Socialist Sin

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The Socialism Shiny Thing

I was pondering what it was about The Socialism Shiny Thing that, at it’s core, was wrong. I typically look at it in terms of things like Capital Allocation Efficiency or sometimes the loss of personal responsibility and liberty. But those did not quite cover it. There was still something basic I’d not quite put into words. A core value of it that was just wrong.

Recently, after some more pondering, the idea crystallized. Socialism was, at it’s core, based on one of the major basic sins.

Thou Shalt Not Covet

The driving force of Socialism is contrary to the 10th Commandment. It is based on being covetous of those who have more or better homes, incomes, money. The ‘redistributive urge’ at the core of Socialism is simply coveting dressed up in pretty clothes. Sometimes it gets enhanced with a bit of ‘coveting by proxy’ where one set of privileged people want to redistribute other privileged peoples stuff to “the poor” or for “the greater social good”. But it is still, at it’s core, covetousness. The one person covets what THEY could do with the other persons “stuff”.

http://apostolic.edu/biblestudy/files/10th-com.htm

THE 10th COMMANDMENT-(coveting)
Exodus 20:17 “Thou shalt not covet thy neighbour’s house, thou shalt not covet thy neighbour’s wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor any thing that [is] thy neighbour’s.”

Remember that some commands are vertical (our relationship with God) then there are horizontal commands (relationship with others) — This command is the greatest of the horizontal commands for sure!

It becomes a “catch all” at the end of this awesome law. Other philosophies deal with basic don’ts. But NONE of them list this one!

*** WE NEED VICTORY OVER COVETOUSNESS *** or we will stomp on others for our own end

And at this time it becomes quite clear why this Democrat dominated government has no interest in the will of the people or the basic rights of others. It Covets, and as a consequence they “will stomp on others” for their “own end”.

And with that, I now have the “moment of clarity” that lets all the pieces snap into place. The why they do it, the ‘how can they justify it’, the works. Coveting and coveting by proxy.

Though this does leave the dangling issue of why “Liberation Theology” can exist in the various churches and why so many nominally Christian countries are Socialist. (And why so many Jewish folks have Socialist leanings).

Perhaps they have not yet realized that it’s embracing a fundamental sin…

About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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70 Responses to Socialist Sin

  1. Wayne Job says:

    The lack of independent thought, and the strange herding instinct for self preservation was always apparent. The violence when the group think is threatened and the superiority attitude shines through. Thank you for the insight, as the rather bothersome habit of the left of taking from the independently successful, was always problematic for me. This breaking of one of gods main rules for a better society, probably explains why they always bugger up everything, when they try to run anything.

  2. Verity Jones says:

    Socialism also seems good at decrying the imperfections of other systems without considering its own shortcomings. Another biblical quote springs to mind.

    “Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye? (Matthew 7:3)

  3. j ferguson says:

    E.M. this is brilliant. You’ve hit on it, without a doubt.

    But the problem with socialism isn’t entirely that it arises from the covetous – there are also the sharers, the people who want you to share.

    I think you mentioned that you’d read Adam Smith. Somewhere in the book is a discussion of “price controls” (my quotes – not his term) on corn.

    His observation was that England depended on the farmers for its continued existence and the farmers had to be able to afford grain for bread in order to keep going, so if price was too high, there would be problems with the folks living close to the subsistence level and their problems would cascade up to everyone else.

    I can’t remember what the mechanism was for helping them out in those times, but it must have been a form of price control.

    Although covetousness may provide the votes to drive us socialist, it’s the sharers (people of great wealth) who make these things happen. And I tend to think they do it with the money of the middle class, not their own.

  4. A williamson says:

    Margaret Thatcher said it best,

    ” The trouble with socialism is, eventually you run out
    of other peoples money to spend.”

    This is happening with socialist governments around the globe.

  5. Robin Melville says:

    Hmmm, but wasn’t there something about heaven and the eye of a needle somewhere in there?

    I guess if the super-rich were to stop exhibiting such folly and greed which redounds upon the rest of us there’d be less interest in redistributing their, occasionally ill-gotten, gains.

    BTW, your blog is one of the most intelligent and interesting things I’ve come across. Thank you.

  6. Pascvaks says:

    “Love Thy Neighbor As Thyself” comes to mind also. The “Socialists” are, indeed, quite the collection of: a. the very best in idealistic motivation, and b. the very worst in practical administration. The Utopians are very impatient; they want it all NOW. They are also very stupid – it takes uncounted years and generations to get all of anything, especially the impossible, human perfection. But that doesn’t stop them. They think all they have to do is promise something, get elected, pass a law or two, and BINGO they have Utopia! Socialists (today’s American Democrats) want what all dreamers want: The Perfect Life in the Perfect Country in the Perfect World. NOW! NOW!! NOW!!! They will never change! The best we can hope for is to move in the general direction they are pointing, they’re not entirely wrong. The worst we can do is give them the total power they now enjoy — that is insanity! And we will pay for this mistake!

  7. Malaga View says:

    I came to that conclusion in the early 1970s when studying Economic History… the politics are based upon materialism, consumerism and greed… not a pretty sight.

    The politics of envy fails on so many levels… as Margaret Thatcher so correctly observed: socialists always run out of other people’s money.

    And don’t get me started on the Politicians… its all about power and control… robbing from the rich… buying off the poor.

    Marie-Antoinette was on the right track (for all the wrong reasons) when she said let them eat cake because government should be about baking the biggest possible cake so that everyone can have a good slice of cake.

    So it seems there is no alternative to the free market… the government should just ensure the markets are free, open, honest and transparent…

  8. E.M.Smith says:

    @Verity: I was about to point out that every group is better at pointing out faults in others than in itself… then I realized that I’m a “died in the wool’ capitalist who happily will explain the ills of completely unfettered markets (monopoly formation, oligopoly collusion, conspiracies to restrain trade and raise prices, government lobby activities, and don’t even get me started on abuses like The Pullman Riots …)

    So maybe there is something more to your point… The tendency for the Market Economies to have more folks who accept them as “The best whore in the whore house” while not being in love with the idea. Where Socialism has more starry eyed idealists who don’t look so much at actual performance for the populace at large…

    @Robin Melville:

    Odd you should pick that verse… One of my favorite versions of the Bible is the Peshitta text. Originally written in Aramaic (the language of Jesus and the Apostles) and left alone for the duration. Some verses in it are just a wee bit more clear than in the multiply translated variations. (From Aramaic to Greek to Latin to English…)

    The author of the translation points out that in Aramaic the difference between “rope” and “camel” is a single little dot. And believes that the dot was not correctly seen in the first step. So in the Peshitta text it says (from memory) “It is easier for a rope to pass through the eye of a needle than for a wealthy man to enter heaven”.

    Makes much more sense than camel. (Yet makes no difference to the message).

    The idea is NOT that wealth itself prevents a moral life, just that the temptations are greater so harder to resist. There is nothing sinful about money or wealth. Just the human failures that they more readily expose.

    @Magala View: I rather like it better when my Government does NOT try to fix things for me (like baking larger cakes) but rather just sticks to keeping OTHER governments out of my face and prevents criminals from stealing my cake. Add a tiny bit of prevention of monopoly, collusion, and price fixing and I’m happy. Basically: Defend me from large predators and get out of the way. I’ll figure out how to bake my own really big cake, and in flavors they never imagined…

    @J Ferguson: Those are the folks I’ve called “coveting by proxy”. They want to share, but mostly share someone else’s stuff… they covet what that rich person of there has, as they could do so much more “good” with it…

    FWIW, there is a fairly easily readable discussion of the issue of “dearths” and “famines” and Smith’s perspective on it here:

    Click to access grada_smithsen.pdf

    I also find this one amusing, though a bit less focused on Adam Smith:

    http://mises.org/daily/3346

    It’s a more general discussion of price controls in the ancient world.

    From the earliest times, from the very inception of organized government, rulers and their officials have attempted, with varying degrees of success, to “control” their economies. The notion that there is a “just” or “fair” price for a certain commodity, a price which can and ought to be enforced by government, is apparently coterminous with civilization.

    For the past forty-six centuries (at least) governments all over the world have tried to fix wages and prices from time to time. When their efforts failed, as they usually did, governments then put the blame on the wickedness and dishonesty of their subjects, rather than upon the ineffectiveness of the official policy. The same tendencies remain today.

    The passion for economic planning, as Professor John Jewkes has cogently pointed out,[1] is perennial. Centralized planning regularly appears in every generation, and is just as readily discarded after several years of fruitless experimentation, only to rise again on a subsequent occasion. Grandiose plans for regulating investment, wages, prices, and production are usually unveiled with great fanfare and high hopes. As reality forces its way in, however, the plans are modified in the initial stages, then modified a little more, then drastically altered, then finally allowed to vanish quietly and unmourned. Human nature being what it is, every other decade or so the same old plans are dusted off, perhaps given a new name, and the process is begun anew.

    Of all the things that justify the moniker “The Dismal Science” for Economics, this tendency to repeatedly try the same “sounds good, always fails” kind of policy is what eats at my heart the most. You would think that after 4600 years of history of failure we’d have learned… but we don’t.

    So we keep on trying central planning. And it keeps on failing. And we keep on trying to decree prices and distribution of wealth, and it keeps on failing. And every time we take another turn on the wheel, it’s markets that end up working. The least bad choice.

  9. j ferguson says:

    E.M.
    Good references. Now I’m going to have to go back to Smith and find out what was done to keep the peasants from starving. My memory was that it was’t only a market response.

    I loved A. Smith, although his meticulousness could be exasperating. ALL possibilities having anything to do with anything he was interested in were looked at in detail including the many that could have been dismissed on sight.

    On another issue discussed above, is it possible that it matters who writes the aphorisms and that a poor person would think of ropes not passing through needles while a rich one could be concerned about covetousness?

    In other words, the moral short comings of a class are more easily seen by someone from another class? likely, this is a spurious view.

    On the corn prices, Smith reports that they were recorded back quite a ways. Someone recently has surmised that the English corn prices might track temperature and found some correlation, although I can’t remember with what. Maybe it tracked during the early instrumental period.

  10. E.M.Smith says:

    The foundational Economist Jevons did one of the earliest and most detailed studies of corn prices and sunspot cycles and found a significant correlation. Rounded up all the records of The Empire in India too, IIRC.

    Economists have known for a couple of hundred years that the sun and it’s solar spot cycles drive grain price changes and production quantities. It’s part of the foundational work of the field of Economics. (Jevons also created the doctrine of “utility”… a core concept.)

    Some on Jevons here:

    https://chiefio.wordpress.com/2009/05/12/jevons-paradox-coal-oil-conservation/

    Jevons was also the one who figured out that increased efficiency of each use of coal resulted in more coal use, not less. You can’t cut oil use by efficiency improvements… but the loony left didn’t like that, so they cooked up some slightly broken re-interpretative economics and buggered the original (fairly good) wiki page. The link is my response….

    Also, FWIW, we spent a long time studying grain and commodity market behaviours in my school. I did go to an Ag school… So this is ‘well ploughed ground” ;-)

  11. Joe Prins says:

    Perhaps Chiefio and the above commenters should read something Ayn Rand wrote way back when. The easiest place to start would be a little book: For the New Intellectual. In particular I refer you to the suummation of her philosophy chapter: This is John Galt speaking. In essence, organized religion is another way of coveting your material possessions.
    Instead of using force, as in taxes, they use your reliance on their invention of a “higher being”, as in thithes.
    Please observe: neither produce anything. Government and religion tell you how to spent your production on them.

  12. Verity Jones says:

    @j ferguson
    re your earlier comment about farmers, and going back to Patrick O’Brian’s Jack Aubrey, I seem to remember in one of the novels O’Brian pulled off very good social and political commentry on the ills of enclosing the “common” land, preventing the villagers from grazing their animals and increasing their dependency on paid employment. I can’t check as we’ve lend our set.

  13. The new socialism, promoted by a hidden banking elite, would seek to “optimize” profit by optimizing markets, so increasing the total amount of buyers and simultaneously controlling the majority of means of production and, last but not least, to avoid conflicting people by, like in the A.Huxley novel “Brave New World”, making a new breed of genetically manipulated human beings, as the “gammas” in Huxley´s story.

  14. LarryGeiger says:

    Theft.
    “Thou shalt not steal.”
    If we tax ourselves to build a road that ANYONE with an auto and driver’s license can drive on, that’s good government. See Roman roads.
    If we are taxed by kings, princes, or bloated socialists to take money from one person and give that money to another, that’s theft.
    The forefathers recognized this principle.
    Social Security is theft. Obamacare is theft. Welfare is theft.
    We don’t like to admit it and liberals generally run quickly away into all sorts of justifications, but it’s still true.
    If we pay a contractor or a soldier to perform a duty, at reasonable pay, for the constitutional benefit of the nation, that’s not theft.
    The current judicial has twisted “promote the general welfare” way beyond what was intended.

  15. j ferguson says:

    @ Verity Jones

    Enclosure of the commons in O’Brian; I remember it well. I also remember that the drive was to increased productivity per unit land measure (acre?).

    I’ve been hunting in Smith for the section about subsistence, such hunting much easier with search in the Ebook version on both my notebook and Kindle.

    Looking at Smith this way reminds me of his relentlessness and how given he was to beating a topic well past death. I have to suppose that once he’s done with something, there is absolutely no other way to look at it that he hasn’t already covered – none.

    E.M. Fergusons were in the grain business in Minneapolis, acting as commission agents from 1888 until company sold in 1990. We loaned seed money to the country and acted as agents for the farmers mostly at Grain Exchange in Minneapolis. Company was named Kellogg Commission because of a conflict of interest with my great-grandfather’s day job driving locomotives out to the Dakotas. He wasn’t supposed to piggy-back a business on top of the railroad’s transportation business. He and the conductor marketed their services to the farmers they met while locomotive was being watered.

    As farms got bigger and could ship unit-trains, farmers could deal directly with the mills and our business became obsolete.

    I never worked there, but was on the board for a number of years and got a pretty good look at the difference between how the commodity market actually worked and how most people thought it worked.

  16. What it advisable to be “redistributed” is same rules for everybody, that´s all. The thermodynamics laws apply to everyone, and it is an individual duty or work, to increase own´s negentropy by opposing entropy, in every realm of the human scenario.
    Usually, in socialist societies, redistribution becomes clearly entropic as it “optimizes”economy in the downward direction: Every time there is less to redistribute.( Example:Cuba)

  17. j ferguson says:

    E.M. Good piece on the politicization of Jevon’s paradox. On a parallel tropic, sometime, do you suppose you could discuss the repeated assertion by the experts that oil demand is inelastic with price. It may simply be that I don’t understand what “inelastic” means but it seems patently clear to me as I watch consumption that lower price means more fuel is sold and higher, less.

    How have I messed up?

  18. Extremes are not bad but silly: One extreme: “I don´t pay and you don´t pay” (How clever we are!)….but this correlates with: “I don´t sell and you don´t sell.”, so market should be optimized.
    The same happens when and where “social policies” are indiscriminately applied (usually because of electoral reasons): protected people expects everything to come “from above” and stop struggling for survival and so can not progress.
    The first excess is commonly found in latin american countries, where we find the unexplainable fact (unexplained for the US people) that intellectual property it is commonly violated….because the ones suppose to pay for it are not used to pay it (If you have an inventor among your personnel you don´t pay him more for that and you just profit from his invention….however the inventor is automatically “authorized” to give the invention to the competition) . The second excess is also found in one succesful latin american country, where, through a very generous “redistribution”among the elderly has caused youngsters to be mantained by elders, ending in youngsters inclined to drugs and deliquency; where all criminals are young people.
    A different case, in another and neighbour country, where the “social policies” were given just as a help for those in extreme poverty, helping them to organize comunal kitchens, where they could eat by paying a small fee.
    The then hundred of thousands of poor people, not having any other alternative but to create their own job, resulted in a society where they represent now the 51% of the GDP(BTW , as these families were families with more than four children each, it has demonstrated that birth control policies are a non sense, by being themselves a big local market).

  19. In order not to be naive we should also consider, that socialism can also be only a “disguise”of covetousness and/or pathologically unchannelled libido.
    With this thought we approach one of the undesired consequences of extreme democracy: The government of the unfitted.

  20. E.M.Smith says:

    @J Ferguson: You haven’t messed up. (Oh, and thanks for the compliment…. BTW, flogging a topic ‘well past death’ seems to be a common trait among us Smiths ;-)

    Price in-elastic does not mean price ZERO-elastic.

    So a rise of price DOES reduce consumption. Just at a too slow rate to prevent prices from rising a lot for each unit of “demand destruction”.

    Oh, and price curves are not all straight lines. Often there is a “knee” where some use or other becomes unprofitable and the demand just dies. You see that kind of price curve when “substitution” is available, for example.

    Take Natural Gas. The winter heating demand is rather price in-elastic. If I’m Damned Cold I’m going to run that furnace and not die. Period. The colder it gets, the more fuel is burned, come hell or hail… So every winter natural gas prices rise. Oddly, the last several decades there has been an ever growing SUMMER price bump (that you can see happening now…) as A/C driven by natural gas peaking turbines has become a price inelastic “necessity” instead of an optional “luxury”. But the same natural gas is used for making “petro” chemicals as feedstock. Now as soon as Nat Gas exceeds oil in price per unit of ‘feedstock’, the chemical company will simply swap to oil. (The last major swap was FROM oil to gas, and oil has stayed high enough since then to make it uninteresting to swap back, but it can be done).

    Similarly, you can use coal as a boiler fuel for electricity or you can use coal as feedstock for “petro” chemicals.

    So we have this odd three-way price dance between them. Some parts of the price curve being very price in-elastic, yet there are these points where a seismic shift happens. During the Arab Oil Embargo of the ’70s, this country started with a fairly high proportion of electricity from oil (somewhere around 1/4? maybe more IIRC) but by the end it was near zero. Price was “inelastic” in the short run (of weeks, we needed electricity…) but over the course of a year or two the generators were refitted for natural gas or coal (depending on the boiler). It took a year or two for the parts to be made and installed, but then oil consumption for electricity simply died.

    Similarly auto fuels. In a “price shock” demand is price inelastic. I simply MUST fill up my tank and drive to work. $2 a gallon or $5, I’m doing it. Now I might skip a driving vacation to Tahoe, but that’s a minor part of my fuel use. The commute to work is most of it. So a double of price ($2 to $4) has a very small, perhaps 1/10, impact on consumption. Demand is price inelastic.

    Longer term, I can sell my Ford F350 4×4 that got 9 MPG and buy a Honda Civic that got 35 mpg (yes, those are actual cars I’ve owned…) and / or sell my home and move closer to work (or change jobs). So over the course of years, oil demand can be price elastic. More than 50% demand change for a 50% increase in prices.

    And that happened.

    The Arab Oil Embargo raised oil from about $2.50 / bbl to over $12/bbl. In the ‘couple of years’ time span. Detroit almost died, Honda and Toyota were “made”. But on the way there we had folk sitting in lines for days to fill their tanks…. Oil demand did not drop to 5/24 ths of prior demand in the 1-2 year time span. But longer term I dropped mine to 8/35

    So the concept of price in-elastic is just that if you change price, the degree to which demand changes is a smaller amount. And it gets enhanced by adding “in what length of time”.

    Another interesting example is potatoes. They are what is called an “inferior good”. In hard times, the demand for potatoes GOES UP. Folks eat less steak, and more potatoes. So you sometimes get a demand RISE in potatoes when foods in general are having a price rises. Potatoes are negatively price correlated with other foods. Don’t know exactly how to describe that in terms of elasticity, but it’s sort of a negative price elasticity of demand ;-)

    In all these cases, in-elastic just means that the price can change by one percentage and the demand changes by a lower percentage. (Make gas $0.35 a gallon and I’m simply NOT going to drive 10x as much… my ‘sit upon’ would not allow it! ;-)

    And for price elastic goods, raise the price %10 and you might just get zero demand. Like at the point where natural gas is 5% cheaper than oil as a chemical feed stock. Raise the price 10% and it’s 5% more profit to me if I swap over to oil feedstock. My demand for gas drops to zero…

    Oh, just thought of a great example. Heart Surgery.

    Make it zero cost, I’m still not going to go get a stent put in. I just don’t need one. No price will make me buy one. Make it “all my lifetime savings” and if I’m on the table with a heart attack, give me the paper to sign. Nearly zero price elasticity of demand for heart surgery. (And that’s the problem of medical costs… we’ve invented more life saving techniques than we can afford, but we’re going to spend the money anyway. Individually or collectively.) But at the margin, you get a little change of demand. If I’ve got a 70% obstructed artery – a nearly nothing stent will go right in. A “net worth stent” will wait while I become a vegetarian and start a fitness plan. So it’s very price inelastic, but not completely zero elasticity.

    Naturally, the “for profit” medical suppliers like to price as close to “full net worth” as they can get, while the Socialized Medical Plans simply deny access to expensive treatments and tell those folks to go die. (No, that’s not hyperbole. “Medical Boards” are set up to “practice public medicine” and decide what gives the most total good for the few available dollars. $1,000,000 on one person means that person dies as the $1,000,000 can be better spent giving 1,000,000 people a vaccine… I can cite real cases if folks need proof, but it’s well documented.)

    It’s the playing out of that scenario that is heading the USA into a Socialized Medicine plan. First it was Medicare, then Medicaid and Medi-Cal joined in. They didn’t pay enough to cover the bills, so the excess was ‘third partied’ onto the bills of the folks who WOULD pay more, those with private insurance. (often they would pay 2 to 3 times as much as the government funded folks). Well, this lead to the “medical cost crisis” that was really a “medical ponzi pricing” crisis and that has lead to everyone being inside the government mandate. The eventual end game is that expensive treatments are simply forbidden and only cheap medical treatments are provided.

    This is done in the name of efficiency and good public health policy, but it is really just supply rationing under price controls. And that always ends badly. (As the link above showed.) So that “price in-elastic” demand ends up with the demand being made elastic by government fiat. What folks were unwilling to accept from market forces (that poor folks could not get cat scans for the same things that rich folks could) ends up being accepted as long as nobody, rich or poor, get that treatment. The ultimate suicide pact.

    Hopefully this helps clarify a bit how price elasticity of demand works.

    FWIW there are non-price elasticities and it can be applied to supply as well as demand. For example, oil SUPPLY is price inelastic in the short term. It takes a few years to drill a well, and shutting in a producing well can damage it’s long term production (not to mention costing you money). And when you have both price inelastic demand and supply, you get unstable markets. As oil has always been. In Total, it’s a fairly Rich Field of Mobil Economic thought ;-)

    (Grains are also price inelastic in supply in the short run. Once the fields are planted in a given crop year, you are kind of done. Over many years, folks can change what they plant, but even there, seeds are produced on a several year cycle, so you can’t just run out and get a 2 x supply of rice seeds. So it’s a couple of years to change the product mix on the supply side. Thus another unstable market with price inelastic supply and demand.)

    Highly elastic markets are things like soda pop. I can always just drink {water, juice, beer, wine, Kool-Aid, …} and the bottler can make anywhere from zero to full capacity every day to match demand.

  21. In all the markets (this won´t like you, not yet “blessed”by a fuels´tax) where there is a high tax on fuels, these have not decreased its sales. So fuels are inelastic. Though the recent gulf rig accident and subsequent oil spill have shown to everybody that the so called “fossil fuels” are not, by any means, scarce or its supply about to end, producers have managed to trick the market with the tale of its “sinful” contaminating property and so to manage its price to fall to levels according to real reserves; perhaps to lower than $10 a barrel, but, instead not only keep it around $80 but, making use of its inelasticity, to tax consumers.

  22. ShugNiggurath says:

    You ask why ‘Christian’ countries are socialist. I’m sure you’ll have heard the leftist cry that ‘Jesus was a socialist’ (I always find that particular appeal to authority very funny as it’s usually atheist socialists who shout it the loudest).

    This idea got itself embedded culturally from the early labour movements which were filled with clergymen. An old joke in the UK was that catholic priests would remind their congregations to ‘vote labour’ at the end of their Sunday sermons before an election. This, to me, is the idealistic version of socialism – looking after the weak, sick and poor. Which are admirable aims as charity, and very Christian, but are nothing to do with the ideological aims of socialism – taking by force the property of one group and sharing it among the rest.

    Given the Jewish origins of Christianity I can see a similar thing happening with Jewish socialists, a thousand years and more in Europe as the underclass would have meant that Jews of any social standing would have created some kind of support system for all, alms for the poor pretty much, and the socialist corruption of morality can look similar from the outside.

    I usually ask socialists to run themselves a thought experiment where, instead of paying tax, they take home the lot and instead pay for the services they need, but that they must also pay to support a non-working, non-family member.

  23. E.M.Smith says:

    @Adolfo: The way unstable markets work is that there is no “equilibrium price”. Prices are always out of equilibrium as each minor supply or demand shift causes the price to swing widely.

    If economies wish to avoid that, they need stabilization policies (such as a supply reserve that can be both added demand during glut and added supply during shortage). Unfortunately, these inevitably get turned into price control mechanisms rather than supply stabilization.

    So you have folks doing stupid things like “Excess Profits Tax” during times of shortage. You don’t hear about any desire to provide more money to the oil companies during times of glut…

    And during times of glut, nobody want to drill wells for 3 years out, as it’s not profitable. So you get swings in that market too. So a ‘drilling stabilization plan’ would also help. But instead we have folks de-stabilizing drilling (and thus supply) in an unstable system

    Watch this space as the price destabilizes to the upside over the next 2 to 3 years.

    On the grains front, we used to have large silos filled with grain for ‘price stabilization’. This got turned into “farm subsidy” and the silos were always full, instead of counter swing stabilizers. We sold all that grain to Russia under Regan and as of now we have a global policy of shipping grain from continent to continent “just in time” instead of storage and stabilization. The whole area of farm subsidy is a mess. And it always has been.

    But do take to heart that there is no “base price” or “stable price” or “correct price” or whatever other term you want to apply to it in unstable markets with both production and demand in-elasticities. Especially when subject to random external factors (like recessions or weather). Your choices are only: Accept wide price swings. or Do supply stabilization behaviours. or Try things that have always failed like subsidy and / or price controls and / or central planning and / or …

    Oh, and thanks for the insight on the nature of the cultural difference.

  24. @E.M.Smith

    You are right. In SA we have experimented all known economic mistakes, thus we know them all, we have them engraved on our bones itself. Then, when someone illuminated like Chavez tries these “solutions” again, we already know the outcome. The same applies to any first world illuminate (or rather covetously oriented).
    These are the consequences of an exaggerated democracy, where government officials are elected without any pre requisites, without even presenting a curriculum vitae and not even passing a rigurous psychological test.
    That is why there is a necessity to have a kind of national agreement, as the spaniards had with the “Moncloa Pacts” of 1977, to be followed and respected by every elected government, to avoid any undesired innovation.

  25. j ferguson says:

    E.M. Thank you much for helping me with this topic. I need to read and consider at more length what you’ve written because I see givens in there of which I’m skeptical. And I suspect my skepticism is failure to comprehend.

  26. ShugNiggurath says:

    Dunno if regular commenters get privileges, my post has been in a queue while others have got through.

    Was it something I said? If you have any issues with my post email me at hm@anelegantchaos.org? Re-read my comment and can’t see anything dodgy with the content.

    REPLY:{ Yes, the first time comment takes a lag time. The way I’m doing it is selected folks go ‘straight through’ while new folks wait for me to do an approval session. You will now be on the ‘straight through’ queue unless I decide to put you in the ‘hold for review’ group due to not following The Rules (see the tab up top). There is only one of me, and I have a wife, family (i.e. kids want stuff) and a half dozen bunnies who demand attention. So a new poster gets to sit in the queue until I am in front of the screen. C’est La Vie. It only happens once per person. -E.M.Smith }

  27. Pingback: TWAWKI » The Turnkrudd Party

  28. Ken McMurtrie says:

    I am taking a risk here because I haven’t thoroughly read all your (EM) comments or other comments. However, my over-simplified comment is that, although your premise of socialism being a sin is “technically” accurate, it is extremely biassed. Extremes and the worst aspects of socialism are undoubtedly valid arguments against socialism per se. But there are many real benefits to society in all its facets from a form of socialist government.
    If you are going to decry socialism, it would only be fair to offer more workable government philosophies.
    The current US version of democracy has allowed the extremes of capitalism to bring the US to the very real brink of catastrophic financial and social collapse. Your timing may not be impeccable.
    Any civil control system can be rightly criticised for its shortcomings, but, in all cases, I would suggest that actual systemic failures are the result of the human failings, present in all factions, of greed, selfishness and lack of respect for others.
    With much respect,
    Ken.

  29. E.M.Smith says:

    @Ken McMurtrie:

    An observation of a truth is never “extremely biased’.

    Truth just is.

    I don’t think of this as an attack on socialism so much as an “Ah Hah!” understanding of it. The first step to fixing a machine is to understand why it’s gone wrong.

    To know that “coveting’ is the base problem tells you where to apply fixes. Just as understanding that “greed” is where unbridled capitalism goes wrong tells you where to patch it.

    As much as I rail against Socialism (and think it deserves it), the fact is that I’m just as dead set against unbridled “free markets”. See the comment about instability in in-elastic supply and demand markets for an example of how markets can go bad.

    And I could post volumes on Standard Oil and the various trusts of the 1800s. And, as I said, don’t say “Pullman Riots” and expect to walk away with all your appendages intact… (Hired thugs and the POLICE were used to KILL and abuse striking workers…)

    I’m also quite willing to state publicly that THEORETICALLY Socialism could have some real benefits. Having most of the wealth of the world concentrated in 1% or so of the hands is not, IMHO, a good thing.

    I’m of the opinion that the “Mixed Economy” gives the best results to date, so that is where I’d like my government to stay. ( You are welcome to do what ever you like in your own country. In fact, I enjoy watching the show as folks try things. I just wish they would try something new instead of the same old failed things.)

    BUT: I watch Brazil with great interest. It has a socialist at the helm. It has Lange Type Socialist features (such as the government participation in Petrobras) and it is thriving. Yet Lula is NOT pushing the usual socialist economic agenda, so I’m not sure what to call it. There is hope that someone may yet find a form of ‘near Lange Type Socialism” that works and is stable for more than 50 years. I’d love to see it.

    But I’m chastened by economic history.

    In 4600 years of economic history we’ve tried an awful lot of stuff. And the pattern is pretty clear. You can have wealth, with large income disparities, or you can have equality, with poverty for all. Welcome to The Dismal Science…

    I suspect it all comes down to one little graph. As incomes rise, more money goes into investment and less into consumption. SOMEONE has to be wealthy for the large investments in capital stock that a society needs. If we’re all average, then not enough investment happens and too much consumption happens.

    As much as I might hope for a world of equality where we could all invest enough and all own our share of the means of production, that does not seem to be possible at present world wealth levels; or with present human failings.

    So yes, I will rant and rail against moving my country in particular toward a form of government that has been repeatedly tried and a form of economic control that has been repeatedly tried and has fairly consistently delivered lower levels of net national wealth (and lower for the lowest classes as well as for the filthy rich). At least until such time as there is an existence proof of an alternative that does better.

    FWIW, China has a shot at it as well as Brazil. Both are experimenting with rather novel blends of market economies with some central control. The big question now is just long term stability. Right behind it is what happens to them when they reach “living standards” parity with the west. It’s easy to be growing fast when you are starting from near the bottom…

    So while my point about Socialism being based, at it’s core, on a sin is a very interesting insight, from my point of view; I don’t hold that this prevents some future incarnation from ‘getting past it’ and doing a better job. Basically, I’m open to the IDEA of a better system, I’m just jaded by a few thousand years of economic history into saying “I’ll believe it when I see it.” Theoretically, an alcoholic can have just one glass of whiskey…

    And until that day, I’ll argue for the system that has done the most good for the most people, even if it has had horrid abuses in some cases and some negative outcomes from time to time. Basically, while it is preferable to have a happy marriage to a perfect wife (economically speaking), until that day it is better to take “The best whore in the whore house”. And for now that’s regulated market capitalism. The “Mixed Economy”.

    (For what it’s worth, I actually do have a “happy marriage to a perfect wife” for all practical purposes. 25 years and counting. Never been to a brothel, and don’t think I’d ever want to. They are a bit creepy in the films I’ve seen of places like Mustang Ranch. Thankfully, individual lives have better choices available than do national economies ;-)

    So the short form would be that I’m waiting for the perfection of mankind that will allow the noble goals of Socialism to actually be reachable. Until then I’m keeping one hand on my wallet and the other on my gun and my eyes on the cutthroats all around me from both the left and the right.

    I believe in the fundamental freedom, rights, and nobility of the individual above all else. Even above all the governments of the world, of all stripes. I’m willing to cooperate with any person or government that does good, and willing to fight any that does bad. I think that is a kind of “Libertarian”, but frankly don’t care. It’s just me.

    Yeah, that’s the Wild West Yankee part of the family tree…

    It really is an interesting difference of mind set that comes with true freedom and responsibility. When you are used to being 100% responsible for yourself and taking 0% “guff” from someone else… well, let’s just say a Mustang is a bit different from a draft horse. I’ve taken my share of “crap” in my life. Those days are long gone. So as folks with an agenda try to put my kids in the barn and exploit them, and try to move my government to a system that removes liberty and increases poverty: Well, yes. I’m going to call it a crappy system. And I’ll do what I can to stop it.

    You, of course, are free to put on the yoke and plough for the state. Heck, you might be lucky and not end up one of the geldings… I understand farm horses get ‘free health care’…

  30. Mike Smith says:

    @Ken McMurtrie Said, regarding the failures of Socialism: “…I would suggest that actual systemic failures are the result of the human failings, present in all factions, of greed, selfishness and lack of respect for others.”

    Ken is the perfect example of why socialism still exists even after every unmitigated undeniable failure seen in every aspect of it’s various incarnations; The arrogance of the “I can control everyone else better and more fairly than the last guy that tried it.” mindset.

    Except it really has nothing to do with fairness at all, and is actually about the socialist trying to compensate for something. I want to call it self loathing, but I haven’t fully synthesized my theory.

    I haven’t the words to define it, but I can describe it like this:

    A young boy who has been practicing piano, plays for his classmates. They enjoy his music and watch him intently while he plays. The pianist has two friends. One is proud of the pianist’s ability and beyond that, proud to be friends with the talented young musician.

    The second friend looks upon the scene from the position of how he has now lost something because he cannot play the piano. Subsequently he imposes a punitive tax on pianos, regulates piano lessons, and limits the music that can be played on the pianos, so that those poor unfortunates who cannot play piano are not made to feel bad about themselves compared to those who can play the piano.

    The second friend is what I want to call a hyper beta male. It’s not enough that they are incompetent or incapable, rather they must force everyone else to be as incompetent and incapable as they are. In this way, the HBM can try to attain some (manufactured) feeling of pride or success, but it does not fill them, or last. Thus they repeat this destructive process over and over, and on ever grander scales.

    I’m still mulling this and occasionally I write it out to help my thoughts gel into something cohesive so I can better explain it to those of us who do not feel this way about another’s display of skill, or competence, or success, and do not understand why there are those who do.

  31. Verity Jones says:

    @Ken McMurtrie
    “The current US version of democracy has allowed the extremes of capitalism to bring the US to the very real brink of catastrophic financial and social collapse.”

    Er, my (very basic out of US) understanding of the financial crisis is that government intervention is at least partially responsible. I believe it was the Democrat’s Community Reinvestment Act regulation that forced banks to be more socially responsive in lending to higher risk ‘less able to pay’ borrowers to ‘enable them to get on the housing ladder’ that led to the whole unsustainable sub-prime bubble and subsequent collapse.

    Similarly in the UK we have pension funds in widespread short-fall. Why? The MSM conveniently forget that while the financial markets were doing well private and company pension funds had huge surpluses (much of which they needed to reinvest to ensure sustainability). The then government eyed these ‘profits’ jealously and taxed them so they could be used for the ‘greater good’. Now anyone who opted-out of the state pension to pay for a better standard of living in the future is affected. This is not just ‘private pensions’ but even basic workers who saw the wisdom of topping up state pensions by buying into company schemes.

  32. E.M.Smith says:

    @Verity:

    Yes, basically. I’ve thought of doing a posting on this as the full story has a lot of subtle details of interest to economists, but the “thumbnail sketch” is this:

    The CRA was passed, encouraging banks to make bad loans. They didn’t do “enough” of them, so under the Clintons an update to the CRA was passed. This mandated that banks had to make bad loans or the government would come spank them. As ‘payment’ for their votes to pass this POS bill, the Rummy Republicans demanded the repeal of Glass-Steagall (that had worked mighty well for 70 years or so).

    OK, the banks had to MAKE the loans, but they didn’t have to keep them…

    I think it was at Bear Stearns (I’d need to check my notes if it was invented there or just inovated there as the inventor changed locations); but at one of the major financial houses they figured out that they could take the bad loans and blend them in with some good loans and put the resultant sausage in a skin called a CDO or Collateralized Dept Obligation. These had traunches of quality packaged up in more skins called a SIV or Special Investment Vehicle ( I think Citigroup invented this layer). These were then given better “investment grade” ratings by the rating agencies (perhaps from incompetence, perhaps because these things were wrapped in ‘insurance’ and they didn’t understand the overall risk.

    These CDOs and SIVs being both insured and rated A were sold all over the world. What could be safer than USA Real Estate, broadly diversified, A-Rated, and insured?

    Time passes.

    Someone figured out that when an economic downturn came, the folks issuing the insurance didn’t have the money to cover the bad loans (being basically an unregulated form of insurance – anyone could issue the contract) and that the banks using these CDOs and SIVs as collateral would have to write them down, and thus have a shortage of “capital” requiring that they sell some of them, that would start a cascade failure of the banks (due to government changing a rule that HAD let banks hold mortgages at probable long term value. Instead they had to “mark to market” every reporting period. And as every trader knows “The market can remain irrational longer than you can remain solvent”)

    So those traders began to short the banks, short the financial instruments and generally start a panic. Even this might not have been completely catastrophic, but for the removal of the “Uptick Rule” that hobbled unbridled Bear Raids. With no such rule, the biggest wallet wins. Period. So they were able to short Lehman and Bear Stearns AND their collateral until they collapsed. This then started a general ‘Run on the banks” world wide that we are still dealing with.

    Root cause: CRA and mandated bad loans (thanks largely to Barney Franks and friends). Secondary root cause: Fanny Mae and Freddy Mac making a loan market where interest rates were artificially so low lots of folks rushed to buy, driving up the prices unstustainably as anyone with a pulse ran out to buy a house. More demand means higher prices.

    Supporting causes: The removal of regulations by the goverment. Glass-Steagal, Uptick Rule, etc. and the imposition of Mark To Market. This allowed the same folks to be both the holders of the crap and the insurers of it along with being the merchants for it. Just stupid. Now if your bank has a run, their insurance is trash too. It also acts as Bear Bait and assures an easy win to a predatory Bear Raid.

    Notice that these are substantially ALL actions by government or government created entities.

    The mechanism was the creation of SIVs and CDOs to move the dirt off the books (and those banks who bought them instead of selling them are the ones that have gone under). But if we’d not done that, it would only have changed which banks got hit (and maybe a little bit of when). It would still have been the case that bad loans were made, spread around, and eventually went bad in an economic downturn. That is always happens when you make bad loans that are under collateralized.

    The first instance of a real estate collapse / panic that I know of is the Panic of 33 AD. Yes, that’s when Jesus was alive… (the more things change, the more they don’t change…)

    https://chiefio.wordpress.com/2009/07/04/business-panic-of-33ad-things-never-change/

  33. A reality check: Would any of you hire any of your elected officials for a job in your own company?…..
    Then, do not complain!
    Just imagine your employees bringing your company to ruin; would you allow it?
    We hire politicians so they should be totally accountable; however they are not, instead, in practice, they end being the personal employees, the servants, of unknown, unelected and invisible bosses.

  34. KuhnKat says:

    Thank you.

  35. Ken McMurtrie says:

    @verity,
    Fair comment. However the basis of this discussion was socialism, which I suggested was not as bad as EM painted and that it does fail because of the human element/sin of greed or, as EM puts it – “Coveting “.
    I then suggested, and I realize that EM had touched on this, that this same sin of greed is capable of bringing down any social system, using the US as an example.
    I am not a socialist but have some socialist leanings, I suppose. I believe in a fair system where some constraints on the moneymakers enable the poor, incapable and disadvantaged keep out of the gutter.
    Back to your comment, the government (US in this case) certainly enabled, failed to prevent, and finally abetted the financial system failure.
    My drift is that all government and financial systems are open to failure if the greed exists and is allowed to be put in action.
    I don’t think any of us are far off the same track, my skill with words could be better and my emotions may flavour what I say or how I say it, but hopefully we all want to see a fair go for anyone who deserves it. (I hope this latter term doesn’t start a new thread).
    @EM.
    We are not too far in divergence, me thinks. However I am not understanding your comment that truth can be biassed but not opinion.
    If a “truth” is biassed, IMHO, it is no longer a truth.
    Whereas, it might be safe to say, some of probably everyone’s opinions are biassed to some extent, not necessarily deliberately, but because we have preconceived ideas and rarely are we perfect. In your case, very rarely do I suspect bias as a component of your musings and comments.
    Many thanks for your efforts, without all your posts and comments, my education would be sadly lacking.
    Regards, Ken.

  36. E.M.Smith says:

    @Ken: Uh, I think you got what I said turned around.

    I said that truth is never biased, it just is.

    Opinion may be biased.

    E.M.Smith

    @Ken McMurtrie:

    An observation of a truth is never “extremely biased’.

    Truth just is.

    I am also making a finer distinction that Socialism is based on the sin of coveting, where a republic need not be.

    A Capitalist economy is NOT a form of government. It is an economic system. So you can very easily have greed in an economy that is NOT reflected in the government. (It depends on a fairly strong moral compass and some pretty good conflict of interest laws, but we’ve had fairly low levels of such corruption in the past).

    The problem with Socialism is that it is a form of government that covets AND an economic system. Socialism puts the economy in the hands of the government. Bad Idea. This puts the levers of power in the same hands as the folks doing the coveting.

    Similarly, Direct Democracies are prone to a very similar form of failure as folks “vote for themselves the largess of the public purse”. That’s why all Direct Democracies have been unstable and collapse. Usually in about 50 years (though it can be faster).

    Stable forms of government are Republics, Empires, and Monarchies. But Empires and Monarchies are prone to severe abuse of the people if you get a bad leader AND to that abuse if the leader is greedy. So they are stable, but prone to being somewhat evil at times.

    That leaves the Republic as the stable form of government that is NOT nearly as subject to those kinds of failures. Though if the Representatives are chosen only from one class of the citizens, you can still get abuses (such as in the Republic of Rome where only a small elite made the decision as to who would be a Senator…)

    A Democratic Republic makes it a bit better than a “Republic of the Few” and better than a Direct Democracy, but has issues if all the “Representatives” are directly elected as we’re seeing now. It flies too close to a Direct Democracy. We were more stable when Senators were the appointees of the States and when the President was an appointee. The Founders had it right the first time.

    Basically, a “house of Lords” stabilizes the urge of the Democracy to raid the public purse for the people, while the people restrain the house of Lords from raiding it for the powerful. We no longer have that restraint.

    So we, as a pretty much full Democracy (though a Democratic Republic), are busily voting in Socialism so it will give us more of the “goods”. We’ve begun the race to the bottom as each side tries to promise more “goodies” to the electorate and to the powerful who fund campaigns.

    FWIW, I also make a bit of a distinction between Greed and Coveting, where you have confounded the two terms.

    Greed is a general desire for more. More money. More goods. More accomplishment. Greed is not always evil. Greed is often a force for good. It drives folks to invest in major risk taking enterprise and drives folks to work more. “Good Greed” make traders get up for the open of the market each day. (On of my personal failings is “not enough greed”. I just don’t put in the effort to be up at 5 am to be ready for market open. I have too much sloth and not enough greed…)

    It is when that greed is turned toward the legitimate wealth of others, when it turns into coveting, that it causes ills.

    Direct Democracies are prone to that failure; but as an accidental consequence of human nature. The form of government does NOT contain it as an essential part. So “Direct Democracies” are not based on a sin, they just allow human failure to be manifest. It’s a “good idea that does bad”. At it’s core, it simply assumes too much good is in folks hearts and minds. It is naive but not sinful.

    Socialism, however, starts off stating that among it’s goals are redistribution of wealth and public ownership of assets (that must be taken from someone else). The very definition of socialism is based on Coveting thy neighbors goods.

    Also while you could generalize the impact of coveting, and perhaps the worst aspects of greed, to monarchies and empires; it is not part of their definition. It depends on the individual monarch or emperor. They are not based on a sin at their core, they are just incomplete with respect to the need to restrain the power of the powerful and unable to deal effectively with the poor leader.

    In a Republic, especially one with a split between a democratic house and a senate of states representatives, there are countervailing forces between the greed of the powerful and the coveting of the poor that prevents both from having too much sway. And that’s why it works so well.

    That is also why, as part of the (very unusual and not typically stable in most forms of government) middle class, I have to watch my wallet (against the coveting) and have a hand on my gun (against the powerful who would usurp power). And that’s why we have a 2nd amendment. It’s not about hunting Bambi…

    That dichotomy of forces is why our government was designed with a set of countervailing forces. The removal of those checks and balances over the years is why we are now sliding slowly into a Kleptocracy of both the powerful and the socialists/ masses.

    And that is why I’m willing to accept a capitalist economic system (as we know pretty well what regulations are needed to make it work well. For example, toss out “Fin Reg” that is a bucket of political favors and put back Glass-Steagall.) It’s much better than a Socialist system precisely because it separates the money economy from the government system (where socialism by necessity blends the two). “Market Socialism” is better than the original forms, and works better, but still has the fundamental problems intact. Basically, it’s closer to a Capitalist Republic, so works better, but not as well as the real deal.

    As someone above put it, all I need is for the government to assure that the markets are free, open, and fair. (The fair part is where regulation comes in). Just keep the other governments of the world out of my country (defend the boarders) and keep the powerful from colluding to control markets (anti-trust laws) and prosecute fraud ( keep the markets fair). Beyond that, leave me alone.

    Yet somehow that’s too much to ask…

  37. Ken McMurtrie says:

    Thanks EM. That does clarify the situation somewhat. At the risk of nit-picking, maybe an observation of a truth could be subjective and contain some bias. Where I really messed up was in mentally carrying the word “biassed” into the next sentence. Sorry for the unnecessary burden on your valuable time.
    The subject is vast, complex, has had a myriad of actual applications with enumerable pertubations and outcomes and has had many books written about it. We can only scrape the surface. Yet we make personal advances in understanding as we go.
    Regards, Ken.

  38. E.M.Smith says:

    @Ken: It’s one of the topics I enjoy thinking about (and talking about) the most, so “no worries” eh? It’s rare to actually find someone else who likes to talk about economics and forms of governments at all, so when that happens, I tend to ‘run with it’ ;-)

    There are more folks interested in how to make money from markets, but that’s more something I do to make money. There is some passion for the field (or I’d not have put as much time into it as I have…) but frankly, I think I’ve got it more or less figured out, and that’s when the interest dulls a bit.

    So Global Warming has a lot of interest (as it’s new, technical, and impacts on so much), but it doesn’t quite displace the passion for the topic of “Political Economy”. Too bad there’s not a lot of money to be made in the field (as an economist… the politicians and lawyers pull in giant buckets of cash…) or I’d get a job doing it…

    Besides, the ‘banter’ helps me learn where I’m being a bit sloppy with the language and where I’ve got loose ends to explain better. 8-}

  39. @E.M.Smith
    There are more folks interested in how to make money from markets, but that’s more something I do to make money.
    If you are interested in the stocks market and Global Warming (Rather Global Cooling), this equals to buy food commodities, which will be scarce.
    The next winter in the NH, if it is like SH winter, it will surprise you…so, buy more popcorn! (I mean grains,etc.)

  40. BTW just check the price increases of some food products in the SH.

  41. E.M.Smith says:

    @Adolfo: Is there a place to check food prices that’s on line?

    I’d be very interested in any pointers to local sources for weather and food price / production data. I’m pretty good at reading Spanish so local language is fine. I can also usually figure out Portuguese too, as long as it’s written. (The spoken form still throws me.. how do you get “dueeshze” out of “dos”… ) so Brazilian sources also ‘work for me’.

    Even online newspaper article links about would be fine, especially local papers. ( I can google the Engilsh MSM coverage, it’s the ‘on the ground’ part that takes forever to find, especially if you are not a frequent user of Spanish search terms and get them a bit ‘off’…)

    I just have this feeling that Something Big is going on in South America and I can only see a little scrap of it up here…

  42. Here you are some:
    Peruvian Institute of Statistics:
    http://www.inei.gob.pe/
    Prices Buenos Aires:
    http://www.alcentral.com.ar/
    Chile:
    http://latercera.com/contenido/655_278620_9.shtml
    Garlic increased to US$10/kg. and lower prices are expected in two weeks:
    http://www.generaccion.com/noticia/73229/dos-semanas-precio-ajo-volvera-costar-entre-seis-ocho-soles
    480,000 alpacas in risk of dying because of cold:
    http://elcomercio.pe/noticia/613622/puno-intenta-sobrevivir-implacable-ola-frio

  43. Onions make people cry: price increase of 37%

    http://gestion.pe/noticia/491654/cebollas-hacen-llorar-amas-casa-suben-37
    (Gestion, economic journal)

  44. Verity Jones says:

    @Ken,
    I am fundamentally altruistic and there are aspects of socialist ideology that are quite attractive, but it is not just human greed that brings it down but also flaws such as laziness, and I see the social justice side as having gone too far in many places. Welfare benefits should be paid as you say to those who need them to get out or keep out of the gutter. If I was a single parent under the UK tax credit system I would be able to claim back all of the tax I pay. This might sound great (it was designed to win votes) but consider this – as a professional I am fortunate to earn before tax what some couples together earn. It is ridiculous to me that my income on its own is considered low enough for a parent to qualify for 100% tax back to prevent a child from being raised in poverty – believe me, even on a single income (which we are at present), we are very far from being ‘on the breadline’.

  45. Ken McMurtrie says:

    @Verity.
    Thanks for your comments.
    What stirs my responses most are injustices.
    The case you mention is certainly valid, that level of assistance is hardly fair.
    I don’t know what levels of benefits apply to unemployed, pensioners etc in UK but they seem to be adequate in most Western developed countries.
    There are local national injustices, like your example, and their are international injustices where millions of people are starving while “we’ have enough food, water and resources that our waste levels are probably higher than their subsistence levels.
    You only have to look at the US expenditure and its spending on “wars” and bailouts to see the “mother of all” injustices. In our own little way, in Australia, we have the same faults.
    Anyway, that is another story.
    As you say laziness is certainly a factor in the unworkability of a social system, perhaps innate, perhaps lack of motivation due to the frustrations of “the system”.
    Regards, Ken.

  46. j ferguson says:

    E.M.

    On the 31st you said you were a “died in the wool capitalist”

    Dead Sheep? I think we know who the sheep are – not likely capitalists, but maybe socialists, or at least their clients?

    Better “dyed in the wool?”

    I’m still digesting your treatise on inelasticities in the oil market.

    For now why should a 10% price change produce a 10% consumption change? Is that a feature of that or other markets? Are there commodities where the demand/cost relationship is so constant that you do see at least a frequent if not necessarily linear relationship between cost, and demand variation?

    It”s not hard to understand that there’s inertia in the fuel markets (and it clearly is “markets” plural) but the inertia and complexity don’t seem to be to be sufficient to say that they are inelastic.

    maybe the whole thing comes down to my failure to understand what “inelestic” means in this context – a term of art, perhaps.

    btw, a new paper by McKittrick reported and available over at WUWT. Looks like he’s planting the ground you’ve been turning over.

    cheers.

  47. E.M.Smith says:

    @j ferguson:

    OK, you caught me. Spelling is not my strong suit. As long as the sounds are right, I’m generally OK with kreative cpeling nd kan reed thu it so I tend 2 jus spel as Eye right the saam as I reade.

    I actually like reading old stuff a lot, and they were much less hung up on spelling ‘just so’ then. You get comfortable with it after a while, then sometimes forget others are not.

    The basic concept of elasticity is very simple. Price elastic markets have a large change in demand for a small change of price. Price in-elastic markets have a very small change of demand even for large changes of price.

    Is there a market where it is exactly “one for one”? I’m sure somewhere for something. But the key point about elastic vs inelastic markets is just definitional. If demand changed more than unit, it’s elastic, if demand changes less than unit, it’s inelastic. Not sure there is a term of art for exact “unit for unit” balanced markets…

    So some markets have a high response of demand to price. Raise ‘feed corn’ above soy and barley and you will have cows and pigs fed soy and barley instead. The reason pigs, chickens, cows, (you name it…) are fed so much corn and soy meal is because they are just a bit cheaper than the other alternatives. (Traditionally, ‘fodder beets” were a large feed crop. Cheap to grow in cold climates. Then corn and soy dropped in price as did shipping costs. Fodder beets are now in danger of extinction. Very highly elastic market…)

    The only thing that really makes it an interesting concept is that the two market types have very divergent behaviours. (Behaviors? Which continent and era ought I be spelling? Should I be spelling? Which culture?…)

    So you need price stabilization for inelastic markets and you need demand stabilization for highly elastic ones. Oddly, futures and options can help for both, but the trades and strategies are different…

  48. j ferguson says:

    E.M.

    Bingo re: elastic. I get it, sorry to have taken up so much time over this. thanks.

    I interrupted my passage through Macaulay to read Pinker’s Language instinct which is fascinating – thanks to you and Chuckles for the recommendation.

    I think an insufficiently noticed benefit of the web and blogging in general is our greatly increased exposure to the Brits, the Scots, Irish, and the antipodeans, and the others kind enough to share their views in English, not to mention each other.

    This is a marvelous thing, something which will likely produce benefits which we so far cannot imagine.

    The 17th century coffeeshop writ large.

    As an aside, Bach’s Coffee Cantata sung in English is a riot.

    best,,,

  49. The problem with unelasticity is that part of it goes to very elastic pockets, usually not ours’

  50. In the end, I think it will happen as in ancient Greece: Cycles of 200 years of democracy/ Monarchy. Barycenter anyone?

  51. E.M.Smith says:

    j ferguson
    Bingo re: elastic. I get it, sorry to have taken up so much time over this. thanks.

    Nothing to be sorry about. I enjoy explaining this stuff a whole lot more than most of what I do each day ;-)

    If I could get a job teaching basic econ, finance, trading stuff all day, I’d do it. But my credential is in computers and data processing and the community colleges want a Masters or better to teach Econ. (And high schools don’t teach it…)

    If I didn’t like Econ, I wouldn’t have a degree in it 8-}

    But the first thing you learn as an economist is the law of supply and demand. The second thing you learn is that there is a very large supply of economists and almost no demand… (barump bump!) :-)

    …and the others kind enough to share their views in English, not to mention each other.

    Agreed; And the ones who are adventuresome enough to post in their native Spanish, French, German, etc. Gives me a chance to test my translation skills and keep some kind of usage up for other languages.

    As an aside, Bach’s Coffee Cantata sung in English is a riot.

    OK, you can’t just put that up and leave it. MP3, soon, or a U-Tube… Links, we need LINKS!

    best,,,

    @Adolfo: Well, perhaps there is a physical basis for the Wheel of Life after all… but I hope not. “This time is Different!” (In trader circles, that phrase is said sarcastically, as it is NEVER ‘different this time’…)

  52. Sinan Unur says:

    Here is favorite quotation from Mises:

    Not only in the countries ruled by barbarian and neobarbarian despots, but no less in the so-called Western democracies, the study of economics is practically outlawed today. The public discussion of economic problems ignores almost entirely all that has been said by economists in the last two hundred years. Prices, wage rates, interest rates, and profits are dealt with as if their determination were not subject to any law. Governments try to decree and to enforce maximum commodity prices and minimum wage rates. Statesmen exhort businessmen to cut down profits, to lower prices, and to raise wage rates as if these matters were dependent on the laudable intentions of individuals. In the treatment of international economic relations people blithely resort to the most naive fallacies of Mercantilism. Few are aware of the shortcomings of all these popular doctrines, or realize why the policies based upon them invariably spread disaster.

    These are sad facts. However, there is only one way in which a man can respond to them: by never relaxing in the search for truth.

    Ludwig von Mises (1949), Human Action.

  53. Sinan Unur says:

    Re: Elasticity

    For some reason, elasticity is one of the most misunderstood concepts in economics.

    It is simply percentage change in quantity demanded divided by the percentage change in price keeping constant all other factors.

    It is a unit free measure of how responsive demand (or, similarly, supply) is to price changes.

    The longer the time span, the greater the responsiveness.

    The more close substitutes there are, the greater the responsiveness.

    Elasticity can be different depending on where you are on the demand curve (constant-elasticity demand curves are a rarity). If you are on a linear segment on the demand curve, elasticity is different at each and every point.

    Finally: Given short enough time periods, or barriers to trade, markets may fail to clear for some time. However, eventually, they will, one way or another. This is simply because markets clear when everyone who is willing to pay at least the marginal cost of bringing it to the market is able to get the good.

    Corollary: All bubbles will eventually burst.

  54. j ferguson says:

    Sorry on the Bach, but I’ll try to find it.

    I heard it sung by a group from Munich when I was in college.

    As i say, I’ll look.

    best,,,,

  55. j ferguson says:

    I might add that the Coffee Cantata had a Peter Schickele air to it but that was in the libretto – the music was straight Bach – but buoyant.

  56. E.M.Smith says:

    I really REALLY need ot do some postings on Mises. Thanks, Unur, for reminding me that I do have a few “soul mates” in the universe, even if they died before I was born…

    @J Ferguson: You could always sing it into your laptop 8-)

  57. Sinan Unur says:

    @E.M. Smith Finding “Human Action” in a library (that had been cleansed of bad influences following a military coup) was what made me think studying economics was going to be OK after all.

    Economics is so different from the natural sciences and technology on the one hand, and history and jurisprudence on the other hand, that it seems strange and repulsive to the beginner. Its heuristic singularity is viewed with suspicion by those whose research work is performed in laboratories or in archives and libraries. Its epistemological singularity appears nonsensical to the narrow-minded fanatics of posi­tivism. People would like to find in an economics book knowledge that perfectly fits into their preconceived image of what economics ought to be, viz., a discipline shaped according to the logical structure of physics or of biology. They are bewildered and desist from seriously grappling with problems the analysis of which requires an unwonted mental exertion.


    The Anti-Capitalistic Mentality by Ludwig von Mises, Section 2

    NB: It’s funny how you took the Sin out of my name ;-)

  58. E.M.Smith says:

    @ SINan Must have been subconscious… fixed…

    I wonder if, in the age of whole libraries on a thumb drive, the urge of dictators (of all polarities) to burn books will abate… One can only hope.

    FWIW, that desire to make economies what someone thinks they OUGHT to be, instead of what they are, leads politicians into more broken policies than just about anything else. Varied forms of wage and price controls, failed subsidy and support programs, wealth ‘redistribution’ that is really wealth destruction, and we won’t even start on “stimulus” …

    Yet each generation of politicians is “blessed” with the same level of political skill and the same dearth of economic understanding. So we’re doomed to ride this wheel again and again and again and…

    Welcome to “The Dismal Science”… (and I love it 8-}

  59. Layne Blanchard says:

    For Me, the epiphany was about AGW, and what really drove the rabid fixation upon it.

    There was the prospect of funding, okay, but that didn’t explain it all.

    It seemed to be a political fixation, and this made some sense, but I still felt there was more.

    It had a religious nature and seemed clearly driven by personal guilt and a desire for redemption.

    It seemed I had enough causes, all I could identify. But the epiphany for me was the realization that collectivist ideologies are themselves a religious cult. AGW is just a component of a larger attempt to enslave the world with a global cult of a communist nature.

    Like Heaven’s Gate and Jonestown, collectivist ideologies begin as a promise of a caring community that somehow offers more of the human experience. But as the cult deepens, leaders ultimately display their selfish intentions, and turn totalitarian and heartless.

    They all too often end in Genocide. The final solution for an ideology born of guilt.

  60. @Layne Blanchard
    Is it surprising, that the same people who are after “global warming” are behind those theories of non reproductive sexual behaviors or behind malthusian theories?.
    I am not saying that ALL those who are after these ideas are really conscious of them, the majority of them are just “imitators”, mechanical robots, “useful fools”, just repeating what those who fund their wallets or their self-indulgent egos tell them to do.
    The “transmission”, though from the beginning was made through “esoteric” institutions ,where “specially qualified people are chosen as Initiates, the echo of these deviate “principles” proceed mechanically, based on the same wrong characteristics of the human “psyche”, as self-pride, egotism, self conceit, self-indulgement,etc.etc.

  61. KevC says:

    On Socialist Sin, I’ve enjoyed this discussion more than most.
    The way I see it is it’s a fight between extremes – laziness and avarice with those who wish to save for the uncertain future being squeezed in the middle.

    Re: Coffee Cantata
    Schweigt stille, plaudert nicht (“Be still, stop chattering”) (aka The Coffee Cantata) (BWV 211) is a secular cantata written by Johann Sebastian Bach between 1732 and 1734. Although classified as a cantata, it is essentially a miniature comic opera.

  62. Verity Jones says:

    The Coffee Cantata

    In Germany, coffee was not accepted in the home until the second half of the 18th century. This was due to a mixture of factors – a long standing fondness for local beer, a general distrust of things considered “un-German” as well as ongoing prohibition, taxes & libel specifically directed against coffee.

    This trend was reflected in Bach’s Coffee Cantata of 1732, a satirical operetta which provides a musical insight into some of the prevailing attitudes. It tells of the efforts of a stern father to check his daughter’s propensity for coffee-drinking by threatening to make her choose between a husband and coffee. Unperturbed, the daughter sings an aria which begins, “Ah, how Sweet coffee tastes – lovelier than a thousand kisses, sweeter far than muscatel”
    (Source: http://www.musarium.com/really/coffeecantata_newest.html)

  63. j ferguson says:

    All,
    Having from the 5th grade, struggled with the French Horn in a succession of orchestras that warmed up playing Bach Preludes and Fugues, I came to love them. Church choir, too.

    The hilarity of the Coffee Cantata in English was Old Bach cranking along as usual with this crazy libretto of which Verity’s sample is typical.

    As I said earlier, my only exposure to it being sung in English was in college. The German performers included a woman I found especially attractive and whose eyes I caught.

    Subtle mugging ensued as she could see I was entranced with the piece and with her.

    Her mugging took the form of “If you thought that was funny, wait until you hear this.”

    The work of Peter Schickele, one time director of the Symphony of the University of Northern South Dakota at Hoople is a bit more exaggerated in the musical forms also being made fun of.

    Symphonette for Horn and Hardart (name of the food automat in New York for readers outside US) is a good example.

    I attended one of his concerts at U of Chi, in the ’60s. I didn’t know what was about to happen, but the program was a cue.

    There can be too much Peter Schikele, but never too much Bach.

  64. Ken McMurtrie says:

    @ Layne.
    “AGW is just a component of a larger attempt to enslave the world with a global cult of a communist nature. ”
    I suggest the enslavement possibility/probability is much more likely to be of a capatalistic/authoritarian/dictatorship nature, however I like your comments.
    @em. What a wonderful world of discussion you have initiated. Awesome!

  65. P.G. Sharrow says:

    Actually there are 3 different groups trying to achieve world wide domination. Each using the others for advantage. This is the last gasp of the old way of gathering power and wealth through manipulations and stealth. The age of the “Net that covers the world” is rendering that way obsolete. The people of the earth want local control and small governments. Lying does not work when every one has access to all information and can talk to any one in the world and manipulations do not work out when they can be easily discovered and transmitted around the world.

    Prophecies for the near future include;
    The radical muslims will kill the head oligarque, not knowing that he has been helping them.
    An act of god will kill the head of the radical muslims, as the leadership is under such pressure that they will try to leave where they are now and try to sneek into the Balkens. A storm will drown him as he tries to land from the sea.
    And the people of the world will eradicate the followers of the “philosophy of more” which are now declaring themselves as they think that they are now about to win control. The Obama nation will be replaced by “a wise old man”. An almost unknown that will help set the word on a new path of doing things.

    My, don’t we live in interesting times. 8-) pg

  66. Ken McMurtrie says:

    @pg.
    Intriguing thoughts. But I guess things will still get much worse before they get better. Maybe you haven’t said they will get better, I strongly hope they do.
    (Apologies for my mis-spelling capitalistic).

  67. E.M.Smith says:

    Communism is not dead, just badly wounded. It will come back after a bit of a think…

    Socialism thinks it is in the ascendency, and to a small extent it is.

    The arch nemesis of Socialism, unbridled Capitalism, has been muzzled all over the world and made into a lap dog as the “Mixed Market Economy” that it slowly being mutated into “Market Socialism”. Some of it is in hiding as Corporatism (see below…)

    Islamism is happy to take over anywhere, be it capitalist or socialist, and is happy to do ‘conversion by the sword’… Great at making headlines too. Well funded by oil money.

    Catholicism has a large number of followers, but after a brief stint dominating Europe has take a rest to figure out how to clean up it’s act. But it’s not given up on wanting to tell the world how to live, just taking a break. Recently, the Jesuits have discovered The Socialism Shiny Thing via “Liberation Theology” and are playing with it. (Watch this space for more rabid hungering after power… as the Pope and the Jesuits are headed to a bit of a ‘dust up’.)

    And through it all, Global Corporatism is slowing taking over large new lands in India, China, Eastern Europe and other areas from which it had been banned in earlier decades. It has learned how to make a pact with the Socialism Devil via Market Socialism and is working to corrupt governments world wide.

    I’m sure there are a couple of other despotic powers trying to crush liberty, but you get the point.

    All around you, at all times, there are massive power structures vying for dominance. The individual with libertarian ideals of being self reliant, self sufficient, and most importantly, free; has a very hard uphill battle against all the petty (and not so petty) TYRANTS of the world who would enslave them. So it’s a never ending battle. And always will be.

    And there are way more than 3 of them…

    Oh, and honorable mention to the surviving Monarchs of the world, lusting after the power of centuries past and cow-towing to Parliaments as they bide their time. Also to the Emperor of Japan, doing the same. Also honorable mention to the EU Bureaucratic Centricism trying to disenfranchise a continent by having the sovereign nations sign away rights, and controls over their people, that the people them selves never would. Masterful job of “Tyranny by Petty Bureaucrat Proxy”; doing nicely at domination of a novel form. We’ll see how stable it is to an invasion of Islamic workers and the revolt of retirees getting pensions cut.

    Finally, one really must mention the Supreme Circle of Thieves at the United Nations. All the above folks ready to sign all sorts of “treaties” to indenture their citizens, as long as each Kleptocracy supports the others in their theft of goods, power, and liberty.

    Never has there been quite so much being brought to bear to enslave the world, while most of the people in it simply do not notice nor care.

    Yes, the tree of Liberty must be frequently fertilized with the blood of patriots. But this time it looks like they will provide it via bloodletting and not via battle. Don’t worry, you will only feel a little “Pinch”, then a calming coolness will slowly settle over you, then just walk toward the light….

    (I know, strays a bit from the Socialism Rant, but the facts are the facts. And among them is that there are a LOAD of evils trying to take your stuff, enslave you and your children, and assure there is no true Liberty. I just usually take one at a time and focus on the most pressing…. )

    It would amusing to extend the “sin” analysis to exactly which sins each stressed the most, but it would take so many hours I’m not sure I have enough time ;-)

  68. Ken McMurtrie says:

    EM: That’s a good post. Much to think about.
    The areas that scare me the most are the drug companies hitting on the natural therapy market, controls of water resources, controls on organic foods, even home grown.

  69. E.M.Smith says:

    They are trying… but it needs to be fought. The right to grow your own food and share with friends is fundamental.

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