Monday, October 08, 2012

An Exercise in Liberal American Economic Thought

Hop in the Captain's F-22 fighter jet and let's go for a ride.  We're going to do an exercise in liberal economic thought.  Specifically, we are going to follow the typical American liberal's economic model or beliefs to their logical conclusion or end, and in doing so learn a lesson I think all people in the political spectrum can appreciate.

Without taking too many liberties (and simplifying things down a lot) the average non-economist American liberal is more prone to believe in a watered down Keynesian version of economics that goes something like this -

"Productivity doesn't matter, activity matters - any activity.  As long as there is some kind of economic activity, specifically transactions and things are 'movin' around' inevitably the economy will grow.  If there isn't enough sloshing around in the economic primordial goo or "Great Liberal Economic Oort Cloud," government can come in and with ANY kind of stimulus, shake things up a bit, and boom, we're magically back to economic growth."

Again, I'm not saying I agree with this, but I think we can all agree this is more or less what the average, non-economist American liberal has in terms of an economic model or understanding of how the economy works (and intellectually honest liberals will admit this).  Besides, you don't have to take my word for it.  All you have to do is look at statements made by Barack Obama and Nancy Pelosi.  Obama claims he'll just "create" 600,000 more teaching jobs, 200,000 in clean energy, etc. etc., with no plans or details on how, just mix it up.  And evidencing to the "activity over productivity" aspect of this liberal model, Nancy Pelosi (and I believe Joe Biden) have said unemployment checks help stimulate the economy.  So even though this simplified, genuinely dumbed down version of an economic model sounds insulting, that really is how most liberals believe an economy operates.

Now since productivity ultimately doesn't matter in the liberal's economic model, by logic (and tell me if I'm wrong here) this means it doesn't matter what we produce.  Under a free market, real world economic model, it is the demands and desires of the customer that drives production.  But under this liberal economic mindset we just need the absolute value of "ACTIVITY."  And since "any activity" is "good activity," said activity is NOT dictated by the demands and desires of the people.

The question is, who or what determines then is going to be this magical Keynesian "activity?"

Answer - the government.

However, there's more to it than simply "government."  Specifically, we have to ask ourselves how will agents of the government come around to determining what activity to engage in?

It's simple.  They'll choose something that's easy and fun.

When given the choice of "what to produce" (because, again, according to this model it doesn't matter WHAT we produce, long as we're doing something) do you think liberals, government bureaucrats, and public sector union members are going champion making hard-to-produce items that require math, technology, engineer, studying, rigor, research and sweat?
Hell no. They're going to choose something easy.

Ergo, what do liberals ALWAYS ALWAYS ALWAYS ALWAYS ALWAYS champion as their "path" or "route" to economic growth?  There are five that come to mind.
1.  Health care (not nursing, doctors or pharmaceuticals, but spending on health programs and the like)
2.  Education
3.  "Green Anything"
4.  Activism/Non-Profit
5.  Welfare

"Industries" or "jobs" that require no skill and no effort, and are PURELY there, in an economically ass-backwards way, to serve the worker and not the customer.  And understand the logic here.  If it isn't going to be up to the customer as to what is produced, then the choice of what to produce defaults to the employee/producer (this goes along way in explaining why so many idiot children major in the liberal arts).

I'd like to say this is the only reason these type of industries are championed by the government - that they're "fun" and "easy."  But sadly, logic also tells us there are other reasons liberals champion such "industries," namely politics.

If you look at the list above, you'll realize championing such industries does two things beyond the supposed Keynesian benefits.  One, it benefits the politician who's advocating spending on these things because they're all "noble and good."  He/she can claim they're "investing in our future" when in reality they're merely mortgaging it and pissing it away.  Doesn't matter than these things are SPENDING with no positive rate of return (which  if there was a return would make it a GENUINE investment), Americans are too stupid to know the difference between an investment and spending.  The politician benefits from this ignorance.  Two, it inoculates the politician championing these causes from his/her rivals because they can hide behind the nobility of these causes.

Are you against education?  You hate children.
Are you against government spending on green programs?  You hate the environment.
Are you against welfare?  You hate poor people, women, children and minorities.

In the end you have what I believe to be the most brilliant, pinnacle achievement in all of political history - a political organism or entity, that produces nothing, gets it financing from other sectors of the economy, to employ its own political agents in (largely) make-work jobs, while at the same time commandeering and hiding behind various noble social aims (help the poor, help the children) to rationalize its parasitic nature, ALL WHILE GETTING THE BLESSING FROM ITS HOST IN THE FORM OF BEING ELECTED IN TIME AND TIME AGAIN.  It's brilliant because people willingly vote this in!

Now I know, I know.  If you're like me your blood pressure is rising because you too are also gifted with Super Awesome Economic Genius (TM) and can plainly see none of this leads to economic growth.  But remember our original goal here.  This is an exercise in liberal economic thought to follow it to its logical end, not a political analysis.  So let's have ourselves a shot of Rumpie, set politics aside and return to economics.

Now, since it doesn't matter what we produce, just as long as we're doing something and mixing it up in the economic goo, according to the average American liberal, our GDP would ideally look something like this:

(I threw in "Whole Foods" "Coffee Shops" and "Unicorns" to account for the sliver of private sector production liberals typically accept as "permissible private sector activity")

Of course we know this isn't a viable or sustainable economy.  Nobody is producing the food.  Nobody is producing the power.  Nobody is producing the doctors.  Nobody is producing the Priuses.  A lot of things are missing for a sustainable economy.  So if this economic model isn't sustainable, how can anybody (liberal or conservative) support this?  Very simple young aspiring economists.

International trade.

You see, according to this liberal economic model, thank god we have the Chinese, Mexicans and Indians, because while we're
  • educating our children merely for the sake of educating them, 
  • spending trillions of health programs to keep people alive while expecting them to do nothing in return, 
  • going to the local OWS camp to protest reality, 
  • majoring in English though we speak it, 
  • and blowing $500 million on the the likes of Solyndra, 
those suckers..errr...I mean "charitable foreign folk" are slaving away making all the stuff we inevitably really do want to consume.  Things like, oh, I don't know, FOOD and ummm...APPLE PRODUCTS and um...CELL PHONES and umm...COMPUTERS and umm....CARS and um...well, frankly, anything that requires a skill liberal-art majoring Americans are too damn lazy to learn and do themselves. 

Now, in the average, non-economist liberal's mind, problem solved!  We produce what we want to make while foreign suckers...errr...our "foreign friends" produce the stuff we actually want.  And as a bonus, our foreign friends will even loan us the money to pay for all this stuff.

It is here, I believe I have fully flushed out and thought through the average American liberal's economic model to its logical end in their minds.  As far as they're concerned, this is a complete economic model.  They not only get to do what they want, they get to consume what they want, warm kumbayaa fuzzies for everyone.

The problem is it doesn't stop there.

Just because the average non-economist American liberal doesn't understand international trade, debt, not to mention the difference between a billion and a trillion, doesn't mean the realities of economics won't come crashing down on this model.  Carrying it further, we obviously see some problems.

One, their entire economic system hinges on debt.  That foreign countries are going to not only perpetually make what we want while we offer them nothing in return (ie - we want electronics, how many Chinese want a book on "Women's Studies?"), they going to stop loaning us money because they're afraid we'll never pay them back.  If you were the chairman of the economic committee in China would you continue to loan money to a country that spends all of its money on people who don't produce, people who are going to die soon, and people who major in "Art History" instead of chemical engineering?  Set the nobility of welfare and social security and the chilllllldrnnnnnn aside.  China doesn't care.  They want their money back, and we, frankly, don't have the productive capacity to produce they valuable stuff to pay them back.

Second, it also assumes the dollar never collapses.  Understand what gives a currency its value.  It's not because the government SAYS it has value.  It's because people (either here or abroad) can take our dollars and buy US made goods with them.  But if the US DOESN'T MAKE ANYTHING ANYBODY WANTS WHO IS GOING TO WANT TO BUY DOLLARS???  What are they going to buy??  An "English Degree?"  50 Shades of Gray?  Are those the US-made goods we're going to make to pay back our $16 trillion debt?  If I did my math right, that's 800 billion copies of 50 Shades of Gray.  So every person on the planet needs to buy, what, roughly 133 copies of "50 Shades of Grey?"  Are you kidding me?

And finally, it is an enormous display of arrogance on our part.  I didn't realize this until I talked to a student at Macalester College in St. Paul.  I asked her what she was studying, she said, "international studies."  I asked her what she was going to do with that and she said, "Oh, well, I go work for the UN or government."  Don't you want to produce something or don't you need experience?  Why would they hire you?  "Oh, that school doesn't offer degrees in those things.  They teach us leadership and management."

I realized what I was witnessing.  A veritable child thinking she has the wisdom and experience to lead - aka - tell other people what to do, just because she went to a really overpriced and crappy school.

This led me to realize just what we are effectively "telling" the rest of the world when our kids major in "Literature" while the rest of the world's children major in math and the sciences.

"Take care of us."

And it's worse than that.  In pursuing the policies that are implied by the average, non-economist, American liberal's economic model, we are essentially dictating roles to the rest of the world.

China will be the manufacturers and workers of the world.  They'll produce our physical wares and electronics.

Mexico will be the farmers.  They will grow our food.

India will be our computer programmers and make those Chinese-made computers really fun.

Brazil and Australia will provide the raw materials so all those other countries can make the stuff we want.

And the US?  Oh, us?  we'll be the stay at home trophy wife.  We'll be the world's shopping mall.  Nothing is made here, just bought and consumed, and all those other countries will finance our spending habits.

Oh, what's what?

"What will we provide in return to all those countries slaving away making our stuff?

Why, leadership of course!

Through the UN, non-profits, Peace Corp, Ameri-Corps, consultancies, our educational institutions, and other various NGO's, we'll tell the rest of the world how they should behave and act.  You see, we're really good at it.  We have millions of 25 year old children who never worked a day in their lives, but that's OK.  They all have masters degrees in "International Studies" and "International Gay Lesbian Art Studies."  They're really smart and will tell you what to do!  You can thank us later!

Heh, I'm sure the rest of you can complete this exercise and logically figure out where it ends.


tweell said...

As the holders of Pax Americana, we get to export our only product unmatched by other nations - our military.

Unknown said...

Then once the economy crashes and the dollar collapses, then we'll go to war in some country like in the Middle East that we have no business in meddling in to "stimulate" the economy back up again and end up in even more debt, while having a fake economic boom. People like this never learn from history and try to justify this lunacy.

Speaking of the manosphere, there's a new book coming out tomorrow called Cheat: A Man's Guide to Infidelity written by stand-up comedians Bill Burr, Joe DeRosa, and Robert Kelly that's coming out tomorrow that I'm probably am going to buy via Kindle this week. You should check it out. The informercial and interview on YouTube are highly entertaining.

Felid Daddy said...


Damn good article! Well done sir....

Anonymous said...


Damn good article! Well done sir...

Anonymous said...

One nit to pick,

Don't call them "liberals." In much of the world, "liberal" means what we consider "libertarian" -- aka sensible economics.

"Leftists" or "collectivists" is more accurate.

And that is my leadership work for the day...

adam said...

I noticed that you didn't link to any intellectually honest liberals as one would expect. Was that oversight, a lack of time to do the research or simply ironic?

Captain Capitalism said...


It was to save time. I don't have 2,000 years in life expectancy or the resources to find one.

If you know of one, by all means, post the links here.

Anonymous said...

How timely. This past week I got into a heated discussion with some friends. I essentially posited: "Nobody owes you anything just because you are breathing." How wrong I was! This is what I learned from the ensuing argument:

*Rich people hoard money by making investments and don't give any away, or something.

*Tea Partiers are racists (and by extension, me) because nobody ever protested a president or his economic policies until a non-white man was elected to the office.

*Forced purchase of health insurance solves all problems (it's just like car insurance!) and I am a meanie who wants people to die in the street because I disagree (almost verbatim accusation, yelled at me)

*All human activity is the result of class struggle. Seriously, one guy said that - someone educated enough to know better. When I pointed out that this was textbook Marxism, he got red-faced angry and doubled down.

*A master's degree automatically entitles one to more money and a life free of struggle to provide for oneself.

Ya' know, I thought through these things over 20 years ago and figured out the truth. These people are in their 40's. Enjoy the decline, indeed.

Shameful said...

The US does have two killer apps, fraud and murder. The USA is the crown king of fraud, sure pillaging a few trillion a year in scams is tough, but the crony capitalists are putting forth their A game. Also no nations raw killing power matches the USA, i strongly doubt that the US will go down as gently as the USSR when they can try to engage in a little nuclear blackmail. These are lunatics, and killing a few billion to keep the ball in play is a possibility. The USA has nothing really worthwile to offer the world, but we are the worlds biggest parasite. Land of the free, home of the brave.

Anonymous said...


Two points :

1) You know what an oxymoron is? "An Exercise in Liberal American Economic Thought" is a shining example of the genre. Arguing about Liberal Economic Thought quickly devolves into something similar to the Medieval religious philosophers arguing about how many Angels can dance on the head of a pin - and about as productive. Pointing out the thought processes produces an insightful article which you've done ..

2) A bit light on the Unicorns in the pie chart IMHO ...

Phil B

ScotB said...

Great posts like this are why I come to this site.

BA - Economics
BS - Engineering

Dan H said...

The core issues that the libs miss, is that if I work, and produce a new "widget", there is now one more widget in the world. As a result of my work, the economy has in fact expanded - there is more "stuff". If we add a government employee to the economy whose job is to take something from one person, and give it to another, his (or her) job does not expand the economy. No wealth is produced, it is only transferred. Therefore, we can say that their job has no "value". This is what the libs miss: redistributing money around, does not add value, and does not produce wealth.

bobby said...

" This is what the libs miss: redistributing money around, does not add value, and does not produce wealth."
- - - -

Well, of course it does, if you use the proper equations.

LET (satisfaction gain) = "S"

LET (S) by receiving redistributed money) = +1 /dollar gained

Let (S) by donating redistributed money) = -1 /dollar lost

Let (value to society of opinion) = "O{v}".

LET O{v} of pro-redistributionist = 1

Let O{v} of anti-redistributionist = 0

Social utility of each dollar of redistribution = SUM of all (S*O{v}).

(1 * 1) + (-1 * 0) = 1

Thus, each dollar stolen and handed on has 100% social utility!

Anonymous said...

What I love about the lefties is that they think they "deserve" something for who they are instead of what they do. This is basically a child's attitude, I deserve something from my parents because I'm their child.

I take a bit of objection to the national debt thing, because half of it is just accounting magic: 3T is owed to the Fed, and somewhere around 5T is the Social Security Trust Fund. So that's both an asset and a liability, cancels each other out. So it's actually not that much. If a wife borrows from the husband, the whole households net debt doesn't change.

ryan said...

What tweell said. If one thinks being the mafia don of the world with a global protection racket is unsustainable, well... I hope not cause otherwise we're screwed.