I spent the last three days visiting and inspecting a few of my "places" in Georgia. I flew and had to suffer Hartsfield International Airport, a sprawling monstrosity of endless walking and intra-terminal trains. The flight from Boston took about 2.5 hours, but it took me 45 minutes to get out of the airport. That's paramount structural inefficiency. Sandwich prices in the airport are stunning - I paid over $10 for a very sub-par sandwich and coke worth only $5. Security with their million dollar scanners still rely on hand pat-downs. One bright side - the people were quite efficient and friendly.
Driving around Atlanta brought to my mind one vision: America's structural dependence on the gasoline engine is stunning. Atlanta is quintessential urban sprawl. Nothing is designed for walking as a backup. Even when one drives to be close to one's destination, there is almost no way to safely walk to stores nearby. Why? The decline and disregard for simple practices of local connectivity that an old town center - aka Main Street - had. City rules require parking - yup, parking for every store. And stores jealously guard their parking, threatening towing if customers of other stores park on their lot.
Atlanta has some buses and some kind of local train (MARTA). But it's completely inadequate; it has to be - the structure of the urban layout does not work for alternative transportation.
Obviously the Ruling Classes fail here again. The US has no rational energy policy and no long term transportation policy.
Why does much of Europe do much better on these matters? Unemployment in Germany drops to a multiyear low this week. Germany is heavily unionized. Its workers - and people - have excellent benefits. Obviously we could learn something from the Germans.
One difference: pay at the top in Germany is held down by taxes and social pressure and pressure from true outside representation on their Supervisory Boards.
Germany doesn't seem to give financial Vikings a free rein to raid and loot companies, either.
The US Ruling Classes have the wrong culture and values to lead America to a new era of greatness. The professional and technocrat classes ruling from DC - aka hogs - simply want to get snouts in the trough while there is food remaining. Their attitude fits a memorable line from that great movie, "Hud", made by the lead character, Hud, a man with no principles: "Let's stick our biscuit in that gravy while it's still hot."
That's the motto of the DC Ruling Classes.
This coming Tuesday, the voters need to pull that gravy bowl away and send the Ruling Class - all of them - back to the countryside for some honest labor.
Word of the Day
"Rambunctious" - adjective [$10] N. American colloq., 19th century origin unknown.
Rambunctious means 1. uncontrollably exuberant; 2. unruly.
Sentence: My new puppy, Lucky Star, is rambunctious to the max!
Friday, October 29, 2010
Monday, October 25, 2010
Traveling
I am traveling to Georgia until Friday to inspect a few of my "places", hence the next post wil be Friday.
Fraternal Libertarianism Must Rule!!!
Fraternal Libertarianism Must Rule!!!
Monday Morning Ramblings
I wonder if executive pay will cut at those banks that have been caught making fundamental management errors. Many banks are paid very large sums every year to service mortgage loans. Yet they have been exposed to have lied and filed false statements in foreclosures. Their internal management systems have been geared to cost cutting and minimal "service", contrary to their legal obligations. Some bank management has lied about its procedures when first asked [e. g. Bank of America].
When management fails in its duties, its pay should be cut. Or they should be fired. Obviously high level management is at fault - trying to wring out excessive profits, they have caused the organization to fail in its duties. Top management at all those banks should see serious cuts in bonuses; perhaps even pay cuts. Running the company properly is their jobs. When they fail, why give them a bonus at all?
Social Revolution
I wonder if worldwide social revolution will get a spark? Certainly the pile of tinder, kindling and dry fuel grows daily. The ruling classes of the rich and powerful and their overpaid, cossetted public employee bureaucracies seem to be getting serious pushback as they try to impose the costs of financial and governmental restructuring on the common man & woman. This is not simply a US issue.
Billionaires the worldwide are using looted wealth to obtain more power and status. Here's a quote from a column in the weekend FT: "On the opening day of Frieze [the Pavilion of Art and Design covering Berkeley Square in London], when I could only spare an hour to scout, I spotted a couple of Russian oligarchs, three North American billionaires, Tom Ford, a sprinkling of other celebrities and a lot of runners, all circling the big-hitters. The money is guarded fiercely by a wall of advisers-as-human-shields, while the amount of hot air that ricochets around the art scene is staggering. It is everything to do with names and status and nothing to do with love of art, or so it seems. There’s a palpable desire to acquire the latest wunderkinder – although how these wunderkinder are determined is a curious process and seems to have little to do with artistic merit. I wonder whether the oligarchs even care where the “wunders” will be next year? There’s so much money swilling about that while the “clever art” (that which doubles in value) may remain on the wall, the majority can be consigned to a Moscow basement. The increasing global disparity of wealth is disconcerting to witness."
Aristotle and Pericles would spit.
And people wonder why I am well-prepared to civil strife and armageddon.
Word of the Day
"Despond" - verb, intransitive [$10] archaic alt.: dispond [$1000]
Despond means to become discouraged.
Sentence: The middle class private sector desponds under their grossly unfair treatment by the ruling classes and their bureacracies. Without a loyal middle class, modern society can collapse. How far can they be pushed?
When management fails in its duties, its pay should be cut. Or they should be fired. Obviously high level management is at fault - trying to wring out excessive profits, they have caused the organization to fail in its duties. Top management at all those banks should see serious cuts in bonuses; perhaps even pay cuts. Running the company properly is their jobs. When they fail, why give them a bonus at all?
Social Revolution
I wonder if worldwide social revolution will get a spark? Certainly the pile of tinder, kindling and dry fuel grows daily. The ruling classes of the rich and powerful and their overpaid, cossetted public employee bureaucracies seem to be getting serious pushback as they try to impose the costs of financial and governmental restructuring on the common man & woman. This is not simply a US issue.
Billionaires the worldwide are using looted wealth to obtain more power and status. Here's a quote from a column in the weekend FT: "On the opening day of Frieze [the Pavilion of Art and Design covering Berkeley Square in London], when I could only spare an hour to scout, I spotted a couple of Russian oligarchs, three North American billionaires, Tom Ford, a sprinkling of other celebrities and a lot of runners, all circling the big-hitters. The money is guarded fiercely by a wall of advisers-as-human-shields, while the amount of hot air that ricochets around the art scene is staggering. It is everything to do with names and status and nothing to do with love of art, or so it seems. There’s a palpable desire to acquire the latest wunderkinder – although how these wunderkinder are determined is a curious process and seems to have little to do with artistic merit. I wonder whether the oligarchs even care where the “wunders” will be next year? There’s so much money swilling about that while the “clever art” (that which doubles in value) may remain on the wall, the majority can be consigned to a Moscow basement. The increasing global disparity of wealth is disconcerting to witness."
Aristotle and Pericles would spit.
And people wonder why I am well-prepared to civil strife and armageddon.
Word of the Day
"Despond" - verb, intransitive [$10] archaic alt.: dispond [$1000]
Despond means to become discouraged.
Sentence: The middle class private sector desponds under their grossly unfair treatment by the ruling classes and their bureacracies. Without a loyal middle class, modern society can collapse. How far can they be pushed?
Friday, October 22, 2010
TGIF ... and a some thoughts
Attention Billionaires!
Shut up!
Sure, you're rich. And some of you made that money by building up a company. Or by running a hedge fund. Or by investing.
But that does NOT make you either an expert or even knowledgeable about anything beyond your own personal experience and work. You open your mouths with ga-ga eyes to the press, loving their adoration and attention, and bloviate about all sorts of subjects. Barry calls you and asks for advice, as he did Steve Jobs yesterday. He acts like he listens. The press glow - after all, you give them cachet.
But in reality you know zippo, zero, nothing about almost everything you blather about. A first line manager knows more. A ground level worker knows more. A sole proprietor knows more. You've been cossetted for years by a cadre of aides doing your bidding. Do you even write your own checks? Fill out your tax return? Take you car to be serviced? Know a friend having a run of bad luck? Personally know anyone who has suffered in this recession (caused by the Street and hedge funds)?
Nope.
You know nothing. And you make that obvious with your advice that you proffer too readily.
Socrates said, paraphrasing, that if you don't know what you don't know, you are ignorant.
Someone else said, it's better to be quiet than open your mouth and let people know you're a fool.
Billionaires: Shut Up!
We don't care about you're stupid, foolish ideas or beliefs. Go do something and help the poor directly, or hire some people for useful work, or send some kids to college without huge loan debts. Act, don't talk.
Word of the Day
"Disyllable" - noun [$10] also 'dissyllable', Prosody
Disyllable means a word or metrical foot of two syllables.
Sentence: "Shut Up" is a written and spoken disyllable, being written as two one-syllable words, spoken for emphasis with word distinction as "Shut ... up!", or shot out with force as the two syllable utterance - "shuddup"! In all three usages, it applies to all billionaires all the time.
Shut up!
Sure, you're rich. And some of you made that money by building up a company. Or by running a hedge fund. Or by investing.
But that does NOT make you either an expert or even knowledgeable about anything beyond your own personal experience and work. You open your mouths with ga-ga eyes to the press, loving their adoration and attention, and bloviate about all sorts of subjects. Barry calls you and asks for advice, as he did Steve Jobs yesterday. He acts like he listens. The press glow - after all, you give them cachet.
But in reality you know zippo, zero, nothing about almost everything you blather about. A first line manager knows more. A ground level worker knows more. A sole proprietor knows more. You've been cossetted for years by a cadre of aides doing your bidding. Do you even write your own checks? Fill out your tax return? Take you car to be serviced? Know a friend having a run of bad luck? Personally know anyone who has suffered in this recession (caused by the Street and hedge funds)?
Nope.
You know nothing. And you make that obvious with your advice that you proffer too readily.
Socrates said, paraphrasing, that if you don't know what you don't know, you are ignorant.
Someone else said, it's better to be quiet than open your mouth and let people know you're a fool.
Billionaires: Shut Up!
We don't care about you're stupid, foolish ideas or beliefs. Go do something and help the poor directly, or hire some people for useful work, or send some kids to college without huge loan debts. Act, don't talk.
Word of the Day
"Disyllable" - noun [$10] also 'dissyllable', Prosody
Disyllable means a word or metrical foot of two syllables.
Sentence: "Shut Up" is a written and spoken disyllable, being written as two one-syllable words, spoken for emphasis with word distinction as "Shut ... up!", or shot out with force as the two syllable utterance - "shuddup"! In all three usages, it applies to all billionaires all the time.
Thursday, October 21, 2010
Make Them Pay
The most ridiculous idea I've seen recently is the one floating around to give the corporations a tax holiday on their accumulated overseas earnings. Here's the main facts: A company creates an overseas subsidiary to do business in other countries. It makes money and pays taxes wherever it operates, such as in Europe or Asia. The company also takes an accounting charge to US earnings for the taxes due to the US, but the actual payment is deferred until the cash is brought back to the US. The company receives a credit on its US taxes for the foreign taxes paid on that income - thus NO double taxation.
Now they want to get out of this tax liability - one already booked and owed. The overseas countries got their taxes, but the US - the home country which provides them existence - would not. That is utterly ridiculous.
Example: Cisco Systems with its CEO, John ("JohnBoy") Chambers. He co-authored an op-ed in the WSJ yesterday asking for this tax break. His co-author was president of Oracle. Both of them make millions of $ a year, but want more.
"One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.
"But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here."
This article and the entire argument is first class sophistry. The companies have ALREADY booked the taxes they OWE to the US. There is no "penalty" - the tax is owed.
In the first place, the only money the company cannot reinvest is the money they OWE to the US government. The rest of the money - up to 65% - can be reinvested. Second, they already OWE that money and have reported that liability to their shareholders. Third, nothing makes them actually invest that money - they can use it for executive salaries or dividends or whatever. Claiming this is a job issue is a total LIE. US interest rates are extremely low. The companies can easily finance new investment for jobs with long term bonds. They are simply lying when they say this tax break is needed.
All JohnBoy and his clique want is another free ride to get more executive pay via stock options and other massive pay packages.
Here's a better idea: tax the entire worldwide earnings NOW. Let's collect this long overdue debt. Close this overseas earnings loophole forever.
Use the money to pay down US debt.
Word of the Day
"Coxcomb" - noun [$10]
Coxcomb means an ostentatiously conceited man, a dandy.
Sentence: Corporate coxcombs seem to think the world revolves around them, that they are Dukes or Princes. It's time to bring them down to learn about the common man & woman. Make them pay.
Now they want to get out of this tax liability - one already booked and owed. The overseas countries got their taxes, but the US - the home country which provides them existence - would not. That is utterly ridiculous.
Example: Cisco Systems with its CEO, John ("JohnBoy") Chambers. He co-authored an op-ed in the WSJ yesterday asking for this tax break. His co-author was president of Oracle. Both of them make millions of $ a year, but want more.
"One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.
"But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here."
This article and the entire argument is first class sophistry. The companies have ALREADY booked the taxes they OWE to the US. There is no "penalty" - the tax is owed.
In the first place, the only money the company cannot reinvest is the money they OWE to the US government. The rest of the money - up to 65% - can be reinvested. Second, they already OWE that money and have reported that liability to their shareholders. Third, nothing makes them actually invest that money - they can use it for executive salaries or dividends or whatever. Claiming this is a job issue is a total LIE. US interest rates are extremely low. The companies can easily finance new investment for jobs with long term bonds. They are simply lying when they say this tax break is needed.
All JohnBoy and his clique want is another free ride to get more executive pay via stock options and other massive pay packages.
Here's a better idea: tax the entire worldwide earnings NOW. Let's collect this long overdue debt. Close this overseas earnings loophole forever.
Use the money to pay down US debt.
Word of the Day
"Coxcomb" - noun [$10]
Coxcomb means an ostentatiously conceited man, a dandy.
Sentence: Corporate coxcombs seem to think the world revolves around them, that they are Dukes or Princes. It's time to bring them down to learn about the common man & woman. Make them pay.
Wednesday, October 20, 2010
Flaws of Pure Libertarianism. III.
Libertarians and the Right love to point out the historical failures of Socialism. And they are correct in doing so. Socialism and its pure form, Communism [aka Marxism], are connected to many of the worst genocides and crimes of the 20th century. The analysis of Friedrich Hayek showed that this was a great risk of those ideologies: the ruthless take over and ... do ruthless acts. But should we blame the ideology for the acts of its corruptors?
Marxist apologists say no, the system was never tried properly and people like Stalin, Hitler, Mussolini and Mao were independent evil leaders. They say the ideology is not responsible.
What is an ideology? Alvin Gouldner in his masterly work, The Dialectic of Ideology and Technology [a very hard read - I'm about 1/3 way thru], shows that ideologies arose from the ashes of the old regimes as respect for traditions of religion and aristocracy collapsed. Assessing "ideology" from a sociological perspective, he shows that an ideology is a rational system that connects the ideas to the world and gives people a basis for collective action. An ideology is a social glue to help them stick together to "change the world".
Without the ideology, the collective action cannot occur; the movement will quickly collapse as its participants squabble over details. The worldview of the ideology is crucial. Seen this way, there is no other conclusion but that the ideology of Marxism IS partly responsible for the evil crimes of its implementors. The ideology of Marxism - and Socialism in its pure form - is simply wrong and unstable. The ideology must bear this burden of guilt.
Let's look now at the common form of pure libertarianism. Where do its proponents proudly point to its successful implementation?
Chile. The Chicago School loves to say how its libertarian economics saved that nation and created its prosperity. Other nations in the southern part of South America also implemented the Chicago School's system in the decades of the 1970s and early 1980s.
Murders of thousands of persons followed. This is rather well documented. Ruthless leaders did those killings. Yet those leader groups [Pinochet, etc.] were using the libertarian ideology to help hold their followers together - they followed the Chicago School's economics. Thus the same standard and analysis that correctly condemns Marxism must also condemn libertarianism. It's a flawed ideology. Ruthless persons take over - or implement it - and do ... ruthless actions.
How can a libertarian argue with this? Friedrich Hayek would be his hero - his idol. Yet the Hayek analysis and the facts confirm that Libertarianism is unstable and can lead to great harm to people. It doesn't work, it's flawed and should be rejected as a political economic system. It should join Marxism on the dustbin of history.
Aristotle would see the beauty of this symmetry [ref.: Nichomachean Ethics]. He saw systems, concepts and values as having a continuum between two extremes, both of which were sub-optimal or bad. A middle ground was an optimum - that's where true virtue lay. In this case, that optimum is Fraternal Libertarianism, which lies midway between socialism and libertarianism.
Word of the Day
"Ferity" - noun [$1000] used in the essay, "Walking" by Thoreau.
Ferity means 1.a. the state or quality of being wild or savage, brutishness, wildness; hence ferocitt; b. Of a plant, etc.: wildness, uncultivated condition; 2. savage or barbarous condition, a form of this; 3. barbarity, barbarous or savage cruelty or inhumanity.
Sentence: Both Marxism and Libertarianism can unleash frightful ferity; the ruthless can achieve power and a free rein in both. Both ideologies are deeply flawed.
Marxist apologists say no, the system was never tried properly and people like Stalin, Hitler, Mussolini and Mao were independent evil leaders. They say the ideology is not responsible.
What is an ideology? Alvin Gouldner in his masterly work, The Dialectic of Ideology and Technology [a very hard read - I'm about 1/3 way thru], shows that ideologies arose from the ashes of the old regimes as respect for traditions of religion and aristocracy collapsed. Assessing "ideology" from a sociological perspective, he shows that an ideology is a rational system that connects the ideas to the world and gives people a basis for collective action. An ideology is a social glue to help them stick together to "change the world".
Without the ideology, the collective action cannot occur; the movement will quickly collapse as its participants squabble over details. The worldview of the ideology is crucial. Seen this way, there is no other conclusion but that the ideology of Marxism IS partly responsible for the evil crimes of its implementors. The ideology of Marxism - and Socialism in its pure form - is simply wrong and unstable. The ideology must bear this burden of guilt.
Let's look now at the common form of pure libertarianism. Where do its proponents proudly point to its successful implementation?
Chile. The Chicago School loves to say how its libertarian economics saved that nation and created its prosperity. Other nations in the southern part of South America also implemented the Chicago School's system in the decades of the 1970s and early 1980s.
Murders of thousands of persons followed. This is rather well documented. Ruthless leaders did those killings. Yet those leader groups [Pinochet, etc.] were using the libertarian ideology to help hold their followers together - they followed the Chicago School's economics. Thus the same standard and analysis that correctly condemns Marxism must also condemn libertarianism. It's a flawed ideology. Ruthless persons take over - or implement it - and do ... ruthless actions.
How can a libertarian argue with this? Friedrich Hayek would be his hero - his idol. Yet the Hayek analysis and the facts confirm that Libertarianism is unstable and can lead to great harm to people. It doesn't work, it's flawed and should be rejected as a political economic system. It should join Marxism on the dustbin of history.
Aristotle would see the beauty of this symmetry [ref.: Nichomachean Ethics]. He saw systems, concepts and values as having a continuum between two extremes, both of which were sub-optimal or bad. A middle ground was an optimum - that's where true virtue lay. In this case, that optimum is Fraternal Libertarianism, which lies midway between socialism and libertarianism.
Word of the Day
"Ferity" - noun [$1000] used in the essay, "Walking" by Thoreau.
Ferity means 1.a. the state or quality of being wild or savage, brutishness, wildness; hence ferocitt; b. Of a plant, etc.: wildness, uncultivated condition; 2. savage or barbarous condition, a form of this; 3. barbarity, barbarous or savage cruelty or inhumanity.
Sentence: Both Marxism and Libertarianism can unleash frightful ferity; the ruthless can achieve power and a free rein in both. Both ideologies are deeply flawed.
Tuesday, October 19, 2010
Flaws of Pure Libertarianism. II.
A crucial test of any theory is whether it is stable under small perturbations - changes. A stable theory will have forces that cause the system to return to equilibrium after being perturbed. An unstable theory will blow up.
Is pure libertarianism stable as a theory of the economy of a closed system? Let's analyze it.
What would cause a perturbation? This is easy - there are two sources. First, the world contains a population with a broad distribution over many, many dimensions: skills, strength, knowledge, geography, etc. second, there is luck. The luck of unknowingly happening to grow up onto top of a huge oil reserve, the luck of being a few days earlier in an invention and thus obtain the patent, the luck of being borne to royalty or wealth, the luck of being picked from a pool of dozens of seemingly and objectively equal applicants for a good job or school, on and on ...
Assume a person - or small group - has a economic advantage over others and implements that advantage to gain wealth: more resources, etc. That person can then use that, invest it and get more. And more. And more. And on and one infinitely. Barring bad "luck" or stupidity in investing, that person or group can accumulate such wealth as to become a force in the political sector. Then that person/group can use the governmental sector to lock in its wealth and power, eliminate competitors and protect its wealth from outsiders.
Don't say this does not or cannot happen. The examples of persons of great wealth buying seats in the US Senate are legion. [John Heinz, Rockefeller from WV, Maria Cantwell, etc.). The US Robber Barons bought entire state legislatures.
What forces exist in pure libertarianism to help prevent this - the creation of a new aristocracy and Ruling Class? The libertarian might say, "competition". Hmmm ...
Does that work?
It could ... BUT the government prevents hardball competition.
For example, an inventor creates a new product and gets a patent. A competitor could copy that idea-invention and sell it for less, but the GOVERNMENT protects the inventor-patentholder by punishing the copycat. Same for copyright protection (which protects computer software), same for natural resources. Who do you think protects that gold mine from others coming in to mine the gold? The government's police force. Government creates "property" and protects PROPERTY RIGHTS from squatters, from nonviolent thieves, from copycats, etc. Notice that none of this "competition" involves violence.
And theories of Pure Libertarianism seem to justify government only to prevent violence. [Cf. Nozick, in Anarchy, State and Utopia] But property rights and contract rights are a creation of GOVERNMENT and are protected by GOVERNMENT.
A truly Pure Libertarianism would have no governmentally protected property rights; such a system would have forces to prevent a new aristocracy - true, pure competition by substitution, copying or simple squatting & nonviolence takings. After all, unless you yourself protect something, it's not yours in a Pure Libertarian world, is it?
Thus we see that while truly pure - ultra, capital "P" - Pure Libertarianism does have forces to make that system stable, the type of small "p", "pure libertarianism" contemplated by almost all economic theorists (including the vaunted Chicago School) requires a powerful government to create and protect property. And enforce contracts. This government nullifies the forces of competition that would make such a system stable. The common system of pure libertarianism is unstable and in a self-contradictory manner uses governmental power to create fertile grounds for powerful, wealthy Ruling Classes and new aristocracies.
QED.
19th century America is an obvious example. Russia in the 1990s is another. And the creation of feudalism in Europe around the 9th century is another.
Notice the examples are the same as I used in yesterday's analysis of pure libertarianism under the Hayek criticism. This is no accident. Today provided a microscopic, small scale analysis; the Hayek criticism is a broad, macroscopic formulation of the same forces.
Also note that Fraternal Libertarianism does NOT fail under perturbation: the regulations of the wealthy and powerful prevent them from becoming a new Ruling Class and aristocracy with hard wall limits on their wealth and power.
Fraternal Libertarianism is stable and a viable political-economic system. Libertarianism is not.
Actions
Krypto wants me to sell some US stocks. This is a weak signal, but since the S&P 500 is nearing my target for the year end (1200), I will comply.
Word of the Day
"Soporific" - adjective & noun [$10]
Soporific means (adjective) tending to produce sleep; (noun) a soporific drug or influence.
Sentence: A Philistine or member of the Booboise might think today's post is soporific, but the rise of the Tea Parties in US political battles makes understanding the ideology of libertarianism crucially important to see how they might evolve ... or devolve.
Is pure libertarianism stable as a theory of the economy of a closed system? Let's analyze it.
What would cause a perturbation? This is easy - there are two sources. First, the world contains a population with a broad distribution over many, many dimensions: skills, strength, knowledge, geography, etc. second, there is luck. The luck of unknowingly happening to grow up onto top of a huge oil reserve, the luck of being a few days earlier in an invention and thus obtain the patent, the luck of being borne to royalty or wealth, the luck of being picked from a pool of dozens of seemingly and objectively equal applicants for a good job or school, on and on ...
Assume a person - or small group - has a economic advantage over others and implements that advantage to gain wealth: more resources, etc. That person can then use that, invest it and get more. And more. And more. And on and one infinitely. Barring bad "luck" or stupidity in investing, that person or group can accumulate such wealth as to become a force in the political sector. Then that person/group can use the governmental sector to lock in its wealth and power, eliminate competitors and protect its wealth from outsiders.
Don't say this does not or cannot happen. The examples of persons of great wealth buying seats in the US Senate are legion. [John Heinz, Rockefeller from WV, Maria Cantwell, etc.). The US Robber Barons bought entire state legislatures.
What forces exist in pure libertarianism to help prevent this - the creation of a new aristocracy and Ruling Class? The libertarian might say, "competition". Hmmm ...
Does that work?
It could ... BUT the government prevents hardball competition.
For example, an inventor creates a new product and gets a patent. A competitor could copy that idea-invention and sell it for less, but the GOVERNMENT protects the inventor-patentholder by punishing the copycat. Same for copyright protection (which protects computer software), same for natural resources. Who do you think protects that gold mine from others coming in to mine the gold? The government's police force. Government creates "property" and protects PROPERTY RIGHTS from squatters, from nonviolent thieves, from copycats, etc. Notice that none of this "competition" involves violence.
And theories of Pure Libertarianism seem to justify government only to prevent violence. [Cf. Nozick, in Anarchy, State and Utopia] But property rights and contract rights are a creation of GOVERNMENT and are protected by GOVERNMENT.
A truly Pure Libertarianism would have no governmentally protected property rights; such a system would have forces to prevent a new aristocracy - true, pure competition by substitution, copying or simple squatting & nonviolence takings. After all, unless you yourself protect something, it's not yours in a Pure Libertarian world, is it?
Thus we see that while truly pure - ultra, capital "P" - Pure Libertarianism does have forces to make that system stable, the type of small "p", "pure libertarianism" contemplated by almost all economic theorists (including the vaunted Chicago School) requires a powerful government to create and protect property. And enforce contracts. This government nullifies the forces of competition that would make such a system stable. The common system of pure libertarianism is unstable and in a self-contradictory manner uses governmental power to create fertile grounds for powerful, wealthy Ruling Classes and new aristocracies.
QED.
19th century America is an obvious example. Russia in the 1990s is another. And the creation of feudalism in Europe around the 9th century is another.
Notice the examples are the same as I used in yesterday's analysis of pure libertarianism under the Hayek criticism. This is no accident. Today provided a microscopic, small scale analysis; the Hayek criticism is a broad, macroscopic formulation of the same forces.
Also note that Fraternal Libertarianism does NOT fail under perturbation: the regulations of the wealthy and powerful prevent them from becoming a new Ruling Class and aristocracy with hard wall limits on their wealth and power.
Fraternal Libertarianism is stable and a viable political-economic system. Libertarianism is not.
Actions
Krypto wants me to sell some US stocks. This is a weak signal, but since the S&P 500 is nearing my target for the year end (1200), I will comply.
Word of the Day
"Soporific" - adjective & noun [$10]
Soporific means (adjective) tending to produce sleep; (noun) a soporific drug or influence.
Sentence: A Philistine or member of the Booboise might think today's post is soporific, but the rise of the Tea Parties in US political battles makes understanding the ideology of libertarianism crucially important to see how they might evolve ... or devolve.
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