Saturday, July 19, 2014

Piketty's Capital, the Tea Party, and Overcoming Ignorance

There's a fresh new economics book on the scene, and it's ruffling more than just a few feathers. Written by French economist Thomas Piketty, the book is Capital in the Twenty-First Century,” and it presents a radical new proposal for wealth redistribution, asking us to reconsider how we think about the profits, income, and the wealth of corporations. Piketty was interviewed on The Colbert Report last month, which was a pretty hilarious interview in my opinion. The book is extremely progressive by American standards. Piketty argues in favor of a massive wealth redistribution and high taxes on the rich. I personally tend to lean more in the Classical Liberal or Anarcho-Capitalist direction (at least economically – socially I tend to be pretty progressive), so the kind of proposals Piketty advocates are something I have sincere doubts about, but I do try to give all sides a fair shot to present their argument. The book is actually brand new, just released this year (the English version, anyway – the original French version came out last year), and it's really upsetting a lot of Conservatives, especially among the far-right members of the Tea Party, which made me want to read the book all the more, as I'm really not a particularly huge fan of the Tea Party.

Now some people may ask why I dislike the Tea Party if I believe in free market capitalism. Well, that's kind of a long story. A few years ago, I made a decision that I wanted to understand Socialism. And I didn't want to have just a passing and shallow understanding, but a deep, thorough, and complete understanding. I wanted to understand Socialism in its entirety. I had to know absolutely everything, in totality.

Back in 2011 I didn't even have any conception about what the word “Socialist” even meant, except that nearly everyone in conservative media was saying Obama was one, and they all seemed to agree that it was a bad thing. Though given the wide variety of government policies to which the word was being applied, it seemed to me that the word “Socialist” had literally no meaning whatsoever, and was just a negative byword that people could use as an empty vessel to describe any and all political policies they disliked. But to me, that attitude just created more confusion than clarity, and served only to shut down discussion, rather than to build a constructive conversation about the proper role of government in society.

This is one of the major issues I have with the Tea Party, and is why I don't support them, even though they do have a legitimate concern about certain things, such as the economy and national debt. Among the members of the Tea Party, the word “Socialist” simply seems to mean “Non-Republican,” which isn't helpful. The economic crisis is certainly a very big problem, but calling every single Democrat a Socialist only splits the country in half and turns the people against each other, which just creates and exacerbates problems, rather than solving them. Besides, such an approach is also a gross oversimplification not only of Socialist theory, but of political theory in general. If we were to define “Communism” as simply any and all government involvement and interference in the economy, then we would find that there has never been a Non-Communist government in the entire history of human civilization. So clearly a more narrow definition is needed. But the Tea Party doesn't seem to want to engage in that sort of complex and intricate exploration of socioeconomic political theory, and instead just wants to beat down their opponents with an ideological club and plaster the label of “Socialist” across anyone who dares disagree with them. Is that the path to freedom? I think not. Quite the contrary, it seems more to echo a warning contained in Proverbs:
“How long, ye simple ones, will ye love simplicity? and the scorners delight in their scorning, and fools hate knowledge?”
— Proverbs 1:22
On top of that, another disturbing trend I've noticed among the Tea Party is that they almost universally oppose Civil Rights, especially equal rights for the LGBT community, which is something I'm a big supporter of. I have even seen some Tea Party candidates go so far as to openly proclaim that they want to repeal the Civil Rights Act of 1964, saying that business owners should have the right to discriminate against their customers and employees, which makes me question whether any of them secretly have ties to white supremacist groups, like the two police officers in Florida who recently lost their jobs when it was discovered that they were secretly members of the Ku Klux Klan. Now I'm not saying saying that the Tea Party is a front group for white supremacy, but the extreme opposition to Civil Rights which is exhibited by large swaths of the party is enough to make me nervous. Apparently they believe that property rights take precedence over human rights. They value brick and mortar above flesh and blood. Maybe not all the individual members of the Tea Party feel that way, but the leadership sure seems to, and ultimately it would be the leadership that would determine what sort of policies got implemented if they ever gained political power. The Tea Party claims to be supporters of freedom, but their particular brand of freedom isn't my cup of tea.

As for Piketty, I'm only into the second chapter of the book so far, and he spends most of the first chapter simply defining his terminology (I find it fascinating that a book can present ideas so complex that an entire chapter is needed just to explain the terminology). Basically the main premise of his argument is what he calls the disparity between labor and capital. Called by Piketty the Fundamental Force for Divergence, and represented by the equation r > g, the question asked by the book is when a company or corporation turns a profit, how much of the profit should be paid as wages to the employees, and how much of it should be paid as a return on investment to the investor(s) who took the personal risk and made the initial investment in the company? In short, what is the most fair way to divide profits between employees and investors? That is the question which lies at the heart of Piketty's book.

Many conservatives are upset by Piketty's book, since to many people it almost feels like a revival of Marxism (a perception which is not helped by Piketty's choice of title). Piketty does also grapple with the Labor Theory of Value, which today is most commonly associated with Communist and Socialist economics. But it must be remembered that although Marxist theory does indeed use the Labor Theory of Value as its foundation, Karl Marx did not invent the theory, and it actually has its origins much earlier in the writings of Adam Smith, who is considered the father of Capitalism.
“The value of any commodity, ... to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities.”
— Adam Smith, “Wealth of Nations,” Book 1, chapter V
It seems to me as though we've entered an age where it is not possible to have any serious intellectual discussion about political or economic theory without wandering into realms which some would perceive as “Marxist. Personally, I believe this is simply the lingering effect of Cold War paranoia which is still entrenched in the minds of the older generation. Unfortunately, given the incredible girth of material that was written by Marx over the course of his lifetime, there is scarcely any economic territory left where he has not set foot and given at least a cursory opinion. As a result, a situation has been created in which literally every and any economist and politician could potentially be labeled a Marxist simply for having an opinion which coincided with something Marx had said at one point or another. But by that standard, even Adam Smith could be labeled a Marxist, which is obviously ridiculous. A few months back, a video began circulating on right-wing forums in which some politicians from Oregon were debating the issue of gun control in what looked like a courtroom, and a man in the audience, who claimed to be a refuge from Cuba, got emotional and shouted “This is Marxism!” The video became extremely popular among conservative circles, getting wide distribution and circulating widely. But there's just one problem. Karl Marx actually opposed gun control.
“The workers must be armed and organized…under no pretext should arms and ammunition be surrendered. Any attempt to disarm the workers must be frustrated, by force if necessary.”
— Karl Marx
Now I don't mean any disrespect to the Cuban refuge in the above video, as I'm sure he went through quite an enormous ordeal in fleeing Cuba. However, I think it's important to make a clear distinction between the policies of Communist dictators like Fidel Castro and the actual writings and theories of Karl Marx. This is the sort of ignorance that I intend to overcome, at least on a personal level. I want to know what Marxism actually is, not what the Tea Party says it is. I will not allow myself to be deceived by propaganda, nor by the misconceptions of the uninformed, however passionate they may be.

As I said above, it has become nearly impossible to seriously debate political and economic theory without wandering into territory which some people might, whether correctly or not, perceive as Marxist. Yet if we are to discover the true nature of economics, and lift ourselves up out of the darkness of ignorance, we must wander into these territories. We might not come out clean, but we'll come out with the truth, and our understanding will be enhanced. In the words of Oscar Wilde, “The truth is rarely pure and never simple.”

I don't know about you, but I intend to find the truth.

My Brush with Objectivism

It's difficult to say for certain when and where I was first introduced to Ayn Rand. For the longest time, it had always been one of those famous literary works, like “To Kill a Mockingbird” or “Catcher in the Rye,” which I knew were considered classics, but which I had never read and didn't know much about. Atlas Shrugged was among these, and it just sort floated around in my subconscious, just below the level of awareness, existing, but in a state which was incorporeal and insubstantial.

One day, I was watching an episode of South Park titled Chickenlover,” in which the character Officer Barbrady reveals that he is illiterate, but subsequently learns to read, and then reads Atlas Shrugged and decides never to read again because of it. This little cameo nudged Atlas Shrugged into my consciousness a bit more, and made me decide that perhaps maybe I wanted to possibly read it someday. I didn't know what the story was even about, but if it was getting made fun of on South Park, it had to be kind of a big deal, right? So I made a mental goal to eventually read Atlas Shrugged at some unspecified point in the indeterminate future. Then I went about my regular life as usual and soon forgot about it.

In 2009, I took a summer-sales job selling home security systems door-to-door. The company was sending sales-reps out of state, so I got to visit a part of the country I had never been to before. On the way there, during a layover between flights (tickets paid for by the company), I decided to browse the used book store at the airport. On one shelf there happened to be an old hardcover copy of Atlas Shurgged. I eagerly picked it up and read the brief synopsis on the back cover, which gave me a glimpse into a world on the brink of economic collapse. It sounded intriguing, and so I began flipping through the pages. Being somewhat impatient, I flipped towards the back of the book to see what state the world would end up in. Had the characters in the book solved the economic problems of their society? Had things fallen apart completely? What did their world look like? By pure chance, I happened to land on what turned out to be one of the most memorable exchanges of dialogue in the entire book:
“Okay, I'll tell you. You want me to be Economic Dictator?”
“And you'll obey any order I give?”
“Then start by abolishing all income taxes.”
“Oh no!” screamed Mr. Thompson, leaping to his feet. “We couldn't do that! That's . . . that's not the field of production. That's the field of distribution. How would we pay government employees?"
“Fire your government employees.”
“Oh, no! That's politics! That's not economics! You can't interfere with politics! You can't have everything!”
So... this was a novel about politics and economics? I smiled. This was in May of 2009, and the country was still feeling the effects of the 2008 financial crisis, so the story felt absolutely relevant to the current times. Unfortunately, I was flat broke, and didn't want to spend what little cash I had on a book, even if it did look like it would be a really good one. Looking at my watch, I realized my next plane was going to be departing soon, and I had only about ten minutes or so to get to the terminal. So I put Atlas Shrugged back on the shelf and walked out of the bookstore. It would be another three years before I finally picked it up again.

I spent that summer involved in what I had initially thought was going to be just another job to pay the bills, but which, looking back, I now realize taught me some very important life lessons. It was the first sales job I had ever had, and it gave me a totally new perspective on salesmen, business, and money. I admit I didn't do particularly well at the job, as I've always been an extremely shy and introverted person, and had a bit of a habit of being a bit submissive (when you're a salesman, these are not good personality traits to have).

Of course I wasn't the only one who was struggling. Many of the other sales reps also found they had significant difficulty in persuading people to buy our product. Taking note of our struggles, our team leader (who had done extremely well with sales in summers past) introduced us to a book which he said would help us overcome our weaknesses. That book was called The Psychology of Selling,” by Brian Tracy. I didn't know it yet, but this book was going to have a profound impact on my life and my perspective on business and money. It was the first time in my life that I had ever read any self-help book, or any book that dealt directly with the issues of money, sales, and business. It was amazing. Although I admit my skills as a salesman didn't improve much, Brian Tracy's book started me on a journey of financial discovery, a quest to discover the inner workings of business, finance, and eventually, economics.

Following that summer, I started to develop a keen interest in money matters, and I began to actively seek out other self-help books on the subject. Over the next couple of years, I delved into various books like Rich Dad, Poor Dad,” by Robert Kiyosaki, Super Rich,” by Russell Simmons, Think and Grow Rich,” and The Law of Success,” both by Napoleon Hill, and How to Win Friends & Influence People,” by Dale Carnegie, along with several others. Combined, these books taught me to think about business and money in a totally new light. They taught me that rather than slaving away for a paycheck at some mindless dead-end job where I would have little control over my own life, I could choose a different path I could choose freedom. These books taught me that personal success, economic prosperity, and true financial independence were simply a matter of having the proper mindset, of understanding how to create and build real value. I had not yet read Atlas Shrugged, but these other books had established in me a value system based on the principles of independence, personal responsibility, humility, productivity, and financial freedom.

Some time later, I read an online article by Mark Ames on titled ATLAS SHRIEKED: Ayn Rand’s First Love and Mentor Was A Sadistic Serial Killer Who Dismembered Little Girls,” in which Ames accused Ayn Rand of worshiping the 1920s serial killer William Hickman. I still hadn't read Atlas Shrugged at this point, and I confess, the article did color my view of the book and Ayn Rand for several months, the positive notions I had felt back in the bookstore three years prior totally overwritten with Ames' graphic depictions of the gruesome homicide committed by Hickman. In fact, it wasn't until the second Atlas Shrugged movie was already in theaters that I finally decided to see for myself what the book was really about. Still under the influence of Ames' article, however, I was unsure if I wanted to give any of my money to the people behind such a work. But I also wanted to see for myself what it was actually about. After all, although I admit I may be influenced by other people from time to time, I'm not one to base my opinion of anything solely on what someone else thinks. So I torrented the first movie over the internet and watched it on my computer. Before I was even halfway through the film, my prejudice against it had evaporated completely. Screw Mark Ames and his stupid article! Who the hell cared what Ayn Rand thought about William Hickman? This movie was amazing!

Though after the film ended, I was struck with the sensation that it espoused the value system of a small businessman rather than a large one, a distinction which I was able to make thanks to reading the works of Robert Kiyosaki. But that was a relatively inconsequential matter, and not worth trifling over. The film was still incredible. I can't recall ever seeing any other movie that actually made big business owners into the heroes (even if it did give them the mentalities small business owners). To see the values of entrepreneurship and business so boldly celebrated in a film was a totally unique experience, as such values were mysteriously absent from other major Hollywood productions.

Since the second film was, as I said, already in theaters, I went to see it just a few days later. Any previous qualms I had about giving money to the producers behind it were totally gone. Soon afterwords, I bought an audiobook version of Atlas Shrugged and listened to the whole thing. I also went online to the Official Atlas Shrugged Store and purchased the BluRay version of the first movie and pre-ordered the BluRay version of the second. While browsing the online store, I also noticed the special edition DVD for We The Living,” so I bought that as well. Later I also shared the movies with my mother, who loved them, and my sister, who claimed she didn't understand them and that they were too political for her. Around that same time I also went online to and purchased a copy of the movie version of The Fountainhead,” as well as Barbara Brandon's The Passion of Ayn Rand (both the movie and the biography).

I went through a period of about six months where I got really into Ayn Rand's philosophy, and where I almost became an Objectivist. But then I found out about her opposition to the Civil Rights Act of 1964, and that stopped me. I could forgive or overlook worshiping a serial killer, but political opposition to the Civil Rights Act was a deal breaker for me. I am a very big supporter and advocate of civil rights, and I strongly believe in what our Founding Fathers wrote in the Declaration of Independence, saying,
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain inalienable rights, that among these are life, liberty, and the pursuit of happiness.”
 Something I've noticed is that a lot of people in Objectivist and Libertarian circles (though to a lesser degree in the latter) seem to think that equality is automatically bad for no other reason than because it's a concept which is part of Communist/Socialist philosophy. But equality is part of Democracy as well, and Democracy was very much a part of our nation's foundational principles, and something that really worries me is people becoming so obsessed with destroying Communism that they end up destroying the values of our founding fathers as well. Because of this, I think we ought to be very careful that when we attack Communism and Socialism, we do not inadvertently attack Democracy in the process. A clear and careful distinction needs to be made, and we should proceed with reasoned caution, without letting our emotions drive us to illogical and harmful actions.

After I found out about Ayn Rand's opposition to the Civil Rights Act, I began to seek out other authors who could potentially refute her arguments. This lead me to two very important books, the first one being Without a Prayer: Ayn Rand and the Close of Her System,” by John W. Robbins, which was praised by 2012 presidential candidate Ron Paul, who said that John Robbins' book should be read by “everyone who wants to advocate freedom with arguments that cannot be refuted.” The second book I read refuting Objectivist ideology was Ayn Rand Contra Human Nature,” by Greg S. Nyquist. These two books essentially obliterated Ayn Rand's philosophy in my mind, as they did an incredibly thorough job of pointing out all the logical contradictions, inconsistencies, and simple absurdities of Ayn Rand's arguments. Like Jerry Andrus' Impossible Box, what had initially appeared to be a beautiful philosophical construct of perfect logical consistency was revealed to be nothing more than an illusion a total sham.

So I dismissed Ayn Rand's philosophy, and reverted back to the more practical and reasonable positions advocated by the actual business gurus I had read previously. I'll always view Ayn Rand as an excellent storyteller, but I prefer to get my financial, political, economic, and business advice from other sources.