Rationing and Capitalism

In this article Chuck tells us about this The New York Times article which claims that socialized medicine will lead to health care rationing which according to NYT is "an inescapable part of economic life." It confuses rationing in our daily lives with the government mandated one. How is my buying stuff with my own money the same as a bureaucrat doing that with my money; and supposedly knowing what is best for me. It all starts with this one statement "access to medical care is a fundamental right."

How do we reach this point of deciding that anybody has a right to a good or a service being offered by another person. Right in this context means that the goods/services can be had forcibly and that the person who thinks that he has the right will decide if he wants to pay anything for it. Now, how is that person supposed to indulge in that long honored American tradition of "making money?" Well he can't - he is forced to accept whatever is offered to him. Pretty much like slaves who live on whatever the master deems acceptable. How did the bastion of freedom, individual rights, and the land of pursuit of happiness reach this point where enslaving another person is considered - in fact advocated openly in so called respectable media?

The mainstream media plays an important role in mobilizing the public opinion against Capitalism. The freedom to work, private property, money, division of labor, are all denounced and are blamed for all the problems of the society. These are the very things missing under Socialism and that has been the cause of the collapse of various Socialist countries in recent times. The environmentalism, animal-rights, are nothing but attacks on Capitalism in various forms.

Profit which indicates to what extent a person has succeeded in creating surplus over and above the resources with which he started to begin with, has become a dirty word. What is a businessman supposed to do? Feel ashamed that he created a profitable business? It's not a coincidence that the most profitable companies in America like Coca-cola, Microsoft, Walmart, are some of the most hated ones. They have consistently been the target of anti-trust regulators. The very concept of anti-trust is that if you are very successful you become a target. This very immoral law is undefined and it is up to the government to decide based on unknown parameters if you have broken the law.

I remember reading in Fortune magazine about a decade ago an article where the author suggested taking over Microsoft's patents. I was flabbergasted. Penalizing a company for it's success? In effect nationalizing the company. I was furious and wrote a letter to the magazine. I suggested the author be sent to India to see the result of his suggestion that had already been implemented. The patent system in India was in a primitive state then and the effects of nationalization had rotted the system to it's core. Fortune printed that letter but it was the last time I read that magazine.

In fact everything from inflation, depression, monopolies, just about everything which can be is blamed on Capitalism. It is another matter that in a perfect Capitalist system none of these things would exist. This where government steps in to protect the society from the evil, profiteering, greedy, businessmen. This where the "planned" society begins. It starts the avalanche of laws, regulations, codes, rules, to manage every aspect of the lives of people - supposedly to liberate them from the clutches of the Capitalists. Thus begins the task of freeing people from the free-markets.

The laws range from progressive income taxes, wealth taxes, labor laws, sales taxes (in India), licensing norms, public schooling, public transportation, and the list goes on. To manage all this - hordes of bureaucrats are needed along with hordes of inspectors and other state employees. Laws to regulate food, water, air, open spaces, closed spaces, vacant properties, occupied properties, laws to create laws, are constantly written and re-written even before people get used to the previous ones. I am talking mostly about India but in last few years I have realised distressingly a lot of these laws exist in America. In last decade India has moved closer towards free-markets and America away from it.

One of the key aspects of Capitalism has always been under attack, it's the capital or the money. One of the champions of this policy has been Krugman of NYT. The inflation of money supply as propagated by Keynes has been a consistent feature of governmental control. The removal of gold standard led to removing any restraints on politicians and the beginning of boom and bust economies across the world. In 2002 Paul Krugman advocated the creation of housing bubble and once the economy suffered from it, guess who is around to give advice to governments on how to tackle it - Paul Krugman. America did very well before the creation of Federal reserve, in fact prospered at unprecedented rates.

Here is what Reisman said in his book:

The ability to create money has also been demanded because it is vital in enabling additional government expenditures to be financed by means of budget deficits and thus in fostering the delusion that the government can provide benefits for which citizens do not pay. And when, as is inevitable, the policy of inflation results in rising prices, capital decumulation, and the destruction of credit, people demand price and wage controls, and then, in response to the shortages and chaos that result, the government's total control over the economic system, in the form of rationing and allocation.

We have seen the above result in country after country and yet in this conflict of economics versus altruism and self-interest versus self-sacrifice - it is altruism and self-sacrifice which keep coming out on top. Here in India rationing has been a way of life for a long time. Even though a ration card has lost some of its importance, it has been kept relevant for majority of the masses. The ration card is supposed to be the visa to the Socialist paradise. In reality a lot of food-stuff meant to be distributed through the government controlled fair-price shops is diverted to the black-markets. The corruption is rampant and all public officials and the shop owners associated with the scheme benefit from it.

Last year under right to information law, a major scam was uncovered when one women was discovered to have 901 cards in her name. Everything which is rationed is scarce and is available in the black market at a premium. Kerosene oil is one of the items and majority of it's supply is diverted and used by government licensed gas stations to adulterate petrol and diesel. This causes huge damage to the engines and ends up with vehicles producing far more pollution. So, for people interested in environment I would suggest backing the free-market system.

Capitalism has resulted in rising productivity and improved standards of living and Socialism has caused nothing but economic chaos and totalitarian dictatorship. I'll end by quoting Ayn Rand:

Capitalism has created the highest standard of living ever known on earth. The evidence is incontrovertible. The contrast between West and East Berlin is the latest demonstration, like a laboratory experiment for all to see. Yet those who are loudest in proclaiming their desire to eliminate poverty are loudest in denouncing capitalism. Man’s well-being is not their goal.

“Theory and Practice,” Capitalism: The Unknown Ideal

The meaning of Inflation

Most people have trouble understanding the meaning of inflation. Jim May at The New Clarion has done a wonderful job in this article "Say’s Revenge" of explaining this very immoral tool of governments around the world. The lack of understanding of Inflation has today encouraged governments (with help from Keynesian economists) to turn this method to covert stealing into an overt act of robbery.

"As Milton Friedman correctly wrote, inflation is always and everywhere a monetary phenomenon. By extension, therefore, so is deflation — which is why, contrary to mainstream economists, we are not in a truly deflationary period at present, insofar as there is no reduction in the supply of *money* that has happened over the last two years. Rather, it is demand destruction that has been happening, and that’s a horse of a different color."

Read the whole article.

China warns Federal Reserve over 'printing money' - Telegraph: "China warns Federal Reserve over 'printing money'
China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds."
(via Instapundit)

The glories of Japanese Keynesianism

Japan's Economy Shrank 15.2% last quarter.

Therefore, the U.S. follows the plan precisely.

Union of Keynes and Kant

Updated
In his article "The Nuttiness of Negative Interest Rates" Robert P. Murphy on Mises Institute web-site wrote that
"In his April 18 New York Times op-ed, Harvard professor (and Bush adviser) Greg Mankiw calls on the Federal Reserve to promise future inflation, in order to fix the economy. Mankiw's article beautifully illustrates what is wrong with today's economics profession: it consists of very sharp guys (and gals) who can develop interesting models that spit out policy recommendations that would destroy the economy. It is no coincidence that Mankiw's worldview leads him to literally propose destroying the currency in order to fix the economy."

It is not surprising that the proposal of literally destroying currency comes from an American professor of one of the leading universities. An economics professor is the ultimate union of Kant and Keynes. Kant laid the foundation for the destruction of human mind and Keynes followed closely with his own recipe for the destruction of the capitalism.

The collectivist view that the economies resources are somehow their responsibility, to be managed and disposed off as they like is the dominant theme of the article. So what if the problems were caused during this management as pointed out by the author which Mankiw conveniently refuses to address. Though I am no great authority on economics, even with my basic knowledge, I can recognise the ugly mishmash of non-reason and anti-capitalism coming together in this call to destroy what Rand said was "the ultimate barometer of a society's virtue"- the money.

Read a part of the speech made by Francisco d'Anconia, Galt's friend on the meaning of money:
"Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence...
To the glory of mankind, there was, for the first and only time in history, a country of money: a country of reason, justice, freedom, production, achievement. For the first time, man's mind and money were set free, and there were no fortunes-by-conquest, but only fortune-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being-the self-made man-the American industrialist.
If you ask me to name the proudest distinction of Americans, I would choose-because it contains all the others-the fact that they were the people who created the phrase "to make money.""
"The Atlas Shrugged" by Ayn Rand.

In America today, the phrase "to make money" is losing it's shine. The strangled free-market system is under a renewed and a more vigorous assault. The solutions which are proposed by the current administration are going to push the existing mixed-economic system dangerously close to Socialism. It is the system which is depressingly familiar to those Objectivists living in third-world countries. My overwhelming concern is that when I come to America, I hope it doesn't resemble the place I have left behind.

The proposed solution to solve the current crisis, of encouraging households and businesses to borrow and spend with the helpful dose of inflationary currency as proposed by the Harvard economist is not a new one. Ayn Rand wrote in her "Capitalism: The Unknown Ideal" in October 65 that "there are economist who proclaim that the essence (and the moral justification) of capitalism is "service to others-to the consumers," that the consumers wishes are the absolute edicts ruling the free market, etc. (...what all such theorists fail to mention is the fact that capitalism grants economic recognition to only one kind of consumer: the producer-that only traders, i.e., producers who have something to offer, are recognized on a free market, not "consumers" as such-that, in a capitalist economy, as in reason, in justice, and in reality, production is the pre-condition of consumption.)"