Another Evidence of Statist Subtlety?

"The economics of success is clear: higher spending on urbanization, health care, and education, funded by increases in taxes, could simultaneously sustain growth, improve the environment, and reduce inequality. If China’s politics can manage the implementation of this agenda, China and the entire world will be better off." - Joseph E. Stiglitz, "Reforming state-market balance in China"

"Reform" is a popular word subtly used by advocates of statist economic policies. They call such policies as "a better strategy" and "the economics of success." They diagnose that "too much market and too little government" is the source of the problem. The antidote therefore is to expand the size of government bureaucracy funded by greater amount of taxes.

This statement is correct understood in its proper context: "The government is clearly doing some things that it should not, it is also not doing some things that it should." To put it in a different context advocating for greater government intervention is not only a distortion of the real state of the economy, but in the end will result into further economic destruction. Allocating more resources to health care and education, and calling for government to take a "leading role" in these sectors of the economy are typical examples. And yet, they still call it "market economy."

Last December 6, 2013, The Freeman published an article, "Abundance Down There, and Back Up." In it, The Freeman claims that there is an ongoing revolution that is quiet and invisible to many. This revolution is happening in the midst of "The Great Stagnation" as described by intellectuals and economists, and has something to do with "automation of everything" and "nanomanufacturing." As a result of this revolution, industries will certainly benefit, but "the political class" is the primary obstacle for the realization of this vision particularly in sectors of economy such as "healthcare, education, and energy." The favorite strategy of this class is increasing economic regulations. No wonder, products and services in these three sectors of economy "are getting worse, slower, and more expensive." 

The progressives do not trust the market; they actually hate it, but they avoid to clearly express their hostility in public. And so they change their language to make their statist ideas palatable to the people. The most successful among them is given a Nobel laureate in "economics." 

Simply Relax

Though speaking about atomically precise manufacturing (APM) and nanotechonology, I find the wise words of K. Eric Drexler applicable beyond conversation about future trends in technology:

"There’s something that I feel I must say to some of my readers, and I hope that they will understand a somewhat counter-intuitive message and take it to heart. If you find these ideas about prospective technologies compelling, convincing, and exciting— if you imagine vistas far beyond any I’ve outlined, or see solutions to urgent global problems and feel the urge to share the full measure of your excitement— then please lie down until the urge passes. In the world as it is, this kind of excitement triggers a negative response, and for reasons that usually make sense; almost all grand ideas proclaimed by excited proponents turn out to be wrong and are generally discounted without consideration. If you want to make a positive difference, please help to keep fundamentals first, help to correct mistaken ideas, and join the conversation without shouting." - K. Eric Drexler, Author of Engines of Creation (1986).

Source: The Freeman January/February 2014

A Quiet and Invisible Revolution

Under the "Perspective" section, The Freeman claims that  there is an ongoing revolution that is quiet and invisible to many (January/February 2014). This revolution is happening in the midst of "The Great Stagnation" as described by intellectuals and economists. 

This revolution has something to do with "automation of everything" and "nanomanufacturing." Examples of this are a robot cutting your hair and printing a pencil. The proper response to this revolution should be one of creative adaptability, a quality most important for entrepreneurs. Those who possess such quality can make use of the opportunities offered by such changes for their own advantage. FEE cites John Chisholm confirming this insight: 

"'Choose any product or service in an area you are passionate and knowledgeable about. The area may be aerospace, boats, cars, cooking, education, electronics, fashion, fiction, films, fitness, gadgets, gardening, health, history, math, merchandising, music, politics, scuba, space, sports, statistics, travel, woodworking, you name it. Now think of limitations of the product or service you selected.'"

FEE explains the importance of such insight: 

"If you find those limitations, then you can exploit them by finding ways to make life better for people by bridging the gaps or solving the problems those limitations present." 

After reading the above two quotations, my mind directed me to think about my chosen academic field, theological education. One of its limitations is the scarcity of literature related to economics. Bridging the gap from theology to economics makes a theological educator marketable. 

This insight is also helpful for those who see automation and nanomanufacturing as economic threats. FEE argues that instead of seeing them as "job killers," they should be seen as "productivity enhancers." 

And then FEE enumerates three trends that will characterize the next twenty years: 

•  "Automation is going to displace a lot of skilled and unskilled labor—particularly as minimum wages and other bad laws raise labor costs that make automation more attractive."

•  "Nanotechnology is going to mean that the production processes we’re used to are going to change. Entire sections of a manufacturing ecosystem (logistics, warehousing, assembly) may disappear thanks to new nanoscale manufacturing techniques that obviate the need for many discrete-but-interconnected parts created in different places."

•  "Connectivity is going to mean that some things can be manufactured—right there—in your home or place of business. Or that new assembly and logistics systems will emerge over the old ones."

FEE describes these trends as "creative destruction" that will result to "radical abundance," which means that "Better, faster, and cheaper is going to be the new normal."

However, "the political class" is the primary obstacle for the realization of this vision particularly in sectors of economy such as "healthcare, education, and energy." This class does it through economic regulations. Moreover, it is part of its nature to feed on the productive sector of the economy. No wonder, products and services in in these three sectors of economy "are getting worse, slower, and more expensive." The only hope is that "sharp, savvy entrepreneurs will find cracks and fissures in these State-heavy sectors and restore the benefits of creative destruction."

Guide Questions:

1. What does the writer mean by The Great Stagnation?

2. What is this quiet and invisible revolution all about? 

3. Can you give examples of such quiet and invisible revolution? 

4. What is Ricardo's law? 

5. What limitation can you find from your favorite product or service? 

6. What should be our attitude towards automation and nanotechonology? What should be our proper response to this revolution? 

8. What is the primary  obstacle for the realization or delay of this vision? Why?

9. In which sector of the economy this vision will be more difficult to realize? Why products and services in these sectors so expensive? 

Notes from "The State" by Bastiat

Note # 1

"The State! What is it? Where is it? What does it do? What should it do? We only know that it is a mysterious being; and, it is certainly the most petitioned, the most harassed, the most bus­tling, the most advised, the most reproached, the most invoked, and the most challenged of any being in the world."

Note # 2

"...you have designed Uto­pias, and if so, that you are look­ing to The State for the realiza­tion of them."

Note # 3

"The hundred thousand mouths of the press and of the platform cry out all at once—"

• Organize work and the workmen. Cover the country with railways. Irrigate the plains.
• Reforest the hills.
• Establish model farms.
• Educate the youth.
• Assist the aged.
• Equalize the profits of all trades.
• Lend money without interest to all who wish to borrow.
• Restrict commerce.

Note # 4

"The mission of The State is to enlighten, to develop, to ennoble, to strengthen, and to sanctify the soul of the people."

Note # 5

"...it has been proven that The State has no means of granting privileges to some without adding to the labor of others."

Note # 6

"The State is the great fiction through which everybody endeav­ors to live at the expense of everybody."

Note # 7

"The State quickly perceives the advan­tages it can derive from the role entrusted to it by the public. It will be the judge, the master of the destinies of all. It will take a lot: then much will remain for itself. It will multiply the number of its agents, and increase its functions, until it finally acquires crushing proportions."

Note # 8

"I contend that the personifica­tion of The State has been in the past and will be in the future, a fertile source of calamities and revolutions. There is the public on one side, The State on the other, considered as two distinct beings; the latter obligated to bestow upon the former, the former hav­ing the right to claim from the latter a flood of human benefits."

Note # 9

"The State has two hands, one for receiving and the other for giving—a rough hand and a smooth one. The activity of the second is necessarily subordinate to the activity of the first."

Note # 10

"It is utterly impossible for it to confer a specific benefit upon some of the individuals who make up the community, without inflicting a greater injury upon the community as a whole."

Note # 11

"Our demands, therefore, place The State in an obvious dilemma! If it refuses to grant the requested benefit, it is accused of weak­ness, and incapacity. If it tries to grant their requests, it is obliged to load the people with in­creased taxes—to do more harm than good—and to bring upon it­self general displeasure from an­other quarter."

Note # 12

"To live upon credit, that is, to exhaust the future, is cer­tainly a temporary method of reconciling them—an attempt to do a little good now, at the expense of a great deal of harm in the fu­ture."

Note # 13

"Citizens! At all times, two political systems have been in existence, and each can justify itself with good reasons. According to one of them, The State should do a lot, but then it should take a lot. Ac­cording to the other, this twofold activity ought to be limited. We have to choose between these two systems."

Source: 

The State by Frederic Bastiat published at The Freeman on April 1, 1965. 

Free State Project and the Wonders of Free Enterprise

Wow! That’s the only word I can say after several days of reading The Freeman December 2012 issue. I find all the articles in it truly educational that is not readily accessible in mainstream education. In sharing my reading on the December issue, I just selected one from each major section except the Book Reviews.

The Free State Project

 Among ten Features’ articles, Bill Walker’s “From the Trenches – The Free State Project” impressed me. I am tempted to copy its entire content and post it on this site. Of course, I am thinking of doing that after asking the permission of Walker himself.

And then I think of another way to directly refer my readers to the source. But as I checked The Freeman, the article is not available. The only way to read it is by downloading the entire December issue. So I have to be satisfied with simply restating here the content of that short article.

The center of the action is New Hampshire. The goal is to gather 20,000 people to move to New Hampshire with the aim of creating a model libertarian community. As of the writing of the article, 1,100 people have moved so far.

Relevant Links:

Free State Project

The Free State Project Grows Up

Solar System as Part of Humanity’s Economic Activity

Proceeding to the next section, the Interview, I could not believe what I am reading. It is about space transportation becoming part of global economy.

At first reading, the ideas of Dr. Lee Valentine appear strange to me. They include ideas like the government’s primary defensive task, the existence of space hotels, orbital tourism market, and asteroid mining. It seems that I am reading a review of a science fiction movie.

But I think Dr. Lee is serious in claiming that the most important defensive job of the government related to space exploration is protection from asteroid impact. He expects that the number of private astronauts would increase in the coming years. He mentioned the rocket plane, “Lynx was designed to serve three markets: private astronaut flights, scientific missions, and small satellite launch…”

Global Positioning System Device

Among the Columns, I like Jeffrey A. Tucker’s “How We Found Ourselves”. He mentioned another example of the wonders created by the free enterprise – the Global Positioning System (GPS) device. This device is very beneficial for those who suffer “spatial disorientation” when in unfamiliar location.

The technology behind GPS was a product of the creativity of several scientists serving educational institutions. But when the US “Government saw its usefulness for espionage”, she kept it “under extreme secrecy for decades…” GPS only reached the market when the US government set it free for commercial purpose. It was only then that humanity’s problem of spatial disorientation was solved. This is a typical example of the continuing struggle between the expanding power of the government and the free enterprise.

Relevant Links:

The Freeman December 2012 Issue

Free State Project

Lessons on Statesmanship

Reading the first article of The Freeman, July – August 2012 Issue, I learned a lot about statesmanship. The article is written by Lawrence E. Reed. It is about Grover Cleveland. The article’s title is Cleveland Passed the Test of Character and Statesmanship.

Allow me to divide the lessons on statesmanship into two sections: ideas about statesmanship and qualities of a statesman.

Ideas about Statesmanship

The ideas about statesmanship are taken from two types of sources. One is from popular, but forgotten quotations penned by the writer and the other is from the reflection of the writer himself. I found three ideas related to statesmanship:

The first idea is about taxation. Grover Cleveland popularized the statement: “Though the people support the government, it is not the duty of the government to support the people.” This statement is considered unpopular in today’s standard. Public opinion resists this idea. The people are asking the state to provide for them. However, in order to give in to what the people ask, the government needs to expand its power and its revenue collection. Unknowingly, such trend is not beneficial to the public in the long run. It leads to the suppression of freedom.

A related statement from Cleveland is an appropriate critique to such expansion of the government’s power: “When more of the people’s sustenance is exacted through the form of taxation than is necessary to meet the just obligations of government, such exaction becomes ruthless extortion and a violation of the fundamental principles of a free government.”

Notice here that in the opinion of Cleveland, welfare state is actually leading to “ruthless extortion” and contrary to the character of a free government. Libertarians are correct that once people see that the government takes it as its duty to support the people, instead of being happy for the “generosity” of the government, the people must be cautious and be warned. It is an indication of interventionism heading to socialism. Furthermore, it is also an indication that free market economy is being suppressed.

The second idea focuses on loyalty. A certain Brodsky describes Cleveland as the “rarest of political animals” whose ultimate loyalty is not to the party, but to the country. The popular saying, “Public office is a public trust” is not merely rhetoric, but a reality for Cleveland.

And the third and final idea centers on the candidates’ qualifications for public office: honesty and statesmanship. Reed describes the honesty of Cleveland “as utterly incorruptible when he left office as he was when he first assumed it.” The second qualification is that of statesmanship. When looking for a candidate for public office, voters should seek for a candidate who is not simply a politician, but a statesman. Reed’s description is timely: “Every statesman is also a politician but not every politician is a statesman.”

Qualities of a Statesman

In a society that is becoming more and more interventionists in the passing of years, statesmanship is difficult to find among politicians. The quality of a Grover Cleveland is rare in a time where people are unconsciously heading to a socialist state. Anyway, we hope that libertarian ideas would educate increasing number of people through the web so that appreciation of statesmanship will become part of public opinion. Here is the list of qualities of a statesman as defined by Lawrence E. Reed:

• He or she doesn’t seek public office for personal gain or because it’s the only job he or she knows how to do.
• He stands for a principled vision, not for what he thinks citizens will fall for.
• He is well informed about the vicissitudes of human nature, the lessons of history, the role of ideas, and the economics of the marketplace.
• The statesman is a truth-seeker, which means he is more likely to do what’s right than what may be politically popular at the moment.
• You know where he stands because he says what he means and means what he says.
• He elevates public discussion because he knows what he’s talking about.
• He does not engage in class warfare or in other divisive or partisan tactics that pull people apart.
• He does not cynically buy votes with the money his taxes take from others, and
• He may even judge his success in office as much by how many laws he repealed or vetoed as by how many he passed.