Open Inquiry

April 21, 2013

There was a Crooked Man…

By Don Kirk in Crony Capitalism Insidious Socialism, Democratic Capitalism/Democratic Socialism

Why is crony socialism always known as crony capitalism? When socialist elites and insiders profit personally from market institutions, why is this only called, ‘crony capitalism,’ and not ‘crony socialism’? Why are only capitalists “greedy,” when actually socialists are just as opportunistic and ‘greedy’?

Slovenia is a case in point. Formerly part of soviet Yugoslavia, Slovenia is the prosperous country which divides the impoverished formerly socialist nations of the soviet bloc from the wealthy Western nations to its north and west. What distinguishes Slovenia from other former soviet countries is that it had not dismantled its socialist institutions–such as the national banks–and turned them into competitive private institutions. Fully half of institutional Slovenia is state-owned, which means they are state-subsidized, and subsidy means taxpayers pay for unproductive and uncompetitive enterprises that would otherwise fail. Always, always, always, state-subsidized enterprises are repositories of either incompetent or corrupt privileged elites; insiders who pocket taxpayers’ monies in the name of ‘national pride’ or ‘socialist solidarity’ or ‘public investment.’

Slovenia’s banks are in trouble. No kidding. What a surprise. The government has already bailed them out once, and now it appears the first bailout did not come with reforms, so still another bailout is necessary. But so long as the banks are state-controlled enterprises, the taxpayers of Slovenia will find that bailing out their nationalized/socialized banks will never end. Too understandably, calls for privatizing the banks are bitterly opposed by large companies whose management benefits personally by banks being state-owned, instead of competitive.

Whether capitalist or socialist, monopolies are marked by rising costs and falling value, and Slovenia’s banks are no exception. So why are crooked socialist companies and corrupt socialist managers known as ‘greedy capitalists’?

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April 15, 2013

When Flat Means Falling Behind

By Don Kirk in Economics, Philosophy of Freedom, Prosperity vs. Poverty

From Stanford Professor John Taylor’s blog, Economics One, his chart showing the disparity of income growth between the bottom 90% and the top 10% in the American economy over the past 65 years. Note that the bottom 90% of American workers have stagnant income growth for the past 45 years.

In those 45 years, 1968-2013, 18 years are under Keynesian (Fabian socialism) presidents: five years of Republican Richard Nixon, eight years of Republican George Bush II, and the past five years of Democrat Barack Obama. Now 40% does not mean causation, and the boom of the Great Moderation under Presidents Reagan and Clinton shows that far more is wrong in stagnating incomes for the middle class than simply implementing Keynesian suicidal economics. What is missing is a comparable graph of changes in productivity for the past 45 years, for both the 10% and 90%.

A structural problem is likely the cause of income stagnation in the American middle class (the 10% probably have dramatic improvements in productivity since the end of the 1982 recession, while the 90% likely do not), and the very last institution capable of correcting structural problems is the United States Congress. Perhaps as great as the increase in productivity from personal computers has been for the bottom 90% since 1982 (the year IBM introduced the PC), the increase in productivity from personal computers for the top 10% has been far greater.

If so, the separation of income growth rates between the American prosperous and the American middle class since 1982 is explained, because income follows productivity.

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April 12, 2013

Absolutism, Relativism, Pluralism

By Don Kirk in Amoral Morality, Ethics

Over at today’s Ethics philosophy blog, a ‘cute’ 3D video is featured, pitting academic moral absolutism against folk moral relativism. The argument is, folk morality is not as absolutist as academic philosophers believe it is, and that people are moral relativists.

Not one word of the video is devoted to moral pluralism, a blind spot common to both absolutists and relativists. They argue for their respective positions, when it is quite likely they are both incomplete, perhaps even wrong, since pluralism is the virtuous mid-point between absolutism and relativism.

Unfortunately, academic philosophy is still way behind how many people actually live their moralities. There is a third position, but the absolutists cannot even imagine how such a thing is possible and relativists are incapable of deciding upon a better choice.

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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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April 5, 2013

Propaganda Unemployment

By Don Kirk in Ethics, Politics

The ‘propaganda rate’ of unemployment (the U3 number) fell to 7.6% last month by refusing to include the many hundreds of thousands of Americans out of work who have become so discouraged for so long that they finally gave up looking for a job (the U5 number). All such people are truly unemployed, but the government doesn’t include them in the payroll numbers because excluding them serves the propaganda purpose of the government report. If the U.S. reported an honest number (U5), national unemployment would be 8.9%.

According to Business Insider, the reason unemployment is reported down while the number of unemployed is up, is due to the worst labor participation rate in 34 years:

Labor force participation rate

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April 2, 2013

No Nobel for Freedom

By Don Kirk in Ethics, Philosophy of Freedom, Philosophy of Human Rights

Even as President Putin of Russia signed legislation this week giving him sole power to appoint governors, the ailing and elderly Mikhail Gorbachev gave a speech decrying the reduction of freedom in Russia. But to Mr. Putin, Mr. Gorbachev’s freedom meant the loss of empire and the rise of “gangster capitalism” in Russia, so the two men have very different views on the benefits of freedom.

Both men are steeped in Marxism during their political careers, although Gorbachev is better described today as being ‘communist,’ not Marxist, and Mr. Putin is better described as a ‘religious nationalist,’ also no longer a Marxist. There is no freedom in Marx’s thought, as both Jaspers and Arendt pointed out, so the two men are disputing freedom in the traditional argument as being merely a theme or topic of political discourse.

Gorbachev won the Nobel Prize for Peace but neither man has freedom as a philosophy, and it shows.

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March 30, 2013

Oops. A Chart of Unintended Conclusion

By Don Kirk in Free Markets Myth, Philosophy of Freedom, Prosperity vs. Poverty

From the Mercatus Center at George Mason University, the relationship in the fifty United States between levels of freedom, both personal and economic, and the two major political parties. A better chart would include corresponding state income growth rates, tax levels, and unemployment relative to the two political parties. By this chart, two of the top three wealthiest States are the least free of all fifty, yielding a narrow conclusion that the least amount of freedom gives the greatest amount of prosperity.

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March 28, 2013

Eugenics for Health

By Don Kirk in Amoral Morality, Ethics

Today’s Discover science magazine has an article on eugenics, making the determinist’s point that eugenics is inevitable in a society that values human health. Instead of using eugenics to breed a super-race of humans, eugenics will become commonplace as the tool to discover inherited diseases before they are passed on to new generations.

Why not have voluntary vasectomies at taxpayer expense as a human health concern? Instead of throwing the divisive issue of abortion upon women, why not throw the issue upon men? If the male wants to have sex without parenting–and he is irresponsibly incapable of using a condom–why not subsidize his vasectomy? This would not eliminate the health problems associated with transmission of HIV, but it would help reduce the vast numbers of unwanted, unloved births who grow up to populate our prisons, jails, and psychiatric centers.

But then, that’s eugenics for society’s health not individual human health, and eugenics for societal health is a very slippery slope down to the self-defeating arrogance of trying to build a master race. Still, why should preventing unwanted, unloved children fall so disproportionately upon women?

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March 26, 2013

Weak Principles

By Don Kirk in Optimists and Pessimists, Philosophy of Mind, Political Psychology, Political Theory

The School of Life in London runs a philosophy blog where a Mr. Stevenson has seven ‘Principles of Optimism.’ His principles of optimism include being busy, have ambition for the future, devote your life to something more important than the self, expose yourself to new ideas, be an empiricist, and suffer criticism gladly. Hmm.

The first five could describe Hitler or Stalin as optimists. Nothing provokes more head-shaking than listening to a philosopher describe how much of an optimist Karl Marx was. Optimism is a psychology, not a set of principles.

It is possible to inject optimism into a pessimistic life, and the mental health improvements are well-studied and documented. But it is how we form our pessimism originally that is just as important as employing ‘principles’ to become more optimistic.

The perceptions of the partially-full/empty glass of water are grounded in how we perceive human nature. If we find humans to be inherently bad, we develop a pessimistic psychology. If we find humans to be inherently good, we develop an optimistic psychology.

The easy test of the divide is to notice how we vote: if we approve of statism, we are pessimists wanting the state to assert control over inherently bad human beings. If we approve of less-regulated humans, we are optimists. ‘Principles’ do not have much to do with it, because the two psychologies are deeply imbeded in everyone. And note, such ‘principles’ can easily be used to describe people who are definitely not optimists.

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March 24, 2013

Scrooge Banks

By Don Kirk in Economics

The gray vertical bar is the Great Recession. The blue line is the explosive growth of money in the economy from the Fed trying to cure the recession’s high unemployment with massive amounts of cheap money (low interest rates). The red line is the amount of monetary reserves that banks are holding in excess of their regulated requirements.

What this chart tells us, is that the banks are socking away the sea of cash the Fed is printing. They are NOT lending the money; they are ‘banking’ the money, earning low interest themselves from the Fed on money they are not lending to corporate America.

Said it before and should say it again: Recessions are government-made. So long as the Fed pays interest on held reserves, banks will hold reserves during economic uncertainty. So if the money held by banks is not being circulated in the economy, the economy suffers at the same time that the banks are doing well by not lending. As ever, the government policies are having the complete opposite effect of what they intend. If the Fed actually wanted to bring down unemployment they would encourage bank lending, and to encourage bank lending the Fed would stop paying interest to banks on reserves frozen in their underground vaults. This is very confused thinking, and tens of millions of Americans out of work are paying for it…as the banks get rich taking no risk.

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