In Which I Rescue Ferd From The Brink of Patchouli

by Frost on July 29, 2011

This is a guest post I wrote for In Mala Fide. Please read and comment on it here.

I don’t usually call people out when I disagree with them. Most are so blinded by some combination of misinformation, prejudice, political correctness, and stupidity that it’s just not worth the time and energy.

Exceptions are made however, for those I respect. Which is why I’d like to have an intervention for our esteemed host, and tempt him back from the precipice of pop-Marxist mushheaded-ness upon which he stands. Ferd, you’re smarter than the Liberal Arts C-students that are usually suckered in by it.

Specifically, I’d like to address this post.

It’s easy to look at the world today, and conclude that free-market capitalism is a failed system. Bailed-out Wall Street executives are paying themselves huge bonuses; massive, politically-connected companies are making record profits while dodging taxes and collecting government bailouts and loans; the manufacturing base of the American economy (and the middle class that it supports) is disappearing.

More viscerally, our daily experiences of life in the United States suggest that the free market system has let us down. Good jobs are hard to come by, prices are rising, and every day’s newspaper brings fresh news of looming catastrophe. If these are the fruits of capitalism, say Ferd and others, screw it.

But it is incorrect and short-sighted to condemn the institutions of free markets and private property, just because the society we live in is: 1) Partially capitalistic, and 2) Shite.

I’ll start by admitting a few points on which I believe we agree.

  • The American financial system is a largely criminal enterprise whose ultimate purpose is to lubricate the expropriation of middle class wealth for a small elite.
  • A large fraction of the efforts of the “private sector” are expended towards transferring wealth, rather than creating it.
  • The US economy is failing to provide opportunities for Americans to enjoy a decent standard of living.

If you don’t think that the United States is letting down its non-elite citizens, check out the Reddit thread referenced in this post. Even in a sample that’s almost certainly younger, smarter, more educated, and more tech-savvy than average, people are struggling. Welcome to the 21st century. Hope you’re wearing a helmet.

The libertarian – not a label I choose to wear on my own shirt, but a philosophy in which I find much to admire – would lay the blame for our current malaise at the feet of excessive government interference in the market economy, such as our bloated welfare state, libraries of excessive regulation, and high taxes. Get the government out of people’s lives, say libertarians, and let the free market cure what ails us.

Ferd has a different idea – highly progressive taxes and a guaranteed minimum income, as a moral and economic imperative.

A guaranteed minimum income, funded by radically progressive income and wealth taxes, and replacing all other existing government entitlement programs, is the only way to keep the economy from collapsing. It will also be more efficient and more fair than the existing welfare state, which is why that well-known Marxist radical Milton Friedman was a proponent of it. Production without consumption is as worthless as a mouth without an anus, and with automation destroying more jobs than are being created, options for maintaining balance are running out.

But hey, all you CONservatives and LIEbertarians can keep sucking billionaires’ dicks while screaming bloody murder about SOOOOOCCIALISM!!!!!!! at anyone who resists the rape of this country by the Wall Street banksters. Keep screaming and clutching your dog-eared, sticky-paged copy of Atlas Shrugged all the way up to when the angry mobs YOU helped impoverish show up at your front door. The welfare state is the price the rich must pay to keep from being lynched en masse by the people they’re fucking over. Revolution insurance, as Xamuel put it. Open your wallet or dig your grave – it’s your choice.

The problem with this idea is that it’s too practical. Yes, a rational government could replace the current melange of entitlements with a single GMI. Milton Friedman, concerned as he was with feasible reforms, was a strong advocate for the GMI.

But there is one big problem with practical right-wing reforms to the US government today: they aren’t possible. If someone sneaks one by, rest assured it will be revoked within the decade. The monotonic trend for the past century has been towards greater anarchy and disorder, with only the occasional transient hiccup. I’m not interested in wasting my breath advocating for the next hiccup. I don’t think Ferdinand is either.

Instead, we need to look at policy questions from this perspective: if we had absolute power to enact whatever reforms we desired, what would we do? The goal is not to come up with ideas that might get passed in the next election cycle. It is to create a complete and compelling alternative to the status quo. The mainstream idea space is bland, unpersuasive, and unnecessarily mired in the narrow prejudices of the early 21st century. Having freed ourselves from those prejudices, we have the unique ability to create an alternative set of ideas, and win people over to them. But to do this successfully, we must also free ourselves from petty concerns of what is or is not possible in the current political environment, and focus on being absolutely, 100% correct.

So, here’s a question for Ferdinand and other advocates a Guaranteed Minimum Income: If you had unlimited power to govern this country as you desired, would you implement a GMI? If your answer is yes, then I will respectfully disagree, and we can have an intelligent conversation about a GMI’s merits and demerits. Personally, if I had the Ring of Fnargl, I would completely separate government from the task of redistribution. The poor can reach out to their families, friends, and voluntary charities. No one would starve. Giving men checks for doing nothing is the fastest way to destroy them, and a GMI would enable millions to squander their lives in drink, drugs, sloth, video games and Internet porn. Voluntary charities would focus firstly on ameliorating the lives of the deserving poor – i.e., the disabled, widowed, orphaned, etc – and secondly on eradicating the bad habits of the poor-by-choice, by requiring recipients to submit to conditions of sobriety, restraint and attempts to find work.

But the larger question is how can we – a small, mostly anonymous community of powerless dissidents – actually shape the future. I suggest that it’s by fleshing out the details and implementation of an optimal world, and rallying support around that flag. Comparatively few will sign up to smear lipstick on a pig.

I’d also like to call out the arguments in this post.

S: But [China’s] economy is growing and they make all of the stuff we buy. And the average Chinese saves more money than the average American.

F: Yeah, and unless someone BUYS that stuff, it’s useless. Who’s going to buy China’s stuff?

S: We DO! Almost everything you and I own was made in China.

F: Yeah, but you and I are civil servants with incomes in the mid-five figures. If you were to be fired tomorrow, would you keep buying stuff at the rate you do now?

S: No, I’d cut back.

F: Yes, you would, and so would most people. Now, the U.S. is in the middle of a recession with no end in sight, meaning that people will spend less on things they don’t need. The Chinese economy is dependent on us buying their stuff. What happens when we don’t do that anymore?

S: Can’t the Chinese export their stuff somewhere else?

F: Yeah, right. The U.S. is the third most populous country in the world, behind China and India. There isn’t another single nation that is both wealthy and large enough to keep them afloat.

S: What about buying their own products?

F: You mentioned before that the Chinese on average save more than Americans. You think they’re going to stop doing that to buy useless junk like we do? It’s our spendthrift ways that make it possible for them to save and save.

I’ll try and help Sally out with her case.

An economy is defined by what it creates. If Americans want to consume, we have two options: We can either produce what we want, or we can produce something others want, and trade for it. There is also option #3, which is to take it by force, but the US hasn’t turned a profit on a war in at least a century.

In the relationship between the United States and China (and, pretty much, the rest of the world) the latter produces things and the former consumes them, in exchange for little pieces of green paper.

In what sense can China be said to “depend” on the United States, when our role in this arrangement could be replaced with a gigantic toy, sneaker and electronic component bonfire?

If we disappeared tomorrow, China could just start throwing out all of the stuff they used to sell to us, and be no worse off. Or they could toss the shipping containers from the cargo ship decks steaming across the Pacific. Better yet, they could donate the goods to us as foreign aid – an idea which I suspect will sound much less ridiculous in a decade or so.

Most likely though, they would start exchanging the goods for those of other countries’, keeping it for themselves, or producing less and spending a little more time with their families. In short, they would become richer. Sooner or later, the rest of the world is going to figure out what we here at In Mala Fide already know: the American Empire is in her death throes. There will be no recovery. All of that outstanding debt will either be defaulted on or inflated away. Our trading partners will soon realize that they would rather make themselves richer, than continue supplying America with charitable donations.

The current situation seems like a pretty good deal for Americans though, doesn’t it? We print paper, they accept it in return for real goods. It seems like there’s an additional, missing piece of the picture, which often leads people to think that America’s role as a non-producing consumer is somehow essential to the world economy.

The reality is that America’s unique privilege of producing currency and debt as her number-one export is a result of history, not economics. Since WWII, when the US sat astride the world as its sole conqueror, she has been given the ultimate benefit of the doubt. American dollars are (still, briefly, for now) the official currency of the world. It is presumed that the US will never default on her debts, what with the End of History having already confirmed the everlasting supremacy of her system of government.

This is why Americans have been able to continue wallowing in McMansions, late-model cars, iPads, designer furniture, and every other luxury of modern life, despite huge numbers of idle workers, and the devotion of the best and brightest to unproductive fields such as law, finance, baby-sitting (aka teaching), public service, and academia. Americans have had sub-zero savings rates for some time now, but we’ve been drawing down our intangible civilizational capital for even longer.

One day soon, other countries will tire of taking our dollars and treasury bills, promises that we have no intention of keeping, for the goods that they’ve made with their sweat and toil. On that day, Americans will suffer a drastic and immediate collapse in their standard of living, and I guarantee – neither the Chinese nor anyone else will be banging our door down, begging us to help them “drive their economy” by resuming our gluttonous consumption.

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