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The Curse of the Ground – The Zeroth law of Economics

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Reagan exited office right about at the same time my generation came to this earth. And it would not be an exaggeration to say that we are all Reagan’s children. The idea of student politics, ideology, protests, communism, feminism, liberalism and so many other isms is so alien to our generation. Bill Gates is our God. Technology is our religion. Silicon Valley is our holy land. We dream of freedom and wealth, not equality and power. Except a for a few crazy souls like me, no one even cares about politics and economics. In short we are Happy. And that’s because we are Reagan’s children.
If you had not watched the video yet and wonder what I am talking about, please watch it first. After watching, think for a minute about what Reagan is trying to convey via the first anecdote.
Reagan rightly points out that Socialism has no respect for man’s soul. But the anecdote also points out another more fundamental flaw of Socialism – the fact that it arrogantly refuses to recognize the existence of “scarcity”. Now if we all lived in a garden of eden, the socialists might be right in asking why can’t everyone just have everything they might need. Actually that question would be meaningless for when food and clothing and shelter and all other material comforts are as abundant as air, why would anyone even feel the need for them? Do you feel the need to breathe? *. But alas we don’t live in a garden of Eden. Nature is not a sweet mother whose gifts we naughty children are refusing to share. The earth does not yield grains or throw out minerals on its own.  Nature is stingy. The book of genesis in Bible captures this in a profoundly meaningful verse

And unto Adam he said,Because thou hast hearkened unto the voice of thy wife,and hast eaten of the tree, of which I commanded thee, saying, Thou shalt not eat of it :cursed is the ground for thy sake ; in sorrow shalt thou eat of it all the days of thy life ; thorns also and thistles shall it bring forth to thee ; and thou shalt eat the herb of the field :in the sweat of thy face shalt thou eat bread,till thou return unto the ground ; (Genesis 3:17-3:19)

God cursed the earth for Adam’s original sin. Ever since, man has had to toil on earth in order to survive. The garden of Eden was lost to him forever. If we are going to live, then we are going to have to earn the means to live. The idea that any one has a right to food, clothing or shelter just because he was born, makes no more sense than the right to own a yacht that Reagan is talking about. Yachts are scarce? Well my friend, so is food. If that were not true, Robinson Crusoe’s life would not have made for such a gripping read. Why the hell did he have to try so hard, if food grows on trees as the Socialists believe.
Now you are exaggerating. No one is so stupid as to not understand this simple fact, I hear you say. But believe me, refusal to consider this simple fact is behind most of our problems. Why do we have this never ending stream of rights – “Right to Food“, “Right to Education“, “Right to Health”, “Right to Internet” (Yeah you heard it right) ? Do we ever ask “But How?”, when our politicians promise us these? Do we ever ask who pays for it? Or do people believe that there is something called a Free lunch?
If you say that Socialists are not so stupid to fail to recognise scarcity, that leaves us with only one other explanation. They are evil. They want to live off others. They shamelessly lay claim to things that they played no part in creating.  But as Margaret Thatcher pointed out, there is a problem with this – “You eventually run out of other people’s money”. And that brings us to the second anecdote and why we all have a duty to stop the socialists. Like the chicken in that story, there are few people in this society who generate enormous wealth that benefits all of us. ( If it were not for Bill Gates, Computers would have remained locked up in laboratories with no one except some bearded unix gurus understanding them. Were it not for WalMart, shopping would not have become a hobby ). And when some stupid Robin Hood decides to rob these people and “help” the poor, he is essentially hampering the creation of wealth, without being of any use to the society himself. Who knows how many ideas were killed before birth due to India government’s sadistic controls prior to the 90s? Would the great technological revolution of the 80s and 90s have happened even earlier had the Reagan-Thatcher era arrived earlier?
Some economists pretend that taxes have no effect upon productivity. If the guy wants to earn more, let him work more. What is the harm in taxing him higher, he still ends up with more money than he had originally. So he will still work, they say. But men have even more complex needs than that simple chicken. To understand the logic behind why “Atlas” will shrug one day, we need to explore the concept called Opportunity cost. But let us keep that for another day. I leave you now with this thought from Mark Twain

Don’t go about saying that the world owes you a living. The world owes you nothing. It was here first.

Noted in Passing:
* You do feel the need to breathe, when air is in short supply, like under water or high altitudes. Then laws of economics will begin to apply to air too. Researchers living in such extreme conditions are forced to treat air as an economic good and manage their oxygen cylinders economically.

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Written by Surya

September 16, 2010 at 6:47 pm

Sometimes a great nation

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It is not midnight in America yet. So I guess I can very well make this 4th of July post. What better day to start a blog on free markets than the day America was born.
Someone said this – “There is a word sweeter than mother, home or heaven. That word is liberty.”

I know another word – America. A word that has given hope and inspiration to millions of frustrated souls around the world. Whenever the rulers of their land became predators, whenever their life and property were no longer theirs, people always had one escape – a flight to the land of opportunities. America was the exceptional nation, a nation devoted to a great cause, an island of hope and joy amidst the hell that the world was becoming. It was indeed a paradise on earth. It was.
This post will not be a commentary on the present state of America. It will just be an attempt to remind myself and the world around what the idea of America means to us. Some people seem to relish America’s fall from grace. I have a lot of issues with the way America functions today. But to discredit the idea of America itself? The day the American dream is finally forgotten, will be the day when we would have hit the final nail in the coffin of civilisation and prosperity. It will be the day when finally barbarians would have run amok on our cities.
On this day in 1776 was born the American dream. This was the day the declaration of Independence was ratified by the Congress. No other document before or after has so beautifully captured the essence of human struggle for liberty.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness.”

It is hard to believe that this was written two hundred and fifty years ago. Freedom is still a radical idea to many. To constitute a nation with freedom as the underlying fabric required great courage, imagination but more importantly enormous restraint on the part of the founding fathers. These were a group of men who had just won a war and had the immense trust of their people. But they had the farsight not to take this trust for granted. They did not misuse this trust to create a government that would have given them personal profit. Nor did they impose their vision of utopia on the people like the other bloodier revolutions did. They were wise enough to understand the best government is the least government. And they codified this into a written document to protect generations to come. Note the crispness of the words and the succinctness of the message. The document declares that men are created equal, thus shunning all the elitist and aristocratic impulses that characterised Europe’s rulers then. But the founding fathers were also careful on what the word equal meant – Equal before law, not the monstrous idea of compulsive equality that other latter day revolutions imposed on their people. The words are very clear – every man has an unalienable right to his life, liberty and pursuit of happiness. The keyword is pursuit. Each person has to pursue his own happiness. No one else has the right to hinder your pursuit as long as you don’t hinder someone else’s. All of America’s prosperity was due to this single line. People are free to profit from their dreams. Call it whatever you want – free market, capitalism, laissez faire. The idea is simple, what I do is none of your business as long as it doesn’t touch your nose. If America is to stay the land it’s founding fathers meant it to be, then it can only be a capitalist nation . And what role does government play here then?Again it is very clear, governments are instituted among men only to secure these rights. In other words government’s only business is to protect the people’s right to their life and property. They have made it very clear that conducting business is not government’s business. And the framers also make it very clear that a government is just only as long as it has the consent of the governed. This leaves no room to doubt that the framers did not intend for America to become an imperial power.
The declaration is an exceptional document that attempted to create an exceptional nation. And it did indeed serve the nation well for several years. A century later, America had become one of the most proserous nations on earth. And it derived it’s prosperity from the sense of liberty, innovation, competitiveness that characterised it’s people. The American entrepreneur was a special breed of mankind. He was the ultimate ideal of manhood. He was the one who took challenges head on. One whose spirit of resilience was matched only by his thirst for freedom. For the first time in human history, men from ordinary station grew to extra-ordinary prosperity within a life time. All this was achieved peacefully, without the violent wars that characterised Europe. At the dawn of the twentieth century it would have seemed to the average American that he was in God’s own land. No they did not have air cooled apartments we have today. They did not have fancy cars to drive around. They did not have TV, they did not have internet. But they had one thing I am not sure Americans have today- Freedom. Freedom to lead their lives as they pleased. People did not emigrate to America then to get free food, free lunch or free health care. They went there because they knew that America was the only nation on earth where any person with a great idea in mind, a few saved pennies in pocket and a burning ambition in the stomach could make it big in life. And many did. There were innumerous rags to riches stories. And prosperity was not confined to the best among men. America’s was a unique system where a person could get prosperous only be making others prosperous. Ford became rich by bringing automobiles within the reach of common man. Transport was no longer a luxury. Edison was not a lonely scientist working on a stupid mathematical problem. He was a prolific inventor who profitted by giving his countrymen a new product every day. The Statue of Liberty stood proud and tall knowing that she was indeed the beacon of hope and aspiration for millions. At that point of time, any person who had said that the twentieth century would be a century of wars, mass murders, endless expansion of government and growth of horrific ideas like Communism and Fascism would have been dismissed as a crackpot.

A decade later, the first world war would break out. America would drag itself into the conflict. Lenin would begin the mad experiment in Russia. A few years later Hitler would rise to power in Germany.  Thirty years later  New Deal would have been put in place in America that would send a tailor to jail for daring to price less than his competitors in the free land. But that is another story.

Written by Surya

July 5, 2010 at 7:57 am

Posted in America, Liberty