L. Neil Smith's
Number 362, April 9, 2006

Free Market Money

Home of the Economically Ignorant?
by Chris Claypoole

Exclusive to TLE

In "Home of the Brave?", John Steinsvold opined:

Economists concede that economics is an inexact science. What does that mean? Perhaps it means their economic forecast is better than yours or mine.

Possibly. But it certainly means, given what follows, that anyone with economics training has a better knowledge of what economics can and cannot do than he does. Not that what he writes has much at all to do with economics. It has far more to do with politics, especially the politics of envy, and of wishful thinking about economic prescriptions that have failed many times in the past.

His paragraph listing the many "inherent" problems in our economy he sees as being caused by "complexity." Let's look at them. (Few are actually inherent, fewer are caused by complexity. He would do well to consult a dictionary before misusing words.)

Needless poverty—What is that? Certainly, ordinary poverty is not complex, so what is the needless version?

Unemployment—This has been around for centuries before "complexity."

Inflation—Ditto. And in most cases, inflation is caused by government action.

Threat of depression—Actually, the increasing interconnectedness of world economies makes the threat of depression less, not more. It's like diversifying your portfolio.

Taxes—Government again. Not complexity.

Crimes related to profit—with the exception of ID theft, all of these have been problems have been around for millennia.

Conflict of interest—Again, a problem of government, around for millennia, not caused by complexity.

Seeing a pattern?

Staggering national debt—As large as it is, the problem is government, not complexity. And, as a percentage of GNP, it is not a bad as in the recent past.

Personal debt—The problem is not complexity as much as confidence that people can pay it off.

He also states that 48 of 50 states are in debt. Which states, in which country? Most states in the U.S. are required by their state constitutions to have a balanced budget. Same with cities and local governments. What phenomenon is he referring to, or is he just mistaken?

Saving for retirement and our children's education—This is not a new problem, either.

Health being a matter of wealth—When, pray tell, has this not been the case? Either in day to day living (being able to afford decent food and shelter, preventive care, etc.) or in medical care, more wealth correlates with better health, and always has. How would you change this, Mr. Steinsvold?

Skipping over a few to avoid boredom (ever notice the argumentative technique of throwing so many alleged problems onto the table that one cannot bother to respond to all of them, even when many are bogus and few are related to the alleged cause?), he mentions crippling strikes. In what country? Corruption and welfare are noted—government again. Then he throws in "wasteful competition." Where have I heard that phrase before? Oh, yes—from socialist busybodies who want to tell us how to run the economy, since they know what products are "needed" and which are "wasteful competition."

He confirms this by ending with "the social problem of the 'haves' vs. the 'have nots' and spending money to fix the problems that money creates." Interestingly enough, he had mentioned "welfare" as one of his problems earlier. Seems like a contradiction to me.

He then posits that Americans "have allowed the use of money to completely dominate our way of life," and that this is why we are no longer a free people. (Gee, I am pretty sure that government has somewhat more to do with that state of affairs.) The debt he mentions is the governments, if I guess correctly, not "ours." And I doubt that most Americans "live in fear of depression, inflation, inadequate medical coverage and losing our jobs." The last one, maybe. Most people I have ever talked to do not think much, if at all, about the first three.

Mr. Steinsvold then drops all camouflage and reveals his socialist "solution": ". . .to carry out our internal affairs without the need to use money." Wow. The depth of both ignorance and wishful thinking boggle the mind. He actually thinks that this help solve his lengthy list of problems; it will enable individuals to "gain complete economic freedom." Only someone completely ignorant of economics and human nature could possibly believe this. I kept reading to see if, at the end of the essay, there was something about April Fools Day. There wasn't.

Money, even the currency foisted upon us by the Federal Reserve, is necessary to a large, dare I say it, complex economy. We cannot, as the largest economy in the world, operate like an Israeli kibbutz (his simile). With a little research, Mr. Steinsvold could have figured out that the kibbutzes could not survive without the surrounding economy. He suggests that all material goods would be "distributed" by local boards on the basis of "need." Where have we heard this before? It didn't work in the communist countries, except to insure that there was a near-equality of grinding poverty, except for those in power (the local boards, one would assume).

He prefers cooperation to competition. This is not an either/or proposition. Companies cooperate on joint projects; people within companies cooperate to complete their tasks, while competing with other companies or even other divisions of the same company (as he notes, before writing that total cooperation would be better that the combination of the two). Competition breeds innovation and efficiency as well as problems like wasted effort. But given the performance of economies that value the one over the other, those that favor competition are far wealthier. How does he think that the US created the wealth he wants to "distribute?"

He seems to actually believe that eliminating money and competition will usher in the Millennium: everyone will enjoy our chosen work, since we will not need to work at something that others value, and will pay for; no more competition, so we will all work together as a team (except those who don't want to—see the previous miracle); "the profit motive will no longer be a hindrance to efficiency." That, of course, is the exact opposite of the real world. The quest for profits is what has always driven the search for greater efficiency.

His local economic boards again show complete ignorance of the last 200+ years of economic thought. Even in a simple economy, no group of people can possibly have enough knowledge in a timely manner to guide that economy. As the level of control expands to state and federal levels, it becomes like trying to predict random numbers generated by hundreds of millions of computers—daily. This is the definition of both hubris and insanity.

He goes on at length, in the same vein, and it's all bloody silly. (Sorry, had to insert at least one pun.) Mr. Steinsvold ends with:

Yes, a way of life without money could be compared to the kibbutzes which now exist in Israel. Can you picture the USA as one big kibbutz? However, ownership of property will remain the same as it is today. Our government will remain the same. Our free enterprise system will remain in place as it is today. There will be no need for money or any substitute for money since everything will be free according to need.

The transition from our present economy to a way of life without money appears overwhelming; but it is a temporary problem. Remember, the advantages to be gained stagger the imagination; but they are real and cannot be disputed. Perhaps it is time for us to grab the brass ring.

How will property ownership stay the same if one of his local boards decides that someone else "needs" the property more than the current owner? Oh, that's right—eminent domain, I would guess. How would a property owner who wants something else trade that property for what he wants, without money? How will the government operate without tax dollars to pay its workers? The temporary problem he envisions would be something like the ones in Russia and China, with the deaths of tens of millions of people. But I suppose Mr. Steinsvold would consider this a small price to pay ... oops, no more prices! The brass ring he wants to grab is far too tarnished to appeal to anyone who gives this some thought, instead of emotion. Possibly, given this essay was published in the "Magic City Morning Star", Mr. Steinsvold believes in magical "solutions" to problems better addressed by rational thought.



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