What is capitalism?

There is an interesting thread at Powerline on the question What is socialism? The central aim of socialism has always been to rid ourselves of the capitalist system. And what, exactly, do these socialists wish to get rid of? Certainly not the phenomenal flow of goods and services that a capitalist economy provides. If socialists promise anything, they promise that there will be even more for everyone, so it’s not getting rid of the bounty that a properly managed economy brings that they seek.

What the actual aim of socialists has always been is to get rid of the capitalists. But why the wish to rid ourselves of the capitalists who open, own and run the businesses that create the goods and services we consume? Why the resentment against the very people who make this abundance possible? That is the issue, and it is at the heart of the divide between the socialists on the one side and those who support the market mechanism and free enterprise on the other.

Why do socialists see no role for the entrepreneurial class? This is a true puzzle since no socialist has any idea how to run an economy from which capitalists have been removed. No socialist economy, in which its capitalists have been discarded, has ever succeeded. Every such economy has been immediately plunged into poverty. Every economy without an entrepreneurial class of independent individuals to run its businesses, to produce and sell inputs to each other, and to sell consumer goods to everyone, has become impoverished. All this is known with a perfect certainty, yet socialism retains an allure that large proportions in every market economy are unable to resist. Against all the evidence of more than a century of socialist experimentation, there is still somehow the belief that you can replace capitalism with a socialist system and maintain living standards. Some people really do not learn from history.

As a first approximation, the problem that capitalism leads to is the wealth earned by those who have no obvious merit and desert to those who wish to see the market system replaced. Why can’t the government do exactly what the owner of a business does, and without having to receive such a large amount of money.

The owner of a business will typically make far less than any number of star athletes. But those athletes have a demonstrable skill that most people do not have, allowing them to excel at whatever particular sport they play. Everyone can see it, few others can do the same, so there is no resentment at the millions athletes are paid.

Same again for rock stars and actors. Everyone can see what they do, and admire their ability, fame and celebrity. The same in a way goes for doctors, who may be neither famous nor celebrated, but have a skill set everyone depends on and are willing to see rewarded for what they do.

Let us look even more closely at these categories. Whether one becomes a sports star or entertainer, there is an apprenticeship through which their in-born talents are developed. But whatever talent these people have cannot be distributed to others. A football player’s stock in trade is playing football. An actor’s skill is in acting. The skill that has made them wealthy and famous cannot be spread through the entire population. They are just what they are and are unique to the individual.

But those who own, run and manage businesses have no obvious talent visible to the vast bulk of the population who understand little of what is required to run a successful business. Few appreciate it. Many think they could have done the same had they made the effort. And anyway, why should someone own and control millions of dollars worth of assets, even if they did accumulate all of it themselves by building a profitable enterprise?

But there is even more to this resentment than just this. It is the “intellectual” classes – the media, public sector and academia – who are peopled by individuals who had done best in school, who had graduated at the top of their class. Here they are, the smartest people in the country, yet earn ordinary incomes. Meanwhile, these business morons, who couldn’t finish a sudoku, or have no idea who Foucault was or what he wrote, here they are earning large incomes running a factory making bricks or producing shoes.

Capitalism is an ingrained feature of a political system that prizes freedom, in which each of us makes decisions for ourselves about many things in our own lives, which includes how we will earn our incomes. Some individuals will decide to earn those incomes by running a business.

Socialism in contrast is a system where the people who got the highest marks at school think they will make those business decisions instead, even though they are often the first to be put up against the wall.

Capitalism is a system in which those who run businesses have to go through the same process in getting to the top as do athletes, by overcoming the enormous competition of others to achieve their goals by being the best at what they do.

Socialism is instead a system in which the non-talented, without any of the necessary gifts for management, get to run our economies because so many others resent the incomes received by the people who are able to run profitable businesses.

Capitalism is how an economy runs if no one is running it. People just get on and produce, sell and buy.

This is what socialism is: replacing the owners of businesses, either with managers employed by the state, or with government-appointed overseers who direct what the business should do.

In all of the different variants on a socialist system, there is a central plan that each of the state managers must follow. No one in an enterprise reacts to the market, that is, to the demands of people who wish to buy the product, or to changes in the structure of supply. They just follow the plan as best they can.

The people who formulate these plans have no means to make the system work, although they think they do. But by the time everyone, including themselves find out how useless they are at running an economy, they are entrenched behind a row of guns and cannot be removed.

Here is an observation from the Powerline comments thread that captures important parts of these issues.

In its most basic sense, “socialism” is CONTROL. Control of the economy, control of society, control of YOU. This is the basic nature of all modern “socialisms” – communism, fascism, progressivism, liberalism. Socialism is the enemy not of “capitalism” – that’s just a Marxist label – but of free markets, a free society, a free people. But it’s worse than just control; it’s invariably very poor control. It doesn’t work. Nobody’s smart enough to dictate every aspect of an efficient economy, and nobody’s honest enough to be trusted to even try. But, poor quality or not, the surveillance and control/police state are vital components of any socialist system; it can’t even theoretically work without control.

Socialists will be our ruin.

Posted in Economics and economy, Economics on the left, Socialism | 71 Comments

Q&A Forum: February 18, 2019

Posted in Open Forum | 120 Comments

Catallaxy Exclusive – Breaking News

A precedent setting complained has been lodged with the Australian Human Rights Commission.

Tran-sexual Billi Betti Bueller has lodge a complaint alleging systematic gender discrimination by the electricity and electronics industry. Mx Bueller said:

“The standard description of electricity connectors as either ‘male’ or ‘female’ represents a heteronormative patrimony. As a transsexual, I should not be forced by industry to choose between a binary connector that does not represent me.

“It is also utterly sexist that the so called female recovers are trapped at the home whereas the male connectors can come and go as they please.”

As spokesperson for the Human Rights Commission indicated that the Commission is reviewing the complaint and will be seeking discussions with the electronics industry.

Posted in Uncategorized | 49 Comments

No part of the mainstream media will tell you but this is the greatest political scandal in American history

Limbaugh claimed that the Mueller Russia probe is itself a cover-up of collusion between Russia-assisted Democrats and the Obama-era Justice Department to harm Trump in 2016

Not a “hoax” but actual treason. Obviously not from an American newspaper but from the Daily Mail in the UK: Trump quotes Rush Limbaugh’s claim that Mueller’s investigators ‘ought to be in jail’ for cover-up of ‘silent coup’ against the president

  • Rush Limbaugh cited the case of Andrew McCabe, the former deputy FBI director, in claiming some Justice Department officials should be locked up
  • McCabe says he knew of Justice Department discussions about using the 25th Amendment to the U.S. Constitution to remove Donald Trump from office. 
  • ‘The Mueller investigation, I believe, is a cover-up of all of that. It’s to distract everybody’s attention,’ Limbaugh claimed
  • President Trump tweeted a tweaked-for-space version of his comments
  • ‘These people are unelected. They took it upon themselves to overthrow the election results of 2016,’ the radio host said
  • He claimed the Obama DOJ ignored ‘potential real collusion and conspiracy between Democrats and Russians to undermine the Trump candidacy’

Meanwhile the story that is dominating the American media is an actual hoax from some B-Grade actor who tried to pretend that he had been attacked in sub-zero weather by two MAGA-hat-wearing racists, who turn out to be black African friends of his.

The American mainstream media is a conspiracy on its own and by itself.

Posted in American politics, Media, Politics of the Left | 33 Comments

Monday Forum: February 18, 2019

Posted in Open Forum | 1,466 Comments

Unreliable energy set to melt the rural grid in Victoria

Exciting times down south, wind and solar equivalent of two coal-fired power stations coming on line by 2025 and the grid won’t be able to cope. OK gold plate the grid.

And how of two coal-fired power stations will wind and solar deliver when the wind is low and the sun is off duty? Exciting times indeed!

Authorities say two coal-fired power stations’ worth of renewable energy won’t be able to reach the grid without major upgrades to networks in Victoria’s west.

Up to five gigawatts of new wind and solar energy will be generated in Victoria’s west by 2025
An expert says almost none of that power will reach the grid through the rural transmission lines in place, which are like a “one-lane bush track”.

Developers are lining up to build wind and solar projects in towns to the west and north of Ballarat, in what is being hailed as another gold rush.

“We’ve got $3 billion worth of projects currently underway,” said Stuart Benjamin, the chairman of a Victorian Government-commissioned taskforce that is overseeing the boom in the Grampians.

“And if some of the limitations that we’re seeing in terms of infrastructure are addressed, we could possibly double or even triple that number.”

Posted in Global warming and climate change policy, Rafe | 49 Comments

An Ocasio-Cortex sampler

The ultimate aim must be to ensure that everyone who calls themselves a socialist is recognised as a highly dangerous fool.

Alexandria Ocasio-Cortez is a figure of fun to most of us. She is an ignorant loudmouth buffoon that more than demonstrates the Dunning-Kruger effect. She is the instigator behind the Green New Deal and may well be its actual author. The cartoon collection below that follows the text represents what we think, but it’s not what the left thinks, and the support for all of this will grow by the week, as insane as we may recognise that it is. The Suicide of the West laid out before us, since you never know what the future has in store.

In The Weekend Oz they have an article reprinted from The Economist which even features her photo at the top of the story on the web page edition: Millennial socialists chip away at the virtues of liberalism. I would use a metaphor based on the use of a sledgehammer rather than the dainty “chip away” but the text is worse. But with her picture comes this chart.

Try this sample from the text of the article, and let me know which side you think The Economist is on.

The millennial socialists think that inequality has spiralled out of control and that the economy is rigged in favour of vested interests. They believe that the public yearns for income and power to be redistributed by the state to balance the scales. They think that myopia and lobbying have led governments to ignore the increasing likelihood of climate catastrophe. And they believe that the hierarchies that govern society and the economy — regulators, bureaucracies and companies — no longer serve the interests of ordinary folk and must be “democratised”.

Some of this is beyond dispute, including the curse of lobbying and neglect of the environment.

Here are a few additional straws in the wind of things to come.

Democrats unveil Green New Deal that would push government to make radical changes

Green New Deal: Some Dems on the fence…  ie, some are unsure, while some are all in

Will ‘basic income’ become the California norm? Town starts $500 no-strings payments…

LIFE UNDER LATE SOCIALISM: As Venezuela Collapses, Children Are Dying of Hunger.  – but who dares to say this is the inevitable outcome of a socialist economy?

Ocasio-Cortez Declares Victory Over The Modern-Day Equivalent Of Slavery: Jobs.

In the meantime, we have the luxury of laughing at the new star of the millennial set. But whatever you may think of her, she is making certain ideas mainstream. She may not lead her generation into the promised land, but it is all too possible that someone will.

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Posted in Politics of the Left | 47 Comments

The Murray-Darling: concocting crises to kill agriculture

Politicians on the left and some on the right are throttling the use of irrigation water to accord with myths spun by nihilists and to the great disadvantage of the nation’s interest as well as those of farmers and their suppliers.

Over the past century, the Murray Darling river’s naturally highly irregular flows have been transformed to convert it into the tranquil, ever-flowing waterway that has allowed the Basin it serves to become the source of 41 per cent of the nation’s agricultural output.

Green activists have however demonised irrigated farming by promoting myths about the river being under environmental stress.  Such claims were further amplified by fictitious and disproven claims that the precipitation into the catchment area will be much reduced due to supposed global warming.

As a result, one quarter of the water previously used for agricultural activities dependent on irrigation has been re-allocated to environmental targets, including transforming the mouth of the Murray from its natural salt-infused state into freshwater lakes.   Mismanagement of these environmental flows was critical in causing an unprecedented fish kill in 2019.

The cost of the Basin Plan in de-rating the region’s agricultural potential has been tragic, for the region. In aggregate terms this is likely to be in excess of $3 billion per annum at a time when agricultural export opportunities are promising. The measures adopted in the Basin plan were reactions to ill-founded and refuted concerns about human damage to the environment.

The Commonwealth should cease incurring costs in preventing water use for irrigation and should re-sell the water it has banked to those willing to pay for it.

See more at the Spectator

Posted in Uncategorized | 36 Comments

Jo Nova responds to the latest abomination from the BOM

Headlines today announce that the Bureau of Meteorology has upped the rate of warming in recent times. Jo Nova and others have been on this case for some time. Her latest commentary.

See also some of the series of posts on Climate Change: The Facts 2017 last year like this one documenting some of the games that the BOM plays.

Posted in Global warming and climate change policy, Rafe | 23 Comments

If orangutangs can work it out why can’t socialists?

You know, that incentives are necessary to promote productive activity and that an economy must encourage the supply-side of the economy if output is to grow. The article is about how Orangutans make complex economic decisions. As they conclude:

“Optimality models suggest that orangutans should flexibly adapt their foraging decisions depending on the availability of high nutritional food sources, such as fruits,” said Josep Call, researcher at the University of St. Andrews. “Our study shows that orangutans can simultaneously consider multi-dimensional task components in order to maximize their gains and it is very likely that we haven’t even reached the full extent of their information processing capabilities.”

Meanwhile Alexandria O-C and her Green New Deal think this is a worthwhile idea: if you are “unwilling to work” they will still pay you an income.

Interestingly this particular proposal is unanimously rejected by the students in this video, once they are told what’s in the GND.

The students interviewed are big on buzz-word ideologies they know virtually nothing about, but still with a few elements of common sense if more is explained. There is hope for us after all, slim as it may be. Perhaps these kids are smarter than the average orangutang, but they would be a rare breed on the left.

Posted in Politics of the Left | 17 Comments