Saturday, February 6, 2010

Modern Financial/Economic/Social Policy: The Art of Theft

“Remember, the enemy has only images and illusions, behind which he hides his true motives. Destroy the image and you will break the enemy.” – Enter the Dragon (Bruce Lee movie)

Behind fancy mathematical equations and theories promoting how to get things done, the truth is ultimately the victim in these endeavors. You can’t get something for nothing, but at the same time you can’t beat something with nothing. It is my objective to at least give you the “something” that will make you think of exactly where you stand. The “something for nothing” thinking is the essence of what is taught in many universities (including the so-called prestigious ones), in particular when it comes to developing financial, economic, or social policy. Of course, this shouldn’t be surprising since “do-gooders,” “world improvers,” and other former central planners (a.k.a. technocrats) are exceedingly busy “teaching” the new generation how to run other people’s lives. In this post, however, I simply want to devote a little bit of space to a rudiment that undergirds modern social science—specifically the disciplines of finance, economics, and social policy. This rudiment is the act of theft.

Of course, they won’t call it theft. In the name of saving the planet, taking care of the elderly, or providing “free” healthcare central planners stake a claim on property that does not belong to them. In other words, they believe the story of Robin Hood is good, despite the fact that they would not agree to this behavior if done to them.

Let me give you an illustration of what I am talking about. Say, for example, you have some money in a bank. If someone were to force you by putting a gun to your head to hand over the money, clearly this would be called theft. It wouldn’t matter if the money were used for a charity or any other thing. In fact, the thief (of the Keynesian variety) could reason that since you are not spending the money, you are hurting the economy. He is going to spend it for you. I hope we are in agreement in this crucial observation: taking something from someone by force is stealing.

I am not adding to the analysis beyond what I’ve just said. I am simply pointing out the fundamental principle that it is wrong to take something for your own use that you have not worked for.

Now, let’s extend the analysis. Say, for example, a politician comes along and claims he/she wants to achieve some goal (fill in the blank). The politician needs funds, of course, to execute the goal. Where is this money coming from? “From us, the taxpayers,” you may answer. But, what about the person who does not want to hand over the money? “It doesn’t matter,” you may say, “it is for the social good.” It goes without saying, but if you don’t pay your taxes, you go to jail. And there you have the gun. In the name of your favorite charity, an individual has been forcefully required to hand over his property. Logically, this example is no different than the previous one I illustrated.

Suddenly what the person agreed what was an act of theft at the individual level, when performed by an elected politician (in the name of doing good), that wrong becomes a right. This is fundamentally why we should never be captivated by anyone doing good deeds; they can certainly be deceiving when it is done out of order.

Make no mistake, I am not advocating that good deeds are bad; rather, doing them by way of stealing, is wrong. Or like the popular saying goes, two wrongs don't make a right!

Modern financial/economic/social policy propagates this thinking and behavior. Teachers of these disciplines promote the idea that redistributing resources by way of a central committee is always and everywhere efficient. They completely eradicate the notion of property rights within the framework of equality before the law. These promoters hide behind elaborate econometric analysis and theorems, which on the surface appear sound and legitimate, but ultimately cause more damage. In other words, the “cure” of the “problems” (created by previous policies) they seek to solve is actually “poison.”

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