Saturday, September 9

Jeffersonian Economics


George Jeffersonomics, that is.

TV Land's Labor Day Weekend The Jeffersons marathon got us wondering about economics and economic myths. Weezy somehow managed to convince George that he was charging to much for dry cleaning and that he had a social responsibility to cut prices and ... lose money. At episode's end George was cutting prices - but the George we know and love certainly jacked them back up as soon as his wife wasn't looking.

Free people everywhere from Bavarian shopkeepers to Masai herders onto Chinese peasants know very well where their own interests are to be found - all the way from the value they place on private property onto how they make and spend money. All of us humans find security in secure ownership and appreciate the notion of "buying for a dollar and selling for two" and spending money just however we like. The key concept here is 'free'.

The tens of billions of free economic decisions that those fortunate billions of us are allowed to make every day are the most magnificent expression of popular democracy and translate directly into the freedom of the political market. Captive people have the very same common human sense but someone, usually a thuggish government, always has a hand in their pocket and is busy telling them what to do and think.

Indeed, such governments are busy trying to convince all concerned that ownership is wrong and must be restricted. They seem to have little trouble finding 'experts' to cheer them on. 'Experts', by the way, who would never tolerate such nonsense where they live themselves. Such governments try to force people to accept that the same rules that have made most of humanity over the past half century escape nasty, brutish and short lives are only appropriate to some humans and not others.

All the while the folks at the top of those governments seem to be doing rather well themselves while their people get poorer. The owners of government skim not only the cream of their economies for themselves but they take out the milk by the bucketful - and invest their riches in countries that actually respect the market and ownership.

common sense

So ... back to George, who knows more economics as a successful businessman than any intellectual, expert or Nobel Prize winner. TV audiences met him as racist Archie Bunker's first Black American neighbor. That Astoria, Queens house was the Jefferson's first stop out of their original home in Harlem. Driven forward by the growing numbers of George's dry cleaning businesses they made it all the way up to the East Side and their own sitcom.

In the episode in question, Weezie visits old friends and Harlem and returns to George upset that everyone in the neighborhood has to go far away to get their clothes done. You see - George's stores are too expensive and she feels they have lost touch with their roots. So she insists that George drop his prices which he does - George gets a big kiss and feels he has done the right thing.

Even more importantly, the writers, producers, the director and the audience feel they have witnessed a modern morality tale about the evils of capitalism. Everyone feels just a little bit smug and superior - that is until they have to wake up the next morning and make a living.

Stuff and nonsense ... all of it.

First of all, if the people in the neighborhood could not afford George's prices he would have to drop the prices or go out of business with no emotional or moral calls needed. Are we to assume that people from New York's richer neighborhoods are travelling long distances to get to his stores? If not then who are his clients?

Secondly, what is wrong with making money? Should George be ashamed for being a successful businessman? His success was not due to political connections or to burning out the competition nor to cheating anyone. Throughout the show his extreme work ethic is evident. He provides a good popular service to his customers, he pays his employees well and he takes all the myriad risks of a small businessman on himself.

Third, notice the further dearth of common sense in the story line. Sure George makes as much money as possible - why else would he work so hard? Why do people get all warm and fuzzy when men like George, those very faithful students of Adam Smith and the engines of economic growth for all of us, are put down?

We aren't quite on the same page with Gordon Gekko here and his "greed is good" philosophy - but it is clear that societies where everyone makes selfish decisions with some basic rules in place (while all keep a sharp eye on the rulemakers above all) are more prosperous and free than any other pie in the sky, heaven on earth idea, feeling or ideology that the most enlightened or damned mind has yet to come up with.

Well what then must be done? The people have a right to clean clothes and it is the job of the occasionally morally loose intellectual and the always morally dead revolutionary to get them those clothes. Never mind that every other revolutionary or third way attempt to get clean clothes for the people was a miserable failure - this time it would be made to work if it was only done with more passion and honesty.

What is a next logical step of such feel good anti-capitalist morality - if it is taken at all seriously? Well quite obviously we 'the people' could confiscate George's business in the name of clothes equality and have the government run it since it is clearly immoral for someone to profit from the need of common people to have clean clothes. Or, the government could regulate George's prices with a massive bureaucracy in place.

In either case the government would oversee first dry cleaning, then regular laundries, next clothing stores, then clothing manufacturers and distributors etc. etc. all the way out to cotton farms, importers of cloth and ultimately the trucks and trains that move them around and the gas that fuels them all. Pretty soon there would be a secret clothes police checking closets in homes and gimgemas aka mandatory meetings where 'anti-clothes equality' counter-revolutionaries would confess their thought crimes. Labor camps and a bullet in the back of the neck may also await those not entirely down with the new era of clothes equality.

in the name of the people

Within a few years no one would have clean clothes or anything they wanted to wear except for a select few who would be more equal than everyone else. Dear reader, you can be sure that the people in charge of clothes equality would all be dressed in designer outfits made with gold thread and fastened with platinum zippers. The 'people' in their now accustomed rags would, according to official propaganda, delight in the equality and the promise of a perfectly clothed future that their leaders promised them.

Think we are overstating our case here? Dude, you are seriously wrong. This in a nutshell is the story of the 20th Century and every version of its totalitarian horrors. There is no clearer comparison to late 20th Century Ethiopia. What is amazing is that any Ethiopians at all (because of their government) actually consider these obvious truths a matter for debate. Most of the rest of the world is on the move and has dropped all of this ideological crap literally decades ago.

There is a necessary and inverse relationship between how much freedom people have economically and how poor they are. In the same way economic freedom and rights of ownership always accompany political freedom. For example, the formula also holds up as a matter of degree. Chinese are today not as free as they should be but much better off than in Mao's time. Ethiopians unfortunately, have essentially the same rules as they did under Mengistu except for cronly economics styled as a free market. It shows in the national index of oppression and poverty.

Ethiopians are still missing out on the fruits of the modern world which belong to them as surely as their right to breathe - and other Ethiopians took it away from them. Their government is in their way with various permutations of silly ideologies and nonsensical policies trotted out semi-annually to justify their rule to the 'thinkers' among foreign aid donors and those who figure Ethiopians could never do better anyway.

Basically, the successes of the West and those who have emulated them worldwide are human successes that are no one's property. There is absolutely no reason that those victories over want and wrong can not be shared by Ethiopians. There is nothing authentic and remotely valuable about being left behind and doing what the rest of humanity avoids like the plague.

Many in the Third World have taken too much Western self-criticism to heart forgetting that the most radical Westerner has very sharp limits at home about how much she can actually re-order what are essentially conservative societies. After all economic 'expert' Westerners don't want to live in poor ideologically correct countries but enjoy being tourists in them while giving them bad economic advice and cheering on the tyrants who pay attention to them.

That way Ethiopians aren't supposed to get any strange ideas about being the masters of their own fates in politics and economics as they submit meekly towards their betters in the politburo and corporate offices of Meles Inc. There are no secrets and nothing new to learn about how some countries suffer and others grow. Revolutionary democracy, agrarian democracy, agricultural led development, new paradigms and other such theories are not only silly they are at this late date of human development, they are simply criminal.

was George rent seeking?

Use of the term rent seeking is a fetish that is supposed to reveal sophistication and wisdom by Meles in the past and in his upcoming book, African Development: Dead Ends and New Beginnings (PDF file - all sponsored by the good folks of Columbia University's Africa Task Force). Meles also uses it to cover himself in the aura of and flatter one of his own fans and intellectual enablers, the Nobel Prize winning economist Joseph Stiglitz.

Professor Stiglitz actually has some ideas worthy of discussion - unlike his student. In his book Globalization and Its Discontents he refers to rent seeking (PDF file),
a theory of “how special interests use tariffs and other protectionist measures to increase their incomes at the expense of others”. He associates this theory with ideological fervor and claims that market failure arguments better explain problems in developing countries.
Sounds alright as a theory right? One problem is that the ideological fervor he is against is that which pushes for freer markets - which we know work better than any other option. He is not worried about ideological fervor that denies people the right to own land and property nor is he talking about the ideological fervor that creates necessarily corrupt dictatorships with governing philosophies such as the new paradigm.

That ideology was formerly known as revolutionary democracy was given to mankind by a man that Stiglitz referred to thus,
Meles combined these intellectual attributes with personal integrity: no one doubted his honesty and there were few accusations of corruption within his government

His political opponent came mostly from the long-dominant groups around the capital who had lost political power with his accession, and they raised questions about his commitment to democratic principles.

Surely, this was precisely the kind of government to which the international community should have been giving assistance
Sounds like something straight out of the government / party owned Walta doesn't it? Stiglitz also says that privatization often means briberization and that wealth often trickled up to the already wealthy elite in societies ostensibly trying to form freer markets. Again, the Professor is right but the leaders he is most enamored of are the worst offenders.

It seems that all corrupt dictators need to do is to use the vocabulary of 'free market critical' development theory to justify themselves. Tyrants are then also free of criticism for creating societies that are by definition dedicated to the concept of rent seeking.

Let us take another look at rent seeking.
In economics, rent seeking is the process by which an individual, organization, or firm seeks to gain through manipulation of the economic environment, rather than through trade and the production of added wealth.

Rent seeking generally implies the extraction of uncompensated value from others without taking actions which improve productivity, such as by imposing regulations or other government decisions that may affect consumers or businesses.
George Jefferson was not rent seeking. He was just trying to run a business and make some money while not hurting anybody. Meles, on the other hand is a rent seeker with few equals. Let us see now, Meles is a dictator with absolute authority over his party and government which are for all intents and purposes inseperable. Both party and government own businesses / monopolies that dominate the economy at every level down to planned fertilizer indebtedness to control peasants and crooked licensing schemes (or different levels of abuse) to control all other economic and political actors at every level.

The state owns ALL LAND and that insecurity is also used to control people. In effect then Meles owns all of Ethiopia in a perverse form of revolutionary feudalism that comes complete with the most selfish aristocracy Ethiopia has every imagined in its worst nightmares going back thousands of years. The government which Meles also owns ostensibly regulates everything but of course it is all a corrupt mess.

All the while the fate of Ethiopians and the stability of the Horn of Africa is held hostage to the whims of Meles in exchange for billions in loans never to be repaid, billions in debt forgiveness for stolen money and billions in direct budget support. Ethiopia is one of the most corrupt nations on earth and one of the least favorite places for foreign investment. No wonder that it is also among the poorest nations on earth.

All of this in the name of 'the people' amidst cheerleading from ferenji enablers. Meles should have his picture next to the word rent seeking in every encyclopedia. The laws, government and life of an entire country has been twisted or preserved from the roots provided by Mengistu to ensure his personal power and wealth and that of his nobility. There are dimensions of rent seeking on the political, economic and intellectual front that are staggering present here.

But ... this is all common sense isn't it? At least it should be. The more people have to use fancy terms to explain simple things and the more they want to do things for the 'good of the people' the more you should hang tightly to your wallet ... and watch out for your throat. What Meles is doing with so much support is mystifying the simple facts of tyranny and the manufacture of human suffering.

meles inc. + intellectual enablers = rent seeking, big time

The big difference between what common sense is and what popular 'feel good' economics says is seldom taken seriously in free societies except in policy towards the politically powerless. The massive chasm between reality and the ideas of every manner of political / economic 'expert' is however a deadly threat to all of us - especially when intellectuals and the pet intellectuals they enable, start trying out new ideas on the captives that they claim to care about.

You see, economics is quite simple. Sure, when you are talking about the Fed moving interest rates 0.25%, calculating M or trying to make sense of derivatives and the like - it does tend to get complicated. However, the most important decisions and what really matters is plain human common sense and the decisions people make in a free system. Such a system is never perfect and its own critical honesty makes it a target but no one has yet made a different system yet that actually creates wealth and increases freedom.

Actually all the other options have made things far worse every time. Good old fashioned capitalism is the best thing going. By no accident it is often seen in the company of genuine elections and freedom of speech. At least the degree to which an economy is free matches how free the people are. Much of the bloodiest century in history that just passed was defined by a battle - practical application of the economic and political market against 'heaven on earth' turned nightmare constructs meant just for the right class, tribe or religion.

Capitalism is not perfect to state the obvious once more. However, that is how most donor countries got to be rich to begin with and how the billions of others in dozens of other countries get richer every year. There is no viable revolutionary capitalism or new paradigm capitalism or third way capitalism or any such nonsense. That is unless the purpose is justifying dictatorship and intellectual satisfaction alone.

There are certainly variations running the spectrum from Sweden and Hong Kong onto the US and India. The essentials are always the same and those essentials are entirely absent in Ethiopia by government design and the enabling of intellectuals and bureaucrats who know better. Feeling good about making plans for a perfect future can not be excused for accepting the rough and tumble of what works today.

Without transparency and accountabily to provide for good governance economics becomes about nothing but rent seeking, getting over and lies. All with the aim of personal enrichment for those with political power. There is no more fundamentally corrupt system than one whose so pretty false promises give it validity that no one believes but so many accept.

That is what Meles Inc. is all about. All those who assist Ethiopia's Prime Minister in his efforts to regain his false mantle as 'the great intellectual' so that he can continue business as usual already know all of this.

rent seeker

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