How Christianity gave us the United States and made the World a Better Place

Posted by PITHOCRATES - December 31st, 2013

History 101

The Pope kept European Rulers from Oppressing their People lest they get Excommunicated from the Church

In 39 AD the Romans crucified Jesus of Nazareth.  Because they said he called himself the King of the Jews.  Or rather those with political power who felt threatened by Jesus’ popularity said this.  His death was to protect power and privilege of those who had it.  Ultimately, though, His death would do more to destroy power and privilege.  For the Golden Rule allowed people to live together in peace.  To build communities.  And to help one another.

Emperor Diocletian split up the vast Roman Empire into four parts.  The tetrarchy.  The rulership by four.  Each of the four parts had its own emperor.  When Diocletian stepped down from power those emperors began vying for power.  By 312 two emperors were in open war with each other.  Constantine.  And Maxentius.  On October 28, 312, they met in battle near the Milvian Bridge over the Tiber.  On the eve of battle Constantine had a vision.  The Christian God would help him win the upcoming battle if he placed the Christian symbol on his soldiers’ shields (accounts differ it was either the Chi-Rho sign or the Latin cross).  He did.  He won.  And became Constantine the Great.  Sole ruler of the Roman Empire.  And because of his victory in the Battle of the Milvian Bridge he began his conversion to Christianity.  Making the Roman Empire Christian.

Christianity spread throughout and united Europe.  And the Pope kept European rulers from oppressing their people.  Lest they get excommunicated from the Church.  In time, though, some resented rule from Rome.  In particular when Pope Leo X sold indulgences (a way to help purify one from sin) to fund the rebuilding of St. Peter’s Basilica in Rome.  This was one of many problems that had many calling for a reform of the Church.  One in particular, Martin Luther, published his The Ninety-Five Theses in 1517.  Kicking off the Protestant Reformation.

Plymouth Colony succeeded when Communal Property became Private Property

Henry VIII, King of England, was a good Catholic.  But his wife wasn’t giving him any sons.  And he wanted a male heir.  So he asked the Pope for an annulment from his wife.  Catherine.  So he could marry Anne Boleyn.  The Pope refused.  So Henry left the Catholic Church.  And initiated the English Reformation.  Making England Protestant.  England would swing back and forth between Catholicism and Protestantism without being either but something in between.  Making a group of Protestants very unhappy.  As they felt the English Reformation did not go far enough.  A group referred to derisively as Puritans.  They were so hated that they were being persecuted along with the Catholics.  So they left England.  Landing in the Netherlands first.  Then they sailed across the Atlantic.  They sighted land on November 9, 1620.  They eventually came ashore and established Plymouth Colony.

About half of Plymouth Colony died within the first few years.  From disease.  And hunger.  The economic system they were using was killing them.  Communal property.  Everything the colonists produced belonged to everyone.  People produced according to their ability and took from the common store according to their needs.  A sort of Marxism.  Before there was even a Karl Marx.  To save the colony Governor William Bradford abandoned the idea of communal property in 1623.  Communal property became private property.  And the colony was saved.  As people worked twice as hard to produce more on their land than they did on communal land.  And because they did they replaced famines with bumper crops.  So instead of dying off the American colonies became the prosperous New World.

The Seven Years’ War (1756–1763) came to the New World.  By the time it ended Catholic France lost its North American possessions to Protestant Great Britain.  To pay off the enormous debt of that war Parliament decided to tax their British American colonists.  Who made out very well in the conflict without the costs the British incurred.  But they did this without discussing it with the colonists.  Treating them as second-class citizens in the British Empire.  Who had no representation in Parliament.  Which led to anger over taxation without representation.  Leading to the Boston Tea Party (December 16, 1773).  Which led to the Intolerable Acts and the Quebec Act (1774-1775).  Which led to the shot heard ’round the world.  The Battles of Lexington and Concord (April 19, 1775).  Which ultimately led to July 2, 1776.  When the Continental Congress voted to adopt the Declaration of Independence.  After a few revisions it was formally passed 2 days later.  On July 4, 1776.  Known forever after as Independence Day in the United States.

In the United States your Last Name does not Determine the Quality of your Life

The American Revolutionary War did not start out well.  As the British pushed them back with little effort.  Until Benedict Arnold (future traitor) did some superb soldiering.  Impeding the advance of General Burgoyne.  The Americans met him in battle for the last time on October 7, 1777.  On the second day of fighting in the Battle of Saratoga.  And won.  Forcing an army in the mightiest empire in the world to surrender.  Shocking the world.  And getting the French to take notice.  Who then entered the American War of Independence.  The turning point of the war.  And world history.  For France was anxious to get back what they had lost to the British.  As was Spain.  Who joined the conflict as France’s ally.  Turning the American War of Independence into a world war.  And a war of attrition.  As their new foes forced them to send British forces all around the globe.  Leaving fewer to fight in North America.  With a British public growing weary of the war in North America.

America won.  Eventually.  Taking 8 years until the Treaty of Paris officially ended the conflict (September 3, 1783).  And peace and prosperity followed.  Thanks in large part to Jay’s Treaty (ratified by the Senate in November 1794).  Which improved relations between Great Britain and the new United States of America.  And began a Special Relationship between two nations of a common people, culture, religion and tradition.  When the treaty expired there was a minor hiccup in that Special Relationship that resulted in war.  The War of 1812 (1812-1815).  But peace and prosperity soon resumed.  With the South having a larger say in the national direction thanks to the Three-Fifths Compromise in the United States Constitution (1787).  Giving the South greater representation in the House of Representatives as they counted 3/5 of each slave to determine their number of representatives.  As the North industrialized and immigration filled their factories and swelled her population the South was losing that larger say.  One thing led to another that eventually resulted in the American Civil War (1861-1865).

The agrarian South had more in common with feudal England than they did with the industrial North.  Rich landowners (the planter elite) comprised an aristocracy that controlled politics.  While peasants/slaves worked the land.  The South was holding onto the Old World.  Where there was power and privilege.  While the North was building the New World.  Though the South talked about states’ rights they used the power of the federal government wherever they could.  Such as the Fugitive Slave Act (1850).  When war broke out the South won most battles.  Until General Grant started his great advance down the Mississippi River.  With the Vicksburg Campaign (May 18 – July 4, 1863) culminating in the capture of Vicksburg.  And control of the Mississippi River.  Severing the Confederacy into two.  Pretty much guaranteeing a Union victory.  It was just a matter of time.  In the east the Battle of Gettysburg (July 1–3, 1863) also ended in a Union victory.  President Lincoln went to the Gettysburg battlefield for the dedication of the Soldiers’ National Cemetery there.  Where he gave his Gettysburg’s Address (November 19, 1863).  Which ended with “we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.”  And so far it hasn’t.  Remaining that shining city upon a hill.  The destination of people everywhere yearning liberty.  And a better life.  Where all men are created equal.  And your last name does not determine the quality of your life.

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2012 Endorsements: Karl Marx

Posted by PITHOCRATES - October 29th, 2012

2012 Election

Because Workers just don’t Spontaneously Join Together into a Functioning Business they need Capitalists

Karl Marx is the father of socialism.  And communism.  He was also the author (along with Friedrich Engels) of the Communist Manifesto.  The 19th century book that said, “Let the ruling classes tremble at a Communistic revolution.  The proletarians have nothing to lose but their chains.  They have a world to win.  WORKINGMEN OF ALL COUNTRIES, UNITE!”  Some people heeded his advice.  Vladimir Ilich Lenin, Joseph Stalin, Mao Zedong, Kim Il-sung, Fidel Castro, Ho Chi Minh and Pol Pot, to name a few.  The greatest mass murderers of all time.  No ideology has killed more than communism.  Not even the socialist Adolf Hitler, leader of the National Socialist German Workers’ Party (more commonly known as the Nazi Party) killed more.

According to Marx the history of society has been a class struggle.  Before his time it was the landed aristocracy oppressing the peasants in feudalism.  Then came along capitalism.  Where the new oppressor was the bourgeoisie.  The capitalist.  The employer.  The person that paid others to work.  And kept the profits of their labors.  Basically that means your boss.  Who you may hate while you’re working.  But if business is slow and layoffs are coming you desperately hope it’s someone else and not you.  And should you lose your job you desperately look for someone else who will pay you to work.  Because that’s the only way you know how to feed yourself and buy yourself nice things.  Like a home.  A cup of coffee at Starbucks.  Or a smartphone.  Marx called this oppression.  While most everyone else would call that being happy to have a job.  Because most workers don’t have a clue on how to run a business.  Let alone build one out of nothing.  For workers just don’t spontaneously join together into a functioning business.  They need capitalists.  For without capitalists there would be no jobs for workers.

So who does the bourgeoisie oppress?  The proletarians.  The laborers.  The employees of the bourgeoisie.  The people that actually do the work.  In his day that meant the factory workers.  Who were ruthlessly exploited in sweatshop conditions toiling away at monotonous tasks beneath the dignity of a human being.  The bourgeoisie was turning man into little more than a machine.  That worked until exhausted.  And what did they get for their labors?  Barely enough to survive.  Interestingly, whenever these cruel capitalists turned to actual machines to free these workers from this inhumane labor they cried out against this capitalist greed.  For replacing workers with machines was greedy.  And destroyed jobs.  So on the one hand these jobs oppressed the working class.  But on the other they were the best thing that ever happened to the working class.

Karl Marx summarized his Theory of Communism in One Tenet: The Abolition of Private Property

That’s something else Marx didn’t like.  Change.  The bourgeoisie was always changing things.  Updating their factories.  Installing new machinery.  Forcing the people that did things the old way out of a job.  Much like President Obama blames much of our economic woes on today.  And our high unemployment.  ATMs have put bank tellers out of a job.  Self-serve checkout lanes have put cashiers out of a job.  One man and a trenching machine put hundreds of ditch diggers out of a job.  The electric light put gas lighting workers out of a job.  And gas lighting put kerosene lighting workers out of a job.  And kerosene lighting put whale oil workers out of a job.  And whale oil lighting put candle makers out of a job.  It’s this modernization that Marx doesn’t like.  It disrupts labor.  Making the old worker obsolete.  So unions come in to protect these old jobs.  Allowing people to earn high wages without having advanced skills.  So instead of learning the skills to do the new jobs of the future they can keep doing the jobs of the past.  President Obama talks about bringing back high-paying manufacturing jobs.  Where workers toil away in those monotonous tasks that are beneath the dignity of a human being.  The kind of jobs the parents of college graduates toiled away at to put their kids through college.  So their kids wouldn’t have to do what they did.  Because the new jobs are better than the old jobs.  They’re easier.  Safer.  And offer higher pay.  But the downside is that they take more education and training.  Where some people will be better than others.  Which is unfair to those who aren’t as good.

Of course to help these factory owners pay these old jobs high wages they need to sell their goods at high prices.  Often at higher prices than the market price.  So they have to unlevel the playing field.  Governments pass minimum wage laws.  Union requirements.  And minimize the competition.  Either by restricting other domestic competitors by high entry costs.  Such as licensing fees.  Or by placing tariffs on lower priced foreign imports.  Raising their prices so they don’t cost less than the higher priced domestically produced goods.  Allowing these few factory owners to pay their employees these higher wages.  By forcing the general public to spend more money than they would have without these protections.  And thereby having to make sacrifices in their lives because they have less of their earnings for their own families.  For these reasons Marx called free trade exploitation.  Because free trade made it difficult for unskilled workers to earn high wages.

Marx summarized his theory of communism in one tenet: The abolition of private property.  For it was the bourgeoisie’s accumulation of private property that exploited the working class.  So no one can own anything.  Even laborers.  Because whatever private property the laborers accumulated came from only one place.  From the exploitation of other workers.  And that’s not the only thing Marx wanted to abolish.  He also wanted to abolish the past.  Even though he held on to the jobs of the past.  Marx advocated abolishing tradition, customs, institutions and religion.  Even families.  He wanted to replace education with communist indoctrination.  Much like they did in Nazi Germany.  In the Soviet Union.  In communist China.  North Korea.  Cuba.  Cambodia.  In a socialist/communist society everyone is equally subordinate to the state.  Where there is no private property.  No bourgeoisie.  Just a dictatorship of the proletariat.  A workers’ paradise.  A communist utopia.  Where no one looked anywhere but to the state for all of their needs.

If Karl Marx were Alive Today he would Likely Endorse the Democrat Candidates Barack Obama and Joe Biden

So what would it be like in this communist utopia?  This dictatorship of the proletariat?  There would be a heavy progressive tax.  (The US has a progressive tax rate.  And the Democrats want to raise tax rates higher yet at the high end.)  No right to inheritance.  (Democrats want to raise inheritance taxes.)  Confiscation of the property of emigrants.  (The Democrats want to highly tax/seize money invested outside of the United States that is trying to escape that heavy progressive tax.)  A central bank.  (The Federal Reserve is a central bank.)  Centralization of the means of communication into the hands of the state.  (The three television news networks have a Democrat bias.  Most newspapers have a Democrat bias.  And the two areas that don’t, talk radio and the Internet, the Democrats want to regulate.)  Free public education.  That indoctrinates our children.  (Public education tries to turn our children into Democrat voters.  By teaching the unfairness of capitalism.  America’s sins.  And by scaring our children about global warming.  And that only government can protect us from global warming by regulating private industry more.  Generous tuition subsidies help continue this work at our colleges.)

The Democrats further this class struggle, or rather create one, with their endless class warfare.  The top 1% isn’t paying their fair share of taxes.  The Democrats embraced the Occupy Wall Street movement.  Pitting the 1% against the 99%.  The Democrats employ racism.  Tuning any criticism of President Obama into a racist attack.  The Democrats try to scare women by warning them of the Republican war on women.  Saying ‘women should buy their own birth control’ is code for Republicans hate women and will oppress them if elected.  The Democrats constantly divide us.  Putting one group against another.  Trying to keep the people agitated.  And angry.  So they will welcome more government into their lives.  And the abolition of the capitalists’ private property through that heavy progressive tax.  The empowerment of unions.  Both private and public.  The restriction of our liberties through radical egalitarianism.  By punishing achievement.  So no one can rise to a higher level of success.  Or to a higher level of wealth.  So everyone is equally miserable in their workers’ paradise.

So if Karl Max were alive today who would he support in the 2012 election?  The party that includes a lot of Marxist doctrine in it all ready.  Marx would feel at home in the Democrat Party.  In fact it would be hard not to see a bit of communist revolution in it.  Especially with communist Fidel Castro and socialist Hugo Chávez already endorsing the Democrat Party candidates.  So it isn’t much of a leap to say that if Karl Marx were alive today he would likely endorse the Democrat candidates Barack Obama and Joe Biden.

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Marx, Engels, Communist Manifesto, Capitalists, Bourgeoisie, Proletariat, Private Property, Soviet Union, Iron Curtain and East Berlin

Posted by PITHOCRATES - May 1st, 2012

History 101

Nationalism, Socialism and Communism forced a more Fair, Just and Equitable Society onto the People

Karl Marx and Friedrich Engels published the Communist Manifesto in 1848.  Launching a war against capitalism.  And private property.  Intellectuals and those in academia loved this stuff.  And labor leaders.  Because it was a path to power.  Especially for those who could not create wealth.  Unlike the great wealth producers.  Like the industrialists.  The entrepreneurs.  Small business owners.  The productive middle class.  That is, the capitalists.  Who work hard and achieve success.  By using their talent and ability to create wealth.  Moving up the economic ladder.  Creating income inequality.  The ultimate sin of capitalism.  According to Marx and Engels.  Intellectuals.  Academia.  And labor leaders.

In the Communist Manifesto Marx and Engels single out the accumulation of private property as the source of all our problems.  The capitalists, the bourgeoisie, have an insatiable appetite for private property.  They just can’t get enough of it.  And therefore oppress their workers, the proletariat, to maximize their property.  By paying them less and less to maximize their profits.  So they can use those profits to buy more and more property.  Which keeps the proletariat in perpetual and abject poverty.  And concentrates all the wealth into the few hands of the bourgeoisie.  And the only way to correct this great inequity was through a worker’s revolution.  Where the proletariat rises up and takes the private property of the bourgeoisie and gives it to the state.  So it belongs to everyone.  Especially to those who did not create it.  A very popular idea among those mired in perpetual and abject poverty.  Who are easily swayed to support this more fair, just and equitable distribution of other people’s wealth.

These progressive views enthralled Europe.  Especially after the Industrial Revolution created some appalling conditions for workers.  And they took this opportunity to put them into practice.  It was the 19th century that gave us the ‘fair’ political systems of nationalism, socialism and communism.  That began the process of transferring wealth from the capitalists to the anti-capitalists.  Precipitating the economic decline of Europe.  Making America the new economic superpower.  Which still maintained the principles of free market capitalism throughout the 19th century.  Until the anti-capitalistic teachings of Marx and Engels took hold in the progressive government of Woodward Wilson.  Bringing back the federal income tax Abraham Lincoln used to pay for the Civil War.  But unlike Lincoln Wilson had no intention of repealing it.  The federal income tax was here to stay.  As progressives began building that more fair, just and equitable society.

The Soviet Union Depended on the West for Food because their Forced Collectivized Farms couldn’t Feed their People

But the equitable movement in America was not as intense as it was in Europe.  Or Russia.  Which was taking the teachings of Marx and Engels to their logical end.  They had a worker’s revolution.  They became communist.  And forced that more fair, just and equitable society on their people.  Whether they wanted it or not.  And those who objected they systematically killed.  Or exiled to a Siberian gulag.  For Joseph Stalin’s rise to power was brutal.  As was the Soviet Union.  Even making a deal with Adolf Hitler to split Poland after the Nazi-Soviet invasion of Poland that launched World War II.  Then Hitler double-crossed their Soviet ally and attacked the Soviet Union.  And the Nazis nearly overran them.  The Nazis were in Leningrad (present day St. Petersburg).  At the gates of Moscow.  And in Stalin’s city.  Stalingrad.  The Soviets were unable to resist the Nazi onslaught.  The only thing that saved them was material aid from the capitalist West.  The Soviet T-34 tank (the best in the war).  And, of course, the millions of Soviet people the Soviet generals could throw into the Nazi killing machine to wear the Nazis down.

No one suffered like the Soviet people did during World War II.  The US and the UK each lost about a half million people.  A terrible loss.  The Soviets, though, lost about 25 million people.  A number that just numbs the mind.  This was the second Russian invasion that had brought an enemy to the gates of Moscow.  The first were the French a century earlier under Napoleon.  There wasn’t going to be a third.  Wherever their armies were at the end of World War II they pretty much stayed.  Turning Eastern Europe into a communist bloc.  And to make the Soviet Union a mightier nation they embarked on a rapid industrialization program.  To make it a modern power like those great nations in the West.  But unlike them they were going to do it the ‘smart’ way.  With their command economy.  Where their brilliant state planners would marshal their resources and do what the free market economies did in the west.  Only instead of taking about a century their Industrial Revolution would take only 5 years.

With no industrialists, entrepreneurs, small business owners or a middle class it fell upon the state planners to industrialize the Soviet Union.  As well as feed the Soviet people.  Well, they industrialized the Soviet Union.  But never brought it up to par with the industrialized West.  Worse, they couldn’t feed their people.  Despite having some of the most fertile farmland in all of Europe in the Ukraine.  The Soviet Union depended on the West for food.  Because their forced collectivized farms didn’t work like Marx and Engels said they would.  And they didn’t work in China, either.  Where another brutal communist dictator, Mao Zedong, killed tens of millions of his people by starving them to death.  By forcing a more fair, just and equitable society onto the Chinese.

Time Froze behind the Iron Curtain and People Lived pretty much Forever in the 1940s

At the end of World War II, like at the end of World War I, no one wanted to think about war anymore.  Winston Churchill, though, did.  For he saw what the Soviet Union was doing.  And saw the spread of their communism as a threat to Western Civilization.  He gave a speech at Westminster College in Fulton, Missouri, in 1946.  And said, “From Stettin in the Baltic to Trieste in the Adriatic an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe.”  There was now an Eastern Europe.  An East Germany.  And an East Berlin.  All behind the Iron Curtain.  All in the Soviet sphere.  All communist.  Where they all suffered under a more fair, just and equitable society.  Whether they wanted it or not.  And they clearly did not.  For the Soviets had to build a wall in Berlin to prevent those in East Berlin from escaping to West Berlin.

The intellectuals, academia and labor leaders loved Joseph Stalin and the Soviet Union.  They thought communism was the enlightened future.  Probably because they didn’t have to live in it.  But what is surprising is that a lot of college students have this affection with communism.  To this day they still wear t-shirts emblazed with the beret-wearing Che Guevara.   Who helped Fidel Castro bring that more fair, just and equitable society to the Cubans.  Who have been trying to escape it ever since by practically swimming to Florida and free market capitalism.  But the college students and their professors still yearn for a Soviet-style economy in the United States.  And condemn capitalism as they sit in coffee bars sipping their lattes.  Enjoying social media on their smartphones.  Wearing the latest fashions.  Enjoying the latest movies.  The newest music.  And dream of that more just society.  Where they redistribute wealth fairly and equitably.  And the rich pay their fair share.  Just like in East Berlin.  Where life was fair.  But it was nowhere as enjoyable as in the unfair West.

Time froze behind the Iron Curtain.  When West Berlin enjoyed the best Western Civilization had to offer in music, fashion, food, entertainment, etc., East Berlin didn’t.  For they were frozen in the 1940s.  Western music was decadent.  So instead of rock and pop music you listened to classical music.  Instead of the latest Hollywood movies you went to the ballet.  You didn’t watch Western television.  Read Western books.  Or newspapers.  No.  You only saw things approved by state censors.  And that were patriotic.  Why?  To prevent their people from seeing how much better life was on the other side of the Iron Curtain.  Where they enjoyed the latest and the best of everything.  Whereas inside the Iron Curtain you went to the black market for any real luxuries.  Like a pair of blue jeans.  Which they didn’t sell in East Berlin.  Because they were decadent.  Why, they wouldn’t even sell a t-shirt with a communist icon on it.  Because you just didn’t wear something like that in the 1940s.  But college kids will attack capitalism.  And support the fairness of socialism and communism.  Even though the things they enjoy come from free market capitalism.  And are simply not available in the communist command economy.  Because the accumulation of private property is the greatest sin of capitalism.  And not allowed under communism.

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Market Economy, Command Economy and Market Failures

Posted by PITHOCRATES - April 30th, 2012

Economics 101

Money replaced the Barter System making it Easier to Trade Freely and Voluntarily

We did our first economic exchanges in a market economy.  Agricultural advances gave us our first food surpluses.  These food surpluses gave people free time.  To do other things besides growing food.  Like developing an alphabet and writing.  Mathematics.  A code of laws.  And we made material goods.  Like pottery.  Farming tools.  Processing olive oil for lamps.  People who were good at making one thing made a lot of that one thing and traded with other people.  Who were good at making one thing themselves.  These people met.  And traded.  Freely and voluntarily.

Free trade.  A key element of the market economy.  Where people freely met and traded the things they made.  With other people who are freely trading the things they made.  Free trade came before money.  We bartered our first trades.  Trading goods for goods.  We then created money to make our trades easier.  Reducing the search time to find people to trade with.

Money is something that can store value.  Which allowed people to trade their goods for money.  Then they took that money and traded it with someone else.  To get something they wanted.  Money allowed people to spend less time finding people to trade with.  Because you didn’t have to find that one person that had what you wanted AND was willing to trade it for what you made.  Money allowed us to advance beyond the barter system.  Which proved more and more inefficient as we produced more and more goods.

Because of Market Failures the Government taxes to Provide Public Goods and Eliminate the Free-Rider Problem

As we produced more and more goods our standard of living rose.  We had more things in our lives that made that life easier.  More comfortable.  And more enjoyable.  Civilizations with a bustling market economy were great places to live.  Because there were a lot of nice things to make life better.  Which other people saw.  From beyond the civilization.  And they wanted what they saw.  And they took it.  By force.  Raiding parties would enter a developed civilization and rape, murder and plunder.  So to enjoy the amenities of an advanced civilization required the ability to protect your civilization.  Which led to one of the first market failures.  The failure of the market to provide city defenses through the free and voluntary trading of people engaged in economic activity.

We call it a market failure because building city defenses and creating an army are things the market economy can’t provide.  One person can’t make a fort or an army.  And trade it with someone else.  It’s too big.  It takes a lot of people and a lot of effort to make these things.  But it doesn’t take everyone.  If everyone else is contributing one person could skip contributing.  That person would still be able to enjoy the benefits of that fort and army.  Living in safety.  And enjoy living in safety for free.  Something we call the free-rider problem.  The fort and army are examples of public goods.  Things the free market can’t provide.  Or that the free market fails to provide.  Not that the market is broken or operating poorly.  It’s because people rarely act freely and voluntarily to benefit other people.  Because any time and money spent doing this is time and money taken away from their own families.  Which would bring hardship to them.  So the government provides these things that are necessary AND cause personal hardship to individuals to provide.  The government forces everyone to contribute.  Which minimizes the hardship each individual must bear.

Some in power like to take this further.  And call things that people can provide for themselves that benefit only themselves public goods, too.  Such as health care.  Higher education.  Housing.  Food.  Everything the people can buy for themselves by working to earn the money to buy these things.  And when they do they alone enjoy the benefits of these goods.  These goods they incurred hardships to obtain.  By working to earn a paycheck.  Or sacrificing other things to have these things instead.  It’s their call.  Their choice.  A choice they enter freely and voluntarily.  Therefore these things are not public goods.  But that doesn’t stop some people from acting like they are public goods.  Usually to help them win an election to office.  Or to overthrow the government.

A Command Economy reduced Economic Activity and Introduced a Police State

Civilizations with a bustling market economy were great places to live.  If you had talent and ability.  If you did then you could work hard and trade your talent and ability for a paycheck.  That you could use to trade for other things in that bustling economy.  Those with great talent and ability would be able to trade these for great paychecks.  Those with less talent and ability would be able to trade these for lesser paychecks.  Which, of course, caused income inequality.  Which is a handy thing to exploit if you want to seize power.  So you can enjoy the best things the civilization has to offer.  When your talent and ability only can trade for one of those lesser paychecks.

History is full of people trying to seize power.  So this is nothing new.  What was new was the way these people seized power.  By using the teachings of Karl Marx and Friedrich Engels.  As they wrote in the Communist Manifesto.  Who attacked market economies.  And capitalism.  Saying that the new middle class, the bourgeois, maximized profits by exploiting the working class.  The proletariat.  Which they said was unfair.  And that the only way to make things fair was to destroy the very concept of private property.  Because only the bourgeois accumulated private property.  The proletariat had none.  And only got poorer and poorer while the bourgeois got richer and richer.  Under their system, then, nothing belonged to the person.  Everything belonged to the state.  If you created something with your talent and ability it belonged to the state.  And then the state determined how to distribute the fruit of your labors.  Basically according to the rule ‘from those according to ability to those according to need’.  Those with the greatest need got the most stuff.  And those with the most ability worked the hardest.  Well, you can just guess how that worked out.  Everyone tried to show as little ability as possible and the greatest need as possible.

Because people weren’t the masters of their talent and ability anymore they couldn’t trade freely and voluntarily.  Which meant there was no longer a market economy.  Instead there was a command economy.  Where the government made all the decisions.  What to make.  How to use resources.  Where people lived.  Where they worked.  And what prices they paid for the things in the state-run stores.  Which had shelves full of things no one wanted to buy.  And empty shelves where the staples went (soap, toilet paper, etc.).  Because the government decided what to bring to the state-run stores.  And in what quantity.  Not people trading freely and voluntarily.  Which reduced economic activity.  Reduced living standards.  And introduced a police state.  Because anyone who had a chance to escape to a market economy did.  Which is why the East Germans built a wall in Berlin.  To keep their people from escaping their command economy.  And going to the market economy across the street.

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Rule of Law

Posted by PITHOCRATES - November 21st, 2011

Economics 101

To take Civilization to the Next Level required the Rule of Law

Agriculture advances gave us food surpluses.  Food surpluses gave us a division of labor.  The division of labor gave us trade.  Money made that trade more efficient.  And religion allowed great gatherings of people to live together in urban settings.  Which was a start.  But it didn’t solve all the ills of packing a lot of people together in a crowded urban setting.

Religion did bring people together.  But organized civilization needs leadership.  And having a leadership position over the masses gives one great powers.  For good.  As well as bad.  And all too often leaders have become intoxicated on that power.  Especially if that leader was also the god that the people worshipped.  Who felt they could do anything they wanted.  To anyone they wanted.  And often did.

But it’s just not leaders who failed to choose good.  A lot of the people did, too.  Some people cheated each other.  Stole from each other.  Didn’t honor their agreements.  Fights broke out.  Some harmed others.  Even killed people.  Clearly, religion alone wasn’t enough to get everyone to live in peace and harmony.  They needed something more.  Some basic ground rules.  Rules of the game.  The game being living together in a crowded urban setting.  Working together.  And entering into economic transactions.  What they needed to take civilization to the next level was the Rule of Law.

We use the Rule of Law to Clearly Identify and Protect our Private Property

The key for economic development rested on the principle of private property.  Economic activity is based on trade.  To trade you need first to create things to trade.  Often requiring costs and great personal effort to create these things.  Which people will gladly undertake.  As long as if they own what they create.  And are free to do whatever they wish with it.  Keep it.  Use it.  Or trade it.

We use the Rule of Law to clearly identify and protect our private property.  We define what is ours.  And forbid others to take what is ours without our consent.  If they do they will be punished under the law.  Which will deter some.  And those undeterred will face the consequences.  Thus producing a safer environment to live in.  Where we are safe in our persons and property.  Especially in crowded urban settings.

This encouraged greater economic activity.  With more opportunity to trade.  Sometimes we didn’t exchange things after concluding our negotiations.  Instead entering into a contract for an economic exchange.  Such as summarizing the terms for the exchange of a piece of land.  Or for a future farm crop.  Agreements we freely and consensually enter into.  Because we trust the Rule of Law to protect and enforce these agreements.

Private Property Rights and Contracts are the Indispensible Requirements of any Free Market Economy

The Rule of Law picked up where religion left off.  For those who did not wish to choose good behavior.  Whether it be people in the masses.  Or the leaders.  The Rule of Law became supreme.  Everyone was answerable to the laws of the land.  Today, government leaders often swear an oath to support and defend these laws.

And by clearly setting the ground rules for economic exchange, the Rule of Law unleashed economic activity.  Perhaps more so than any other thing.  By establishing private property rights.  And creating contracts.  The indispensible requirements of any free market economy.

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LESSONS LEARNED #13: “If you were to live under the socialist maxim ‘from each according to his ability to each according to his need’ you would find yourself surrounded by needy people with no ability.” -Old Pithy

Posted by PITHOCRATES - May 13th, 2010

KEY TO CIVILIZATION growth is the food supply.  Food surpluses in particular.  Before dependable food surpluses, life was short, harsh and miserable.  Especially for women.  When they weren’t working in the fields they were giving birth and raising children.  High infant mortality rates, though, inhibited population growth.  Most of the children women gave birth to didn’t survive to adulthood.  So there was a constant state of child rearing.  But few children survived to help with the business of family life.

Malnutrition and famine were common.  Feudalism provided a precarious balance between life and death.  For centuries the common people (i.e., peasants) eked out survival on their landlord’s manor.  The lord owned the land.  The peasants worked it.  Most of the bounty went to their lord.  But they kept what they grew on a small strip of land for themselves.  Just enough for subsistence.

But England changed all that.  By 1750, her agricultural output was second to none.  Private property.  Free market economy.  Capitalism.  Increased productivity.  Specialization.  These all combined to provide incentive.  Incentive produced food surpluses.  Food surpluses produced profits.  Reinvested profits improved farm yields.  This produced more profit.  And the cycle continued.  In less than a century feudalism would disappear from England.  There, you either worked land you owned or were paid wages to work land owned by others.  People began to live longer and healthier lives. 

The British Empire ruled the civilized world in the 19th century.  Representative government.  Abolition of slavery.  Free trade.  The Industrial Revolution.  These things, and others, gave them wealth, power and moral authority.  A lot of good came from this island kingdom.  Including the United States.  They weren’t perfect.  There was a learning curve.  But the modern capitalistic economy which they gave us liberated the masses.  It let us do what we wanted to do, not just what we had to do.  In particular, women, who could do more than just raise families and work in the fields.  One day, she could even become prime minister of Great Britain.

FOOD SURPLUSES BEGET industrialization.  Food surpluses beget everything, really.  Food surpluses release human capital to do everything else we do besides farming.  England was at the van of this modernization.  Others followed.  In time. 

Russia abolished serfdom (i.e., feudalism) in 1861.  Industrially backwards at the time, this liberty awakened a dormant human capital.  They followed the English model.  In time, with the advent of steamship and rail transportation, Russian grain competed with other European producers.

Joseph Stalin, looking to jump ahead in the industrialization process, implemented collective farming in the late 1920s.  He turned away from the English model.  The government became land owners.  It was feudalism on a grand scale.  Large collective farms would produce vast food surpluses that could feed industrial cities.  And there would still be surpluses left over to export to raise capital to build these industrial cities.  At least, that was the plan.

With less incentive came less productivity.  What land the former serfs had come to own was lost to the state.  The state took so much of the harvest that there was little food left for those who labored to grow it.  And the price the state paid for their crops was less than it was before collectivization.  The ‘free’ serfs were earning less and working more.  They didn’t like it.  And chose not to participate.  Collectivization became forced collectivization. 

Deportations, terror, murder and famine followed.  Perhaps more than 5 million starved to death during the famine of 1931 and 1932.  Others were to follow.

Forced collective farming produced famines elsewhere.  In China, during Mao Zedong’s Great Leap Forward, forced collectivization produced even greater famine deaths.  Historians estimate that 20-30 million, maybe more, starved to death in the famine of 1959–62.  Though hard numbers aren’t available, North Korea suffered a devastating famine in the late 1990s that claimed millions.  But in the West, in the 20th century, famine was unheard of.  When the United States suffered during the great Dust Bowl of the 1930s, there was no corresponding famine despite the loss of productive farmland.

WITH INDIVIDUAL LIBERTY comes incentive.  With incentive comes productivity.  A small island nation of free land owners could produce grain to feed themselves with surplus left over for export.  Nations with great fertile tracts farmed by forced collectivization led to famine.  Slaves have little incentive other than to subsist.  The collective good means little to them when they are starving.  They continue to sacrifice.  And continue to suffer.  Even if they do produce a few more bushels of grain.  So if the suffering is the same, what is the incentive to work harder?

As individual liberty declines, those in power tend to exploit those they rule.  In the name of the state.  Or the common good.  This is easy to see when it results in famine or revolution.  Not easy to hide those things.  But it is a little more difficult to see when the results are more benign.  Longer unemployment benefits, for example.  I mean, those are pretty nice.  Hard to see the downside in them.  As it is in other benefits these rulers give us.  So we are seduced as they whisper these sweet nothings in our ears.  And soon we willingly cede our liberty.  A little at a time.

WITH THE RISE of individual liberty, there was a corresponding decline in the ruling elite thanks to representative government.  Great Britain gave this gift to us and the United States took it to incredible heights.  The oppressed everywhere immigrated to the United States to feed a growing industrial demand.  Being new, we did not know all the affects of industrialization.  When the bad things came to light, we addressed them.  Great Britain, for example, was one of the first to protect women and children from the worse of industrial society.  Still, working conditions could be harsh.  As could life in the industrial cities.  Poverty.  Filth.  Disease.  And it was the wretched state of life in these slums that gave birth to a new school of thought on industrialization. 

In 1844 Friedrich Engels wrote The Condition of the English Working-Class to expose life in these slums.  He would collaborate 4 years later with Karl Marx on a treatise called The Communist Manifesto.  And from this Marxism, Communism, socialism, collectivism, etc., would follow.  As economic systems go, these would all prove to be failures.  But the essence of them lives on.  State planning.

You see, it was capitalism that gave us the industrial slums.  And that was good propaganda for a ruling elite looking to rule again.  So they whispered sweet nothings into our ears.  They talked about a Social Utopia.  From each according to his ability to each according to his need.  Fair taxation (i.e., only the ‘rich’ pay taxes).  Social safety nets (paid for by taxes of the rich).  Shorter workdays.  Longer paid vacations.  More government benefits.  A burgeoning welfare state.  Free stuff for everyone.  Again, paid for by taxing the rich who have exploited the working class.

What evolved was the elimination of the middle class.  You had the evil rich (and the middle class were, for all intents and purposes, rich because they didn’t need government help) whose wealth the government taxed away.  And the poor.  The poor who the government would now take care of.  If elected.  And they were.  They seduced a great many people with their utopian vision.  Even in the West. 

Great Britain and the United States would fall to this seductress, too, thanks to the Great Depression.  It was capitalism that gave us the Great Depression, after all.  The greed of the money people.  And so these great nations declined from greatness.  They became welfare states, too.  They had short respites during the 1980s.  Margaret Thatcher helped rejuvenate Great Britain.  Ronald Reagan, the United States.  But the ruling elite whispered more sweet nothings in our ears and the decline continues.

In 2010, our appetite for state benefits appears to be insatiable.  And we may have run out of wealth to tax away to pay for it.  California is on the brink of bankruptcy.  New Jersey elected a governor who proposed draconian spending cuts to stave off bankruptcy.  Other ‘blue’ states (i.e., states who vote Democrat) are also in trouble.  Underfunded pension obligations.  Demands of teacher unions.  Of government worker unions.  Everyone is there with their hand out.  None of them are willing to sacrifice for the common good.  No, they expect others to do the sacrificing.

THE OBAMA ADMINISTRATION has increased federal spending to such record levels that Communist China is concerned about our fiscal/monetary policies.  As they should be; they hold a lot of our debt.  The federal government has ‘bailed out’ private industry and taken de facto control.  They have created a healthcare entitlement that will cost more than a trillion dollars.  More spending is coming.  And it is all for the greater good.  They are vilifying those who are not poor, taxing away what wealth they can from them and giving it to the poor.  When about half the electorate doesn’t pay any income taxes, there is little opposition to raising taxes on those who do.  For if the ‘rich’ complain, the government vilifies them.

Where will it all end?  It is difficult to say.  How will it end?  Badly.  We can look at Europe who we seem to be emulating.  They’re further down The Road to Serfdom than we are.  With the excessive government spending, there will have to be greater government revenue (i.e., taxes).  Previous methods of taxation may prove insufficient.  Hello value added tax (VAT).  It’s all the rage in Europe.  It’s a multiple tax.  At every stage of production, government is there.  Taxing.  From the raw materials to the final assembly, government is there at every stage.  Taxing.  VATs will increase government revenue.  But they will also make every day life more expensive.  VATs increase the sales price of everything you buy.  And you pay it again at checkout.  It’s everywhere.  Everything will cost more.  From manicures to lattes to toilet paper to tampons.  And this is a tax everyone pays.  Even the poor.  It is a regressive tax.  The rich will pay more, but the poor will feel it more.  This hidden tax will take a larger portion of what little the poor has.

But how bad can it really get?  In 2010, I guess the answer would be to look at Greece to see what happens when a country can no longer sustain her welfare state.  And the people aren’t all that keen on losing the government benefits they’ve grown accustomed to.  It isn’t pretty.  But when you start down that road (from each according to his ability to each according to his need), the taking and giving always get bigger.  It never gets smaller.  And when you reach a critical point, government just can’t sustain it any longer.  And it crashes.  Like in Greece.

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