Tuesday, May 17, 2011

Why Democracy Doesn't Work: A Short Summary

excerpted article from Ryan Faulk

This is just a quick post reiterating why democracy doesn’t work:

1. Rational Ignorance. Because you only have one vote and won’t influence an election, it is rational for most people to not spend time researching the issues. Attempts to curb this problem could be to require a poll test, but that is full of obvious problems. Democracy depends on voters being informed on issues that they cannot have an impact on, which is to say democracy depends on voters being irrational.

2. Package deals. When you buy things from a store, you get to be a la carte to a great degree. You don’t have to buy a complete kitchen set, you can buy the refrigerator and the microwave separately. The specificity depends on demand - few care to buy each component of a refrigerator separately, and so that stuff is harder to find.

With democracy, your only choice is between platforms that have a shot at winning, and this is usually only two or three and encompasses too many issues. Maybe you want school spending to be cut, and want unemployment insurance to be cut, but each candidate or party is only willing to cut one or the other, so you don’t get to truly vote your preference.

3. Voting wars. Group A votes itself the resources of group B. Simple enough. Elections aren’t really a competition of ideas, because trying to get group A to vote for not getting free stuff from group B is not a contest, it’s begging a thief. Humans are moral animals, and so theft-rationalization industries develop, which rationalize the theft with marxoid economic theories, appeals to racial identity and collective intergenerational debt, and various other obtuse and roundabout justifications.

One of these rationalizations is to call opponents of democracy social darwinists. They support an evolutionary environment that enables the irresponsible reproduction of their voting blocs at the expense of the responsible reproduction of their opponents, but you are to believe that that is NOT social darwinism, but when you advocate an environment that enables the reverse, that’s social darwinism. So social darwinism = an evolutionary environment that grants no favoritism to irresponsible reproduction of the takers.

There is also the problem of the identity-democrat, and I don’t necessarily mean advocate of the US democrat party, though that correlation high. The identity-democrat fancies himself an advocate of the little guy, and so masochistically votes for wealth redistribution schemes that harm him. The identity-democrats tend to be “progressive” on social issues and white, while the taker-democrats tend to be more conservative and black and brown (they are NOT “liberals”, they are racial national socialists).

4. Concentrated benefits, diffuse costs. When you cut unemployment insurance, you are no longer giving a concentrated group of people the money they need to survive, and many of them will die. This makes them extremely motivated in opposing cuts. Whereas the people paying for unemployment benefits won’t die from paying a little bit more.

The results of democracy are manifest - constant increases in spending, with anti-spending movements being flash-in-the-pan spoiler operations. The Taxed Enough Already (TEA) party has not achieved any of their goals of cutting spending, and they most certainly will not since the incentives of democracy are against it, as are many of the beneficiaries of democracy-enabled theft.

One should place democracy in the same ideological zone as communism, because the underlying assumption of democracy IS communism, because it assumes things are already communally owned and thus can be voted on. If they weren’t communally owned, if an individual really owned what is called “his home” and “his money”, then you couldn’t just vote to take any of it away to give it to people who don’t have value.

(That’s another reason many are militantly pro-democracy: without it, nobody would care what they said or thought. Democracy is 1 person = 1 vote, giving worthless people a level of influence they couldn’t achieve by honest means.)

Democracy is a form of communism. And the US is a representative democracy. My prediction is that democracy will be remembered as a form of communism, and just as we wonder how the USSR lasted as long as it did under the impossible regime of explicit communism, people will marvel at how the USA lasted as long as it did under a regime of implicit communism. This is easy to understand, but difficult for most to swallow.

One last point is that democracy is inconsistent. Man supposedly needs a state because if left to his own devices it’ll be Mad Max, yet this state is to be controlled either through popularity contests (representative democracy) or man’s own judgement on abstract issues which he has no rational incentive to properly research (direct democracy). Man is fallen so needs a state, but this state is to be controlled by man? Monarchy is at least consistent in this regard.

Wednesday, May 4, 2011

How high should the wage hike be?

Political organization, or more precisely, mob intimidation, cannot change the laws of economics but only make it harder for employers to keep their business running. Raising wages will in the long run reduce job opportunities and increase the price of consumer goods. The poor stand more to lose since they are on fixed income and spend a large portion of it on consumer goods. Notice also that it is always the employers who are at fault while the government itself, which is the source of the problem, is never questioned

I have already argued in a previous article that wages are primarily determined by productivity and not by the discretion of the employer. Generosity or good faith of the employer has very little to do with it. If the laborers get wages which are higher than what all of them can produce, then the employer will either have to pass the additional labor costs to the consumer in the form of higher prices or file bankruptcy.

The minimum wage laws also have glaring contradictions. The labor code allows for exceptions. Physically and mentally impaired individuals as well as apprentices and learners can be paid at least 75% of the minimum wage. Firms employing less than ten workers are exempt from paying minimum wages. If you ask why certain exceptions are made, the answer will be based on economics. But then that only defeats the purpose of the minimum wage law in seeking to reverse the laws of economics. If we must defer to economics in the case of the physically disabled workers, why not defer to economics when it comes to workers in general? After all, economics applies at all times and in all places.

Arguments against minimum wage laws are not only theoretical, as prices of consumer goods increase every time a wage hike is ordered by the Philippine government.

Some don't buy into the argument that businesses would close if minimum wage rates were increased. They charge hypocrisy on business owners who take their families on expensive vacations while not giving workers enough to eat. This is of course an exaggerated claim. If a worker's wage is not enough for him to eat, then why is he still working in that same job in the first place? It is ridiculous to claim that workers don't have enough to eat when a lot of them already support many children with that meager wage, but that is a topic for another discussion. Just because an employer is rich doesn't mean he must pay wages at more than the worker's productivity level. The employer could have gotten the vacation money from saved profits in the past. Why should the employer use those saved profits to subsidize a business which is made unprofitable by the minimum wage? Why should the employer enter into an employment agreement where he has nothing to gain? It really redounds to an advocacy of the Marxist exploitation theory, whether or not people are aware of it. Pro-labor advocates think that profits are undeserved because it is taken from labor's 'full value'. Fortunately, Marxist fallacies have been refuted by economists of Marx's own generation.

To those who think labor has a right to a share in profits, I quote from capitalism.org

"Why are the laborers who demand a share in the capitalist's profits, silent in demanding their "share" when he incurs losses? Why don't they cry out and demand that they get to receive a share in those losses? If labor is the sole cause of all profit, then is it not also the sole cause of all losses? A moments reflection will point out that laborers are only responsible for their job description -- they are not directly responsible for the losses of a business -- and that the cause of an enterprise's losses lies essentially with the owner, as do the profits."

Then there's the bargaining power argument. There are more workers than work, they say, and the workers have to accept lower than productivity wages because the employer can just hire somebody equally desperate for a job. The premise of this claim is palpably false as it does not recognize the primordial fact of scarcity, which is the whole basis for the study of economics. There is always going to be jobs available because humans have unlimited desires and limited means to meet those desires. Bargaining power is actually dependent on productivity. The greater the gap between a worker's productivity level and his wage, the greater the risk that that worker will be hired by a firm offering a higher wage. Competition among employers bids up the price of labor to the point where it approximates productivity levels. If one disdains the difference in 'bargaining power' between employers and employees, then one must place the blame on anti-competitive government interventions such as permits, regulations and anti-trust laws.

The laws of economics cannot be changed by passing legislation. The only way to deal with the primordial fact of scarcity is through entrepreneurial discovery of more efficient ways of allocating resources. This means allowing the price mechanism to work and the profit and loss system that follows it. In hard times such as these, we need markets more than ever.

Monday, May 2, 2011

The idiocy of American Nationalism and the Corrupt Philippine Police and Military

It’s disgusting to see so many people praising the US government for its assassination of Osama bin Laden. Turning on Fox News reveals that national delusion is at an all time high in the US with footage of the ignorant American sheep waving the American flag in celebration of their government’s act of murder.

The enemy is not some bearded men carrying AK-47s living in caves in some backwater country. The real enemy of the American people is its government, which draws awesome power from the Federal Reserve System. Empires are always destroyed from the inside, when its people become infantilized and made dependent on the government, when the specter of total fiscal and monetary socialism looms on the horizon.

Here in the Philippines the government is propping up security measures to ward off possible retaliation from Muslim elements connected to Bin Laden. As a result, more money will go to the most corrupt bureaucracies in the Philippines, namely the police and military. The Philippines shouldn’t even be in this mess if its government did not enter into entangling alliances with the US government.

Here is a blog post in LewRockwell.com that says a lot about this stupid propaganda.

Every time the US waves the bloody shirt of Osama, it has a purpose. Obama has been drastically weakened in recent months, and the US has been hurt by murdering Gadaffi’s family members. The mass-killing in Afghanistan, Iraq, Pakistan, etc. is not going well. The economy is a wreck. Dollar debasement is speeding up. Gasoline prices are high. So…tah-dah…the body of Osama bin Laden for our edification and distraction. It may even be true. Certainly the CIA will assure us that its DNA test proves it.

UPDATE from Darien Sumner:

In re: Osama bin Laden’s death, here are the first three things that went through my mind:

1) Congratulations to the United States government on spending only ten years and a few trillion dollars to kill one old man.

2) This means we get all of our liberties back now, right? And our money? And the thousands of lives lost?

3) Ah, now the Libyan war is beginning to make a lot more sense from a political standpoint. The government needed a new bogeyman to chase.

Sunday, May 1, 2011

A Striking Observation of Socialist Health Systems

Actress Natasha Richardson died in 2009 because she could not be treated for head injury in Canada, she is an unfortunate victim of socialist health care

I have argued before that US health care ‘insurance’ is not really health insurance because it covers uninsurable health conditions. In my past article I said,

"There can only be insurance where insurance companies can create groupings and sub-groupings of classes. In order to do this, they have to --- wait for it --- discriminate! Suppose insurance company X has a number of professional boxers and economists as clients. They would of course have to segregate the two groups. The professional boxer has to pay a higher insurance premium because his risk of injury is much higher than that of the economist, more importantly, he has to be pooled together with other boxers while the economist has to be pooled together with other economists. Putting the two groups in one pool will amount to a redistribution scheme as the economist has to pay a higher premium, subsidizing the boxers he is being pooled with."

"[Situations which are] under the control of individuals are not insurable. There is really no such thing as car insurance since the physical condition of a car falls under the responsibility of its owner. No insurance company would offer car insurance since they will incur losses because of clients taking advantage of car insurance. This rule is also the reason why so -called government 'unemployment insurance' creates more unemployment. The government has created, in the realm of health care, a scheme similar to having insurance on the loss of sales of a business ---- it is that ludicrous!"

"It is obvious that health care insurance in the United States even before Obamacare is really just a fraudulent redistribution scheme creating perverse incentives that will make a population less healthy and more degenerate. It is therefore no surprise why so many Americans do not have health insurance for the simple reason that they did not want to pay high premiums to subsidize sickness, recklessness and degeneracy and in the process creating more of such."

Ludwig von Mises stated that,

"The psychic forces which are active in every living thing, including man, in the form of a will to health and a desire to work, are not independent of social surroundings. Certain circumstances strengthen them; others weaken them. The social environment of an African tribe living by hunting is decidedly calculated to stimulate these forces. The same is true of the quite different environment of the citizens of a capitalist society, based on division of labor and on private property. On the other hand, a social order weakens these forces when it promises that if the individual's work is hindered by illness or the effects of a trauma, he shall live without work or with little work and suffer no very noticeable reduction in his income. Matters are not so simple as they appear to the naive pathology of the army or prison doctor."

"Social insurance has thus made the neurosis of the insured a dangerous public disease. Should the institution be extended and developed, the disease will spread. No reform can be of any assistance. We cannot weaken or destroy the will to health without producing illness."

Many free marketers argue that data affecting mortality rates cannot be used when comparing the US health care system (which is semi-socialized since the State comprises 50% of health care spending) with UK/Canadian health care systems because Americans kill each other more often, consume more narcotic drugs and have unhealthy lifestyles leading to obesity and illnesses. However, those unhealthy lifestyles and crime statistics are also caused largely by government and not by some wild American ‘culture’. The unhealthy lifestyle is subsidized by the welfare scheme as explained above while the high crime rates and narcotic drug usage can be explained by the destructive ‘War on Drugs’.

It is interesting because the US system encourages sickness while the UK/Canadian system discourages it. The UK/Canadian health care systems discourage getting sick because getting treatment is such a hassle and quality is low. Waiting lines don’t really coincide with consumer preferences while sin taxes and FDA regulations do not give citizens of social democratic Europe many options to live unhealthily. This is the reason Americans are obese while Europeans are fairly fit (not to downplay the thousands who die every year in the socialist hospitals of the UK and Canada, see here, here, here and here). In the end though, no one is happy and human freedom is lost when responsibility and control over health and life are surrendered to politicians.

Blessed John Paul II on the Dignity of Work

*This entry is not intended to give a political interpretation of the late Pope but rather to show what he definitely did NOT mean by contrasting what he said with the leftist perspective. Too many times Christianity is exploited by the Left in the Philippines.

When the late Pope John Paul II, who is to be beatified today, visited Legazpi City, Philippines in 1981, he expressed interesting thoughts on manual labor. I quote from this article,

“Do not be ashamed of your work. Be proud of manual labor” – Pope John Paul II

“The eloquence of the life of Christ is unequivocal: He belongs to the ‘working world,’ He has appreciation and respect for human work. It can indeed be said that He looks with love upon human work and the different forms that it takes, seeing in each one of these forms a particular facet of man’s likeness with God, the Creator and Father,” – Pope John Paul II (Encyclical Laborem Exercens, n. 26)

A paraphrase of the late Pope bluntly makes an important point here,

He said the Son of God did not disdain being called a “carpenter” and did not want to be spared the normal condition of every human being.

All form of work, even that of garbage collector or street sweeper is dignified work. And it is dignified because it serves the needs of men. Man must work for him to survive and improve his economic condition.

I point this out because political opportunists in the Philippines use the moniker ‘Christian Social Democracy’ or ‘Christian Socialism’ to deceive the gullible and get new recruits. Theirs is a political philosophy which brings dissatisfaction, shame and misery to the laborers by making the latter think the worker as a victim of some social injustice rather than an acting agent in an economy who has the ability to shape his own destiny. The pride and virtue of work is taken away by the belief that wages are not tied to the productivity of labor but is arbitrarily set by greedy employers and can hence be changed by using the political process and passing legislation.

Nothing could be further from reality. Wages reflect the marginal productivity of workers. The only way to increase wages is through higher marginal productivity which depends on the amount of capital investment per head of labor, among other factors like skill level and education. At the macro level, wages are determined by supply and demand, with the demanders of labor being the employers and the suppliers the employees. The extent to which this analysis does not apply to the real world is the extent to which the government has intervened in the market through various taxes, regulations and licensing. The average private school teacher earns less than the professional boxer because there are much more people who can teach relative to the number of people who can enter the field of professional boxing.

Before complaints can be made against working conditions and wages in a market economy, five things must be considered.

1. Real wages were much lower and working conditions harder during the time of our fathers and grandfathers than they are now.

2. That the number of occupations and employment opportunities available during the past were very limited compared to what it is now.

3. That social mobility in the past was less than what it is now. If your father was a carpenter, then you would most likely end up a carpenter despite your personal dislike of such occupation. Today, there are more opportunities to pursue one’s passion and women are not so much pressured by their parents to marry a man of high status.

4. That the accumulated savings of our forefathers which were invested in entrepreneurial ventures is the sole cause of our higher standard of living.

5. That government intervention (no matter how well-intentioned) can only serve to impede the process of economic, cultural and social development. The amenities of modern civilization such as clean toilets, hot showers, books, mobile phones, and air-conditioned homes are enjoyed by the majority of people despite of governmental activity and never because of it. The inventor of can opener has done much more for humanity than all the welfare programs of politicians combined.

Whether or not the worker feels joy or misery about his work largely depends on his mental state. The ‘grand old man of economics’ Ludwig von Mises lists two joys of work which the socialist ideology destroys.

1. Joy of being productive member of society

2. Joy coming from the aesthetic appreciation of the worker’s skill in producing something valuable

von Mises stated that,

“… anticapitalist propaganda is a systematic scheme for the substitution of tedium for the joy of labor…The worker rejoices in his place in society and his active cooperation in its productive effort. If one disparages this ideology and replaces it by another which represents the wage earner as the distressed victim of ruthless exploiters, one turn the joy of labor into a feeling of disgust and tedium.”

He further discusses,

“The worker begins to hate his work if he becomes convinced that what makes him submit to the disutility of labor is not his own higher valuation of the stipulated compensation, but merely an unfair social system. Deluded by the slogans of the socialist propagandists, he fails to realize that the disutility of labor is an inexorable fact of human conditions, something ultimately given that cannot be removed by devices or methods of social organization. He falls prey to the Marxian fallacy that in a socialist commonwealth work will arouse not pain but pleasure.”

The leftists want workers to feel like they are victims of injustice so that they can be used to push for government intervention which is not based on any economic literacy. This only makes the worker feel unhappy about his work. If one is concerned about the lot of workers, then the first step to forming a solution is to understand the situation. This requires an understanding of economics. Economics grounds our thinking in reality. By informing us of the limits of our efforts to change society, we are more effective in pursuing that change. As economist and social theorist F.A. Hayek said,

"[t]he curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

For more info on Blessed John Paul II and his views on social issues, please read the following:

The Pope and the Cause of Freedom


Centesimus annus