This week’s links thread is devoted to economics. The links and videos are informative but you need to take your time to understand the concepts if you are encountering these for the first time.
Over here on the remnants of the alt right we like to rant about saving our cultures from the ravages of the prog left. But the thing that has really enabled the respective cultures of the West to prosper over the last few hundred years has been the improvement of the average person’s economic freedom as well as the systematic unlocking of their economic potential. This built up in Europe over a period of hundreds of years, with the gradual benefit of many small advances, culminating in the extraordinary explosion of wealth in the years of the industrial revolution.
A graph from Catallaxy Files that illustrates this point.
A few days ago the Z Man raised the opinion that if the dissident right wishes to be taken seriously then it will need to start getting its act together as to its views on economics and economic theory.
In order to address the BQ, the Dissident Right is going to have to break free from the old moral paradigm with regards to class, inequality and economics. The fact is, no one will care if Mark Zuckerberg drowns in his bathtub, other than his mail order wife. The same is true of Jeff Bezos. The things that the vast bulk of Americans care about don’t depend on getting cheap stuff on-line at Amazon. The billionaire class is no more essential to society than any other luxury good. They are tolerable unless they become a burden.
That’s going to be hard for our side and it is going to be even more difficult for the sort of people attracted to the Oaf Keepers or the PoofBerries. That’s the effect of a few generations of telling people that it is un-American to think ill of the rich. Even so, part of breaking free from the old thinking will be adopting a new brand of economics, along with tackling the realities of demographics. You can be pro-white all you like, but that’s of no use if you’re a serf living on the modern version of a feudal estate, run by an oligarch.
We don’t have to develop a new brand of economics. We simply have to return to what worked in the past before modern governments began believing that they had the answer to the ups and downs of a natural economy. Think about it: if a government could interfere in the economy so as to make the good times supposedly last for ever, why, the result would be that it could always get elected!
Of course, the truth is the opposite, but that has not stopped numerous government interventions under the noble guise of intending to save the economic world. From the New Deal to Japan’s 25 year economic slumberfest to the sclerotic response to so-called stimulus spending, the examples that reveal the truth to the great deception that spending drives an economy are there for all to see and not learn from.
The modern idea that spending drives an economy and thus creates employment has its origins in the work of John Maynard Keynes. This is in direct opposition to the 19th century economist John Stuart Mill who argued in support of what came to be later known as Say’s law, that demand is constituted by supply.
Here is Australian economist Steve Kates explaining Say’s Law and the misconceptions that surround it. (There are some audio issues at the very start but these soon go away).
Kates speaks about Mill’s fourth proposition on capital, (1848), which is “Demand for commodities is not demand for labor.” In other words, you cannot increase the number of people employed by increasing demand for goods and services.
Here is a piece at the Mises Institute titled, More spending does not drive more employment. (hat tip to The Law of Markets).
In a mechanistic, circular-flow view of the economy, too little spending is a problem as that causes a general glut, which in turn forces employers to cut costs and lay off workers. This is not how the real economy works, however. As Ricardo noted, “[the actual problem is that] men err in their productions, there is no deficiency of demand.”
A population does not decide en masse in some nationwide subconscious telepathic event to cut all unnecessary spending and not go out for dinner anymore. People stop spending because they themselves have run out of money. The reason that they have run out of money is because they have lost their jobs, and the reason they have lost their jobs is because a larger than normal proportion of their employers had been misled about the products that could be sold at a price higher than production costs.
A drop in consumer demand is a reaction to this cause, and thus a symptom of it.
What is it that entrepreneurs do? They produce in anticipation of being able to sell their goods and services. Whether there “is” demand for the individual entrepreneur’s undertaking depends on people’s valuations of the goods when they are offered.
The parts in bold highlight the point that producers must make a decision in the present of what to produce based on a future market where the outcome is unknown. Being an entrepreneur is the ultimate example of having skin in the game. And it gives the lie to the Keynesian idea that demand drives supply. How could such a thing be remotely true when producers must make production decisions well before any products are sold?
What this means is that entrepreneurs speculate about the future in which they will offer their intended goods for sale. Consequently, the investment to produce happens whether or not there “is” spending in the market. Entrepreneurs do not make decisions based on what is, but based on what they anticipate about the future. Production, of course, takes time, so what is at the time the decision is made is not very relevant for what will be when the production process is concluded.
This fundamentally undermines the Keynesian view of the economy, because the entrepreneur will employ people before demand is known — in fact, even before demand can be known. When the entrepreneur is successful, which means the goods are eventually sold at a price that covers the cost of production, there is a relationship between spending (on those goods) and the profitability of the enterprise.
The underlying lesson is that spending does not drive an economy. What gives life to an economy is the continual work of entrepreneurs. Which means that the more that a given government gets out of the way of entrepreneurs, by reducing barriers to entry, by reducing the number of regulatory hoops that they must jump through, and by reducing their tax burden, then the better an economy will perform.
The best example of a modern economy operating on these principles is Singapore, and it is no coincidence that that country continually leads the world in all economic activity and the personal prosperity of its citizens.
The dissident right, the alt right, the alt west, whatever you want to call it, if it is to succeed it must take up the inherent truths in these discarded economic principles. The left have lied about everything for the past fifty years, including the economy. If we are to succeed then as well as combating them on the cultural and social front we must also offer a superior economic strategy. Fortunately for us we need only look to our near ancestors to discover just such a plan. The work has already been done for us; there is no need to reinvent the wheel, simply to put it back on once again.
And after all that it’s time for the hawt chick of the week. Brought to you by Dutch hockey players.