Thursday, November 9, 2017

No Wonder They Are Socialists...

...they have no idea of what creates wealth and the importance of capital.



  1. I'm disavowing libertarianism. Everyone should be required to work road or building construction for to get a feel for how difficult it is to build our modern conveniences. And to hang with some "real people" for awhile.

    That's me on the left, 1975.

    It's also an example of the problems with capital goods under socialism. When they built the Interstates in the 50s and 60s, they didn't think about the cost or manner of maintaining them. This project, I-90 through Erie County, PA, was one of the first re-building jobs because I-90 was one of the oldest Interstates. They simply paved an inch of blacktop on top of the old decrepit concrete and then laid new concrete with steel bars on top. It started cracking up almost immediately as Erie is in the Lake Erie snow belt. Since then, they decided they needed to dig up all the old concrete and lay down new gravel and new concrete. They can grind the up old concrete into new concrete.

    The millennials are the Eloi.

  2. Since the 1970s at least people in the USA have become increasingly disconnected from the manufacturing and the building of things. As stuff is made overseas to such a large degree the physical connection to it is lost. This is one of the consequences of present day trade policies where foreign government subsidized products displace domestically made ones. (this is not an argument for tariffs)

    The rise of finance in place of engineering and more and more being controlled by politics has also accelerated this disconnection.

    Making or building or maintaining something physical and valuable is a very difficult to road to wealth compared with finance and politics. Hence everything becomes magic instead of hard work.

    From there comes the lack of respect and outright disrespect for the people who do make things. What they do is then to be socialized because they have unearned 'privilege' from magic.

    Socially the connection between choices and outcomes has been largely obliterated. When someone suffers because of his own choices the call is take from those who made more prudent choices. Because they are "lucky".

    So of course they are socialists. To not be a socialist requires understandings that are simply becoming increasingly rare.

    1. To be clear though, there is nothing inherently better about manufacturing things compared with providing services. As long as you are serving customers' voluntary preferences, both lines of work are equally valid in economic and moral terms. The real issue is whether a vendor is renting the state's coercive powers as part of his business. If so, that IS worthy of condemnation in both economic and moral terms. While it's true that many parts of the most visible service sector, Wall Street, are in bed with the state, and thus are deserving of our opprobrium, there are plenty of service vendors who are not cronies of the state, and plenty of manufacturers of things who are.

    2. It is not about being inherently better but understanding the value of capital. Human and physical. I am strictly referring to how state interference has created the condition that RW was remarking about.

      This idea that state interference elsewhere in the world that results in cheap products here doesn't have adverse effects here is just nonsense IMO. In part starts a chain of events that results in people who have no understanding of capital because they are thoroughly disconnected from it. It's easy to reallocate property, that is have no moral qualms about it when its perceived as cheap and created by elves in a far off land. The economic domination of politics and crony finance also helps the perception that all wealth is unearned. That it comes from luck, social connections, and privilege.

      WRT services, I agree that it is fine if it is voluntary. However, the rental economy being created where everything is a service is in large part a direct result of central bank monetary policy. Uber,robot cars, and much more would simply not exist without various QE programs, low, zero, and negative interest rates and so on. One doesn't have to be directly in bed with the state to do malinvestment. The state merely need create the conditions for the malinvestment to occur.

      Even service work suffers in this lack of understanding of capital. We now live in a society where someone who does some dirty disgusting job that is a service is considered to have privilege because of some group assignment. If everything is socialized the first services we are going to run short of are the "dirty jobs" of the Mike Rowe variety. (I mentioned maintenance, that's generally a service.)

    3. While I agree that there are many things that are facilitated by the state's monetary policy which wouldn't exist otherwise, it's not true that everything we see is a result of that. Who's to say that Uber wouldn't exist in an unhampered (free) market? Its valuation might not be where it is without the Fed's monetary policy, but we could imagine technological development like this occurring in a truly free market.

    4. Uber has been losing billions upon billions every year. That's just not doable without today's conditions. There would be no support for the staggering losses of these companies in a free market with normal interest rates.

      A free market wouldn't even have taxi cartels in the first place. So we would be left with a useful piece of software for an already established industry. (it was the taxi laws that ended people offering rides for hire in their private vehicles)

    5. If you're talking about an exact duplicate of Uber's evolution, fine, but I was making the point that a free market wouldn't mean the end of risk-taking and innovation. Even in a free market there may be capital providers willing to support a new business through its early losses if there were credible projections of eventual profitability and a decent return on capital. Moreover, it is conceivable that some of the losses of a firm like Uber are because it has to compete with the taxi cartels that have a state-provided advantage in the market; in the absence of these cartels, perhaps an Uber-like company would be able to get to profitability more rapidly.

  3. Can you blame them? In a world of baseless, ever expanding money supplies, everyone wants easy money. Cryptos are making the easiest money right now. The millennials had to learn this outlook on life from somewhere. I mean, you know that everyone in Wall Street trading stocks truly cares about providing capital to the businesses that create our material wealth and aren't only motivated by returns, transaction fees, and gigantic bonuses. I'm 38 and am finally realizing that all my time spent in manufacturing has been a waste and pointless. Unappreciated and nowhere close to being as lucrative as a career in law, medicine or finance.