Monday, December 19, 2011

The Truth about the President’s Economic Policy Part 3

So, if none of our leaders will provide the truth about the President’s speech in Kansas, someone else will have to do it.

In his speech, the President said:

“Today, we're still home to the world's most productive workers. We're still home to the world's most innovative companies. But for most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success. Those at the very top grew wealthier from their incomes and their investments – wealthier than ever before. But everybody else struggled with costs that were growing and paychecks that weren't – and too many families found themselves racking up more and more debt just to keep up.”

Here the President is attempting to provide a reason why the “optimism” of the previous statement (Part 2) has been “eroded”. Yes, the President says, we still have the most productive workers and the most innovative companies, but the “basic bargain” has been eroded, hard work stopped paying off for too many people. What does this mean? Who eroded the “basic bargain”? What was that basic bargain? How was it brought about? Who made it possible?

The basic bargain to which the President refers was a sort of implicit contract that if you “give it your all” you have some assurance that you’ll be able to take care of your family, have your health care taken care of and put away money for retirement. It is this “bargain” that has been eroded, according to the President. The “middle class” is no longer receiving the benefit of the “basic bargain” and someone is responsible for that: “those at the top”.

Before we go back to the President’s speech, we must establish the full context. First of all, we should understand what made possible those “most productive workers” and “most innovative companies” to which the President refers. I think it is important to have this background if we are to think in essentials. Indeed, you can’t decide what to do in the future if you don’t know the essential principles that got us where we are.

How does a nation accomplish productive workers and innovative companies? Not every nation has been able to do this and it is important to be clear about the ideas and values that create prosperity. In other words, what must we have in the way of economic principles in order to build a vibrant economy?

History has provided an answer: capitalism. Capitalism is the prerequisite of prosperity. Remove capitalism from a nation and you lose it. Why is this? What is so good about capitalism that it creates such tremendous abundance?

As Ayn Rand has pointed out: “Capitalism is the system that made productive cooperation possible among men, on a large scale—a voluntary cooperation that raised everyone's standard of living—as the nineteenth century has demonstrated.”(1)

The fact that capitalism enables voluntary cooperation is missed by the President and his economic advisers. And they have no idea why voluntary cooperation is accomplished more effectively by capitalism than by their vaunted collectivism that requires cooperation through shared sacrifice. Capitalism must be inferior to them because it is only about “playing by your own rules” and stealing from people. This view sees exploiters everywhere and it misses the spectacle of millions of individual acts of mutually beneficial cooperation that take place every day under capitalism.

Rand also provides the definition of capitalism:

“Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man's rights, i.e.., the task of protecting him from physical force; the government acts as the agent of man's right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control.”(2)

According to progressives, capitalism is not about the banishment of physical force; it is about the use of physical force through government to create monopolies, get special privileges and steal from the consumers who have no choice but to work in the factories and use the products. They ignore the men who rose from poverty to become some of the most successful industrialists in the world; whose enterprises provided virtually all of the luxuries we enjoy today. They ignore the elevating standards of living, the longer life-spans, the mobility and self-confidence that people develop because they hold their destinies in their own hands. They ignore the millions of morally proper decisions that people make daily. They ignore the fact that capitalist systems tend to be more peaceful and secure because people who earn their own livings do not feel compelled to violate the property rights of others.

Leftists cannot think in terms of essentials. They don’t understand that survival is about work and that any system that liberates man to pursue survival through production and trade is one that creates a million mutually beneficial trades every day. They confuse production with force and criticize production as if it means a zero-sum transaction where one person wins and gets rich and the other person loses and becomes poor. They ignore the fact that it is capitalism, and nothing else, that created the middle class. So they proclaim themselves champions of the middle class while they seek to destroy or undermine the source of voluntary cooperation: capitalism. And they countenance physical force by government in order to rectify what they consider to be problems created by capitalism (that are actually created by their own coercive policies).

Progressives act as if they are righteous defenders of the average man, protectors of the rights of man, as if they were fighting dictators not industrialists. They posture as courageous critics of a corrupt system while ignoring the fact that the capitalist “dictators” they denigrate are merely clear thinking men who have mastered the art of production, not the art of conquest. They don’t understand what it takes to create and manage a thriving corporation because they have never done it and they let their altruist morality cloud their minds to the fact that capitalism has lifted more people out of poverty than any of the sundry dictators they admire. Where capitalism enables thriving, socialism enables murder; and yet they don’t see it – they don’t see the killing fields and mass graves.

They don’t see the beautiful cities of capitalism, the tall buildings, the bustling factories and the brilliant shops offering stunning products. They don’t see the automobiles and the jet airplanes and the HDTVs, the 5-speaker sound systems and the iPods and iPhones. Instead, they imagine dead bodies and starving children in the clutches of a blood thirsty capitalist eager for plunder. They proclaim that capitalism would just as soon let people starve for the sake of profit without noticing that the real starving people in the world are those trapped by the progressives' view of the world.

And what is their view of the world? Like all altruists, they believe man is evil at base and incapable of being moral. They send out this teaching through every pronouncement and judgment of men. They treat individuals as expendable and particularly worthy of ridicule. Since their morality holds that man should sacrifice for others, they see man’s inability to be totally self-sacrificial as a black mark on man. Therefore, the most successful, those who practice sacrifice the least, are viewed as particularly evil and deserving of forced sacrifice, control and punishment. If you notice a similarity between this view and the views of some of the most brutal tribal leaders of the past including some of the most monstrous dictators, the similarity is not a coincidence.

What is the greatest threat to capitalism, peace and cooperation? It is the progressives' view of man coupled with the idea of collectivism, the modern form of tribal organization; the idea that people must cluster into bands or tribes and battle one another for political power. Anti-capitalism is essentially anti-reason and anti-man in the same way that collectivism is anti-individual. It is a desire to destroy the good because the good is unwilling to grovel at the altar of self-sacrifice.

Don’t proclaim that altruists really want to do good things for people. There are two sides to the altruism coin. One side is protestations of love for man while the other side is protestations of hatred for everything. One side, the side of professed love, is the outward expression of altruism that keeps altruists in the game of acting on their hatred. And this brings us back to the President’s speech.

The President, by proclaiming a love and support of the middle class, declares that the enemy of the middle class is the very system that created the middle class: capitalism.

Yet, capitalism can only exist in a nation where the government protects individual rights and the rule of law. Its basic principle is that the individual is free to use his own mind, create his own survival and keep the results of his work. It declares that man is essentially good, capable of reason and that he acquires his survival through production and trade with others, by means of reason. What does capitalism require? Capitalism requires freedom, freedom to think, freedom to evaluate reality, to make judgments, to develop products, to obtain capital, to trade and to keep the results of one's work. The President will have none of that.

Remember what I said about the character of the American people in the pre-war and wartime period; that their victories were made possible by the fact that they were free. Their freedom meant they were free to live, to think, to invest and to create…they were not regulated into prosperity; their Constitution liberated them to create that prosperity because the Founders knew that their hard work and thought would directly benefit them and that a government that protected their rights is the most advanced government possible.

Because of capitalism, the American spirit was free to win the war and this spirit, this sense of life, released upon the world a “can do” attitude that says anything is possible if you are free to act. Capitalism means freedom to survive; not just for “those at the top” but for all Americans. Americans become “those at the top” compared to the rest of the world by producing and investing their own savings (for retirement). The middle class was created when Americans were liberated to work in the factories; liberated to become the workers, middle managers and the upper managers. Without capitalism you do not have productive workers, innovative companies or a middle class.

How can the President be a defender of the middle class when he does not seem to understand this critical point about freedom - and especially about capitalism? How can he, on the one hand, champion freedom and on the other champion re-distribution of the income of producers? Isn’t he turning the producers into slaves through re-distribution? How can he, on the one hand, claim to be liberating producers, “those at the top”, while on the other hand raising taxes upon them? How can he, on the one hand, praise the free market, while on the other hand creating oppressive regulations that stifle economic activity? How can he, on the one hand, recognize that Americans are productive and our factories innovative while on the other hand not even acknowledging that it was capitalism that brought it about? And if it was capitalism that brought this situation about, how can he, on any hand, claim that “playing by your own rules” is what brought capitalism down and ended the "basic bargain"?

So the real question is not how did we lose our optimism and the “basic bargain”. The real questions should be “how did we lose capitalism?” and “how can we get it back?” And the real answer should be, by eliminating regulations, letting people keep what they earn and returning to the Bill of Rights.

-to be continued

1)How To Read (And Not To Write), The Ayn Rand Letter Vol. 1, No. 26 September 25, 1972
2)What is Capitalism, Capitalism: the Unknown Ideal by Ayn Rand

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