Tuesday, January 18, 2011

Moore Nonsense on Taking and Giving

To start the new year, I have been receiving free movie channels through a promotion.  On one of them, Michael Moore's movie, "Capitalism: A Love Story" came on.  Since there is no way that I'd ever pay to watch one of his movies, free was about the right price.  I soon discovered that even free was too much.

Either the first or second sentence out of Moore's mouth was this, "[Capitalism] is a system of taking and giving."  It is mind-numbing how completely wrong this is.  Capitalism, or rather the free market, is a system of giving and giving.

Suppose you go to the store because you want to buy a snack for a dollar.  In order for you to give up the dollar, which do you have to value more: the snack or the dollar?  The answer is the snack.  In order for a trade to occur, what does the guy behind the counter have to value more: the snack or the dollar?  His answer has to be the dollar.  If both sides of the exchange value the dollar more, there would be no trade.  Also if both sides value the snack more, again there would be no trade.  We trade because each side values what they gain more than what they are giving.  Trade requires unequal valuations.  Since value is in the eye of the beholder, meeting this requirement is not difficult.

When we trade both sides say, "Thank You" because both sides are giving and benefiting. 

A system where one side gives while the other side takes also has a name: it is called stealing.  It is a system where one side has no choice in the matter while the other side has all the power.  An example of this relationship is the one between the individual and the state.  The individual must give whenever the state decides to take.  Try not paying your taxes and see what happens. 

The relationship of giving and taking is between unequal parties.  The relationship between giving and giving is necessarily between equals, since both sides can walk away from the trade at any time.  The ability to refuse and say, "No" is the most fundamental power that an individual has in expressing one's individuality.

In his movie, it's clear that Michael Moore thinks that we were harmed by the national bail-outs of the large banks and corporations.  I completely agree that this was a disgrace and that it never should have happened.  These banks and corporations should have been left to fail.  However, the bail-outs weren't market phenomena, rather they were the actions of the state repeatedly intervening in the economy.  The government took tax money and gave it to these institutions. 

Furthermore, the underlying cause of the economic crisis wasn't too little government, it was that there was too much.  The free market has a system of natural checks and balances that prevent massive business cycles.  It is when the government disrupts this system, that bubbles form and burst.  Those that cannot see the past the immediate and are unable to look at deeper causes blame "capitalism" in a knee-jerk reaction. 

Michael Moore's movie was just thata classic case of haphazard economics and laziness.  He could learn much from Henry Hazlitt's single lesson:

[T]he whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence.  The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.


Post a Comment