Posts tagged Buchanan & Tullock

Column on BBC & Capitalism

BBC’s Biased Coverage of Capitalism

Tibor R. Machan

On the BBC website an interview was featured recently with the famous orthodox Marxist, Eric Hobsbawm, who promptly denounced capitalism as if he had established definitively its inferiority as a political economic system. Is the BBC such an irresponsible news organization that it will feature Mr. Hobsbawm’s characterization of capitalism with no one who champions that system featured responding to him? (If you search, no such balanced presentation can be found on the BBC website.) Or is this happening because, after all, BBC is a state broadcast endeavor and has a big stake in discrediting a system that relies on private initiative?

From a Marxist perspective especially this conclusion is quite reasonable, since we are all supposed to be driven by economic motives and here is an instance that might just fit this idea perfectly. The BBC would be one of the casualties of capitalist inspired privatization! As a creature of the state it relies on confiscated resources for its operations and capitalism goes against that policy big time.

The question that was put to Mr. Hobsbawm by the BBC’s interviewer, had to do with capitalism and responsibility. That is, whether agents in a free market would be motivated to act responsibly and the answer Mr. Hobsbawm gave is “No.” Yet if people act irresponsibly in genuine free markets, this will soon be known and they would lose trust from fellow market agents. Only when governments protect market agents from the consequences of their behavior will they be able to persist in acting irresponsibly.

Moreover, if those who would regulate our economic conduct are, as they must be, human beings, why would they be virtuous while the we would not be? Why would they not use their monopolistic legal power to secure advantages for themselves, just as public choice theory (as per James Buchanan and Gordon Tullock) postulates?

What free market capitalism cannot offer, because it doesn’t control people, is compliance with all tenets of ethics. But neither can anyone else make such a promise and when they pretend they can, this invites the most insidious lack of ethics, namely, tyranny.

The bottom line here is that if you are interested in the nature of capitalism, don’t ask a Marxist but a champion of that system of political economy, such as Professor Richard Epstein (NYU) or Randy Barnett (Georgetown U.) or, yes, me! Then go and find some critics and contrast their different answers and let the audience assess which approach is more reasonable.

The BBC doesn’t appear to honor this approach, the only balanced one, when dealing with the nature of capitalism. Too bad. Failing to let a competent defense of that system be aired on BBC may even promote some major economic malpractice, including the appointment of all kinds of petty tyrants who presume to know how to run our economic affairs.

“As an economic system capitalism has nothing to do with responsibility,” says the Marxist sage, yet this is perverse, uninformed, given that trust and being responsible to fulfill one’s promises is essential to free market capitalism. Indeed, one reason that that system works pretty well when uncorrupted by state interference is that those who fail to be responsible do not flourish in it unless favored with privileges they haven’t earned.

As many have pointed out, the famous association between capitalism and the pursuit of self-interest is widely misunderstood. “Self-interest” in how capitalism operates means nothing more than that people are doing what they want (since they are free to do so). But what they want to do may be for their own or for someone else’s benefit; nothing in capitalist theory spells that out. Indeed, it is a strong feature–not without some problems–of capitalist economic theory that saying that people pursue their self-interest says nearly nothing about what they are likely to do. This is because in that theory self-interest is understood subjectively. Whatever one believes is in his or her interest is exactly what is; but this makes it perfectly reasonable that someone who wants to consume heroin or engage in innumerable other self-destructive activities (by common sense standards) is actually pursuing his or her self-interest.

In any case, the main point here is that the BBC seems not to care to practice responsible journalism even while asking Mr. Hobsbawm to comment on the relationship between responsibility and capitalism. How ironic.

Column on Obama’s Keynesian Superstition

Obama’s Keynesian Superstition

Tibor R. Machan

President Obama gave a speech on Thursday afternoon announcing the American Job Creation Act. There were numerous points that were open to criticism but before dealing with a few, it is important to state what creates jobs: Jobs are created when people who have earned an honest buck go to the market and purchase goods and services that other people need to produce. If a good many go to the market to do this, there will be many jobs, if only a few, there will be few jobs. Moreover only if the people get to choose what purchases they make in the market will the resulting jobs be more than make-belief, artificial jobs, like digging holes and filling them up again.

Mr. Obama and his team appear to believe that printing money and handing it to people who may or may not take it to the market and spend it on goods and services serves to create jobs but this is sheer superstition. It is like thinking that steroids produce healthy muscles in one’s body. Such spending is more akin to fueling artificial production–like getting a bunch of extra haircuts with phony money one has obtained from a forger. Or numerous baths or car washes–as if people had no ability to allocate their limited resources prudently but will do well by spending the phony funds (or other peoples’) on duplicate goods and services. So, bottom line: jobs are created from people spending honestly earned income, not from spending phantom income.

Now back to Mr. Obama’s address. He started by telling us all that “the millions of Americans who are watching right now do not care about politics.” Oh? Who are those millions of people who take part in primary elections, in caucuses, and in all the campaigns around election times?

Obama continues: these millions of Americans “have real life concerns,” as opposed to politics. What a thing to say for a lifelong politician. It is a strange confession, to proclaim that politics is not a real life concern. How these little asides turn out to be very revealing from a Harvard educated politician!

Obama also told us that all these Americans “know that Washington hasn’t always put their interests first.” No kidding–”hasn’t always”? How about has very, very rarely. Anyone with only a cursory familiarity with public choice theory–an idea Professors James Buchanan and Gordon Tullock developed (for which Buchanan received the Nobel Prize), in their book The Calculus of Consent (1962)–can appreciate that Obama completely understated the degree to which Washington fails to put the interests of Americans first. For one, Americans are a highly varied lot and they have zillions of interests which plainly cannot be addressed by Washington. Politicians aren’t deities, Mr. President.

Then, also, politicians are mostly busy looking out for their own interests–mostly getting reelected the next time they run for office–except when looking out for the interests of special groups and major donors that happen to further their own. So this entire line of reasoning on which it seems the president is basing his American Job Creation Act is fallacious.

Here is yet another howler from Mr. Obama: “The people in this country work hard to meet their responsibilities.” Well, some do but some don’t. Many people in America believe that they are entitled to benefits from the government simply because they exist, they have been born here, kind of like the what millions of Greek citizens evidently believe. And many believe that they are credit worthy even while being anything but. Which is to say millions of Americans have expected to be provided with loans to buy homes even though they had no idea how to pay them back or had the collateral to back them. This does not testify to what the president has claimed about the people of this country.

The entire plan of the jobs bill amounts to nothing more than artificially manufacturing jobs, from phony money, phony demand. And this doesn’t even address the issue of Mr. Obama’s favorite superstition, namely, his idea that he can somehow turn America into a showcase of green life without incurring massive expenses for this, expenses the country cannot afford. (It is interesting how Obama has avoided the subject of his giving awards to certain companies that went green big time and then went belly up!)

One could go on. Sadly if an Obama enthusiast were to come across these points they would most probably be dismissed as nothing but dirty Republican or Tea Party politics. No one of Obama’s team ever confronts the arguments–they just ridicule the people who put them forth, even demonize them.

And don’t forget the persistent rich bashing that made its appearance in this lecture just as it tends to in every other given to us by Mr. Obama or members of his team. Ok, so some rich folks are doing well even these days. So why begrudge them this? It’s like wanting to injure able bodied folks because there some some who are disabled. Disgusting. Moreover, even as a public finance, the idea of targeting the wealthy is ridiculous. If all those with over $250,000 had their money confiscated by the feds, hardly any dent would be made on the national debt, especially if one subjects the idea to more public choice analysis.

Mr. Obama, you aren’t going to make jobs and you aren’t going to do any good to most Americans apart from some of your pals in the bureaucracy with what you want to do. Take an entirely different approach, namely, remove government regulations and lower taxes for everyone and that will most likely energize the country’s economy.