How Occupy Wall Street Protests Create Jobs

When OWS demands more government regulation of corporations, the corporate lobbyists roll up their sleeves and get ready to go to work.

The Economics of a Compulsory Government - Part 1

As F.A. Hayek put it in one of his TV interviews, one of the fallacies of socialism and central planning is the assumption that all the available knowledge can be used by a single central authority. It does not recognize that the modern society (which he calls the extended order, where we work for people whom we do not know and we are supported by people whom we do not know), is based on the utilization of widely dispersed knowledge. Once you are aware that we can achieve great utilization of available resources only because we utilize the knowledge of millions of people, it becomes clear that the assumption of socialism that a central authority can command all this knowledge is just not correct. The objection against production for profit is an objection precisely against the instrument that makes this extended order possible. Production for use would only be possible if we knew all the facts. Profit is the signal that guides us and tells us what we must produce for people whom we do not know. We also have to refute a just distribution by a central authority with the same arguments. In order to achieve just distribution, the central authority would have to know all the facts, which is of course impossible. The standard of living we enjoy today is due precisely to the spontaneous process in which we are able to make use of infinitely more information than any central authority possesses.

Perhaps the greatest difference between the private sector and the government is the profit/loss system that exists in the private sector in contrast to the lack thereof in the public sector. In the free market system we can make profits when we are efficient in satisfying consumer demands and we suffer losses when our activities are not producing anything of value to the public. The tragedy is that in a compulsory government no such system exists, since it receives its revenues not from sales of products and services to voluntary buyers, but through taxation. There is hence no way of knowing whether the government is satisfying anyone's wants and demands, whether it is producing anything of value or wasting resources. The voluntary purchase in a free market is a manifestation that someone is producing a product that is the best alternative to the buyer at the time and place of the purchase. Taxation, on the other hand, is a manifestation only of force and extortion. We also do not know how productive the government's employees are. On the basis of this, the only thing we can conclude is that any given compulsory government confiscates money from one individual and gives it to another to perform a certain task. 

In a typical western democracy half of people's incomes are taken away by the government and thrown into the dark, so to speak. Since we cannot calculate what happens with it afterwards, there is no way of knowing if anything productive is happening. All human beings have their self-interests and the beauty of the free market private sector is that the only way you can satisfy them is by satisfying the demands of your customers, which is, simplified, to make better products and cheaper. In the so-called public sector, there is no such incentive or connection. The interests of government employees are the same as everyone else’s (to maximize income and minimize the effort), while it cannot be argued that they are achieved through the satisfaction of the demands of the public. Absent the profit/loss system, this cannot and is therefore never established.

When analyzing every single private enterprise you can easily see how productive they are by looking at their profit and comparing it against the number of employees, the value of their capital etc., and calculate the productiveness. You can see if they are utilizing resources to produce new value and how successful they are at it. The more successful they are, the more capital they can attract. This is, no doubt, a desirable effect. On the other hand, while analyzing the government, it would be an oxymoron to even ask the question, for instance, how productive is the Ministry of Interior. There is no answering this question. And since there is no way of determining this, how do we know that it is productive at all? How do we know it is a benefit to society, that it is producing anything of value whatsoever? Since the government and it’s employees are not motivated by the profit/loss system, and all their revenues come from compulsory taxation, they are not compelled to satisfy anyone’s demands except their own.

Beware Greedy Consumers!

A large number of recent protesters have been caught in the "greed is evil, end all greed, end capitalism" propaganda that keeps on resurfacing in history like feces in a broken toilet that just wont flush very well. But did you notice how these protesters will always claim how "they" are greedy? It's always the other guys. Ask the average protester if they think that they themselves are also greedy and you are most likely to get a negative response, if not a slap in the face.

The fact is we are all greedy to a certain extent, this is not a bad thing a priori. Here I use greed as a synonym of ambition because I don't see much difference between them. I suppose they are both defined roughly as wanting to achieve a better result for yourself beyond what most other people would deem is enough. Whatever that means. Try defining "enough", if you can. You'll find inevitably, with no exceptions, that it boils down to what you think is appropriate for oneself or another, it's only your opinion, nothing more.

So my point is that greed is not a bad thing in and of itself. It pushes people to achieve more and to dream of big things. This is how we got Henry Ford's automobiles, Steve Jobs's computers and so forth. People had big dreams and ambitions. If greed is then nothing more than aspiring to achieve more than you "really" need, how on earth is this a bad thing? I want two cars, instead of just one. How is this bad? Most people need one car (well, they don't really need them, do they?), I want two. So I'm willing to work twice as hard to earn it. No big deal. The "greedy" desires I have are not the malice. The only question relevant here is what means I am employing to achieve these desires. Am I willing to do the honest labor and work for my goals, or am I willing to steal and cheat to get there. This is the only thing that is relevant. Whether the goals themselves are more than one needs or not is completely irrelevant and, really, none of anyone's business. Also, greed is not a prerequisite of being a bad person. By that logic, one could just define a flat screen TV as something you really need and therefore wanting to have it is not a consequence of greed and stealing it is not a vice. By the same token, working hard and long hours to buy a fifth car is evil and should be punished. It doesn't work that way. It's not greed that is the issue here, we're all greedy. It's just that some poeple will employ honest and some poople will employ dishonest means to achieve their goals.

Let me illustrate this with a quick example. EasyJet, a low-fare British airliner, earned an after tax profit of £121.3 million and carried 48.8 million passengers in 2010. This means they made a profit of exactly £2.49, which is €2.84 or $3.94, per passenger. So I was curious what the other side of the trade was, how much did the customer benefit from their services. I went to Orbitz.com and looked for the cheapest flights between today and the end of October and compared the fares to Easyjet's for one particular route. This is the result I got:

A comparison between EasyJet flight fares on EasyJet.com and the cheapest other airliner as found on Orbitz.com on October 15th in USD.

It is true that EasyJet requires an additional payment of $21 for luggage, but sometimes hand luggage will suffice, especially if you are traveling for a week or less. But let's suppose you do pay that $21. And an additional credit card fee of $21. There are also cheaper ways of payment but let's suppose the worst case scenario. On the other hand, Orbitz and the other airliners may also require some additional fees, I didn't look into that so I cannot be sure. But the bottom line is that for every passenger, the "greedy" EasyJet capitalists profit 3.94$, while the passenger profits at a minimum a whopping $58.25. In addition to this, every passenger who voluntarily flies with any airliner obviously profits from the transaction since otherwise they would have held on to the money and not taken the flight.

So what protesters against profit and capitalism are really saying is take those $3.94 of profit out of the capitalist's pocket and put it into mine to add to the $58.25 of profit that I am already making. They're not saying eliminate all profits, what they are saying is reduce the other person's profit and increase mine! Who is the greedy bastard (you may use pig, swine or bastard interchangeably) here then?

Kudos to the Anti-capitalist!

Capitalists give people jobs. They give them contractually specified things to do by no means of force or intimidation. People can accept the offer or refuse it. They also pay them contractually specified amounts of money to do these things. Governments, on the other hand, take non-contractually specified amounts of money from people (i.e. however much the hell they want to take) by force or intimidation for doing non-contractually specified non-binding things. Yet, people continually demonize capitalists and praise their governments and even call them to the rescue. How people come to this conclusion is beyond me. The difficulty of understanding this issue is the difficulty of understanding the difference between the words GIVE and TAKE. This guy over here gives you money, that guy over there takes it. How hard could it be? It takes some serious sociopathic brainwashing to get people to believe the anti-capitalistic socialist propaganda. Completely non sequitur. And also 1+1=3.

But hey, that's what our beloved government schools are for, right? People often say that our schools are failing our children, that they are not giving them the tools necessary to succeed in life. I would disagree. They are not failing, they are doing exactly what they were designed to do - teach the kids that government is your friend. Kudos, you've done it!

Listen to Dead People

It's amazing how we sometimes believe that we the living are always on the forefront of knowledge. That we progress ceaselessly, always upwards and that we know more than our grandfathers did and we can therefore ignore their insights. We tell ourselves stories about how very different our society is today than it was in their times and so we can make up our own rules. How vain we are. The fact is that there is a host of ideas out there, written by people who now lack a pulse, that were somehow forgotten or ignored, but have a far better insight than 99% of the soundwaves that fly into our ears on a daily basis. Here are some of the ones I find interesting:

"It means forgetting that the execution of these regulations is always entrusted to men who may have all the more interest in fraud or in conniving at fraud since the fraud which they might commit would be covered in some way by the seal of public authority and by the confidence which this seal inspires in the consumers."
-Anne-Robert-Jacques Turgot (1727-1781) about how foolish it is to believe government regulators will always look out for our own good as opposed to actors on the market who are supposedly always just trying to con us, while government agents are angels and cannot be corrupt.
Source

If the king "should tell the tyrant's usual lie that he applies the profit from debasement to the public advantage, he must not be believed, because he might as well take my coat and say he needed it for the public service".
-Nicole Oresme (1325-1382) on how governments have always used the tool of money debasement to enrich themselves at the expense of everyone else and then to add insult to injury, had the nerve to try to convince us that this is really for our own good.
Source

"Disputes among the ordinary people are merely trivial matters, for what scope of consequences can a contest of strength between ordinary fellows generate? They have no spreading lands to arouse avarice... they wield no authority through which they can advance their struggle. Their power is not such that they can assemble mass followings, and they command no awe that might quell [such gatherings] by their opponents. How can they compare with a display of the royal anger, which can deploy armies and move battalions, making people who hold no enemies attack states that have done no wrong?"
-Pao Ching-yen (4th century AD) on the devastating results of government force.
Source

What did these people know that we don't? Were they correct? Do these words seem like a relic of the past or can we use their knowledge and apply it to the challenges of today?