Monday, January 6, 2014

Five Economic Reforms Millennials Should Be Fighting For???

The latest internet squabble is over a Rolling Stone article  that advocates 5 things that the "millennials' should be fighting for.

Bad grammar in the title aside, here are the main points of the article:

1. Guaranteed Work for Everybody
2. Social Security for All
3. Take Back The Land
4. Make Everything Owned by Everybody
5. A Public Bank in Every State

Before we dissect each point, let's take a quick peek at the overall incoherence of the article.

Point 1 guarantees work for everyone.   Point 2 guarantees an income even if you don't work.  Why do you need guaranteed work if you already have guaranteed income?  Who would choose to work if the alternative was to not work and still get paid?

Point 4 calls for the elimination of private financial assets, and Point 5 calls for a public bank into which you deposit your private financial assets.  Hello?

Each of the points, when examined in detail, betrays the intellectual vapidity and the complete detachment from reality of the author.

1. Guaranteed Work for Everybody
...The easiest and most direct solution is for the government to guarantee that everyone who wants to contribute productively to society is able to earn a decent living in the public sector. There are millions of people who want to work, and there's tons of work that needs doing – it's a no-brainer...
... Imagine a world where people could contribute the skills that inspire them – teaching, tutoring, urban farming, cleaning up the environment, painting murals – rather than telemarketing or whatever other stupid tasks bosses need done to supplement their millions. Sounds nice, doesn't it?

Sound nice?  (the underlying thought behind all liberal ideas, BTW, it 'sounds nice').

The furious envy that drives the author is betrayed by the thought that 'bosses' hire people to do 'stupid tasks' to 'supplement their millions'.  Last time I checked, no one is forced to work in any of these jobs. Businesses exist ONLY to make profit for the owners.  That is their sole purpose, and to demean the tasks that help them create value shows that the author has never run a real business.

2. Social Security for All
What if people didn't have to work to survive? Enter the jaw-droppingly simple idea of a universal basic income, in which the government would just add a sum sufficient for subsistence to everyone's bank account every month. 

What if people didn't have to work:?  What if Unicorns were real?  People DO have to work.  The means for our survival does not drop from the sky like mana from heaven .  We must produce the food and shelter we need to survive.   The fact that modern capitalism produces so much surplus wealth that the author has apparently become detached from reality does not change the fact that unless people work there is no food to eat.

3. Take Back The Land
Ever noticed how much landlords blow? They don't really do anything to earn their money. They just claim ownership of buildings and charge people who actually work for a living the majority of our incomes for the privilege of staying in boxes that these owners often didn't build and rarely if ever improve.... In any case, we have to stop letting rich people pretend they privately own what nature provided everyone.

Again, we see the author's total detachment from reality.  Landlord's actually do provide a valuable service.  They provide capital to allow people (like the author) who lack capital, to live in housing they could never build themselves.

Property rights and capital produce apartment buildings.  No property rights and socialism produce the shanty towns with cardboard and tin shacks you see throughout the third world.

And nature did not provide apartments.  People did.  Search the world and you will not find an apartment building that sprung forth from the bosom of nature.   People saved money and built the building.  They improved the land.  Absent property rights in land, these improvements do not happen and everyone is living in a cardboard hut.

4. Make Everything Owned by Everybody
... Just buy up their stocks and bonds. When the government does that, it's called a sovereign wealth fund. Think of it like a big investment fund that buys up assets from the private sector and pays dividends to all permanent U.S. residents in the form of a universal basic income. 

This idea assumes that the government creates value when it prints money.  This is absolutely not the case.  A dollar is a claim on the work of other people.  I trade you a dollar for the scarf you made, or you give me a dollar in exchange for an hour of my labor.

The money the government has comes from the taxpayers, and the 1% pay the vast majority of the taxes.

Taking peoples assets away and giving them back a claim on their own future labor is not progress, it is theft.

5. A Public Bank in Every State
 The whole point of a finance sector is supposed to be collecting the surplus that the whole economy has worked to produce, and channeling that surplus wealth toward its most socially valuable uses. It is difficult to overstate how completely awful our finance sector has been at accomplishing that basic goal. Let's try to change that by allowing state governments into the banking game.

No, banks do not exist to channel wealth to 'socially valuable uses'.  They exist to make profit for the owners.  
One reason that our finance sector has failed to meet that 'goal' is that it is not trying to accomplish that goal. 

And allowing the government into banking will have the same degree of success that the government has had in backing green energy companies.   Every one of those investments has failed spectacularly, with Solyndra being the $500MM poster child for how badly the government invests.  

Imagine if the entire world were run by the people that invested in Solyndra?

In summary, the author has a bunch of half baked ideas that don't stand a chance of succeeding in the real world. 

And for the record, the alternative to low wages is not higher wages, it is no wages at all. 

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