History And Realpolitik

Sometimes it is truly frightening to watch world leaders make decisions and take actions that history clearly demonstrates are doomed to failure.  In 2002 a book was published “Warrior Politics” which was an essay on “Realpolitik”   In this short book the author uses historical references gleaned from some of the worlds great thinkers and philosophers to put the 20^th century into perspective.  Certainly the 20^th Century will go down in history as a pivotal period.  It included the rise of Communism and its ultimate failure.  A failure still not recognized by many academics and politicians who still think Socialism and Communism are viable political structures but previous failures were not due to any inherent flaws but because the implementers were incompetent.  The 20^th Century saw genocides on massive scales, not just in Germany but in Asia, Eastern Europe, and Russia as well. It saw what was thought to be the decline and fall of racism but what in reality merely changed the face of racism as society fragmented along both race and economic lines. 

Without doubt two of the most important events in the 20^th Century were the two world wars but it is worth noting that these two wars parallel the Punic Wars between Rome and Carthage.  In the second century BC Carthage was the dominant power in the Mediterranean but that power was being challenged by Rome.   After the first Punic War Rome imposed an unjust peace on Carthage which directly led to the succeeding wars which were costly in lives and treasure.  This is precisely what happened in the 20^th Century.  Germany was a newly minted country and a rising power in Europe.  This drive for power brought it into conflict with France and England and gave rise to WWI.   But the allied powers failed to see the parallel with the Punic Wars and imposed the unjust Treaty of Versailles.   This treaty led directly to the rise of Adolph Hitler and WW II.

But these are only the most obvious lessons to be gleaned from history and as the 2oth century fades into history we find the 21^st Century leaders repeating the mistakes of history.   We find the US – much like Rome – embroiled in a seemingly endless series of wars.   The Pax Romana taxed the Roman Empire just as the Pax Americana is taxing the American Empire – and for many of the same reasons.  America is engaged in Afghanistan, Iraq, Libya, Palestine, Syria, Egypt, China, India, and Pakistan.  But for what purpose and for what advantage to America?  The glib answer of course is that these are necessary to protect America both economically and militarily, which of course would have been the response of any of the Caesars.  But there are no specific answers coming out of Washington, because there are no concrete advantages to America.  Why is the US subsidizing Palestine (Hamas) when they are clearly the group who are the aggressors against Israel and have never shown even the slightest indication that they want peace.  In fact the only thing they want is for Israel to vanish and all Jews (and Christians) to be driven from “Arab Lands”.  We entered Afghanistan for the purpose of capturing Osama bin Laden, that is accomplished but once it was clear he was no longer in Afghanistan what was the purpose of us lingering there?  An even larger question is why didn’t the US destroy all of the poppy fields?  The answer has been this would have turned them against us – are they for us now?  Aren’t these fields the source of much of the drug trade throughout the world and the revenue source for the Taliban?  At least the Romans could justify their military excursions on the basis that conquests generated greater revenues for the state, but for the US these military adventures are merely costly with no tangible benefit for America.

One of the major reasons for the ultimate decline of Rome was the rampant corruption at the top.  The Justice system was corrupt the politicians bought votes, and the politicians were engaged not just in power struggles but in lining their own pockets.  Does any of that resemble the US Congress today?  The voter roles are clearly corrupt and this is so widely accepted that it is a joke.  Key politicians pay no taxes (unless caught) and enact legislation to enrich themselves and to pander to special interests.  The Justice system may not be for sale but it certainly is out of control.  The courts have begun to act as a legislative branch via their interpretation of laws which has given us rules that are totally counter to the majority will. 

The 20^th Century saw the decline of morals as well as civility as drugs and sexuality became more and more accepted.  Marriages declined, divorces increased, and children being born out of wedlock saw a dramatic increase.  An ever increasing number of citizens chose to live marginal lives on the government dole rather than seek work.  This too parallels Rome where the population depended on government subsistence and entertainments.  This destabilized the Roman government as it became harder and harder to support the unemployed.  No government can sustain large numbers of unemployed for extended periods and the strain of this is already apparent in the US.

The result is American prestige is declining just as America has entered into a decline.  Any sense of shame or moral authority is gone via Court decisions that permit everything in the name of free speech.  People increasingly look to the government for help and support rather than rolling up their sleeves and taking care of themselves and their families.  The Congress has lost any sense of fiscal responsibility as they spend money on special interests while borrowing money to give away.  Rome was not conquered it rotted away and there is a message there that should not be ignored by our Congress or the American People.

 

Troubles In China

A casual reading of the news would lead you to believe that China is about to overwhelm the US and the world economy as a whole.  That it is not just a rising economic power but a military one as well.  However, a closer look would indicate that perhaps things are not as they appear and in fact China is struggling with some very significant internal problems.  People tend to ignore that this is The People’s Republic of China, a communist state where the government owns everything and is responsible for everything.  While it is true that the government has relaxed some of their rules on private ownership, the government still controls anything of importance.  Like most dictatorships the people offer passive resistance thereby obstructing government programs, while there is inefficiency and corruption within the government this passive resistance exacerbates the problems.

Perhaps the best example of problems the government cannot control is pollution.  China’s pollution problems are great and increasing.  They have huge energy demands which are being met with coal powered plants and their accompanying air pollution.  In an effort to meet the growing demand for power the government built the Three Gorges Dam which introduced significant environmental and social problems. Not only has this dam created internal problems with the local population it has brought worldwide concern over its environmental impact.  But China's pollution problems extend even further. In an effort to stimulate the economy and stifle unrest the government relaxed their regulations regarding private enterprise.  With this shift came increased personal wealth and with that wealth came more auto’s.  As the number of autos grew so did the smog and a decline in air quality which the government has been unable to control or reverse.  But more alarming is how the managers of the government owned facilities ignore regulations and are pouring untreated sewage and chemicals into their rivers.  

China, even Imperial China, has historically had a long history of corruption and that continues today even at the highest levels. Those who control the government are very rich and their business practices are carefully guarded secrets but that attitude simply percolates downward and spreads across the entire infrastructure.  Nepotism is rampant so organizations are overstaffed with family members who pass business back and forth within the family.  Nowhere is the mismanagement and corruption more evident than in the financial sector where the government banks make loans to other government operations without any due diligence.  These bad loans are not repaid but are carried on the books as assets. So the government makes the loan to the government without creating any jobs or wealth, the result is less money available for capital investment or new endeavors.

Socialism and communism place employment over efficiency and this is certainly true in China.  The means of production in China are located along the coastal areas and are wholly owned by the government.  These factories are subsidized by the government and the production targets are set by the government.  As long as the global economy was growing this was not a problem but as the economies of the US and Europe slowed unsold inventories have accumulated.  This has made many employees redundant in an environment where employment is a primary objective. So the government is faced with unsold inventories and too many workers.  Adding to this problem has been an influx of young workers who are leaving the agricultural areas looking for higher wages and a better life.  The result is a growing unemployment problem which the government is struggling with.  The subsidies are siphoning off money needed for infrastructure improvements needed in the interior plus the agricultural workers are struggling to make a living.  How the People’s Republic of China deals with this problem while maintaining their Communist ideals is to be determined.

In spite of these problems there is an even larger problem facing China and that is their determination to keep the value of the Yuan low.  The Yuan has been tied to the dollar which worked well for the Chinese when the economy and the dollar was strong but as the value of the dollar declined so has the Yuan.  The result has been inflation making foreign goods more expensive to the Chinese citizen just as they are beginning to enjoy their increasing wealth.  This in turn is putting pressure on the government to increase wages just as they are faced with unsold inventories and redundant employees.  Adding to their financial woes is pressure from the US to revalue the Yuan which they resist because it would simply make a bad situation worse.  But the undervalued Yuan is adding to their inflationary pressures so the government is caught between a rock and a hard place. 

How long The Peoples Republic can continue with the central planning demanded by communist philosophy remains to be seen but they have significant problems, which are growing daily.

 

The Chinese Bubble

The socialists and communists never seem to learn that central planning and government control is a failure, is expensive, and never seems to accomplish any of their objectives. Currently the feeling seems to be that China (formerly known by the politically incorrect but accurate title – The People’s Republic of China) is taking over the world. Everything seems to be made in China and the PRC seems impervious to the economic woes of the world. But is this real? Is the PRC the economic success that they want you to believe or are they practicing the tried and true strategy of the USSR, which is that if you say it’s true then it must be true?

It is important to understand that there is no private capital in the PRC and that everything is controlled by the government. This means that all new construction, production volumes, and imports are strictly controlled and subsidized by the government. Given this strict control and oversight by the government the PRC must be a booming success but alas – it is looking more and more like the PRC may have created a bubble that is nearing a tipping point.

The Central Planning philosophy seems to be “if you build it they will come”. Meaning that if you build a mall or apartment complex the consumption will follow which has left the government holding empty buildings, empty malls, and ongoing construction projects which will yield even more empty buildings and malls. You must remember the bedrock philosophy of socialism is employment not efficiency so the harsh rules of capitalist supply and demand are ignored and not viewed as relevant. The result is that there is a housing glut with substantially more housing available that is needed, but that really only applies to the coastal region. The interior of China continues to be rural with a standard of living equivalent to most third world countries.

But this problem of excess capacity isn’t limited to housing but is prevalent in manufacturing as well. Chinese manufacturers continue pumping out huge amounts of steel, cement, aluminum, and other products to the point that it is unlikely the economy can absorb the output. When the world economy took a down turn China did not cut back but continued churning out massive amounts of product. Now the world economy has cut back and the domestic Chinese market cannot absorb the surplus. In a capitalist economy the individual businesses would simply reduce output, eliminate inefficiencies, and reduce headcount but these solutions are not possible with central planning, because employment is the objective. Furthermore, Chinese industry is heavily subsidized and relies strongly on imported raw materials. The pressure on the Chinese government is tremendous and the question is – how long can they maintain this drain on their economy?

China -- Red Dragon or Paper Dragon

From what you read in such prestigious sources as the New York Times you would think that everybody should start learning Chinese because China is not only a rising military power but an economic power house that is overwhelming all competition. But is that a realistic appraisal of the situation? I think a little critical thinking may be in order.

First the New York Times is not noted for its veracity or being in love with capitalism nor is most of the American media The critical thinking seems to be reserved for American business and foreign policies rather than any critical analysis of what lies beneath the public policies and positions of the Peoples Republic of China. In fact when was the last time you saw any reference to China as the “People’s Republic of China”? Currently the PRC is simply referred to as China which may just be laziness of the part of the media but the fact is failing to call the PRC what it is in reality is misleading. The reality is that Communism or Marxism are demonstrable failures as a government. Furthermore Socialism as a governmental form is far from successful as can be seen in the current upheavals in Greece, Italy, France, and across Western Europe in general. The fatal flaw in these political philosophies is that their objective is employment not efficiency and wealth redistribution not wealth creation.

There is no free enterprise in the PRC in spite of appearances. Permitting a family or an individual to set up a noodle stand is not quite the same as opening a factory. The Chinese government permits these small businesses to operate more like a safety valve on a steam engine – the internal pressures on the Chinese government are immense and growing. These pressures are both political and economic but the economic ones are by far the greater.

In the PRC the government owns everything – there is no true private ownership. The government owns all of the factories, the land, and all means of production from rice to warships which mean that they are the sole employer and that they control all prices. But the PRC, like all governments is faced with a finite amount of revenue that must cover their overhead, but unlike capitalist governments they cannot raise taxes because that is just taking from one pocket and putting it in another. Consequently the PRC is forced to increase revenues from exports which means they must compete in a global market for both labor and goods. To date the PRC has been able to maintain the fiction that they are a competitive powerhouse but in reality they are operating a giant Ponzi scheme.

The PRC is manufacturing and exporting vast amounts of product because foreign manufacturers are sending thousands of jobs to this “low labor cost” market. But the manufacturing centers are along the coastal areas where the quality of life is far superior to the internal quality of life. This is leading to a growing influx of young people seeking a better life which in turn is causing pressures on housing as well wages as the cost of living increases. If the wages increase the competitive position vanishes and that foreign investment will move to other low labor cost markets. The PRC has attempted to deal with this issue by subsidizing the manufacturing which means that the cost of goods being exported are a) below cost b) at cost or c) with low margins. This in turn has led to quality issues but the real problem is that these subsidies are draining financial resources from the interior infrastructure. While the internal infrastructure cannot be improved the major problem is that it cannot even be repaired. The PRC has suffered greatly from major floods and earthquakes which have left much of the interior in need of repair, which means the government is faced with some very difficult decisions. They cannot reduce the subsidies without raising prices which will create a demand for higher wages which will drive foreign investment away. They can fail to quickly repair the damage but the rural areas are already restive due to their quality of life versus that of the coastal areas. What ever they decide there will be major changes in the economy of the PRC.

And this brings us to the Chinese Military. As Talleyrand once said regarding Napoleon’s military exploits “the problem with an army is that it eats” and thus the PRC has this issue to deal with as well. Armies are pure overhead. They cost a great deal to feed and equip while providing nothing in peace time, so they must be employed or reduced in size. The PRC cannot use their army by adopting an expansionist policy nor can they reduce its size because they would still have to pay the soldiers being released because the government is the sole employer. But there is another less visible issue and that is the military itself. Generals do not like to see their power reduced but more importantly the soldiers themselves are the sons and daughters of farmers and small shop keepers. These are the people who are suffering from a poor quality of life which is aggravated by the damaged infrastructure. A Failure to alleviate the suffering in the rural areas could easily transfer to a restive military, so the central government cannot ignore the problems of the interior and they are caught on the horns of this dilemma. If those weren’t problems enough there is another historic problem that has plagued China for thousands of years and that is corruption. Nepotism, bribery, and kickbacks are a way of life and part of the Chinese culture. The PRC does what it can to stop this and do prosecute and act on the most outrageous examples, but the problem is endemic and undermines trust in the government.

So China – the People’s Republic of China – is perhaps more of a Paper Dragon than a real one. While they appear to be crushing everything in their path, the reality is that Communism and Central Planning are demonstrable failures. The PRC cannot continue to sustain the house of cards they have built indefinitely and their dominant position in world trade must eventually collapse from the internal economic pressures.

Rome and The US And The Roots of Decline

History And Realpolitik

Sometimes it is truly frightening to watch world leaders make decisions and take actions that history clearly demonstrates are doomed to failure. In 2002 a book was published “Warrior Politics” which was an essay on “Realpolitik” In this short book the author uses historical references gleaned from some of the worlds great thinkers and philosophers to put the 20th century into perspective. Certainly the 20th Century will go down in history as a pivotal period. It included the rise of Communism and its ultimate failure. A failure still not recognized by many academics and politicians who still think Socialism and Communism are viable political structures but previous failures were not due to any inherent flaws but because the implementers were incompetent. The 20th Century saw genocides on massive scales, not just in Germany but in Asia, Eastern Europe, and Russia as well.

Without doubt two of the most important events in the 20th Century were the two world wars but it is worth noting that these two wars parallel the Punic Wars between Rome and Carthage. In the second century BC Carthage was the dominant power in the Mediterranean but that power was being challenged by Rome After the first Punic War Rome imposed an unjust peace on Carthage which directly led to the succeeding wars which were costly in lives and treasure. This is precisely what happened in the 20th Century. Germany was a newly minted country and a rising power in Europe. This drive for power brought it into conflict with France and England and gave rise to WWI. But the allied powers failed to see the parallel with the Punic Wars and imposed the unjust Treaty of Versailles. But the allied powers failed to see the parallel with the Punic Wars and imposed the unjust Treaty of Versailles Germany. This treaty led directly to WW II.

But these are only the most obvious lessons to be gleaned from history and as the 20th century fades into history we find the 21st Century leaders repeating the mistakes of history. We find the US – much like Rome – embroiled in a seemingly endless series of wars. The Pax Romana taxed the Roman Empire just as the Pax Americana is taxing the American Empire – and for many of the same reasons. America is engaged in Afghanistan, Iraq, Libya, Palestine, Syria, Egypt, China, India, and Pakistan. But for what purpose and for what advantage to America? The glib answer of course is that these are necessary to protect America both economically and militarily, which of course would have been the response of any of the Caesars. But there are no specific answers coming out of Washington, because there are no concrete advantages to America. Why is the US subsidizing Palestine (Hamas) when they are clearly the group who are the aggressors against Israel and have never shown even the slightest indication that they want peace. In fact the only thing they want is for Israel to vanish and all Jews (and Christians) to be driven from “Arab Lands”. We entered Afghanistan for the purpose of capturing Osama bin Laden, that is accomplished but once it was clear he was no longer in Afghanistan what was the purpose of us lingering there? An even larger question is why didn’t the US kill all of the poppy fields? The answer has been this would have turned them against us – are they for us now? Aren’t these fields the source of much of the drug trade throughout the world and the revenue source for the Taliban? At least the Romans could justify their military excursions on the basis that conquests generated greater revenues for the state, but for the US these military adventures are costly.

One of the major reasons for the ultimate decline of Rome was the rampant corruption at the top. The Justice system was corrupt as the politicians bought votes, and the politicians were engaged not just in power struggles but in lining their own pockets. Does any of that resemble the US Congress today? The voter roles are clearly corrupt and this is so widely accepted that it is a joke. Key politicians pay no taxes (unless caught) and enact legislation to enrich themselves and to pander to special interests. The Justice system may not be for sale but it certainly is out of control. The courts have begun to act as a legislative branch via their interpretation of laws which has given us rules that are totally counter to the majority will.

The result is American prestige is declining just as America has entered into a decline. Any sense of shame or moral authority is gone via Court decisions that permit everything in the name of free speech. People increasingly look to the government for help and support rather than rolling up their sleeves and taking care of themselves and their families. The Congress has lost any sense of fiscal responsibility as they spend money on special interests while borrowing money to give away. Rome was not conquered it rotted away and there is a message there that should not be ignored by our Congress or the American People.

China and Economics

The idea that China is rapidly taking over the world economy is a widespread belief, but like so many things related to Socialism and Communism the realities are frequently ignored by pandering press. Currently the focus is on Greece and Europe where all of those socialist dreams are rapidly becoming an economic nightmare as it becomes apparent that government spending cannot exceed tax revenues. But there are other socialist countries where the stark reality of economics is beginning to rear its ugly head and China is one of those.

China – like so many other nations including the US, unleashed a flood of “stimulus” money in 2008 for the purpose of stimulating its economy which had been hard hit with the global decline. This stimulus money mostly went to local governments with the intent that this money would be spent on the infrastructure. This money vanished but with no real improvement in the infrastructure and by 2010 the local governments were $1.6 trillion dollars in debt, mostly in bank loans with a substantial portion of those loans being bad debt. Many of those infrastructure projects are sunk in debt and incomplete and those that have been completed have done little to stimulate or support China’s economic growth as they are simply “bridges to nowhere”. The reality is that no government can continue to make loans that are not paid back because eventually you run out of money. Greece and Europe (and soon the US) are in the throes of that reality and China is not far behind.

Cart Water’s and American Investment Banker and a specialist in China, points out that 55% of the Chinese GDP was from infrastructure investment – meaning bank loans which in a Communist country means the government. But governments do not make a profit and this is true even in communist countries and the collapse of the USSR is an example of how governments cannot run anything at a profit. So the Chinese government is trying to shore up its economic house by shifting much of the local government debt off of their books while the state owned banks re-capitalize using state guaranteed profits generated by the spread between interest rates on savings and interest charged on loans. Chinese law allows the banks to roll over their bad debts indefinitely so they can gradually pay down these debts. This is a communist country where the government controls everything so it is easy for the government to rig the system, which is just building a house of cards that cannot stand forever.

Of course in a rigged system the banks make money no matter if the loans are bad loans but the reality is those loans don’t go away and as that debt load grows the government will find it harder and harder to lend more money for investment in the infrastructure necessary to maintain their economy. That economy is highly dependent on the industrialized coast cities and their industries which are government subsidized. But China remains a largely rural economy and the disparity in income between the interior and the coastal region is creating unrest and demands for infrastructure and quality of life improvements that the government cannot meet in its leveraged state.

But the work force in the Industrial cities is demanding higher and higher wages which is placing the government into a difficult position. A failure to meet the demands for higher wages will cause the workforce to become even more restive than it already is but raising the wages reduces China’s competitiveness in the world labor market while reducing their ability to satisfy the rural area’s demands for improvements in infrastructure and quality of life. The government has made some attempt to increase wages but this has caused some manufacturers to abandon China and move to lower cost labor markets. This migration out of China is causing unemployment and empty factories which is having an impact in the rural areas because the government can’t fund the necessary improvements in the countryside and those unemployed workers were sending money to their rural families but that has ceased adding to the unrest. There have already been riots and unrest which the government is attempting to keep out of the public eye but they recognize the gravity of the situation.

Socialism and communism alike cannot and do not work in the long term. Europe is nearly bankrupt and faced with the reality that their extravagant government benefits cannot be sustained in the face of higher costs and greater longevity of their populations. Attempts to reduce these benefits even slightly had resulted in riots and instability. This is a lesson not wasted on the Chinese but the fear that China is going to take over the world seems unfounded.

China and Economics

The idea that China is rapidly taking over the world economy is a widespread belief, but like so many things related to Socialism and Communism the realities are frequently ignored by pandering press. Currently the focus is on Greece and Europe where all of those socialist dreams are rapidly becoming an economic nightmare as it becomes apparent that government spending cannot exceed tax revenues. But there are other socialist countries where the stark reality of economics is beginning to rear its ugly head and China is one of those.

China – like so many other nations including the US, unleashed a flood of “stimulus” money in 2008 for the purpose of stimulating its economy which had been hard hit with the global decline. This stimulus money mostly went to local governments with the intent that this money would be spent on the infrastructure. This money vanished but with no real improvement in the infrastructure and by 2010 the local governments were $1.6 trillion dollars in debt, mostly in bank loans with a substantial portion of those loans being bad debt. Many of those infrastructure projects are sunk in debt and incomplete and those that have been completed have done little to stimulate or support China’s economic growth as they are simply “bridges to nowhere”. The reality is that no government can continue to make loans that are not paid back because eventually you run out of money. Greece and Europe (and soon the US) are in the throes of that reality and China is not far behind.

Cart Water’s and American Investment Banker and a specialist in China, points out that 55% of the Chinese GDP was from infrastructure investment – meaning bank loans which in a Communist country means the government. But governments do not make a profit and this is true even in communist countries and the collapse of the USSR is an example of how governments cannot run anything at a profit. So the Chinese government is trying to shore up its economic house by shifting much of the local government debt off of their books while the state owned banks re-capitalize using state guaranteed profits generated by the spread between interest rates on savings and interest charged on loans. Chinese law allows the banks to roll over their bad debts indefinitely so they can gradually pay down these debts. This is a communist country where the government controls everything so it is easy for the government to rig the system, which is just building a house of cards that cannot stand forever.

Of course in a rigged system the banks make money no matter if the loans are bad loans but the reality is those loans don’t go away and as that debt load grows the government will find it harder and harder to lend more money for investment in the infrastructure necessary to maintain their economy. That economy is highly dependent on the industrialized coast cities and their industries which are government subsidized. But China remains a largely rural economy and the disparity in income between the interior and the coastal region is creating unrest and demands for infrastructure and quality of life improvements that the government cannot meet in its leveraged state.

But the work force in the Industrial cities is demanding higher and higher wages which is placing the government into a difficult position. A failure to meet the demands for higher wages will cause the workforce to become even more restive than it already is but raising the wages reduces China’s competitiveness in the world labor market while reducing their ability to satisfy the rural area’s demands for improvements in infrastructure and quality of life. The government has made some attempt to increase wages but this has caused some manufacturers to abandon China and move to lower cost labor markets. This migration out of China is causing unemployment and empty factories which is having an impact in the rural areas because the government can’t fund the necessary improvements in the countryside and those unemployed workers were sending money to their rural families but that has ceased adding to the unrest. There have already been riots and unrest which the government is attempting to keep out of the public eye but they recognize the gravity of the situation.

Socialism and communism alike cannot and do not work in the long term. Europe is nearly bankrupt and faced with the reality that their extravagant government benefits cannot be sustained in the face of higher costs and greater longevity of their populations. Attempts to reduce these benefits even slightly had resulted in riots and instability. This is a lesson not wasted on the Chinese but the fear that China is going to take over the world seems unfounded.

Ayn Rand in Summary

Several days ago I was challenged for being an ideologue without actually understanding conservatism or acknowledging the extreme views of Ayn Rand. As part of this discussion I was asked to respond but in something short of a white paper.

Ayn Rand is a very complex person while paradoxically seeming to be simplistic and predictable. I agree with others in that Rand’s philosophy can be summed up as “Objective Materialism”, but what this means probably falls into the same amorphous category as ‘socially conscious”. Do I find her views “appealing?” Yes and no – I think Rand makes some very valid philosophical points but that doesn’t mean that I subscribe to all of her positions, which can be extreme. Some of the left have asked that I distill Rand’s philosophy into a set of bullet points. The bullets below represent my effort to do so, but condensing Rand’s philosophy into a series of bullets probably cannot provide any in depth insight into her philosophy as a whole. So here is my (pathetic?) attempt to summarize Ayn Rand’s philosophy.

1. Probably the simplest and easiest way to view Rand’s philosophy is to summarize it as the struggle of society and government between individualism and collectivism. Where the individual has a right to be himself and to retain the fruits of his labor while the collectivist represents the right of government to take the fruits of the individual’s labor and use it for the “greater good”.

2. Rand sees the collectivists as destroyers of capitalism and the profit motive who if left unchecked will cause the ultimate collapse of society itself. Although Rand died before the collapse of the USSR I think that bears out her conclusion.

3. The Philosophy of Objectivism essentially is a defense or advocacy for reason, individualism, capitalism, and the free market economy while establishing a rejection of government coercion through laws and regulations intended to further government control and support for the greater good of society.

4. Much of Ayn Rand’s philosophy can be summarized as describing the inherent conflict between Marxism (Rand was a strong anti-Marxist) and Capitalism in the form of a free market and individual rights over the collective.

5. Rand’s Magnum Opus “Atlas Shrugged” actually was a treatise on how fascism, communism, and socialism or any form of government control of society is fatally flawed at its core and ultimately destructive to society as a whole. She feels that any form of coerced self-sacrifice is destructive to society.

6. Perhaps the most controversial part of Ayn Rand’s philosophy is her rejection of God or any sort of higher being. In her philosophy she rejects anything which she sees as claiming authority or control over the individual or the individual’s mind. Whether or not she is an outright Atheist is unclear, but this position puts her at odds with much of the conservative political movement.

7. Rand’s philosophy when examined at its core echo’s the position of Frederic Bastiat (The Law) which postulates that no man or government can obtain anything of value from an individual through force either physical or legal. In effect the rights of the individual are paramount (read rights of property) and that the individual has the fundamental right to the fruits of his labor. In effect Rand supports laissez faire capitalism – a free and unregulated market. Rand (and Bastiat) reject any legislation based on enforced or coerced altruism (e.g. equalization of opportunity) which Rand sees as a triumph of special interests over those who produce value (the individual).

8. Another summarized view of Ayn Rand’s philosophy and what probably makes it attractive to the political conservative is her position that society must protect itself from the parasites and “looters” (her term) who are represented by the “tax the rich politicians”, big labor, government ownership, government spending, government economic planning, onerous federal regulations, and most of all any form of wealth redistribution. That latter point in and of itself makes her philosophy attractive to the political right.

I think the above is a brief summarization of what passes for Ayn Rand’s philosophy called Objectivism and Individualism. There is undoubtedly more than what is shown here but I think these brief paragraphs demonstrate why she is attractive to the political right. Now it can be argued that her positions are extreme and that a society composed entirely of individuals beholden to no one but themselves could not be sustained anymore than the collectivist society that she condemns. On the other hand it can be argued that the US was a great deal richer and freer before the federal government became so powerful while the failure of the collectivist society is demonstrated by the failure of the USSR and the growing woes of the socialist European nations

The ABC's Of Liberalism

The term “Liberal” and “Liberalism” is being bandied about in so many contexts that its actual meaning seems to becoming lost. The fact is that most people today – at least Americans are “liberal” the problem lies not in the philosophy of liberalism but in its interpretation and implementation. Liberalism is actually a philosophy that emphasizes individualism, equality, and freedom – things which I think the typical American stands for and believes in. The problem starts almost at the outset because as a “theory” liberalism describes how things ought to be rather than how they actually are. In practice the liberal wants a government that perfectly embodies the three basic points of liberal philosophy, rather than accepting the pragmatic reality of the government we have.

Liberals and non-liberals alike want government to secure the rights of individuals the problem comes in the implementation of that goal. Both want every individual to be treated equally but for some that equality is equality under the law but for others that kind equality is not enough because equality cannot be had if some are richer than others. For these people the clear responsibility of government is to redistribute the wealth so that equality among all citizens can be achieved. While some people believe in the basic right to individual ownership of property others think the government has the responsibility to secure goods for every citizen, even at the expense of others and their property rights. This leads to the progressive income tax, housing subsides, affirmative action, income tax refunds to those who pay no income tax, and more recently the seizure of private property for developers to build malls and buildings for the “good of all”.

While most Americans would say they believe in freedom, in practice they do not. In fact the typical American believes in limited freedom and the number of limitations on our freedom increases daily. In fact this may actually best illustrate how liberalism in practice has so deviated from liberalism as a philosophy. Some would think that “freedom of speech” has been expanded beyond what was intended by the founding fathers with the acceptance by the Supreme Court of pornography, profanity, and the desecration of Christian symbols. But Christian theology and symbols are banned from schools and public buildings while Islamic and other religious symbols and theology are not. Huckleberry Finn cannot be taught in schools because the word “nigger” is used. The government has banned smoking which is a direct infringement of individual rights – justified by liberals on the basis of “the common good”. Car seats and seat belts are mandatory and indeed they may be very useful but the reality is that compulsion to buy them and use them is a direct abridgement by government on individual rights. So while most Americans believe in the liberal philosophy the implementation has strayed so far afield as to border on fascism.

This idea that the government has an obligation to provide for the individual was the motivation behind Karl Marx and his communist philosophy. Even though communism has caused more harm than good and has cost millions of lives, the basic belief that government must provide for the individual lives on. It lives on with the universal healthcare bill before congress today. It lives on in the “tax the rich” ideas prevailing in congress today. It lives on as the individual right not to be offended. The government now protects the rights of minorities at the expense of the majority when the whole purpose of the American Republic was government by the majority. We have come along way from that ideal. What started as a government for the people has morphed into a people subordinate to the government whose objective is to provide first and foremost for the individual at the expense of the majority.

Rome - America - Capitalism

This lengthy essay is in response to a comment posted by Susanna.

Susanna:
Thank you for your comments regarding Ancient Rome. Yes it is true that Roman society was sharply divided between the wealthy and everyone else but the society did function. The Gracchi’s did attempt to land reform but as you may know it failed. Nevertheless land was constantly being allocated to former members of the military and the majority of Roman Society lived better than they did after the Romans were eclipsed by those who desired their wealth without actually earning it. The result was grinding poverty and marginal living for virtually all of society. So eliminating slavery and redistributing land and wealth didn’t actually improve things.

While in college my history class addressed the issue of land reform as a means of wealth redistribution. The idea was that most of the land and wealth was in the hands of a few so various “Presidente`s” elected to take the land from the wealthy land owners and give it to the peons. This was done several times and it failed every time. Within a very few years the wealthy land owners once again owned the land and the peons were back working it. The root cause was not greed or even predatory practices – the fundamental issues were that not everyone is a good farmer so some simply failed to work the land properly and had to sell it in order to eat. Others could farm the land but could not make enough to feed their families because they didn’t have enough land. Eventually these farmers also sold their land and within a few years the land was back in the hands of the wealthy, the government collapsed, and a new Presidente` was in place.

Now you note that 90% of the wealth of America is in the hands of 10% and you say this as if this was wrong. In my work I travel extensively and I have noted that virtually everyone owns a car, has housing, eats regularly, has a TV, and most have one or more computers. I would say that everyone I meet on a daily basis is not “rich” nor are they in that rarefied 10% so your statistic is really meaningless. I also have in my circle of friends 3 people who do in fact reside in that 10% and probably in the 5% range. One man escaped from the communists and came to the US with no money whatsoever. He worked as a carpenter, saved his money, bought land, and today owns homes all over the world, contributes heavily to the Republican Party and commented recently that the very words used by President Obama were the exact words the communists used when they seized his family’s farm and livestock. Another man sold tools out of the trunk of his car. He gradually built his business and recently sold it for $57M and retired. One my oldest friends left the Navy and worked as door to door salesman. He borrowed money to buy one share of the business he worked for. Twenty years later he bought the last share of that business and today he owns it and is worth millions. All three of these men contribute heavily to charity and employ hundreds of others. So opportunity exists for those who choose to work. Those who choose not to work have no right to the wealth of others.

Since you are student of Roman History you might check Emperor Severus. As I recall he tried the Obama approach of taxing the wealthy in order to raise revenues. Paradoxically the higher he raised the taxes on the rich the lower his revenues dropped. You cannot take from the wealthy and give to the unproductive without reducing the total revenues and lowering the standard of living. This was made very obvious with the various communist regimes in the 20th Century.

I do agree that there is a growing underclass in America but I disagree with your implied root cause. You state that this underclass is the result of a lack of education, housing, and healthcare. Public schools are available throughout the country. The schools are routinely destroyed by the children of the underclass whom they are serving. These children do not attend, do not do the work, assault the teachers, and destroy the property. Rather than take responsibility for the poor education their children are receiving they blame the government, the wealthy, the whites, anyone but themselves. So the education is there if they choose to take advantage of it and many do. I am not responsible for the bad decisions of the underclass regarding their education. The government has routinely built public housing for the underclass who have just as routinely destroyed it. The government has torn these projects down and built new ones with the same result. The government then offered programs so the homeless could buy houses with no money down. This allowed hundreds of people to buy homes they couldn’t afford which forced them into bankruptcy and the ill advised government program to spend trillions of dollars keeping companies out of bankruptcy after the government forced them into this ridiculous program to start with.

This brings us to the question of healthcare which you apparently think is some sort of right of the underclass. The actuality is that every hospital in the country is required to provide service to the indigent without charge. The cost of this service is borne by those who have (and pay for) health insurance. So the reality is that there is no one in this country who must go without healthcare and that includes millions of illegal aliens who are slowly bankrupting the welfare system.

Some how you have concluded that the social welfare programs initiated by Roosevelt and expanded by every President since, have not worked because of greed. Precisely whose greed you don’t mention, but I suspect you attribute the woes of society to those who actually work for a living and those businesses that strive to make a profit while employing others. Making a profit is not greed and taking money from those who earn it and give it to those who do not, is communism in its purest form. I think this philosophy has failed repeatedly. I

In the late 1990’s shortly after the fall of the Communist Regime (USSR), I was part of a university program dealing with Russian professionals. The objective was to give them insight into businesses being run for profit. This was an astonishing experience for all parties but those that visited my home never grasped the size of my home and the quality of my life as the result of how hard I worked. They were accustomed to not working and drinking constantly. Prior to this program I was on a tour in Denmark of manufacturing facilities. The other American and I were appalled at the gross inefficiencies and commented that we could increase production and decrease costs by at least 50%. The tour guide stated that the objective of the socialist government was employment not profit or efficiency.

Now you think that people who work hard are doing it solely so they can have more money than their neighbor. I have no idea where you got that idea from – perhaps it is your personal motivation – I don’t know but I do know most of the people I know work because they like to work. I know I do what I do for fun and the fact that I make a lot of money doing it is a by product not the driving motive. In fact I would turn this around and say that those people who you view as the underclass are there due to their own decisions. They are the ones who didn’t like school. They are the ones who don’t have a trade because work requires you arrive on time, follow directions, don’t take drugs, and don’t drink. These simple rules are too stringent for most of those whom you see as the underclass. They are the ones who make these decisions that prevent them from enjoying the fruits of their labor. Instead they whine and appeal to politicians to give them something from the government. Of course most politicians seem to forget that the government doesn’t make money it extorts it from those who do work to give it to those who don’t. The current economic collapse is a direct result of these government run attempts to satisfy the demands from this underclass who are there because of their own bad decision making.

Do I despise and distrust the elected representatives? I certainly do although not as much as I distrust the Judiciary. Beginning with FDR the congress and the judiciary have step by step and inch by inch distorted the Constitution and Declaration of Independence into something totally unrecognizable. Apparently you think this battle over healthcare reform is the main issue – it is not. The Congress and the liberal community based on the West and East Coasts have so lost touch with the temper of the country that they really don’t understand this ground swell of anger or how to cope with it. They keep tying it to healthcare which has little to do with it. The anger begins with affirmative action which has led to quotas and reverse discrimination. It starts with the idea that prayers cannot be said in public, that we are not a Christian Nation, that atheists can dictate how we live and worship, that politicians are distorting the Constitution to restrict guns, that the courts give more rights to criminals than they do to citizens. That the President can by pass congress and appoint czars to run the businesses which he is illegally seizing. The great majority of the population is tired of being ignored and having the very fabric of the country eroded by thoughtless self-seeking politicians and judges with their own agendas.
Now to return to Rome for a moment, the reality is that the Roman Empire encompassed the entire Mediterranean Basin. The vast majority of people in the empire lived happy productive lives. The bread and circuses really was a City of Rome issue and not an issue in the Empire per se. In fact an argument could be made that a lot of loafers and idlers gravitated to Rome for the simple reason they could get handouts from the government. This welfare system was unique to Rome. It didn’t work there and it isn’t working here either because it still rewards idlers and loafers. Corruption for the most part is a government institution and enjoyed by those politicians who need to be turned out of office. Just look at the current administration – it is filled with jail birds, tax evaders, and officials totally out of touch with the people.

I urge you to read:
“The Law” by Frederick Bastiat
“ The Worldly Philosophers” by Heilbronner

Royce

THE RICH, THE POOR, AND THE REFORMERS

Civilization as we know it probably began in the Middle East and probably in Mesopotamia or Egypt. These societies were agrarian with each family farming for itself – essentially a subsistence life. However, very quickly these societies divided into farmers and craftsmen and not long after that came military and governors. Of course the governments and the military were consumers not producers so the society had to support them in the form of taxes. Naturally as the society continued to evolve it began to stratify into classes with the military and officials becoming the upper class, the nobility, and the rich. The point of this obvious historical review is to point out that mankind has always been divided into the rich and the poor and that wealth has never been equally distributed. In fact the very idea of equality much less egalitarianism is a relatively modern concept.

Nevertheless this idea that business, businessmen, and capitalists are evil and that the primary purpose of government is to distribute the wealth of society equally. The underlying principle seems to be that the capitalist has no right to the profits because those profits are earned by the workers he employs, therefore, the revenues generated by the business rightfully belong to the workers. Because these capitalists are reluctant to return the profits to the workers who earned them it is the responsibility of government to seize those profits and redistribute them to the workers. The fact that this has never worked in practice is ignored by these social activists who generally have never actually had to earn a profit or been accountable for the results of their decisions. Currently we see this philosophy being employed by Hugo Chavez in Venezuela. He has seized the assets of foreign investors, fixed prices, over employed people, and then blames the US and others for the failure of his policies. The standard of living is declining, goods are disappearing, and while prices are fixed the items are only available on the black market. This result was first observed under the Emperor Diocletian. Lessons from history don’t seem to be learned by social activists.

Of course the most famous of these social reformers was Lenin, who corrected the abuses of the aristocracy by slaughtering all who disagreed with him, seizing all methods of production, confiscating all revenues in the name of the state, and eliminating private property. Theoretically this was supposed to take the revenues generated by the workers and return the wealth to the workers equitably. Of course as George Orwell observed in his famous satire “Animal Farm” some animals are more equal than others. In practice the wealth was not distributed equally but along selective party lines and the result was the stratification of society into the rich and the poor – a fact either ignored or denied by the social activists who even today believe Marx was right and Lenin failed to implement Communism correctly. Hugo Chavez seems to be one of those who think Lenin was wrong and Marxism is right. His failures to make Marxism work he attributes to interference by the US.

But these are the obvious actions of these social reformers whose failures are highly visible. However, there are social activists among us today who still believe in the tenets of Marxism but don’t use such inflammatory names; instead they call for social reforms through legislation. This began with the infamous book “Silent Spring” by Rachel Carson. This book was later determined to be a hoax but the damage was done, industries ruined, and DDT was banned. Of course the damage to public health was ignored in favor of the animals which were alleged to be endangered by DDT. This was followed up by various other efforts at social reform and perhaps the most famous was the ban on smoking. Any empirical ties between smoking and cancer remain statistical even though the incidence of lung cancer has remained steady even as the number of smokers declines. But these were just warm-ups for the social reformers because they really are after business and the rich. These are their real targets because they truly believe that the rich have no right to what they earn as long as there are people living in poverty.

They are attacking capitalism as evil and as allowing the wealth to be concentrated into fewer and fewer hands. They believe that the profits earned by a corporation should be shared with the workers through profit sharing and not distributed to the shareholders – who of course capitalized the business to start with. The idea that it was the capitalists who created and grew the business is ignored. The workers wouldn’t have jobs and there would be no revenues much less profits to share without the capitalists who funded the enterprise initially. These social reformers rarely have actually run a business or have held positions where they were required to earn a profit. Instead, they are opposed to layoffs as a cost cutting measure because in their eyes that is immoral. For them the socialist ideal of employment over efficiency and profit is what should drive industry, not return on investment.

These are the people who are horrified at the “obscene” profits being generated by the oil companies. What is being ignored is the difference between gross revenues and net profits, but this subtlety is ignored in their drive for wealth distribution which is and always has been their objective. This is the whole purpose of the graduated income tax – it is a legislated method to strip the wealth from those who earn it and redistribute it in the form of handouts to those who did not. These are the people who feel that there is something morally wrong with some people being rich while others are poor. They never make the connection between decisions, lifestyle, responsibility and wealth. Those who work hard and make responsible decisions prosper and those who do not suffer the consequences of their bad decisions and efforts to redistribute the wealth to the poor has historically only resulted in increasing the number of poor and lowering the quality of life for everyone. The reality is there are poor and there are rich and there has always been this dichotomy and every effort to form an egalitarian society has failed.

Liberalism in Review

It seems self evident that Liberalism – as distinguished from what remains of the Democratic Party – is actually a belief system rather than any coherent political philosophy. Essentially Liberals believe that Capitalism is evil, that Marxism is good, appeasement of belligerents is the best foreign policy, and America is wrong. This Liberal belief system has been wrong throughout the 20th Century and its fallacious reasoning continues even today, if you doubt these statements let us review some statements and positions taken by well known Liberals.

Robert Heilbroner, the author of “The Worldly Philosophers” made this statement following the collapse of the Soviet Union; “the collapse if the Soviet system, hailed as a victory for human freedom, was also a defeat for human aspirations”. You wonder if the thousands of Ukrainians starved to death by the Communists or the thousands who died in Soviet Labor Camps lament this failure of Marxism to fulfill its Utopian promises. But liberals live in an Orwellian world where facts are ignored or re-interpreted to show that the Liberal position was correct. The New York Times columnist Tom Wicker, following the liberation of Czechoslovakia from the Communist yoke wrote; Freedom is not a panacea; and that communism failed does not make the Western alternative perfect, or even satisfying for millions who live under it”. Presumably it is satisfying enough for Mr. Wicker so that he continues suffering under the yoke of freedom of the press, freedom of speech, and capitalism.

But these are just recent views expressed by the denizens of shallow end of the intellectual pool. In 1921 Lincoln Steffens pronounced – after a visit to the Soviet Union, “I have seen the future and it works”. This statement was made during the period of famine and mass murder conducted by the Communists, but then data gathering, analysis, and critical reasoning has never been a hallmark of Liberals, they rely on their fundamental belief in the sanctity of government, the evils of individuality, and the need for people like themselves to rule over everyone else.

However, even as rumors regarding the failures of Communism began to creep out, George Bernard Shaw, spent 10 days in Russia and stated on his return “Russia flaunts her roaring and multiplying factories, her efficient rulers, her atmosphere of such hope and security has never been seen by a civilized country on Earth”. This was a typical statement made by the Western Intellectuals who could never be brought to believe that Communism was a failure and the Soviets were murderers. That disbelief continues even today as Western academics and pseudo-intellectuals like Michael Moore continue to extol the glories of Marxism and the evils of capitalism.

Perhaps the best example of how the Liberal establishment ignores facts and relies on their faith in left wing causes and icons, is the Alger Hiss case in 1947. Hiss was another of the East Coast Patricians who had been educated at Johns Hopkins and Harvard University. He joined the State Department in 1936 and attended the Yalta Conference. He was a leading diplomat but he was also a Soviet Spy, accused by Whitaker Chambers. Chambers was a nobody, a flunky, a common civil servant who accused a darling of the left, Hiss, of being a traitor and part of the spy ring of which Chambers was part. Naturally the left wing media launched into a full scale attack on Chambers, accusing him of being a liar, a spy, and a homosexual. The possibility that Chambers was telling the truth was never even considered.

After a sensational trial that included papers hidden in a pumpkin, Hiss was convicted. However, even after his conviction the liberal press viewed him as a political martyr and not as a convicted spy. It was Chambers who was castigated by the press and it was not until 1995, after the fall of the Soviet Union that papers from the Russian Secret Police revealed that indeed Hiss was a spy. This failure of the liberal press to accept incontrovertible proof that one of their own is an enemy is a vivid example of how the liberal establishment is faith driven and functions independently of facts.

Harry Truman – a Democrat – and perhaps one of the greatest American Presidents had the temerity to view the military expansion of the Soviet Union following WW II as a threat and in response created NATO. As enduring and as important of a deterrent this has been, the “intellectual” elite in 1949 condemned the President as a war monger. These intellectuals included Aaron Copeland, Clifford Odets, Norman Mailer, Arthur Miller, et. al., who accused Truman of “warmongering against the Soviet Union” and that the Truman Administration was comprised of the “enemies of man” and that the Truman policies would lead inevitably into a third world war.

So several things can be drawn from these Liberal attacks on things and people whom they believe do not hold the politically correct views. First, Liberals are not necessarily Democrats and the true Liberal is essentially anti-America, anti-capitalist, and anti-nationalist. Secondly, Liberals cannot be persuaded what ever they believe in is false even when presented with proof. Thirdly, that any action taken to preserve the safety of America is intrinsically wrong because it could cause people to dislike us. And fourthly, socialism and Marxism are superior to any form of government based on capitalism and the Soviet Union’s failure is not significant.

Blame America

Why do so many Americans seem so embarrassed about being American that they are compelled to apologize and hang their heads over the actions of the freest, most generous, and kindest nation ever to trod the earth? The French go into orgasmic elation over Napoleon and the “Glory” of France. Ignoring the pre-emptive wars initiated by Napoleon, the thousands of deaths, and the failure of France to ever recover its power after his fall. The Spanish reflect with pride on the reign of Phillip II, without regard to the rape of the New World or the Armada, which marked the beginning of the decline of Spain as a world power Even the Mongolians, leap to their feet and cheer at any mention of the “Great Khan (Genghis)”, who is noted for his barbarism as much as his generalship. But to mention George Washington or the founding fathers and we are immediately reminded that they owned slaves, they were hypocrites, and just a bunch of old white guys protecting themselves – hail academia!!

The fact is that since its founding, America has consistently been the freest and most welcoming nation in the world. While it took a while to free the slaves and even longer to accord the Negro the equal rights promised to all men, it was done and today everyone is assured of equal protection under the law. The United States has attempted to remain free of the entanglements of foreign treaties advised by George Washington, but modern technology has rendered this impossible. America has consistently been labeled a colonial power while systematically eliminating colonialism. It was America that wrested the Spanish Colonies of Cuba, Philippines, and the Caribbean Islands from Spain. These have all been freed but not necessarily for the better.

The real tests came with World War I, where the Germans were intent on dominating Europe and were ably supported by the Ottoman Empire and were well on their way when the United States entered the war on the side of the British. Had the United States maintained its isolationist policies Europe would be a far different place today. But this was the first taste Europe had of the awesome power of the United States. Not necessarily military power but industrial might. However, once the war was over, Europe returned to its old colonial ways and merrily began creating arbitrary countries and re-establishing their empires, while the US returned to its internal affairs, rendering the League of Nations totally impotent.

Following WW I Lenin overthrew the Czar and founded the USSR, a communist nation based on Marxism and glorified by the western intelligentsia. It is this same intelligentsia that is still attempting to establish the moral equivalence between the Soviet style Communism and the American Style Capitalism. The University of California Press in 2004 published titled “The American Gulag and then in 2005 published another book titled “The British Gulag”. The latter was written by a Harvard (no surprise there) Historian named Caroline Elkins. To equate these to Soviet Gulags is outrageous because the people in these prisons are there after being convicted in a court while those in the Soviet Prisons were commonly sent there without any trial or even informed of their crime.

During the 30’s and 40’s the Western Intellectuals couldn’t get enough of communism and George Bernard Shaw visited Russia in 1931 and wrote a panegyric upon his return – denying rumors at the time of mass starvation. In fact there was a systematic suppression of the growing evidence of mass starvation in Russia by the Western Press. The New York Times between 1921 and 1934 actively suppressed the truth about the Ukrainian famines and in 1932 won the Pulitzer Prize for a report that stated “any report of famine in the Ukraine was exaggerated or malignant propaganda, even thought the author (William Duranty) had been there and personally knew of the millions dying of starvation. These are the same people, the same intellectuals, and the same media that are still attempting to demonstrate the bankruptcy of capitalism and the evil empire of America.

Then came WW II which was the direct result of the failure of France and England to grasp their aspirations for territorial expansion and their crippling punishment of Germany. When it became obvious that the neither the French nor the British could withstand the onslaught of Germany, they turned to the United States of help. This actually marked the turning point in world history where the New World – the United States – became the world power – the hegemonic power – and Europe started its ongoing decline into irrelevance. But it was the awesome power of America – both military and industrial power – that ultimately defeated the Axis Powers of Japan, Germany, Italy, and the turncoat French.

The great tragedy in the aftermath of WW II turned out to be the creation of the United Nations. The League of Nations was thought to have failed because America failed to join so the belief was that if America joined the United Nations it was sure to succeed. It has been an unmitigated disaster for America. It has failed in every endeavor it has undertaken. It has not prevented any war, has not prevented or even alleviated poverty; it has become a highly corrupt and ineffectual organization whose only purpose seems to be to thwart America, while expecting America to pay for everything. Worse, the American Left as well as the leftists the world over seem to think that the UN has the moral authority over America so America should not act in its best interest without UN approval. The real irony is that the UN ignores every other country that acts unilaterally but castigates the US.

Another irony is that the political left continues to wail about the poverty in the US without actually understanding the realities. The reality is that being poor in America is a far cry from being poor anywhere else. In America 46% of the “poor” own their own homes, 72% have washing machines, 60% own microwave ovens, 92% have color TV’s, 76% have air conditioning, and 66% own one or more cars. Two thirds of poor households in America have two or more rooms per person and the average poor person in America has more living space than the average person in Paris. In spite of all of these advantages and contributions to the world, the American Intellectuals still view America as oppressive. However, I note they don’t move to Cuba, Russia, or even to North Korea so I guess America isn’t as oppressive as they maintain. Can you spell hypocrite?

Socialism Is Love

Hugo Chavez is clearly a closet Marxist but when asked why he was such an avid socialist he summed up socialism by describing it as “love”. “Socialism is Love” is perhaps the best description, in the fewest words, of socialism and communism that I have ever heard. If you consider the motives of many of the outspoken Liberals, Socialists, and even Marxists, you see that what they are seeking is to ensure that everyone shares in the wealth and advantages of society as a whole. Truly a worthwhile objective but then why have these altruistic philosophies failed in practice – or have they failed”

It seems clear today that Communism has failed. Lenin overthrew the Czar in 1917 and purged not just the aristocracy but the capitalists, the business owners, and even the farmers who owned land. Everything was taken over by the state and was to be run for the benefit of everyone. The very foundation of Marxism is expressed in this one phrase:

“From each according to his ability. To each according to his needs.”

This simple phrase indicates that everyone will work to their capacity and give to the state all of their output so the state can redistribute the wealth they generated according to the needs of everyone. In practice this means that if you can generate $100 but only require $10 to support yourself then the state returns $10 to you and distributes the remaining $90 according to the “needs” of others. Of course in practice it seems that members of the Communist Party had more needs than non-members and senior party members had even more needs. Intellectuals, artists, and professionals were generally viewed as parasites because they didn’t produce anything tangible and were treated accordingly.

The stark reality is that the left wing of society closed its collective eyes to the failure of Communism under Lenin and Stalin. The Western Intelligentsia continued to extol the glories of the Worker’s Paradise even when it was obvious that it was nothing short of a crude dictatorship that was systematically murdering thousands of people. This self-deception continued right up to and beyond the fall of the USSR. Castro came to power as a “socialist” whose objective was to overthrow the evil Dictatorship of Bautista with a free and democratic – albeit socialist – government. However, once Bautista was gone, the free and democratic government never materialized, instead Castro declared himself not just a “socialist” but a Marxist. Elections were held but the only party was the Communist Party and the only candidate Fidel. Gone was any semblance of freedom. This same scenario is being played out today in Venezuela by Hugo Chavez who describes himself as a “socialist” while he is rigging elections, nationalizing industries, and wrecking the economy in the his efforts to spread the wealth. Even Chavez himself hints that he is a Marxist, but few people in the media or on the left are willing to call him what he is – a Marxist Dictator cut from the Stalinist cloth.

Every communist regime from Lenin until now has been a disaster economically as well as politically. There has never been a Communist government voted into office and once in control no communist regime has ever been unseated electorally – all have been overthrown by violence. Fortunately few communist regimes remain but those that do are repressive and examples would be North Korea, Viet Nam, and Cuba. Of course many of the fellow travelers would point out that China is “communist” and very successful. However, modern China is no longer a “communist” nation but rather an updated version of Imperial China. The country has adopted many of the trappings of a capitalist society like entrepreneurship, profits, and individuality. Of course there is little freedom of the press, assembly, or speech, but then those things weren’t characteristics of Imperial China either. China has let the capitalist cat out of the bag and they will never be able to put it back, so China will slowly continue its evolution from Communism to Capitalism.

But what of those nations that are truly socialist – countries like France and Sweden? Aren’t they successful? Obviously it depends on how you measure success, but keeping in mind that one of the primary objectives of socialism is employment not profitability or productivity, then the socialist countries of Western Europe do not perform well.

The Gross Domestic Product per capita of France is 26% below that of the US, Sweden is 22%
And Germany is 38% below that of the United States. When viewed in terms of Gross Domestic Product per Employed Person the United States produces $81,024 per person while France produces $63,097, Sweden $63,401, and Germany $59,052 and these are countries where employment is a primary objective and the rationale for government control. But the unemployment rate in the US is at 4.5% while France and Germany have unemployment rates of 9% and Sweden 7%.

The obvious conclusion is that capitalism undoubtedly has greater swings in employment it has greater productivity and wealth generation than any of the socialist countries and ironically less unemployment. So while the socialists and Marxists show their “love” for the poor and downtrodden at the expense of the rich and successful, the overall result is a reduction in overall wealth and greater unemployment, not considering the flight of capital and brains as the more educated and aggressive members of their society flee their loving embrace. One is reminded of George Orwell’s “New Speak” where “Love is Hate”. This certainly seems to apply to Communism and Socialism.

Another Experiment in Socialism Gone Awry

It is truly amazing how the socialists in the world fail to get the message that it doesn’t work. Our Universities and the Educational community in general continue to be filled with these people who feel capitalism is evil and that socialism is the only “fair” way to run a government. Of course it goes unsaid that they should be the ones to run the government because the rest of us are too stupid to make the right decisions. Even in those European countries where socialism is entrenched the best they have been able to achieve is a level of mediocrity, where no one is terribly rich, no one terribly poor, and many who simply give up and live parasitic lives without working. If it wasn’t for the leadership of the United States most of Europe would simply collapse. But that really isn’t the issue. The issue today is Venezuela, a once prosperous country rich in oil revenues but suffering from the usual Latin America malaise of few members in the middle class, too many ignorant and uneducated peasants, and too little reinvestment in the country.

What we find today in Venezuela is Hugo Chavez doing what dictators and communists have done forever and that is promise something for nothing to the masses and then find a scapegoat to blame for the failures that inevitably follow from socialist policies. Since Chavez gained power the economy of Venezuela has slipped into decline and is growing worse day by day. At first glance this deterioration may not be obvious because the streets are filled with vendors hawking their wares and shouting out prices. These vendors are selling virtually everything and from the sheer number it would appear that the economy is in good shape and that the people are prosperous and doing well. But this appearance is deceiving because the supermarkets where one would ordinarily buy vegetables and other staples are virtually bare. But why is this happening when the whole objective of socialism / communism is to share the riches with everyone. The objective is to take from those that have and give to those who have not so why are goods becoming scarce?

Obviously the answer to this question is complicated but it starts with some of the fundamentals of socialism / communism. In capitalism the objective of any enterprise is profit and if the profits are not forthcoming the business goes out of business. In socialism and in Venezuela the Chavez form of Socialism is more nearly akin to communism the objective is employment and any profits from the enterprise are taken by the state and redistributed into other endeavors that are not making a profit. The inevitable result of this policy is that eventually there are no profits being generated by any enterprise. But the more direct impact of government control of the economy is the policy of price control. This failed in ancient Rome and it has failed in every instance where it has been tried and it is failing in Venezuela. As soon as the government fixes the price at which a product can be sold it immediately drives that product out of the marketplace because the product can be sold at a higher price on the black market. Punishment of black marketeers increases the scarcity and drives the prices even higher. In Venezuela the government allows these individual entrepreneurs to exist, which is why the street vendors are selling vegetables on the street but the shelves in the markets are bare.

Regimes like Chavez’s drive away business from outsiders and cause investors internally to flee the country taking their wealth with them. This has historically been the problem in Latin America as one dictator after another seizes power the wealthy move their wealth to other countries and the new regime falters and fails to be replaced by other and the pattern repeats itself. Dictatorships are inherently unstable and eventually fail. Communist states follow the same pattern for much the same reason – any prudent person will not stand by and allow the fruits of his labor to be seized by the government and redistributed to the unproductive.

There is a lesson here for America’s leftists and the extreme positions held by many in the Democratic Party. Raising taxes is simply a legal way of taking the profits from the productive and giving them to the unproductive. This is what Chavez is doing in Venezuela and his strength comes from the unemployed, the disenfranchised, and the poor. The power base of Pelosi and the extreme left increasingly rests on the illegal immigrants, the poor, and the unproductive.

But the real warning is that Hugo Chavez is a “democratically elected” leader who seems to have convinced the American left that he is not only a popularly elected leader but that he represents the future of Latin America. Of course this was the position these same leftists took with Fidel Castro and we see how well that worked but the situation in Venezuela may actually be worse because Chavez like dictators before him is using the US as a scapegoat to distract the people from the evident failures of his regime. This is the same technique being used by Kim Jong Il in North Korea, the Mullahs in Iran, the Islamofascists all over the world, and the list goes on and on. However, unlike the others Chavez appears to be trying to provoke the US into some sort of retaliation or military intervention. The recent capture of the British Soldiers is an example of this attempt to provoke an attack by the Iranians. Chavez needs something similar to consolidate his grip on the country because his seizure of private property and obvious drift toward a fascist communist state is rapidly eroding his power.

The leftists in this country and worldwide continue to view the US as the oppressor of the weak, especially Cuba and other communist countries like North Korea. Chavez is relying on this attitude and the fact that the US is distracted by the Islamofascists, which gives him the opportunity to establish himself as the first Communist in South America. He doesn’t represent a significant problem yet but he is not someone to be ignored for long.

Perspectives on Capitalism

Laissez Faire capitalism is actually Laissez Faire Trade and it is an ideal form of capitalism much as Communism is an ideal form of government or economics. When viewed in their pure form both are superior. There is no doubt that Communism is not only a pure form of Christianity but it is superior to virtually every other form of government, although Communism is probably more a philosophy of economics than government. In its pure form Communism would require very little government and would be closer to anarchy than democracy. Unfortunately in practice Communism has failed in every instance it has been tried because it cannot accommodate human nature. The result is rather than elevating mankind to a superior level it reduces everyone to the lowest level of the basest member and Laissez Faire Capitalism has the same problems.

In theory Laissez Faire Capitalism would bring prosperity to the world. It would be a place without unemployment where everyone was a productive member of society and the wealth would be shared by everyone on the basis of their contribution to the common good. In this theory there would be no government restrictions or controls over business or trade. Monopolies and cartels would be possible because these would increase productivity, efficiency, and generate more revenues to be shared by all either in the form of lower prices or dividends on their investments. Alas – in practice what we get is greed, higher prices, and reduced availability to the mass. There are two active cartels in the world today, OPEC and DeBeers, both keep tight control over product availability to maintain high prices, and these exist in economies that are controlled by governments, you can imagine the situation if there were no controls.

Communism failed because humans are frail creatures who succumb to greed, sloth, envy, and the other deadly sins. The same is true for Laissez Faire Capitalism. At the beginning of the Industrial Revolution trade and business was virtually unrestricted but instead of glorifying mankind it highlighted the worst characteristics of mankind. This was the period of the Robber Barons, the entrepreneurs who formed monopolies to restrict supply and thus raise prices. The drive to profit led to a destruction of the environment and the death of water ways, the extermination of species, child labor, unsafe working conditions, and corruption in government, slums, and disease. Eventually most of these actions came under government scrutiny and eventually laws were introduced to control or eliminate them – over the resistance of the entrepreneurs. The result is what we now have which is a form of controlled capitalism but a far cry from Laissez Faire Capitalism.

Perhaps the foremost proponent of Capitalism or one of the most influential, has been Ayn Rand and her various novels, which are actually expositions of her philosophy of self-determination. Essentially Rand’s position is that the government has no right to dictate or govern your actions as long as those actions don’t harm others. However her characters are flawed and their actions are sometimes illegal. Roark commits arson because his work has been compromised and he feels it within his right to destroy what he created regardless of who owns it or who paid for it. This is how she constructs the situation in which to mount her argument regarding self-determination, but this is a literary fiction and must be viewed through the lens of reality. In practice what she is saying is that anyone who has created or produced anything retains ownership rights eternally. This means that if you modify your automobile the manufacturer has the right to confiscate it and destroy it. If you add rooms or change the roof of your house the architect or builder has the right to prevent you. In essence Rand’s view is extreme and untenable because it violates the law at many levels, but her essential philosophy is that a person should stick to their principles regardless of the cost. Unfortunately, like communism her views are extreme and to a great extent unrealistic because they are untenable in the real world.

At a more fundamental level Rand makes a further point and that is that the strong cannot be forced to support the weak. If a person is a ne’er-do-well or an outright failure the government has no right to force an individual through taxation or other means to support or help that person. Each person should rise and fall based on their own actions and the strong should not be coerced into helping the weak. This is a common thread through all of her work and the foundation of many extreme right wing beliefs. This is the essential position taken by Bastiat in his 1830 paper “The Law”.

What is missing or at least what is minimized is the dichotomy of law versus morality. Essentially the position held by Rand is that the government has no right to coerce--through the law – an individual to support someone else who is less capable, less industrious, less intelligent, or simply lazy. In effect the collective authority has no right to enforce morality or obligate a person to a moral standard. This coercion is via taxation and social programs but in reading Rand’s novels she takes this coercion a step further and maintains that no one has the right to demand anything from an individual and that an individual retains his rights over everything he produces. Clearly this is an extreme position and falls outside of any form of capitalism or even reality. But this isn’t the most egregious flaw in Rand’s philosophy or in Laissez Faire Capitalism.

The flaw is the total lack of any morality or moral obligation on the part of the individual. The concept of Noblesse Oblige is ignored. While a person should establish and adhere to their own principles (within the law) they also must establish a moral code that acknowledges their obligation to society and to others. The strong and the powerful have a personal obligation to care for those under their control or influence. The crux of the argument is that the government or some central authority does not have the right to force the individual into fulfilling this moral obligation, but that same individual should have the moral fiber to voluntarily assume these responsibilities and in practice most do.

Theoretical positions must always viewed with some degree of skepticism because theories have the unfortunate history of failing in practice. More than one philosopher has postulated Utopia and every attempt to implement these philosophies has failed. This doesn’t mean these are bad philosophies it just means we should only take those portions that can realistically be applied and ignore the rest. Hence we have a capitalist society but not a laissez faire one.