Tag: Socialism

Why Intellectuals Hate Capitalism

George Noga
Does capitalism really sow the seeds of its own destruction? 
Why Intellectuals Hate Capitalism
By: George Noga – March 4, 2018

       This is the first of two posts seeking to answer the above question about capitalism and self destruction. This question has a nexus to our three February posts (available at www.mllg.us) about the debt crisis. Both stem from the consequences of the stunning success of capitalism in creating enormous wealth for all. This first post explains why intellectuals and progressives loathe capitalism and love socialism.

       A century ago economist Joseph Schumpeter wrote that capitalism would self destruct: “I do not think capitalism can survive. Its demise will not be due to economic failure; instead, its very success undermines the institutions which protect it and creates conditions in which it can’t survive.” He theorized: (1) capitalism would enable more people to become educated; (2) they would be taught anti-capitalist dogma by professors now free to promote their ideas rather than to work; (3) people thusly (mis)educated would vote for liberal welfare states leading to the end of capitalism.

       Vituperation from socialist professors has infected college students and wafted into the general population. There are six main reasons liberals hate capitalism.

1. Capitalism evolved organically. No intellectual wrote a capitalist manifesto; Adam Smith merely explained what happened naturally. Capitalism just happens; it doesn’t require professors to theorize. No one is capable of controlling capitalism, whereas socialism requires controllers, i.e. intellectuals who know what is best for everyone.

2. Capitalism is egalitarian. An uneducated, uncouth bloke can make a fortune by say recognizing the market for used auto parts and buying and stripping junk cars. He gets rich because he provided a valuable service to consumers. In contrast, the intellectual is unrecognized and unrewarded. Successful capitalists repulse elites.

3. Professors are rewarded by bureaucrats, not markets. They succeed by pleasing their statist employers, not by pleasing students (customers) or by attracting new students. Capitalism does not reward them based on their exalted education and good intentions. They prefer regulation to the chaos of the marketplace. They believe their pet theories should override the free decisions of individuals, if necessary by using the police power of the state. Their peers all are anti-market and they must go along to succeed.

“Capitalism is: To each according to his accomplishments.” 

4. Consumers are sovereign; intellectuals have no special status. The common man holds all the power; his decisions to buy (or not to buy) determine what is produced and makes suppliers rich (or poor). Wealth is achieved only by serving consumers.

5. Capitalism brooks no excuses for shortcomings. Capitalist success is based strictly on one’s ability to provide value to his fellow man. Capitalism is to each according to his accomplishments; those who fail are found wanting by their fellow men.

6. Intellectuals desire control over others. They fail to understand why the unwashed, poor ignorant rubes in flyover land believe they know what is best for them and for their families. Intellectuals see themselves as heroic emancipators, crushing greedy capitalists, saving helpless victims and reaping the just approbation of all mankind.

      America’s immense, broadly shared wealth comes with pernicious consequences.  Any society rich enough to have millions of pet insurance policies with acupuncture, chiropractic and mental health benefits is a society that arguably has lost its critical connection between wealth and capitalism. More on this next week along with our conclusion about Schumpeter’s prediction of capitalism’s self destruction.

Our March 11th post is the second and final part dealing with Schumpeter.

Red October – Socialism, Sweden and Scandinavia

George Noga
Scandinavian countries are not prosperous because of socialism but despite socialism. They tried socialism; it failed; they rejected it and reinstituted free market capitalism.
Red October – Socialism, Sweden and Scandinavia
By: George Noga – October 15, 2017
      Many Americans, especially millennials and progressives, believe Scandinavian countries, particularly Sweden, are veritable socialist Utopias. Bernie Sanders and Hillary Clinton said so during the last election and were unchallenged by the equally clueless media. Whenever I discuss politics or economics with liberal interlocutors, they invariably cite Sweden as proof that socialism works. They are wrong on all counts; Sweden is neither socialist nor especially wealthy. Let’s look at some history.
        Sweden once was so dirt poor it sent waves of immigrants to America. Circa 1875 Swedes embraced free market capitalism and began to prosper. Around 1970, Sweden took a hard left turn; taxes soared, welfare expanded and private enterprise was discouraged. The predictable result was rampant crime and drug addiction, Kafkaesque bureaucracy, welfare dependency and emigration by successful Swedes. By the 1990s Swedes saw socialism as a colossal failure; they cut taxes, restored free markets and economic freedom; they replaced leftist governments with right-leaning ones.
     The stories of the other Scandinavian countries (Norway, Denmark, Finland) are similar. Today, all four enjoy dynamic market economies albeit with robust social insurance programs financed by high middle class taxes. They can afford such benefits only because of successful capitalist economies that produce sufficient wealth. No socialist economy has ever generated enough wealth to fund such benefits. Sweden is not prosperous because of socialism; it is prosperous because it survived socialism.
       Note: The Scandinavian model of social insurance can only work in small, homogeneous populations with deeply shared and ingrained values, social and cultural cohesion and a middle class (there never are enough rich) willing to accept extraordinarily high tax rates.
       Americans incorrectly believe Scandinavian countries are wealthy; however, they compare very unfavorably to the US. The GDP of Houston, Texas is larger than all of Sweden. If Sweden were a US state it would rank among the very poorest in per capita GDP. Moreover, Sweden is 30% more expensive. This means that when considering both purchasing power and GDP, Sweden would be the poorest US state – by far.
       With the lie of Scandinavian socialism outed, consider if communism, socialism or any collectivist economy ever has produced sustained prosperity. The short answer is never. Socialism may produce short-term gains by nationalizing property, debasing currency, seizing assets and borrowing. This is akin to mortgaging your home, selling your patrimony and stealing your neighbors’ property – all to finance a gigantic party. But the party always ends when the other people’s money runs out.  
       Examples of communism/socialism are Cuba, USSR, North Korea and Venezuela. Their horrors are obvious except to diehard progressives. These are the places to observe the reality of destructive collectivist schemes. Liberals and their media running dogs falsely cite Sweden and Scandinavia as socialist success stories when, in fact, they are socialist failures and capitalist successes. It is all a big lie as indeed all of collectivism is a big lie. Commies promise you Sweden but they give you Venezuela!
Red October continues next week with a healthy dose of commie humor.

Red October – A Tale of Six Islands

George Noga
Communism promises Xanadu, Valhalla, Elysium and Zion; it delivers North Korea,
Venezuela, USSR and Cuba. It promises a Garden of Eden but delivers hell on earth.
Red October – A Tale of Six Islands
By: George Noga – October 8, 2017
      Our month-long series chronicling 100 years of communism continues; this week we compare island nations with command economies to ones with market economies. There is something about the self-contained nature of islands that invites comparisons. For good measure, we contrast liberal US cities and states with conservative ones.
       Communist Cuba, a brutal dictatorship, has a failed economy; its GDP ranks 137 and its freedom index 171. Most Cubans’ take home pay is $30/month. It is a nihilistic society where one-third of all pregnancies are terminated. Socialist Greece, constantly being bailed out by its neighbors, is a failed state. Uber-liberal Puerto Rico is bankrupt; it owes $75 billion in bonds and $40 billion in unfunded pension liabilities – equal to $100,000 per household. People are rapidly fleeing this crime-riddled wasteland.
       Singapore is rich; less than 20% of its economy is in the public sector and taxes are half that of the US. It ranks #2 in the world for economic freedom. The #1 place for economic freedom is affluent and capitalist Hong Kong. Taiwan, a vibrant free market democracy, ranks high in both wealth and freedom. A mere few generations ago all six of these places were desperately poor. Today, the ones (Singapore, Hong Kong, Taiwan) that chose freedom and capitalism are all rich. The ones (Cuba, Greece, Puerto Rico) that chose collectivist, anti-market schemes are impoverished hellholes.
       Deep blue states (California, New York, Illinois) are hemorrhaging people with 1,000 each day abandoning them for deep red states (Texas, Florida, Utah). They move to escape blue states’ confiscatory taxation, job killing minimum wages, forced unionization, welfare fraud, choking regulations, green energy mandates and social pathologies. As humans always have done, they gravitate to places with economic freedom where household income is $10,000 higher and people are happier.
        Many cities have been governed by progressive politicians, often for more than a half century; Detroit, Newark, Cleveland, Chicago, and Washington come to mind. The legacy of such liberal stewardship is bankruptcy, shrinking population, failed schools, high taxes and crushing debt. They are dismal, dangerous and dirty places. If liberal policies worked, they should be thriving magnets showcasing progressive ideas and the failure of free market capitalism. Instead, contrast these failed cities with successful ones such as Dallas, Houston or Salt Lake City. Whether it be islands, states or cities, it is clear that more liberty and less government works and that socialism fails.
       As I oft have written, liberalism (and every one of its collectivist cousins) is a lie. They promise Utopia, Xanadu, Nirvana, Elysium, Valhalla and Zion but what they give you is death and desperation as in Venezuela, Cuba, the USSR and North Korea. Economist Ludwig von Mises nailed it nearly 75 years ago when he wrote:
    “The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and a resistance to every kind of improvement. They call themselves liberals, but they are intent on abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want the government to be omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into one gigantic post office with every man but one a subordinate clerk in a bureau.”
Red October continues next Sunday with “Socialism, Sweden and Scandinavia”.

Red October – 100 Years of Communism

George Noga
A brief history of communism (and its socialist cousins) as it turns 100 this month
Red October – 100 Years of Communism
By: George Noga – October 1, 2017
         This month marks the 100 year anniversary of the communist takeover of Russia. Throughout this centenary month MLLG chronicles the century of communism and its close cousins – socialism, utopianism and collectivism – in our series: Red October.
      From time immemorial, quixotic romantics have dreamt of paradise: Utopia, Elysium, Valhalla, Xanadu, Eden, Nirvana. In the end, all they had to show for their fantasies and delusions was a sea of blood and millions of broken lives. Despite its grisly record, collectivism still exerts a powerful emotional appeal on progressives, who remain slaves to Utopia. Our Red October series documents communism’s century of mental poison and human misery to bestir those beguiled by its siren song.
         America’s first settlements began with Utopian dreams. When colonists arrived in Jamestown everything went into a common store, severing all links between work and benefit. Within 6 months most died from starvation. When another 500 settlers arrived, 440 more died. When the Pilgrims arrived at Plymouth, the socialistic Mayflower Compact governed them; soon they were eating rats and most died. Like socialism everywhere (Venezuela today), there was starvation in the midst of plenty. Only when they rejected socialism and embraced property rights did the colonists prosper.
         A hundred years of communism has produced death and destruction on a massive scale. Soviet communism killed 50 million, not counting tens of millions in Gulags. Not to be outdone, Mao and the Chicoms killed 70 million. Pol Pot killed 6 million in tiny Cambodia. Then there is Laos, Cuba and North Korea. The toll in death, torture, misery, destruction and suffering is unparalleled in human history. It must be noted that even the reviled Nazis were socialists as Nazi is shorthand for the National Socialist Party. Fear not, the unreconstructed commies will get it right the next time.
         The evils of collectivism are on full display today in oil rich Venezuela – once the wealthiest country in South America. After 18 years of Chavez/Maduro style socialism people are starving. Medical care is unavailable; operating rooms are filthy; and people die for lack of antibiotics. Infant mortality is higher than in war-ravaged Syria as incubators are broken and there no longer is any baby formula. Shortages, including toilet paper, are endemic. Inflation is nearly 800% and the economy has contracted by one-third. People are dying daily in the streets while others are desperately fleeing.
      The gulf between the words and deeds of communism and all forms of collectivism is an unbridgeable abyss. They speak of comradeship, equality, brotherly love, peace, prosperity, progress and freedom. Their deeds result in brutal dictatorships, Gulags, world wars, police states, totalitarianism, economic stagnation, shortages and a general sense of torpor and malaise. They promise Utopia but deliver Venezuela. They want to be judged by their lofty intentions but they are damned by their actions.
        Communism and its collectivist cousins always fail because they are diametrically and fundamentally opposed to human nature – which is deeply ingrained and cannot be overrode. From each according to his ability; to each according to his needs abrogates human nature. Even people as altruistic, homogenous and devout as the Pilgrims chose to starve rather than to modify their humanity to conform to that deadly mantra.
       Collectivism sometimes may work for a family, clan or tribe where familial bonds (a key part of our human nature) override economic incentives. However, throughout human history, there is no example extant where socialism has worked for a group of more than 25 people. Judge collectivists by their actions – not by their words!
Our Red October series continues next Sunday with “A Tale of Six Islands”.

Why Government Fails While Business Succeeds

George Noga

Government fails while business succeeds because of immutable human nature. At root, it is exactly the same reason socialism fails while capitalism succeeds.

By: George Noga – August 14, 2016

    Business succeeds because its risks, rewards and incentives are properly aligned with human nature. The need to make a profit focuses attention and demands great effort because success confers wealth and status while failure has immediate and unpleasant consequences. Thus, business attracts motivated, talented and hard working people. Why would anyone be a bureaucrat if he/she could succeed in business?

    All that is well understood; however, there are more compelling explanations for spectacular corporate successes like Apple, Walmart, Disney, Berkshire Hathaway, FedEx and Coca-Cola. Juxtapose these against abject government failures such as public schools, terrorism, Madoff, economic growth, jobs, disaster relief, health care, IRS, USPS and most major cities (Newark, Detroit, Chicago), states and nations.

    It all comes down to human nature which is unchanged since man walked on two feet. Humans are hard wired to further their self interest and to respond to incentives. This explains why socialism has never worked outside a small group like a family, clan or tribe. Socialist or Utopian schemes never have worked for more than 50 people – probably it is more like 25. We need look no further than Jamestown and Plymouth to see how socialism resulted in starvation and every form of privation; it was only when the settlers instituted private property that hunger and suffering were alleviated.

    The same principle that dooms socialism also casts its pall on government – even in capitalist countries. Both are contrary to the most basic laws of human nature – self interest and incentives. Public sector economics explains the inner workings of government; it proves,inter alia, why government prefers debt over taxes, why taxes are opaque and why failed public programs continue to exist and even to expand.

    In  business, all it takes is one driven entrepreneur such as a Jobs, Gates, Buffet, Fred Smith, Sam Walton or Walt Disney to change the world. By its very nature government must appeal to the lowest common denominator (“LCD”) of the populace to win elections. Politicians behave rationally when they do whatever is necessary to win elections. That explains why they divide people by race, gender, age and income and pursue policies they know to be detrimental to those they represent.

    A great paradox lies at the heart of government and human nature. Some limited government is necessary but there is no practical way to make it respond to the people’s long term best interests. The only possible solution is to reduce the size and scope of government to the absolute minimum, i.e. more liberty and less government.

    Business structures its incentives to appeal to the best and brightest among us and, as a consequence, one talented and motivated business person can change the world and make life better for everyone. In contrast, government always descends to the LCD or to the level of the least of us. Socialism and government always fail because they are, at the most elemental level, diametrically opposed to abiding human nature.

Next: The timeless struggle between personal freedom and government power.

Guns in America – Liberty vs. Government – MLLG Update

George Noga

We address: (1) Guns in America redux; (2) MLLG status and website; and (3) the eternal struggle between personal freedom and government power.

By: George Noga – June 26, 2016

    This post touches briefly on three topics beginning with a followup to our February 2016 series: Guns in America, which enjoyed phenomenal distribution that propelled it to a high position on search engines including Google. Recently, we noticed a paper published in the Harvard Journal of Law & Public Policy. Although it was published years ago, it has just now begun gaining widespread traction in the gun control debate.

  The paper is entitled: Would Banning Firearms Reduce Murder and Suicide? To read, simply click the title. It documents that gun control has no correlation with criminal violence and, in fact, has a negative correlation, i.e. more guns, less crime. The authors concluded that gun control is ineffective because it does not affect the social, cultural and economic factors that are the real determinants of violent crime. Note: The main sources for the study include the CDC, US Academy of Sciences and United Nations.

Uncommon Wisdom about Liberty and Government

    It doesn’t get better than this; that’s why MLLG is publishing a lengthy quote. The case being discussed was before the Texas Supreme Court and involved eyebrow threading, a safe and traditional South Asian practice to remove unwanted hair. The State of Texas demanded threaders obtain cosmetology licenses requiring 750 hours of training (that did not include eyebrow threading), shut down of their businesses and fines of thousands of dollars. The threaders took Texas to court. Justice Don Willet wrote the following in his opinion supporting the threaders, who won the case 6-3.  

   “This case concerns the timeless struggle between personal freedom and government power. Do Texans live under a presumption of liberty or a presumption of restraint? The Texas Constitution confers power – but even more critically, it constrains power. What are the outer boundary limits of government actions that trample Texans’ constitutional right to earn an honest living? Must courts rubber-stamp even the most nonsensical encroachments on freedom? Are even the most patently farcical and protectionist restrictions unchangeable, or are there judicially enforceable limits?

    “This case raises constitutional eyebrows because it asks building-block questions about constitutional architecture – about how we as Texans govern ourselves and about the relationship of the citizen to the State. This case concerns far more than whether (Texans) can pluck unwanted hair with a strand of thread. This case is fundamentally about the American Dream and the unalienable human right to pursue happiness without curtsying to government on bended knee. It is about whether government can connive with rent-seeking factions to ration liberty unrestrained and whether judges must submissively uphold even the most risible encroachments.”

MLLG Preview and Website Update

    So far in 2016, MLLG has published two series, Guns in America and Inequality in America. We have blogged about, inter alia, the US election (3 times), climate change (3), government and socialism (3), school choice, tax inversions, Pope Francis, Islamic terrorism, Scandinavian economics and Jefferson-Jackson Day. Whew!

    For the second half of 2016, look for multi-part series on (1) climate change; (2) poverty, hunger and homelessness in America; and (3) financial repression, negative interest rates and the war on cash. Other pithy topics may include: China, political correctness, Greece and Puerto Rico, Uber and gay marriage (you’ll really like that one) and media bias. This summer, as customary, we lighten things up with posts about life in Montana – our summer home. We call these posts “Montana Moments“; enjoy!

Bottled Water and Socialism

George Noga
A simple bottle of water, available in stores for under a dollar, proves why
communism, socialism and all command economies are doomed to failure.
By: George Noga – March 27, 2016

       In the 1970s still water began to be offered for sale in the USA in single serving sizes. I knew sparkling water had been sold for some time and there was a market for bottled water in parts of the world where the tap water was not safe or of poor quality. But I thought “Who in America would pay for single serving still water when safe, good quality water runs Scott free out of faucets, water fountains and coolers?”

     I am trained in economics and like to consider myself as reasonably bright, possessing integrity and motivated to make the best possible decisions to serve my fellow man. Yet, if I were a 1970s era government planner, I would have prevented our economy’s scarce resources from being used to produce and distribute bottled water.

     I would have been dead wrong! Today, bottled water is the second largest beverage sold – ahead of both milk and beer. In 2014, 11 billion gallons ($25 billion) were sold in just the USA – equal to 34 gallons per American and this ranked the US as only 10th in the world. This was true despite its cost of around $1 for 500 milliliters which works out to $7 per gallon – nearly three times the price of gasoline.

     Education, training in economics, smarts and logic coupled with the very best of intentions would have proved incapable of discerning the preferences of my fellow citizens, the ambitions and creativity of entrepreneurs and the behavior of consumers armed with a free choice. If I had been the chief government planner in the 1970s, there would be no bottled water available for sale today in the USA.

     Yet, despite a government apparatchik being as totally wrong as I would have been about bottled water, no one ever would have known about my mistake because  no one could possibly have known what would happen with free people in a free market. And it isn’t just bottled water. There would be no copy machines or personal computers; IBM originally estimated the world market was for only 5,000 copiers and under 100 personal computers. There would be no internet as the cognoscenti of the time believed it would only be used by government and universities.

     The humble bottle of water we now take for granted proves all forms of socialism and command economies are frauds and conversely proves why free markets work.

The next post will be on April 1st; readers may think it is an April fool, but it isn’t!
MLLG

The MLLG Blog Returns for 2016 

George Noga
By: George Noga

      It’s baaacck! After taking 2015 off for reflection and discernment, the MLLG blog returns. To be sure, there are changes of which the principal ones are:

  • We have a new commercial email provider with greatly enhanced readability; with few exceptions (such as mobile devices and Roadrunner email), you will see exactly what was written in the format it was written;
  • Our website is being upgraded to contain past posts from June 2011 onward and new posts on a timely basis; there will be subject and chronological indexes as well as a section containing the best of MLLG writings. The new site should be 100% functional soon; when it is ready, we will let you know on these pages;
  • Posts are shorter – 500 words more or less – readable in 2-3 minutes;
  • Current events and opinion are emphasized; however, economic, political and human interest content continues – fact based and principled as always; and
  • Frequency is not on a set schedule but expect 3-6 posts per month.

There is no cost to receive posts via email or internet. We will not request financial support until 2017 at which time we may ask readers and supporters to make voluntary contributions. The costs of operating the blog are not onerous but are nonetheless very real. There are costs for using a commercial email service for tens of thousands of emails and for, inter alia, maintaining a domain name and website.

Why do we need another blog and what can MLLG offer that is not currently being provided elsewhere? If you stay with us for a while, you should agree that you are receiving perspectives not usually found elsewhere. The author’s background as a financial analyst, economist, CPA and high level political operative confers a special knack for combining fact, logic and insight – not to mention well over a half century as a keen observer of life in these United States and beyond.

We unabashedly approach matters from a more liberty – less government perspective but never – absolutely never – at the expense of facts or logic. We have many progressive readers who respect being presented with principled analyses, even ones contrary to their cherished beliefs. However, the MLLG blog is not intended to convert liberals – but to witness the blessings of liberty to a candid world.

      Enough explanation. The next MLLG post you will soon receive is a memoir of the days the author spent with Jeb Bush and Rand Paul. Not many bloggers have spent full days one-on-one with two 2016 presidential candidates. Other upcoming posts deal with the 2016 election, radical Islam, EPA carbon regulations, how bottled water gives the lie to socialism and a special multi-part series about guns in America. Stay tuned!