Non Sequiturs on Parade – PART V

Let’s continue analyzing Steve Roth’s handy compilation of leftist bromides, non sequiturs, self-congratulations, and just plain ol’ errors, “Why Welfare and Redistribution Saves Capitalism from Itself.”[i] This series of posts addresses the following question: Did Roth explain why welfare and redistribution save capitalism from itself? (Prior posts on this question can be found in PART I, PART II, PART III, and PART IV.)

Author’s Note: I bear no animus toward Mr. Roth. As the article being discussed is the only writing of his I’ve ever read, I do not know if it is typical of his work. I assume he believes what he is saying and believes his ideas are in the best interest of society. I’m picking on this article because it is so illustrative of many of the myths and fallacies that underlie the left’s narrative. I do bear animus toward pedaling the article’s faulty notion that giving government more money and control over the economy has in the past and will in the future result in better outcomes, and that trimming the government’s overgrowth will lead to ruination. My hope is that a focus on the article’s illogic and faulty interpretations of history will help reveal that Pied Piper tales like this one may sound nice, but that they lead us astray. Everyone should also be aware that many of the leftist “facts” and historical perspectives presented in the article are highly contested by many academics, including at least three Nobel Prize laureates in economics, whose works are antithetical to the interests of power grabbing politicians and the academics hired or subsidized by the government to produce papers and testimony that support the politicians’ power grabs. (In my opinion much of what comes out of academia is political propaganda). Sadly tales like the ones Roth spins are (not surprisingly) taught in our government subsidized schools.

Let’s continue sorting this out.

Let’s first touch on a relatively minor—nevertheless clarifying—matter. Exactly what is the difference between “welfare” and “redistribution” such that they needed to be separately identified as necessary to “save capitalism from itself”? It is not self-evident, and Roth didn’t say. Because he failed to explain why either or both “save capitalism from itself,” perhaps this question is not important. Roth may have just been preening before his fellow leftists—with no actual thought behind the word choice. For this reason I’ll use the word “redistribute” to cover both items.

What does “saves capitalism from itself” mean? Let’s take a look at what capitalism is.

Capitalism: An economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.[ii]

Capitalism (this poor word eschews the essence of the system it attempts to describe)[iii] is what enables people to create wealth in excess of what is necessary to fulfill the basic needs of those from whom wealth is taken in order to give that “excess wealth” to people deemed to have insufficient wealth.[iv] (This statement is simpatico with Roth’s acknowledgement of the “immense, world-changing, manifest benefits, market capitalism”[v] bestows on humans.) Functionally “capitalism” is a system in which individuals specialize in producing things valued by other individuals and voluntarily trading their products with others who specialize in producing other things of value. There is much inherently good about this cooperative human activity. First and foremost, it induces people to cooperate for the benefit of all and involves no coercion or threats of violence. The process is indifferent to the participants’ race, color, creed, or origin, and, therefore, encourages cooperation among all people.[vi]

As I have discussed in “Wealth” and many other posts, specialization and trade create wealth. The existence of wealth 1) is essential to fund research, innovation, production, and delivery of the cornucopia of things which have contributed so mightily to human progress and flourishing, 2) increases the time that can be spared for contemplation, play, leisure, and sleep, and 3) provides the wherewithal to be charitable. Do humans really need to be saved from capitalism? Surely not. Consequently, Roth’s central claim is nonsense.

Rather than saying something accurate and helpful, Roth, as leftists so often do, is smearing (perhaps for political purposes) the word “capitalism” by conflating it with 1) the fraud, corruption, cronyism, illegality, mistakes, and other malefactions humans bring to capitalism— just as they do to any economic system, and 2) the envy, jealousy, etc. (the most significant of which were discussed in PART IV) that are negative reactions people have when some wind up with significantly more wealth than others (which under capitalism is inevitable by virtue of the fact that certain people are significantly more productive than others). “We” do need to be saved (if possible) from the consequences of letting bad actors and bad ideas operate in conjunction with a capitalist economic system become so large that those negatives exceed the “immense, world-changing, manifest benefits” capitalism generates. This is the “saving”[vii] with respect to capitalism that is important or meaningful. Because he does not discuss these, Roth does not address the real issue of the topic about which he is writing. Worse, his commentary fans the negative embers or flames that smolder or rage in the minds of some people who, for whatever reason, wind up with significantly less than the most productive individuals.

Taking property under threat of force in order to redistribute it to people who do not produce enough to sustain a lifestyle acceptable to them is fundamentally antithetical to the voluntary exchange implicit in capitalism. The more “we” redistribute wealth, the less wealth to be redistributed will be generated, and the less 1) research, innovation, development, and delivery of the cornucopia of things which have contributed so mightily to human progress and flourishing and 2) time that can be spared for contemplation, play, and leisure. The blessings of capitalism are most vivid among the rich. Capitalism’s ability to improve the absolute standard of living of the poor is the much more remarkable wonder of capitalism—regardless of the fact that the poor never seem to realize, much less appreciate  it.[viii]

To be sure, I am not saying, “Therefore, there should be no redistribution.” I am trying to bring important clarity to a tradeoff that is being made when “we” redistribute. Certainly, voluntary charitable “redistribution” should be admired and otherwise encouraged. That is another form of voluntary exchange in which givers get good feelings (or, in less virtuous cases, good PR) and recipients get things they need and would not otherwise have. Moreover, some forced redistribution, when done well, does more good than harm. However, most of how government actually redistributes does more harm than good.[ix] I may not even be opposed to “massive” redistribution, depending on how much “massive” is and how effective the programs are at accomplishing the stated goals.

Again, does Roth’s discussion of capitalism advance his claim that capitalism needs saving or that welfare and redistribution save capitalism? I think not.

_________________________________________________________________

[i] If you haven’t already done so, please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my posts about the article.

[ii] Capitalism definition.

[iii] See What are the biggest misunderstandings about capitalism?

[iv] id. Also see, “You will always have the poor among you. . . .” to see why (1) America’s poor are in the top 1% of the wealthiest humans to ever live, but are, nevertheless, fairly described as “poor,” (2) they will remain poor even with vastly more redistribution of wealth to them, and (3) the absolute standard of living of the poor will rise faster if the amount redistributed to the poor were less.

[v] I have no idea what Roth thinks he is adding to the concept when he puts “market” in front of “capitalism.” Is there some other kind of capitalism? If anyone knows, please let me know.

[vi]When goods don’t cross borders, soldiers will.” Frederic Bastiat

[vii] Just as there are no “Solutions,” there is no “saving” from all negative consequences and human reactions no matter what economic system is employed.

[viii] See, “Wealth Creation. No Happiness, Why Bother?

[ix] I understand and respect those libertarians who place such a high value on liberty that they reject any utilitarian justification for curtailing liberty. That position has much positive to be said for it. I also see the slipperiness of the slope once one moves off that high plateau—once the principle is conceded, a slide to the bottom of the abyss may become inevitable. America’s trajectory appears to be a confirmation of that fear. However, I believe that all things human involve slippery slopes and that massive utilitarian benefit in exchange for a slight loss of freedom is warranted. The Constitution is evidence that the founders believed absolute freedom is not optimal. I also believe that America is currently far beyond the point of diminishing returns with the compromises to freedom it has already made.

5 thoughts on “Non Sequiturs on Parade – PART V”

  1. […] Let’s continue analyzing Steve Roth’s handy compilation of leftist bromides, non sequiturs, self-congratulations, and just plain ol’ errors, “Why Welfare and Redistribution Saves Capitalism from Itself.”[i] The issue this series is addressing is: Did Roth accomplish his purpose to explain why welfare and redistribution saves capitalism from itself. (Discussions of other instructive aspects of the article can be found in PART I, PART II, PART III, PART IV and PART V.) […]

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  2. From Amadeus: “Of course! It’s the best opera yet written, I know it… why didn’t they come?” I think your best thus far.

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