The De-Industrialization of the US: A String of Enlightening Fallacies. Essay on International Economics, in Plain English

Jacques Delacroix Liberty , , , , , ,

About ten days ago, I began I lively exchange with a stranger, G., on the Facebook wall of the President of the Independent Institute, of all places. The I.I. is my favorite think-tank. It’s located in Oakland, California. It’s my favorite because it regularly performs, intelligently and usefully, the function of bringing libertarian thought (broadly defined) to all who are interested. It has been doing this for years and on a shoe-string budget. (Full disclosure: I have had two co-authored articles [here and here; both pdfs – BC] in The Independent Review, one of the journals associated with the Independent Institute.)

You can easily Google the Independent Institute’s website.

My interchange with G. begun when I noticed one of the most common fallacies on one of his Facebook messages: He expressed himself in a way that led me to believe that he thought the US had been de-industrializing for years, chiefly to the benefit of China. We were both referring only to manufacturing industries.

G.’s impression is correct only in the most trivial way. It’s wrong on the whole, very wrong.

What is true is that American manufacturing employment has declined steadily for the past forty years. That’s true in an absolute sense. Fewer Americans work in manufacturing than used to.

This would have happened if there had not been any China, Red or otherwise. I gave G. the following historical precedent to which he did not respond:

Around 1860, about 60% of the American workforce was in agriculture. Today, it’s around 3%. (Note: Don’t go on a television game show with those figures. They are close enough for my purpose; that’s all.)

Nevertheless, American agriculture produces more than it ever has, in every sense of the word, whatever measure you want to use.

American agriculture used so much of the country’s labor power because it had low productivity then. (That’s value of production per worker.) As productivity improves, farmers can produce as much with fewer workers. What happened in the American case (and in Canada, and in Australia, and in Western Europe) is that farmers produced more with fewer workers. This virtuous trend has not stopped. It’s going on as I write. Some reforms may slow it or even reverse it; so-called “organic agriculture” may be one.

What happened early in agriculture happened later in manufacturing. Here are the simple, hard to believe, but nevertheless real facts:

Productivity in American manufacturing had never stopped growing, except for lags of a year or two. So has total American manufacturing production.

The simplest, most general rule-of-thumb is:

The year in which American manufacturing output was the largest in value, was last year, or the year before.

This is true although American manufacturing employment is declining and declining fast. Remember the 1860, 60% precedent.

I suspect G. did not get this point, in part because I did not explain it so well on Facebook. In part it’s because he appears transfixed by his own experience. G. is an experienced executive with manufacturing responsibilities. He says he is in China often. G. argued with me that the evidence of his own eyes was that a lot of manufacturing that used to take place in the US is now done in China.

I have no doubt that he is right, well, sort of right. Thirty years ago, when I bought an ordinary gardening tool, it was invariably made in the US. Nowadays, it’s invariably made in China, or at least, not in America.

My garden tool is also cheaper, much cheaper than it used to be. I mean in constant dollars, I mean relative to everything, including the minimum wage and including the median wage. It’s true practically in any measure you want to use. My money goes a longer way. That’s what it means to be richer: Whatever money you have buys more. As a consumer, I have only gained by the fact that the production of garden tools is now very largely done in China.

That’s speaking as a consumer. If I had been employed in the American garden tool manufacturing industry say, twenty years ago, I might easily have lost my job. That would in fact have been a consequence of outsourcing.

This is not the whole story. The reality is more complicated. In brief, for every job lost to outsourcing, one or more are created by the after-effects of outsourcing. This is a factual but counter-intuitive observation I don’t want to discuss in this essay. Here is a brief way to deal with it: If you lost your job to outsourcing, nothing I will say will console you. I can only hope that the American economy is growing and flexible enough to provide another job soon. I hope it will be as a good as the one your lost. Looking at the past thirty years, there is a very good chance it will be a better job.

If the American economy does not offer an abundance of good new jobs, ask yourself why.

If you did not lose your job to outsourcing: see above; you are now richer than you were twenty or even ten years ago, the current crisis (circa 2009) notwithstanding. If you want to know the net effect on American employment, a crude but legitimate approach is simply to look at evolving unemployment figures: In spite of massive outsourcing, American employment was very high except from 2009-2014. (Note: Net effect = jobs added-jobs subtracted.) As long as unemployment is low or going down, it’s not likely that limiting outsourcing would do you any good.

Training exercise: The 60% of the work force who were in agriculture and who lost their jobs since 1860 evidently found something to do. The many manufacturing workers who lost their jobs in the past forty or fifty years ______ (Complete the sentence in your mind.)

G. seems to refuse to consider any of this because he thinks his own experience an appropriate substitute for the kind of stuff I am writing now.

His experience is called “anecdotal evidence.” It’s usually worse than no evidence at all to demonstrate anything. (It’s often useful to formulate hypotheses though.) Here is why it’s worse:

My wife beats me frequently. I deduce from this personal experience that wives originate much of or most conjugal violence. Furthermore, I know for a fact that my wife does not drink alcohol. So, I am pretty sure drunkenness does not play much of a role in domestic violence. (Ok. I am messing with your minds; my wife does not beat me, ever. She would like too though, and often.)

What happened with the transfer to China of American garden tool production is complex and factually well-supported, both. Fortunately, if you are busy, or impatient, or simply if you have a life, there are valid short-cuts to help you get a grip.

China, now India, and many other countries that could barely keep alive in the fifties are now producing. They are now finally contributing. This is good for me, for two reasons: One, the more goods there are worldwide, the cheaper they are, in real terms. Second, rich neighbors may sometimes be rivals politically, and even militarily, economically, they are all potential customers. The richer they are, the more I can sell them and, the richer I become.

As compared to 1955 today, the world produces all the garden tools it used to produce, many garden tools it did not produce then, more food than it did, more of everything than ever plus, it produces things that no one had ever heard of in 1955. That would include the low-end but amazingly sophisticated computer I am using to type and to disseminate this essay. Incidentally, there were television sets in 1955. Everything about them was awful and they were more expensive than the sets we have now. (That’s by any measure you want to use.)

There remains the genuinely important question of what industries are going to be in what countries. That’s an important issue because acts of production are not born equal: Making concrete, or steel, generates less in earnings, including wages, than producing software.

The short-cuts to this important issue are these:

  1. Government seldom does anything right economically;
  2. The issue of production allocation among countries is well explained by the Doctrine of Comparative advantage. It’s almost 150 years old. It’s well tested. It’s not unfashionable just because it’s old. Old explanations should only be buried when they have been demonstrated dead.

My correspondent, G., is obviously worried about America’s place in the world and he seems impressed by solar technology. In support, I suppose, of what he would like our government to do, he sends me an article about China’s policies in this respect. It’s at:

(http://cleantechnica.com/2009/07/24/what-we-can-learn-from-chinas-heavy-investment-in-solar-energy/)

A sentence in the article caught my eye both because of its bad grammar and because it’s such a shining example of bad policy:

“China is telling their [sic] banks to support [solar energy industries] with strong loans…”

Two comments: 1) What reason is there to expect any national government, Chinese Communist or otherwise, to make good choices regarding what industries should be developed? The Communist Chinese are the same gang responsible for keeping China an underdeveloped country for forty years. We now know it did not have to be that way. Yes, they are reformed but we don’t know how thoroughly nor for how long. Thoroughly democratic Western European governments have a long record of failures in deciding national industrial priorities.

“How about the Airbus?” Two responses: To this day, the invoice for this multinational government venture has never been presented in a transparent fashion. Airbus looks like an economically viable venture but we don’t know for sure. If you invest $10,000 to earn ten dollars ten times and you have to spend eleven dollars each time, your venture may sell a lot but it’s not successful.

Second: The Airbus project benefited by the Concord experience, an extraordinarily costly apprenticeship and a rank economic failure from its first to its last day.

To my knowledge, the only large instance of a commercially successful government-prompted industrial venture is the Internet. It was done strictly on a cost-plus basis, as a defense project (another story), with hands-off by the federal government. (I would appreciate being corrected if there are other instances. Details and verifiable sources required.)

Examples in the negative abound. I will refer to what I know best. French governments have been sticking their noses into nearly all sectors of French industry since 1945. They had wide latitude to do so, because there were no intellectual defense of real, free-market capitalism in France until about ten years ago. French governments even intervene vigorously in the motion picture industry. French governments however never reached much into several industries, because they were too fragmented, or because industrial actors opposed a spirited defense against government intervention. Notable among those are the food transformation industry and the wine and spirits industry. Guess which French industries are more than holding their own, on the national market and internationally? (To begin, think Danon and think Gray Goose Vodka.)

G. also calls Chinese solar industry policies in a Facebook message developing “comparative advantage.”

It’s not comparative advantage. Like most college graduates and most MBAs (and deplorably, most university professors, I suspect), G. misunderstands the concept. His mistake is not small, it’s huge. I think you don’t understand the logic of international trade and investment if you don’t get comparative advantage. Let me try because my readers are, by definition, an elite group.

My comparative advantage is what I do best. Period. It’s not what I do better then the other guy. If I suck at everything I do, I still have a comparative advantage because I don’t do everything equally badly. That’s always true in the real world.

The doctrine of Comparative Advantage is the single most important rational underpinning of international trade, and indirectly of international investment.

It says clearly and absolutely that if every actor focuses his effort in what he does least badly, all the actors jointly produce more than would otherwise be the case. Period!

Logic test: Is there a difference between: “What I do least badly, “ and, “What I do best”?

Instant reminder: Once you know what I do least badly, in itself does this tell you anything about what I do better, or worse, than my neighbor Tom? This is a “yes” or “no” question. Don’t wimp out!

Below is a different approach to the same concept of Comparative Advantage. Select the approach that suits best your particular genius and stick with it.

My buddy John is an excellent, Mercedes-trained car mechanic. He is also an indifferent floor sweeper. Every time I catch him broom in hands, sweeping his shop floor, I bitch at him, “Stop, man; every time you sweep, you are impoverishing me.”

I am right? I insist you already have all the information you need to answer this question. Again, don’t wimp out on me.

Facts matter but thinking things through slowly is also important.

There is a Muslim saying attributed to the Prophet Muhammad:

“Ignorance is a sin.”

From the Comments

Brandon Christensen Comments, Current Events, Economics, Liberty , , , , , ,

Co-editor and Economics professor (who happened to predict the economic crisis of 2008 in a book a year before it happened) Fred Foldvary makes a very important point regarding some of the common fallacies associated with trade deficits and tariffs:

The reason the US has a big trade deficit is that US taxes make exports more expensive. Most other countries have big value added taxes, which get subtracted from export prices. WTO rules allow for the deduction of VAT but not of income taxes from exports. If the US shifted from income taxes to either VAT or LVT (land value taxation), the trade deficit would largely disappear.

But given current taxes and WTO rules and the trade deficit, high tariffs on imports would destroy US comparative advantages, artificially boosting high-cost industries. The US would have to abandon the WTO, and other countries would retaliate with tariffs against the US.

If California has a big trade deficit with New York, would a tariff against imports from NY help? If not, then a tariff against China is likewise counterproductive. The law of comparative advantage works regardless of borders. I have a big trade deficit with my local grocery store; I import their food and they get no products from me, only a money asset. Would a tariff on the food store’s exports help me? Sure I would buy less of their food, but I want their food, and I want it cheap!

Two things I would like to draw attention to in this great piece of insight: 1) income taxes are horrendous and 2) the avowed internationalism of the freedom message.  I would like to repeat a basic insight that Dr. Foldvary provides to readers: “If California has a big trade deficit with New York, would a tariff against imports from NY help? If not, then a tariff against China is likewise counterproductive. The law of comparative advantage works regardless of borders.”

One of the best ways to tell a “real” libertarian from a “fake” libertarian is the defense of internationalism that is given for any argument.  Nationalism is a vulgar and often extremely harmful way of thinking and has destroyed countless lives and restricted countless others from attaining affluence and dignity.  It feeds the growth of the State at the expense of the individual and contributes to malice in foreign affairs.  The concept of international trade as it is spelled out by Dr. Foldvary is especially important.  Also remember, if you have any questions regarding subjects, don’t hesitate to ask.  This is a blog run (mostly) by intellectuals, and one of the goals of this consortium is to help educate the intelligent layman on sophisticated subjects.

My prompt regarding democracy also produced a number of great insights, and so far I have found subconch‘s input to be the most thought-provoking:

“The individual is core in a democracy, and the process should not be beyond his reach, or overwhelm him so, that he may not select his representative by reason, or further recognize intrusion on his or his neighbor’s liberty. The people are the ultimate check and balance on the system, but if they be separated from it, the scales will continually tip toward tyranny.”

I highly recommend reading the whole ‘comments’ section.

Communist Dinosaurs

Jacques Delacroix Current Events, Politics , , , , , ,

I watch a French two-and-a-half-hour weekly television show that’s pretty good in most respects. It mixes no- hold-barred interviews of politicians with talks with movie directors, authors and artists, including singers.  There is a presidential election beginning in France too. It relies on an an incomplete primary system. To make a long story short, anyone with a grievance or an idea who can get 500 signatures of I don’t know whom can run. That makes for a lively and exotic first round of  balloting. In the second round, things get serious. In any case, this time, there is an explicitly “communist” candidate (Trotskyst branch). She runs for an organization that calls itself “Workers’ Struggle” (Lutte ouvriere).

It’s not clear what her party considers as “workers” but from the candidate’s choice of examples of struggle in her interview last night, there is a strong preference for conventional blue-collar and pink-collar workers. Of course, manufacturing jobs are vanishing from France as they have been doing here. People employed in manufacturing are becoming accordingly scarcer. Bad strategic bet that, defining yourself as a workers’ party when you also define workers that way, (going away, going away, gone!).

The “communist” candidate discourse is loud as it is transparent. Let me summarize: Continue reading →

Greece: What’s Going On?

Jacques Delacroix Current Events, Economics, Liberty , , , , , , , ,

The Greeks are rioting in the extreme cold. They have been rioting now for weeks to protest austerity measures their coalition government is attempting to impose on them. It’s an emergency government trying like hell to borrow money from richer countries, especially Germany so Greece, the state can pay its bills. The creditors and would-be creditor countries headed by Germany are saying such things as (I am paraphrasing):

You have many more public servants per 10,000 citizens than we (Germans etc, ) have. You will have to reduce the number by so many thousands by such and such a year as a condition of our lending.

Your government’s tax receipt as a percentage of GDP is much smaller than ours. There is also abundant evidence of massive tax cheating that is unheard of in our countries. You are going to have to improve the collection of taxes by such and such. (Note that this say nothing about tax increases.)

The creditor countries are all democracies whose tax-payers have the ability to express what they think about the bailouts of other countries. It’s their money. Their national politicians are lending to a nation-state that my local banker in his best days would not have given a second look to. The long and the short of it is that Greece, the country, is a bad credit risk. That’s why its government would have to pay something like fifteen percent interest if it could borrow money on the open market. For a comparison, I have US Government bonds purchased six years ago that pay 4,6 %. That was considered very good then. It’s even better now.

Note that there is no info about what private Greek concerns have to pay to borrow on the open market. I would not be surprised if they were able to borrow at normal rates. I wonder why this information is lacking. Massive privatization surely looks good with respect to a country where government finances are such a debacle. Big innovations work out best when it’s impossible to say: Situation normal; everything working just fine.

Ordinary Greeks are rioting against the prospect of cinching their belts a lot tighter. They are even thinking Communism again because this all comes as a surprise. For thirty years, they were allowed to believe that Greece was economically more or less a kind of southern version of Germany, not quite as prosperous and productive but pretty damn close and on its way there. Continue reading →

Democracy: Warts and All

Brandon Christensen Liberty , ,

I am currently writing a paper for a political philosophy course on my ideal state (we are reading Plato’s Republic).  I have made it a democratic one, despite some serious misgivings.

I realize that the people can be easily fooled by sophists and schemers, but in the end, I think that democracy represents very well the dignity of the common man.  In fact, I am tempted to think that democracy is the best form of government, despite Churchill’s lament.

How democracy is structured is probably more important than if it is the best form of government.  Our federal republic is pretty good as it stands (unless you are Ruth Bader Ginsberg, of course; according to her, South Africa has a much better constitution than our own), but there have been some serious flaws discovered over the centuries.

Can you name a few?  The compromise on slavery and the inability of the Supreme Court to enact the 14th Amendment to protect black Americans from Jim Crow laws both stand out prominently in my view.  Furthermore, can any of you come up with a better way to utilize the democratic process that is so integral to the dignity of the individual?

Teacher Sex and President Sentences Terror Suspects to Rape?

Jacques Delacroix Current Events , , ,

WARNING: THERE IS A BAD ARABIC TRANSLATION OF THIS POSTING IN EXISTENCE SOMEWHERE. I  DID  NOT REQUEST IT, I DID NOT AUTHORIZE IT, AND I DID NOT APPROVE IT. I AM ONLY RESPONSIBLE FOR WHAT I WRITE IN ENGLISH, IN FRENCH AND, RARELY, IN SPANISH.

There are days, rare days, when I feel completely French, after more than forty years. One such occasion is whenever anyone criticizes foie gras, its consumption, its presentation, or its production. (Go ahead, Google it; it’s all true.)

The other times my French culture of origin soars up within me is when I hear from the media that yet another Florida school teacher is accused of having her way with one of her young male students. It seems to happen mostly in Florida, somehow. Don’t ask me why. It must be the enervating climate. Anyway, there was a such an announcement in the news yesterday.

I am sorry, I can’t quite get my indignation up. In fact, the news brightened my day to an extent. “Double standard,” you say. Sure thing! It’s mostly Mother Nature’s decision. Facts matter: First, boys can’t be raped by women. You can’t repeat it often enough. Second, boys don’t get pregnant. Sorry to give you the obvious but the politically correct media seem to have forgotten it. Third, there is a part of me that is in synch with thousands of years of popular sentiment: I suspect that sex is emotionally more important to females than to males. Continue reading →

Update on America and on the World

Jacques Delacroix Current Events, Politics , , , , , ,

Newt Gingrich [recently] won the South Carolina primary by a big margin. I know that’s only South Carolina, perhaps the most conservative state. Still, that’s a major rebuke to serious candidate Romney. The speeches both gave after Gingrich won delineate clearly two major paths for the Republican Party. Romney’s speech was colorless, odorless, rich in platitudes. It was the kind of speech unfairly associated with “moderates” who deserve better.

Gingrich spoke incisively, precisely about what agitates conservatives like me who are not born-again Christians nor any of the other stereotypes the liberal press has invented. We want a smaller government that’s not wasteful and that does not get us into debt for two  generations to come. Gingrich’s speech was well received for another reason: It spoke of simple pride in America, not of imperial pride, not of a wish to dominate, not of hubris but of simple dignity.

There is a pervasive feeling that we lost our national dignity during the three-year Obama presidency. It was not all his fault. Certainly, a major contributor is our large national debt that was already too large when he took office. However, it’s fair to charge Obama for this loss of dignity because he told us repeatedly that America should become a smaller, more ordinary country, and it has. If you tell Mom in anger, ” I wish you died” and she dies, don’t be surprised if your brothers are angry at you. And, President Obama, whose middle name is  still Hussein, bowed to the King of Saudi Arabia, the grandchild of camel thieves who happens to have captured a lot of oil. Continue reading →

More Great News!

Brandon Christensen Current Events , , ,

As many of you know, Dr. Jacques Delacroix has begun posting to the blog. Dr. Delacroix has a PhD in Sociology from Stanford and his work has been published in the discipline’s top-flight journals. Prior to retiring, he taught at Santa Clara University’s Leavey School of Business alongside co-editor Fred Foldvary. You can read more about him here.

We also have another new addition to the consortium as well: Dr. Ninos Malek, an Economics Professor at San Jose State, De Anza College, and Valley Christian High School.  Dr. Malek earned his PhD in Economics from George Mason University and his work has been published in a wide variety of academic and online publications.  You can read more about Dr. Malek here.

Fascism Explained

Jacques Delacroix History, Liberty, Religion , , ,

Below is a fairly long essay. You may want to read it in installments.

[Update: There is also a Part 2 posted on this blog.]

The aim of fascism as a political movement is to substitute for individual self-confidence based on skills and achievements uncritical trust in a leader or in an organization. Fascism as a form of government has no objective. Invariably, it ends either in misery or in a catastrophe.

The word “fascist” has been so overused – entirely by Left-leaning people – that is has become an empty insult. I am guessing that most Americans alive today only know the term as a nasty epithet, perhaps with vague references to Italy’s Mussolini. This is too bad because fascism is a real socio-political phenomenon that took over a fair number of developed societies in the middle-part of the twentieth century. Fascism is also alive, under other names, in and out of power, in the semi-advanced but chronically stagnant societies of Latin America. I think that the fascist temptation is always, forever present in the background of modern societies, including democratic societies. (There are more discussions of contemporary fascism further down in this essay.)

I am addressing this brief description of fascism to my younger contemporaries, in the US and elsewhere, because fascism has become relevant to the current American situation. I am not trying to shout an alarm call as I would with a fast spreading forest fire, for example, just helping inform the curious and intelligent but justifiably ignorant as I always try to do on this blog.

Much has been written about two aspects of the best known fascist movements and regimes. First, there have been many books about the most visible leaders of the most visible fascisms, especially about Hitler and Mussolini. These works have focused on the personalities, the families and the psychological antecedents of those leaders and, to a lesser extent, on the leaders’ inner psychology while they were in power. Second, there have been a number of notable studies of the immediate followers that is, on the large numbers of ordinary people who joined explicitly fascist organizations, such as the infamous SS in Germany. There is current resurgence of interest in the long-lived Spanish brand of fascism, under Francisco Franco. (Franco achieved his dictatorship after a bloody civil war. Yet he governed Spain peacefully for more than thirty years.)

To my knowledge, it’s difficult to find much about the more passive supporters of fascist movements, the great bulk of them. This is an important question because the foremost fascist party in history, the Nazi Party, came to power through largely constitutional means. Many ordinary Germans who were probably nice people supported it. It’s difficult to think about it because of so many movies but initially, supporters of fascism are sweet-faced and pure-hearted. It seems to me many Hitler and Mussolini supporters were hoodwinked, in part because they were too lazy to think of the consequences of their choices.

To make a long story short, the Nazis won the largest number a vote in a regular election, assumed government power and proceeded to eliminate democratic rule. Nazism was brought to power by the naivety of some and by the passivity of others. Mussolini’s Fascist Party seized power with considerable popular support. The short-lived but devastating French version of fascism, was formulated and led by a general and war hero to whom the democratically elected representatives of the Republic handed power willingly.

The less known, less flamboyant, but much longer-lasting Portuguese brand of fascism was invented by a mild-mannered Professor of Economics. Although he was installed after a military coup, Salazar was for practical purposes, little opposed by Portuguese civil society for most of his rule. He led Portugal to the lowest economic rank in Europe, pretty much to Third World status. Similarly, fascist movements came to power mostly peacefully in Hungary and in Romania in the late thirties and early forties. After WWII, General Perón of Argentina implemented a successful fascist program with the assent of the broad mass of Argentineans. He was able to pull it off twice. He left the country in a shamble from which it has not recovered, thirty years later.

The Islamic Republic of Iran is a conventional fascist state installed originally by a broad mass movement. It has limited political representation. Economically, it conforms faithfully to the historical fascist experience of initial success followed by a continuous descent into poverty. This, in spite of massive oil revenues. Its apparatus of repression includes draconian laws, summary arrests, trials without protection for the accused, capital punishment for a broad range of non-homicidal offenses, and prison murders. It looks completely familiar though the repression is done in the name of religion.

So, let me correct a common mistake: Fascism is not a political ideology imposed by force from above. It’s a mass movement. It requires both mute consent from some and a high degree of enthusiasm from others.

All fascist regimes ended in blood and disaster or in whimpering economic disgrace because they showed themselves unable to provide more than the bare necessities of life. Given the dramatic ending of the more dramatic fascist regimes, again, such as Hitler’s and Mussolini, we tend to ignore this prosaic truth: Fascism is a recipe for prolonged poverty, at best. That’s when it does not end in total economic ruination as in Germany. The end of Spanish and of Portuguese fascism were negotiated affairs conducted under Army pressures. Spain’s and Portugal’s economies began taking off immediately after the transfers of power to democratically elected government that lacked any economic experience.

Fascist economic programs never work.

In power, fascist parties invariably attempt to concentrate the levers of the national economy in a few government hands. They do so either by nationalizing outright the means of production, or by forcing employers and employees into the same state-controlled organizations. Often, they cynically call these organizations “labor unions,” or “trade unions.” This mode of organizations is technically called “corporatism.” The word does not imply that corporations have power but the reverse: The government or its agents make the main decisions for corporations. Of course, corporatism is the complete negation of capitalism which requires all-around competition. That includes the competition of owners and controllers of capital with workers. All-around competition is inherently messy. It’s the converse of a well-trained army marching in lock-step, for example. Fascists hate disorderliness. They are fussy.

Technical note: Nationalization, the government take-over of a company owned by stockholders almost never requires a majority of the shares of ownership. Under current laws, in the US, the control of 15% of the shares is usually sufficient. Frequently, it takes much less than 15% ownership for a government to dictate a corporation’s policies. That’s because the stock is usually widely dispersed, with the largest stockholders owning a very small % of the total.

Fascists concentrate economic control in the name of orderliness.

Fascist governments and fascist movements detest capitalism.

A fascist movement always preaches national unity. Fascists begin by deploring unpleasant partisanship. In the name of national unity, fascist parties seek to weaken open discussion. They use words such as “bi-partisan,” and “overcoming our differences,” repeatedly and until they appear to describe what is obviously desirable. The American practice of democratic governance, by contrast, is based explicitly on confrontations followed by negotiations, one issue at a time, between often-changing coalitions.

When it comes to power, the fascist party abolishes competing political parties. It may do so by absorbing them or by persecuting them and murdering their members. The same fascist government often practices both forms of elimination. Thus, the powerful German Communist Party pre-1933, ended up partly in Nazi concentration camps, partly in the Nazi SS guard.

Fascist politics require the elimination of competing voices.

Fascist movements are often headed by providential leader, one who presents himself a a savior from a grave crisis, real or imagined ( real or imagined, and sometimes made up). The best known fascist leaders such as Hitler, Mussolini, and Perón, have also been charismatic. This is not absolutely necessary, providential is enough. Salazar of Portugal, a rotund, short man, was as lacking in charisma as anyone. Franco was downright sinister, even to many of his followers. Yet, personal charisma certainly helps a fascist leader achieve power. It helps his credulous followers suspend their sense of criticality.

Fascists profit by the unchecked veneration of leadership and they cultivate it.

Fascist movement are usually not content to suppress dissent. They demand the sincere submission of individual wills to the benefit of a greater collective good. That’s because only inner submissions guarantees a long, unchallenged rule in spite of increasingly bad living conditions. The fascist movement imposes this demand first on movement followers and then, on all citizens.

Fascism places the collective (real or not) much ahead of the individual.

The muzzling of the press, serves both to eliminate the voicing of dissent and to achieve the submission of individual wills. A society with no press though is not the most desirable goal of a fascist government. Fascism seeks to whip up mass enthusiasm. So, the best situation is one where the press speaks in a unified voice in support of the fascist party, or of its leader. What is true of the press narrowly defined, is true of other mass media as well. Thus, Hitler, actively encouraged the development of a German cinema entirely to its devotion. So did the French fascist regime between 1940 and 1942 (with active German Nazi help, by the way.) Enthusiasm helps ordinary people bear burdens and it helps them suppress their pangs of conscience when they witness immoral actions.

Fascism requires the uncritical enthusiasm of many to achieve power, and more so to keep it because of the progressive impoverishment it causes, and also to gain toleration for its bad actions.

In some important historical cases, there is not much muzzling to be done because much the bulk of the mainstream media is already supporting the providential leader, before he comes to power. That was the case in Germany in and, to a lesser extent in Italy. Mussolini himself was a journalist, presumably with ability to manipulate the press rather than suppress it. Having the movie industry endorsing unconditionally a fascist leader would prove invaluable in a contemporary society because of the superior ability of movies to engage the whole person’s emotions along with his intellect. Also, it’s likely today that many more people watch movies than read newspapers. This is especially true of the young.

The intelligentsia, the educated class, or a large fraction of it, invariably plays a role in the ascent or legitimation of fascist ideas. Martin Heidegger, then and later, an important German scholar philosopher, became an active Nazi directly upon Hitler’s accession to power. In the case I know second best, that of France, foremost novelists, such as Drieu la Rochelle, and Louis Ferdinand Céline, were early and ardent supporters of fascism. Marcel Déat, a noted philosophy professor with the best academic credentials turned politician, was one of the most effective collaborators in the Nazi occupation of France. (It’s also true that many more French intellectuals supported the totalitarianism of the Left, instead. So?)

Fascism gains intellectual respectability from the endorsement of conventional luminaries.

Given their insistence on national unity, fascist movements must appear respectable to the political center, the main abode of respectability. The great American sociologist Martin Seymour Lipset famously called fascism, “the extremism of the (political) Center.” Hence, fascists cannot afford to suppress opposition openly by illegal means. Once they are in power, they change the laws so that anything they wish, including the mass murder of the mentally ill and later, the attempted destruction of all Gypsies and all Jews within their reach, is made legal. Before they reach power however, they must appear civilized to avoid unnecessarily alarming ordinary middle-class citizens. In order to pursue both ends, fascist movement employ goons, organized extremists toughs whose actions they are able to condemn when expedient.

Fascist movement commonly employ goon associates to wreck democratic elections by putting unbearable pressure on electoral organs designed for a civil transfer of power. In a normal democracy, it usually takes a small percentage of the votes cast to win an election. Thus, pressure tactics are often successful. Fascist movement sometimes sacrifice their goon wing once they are in power. Hence, Hitler liquidated his strong-arm SA guard in 1934. that is, after he had gained the chancellorship (more or less the presidency), when they had outlived their usefulness as a tool of street terror. Hitler may have had only a hundred or so SA leaders assassinated. The bulk of the SA rank and file learned to stay down. Many were incorporated into the other and rival strong-arm branch of the Nazi movement, the SS.

Fascists use extra-legal methods to gain political power, in addition to legal methods.

Fascist regimes are never conservative. They are revolutionary or radical reformists with an agenda of social justice. These words mean always and everywhere, “equalization.” There is some confusion in history books on this issue for several reasons. First, the head of Spanish fascism, General Franco had a Catholic agenda that looks culturally conservative on the surface. In fact, Franco tried to restore his own archaic version of Catholicism in a country where religious practice had gone down to near-zero levels among the men. Thus, Franco was not trying to conserve anything but to go back to a largely illusory, invented past.

An other source of confusion in that in several European countries and most dramatically, in Germany, big business circles eventually did lend their support to fascists governments. Two reasons for this. First big business leaders were then afraid of a Communism which had not yet demonstrated its incompetence as a solution to anything except the good life. (More below on the relationship between fascism and Communism.) Second, the owners and/or managers of large business enterprises are often natural collectivists. They tend to abhor real, unfettered competition and to prize workplace discipline. Fascist regimes protected them from the one and provided the other to perfection.

I believe that liberal scholars in the West have deliberately fostered the confusion, the idea that conservatism and fascism are two positions on the same axis. I don’t have the space to develop the basis of my belief here. Yet it’s a critical belief I developed during thirty years around liberal and left-wing scholars. Fascists and big business leaders love neatness above all. They detest the give-and-take and the tumultuous competition of the market.

It goes without saying that once they are well established, fascist governments attract the usual conscience-less opportunists, in addition to several breeds of fanatics and sadists. We know roughly what kind of personalities are attracted by the potential to exercise unchecked power. More interesting is the question of what kinds of people tend to become passive followers of fascist movements before they assume power or, in the early stages of their being in power. The question is important again because fascism is not imposed from above. Rather, it comes to be the government through the acquiescence of masses of people no-one would call, “fascist.”

It seems to me that at the basis of this acquiescence lies a combination of dispositional attributes. The first such attribute is probably a tendency to become alarmed, to live in the expectation of frequent or impending disasters. Such inclination will cause some people to throw up their arms from impotence and to search for a radical solution. This makes sense: If the real situation is extraordinarily threatening, the hope that the usual, ordinary solutions will work may vanish. This attitude historically led to an abandonment of institutionally valid politics, such a majority vote, or respect for legality in general, and for individual liberties in particular. Second, since fascism is an impatient recourse to authoritarian solutions, it’s often a psychological return to childhood.  (Almost all children are impatient. ) Under a perceived serious threat, some people will pull harder while others will revert to the days when, in their own personal experience, Mom or Dad made things right. Third, backers of fascism tend to be naive. This is difficult to comprehend because their naivety is often accompanied, in every other respect, by normal intelligence. The naivety I refer to operates as if a corner of their brain shut itself off from regular, adult reality checks. I suspect the part of the brain that becomes activated then is the same that makes us love fairy tales, and fiction in general.  Fourth, and neither least nor last, followers of fascism are almost always burning with a sense of justice. Their requirement for justice is impatient (see above) and of the simplistic, kindergarten variety: Jimmy got two apples; I have to have two apples also, and Charlie must have  two; otherwise, it’s not fair!

In summary: Fascism abhors the idea of the individual will of ordinary citizens. In this, it is the complete moral opposite of classical conservatism which recognizes only the individual. Fascism’s main achievement everywhere and in every epoch, is to make ordinary people poor, dependent and afraid. Fascism is not imposed by force. It wins through the support of the uncritically enthusiastic

This is just and introduction. It’s easy to find good material to read on fascism. Or, you might just decide finally to read the great short book you pretended to have read in high school but never did: George Orwell’s “1984.”

Next: The relationship between historical fascism and communism. (Hint: Same damn thing!)

Adam Smith, Or: The More Things Change…

Brandon Christensen Economics, History , ,

…the more they stay the same.

I have moved on from Montesquieu’s The Spirit of the Laws to Adam Smith’s The Wealth of Nations in my Honors course on Western thought (it is being taught by a professor who is part of this blogging consortium, in case you are curious; it is part of my daily reading).

Many, many things have stood out to me so far, but I would like to share two of them here. The first thing has to do with the back of the book (I am reading the cheap paperback published by Bantam and edited by Edwin Cannan). The back of the book plainly states:

He argues passionately in favor of free trade, yet stood up for the little guy [emphasis mine – BC].

This mischaracterization of classical liberalism (libertarianism) is not limited to the publishers of Adam Smith’s most popular work, and it frustrates me to no end that free trade and classical liberalism are somehow treated as arguments in favor of a privileged class.  The entire idea that drives classical liberalism is one that is rooted in the dignity of the individual and of the common man.  This is one fight that the libertarian should easily be winning, yet he is not.

The second passage that I would like to share is one that most of us are extremely familiar with, and can perhaps provide a chuckle rather than frustration (I know I laughed):

The annual produce of the land and labour of England […] is certainly much greater than it was, a little more than a century ago […] Though, at present, few people, I believe, doubt of this, yet during this period, five years have seldom passed away in which some book or pamphlet has not been published, written too with such abilities as to gain some authority with the public, and pretending to demonstrate that the wealth of the nation was fast declining, that the country was depopulated, agriculture neglected, manufactures decaying, and trade undone.  Nor have these publications all been party pamphlets, the wretched offspring of falsehood and venality.  Many of them have been written by very candid and very intelligent people; who wrote nothing but what they believed, and for no other reason but because they believed it.

Does this not sound awfully familiar? I could produce a number of links to a number of books and pamphlets on just this topic, but I am sure that readers had their own memories jarred when reading Smith’s keen observation. It looks as if we still have a lot of work to do.

Foreign Policy and Human Ignorance: The Attack on Non-Intervention

Brandon Christensen Current Events , , , , , , , , , ,

I have recently been having more than a few back-and-forth debates with my old sparring partner Jacques Delacroix concerning matters of foreign policy.  The most recent debate has produced a number of great insights and opportunities to further enhance an understanding of foreign affairs.

Against the backdrop of this lively and hopefully continuing debate is the recognition that both of us are extremely ignorant human beings, and that we know far too little about anything to be in a position to command or direct institutions that are not based upon mutual consent and agreement.  The one institution – government – that is widely regarded to be necessary for the use of coercion should have its monopoly on force widely distributed throughout various avenues of power and severely restricted by the use of legal precedent.  This small paragraph essentially sums up the foundation of both libertarian and conservative thought in the United States, and as you read through this essay (or any other writings believed to expound upon conservative or libertarian ideals) I would highly recommend remembering this small but important fact.

Indeed, if I had to pinpoint the exact locus of difference between a Leftist and a conservative/libertarian, it would be this fundamentally opposite view of man that each camp harbors.  Seldom have I met a Leftist  Continue reading →

Great News!

Brandon Christensen Current Events, Economics, Links , , ,

Co-Editor Fred Foldvary has been invited to be a contributor to a blogging symposium about “Libertarianism and Land” put on by the Bleeding Heart Libertarians consortium.  Here are the details:

I’m very pleased to announce that from April 23-27 of 2012, the Bleeding Heart Libertarian blog will be hosting a virtual symposium on the topic of “Libertarianism and Land!”

The five day event will explore different libertarian perspectives on questions pertaining to the moral justification of and limits on property rights in land. Each day will feature a keynote post from one of our main participants. The other main participants will have the opportunity to respond with posts of their own, and the general public is welcome to participate in the comments thread.

We’ve lined up some terrific people for this event. Our main participants will be:

  • Eric Mack – Professor of Philosophy at Tulane University
  • Hillel Steiner – Professor of Political Philosophy at the University of Manchster
  • Fred Foldvary – Lecturer in Economics at Santa Clara University
  • Kevin Carson – Blogger and author
  • David Schmidtz – Professor of Philosophy and Economics at the University of Arizona

More information to follow as the date draws nearer. I hope you’ll join us for what I think will be a fascinating discussion!

Do be sure to tune in to Bleeding Heart Libertarians all that week.  I am sure that many good things will come of this, especially since Fred Foldvary was one of the few people in the world to accurately predict the housing bubble collapse based upon his knowledge and understand of land and its connection to the economy.

Rebellion in Homs

Brandon Christensen Current Events , , , , , , , , ,

As we speak, the brutal dictatorship of Bashar al-Assad is slaughtering his people.  Assad is the son of one of the most notorious dictators of the modern Middle East, Hafez al-Assad, and, like his father, is a member of the socialist Ba’ath Party.  It worth mentioning that Saddam Hussein’s ruling party was also a socialist Ba’ath Party, though I don’t know how closely connected the Iraqi and Syrian parties were.  I just know both parties are Arab nationalist and socialist in nature.

One of our co-bloggers, Jacques Delacroix, has been an outspoken proponent of bombing the Assad regime in the name of democracy lately, and he has not shied away from proclaiming the Iraq War a success, or condemning libertarians (you read that right) to hypocrisy for U.S. refusal to bomb Rwanda during the 1990’s.  He is also a proud supporter of the military occupation of the Balkans by NATO troops and the subsequent partition of Serbia into a plethora of different narco-states, and has not hesitated to heap praise upon President Obama for the recent bombing campaign that led to the removal of Muammar Ghaddafi from power in Libya.

I have addressed Professor Delacroix’s arguments for Libyan intervention here (there is a long dialogue between he and I in the ‘comments’ section).  I have addressed his arguments for bombing Rwanda and occupying the Balkans here (again, there is another long dialogue in the ‘comments’ section).  I have addressed his claims of Iraqi democracy here (it’s in the middle of the dialogue) and recent events in Iraq have, of course, borne out my argument.

I would like to draw attention now to his most recent idea for helping out the rebellion in Syria, and specifically in the city of Homs, close to where Bashar’s father murdered 20,000 in 1982 in the city of Hamah.  This is not embarrass Delacroix or to start a fight, but rather to initiate a dialogue and see where it takes us.  I had to ask him what his plans for Syria would be, since interventionists are infamous for being beholden to their hearts rather than their heads.  From his other blog: Continue reading →

Links From Around the Consortium

Brandon Christensen Current Events, Economics, History, Links , , , , , , , , , ,

Brian Gothberg’s piece on whaling and property rights deserves another look, as he channels Nobel laureate Ronald Coase:

According to a simple version of the Coase (1960) theorem, if the costs of transacting were very low, it would not much matter for the allocation of resources how stock rights were initially assigned. Trading ensures that rights would be put to their highest-valued uses, whatever they might be. If particular whales have more value as a source of pizza toppings than as the subject of a tourist?s photo session, whale-watching companies would be encouraged to sell any rights that they might have to whalers. If, on the other hand, particular whales have great value simply as magnificent creatures whose existence is to be nurtured and cherished, conservation groups would tend to end up with the rights to those whales.

Reality is not always simple, however. Transaction costs are sometimes high. In particular, there is a free-rider problem […]

Co-editor Fred Foldvary opines on how deregulation hurts the economy.  This is perhaps the best piece I have found on regulation and its effects on the economy at large.

I found this piece by Jeffrey Rogers Hummel on President Martin van Buren, whom he calls the ‘American Gladstone’.  If you’re itching for some historical information on one of the American republic’s little known presidents, I recommend you grab a cup of coffee and enjoy.

And, not to be outdone, Jacques Delacroix asks if the French have it better.  He is specifically referring to the debt-to-GDP ratios of France and the U.S.  The whole thing is good throughout, more so because Delacroix professes to hate the French.

Montesquieu Is Back!

Brandon Christensen History , ,

I just finished up Montesquieu for a class on political theory. I know economists will probably roll their eyes, but I liked the readings on the whole. From yet another passage in his magisterial work The Spirit of the Laws:

It is the triumph of liberty when criminal laws draw each penalty from the particular nature of the crime.

If one were to take a step back and examine the laws of the United States today, would one find Montesquieu’s liberty? I am thinking specifically of the drug war, and how there is almost nothing so cruel and opposed to liberty than Washington’s stance on drug use (and abuse).

In another section the book, I found this to be the most compelling summation of classical liberal thought I have ever read (no really):

There are two sorts of poor peoples: some are made so by the harshness of the government, and these people are capable of almost no virtue because their poverty is part of their servitude; the others are poor only because they have disdained or because they did not know the comforts of life, and these last can do great things because this poverty is a part of their liberty.

I can’t think of a better defense of individual liberty than this.  Perhaps I am being too nuanced in my reading of this passage, but it struck a chord with me.  I’d like to hear what sort of passages you have heard in regards to liberty over the years that have a profound impact upon the way you think about the world!