Category: Uncategorized

Kid Charlemagne

Just because . . .

“Could you feel your whole world fall apart and fall away?”
“Is there gas in the car? Yes, there’s gas in the car . . .”

Crony Capitalism vs. Competitive Capitalism

In certain circles, the word “capitalism” is a synonym for the worst in mankind.

In other circles, the word represents the highest aspirations of the human spirit.

Both are correct.

How can this be?

As in so many things, it all depends on the shadows of meaning attached to the word. At its core, the word “capitalism” means an economic system based on capital–that is, based on money. The first shadow of meaning, agreed on by almost everybody, is that one of the unique traits of capitalism is that capital (let’s broaden the term “capital” to include both money and property in general–land, buildings, machines, intellectual property, etc. in the broad category of capital) is owned by private entities–as opposed to being owned by the government.

Note something important here. What important element of an economy is NOT capital?

People.

At least, in societies where slavery is not tolerated, human beings are not considered to be capital. They fall into another category: “labor.”

But anyway, the first shadow, the first bit of “spin” put on the word “capitalism” is that capitalism is an economic system where capital is owned by private entities, not by the government. This is the shadow that differentiates capitalism from all systems of authoritarianism–the “authority” in the word authoritarianism meaning that the government has total ownership of everything–regardless of what you call the government: the Crown, the Chief, the Boss, or the Central Committee. With me so far?

The second piece of spin is that not only is the capital owned by private entities, it is also controlled by those same private entities–for the most part, anyway. This is the bit of spin that differentiates the economic system of capitalism from the economic system of fascism.

Here’s where we start encountering the conundrum with which I started this article. Now, few people seriously argue that the appropriate level of government for a society of human beings is zero–mankind is simply not wired to behave very well in a system of anarchy. History shows that anarchies rapidly degenerate into systems of authoritarian strongmen vying for power and resources and generally trampling on anyone who gets in their way, or even is unfortunate enough to get noticed. So let’s dispose once and for all with the idea that some level of government is not required by human beings. It is. A lot of us are nice people, but some of us are not. The bad apples spoil the fun for all of us.

Now, having decided that some government is appropriate, the question is how much? Here’s where it gets tricky.

Remember again the basic definition of capitalism, with only a smidge of spin: private ownership and control of capital. Let’s call this competitive capitalism:, because the only constraint on the behavior of actors within this kind of capitalist society is to maximize their own profit-making ability. They can use the traditional ways to do that: improve efficiency, provide better products, superior advertising, better customer service, that kind of thing. Remember, at this point, we have not introduced any government involvement in the system, so “well-connected” people don’t necessarily have an overwhelming barrier to entry, even in the most daunting of markets. Think of Bill Gates and Microsoft vs. the behemoth that was IBM in the 1970’s.

Let’s now add the government into the equation. At its most fundamental, a government is simply an entity which is dedicated to the application of force and power within a society–indeed, it is often said that the government has a “monopoly on the use of force.” The minimum effective human government, sometimes called the “night watchman state” simply attempts to safeguard its citizens lives and property. As the government acquires more power, it expands its use of power and force beyond the “night watchman” role into other roles, such as the regulation of various economic activities–usually starting with things like prostitution, alcohol control, and control of other intoxicating substances, but rapidly expanding into other areas for reasons of “safety” or for other well-intentioned purposes.

As this government power expands over economic activity, it becomes easier for certain persons and groups to use that regulation power for their own cynical, selfish financial advantage. Those who seek to use government power to do this will either use that power to hinder their competitors, or to enhance their own efforts. Generally, they do this under cover of some rationale which makes the intervention “good for society.”

This is crony capitalism.

Notice who benefits from crony capitalism: those persons and groups who are able to manipulate the political process in order to direct government power towards a result that is beneficial to them.

Who doesn’t benefit? Everybody else. The persons and groups using governmental power rather than competition to succeed in the capitalist market are NOT producing goods and services at the most optimal possible price, are they? The need to operate a strictly competitive operation is removed by their use of government power to advance themselves and/or to hinder their opponents. So the customers of the crony capitalists pay in two ways: first, they pay more for the good/service offered by the crony capitalist, and second they pay more for the government which enforces the laws which benefit the crony capitalist.

Now, let’s contrast: Who benefits from competitive capitalism? Competitive persons and groups–and their customers, who receive their goods and services at the most optimal price possible.

Who does not benefit from competitive capitalism? It’s easy to say “those that can’t compete” but it’s not completely accurate. It’s not accurate because of the simple concept of opportunity cost.

(Opportunity cost is basically all of the other things you could have done with your money or time other than what you actually did with your money or time. If you make $10 per hour, but decide to take four hours off and go watch your daughter play soccer, the opportunity cost of that decision is $40. But if instead, your three neighbors all offer you $20 each to come home early that afternoon to mow their lawn, then the opportunity cost to staying at your $10/hour job vs. mowing those three lawns turns out to be $20 (3 lawns X $20 minus 4 hours X $10). People generally do the thing that, at the time, seems like the best use of their time. The cost of doing this is anything else they could have done. That’s opportunity cost.)

So, how does opportunity cost enter into the discussion of who doesn’t benefit from competitive capitalism? Well, let’s say that you and someone else (let’s call him Bob) are stranded on a desert island. You’re stuck eating a diet of fish and coconuts.

Now, Bob can catch eight fish per day. You can only catch four per day. On the other hand, Bob can harvest and open three coconuts a day, and you can only harvest two a day. So, by every measure, Bob’s just better than you are. You can’t compete, right?

Well, no.

See, Bob can’t both fish and open coconuts at the same time. If he tries to do that, the fish will take his fishing pole out to sea and he’ll have to make a new one. It’s the same with you–you can either fish, or collect and prepare coconuts.

So, each day, if Bob fishes and you’re on coconut duty, each day you’ll have between you:
Eight fish, and two coconuts.

On the other hand, if you fish, and Bob’s the coconut guy, each day you’ll have:
Four fish and three coconuts.

What do you do? Well, if you both like fish better than coconuts, then Bob will fish and you’ll collect coconuts. Maybe occasionally you’ll switch up and have a coconut day, but the point is even if Bob does both jobs better than you do, you both have jobs because Bob can’t do both jobs–he can only do one. His opportunity cost is your opportunity.

And the fringe benefit is that you get more fish to eat than you would otherwise have had. That’s why “those that can’t compete” don’t necessarily lose out in a competitive capitalist society. Indeed, because the goods and services in such an economy are optimally priced, they benefit that way, too.

So, if competitive capitalism is so good, why does crony capitalism even exist? For the very same reason why human beings require government: most people are good folks, but some people aren’t. Most people will play by the rules most of the time, but there are those who want to bend the rules or change them entirely so that they have the advantage–and that you don’t.

Most of these people give lots of money to politicians, for much the same reason that Willie Sutton robbed banks: “Because that’s where the money is.”

The problem is not capitalism.

The problem is crony capitalism.

A week Whip

Oh, yes, the Whip has been on the shelf for quite a while, hasn’t it? Well, don’t expect a lot of regular whippage, but this is the stuff that accumulated in my browser’s tabs over about the past week:

What We Believe: A Primer, Part 1. Well worth ten minutes of your time, especially if you think “teabaggers” are wacko raaaaacists:
An Ethics Meltdown at the Justice Department [*1] — Harper’s Magazine. One more thing the Tea Party movement will need to clean up.

[*2] — From Richard Fernandez’ “Belmont Club,” featuring this horrifying video from the BBC:

Doomsday Clocks: Are We Heading for Another Great Depression? [*3] — And, a horrifying chart via The Blaze . . .

How Big Is The Coming Political Tsunami? [*4] — from Rand Simburg’s “Transterrestrial Musings”

Terror warnings: Be specific or be quiet [*5] — Washington Post’s Anne Applebaum states the obvious about the moronic “terror alert” issued last weekend for Europe . . .

2011’s Uncharted Political Waters [*6] — Tony Blankley at Real Clear Politics

Taxes and Presidential Math [*7] — Wherein Veronique de Rugy attempts to school our economically illiterate President on tax cuts . . . featuring this entertaining chart:

‘Dishonest’ and ‘Morally Bankrupt’: ‘Whale Wars’ Captain Alleges Lies and Cover-Ups[*8] — via The Blaze, discord in Sea Shepherd-land . . .

Obama plans to be out of the country for 12 days following midterm election [*9] — from the Washington Examiner

Anatomy of the Obama Meltdown [*10] — Victor Davis Hanson at National Review Online

Democrat Dirty Tricks: A Primer on Stealing Elections [*11] — Ed Lasky at American Thinker

Who is the Republican Party? The Denver GOP Has the Answer [*12] — RAAAAACISTS!!! Sexist, homophobe violent gun-toting bitter clingers! Teabaggers! Dangerous! Evil! Run! Flee for your lives! REPUBLICANS!!!!!! AIEEEEE!!!!!!

INTERESTING: New York Times no longer referring to “Obama’s first term” [*13] , and . . .

Republicans should give Chicago Democrats nightmares by running on a campaign to enact a “forensic audit” of City Hall for the last 20 years [*14] — from those wacky Chicago Hillbuzz guys . . .

SF Fanatic: The New SF/F TV Shows Are Crap [*15] — Yeah, I’ve noticed . . .

Republicans See a Political Motive in I.R.S. Audits [*16] — in the New York Times, believe it or not.

Obama will not sign foreclosure-friendly bill [*17] — This is, I think, “even a blind squirrel finds an acorn once in a while” sort of news . . . of course, comparing Obama at this point to blind squirrels may be an injustice to sightless rodents . . .

Scratched glasses give perfect vision for any eyesight [*18] — Hey, maybe this would help the sightless rodent situation . . .

Scientists and Soldiers Solve a Bee Mystery [*19] — The Bees Know . . .

Casting Call: Obama’s MTV Open Town Hall [*20] — The Democrats aren’t even bothering to hide the fact that their whole act is, in fact, an act. Staged. Not real. They’re auditioning actors to play the part of “citizens” for an Obama town hall meeting. Pathetic.

The Cost Of Moslem Intolerance [*21]

The Paul Gauguin [*22] — Carl’s on a cruise . . .

Happy Couples Are On the Same Page – Literally [*23] — from Yahoo News

Mao and Later: How Markets Benefit Well-Being[*24] — The price of collectivism, in dollars. This doesn’t take into account the lives wasted or destroyed by well-intentioned authoritarianism. Nobody starts out wanting to be a monster. It just sorta happens. Over and over and over again, throughout history. At some point, you’d think we would learn.

Data from Brad DeLong, via Reason Hit and Run

PRESS MAN: The Paranoid Style in Liberal Politics [*25] — Andrew Ferguson in Commentary Magazine

Another awesome George W. Bush story you probably have never heard that makes me hate myself for ever saying anything bad about this man. [*26] — More from HillBuzz . . .

To Obama’s Chagrin, Young Voters Get Serious [*27] — Jonah Goldberg at Townhall

Federal Judge: ObamaCare Is Constitutional; Commerce Clause Gives Government Power Over All Economic Decisions and Not Merely Economic Activity [*28] — at Ace of Spades HQ. This sort of thing used to be called an “Intolerable Act,” I think.

The Constitutional Oath [*29] — But if you don’t think the Constitution means anything, then your oath doesn’t really mean anything either, now does it?

Surprise: Ethics Trials for Waters and Rangel Won’t Start Until After Nov 2 [*30] — Maybe the Republicans can manage to hold these off until the next Congress comes into session. Wouldn’t THAT be fun?

Atlas Shrugged, Hayek Wept [*31] — One fundamental thing that leftists don’t understand is that people on the right actually do understand people on the left, whereas people on the left are utterly mystified, bewildered, and terrified by people on the right, because they do not understand why the right believes what it does and why it behaves the way it does.

You Are Required To Buy A Musket [*32] — If one federal judge can decide that you are required to buy health insurance, why can’t another decide that you’re required to buy a gun? Or a pony?

Fed Officials Mull Inflation as a Fix [*33] — Bend Over, America. Here it comes . . . the people who are “supposed” to know what they’re doing don’t have a clue. They’re repeating ALL of the worst mistakes of the past, while telling us all thwe while that this time it will be different, because, you know, they are smarter. Yeah. Right. Bend over. It’s coming.

Stargate Universe: Likes, Dislikes, Dos and Don’ts [*34]

‘You’re a Liar’: Student Who Heckled Obama Gets Roughed Up [*35] — Because people on the left are so tolerant of diversity don’t you know . . .

Progressive Feudalism [*36] — Thomas Lifeson at American Thinker. I’ve been calling the society that the Democrats and the “progressives” have been working towards a kind of feudalism for some time now. And guess who’s the lords of the manor? Here’s a hint: Not You. Guess who’s the serfs? Go look in a mirror. Bend Over, America, it’s coming.

Uh, Wee Problem Here On Grains….. [*37] — The economic illiterates in charge of this country are playing with fire. Weimar Republic-style fire. Watch commodity prices, especially food. Bend Over, America, It’s Coming.

OK. We need a humor break:

Oh, we are so screwed. But, onward!

The Colbert Democrats [*38] — Charles Krauthammer in the Washington Post. Did I mention We Are So Screwed?

Which Obama Will Emerge After the Storm? [*39] David Paul Kuhn at Real Clear Politics. My strong preference would be the Obama that would emerge, see his shadow and become frightened, then go back underground for two more years and leave the rest of us the hell alone. Probably won’t happen, though.

Revenge of the Hillary Voters [*40] –Rich Lowry at Real Clear Politics, engendering this further commentary from Kevin Dujan at HillBuzz: The Revenge of the Hillary Voters [*41] . Dujan, being one of the aforementioned Hillary Voters, speaks with some authority on the topic.

BUSTED! Video Documents Role of Democrat Consultant Neal Rauhauser in Smear Campaign Against Tea Party [*42] — Gosh. Democrats doing sleazy, nasty, unethical, obscene things to win elections. Golly, Wally, that NEVER happens.

The Elitist Individualism of H.L. Mencken [*43] — A mental palate-cleanser after the filth of the previous article.

Less Government, Less Economic Trouble [*44] — Robert Higgs in an article originally printed in the Christian Science Monitor

If 2010 is an “anti-incumbent” election, how can it be that 80 percent of the incumbents will be re-elected? [*45] — Mark Tapscott asks at the Washington Examiner . . .

This Stock Market Rally Has Everything To Do With The Turn Against Obama [*46] — Actually, I personally think it has more to do with the Fed continuing to artificially inflate the money supply, which is paradoxically keeping prices up because it’s making the actual value of everything decline in dollar terms. That’s what inflation is. That’s why you need to watch commodity prices carefully. They’re going to go up, I think. Way, way up. I think we’re set up for double-digit inflation–at best, in the fairly near future. All of the “experts” will act like we’re in a boom, but it will just be another bubble. And when that bubble bursts, the game will be over. So will the entire world’s economy. The dark age will begin.

How radical is our “radical-in-chief” [*47] — Paul Mirengoff at Power Line

Cool as Ice [*48] — Robert Costa at National Review Online, writing about Joe Miller, the Alaska libertarian (small-L) Republican, trying to fight his way through the special interests and into the U.S. Senate

Why Inflation Matters [*49]

Economics for 11-Year-Olds [*50] — Still possibly too arcane for Washington/elite/Ruling-Class people, unfortunately . . .

Over 52? Then you’re probably grumpy [*51] — This explains . . . something . . .

A Tale of Two “Rallys”

Faith, Hope, Charity.[*1]

Hate, Envy, Greed.[*2]

I know which of those appeals to me. Do you? Are you supporting people who have your best interests AND the best interests of all of your neighbors and friends, or are you supporting people whose two favorite strategies are “divide and conquer” and “the ends justify the means?”

VDH: From the unthinkable to the Passe’

Victor Davis Hanson:[*1]

Whether hard communism or soft socialism, statism does not work. We all know why — it goes against human nature, rewarding mediocrity and punishing merit, professing egalitarianism for the masses, while the operators of the system, whether the old Soviet apparatchiks or the new crony EU Brussels bureaucrats, satisfy their appetites like capitalists.
. . .
Most of what we are told about universities is untrue. America’s reputation for higher learning excellence (in business, sciences, medicine, engineering, and finance) is despite not because of the humanities and social sciences. Current research in the liberal arts (the portfolio the English or sociology prof is tenured on) increasingly has almost no relevance to the general public or applicability to teaching or even scholarly merit.
. . .
I fly to an airport, have a minute, and access over 60 million words of the corpus of ancient Greek literature in between flights. Big deal?
The strange thing is that none of this has been quite factored into fossilized metrics that supposedly quantify the standard of living, poverty rates, GDP, etc. In the grocery line not long ago, two teens were chatting in Spanish to relatives by iPhone in distant Mexico. Are they impoverished or enjoying a privilege exclusive to royalty just forty years ago?
. . .
I cannot fathom how the Democratic Party became run by those who live lives nothing remotely similar to what they profess. Yes, I know the Roosevelt-Kennedy tradition of limousine liberals, but today’s chasm between word and deed is stunning — and never remarked on. Are we to believe that prep-schooled and Ivy Leagued millionaire Barack Obama is the blue-collar face of the Democratic Party, while one of twelve children John Boehner is some sort of J.P. Morgan insider rich man? No wonder that Obama must fake his cadences, bowl, and try to eat cabbage instead of arugula.
. . .

Yeah, it’s another “Read The Whole Thing” article. And yes, Victor Davis Hanson is a Democrat. In California.

The opposition to the Obama/Pelosi/Reid statist takeover of the United States is not a kneejerk thing. It is deep, principled, and based solidly in the foundational political traditions of this country. The Tea Parties will not go away. Calling them names makes them–us–stronger, more determined, more resolved.

This war against freedom is as old as mankind, and it is never truly won. But it is never truly lost, either.

We will be free.

And, if you’re rolling your eyes right now, be careful. While you’re aiming that gun of government power at us, your eye-roll will be all the opening we of the liberty movement will need to take that gun away from you, strip it down into pieces, and scatter them so that it will again take you centuries to put it back together again.

Because we know something you don’t. We know that you can’t help yourself–that you are compelled to put that gun together and point it at us. It’s part of what makes us all human. But we also know that there is a better way than pointing guns at each other.

Freedom. Liberty. Individual responsibility.

We invite you to join us.