notes, in today's dollars, Henry Ford's workers were making $2,500 a week building cars. Again, this is without regulations, without unions, and the best product being produced. How can this be? Competition and free markets lead to efficiency and better goods and services at lower prices. If everyone is left to buy what they want- the market will always be efficiently producing the best things available at the cheapest cost. People will have the same amount of money, but more things to spend it on. More goods and services can be produced and more jobs created.

Coming from another perspective, Ayn Rand has referred to the concept of trading value for value. Trading value for value, by definition, leads to prosperity and wealth because both sides are gaining in the transaction. When there is a voluntary trade between two individuals- for example, a car for $20,000- one individual values the $20,000 more while the other individual values the car more. Both individuals gain value. When force is used, people are coerced into trading for something they value less than what they currently possess. Either both sides lose value or one side gains while the other side loses. In this instance, wealth is destroyed or, at best, created at a much slower rate than with mutual, voluntary transactions.

The bottom line is that government intervention is not necessary. The free market is far more efficient and capable of deciding what should be produced. Every individual votes for the existence of products and services available on the market when he or she purchases things they want. If no one wants a particular product, it won’t last on the market because it won’t get anyone’s votes. If a product is unsafe, people won't buy it or will sue the producer. In this case the company would incur losses and either go bankrupt (think Enron) or have to change their ways in order to survive (think Toyota and Tylenol).

If a particular product is loved and desired by many, then people want it. They vote for its existence when they pay for it. That is the industry that will thrive (think Apple and iPods). The company will have earned the wealth it has made because they were the ones that provided the best, most desired service. They were the ones that were able to best improve the lives of their customers. They were able to give individuals quality goods at cheaper prices, which allows those individuals to spend their money and time on other things. These companies, working in the free market, are the ones that grow the economy and allow us to prosper; it is not government stimulus.

Friday, July 29, 2011

If money were to grow on trees would we all be richer?

As a child, I remember being told that money doesn't grow on trees. I also remember that I wish it actually did grow on trees because then I'd be able to buy anything that I wanted. But does having an everlasting supply of money actually make you richer? All else being equal (goods and production in the world) if every individual were to have an extra $1,000,000 would the world as a whole be "richer?" No, because money doesn't make us richer; production makes us richer. Money is used to represent each individual's underlying production and wealth in the world. Everyone's purchasing power is still the same if everyone's money supply goes up by their proportion of wealth and their proportion of future production. Nothing would change except it might now cost $6,000 to buy a cheeseburger.

The next argument to come up might be, "Well, if I was the only one to have a money tree, then I'd be richer." This would be true in the sense that your purchasing power in proportion to others would increase because money is used to represent that purchasing power (and you would have more money). But, the problem is that you didn't actually produce anything extra. You would merely be stealing the production of others and spending it as if it were your own. This would be no good for society as a whole (not only are you not producing anything, but you are taking production away from others... this results in a net loss. Wealth is consumed without adding any new production). If (before the money tree) your money represented 5% of the economy's wealth (and you had 5% of the money supply) everything would be fine. But if (after the money tree) you had 5% of the economy's wealth, but had 10% of the money supply, then you would be able to spend as if you had 10% of the economy's production. You would be stealing savings and production from those who have legitimately earned it.

This is what the Federal Reserve does. They are that money tree. The Fed prints money out of thin air. It might not be a problem if the newly printed money were distributed to each person according to their current wealth and their future production. In this case everyone's purchasing power based on their legitimate contribution to society would be preserved. However, the money that the Federal Reserve prints goes to the central banks and is then given to banks across the nation to loan out to people and businesses.

The distribution of the newly created money goes out to the first people that get loans (most often this is businesses). The spenders are rewarded and the savers are punished. The spenders are spending money that isn't actually theirs to spend. As a side note, see this wonderful comic book for the reason why prosperity is built from savings and NOT spending.

So why does the Fed do this? The idea (at least in a stumbling economy) is that an increased money supply given to banks would drive down interest rates (which would boost the economy- i.e. give it a stimulus). If all banks have extra money to give out, then anyone could get a loan from a bank. If the first bank has too high of an interest rate, they could go over to the next bank and get a loan with them. In other words, the surplus of money to loan out (that was printed out of nowhere) would lead to bank competition and lower interest rates for borrowers because there would be so much to lend out.



With the lower interest rates, more people would be willing to invest in things (demand is increased based on this fake money and fake level of interest rates). More specifically, more people would be willing to invest in things they wouldn't normally invest in (if they were to base their decision on their real wealth, their real purchasing power, and the real level of interest rates). This is what is called malinvestment. People and businesses are tricked into investing (and spending) their money on things they can't actually afford based on their real wealth level (they focus on their amount of money from the money tree, not their actual underlying wealth). The excess spending leads to a bubble- a short-term boost to the economy based on the excess spending. Real savings are depleted and once people realize they are spending money they don't actually have because the wealth underlying that money doesn't actually exist, the bubble pops.

The solution to this problem isn't more spending. It isn't more stimulus. The solution is to get rid of the money tree. Let everyone spend money and invest based on their actual wealth and their actual production. "Stimulating" the economy by creating artificial wealth only leads to disaster... see the Great Depression... see the Internet bubble... see the Housing bubble.

Saturday, July 23, 2011

An Introduction to Greek Philosophy

Check out a brief introduction to Greek Philosophy, Plato, and Aristotle.

I would like to add the five branches of philosophy to the discussion. Use your understanding of the branches of philosophy to understand where Plato, Aristotle, yourself, politicians, religions, etc. are coming from). Arguments for or against a particular view are fought on these grounds. If you want to attack certain political views, for example, you can challenge the metaphysics, epistemology, and ethics the view is based on. Check their premises to find contradictions and irrationality at the root and you will have won your case against that view.

1. Metaphysics- The study of existence (Is this universe the only existence, or are there other existences out there like Heaven and Hell?).
2. Epistemology- How we acquire knowledge about existence (For this world, we use our senses and our reasoning mind to acquire knowledge and work within the metaphysical world. If you were to believe in Heaven and Hell, epistemologically you would be saying that knowledge of existence can be acquired outside of your senses or outside of your own actual experiences within reality i.e. Faith- accepting something exists metaphysically without actual evidence or proof that it exists. Can you know something without actually knowing it?).
3. Ethics- What actions are right/wrong for an individual (How should I act? With independence, rationality, integrity, honesty, productiveness, etc. According to Ernesto Fernandez, Aristotle's view was that our "natural function is to exercise virtue.")
4. Politics- What actions are right/wrong for society (How should society act? Protect the rights of individuals: the right to life, liberty, property, and the pursuit of happiness).
5. Aesthetics- The study of art (what can be and ought to be).

Here's a wonderful chart of everything included within each branch for the philosophy of objectivism.