Monday, June 11, 2012

Our Choices ... Individualism or Collectivism, Market Based Competition and Self Reliance or Government Knows Best Intervention

Two recent short commentaries intended to be about two separate things don't seem so separate to me. To me they're very much about the same thing.

The first Notable & Quotable says this about the "relationship of individual initiative and poverty:"

"I want to emphasize the importance of individual initiative in reducing poverty and promoting economic success. Young people can virtually assure that they and their families will avoid poverty if they follow three elementary rules for success—complete at least a high school education, work full time, and wait until age 21 and get married before having a baby. Based on an analysis of Census data, people who followed all three of these rules had only a 2% chance of being in poverty and a 72% chance of joining the middle class (defined as above $55,000 in 2010). These numbers were almost precisely reversed for people who violated all three rules, elevating their chance of being poor to 77% and reducing their chance of making the middle class to 4%.

Individual effort and good decisions about the big events in life are more important than government programs. Call it blaming the victim if you like, but decisions made by individuals are paramount in the fight to reduce poverty and increase opportunity in America. The nation's struggle to expand opportunity will continue to be an uphill battle if young people do not learn to make better decisions about their future.

And an earlier Notable & Quotable column said this about the "mistaken Keynesian focus on 'aggregate,' economy-wide measurements:"

"Economist Robert Higgs in "Delusions of Power" (2012):

John Maynard Keynes persuaded his fellow economists and then they persuaded the public that it makes sense to think of the economy in terms of a handful of economy-wide aggregates: total income or output, total consumption spending, total investment spending, and total net exports. . . .

In fact, "the economy" does not produce an undifferentiated mass we call "output." Instead, the millions of producers who bring forth "aggregate supply" provide an almost infinite variety of specific goods and services that differ in countless ways. Moreover, an immense amount of what goes on in a market economy consists of dealings among producers who supply no "final" goods and services at all, but instead supply raw materials, components, intermediate products, and services to one another. Because these producers are connected in an intricate pattern of relations, which must assume certain proportions if the entire arrangement is to work effectively, critical consequences turn on what in particular gets produced, when, where, and how.

These extraordinarily complex micro-relationships are what we are really referring to when we speak of "the economy." It is definitely not a single, simple process for producing a uniform, aggregate glop. Moreover, when we speak of "economic action," we are referring to the choices that millions of diverse participants make in selecting one course of action and setting aside a possible alternative. Without choice, constrained by scarcity, no true economic action takes place. Thus, vulgar Keynesianism, which purports to be an economic model or at least a coherent framework of economic analysis, actually excludes the very possibility of genuine economic action, substituting for it a simple, mechanical conception, the intellectual equivalent of a baby toy. . . .

Because the vulgar Keynesian has no conception of the economy's structure of output, he cannot conceive of how an expansion of demand along certain lines but not along others might be problematic. In his view, one cannot have, say, too many houses and apartments. Increasing the spending for houses and apartments is, he thinks, always good whenever the economy has unemployed resources, regardless of how many houses and apartments now stand vacant and regardless of what specific kinds of resources are unemployed and where they are located in this vast land. Although the unemployed laborers may be skilled silver miners in Idaho, it is supposedly still a good thing if somehow the demand for condos is increased in Palm Beach."


What will We the People choose for America going forward?

Will it be an individualistic market based competitive society and economy, or will it be a collectivist government knows best interventionist one?

If it's the latter, then continuing down the path to bigger and bigger government intervention clearly is the proper course.

But if it's self reliance, prosperity and individual freedom that are most valued, the route we take has to be one based on individual self reliance and free market competition.

Although originally our federal government was formed to secure for its citizens the blessings of liberty, since the 1930s we have been following the footsteps of Europe which are leading us to the edge of an unaffordable entitlement welfare state cliff.

We Americans simply can't have it both ways. Not free market based individualism and government controlled collectivism, too. We have to choose between our American heritage and the European way.

Summing Up

My own view on all this stuff can be expressed simply as follows. We all begin as C students.

Some of us proceed to get As, some get Fs and most get Cs. It's generally neither talent nor natural ability that separates the As from the Cs from the Fs.

It's more often effort and self discipline. And, of course, a little luck helps, too.

And it's the exact same things at work for individual states, nations and continents.

For me, the subsidiarity principle and playing small ball are the only legitimate and fulfilling way to play.

The free market's "invisible hand" will work just fine for almost all of us, but only if the government we choose enables it to do so.

And we'll take good care of all those among us who need our help as well.

That's American Exceptionalism.

Thanks. Bob.

No comments:

Post a Comment