A daily dose of philosophical food for your noodle!
Friday, May 23, 2008
Nationalizing the Oil Industry? By Diana Hsieh @ 12:22 PM
Just when you thought American politics couldn't get any worse, Maxine Waters threatens to nationalize the oil industry, if consumer prices aren't to her liking:
Of course, Maxine Waters wouldn't ever support the genuine cure for high energy prices, namely the elimination of government controls on drilling for and refining oil, as well as on other forms of energy like coal and nuclear power. As any semi-conscious student in a microeconomics class knows, such controls constrict supply and drive up prices. But nevermind that mumbo-jumbo. Maxine Waters has a different kind of plan: oil company executives must find some way to magically violate the basic laws of economics -- or else!
...But there's just something - make that lots of things - wrong, in general, with retiring at 55, 62 or even 65. I would go so far as to call it profoundly selfish and unpatriotic.
Dropping out of the work force while still in one's prime means ending one's contributions to America's strength, mortgaging our children's and grandchildren's future and leeching trillions of taxpayer dollars from the economy.
...Thus, working longer would increase national output and personal wealth. And given our nation's crying need for teachers, social service workers and public servants, millions of "seasoned citizens" could serve our communities while giving meaning and money to people with decades of life and activity left in them.
...For everyone's good, Americans should at least be able to work as long as their shorter-lived, poorer grandparents did. By doing so, they would be unselfishly helping preserve and strengthen our nation's future by alleviating - rather than worsening - our national debt and making hands-on contributions to our children and communities.
There are a few noteworthy unstated premises in his argument.
(1) Your life is not your own; instead service to others is the highest good.
(2) Selfishness is opposed to patriotism; in other words looking out for your own interests is harmful to the USA.
(3) When you stop working, you are "leeching" off of others.
Of course, the current system of Social Security taxes are just a giant Ponzi scheme. The government attempts to promote the fiction that you are paying your own money into the system when you work and you are "getting it back" when you retire. At least Yarrow is correct in stating that retirees are collecting other people's money.
As the Social Security crisis deepens over the next decade or so, I expect we'll here more such collectivist arguments, in an attempt to forestall intergenerational resentment amongst American.
But the solution is not to force people to work longer for a mythical "common good". Instead, it is to phase out and eventually eliminate the collectivist system of Social Security altogether and let people truly fund their own retirement with their own money. Yes, there will be some painful transition costs. But if we do nothing, we'll pay in the form of vastly more economic pain in 15-20 years, with interest.
Here are some excerpts from Baum's essay. (The material in quotes is from William Bradford, governor of the Plymouth Bay Colony for 30 years between 1621 and 1656):
...The Pilgrims' first winters after they landed at Plymouth Rock in 1620 and established the Plymouth Bay Colony were harsh. The weather and crop yields were poor.
Half the Pilgrims died or returned to England in the first year. Those who remained went hungry. Despite their deep religious convictions, the Pilgrims took to stealing from one another.
...One of the traditions the Pilgrims had brought with them from England was a practice known as "farming in common." Everything they produced was put into a common pool; the harvest was rationed according to need.
They had thought "that the taking away of property, and bringing in community into a common wealth, would make them happy and flourishing," Bradford recounts.
They were wrong. "For this community (so far as it was) was found to breed much confusion and discontent, and retard much imployment that would have been to their benefite and comforte," Bradford writes. Young, able-bodied men resented working for others without compensation. They thought it an "injuestice" to receive the same allotment of food and clothing as those who didn't pull their weight.
...After the Pilgrims had endured near-starvation for three winters, Bradford decided to experiment when it came time to plant in the spring of 1623. He set aside a plot of land for each family, that "they should set corne every man for his owne perticuler, and in that regard trust to themselves."
The results were nothing short of miraculous.
Bradford writes: "This had very good success; for it made all hands very industrious, so as much more corne was planted than other waise would have bene by any means the Govr or any other could use, and saved him a great deall of trouble, and gave far better content."
The women now went willingly into the field, carrying their young children on their backs. Those who previously claimed they were too old or ill to work embraced the idea of private property and enjoyed the fruits of their labor, eventually producing enough to trade their excess corn for furs and other desired commodities.
...With proper incentives in place, the Pilgrims produced and enjoyed a bountiful harvest in the fall of 1623 and set aside "a day of thanksgiving" to thank God for their good fortune.
"Any generall wante or famine hath not been amongst them since to this day," Bradford writes in an entry from 1647, the last year covered by his history.
We now know the Pilgrims' good fortune had nothing to do with luck. In 1623, they were responding to the same incentives that, almost four centuries later, have come to be regarded as necessary for a free, productive and prosperous society.
I don't know if Ayn Rand was familiar with the Pilgrims' story when she wrote her fictional history of the Twentieth Century Motor Company in Atlas Shrugged. (Of course, her direct personal experience growing up in the USSR undoubtedly provided her with ample evidence of the importance of property rights, without having to study the history of the Pilgrims!)
But the parallels are striking, because the principle is the same. Trying to live by the credo of "from each according to his ability; to each according to his need" leads only to misery and poverty, and turns decent people into criminals. On the other hand, respecting property rights results in happiness and prosperity.
If only more Americans had remembered the economic and moral lessons of 1623, then we might have avoided some of the painful mistakes of the 20th century.
He decided to start from the very bottom of the economic ladder, with "a gym bag, $25, and little else". He moved into a homeless shelter "on the wrong side of the tracks in Charleston, S.C." He set as his goal "to have a furnished apartment, a car, and $2,500 in savings within a year", without relying on his education or his former contacts.
He worked his way out of poverty, found work as a day laborer, made new friends, and landed a steady job at a moving company. He had to quit his experiment after 10 months because of learning of an illness in his family, "[b]ut by then he had moved into an apartment, bought a pickup truck, and had saved close to $5,000."
According to the article:
The effort, he says, was inspired after reading "Nickel and Dimed," in which author Barbara Ehrenreich takes on a series of low-paying jobs. Unlike Ms. Ehrenreich, who chronicled the difficulty of advancing beyond the ranks of the working poor, Shepard found he was able to successfully climb out of his self-imposed poverty.
Clearly, this shows the crucial role that a person's character, attitude, and work ethic play in whether he is successful or not, as opposed to the exact magnitude of material resources he starts with.
He has also written a book about his experience, entitled, Scratch Beginnings: Me, $25, and the Search for the American Dream. It looks like his book has gotten consistently high reviews on Amazon. (We've ordered a copy already, but it's currently out of stock and on back order.)
If I were a betting man, I'd sell Europe short. Assuming that I could find any economically-literate Europeans who'd take the other side of the trade...
The Tribunal de Grande Instance (a French appeals court) in Versailles ruled back in December that Amazon was violating the country's 1981 Lang law with its free shipping offer. That law forbids booksellers from offering discounts of more than 5 percent off the list price, and Amazon was found to be exceeding that discount when the free shipping was factored in.
The company was told to start charging within ten days or pay a daily fine. It also owes €100,000 to the French Booksellers' Union for the court battle and for the losses it has apparently caused them. With the holidays over and the ten-day grace period over, Amazon has officially announced its plan to ignore the court order and pay the fine instead, according to the International Herald Tribune.
Amazon can do so for 30 days (€30,000), but after that time the court will review the fine. They could raise it, or they could lower it, but given that Amazon has chosen to flip the justices the bird, guess which outcome is more likely? At some point, if Amazon doesn't change its ways, the fine will probably be jacked up so high that the company has no choice but to comply.
Jeff Bezos, Amazon's CEO, has taken to the virtual airwaves to rally the French public in support of Amazon's free shipping. He sent out a recent e-mail to French customers in which he claimed that "France would be the only country in the world where the free delivery practiced by Amazon would be declared illegal." He then asked people to sign an online petition that has so far garnered more than 120,000 signatures.
I am glad that an American CEO is defending his company's right to engage in mutually voluntary rational trade (and in the process save money for his customers). I don't know whether Bezos is doing it in a principled fashion that gets to the moral fundamentals or if he's only making a pragmatic argument.
