Capitalism

Instapundit: Markets Work to Transmit Bad News. No Wonder They're Unpopular.

But are they really? Large majorities of us prefer creative destruction to government-managed economies.

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Writing at USA Today, Glenn Reynolds of Instapundit gets to the reason why markets are often unpopular with politicians, intellectuals, and other critics:

When the "Great Leader" builds a new stadium, everyone sees the construction. Nobody sees the more worthwhile projects that didn't get done instead because the capital was diverted, through taxation, from less visible but possibly more worthwhile ventures — a thousand tailor shops, bakeries or physician offices.

At the same time, markets deliver the bad news whether you want to hear it or not, but delivering the bad news is not a sign of failure, it is a characteristic of systems that work. When you stub your toe, the neurons in between your foot and your head don't try to figure out ways not to send the news to your brain. If they did, you'd trip a lot more often. Likewise, in a market, bad decisions show up pretty rapidly: Build a car that nobody wants, and you're stuck with a bunch of expensive unsold cars; invest in new technologies that don't work, and you lose a lot of money and have nothing to show for it. These painful consequences mean that people are pretty careful in their investments, at least so long as they're investing their own money.

Drawing from Nassim Taleb, Megan McCardle, and the well-worth-following Twitterer @chmtp, Reynolds argues

Markets make people better off, but they don't provide sufficient opportunities for politicians to extract bribes and intellectuals to feel better about themselves. This explains why they're unpopular with politicians and intellectuals. The real question is why anyone else listens to the self-interested claims of politicians and intellectuals. Maybe because the subject of what works and what doesn't in economics is mostly written by journalists?

Read the whole thing here.

Reynolds quotes from Reason's recent interview with Whole Foods' John Mackey, who lays much of the anti-capitalist mentality at the feet of jealousy and status envy.

I'm not fully buying that, though I think there's some of that going on. Years ago in a very different context, my Reason colleague Brian Doherty once noted that the most punishing thing about markets in general is that they almost completely dismantle any fantasy of control a particular producer might have. One minute you're topping the charts and playing stadiums, the next thing you know you're back doing bar mitzvahs at $10,000 a show. Understood properly, creative destruction is an endlessly subversive ideal that calls to mind the Buddha's response to the king who asked him to say something that would cheer him when he was sad and humble him when he was gloating: This too shall pass. 

Customers in a relatively free economy are more fickle than fate itself. When functioning freely, capitalism forces producers to offer better and better goods and services at lower and lower prices. That goes for ideas, as well. Without regard to ideology, policymakers and intellectuals (broadly defined) have an inordinately difficult time getting people to pay attention to what they consider the obvious truth. That causes anger and resentment more than envy per se.

Reason

Beyond that, there is a huge tendency for capitalists to equate their (often-momentary) riches with something approaching the natural order of things. Too many plutocrats in 19th-century England and America, for instance, assumed that their success was either god-granted or, possibly even worse, the result of some "natural aristocracy" when in fact it was embedded in all sorts of cultural, genealogical, and contingent networks of power. At times, that led to something far beyond callous disregard for the unfortunate and the poor. In fact, it often led to closing off paths to betterment on the tautological grounds that you just can't help some people. If they were capable of rising above circumstances, this thinking goes, they'd have already done so.

So there are more reasons than graft and envy for anti-market animus. Perhaps the most interesting thing is that free enterprise is actually amazingly popular. Amazingly few people believe in pure socialism or command economies any more, showing that we can learn from history. As the Reason-Rupe poll found, nearly 70 percent of Americans have a favorable view of "free markets" and fully two-thirds have a negative view of a "government-managed economy." In the same poll, millennials are far more likely to respond positively to the term socialism, but it's clear from other contexts that they don't understand its historic meaning. Hence, even millennials favor "free markets" far more than "government-managed" economies.

Reynolds quotes from our John Mackey interview. In his book Conscious Capitalism and in virtually every presentation he gives, Mackey always raises capitalism's image problems. He believes it is the best anti-poverty program ever created but worries that many of its champions fixate on its competitive aspects and its efficiency gains at the expense of painting a fuller picture of what free enterprise does for all members of society, especially the poorest among us. Check out a transcript here and watch the video below (produced by Todd Krainin).

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  1. In order to appreciate and value markets you have to value opportunity and self reliance over things like fairness, equality and security. Markets are not always fair to the individual. Booms and busts do happen. Hard working good people can sometimes see their entire life’s work ruined do to a totally unforeseeable change in the market and due to no fault of their own. To embrace the market, you have to be okay with there being real misfortune and hardship occasionally.

    To do that, you have to value opportunity and self reliance over security and fairness. If you value some vague sense of fairness and equality over all other things, then you are not going to embrace the market because markets are not fair and they are not equal. This is why the culture war is so important. If your society doesn’t value self reliance and opportunity more than it values fairness, equality and security, it won’t embrace the market or really freedom in general. Ultimately, we are only as free as our culture allows us to be.

    1. Personally I find the free market to be the most fair, but I guess defining “fairness” is part of the issue here.

      1. “Fairness”==”Justice”. Better?

        1. Justice = whatever the judge said while instructing the jury.

        2. Social justice or actual justice?

    2. Another factor is our human nature to assume two sides to every issue (day and night, man and woman, up and down). So if markets are as you say, then there must be the opposite where things can be fair and secure and equal. That’s an illusion. But to support markets implies, to some people, that you oppose equality, fairness and security. Of course, life itself isn’t fair.

      1. So if markets are as you say, then there must be the opposite where things can be fair and secure and equal. That’s an illusion..

        Indeed. Nature is not fair, men are not equal, and nothing is secure. Unless you consider death to be an acceptable outcome, in which case “extinction of the human race” is the opposite of market economics that provides fairness, equality, and security to all.

        But people will gladly accept the illusion for a little while while humming past the obvious signs of impending failure. It is darkly ironic that market economics enables shrill idiots to screech “market failure!” in relative comfort; with centrally planned failure, they would have been hungry, sick, or just plain dead, instead.

    3. I in general belive in market efficiency but no market have ever been 100% free & will never be. There will alway be someone with power that will use some form of deception, coercion, control, fraud, and destruction to mold the market more toward his or her favor.
      There are people whose desire it to rule, control, & dominate. They are happier they can force other down even if it decreases their wealth because they get more out of their power trip that they lose because of wealth decline.

      This is the reality that free market advocates gloss over. Market’s are good because they don’t require everyone to believe in a utopia to function but at the same time they lie to themselves because, they believe that everyone will play fair. Eventually the rich get their fortunes gobbled up by a junta or mob started by the people the market’s have thrashed.

  2. When the “Great Leader” builds a new stadium, everyone sees the construction. Nobody sees the more worthwhile projects that didn’t get done instead because the capital was diverted, through taxation, from less visible but possibly more worthwhile ventures ? a thousand tailor shops, bakeries or physician offices.

    This is basically just a restatement of That Which is Seen and That Which is Not Seen.

    People’s schizophrenic responses to polls about the words “socialism” and “capitalism” or “free markets” notwithstanding, revealed preference makes it pretty clear they have a very different understanding of those terms than libertarians (or professional economists).

    1. “revealed preference makes it pretty clear they have a very different understanding of those terms than libertarians (or professional economists).”

      I’m not sure how to take that comment. Objectively there really aren’t many cases of successful “socialism”. There are plenty of examples of successful “captialism”.

      How many people are moving to the few remaining Communist countries and how many are moving to Capitalist countries? I’d say revealed preference very much favors Capitalism. Or is that what you meant?

      1. I’m saying here in the states, markets tend to become less free over time, usually with significant and enthusiastic public support. I doubt that any but an infinitesimally small fraction of the people who respond positively to the term “free market” would actually support, say, dismantling the FDA, EPA, FCC, CFPB, FTC, let alone things like removing licensing barriers, legalizing drugs or repealing minimum wage laws. Whereas a significant portion of the people who respond negatively to the term “government managed economy” would probably support all of those things, including some portion who desire to increase the scope of those agencies substantially. When you say you support a “free market”, but then support policies that are antithetical to the concept, your revealed preference says more than your stated preference, IMO.

        1. In that vein (I think) I’ve seen a couple negative reports on the evening news about AirBnB. The negatives though are people running afoul of laws and regulations. One was a California law about notice to tenants for evictions; the AirBnB tenants “legally” overstayed their visit using that law as their shield. But, there was no implication in the reports that the law was the problem or ought to be changed or even repealed. The law was like gravity, it just is. And therefore AirBnB is suspect.

        2. I think you have it backwards. Voters often favor limiting markets. Consumers and producers, within the scope of their narrow interactions with the market, do not. There’s almost total overlap between those groups, demonstrating a great deal of schizophrenia in our personal and political preferences. How people tend to vote is their stated premise, but how they continue living is their revealed premise. It’s just that the state-market interface is so vast and deep and hopelessly complex that most people don’t understand how tugging on one part of the web ultimately affects every other part.

          1. That’s entirely possible. People can’t help but be self-interested even if it bumps up against their political ideals (Ayn Rand was right about that much; there really is no such thing as unselfish altruism). The result is still the same though. Markets become dramatically less and less free as people simultaneously claim they support free markets.

      2. “I’d say revealed preference very much favors Capitalism.”

        I’d say that revealed preference very much favors golden eggs, but how they feel about the goose is another question.

  3. OT: Hillary’s email firm was run from a loft apartment with its servers in the BATHROOM

    One [ex-employee] called it ‘a mom and pop shop’ which was an excellent place to work, but hardly seemed likely to be used to secure state secrets.

    Oh, boy, ….

    1. So Hillary’s really in the outhouse now – hoooo boy

        1. Does Mary hope Hillary bows out so she won’t be forced to vote for her in 2016?

        2. “I’m a Hillary Clinton fan and here’s a long list of ways in which she is horrible.”

          Wut?

          A lot more heads are going to explode before this is over.

          1. A lot more heads are going to explode before this is over.

            *embeds fingers deeply into ears*

            LALALALALAAAAAAAAAAAALALALALALAAAAALAAAAAAAAA
            LALALALALAAAAAAAAAAAALALALALALAAAAALAAAAAAAAA
            LALALALALAAAAAAAAAAAALALALALALAAAAALAAAAAAAAA
            LALALALALAAAAAAAAAAAALALALALALAAAAALAAAAAAAAA
            LALALALALAAAAAAAAAAAALALALALALAAAAALAAAAAAAAA
            LALALALALAAAAAAAAAAAALALALALALAAAAALAAAAAAAAA

    2. Is there really any way that server wasn’t hacked by China and Russia?

      1. Based on the SSL score, it’s certainly been hacked.

    3. It’s quite likely that the company Clinton used to set up her servers is based in a loft apartment but her server is probably in New Jersey according to the trace route (and in the New Jersey Internap data center according to old articles).

      It’s not that unusual ? I’ve got my servers in the kitchen (since that’s the coolest part of the office) and I’ve set up servers for a variety of companies and organizations small and large.

  4. Large majorities of us prefer creative destruction to government-managed economies.

    ?!!?!!

    Why do the ballot box results say exactly the opposite?

  5. Speaking of markets, things have been great the last few months!

    Oh shit, my phone was upside down. Never mind!

    1. *** ling, ling ***

      1. harroh?

        1. Wong numbah

          1. So solly! I misdiared!

  6. The real question is why anyone else listens to the self-interested claims of politicians and intellectuals.

    Because most people are idiots. And I mean that in the nicest possible way.

    This is not to say that most people are stupid; they aren’t. But you have to take into account that the vast majority of people consider the threat of deadly violence or imprisonment to be a moral means of achieving what they consider to be social ends.

    Of course, they never see it this way and would never personally do this to their local circle of family and friends, but they have no problem putting the boot to the face of anyone outside that circle in order to get what they want, as long as they sanitarily outsource that activity to the all-loving state and it’s friendly goons.

    1. Well, if you believe in Dunbar’s number, it explains a lot.

      1. Who knows, but essentially, the bulk of humanity has gone fucking nuts. “I’ll kill you to get what I want. Well, not personally, but someone will.”

        Zippity-fucking-moral-do-da all day long.

  7. Obama opens up Arctic Ocean for drilling – Progs moan.

    http://www.usatoday.com/story/…../31890239/

    Peanuts “BUT OBAMA WON’T LET US DRILL HERE!”

    1. As a resident of a place that saw endless protests that managed to never utter Obama by name, your point is ultimately lost. And uh, old news.

      Every one of those progs will support Bernie until it’s untenable, then they’ll vote Hillary. Rinse, repeat.

      1. You don’t understand the composition of the two major parties – but most of you Peanuts don’t. You think all Dem voters are hairy black lesbian environmentalists. Amazingly they are not.

        Progs hate Obama and have since his first year in office. Its the pro-biz Dem faction (think Silicon Valley and Warren Buffett) that kept Obama in office. Bernie and Obama have very little in common.

        1. You don’t understand the composition of the two major parties – but most of you Peanuts don’t. You think all Dem voters are hairy black lesbian environmentalists. Amazingly they are not.

          Uh, no I don’t. I think they’re largely a wide swath of people who got their “News” from Jon Stewart (whom it turns out was receiving direction from the White House).

          If I thought they were all hard-core environmentalists, I’d assume (although I might be wrong) that they’d eventually hold Obama to account. But as I pointed out, in the end, he’s never held to account for reaming the Democrats in the ass. Like a cop who can shoot people willy-nilly and never suffer any consequences, there’s no reason for Obama to stop.

          s the pro-biz Dem faction (think Silicon Valley and Warren Buffett) that kept Obama in office. Bernie and Obama have very little in common.

          Not true… they have a reliable constituency in common.

          1. Why are you arguing with one of Tulpa’s socks? Don’t you have something better to do, like slam your head in a car door several hundred times?

            1. Because I don’t engage Tony any more, so I have to relieve the pressure somehow.

              1. Wouldn’t you rather just punch yourself in the balls? At least then the pain would go away after a while.

            2. Wait, but if… are you saying Tulpa is Weigel?

        2. “Progs hate Obama and have since his first year in office.”

          Progressives who voted for Obama in 2008, voted for Obama again in 2012 by an overwhelming margin.

          You are an idiot.

      2. And uh, old news

        August 18, 2015.

        1. Obama administration allows Shell’s Arctic oil wells but drilling still restricted
          Controversial decision from Interior Department is conditional on availability of spill-response equipment, which is currently en route to Oregon for repairs

          July 22, 2015.

          And the Shell oil rig was docked in Seattle in prep to move to the arctic in early June. Which means that Shell already knew that the arctic opening was a done deal.

          1. ANCHORAGE, Alaska ? The federal government on Monday gave Royal Dutch Shell the final permit it needs to drill for oil in the Arctic Ocean off Alaska’s northwest coast for the first time in more than two decades.

            The Bureau of Safety and Environmental Enforcement announced that it approved the permit to drill below the ocean floor after the oil giant brought in a required piece of equipment to stop a possible well blowout.

            Monday (the 17th) – final permit. That’s the “news”.

            I don’t doubt that Shell knew what was going to happen.

            1. I don’t doubt that Shell knew what was going to happen.

              Right, Shell moves a billion dollars worth of gear into position based on “if”.

    2. Now that post is classic PB.

      Shell was given a permit in 2008. The Obama administration reluctantly allows one company to finally perform the first actual drilling 7 years later. And PB attempts to spin the narrative.

      Apparently, in his mind, delaying the use of a permit for 7 years is perfectly acceptable.

      1. …in his mind…

        Well, that is a major flaw in your reasoning.

      2. The validity of the government’s sale of roughly $3 billion worth of drilling leases covering 2.8 million acres of the Chukchi Sea was thrown into doubt in July 2010, when a federal district court in Alaska concluded that the environmental analysis the Bush administration completed before the auction fell short of what was required by U.S. law. The court ordered the Interior Department to redo the assessment and decide whether to void, uphold or alter the leases.

        That permit was found illegal and was later corrected by the Obama Interior Dept.

        http://fuelfix.com/blog/2011/1…..ng-leases/

        1. That’s the point, PB. It took them seven farging years to correct a permit.

          Drilling delayed in drilling denied.

          Say, hows that Keystone Pipeline coming, anyway?

          1. Read again.

            The court ordered the Interior Department to redo the assessment and decide whether to void, uphold or alter the leases.

            The Obama Interior could easily have voided the permits if they were whacko enviros like all the Peanut Gallery wrongly believes. Obama energy policy is All OF The Above.

            And Keystone would INCREASE Midwest gas prices – studies have shown. Then there are ED issues.

            1. Obama energy policy is All OF The Above.

              Yeah, I mean, if you don’t count the entire continental united states and its coastlines, Obama’s like, totally pro-oil.

              Obama’s energy policy, like his policy on everything else, is the same as the shady accountant who, when asked what is the sum of 2+2, replies, “What do you want it to be?”

          2. Seven years which included one presidential election and one midterm. No, nothing political about that.

    3. As I suspected, those are only exploratory wells.

      Its the production wells that matter. The feds have allowed exploration before, and blocked production.

      Let us know when Shell gets the green light to actually go into production.

      1. So let me get this straight:

        According to the shriekbot, when the Obama administration finally relented, after nearly a decade of obstruction, on allowing a single company to perform a single exploration, under a permit that had already been granted by the previous administration, after having been ordered by the court to stop dicking around, it is a sign of how pro-oil the President is.

        There must have been an ink shortage at the government pen factory.

  8. You know who else didn’t want to hear any bad news….

    1. Sergeant Schultz?

    2. Han Solo?

    3. Several of my ex bosses?

  9. Drawing from Nassim Taleb, Megan McCardle,

    Is this the same Megan McCardle who didn’t like short sellers because she didn’t understand their purpose?

    1. Well, he didn’t say the economic genius Megan McArdle…

    2. To be fair, all he ‘draws from Megan’ is a quote about how many journalists see the lack of monetary reward in journalism itself, despite nominal success, and conclude…. “systems that reward people through political influence look better.“, by contrast to market-economics.

      I do think many people in the journalism game often lack the economic perspective on how all they are really doing is “Enabling Advertising Opportunities”.

      Whether you’re writing a column on Asian Banking Regulations for The Economist, or covering the newest trends in black women’s hairstyles… its basically the same function – drawing in eyeballs, and marketing the relative value of those eyeballs to potential advertisers.

  10. Uh huh

    Drafted at an international symposium in Istanbul, the Declaration calls for “all people, leaders and businesses …to commit to 100% renewable energy”.

    It also argues for increased financial support for communities vulnerable to climate change.

    The main focus though is on “well-off nations and oil-producing states,” who are urged to lead the way in phasing out greenhouse gases, no later than the middle of this century.

    The Declaration calls on the rich countries, to recognise their “moral obligation to reduce consumption so that the poor may benefit from what is left of the Earth’s non-renewable resources”.

    “People need to be told and politicians need to stop misleading their people, in telling them they can go on increasing their standards of living for ever and ever and ever,” Fazlun Khalid, a long time Islamic environmentalist involved in drawing up the Declaration, told BBC News.


    At least they’re honest.

    1. Peak Abu?

      1. I definitely laughed at that one

    2. The Islamic Climate Declaration says that the world’s 1.6bn Muslims have a religious duty to fight climate change.

      I’m sure ISIS will get right on that.

      1. At least they’ve finally found some common ground with the pope.

      2. Well, if they kill enough Jews and Christians they will depopulate the planet, and that is definitely on the watermelon’s wish list.

        1. Don’t forget Hindus, Buddhists, Yazidis, Yorubans, Wiccans, Zoroastrians, Jainists, Sikhs, and Insufficiently and/or Improperly Pious Muslims.

          1. Oh, and atheists and agnostics, obvs.

    3. Sounds like they want to haggle on living standards.

  11. Too many plutocrats in 19th-century England and America, for instance, assumed that their success was either god-granted or, possibly even worse, the result of some “natural aristocracy” when in fact it was embedded in all sorts of cultural, genealogical, and contingent networks of power.
    .
    They didn’t, you know, build those railroads, or bridges, or mining empires, or factories.

    1. White privilege has been around since Babylon.

  12. Perhaps the most interesting thing is that free enterprise is actually amazingly popular.

    Ah, our old friend stated v revealed preference.

    For something amazingly popular, it sure is under constant attack by governments, with little to no popular opposition.

    Sure, they aren’t going full retard commie, but there’s plenty of anti-market stuff you can do, and is being done, short of that.

    1. For something amazingly popular, it sure is under constant attack by governments, with little to no popular opposition.

      This with a raging hardon.

      From where I stand, western Democracies loot their neighbors and shield their interests from market competition via the democratic process as a matter of course.

  13. “Amazingly few people believe in pure socialism or command economies any more'”

    Yet it is amazing what a high proportion of these few people get gigs as ‘economics writers’ for national magazines/lefty intellectual-posing online journals.

    1. In other worlds, most people don’t like the “icky” parts of communism, but the rest is ok. The part where the one is an inevitable consequence of the other will just be ignored as inconvenient.

  14. are you saying Tulpa is Weigel?
    .
    We’re all sockpuppets, now.
    The whole place is just a figment of Mary’s dog’s imagination.

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