Socialism’s “intellectual suicide”

April 29, 2013

Carmen, Carmen…

By Don Kirk in Free Markets Myth, Keynesian Myth-Math, Prosperity vs. Poverty, Socialism's "intellectual suicide"

Spanish unemployment. Past 25%, and still rising, after five years of both Leftist and Rightist governments promising they knew how to end the economic debacle. Well, they created the problem so one would think they know how to solve the problem, but if a country is going to base its economic policies according to ideology, then we shouldn’t be surprised when they fail.

Currently, yields on Spanish bonds trade at 4.16%. Debt is at 110% of GDP (more than the entire economy), which means the cost of the debt has to be financed out of annual economic growth.

Oops. Spanish GDP growth is 1.5%, on a good day and after drinking plenty of Spanada wine. So, 4.16 – 1.5 = -3.66. Conclusion? Spain is being toilet-flushed by more than 3% per year by ideological economics of Leftists and Rightists, both of which are utopian and laden with myths. Watch for Spanish youth to be migrating to Latin American economies to escape the toilet-flushing at home.

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April 8, 2013

Socialism’s Sociopathy

By Don Kirk in Life-Flourishing vs Life-Extinguishing, Socialism's "intellectual suicide"

Mr. Obama’s proposed budget calls for tax-deferred retirement accounts to be capped at $3 million in assets, suggesting that accumulated savings in excess of $3 million are not “reasonable.” Much of the political impetus for this plan to limit the amount of savings working people can sock away to become millionaires in their retirement apparently is Mr. Romney’s personal retirement account that holds well in excess of $3 million.

Mr. Romney’s conservative Right decries the proposed limits with an argument that once a person reaches the limit, they’ll stop being thrifty. Hmm. Maybe, but also, maybe not. More likely, someone who has maxed out on tax-deferred savings will concentrate upon savings at reduced capital gains tax rates, meaning that they’ll continue to buy stocks but outside of their retirement accounts.

Actually, the math works in their favor. Distributions from an I.R.A. are taxed at ordinary income tax rates, while capital gains are given preferred lower tax rates. Literally, Mr. Romney’s investments in his I.R.A. will pay more in taxes than he would if he simply made those savings outside of his I.R.A. Why pay 40% tax on distributions from your I.R.A. instead of paying 15% tax on capital gains on stocks sold?

There are so few $3 million I.R.A. accounts in the country that one suspects this idea of Mr. Obama’s is simply vicious partisan politics posing as policy. Mr. Obama simply wants to punish the wealthy, and this anti-Romney policy does nothing to benefit the country. This is nothing more than sociopathic socialism’s hate-filled desire to punish, to dominate, to control individual personal success.

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March 18, 2013

Infants Rule

By Don Kirk in Economics, Philosophy of Freedom, Political Theory, Socialism's "intellectual suicide"

Economics professor Jeffrey Dorfman of the University of Georgia has an excellent piece today in Real Clear Markets suggesting that the inability of politicians to agree on economic policies is a function of the politicians following one of three philosophers. Dr. Dorfman suggests that free-marketers follow Vifredo Pareto (no harm to anyone, a Libertarian position), free traders follow Nicholas Kadlow (not actually a philosopher), where the harm done is outweighed by the benefit derived (a form of Utilitarianism), and John Rawls, who famously argued that the ‘first position’ is to be given to the least-well off for a society to be just (the welfare state of democratic socialism, Keynesian economics). Rawl’s most famous book is above.

Rawlsian ’first position’ argument is infantalysis. The least-well off are those unwilling or incapable of providing for themselves. They are, especially to the determinist world-view inherent in all socialists, “helpless.” The characteristic of ‘helplessness’ is the fact of the human infant, by far the animal with the longest period of helplessness of any animal on the planet. Rawlsian philosophy/Keynesian economics is motivated by the psychic desire to reward, to care for, to nurture, to provide for human helplessness and in that psychic desire, they propose policies which will reward the infant’s lack of judgment, the infant’s lack of experienced prudence, the infant’s lack of any practical sense of responsibility found only in a mature, grown adult.

Professor Dorfman is correct in his analysis. But he missed the deeper psychological insight: The policies of ‘caring’ economics perpetuates the helplessness it desires to alleviate. Democratic socialism is like all forms of socialism: self-defeating economics, infantalysis philosophy.

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March 15, 2013

Sea of Red

By Don Kirk in Free Markets Myth, Keynesian Myth-Math, Socialism's "intellectual suicide"

The sea of red is angry government worker unionists in Brussels protesting the austerity program in Europe which is reducing their jobs. The unionists honestly believe in John Maynard Keynes’s Fabian socialism, where increased government spending, not reduced government spending, will restore Europe to a path of economic growth.

This intellectual battle has been fought for more than a century, and clearly from the above picture, the battle rages. Unfortunately, the battle is over two myths—the ‘free market’ versus ‘government stimulus’—and neither myth is capable of building or restoring economic growth.

What the socialist unionists fail to understand is that government expenditures, at all times, are a cost to the economy. Government ‘stimulus’ often actually worsens an economy, although the stimulus does wonders for the salaries and careers for government unionists. What ‘free marketers’ fail to understand is that there is no such thing as a free market, and likely there never will be. It is impossible to create economic growth by adopting policies based upon utopian myths.

The key is economic liberties, which include both labor and business freedoms. If Europe, and especially the United States, paid more attention to raising their rankings in economic liberties, they would find their economies growing as a result.

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February 10, 2013

Gimmee, Gimmee Greed

By Don Kirk in Economics, Ethics, Keynesian Myth-Math, Socialism's "intellectual suicide"

In a famous psychology experiment measuring the ability of unchaperoned children to resist eating a tempting marshmallow, researchers discovered that the ability to ‘defer gratification’ correlates with better academic performance, more stable adult relationships, higher incomes, levels of happiness, longevity, just about everything positive in a person’s life. The inability to resist temptation is called ‘immediate gratification,’ and since just about every measure of life satisfaction and happiness is worse in children who demonstrate ‘immediate gratification,’ it measures emotional immaturity.

Capitalism is built on ‘defer gratification,’ while socialism is built on ‘immediate gratification.’ If the capitalist consumes now instead of saving for the future, she will never accumulate the capital surplus which grounds capitalism. No surplus, no building wealth. The socialist, however, encourages spending now, even borrowing against future income, in order to satisfy immediate needs. Famously, John Maynard Keynes, the world’s most influential Fabian socialism economist, quipped that borrowing now instead of saving for the future was the correct policy because “in the end, we’re all dead anyway.”

This cavalier greed in socialism is glaring in school district financing. Education in America is a socialist monopoly, the government-owned supply of a mandated service. School districts for the past several years have been using a borrowing vehicle known as ‘Capital Appreciation Bonds’ to finance building or renovating school structures. These particular bonds permit the school districts to borrow money now and not pay the interest or principal for many years in the future. Sounds like a future housing bubble.

Two problems. The eventual payer of the debt is the local property owner. They will be taxing their properties in the distant future for the money the school district borrowed today, but they have no tax increases until the bonds mature, which can be as long as thirty years. Hurray! Free money! Many property owners will be dead within thirty years, and many more will have simply moved away to another city. This is ‘immediate gratification’ in spades.

The second problem is, the math. By not paying the debt as it is incurred, the immediate gratification runs an unpaid clock. Compounding unseen–’unseen’ because payment is deferred while gratification is immediate–is the interest on the debt. When you add up the final cost, the total cost is as much as ten times the amount borrowed.

In real terms, according to yesterday’s article in The New York Times, the Poway School District in southern California will have to pay back $1,000,000,000 (one billion dollars) for the $100,000,000 (one hundred million dollars) it borrowed in Capital Appreciation Bonds. Another school district will pay back 350 million for the 35 million dollars it borrowed. The Orange County Register newspaper reports that local Placentia-Yorba Linda school district will pay back 13 times what it borrowed: $280 million for $22 million borrowed.

Wrong! The property owners will have to pay the billion dollars! The school district merely will send the bill to the property owners who live locally, thirty years from now. Ten times future cost for today’s money is certainly ’immediate gratification,’ and that is simply a measure of emotional immaturity…or it measures socialism’s “death spiral economics,” otherwise known as GREED.

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November 28, 2012

Socialism’s “intellectual suicide.”

By Don Kirk in Economics, Ethics, Political Theory, Socialism's "intellectual suicide"

Since ‘socialism’ is so often a category on this blog as “intellectual suicide,” let’s explain very briefly the three features of the ideo/theology of socialism which makes it intellectually suicidal.

Socialism’s ‘intellectual suicide’ is the phrase of Ludwig von Mises, an Austrian economist famous for creating praxeology in his four-book work, Human Action. Von Mises’s argument was that socialism is intellectually suicidal because of its inability to price. Prices in socialism are set by fiat, either by an all-wise individual or by an all-powerful bureaucracy. Since the dictated prices have little or no relation to costs or profits under socialism, such prices are removed from reality. Because socialism is an ideal instead of reality, its inability to price according to reality is intellectual suicide.

Second, socialism is an intellectual regress. In a regress, the impulse is to find bottom, and at the bottom the regress is nihilism, the nothingness. Socialism’s regress is a function of its denigration of profit and merit. Profit is a measure of efficiency and merit rewards human creativity. Lacking both efficiency and innovation, socialism stagnates an economy because the return on investment is less than the cost of the investment, resulting in an economic ”death spiral.” Without profits to generate efficiency in socialism, for your $10 investment you receive an $8 return; for your $8 investment you receive a $5 return, etc. And because of the denigration of merit there are few innovations in socialism; there are no life-saving pharmaceuticals, for example, ever invented in a socialist nation.

Finally, the intellectual suicide of socialism is grounded in socialism’s ‘flip of morality.’ Socialism uses the legal monopoly by government over armed force to take away what one person has earned from the sweat of their muscles or mind and redistribute that confiscation to someone who has done nothing to earn it. This is theft, whether by Robin Hood swinging through the trees wearing green tights or by the government. By ‘flipping’ the morality of theft, socialism makes theft moral.

Socialism is intellectually, economically, and morally incapable of building or creating prosperity. Socialists can certainly spend money, but because of their regress to nihilism they cannot generate prosperity without instituting some modified form of capitalism.

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November 26, 2012

Utopian Nihilism

By Don Kirk in Foreign Affairs, Ideo/theologies, Socialism's "intellectual suicide"

The environmentalist movement is meeting in Doha again this week, and they perceive that the world-wide economic downturn is now a higher priority in governments than reducing hydrocarbon use. To reach the environmentalist goal of reducing global temperatures by 2 degrees Celsius, the amount of burning hydrocarbons would have to be reduced by 1% per year until they are eliminated by the end of this century. Since the world’s economies are not going to self-destruct by banning hydrocarbons in the name of “shared sacrifice,” philosophically the ideo/theology of apocalyptic environmentalism is the idealism and utopianism of nihilism.

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October 26, 2012

The Corrupt Comrade

By Don Kirk in Crony Capitalism Insidious Socialism, Ethics, Socialism's "intellectual suicide"

Yesterday’s New York Times has an article on the 70 year old Wen Jiabao, prime minister of the People’s Republic of China and leader of the Communist Party, retiring with a personal fortune estimated at 2.7 billion dollars. His mother was a school teacher her entire life, his father tended pigs during the Cultural Revolution, and Mr. Wen has been a government functionary his entire life, growing up as a boy “in extreme poverty.”

Clearly Mr. Wen never accumulated his family fortune as a risk-taking capitalist. Just as clearly, the morality of communism is government-sanctioned theft. Whether capitalist or communist, as Acton noted long ago, “Power corrupts, and absolute power corrupts absolutely.”

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October 22, 2012

Objective Facts vs Ideological Fiction?

By Don Kirk in Economics, Ideo/theologies, Keynesian Myth-Math, Socialism's "intellectual suicide"

This is Stanford University conservative economist Dr. John Taylor’s chart of eight U.S. economic recoveries over the past 130 years. He argues that the reason the current U.S. recovery is the worst in over a century is because of government policies.

Dr. Taylor’s conclusions are sharply disputed by Keynesian/Fabian socialism economists, notably Dr. Paul Krugman of Princeton University. In their democratic socialist view, the current recovery is so weak because when recessions include a financial collapse they always result in a deeper and longer-lasting recession.

But look at the chart. The two-year recovery from the financial collapse during the Great Depression is robust, in contrast to the weak two-year recovery after the financial collapse from the recent Great Recession. From the data, the Keynesian/Fabian socialist argument is false; the history of financial recessions do not account for the present long-lasting economic stagnation.

Please note, in addition, the chart does not make Dr. Taylor’s conservative argument that government policies are to blame. That is likely true, but the chart merely establishes that the democratic socialist argument—that the present weak recovery is to be expected by the history of past financial crises—lacks empirical grounds. Something other than a financial crisis recession is causing the weak recovery from the 2007-2009 Great Recession. Dr. Taylor needs a different chart to prove his point; otherwise he is simply making a conservative ideological argument to counter a Left-liberal ideological argument.

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October 18, 2012

French Suicide

By Don Kirk in Economics, Rationality vs. Irrationality, Social Regress & Social Progress, Socialism's "intellectual suicide"

Apparently the French disdain for all things American extends to supply-side economics. Clearly the French never learned economic growth from John Kennedy’s or Ronald Reagan’s supply-side economics in the 1960′s and 1980′s. CNBC reports today that real estate listings of the most expensive homes in France are up a whopping 25% this year. Commission real estate agents are having a booming year.

The socialist president of France, monsieur Hollande, recently raised taxes on the wealthy French to 75%. The conclusion from the CNBC story is, such punitive rates are driving many of France’s most prosperous citizens to sell their French luxury homes in anticipation of moving abroad to escape the super-high level of French taxation

Economist Arthur Laffer–an American–famously drew the ‘Laffer Curve’ on a cocktail napkin, pointing out that at some level of rising taxation the government receives LESS revenue, because people naturally will adjust their lives to minimize their immediate earnings. The magic point of falling government revenue from rising government taxes is believed to be 40%, hence Mr. Obama’s call for raising income taxes upon America’s wealthy to 39.5%.

Mr. Obama’s call for 39.5% tax rate on the American wealthy appears to have read Laffer, and learned a lesson. The French call for 75% tax rate on French wealthy appear to have never read Laffer, or perhaps because he is an American, they simply ignore him. If the Laffer Curve is accurate, the French government will see its revenues DROP as wealthy French leave the country and those remaining work to minimize their taxable incomes. If raising government revenue is the French goal, then the too-high tax rate is self-destructive and is a social regress committed in the name of ‘social progress.’

As ever, socialism is, even if unintentionally, economically and intellectually suicidal.

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Socialism’s “intellectual suicide”

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