Tag: freedom

Capitalism is Honest

Part two in a series of eight on the morality of capitalism.

Capitalism is honest because it accepts reality as it is.

Economist Thomas Sowell describes two ways of looking at the world, or two “visions:” constrained and unconstrained. Sowell’s book, “A Conflict of Visions,” is an application of many themes in the work of economist F.A. Hayek; especially Hayek’s views on the dispersed nature of information, the limits to what humans can know about each other, and the problems with attempts to replace organic and decentralized markets with top-down rational planning.

A constrained vision of the world recognizes some things as more or less unchangeable—scarcity and elements of human nature like the desire to better oneself and even frequent greed and nastiness. The best bet is to deal with these realities as best we can, rather than to wish them away. An unconstrained vision sees these as problems to be solved. Humans and our social systems are perfectible, if only we plan and direct our activities in a more rational way.

Regardless of the merits of each respective vision, it is to the great benefit of us all that a capitalist economic system is based on a more or less constrained vision. Even if it is possible that someday people may be better or scarcity may be gone, it’s here, and capitalism doesn’t need it to go away in order to work.

Honest about interest

Greed and self-interest are different. Self-interest is unavoidable. All people are self-interested, even when acting altruistically, because they believe the action will get them closer to where they want to be than inaction. Greed is unknowable to anyone but the greedy person. As Milton Friedman reminded Phil Donahue, greed can’t be prohibited by any system. Capitalism realizes this, and rather than wishing greed away, it provides an incentive structure that channels self-interest, whether greedy or not, to produce the least harm and the most good.

This is the fundamental insight of Adam Smith, that the butcher doesn’t provide meat out of love for his customers, but out of regard for his own self-interest. It’s not good if the butcher is greedy, but even if he is, good can result if he’s in a capitalist system. Capitalism is not harmed if he is a selfless person, nor is it harmed if he’s greedy. In fact, if he is a greedy jerk, it is likely to hurt his business because customers may not like buying from him. Bigots, jerks, scoundrels and greedy people won’t ruin capitalism, but capitalism might ruin them.

Contrast this to government, where officials and bureaucrats are supposed to do not what is good for them, but what is good for society. For government programs to achieve their goals, it would require people—voters, politicians, employees—to be always selfless. Voters don’t bear the cost of casting selfish votes; politicians can spread the costs of pork across millions of taxpayers and concentrate the benefits to a few; and the workers at the DMV or TSA don’t fear losing your business if they treat you poorly. Governmental solutions are not honest about human greed, and they cannot channel it to create benefits for all like the market can.

Honest about scarcity

Capitalism also recognizes scarcity and is honest about it. Love to save trees? Love to save children?

Say there is a forest that is highly valued by the environmental community. It is also the site on which some philanthropist wants to construct a children’s hospital. What’s more important? In government-run or managed economies, this becomes a bitter political question, and everyone is forced into the unenviable position of deciding whether they care more for trees and animals or sick children. In a market system, the property owner can accept offers for the land and a price will emerge. Those who truly value it most will place a higher bid and proceed with their plans for the forest.

To many people, this seems cold and calculating. It feels as though markets reduce children and trees to dollars and cents. In reality, it is an honest way to deal with scarcity, and it allows for the most valuable actions, as judged by the people involved, to be completed. What is the alternative? A system of price caps, regulations or government decisions about land use will not result in the best use of the land, but the one that is most beneficial to political interests. It prohibits caring people who might be willing to sacrifice great amounts of their own resources from doing so, in order to please other people who may only mildly care and aren’t willing to put any of their own resources behind their desires. “Price gouging” is another excellent example of the good that results from capitalism’s ability to deal honestly with scarcity.

Promotion of personal honesty

Capitalism is not merely a system that honestly recognizes and deals with scarcity and greed, it also encourages and breeds trust among individuals. When I go to the store to buy fish, I don’t really consider the possibility that the store may sell me rotten or poisoned fish. No conscious process takes place in which I analyze the incentives facing the store owners and employees and asses my probability of risk. And these are people I’ve never met, people who don’t care about me, and people who I may dislike if I did meet them. Yet the very anonymity and impersonal nature of markets require a tremendous amount of trust from all parties. And we do trust each other! I needn’t trust anyone’s motives or knowledge personally, but the market itself has proven to be so trustworthy that I don’t feel any suspicion.

Capitalist economies produce trusting people. Contrast that to dictatorships or heavily planned economies. If you’ve ever spent time in a country with a heavily controlled economy, you’ve probably experienced things like vendors holding your money up to the light to check if it’s fraudulent.

Dream of the real world

Dreams of a world without scarcity or greed are wonderful. But an economic system that is honest about the scarce nature of resources and people of less-than-stellar character, is an unheralded blessing for humanity. It helps us make better choices with what we have, it channels the otherwise destructive behavior of others for our good, and it makes us more trusting people which creates a more vibrant civil society.

The Morality of Capitalism

This is part one in an eight part series on the morality of capitalism.  Originally posted here

It is a common belief that capitalism “delivers the goods” and creates prosperity, but does so only at the cost of our souls, our dignity and our humanity. Many people doubt capitalism not because they fail to see its wealth-generating capacity, but because they believe it to be immoral. I wish to contest the idea that capitalism is immoral and present evidence to the contrary. Not only do I believe capitalism passes the minimum test by failing to violate basic moral standards; I believe it actively promotes a robust sense of morality in a way far superior to any other system.

Before I present my arguments, I would like to define what I mean by the word “capitalism.” I mean only a system where individuals are free to keep, trade, use or give away property that was peacefully acquired. This is merely a negation of the use of force in the use and exchange of goods. I do not mean a system that is pro-capitalist, or pro-business or pro anything but freedom for the individual.

In matter of fact, capitalists and established businesspeople have always been the most active enemies of capitalism. That is because capitalism is decidedly not pro-business. It allows for human creativity, competition and ceaseless challenges to vested interests as people continually innovate in order to better serve customers. It is a system that does not allow one to rest on their laurels long, and as such, those who have been successful frequently try to slow capitalism down and look to the state to find shelter from its dynamism.

If the word capitalism is distracting, I encourage you to substitute “free trade,” “free markets,” “voluntary exchange” or simply “freedom.” It will not change the meaning of my arguments in the least. I have chosen to use the term capitalism because it creates a more provocative title and because the term is embraced by the curators of this blog. There are good arguments both for and against the use of the term capitalism by advocates of free markets, but I wish to avoid this debate at present.

The titles of the next seven posts in this series provide a clue as to where I am going:

Through these posts I will attempt to briefly explain why a system of free enterprise is the best possible way to promote these virtues. I don’t think we should merely accept or “put up with” capitalism, but we ought to embrace it as the key to unlocking human potential—moral, mental, spiritual and physical. There is much more to be said on the morality of capitalism than I will say in this series, and I mean only to present some of the most basic arguments.

The Timeless Way of Being

I am currently reading Christopher Alexander’s The Timeless Way of Building on the recommendation of a friend.  It is one of those books that is so full of insight that it cannot be absorbed all at once, especially with the analytical part of the brain.  It is as intuitive as it is logical.  It’s the kind of thing that forces you to think outside of your paradigms, but in a way that is oddly comfortable.

Yesterday a section of the book stood out to me in particular.  It was about the patterns in building that are good at resolving conflicting forces, and those that are not.  Alexander maintains that there is near universal agreement on what patterns of, say, a window or a garden resolve conflicting forces.  He asks people how they feel in a certain window area vs. another, and 95% or more feel good in the same one.  It may seem outlandish to claim that there is so little disagreement about what makes for a good pattern in building, but the key for Alexander is the word feeling.

He does not ask what they think of flat windows vs. Bay windows.  He does not ask their opinion on window material or position.  He does not ask what a builder should do.  He does not ask anything that evokes a belief or idea or a connection to some overarching plan or policy.  These ought expressions get in the way of the is  of the forces at work within us.  It turns out it is incredibly hard to be honest with ourselves about what feels good.  It takes a lot of discovery, and shedding all the baggage and ideology we carry around.

It someone asked me what I thought of using locally grown ingredients in food, my mind would immediately leap to the idiotic and regressive political movements that seek to force economies into localism, drive up prices, drive down quality, get everyone too involved in everyone else’s business while self-righteously proclaiming the superiority of an absurd proximity bias.  In other words, my thoughts on the matter would probably be negative.

Because of this, it is possible that I would overlook an opportunity to bite into a delicious and juicy local fruit at a farmers market, for fear of giving credence to the food busybodies.  These thoughts – my view that no one ought to get preachy about local ingredients – might prohibit me from finding alignment with the genuine feelings within me.  It’s harder than it first seems to constantly stay in touch with what feels right – with who we actually are – in the face of all the things we think we should be and believe.

This is one of the reasons democracy is such a poor way of resolving collective action problems.  It not only seeks and allows our mere opinions, it rewards our proclamations of what we wish we thought, or what we pretend to want, instead of what actually make us fuller, happier people.  It rewards and glorifies the boring lies and spin we weave into our narratives, and vilifies our honesty about what really harmonizes with us.

It’s much more fruitful to dig down to the bottom and discover what you really do feel, and work with those forces rather than pretending they don’t exist.  This is why capitalism is such a powerful and beautiful system of social coordination; because it takes humans as they are, imperfect knowledge and motives and abilities, and the scarcity and difficulty the natural world presents, works with it, and channels it all in a harmonious and life-giving way.  Capitalism is honest.

This is why the economic way of thinking – the rational choice model – is so enlightening and useful in explaining human behavior and institutions.  It does not condone or condemn, it just accepts ends as a given and seeks to understand what means will and will not achieve them.

Certainly some goals or desires or feelings are better than others.  Certainly some are worth trying to change.  But playing pretend and building patterns around forces we wish existed in us and in others, instead of what’s actually there, doesn’t help.  There is no better way to express this insight than to quote The Timeless Way at length:

“But a pattern which is real makes no judgments about the legitimacy of the forces in the situation.

By seeming to be unethical, by making no judgments about individual opinions, or goals, pr values, the pattern rises to another level of morality.

The result is to allow things to be alive – and this is a higher good than the victory of any one artificial system of values.  The attempt to have a victory for a one-sided view of the world cannot work anyway, even for the people who seem to win their point of view.  The forces which are ignored do not go away just because they are ignored.  They lurk, frustrated, underground.  Sooner or later they erupt in violence: and the system which seems to win is then exposed to far more catastrophic dangers.

The only way a pattern can actually help to make a situation genuinely more alive is by recognizing all the forces which actually exist, and then finding a world in which these forces can slide past each other.

Then it becomes a piece of nature.”

Mr. Alexander is an architect and is here talking about patterns in rooms, gardens, buildings and towns.  He refers to things like the human desire to go towards the light in the room, and the desire for comfortable seating.  The patterns he seeks are those that bring into harmony such forces.  But read the above again, slowly, and consider how much broader this insight might apply; to institutions, to social coordination problems, and to our own lives.

Interview with an Optimist: T.K. Coleman

It’s not hard for any moderately observant person to see the oppressiveness of the state all around us. We are taxed, regulated, coerced, controlled, patted down, pulled over, censored, cited, and sued anytime we step outside of the ever-changing boundaries prescribed by the political and bureaucratic classes. Many take umbrage at these violations of our innate human freedom and dignity. We engage in all kinds of activities to push back against the state.

It doesn’t always work, and certainly not immediately. It’s all well and good to try to change the world, but how can we live fulfilling lives in the meantime? The world as it is is unfree. Today, I’m going to talk to someone whose focus is not on how to make the world freer, but on how to live free in the world as it is.

My good friend TK Coleman, creator of the blog Tough-Minded Optimism, has the audacity to claim that we can be free here and now, no matter what the world brings — and he practices what he preaches. TK has an amazing mind, is a lifelong learner, and somehow manages to maintain a mindset of freedom and optimism in some of the most oppressive circumstances. I have learned so much from him and look forward to my daily TMO emails. He’s going to share his philosophy and how he finds a state of freedom while surrounded by a state of oppression.

IMM: First, tell us just a little bit about yourself.

TKC: I currently live in Los Angeles, where I’m actively pursuing my dreams in writing, entrepreneurship, and media production. I’m originally from Chicago, where I grew up in the era of the Michael Jordan’s Bulls dynasty. I’m the son of a preacher man. My father is a pastor, and the majority of my childhood involved being immersed in church services and other related activities.

While I wouldn’t describe myself as religious, I’m one of the lucky few pastor’s kids who grew up in an environment of organized religion without being emotionally scarred or turned off by many of its negative aspects. My academic studies and professional experiences range from philosophy and theater to financial analysis and public speaking. My true love is philosophy. I have a real passion for learning and contemplation. I enjoy pretending that things are more complex than they really are.

IMM: You recently had a horrible run-in with the police. Can you walk me through that experience?

TKC: Sure. Basically, my wife and I were heading out to a Hermosa Beach comedy club for a date night. It was around 7 p.m. on a Friday. We were pulled over by a police car about two miles from where we live. Two cops got out of the car and one of them approached my window, while the other approached my wife, who was sitting on the passenger side. When I let my window down, he asked me if I had legit identification. I answered, “Yes, sir,” and in an unexpected turn of events, he asked me to step out of the car.

Because I know that police officers are very sensitive to how they’re spoken to, I always speak to them with the utmost respect and cooperation. I’m not interested in giving them any reasons to interpret my behavior as threatening. So I politely said, “Yes, sir,” and stepped out of the car as instructed. The officer then put me against my vehicle and started to search me. He grabbed my wallet out of my pocket and sat it on top of my car. He asked me if I had a record. I said no. He asked me if I had any drugs or weapons on me. I said no.

Then he said, “This is how we do it in Los Angeles.” At that point, he walked me over to his car and began searching me more thoroughly. After that, he threw me in the back seat of their car, and both officers started to question my wife. One of the officers went inside our car and started searching around. I had no idea what was going on. They never told me why they pulled us over. They never asked to see my license. They never asked to see registration. After questioning my wife for about 10 minutes, they came back to their car and did a background check on me.

After my record showed up as clean, they let us go. I won’t sugarcoat the experience and say they were kind and respectful. They were rude and vulgar. They were physically aggressive with me, and they harassed my wife. They acted like bullies. At the end of the experience, they gave us no tickets, no warnings, no apologies, and no explanations. Just another day at the office for those guys, I guess.

IMM: Aren’t you angry at the police? How do you live free when something like that happens, or can happen at any time? Did that incident challenge your worldview?

TKC: While I certainly don’t condone the manner in which those police officers treated my wife and me, I wouldn’t describe myself as being angry with them. My absence of anger, however, has nothing to do with the cops. I am not angry, because being angry at them simply doesn’t serve me in a constructive way. Everything that I want, can, and need to do about that situation is more effectively executed when I’m acting from a state of composure and self-control. Since being bitter at those cops offers me no incentives of the kind I would be interested in, I choose to focus my attention in a life-giving way. It not only feels better, but it’s also a more creative and practical approach for me.

This might be a good segue into discussing a critical component of my philosophy. It’s captured in the phrase “Never let anyone steal your fire.” The basic idea is that we are autonomous beings who hold the unconditional power to dictate our inner disposition. While external forces may have the ability to impose unwanted conditions on us, we ultimately get to decide how we perceive and process the data of our experience.

Some people, for reasons as small as a bad night’s sleep to factors as grand as being a victim of abuse, are out there carrying around all kinds of potentially harmful thoughts. When we interact with these people, it’s extremely easy to let them determine our mood and, hence, our quality of life. Refusing to let anyone steal your fire means you don’t become a sponge for other people’s energy. It means you don’t allow your inner spark, your enthusiasm, your passion for life to be snuffed out by someone who’s taking their unhappiness out on you. If you let them steal your fire, they win.

Those police officers took control of my body, but they can’t touch my mind. They had the guns and badges, but I have the dominant vibration because I won’t give them the permission to influence my attitude. I win. They may have issues going on inside themselves, but I don’t take ownership of their mess. They’ve probably ruined lots of people’s days with their behavior, but not mine. When it comes to how I feel, I hold all the badges and the guns.

IMM: What was your response? Did you register any protest with the police?

TKC: Because of the way the situation went down, I wasn’t focused on their badge numbers. I was watching my wife the whole time. My focus was on her safety. Once they let us go, we got out of there. So I didn’t have much information on them. But I did call my local police department and the sheriff’s department, and they responded very respectfully to my concerns.

IMM: There are a lot of people that seek legal or political action or try to educate others in order to fight back against state oppression. Do you think that’s the wrong approach?

TKC: I have no problem with people who aggressively fight against oppression through legal and political battles. Some people get really fired up by that approach, and they seem to be quite effective at it. I say go for it. No matter what your cause is, you have to adopt an approach that charges you up if you want to have an impact.

I don’t think there are “right” or “wrong” approaches in a legalistic sense. I think there are approaches that are more or less effective in relation to desired goals. So if you have a way of going about life or politics or whatever, then I really have no criticism to offer. It’s up to each person to do the cost-benefit analysis on their actions.

Those of us who consider ourselves advocates of freedom comprise a diverse community. Some of us like to get out on the front lines and fight as political activists, while others prefer a more indirect educational approach. I’m pretty nondogmatic about all of this. If you support freedom, I support you.

IMM: Isn’t your worldview just naive, fairy tale stuff? It can sound like feel-good mumbo jumbo to someone who’s got a boot on their neck. Are you too idealistic?

TKC: Well, I should begin by challenging the distinction between the guy who has the boot on his neck and the guy who doesn’t. Lots of self-help gurus let people get away with this, and I think the results are tragic because they allow people to frame messages of hope in a way that’s significantly disadvantaged. If by “boot on your neck” you mean the experience of pain and suffering, then we all have a boot on our neck in some capacity.

Who’s the guy that purports to teach you and me a lesson on what it REALLY means to suffer? One person has money problems, while another has health problems. One person can’t find true love, while another grieves the loss of their soul mate. One person has all the money they need, but can’t overcome the trauma of a lifetime of childhood abuse. Another person grows up with the perfect family, but is constantly harassed and teased because of the way they look. I could go on and on, but my point is this: It’s easy for one person to use their particular experience of difficulty as the definition of what it means to struggle, but no one has a monopoly on heartbreak and hardship.

My suffering is as real to me as yours is real to you.

Whether we share the same philosophy or not, we all share the human experience of being vulnerable to death and disappointment.

It’s unwarranted to assume that optimists are optimists because they don’t know what it feels like to have a boot on their neck. That basically assumes that we would all be pessimists if we were only smart enough to realize how bad the universe actually is. I think it’s the other way around. I’ve never seen a pessimistic belief that was capable of surviving a few well-thought-out questions. So I think pessimism is the fairy tale. I think pessimism is too idealistic.

I became an optimist not because I have a ton of evidence for how awesome life is, but because I lack sufficient evidence to make negative judgments. I arrived at an optimistic perspective through the back door of skepticism, rather than the front door of faith. The real enemy of pessimism, in my opinion, is not positive thinking, but critical thinking. For me, optimism isn’t about deluding yourself with positive BS. It’s about refusing to delude yourself with negative BS. It’s about subjecting the doom-and-gloom perspective to the same sort of scrutiny we apply to the Pollyanna perspective.

So no, this isn’t about feel-good mumbo jumbo. It’s about feel-good mental judo. It’s about using your intelligence in way that’s healthy, productive, and personally fulfilling. It’s not about throwing your brain out the door. It’s about throwing your BS out the door.

Here’s another point: Either an idea is useful to you or it’s not. If it’s useful, use it. If it’s not, throw it out. Forget the labels. Use what’s useful no matter what it’s called. This isn’t a religion. Nobody’s required to believe anything that doesn’t rub them the right way. I haven’t received any messages from beings who’ve come from outer space, so there’s no special reason why you ought to listen to me. Your experience is your authority. If something works, there you go. If not, don’t waste your time arguing with me. I’m just some random happy dude who found his own way. Go find yours.

IMM: Isn’t it kind of selfish to opt for this Zen-like retreatism for your own personal happiness while people suffer all around you? Shouldn’t you take action to help them be free in the physical sense?

TKC: I personally don’t advocate retreatism. I don’t think we should all just sit around drinking green tea 24 hours a day, but I also would hesitate to join the chorus of those who worship the gods of guilt-driven, duty-based, obligatory activism. I think Howard Thurman nailed it on the head when he said, “Don’t ask what the world needs. Ask yourself what makes you come alive and then go do that. Because the world needs people who have come alive.” I swear by that saying.

The real tragedy of charity in contemporary culture is not that too few people are helping out, but that too few people have an appreciation for the social and economic value of self-interest.

Now here’s another interesting point… I don’t think optimistic philosophy is causing the number of charity volunteers to decline. If anything, it’s the other way around. When you are afraid of the world, when you feel like a worthless drag, when you believe evil prevails over goodness, when you believe your life is harder than everybody else’s, what causes are you going to be signing up for? Who are you going to be a benefit to with that kind of mentality?

The people who are most likely to help others are the people with beliefs that reflect an inner sense of abundance. They see themselves as having something to offer (even if it isn’t money). They believe in their capacity to make a difference. They believe in the potential of those they help. Those are all the same ideals I advocate.

IMM: I’m a big fan of books and articles on economics, political philosophy, history and other areas that illuminate the problems of the state and reveal the power of markets. Do you think it’s unhealthy to spend so much time with these ideas? Would I be better off remaining uneducated about the problems of the state — in other words, is ignorance part of the “bliss” you’re trying to achieve?

TKC: I think it varies from person to person. If it gets you going in a constructive way to study those things, then study away. If it’s making you paranoid without adding benefits that offset the costs of your paranoia, then it might be time to find a healthier and more fulfilling hobby. A good analogy for this would be The Lord of the Rings. One character was able to carry the burden, while another was transformed into a demon by those same burdens. There’s nothing wrong, as a matter of principle, with putting your attention on so-called “bad news.” You just have to be your own judge and have a good feel for the burdens that you can handle.

If we’re going to say “Ignorance is bliss,” then we should be careful to define what kind of ignorance we’re talking about, because ignorance of one’s rights and possibilities, for instance, is certainly not blissful, in my opinion. I’m not actively pursuing ignorance as a spiritual path. For me, intelligence is bliss, understanding is bliss, and creativity is bliss, so those are the sorts of qualities around which I build my particular brand of optimism. Another way to put it would be this: Optimism is not the denial of truth, it’s the recognition that truth isn’t something we need to run from or be afraid of. When you take yourself seriously as a creative force, you can face the truth with confidence and composure.

IMM: So how do you balance being knowledgeable about the way the world works with not getting angry at its deficiencies?

TKC: For me, exposing my mind to the truth is not a discouraging exercise. If confronting the truth feels like you’re being whacked upside the head with a billy club, it may be because you’re beating yourself up unnecessarily, you’re communicating the truth to yourself in an unhealthy way, or you’re predominantly focusing on those parts of the truth that are most challenging to you.

People don’t feel beaten up and broken down because of the truths they discover. They feel beaten up and broken down because of the other truths they omit and overlook. If your encounters with truth are failing to increase your sense of personal freedom, the solution is not less truth, but more truth.

If you focus on the world’s deficiencies and stop there, then you’ll probably feel like crap. But why stop there? It’s intellectually dishonest to focus on what’s wrong with the world without acknowledging our rich history of overcoming incredible odds. It’s delusional to lie to yourself about all the crap that’s going on in the world, but it’s also delusional to lie to yourself about being unable to create positive changes. The truth is the truth, even when it’s not negative.

So for me, I find that balance by taking a holistic approach to my studies. I don’t limit myself to just one perspective. I study the problematic truths and the promising ones.

IMM: Any final thoughts?

TKC: My message to the world in a nutshell is quit trying so darn hard to be positive. Optimism isn’t about making positive assumptions, nor is it about forcing yourself to feel good. Optimism is simply the art of remaining open to possibility. In other words, what happens when we are no longer occupying the mind with our judgments, labels, and dogmatic opinions. When we are not trying to artificially make ourselves believe that life is great and when we are not busy assuming that it’s the end of the world, we are left with nothing but possibility.

That state of being open to possibility without judgment is the source of creative power, personal growth, inner peace, and pleasant emotion. Positive assumptions are needed only when you have negative assumptions that you’re trying to overcome. But when you drop your assumptions altogether, your soul stands naked in the open fields of possibility. And what you choose to create from that space is up to you.

A Few Quotes

On politics and government

“Aristotle said that some people were only fit to be slaves. I do not contradict him. But I reject slavery because I see no men fit to be masters.” – C.S. Lewis

“I am really sorry to see my Countrymen trouble themselves about Politics. If Men were Wise the Most arbitrary Princes could not hurt them. If they are not Wise the Freest Government is compelled to be a Tyranny. Princes appear to me to be Fools. Houses of Commons & Houses of Lords appear to me to be fools, they seem to me to be something Else besides Human Life.” – William Blake

“Politics is a dirty business, a ruse, an ideological cul-de-sac, a vast looter of intellectual and financial resources, a lie that corrupts, a deceiver, a means of unleashing vast evil in the world of the most unexpected and undetected sort and the greatest diverter of human productivity ever concocted by those who do not believe in authentic social and economic progress.” – Jeffrey Tucker

“Sed quis custodiet ipsos custodes?” – Juvenal

On tyranny

“Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive.[…] those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth.” – C. S. Lewis

“The struggle for freedom is ultimately not resistance to autocrats or oligarchs but resistance to the despotism of public opinion.” – Ludwig von Mises

“As long as the public identifies order with law, it will believe that an orderly society is impossible without the law the state provides. And as long as the public believes this, it will continue to support the state almost without regard to how oppressive it may become.” – John Hasnas

“I have sworn upon the altar of God, eternal hostility against every form of tyranny over the mind of man” – Thomas Jefferson

On freedom

“And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works.” – Frederic Bastiat

“Every man must have freedom, must have the scope to form, test, and act upon his own choices, for any sort of development of his own personality to take place. He must, in short, be free in order that he may be fully human.” – Murray Rothbard

“I freed thousands of slaves. I could have freed thousands more, if they had known they were slaves” – Harriet Tubman

“The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion” – Albert Camus

Five Assumptions About Fire Codes (why laws are less important than we think)

Originally posted here.

A friend and I were discussing the provision of fire services, and he made a comment in passing about how, thanks to government fire codes, fires have dramatically declined. It is true that fires have declined over the last 35 years (at least), but is it true that government fire codes are the reason?

There are at least five untested assumptions behind the idea that fire codes are the cause of a safer world.

Assumption 1: Cause and Effect

The most obvious assumption is that fire codes cause a reduction in fires. It is easy to see how unlikely this is when you perform a simple mental exercise: Imagine enacting US fire codes in, say, India. In India it is not uncommon for electricity to arc between two buildings or for people to pirate electricity by tapping in to an existing power line with a makeshift wire draped across the ground. Surely fire codes would prevent the dangerous electrical fires that sometimes result. The problem is, fire codes already exist in India, but nobody follows them. Why not? Because no one can afford to follow them.

Before government regulations can be broadly followed, they first have to be of limited consequence. Child labor laws only take effect once there are very few children in the work force, due to economic growth. It is well documented that OSHA regulations only came into effect after workplace accidents dramatically declined on their own. If you tried to impose the U.S. minimum wage on a very poor country, no one would follow it because if they did many would die for lack of work, income and food. You cannot wave a magic wand and demand that people take on major costs if the majority of people are not already able to bear the cost. Government regulations have a damaging effect to be sure, but it is primarily on people at the fringes of the economy—the poorest.

Government fire codes receive the credit for reducing fires, when in reality it is economic growth that makes people wealthy enough to spend money on safer construction. The codes come after the fact and claim the credit.

Assumption 2: Irrational Consumers

The idea that government fire codes reduce fires also assumes that, absent such codes, people would not protect themselves from fire. Are people so short-sighted that they would not think to protect their own property if the government didn’t force them to?

It is in everyone’s interest to protect their property from catastrophe like fire, and as such the vast majority of people do. Insurance is a common way to do so, but people also seek safe construction and other assurances against disaster. In fact, insurance companies have a tremendous incentive to only insure buildings with good fire prevention techniques in the first place (except when, as is not uncommon, the government interferes and prohibits insurers from placing stipulations on policies).

It can hardly be granted that people are too foolish to protect their own property from fire damage at all, so maybe it is assumed that people will merely protect their property at a minimum level and not “enough” without being forced to. But what is “enough?”

Assumption 3: Less Fire is Better

Fires are on the decline, and this is universally good, right? Not necessarily. Economist Steve Horwitz gives a question to his students that goes something like this: If a massive earthquake hit a city, what would be the economically optimal number of buildings destroyed? The answer: greater than zero.

How could that be? We all know destruction is not good for the economy (everyone, perhaps, except Paul Krugman). Consider that the cost of making the least valuable shanty in town entirely earthquake-proof is probably more than the value of the building itself. The same goes for fires. Not all structures are of equal value, and not all structures have equal risk of burning down. Because of this, it makes sense that people will have different risk preferences when it comes to protecting their property.

If I own a pole barn full of ice far away from any other buildings or woods, I am unlikely to invest in sophisticated fire prevention or suppression technology (unless compelled by the state), whereas a fancy condo owner in a downtown location is far more likely to pay for the best of the best. It’s easy to see how silly it would be to mandate that every single structure be built to withstand F5 tornadoes, category five hurricanes, massive floods and epic earthquakes. The same principle applies to lesser degrees of protection. For many structures, government fire codes are not worth it and the risk of a fire is lower than the cost of prevention. For others, government codes are not nearly sufficient and much more stringent precautions are in order.

The problem with government codes is that they are blunt and uniform and force everyone into the same mold, squelching innovation and disallowing the kind of marginal risk assessment that conserves resources. Not only are less valuable structures forced to overprotect, but often government codes are so widely accepted that more valuable structures are perceived to be sufficiently protected if they meet government standards, when in fact they may be better off with more.

Assumption 4: Irrational Politicians and All-knowing Bureaucrats

For fire codes to be the cause of enhanced safety it would require irrational political actors. Elected officials and bureaucrats would have to act not in their own rational self-interest, but on behalf of the public at large. To choose just the right amount of fire protection and just the right technologies to supply it requires not only a denial of potential individual profit (by cozy deals with some companies, etc.), but also a superhuman knowledge of what kind of construction everyone needs in every situation.

In reality we see that “rent-seeking” is prevalent everywhere the government intervenes—indeed, it could not be otherwise. How is a politician to choose the physical properties that must be present in caulk used between drywall and copper piping in a commercial building? Without the expertise they—or a wide array of public agencies—must rely on the information provided by competing companies. If it all sounds the same, do you think the company that donates to the right political campaigns might get an advantage? It is a fairy tale to imagine political actors wise and selfless enough to pick exactly the right amount and type of fire protection for every application. Every time they do pick, it reduces the options available to consumers and stunts the discovery procedures of the market in finding the best methods.

Assumption 5: The Government Did It

A final assumption is that the codes and norms of fire safety are, in fact, created by the government. In our discussion my friend mentioned government fire codes but also added a, “Thanks to UL.” UL is Underwriters Laboratory, a non-government organization that certifies goods for safety. They have built up quite a reputation in the marketplace and are highly trusted. (So much so that one professor has taken to chewing on UL certified power cords to prove how safe they are!)

It is often assumed that the order we see around us is the result of a government mandate—after all, mandates do exist for almost everything. But more often than people realize there are private entities and institutions doing the heavy lifting—UL is just one of them. There is a market demand for fire codes, and the market supply is far more complex, subtle, efficient and diverse than a government could ever be.

Conclusion

It is easy to assume government ought to get the credit for a great many life improvements. After all, government agents are constantly taking any opportunity to claim credit for everything under the sun, and to pass laws and regulations that demand certain improvements, whether or not they already exist. The existence of indecent exposure laws is not what keeps me from running naked through the shopping mall, and such laws shouldn’t be credited with my propriety. It’s naïve to assume that fire codes are the cause of a safer society, not merely a reflection of it.

Laws are less powerful than we think they are.

The Seduction of Guarantees

We want guarantees in life.  We are risk-reducing creatures who want to plan and plot and know as much in advance as possible.  We want tight and definite parameters around the possible outcomes of our actions and our world.  Whether we like it or not, they don’t exist.  Still, we persist in fabricating them and acting offended when people acknowledge the impossibility of our desired guarantees.

I recently heard two libertarian philosophers discussing social justice.  One made the case that social justice is a good goal, and that it is congruent with liberty because a truly free society results in the best-case scenario for the least well-off; something even John Rawls would approve of.  He said free-marketers should proudly fight for social justice and remind the world that a free economy will improve the absolute conditions of the poor more than anything else.

The other philosopher responded by saying the world is awash in guarantees   We are not suffering for want of guarantees, but for want of opportunity.  He said guarantees create expectations; when these are not met, they result in complaints, frustration, blame and disillusionment.  We needn’t coddle the unrealistic desire for a sure thing, but encourage an embrace of the risk and uncertainty in life and the courage to create and try even when the end results are unknown.

Even if it is true that free-markets result in better lives for the poor, is it really helpful to make the case for freedom to specific individuals as one that promises this?  To say that freedom will make you better off is appealing to everyone, because everyone wants a guarantee.  And it is correct in a general sense.  But the truth is no system – not a free society or a totalitarian one – can guarantee a specific outcome to specific individuals.  Will markets produce better results than interventionism?  You bet.  But can either system promise what will happen to each individual?  No way.  To hinge the case for liberty on guarantees is to utilize the same false advertising tyrants have been using since time immemorial.

Liberty is beautiful.  It promises nothing but the freedom to be, to act, to try, to create, to produce.  It does not promise what effects will follow cause, only that cause will be unimpeded so long as it does not impede anyone else.  The desire for a guarantee is the very desire that causes people to tolerate and advocate their own enslavement.  This desire itself is dangerous.  Better to disabuse oneself of the myth of a guarantee.

Anyone who’s done sales knows the danger of relying on expected results instead of actual results.  Don’t count the money until the check clears.  If you cultivate a guarantee loving mindset, you’ll find yourself bitter at all the unrealized expectations in life.  You will feel as though everyone, society, the system, or reality itself is your enemy.  Really, by choosing to accept the unreality of guarantees, it is you who have made yourself the enemy of what is.  Why?  It accomplishes nothing but to stunt your own creative and cooperative capacity and replace it with an adversarial outlook towards your fellow man.

The world is uncertain.  We seek to make the most out of it and eliminate hardships, but every course of action only brings probabilities of success, not guarantees.  That’s OK.  In fact, it’s wonderful once we make our peace with it.  Stop debating which ideas can guarantee what, and embrace the fact that guarantees are a serum that slows us down from acting to achieve our ends.  After all, it is the process of seeking just as much as the ends we seek that brings fulfillment   Guarantees put all the emphasis on the sought, and none on the seeking.  Even if our ends are realized, this mindset deprives us of half the joy.

I am not making the case that freedom ought only to be embraced because it’s “right”; far from it.  Freedom will produce better outcomes than statism, and this is the best reason to advocate it.  But what those outcomes are specifically, and how the manifest in each individual’s life is unknown, just as the results of statisms deprivations and favors are unknown.  What is knowable is the fact that freedom produces an outcome for every individual that no system of control and dependency ever could; but it is not an external or material outcome.  It is a sense of pride, of life, of self-worth that is impossible in a system built on false guarantees and dispensations from authorities.  The freedom to experience the effects of one’s cause, regardless of whether it is for good or ill, produces a sturdiness and fullness that humans need to be fully human.  The dignity of uncertain freedom is orders of magnitude greater for the human soul than the patronizing promises of central planning.

The Paradox of Survival

People who live the fullest lives have a loose grip on everything. They don’t cling too tightly to relationships, possessions, health or life itself. They are free from mood-controlling fear and worry. They take the prospect of terminal illness or the loss of a job with ease, because they don’t find their solace in their present material position relative to others, but in something deeper and more unshakable.

The ability to let go of things is useful in every arena of life. Let go of your kids rather than lamenting their choice of hobbies, or the fact that they grow and change. Let go of your fear of losing and put yourself into your sport with abandon. Let go of the desperation to be loved or else you are likely scare others away; to be less lovable. Let go of fear of death, and what life you have is richer.

All this freedom found in letting go, yet humans are programmed to seek their own survival above all else and against all odds. Are we to fight our own hard-wiring? And why are humans so universally inspired by stories of fighting cancer, fighting the odds, resisting the inertia of world, not giving up, not letting go? There is something noble and heroic about refusing to roll with the punches.

How can we square these competing approaches? If suffering from a serious sickness, is it best to let go of our fear of pain and death and find our zen, or should we fight the degradation of our bodies with every fiber?

Both.

There is a way to reconcile a loose grip on life with a refusal to let go of our dreams. I haven’t mastered it. Few have. The space between freedom from worry over the vicissitudes of life, and intense focus on how to overcome them, is the place where greatness emerges. I’ve seen it in sports. Think about Michael Jordan playfully taunting his opponent at the free throw line. He was so free from the worry of missing the shot, or of embarrassment that he closed his eyes while shooting – a loose grip on the game. At the same time, he was so focused on dominating the game, being the best, and making the shot. Greatness.

The key is to hold on to what we have and keep climbing the obstacles that impede us to obtain what we want. The key is also to let go of what we have and be free from the fear of not obtaining what we want. Now all you have to do is both at the same time.

Happy Easter

Whether or not you follow any of the various religions that celebrate Easter, or other celebrations of rebirth and new life this time of year, there is beauty and power in the symbols that accompany the season.  The emergence from winter’s death and dormancy; the wild, erratic, uneven surge of growth; the sights and sounds and smells are impossible to ignore.  Breath in the Spring air, let it fill your lungs, and contemplate the power of life, creativity and change over death, repression and stasis.

If you are so inclined, enjoy this post about the Christian tradition around this holiday, and what it has to remind about the life-giving power of freedom vs. the violence of political power.

Voters are Liars

I recently heard a political commentator bemoan the results of surveys and elections.  He said the sad truth, whether libertarians wanted to hear it or not, is that Americans want big government.  They want handouts, high taxes, regulatory interference, and on and on.  They vote for people who talk about it.  They re-elect them when they deliver it.  On opinion surveys they favor entitlement programs and broad intervention.  I couldn’t help but laugh.

A person who studies only quarterbacks is likely to interpret an NFL game as the result of QB play.  A person who immerses themselves in politics is likely to interpret society as the result of political opinion and activity.  In the former case, there is at least plausible evidence that QB’s are a major factor.  In the latter, it is almost entirely an illusion that politics and political sentiment reveal the broader health of liberty.

Voters are liars.  They tell the truth about their opinion in the abstract, free from trade-offs and constraints, but this has little to no meaning when translated into the real world.  If I asked you to vote between a person who offered a better world, and one who offered a less bad world, and promised that your vote was guaranteed to not change the outcome either way, what would you do?  What could I conclude about your preferences from your vote?

If I polled you and asked whether or not you like the idea of someone giving you something for free, again promising that how you answered had no bearing on the real world, what would you say?  What could I learn from that about your values?

Voting and surveys are free ways to express a sentiment or indulge in a real or desired preference.  Not only that, the sentiments expressed are not about the real world.  Politics is a zero sum game, completely unlike nearly every other arena of life.  Imagine how different your preferences would be if everything were zero-sum like politics.  What if you had to choose once for all between brands of coffee, cars or clothing?  What if you could not go back, at least not for several years, and try another?  What if whatever a majority in your area voted on would be applied to everyone else?  Under this scenario we could poll people and ask which of three or four brands they prefer.  We’d get some data, but it would reveal nothing whatsoever about what people actually value if they were choosing in the non-zero-sum marketplace and bearing the full costs and benefits of their choices.

Back to society today.  Do people really favor less liberty and more government?  Elections and polls are a very poor measure.  Let’s not look at stated preferences about the artificial political world, but revealed preferences in the real world of win-wins, marginal decision making, internalized costs and benefits, and trade-offs.  If you examine the market, what would you say people are “voting” for?  Radically individualistic technology.  More and more choice.  Freedom from being lumped in with groups.  The ability to choose everything.  Private alternatives to government dominated services like transportation, information transmission, education, protection, rule-making  social norms and values, health maintenance, and on and on.

Don’t listen so much to what people say, look at what they reveal by their actions.  Nobody admits to loving Barry Manilow, but the guy sells a ton of records.  No one says they want to abolish public education, but they keep putting their resources into alternatives to it.

Frankly, I don’t care what people say in polls or who they vote for in the fairyland of politics.  What I see around me – the revealed preferences of billions of earth’s citizens – is a vote, indeed a mandate, for more freedom.

Agree With Everything for a Day

A good friend told me he experimented with something totally out-there: agreeing with everything.

He said he made a conscious effort, as a sort of experiment, to find a way to agree with every statement, worldview, attitude and belief he came across, no matter how incorrect or crazy it seemed.  The results were pretty invigorating.  Not so much that he found new value to beliefs he previously discarded, but more because his enjoyment of life, resilience to the unsavory words and actions of others, and ability to find laughter and entertainment all around him increased.

Give it a try, just  for a day.  Resolve to accept everything you hear today as true.  See what happens.  Every opinion has some kind of truth in it, even if twisted or put out of focus in some way.  Look for the nugget you can agree with.

If you’re a big sports fan and you see a post about how sports are shallow, and numb children to violence, and are corroding societal values, agree with it.  Find the interpretation of the statement that you could see value in, decide to take the statement as such, and without qualifiers say to yourself, “That’s true.”  When you see a comment on the post that says, “You small-minded fool, sports are uplifting and a great way to channel aggression and tribal instincts in a playful and non-harmful context.”, say to yourself, “That’s true”, without giving further explanation to the apparent contradiction.  Find a way to be mentally at ease with granting the label “true” to both statements.

I’ve tried this a few times and have been surprised at just how entertaining and challenging it can be.  It requires some serious mental stretching and imagination, but it’s an addictive kind of game; I found myself looking for more and more extreme claims, just to test my ability to treat them as true in some essential form.

Rebuttals and rejoinders and back-and-forth over ideas are fun and productive.  Analysis – the systematic division, categorization, and counter-position of concepts – is fruitful.  But it also comes naturally, and often too emphatically.  Try a radically accepting approach that synthesizes everything, just for the fun of it.

This blog post is true.  So is your objection to it.

Inequality vs. Favoritism

Inequality is inescapable and morally neutral.  There is no virtue in trying to eradicate it, and it makes no sense to talk of reducing it.

My children were born unequal.  They will remain unequal as they learn, achieve and acquire.  Any efforts to make them equal do harm to all parties involved.  Many people agree that I could never make them equal, but maybe I should try to make them more equal.  Equality is not a more or less concept, it is either or.

3 is not equal to 2.  Neither is 4 equal to 2.  It is meaningless to call one more equal to 2 than the other.  We could say that 3 is more equal to 2, because it is only one whole integer removed from 2.  We could say 4 is more equal to 2 because it is divisible by 2, and only one even number removed.  It is entirely dependent on our frame of reference.  Equality between individuals is as impossible as equality between 2 and 3, and degrees of inequality are entirely subjective; a matter of perception, different for all observers and participants.

It is fruitless to attempt to lessen inequality or increase equality.  In fact, it’s worse than fruitless, it is destructive.  Not only does it produce arbitrary and unpredictable results which disillusion and demotivate the targets, it fuels strife, envy, and limiting one’s potential to the achievements of their perceived betters.

Still, there is something to the desire to create equality.  I would be a terrible parent if I lavished gifts and affirmation, or insult and condemnation, on one child far more than the others.  Not because it would make them more unequal; they are and will always be unequal.  But because my deliberate action of applying the family rules, mores and norms selectively and unfairly would break trust and breed conflict.  I would be engaging in favoritism, either negative or positive.

I will not try to clearly define favoritism, because I think putting it into words actually makes it less understandable than if we stick with our intuitive and tacit understanding of the term.  It is not merely acting differently towards different people.  If I speak Spanish to a Spanish speaking person and English to an English speaking person I am not acting uniformly towards them, but I am not showing favoritism.  Interacting with my unequal children in ways that best resonate with their unique “language” is not favoritism either.  Favoritism is when the spoken or unspoken rules of the house are not consistently applied.

If it is known that doing X chores will get you Y payment, or that treating Dad’s iPad carelessly will result in less access to the iPad, these norms must be applied in a uniform way.  I may communicate the norms and remind my children of them in different ways based on their individuality and inequality, but if one kid gets paid more for the same work, or one gets access to the iPad despite throwing it against the wall and the others don’t, I’m engaging in favoritism that damages everyone.

Uniform application of the family norms will result in inequality, as is inevitable with unequal children.  Some will get more chores done and earn more money.  Some will have a hard time controlling emotions and end up throwing the iPad and losing access to it.  Their nature and choices will produce unequal results.  There is no evil in this.  To aim at equality puts the focus on outcomes; the relative positions resulting from individual actions within an institutional context.  This is a meaningless point of reference, and incredibly poisonous when chosen as the basis by which to judge institutions.  It devolves into, “Anything that rubs me the wrong way, or anything you excel at must be curbed.”  It’s a sentiment that coddles and nurtures our least civil and humane and most barbaric and short-sighted tendencies, usually in the name of the opposite.  It is the uniformity of treatment in relation to the understood rules and norms that matters, not the inequality that results.

The attempt to make my children equal, or more equal, or even treat them equally is futile and destructive.  It is enlightening and beneficial to keep an eye out for favoritism and uniform application of the rules.  I have to check my tendency to selectively apply the mostly unspoken institutional arrangements of the family, and it’s healthy to audit myself in this way.  But the minute I make equality the goal, confusion and frustration take hold, and the rules become more, not less, arbitrary.

Of course society is not a mirror of the family, but the lessons still apply.  To seek equality, or more equality, or less inequality, is an unproductive pursuit, and typically a mask for other frustrations we’re trying to ameliorate where we want the moral sanction of our peers to do so.  Drop it.  Inequality is morally neutral and needn’t be resisted or defended.  Focus on reliable and fair institutions that don’t systematize and reward favoritism, but make it harder and more costly.

Switch the Default to Neutral

Yesterday I talked about the virtues of remote work.  The point was not to prove remote work is better, but to change the default assumption.  The default position in nearly every firm is that workers must work together in an office.  The prospect of remote work is treated with special scrutiny, and it must prove especially valuable to be tried.  Meanwhile, the default of on-site work is given no scrutiny whatsoever, simply because it is the default.  What happens if we change our default to neutral?

Not just in the case of remote vs. on-site work, but in every choice between methods or worldviews there is much to be gained by switching the default away from the status quo and to an open position, ready to compare alternatives side-by-side.  One needn’t go out of the way to see the merits in a different point of view so much as back off a little from the currently favored view and see how it stands up to scrutiny.

Probably the most difficult areas to have a neutral default are those involving authority.  We tend to assume the best about authority and make it the default position, while we fear the worst about freedom and put it on trial.  Consider prevailing views about the state and state provided services.  The idea of fully private roads, or protection, or adjudication, or education, or charity are immediately met with skepticism and myriad objections in our minds.  They are compared to our idea of how things should be, and almost never to how things actually are under state monopoly.

Our default position is that a single authority is better at most things, but how often do we zoom out and analyze from a neutral default?  What happens when you compare government controlled postal delivery with private in a detached way, as if a disinterested observer from another planet?  What about other services?  The default position deserves analysis equal to that which we give to new ideas.

It’s not only government authority we default to.  I’ve found that as a parent, my default position is that raising kids on the power of my authority and say-so is better than giving them free reign and treating them like rational agents.  Turns out the default is wrong.  No, kids are not fully capable of making sound choices, especially at a very young age, but I’ve been amazed at how well – indeed how much better – they do when I back off and leave more choices in their hands.

The first time I heard radical ideas about unschooling, free schools, unparenting, and other laissez faire methods of interacting with children, I demanded answers to all the hard questions and difficult situations that may arise.  I examined every angle and poked holes in weaknesses I saw in each approach.  Had I ever been so rigorous in examining the more regimented style of traditional education and child-rearing?  Had I put my default assumption, that kids need order imposed by external forces, to any real test, mentally or in practice?  I was having a nice romance with the default position and failing to see its weaknesses, to the detriment of myself and my kids.

Sometimes you have a default for well-developed reasons: you have examined multiple options and found one far superior, so until further notice, it will be the default.  This makes sense and needn’t be abandoned as an efficient way of giving new ideas the basic smell test.  But ask yourself how many of your defaults fit into this category?  It’s surprising how many default assumptions we’ve never actually examined.  We assume our assumptions exist for good reason, but many do not.

Upon examination and experimentation, we may well arrive at the status quo as best option.  But if we never take a close look at our assumptions we do ourselves a great disservice.  You needn’t excitedly embrace every new idea or temper your skepticism about it.  Simply change the default position to neutral.  Be careful; your whole world may change.

Creating Disequilibrium is Good

Originally posted here.

There is no denying that our economy is undergoing dramatic changes. That brings not just difficulty, but also opportunity for entrepreneurs. In fact, the “creative destruction” of the market is part of what drives economic growth.

Putting aside the causes of our current economic troubles (except to say free markets are not the culprit), we can’t forget that, though massive bubbles are not necessary, markets are by nature dynamic even in the most stable of times. This dynamism is not an evil to be avoided at all costs but the very thing that makes free economies so productive.

Classical economists often treated economic growth as a mechanistic operation that happened at a stable rate as a result of unchanging levels of investment and production — as if economies simply grew on their own as long as production was steady and inputs were not disrupted. The problem with this view is that, quite simply, the real world doesn’t work that way. In 1911, economist Joseph Schumpeter’s Theory of Economic Development radically changed this view, and his insights are still relevant today.

Schumpeter stressed the role of the entrepreneur in economic growth and argued that, far from a static maintenance of equilibrium in production, it was the entrepreneurial ability to causedisequilibrium that created wealth. The constant innovation of these economic actors shakes the economy up, breaking down old methods and building up newer and better ones.

It’s not just increases in production that create wealth but a radical reforming of the way production itself is done. Think Henry Ford’s assembly line. Such entrepreneurial innovations disrupt the unrealistic ideal of a stationary economy. They do destroy the old order — like the classic example of buggy makers losing their jobs when the automobile took hold — but they cause growth because what they create is more valuable than what they replace. Can you imagine halting the progress of the automobile in order to preserve buggy makers?

Schumpeter argued that the role of the entrepreneur was different from that of the inventor, manager, laborer, or capitalist. Entrepreneurs need not be wealthy or even especially intelligent. They may be all or some of these things, but that’s not what makes them entrepreneurs. Schumpeter said the entrepreneur was the person who creates new combinations in production.

The creation of a new good or service — a new way to produce the same good or service, a new market for the good or service, a new source of supply, a new organization of the industry — these are the entrepreneurial functions. Such innovation does not necessarily require new invention, just a different utilization of available knowledge and technology.

As Schumpeter said in a 1928 edition of the Economic Journal,

“[I]t is not the knowledge that matters, but the successful solution of the task … of putting an untried method into practice.”

The entrepreneur, by seeing and acting on different combinations of existing knowledge, products, and services, disrupts the economic order and creates growth. There is evidence of this “creative destruction” all around us: every year millions of jobs are created and destroyed, yet the overall long-term trend is continued economic growth.

The growth could not happen without both creation and destruction; it is the driver of growth, not a problem to be solved. If the economy were static — if jobs were never lost, prices never shifted up or down, investments never enjoyed large profits or major losses — we would not live in a stable utopia but a stagnant subsistence economy.

Don’t be afraid to disrupt the economy. Look for ways that things can be done differently — goods, services, and production methods that can be rearranged, new technologies that can be better used. Right now, as the economy reshuffles, there are more opportunities to generate change than ever — the kind of dynamic change that we need to grow out of this slump.

Don’t just sit there, create some disequilibrium!

Lies Are Boring

Ego & Hubris is the story of Michael Malice, told by American Splendor author Harvey Pekar in graphic novel form.  It’s an incredibly entertaining read because Michael is incredibly honest.  Most of us tell lies most of the time, and they make for lives and personalities that appear far more boring than they actually are.

Some of the reviews I read for the book treat Michael as some kind of heinous person.  After all, he can seem vindictive and rude.  Like the time when his boss was being a jerk about him spending time with his grandmother who had cancer.  Malice later discovered the boss’s wife got cancer and thought it served him right.  Sounds horrible when you read it.  But it’s a very honest expression of a feeling many people would have in the same situation.  The difference is most people would lie about how they felt – to themselves and certainly to someone writing their biography.

If you watch interviews with celebrities, no matter how different the people’s lives, the interviews are all quite similar.  They’re boring.  Safe answers are given that keep up an image that will offend the fewest fans.  Fans pretend to want these lies.  When a famous person is honest, everyone feigns offense.

When politicians talk during campaign season, the mutual lying reaches absurd heights.  Imagine the shock – shock! – if a candidate for office said, “Yeah, I know there’s some charity event to raise money for poor children tonight, but frankly I’m just too tired to go.”  Or, “You know, my opinion on Sub-Saharan Africa doesn’t really matter because there’s not much I can do about it.”  Honesty like this would be branded callous, and make a lot of people uneasy.  This despite the fact that every reasonable person would agree that it’s OK to be tired and not feel like going to an event, even for a good cause.  Every would-be voter knows that Sub-Saharan Africa really doesn’t matter all that much to them.  So why do they pretend they want it to matter to a candidate?

There’s a lot of lying going on.  Public figures lie about who they are, what they do, and what they feel.  If they slip and let a little honesty through, the public lies and pretends to be offended.  It makes for a pretty boring spectacle.  It’s one of the reasons I don’t read or watch the news.  It’s so phony and everyone knows it but no one dare admit it.  If we’re all gonna play pretend, I’d rather follow professional pretenders in well-crafted pretend stories in the movies, novels and TV shows.

When people let their real questions out, and public figures give their real answers revealing their real feelings and thoughts it’s pretty entertaining and enlightening.  The more honest radio interviews, for example, are usually done by people called “shock jocks”.  Sure, they say some silly stuff just to be different, but they tend to also ask the type of questions most people actually want to know.  In the giant lying game of public life, we have to dub them “shocking”, because nothing is more shocking than honesty.

We see it in celebrities but rarely in ourselves.  Part of the reason we don’t talk honestly about ourselves is because we don’t know ourselves very well.  We know the self we wish we were better than the one we’d actually be happy being, or the one we actually are.  Self-knowledge precedes self-honesty.

Sometimes I meet one of those rare people who, like Michael Malice, knows who they are and doesn’t pretend to be otherwise.  It’s refreshing.  They can be a little intimidating because they are used to honesty and can see through BS in others as well as in themselves.  It’s also intensely interesting and challenging.  It reveals how shallow most human interactions are.

Our actual identities are far more interesting than the lies we tell about ourselves. The narratives and carefully constructed biographies we publicly project are boring and second rate compared to the fascinating truth of who we really are.

Learn the truth about yourself, and don’t hide it.  We’ll all have more fun.