Friday, December 26, 2008

A Pensioner Defies the Tide

Robert Sheer, a company-pensioned retiree from the Los Angeles Times, writes: “Republicans bring Socialism to America” on the ‘Fold/Spindle/Mutilate 2.1' Blog HERE:

It’s enough to drive one back to the invisible hand of Adam Smith. Personally, I would rather we took our chances these days with letting the corporations sink or swim on their own without government interference. If tough love was good enough for troubled families cut off the public dole by Clinton’s welfare reform, which summarily ended the federal poverty program, why have a poverty program for troubled corporations?”

Big Government is always accompanied by big business. The complex connections between legislators and those who influence them (and those many others who attempt to influence them) makes for a large non-separated, non-independent, and largely dependent capitalism, well short of the ‘ideal’ of laissez-faire, as imagined by exponents of ‘free- enterprise America’, of which Robert Sheer would appear to be an advocate.

Ironic, that the only use by Adam Smith of the metaphor of an invisible hand in all of Wealth Of Nations was in relation to the risk avoidance of some, but not all, merchants who preferred to use their capital locally rather than risk it in profitable ventures abroad (that is in the British colonies in North America) and in so doing they automatically (by the arithmetical ‘law’ that the whole is the sum of its parts) made more capital available for increasing local employment and profit-making enterprises in Britain than would it otherwise would have experienced.

And even then, not to put too fine a point on it, the British state was intimately connected to both sets of merchants – those who traded with the North American colonies and those who stayed at home – through the Navigation Acts (since Cromwell’s time, when Britain was menaced by Dutch naval power), which enforced a total monopoly on sea trade for British-owned and British-crewed shipping; through various monopoly laws forcing colonists to send their exports only to Britain first (some of which was then re-shipped in local shipping to the continent) and, forsooth, forced them only to import British products for re-sale and use in the colonies. All this backed by the military presence of British troops and naval vessels, and British laws, at no small expense (the 7-years war alone cost £120 million). The rebellion of the colonists swapped one interfering government for another one (albeit a much improved version; the US Constitution is a monument to civilisation).

As governments got bigger, the intimate connection of monopolists, protectionists with government, and the application of multiple laws and legal processes, spending grew in step. And so it has in the USA, of which Robert Sheer now calls on government not to ‘bail out’ large sections of the US economy in pursuit of a nirvana under the slogan of taking ‘our own chances’. What bravery! What sacrifice of personal chances in pursuit of principle (one, incidentally, that never existed)!

What happens next when Robert Sheer’s pension folds under growing claims for pensions along with collapsing capital assets that are the source of his pension, dry up under ‘tough love’ capitalism? There is a pile of paper entitlements to earnings from real assets, but no locked box of cash lying in some vault somewhere from which Robert’s pension is paid each month!

Frankly, I am in awe at Robert’s defiance. I am also old enough to know that when the proverbial hits the fan he will need the stoicism of a saint not to demand that politicians do something about his new status of poverty, such as by adopting the ‘right’ policies (whatever they are) to get the economy ‘moving’ again.

And I wouldn’t rely on the so-called invisible hand to set it right; the metaphor is not about how markets work, so much as what risk-avoidance drives separate people to do or not do with their scarce assets.



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