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Tuesday, October 30, 2007

Governance, Capitalism and Alleviating Misery

As discussed in previous posts, good governance makes it easier for free market economic systems to work their magic in generating wealth and lifting people out of poverty. Recognizing the benefit and/or harm of past actions might be helpful in making better decisions in the future. Drawing on a Thomas Sowell column, Mark Perry makes the following points: Political Solutions: Socialism on Installment Plan?
Sowell outlines a dangerous pattern:

1. Based on some perceived market failure, a political solution (regulation, subsidies, legislation, tariffs, price controls, property rights restrictions, below-market insurance programs, zoning laws, real estate regulations, etc.) is implemented to solve the "problem."

2. The political solution is inherently distortionary, introduces inefficiencies, and makes the original situation even worse.

3. Additional politcal solutions are then proposed to addresss the growing problems created by the previous political solutions.

Steps 1-3 continue to repeat, leading to the possibility of "socialism on the installment plan," or Hayek's concept of "The Road to Serfdom," because of the "fatal conceit" of policymakers.
Improving the rules and institutions that allow the private sector to work better without trying for a direct government solution would be a step forward in many cases. Milton Friedman reminds us of the primary source of wealth creation.

The Land of Makebelieve: Where are the Philosopher Kings?

HT: The Club For Growth Blog

Dr. Sanity deals with the significance of this and the global reach of the extended order in Helping The World Out Of Its Misery. She quotes Alvaro Vargas Llosa:
Ever since the Industrial Revolution, poverty has been significantly reduced throughout the world. Two hundred years ago, the average income per person worldwide was the equivalent of less than $2 a day; the figure is $17 today. This fact is relevant to the current discussion on globalization because, even though the information technology revolution, biotechnology, the emergence of new world players and outsourcing may give us the impression that we are in the midst of something entirely new, we are simply witnessing a new phase in the process of innovation that is the market economy -- and this began a few hundred years ago.

The fact that 20 percent of the world's population is extremely poor should not make us forget that millions of lives have improved dramatically in the last three decades. Illiteracy has dropped from 44 percent to 18 percent, and only three countries out of a total of 102 included in the U.N.'s Human Development Index have seen their socioeconomic conditions deteriorate. China's economy used to represent one-26th of the average economy of the countries that comprise the Organization for Economic Cooperation and Development; today it represents one-sixth.

These are not arcane facts. They are widely available and easy to understand. Publications such as Indur Goklany's "The Improving State of the World," David Dollar and Aart Kraay's report on the global economy, and Francois Bourguignon and Christian Morrisson's "Inequality Among World Citizens" -- to mention but three among many recent studies -- provide overwhelming evidence that the world is better off thanks to the increased flow of capital, goods, services and ideas.

All of which falls on the face of those who predict that in the next few years we will see a massive concentration of wealth among a few winners who will leave millions of losers behind. While it is probably true that the gap between low-skilled workers and those who are better educated will mean that different people will be impacted in very different ways by the continuing evolution of the global economy, the reality is that even those on the bottom rungs stand to benefit from the worldwide embrace of globalization.

Poverty was the natural condition of all of humanity until the market economy opened up the possibility of ever-increasing productivity.

The world was not rich and suddenly turned poor. The progress of the market economy that began to free the world of its shackles continues at an even faster pace today despite the many restrictions still faced by the people who create wealth and exchange it, and despite the fears that these momentous times understandably inspire in those who have difficulty adapting. What a heartening thought.

She then presents the following notion regarding people who would resist this approach:
An even more subtle approach is to insist that wealth and prosperity is directly correlated to unhappiness.

All these global luddites, along with their medievalist and jihadi brothers have one thing in common. They despise capitalism and are all deeply resentful of the modern era because despite all the material things available to make life easier and more enjoyable, they aren't happy!

But, guess what? Happiness is not related to the number of things one possesses. It has more to do with the power and energy that actually creates the wealth and technology--the free expression of that creative impulse that lies within every human. It has to do with taking responsibility for your own individual life and striving for the best that is within yourself.

This is the real opportunity that capitalism on a global scale brings--not the general wealth and better living conditions--those are just the by-product of unleashing the inner creative spirit and pursuing one's individual happiness; and by doing so, raising the general happiness.

Many of these anti-globalism elites mistakenly believe power over others is what will make them happy, and so they attempt to control and shackle that creative power--the best that is within others.

Their idea of "social justice" is intimately tied to making themselves feel good and establishing their own caliphate of the do-gooders, where happiness is mandated for all in equal measure. But they approach happiness from the wrong direction.

She draws upon a Robert Samuelson column and then continues:

What is most distressing is the desire on the part of the anti-globalists to oppose the very thing that will ease human misery; while their underlying socialist ideology encourages them to legislate or mandate happiness. This is more than just an illusion; it is a frank utopian delusion.

And, it is at the heart of why about half the population of this country isn't happy.

Happiness is not related to power over others; rather it is intimately connected to learning to have power over one's self in order to harness the capabilities within and become the best person you can be, or as Samuelson notes, "Happiness depends heavily on individual character and national culture."

And that last says it all. A culture that promotes victimhood and the entitlement mentality; and which fosters class consciousness and envy is going to be stuck in a hopeless "happiness quagmire." There are actually people who believe that they can not only "redistribute wealth", but that in doing so they will be "redistributing happiness".

But these do-gooder dictator wannabees can't have it both ways (and, of course, they do want it both ways; no matter how perverse the contradiction). They can't simultaneously morally condemn the materialism of capitalism and then at the same time redistribute the wealth it produces. So, instead they claim that they are trying to minimize human misery and promote social justice by opposing the very policies that are most likely to put the world out of its physical misery and give each person a fighting chance to tap into the potential within.

Global capitalism can't guarantee happiness; or an end to evil in the world. All it does is provide the conditions that enable the pursuit of happiness. It is the freedom to pursue that which one thinks will make one happy that, slowly but surely, decreases the level of misery in the world.

Without human freedom there can be no wealth created; because wealth is the product of the unfettered human mind. If the do-gooders really wanted to help poor of the world out of their misery, they would stand aside and let the market do what it does best.
There is quite a bit to this freedom thing, although it has a minority of serious defenders!


Bret said...

"Happiness is not related to power over others; rather it is intimately connected to learning to have power over one's self in order to harness the capabilities within and become the best person you can be..."

Perhaps happiness is greatly overrated and isn't really related to either power over others or harnessing the capabilities within.

Both are, however, related to power. Power over others and power over one's self. Perhaps we all aim to exert and extend power (will-to-power) and both having control over others or cooperating with others such that power is generated through that cooperation are both means to exerting and extending power.

Some, who are creative, intelligent, and productive will inherently do better via cooperation. Others will do better via exercising control over others.

I think that few people are into freedom for freedom's sake. Those who are into freedom are into it so they can extend their power freely through cooperation with others. If you're not good at that, you might as well do your best to exert control over others.

Susan's Husband said...

There are people who are entirely extroverted in the sense that they have no inner self, but are "constructed" by the opinions of others. They exist only as others see them, not as they see themselves. For such people, there is no difference between self control and other control. It makes toleration of differing opinions difficult, as it that creates a sort of schizophrenia. I suspect a lot of the control freaks are of this nature.

erp said...

To all of the above yes, especially the fact that there are so few serious defenders of capitalism and as a corollary so few serious condemners of socialism.

SH has hit on something that's been part of my thinking for a long time. Very few people have inner lives. Nothing is going on in their heads, so they are easily bored and in constant need for distraction and amusement. That's why so many people walk around with a wire or a phone in their ear listening to something other than their own thoughts. It’s not enough that the very air is polluted with “music” and television sets blare in public places and it’s getting harder and harder to shut it out of my mind. Perhaps becoming hard of hearing won’t be that onerous.

The casual arrogance of the left is breathtaking. The do-gooders can’t be “happy” or cheerful or appreciate what’s good and beautiful about their world because everyone on the face of the earth isn’t enjoying it as well and they won’t be happy until the whole world is singing Kumbaya in the original Swahili and everyone is dependent on them for everything.

They really can’t accept the fact in front of their noses that they are making things worse with their constant meddling, to wit, the disgrace of famine, disease and misery in much of Latin America, Africa and Asia in the 21st century.

Global warming comes out of this same mindset of arrogance. They can’t let nature take its course as it has done over the eons, but they think they can stop and even reverse the very nature of nature which is change. In their foolishness, they want to fix the natural conditions of their youth and declare them the optimum to which all future ages must comply.

It’s so silly, it’s mind boggling, yet that’s the cry and even those politicians smart enough to know it’s nonsense, pay lip service to “doing something” about it.

Bret said...

susan's husband,

Excellent observation! If true, it explains a lot to me. I'm fairly introverted so it explains why I've never been able to understand control freaks. And it's true that most control freaks I know are more on the extroverted side.

Howard said...

Wow, great comments all around.

Seems like there should be an Eric Hoffer quote in here somewhere...