A Fundamental Flaw of Free Markets

This video is an explanation of the type of issue I often consider. Listening to it, it got me thinking about why this needs to be explained.

Going by the data I’ve seen, this explanation seems obvious. I honestly can’t see any other convincing explanation. Yes, some rich people are deserving, but many aren’t deserving of being as rich as they are or aren’t any more deserving (in terms of talent, intelligence, ambition, etc) than many less advantaged people.

So, why doesn’t this seem obvious to many conservatives? What keeps them from seeing it? I suspect many refuse to seriously consider the data because it contradicts their beliefs and assumptions. That is understandable. If they get all their news from Fox News, Wall Street Journal, and right-wing talk shows, they probably never (or, at least, very rarely) would even come across any data that contradicts their beliefs and assumptions. That is sad, but understandable.

Still, I doubt that this explains it all. There has to be many conservatives who are familiar with the data and yet still support the rich having advantages. Why?

Is it just team sports mentality, just rich people defending other rich people that they personally identify with as being part of their group? That makes sense psychologically. Poor people do the same thing, although less effectively since they less power.

Another explanation is that some people believe that, despite inequality being morally wrong or less than perfect, is still better than the alternative. Maybe it’s a belief that the egalitarian vision is dangerous. It’s better to have an imperfect system than to risk its destruction by trying to improve it. Certainly, some conservatives do believe this, but I find it a bit too convenient that they many rich conservatives just so happen to support the analysis that benefits them personally.

Yet another explanation is that some people are just cynical. They have theirs. Fuck everyone else. They are on top of the wall and so they kick the ladder away to ensure no one can challenge their position of power. I wonder about this. How many conservatives are this cynical? Or, if not quite this cynical, how many conservatives are to varying degrees motivated by cynicism?

I don’t ask this as a way to dismiss all conservatives and all rich people. I genuinely want to understand what motivates people, want to understand why inequality keeps growing in this country. I can’t believe it’s a mere accidental side effect of an otherwise moral system. There is a class war going on, but I don’t know how many people even see it. For those who don’t see it, what is their incentive in remaining blind to the suffering of others?

CEOs Rake it in While Poor Suffer

This is sad. There is no justice in America.

http://ips-dc.org/reports/executive_excess_2010

http://www.ips-dc.org/blog/ceo_pay_and_the_great_recession

http://www.cnn.com/2010/US/09/01/layoff.ceo.pay/

http://www.msnbc.msn.com/id/38935053/ns/business-us_business/

http://www.huffingtonpost.com/2010/09/01/ceo-pay-layoffs_n_701908.html

http://thinkprogress.org/2010/09/01/ceo-compensation-workers/

http://www.marketwatch.com/story/ceos-that-lay-off-workers-earn-more-study-2010-09-01

http://www.fool.com/investing/general/2010/09/01/the-more-jobs-you-cut-the-higher-your-pay.aspx

http://www.alternet.org/news/148035/hidden_corporate_scandal:_ceos_who_laid_off_the_most_workers_rake_in_the_most_treasure

Rich Liberals Vs Conservatives w/ Author David Callahan

In this interview, David Callahan’s view intrigues me.

He is arguing that the liberal rich has been smaller in recent decades than the conservative rich. However, supposedly with the growing technology industry and the knowledge economy, there has been a growing liberal rich. These wealthy liberals are highly educated and got their wealth through entrepreneurship. It’s an interesting argument. Entrepreneurs are more likely to be liberal whereas old money and established corporations are likely to be conservative.

Over the last half century or so, the conservative rich created a massive infrastructure of conservative media, think tanks, lobbyist groups, and astro-turf movements. Liberals, on the other hand, have been very lacking in organization. But this apparently has been changing this last decade. I’d probably say it’s the internet that has been a boon for liberals because the internet makes it easier to do grassroots bottom-up organization which is where liberals excel. The argument, however, is that the internet has boomed along with the wealth of the liberals who started businesses in this sector. So, there was the introduction of tools for grassroots organization at the same time new money was funding liberal organizations and media.

It still seems liberals aren’t quite organized in a lock-step way as is seen among conservatives, but definitely a shift has happened.

The shift the author sees is in that the upper class is shifting away from the Republican party. “The upper class is becoming more educated, more secular, more based in urban America (particularly on the coasts). And the Republican party is becoming more religious, more based in small town America, and becoming less educated.” This argument seems supported by the evidence showing the average IQ of Republicans has decreased since a high point during Reagan’s administration.

Libertarians: Rich White Males of the Republican Party

“You have the courage to tell the masses what no politician told them: you are inferior and all the improvements in your conditions which you simply take for granted you owe to the effort of men who are better than you.”

~ Ludwig von Mises writing to Ayn Rand

In the above videos (I think he mentions it in the first one), brainpolice2 mentioned the data of libertarians being mostly white males from the upper middle class. The point being they’re supposedly out of touch with the average person and particularly out of touch with demographics that have in the past lacked political power and representation (minorities, immigrants, women, etc).

I thought I’d seen this data before, but I decided I should verify it. I found some data from the Cato Institute (which certaintly represents wealthy libertarians). Indeed, libertarians are 82% white (80% for all demographics) and 7% black (12% for all demographics). So, that isn’t all that extremely off the average and in fact is the same as what Cato labels as liberal (both groups being below the 83% white and 10% black of conservatives). This is a bit confusing as I’d have to look at their definitions more closely, but one comparison stood out. Cato’s diagram of ideologies puts populism opposite of libertarianism and populism has the highest percentage of minorities at 15% black (and 80% white). The Democratic party tends to draw both liberals and populists which is why there is higher representation of minorities among Democrats.

I suspect, however, that with the Tea Party there has been an increase of populism among whites which oddly has combined forces (at least in part) with the opposing ideology of libertarianism. I think this is because conservatism stands between the two and conservative nationalism bleeds over into libertarianism and populism. Anyway, at least in 2006 when this data was taken, white libertarians were the demographic most opposed to black populism (opposed both in terms of ideology and minority representation).

Some other demographic details:

Libertarians – second most well educated (after liberals), second most secular and least church attending (after liberals), highest percentage of males of any demographic, youngest demographic (youthful idealism?), wealthiest demographic (idealism supported by a comfortable lifestyle?), below average percentage in all regions except for the west where they have the highest representation of all demographics (I’m not sure why that is), mostly identified as Republican.

And let me compare to their opposite ideology:

Populists – least well educated, one of the most religiously identified and church attending (only slightly below conservatives), majority female, oldest demographic, poorest demogrpahic, most southern demographic, Cato doesn’t have the political identification data for this demographic (going by Pew data in “Beyond Red vs Blue”, I’d assume that this demographic would mostly Democrat).

According to Cato definitions, libertarians are socially liberal and fiscally conservative and populists are socially conservative and fiscally liberal. Since I brought up the Pew data, my guess is that these two ideologies would correlate to the Pew Demographics in the following way. Libertarians seem to be a perfect fit for what Pew labels as Enterprisers (which are basically the rich, white, males who vote almost entirely Republican and are the most loyal viewers of Fox News). Populists are probably mostly what Pew labels as Conservative Democrats and Disadvantaged Democrats (which have higher percentages of minorities, females, and the poor), although populists might also be found among the demographic Pew labels as Pro-Government Conservatives (the poor, female minorities who are almost evenly split between Republican and Indpendent).

In conclusion, it would seem that libertarians in the US are simply the rich, white, male demographic of the conservative movement who mostly identify as Republican. If I’m reading the data correctly (from the two above sources), libertarians seem less prone towards identifying as Independent than many other demographics (such as liberals or else conservatives who are some combination of poor, minority and female). Rupert Murdoch, the self-identified libertarian and former board member of the libertarian Cato Institute, is the Chairman and CEO of News Corporation, the owner of Fox News Channel. Murdoch seems the perfect representative of this libertarian demographic and he seems to have intentionally conflated libertarianism with the Republican party.

Ron Paul is another libertarian who fits the description of rich, white, male Republican. He might be a bit different than Murdoch in emphasizing civil libertarianism slightly more, but I doubt they’d disagree on much. Ron Paul did show his true libertarian colors recently.

Compared to many conservatives, I like how Ron Paul comes off as well-intentioned in his values. I get the sense that he is the complete opposite of the cynical neo-conservative who will use anything, including libertarian rhetoric, to win votes. In the comment section of the above video, there was a mocking portrayal of libertarianism which was on target. Despite good intentions, even someone like Ron Paul often comes off as a bit detached from the average American’s experience.

clownporn1 wrote (see comments here):

One of the more pretentious political self-descriptions is “Libertarian.” People think it puts them above the fray. It sounds fashionable, and to the uninitiated, faintly dangerous. Actually, it’s just one more bullshit political philosophy.

– George Carlin

Libertarianism is a fad political ideology for 13 year old boys, first year college students, and white business owners who use the “private property” argument so they don’t have to serve blacks.

This morning I was awoken by my alarm clock powered by electricity generated by the public power monopoly regulated by the US Department of Energy.I then took a shower in the clean water provided by the municipal water utility.

After that, I turned on the TV to one of the FCC regulated channels to see what the National Weather Service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like using satellites designed, built, and launched by the National Aeronautics and Space Administration.

Then, after spending another day not being maimed or killed at work thanks to the workplace regulations imposed by the Department of Labor and the Occupational Safety and Health Administration, I drive back to my house which has not burned down in my absence because of the state and local building codes and the fire marshal’s inspection, and which has not been plundered of all its valuables thanks to the local police department.

I then log onto the Internet which was developed by the Defense Advanced Research Projects Administration and post on freerepublic and fox news forums about how SOCIALISM in medicine is BAD because the government can’t do anything right.

self pwnage you say

Conservative Moral Order & the Lazy Unemployed

I was just having a discussion about the conservative worldview. Many conservatives believe in meritocracy and that our society is a meritocracy. They assume that rich people deserve their wealth because they’ve somehow earned it or are somehow morally superior. The poor are therefore lazy and morally inferior. This is what George Lakoff calls the Moral Order principle of conservative Strict Father morality. It’s because of this Moral Order that conservatives complain about the rich getting taxed which they see as the government stealing from hardworking Americans. This, of course, ignores all the Americans who do work hard and all they get is the shaft from the wealthy elite.

It’s easy for some to think that this is just a liberal exaggeration, but sadly many conservatives do have such a warped view of reality. For example, Ben Stein made an interesting comment recently:

http://thinkprogress.org/2010/07/20/ben-stein-ui/

Writing at the American Spectator yesterday, former Nixon speechwriter and TV personality Ben Stein downplayed the suffering unemployed Americans are experiencing by writing that the people who are unemployed right now are “generally people with poor work habits and poor personalities.” He claims the unemployed are Americans with “unpleasant personalities…who do not know how to do a day’s work“:

The people who have been laid off and cannot find work are generally people with poor work habits and poor personalities. I say “generally” because there are exceptions. But in general, as I survey the ranks of those who are unemployed, I see people who have overbearing and unpleasant personalities and/or who do not know how to do a day’s work. They are people who create either little utility or negative utility on the job. Again, there are powerful exceptions and I know some, but when employers are looking to lay off, they lay off the least productive or the most negative. To assure that a worker is not one of them, he should learn how to work and how to get along — not always easy.

Of course, saying that the 15 million Americans who are unemployed right now are “generally” people with “poor work habits” is as offensive as it is wrong. The current recession is a global phenomenon caused by the collective bad behavior of the world’s largest financial institutions. Before the recession, the unemployment rate hovered around six percent; it is ludicrious to say that millions of Americans suddenly got lazier and less able to work within the span of a few months.

The Truth of Capitalism

When was the Golden Age of the Free Market?  It never existed. 

The rich and powerful capitalists have always been trying to control the government and manipulate the markets… and they always will.  The only place a free market might exist is in the village of some isolated tribe in the Amazon, but don’t worry the capitalists will figure out a way to find and destroy that village.  No free man will be left alive. 

Don’t worry about the government.  The president, the congress, the senate… they’re all puppets.  And the few who haven’t entirely sold their souls are powerless to do anything to change the system.

You could attempt a revolution if you like.  But if you do, the Military-Industrial Complex and the police state will destroy you and everything you love.  Join the Tea Party if it makes you happy.  But know the FBI is keeping a record on every protester. 

When one party is in power, vote for the other party… repeat again and again… nothing ever changes.

“When the oppressors give me two choices, I always take the third.”
-Meir Berliner (died fighting the SS at Treblinka), as quoted in A Language Older Than Words by Derrick Jensen

Quotes About The Federal Reserve And Central Banking

“Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.”
-Sen. Barry Goldwater

“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
-Henry Ford

“The regional Federal Reserve banks are not government agencies. …but are independent, privately owned and locally controlled corporations.”
-Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982

“The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”
-Congressman Louis T. McFadden

“The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson.”
-Franklin Delano Roosevelt

“As soon as Mr. Roosevelt took office, the Federal Reserve began to buy government securities at the rate of ten million dollars a week for 10 weeks, and created one hundred million dollars in new [checkbook] currency, which alleviated the critical famine of money and credit, and the factories started hiring people again.”
-Eustace Mullins

“This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill.”
-Charles A. Lindbergh, Sr. , 1913

“When you or I write a check there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money.”
-Putting it simply, Boston Federal Reserve Bank

“We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it.”
-Congressman Louis T. McFadden in 1932

“The few who understand the system, will either be so interested from it’s profits or so dependent on it’s favors, that there will be no opposition from that class.”
-Rothschild Brothers of London, 1863

“While boasting of our noble deeds were careful to conceal the ugly fact that by an iniquitous money system we have nationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery.”
-Horace Greeley

“The Federal Reserve bank buys government bonds without one penny…”
-Congressman Wright Patman, Congressional Record, Sept 30, 1941

“…the increase in the assets of the Federal Reserve banks from 143 million dollars in 1913 to 45 billion dollars in 1949 went directly to the private stockholders of the [federal reserve] banks.”
-Eustace Mullins

“The financial system has been turned over to the Federal Reserve Board. That Board administers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money”
-Charles A. Lindbergh Sr., 1923

“Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with a flick of a pen they will create enough to buy it back.”
-Sir Josiah Stamp, former President, Bank of England

“All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.”
-John Adams

“Whoever controls the volume of money in any country is absolute master of all industry and commerce.”
-James A. Garfield, President of the United States

“A great industrial nation is controlled by it’s system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world–no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men.”
-President Woodrow Wilson

“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it’s issuance.”
-James Madison

“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.”
-Thomas Jefferson

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe.”
-Abraham Lincoln

“Give me control of a nation’s money and I care not who makes it’s laws”
-Mayer Amschel Bauer Rothschild

The Conservative Nanny State

Here are some videos of Dean Baker and below is a link to his book which is available for free online.  I noticed that Noam Chomsky mentioned him in a video on Youtube (follow this link to see the video and some commentary).  Here is what Chomsky said in an interview:

The next group of appointments were the maiden problem that the—the issue, the primary issue that the government’s going to have to face is what to do about the financial crisis. Obama’s choices to more or less run this were Robert Rubin and Larry Summers, from the Clinton—secretaries of Treasury under Clinton. They are among the people who are substantially responsible for the crisis. Actually, one leading economist, one of the few economists who has been right all along in predicting what’s happening, Dean Baker, pointed out that selecting them is like selecting Osama bin Laden to run the war on terror.

The Conservative Nanny State
How the Wealthy Use the Government to Stay Rich and Get Richer

by Dean Baker

In his new book, economist Dean Baker debunks the myth that conservatives favor the market over government intervention. In fact, conservatives rely on a range of “nanny state” policies that ensure the rich get richer while leaving most Americans worse off. It’s time for the rules to change. Sound economic policy should harness the market in ways that produce desirable social outcomes – decent wages, good jobs and affordable health care.

“Here is the brutal truth, exposed systematically, methodically, unsparingly. Forget the pork rinds and the hokey Texas twang: Conservative government is government by and for the upper class.” 

Thomas Frank, author of What’s the Matter with Kansas? How Conservatives Won the Heart of America

“Dean Baker is one of the most insightful and original economists in Washington. With this book, he exposes the prevailing myth of modern conservatives. They are not for limited government, as they claim. Rather, they are for a government that helps their own. Baker says it is time to balance the books. Government is by all the people, for all the people. It’s that simple.”

— Jeff Madrick, author of Why Economies Grow: The Forces That Shape Prosperity and How We Can Get Them Working Again

“There’s a new book from Dean Baker available as a free PDF download or in paperback if you’re so inclined. It’s fantastic…. It would be a wonderful thing to start getting attention to some of the issues he raises. At the end of the day, the current Democratic agenda of raising the minimum wage and re-establishing pay-as-you-go budget rules is a bit unambitious.

— Matthew Yglesias, The American Prospect

“In his recent book, ”The Conservative Nanny State,” the economist Dean Baker argues that government nannyism, broadly defined, benefits the rich.  So there is no point in pretending that government doesn’t influence behavior.”

— Daniel Akst, The New York Times, July 23, 2006

“[The book] examines massive government interventions in the market—including immigration, trade, monetary and intellectual property policy—and notes how they all have the curious effect of making America’s wealthiest people even more stupendously rich. And as if this weren’t bad enough, Baker has made The Conservative Nanny State available for free as a pdf (or at low cost as a paperback). Clearly he’s a madman who’ll stop at nothing.”

— Jonathan Schwarz, TinyRevolution.com

“Baker knows what the phrase “free market” really means, and in his new book, The Conservative Nanny State (which you can purchase in paperback or download as an e-book free of charge), he lays waste to the notion that American conservatives embrace anything resembling a truly free market. In fact, they’re perverse Marxists, using heavy-handed government intervention to redistribute wealth upward.”

Joshua Holland, AlterNet

“Baker does not use the term “crony capitalism” to describe the conservative economic agenda, but it is surely in the spirit of his argument. Skimming through the book shows that, to a degree, cronyism is in the eye of the beholder. For example, Baker takes aim at copyright and patent protection, expressing a view of intellectual property very different from mine…Because my textbooks are copyrighted, I suppose that I am a crony, using the power of the “conservative nanny state” to enrich myself as the expense of poor students around the world. Although I disagree with Baker on a wide range of topics, I will give him credit for one thing: He is not a hypocrite. Baker is distributing his new book free over the internet. As for me, if you want one of my books, you will have to fork over the cash.”

— Greg Mankiw, Harvard University

“Dean Baker has done us all a great service by exposing the counterfeit language pundits and politicians use to hide who really gets what in our economy. The biggest welfare chiselers, it turns out, are the corporate rich. This excellent book convincingly shows that the fundamental issue about government is not its size, but whose side it is on.”

— Jeff Faux, Economic Policy Institute

“More good ideas than a dozen Center for American Progress symposia. New America Foundation, this should make you feel old. If a million Kossacks typed on a million keyboards, eventually they would duplicate it. Eat your heart out, Hamilton Project. 113 pp. and a free download.”

— Max Sawicky, Max Speak, You Listen!

“Dean Baker is an innovative political thinker and has a gift for presenting economic issues in a clear, coherent way. He is particularly good at unmasking the hidden assumptions built into the political discourse about economic issues, and demonstrating how those assumptions, if unchallenged, will continue to put progressives on the defensive and, in the process, inflict economic damage on the country as a whole.….The book provides a handy guide to exposing conservative reliance on government intervention into the market economy.  It may well change the way you think about economics, markets and the like.”

— Daily Kos

“Baker had me from the preface…Writing for the layman, he puts the last 25 years of economic policy into a framework that cleverly repositions the terms of debate. Once one can point out that the so-called free market does not exist, and in fact is being warped and twisted by the right far more than by the left, one becomes much more potent on the ideological battlefield. So next time you feel like picking a bar fight on the topic of inflation, read a chapter or two of “The Conservative Nanny State” first. You’ll be well armed.

Andrew Leonard, Salon

“My favorite economist, Dean Baker (I want his rookie card!), has just put out a free PDF of his latest book, The Conservative Nanny State. I would urge everyone to read this book — it’s not all directly related to environmental causes, but some of it is. More broadly, there’s an obvious moral: The system we live in is, to an enormous extent, determined by government policies. Understanding that, and understanding how the apparatus of the state is tilted towards the already-wealthy, is crucial to any progressive cause.”

—  John McGrath, Gristmill