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Government Meddling Is the Reason You’re “Underpaid” | Mises Wire

Posted by M. C. on October 10, 2019

…government is the problem and competition is the answer

https://mises.org/wire/government-meddling-reason-youre-underpaid?utm_source=Mises+Institute+Subscriptions&utm_campaign=db2d762be7-EMAIL_CAMPAIGN_9_21_2018_9_59_COPY_01&utm_medium=email&utm_term=0_8b52b2e1c0-db2d762be7-228343965

People frequently allege that, under capitalism, people aren’t paid what they are worth to employers. As a measure of how frequently that gets repeated, a Google search of “underpaid” I just did turned up 1,770,000 hits. And there is one sense in which that allegation may be true. But the commonly-drawn implication that state coercion will improve things is false.

The competitive market process does not guarantee that your payment equals your value to your employer. It guarantees you are paid at least as much (adjusted for a host of other circumstances and preferences) as your next-best known alternative.

Say Bob and Bill are your potential employers. Bob offers you $50,000. If Bill values your additional productivity at $70,000, what will he offer you? It is indeterminate. All we know is that it must be enough to outbid Bob, other things equal, to attract you. Bill need not pay you what you are worth to him. But even if you are paid less than your value to Bill, your supposed “underpayment” does not harm you. You are made better off than you would have been by any offer you accept from Bill.

If, however, Barbara joins those who seek your services, and offers you $60,000, Bill will have to beat that, rather than $50,000, to keep your services. If Betty then also joins the pursuit of your labor services at $69,000, that becomes the number that must be beaten. In other words, the more competitive the market for your labor becomes, the closer your pay approaches what you are worth to your employer, because the value of your alternatives approaches your value to your chosen employer. And only the free market guarantees that you will be paid that well.

Better Wages Come from More Competition Among Employers

This reveals why government coercion is not the path to increased worker well-being. Governments and their “big labor” progeny are constantly advancing mandates that impose barriers to entry and competition for their favored groups from other workers. When reduced barriers to entry and increased competition are the means by which workers become paid nearly what they are worth to employers, such coercive government “solutions” actually guarantee that many workers will be paid far less than they would otherwise have been.

Government is also a major source of other reasons why workers’ paychecks are less than their value to employers.

Government-mandated worker benefits provide one example. The costs of those benefits must ultimately come out of employees’ total compensation. So while government sponsors claim credit from recipients for mandated health coverage, worker training, family leave, workman’s compensation, etc., workers’ earnings are reduced to cover their added cost. But because these act as hidden taxes, employers get the blame for the lower wages that result.

Employer “contributions” for state unemployment and disability insurance, as well as their half of Social Security and Medicare taxes, are another source of such worker “underpayment.” Employers, knowing they will be on the hook for these bills, over and above wages paid, offer less in wages. Again, the money ultimately comes from employees’ pockets, but they blame their employers instead of the government for reducing what they take home as a result. When workers say “I was robbed,” they may be correct — but they finger the wrong suspect.

And these costs are substantial, An article in the September 29 Los Angeles Times noted that they can comprise 30% of employers’ labor costs.

Corporate taxes have similar effects. To the extent that such taxes’ effects reduce net-of-tax earnings, they reduce the value of workers to employers. Yet again, government gets the money and accolades from beneficiaries of added expenditures financed, while businesses are scapegoated as if they caused the underpayment. In, fact, Steven Entin summarized recent data-based studies on corporate tax incidence as showing that “labor bears between 50 percent and 100 percent f the burden of the corporate income tax, with 70 percent or higher the most likely outcome.”

The widespread assertion that people aren’t paid what they are worth to employers may be true in one sense, but not in the sense those making the assertion usually imply. “Greed” or some faulty “ism” is not to blame, and more government interferences provides no magic solution. The maximum such “underpayment” in a competitive labor market is the extent that your value to your highest valuing employer exceeds that of your second-highest valuing employer. And that difference gets smaller as labor markets get more competitive. On the other hand, there are many ways government’s coercive power reduces what workers take home well below their value to their employers (or how valuable they would be if they were freely allowed to compete for all jobs), in order to fill their treasuries and protect their “friends” from competition, while blaming others for what they have imposed. So, if being paid what someone is worth to an employer is the standard, government is the problem and competition is the answer.

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The Long History of Government Meddling in the American ...

 

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No, Capitalism Doesn’t Threaten Humanity | Mises Wire

Posted by M. C. on October 6, 2019

Presumably Monbiot would say that past success is no guarantee of future performance, but as a different Guardian article explains, the UN reports that the world has seen “astonishing” improvements in human welfare just since 1990.

https://mises.org/wire/no-capitalism-doesn%E2%80%99t-threaten-humanity

Presumably bolstered by the fiery claims of Greta Thunberg and the general theme of Climate Week, people on Twitter have been declaring that capitalism threatens humanity. This angst rekindled interest in a Guardian article that ran a few months ago, in which author George Monbiot argued that the very nature of capitalism is “incompatible with the survival of life on Earth.” Not only do such claims ignore the obvious progress of humanity staring us in the face—and the environmental activists are supposed to be the empirical ones in this debate—but even if Monbiot’s worries about the climate were correct, capitalism would still be the best social system to deal with the crisis.

Monbiot’s Case Against Capitalism

The following excerpt summarizes Monbiot’s two-pronged argument for why capitalism threatens our entire species:

Capitalism’s failures arise from two of its defining elements. The first is perpetual growth. Economic growth is the aggregate effect of the quest to accumulate capital and extract profit. Capitalism collapses without growth, yet perpetual growth on a finite planet leads inexorably to environmental calamity.

…The absolute decoupling needed to avert environmental catastrophe (a reduction in material resource use) has never been achieved, and appears impossible while economic growth continues. Green growth is an illusion.

A system based on perpetual growth cannot function without peripheries and externalities. There must always be an extraction zone – from which materials are taken without full payment – and a disposal zone, where costs are dumped in the form of waste and pollution. As the scale of economic activity increases until capitalism affects everything, from the atmosphere to the deep ocean floor, the entire planet becomes a sacrifice zone: we all inhabit the periphery of the profit-making machine.

…

The second defining element is the bizarre assumption that a person is entitled to as great a share of the world’s natural wealth as their money can buy. This seizure of common goods causes three further dislocations. First, the scramble for exclusive control of non-reproducible assets, which implies either violence or legislative truncations of other people’s rights. Second, the immiseration of other people by an economy based on looting across both space and time. Third, the translation of economic power into political power, as control over essential resources leads to control over the social relations that surround them.

Monbiot’s critique of capitalism is entirely unfounded. In the first place, it defies all empirical grounding, which is ironic because it’s my side of this debate that’s allegedly composed of unscientific “deniers.” Especially as formerly communist countries move towards freer markets, the world has seen dramatic improvements in living standards, while the relevant availability of “depletable” resources has increased; even climate-related deaths have plummeted over time.

But it gets even worse for Monbiot’s thesis. Even if we imagine a scenario—contrary to reality—where humanity did run into a crisis because of natural resource crunch, the best way to deal with the situation would be reliance on private property and market prices. To blame capitalism for the potential problems of a finite world is like blaming thermometers for the flu.

Just the Facts: It’s Getting So Much Better All the Time

In this section I’ll illustrate some of the basic facts, documenting that human welfare has drastically improved during the same period that we have ostensibly seen the ravages of human-induced climate change.

First, consider a chart from Bjørn Lomberg (and reproduced by Marlo Lewis) that shows climate-related deaths from 1920-2017:

Climate-1-1-768x728.png

It’s hard to see evidence of impending disaster in the above chart.

As the chart shows, U.S. “proved reserves” of crude are at an all-time high at some 39.2 billion barrels (as of 2017), up from 13.6 billion barrels in 1930. The increase in crude reserves has occurred despite the fact that the U.S. has produced an enormous amount of crude oil over this period.

Indeed, as the separate EIA chart shows below, since 1950 U.S. crude production has rarely fallen below 5 million barrels per day, and it’s currently (as of June 2019) at a record high of some 12.1 million barrels per day.

U.S. Field Production of Crude Oil

Cliamte-3-768x284.png

The pattern is similar for world oil reserves and production, but I chose to use U.S. data because it is the most reliable. There’s also a similar pattern for natural gas and coal; as this 2011 IER report shows, North America alone has enough fossil fuels in the broader category of “recoverable resources” to satisfy current consumption rates for literally centuries. And they are growing. According to the Potential Gas Committee’s latest report, U.S. reserves of natural gas increased by the energy equivalent of 100 billion barrels of oil in just the last 2 years.

Now how can this be possible? How can the U.S., for example, have more “proved reserves” of oil now, than it did in (say) 1950? The answer is that it doesn’t make sense for humans to go out and find every last drop of oil (or lump of coal) housed in planet Earth. At any given time, it’s only sensible to have located the precise deposits of a healthy margin of such depletable resources, which is only a small fraction of the physical stockpile.

Yes, since there is a finite amount of crude oil, it must be the case that humanity will eventually have to switch to some other energy source. But humanity—especially in the modern age of relatively capitalistic institutions—has so far had no trouble maintaining consistent increases in total output, notwithstanding the “finite” resources on Earth (or the physical universe, for that matter).

Presumably Monbiot would say that past success is no guarantee of future performance, but as a different Guardian article explains, the UN reports that the world has seen “astonishing” improvements in human welfare just since 1990. Specifically, more than a billion people were lifted out of “extreme poverty,” with “the number of people living on less than $1.25 a day [falling] from 1.9 billion in 1990 to 836 million in 2015.”

What would the data have to look like to vindicate capitalism from the charges of Monbiot?

Even in a Collapsing World, Capitalism Would Be Our Best Defense…

Conclusion

George Monbiot alleges that capitalism, left unchecked, will cause the literal extinction of humanity. His arguments ignore all of the evidence of capitalism’s benefits staring us in the face. Yet even on a theoretical level, private property and market prices help organize human activity so that we can deploy our scarce resources in the most efficient manner. Empirically, capitalism has allowed humanity to flourish with an ever-rising standard of living. But even in a catastrophic scenario where we hit a hard resource constraint, capitalism would still be an important tool in our defense, just as we would badly need math and science to help us cope with the emergency.

Originally published at the Institute for Energy Research

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Critical Thinking Definition: Corruption Scandals ...

 

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Academic Stupidity and Brainwashing – LewRockwell

Posted by M. C. on September 19, 2019

Brainwashing our youngsters is a serious matter. The people responsible for the California Department of Education’s proposal ought to be summarily fired.

https://www.lewrockwell.com/2019/09/walter-e-williams/academic-stupidity-and-brainwashing/

By

Just when we thought colleges could not spout loonier ideas, we have a new one from American University. They hired a professor to teach other professors to grade students based on their “labor” rather than their writing ability. The professor that American University hired to teach that nonsense is Asao B. Inoue, who is a professor and associate dean in the College of Integrative Sciences and Arts at Arizona State University. He is also the director of the university’s writing center. Inoue believes that a person’s writing ability should not be assessed, in order to promote “anti-racist” objectives. Inoue taught American University’s faculty members that their previous practices of grading writing promoted white language supremacy. Inoue thinks that students should be graded on the effort they put into a project.

The idea to bring such a professor to American University, where parents and students fork over $48,459 a year in tuition charges, could not have been something thought up by saner members of its academic community. Instead, it was probably the result of deep thinking by the university’s diversity and campus life officials. Inoue’s views are not simply extreme but possibly hostile to the academic mission of most universities. Forgiving and ignoring a students’ writing ability would mostly affect black students. White students’ speaking and writing would be judged against the King’s English, defined as standard, pure or correct English grammar…

Not holding students accountable to proper grammar does a disservice to those students who overall show poor writing abilities. When or if these students graduate from college, they are not going to be evaluated in their careers by Inoue’s tailored standards. They will be judged according to their objective abilities, and it probably follows that if they fail to meet those objective standards, the standards themselves will be labeled as racist.

There’s another very dangerous bit of academic nonsense happening, this time at the K-12 level of education. One America News Network anchor interviewed Mary Clare Amselem, education specialist at the Heritage Foundation, about the California Department of Education’s proposed ethnic studies curriculum. The proposed ethnic studies curriculum would teach children that capitalism and father figures are racist.

The proposed ethnic studies proposal has been removed from the California Department of Education website. House Minority Leader Kevin McCarthy, R-Calif., said, “While I am relieved that California made the obvious decision to revisit this wholly misguided proposal, we need to know why and how a blatantly anti-Semitic, anti-Israel, factually inaccurate curriculum made its way through the ranks of California’s Department of Education.” He added, “This was not simply an oversight — the California Department of Education’s attempt to institutionalize anti-Semitism is not only discriminatory and intolerant, it’s dangerous.”

Brainwashing our youngsters is a serious matter. The people responsible for the California Department of Education’s proposal ought to be summarily fired.

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Why Big Business Prefers Lobbying Government to Competing in the Marketplace | Mises Wire

Posted by M. C. on August 30, 2019

https://mises.org/wire/why-big-business-prefers-lobbying-government-competing-marketplace

The government — we are told — is necessary to protect us from the excesses of capitalism, and whatever gripes the average person might have about their elected officials, almost all of them can agree upon this.

But there’s a problem with thinking the government can ever enter the economy as a fair referee rather than merely playing into the hands of whatever factions are most rich, powerful, and influential; because as soon as a corporation can make more money by angling for government favors than they can by serving customers, that is exactly what they are going to do. Not necessarily because they are evil — but because it becomes the rational thing to do.

On an open market where only voluntary exchanges are permitted a business can only turn a profit by providing something that the general buying public wants. No matter how greedy the corporate fat-cats may be, if they fail to “cough up the goods” (and services) that people want, they will be out of luck. In this way, the market forces of otherwise self-interested people will apply their self-interest to social ends.

Critics may still complain about “tooth and nail” competition, but at least on a free market firms are competing to serve you better and win your disposable income. As soon as the government intervenes in the economy one thing is for sure: companies will compete for control over legislative bodies and the strings of the public purse. This is where the real “tooth and nail” begins…

According to the Sunlight Foundation, America’s 200 most politically active corporations spent $5.8 billion on federal lobbying and campaign contributions. That’s $5.8 billion spent on political gaming instead of invested in jobs and product development.

These incentives drive companies to misallocate resources by making products that the general public doesn’t want profitable, and products that they do unprofitable. In other words, the government has become the client of these corporations rather than their customers. And companies often must lobby in self defense.

Firms might lobby or contribute to political campaigns to earn the exclusive right to provide government with their products. This will give them a huge advantage over competitors even if they are producing inferior or more expensive services. They can lobby for subsidies on their own goods or tariffs on cheaper or superior competitors.They can get the government to pass laws about who can and cannot operate in their sector.

Mandatory licenses, fees, reviews, huge stacks of forms, inspections, make it expensive for small start up businesses to enter the market and compete on an equal playing field. Companies spend millions of dollars on accountants, lawyers, actuaries and bureaucrats — not to mention tens of thousands of hours — to make sure they comply with the entangling webs of red tape, and make no mistake this harms the public. The costs are reflected in the price of products, and those are millions of dollars and tens of thousands of hours that are not being spent on more productive work that would benefit others. The rounds of “regulation” inflate corporate profits more and more, by cutting small firms out of the market and directing sales to bigger firms who can afford specialists or whole departments to play the game.

By changing the incentive structure of the economy to favor profit through political influence over serving customers the government corrupts the market rather than moderating its excesses.

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Stop Hating on Self-Checkouts – Foundation for Economic Education

Posted by M. C. on August 22, 2019

https://fee.org/articles/in-praise-of-self-checkouts/

Tyler Curtis

If you’ve been to the grocery store lately, then you’ve probably had to make this choice: regular cashier or self-checkout? For many shoppers, the choice often depends on which option has a line, how many items they have in their basket, and sometimes they’ll just choose whichever lane is closest. Others, however, hate self-checkouts with a visceral passion. Not only do they refuse to use the machines, they don’t want self-checkouts to exist at all.

This attitude is woefully misguided. While there is nothing wrong with preferring to engage with a human cashier, a fair number of shoppers enjoy the benefits self-checkouts have to offer. Indeed, there is much about self-checkouts to praise.

Why All the Fuss?

Though most shoppers who tacitly boycott self-checkouts do so with respect, patiently waiting in line for a human cashier, there is a vocal minority who would like nothing more than to take a Louisville slugger to the dastardly appliances.

One such malcontent is Kaitlyn Tiffany, a Vox writer who presumably would have felt comfortable with mobs destroying power-looms in 19th century England. In an article bluntly entitled, “Wouldn’t it be better if self-checkout just died?” Tiffany laid out precisely why she believes retail stores ought to eliminate the machines.

Her first objection is a simple one: self-checkouts are annoying. And admittedly, that’s hard to argue with. Those who’ve been scolded for placing an “unexpected item in the bagging area” will understand. “Seemingly everyone hates them,” writes Tiffany.

As someone who worked as a self-checkout attendant for three years, I can confidently say that Tiffany’s generalization is way off base. Not only are self-checkouts not universally loathed, there are a large number of shoppers who actually prefer them over a human cashier.

To the self-checkout haters, this is ludicrous. “Why would I want to scan and bag my own groceries?” they ask with haughty indignation. Well, there are a number of reasons.

First, no one is going to treat your items with as much care as you do. One does not have to be a cynic to understand that there are reckless cashiers who will bruise your fruit or smash your bread. You can also bag your groceries in whichever way you prefer. For those worried about breaking their eggs, or mixing that leaky package of meat with the vegetables, being able to bag your own groceries is nothing to scoff at. Self-service often means better service.

Second, using the self-checkout is frequently the fastest option, at least for those who feel comfortable with the technology (no unexpected items in the bagging area!). Even its relative unpopularity with other customers is a bonus for those who like them; after all, if fewer people want to use the self-checkout, the chance of there being a line is diminished…

The great thing about the free market is that it doesn’t force everyone into one-size-fits-all products. Sadly, there are many who see this as a bug rather than a feature. Market skeptics like Kaitlyn Tiffany observe shoppers scanning their own groceries and see nothing but capitalist trickery. But for those who value having more choices, the only complaint can be: I wish this had been available sooner!

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Our Planet Is Not Fragile – LewRockwell

Posted by M. C. on August 4, 2019

Occasionally, environmentalists spill the beans and reveal their true agenda. Barry Commoner said, “Capitalism is the earth’s number one enemy.” Amherst College professor Leo Marx said, “On ecological grounds, the case for world government is beyond argument.”

https://www.lewrockwell.com/2019/03/walter-e-williams/our-planet-is-not-fragile/

By

Rep. Alexandria Ocasio-Cortez claims that “the world is going to end in 12 years if we don’t address climate change.” The people at the Intergovernmental Panel on Climate Change agree, saying that to avoid some of the most devastating impacts of climate change, the world must slash carbon emissions by 45 percent by 2030 and completely decarbonize by 2050.

Such dire warnings are not new. In 1970, Harvard University biology professor George Wald, a Nobel laureate, predicted, “Civilization will end within 15 or 30 years unless immediate action is taken against problems facing mankind.” Also in 1970, Paul Ehrlich, a Stanford University biologist, predicted in an article for The Progressive, “The death rate will increase until at least 100-200 million people per year will be starving to death during the next ten years.” The year before, he had warned, “If I were a gambler, I would take even money that England will not exist in the year 2000.” Despite such harebrained predictions, Ehrlich has won no fewer than 16 awards, including the 1990 Crafoord Prize, the Royal Swedish Academy of Sciences’ highest award.

Leftists constantly preach such nonsense as “The world that we live in is beautiful but fragile.” “The 3rd rock from the sun is a fragile oasis.” “Remember that Earth needs to be saved every single day.” These and many other statements, along with apocalyptic predictions, are stock in trade for environmentalists. Worse yet, this fragile-earth indoctrination is fed to the nation’s youth from kindergarten through college. That’s why many millennials support Rep. Ocasio-Cortez.

Let’s examine just a few cataclysmic events that exceed any destructive power of mankind and then ask how our purportedly fragile planet could survive. The 1883 eruption of the Krakatoa volcano, in present-day Indonesia, had the force of 200 megatons of TNT. That’s the equivalent of 13,300 15-kiloton atomic bombs, the kind that destroyed Hiroshima in World War II. Before that was the 1815 Tambora eruption, the largest known volcanic eruption. It spewed so much debris into the atmosphere that 1816 became known as the “Year Without a Summer.” It led to crop failures and livestock death in the Northern Hemisphere, producing the worst famine of the 19th century. The A.D. 535 Krakatoa eruption had such force that it blotted out much of the light and heat of the sun for 18 months and is said to have led to the Dark Ages. Geophysicists estimate that just three volcanic eruptions — Indonesia (1883), Alaska (1912) and Iceland (1947) — spewed more carbon dioxide and sulfur dioxide into the atmosphere than all of mankind’s activities during our entire history.

Our so-called fragile earth survived other catastrophic events, such as the floods in China in 1887, which took an estimated 1 million to 2 million lives, followed by floods there in 1931, which took an estimated 1 million to 4 million lives. What about the impact of earthquakes on our fragile earth? Chile’s 1960 Valdivia earthquake was 9.5 on the Richter scale. It created a force equivalent to 1,000 atomic bombs going off at the same time. The deadly 1556 earthquake in China’s Shaanxi province devastated an area of 520 miles.

Our so-called fragile earth faces outer space terror. Two billion years ago, an asteroid hit earth, creating the Vredefort crater in South Africa, which has a diameter of 190 miles. In Ontario, there’s the Sudbury Basin, resulting from a meteor strike 1.8 billion years ago. At 39 miles long, 19 miles wide and 9 miles deep, it’s the second-largest impact structure on earth. Virginia’s Chesapeake Bay crater is a bit smaller, about 53 miles wide. Then there’s the famous but puny Meteor Crater in Arizona, which is not even a mile wide.

My question is: Which of these powers of nature could be duplicated by mankind? For example, could mankind even come close to duplicating the polluting effects of the 1815 Tambora volcanic eruption? It is the height of arrogance to think that mankind can make significant parametric changes in the earth or can match nature’s destructive forces. Our planet is not fragile.

Occasionally, environmentalists spill the beans and reveal their true agenda. Barry Commoner said, “Capitalism is the earth’s number one enemy.” Amherst College professor Leo Marx said, “On ecological grounds, the case for world government is beyond argument.”

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A young person with MORE Sense than 50% of Our Politicians.

Posted by M. C. on July 31, 2019

https://raptureonline.blog/2019/05/24/a-young-person-with-more-sense-than-50-of-our-politicians/

Author: andthentheendshallcome JERRY PARKS

This article was written by a 26 year old college student by the name of Alyssa Ahlgren, who’s in grad school for her MBA. It’s a short article but definitely worth a read. I would love to see this go viral!!

“College Student: My Generation Is Blind to the Prosperity Around Us

I’m sitting in a small coffee shop near Nokomis trying to think of what to write about. I scroll through my newsfeed on my phone looking at the latest headlines of Democratic candidates calling for policies to “fix” the so-called injustices of capitalism. I put my phone down and continue to look around. I see people talking freely, working on their MacBook’s, ordering food they get in an instant, seeing cars go by outside, and it dawned on me. We live in the most privileged time in the most prosperous nation and we’ve become completely blind to it. Vehicles, food, technology, freedom to associate with whom we choose. These things are so ingrained in our American way of life we don’t give them a second thought. We are so well off here in the United States that our poverty line begins 31 times above the global average. Thirty. One. Times. Virtually no one in the United States is considered poor by global standards. Yet, in a time where we can order a product off Amazon with one click and have it at our doorstep the next day, we are unappreciative, unsatisfied, and ungrateful.

Our unappreciation is evident as the popularity of socialist policies among my generation continues to grow. Democratic Congresswoman Alexandria Ocasio-Cortez recently said to Newsweek talking about the millennial generation, “An entire generation, which is now becoming one of the largest electorates in America, came of age and never saw American prosperity.”

Never saw American prosperity! Let that sink in. When I first read that statement, I thought to myself, that was quite literally the most entitled and factually illiterate thing I’ve ever heard in my 26 years on this earth. Many young people agree with her, which is entirely misguided. My generation is being indoctrinated by a mainstream narrative to actually believe we have never seen prosperity. I know this first hand, I went to college, let’s just say I didn’t have the popular opinion, but I digress.

Why then, with all of the overwhelming evidence around us, evidence that I can even see sitting at a coffee shop, do we not view this as prosperity? We have people who are dying to get into our country. People around the world destitute and truly impoverished. Yet, we have a young generation convinced they’ve never seen prosperity, and as a result, elect politicians dead set on taking steps towards abolishing capitalism.

Why? The answer is this, my generation has only seen prosperity. We have no contrast. We didn’t live in the great depression, or live through two world wars, the Korean War, The Vietnam War or see the rise and fall of socialism and communism. We don’t know what it’s like to live without the internet, without cars, without smartphones. We don’t have a lack of prosperity problem. We have an entitlement problem, an ungratefulness problem, and it’s spreading like a plague.”

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Capitalism Didn’t Invent “Keeping Up with the Joneses” | Mises Wire

Posted by M. C. on July 29, 2019

https://mises.org/wire/capitalism-didnt-invent-keeping-joneses

Anti-capitalists long ago lost the argument about whether or not capitalism is the most effective way to increase living standards. Thanks to the spread of a largely-capitalistic marketplace, global poverty rates have fallen precipitously, life expectancy has risen, and standards of living continue to rise. The greatest gains have been in the so-called “developing world.”

But this hasn’t stopped anti-capitalists from coming up with new reasons — reasons unrelated to overcoming poverty — as to why capitalism ought to be abandoned.

One common complaint along these lines is that the capitalist system — mostly through advertising — makes us miserable by convincing us we must continually compete with others to raise our economic and social status within society.

Perhaps the most famous and still-talked-about example of this capitalism-makes-you-miserable narrative is found in 1999’s film Fight Club. The film centers around characters who attempt to escape their dull, depressing lives otherwise ruined by a desire for capitalist excess. At one point, the character named Tyler Durden delivers a monologue concluding that consumers in the capitalist society are

slaves with white collars. Advertising has us chasing cars and clothes. Working jobs we hate so that we can buy sh-t we don’t need.

At the root of this contention is the idea that capitalism causes consumerism, and consumerism drives us to strive ever harder to attain higher levels of material comfort and social status. Rather than enjoying a simple care-free lifestyle, the argument goes, we sacrifice our free time and happiness to working long hours in pursuit of needless consumption and competition.

[RELATED: “Capitalism Doesn’t Cause Consumerism — Governments Do” by Ryan McMaken]

But is capitalism really to blame for this sort of thinking? Is the insatiable quest for higher social status something newly invented by modern market economies?

Hardly.

Unfortunately, the desire to be popular, desirable, and possessing of high levels of social status is not tied to any particular economic system. It is found in all societies, and was certainly not something that suddenly appeared as economies began to industrialize.

What capitalism and industrialization did do was create more options available to people seeking to improve their positions within the social hierarchy. In ages past, status was closely tied to one’s family lineage or to how much favor one enjoyed with the imperial court. In capitalist times, these old criteria have not vanished, but a new  pathway to status was opened up: wealth obtained through success in the marketplace.

Social Status and Wealth Attainment in Pre-Capitalist Times

Prior to indistrialization, social mobility was — with only rare exceptions — open only to people who were already born into a relatively high social strata. Those who were born into the nobility or high-ranking levels of government bureaucracy could perhaps aspire to reach even higher levels of rank within the ruling classes.

The average peasant had no such hopes. For an average person in the pre-capitalist world, the methods of raising one’s status in society were few and exceedingly difficult.

In the ancient world, competition for social status was high-stakes and ever-present. Given the absence of a middle class and the grinding poverty experienced by the overwhelming majority of human beings in these times, those who had managed to rise above the peasantry fought hard to stay there.

The methods of maintaining and increasing status included:

  • Successful military service.
  • Winning favor with government officials through displays of personal loyalty.
  • Marriage into a family of higher social status.
  • Excellence in athletic competitions (most notably in Greece).

Military service was an especially fruitful means of increasing one’s social status. In the Neo-Assyrian empire, to list just one example,

To kill a prominent enemy was a conspicuous way for a soldier to distinguish himself and prove his loyalty to the king … [and this method was] explicitly highlighted as a method of raising a warrior’s profile.1

Material rewards were meted out by rulers to “those who brought in the heads of high-ranking enemy leaders.”2

Military service was a key factor in improving one’s fortunes throughout the ancient world, which is to be expected since warfare — and not commerce — was among the most easily available means to increase one’s wealth in a pre-capitalist world.

Social Status in Socialist Systems

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Judy Shelton’s Remarkable Attack on the Fed | Mises Institute

Posted by M. C. on June 13, 2019

https://mises.org/power-market/judy-sheltons-remarkable-attack-fed

Jeff Deist

Judy Shelton’s recent interview with the Financial Times is nothing short of remarkable…

…Consider this salvo against the Fed’s inescapable role as central planner:

How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market supply determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?” Ms Shelton said. “If the success of capitalism depends on someone being smart enough to know what the rate should be on everything . . . we’re doomed. We might as well resurrect Gosplan,” she said, referring to the state committee that ran the Soviet Union’s planned economy.

And her attack on the Fed’s outsized role in the economy:

She also said that the Fed should continue to reduce its balance sheet below the $3.5tn target set by Jay Powell, the chairman. “I would rather the Fed be less of an entity. When a central bank buys up government debt, that’s the beginning of compromised finances.”

She also recognizes malinvestment:

“It’s the distorting aspect of the Fed that is the worst aspect — it’s a wag-the-dog situation. People are fixated on the Fed and are making money by arbitraging, trillions of a second after the latest FOMC announcement,” she added.

And she isn’t afraid to support a role for gold in monetary policy:

Ms Shelton has long been sympathetic to the gold standard, which the US fully abandoned in the early 1970s in favour of a flexible exchange rate for the dollar. “People call me a goldbug, and I think, well, what does that make them? A Fed bug,” she says.

“Fed Bugs”! Why didn’t we think of this?

Shelton, who works as an economic adviser to Trump, is not an economist by training. Her PhD in business administration, from Utah State no less, is sure to draw jeers from the Ivy League central bank crowd. But it’s Ivy League economists, after all, who created the last crisis in 2008. And needless to say they’re sounding alarm bells about Mrs. Shelton. The worst offender is former Treasury official Larry Summers, who shamelessly calls Shelton “dangerous.”

Sorry, but a financial terrorist and chief architect of the weaponized derivatives market in the 2000s should have the simple decency to keep quiet and thank his lucky stars he’s not in jail…

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Socialist Promises – LewRockwell

Posted by M. C. on May 22, 2019

Socialism promises a utopia that sounds good, but those promises are never realized. It most often results in massive human suffering. Capitalism fails miserably when compared with a heaven or utopia promised by socialism. But any earthly system is going to come up short in such a comparison.

https://www.lewrockwell.com/2019/05/walter-e-williams/socialist-promises/

By

Presidential contenders are in a battle to out give one another. Senator Elizabeth Warren proposes a whopping $50,000 per student college loan forgiveness. Senator Bernie Sanders proposes free health care for all Americans plus illegal aliens. Most Democratic presidential candidates promise free stuff that includes free college, universal income, “Medicare for All” and debt forgiveness.

Their socialist predecessors made promises too. “Freedom and Bread” was the slogan used by Adolf Hitler during the National Socialist German Workers’ Party (Nazi) campaign against president Paul von Hindenburg. Hitler even promised, “In the Third Reich every German girl will find a husband.” Stalin promised a great socialist-Marxist society that included better food and better worker conditions. China’s Mao Zedong promised democratic constitutionalism and the dream that “farmers have land to till.” These, and other promises, gave Mao the broad political support he needed to win leadership of the entire country in 1949…

Capitalism, or what some call free markets, is relatively new in human history. Prior to capitalism, the way individuals amassed great wealth was by looting, plundering and enslaving their fellow man. With the rise of capitalism, it became possible to amass great wealth by serving and pleasing your fellow man. Capitalists seek to discover what people want and produce and market it as efficiently as possible as a means to profit. A historical example of this process would be John D. Rockefeller, whose successful marketing drove kerosene prices down from 58 cents a gallon in 1865 to 7 cents in 1900. Henry Ford became rich by producing cars for the common man. Both Ford’s and Rockefeller’s personal benefits pale in comparison to the benefits received by the common man who had cheaper kerosene and cheaper and more convenient transportation. There are literally thousands of examples of how mankind’s life ha been made better by those in the pursuit of profits. Here’s my question to you: Are the people who, by their actions, created unprecedented convenience, longer life expectancy and a more pleasant life for the ordinary person — and became wealthy in the process — deserving of all the scorn and ridicule heaped upon them by intellectuals and political hustlers today?..

By the way, I’m not making an outright condemnation of socialism. I run my household on the Marxist principle, “From each according to his ability, to each according to his needs.” That system works when you can remember the names of all involved.

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The Socialist Utopia [MYTH] of Nordic Countries - Ben ...

 

 

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