We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day

For [Adam] Smith, the dangers that natural liberty faces are not a result of the system of free markets itself, but of mankind’s flawed human nature, particularly the desire of those he called “merchants and manufacturers” (among others) to “rig the system.”

The natural desire to “better our condition” motivates us to strive for a better life. This is the motivation that underlies the success of natural liberty. Yet this same natural desire also leads to cronyism and corruption when businesses and others use the power of government to procure for themselves “systems either of preference or of restraint.”

In so doing, Smith said, they impose an “absurd tax on the rest of their fellow citizens,” retard growth, and increase inequality.

As a result, free markets are neither self-establishing, nor self-sustaining. If we are to continue to reap the very real benefits of natural liberty, we must be prepared to defend against cronyism.

Lauren Brubaker

16 comments to Samizdata quote of the day

  • Paul Marks

    Actually “Cronyism” or “Corporate Welfare” is a comparatively mild problem – apart from in BANKING where it is indeed horribly serious, the endless desire to lend out “money” that DOES NOT EXIST (“this is not fraud, because it is legal” – so if Parliament legalised rape that would make rape O.K.?), and the need for Government Central Bank support when the Grand Scam inevitably goes from boom to bust.

    A more serious problem is MISGUIDED COMPASSION – even the insane monetary policy is partly misguided compassion (it is not all cronyism and corporate welfare), the desire for “low interest rates” (lower than Real Savers would demand for NOT consuming) so that “people can borrow” for the “needs of trade” and the rest of it – and I am sure (and I am NOT being sarcastic) that most such talk is quite sincere.

    And then there is, above all, the Welfare State – the attempt to replace the basic functions of Civil Society (education, healthcare, old age provision…….) with THE STATE. Some Germanic thinkers were experimenting with such ideas in the time of Adam Smith, but there is no reason why he should have predicted the current crises.

    The grand design to replace Civil Society with the state is not motivated by “greed” or “cronyism” – it is motivated by COMPASSION, but horribly misguided compassion. It is this that is the main threat to civilisation.

  • bobby b

    The writer makes a far better case for guarding against government misuse and overreach and corruption than for guarding against free markets.

  • Nicholas (Unlicenced Joker) Gray

    Paul, point out to the compassionistas that The Salvation Army is doing a great job in serving the poor, without any government funding. If they really want to help people, then this is one way to do it.

  • Although I’ve read every word in “The Wealth of Nations”, I owe to Thomas Sowell the realisation that you could go to Hyde Park corner, stand on a soap box, and, using only judiciously-chosen quotes from Smith, be mistaken for a left-wing orator. Smith repeatedly explains, sometimes using harsh terms for clarity, that capitalism does not require the capitalists to be unusually free from ordinary self-seeking. By contrast, socialism requires extraordinary virtue in its ruling class, and even heavy-handed government regulation requires more virtue in the regulators than is commonly found.

  • Runcie Balspune

    the endless desire to lend out “money” that DOES NOT EXIST

    A bank lending out its own (commodity) money more than once is not really a problem in itself and is not fraud up to the point its financial obligations cease to be met, we should assume any default is unintentional, that is the risk you take dealing with a bank, if you accept a bank note as payment then there is the risk it would be worthless overnight and either party can choose to accept this or not, the “crony” part comes when the government underwrites the amount and removes the risk for the client and the bank, so the bank is no longer lending out its own money, inevitably leading it more often.

    I think most libertarians campaign against fiat currency and perhaps this is one of the problems it would solve.

  • Thailover

    Paul, you are quite right. When the feds set a fake price for money then there’s no such thing as a fair market based on said currency. But this is only part of what is the main threat to our civilization. The zero-sum fallacy not only pervades our economic system but also our group dynamics. There are people who think that the only way to make one race stronger is to disempower another. That the only way to empower women is to disempower men. The only way to empower girls is to destroy the Boy Scouts. This is of course a fallacy.

    The truth is that The Virtuous wealthy make everyone else wealthier. And to use woo woo speak, divine feminine and divine masculine must rise in power together. Because one person isn’t strong because the other person has been made weak.

  • Julie near Chicago

    Nicholas! You do realize that the Salvation Army is a Christian organization, right? *extemely severe expression”

    Didn’t you ever see Guys and Dolls?

    Brando, Jean Simmons, Sinatra … a great romp in the “underbelly” of NYC. 2:39; pay to watch, or look at clips in the sidebar.

  • Julie near Chicago

    Thai, I hate to rain on the parade, but …

    1. “The Virtuous Wealthy” smuggles in the idea that it is possible for a wealthy person to be Virtuous. This, as we all know very well, is a contradiction in terms. And anyway, no amount of Good Works and Clean Living can make up for the simple and obvious fact that a person evil enuf to be Wealthy is already beyond redemption. Some sins cannot be made up for. *virtuous expression*

    2. “Woo-woo speak ….” Excellent. Makes me want to make love with a train. (A good old-fashioned Streamliner, ca. the 50s. Or the slightly older version, with the smokestack and the cowcatcher. Glamor indeed!)

  • Thailover

    Julie,

    “Didn’t you ever see Guys and Dolls?”

    I try not to, lol. I “caught” my (very man’s man) brother-in-law the other day watching the movie Grease. I said, “I didn’t know you where gay”. LOL. He then started explaining himself, sheepishly, like someone explaining he buys Playboy “for the articles”. 😆

    “The Virtuous Wealthy”. Your comments made me smile.
    Reasoning is for the reasonable, but unfortunately the “Far Left” or extremem Left, (Like the extreme Right) don’t reason. And as Peter Schwartz points out in his excellent book In Defense of Selfishness, the far Left redefine need as, “you have it, they want it”, i.e it’s something to make them feel envy and jealousy. So we, the reasonable and just, can explain the virtuous creation of personal wealth till the cows come home, it won’t impress those who hate the wealthy for no other reason than the wealthy getting wealthier, in and of itself, increases the non-wealthy’s “need”.

    “Some sins cannot be made up for.”

    Socialist/Communist Bernie Sanders is trying his virtue signally best. It’s odd that this public servant is a multi-millionare with three mansions though, and here I am without even one mansion. ‘Doesn’t seem fair, does it? 😥

    “Makes me want to make love with a train.”

    (Insert inappropriate size-queen joke here)

    😆

  • NickM

    “Makes me want to make love with a train.”

    Try British railways if you don’t want it to come to quickly 😉

  • Paul Marks

    Runcie Balspone – when an honest money lender lends money that is exactly what he (or she) does, they PHYSICALLY lend out some money (they do not “create money” by inventing numbers and writing them in a ledger – paper or electronic). And the moneylender does not have the money after it is lent out – till when and IF it is repaid.

    I have nothing against a “Shylock” – but bankers are quite different. A banker (even in the days when gold was supposed to be money) “expands the money supply” by writing numbers and pretending they are money. And when the crash inevitably comes – the bankers demand a “suspension of cash payments” and the government courts oblige. In the days BEFORE the Welfare States Credit Bubble banking (boom-bust ism) was the great threat – even today it is second most severe threat.

    Lending must be from REAL SAVINGS (the actual sacrifice of consumption) – not from the “legal fictions” of banker documents. Say (for example) silver is money – when one borrows money one should walk away with silver (or the title to physical silver), and the person or business that lends the silver can not lend out the silver and keep the silver – at the same time.

    If three men are ship wreaked on an island with one hat and do not produce any more physical hats – when the rescue ship comes there is still only ONE HAT. The three men saying “but we are bankers, and our account books show we now have thousands of hats – because we have been lending this hat to each other” does not alter this. Indeed if they insisted on saying this – I would be tempted to NOT rescue them (just leave them on the island).

  • Paul Marks (May 12, 2018 at 7:35 pm), I have more tolerance for the abstract idea of fractional banking – as one might tolerate the abstract idea of a state and laws while thinking an existing state and lawbook needs drastic slimming.

    One might compare airlines’ overbooking because they know a statistical number of passengers will not show up to fly. For a certain percentage and a certain willingness to reward the passenger who loses out (i.e. to fine the airline when it gets it wrong), it could be the most economically efficient arrangement.

    Bankers who lend more money than they have, calculating that not all depositors will withdraw at once, are capable of being economically efficient – such behaviour coincides with the UK’s industrial revolution. As always, they need skin in the game – not extra-contractual government protection whenever risky calculations go wrong. Bankruptcy is how capitalism purges mistakes. Bankers must be able to go bankrupt.

  • Julie near Chicago

    Thai, you made me smile too. 😀

    I had to bite my tongue and all 11 of my fingers to keep from making an apposite riposte to your “queen-size joke,” but I figure Samizdata is already blue enough (in two shades!) without my adding more blue comments to it. Believe me, if this weren’t a Family Magazine …. !!

    And the same to you, Nick. That one was definitely worthy of an *Ee-e-e-ewww!* ;>)

  • Thailover

    Paul, fractional Reserve banking works just fine when there’s no crisis. But when there is Crisis there is risk of this Ponzi scheme actually collapsing. And On a related note, the roof only leaks when it’s raining, so as long as it’s not raining…

    😛

  • Julie near Chicago

    Oh f’r’eaven’s sake. When it’s raining what you do is invite yourself for a sleepover at your neighbor’s. If there are any you can stand. 😀

  • Nicholas (Unlicenced Joker) Gray

    Julie, no, I didn’t! I thought the Salvation Army was a paramilitary organisation! Which is why I always gave them money- I thought they’d shoot me unless I did! I’m going to demand a refund!

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