Thursday, March 31, 2011

Anything Evil about Capitalism? Part III

So, About the Morality of Capitalism

We defined wealth as the accumulated results of labor (Part I). Capital is the accumulation of work above and beyond what is essential followed by careful use of it toward a good idea intended to result in even more surplus. Capitalism is a system for using capital (accumulated surplus wealth) to invest it in more wealth creation (Part II). With that understanding I think we’re ready to make a value judgment about capitalism.

I assert that capital in and of itself is simply never evil. Capital might be considered always good. It represents work above and beyond what is essential followed by careful use of it toward a good idea, resulting in even more surplus.

What about capitalism? It’s the system that allows for those who have developed capital to invest it in projects that they hope will produce additional wealth (i.e., additional results of labor). There is some risk involved in the investment of capital and the borrowing of capital, but that is agreed to by both parties.

No one takes advantage of someone else’s work for free (*extra commentary on this below). Everyone is free to decide how they will use their time and energies to produce wealth for themselves. So, by definition I think we can say capitalism is purely moral. In Spherical Model language, capitalism, or in other words free enterprise, is above the 45th parallel in the northern hemisphere—which means it aligns with, synergetically reinforcing, political freedom and civilization.

So why do so many people refer to it as evil immoral capitalism? Because the outcome is unequal. The outcome is strictly and impartially fair, based on actual work and effort resulting in something society values. But it is unequal. The question, then, is whether it is a bad thing for there to be unequal outcomes. Those who believe capitalism—also referred to as free enterprise or free market economics—is evil are those who believe people should be guaranteed outcomes regardless of efforts toward those outcomes. This point of view is based, not on fairness, but on fear. Fear and jealousy.

Their assumption is, some people have lesser abilities than others, or fewer opportunities, so they will work just as hard and be unable to get the same results; this is unfair. But is it?

Look at a doctor, for example. The doctor must have studied during high school to assure he could go to a good college. Then he spends four years, at his own expense, studying pre-med courses, and he must study hard enough to earn not just mid-range grades but excellent grades. Only top performers are accepted into med schools. So this has required hours and hours of studying that someone not preparing to be a doctor might not have had to do; others can go to parties and ball games, and take time reading for enjoyment and attending music concerts for entertainment—not that these are bad things; but they are good things that the med student may have had to forgo for many years. Following med school, there’s residency, followed quite possibly by more years of specialization. A non-med student might go out into the workplace at 22 and start repaying a relatively small school debt, and get on with enjoying life. But the med student might be studying—and accruing school debt in the range of $150-$200 thousand—well into his 30s. So, yes, there is an expectation that his sacrifice to gain this expertise will be repaid with sufficient to repay as well as to have a comfortable lifestyle. It isn’t guaranteed that he will make sufficient, but it is expected, if he indeed becomes a valued physician following his decade of preparation.

Is it unfair for the doctor to receive a reward commensurate with how much a willing public values his expertise? No. Even when his expertise gives him a greater reward than a car repairman gets for his expertise? If the public so values it, then it is fair.

Those who hate capitalism tend to be those who don’t produce it. They don’t have either the discipline or the drive to produce more than is necessary, and then to find ways to have that wealth work for them. They are jealous of those who have produced capital and use it. They insist it’s unfair that some have advantages that they don’t.

Alternatively, they are despots who covet control of the capital others have produced. I suspect they don’t actually believe they should receive less for their labors so that nonproducers can have equal outcomes with them; they believe you and I should receive less so that our outcomes will be equal to that of nonproducers, while they reward themselves for attempting to bring about this obviously unfair equality of outcomes. That is something I would call evil.

* About the extra commentary: My son Economic Sphere is detail oriented and precise, and he suggests that, when I talked about ways to get capital, I left out inheritance. I purposely simplify, to get to the root definition (economics without math). But I think he’s right that there is a misperception that those with capital got it by some unfair, arbitrary-advantage kind of way. So let’s at least address inheritance. However, today’s post is long enough, so the extra commentary on inherited capital will be part IV tomorrow.

Wednesday, March 30, 2011

Anything Evil about Capitalism? Part II

Then What Is Capital?

Yesterday we defined wealth. If you need to catch up, it’s here: Part I. Today, in Part II we’re going to define capital and capitalism. Tomorrow, in Part III, we’ll use those definitions to determine whether capitalism is an evil system of depriving the poor in order to enrich the already rich, as you may have been led to believe, or whether it’s a system of increasing productivity and thereby increasing wealth.

Let’s look at Crusoe on his island again. Crusoe has some good ideas about farming. He understands that, with some tools, he can greatly increase the productivity of his bare hands. The first thing to do, then, is to spend some time making a plow. It’s not easy. Without ore and a forge, he has to make do with supplies at hand. He makes a plow out of coconut shell and some sturdy bamboo, which he has lashed together with the fiber he also uses for fishnets. It’s pretty crude, but it’s a lot more effective than digging with his hands. He is able to accomplish more. The plow he has made is capital.

Capital comes from surplus work. In addition to the farming he was doing by hand to subsist, he took extra time to work on this capital project. It wasn’t easy, but it was worth it. Because with that capital (i.e., extra time/work/wealth invested), he is able to produce more with his garden.

With the surplus he is able to produce with his plow, he finds himself with more time above and beyond what it takes to subsist, and he can use this time for more capital investment. He spends many spare hours gathering large sections of bamboo, which he connects together in a rickety but effective pipeline from the spring. He has invested in an irrigation system. The capital comes from his extra work, the actual building of equipment—which will greatly save his labor in the future so he can produce more.

Capital is always a representation of surplus work that is invested to find ways to produce more wealth. A society of hard workers without capital may remain as third-world agrarian subsistors for thousands of years. But bring in some capital investment for invention, and quite suddenly you have the makings of an industrial revolution.

There are two ways to get capital. The original and best way is to work more than necessary while spending less than you’re making. That is what Crusoe does in the irrigation example.

Another way is by borrowing capital. Debt is, of course, spending money yet to be made on the assumption that it will be made. So debt means it’s going to take longer before those future earnings feel like wealth. But sometimes the expectation is that, with capital, so much more can be accomplished that the debt will be paid off and then some.

Suppose Friday wanted to do fishing from a boat, because he knows he would have access to more fish to catch out away from shore. But building a boat is a big capital investment. If he takes time out from his fishing to build a boat, he will be without food for maybe a month—not really an option. Or he could build the boat slowly, but in his spare time it would take him maybe a year to get it finished. But suppose another native already has a boat (he used it to try to leave the island once, but then decided he preferred the island as home, and the boat has sat unused since). The boat is capital for the other islander—his surplus.

Friday makes a deal with the boat owner: “You let me use the boat now, and I will make payments to you for the cost of the boat plus a percentage more, to compensate you for letting me use the boat before I could pay for it.” This deal is a loan, with the cost plus interest being returned. But it is also a use of the boat owner’s surplus. He is able to put his capital to work, to increase his own wealth, by investing in Friday’s plan. So loaning capital is one part of capitalism.

There is some risk. Friday might be wrong about there being more fish out away from shore, so he might have a hard time repaying with interest. Or he might crash, causing the loss of investment, which would mean taking a very long time to repay the loan plus interest (and maybe defaulting and never being able to repay).

Another way Friday might make the deal is like this: “You could become part owner in my business. I will do all the work and all the fishing, but because I use your boat, I will give you an agreed on percentage of my profits.” Friday makes the boat owner an investor in his business. This arrangement is a partnership, but there are various other arrangements for a person with capital to put his money to work in someone else’s business. The stock market is a complicated mechanism, but it’s really just about finding ways people can take their capital (their surplus wealth) and put it into projects that they believe will help them make more wealth, benefiting both the owner of the capital and the user of the capital.

In this system, there is never a time when someone gets something for nothing. The capital investor has worked beyond necessity to earn the capital, and he tries carefully to place this wealth where it can do more wealth creation (and wealth is created by work, remember, so he is facilitating productive work). The entrepreneur who uses the capital does not receive it for free; he must use it to make a business productive enough to provide wealth for himself as well as the investor.

In short, what is capital? The accumulation of work above and beyond what is essential followed by careful use of it toward a good idea intended to result in even more surplus.

And what is capitalism? A system for using accumulated wealth to invest it in more wealth creation.

Keep these definitions in mind tomorrow as we look at the morality of capitalism.

Tuesday, March 29, 2011

Anything Evil about Capitalism? Part I

For the next two days we're going to have a mini econ class. Today’s topic is “What Is Wealth?” Tomorrow’s will be “What is Capital?” With that information in hand, we’ll be able to judge whether capitalism is good or evil.

Don’t worry, it shouldn’t be too painful. Much of this is excerpted from “The Economic World” at Spherical Model, if you happen to find yourself wanting more.

What Is Wealth?

Wealth is not some mystical entity endowed by either government or birthright. Nor is it something that the haves enjoy by depriving the have nots of their fair share. Wealth, simply, represents the accumulation of the results of labor.

Money is a representative, or symbol, of wealth, to make it easier to exchange. Wealth is not created by government; in fact government is incapable of creating wealth and can only spend it. Government can, however, regulate (that is, make standard) monetary units by coining money, or printing money, each unit of which is intended to represent a result of labor that can be exchanged for the results of someone else’s labor. (Warning: governments often don’t take this responsibility seriously; they mess with the money supply, minting more money, which results in inflation—because each monetary unit represents less work.)

In basic Econ classes, discussions usually start with very simple worlds, like Robinson Crusoe alone on an island. At first, whatever Crusoe has, it’s a matter of what he is able to obtain for himself. He fishes. He gathers. He hunts. He plants, irrigates, and harvests. And barring a catastrophic hurricane or some such disaster, he is free to enjoy the fruits of his labor. This is his wealth—the results of his capacity to recover from the shelterless, foodless situation he finds himself in right after a shipwreck.

But his wealth is limited by his personal time, talents, and energies. It might be that, once he discovers another person on the island, Friday, they commiserate about their limitations. And somewhere along the way they discover differences in abilities. Crusoe is pretty good at farming, but fishing is tedious and frustrating, so he often goes without that protein source. Friday, on the other hand, finds fishing easy, but he’d sure like his garden to yield more veggies and rice to go with it.

An idea finally dawns on them. How would it be if Crusoe gave up fishing altogether and spent more of his time farming, expanding his garden to provide for the entire population of the two of them? And at the same time, instead of struggling to farm without success, Friday would spend even more hours fishing. Then he would trade his surplus fish for Crusoe’s surplus harvest. They try this, and it works so well, they both have more to eat than they had before, and they both have more spare time for climbing coconut palms or hunting—necessary tasks which neither one is particularly good at.

But this trade thing is working out so well that, when they meet a native who has no trouble at all shinnying up those palm trees, they make exchanges with him. And another native is very handy with a spear and can easily take down a wild boar, which is much too big to use up by himself before it spoils, so he’s glad for the exchange, and the others are very glad not to have to face those wild boars any more.

They specialize. They all work mostly at what they are best at. The result of their total labor is now considerably greater than the total would be without specialization. This leaves them all more actual wealth (results of labor) and even more time to enjoy the wealth.

So, what is wealth again? The accumulated results of labor. Remember that for the quiz.

Monday, March 28, 2011

What Works for Schools

I just finished reading the book Waiting for Superman: How We Can Save America’s Failing Public Schools, a companion to the recent documentary, which I haven’t seen. The book is actually a series of essays, the first two by the producers of the documentary about why they made the film and how they made editorial decisions, sort of a behind-the-scenes look. The rest are by various educators, some better than others.

Full disclosure: I am not a champion of public schools. I homeschooled for the last ten years of my kids’ K-12 years, and while I realize that may not be the solution for everybody (maybe for not more than 10%), it not only worked for us, we thrived as homeschoolers—teachers and students. Family benefits were beyond expectation, and I wouldn’t have given it up.

I can give a pro-homeschool lecture another day (believe me, I can!) But today I just want to note a few things from the book, about what we do know that works.

First, what doesn’t work: the following table shows what we’ve been spending money on that has failed to result in better student achievement
(p. 91):

Public School Resources in the United States, 1960-2007
                                                                                    1960       1980       2000          2007
Pupil-teacher ratio                                                       25.8        18.7        16.0           15.5
Percentage of teachers with master’s degree
            Or higher                                                          23.5        49.6        56.8           n/a
Median years of teacher experience                            11            12           14              n/a
Real expenditure/student (2007-2008 dollars)          $3,170      $6,244     $10,041   $11,674

So, smaller class sizes, teachers with additional education levels, teachers with greater experience, and simply more dollars per student—none of these, as policy, has yielded any positive benefit.

So what does? In his essay “What Really Makes a Super School?” Jay Mathews uses two examples: Garfield High School in East Los Angeles, where Jaime Escalante (subject of the 1988 movie Stand and Deliver) taught, and the charter school network KIPP (Knowledge Is Power Program).

How super are these examples? “In 1987, fully 26 percent of all Mexican-American students in the United States who passed an Advanced Placement calculus exam were at Garfield High School. That means Escalante and the calculus teacher he trained, Ben Jimenez, were doing something extraordinary” (p. 169). More than a quarter of highly successful Hispanic math students in the entire country, out of tens of thousands of various schools and teachers, were the product of Escalante’s classes—in a poverty area where the students didn’t have any advantage until he gave it to them. That’s a super teacher.

As for KIPP: “In 2008, KIPP assessed the first 1,000 students who had completed all four grades of a KIPP middle school. Students from about twenty KIPP schools were involved in this assessment. Eighty percent of the students sampled had family incomes low enough to qualify for federal lunch subsidies. Ninety-five percent were black or Hispanic. On average, they had gone from the 32nd to the 60th percentile in reading and from the 40th to the 82nd percentile in math” (p. 179). Essentially, they rose from typical urban levels to suburban levels, all disadvantages disappearing.

What were they doing right? KIPP has a list of Five Pillars, which are pretty much identical to what Escalante used as well. Here’s the secret formula:

  • High expectations of all students.
  • Expanded learning time.
  • Testing to measure progress.
  • Team spirit (positive atmosphere).
  • Power to Lead (ability to make decisions in best interest of the school).

None of these essentials costs significantly more than what we’re doing. It’s one of those simple solutions that isn’t easy. But it is possible. And there probably isn’t a school district that can legitimately say, “That wouldn’t work here.”

Here are my suggestions for getting closer, right away:
  • Abolish the federal Department of Education. It is a drain on money states need. It has not contributed to greater student achievement in its entire existence. And schools were better meeting student needs before it was established in the mid 1970s. Cutting the federal education budget doesn’t mean you hate students and frown on education—just the opposite.
  • Give local levels (parents, schools, districts) power to make decisions about curriculum, and about teacher hiring and firing, so that students benefit from the best and don’t have to suffer with the worst.
  • Let students know what is expected of them, what it will take on their part, and what the life outcomes can be for them. If students choose not to participate, separate them so that uncivilized environments don’t hinder the willing learners. This will include teaching principles of honesty, caring, helping one another.
  • Focus on essential education: math, reading, science, history. But use arts and athletics to educate the whole person. Music can increase math ability. Drama can enhance literary understanding. Sports can increase physical health as well as improve brain function and teach civilizing principles.

I’m not particularly in favor of more time for kids in government institutions and away from family. I think concentrated learning time is efficient and requires less time. In homeschool we accomplished more in fewer hours. But we had the advantage of teaching moments at any time they happened, because the teacher and student were together during so many leisure hours. I don’t know how to translate that to a public school, so maybe longer hours and longer school years are all they can do to catch up.

If we’re going to have public schools (and despite my preferences, that looks inevitable for the foreseeable future), the least we can do is make them work based on what we know actually works.

Friday, March 25, 2011

How to Tell What Is a Right

Today’s blog post is excerpted from the end of the article Free Enterprise vs. Controlled Economy, at Spherical Model. (The tab title is actually Economic World for brevity.) Why repeat it hear? It’s a good length for a relatively short post, while being an important idea. That will do for a Friday. One of the advantages of a blog is that I have permission to quote myself, or to reword at will. So…

There is a premise on the other side that people have a right to certain economic success—one of those “positive rights” pressed so hard by FDR. Let’s be clear on what a right is: it is not a privilege, something you might be granted under certain circumstances. It is something that you deserve simply for being human. You do not have to earn a right; you can’t rightfully be deprived of it (with possible forfeitures such as committing capital crimes). If it is a right, it does not come from government; it comes from God. Government may use its power to either guarantee a person’s rights, or to deprive a person of his rights. Restraint from depriving a person of his rights is not equivalent to granting rights. Rights simply do not come from government.

So, if something is a right, it is a person’s natural right whether there is a government entity guaranteeing it or not.

We’re born naked, impoverished, and inexperienced. It is by growth, hard work, and gaining in expertise that we try to overcome this condition throughout our life. We are born with the right to life, the right to live free (not enslaved), and the right to pursue our own path to overcome the naked impoverished state.

Do we have a right to clothing? Well, it’s sure nice to have the appropriate clothing when you live through a northern winter. But is it your neighbor’s obligation to work to provide your clothing? Or is that your own obligation? Would it be good of your neighbor to give you his surplus clothing if he saw you were in need? Yes. But his giving it to you is charity, or philanthropy, not an obligation to meet your right. If he had no surplus, but just enough clothing to keep himself from freezing, would it be his obligation to give up a coat to you? No. If he were heroic, he might work out a way to share with you and perhaps keep you both alive. But he is not obligated to do so. So, your clothing is not his obligation. Providing clothing for someone other than self is a charitable act.

At the basic level, the relationship of parent to child is charitable. The parent can clearly see that the child cannot provide his own clothing, so the parent, showing his care for the child, provides that clothing. Same with food. You might even say that the parent has an obligation to feed, clothe, shelter, and nurture the child, because the parent brought the child into the world and therefore has an obligation to that child. But the obligation isn’t without limit. The parent nurtures the child to be capable of feeding, clothing, and sheltering himself. And then, at that point, the parent no longer has the obligation to provide. If the grown child lost a job, and had a temporary need for economic help, it might be that the parent could step in and offer food, clothing, and shelter from his surplus (charity). But the parent would have no such obligation to a grown and capable child who lacked means simply because of unwillingness to work for them. And that parent would have absolutely no obligation to provide from his hard-earned supply to a lazy child of the neighbor down the road.

So, even though we need them, we do not have a right to food, clothing, and shelter. Ditto for a furnished apartment, a television, telephone, medical care, air conditioning, or a car. [Ditto, I might add, health care insurance.] Nice to have. Important to have. Maybe even necessary to have in order to progress. But it is a capable person’s own obligation to work to provide these necessities for himself.

In a civilized society, there will be a desire to somehow provide these necessities to those who are not capable of taking care of themselves: the impoverished because of illness, accident, injury, or lowered mental capacity. But it is philanthropy that fills the need—not government taking from a producer by force to give to a non-producer.

[Philanthropy, or charity, solutions were the subject of yesterday’s post.]

Thursday, March 24, 2011

Peanut Butter News

One of the excuses big government types give for having to take our money and give it to others, is because there’s no other way. But there are nongovernmental solutions, and I saw one of them in action yesterday. I attended the rededication (following a renovation that began last June) of the peanut butter cannery in northwest Houston, run by The Church of Jesus Christ of Latter-day Saints. Many people from the community were invited to attend (so many came that it was standing room only for the ceremony), because this is a place where the whole community serves.

The cannery was built in the early 1980s, intended to supply peanut butter as part of the Church’s welfare program, and also to be used for humanitarian aid. The cannery is one of many food production facilities throughout the US and Canada intended for these purposes worldwide.
In 2003 the cannery became even more. A year earlier Larry Talley, a Latter-day Saint as well as an employee at that time at Exxon-Mobil, got this brainstorm one day about the cannery. It was used only for 48-hour shifts, manned by Church-member volunteers, about 11 times a year, producing for the Church’s distribution needs. What about all those other days when it wasn’t being used? What if we could produce peanut butter for the Houston Food Bank on some of those off days? He made the proposal, I believe combining input from the local Church leadership running the cannery, the Houston Food Bank, and his company’s HR department (for the volunteer labor). The agreement was that the Church would provide the jars, lids, extra ingredients, and use of the machinery; the Houston Food Bank would gather donations to fund the purchase of the peanuts, and community organizations would staff the volunteer crews. In early 2003 the first Houston Food Bank labeled peanut butter was produced, and the project has been providing about 98,000 jars a year, at a cost to the food bank of about 60% of the cost of commercial peanut butter.

The peanut butter shifts were somewhat limited by the equipment. Once started up, they had to run pretty much continually until the run was completed, because the cleaning process was involved (using I think I was told about 40 gallons of oil—but I may be remembering that wrong) and somewhat expensive. So Houston Food Bank sessions were always tagged onto the day before the Church’s scheduled weekend sessions. The renovation has enlarged the capacity significantly. There’s a new roaster—now in a separate building from the canning process—the entire housing for which was added on to the building. Sorting is now done by laser, rather than by dizzying eyes working at a conveyor belt. Everything is faster. Instead of 4000 jars per 4-hour shift, the cannery can produce 4800. This year the project will produce 250,000 jars for food banks in Houston and across Texas. Houston Food Bank distributes at no cost to 300 relief agencies.

A crew of 16 can now handle the task that used to take 25 volunteers. All the labor is provided by community volunteers, from corporations, various church congregations, sports teams, and any organization or family (ages must be 16 and up). I’m told the entire schedule for this year is already full. People really enjoy this as a project. Corporations use it for team building. Other groups do it as a service project. You get training in a 30-minute (or less) session prior to starting on the line, to cover health and safety issues. And you trade jobs throughout your session, working variously at stations that line up the jars ready for the extruder, place lids on jars ahead of the sealer, control the label machine, or pack and seal the jars in boxes. It’s assembly line work, and you might not want to do it every day, but as a field trip, it’s pretty fun. And satisfying. You can see the 4800 jars you just helped produce—that will go directly to people who really need it. (And you get to take one home with you!)

During the dedication ceremony, Briane Greene, President of the Houston Food Bank, talked about how the peanut butter is used. This peanut butter is not just for the food insecure. It’s used for the Backpack Buddy Program—a weekend pack of food for children showing symptoms of chronic hunger. The program is in 200 schools, and peanut butter is the most requested product. It’s a protein food that doesn’t need refrigeration or cooking, with a shelf life up to three years. But, mainly, kids like it.

He said that there was some anxiety among the kids as Christmas approached. They realized the kids were worried about going all the way through the holidays without getting food from school. So they stocked up the schools with extra to make sure the kids had food through the Christmas break.

Larry Talley was quoted on the brochure handed out, saying, “The need for peanut butter is tremendous. If we could make more through additional funding and volunteers, the Houston Food Bank would distribute more, up to ten times more.”

Church leader Gifford Nielsen (yes, the Gifford Nielsen who had a long career as a sportscaster in Houston) talked a little about the Church’s welfare farms and canneries. He grew up in an area where the Church owned fruit tree farms. He recalled going out there with his dad, following directions to help pick up branches after the adults pruned the trees. And later in the summer they would go back and pick apples, placing them carefully first in sacks around their necks, and then gently into crates.

The peanuts for this project are grown on a Church-owned farm in Pearsall, Texas. Church member volunteers from in and around San Antonio take turns working on the farm. The variety of peanut is only grown in central and west Texas, and it has the highest content of Omega 3 fatty acids. So it is more nutritious than other varieties of peanuts. The Church doesn’t own shelling equipment, so it sells the peanuts to Wilco Shelling Company, and then buys them as needed throughout the year.

2000-lb. bags of shelled peanuts

The walls around the roaster are filled floor to ceiling with 2000-lb. bags of shelled peanuts—with about 1.8 pounds going into each jar. They said that supply could be used up in 2-3 days of canning.

Nielsen mentioned the Church’s welfare policy, from 1936 (during the Great Depression): “Our primary purpose was to set up, insofar as possible, a system under which the curse of idleness would be done away with, the evils of the dole abolished, and independence, industry, thrift, and self-respect be once more established amongst our people. The aim of the Church is to help people to help themselves.” The Church of Jesus Christ of Latter-day Saints has one of the most extensive welfare systems anywhere to help its membership in times of need. A tour of the facility beyond the cannery section showed what looked like a supermarket, a place where those in need of temporary help receive their groceries and household supplies. Many of the products have labels showing they were produced on Church farms and canneries. The congregation leader, the Bishop, knows each person in his congregation and signs a list of their needs that get filled in this Bishop’s Storehouse. So, the Church really knows how to take care of its own.

Another section of the facility is a staging area for disaster relief. When a hurricane is on the way to the Gulf Coast Region, tractor-trailers are loaded up days ahead and put on route to this facility, where basic food, water, and supplies like tarps, generators, and chainsaws, are sent to be in place as soon as the storm hits. The Church often arrives with relief on the scene before the Red Cross.

All of this humanitarian aid, both for the Church members, and for the wider community, is completely paid for by member donations (beyond the tithing members also pay) to the Church’s Humanitarian Services Fund.

Gifford Nielsen talked for a minute about miracles that happen through this peanut butter project:  “Through the efforts of many, miracles will take place. Some we’ll know, and some we’ll have no idea…. We bless others, but we really save ourselves.”  I felt inspired, almost tearful, when he added, “The greatest miracle can happen within us as we serve.” All of us there--we wanted those miracles to keep happening.

This is my theory about a civilized society (above the 45th parallel on the Spherical Model). There will be poor, and people in temporary or even long-term need. A civilized people will surround them with help, to get them through the tough times, allowing those who serve to also serve others, so they maintain their self-respect. This is charity, in the best sense, where giver and receiver both benefit. This kind of miracle can’t be accomplished through government coercion. Using tax dollars to redistribute wealth makes the giver feel deprived of the will to give, and makes the receiver feel entitled without work.

Peanut Butter's gourmet side

When I’m at that cannery, I feel the love, the miracles, that happen there. And I have faith that this kind of example could spread.

Wednesday, March 23, 2011

Economic Theme

My son Economic Sphere tells me, “Mom, you don’t have to write a novel every time you post.” So today I’ll be brief.

For the past couple of years I’ve been collecting quotes that relate to the political (freedom), economic, and civilization spheres. I try to identify which sphere they fit in, but sometimes they overlap. Today we’ll do a classic economic theme from three different centuries.

How is the legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.—Bastiat, The Law

“I want people to be able to get what they need to live: enough food, a place to live, and an education for their children. Government does not provide these as well as private charities and businesses.”—Davy Crockett

I don’t think that stupidity, ignorance or insanity explains the love that many Americans hold for government; it’s far more sinister and perhaps hopeless. I’ll give a few examples to make my case. Many Americans want money they don’t personally own to be used for what they see as good causes such as handouts to farmers, poor people, college students, senior citizens and businesses. If they privately took someone’s earnings to give to a farmer, college student or senior citizen, they would be hunted down as thieves and carted off to jail. However, they get Congress to do the identical thing, through its taxing power, and they are seen as compassionate and caring. In other words, people love government because government, while having neither moral nor constitutional authority, has the legal and physical might to take the property of one American and give it to another.—Walter Williams, 6-10-2010

Tuesday, March 22, 2011

The Push Poll

When people ask, “Who are these people they survey all the time? I’ve never been asked to take part in a survey,” the answer is—me. I get surveyed, a time or two a month, with more frequent surveys around election times. Sometimes they’re political surveys, sometimes consumer surveys. (Although I tend to not qualify for consumer surveys, because I don’t shop enough.) Sometimes they’re combined. Anyway, last night I took part in a rather lengthy phone survey, mostly political. And I think it was either what is called a push poll (intended to change the mind of the person being surveyed), or it is being done by a certain industry to find the best ways to sway public opinion.

It was about VLTs (video lottery terminals), a form of gambling currently illegal in my state. During the current budget crisis (even in relatively healthy Texas, unemployment is around 9%, and as a result state revenue has fallen—hence the budget crisis) lawmakers are looking for a quick fix, without having to cut the services they use as inducements to vote them back into office. A lottery (which this state already has “for education”) is essentially a voluntary tax paid by stupid people, often stupid poor people who can’t afford to pay it while paying their rent and lunch for their children. VLTs would be an extension of the concept: get voluntary tax from stupid people so that we don’t have to raise taxes or cut the budget. They’re proposing I believe about 22,000 such machines, to be spread around horse and dog racing tracks and Indian reservations.

This comes up just about every legislative session (maybe because the budget is the one thing required of the legislature, and it’s always hard to accomplish). About six years ago these points were brought to my attention [along with my comments for today]:

  • VLT slots are being falsely presented as a solution to school funding [this time also for higher education, transportation, social welfare, police and fire protection, and other budget items]. This form of currently illegal gambling is actually being pressed by powerful, well-funded gambling lobbyists, not educators [still true]. VLT slot money is unstable and unlikely to be a reliable funding source for schools and other government.  Lottery money has been presented as a funding solution for education in the past and has failed to result in the promised solutions. [Logic tells us if the lottery had been the solution it was promised, we wouldn’t be having this discussion now. But getting rid of a lottery that fails to deliver as promised is almost impossible.]

  • VLT slots are considered the “crack cocaine” of gambling, resulting in new pathological and problem gamblers. Estimates show the 40,000 proposed [that year] slots would create 90,000 new pathological gamblers in Texas. VLT Slots feed on pathological gambling: 33%-42% of VLT Slot revenue is from addicted gamblers. Estimates show each pathological gambler costs the general public $8000 a year in social and economic losses.  
  • For every dollar the state brings in with gambling revenue, it puts out $2-3 in increased social spending—for addiction, bankruptcy and crime. Societal impacts include job loss, family break-up, domestic violence, bankruptcy, suicide, and child poverty. Most of the profits will be paid to out-of-state owners, resulting in less money in Texas.

Because of the survey last night, I can tell you that they will pressure you to support this additional gambling in the following ways:

  • VLTs would only be placed where gambling already happens legally.
  • VLTs would bring in billions in revenue that can be used for education, higher education, transportation, protection, health and welfare.
  • VLTs would bring in thousands of jobs.
  • VLTs would encourage money to stay in the state that is now being spent at casinos in neighboring states.

You will also be told that, since the only ways of increasing revenue are by taxes or non-tax sources, and since VLTs are a non-tax source, wouldn’t you prefer allowing voluntary gambling rather than, say, an increased sales tax? I pointed out that this is a false choice; increased taxes typically result in lower revenues, and gambling causes greater expenditures in social costs. So for greater revenue, you want to encourage economic growth. That, of course wasn’t an option.

You will be told that the only reasons people have against the VLTs are that they could spread, and they increase traffic. Um, yawn. The survey didn’t seem to be aware of my points above, but had chosen pretty much the wimpiest arguments they could come up with to describe the opposition. I informed the surveyor of the points above, suggesting they were better arguments against.

Several times I was asked, in various ways, “If VLTs were made legal in the state, would you prefer to have them limited to 20,000 or 40,000?” Or, “If VLTs were made legal in the state, would you prefer to have them only at racetracks and Indian reservations where gambling already takes place, or expanded to airports or other public venues?” I would not, could not, in a car, not on a boat, not on a train. I do not want them here or there; I do not want them anywhere! (Thank you, Dr. Seuss, for always being so quotable.)

The process here would be to put a state constitutional amendment before the voters, and let them decide. But if this survey was an example of how to manipulate the public so that it doesn’t really know what it’s deciding, then it is better not to bring it before the public. (In Texas, it’s SJR 33 for the constitutional amendment and SB 1118 for the enabling legislation. You can read Sen. Hinajosa’s rousing endorsement here: A call to your state senator and representative would be a good idea.)

I want to make a point about how this relates to Civilization on the Spherical Model. Is there anything civilizing about wanting something for nothing? Gambling is essentially being willing to pay hard earned money for the chance of getting more money that wasn’t earned. I realize not everyone agrees with me about the vice of gambling. If a person has the money, why not have the freedom to spend it as he chooses? That’s a good argument. Oddly enough, when a person chooses to spend that money in ways that are contrary to civilizing thought processes, those ways can lead to loss of freedom—addiction. Not for everyone, so there’s always a chance a person can get away without too many negative consequences. But just making the choice to want something for nothing (or to want escape from reality as with drugs, or to want sex without responsibilities or consequences) has a decaying effect on civilization as a whole. It isn’t possible to gain ground up toward civilization by taking steps downward toward savagery, even if they’re just little baby steps.

Monday, March 21, 2011

Limited Government vs Anarchy

Brett responded to my attempt at thinking through the issue in last Thursday’s post. I spent the weekend thinking about it. The comment disappeared for reasons unknown to me, and then reappeared this morning. So I thought I’d respond at least to parts of it. What we’re discussing, I think, is whether a person should ever under any circumstances submit to a government. I think it is practical and healthy for a civilized society to do so—within the limited government outlined in our Constitution. Brett argues that it is always unwise, because there will always be a chance that the majority will decide differently from you, leaving you coerced.

Brett’s comment is copied here, for convenience of reading, with my responses interspersed in italics.

But not 100% of people within the United States consented to the Constitution. I agree that IF everyone agrees to something it isn't coercion and does not go against Natural Rights. That is not what happened in US or anywhere else in history.

I grant that not 100% of people consented; I do abide by my statement that virtually all of the populous consented (or else left). If a person has granted a lower level authority to make certain decisions by majority rule, that is essentially consent even when there is not agreement. But I concede your point.

So if you enter into a contract with someone, your children are responsible for your signature even if they are adults and never consented to it? I assume your answer is no, but that govt is somehow different. Why does the relationship between people that call themselves government and people who are called citizenry allow for rules of contract that are completely alien to the right of contract?

Actually there are many things related to inheritance where children do assume the responsibilities signed onto by the parent. If a grown child inherits a mortgaged property, for example, from a parent’s estate, the grown child takes on the mortgage, or allows the property to be sold to pay off the mortgage as well as any liens or other debts to be paid by the estate, before the grown child receives a monetary or physical inheritance. If such heir receives a property in, say, an HOA, the same covenants apply to the new owner as to the old. If the heir does not want to sign on to these contracts that are already in place, the choices still require the heir’s action, i.e., to sell the property to someone who will abide by the contract. (In some cases, refusing the accept the inheritance might be a possibility if the executor can then grant the property to a willing heir, but the heir's refusal is taking action nevertheless.)

Is citizenship an inheritance? Our laws are set up such that it is. So the heir must take action in order to not receive the inheritance—typically by leaving the jurisdiction and taking up residence/citizenship in the location of his choice.

Let me ask a question, a different challenge of sorts. Then I'll give my thoughts.

Question- It comes from Robert Nozick:

Thoughts-Further, although someone can enter into an organization and agree to its terms (examples: 1)decisions will be made by majority vote and regardless of outcome, I submit to each decision.2)I agree to box you. I may not like every punch but I will accept each one if you allow me to also do the same.3)Although not a member of the LDS church, someone can attend BYU by signing the Honor Code [referred to in my post on March 5, "Civilization in Action."] where they must follow church standards regardless of belief while in attendance), this is very different from the reality of all government, including the one put forth by the Constitution. Some people may consent to government, and they may have theirs, but to those who choose not to are not allowed to live apart from govt intervention. If they do not want the protection of the police, they CAN NOT contract out because it is "illegal" (illegal according to govt, not natural law) for anyone to compete with the US.

In a truly free/civil society, people can submit to a government with all of its coercion, but those who do not must be allowed to use their property to their desires. They must be able to allow services and goods that compete with the government of the day. Government can not claim a territorial monopoly so that the choice is either government or nothing.

A recent example of this was a home fire where the homeowner, on the outskirts of the jurisdiction had refused to pay for the fire protection service. The fire fighters were on hand to protect the fire from spreading to those contracting for the service, but the home burned to the ground. There was outrage that the fire fighters would not voluntarily serve even where not contracted. Even though there was no breach of contract, the devastation that resulted made the fire fighters (and any governmental entity directing them) to appear unreasonable and uncivilized. If the house had not been on the outskirts, but right in the center of the jurisdiction, but with an opting out homeowner, confusion would ensue, as well as an assumption that the fire fighters should put out fires no matter what--unfairly burdening those who contract for the protection. Just an example. I don't know if you could come up with an opt-out system that would be workable.

It can not be said, "but no one owns the land they are on, it is the property of the US." According to Homesteading, a principle of Natural Law, property is obtained by mixing your labor with nature to make it productive. The US can not just simply claim empty tracks of land as their property, it is no ones property. The people who moved there and settled it own it, not the government.

I’m not going to argue this point with you. I grew up in a state with above 80% of land claimed by the federal government, which is pretty much obscene.

It is not incumbent on someone living under the involuntary monopoly of a government to use the political process that government created to change its policies (though you have expressed revolution as a potentially just method). That individual IS being oppressed on and the monopoly should withdraw its force from them until consent is actually given. The individual has a right to not have force initiated against it. An individual may enter into a legal agreement with a government and be bound to it, but their posterity is not held to that standard, especially once they are adults and are fully capable of contracting themselves. They too must agree to the government they live under. They are, by default, free people until their consent is given. The default is not that they are to be subject to government as slaves of the majority. They are not born into legal slavery/oppression. They are not allowed freedom only upon paying a tax, leaving their property, and moving to a different territorial monopoly (govt) in another location in the world.

This may be the reality of the world that is called Earth, but it is not just according to Natural Law. Natural rights do not justify involuntary government. Anything more than voluntary interactions can only be justified by utilitarian arguments, for natural law rejects it.

Posted by Brett to Spherical Model at March 21, 2011 8:43 AM

In a truly free/civil society, people would have only limited (and typically very local) need to submit to government at all. In the actual world, tyranny and chaos are the typical choices. In a relatively free country, if you choose not to submit to the government of your land, you can leave. In a theoretical world with plenty of uninhabited but self-sustaining islands, you could set up your own island nation with just yourself (plus maybe chosen family members) and live freely without any ruling government whatsoever. But, even in that theoretical world, what would prevent an invading force from taking over your island? Your personal resources for self-defense only. Let’s assume that, unlike in Swiss Family Robinson, such resources are inadequate. You are then coerced into losing your property or using it only in such ways as the new ruling power allows you to.

Anarchy (lack of government) is not actually the opposite of tyranny—unless you are alone on an uninvadable island—it is tyranny by the force of whoever is biggest, strongest, best armed (like in gangs), rather than a state tyrant that is biggest, strongest, and best armed. (See description of southwest quadrant in “The Political World Is Round.”)

So, in the real world, you either submit to a state or anarchical tyrant, or you submit to a limited power government, designed by consent of the governed to protect life, liberty, and property without otherwise interfering with free choice. When it is a choice of southern hemisphere (the typical choice in history) or the northern hemisphere—particularly the northern freedom zone as our founders designed the US Constitution—I’ll take that northern freedom zone by choice.

Friday, March 18, 2011

A Little Citizen Lobbying

Today I had a little adventure in taking action that I hope was a good use of time and energy in the struggle for our freedoms. I’ve been attending my local Tea Party meetings since last summer, and got the assignment to follow state legislation and arrange for visits with local representatives’ offices. It may be, in the long run, a small thing, but we have been making monthly visits to these legislators’ offices, meeting with their staff. (The representatives are currently at the state capitol because the legislature is in session.)
Instead of taking grievances, our purpose has been to take a list of issues and legislation that we’re following, thanking the representative (when appropriate) for supporting the legislation, and generally letting them know our group is out here, sharing conservative opinions and trying to find ways to make good things happen. So far the staff we’ve met have been very welcoming and agreeable. (In our area, the representatives range from pretty conservative to thoroughly conservative, so this isn’t surprising.) Word was the one we visited today was at the less committed end of conservative, but from her staffer’s point of view, she is conservative and agreed with us on all the issues we brought. Even if that wasn’t true before we came, having them say it (apparently while believing it) is likely to have some effect. I hope so.

Thursday, March 17, 2011

Citizenship and the Proper Role of Government

In the meantime, while I was working out an answer to Brett’s challenge (read yesterday's post, or the comment after my March 8 post), Perth made a brief rebuttal, focusing on the individual vs. collective differences between, say, health care and defense—which does come to the essence of the question. But I wanted to cover more, to deal with Brett’s implication that essentially everything a government does, based on majority approval, is still coercion for whoever doesn’t approve. So here’s my attempt at a larger answer.

The contract between the people and the governmental entity is not exactly the same as a contract between a person and a commercial enterprise. There are implications about perpetuity and citizenship that make the difference. Also, when we’re dealing with the US federal government, the contract is not simply between individuals and nation; it is between states and nation, retaining their sovereignty, and allocating only those rights that need to be handled by all the units at once.

The creation of a government is not a majority opinion coercion; it is an agreement between all the people and the government being created by them. Think of our founding—virtually all citizens within the independent confederated original states did want to belong to the union. (Those who didn’t are what we call Canadians.) And, as important, the states that the individual people had created prior unanimously contracted to create the federal government.

It is the people who join together to create a governmental entity: a township, a county, a city. If granted authority by the people, those units can join together to become a state—a sovereign entity. At our founding the sovereign states realized that individually they were weak and would succumb to invasion, piracy, or trade difficulties. And they also had difficulty trading freely among themselves. But by uniting, their combined strength gave them abilities as a larger sovereign nation, strength that protected them all. Intent is spelled out in the Preamble:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

At the lowest level the Constitution (the contract) is essentially agreed upon by all members to become citizens. (It may look more complicated, but if a person agrees to go by a majority opinion in his village, then he is giving his consent, even if he would have preferred a different outcome. So he isn’t compelled.) The original contract has limitations, spelled out in the charter documents. Once the entity is created, all those agreeing to it have citizenship in it. This is consensus, not majority rule.

The agreement, or contract (you could use the word covenant—a two-way contract) is between the people as a whole and the entity they created. They may, in that agreement, allow the entity to join with other similar entities as needed to form a larger governmental unit; the original states were authorized to join together to form the United States.

Individual people change. People emigrate, and give up their citizenship. New people born into the community inherit their citizenship (thus the phrase “to ourselves and our Posterity”); that means they also inherit the terms of the contract. If those with inherited citizenship don’t agree to the stipulations of the contract, they must either seek for legal means to amend the contract (amend the Constitution), or they must abide. Or they can emigrate and renounce their citizenship.

New people immigrate in. They must go through a process to learn the terms of the agreement and gain citizenship. For example, when you buy a home in a community with an HOA, you sign covenants agreeing to the rules, thus becoming a citizen with voting rights and other privileges, along with obligations, in the HOA. A renter isn’t a citizen—no voting rights, but is still required to obey certain standards by the landlord, who has made them clear in the rental contract, so as to keep his commitment to the HOA. Similarly, when you move into this country, you go through a process to earn citizenship, to become naturalized, at which point you have access to all the rights and privileges of natural born citizens (except for becoming president). [Note: it’s the process to earn citizenship, to understand and consent to the contract, that is at issue with illegal immigrants. How can an entity maintain the contract when numerous people demand the benefits but do not understand or sign on to the contract? Making the process less onerous is another issue, but the privileges of citizenship should only be afforded to those who agree to the contract.]

The point is, individual citizens may change, but “We the People” as a whole are the ones to keep the contract with the governmental entity. So if an individual in our day happens to disagree with a portion of the original contract, his opinion doesn’t matter. By virtue of enjoying citizenship, he has de facto agreed to the terms, whether he claims to be coerced or not.

Now, back to the issue of the proper role of government. The original argument is that the people can only grant to government those natural rights they have in the first place. The confusion comes because I point out that, because you have the right to protect your life and property, you have the right to join together with others who hold that right, and contract with someone (a sheriff at the town level, for example) to provide protection for you. So I will clarify by saying when you create a governmental entity to do this task, this is different from simply hiring, say, a security guard service to watch over your adjoining properties, a service you can choose not to purchase at any point the contract legally allows. You create the governmental entity and grant it the authority to protect itself (the way you protect your own self). By creating the entity, you have consensus from all citizens to combine for this security reason. No one is coerced to pay for it; everyone has consented, and everyone benefits equally.

What about health care? You do indeed have the right to care for your health, and you do indeed have the right to combine with others to pay someone to care for you all; this is what insurance companies, HMOs, and various other commercial entities that provide health services are about. In each of these cases, you choose to participate—there is 100% consensus. No one is forced to sign the contract. And if you don’t like this service, you can change to another.

Can you do that when you create a governmental entity? Let’s see. You have the right to protect your personal health, but your neighbor doesn’t have the right to require you to pay for his. So, you have the right to grant the governmental entity the right to maintain the health of its body (why you can argue that there are reasons for caring about plagues, epidemics, water purity, and the like). But you don’t have the right to grant the entity to force some individuals to pay for the care of other individuals. This is Perth’s argument: the entity is created by the whole to benefit the whole, not to benefit individuals within the whole over and above other individuals.

In the contract grant to the federal government, there is no majority, small or large, that has power to usurp rights from the minority. The entity was created to protect all equally. If the US Defense Department protects the borders of the country, it protects the borders of the whole entity, the whole nation, not just, say, the border of Montana but not the border of Arizona. (Right now it is failing to protect the Arizona border and has essentially ceded 60 miles of highway to Mexico, a loss to us all as a whole.)

The governmental entity is essentially power, so a wise people grant the entity only those powers that it must in order for the whole unit to flourish—protection of life, liberty, and property and the structures to support that—law and justice system, standards weights and measures, and standard monetary units, for example. Some units may agree on infrastructure in the common lands to facilitate commerce. But “We the People of the United States” were careful to limit the reach of the federal government. In no case do we grant a majority, say 60%, the right to coerce the minority 40% to pay for services to which they have not consented. When that has happened (and I grant that it has), that has been usurpation. There may be elements of the military budget that you can argue do not qualify as what you’ve consented to, but Defense of the nation—insuring domestic tranquility (lawful peace between and among the states) and providing for the common defense—are agreed to by all citizens. For a citizen to refuse to meet his obligation to pay his share of the common defense is to renege on the contract, which is why the government has authority to then enforce the contract.

But I think we agree the real problem is not how to enforce citizenship obligations, but how to stop the government usurpation.

Wednesday, March 16, 2011

First Blog Comment

Firsts are often memorable—and I got my first comment yesterday, on my post from March 8, on the Role of Government. I’m excited, because it’s a good comment and really making me think. I happen to know Brett, who made the comment, and am aware of his Libertarian viewpoint. He’s young and extremely bright, as well as what I describe as civilized. I’ve said in “The Political World Is Round” that we’d be better off if the debate were actually between conservative Republicans and Libertarians.

It’s like the debate during our founding between the Federalists and the Anti-Federalists. I tend to identify with Jefferson, among the Federalists (more often Jefferson than Hamilton), but the Anti-Federalists were often (maybe always) right in their concerns about granting any power to a central entity. We owe them the Bill of Rights. The Federalists had thought these basic rights were so well understood by the people that listing them in the document was unnecessary. But, however well the people understood them in the 1780s, it’s amazing how difficult they are for some people to understand today, even with them written out.

So (I hope Brett doesn’t mind) I’m including Brett’s response below, which is enough hard thinking for one day. Tomorrow—assuming I am up to the challenge—I will respond. (If you want to read the post he’s responding to, it’s here.)

BRETT: If I have a right to tend to personal illnesses and do my best to maintain my personal health, then surely I have a right to bank together with my neighbors and if one of us is especially good at taking care of others then we can appoint him/her a doctor to protect us all of illness to his/her best ability. In that sense we have a right to defending our selves against not only human aggression of our life and property, but also bacterial and viral aggression. In what way is this different from getting together to appoint a sheriff for protection of property. Getting together with my neighbors to appointing an electrician or any other person to perform a service or provide a good.

In short, arising from a right to property is the right to contract.

If it is unjust for say 60% of the population to create a system of healthcare for all of the population, requiring all (or certain people based on ability) to pay for it since all will receive it. How is it just for a portion of the population to appoint a sheriff to defend property for all of the population and require all to pay since the service is being provided for all?

In short, if it is unjust to steal from others or to coerce them to pay for services they do not wish to receive or have not contracted for (Medical Care, Education, Municipal Waste Collection, etc.). Then is it not incumbent upon you to be consistent with military spending? For unless there is voluntary contract with ALL that is involved, force and coercion is used, which is something no person has a right to use against another. Only completely voluntary military spending is legitimate, otherwise, it too is a form of income redistribution.