Meteors and Entrepreneurs (James E. Miller)
Monday February 25th, 2013
American political culture is full of absurd myths. Abraham Lincoln freeing the slaves because of a divine moral imperative and Harry Truman dropping the atomic bomb in the name of saving lives both come immediately to mind. In the realm of economics, practically everything espoused by the political class and its fawning press should be taken as a falsehood. This includes one of the greatest myths espoused in the past three decades: Ronald Reagan's toppling of Soviet Russia through a massive domestic defense build-up. In 2004, the Economist, a periodical venerated for no particular reason, called the Gipper the "Man Who Beat Communism." Travelers of conservative circles gleefully repeat this theory in front of television screens with big smiles and even bigger egos.
The truth is, Reagan had little to do with ending the experiment of Soviet communism.
The Union of Soviet Socialist Republics collapsed in 1991 not because of a serious-looking President or sophomoric pleas of American exceptionalism but due to the internal inconsistencies of the communist economic system. Von Mises explained why a lack of private property rights coupled with a pricing system that objectifies subjective values turns civilization to mush almost a century ago- so of course his groundbreaking work was ignored by the enlightened slew of history reporters more interested in society being dominated than the truth.
For decades, the people living in totalitarian, collectivist Russia survived through black markets. With the ability to engage in economic calculation forcibly removed, the victims of communism had little choice but to risk punishment for legal defiance if they wanted some level of material comfort. These underground markets were notoriously efficient because they were driven by what leftists consider the most repulsive of human characteristics: self-interest.
Following the sudden disintegration of communist rule, black markets continued to function as a means of providing bare sustenance. That is, until ex-KGB officer Vladimir Putin took over the presidency and began instituting market reforms like the 13% flat tax. Putin’s efforts have been successful enough to recently attract actor Gérard Depardieu away from the greedy mitts of French's socialist "so-called worker" class.
During the recent meteor debacle in the city of Chelyabinsk , these market instincts began to stir again following the destruction wrought by a shock wave which "blew in an estimated 100,000 square meters of glass." Stealing a page from inner-city looters during a riot, several astute Russians took advantage of impending government aid by smashing windows in their own homes in the hope of receiving compensation. If that wasn't enough, in close proximity to a lake where a chunk of meteorite touched down, people gathered fragments to sell over social media networks despite no verification if the rocks were genuinely extra-terrestrial. Clearly, old habits of the underhanded entrepreneur die hard.
Except this wasn't entrepreneurial in a normal sense.
The entrepreneur, as Murray Rothbard writes, "is always on the alert, then, for discrepancies, for areas where he can earn more..." By taking factors of production from undercapitalized to productive use, anyone cognizant of profit opportunity can be compensated for satisfying the needs of others. It is the entrepreneur, along with those who accumulate capital, that drives the market process. Without the keen insight of folks such as Steve Jobs, Bill Gates, and Henry Ford, the innovative products we enjoy today would be nothing but a fantasy.
Keynesian economists view the entrepreneur as a mindless drone; a kind of zombie devoid of any ability to take advantage of unmet demand of the public at large. The fact that modern civilization was built upon the coordination of buyers and sellers eludes this distinct group of intellectuals. Their focus is man as a mechanical being and not a free thinker.
Normally, entrepreneurial behavior is deserving of praise. In the case of smashing windows for a cut of the dole, it ends up being a wasted effort. No wealth is being added to society net wise. Those able to fleece the welfare scheme are doing so at the expense of everyone forced into paying taxes. The former gain while the rest lose.
The state is always the great perversion of mankind. Instead of serving, it taxes. Instead of convincing, it forces. And instead of serving the public good, it merely serves its own interest. State-funded disaster relief is more of the same. Politicians who guarantee assistance in times of hardship place the burden of responsibility not on their backs but the backs of taxpayers. Enforcers of the state are nothing but predatory money changers who systematically take and distribute property of the citizenry.
The act of buying low and selling high is an action natural to mankind. When put to productive ends, it raises living standards. In the shadow of central government, individuals who would normally devote their energies to wealth generation fall under the allure of state benefit. They begin taking advantage of the widespread coercion leveled upon the public. Whether it be joining the cabal of bureaucrats who take pleasure in regulating society or lobbying for special privilege, the result is always civilized degradation. An inestimable amount of benefit from human effort becomes lost to an organized racket of thievery.
It should be mentioned that selling a rock under the auspices of it being a dislodged portion of a meteorite isn't exactly a "good" thing to do moral wise. That isn't to say the practice should be outlawed with guns and badges. Sympathy should be reserved for someone who is not moronic enough to buy space junk on the internet. Even so, entrepreneurial shysters on the internet trying to make a quick buck off intellectual shortcomings are far more respectable than anyone who occupies the corridors of the state.
James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada. Send him mail