Fatal Conceit

Friedrich Hayek’s last major work was The Fatal Conceit: Errors of Socialism (1988).  It built onto the analysis of his essay The Intellectuals and Socialism (1949).  Ideas begin with brilliant theorists and original thinkers but they are spread by intellectuals, whom he called “second hand dealers in ideas”.  Intellectuals then decide which views and opinions are important enough to reach us.  This is how a society can become so obsessed with fatally bad ideas.  Intellectuals are the gatekeepers of ideas and they often open the floodgates for bad ideas (like collectivism) that cause death, misery and economic devastation.

 

Pro-market minds (advocates of spontaneous human order created by competitive markets) tend to become businessmen, engineers, doctors and lawyers. Anti-market minds (those who demand a deliberate arrangement of human interaction by central authority based on collective command over resources) tend to become intellectuals and scholars.  The anti-market mind, for Hayek, is highly intelligent but wrong.  Why?  Intelligent people tend to overvalue intelligence.  They think everything worth knowing can be uncovered with intellectual examination and find it hard to believe that there is any useful knowledge that is not deliberately unveiled. Intellectuals neglect the traditional, natural cultural evolution that produced the current order, including the highly moral institutions of private property, freedom and justice.

 

To understand our civilization, it’s important to recognize that the current political economy arose unintentionally as individuals conformed to specific moral practices, many of which intellectuals tend to dislike, whose significance they fail to understand, whose validity they cannot prove, but which are spread by means of an evolutionary selection. The relative wealth of a small minority of the population derives from groups of people who happen to follow these moral practices.  Hayek writes “The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be ‘fruitful, and multiply, and replenish the earth, and subdue it’ (Genesis 1:28). Our War Chest was naturally born and is protected from incorrect, anti-market intellectuals by correct, pro-market moral order.

Intellectual Bunker

While reviewing literature patrolling the outer perimeter of our War Chest bunker, I came across some enemy thoughts exploding faintly in the distant horizon of the idea wars. University of Connecticut Law Professor James Kwak’s book: Economism – Bad Economics and the Rise of Inequality (2017).  He starts with the proposition that ideas matter… a lot, not because they are incontrovertibly right, but rather because they have the power to shape how people see the world and are used as weapons in how resources are allocated… and defended.  His thesis is that “economism” is an ideology used by the wealthy and powerful to exploit everyone else by overemphasizing simplified economic concepts in how the world is viewed.

 

I liked (but disagree with) his book because Kwak recognizes the lasting intellectual fire power of Ludwig Von Mises (1881-1973) and Friedrich Hayak (1899-1992). He believes the wealthy started with those ideas and then relentlessly and ruthlessly pushed targeted notions onto the public and politicians via conservative think tanks.  He then advocates wealth re-distribution justified with the tired old marginal utility concept (extra wealth is more valuable/useful to the poor than it is to the rich).  Government, it is argued, has the responsibility to make the world a better place.  Remember Aristotle’s flutes?  How should flutes be allocated? …to the wealthiest? No, flutes should be distributed to the best flute players.  But Hayek already ripped to pieces the idea of a collectivist, Government planned economy.  And that’s the only real alternative to capitalism – no matter how loudly the G20 Summit anti-capitalism protesters scream.

 

In fact, Kwak is the pot calling the kettle black when he argues that conservative ideology and the “anti-tax chorus” is hegemony. The methods of Socialism are completely based on deceiving the public with propaganda.  In case you forgot, communism/socialism will not and cannot work because it’s:

1. Idealistic and utopian
2. Treacherous – selling an intellectual bill of goods
3. Effected by the Social Engineer, the worst type of person to run things
4. Contrary to the Rule of Law
5. Destruction of freedom and prosperity
6. Forces people to rely on the favor of the mighty
7. Distorts the definition of liberty (replaces true freedom with the freedom of the barracks)
8. Bad guys always end up on top
9. Destroys truth by relying on propaganda
10. Does not work – millions have suffered and died trying – enough is enough

 

Fortunately, we are safe behind our reinforced bunker of assets and awareness. Throw another intellectual sandbag in front of your Estate Planning War Chest.

Bombs Bursting in Air

I love fireworks on the 4^th of July.  It’s of course symbolic of our Nation’s violent founding in the Revolutionary War.  We celebrate Independence Day and understand that violence was necessary to secure our rights to life, liberty and property.  But some writers think violence is still necessary (violence against property owners) because of existing oppressive power structures and wealth inequality.

 

The marketplace of ideas is a battlefield. French economist Thomas Piketty’s book Capital in the 21^st Century (2013) was hailed as a hugely significant work by wealth redistributionists.  The title is a wink to Karl Marx’s book Das Kapital (1867) advocating communism.  Piketty proposes global “confiscatory tax rates” (his words) in his attempt to legitimize violence against the wealthy.  The book received accolades from the Left because they have been so desperate for new material since the ideas of Karl Marx were blown to bits.

 

Piketty’s ideas were subject to vehement criticism some of which are summarized in the book Anti-Piketty (2017).   It’s a collection of 24 ballistic missile essays from various authors launched into Piketty’s supposed economics book (it’s clearly political – a treatise on morality or normative economics – ‘I thus declare that this is how things should be!’).  The Anti-Piketty essays are so piercing that they’re humorous with titles like “Piketty Gets It Wrong”, “Piketty’s Numbers Don’t Add Up” – so much to criticize because of the gigantic leaps of logic and gaps in data according to the critics.

 

Collectivist ideas have long been debunked and are now being dressed up in disguise. Even Karl Marx remarked that “history always repeats itself:  the first time as tragedy, the second time as farce.”  We strolled through the completely devastated intellectual and moral landscape of Collectivism here starting on 11/30/16 as we examined the chapters of F. A. Hayek’s Road to Serfdom (1944).  Piketty’s work is subject to the exact same criticism (beware the social engineer from my 12/20/16 post).  Loosely quoting from Chapter 5 “The Sociology of Piketty’s Anti-Rich Stance” in the book Anti-Piketty (pg. 46):

Intellectuals who are affluent but not super rich are eager to set the threshold for confiscatory tax rates just beyond their own income levels. But this sort of class war is only part of the equation…. it’s more about power.  A full endorsement of classic leftist radicalism would set a torch to Piketty’s own tower of privilege.  The State, guided by experts, informed by data, must be empowered to decide how the Rawlsian difference principle is applied to society.  Piketty’s assurance that inequality “inevitably” leads to violence amounts to an implied threat:  “Let us distribute resources as we think best, or the masses will bring fire”. 

 

It’s the same tired old ethics of envy and resentment towards the wealthy. Ludwig von Mises (1881-1973) wrote that intellectuals “loathe capitalism because it has assigned to this other man the position that they themselves would like to have”.  Hayek believed social engineers are “second-hand dealers in ideas”.  No need to worry about political attacks on wealth, there are plenty of intellectual warriors battling to protect our interests in the war of ideas.  Enjoy the fireworks and the economic rocket’s red glare.  Your life, liberty and property are safe.  Happy 4^th of July from the War Chest!

A Lament for the Dead

An elegy, in English literature, is poem of serious reflection mourning the dead.   J. D. Vance’s Hillbilly Elegy – A Memoir of a Family and Culture in Crisis (2016) is a deeply personal account of how one man’s family dealt with and profoundly felt the tidal wave of socioeconomic changes engulfing America.  A friend told me he thought the book was depressing; but it’s beautifully moving at the same time – like well composed melancholy music.  It’s a riveting piece of literature, widely acclaimed by critics.

 

Vance opines plenty about the politics and economics of what’s going on but he understands, like his feisty and wise grandmother, that there is no single correct political position or solution to these troublesome times. There has been a very sad economic death for millions of Americans.  But things aren’t as bleak as that may sound.  We, the fortunate non-hillbillies and those like Vance who climb out of the grave as dirt is being shoveled down, thrive economically and culturally.  It’s just that there are fewer and fewer of us and there are more and more resentful people who don’t like us.  It’s a war; wars aren’t nice; there are casualties in war; don’t let your family be one of the casualties.

 

Our tribe will continue to do the things that we do and have done to keep our wealth demographic (the top 20% or so) in a continuously fortified position. There is a quiet rising of the American upper-middle class.  We will be criticized, vilified and attacked by politicians and writers like Richard V. Reeves in his book Dream Hoarders: How The American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That’s A Problem, and What to Do About It (2017).  The burning question is what can and will policy makers do about “the problem” (us)?  The answer, from my intellectual and economic battle bunker, is very little.  We are armed with a War Chest of defensive weapons and awareness that can be deployed to defend our families from attack.

 

We are not evil hoarders. On the contrary, we are virtuous, hard-working, honest and perhaps lucky humans who carefully avoid the learned helplessness that Vance writes of for the learned willfulness and personal discipline he developed as a U.S. Marine.  The virtue of will comes from harnessing attention, which can be wandering and unfixed (as it is in the poor and not voluntarily so).  In the words of Williams James (1842-1910):  “Whether attention comes by grace of genius or by dint of will, the longer one does attend to a topic the more mastery of it one has. And the faculty of voluntarily bringing back a wandering attention over and over again, is the very root of judgment, character and will.”  See y’all next Tuesday.

Prepare for Battle

The Broken Ladder (2017) by Keith Payne is a great book not because it offers new ideas, rather because it methodically takes a scientific walk through what is already known about wealth, power, poverty, life and death. Inequality creates despair and stress leading to social problems (crime, lower life expectancy, disease and hopelessness).  The concern for us is…..what are they gonna do about it?

 

The reason why the poor (and these are people who perceive themselves as poor, not just the actual poor) have such lower quality and quantity of life is a short-sighted decision making capacity – they can’t control their spotlight (4/5/16 post); they have a shorter time span of discretion (3/26/16 post); they live in an environment of scarcity (11/17/15 post) and die sooner (3 posts on wealth and death starting 4/19/16).  It’s not their fault.  Many, including Professor Payne, believe that wealth inequality is an urgent public health crisis.

 

Politicians are fomenting dangerous societal rage and resentment. Anger is an emotion to be controlled with reason and discipline but politicians are doing the opposite, fanning flames of discontent.  There cannot even be an honest public debate.  The attitude is “I disagree with you, so you are evil”.   Payne notes that people who are financially successful tend to regard those who disagree with them as idiots and morons rather than simply people with a different opinion.  The bias is obvious, not only because of natural psychological illusory superiority, as discussed in his book, but also because the debate is moral not intellectual.

 

Is it moral to forcibly confiscate someone’s private property in order to redistribute it to others for the “betterment” of society? No!  But mainstream thinkers and writers are engaging in a battle to win this moral dispute in favor of extensive wealth redistribution.  And it’s not the super wealthy in the cross hairs – it’s you (my Mass Affluent clientele).

 

This Sunday’s Chicago Tribune had a second page article “Who’s to blame for American inequality? It might be you”.  It discusses the book Dream Hoarders (2017) vilifying the moderately wealthy.  You evil dream hoarder! (Well, at least hoarders are only in Dante’s fourth circle of hell; there are a few lower circles).  The New York Times ran an Op-ed piece “Stop Pretending You’re Not Rich”, criticizing people who give their children social and economic advantages and why that’s bad.

 

A National Review article after the congressional shooting “The Left Embraces Political Violence” is telling.  It quotes philosopher Slavoj Žižek who believes the ancient moral position that violence is never legitimate but sometimes necessary should be flipped because so many people feel oppressed.  From an “emancipatory perspective”, he says it is the reverse; violence is always legitimate but never necessary (it’s a matter of strategy on whether or not to use it).  There are thinkers who believe that it is moral to violently and coercively attack your family’s wealth.  Nietzsche’s slave morality is dangerous to the successful.  Secure your legal armor; raise your War Chest sword and shield; prepare for battle.

Angry Primates

If you’re interested in the changing political economy, you should be aware of two recent books. The Broken Ladder – How Inequality Affects the Way We Think, Live and Die (2017) by Keith Payne and Hillbilly Elegy – A Memoir of a Family and Culture in Crisis (2016) by J. D. Vance.  The authors of both books grew group up poor and then became very successful.  One is a professor of psychology at the University of North Carolina and the other a former Marine war veteran and graduate of Yale Law School.  Their credibility on the controversial topic of wealth and poverty is remarkable, standing out among countless other books and articles on the subject, over which there is a staggering array of radically differing opinions and perspectives.

 

One of the readers of this Blog mailed me a copy of Hillbilly Elegy because she enjoyed it and knew I would as well. My daughter’s entire college freshman class (all majors) was assigned to read Hillbilly Elegy and write an essay on it before classes begin this fall.  It is a New York Times #1 best seller and an important book about the loss of the American Dream for a large segment of the population.

 

The Broken Ladder is fascinating because it’s about the hard science psychology of economic status. Professor Payne explains that humans (and many other animals) crave social status as much as food and sex and become stressed, depressed or enraged if they see themselves at the bottom of the status ladder.  There is a deep seeded need to compare what we have with what others have, which profoundly changes how we think and live.  He cites lots of psychological experiments.  In one of my favorites, monkeys are taught to hand an experimenter a small stone in exchange for a slice of cucumber. Then they put two monkeys next to each other.  The first one hands over a stone, so he gets a cucumber.  But then the second monkey is handed a grape instead of a cucumber after he gives the experimenter a stone (a grape is a much tastier treat for a monkey).  When the first monkey again hands another stone to the experimenter and gets a cucumber slice instead of grape, he becomes enraged – throwing it back in the experimenter’s face, jumping up and down screaming while grabbing and shaking the cage bars.  Monkeys get really pissed off when they feel unfairly treated and another monkey gets something better!

 

Well, our fortunate wealth demographic has been handed a grape and the millions who are left with a cucumber slice are being damaged psychologically. The anger and sense of injustice in America is becoming palpable.  Economic war is a dangerous matter of life and death, like real war.  Let’s spend the next few War Chest weeks exploring the ideas in those two noteworthy books.

The Contentious Poor Are Losing The War

Our War Chest trek through Patrick J. Deneen’s Conserving America? Essays on Present Discontents (2016) ends with Chapter 12 – After Liberalism, where he brings it all together in an unpleasant conclusion that humanity has sorted itself into a handful of happy economic winners and a massive crowd of unhappy losers.

 

Frances Fukuyama announced in 1991 after the fall of the Berlin Wall this it was the “end of history”. Capitalism and democracy defeated all of the alternative ideologies because:  1) It’s clearly the best way to advance science, technology and economic growth; and 2) Morally, it affords citizens equal dignity, no matter parentage, place of birth, wealth, occupation, race, gender, etc.  But Deneen points out that those two goals are contradictory and grow increasingly antithetical to each other.

 

Classic liberalism sought to liberate individuals from arbitrary and unchosen relationships, promoting free choice to shape one’s own life. This freedom to make yourself is the reason for government, according to James Madison, chief architect of the U.S. Constitution.  He wrote that “the first objective of government is the protection of the diversity in the faculties of men from which the rights of property originate”.

 

John Locke wrote that with the invention of money, people can begin to accumulate beyond mere subsistence and it becomes increasingly evident that there are only two kinds of people – the “industrious and rational”, on the one hand, and the “querulous and contentious” on the other.  And guess what?  The lucky, hard-working and smart winners are vastly outnumbered by the unlucky, ignorant or lazy losers.  Political efforts to improve their situation make it worse because the successful have the power to disengage from public discourse.  Robert Reich called it The Secession of the Successful (NY Times 1991).  The mass poor are casualties of war; permanent discontents.  To the extent public policy seeks to forcibly redistribute wealth to them, they (or their political representatives) are enemy combatants.

 

Deneen writes that Tyler Cowen’s book Average if Over (2013) should be required reading for anyone interested in where America is headed.  I noted that book here in my 3/22/16 post.  We are becoming two very different Nations – the top 10-15% high agency, smart wealth owners.….and everyone else.  Wealthy humans are pulling away.  You cannot be average anymore.  We will soon reach the “end of liberalism”, having sorted the industrious and rational from the querulous and contentious with near perfect precision.

 

Deneen paints a stark portrait of the human equivalent of strip mining, identifying intelligent and industrious young people, and through standardized testing, extracting them for processing at Universities and then excreting them to hubs of economic activity, leaving behind a landscape stripped bare of talented, hardworking people. He ends on some hopeful notes.  I am not as optimistic; my cynicism drives me to advise anyone who will listen – it is absolutely vital to create and stock a personal War Chest with assets and awareness so that you can avoid the carnage from this ongoing global economic war.