The point of this series is to make clear how the world has changed for the better since innovation and trade have taken off to provide increasing amounts of “More”, while the old standby of taking it from others ultimately results in “Less.” The problem is we either have to commit to adapting to a changing world with greater flexibility and efficiency or get caught in the downward spiral of government-directed economies invariably get snared. More government direction and you go down the road to “less.” The leaders promise “More” and maybe initially deliver by taking it from some and giving it to supporters, but ultimately they can’t adapt quickly enough and fall behind. The people get restless. The leaders grow fearful and clamp down on dissent. Maybe, aggressive foreign ventures are taken to distract from the leader’s failures. Sanctions for these actions or human right violations follow adding to the economic distress. The country is forced out of normal trade as unreliable in any supply chains. The economic situation gets even worse and the leaders have to be even more repressive. On and on it goes. Unfortunately, this is the history of every modern top-down government. If we wish to avoid this horrible fate we need to take certain steps:Continue reading
Never in human history has the average human had “More.” Capitalism if left alone to continue to work its magic promises to bring even “More” to everyone allowed to participate. Only where economies are increasingly run by top-down dictates is the human condition deteriorating. Yet as we have seen this highway to more is threatened both at home and abroad. Even China where allowing capitalism rum a major part of its economy brought a billion people out of abject poverty is reasserting top-down control. No wonder its growth rate is slowing in line with every turn of the screw. We know where this leads, increasing oppression and, of course, “Less.” At home, we have a large part of our populous favorable to socialism and outright hostility to capitalism. To understand this strange reaction to a system that has provided everyone with far “More” than our forebearers ever dreamed possible, Joseph Schumpeter (1883-1950) gave us some insight. The economist popularized the phrase “Creative Destruction” to describe the dynamics of market capitalism and how its disruptive the forces of innovation undermined norms. With the widespread change, some suffer near term loss but overall most gained. He lauded the entrepreneurial spirit of the capitalists, but thought the loss of equilibrium would cause socialism to win out in the end. He based this on the hostility of intellectuals on one hand and workers on the other. He couldn’t have been more wrong. As we’ve shown, socialism and every other top-down system have proven to be an utter disaster. As it turns out the equilibrium under these systems is upset but not in a good way. However, this hasn’t quashed the hostility among many intellectuals and workers.
Today’s intellectuals are the direct descendants of the small number of literate elites topping the heap all over the world for all those centuries prior to 15th. Whatever “More” there was to have belonged to them. They were the military leaders, the governors, the lawmakers and keepers, the bureaucrats running most everything, the repositories of whatever passed for knowledge and the intermediaries to the gods. The vast majority of humanity was just dust beneath their feet. The uncouth deplorables were put on earth to serve their betters. They only suffered merchants and artisans to provide them with the good things of life. They were the top of the human pyramid. The commercial class had to kowtow and often bribe these officials in order to survive. This still exists but much more muted in liberal capitalist countries. As commerce grew and entrepreneurs prospered, the intelligentsia had to share power and place. They are not happy.Continue reading
n our last post, we laid out how old-style top-down governments cannot keep up in a world where change can come from anywhere at any time. Lumbering bureaucracies must become increasingly repressive to maintain the control that has only provided “Less”. Moreover, you can’t be part of a worldwide trading system and supply chain while intimidating and undermining your more liberal neighbors. Threatening supply routes whether it be the South China Sea or the Straits of Hormuz just doesn’t denote a commitment to world trade. Top down just isn’t compatible with the continued growth of “More.” Yet even countries once appearing to follow the liberalizing path (in the classical sense) to”More” somehow found a way to be increasingly top-down and moved in the opposite direction. Venezuela surely has made the trip. Turkey seems headed in that direction. China is at the crossroads. Could others follow? Could we actually get off the highway that has brought us so much “More”? There is always a danger of backsliding and unfortunately, there are worrying signs.
But don’t we need Laws and rules? Of course, all civilized societies have to have them, but there are rules and laws and there are rules and laws. In order for us to flexible and adaptable they have to be needed, fair, level playing field, workable, and reviewable. A good example of this is how we approach energy in light of a warming world. Presently we have a hodgepodge of mandates and subsidies favoring some while penalizing others. A tax subsidy to the producers of luxury electric cars puts competitors with a much different solution at a disadvantage. Many think a better way is to have a carbon tax and let everyone choose what is the least costly way to have energy in light of the tax. Definitely, this would be superior to what we have today, but how do we determine the proper amount of the tax. Once the tax is collected what do you do with the money? Spend it or rebate it? However, the biggest negative is even if it works and we reduce our emissions further unless the rest of the world does the same it will hardly move the needle. However, it would raise our relative costs putting us at a huge disadvantage. Even if the rest of the world buckled under and adopted high cost Zero carbon emission energy sources it would doom a billion plus people to continued poverty. How moral is that?Continue reading