Economics and
politics – an indigestible mix
"When the State cannot please everyone,
it will choose whoever it will serve better." Anthony de
Jasay, the State [1985]
During the
discussions of the French and American Constitutions, the prevalent
topic was the separation
of religion and State – incidentally, that had been the
recurring topic for 3 centuries, when nobility and
priesthood had privileges unacceptable to the emerging
bourgeoisie: The privileged classes were tax exempt and had a series
of perks: right to levy certain taxes, Honorary privileges, prerogatives,
monopoly of judicial court jobs and management positions in the army, Navy
and the Administration.
In early 1789
were elected to the French Parliament 935 members, distributed as follows:
Clergy (247); Nobility (188) and third estate (500).
In this way, on 17
June 1789 the third estate, claiming that their members represented most of the
nation, proclaimed themselves the National Assembly, with no voting by the
other classes. This began the
French Revolution. (data taken from the texts of brazilian reasercher
Ricardo Bergamini )
The first
amendment of the American Constitution – 12/15/1791 – defines that Congress
cannot legislate on the establishment of religion (establishment clause) or
prohibiting the free exercise of religion (religious free exercise clause).
On the subject, State-religion separation
formulators (Founding Fathers) of the American Constitution, I suggest reading
the book by Alan e. Johnson, The First American Founder: Roger Williams and
Freedom of Conscience
(Pittsburgh, PA: Philosophia Publications,
2015), 279-84, containing a consistent bibliography on this subject that
dominated the discussion of the constituents.
These concepts have changed the course of mankind
ever since - imagine what it would be like if the world had the assistance
of the clergy and the nobility to manage taxes nowadays.
After almost
3 centuries, humanity finds itself facing demands that we place on a new
perspective: the separation
of politics from economics, blocking the access of politicians
and bureaucrats to the resources raised by taxes. Utopia or dream? Imagine the
difficulties to separate politics from religion for nearly three centuries and
the impact of it on the course of humanity.
This
indigestible mixture led to world wars, conflicts, corruption,
poverty and inequality, politics for a few and not for the people, or even:
power emanates from a few to benefit only the rich. This indigestible mixture
also enables the crony economy, where being friendly to the King is
more important than being competent. By the way, Adam Smith wrote his
master work: "Wealth of Nations" in order to mitigate the effects of
the particular crony mercantilism of his time. If written today, the American
Constitution rather than starting with "We the people" would start
with "We the rich".
For your
reflection, please focus on the basics:
• Economics is a science in which all agents
are regulated by the inexorable, impersonal and uncontrollable laws of supply
and demand, if there is no market manipulation;
• Politics is an art in which the protagonists
decide according to the questionable, circumstantial and personalist human
will.
These are
separate universes, following different rules. Growing market regulation was
necessary because opportunities are not offered to all, for nutrition, health
and education. These 3 sectors, under the current rules, do not
operate by themselves. The government needs to pump resources to keep them
operating.
Human
intervention in the economic process proved to be ineffective. The recent
situation started with British economist John Maynard Keynes in
1936. His general theory, consolidated in the Bretton Woods meeting
of 1944, presented a creative plumbing system, operated by the
Government, credit, investments, savings, currency exchange and other
variables. Keynes built a proposal
of human interventions in the economic process – as creative as ineffective –
its practical result over time was a combination of stagnation with
inflation – an insult to human intelligence. That proposal lacked a
basic concept: development only happens with the addition of human productive
work, only this generates capital, because capital is nothing but
accumulated labor – both sources, labor and capital, are basically the
same. It turns out that the current system allows harvesting without planting –
it is a baseless impossibility.
We need more Mises/Hayek and less Keynes's recipe,
to reach stability and progress.
The history of mankind is the conflict of
classes seeking to manage taxes collected from the people.
It is useless
to attempt to put in opposite camps and in conflict, the variables of work
and capital, because they are cumulative and have complementary
interests.
The real and
irreconcilable conflict is between the production process (workers and
employers) and bureaucrats/politicians – or producers of wealth, on one side,
and predators of the wealth generated, on the other. This will be overcome
only by the separation between Government and the economy.
Strengthening the aggregate demand through
taxes and fees, the Government merely transfers resources from the
invariable laws of the market to the questionable field of human
will. It creates more jobs in the
governmental bureaucracy, subtracting those from the private initiative,
thus creating a large
parasitic system, fully supported by our taxes. Something like:"everything
for the people, but without the people" in an authoritarian pattern.
Those who
advocate the maintenance of companies under Government control are not from the
right or from the left, they are ideologues of retrocession.
"All who desires peace and harmony in human
relations must always fight against statism."-Ludwig von Mises
"The arrangement of goods and services that the State currently
offer can be divided into two subsets: those goods and services that should be
eliminated and those that are to be privatized."- Murray n. Rothbard
Political decisions in economic matters are
invariably wrong, not slightly wrong, but wrong in their
foundations. They cause profound impacts on the lives of
people. Politicians
imagine they can manage prices as if this were an arbitrary number
subject to manipulation by the Government without consequences in economic life. The
definition of a minimum wage is an undisputed example of this
impossibility. Well-meaning politicians want people to earn more, but
the disastrous consequence is the loss of jobs for unskilled workers,
exactly those who need them most.
I suggest reading the excellent text by
the professor of Economics at George Mason University- Donald J.
Boudreaux
" Sometimes, there is no good option " -Posted on 19 November 2015.
" Sometimes, there is no good option " -Posted on 19 November 2015.
We have to
bend to the inexorable truth: the economy is ruled by laws that cannot be
manipulated. This explains
the frustration brought about by dictatorial regimes as well
as by populists of all kinds, elected with the proposition of
unreachable miracles. They bring trial and frustration. In the search
for solutions, an important step is recognizing that the economy does not
obey human will.
Dictatorships
or regimes of force can only be defended by those who would like to be on the
side of power; If you're on the other side, you will defend democracy with all
conviction.
We
are currently seeing, perplexed and helpless, the political world in
fraud, abuse, negligence or crimes against the economy, with profound impacts
on the lives of millions of innocent victims.
Experts and
intellectuals often and unfairly point a finger to businessmen as those
responsible for poverty, frustration and disappointment in the
current human condition. This is totally unfair and far from reality.
Businessmen operating in the free market make money by satisfying the
needs of others, never their own, something that is totally distinct from
politicians and bureaucrats who in certain cases, partnership with fraud,
cheating and corruption. A CEO or company Executive is appointed by
his merits and experience rather than promises and lies, like
politicians. Anyway, nothing
is more worthy and morally sound than maintaining a standard of living through
the options of consumers who, in the last analysis, are crucial
for the maintenance of companies operating in the free market –
every penny spent in a supermarket means wishes and stimuli to
organize the production and distribution of goods and services. Businessmen bring progress and jobs,
unlike politicians who choke the people with taxes and paralyze progress.
Investors should be received with a red carpet, because they are very
important for job generation. The business leadership, integrity and
discipline encompass qualities of character that are essential to provide
for the needs of the community.
Great
short-sightedness still dominates the dull mind of certain
intellectuals who imagine that economies have nationalities – businessmen always search investments to make
money where this is allowed. Imagine that to determine a nationality to an economy is
like assuming that the law of gravity only applies to certain
countries!
Only in
free markets a real democracy can take place. With government
interference, the system evolves to autocracy, where success depends on
the virtue of rulers.
Coercion is
not the trademark of the free market, where consumers voluntarily can say yes
or no to a supply or exchange of goods and services, with simple rules: not to
steal, not to kill and not to cheat, unlike the political world. Humility,
honesty and freedom are the only ways to win in the competitive world
of the free market, cultivating ethics for human dignity and mutual prosperity.
I
suggest reading the excellent text by the Professor of ethics and
business leadership at CITADEL, Richard
m. Ebeling, dated of 10/27/2016 – "Entrepreneurship, Market Economy and
Human Improvements"
Now let's
see how we can separate politics from economics.
Human work is a process of transformation of
energy, so that you can
manifest the human will: nutrition, health and education must be provided in
advance and then payment for the job performed by the
worker, who needs payment and attention as a vehicle needs fuel and
maintenance for travel.
These 3
sectors constitute legitimate Government interference in the economy:
Governments around the world, whether socialist or capitalist, need to
subsidize in some way their agriculture (nutrition), plus health and
education. In other words, these sectors must permit managers to
offer equal opportunities in any society. A new Social Pact will be that
one where these 3 sectors become a private responsibility in the
productive process, purchased under free market prices. The
Government reduces taxation proportionately. With this we have the desired
separation between economics and politics. From then on,
laisser faire, laissez passer- the free market acting broadly, comprehensively
and freely – full productive employment is the guarantor of this Social Pact.
In 1758, Francois Quesnay, one of the leaders of the physiocrats,
combining his knowledge of agriculture and medicine, presented to King
Louis XV an economic table showing the interdependence and the flow of
goods and money through various sectors of the economy: farmers, landowners,
industrialists and merchants. His advice to the King of France: there's no need for the Government
to regulate prices of goods and services. Competition, by itself,
can regulate prices with justice. We only need to follow this
wise advice of Quesnay. - Leave human beings free to make their own decisions.
Private
initiative is not only more competent to manufacture automobiles or tvs
sets, but also to provide health and education. It's politically myopic to leave
these in the hands of the Government, because of the importance of these
sectors. The private sector must be the engine for production of these
essential services – it is the private productive sector who happens to
pay this account, directly to the hospitals and schools. Some countries
are still presenting young pupils with the school content of
centuries past.
"Nobody spends other people's money so
carefully as he spends his own. If we want efficiency and effectiveness, if the
knowledge is put to good use, it needs to be done by the private sector. "
-Milton Friedman
With the
action of the private sector, students and families should have complete
freedom of choice of profession, adding a vital connection to the
equation - the manager will only invest in the training of professionals
who are interesting for the production process.
I
suggest reading the excellent text of Professor Jason
Morgan from Mises Institute "How To
Make Higher Education Affordable” published by The Latest from
Mises.org - NOVEMBER
7, 2016
Now, in
order to relax after a stressful subject, please watch this masterful
presentation celebrating the tenth anniversary of the play "Les
Miserables", by Victor Hugo - https://www.youtube.com/watch?v=YnmA-8IMVWw
& feature = in-subs _ digest –
Do You Hear the People Sing- Published on 21 jan 2015
Cordially,
Ronaldo Campos Carneiro – nov/2016
rcarneiro4@gmail.com
http://ronaldocarneiro.wordpress.com
http://rcarneiro4.blogspot.com.br
rcarneiro4@gmail.com
http://ronaldocarneiro.wordpress.com
http://rcarneiro4.blogspot.com.br
----------------------------
Happy 2017 - comments
De: Wilfrid Wilkinson [mailto:Wilfrid.Wilkinson@rotary.org]
Enviada em: sábado, 5 de novembro de 2016 14:14
Para: Ronaldo Carneiro
Assunto: Re: Happy 2017 Peace, Health and Freedom
Enviada em: sábado, 5 de novembro de 2016 14:14
Para: Ronaldo Carneiro
Assunto: Re: Happy 2017 Peace, Health and Freedom
Thank you for your early Christmas greetings which are warmly reciprocated. My wish is that Christmas 2016 and the 2017 New Year will bring about some of the needed changes that you have so eloquently identified. I read your thoughtful message and concluded that this world seems doomed to duplicating the errors of its past. However, the first glimmer of hope for a change is recognition of what is wrong with the present.
Your message identified those wrongs of both the past and the present which creates the platform to go forward with an improved and better way of living in this world, which appears to get smaller each year.
Kind Regards
Wilf Wilkinson
PS: Yes, Rotary (still) Shares.
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