Tuesday, December 24

What comes around goes around: Collectivism: deeply embedded in American economic development backed by government

Those who read the 'Tofu and Police State' post know I went to some effort to clearly distinguish my use of the term "economic collectivism" from the general understanding of collectivism and its best known historical usage. If the effort seems like overkill I'll ask you to read Collectivism: Deeply Embedded In "Economic Development" by Cheryl Pass at Freedom Outpost, published in September 2012.

It's very easy to mistake the kind of economic collectivism I'm talking about for the topic of the essay, even though the topic is important and also significant to my own discussion. Here's an excerpt from essay. See the website for the photograph of the dilapidated Firestone /Loray Mill:
[...] Our taxes are committed to saving the Firestone / Loray Mill, whether we wanted to or not. If this were just one instance, it might be viewed as an anomaly, but it isn't. Every town in America now has an "Economic Development" office that is a quasi-government agency combined with private sector interests. Our city and county have committed our taxes to many of these "Economic Development" schemes. We have bought land and given it away. We have spent money on site preparation. We have forgiven taxes. We have given utility credits. We have guaranteed loans.

In short, we in the private sector are forced to prop up certain chosen business ventures collectively. Just like Solyndra at the Federal level, this situation is occurring every day all over the country.

We are on the hook. All of us. While we get poorer, the chosen few run away laughing all the way to the bank. Our bank. Taking our money. And politicians just keep doing this, over and over again at all levels of government. I can label this as Fascism or Communism. Either way, it isn't the American way of life as I know it is supposed to be. It is tragic, frankly.

So how collectivist are we today? Deeply embedded. Somehow government has given itself permission to steal from all, to favor the few. Who are these people? They have convinced themselves collectivism is O.K., as long as it is for "Economic Development."
I hope you'll read the entire essay; I found it very moving because she's just trying to explain what happened to her, to her town. I came across the essay while I was mining the internet in search of the general understanding of the term "collectivism."

But I'll tell you my first reaction to Cheryl's story. It was the same reaction I had to the news that ordinary working Cypriots, suddenly and with no warning, found their savings deposits had been frozen by their government at the direction of the Troika, which includes the International Monetary Fund.

I blurted, "How does it feel?"

You see, what was done to Cheryl Pass and the other sensible people in her town, what was done to the Cypriots, is simply the kind of one size fits all prescription that has long been inflicted by the World Bank and the International Monetary Fund on the world's downtrodden in the name of economic development. So what Cheryl talked about is also what's known as the chickens come home to roost.

Americans and West Europeans helped fund the World Bank and IMF for generations, yet what happened to the funding, how it was it used, didn't affect the funders because the economic prescriptions weren't applied to their own countries. They were applied to 'underdeveloped' countries. Then, a historic recession happened, one that converged with a vastly changed world. So now Americans and West Europeans must be treated as if they're underdeveloped peoples in order to save their economies.

Yes of course it was always done with the best of intentions, but you know what they say about the road to Hell. So when Cheryl observes that the situation she described isn't the American Way as she knows it, she's inadvertently speaking the literal truth. Actually it is the American Way, it's been the American Way for more than a half century; it's just that until recently few Americans were aware of exactly what that way entails -- not until it was imposed on them.

However, I too am an American, born and raised, so in March I didn't engage in schadenfreude after I listened to Zen Master Larry Summers convey the bottom line for Americans in the wake of the Troika's Cypriot Solution.

But walking back from where we are now will require Americans understanding the kind of thinking that's supported the reign of economists since the Great Depression and the Mandarins of the Future, as author Nils Gilman termed the U.S. government's economic initiative to save Third World peoples from the Soviet threat by modernizing them.

To return to Cheryl Pass, in one respect I think she's wrong. As I've pointed out in the 'Economic Collective' posts, the thinking that supports the economic developers isn't communist or fascist even though it can inform both types of government. It can inform any type of political or economic stance because it's rooted in over-application of statistical reasoning.

And so in my view the great irony is that the self-termed capitalists who've backed indiscriminate applications of modernization theory have done more to give capitalism a bad name than all the communists combined. Before these people are capitalist they are economic collectivists. Yet because they can't think outside the paradigm they don't get it, even when you shout in the effort to explain that the economy doesn't actually exist, any more than the statistical person exists, except as a concept.

Because they can't be shaken from their spell, they can't see the difference between a cause and an effect. To explain the import of this mental blindness:

1. Economics is called a science, a social science. Science asks, 'How did X phenomenon occur?'

2. Once scientific observations about the economic behavior of groups is applied; i.e., used with the intention to create a desired economic effect, this risks confusing observed effects with a path for achieving desired effects.

3. Once the risk is institutionalized at the level of government and backed by the guns of the state, then is when you can see horrors. Real horrors. Not conceptual ones.

As to whether there's any way to stop the madness -- I would guess that there has to be a revolution in economics, which became reliant, obsessively so, on mathematics during the post World War Two era. The Austrian School doesn't rely so much on math, but the mainstream economists do, unless you want to argue they've all been co-opted by the Keynesians, who do rely on math.

Beyond that, governments need to be pried from their obsession with acting Scientifical -- before they Scientificalize humanity back to the Dark Ages.


1 comment:

bdoran said...

And the World is not enough..the USG wants information on other countries citizens financial matters.

All to be kept confidential of course...