Policy for accommodating the dirtbags.
One of the healthier debates that took place during the macroeconomics group session revolved around the role of government – the good, the bad, the ugly – and the uglier. What is government for? What is it not for? Who stands to gain, to lose, from government with more authority? With less authority? Libertarianism? Ron Paul? Saudi Arabia? Wall Street “banksters?” All that and more below.
Please add your comments at the bottom of the page, and enjoy!
[Editor’s note: Posts have been edited for punctuation, spelling, grammar and length.]
littleguy123: Gabe, I'll keep thing shorter this time to make it a little easier to focus.
First, I think your lack of faith in human nature reinforces my argument, rather than yours. If neither government nor business is either honest or trustworthy, that makes the choice of which should be entrusted with important social, industrial, economic functions very clear.
There is government, which has both a formal duty to serve the interests of the people, and formal accountability (via elections). Then there is business, which not only has no duty or accountability to the general population, but whose goals are diametrically opposed to those of the general population.
Specifically, all employment is exploitation - by definition. If businesses couldn't make any profit off of the backs of their workers, there wouldn't be a business. The goal of business/employers is to maximize the level of exploitation, while the goal of employees is to minimize exploitation (i.e. to receive as large a chuck as possible of the profits generated by that labor). The more power delegated/ceded to business, the greater the overall level of exploitation.
Which leads into a point you made in your reply: "You haven't established how under-reporting unemployment numbers accomplishes this goal [creating/maintaining a glut of workers]."
Sorry, you're right, of course. Here's how it works. The population would simply not tolerate a government/economy which openly tolerated double-digit unemployment. However, if you can deceive the population into believing that unemployment is only half (or less than half) of the actual rate, then the evidence shows that the population will remain mollified - despite the empirical observations right in front of their own eyes (massive numbers of homeless people) that the numbers they are being fed have no connection with reality.
While I'm not nearly naive enough to believe the views that you and Matt impute to me - that I think we can have a government of ALL honest people, or to expect it to act honestly all the time - this is simply an issue of the lesser of evils. As Rob knows, my solution to making government SOMEWHAT honest is to raise the caliber of VOTERS, themselves.
If you allow idiots to vote, it should be no surprise you get cynical governments who rule through deceit and seek to align themselves with business/the wealthy as the funding source to retain power. However, if you make the move to have a somewhat informed electorate - you BEGIN to create accountability in the system.
While you can argue that even this vision of reform is idealistic and unattainable, it is still far better than the alternative: Ceding all power to corporations, and commencing an irresistible move to neo-feudalism - where corporate barons have reduced all the serfs to a subsistence-level existence, too dependent on their masters to ever seek economic / political freedom.
gabrielgray: I can see how you might think I've lost my faith in human nature. But I protest; my faith in human nature is stronger than ever. Human nature is inherently self-interested, and I have great faith that it will remain so. That being the case, let's harness that self-interest to the most efficient creation of wealth (here I mean fish tacos and well-designed surf boards) and the broadest extensions of liberty.
I believe human nature has no history. Languages change, cultures change, mores and values change, but human nature remains the same generation after generation. That is not to say that societies can't improve morally, or deteriorate spiritually, over time. Both of those things happen frequently in history. It's just that the raw material (the propensities and frailties of being human) remains stable through the millenia. This is sometimes expressed as "People suck" but I object to that characterization strongly. Yes, humans disappoint, but humans also amaze. And some humans are amazingly disappointing.
"If neither government nor business is either honest or trustworthy, that makes the choice of which should be entrusted with important social, industrial, economic functions very clear."
Yes, the answer is clear: Neither. I don't trust businessmen, but then, I don't have to. I have a choice to reject the companies and products I distrust. I mistrust government even more, but I have no choice; government has a monopoly.
The functions you mention should be left to the people to define, through the proper functioning of an honest, open marketplace.
The trick is to get people where they are most likely to be productive and fulfill their potential to add to the quality of their own lives and those of the people with whom they interact. That doesn't happen in stratified or rigidly controlled societies – not enough social mobility or degrees of economic freedom. For this reason, we have to maximize liberty.
And here's where your view of government crashes into the ditch: It is not possible to maximize individual liberty without taking controls and choices away from government. Likewise, it's impossible to expand government without shrinking individual liberty. Repeat that statement over until you see it clearly: The expansion of government is, by definition, transferring the right to choose and control to ruling elites, and away from the individual. Your willingness to give control to government is your willingness to let the government make decisions for you. The more areas that fall under government purview, the less liberty we have.
You haven't addressed the fact that government is inherently inefficient and wasteful, and thus impoverishing. You say we must prevent the banksters from reducing us to serfdom (and I agree with that) while overlooking the fact that we are already in serfdom to government. Government has already grown to the point of confiscating wealth, crippling productivity and restricting freedoms to a degree no one would have believed 30 years ago. I maintain that government is at least as corrupt as the bankers and multinational corporations, while being much more restrictive of my freedoms. And as we've agreed, they work together in a cozy cabal. How can you trust a government that cozies up to the con men? Where will you find a government that doesn't?
Put another way, I may think Rex Tillerson's 8% profit margin excessive and avoid the Exxon stations. But if I think the government's 40% payroll taxes excessive, what choice do I have? Pay up or go to jail.
“‘You haven't established how under-reporting unemployment numbers accomplishes this goal [creating/maintaining a glut of workers].’”
Here you misunderstood me. The goal we were referring to was to keep the people living in fear of losing their jobs. In fact, the population does not remain mollified. No one believes the official unemployment stats in the U.S. and the natives are getting restless indeed.
"My solution to making government SOMEWHAT honest is to raise the caliber of VOTERS, themselves."
Here you hit the nail on the head. But be forewarned that it's easier said than done. And your religion of big government works against the goal; the more powerful and all-encompassing government gets, the less people feel the need to do their homework, keep their own houses in order, understand economics, governance and monetary policy, and behave with intelligence or take responsibility for themselves. This point is beyond argument: As Western governments have grown exponentially in power and control over my lifetime, their populations have indisputably sunk deeper and deeper into immorality, irresponsibility, and inability to manage their own lives.
You're trying to have it both ways; sorry, it doesn't work that way. You can have a strong, moral, vigilant and free populace, or you can have a powerful controlling government. You cannot have both at the same time.
littleguy123: Gabe, I think we've managed to boil-down our differences to a relatively narrow chasm.
If you weren't being overly glib, then with respect to human nature the first rule is "look after #1", and the second rule is to never forget the first rule. I'm a little more optimistic, in that I think people are generally decent, but perpetually susceptible to temptation. In other words, given a little "encouragement" and "oversight" a society can function at a relatively amicable level.
The other major difference is our “religion” - i.e., where each of us is willing to place our faith. Your pillar is "the proper functioning of an honest, open marketplace" and if we can have that, the rest of the mess we call society would at least be livable.
A HUGE part of my education about markets over the last couple of years is discovering exactly how and why our "free markets" are such a dirty, manipulated game - where the most notorious cheats are generally those RUNNING the system. It hasn't helped that I've been lately bombarded with more material in this area through Stockhouse and other sources (lol).
I suppose I wouldn't reach a comfortable level of trust until all those people were chained, and generally muzzled, with their every word recorded, and their every movement videotaped. Put another way, I see your utopia as a thankless/hopeless task - akin to cleaning the "basement" of an outhouse (while in use).
I, on the other hand, choose to put my (NOT blind?) faith in government - with the qualification that I did a piece on my blog not too long ago that our current version of "democracy" is ready for the scrap-heap, and offered some suggestions on how we could improve on the current, defective model.
"Garbage in, garbage out." If we don't/can't find a way to upgrade and elevate our process for creating and choosing governments, then we might as well "simplify" the model, and simply go back to the era of Kings and Queens.
I don't think that will end our debate, but it will probably make it easy for BOTH of us to "agree to disagree."
gabrielgray: Glib? Who, me?
In reality, everything is a lot more complicated than that, but we're dealing with abstractions so we generalize. There are some really good reliable people, including in government, and there are some thoroughly rotten people. Unfortunately, the present age and the present system are rather more accommodating to the dirtbags.
This is maybe a glass half-empty/ half-full sort of dispute, representing the dissent between an optimist (that would be you) and a pessimistic realist (that would be me) who are looking at the same thing through their differing filters.
A pessimist is just an optimist grown old. =) I would almost agree with your view of humanity, but I would rearrange it just a tad. I think I would say that people are inclined to give in to temptation, but with a proclivity to behave decently, if it doesn't cost them too much. How much they give in to temptation and how often they choose the route of behaving decently is to a large extent a function of the atmosphere they inhabit, because people are susceptible to the herd influence, "peer pressure," the desire to conform - much more than most people realize.
A friend just came back from Dallas, where she was at a mall when a woman was shot in the face while she waited for her daughter to come out of a movie theater. A street thug just wanted her truck; his MO for getting it was to shoot her in the face (through the window) and then drag her out and take over the truck. Instead she drove herself to a nearby store and got help. He ran away.
People will spend endless hours in circular arguments about root causes and never get anywhere. But in a situation like that, you can't get too far talking about human goodness. It's a philosophical concept that has no relevance. Without a healthy cultural environment to nurture the positive aspects of human nature, you will always end up with brutality and savagery.
If you spend all your life in a peaceful, generally well-behaved corner of the world, it's not strange that you have an optimistic outlook on humanity. I wonder if you've traveled much?
I've been in some places and seen some things that tend to shake one's confidence in inherent human goodness. I don't have time to tell the stories here, but on a couple of trips to Haiti I witnessed things that were truly horrifying. Spending a few days in the wrong precincts of Houston or Philly might be equally disillusioning.
In the end, if human nature were reliably beneficent and fair-minded, we could do with a lot less government. As things stand, Matt and I may have to live with more than we would like. And, of course, you may have to live with less than you'd like. Such is life.
StilesBC: A little over three years ago, you could have found me making the same arguments as littleguy123. Almost verbatim. If you look hard enough, it might even be found somewhere in cyberspace. :)
I've tried to pinpoint when the seismic shift in my thinking occurred, but hadn't been able to until now. I always thought it must have happened gradually. It happened while I was touring South East Asia. I had been reading a lot of Orwell prior to the trip itself. And once I arrived in Malaysia, I began reading a lot of Asian history. It sickened me. Dynasty after dynasty, society after society, originally good, but eventually turning evil. All because of the lust for more power. The storyline was almost identical every time:
- rebellion overthrows corrupt government
- forty years of peace and prosperity ensue
- some sort of a shock occurs (economic or natural disaster)
- blame is laid on foreigners and war ensues
- in the name of war, government grows
- war ends
- society splits itself on ideological grounds. The people that lost everything in war question government on it's authority
- these people are persecuted by government, not wanting to admit its wrongdoing for fear of reprehension
- civil war and rebellion
Wash, rinse, and repeat every 90-100 years.
For me, the tipping point was Cambodia. The things I saw there sent me into a tailspin of depression. It was everything I had read in the history books, only this had happened in my lifetime. We are taught in school that history is terrible, but will never be allowed to be repeated (the examples for me were WWI & II) because we have evolved. "People back then didn't even have televisions!" Seeing that falsehood with my own eyes was required to make me believe that it is possible.
For it to be prevented, we need to be eternally skeptical about governments’ motives. And through law, strictly limit their size.
This group discussion was conducted with members of the Stockhouse community.
Next: We present some final thoughts from the June, 2008, Macroeconomics group to wind up the series.
Archive
Investor groups launch with macroeconomics discussion
Inflation and money supply, part I: Treasuries crowd bonds
Inflation and money supply, part II: Buyer’s remorse
Inflation and money supply, part III: Indeflationists unite
Inflation and money supply, part IV: Measuring money
Inflation and money supply, part V: Derivative “Death Star”
Oil supply, oil demand: Is oil in a bubble?
Housing crisis redux: Where do we go from here?
U.S. dollar devaluation not the only currency bet in town
Government and liberty, part I: Size does matter
Government and liberty, part II: A utopian fantasy
Spin-offs
Inflation debate stirs investors
Oil speculation theory taken to the woodshed
Oil prices: A critique
