The postulation that wealth is zero sum, meaning that whatever wealth I have has been gained at the expense of others, in effect total global wealth is finite but is inequitably distributed. This argument rests on the assumption that wealth cannot be created and wealth can be defined and quantified. I submit that this is a fallacious argument.
First wealth can be defined in many ways such as the value of knowledge, a great many friends, honors, respect, or many other abstractions where the “wealth” is self determined or determined arbitrarily by others. This type of wealth is not finite and can be both created and destroyed. Therefore, for any meaningful argument wealth must be defined in terms of tangible goods such as gold, money, art, land, etc. But the postulation is that wealth is zero sum meaning that it is finite when it is obvious that the world’s available wealth today is far greater than it was a hundred years ago. But the professor / philosopher avoids this inconsistency by stating that his zero sum argument only applies to the moment and cannot be viewed in any historical context. But this refutes his argument that wealth cannot be created because global wealth has increased and he acknowledges this. This reduces his argument to the total global wealth is finite at any given moment, which is true at that moment, but in the next moment new wealth can be created e.g. a gold strike, oil strike, new invention, etc. The professor / philosopher acknowledges this but then moves to the more abstract view of wealth common to those who argue that wealth can only be gained at the expense of others – hence that wealth is finite.
The argument then becomes increasingly doctrinaire as he attacks – without noting – capitalism. He argues as follows:
“Material wealth obviously originated in the creation/origin of the universe (that is where the stuff comes from). Once we had the earth and people, people could start acquiring material goods like land and resources. These resources can be made more valuable by the addition of labor, thus creating wealth. They can also be made more valuable by other means, such as creating scarcity and controlling pricing. These material goods can be acquired in various ways, fair and foul. The classic method is, of course, conquest.”
How this argument supports a zero sum conclusion is beyond me because it demonstrates how wealth can be created and shared yielding a wealthier population overall. The actual argument appears to be the inequity of some people being wealthier than others based on the assumption that unethical and even illegal means were used to accumulate that wealth. He leaves no room for wealth accumulation via fair means. But his argument has ceased being the creation of wealth but instead has shifted to the sharing of wealth.
At this point the argument shifts to the abstraction of money “the pieces of paper” whose value is commonly agreed to but his real argument doesn’t appear to be the creation of wealth but how that wealth is created.
“Monetary wealth is obviously a social construct: we made up the financial game and the “creation” of wealth depends on the sort of game being played at any given time. For example, some folks “created” wealth by clever repackaging of toxic assets. Other people “create” wealth by working and investing their money (which is supposed to give them more money). In many ways, this is “fictional” wealth in that we are literally just making this stuff up and its value depends entirely on how far we are willing to all play make-believe. Yes, I play the game-it is a convenient way to handle exchanges in some ways. But, I always remember that it is just a game we are playing (I work, I get some paper, I hand the paper to someone and they give me an apple).”
The point being made here is a little fuzzy to me because everyone knows that paper money is an abstraction whose value is set by common agreement and backed by the government. The creation of wealth followed the same rules when commerce depended entirely on gold and silver currency. It appears that he is simply opposed to how wealth is created and how it is inequitably distributed. But he concludes his argument that wealth is finite by arguing that currency (paper) is finite because printing more doesn’t create wealth but results in inflation. That is true but then at a stroke he reduces wealth to how much money you have and since that is finite wealth is finite and zero sum. That is ridiculous of course because tangible wealth can be created in many ways and the currency is simply a method of measuring the wealth created.
In my opinion this entire argument illogical and rests on false assumptions. And when the argument is reduced to its core it appears that it is anti-capitalism and the unequal distribution of wealth.
.
Monday, October 24, 2011
Monday, October 03, 2011
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.
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.
Thursday, August 25, 2011
The Arab Spring and Islam
The entire Middle East is in turmoil as the people rise up in rebellion against the incumbent rulers. Unfortunately the western world sees this as a spontaneous effort by the people to achieve freedom and representative government. Actually this view rests on an appalling lack of historical knowledge as well as any insight into what Islam is all about. From the beginning Islam has swept all of the secular powers in the Middle East out of power and made great inroads into Europe and Asia but at no time did the Islamic rulers ever establish any semblance of a representative government or allow any of the freedoms so cherished by the West. Instead there has been just one repressive government after another and the Arab Spring is unlikely to produce anything close to a democratic government with all of the freedoms the west associates with democracy. In Iraq where American power overthrew a brutal dictator the new government is struggling to establish a representative government but is being challenged by Imam Al Sadr who wants an Islamic style government. In the meantime Christians are being persecuted along with any Jews that remain, so regardless of who emerges with the power it is unlikely to look anything like any western style democracy.
The people in the west, particularly those who subscribe to the pseudo-religion of multiculturalism and political correctness, watch these rebellions through western eyes and with virtually no understanding of what is actually happening. In the Arab world loyalties are very different than in the west and Libya is an excellent example to observe loyalties in the Arab world. In Islam loyalty is to the family – not just the nuclear family but all of the aunts, uncles, cousins, and nephews. The second loyalty is to the village and the third level of loyalty is to the tribe. Loyalty to a country if it exists at all is pretty thin and in spite of all of the flag waving in Libya this is essentially a tribal war and not a civil war in terms of the people versus the government. This is a group of western tribes who have held power for forty years being challenged by the eastern tribes who think it is time they held the power. Once the current regime in Libya is gone the new one is unlikely to establish anything resembling a truly democratic government. It will be an Islamic government with the only unknown being how extreme will it be.
Somehow the politically correct crowd in the west excuses the excesses of Islam on the basis that these are extremists and that at its core, Islam is a religion of peace. The naïveté of this position is astonishing given the 1500 years of evidence. The reality is the Muslim Moderates the politically correct cite as examples of Islam as peaceful simply don’t understand Islam. The true Muslims are those that are conducting the war against Christians, Jews, and Infidels. They are not “extremists who have perverted the teachings of the Koran – no -- in fact they are following Islam and the Koran to the letter. In reality it is the moderates are not adhering to the teachings of the Koran and it is unlikely they would be tolerated by Mohammed if he were alive today. Of course it is possible that as the Arab Spring progresses these moderate Muslims might come to power but it is highly unlikely given the history of Islam.
The mobs in the streets of Syria, Libya, and other Arab states are all male although in Egypt you might see a few women but even there the majority is male. Does anyone expect for the new regimes to suddenly give women equal rights? Will women be free to dress as they choose and go where they please? Will there be freedom of religion? Will Christian missionaries be permitted to proselytize in these countries under the new regimes? Will the new governments allow freedom of the press or will the government continue to control what the people hear? Will these new governments be friendly to the west or will they continue the jihad? Will Hamas, Hezbollah, Al Qaeda, and the multiple jihadist groups stop attacking the west? The reality is that nothing has changed and it is unlikely anything will change. Islam has been at war with Christians, Jews, and the infidels since the 7th Century and their attacks will not cease until they have conquered the world, which is what they believe is the command of Allah.
The western powers can help overthrow these repressive regimes and hope things will change but it is very unlikely. It is more probable that the former repressive regimes will be replaced by new repressive Islamic regimes perhaps not as extreme as the Taliban but certainly not resembling anything like a true democratic government with all of the freedoms associated with a free and open society.
The people in the west, particularly those who subscribe to the pseudo-religion of multiculturalism and political correctness, watch these rebellions through western eyes and with virtually no understanding of what is actually happening. In the Arab world loyalties are very different than in the west and Libya is an excellent example to observe loyalties in the Arab world. In Islam loyalty is to the family – not just the nuclear family but all of the aunts, uncles, cousins, and nephews. The second loyalty is to the village and the third level of loyalty is to the tribe. Loyalty to a country if it exists at all is pretty thin and in spite of all of the flag waving in Libya this is essentially a tribal war and not a civil war in terms of the people versus the government. This is a group of western tribes who have held power for forty years being challenged by the eastern tribes who think it is time they held the power. Once the current regime in Libya is gone the new one is unlikely to establish anything resembling a truly democratic government. It will be an Islamic government with the only unknown being how extreme will it be.
Somehow the politically correct crowd in the west excuses the excesses of Islam on the basis that these are extremists and that at its core, Islam is a religion of peace. The naïveté of this position is astonishing given the 1500 years of evidence. The reality is the Muslim Moderates the politically correct cite as examples of Islam as peaceful simply don’t understand Islam. The true Muslims are those that are conducting the war against Christians, Jews, and Infidels. They are not “extremists who have perverted the teachings of the Koran – no -- in fact they are following Islam and the Koran to the letter. In reality it is the moderates are not adhering to the teachings of the Koran and it is unlikely they would be tolerated by Mohammed if he were alive today. Of course it is possible that as the Arab Spring progresses these moderate Muslims might come to power but it is highly unlikely given the history of Islam.
The mobs in the streets of Syria, Libya, and other Arab states are all male although in Egypt you might see a few women but even there the majority is male. Does anyone expect for the new regimes to suddenly give women equal rights? Will women be free to dress as they choose and go where they please? Will there be freedom of religion? Will Christian missionaries be permitted to proselytize in these countries under the new regimes? Will the new governments allow freedom of the press or will the government continue to control what the people hear? Will these new governments be friendly to the west or will they continue the jihad? Will Hamas, Hezbollah, Al Qaeda, and the multiple jihadist groups stop attacking the west? The reality is that nothing has changed and it is unlikely anything will change. Islam has been at war with Christians, Jews, and the infidels since the 7th Century and their attacks will not cease until they have conquered the world, which is what they believe is the command of Allah.
The western powers can help overthrow these repressive regimes and hope things will change but it is very unlikely. It is more probable that the former repressive regimes will be replaced by new repressive Islamic regimes perhaps not as extreme as the Taliban but certainly not resembling anything like a true democratic government with all of the freedoms associated with a free and open society.
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