Wednesday, November 24, 2010

China as the Borg

What is the relationship between economic or technological progress and political freedom? In a previous post that analyzed this question, I wrote:

In her dystopian novella, Anthem, Ayn Rand demonstrated her keen understanding of the relationship between technological progress and political freedom by setting a future collectivist society, not in an advanced mechanized utopia, but in a devolving, primitive slave pen. Rand would later prove in great detail that the pre-condition to man's happiness and prosperity is the freedom to think, produce, and trade. A society in which the state stifles the individual mind, erecting legal barriers to production, trade, and profit, is a society doomed to suffer the misery of privation and technological stagnation.
History could not offer more evidence to prove this point. The fact is that relatively free people enjoy remarkable upward progress in living standards while those living under dictatorship endure generation after generation of squalid degradation. In other words, political freedom, i.e., "freedom from government coercion," is the precondition of economic freedom which, in turn, leads to material progress. In reality, individual countries rarely if ever represent pure ideals of laissez faire capitalism or Orwellian level socialism. Most are a mixture of the two - a so-called "mixed economy" - in which the degree of economic progress is directly correlated to the degree of economic freedom.

Although this principle is theoretically and empirically true beyond question, it is fascinating how this principle appears to have been jettisoned by those who analyze developing economies where central planning is still a dominant political theme - particularly Asian economies. In fact, many seem to accept the exact opposite belief!
Recall the wave of fascination with "Japan Inc." that swept the West in the 1980's. Despite Japan's economic collapse, we are now being led to believe that "China Inc.", i.e., China's leviathan complex of central planning bureaucracies and state owned enterprises, are superior in their ability to lead a kind of collective economic juggernaut. Not coincidentally, this view of collectivism can be observed in popular culture. In the television series, Star Trek: The Next Generation, there was a collectivist alien race known as the Borg which traveled around in a space ship cube conquering and assimilating other races:
Also referred to as the "hive mind" or "collective consciousness", this is the term used to describe the group consciousness of the Borg civilization. Each Borg individual, or drone, is linked to the collective by a sophisticated subspace network that ensures each member is given constant supervision and guidance. The collective is broadcast over a subspace domain similar to that utilized by the transporter...
What is fascinating is that the writers of the show, like their economic counterparts today, regarded this collectivist system as efficacious - the Borg were portrayed as the most powerful race in the universe. In fact, as the article states: "the Borg have become a symbol in popular culture for any juggernaut against which 'resistance is futile'." In essence, for modern analysts, China Inc. is like the Borg against which economic resistance is futile.

This false view of collectivism is why I found
this interview with Vitaliy Katsenelson excellent. In 2009, I wrote about the emergence of a Chinese bubble, and Katsenelson provides some fresh insight into exactly why Chinese central planners will fail and why it will end in economic disaster. As he states:

So when we look at China, the conventional wisdom says that the government is very, very smart, and therefore they can do a very good job in steering the economy in the right way. Chinese government may have the best intentions, its leaders may have IQs of 250 each on a bad day, but it is impossible to centrally manage an economy of China’s size.
After a hundred years of central planning boom-bust debacles, you'd think economists would learn. Central planning collectivists are not the Borg. In fact - keeping with popular cultural references - they are closer in stature to the Wizard of Oz.

Tuesday, November 23, 2010

Government spending your money to attack you...

In 1960 about half of federal spending was for a legitimate function of government - defense. Now, only 14% is for defense, and half of all federal spending is for interest and social security/medicare. (source: Heritage Foundation). Oh, and just to add insult to injury, not only are we not spending money to defend ourselves, evidently, we may be spending money to attack ourselves! Some of your money may be going to fund the Ground Zero mosque since the developer has applied for federal grant money...



Monday, November 22, 2010

Reisman, Frezza vs. Madness

George Reisman has an excellent post on Harvard Professor N. Gregory Manikiw's claim that increasing taxes is reducing spending.

...the danger exists that Left and Right are about to unite to accomplish a colossal political fraud in the form of enormous tax increases sold to an unsuspecting public as reductions in government spending.

Bill Frezza on how the government is "Criminalizng the Act of Doing Business".

Successfully demonizing business, making it ripe for manipulation and plunder, takes a well planned effort sustained across multiple fronts.

Start with a broad cultural assault equating profits with theft. Follow up using the highest corporate tax rates in the developed world to confiscate and redistribute profits to favored constituents. Force companies to divert precious resources into satisfying complex and ever-changing regulations. Then inflict a cost that can't be passed along to customers or shareholders by criminalizing a broadening catalog of business practices. Make a big show of selective enforcement so that every senior executive goes to bed wondering, am I next?

Wednesday, November 17, 2010

What the Left Cannot Learn from the Election

In a previous post analyzing the tactics of modern liberals, I wrote:
Since they [the left] take a non-conceptual or non-objective approach, they must rely on faith or belief in the absence of evidence which necessitates appealing to others on the basis of non-cognitive factors such as emotion or mysticism. Consequently, the left must urge others to believe their ideas, not because they can prove that they are right, but because it feels good, or equivalently, because the opposing view scares them. Any rational scientist would be eager to stand up and demonstrate the validity of his theory by reference to the facts and the use of logic. Conversely, the intellectually bankrupt left hides from their opposition and offers nothing but slurs and appraisals of their emotions.
Later in that same post, I wrote:
When an individual rejects the efficacy of his own mind, like an animal, he must turn to a group for guidance, protection, and a sense of pseudo-self worth. The subjectivist left regards people, not as individuals, but as members of collectives whose identities are determined by the attributes of their group. Accordingly, they do not evaluate an idea in terms of truth or falsehood. That is too "simplistic." According to the left, people are conditioned by their circumstances, their "environment", or their race, socio-economic class, or gender. Therefore, it is not necessary to reason or offer a policy that is logically consistent with abstract principles pertaining to individual rights or the laws of economics. One must condition the opposition or "penetrate the message war" by finding some non-cognitive form of appeal, i.e., by offering warm and fuzzy platitudes or demonizing the opposition.

Accordingly, the left must view ideas as the arbitary products of warring mobs.
If I am right in this analysis, what would be the likely reaction by liberals to their blistering electoral defeat? Would the reaction imply some understanding that Americans are rejecting Obama's view of the role and function of government in our lives? Would the reaction imply some sense that their statist policies have not only proved to be economically disastrous but so antithetical to the founding principles of our nation that they have spawned a vast grass roots political movement aimed at restoring limited Constitutional government and removing them from power?

Of course not. To them, principles are irrelevant. There is no right or wrong, black or white. If one side has succeeded, it is only because they have been more effective at "penetrating the message wars,"i.e., psychologically conditioning the masses into accepting their propaganda through appeals to fear and our alleged innate bigotry. The theme of a recent 60 Minutes interview with Obama reveals exactly this approach:
After suffering a “shellacking” in the midterm elections, President Obama acknowledges what many have seen as his chief weakness – failing to sell the importance of several legislative milestones to the American people.

“I think that’s a fair argument. I think that, over the course of two years we were so busy and so focused on getting a bunch of stuff done that, we stopped paying attention to the fact that leadership isn’t just legislation. That it’s a matter of persuading people. And giving them confidence and bringing them together. And setting a tone,” Mr. Obama told 60 Minutes’ Steve Kroft in an exclusive interview set to air Sunday.

“Making an argument that people can understand,” Mr. Obama continued, “I think that we haven’t always been successful at that. And I take personal responsibility for that. And it’s something that I’ve got to examine carefully … as I go forward.”
Note that he is NOT taking responsibility for wreaking havoc on the American economy by exploding the size of government, demonizing businessmen, nationalizing major industries, and endangering the lives of all Americans by putting the Department of Motor Vehicles in charge of the nation's health care. Note that he is NOT taking responsibility for pissing away a trillion dollars on "clunkers" and turtle tunnels while debasing the dollar to such an extent that Zimbabwe is getting jealous. Note that he is NOT taking responsibility for traipsing around the world kowtowing to foreign leaders and apologizing for America while our emboldened enemies strengthen their arsenals and American soldiers die in the mountains of nowhere chasing tribal chieftains.

So what exactly is he taking responsibility for?

He IS taking responsibility for not "selling" us, i.e., for not properly conditioning the masses into accepting His goodness. You see, he now realizes that it's not enough to shove a dictatorship down people's throats - what he, in his infinite pragmatism, calls "getting things done" He needs to set a "tone" (appeal to our emotions) and "persuade" us to let Nancy Pelosi and Harry Reid manage our businesses and our health. Wait, persuade us by principles, logic, and facts? No, by instilling "confidence" and "bringing people together," i.e., by making people feel good and forging consensus.

Here is another fascinating example by way of this article that discusses Bobby Jindahl's new book and cites details related to his dealings with Obama during the oil spill:
[A]fter Obama instituted a moratorium on offshore drilling, Jindal recounts that the president dismissed his concerns about the economic impact of the ban.

“I understand you need to say all of this, I know you need to say this, that you are facing political pressure,” Jindal quotes Obama telling him. When the governor said he was concerned about people losing their jobs, he said the president cited national polls showing that people supported the ban.
Note that Obama's fundamental orientation is not to reality, i.e., the real economic impact of the ban. Rather, he dismisses Jindahl's concerns as if there could be no real economic impact and Jindahl is merely reciting these concerns as a form of political posturing. Obama cannot even imagine that his policy is actually wrong. Anyone who disagrees or expresses concern, like the Tea Party protesters in another context, can only be an uninformed ignoramus conditioned by Fox News. After all, a poll shows people support his plan, therefore, there can not be any real negative impacts.

And what about Pelosi? To what does she attribute the losses? According to this article "the California Democrat attributes the loss of at least 60 seats to high unemployment and '$100 million of outside, unidentified funding.'" Oh that darn unemployment. Wonder where that came from - can't be policies that discourage businessmen from operating businesses! And, of course, "unidentified funding." You see, all you have to do is raise the money to condition the masses, and you win. She literally cannot imagine that she is wrong or responsible. Next time, she will just try and raise more money and hope that pesky unemployment thing isn't a problem.

What the left cannot learn from this election is that their statist ideology is thoroughly understood by most Americans, even better than they understand it, and that is precisely why it has been rejected. Americans understand that socialism leads to tyranny, stagnation, and misery while capitalism leads to freedom, prosperity, and happiness. Americans are demanding freedom, individual rights, and a limited Constitutional government whose function is to secure our rights to person and property and otherwise leave us alone. Unfortunately, given their philosophical premises, this is a principle that the left literally cannot learn.