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It should be evident that collective ideologies fail miserably in their stated objective of creating a more equitable and prosperous society compared to the alternative system of private property and market-based exchanges (generally labeled capitalism.) The empirical evidence that socialism fails is overwhelming to the objective observer and the analytical support for why it fails is not hard to understand. Yet, socialism’s appeal continues among a broad coalition of groups in many societies, even those that are fairly liberal.

We’ll go into the analytical reasons why socialism fails in the next part. Here I am going to focus on the simple matter of deciding whether socialism indeed fails to deliver. To that end, we just need to ask in which direction people prefer to move — from socialist countries to capitalist countries or the other way around? From the US, Canada, the UK, Australia, New Zealand, South Korea, Japan, Germany, etc., to Venezuela, Russia, China, Cuba, North Korea, etc., or the other direction?

People overwhelmingly move from socialist countries to capitalist countries. Which reminds me of a joke. These two guys were arguing whether Russia or the US was nicer. The Russian said to the American, “You Americans only care about money. We in the USSR care about people.” The American replied, “I agree. That’s why we Americans lock up our money, and you lock up your people.” Continue reading “The Obvious Appeal of Socialism – Part 1”

What’s so wonderful in perpetuating the cycle of misery and death by procreating?

Pure selfishness created the life that’s guaranteed to suffer, die and be totally forgotten, signifying nothing. Please spare me the honoring of mothers and fathers.

Today I called my friend  Courtenay to wish her a happy “Mother’s Day” since Cassie (14) and Remi (10) are adorable kids. And then I went on a rant about how terribly selfish it was that she decided that it is a good idea to bring two sentient beings into existence who are bound to suffer physical, psychological and existential pain — and eventually die.

She humored me and didn’t contradict my position. Perhaps she didn’t really understand that I was actually indicting her of a moral failing. Or perhaps she’s smarter than I give her credit for. Perhaps she got my point and was willing to admit her fault in adding to the sum of suffering in the universe.

Biology is what it is. But now, people can choose  to overcome their naive instincts and do what, though legally allowed, is morally wrong. People should stop breeding because it leads to suffering.

Herr Dr Prof Friedrich August von Hayek is one of my three favorite economists—the other two being James Buchanan and Milton Friedman. Like them, I too am a classical liberal. Since Hayek was born on May 8th, 1899, today’s a day to celebrate.

I confess that I did not fully appreciate the core lessons of economics until after I had finished my formal studies. I had learned the usual neoclassical stuff — including impressive looking math involving the calculus and maximization of twice-differentiable continuous functions, Lagrange multiplies and other sillinesses. I am not dissing the use of math; just that the mathiness is silly. Continue reading “Happy Birthday, Prof Hayek”

Property

At a very abstract level, the formula for prosperity is to have a liberal market order and institutions that support that liberal market order, namely those that protect property rights, enforce contracts and settle disputes, and provide the rule of law.

Property rights does not imply the privileging of the rights of property over the rights of humans, although socialists mistakenly believe that that is what it means. The right to private property is the source of all human rights. Without the right to own property, one is hardly a human being; one becomes mere chattel or property. Continue reading “An Essay into the Nature and Causes of Poverty — Part 4”

It is hard to overemphasize how critically important exchange is in any economy, including that of primitive hunter-gatherer societies. Only hermits who voluntarily choose to live in extreme isolation don’t engage in exchange, and those who are marooned on deserted islands are forced to be self-sufficient.

Exchange 

For the rest of us, we rely on exchange for meeting practically all our needs. Just reflect on the fact that every one of us consumes a very tiny fraction, if anything at all, of what we actually produce. The factory worker produces cars but most of his consumption consists of non-cars; the doctor produces medical services but consumes very little of that; similarly the architect, the farmer, the green grocer, ad infinitum.  Continue reading “An Essay into the Nature and Causes of Poverty — Part 3”

I like to think that I am a reasonably rational person. Given enough evidence (information) and time to ponder the facts, I believe that I generally reach correct conclusions. I also believe that the average person is capable of rational thought but it requires determined, effortful practice and lots of time. It really is hard work. Unfortunately, most people are not inclined to do that because they irrationally and wrongly believe the cost of doing so exceeds the benefits.

The Wikipedia introduces rationality thus: “Rationality is the quality or state of being rational – that is, being based on or agreeable to reason. Rationality implies the conformity of one’s beliefs with one’s reasons to believe, and of one’s actions with one’s reasons for action. “Rationality” has different specialized meanings in philosophy, economics, sociology, psychology, evolutionary biology, game theory and political science.” Continue reading “Steven Pinker’s Harvard Course on Rationality”

“War is a judgement that overtakes societies when they have been living upon ideas that conflict too violently with the laws governing the universe… Never think that wars are irrational catastrophes: they happen when wrong ways of thinking and living bring about intolerable situations.”                        — Dorothy L. Sayers

In the near future, we are likely to call this the Third World War, or WW3.

World Wars are events that are global, cause severe economic damage, and result in very large numbers of deaths. Unlike ordinary wars, which are localized, by definition world wars involve the entire planet and no nation is entirely immune from the death and destruction that follows.

This world war, unlike the previous two in the last century, is not a military war. But like them, it will lead to some economic, social, and political upheavals that could not have been anticipated at the start. The start of world wars can only be identified in hindsight, when the whole world is engulfed in conflict. Continue reading “The Third World War”

Today is “May Day,” the first of May. In many European cultures, it’s a traditional spring festival holiday, celebrated since ancient times. For communists and socialist, it’s the “International Workers’ Day” and they too call it “May Day.”

India being a socialist / communist country, 1st of May is “Labour Day” and is a public holiday.

It’s kind of fitting that the communist/socialist celebrate “May Day” because “Mayday” is the international life-threatening distress call for mariners and aviators. It’s derived from the French m’aider (‘help me’). That use originated in 1921. When a population falls victim to socialism, it’s in life-threatening distress and needs urgent assistance to recover from the disease that kills in the scores of millions. I remember the countless victims of collectivism on this day.

And finally, there’s an old favorite love song “First of May” by The Bee Gees. Here, have a listen: Continue reading “First of May”

Value and Wealth

Since this is an essay on poverty (part 1 here), it is useful to consider its polar opposite, namely wealth. Defining wealth precisely is therefore the first order of business. Wealth is anything that is of some value to some person. Value is hard to pin down because it varies according to the person doing the evaluating. Just as beauty lies in the eye of the beholder, value lies in the mind of the evaluating person. 

Exchange

One man’s garbage is another man’s treasure, as the adage states quite correctly. Therefore two people may value the same thing quite differently. That difference is the only reason that people exchange stuff. For example, when Jim buys a sandwich for $5 from Joe, clearly Jim values the sandwich more than he values $5, and conversely Joe values $5 more than he values the sandwich. Also worth noting that exchange involves distinctly dissimilar things. Continue reading “An Essay into the Nature and Causes of Poverty — Part 2”

Economics

In the following, I explore a few fundamental ideas relating to the core subject matter of economics. One can precisely date the founding of the discipline with the publication in 1776 of Adam Smith’s seminal work titled An Inquiry into the Nature and Causes of the Wealth of Nations.

Note that the focus was on the wealth of nations, and not  the poverty of nations. Poverty is the default condition of all peoples in all times; it is the nature and causes of the wealth of nations that require explaining.

Economics is a branch of social science. Social science is devoted to the study of human societies and human interactions. Today economics is a vast field with dozens of specialized areas of inquiry. But the discipline was started by, would you believe, philosophers. What we call classical economists today — Adam Smith, David Hume, John Stuart Mill, et al — were philosophers. Smith’s first book Theory of Moral Sentiments (1759) laid the ethical and moral foundations for his later book on the wealth of nations. Continue reading “An Essay into the Nature and Causes of Poverty — Part 1”