Davd Gelernter’s post confuses me. I think it is because he is confused.
He says “capitalism strikes me as the spoiled brat of the political and philosophical universe… Everyone knows about capitalism’s successes; we need to spare a little attention for its failures too.”
And what is an example of the failure of capitalism? Why, the highly subsidized and regulated field of education:
“Everyone knows that elite US universities occupy the wacko left of the ideological spectrum. Because they run the ed schools, they’ve gradually turned the public schools into wacko-left institutions…”
Why the supposed market failure?
“In part because humanities and social science professors are paid approximately nothing…Why shouldn’t US humanities professors hate this country and hate capitalism when their mediocre-ist students routinely get rich while their professors can’t even pay their damned bills?”
Here, we might consider a hat tip to The Anti-capitalistic Mentality by Mises. See sub-section five, “The Resentment of the Intellectuals”.
To answer Glernter’s question directly: All sorts of people hate capitalism for all sorts of bad reasons. Why should I take seriously the concerns of someone who earns less than they think they should? If a professor can’t pay his bills, then he has over-extended himself. Surely you don’t claim that professors are below the poverty line or some such. Instead, professors should realize that although teaching and learning are important, their marginal unit is not necessarily that socially valuable, and therefore their market salary is not necessarily the same as someone who applies the knowledge so taught.
Mr Gelernter then reveals his planning demon:
“Do we really think this is a clever way to run a country—to pay the people who have maximum influence on the attitudes of young people so little that they’re bound to be resentful and angry?”
Well, no, Mr Gelernter; but, many of us don’t think a country should be “run” at all.
He claims, “Nowadays, colleges that have managed their portfolios well are swimming in money and are putting up new buildings right and left.”
Oh, good point. If that’s true, I would expect a limited-government blogger to recommend reducing federal subsidies. Right? Wrong. He launches into a string of red herrings of dubious truth value:
“How much of that filters down to the faculty? Zero…And why do we want to be a nation that worships rich people anyway? Conspicuous consumption used to be bad taste. Unfortunately taste has been abolished. And students have never been so obsessed with money, and so indifferent to spiritual things.”
He sums up:
“…the next time a multi-billionaire tech bigshot tells me how wonderful capitalism is, I’m going to throw up. Obviously they think it’s wonderful. But there’s more to life.”
Oh, come on. If you mean the over-regulated, over-taxed, subsidized, quota’d, and trade-barriered capitalism we have today — then, yes: there are bigshots like Bill Gates and George Soros who think capitalism is great. But if you mean real capitalism — laissez-faire capitalism — libertarian capitalism — the capitalism of Rand, Mises, Bastiat — show me three.
No, really. Show me three billionaires who are public advocates of laissez-faire.
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Well, the free market will usually, if there is no state interference, price a good or service close to what it is worth.
I find it odd that when Bill Gates and Warren Buffet advocate for the rich paying more of their “fair share” of taxes, they mean a tax on income, not wealth. Since they are already wealthy and the largest portion of their wealth is from capital appreciation, not income, it won’t affect them much. Income tax does, however affect the mom-and-pop operator trying to save and invest his way out of the middle class.
And I concur that we haven’t yet seen true capitalism. If people were paid what they are worth, Mr. Gelertner would starve while trying to peddle his intellectual musings on the inane.
“And students have never been so obsessed with money, and so indifferent to spiritual things.”
In this context, it seems, “spiritual things” is a code word for things of no obvious worth.
“Show me three billionaires who are public advocates of laissez-faire.”
http://www.reason.com/0510/fe.mf.rethinking.shtml is one.
I’m having trouble coming up with two more, though.
Ack. The above comment should say:
“T J Rogers is one.”
Sorry about the lousy html.
I’m under the impression that these sociology professors have a negative marginal revenue product. They should be taxed, not subsidized.
I just recently listened to an 84 lecture series on US History from The Teaching Company (teach12.com) (torrents available in many places), I was appalled at the ignorance of these professors, specifically their economic ignorance. Central banking and monetary control are never discussed, only “busts” are discussed.
The Great Depression is reduced to Florida speculators and the Dust Bowl. Practically every political figure is praised, and nearly every “progressive” policy is given a warm welcome. Luckily this blog recently posted a link to Rothbard’s essay on Historical Thought – and these 3 particular professors all swear by the Whig theory. Although I did learn a few things I didn’t know – I was still shocked by the collectivist outlook on every topic that these ass-clowns discussed. Everything was a blob vs blob.
This Gelernter guy actually works for the professedly libertarian and scholarly Cato Institute? He sounds like he wouldn’t know *Economics in One Lesson* from *Europe on $10 a Day*.
BTW, it’s rather doubtful that raising the salaries of liberal arts professors — short of bestowing them seven-figure incomes, anyway — would make them friendlier to property rights and free markets. The professors at the more elite universities, where salaries are highest, tend to be even more socialistic and countercultural than their less exalted colleagues. The preposterously overpaid elite university administrators, who generally rose from faculty ranks, show little sign of favoring markets (even when obligated to hobnob with rich potential donors).
Indeed, the professoriate has moved to left in coincidence with the rise of government-driven expansion of so-called higher education and its attendant personnel. The growth of the class of government- and philanthropy-dependent professors has only emboldened them to expect more of the material benefits our society has to offer, and there’s no reason to think that a 25% or 50% or 100% wage increase would leave them more satisfied with society’s economic arrangements.
Beyond Mises’s *The Anti-Capitalistic Mentality*, much further insight into the role of envy in the modern intellectual’s thinking may be found in this essay by the late Robert Nozick, also to be found, ironically and to its credit, on the Cato website:
http://www.cato.org/pubs/policy_report/cpr-20n1-1.html
Funnily enough, I surmise that whatever truth there is to the dubious statement “Conspicuous consumption used to be bad taste. Unfortunately taste has been abolished. And students have never been so obsessed with money, and so indifferent to spiritual things” is a result of central banking.
As a reference example, the Weimar Republic. Whenever time horizons are compressed enough, there is an obsession with the flashy, outward signals of “success” and with making a lot of money fast.
In such a regime, if there are markets at all, the society becomes a left-winger’s parody of capitalism, as all private plans become drastically accellerated and de-rationalized.
Which explains why essays like the one referenced in this post seem to make sense to the shallow.
Draw your own conclusions I suppose…
And why do we want to be a nation that worships rich people anyway? Conspicuous consumption used to be bad taste. Unfortunately taste has been abolished.
Sounds like a case of sour grapes to me.
“Conspicuous consumption used to be bad taste.”
A reading:
“The faultless attire of Sir Hugo was matched by his faultless punctilio and observance of yachting protocol. Immortality at the bar
of the New York Yacht Club was achieved by his resolute demeanor when faced with crises that would have unnerved lesser men. During one of
Mrs. Langtry’s New York stage appearances a group of gentlemen including Ned Center, Center Hitchcock, and one or two other sports were guests of Sir Hugo for an afternoon’s sail down New York harbor at the terminal of which it was planned to dine at a well-known shore-dinner resort on Staten Island. Somewhere along Bedloes Island the owner contrived to fall overboard. As the vessel was moving at a gentle pace and the Baronet was known to be a strong swimmer, little
concern for the contretemps was expressed by his friends and presently the yacht’s cutter with two seamen at the sweeps was put over to retrieve the watterlogged nobleman.
As they came up with De Bathe, who was treading water with his yachting cap still in place and monocle adjusted, he was observed to be in a bad humor about something.
‘Who the hell do you think I am?’ was his greeting to rescuers.
‘Why, you’re the owner, Sir Hugo, sir! You’re the master!’ the seamen replied in some surprise.
‘That being the case, you can goddamned well go back and fetch out the long boat. And have the captain in command, you hear? And while you’re at it you can get into your dress blues and show a little spit and polish. We’ll have a little style around here when the owner falls overboard.’”
(Lucius Beebe, “The Big Spenders”, 1966, Doubleday & Co., pp. 236-237)
~~~~~~~~~
I miss the rich.
A simple Godelian proof – the market fails to preserve itself. It cannot even sustain small freedoms gained – that requires effort of another kind. Alternately, the market is efficient at destroying itself when people prefer to have socialism or anarchy (the latter in the sense of no enforcement of property rights instead of a centralized authority recognizing claims based on “need” instead of legal title in the former).
I would also note that just because someone uses a straw-man argument doesn’t mean that his point of view is the wrong one, it merely proves he cannot adequately argue it.
The market sometimes concentrates economic power, sometime to monopoly where Acton’s addage applies, absolute power corrupts absolutely.
Multimillionaire Tech Bigshots are usually beneficiaries of government grants of monopoly (intellectual property typically) or some other regulation or interference which the technology attempts to fix.
The market doesn’t provide love, or even marriage. It does provide what to eros is unhealthy fast food, as well as other vices. In that sense the market “succeeds”, but to our detriment.
The market provides goods and services efficiently, and hence can’t “fail” unless you desire the market to do something it wasn’t designed to do, e.g. a levee won’t prevent a fire, and a cyclone fence won’t prevent air pollution. It doesn’t provide goodness, justice, fairness or many other things (except in the narrow sense of trade and exchange – but it provides hitmen and arsonists as efficiently as gardeners and maids).
In this I think both sides are wrong – the original post wants the market to undo all of the effects of the fall, and the second equates a free market with undoing the effects of the fall.
The market is a very powerful force like a hurricane and needs to be respected, harnessed, and other things need to take care of some of the chaotic effects. But a hurricane won’t assemble a pile of boards, shingles, and dry-wall into a house, it will normally disassemble a house into such a pile. This doesn’t make the hurricane evil, it is just what hurricanes do by nature.
The problem with any direct (and most indirect) intervention in markets is that it is like twisting a gyroscope – it reacts in unexpected ways and directions and against that force. And usually the interventions create worse (but maybe better hidden) problems.
There is a third dimension beside the state and the market – it is the church or other voluntary institutions something like the red cross. Their function is to address things neither trade or force properly address. They can help the poor, heal the sick, educate the ignorant. Those are corporal and spiritual works of mercy, so are subject to the separation of church and state, but aren’t directly handled by the market (consider someone who is disabled and can’t labor and has no property to trade). The state has no power to help him either – the commandment against theft and robbery applies to the collective. The third dimension of society handles such things.
Trying to shoehorn that function into either of the other two (state or market) is like expecting hurricanes or animals to assemble houses – they won’t and they will destroy existing ones with the shrapnel or habitat provided from the piles for the attempt.
The state’s problem is exactly the opposite of the free market – while the latter is unstable and tends to destroy itself, the former tends to accrete power and functions it has no business in (or even overdoes anything even minarchists might accept).
The balance can only be kept by the third dimension as far as I can conceive – when it is healthyit produces virtuous people who encourage the market and discourage the state.
Like a garden that will turn either into a desert or a swamp without maintainence, society needs active maintainence – planting, uprooting, and pruning.
But just like some asthetic confusion says letting kudzu grow over everything is a proper garden, some people think the state doing everything is a proper society.
And others seem to think that barren sand and rocks is a garden (zen, maybe, garden, no). It may be deeply intellectual or interesting, but it isn’t a garden. The lines – be it on historical or Supply/Demand charts – or in the sand around the rocks don’t substitute for an actual rosebush.
The market doesn’t provide love, or even marriage.
Really?! You have an unusually strict definition of the market.
tz said:
This makes no sense. The market is not an entity. The market is an abstract term used to encompass the actions of individuals engaged in trade. To say that the market cannot sustain itself seems rather like saying that trade cannot make itself happen. Of course it can’t. Why would anyone expect it to be able to do so? And for the same reason, the market also cannot destroy itself. People make choices. Individuals act. The existance and strength of the market is not determined by the market for the market is not an entity that can act for itself. The existance and strength of the market is determined by the actions of individuals. Only individuals decide between capitalism or socialism, honesty or deceit, reason or irrationality.
“…society needs active maintainence – planting, uprooting, and pruning.”
Sounds like Mao, or Joseph, or Pol, or that German fellow (can’t quite remember the name).
tz, why not leave people alone? They do not need all the trouble your “good ideas” will bring them. Moralising is all great fun but the rule of Capitalism is, respect private property & stay out of other people’s private business affairs. Do this (easy enough) and there are no “market failures” to be concerned about.
Simple enough.
Sione
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