Saturday, November 22, 2008

On Our Way

On Our Way is President Roosevelt's book describing the policies of his first year or so of presidency and the rationale behind them.

Perhaps the most important quote fromthe book is on its very first page:
"Some people have called our new policy 'Fascism'. It is not Fascism because it springs from the mass of the people themselves rather than from a class or a group or a marching army. Moreover, it is being achieved without a change in fundamental republican method".

That is, the fact that his economic policies were very much modeled after those of Fascist Italy is of no significance, since there is nothing wrong with those policies. The only thing objectionable about fascism is the methods used to gain and hold power. This theme echoes throughout the book. The ideas that there is a clearly defined national good, that the great helmsman can clearly see where this good lies, that those who pursue their own interests rather than acting to advance this general good are utterly wicked and undeserving of any rights, to Roosevelt these are not even subject to question.

The combination of arrogance and idiocy is astonishing. Here's a particularly egregious quote, from page 86 of the John Day 1934 edition: "We had for many weeks, and indeed months, subscribed to the general principle that if the hours of labor for the individual could be shortened, more people would be employed on a given piece of work. That was the purpose behind Senator Black's bill that called for a thirty-hour week for all employees in every industry and in every part of the country. Closer study, however, led us to believe that while the ultimate objective might be sound, the convulsive reorganization necessary to put such a law into effect might do almost as much harm as it would do good."

Roosevelt breaks his arm patting himself on the back for establishing relations with Stalinist Russia... at the height of the Ukrainian terror famine! He does not dismiss objections to opening relations with the brutal despotism. He does not acknowledge there could be any such objections. He merely proclaims, "thus, after many years the historic friendship between the people of Russia and the people of the United States was restored", as if the government was synonymous with the people.

Roosevelt's main objection to the free market seems to be that it is far too productive, although why less productivity would be better in his mind is not made clear. He was certain that "speculation", that is, buying low in order to sell high is by nature sinful and destructive. It would degrade the purity of assertion to explain why this is so.

Roosevelt more or less acknowledges that much of what he did, he did because he could not do what he really wanted to, which was to reduce the nominal debt, both of the government and of private individuals. The purchasing power of a dollar is far from constant, and Roosevelt argues that it is more just to require debtors to repay their debts in "dollars" which have approximately the same purchasing power for goods and services in general as "dollars" had at the debt was initially issued rather than "dollars" having the same value in gold. In 1933 it was not yet feasible to simply print paper "dollars" until their purchasing power had returned to pre-crash levels. So instead he chose to decimate productivity in order to raise the prices of goods, and restrict employment in order to raise wages. Sort of like tying a tourniquet around a patient's neck to stop a bleeding head wound. In fairness, it was a severely bleeding head wound.

Sunday, November 9, 2008

Obtaining Wealth

This post is about general categories describing how wealth is obtained, and by "wealth" i mean things of value, good or services, in any quantity, not necessarily about huge amounts.

There are always many ways of categorizing concepts, and although some are clearly better than others, there isn't necessarily one "true" or "best" way. One common scheme assigns all specific methods to two general categories: "voluntary" (creating goods or obtaining them via some mutually agreement with their rightful owners) or "involuntary" (forcibly taking them from others, or forcing others to labor for one). This scheme seems to naturally to a moral classification (voluntary = good, involuntary = bad), although there is some question as to whether it is morally acceptable to forcibly take goods form those who have themselves obtained said goods by force, and how or if a rightful claim to goods forcefully taken could ever be established, particularly if the last rightful owner is dead.

I think it is often more useful to think in terms of three categories. What I will call "making" (which largely corresponds to the "voluntary" case above), "taking" (involuntary) and "finding". I won't try to define these here, but trust that if my readers (if there are any) have questions as to what I mean by them they will ask in the comments section. There are two related reasons why I make a distinction between finding and making. First, finding often seems largely a matter of luck rather than effort. Second, finding and claiming something deprives others of the opportunity of finding and claiming it themselves in a way that making really doesn't. For both these reasons there is less of a moral sense by third parties that the finder is entitled to the goods that he finds than that the maker is entitled to the goods he makes. This is particularly true of highly valuable random finds.

Making seems to increase the total amount of wealth in existence in a way that finding doesn't. This isn't a true as it may initially seem because value is not in things in and of themselves but rather the use of them. The discoverer of an uninhabited island certainly increases the wealth in existence by any value he obtains from the use of it until it is discovered by someone else. But given that someone else will eventually find it independently (or would have had not the first discoverer made it known), the claim that the initial discoverer and his heirs are enttled to its full value forever seems somewhat arbitrary.

Of course, not all activities fall neatly into just one of these categories. For example, it is quite common for providers of goods and services to deal voluntarily with their customers, but they obtain a higher price than they otherwise might because they or others acting on their behalf have used force to restrict the number of providers. One could might that in this case the free market price is earned and the price premium is essentially stolen. Of course, in the constrained market one does not know what the free market price would be.

Wealth obtained through pure trading or "speculation" seems to be largely found rather than made. Although to an extent speculators and traders help to decrease fluctuations in prices and to move commodities from where they are less to more useful, to a large extent those faster to realize that the price of something will increase are merely depriving those not so quick of their potential profits.

I must emphasize that I am not advising any particular moral conclusions be drawn from this, specifically I am not arguing that found wealth, or any part of it, may legitimately be seized. I do think it is useful to understand why even a libertarianish person might not accept the validity of a claim to found wealth.