scrivener

Opposite Day

I used to joke that most of what is taught in elite American universities about society is wrong, but I’ve come suspect that it is not wrong.

I’m beginning to entertain the possibility that everything the media, academia, politicians, big businessmen, the judiciary, “the establishment” and all “right thinking people” believes about society is not only wrong, but directly opposite the truth.

Progressives have been ruling the US and determining the acceptable narrative since about 1960, which is fifty six years. Yet for fifty six years they have blamed all the tragedies of the human condition on the power and influence of non-progressives. So that is the first opposite. They ran the place for most of living memory yet our problems are due to their defeated enemies.

Progressives condemn capitalism and attribute all sorts of ills, injustices and unsociable behavior to the quest for profits. In truth, under laissez-faire capitalism, profits are a sign of virtue and the strong benefit rather than exploit the weak. Think about the fate of some below average schlub in Havana or North Korea as opposed to some below average schlub in Palo Alto or New York City.

Progressives condemn white Americans as racist. I don’t know a way of measuring racism, but they sidestepped the impossibility of measuring racism by defining racism as racial prejudice combined with power. By definition white people are in power so only they can be racist. The institutions controlled by white people, the universities, the courts, the media, corporations, seem to me to be even handed. Does anyone contend that movies and TV are bigoted? that university admissions disfavor blacks or university administrators dismiss black grievances? that a black man shot by a policeman gets less due process and justice than a white man? I cannot see into the hearts of my fellow man but I am beginning to suspect that whites may be less bigoted than other races. Opposite day.

Progressives decree that women are subjugated to male patriarchy in America. Yet a twenty one year old woman in New York City can walk out alone in a mini skirt, expect not to be sexually assaulted, pick and choose among the many men attracted by the sexual display, stay out until the early morning hours for her pleasure and walk home alone, unmolested. I would say that the majority of women in the world do not have that freedom. Its amazing that there can be such a honorable culture.

Progressives say that income inequality is bad. Maybe income inequality is good. If income inequality is bad, are not other forms of inequality bad? Slim attractive women live better lives than fat unattractive women. Most of the times I see a woman driving a luxury car like a BMW or a Range Rover, she looks hot. No one agitates for less inequality in political power.

Diversity is supposed to lead to more points of view leading to better results in whatever project you are engaged in. No empirical study of the theory have ever been performed to my knowledge. Perhaps the opposite is true. Diversity could lead to misunderstandings, sand in the gears, annoyances caused by radically different cultures, resentments, petty score keeping by race, tribal loyalties superseding institutional loyalties. Who knows.

The premise of Opposite Day is that it is not a mistake in knowledge. It is not innocent error. Perhaps it is a calculated program of lies. The purpose of the lies? To take power from some people and give it to others.

To the Left, Western Civilization is Irredeemably Evil

If you want to unseat the elite who have power now and replace them with you, you need a reason why you are preferable to them.

One could pledge to reform and improve sclerotic institutions, but where is the percentage in that? Running fair institutions that give no favor to you and your supporters is pretty weak beer for all the effort.

No, a much better rationale for replacing the current power elite with you is to convince people that the current institutions are irredeemably unfair. Then you get to take over the institutions and run it according to your lights. Universities are not overpriced, over administered, and failing in their missions to educate. No, they are full of rapists, racists and privilege. Only by throwing out the current administrators and professors can they be made fair. You get to keep the overpriced, over administered, and failing features. Once you start running the place you can get some of that swag, reward your supporters with useless administrative positions and keep goofing off in the work (educating) department.

Marx and the Bolsheviks claimed that capitalists were exploiting the workers. Power must be moved from whomever had it now to the Bolsheviks to right the injustice and make life better. Strong medicine had to be applied by the new leaders least society slip back into injustice. I don’t think the condition of the proletariat were improved much by the Russian Revolution. In the USA the working class got richer, more secure and freer with no radical change of leadership or institutions. Soon all revolutionaries seeking power for themselves needed a new grievance to justify the revolution.

Our government is very corrupt but it is not a system that is irredeemably evil. One could change the tax code so it did not blatantly favor one person or business over another. One could stop bailing out banks ran into insolvency by their management. One could prevent the government from taking an ownership stake in a business, like General Motors, and then regulate the safety of the product of General Motors. One could stop politicians from getting millions in ex post facto bribes for favors by having politicians forfeit their pensions and secret service protection if they engage in remunerated work after office (or accept gifts). One could dry up the student loan money that is funneled into rich failing institutions. One could make the Justice Department independent of the Executive Branch. One could end the Federal Reserve.

Those are all possible things – there would be reduction in the discretionary power of our elite if they were instituted. Naturally it would be hard to accomplish such things, since the elite would resist them and the reformers would not get a large amount of personal gain. Not to say it would be impossible for determined people of good will.

Why do Politicians Promise Affordable Health Care

Often we have no choice but to buy health care services. No one likes to pay money for a purchase forced upon them. The need for health care may strike arbitrarily due to no fault of the sufferer. Health care can be ruinously expensive. It all makes it seem unjust and painful to devote lots of money to it.

So should the price be reduced by all the means available to the modern state? The state could put a lot of pressure on health care providers to force a lower price.. There could be tax incentives for insurance plans that keep price increases lower than a goal. There could be ceilings on annual price increases, limits on the number or MRI’s, government panels to approve treatments and drugs, mandated end of life counseling, penalties for hospitals that have higher than average readmission rates, cash payments to doctors whose patients use fewer services, etc.

What purpose does the price of something have in a capitalistic system, besides extracting your hard earned money?

Price allocates the current supply to those who value it most.

The money you spend on something can be viewed as a willingness to give up all the other things that the money could buy for you. So more accurately price allocates the current supply to the people who relatively value it more among their options. No one can make it possible for you when making purchase decisions to have the options of Donald Trump, but you can make it possible to allocate the resources that you do have among your competing wants, thereby valuing some things more and some things less. Donald Trump probably does not move the demand curve for any medical care, because people like him are very rare. I could charge $100 for an aspirin and would sell very few aspirin. If I were sitting next to Trump in the jury room and he had a headache and wanted an aspirin I might make a $100 sale. The entire supply is what determines the price, and that has to take into consideration people who are more reluctant than Trump to part with $100.

Price also communicates information to the entire economy.

Price signals to suppliers, producers and sellers, how valuable their “things” are. A high price signals a willingness to buy it in preference to lower priced things. A high price also invites more supply. In NYC twenty five years ago you could get a cup of coffee on nearly every block. It was served in a paper cup from a large urn, not good. Enter Starbucks, introducing west coast coffee to NYC. Not only did Starbucks open a store seemingly every block but also thousands of independent coffee shops sprung up, eating places started sprouting European espresso machines, and even McDonalds entered high end coffee. Why did that happen? For decades New Yorkers were offered the same coffee urn product (except at high end restaurants). Suddenly, millions of dollars were voluntary invested by private citizens to supply great coffee. How did they get the idea that escaped them for decades? Did New York citizens not appreciate good coffee while the West Coast did? Later developments showed the demand for good coffee in NYC was as great as in Europe or Berkeley, but the darn suppliers did not know it. Starbucks charging five times the price of a cup of swill, and selling like hotcakes, convinced them, drew capital and effort, and increased the supply of great coffee overnight.

So price under capitalism has an important function of transmitting information. If you suppress the price you short circuit the information.

Why would politicians and bureaucrats think that they can make health care more affordable to people who can order their allocation of money as they see fit without causing over consumption and underproduction of health care?

Trade or Comparative Advantage (cont.)

Last post I claimed that trade could improve the lot of all participants, be they more productive or less productive, higher cost producers or lower cost producers, advanced or backwards.

I even claimed that if you are better then me at every productive activity, I can benefit from trade with you. This is the opposite of the wisdom that capitalism and voluntary exchange allows the “stronger” to take more from the “weaker”.

To simplify everything I imagined a shipwrecked pair, Mr. A and Mr. B on an island. Their little economy was focused on survival and the main element of GDP was fishing and gathering fruit. Reality compels them each to somehow obtain four fish per day and four small fruit to thrive. I claimed that if Mr. A was better at fishing and Mr. B was better at gathering, if they traded the products of their effort they could get the same output for less work because they could specialize at that which they were best.

As a baseline we could imagine each of Mr. A and Mr. B had to work four hours each day at fishing and four hours at gathering to get their requirements. Now suppose Mr. A has some sort of absolute advantage over Mr. B. Mr. A. can not only catch his four fish in three hours but is a killer at gathering, getting four fruit in two hours effort.

Of course, Mr. A could work five hours per day getting everything he needs (3 hrs for 4 fish, 2 hrs for 4 fruit). He could with satisfaction watch poor Mr. B work eight hours a day for the same. Or he could be smart and realize that if he traded with Mr. B, he could spend all his time on his most productive activity – gathering fruit. He could gather enough fruit for all their needs in four hours instead of personally meeting his fish and fruit needs in five, but he could only do it if Mr. B joined in an agreement with him. Mr. B had to give him some of his fish for Mr. A to specialize in fruit. Even though Mr. A is better at fishing then Mr. B, he is even more better at gathering fruit. Obviously they would come to some agreement that splits the gain for Mr. A (five hours work reduced to four hours work) with Mr. B in exchange for Mr. B allowing him to specialize in his best field.

Mr. B stops gathering fruit and spends all his time fishing. Even though he is no more productive fishing than gathering fruit, his specialization enables Mr. A to produce more at less effort. His reward for enabling Mr. A is some of Mr. A’s higher productivity.

That is why the lawn care guy benefits from the brain surgeon. When I was a kid in a working class neighborhood nobody paid to have their lawn mowed. Well maybe a few people did as favors to enterprising kids or when facing declining health. Where I live now, people make lots of money when they are working. In fact most would trade money for a little free time for themselves and their family. Their high productivity makes it possible for very low productivity people (perhaps someone who can not read or write or speak English) to get a little of the higher productivity person’s production.

Far from the strong taking advantage of the weak, capitalism and voluntary exchange spreads the wealth. If Mr. A with his higher productivity did not exist, poor Mr. B would be stuck working eight hours a day to live. When higher productivity Mr. A arrives, there is surplus available for them to split. If Mr. A tries to claim all the new surplus for himself, Mr. B can simply decline to trade with him being no worse off then before.

Trade or Comparative Advantage

Trade, voluntary exchange, is now controversial, particularly international trade. Are we being taken advantage of by the Peoples Republic of China? After all they have lower labor costs and fewer expensive pollution controls. Or, as in most areas of life, is it a trade off between benefits and detriments? Free trade with the PRC gets American consumers cheaper Iphones but causes other Americans to experience a loss of high paying manufacturing jobs.

I contend that trade creates a free benefit for all parties involved, be they more or less productive, higher or lower cost producers, developed or underdeveloped economies. Interestingly when trade occurs, the stronger benefits the weaker, as well as itself.

Imagine two castaways on an island. In abstract, an economy

I will postulate some reality constraints on them. Each has to eat to survive. There are two categories of food available to them: fish and fruit. If one ate only fish he would die of scurvy, if one ate only fruit he would lack protein and starve,

Our castaways, Mr A and Mr B, each need 4 small fish per day and 4 fine fruit to meet their caloric requirements. Mr A and Mr B can meet their requirements by each fishing 4 hours per day and each gathering fruit 4 hours per day. Under these conditions there would be no trade between them.

In the real world, some people are better than others at tasks. Anyone who ever played a pick up game of sports knows some people are better than others at any given task. Suppose Mr A is a better fisherman and can catch his 4 small fish in three hours. Suppose Mr B is a better gatherer and can gather his 4 fruit in three hours.

Without trade

Mr A 3 hours fishing (4 fish) 4 hours gathering (4 fruit) 7 hours work to survive

Mr B 4 hours fishing (4 fish) 3 hours gathering (4 fruit) 7 hours work to survive

Now suppose it occurs to Mr A and Mr B to make a trade. Mr A could trade 4 fish to Mr B for 4 fruit. Now the situation is:

Mr A 6 hours fishing (8 fish) 0 hours gathering fruit (no fruit) 6 hours to survive

Mr B 0 hours fishing (no fish) 6 hours gathering fruit (8 fruit) 6 hours to survive

Our little economy just achieved the same output with two fewer hours of work per day, for free.

Next entry: what if Mr A is better at both fishing and fruit gathering than Mr B?

Digression

The left in its own theory refers to the racial issues as a subset of class issues, and treats them as it treated class warfare: a means of arguing that the powers above are unjust, and therefore must relinquish more control.

from amerika

This makes many things clear to me. The Left is so critical of America, when obviously America is pretty near the best the world has to offer in everything, because they want to dispose the elite in America and replace it with themselves.

Why would Obama denigrate America when he rules it? He dosn’t really rule it, yet. There are many power centers. Wall Street is dominated by different people. Academia and media are on board, but the military, some religious groups, some local governments, some private businesses in more competitive fields, small businessmen, parts of the Internet, the traditional family, the federal reserve, some federal courts, some local courts, and countless others wield significant power.

I studied world history, philosophy, religion and art. One thing absolutely clear to we students was there were three amazing civilizations in about five thousand years of known human history: Ancient Greece, the Roman Republic, and the United Kingdom. I have no doubt that if in some time in the distant future similar students study world history the same three cultures will be lauded but with the addition of the United States. Against all odds, where the norm is and has always been one man lording over another, America cut out a small area of self determination for any person. As a reward it became the richest, most powerful and most attractive country in the world.

Profits Are Good

When I got to college I was surprised at how much disdain capitalism and the bourgeoisie were held in. I was a small town unsophisticated kid. To me, a law abiding person who served the wants of fellow people and supported a family seemed good. The way life was ordered, with shopkeepers, tradesmen, doctors, clerks, was not only familiar but correct.

Professors didn’t agree with me. In fact, it was implied that my thinking was shallow. The bourgeoisie were exploitative, secretly dishonest, depraved, and above all boring. The artist, the academic and the world historical individual were the ones who deserved respect. Don’t think too much about the trail of blood left by the world historical individual.

Anyway it is a story for another time how I came to decide that capitalism is good. I have decided to start a blog defending capitalism. To defend capitalism one has to defend profits. For under capitalism no business exists and grows unless it is profitable.

Continue reading “Profits Are Good”

Uber is Revealing

Uber is revealing how government is generally a supporter of entrenched interests. Upstarts and competitors are always hated by existing businesses. Under real capitalism there is little an existing business can do other than produce a better good or service at a lower price. When the government has unlimited powers to regulate business however the more powerful existing business can wield the police power of the State to throttle competitors.

Here’s an example from the news: Counsel meeting could limit the number of Uber cars. The stated public purpose is to fight congestion. That reasoning ignores the benefit to people. Of course adding Uber cars to the surface streets of Manhattan increases congestion. It also makes it possible for people to get around conveniently without bringing their own car. Huge parts of Manhattan have no cabs cruising most hours because there is not enough demand. Calling a radio dispatched limo can involve an hour wait. Competition for yellow cabs will make service better. Just the entry of Uber often makes the local cabs cleaner, the local drivers more pleasant and the cars upkeep better.

The taxi industry proposed similar legislation before. Where are the people who commute to Manhattan by car and bus? Are they calling for this type of legislation? How about pedestrians and businesses? Are there concerned committees with broad support?

Thousands of people want to work by providing a service to Manhattan. More thousands want to voluntary exchange their money for an Uber ride. Yet the city counsel wants to prevent this voluntary exchange.

Uber reveals this about regulation

Government almost always forwards the interests of established business over the upstart business and the customer.

Ostensibly, regulation of taxi services is for the safety of the public and to insure minimum levels of service. In actuality it is to prevent competition in service, price and innovation, all to the benefit of entrenched taxi service providers.

I remember the cabs in NYC years ago. The vehicles were poorly maintained and dirty. The driver often spent his time on the cell phone talking loudly in a language I could not understand, as if he was on his own time instead of in my paid service..

In Miami the trip from the airport to Miami Beach was fixed fare. Once the shocks on the cab were bad and it bounced up and down so severely I thought we would drive into the bay. Another time I could smell exhaust in the car. I thought the driver might pass out at any moment. Because the fare was fixed the drivers drove as fast as they could. At night they would turn off the dashboard lights so the passengers could not guess how fast they were flying. Nothing like speeding on a causeway over water in an under-maintained car while the driver is in deep conversation with someone miles away.

Then I tried an Uber car in Miami. The car was a very new Toyota small SUV. The driver had provided water and candy for passengers. He asked about the temperature to set, whether there should be music or not and at what volume. The trip cost slightly less than an equal taxi trip. I was hooked.

Why is Uber so much better? Every major metropolitan area regulates taxis. They limit who can offer the service; hence it is a government enforced monopoly. They act as monopolies always act Either they raise prices (or not if prohibited by regulation) or cut on service and capital investment, or both. The cabs are crappy The drivers are rude and unconcerned about your experience,

The politicians gain the fees and support of taxi fleet owners. The fleet owners gain freedom from competition and the need to manage and provide a good customer experience. The drivers gain almost nothing. Hired hands who take their little share out of the arrangement by freedom from providing customer service. After all, there will be fares no matter how surly or preoccupied the drivers are. The customer pays for the politician’s and the fleet owner’s benefits. He pays in crappy cabs, higher prices, lousy customer service.

It’s repeated everywhere. The most regulated enterprises provide the poorest customer service. Think of what your experience at the doctor’s office or hospital is like today