Tuesday, March 29, 2011


As usual, Wretchard has an excellent and interesting post; this time on the difference between 'thing-makers' and 'dream-merchants':
Bing’s approach highlights the war that Frum alluded to but never quite described: the eternal battle between the thing-makers and the dream-merchants. The contrary arguement to the belief that the UAW built Detroit’s prosperity was that Henry Ford built it — built it by faith in the reality of things. In that view wealth comes from the existence of things like cars, machines, buildings and such, and the intellectual and physical means to make them. In contrast, the alternative theory is that wealth arises from such things as collective bargaining agreements, laws, aspirations and rights. In a word, “if you build it, thy will come”. Mayor Bing’s plan to build developments recalls nothing so much as the South Seas cargo cults who believed all that was necessary to make the skies rain with goodies was to build a dirt airstrip and palm-leaf control tower to attract resupply flights from somewhere. “If you build it, they will come”.

Who “they” is remains unclear. But they are out there.

“Building” in this case doesn’t mean producing the actual product. “Building” means building the dream, constructing the appurtenances of the actual things, not the things. It means creating the “rights”, specifying the entitlements, winning the court cases to increase the population so all will be well.

Ayn Rand was somewhat more pejoritive in her analysis of the conflict. She saw it as a battle between "the producers" and "the looters":
Since the advent of capitalism, businessmen have been denounced for the corrupt actions of a few political profiteers. To help understand that there is a distinction, consider two characters in Ayn Rand’s 1957 novel “Atlas Shrugged.” In the book, Rand describes two opposite kinds of businessmen – those she calls the “producers” and those she calls the “looters.”

The producers, such as Hank Rearden, inventor of a new metal stronger and cheaper than steel, work tirelessly to create products that improve human life. The looters are basically pseudobusinessmen, like the incompetent steel executive Orren Boyle, who get unearned riches by getting special favors from politicians. Their business isn’t business, but political pull.

It is the producers who make life possible: who keep grocery shelves stocked; who discover new lifesaving drugs; who make computers faster, buildings taller, and airplanes safer.

The looters, on the other hand, leech off the wealth created by producers.

The novel rejects the widespread notion that both the producer Reardens and the looter Boyles are fundamentally united by a desire for profit. Only the Reardens, she argues, deserve to be called profit-seekers, because they earn rewards through productive effort; the Boyles are antieffort parasites seeking unearned loot.

But it’s not only unearned wealth the looters want. In “Atlas Shrugged,” Boyle uses his influence to throttle Rearden with progressively harsher government controls and regulations, because he can’t survive except by hindering the competition.

Producers, however, don’t need special favors, only freedom: the freedom to produce, to trade voluntarily, and, if they succeed, to keep the profits. As a country becomes less free, it creates and unleashes more and more Boyles, who succeed at the expense of the Reardens.

How do unions fit into this concept?
The artificially high wages forced on the economy by compulsory unionism imposed economic hardships on other groups—particularly on non-union workers and on unskilled labor, which was being squeezed gradually out of the market. Today’s widespread unemployment is the result of organized labor’s privileges and of allied measures, such as minimum wage laws. For years, the unions supported these measures and sundry welfare legislation, apparently in the belief that the costs would be paid by taxes imposed on the rich. The growth of inflation has shown that the major victim of government spending and of taxation is the middle class. Organized labor is part of the middle class—and the actual value of labor’s forced “social gains” is now being wiped out.--“A Preview,” The Ayn Rand Letter, I, 23, 2

Nowhere is this more true than in unions for public employees who are paid by taxpayers, and who's unions translate their numbers into political clout to get more benefits and perks. That this is a rather obvious conflict of interest and not exactly ethical behavior seems to escape the attention of Democrats these days. Is it any wonder there is a large scale rebellion among the state and local governments who are going broke dealing with escalating benefits and retirement packages?

The unions are once class of "looter", but there is another who operate in much the same way as the public unions. This class of looters are those businesses that have learned to play the government's game to profit themselves at the expense of the taxpayer.
There is nothing illegal about lobbying or giving to charity. In fact, in our current system, it is hard for a capitalist to compete without “investing” in politics. The U.S. corporate tax rate is the highest in the world at 35 percent. And if GE did not have a Washington office dedicated to lobbying for benefits from the government, over the last five years it would have had to pay somewhere around $9.1 billion in taxes on its $26 billion in American profits alone. Instead it got a $4.1 billion benefit. That is a $13.2 billion payoff on a $200 million lobbying investment. What kind of capitalist could say no to that kind of return on investment?

When once-great exemplars of capitalism like GE are profiting more by investing in lawyers and lobbyists in Washington instead of engineers and innovators, our system is clearly broken. We can start to fix these incentives by reducing the corporate tax rate. But much broader reform of our tax and regulatory system is needed.


You might not think that there is much to connect public unions with corrupt businesses whose 'capital' primarily comes from government handouts, bailouts, or favors; but there you have it: both have a looter mentality that refuses to acknowledge reality and expects entitlements and handouts to continue ad infinitum.

Both expect that unearned wealth (i.e., yours) will keep flowing into their coffers.

Perhaps they did not start out to be looters, leeching off the productive; but they learned to survive and thrive in the environment of pull and privilege that big, intrusive governments create. They learned to buy votes and favors; to get the big government contracts and the big government's protection of their 'special' status.

Most of these businesses and even the unions once produced products that were worth something of value.

For the businesses, once upon a time, they had to make a profit by convincing people like you and me to buy what they had to sell. Now they only need the sanction of the powerful people in Washington to make money; now they only have to convince congressmen and senators (and even presidents).

As for the unions, they once offered a product to workers that prevented them from being exploited and abused in the workplace. But they have now evolved into coercive organization who regularly exploit and abuse hard working taxpayers in order to optimize their extravagant entitlements; AND they have the sanction of the government to do it.

As noted in one of the quotes above, there is nothing illegal about lobbying or giving to charity. Nor is there anything illegal about workers voluntarily getting together to organize or ensure a decent and fair salary; or benefits and a safe workplace. But at some point in time, the psychology that stimulated these benign--and important-- endeavors crossed over into a full-blown looter frame of mind.

Now that they've had a taste of government(i.e., coercive) power; they find they like having power over others; and they're in it for whatever they can get (away with).

It's not the 'rich' who are exploiting the middle class; it's the new looters and their government enablers.

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