Free Markets, Free People

Redistribution of wealth


The myth of “collective action”

As we launch ourselves further into an era of “collective action” as Obama called it in his 2nd Inaugural address, we can be sure that reality won’t stop the left from remaining true believers in its ultimate power and good and demanding it be forced on us all.  But what does that really mean?

Let’s hark back to Mancur Olson’s critique of collective action for a moment and point out a little ground truth about it, shall we?

Olson’s critique of collective action is complicated, and it is made less accessible by an ungainly prose style. But the gist is that large numbers of people do not naturally band together to secure common interests. In fact, the larger the group, the less likely it is to act in a truly collective manner.

As Olson explained, the interests that unite large groups are necessarily of the lowest-common-denominator variety. Therefore the concrete benefits of collective action to any individual are usually small compared with the costs — in time, effort and money — of participation. “Free-riding” is a constant threat — as the difficulties of collecting union dues illustrates.

By contrast, small groups are good at collective action. It costs less to organize a few people around a narrow, but intensely felt, shared concern. For each member, the potential benefits of joint action are more likely to outweigh the costs, whether or not success comes at the larger society’s expense.

Now, to me, that’s common sense. The bigger the group the more unlikely it will find common ground than a smaller group. So urging a nation of 300 million to a common effort or collective action? Yeah, not going to happen – at least in the areas Obama is likely to want to make such an effort.

That’s not to say that collective action won’t happen. It happens everyday in DC as Charles Lane points out:

Hence, the housing lobby, the farm lobby and all the special-interest groups that swarm Congress. Hence, too, the conspicuous absence of an effective lobby on behalf of all taxpayers or, for that matter, all poor people.

If there is any “collective action” that will take place in DC, besides those noted, it will be among the politicians who band together (and break apart) depending on what they’re after this week or next.  Their constituency?  Not that big of a concern to most.  Those that reside inside the beltway are more likely on their radar than those who voted to put them in office.

So when Obama called on Americans to once again act “as one nation, and one people,” he was, at best, stating an aspiration.

No he’s not – he’s mouthing platitudes to calm the masses, put the opposition on the defensive and set himself up to get his way. And this is how that will work:

Olson’s assessment of reality, both historical and contemporary, is less lofty but more accurate: “There will be no countries that attain symmetrical organization of all groups with a common interest and thereby attain optimal outcomes through comprehensive bargaining.”

Nope. It will be the group/party that is able to appeal the best to the masses and thereby garner more  of a veneer of support for their agenda than can the other party/group, whether or not the ultimate goal of the action is good for the country or the majority or not. Whether it really benefits the country as a whole usually has little bearing on the effort. And the minority? Well, they’re simply left hanging in the wind.

Their call for “collective action” is a cover, a means of draping the usual politics in high sounding rhetoric. The reality of the situation is that what he calls “collective action” is simply a new code phrase for continued class warfare and redistribution of income. The purpose of proposing “collective action” is to enable him and his cronies to label anyone who opposes them and their actions as divisive, unpatriotic and just about any other name they can think of necessary to demonize and dismiss them.

Meanwhile, the “collective” dismantling of this once great country will continue apace.

~McQ


Krugman’s latest pearls of wisdom

I noted yesterday that one of the more prolific hacks left off of Alex Pareene list (link in previous post) at Salon was Paul Krugman.

QandO has a long history of examining Krugman’s political thoughts and finding them mostly wanting.  That’s not to say he’s a bust at everything he does – when he just talked economics he had some interesting things to say.  But his venture into political advocacy has, shall we say, not helped his overall reputation in the least.  One of the reasons is he’s prone to saying things like this:

The rich don’t necessarily deserve their wealth, and the poor certainly don’t deserve their poverty.

Don’t “deserve” wealth or poverty according to whom and by what standard, Mr. Krugman? 

Who gets to decide what is or isn’t “deserved” if earned or obtained legally?  And how does one make the blanket statement that “the poor certainly don’t deserve their poverty?”  That, in many cases, is demonstrably false. 

If we agree we are the sum of our choices in life, and those who’ve made consistently bad choices (drop out of school, take up drug use, commit criminal acts) end up in poverty, how is it they don’t “deserve” what they now suffer?  Certainly I can think of examples of the poor who may be poor through no real fault of their own – the mentally deficient who haven’t the skills to earn high wages, etc.  But for the most part, if everyone is offered essentially the same opportunities as others and they choose not to take advantage of them, how does one relegate their descent into poverty as “undeserved”?  Especially when others in precisely the same circumstances make different decisions that raise them out of poverty?

What, in fact, that statement is meant to reflect is Krugman’s apparent belief that wealth is unequally distributed not because it is earned, but by an immoral and unfair system that needs to be fixed. 

The market, in Krugman’s world, arbitrarily picks winners and losers and rewards them at whim apparently.  Thus most of the rich and none of the poor “deserve” their financial status.

So this should come as not surprise:

Allow me to make a point: Economics is not a morality play. It’s not a happy story in which virtue is rewarded and vice punished.

The market economy is a system for organizing activity — a pretty good system most of the time, though not always — but not according to any moral significance.

Really?  So nowhere in such an economy is honesty, fairness, good customer service rewarded with business over competitors who exhibit none of those virtues?  Instead, it’s just a “system for organizing” where consumers buy from which ever vendor they first come upon without ever once considering those virtues as a reason for buying?  Does the system punish those who act in what one could consider an “economically immoral” manner – i.e. in violation of the laws of economics” or screwing over customers?  Does it not mostly reward those who act in a manner that most pleases their customers and helps their reputation?

How is that not evidence of a moral code operating within a given market?

Well of course it is – but such a code is inconvenient to the Krugman’s of the world, because admitting that markets, unimpeded by government intrusion, would reward or punish those who transgress its laws would mean the argument for more government intrusion would fall flat.  And certainly, admitting that the rich “deserve” their riches as much as many in poverty “deserve” their poverty would again admit to a morality that precluded government making everything “fair” by it’s attempts to redistribute that “undeserved” wealth.

Those key premises are what Krugman and much of the left base their criticism of capitalism on, never once admitting that a) capitalism as it should exist doesn’t and  b) the reason the markets may not seem to be “working” is because of the amount of distortion they already suffer from government intrusion.

Of course, it is the age old cycle many of us have come to understand – government declares something to be a problem, declares it is the solution, exacerbates the problem and again declares only it can fix it with even more intrusion. 

“Morality” is, at a base level, “good and bad”.  We label what we deem “good” as moral.  The bad stuff is “immoral”.  How one can observe real markets at work, where the basic transaction is a voluntary exchange of goods for money between two people (entities) and not recognize the basic morality of such an act wouldn’t understand morality if it bit them on the leg.   Billions of those transactions will happen on this, Black Friday.  Consumers will go to stores they trust from experience, buy from vendors with good reputations and the best customer service and reward them with their business.  That decision is one based in morality in which the consumer weighs the options and picks the vendor who best exemplifies their moral ideal in the marketplace.  If they’ve been burned in the past by store X, that store most likely will not get their business – a decision based on the moral judgment of the consumer.

How a so-called economist doesn’t understand the basic morality of markets seems a bit beyond me.  Which is why I put Krugman in the hack category.  That morality, which is plainly evident to me, is inconvenient to Krugman’s thesis that government must intervene in the economy.  He can’t really point to any success stories (well he tries by saying, finally, that massive government spending for WWII brought us out of the Depression and that’s suspect), so he’s left trying to explain why it is government’s job to save us from the inherent unfairness of the market.

You have to leave a whole bunch of stuff out to do that.  And you have to establish nonsensical premises like “the rich don’t necessarily deserve their wealth, and the poor certainly don’t deserve their poverty”, in order to advance your government intrusion thesis.

Thus the cycle repeats – government is again the only solution to the problem government created.  After all, the markets put us 14 trillion in debt, not the profligacy of government – or so I fully expect Krugman to explain in some future bit of nonsense in the New York Times.  It would make about as much sense as this nonsense.

~McQ


Tax system is all about redistribution of income

Far be it from me to defend taxation, and I certainly am not one to tout government as the chosen tool to ensure fairness except in treatment by the law, but this is a bit ridiculous wouldn’t you say?

About 47 percent [of US housholds] will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center, a Washington research organization.

Liberals like to go on and on about a “progressive tax system” (so do Marxists, but that’s another story).  But my understanding of a progressive system is that everyone pays, just that those on the bottom end of the income scale pay less than those on the top.  But in reality, in this “progressive system” most of the bottom end of the income scale are paying nothing.

So that explains all the calls to insurance agents, doctors and human resources offices asking “where can I get me some of that free Obamacare?”  We’ve established a defacto welfare class through the “progressive tax system”:

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

“We have 50 percent of people who are getting something for nothing,” said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

Ironically, when it comes to health care, the “fairness” argument from the Democrats and “progressives” requires an individual mandate since they claim that without everyone paying into the system costs can’t come down (even though that won’t cut costs either, that’s their argument).

But this goes to a bigger problem – a mindset of entitlement.  And that is a mindset that favors the status quo (or its expansion) since it is to the advantage of those who benefit and, one would assume, they find no reason to challenge any program which may expand it.  ObamaCare is simply the latest.

Since they have no skin in the game, it costs them nothing to be complacent and they’re not likely to stir themselves to save that portion of Americans paying taxes from having to pay more to fund the redistribution of income from which they benefit via the “progressive” tax code.  Loot the rich is good where they’re sitting.

Taxes, at best, are a necessary evil with which we fund the necessities of government.  What taxation isn’t, or certainly what our founders never intended it to be, was a vast system of redistribution of income.  The tax system we have is an abomination -  it isn’t “fair”, it’s isn’t “progressive” and it violates the function of taxation as described by our founders.

But it is certainly a handy tool for big government progressives with which to grow their constituency and pad their vote counts.  It must surprise them somewhat that some of those on this plantation they’ve been building for years are, for some unknown reason, attending Tea Parties and protesting the direction of the country.  Even some of those who benefit from the redistributionist status quo understand that it’s just not right and certainly not a principle upon which this nation was founded.

~McQ


Final Thoughts

Taxation clarified:

When you give your money to someone in need, simply because you want to help, that’s called CHARITY.

When someone in need holds a gun to your head and makes you give them your money, that’s called ROBBERY.

When someone holds a gun to your head, makes you give your money to him for the benefit of someone in need whom he claims to represent, that’s called SPREADING THE WEALTH.

As a corollary, when someone takes out massive loans in your name and the names of your children in order to give that money to someone else, that’s called STIMULUS.

Of course, I don’t mean that all taxation works this way. I want a strong military, competent police and a functioning judiciary to protect our society and individual interests. “All taxation is theft” is fun to ponder, but not reality. Having a civil society will always cost something. It’s when taxation goes beyond what’s necessary to perform those minimal functions that “theft” becomes an appropriate term.

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