George Orwell as a Public Choice Economist?

George Orwell as a Public Choice Economist? is an essay by Michael Makovi.

George Orwell's famous novels Animal Farm and Nineteen can give the impression that Orwell was an anti-socialist. However, he was not strongly anti-socialist. Makovi holds that:

- George Orwell was a (democratic) socialist, despite his famous novels being biting satires of socialism, and

- Orwell’s criticisms were directed not against socialism per se but against the Soviet Union and similarly totalitarian regimes.

Makovi argues likewise in another essay, Two Opposing Literary Critiques of Socialism: George Orwell Versus Eugen Richter and Henry Hazlitt.

The Wikipedia article about Orwell agrees. "His work is characterised by lucid prose, biting social criticism, opposition to totalitarianism, and outspoken support of democratic socialism."

What's unique about both articles is that Makovi portrays Orwell as a public choice economist. Orwell died in 1950 before public choice economics gained much recognition in the 1960s, but there were strands of public choice economics in the 1950s. 

The first article has a good description of public choice economics in layman terms. 

"This interpretation of market activity as being based largely on self-interest is probably familiar to most readers, even those not trained in economics. Yet somehow, when we shift to the study of politics, the general assumption is often that political officials are not  self-interested, that they serve only the public good for conscience’s sake."

"No doubt, there are many individuals who are in politics because they sincerely wish to advance the public weal. But Public Choice is skeptical of the assumption that just because someone is in government office, he is an altruist. Public Choice argues that we ought to assume that political officials are every bit as self-interested - or not - as market actors - no more, no less. In other words, Public Choice assumes moral, behavioral, and psychological equivalence between public and private actors. This does not necessarily mean people seek to maximize their financial wealth alone, for self-interest means only seeking to obtain whatever an individual person subjectively desires, which may or may not be money." 

I add that the politician's self-interest may also be power over the lives of other people. The politician is in a position of using coercion or threat of coercion -- typically with somebody else, the police or the court system, doing the enforcing -- to punish or induce said others to act in a manner desired by the politician.

This is not to say that I view all power negatively. High-level executives in a private business have lots of power. The decisions they make may strongly affect the business and its employees. However, the executives generally do not have the power to enforce their decisions in the manner that politicians do, backed by a coercive government. 

This interpretation of market activity as beingbased largely on self-interest is probably familiar tomost readers, even those not trained in economics.Yet somehow, when we shift to the study of poli-tics, the general assumption is often that politicalofficials are

 not 

 self-interested, that they serve onlythe public good for conscience’s sake.

A socialist’s view of the self-employed

I don’t know if this article is typical for a socialist. I suspect it is at least common. Anyway, the author has a low opinion of the self-employed. He calls them the “petty bourgeoisie” who “exploit themselves.” Socialists are obsessed with “exploitation,” i.e. victimhood. Socialists ignore entrepreneurship almost entirely.

The initiative, courage, grit, risk-taking, and exercise of thought needed to succeed in self-employment have no place in the author's narrative. The thought needed to decide what products or services will attract customers, the time and expense spent on marketing, getting and satisfying customers, and the riskiness of being self-employed are all ignored. 

Suppose SE is an excellent young tradesman (electrician, carpenter, etc.) who works for someone else. His employer pays him a steady income, keeps him busy finding work for him, and provides “fringe” benefits like health insurance and paid vacation. Of course, per a socialist he is only an “exploited wage slave.” Yet SE believes he could do better in the long run by becoming self-employed and maybe in a few years employ others. He knows what his employer charges customers for his work significantly exceed what he gets paid. He might wish to specialize in specific sorts of work or customers. There could be other reasons. In any case, SE would like to “be his own boss.”

If he chooses to do so, then SE will incur the time and expense of finding customers himself and/or pay somebody for this. He might get a few among customers he did work for with his ex-employer; maybe not. He will have to buy his own health insurance and he foregoes paid vacations. If he doesn't have enough savings, he will have to rely on some financial help from others for a while until he attains a steady supply of customers.

This is not to say all who become self-employed do so for the same reason as SE. They may do so while in more desperate circumstances, like being laid off during a tight job market.

All this is totally ignored in the socialist’s narrative Little joy in being your own boss. I have never seen an advocate of socialism acknowledge any worker's choice between (1) a more certain, reliable income as an employee and not having to spend time or money to find their own customers, and (2) an iffy income that comes with being self-employed. And of course, if the time comes when SE employs others and pays them wages, a socialist will regard SE as a “despicable” capitalist “exploiter.” 

Coronavirus -- supply chains

The COVID-19 pandemic has shined some light on the significance of supply chains. To a final user the supply of toilet paper and milk products are ordinarily so reliable that they can be easily taken for granted. However, the pandemic has caused disruptions in the supply chains for them.

While there has been hording of toilet paper, the disruption has also occurred because there are two major kinds of toilet paper -- commercial and household. More people staying at home, schools closed, and many workplaces and businesses closed has lessened demand for the commercial kind and increased demand for the household kind. As this article explains, the two kinds are made, packaged, and distributed very differently. The changes in demand have caused a ripple effect back through many links in the supply chain.

A similar disruption has occurred in the supply chains for milk products. The first link in all chains is raw milk from the dairy farmer. However, the chains differ after that. As this article explains: "Mass closures of restaurants and schools have forced a sudden shift from those wholesale food-service markets to retail grocery stores, creating logistical and packaging nightmares for plants processing milk, butter and cheese. Trucking companies that haul dairy products are scrambling to get enough drivers as some who fear the virus have stopped working. And sales to major dairy export markets have dried up as the food-service sector largely shuts down globally."

There was also a sudden surge in demand for personal protective equipment (masks, gowns, etc.), beds in hospitals, and ventilators. The supply chains for these things did not have the size and resilience to adapt as quickly as many wished.

Facts like these should be a wake-up call for socialists like Bernie Sanders and Nathan Robinson, but I doubt they will. They talk like they take supply chains completely for granted. They show no grasp or interest in supply and demand or how products get made and distributed to the end user. They have nothing to say about the informative value of prices and quantities. Their sole concern is how income is distributed. All BS can say about prices are that some are too high for middle and lower income people and the cause is the greed of the wealthy. They show no grasp or appreciation for higher level decision-makers along any supply chain. Their overwhelming concern is the welfare of middle- and lower-income workers not responsible for any higher-level or even mid-level decision making.

Why You Shouldn’t Be A Socialist #3

The author devotes a chapter to critics of socialism with ‘Why Opponents of Socialism Are All Wrong’ as part of the title.

One criticism is that socialists always deny that socialist governments are “true socialism.” Ironically, that’s what Robinson does. Referring to critics using Venezuela to discredit socialism, Robinson denies Venezuela is a case of “true socialism.” He dismisses North Korea being called socialist simply because it isn’t democratic (245). So does he believe North Korea is capitalist? Heh. He chides others who treat socialism as synonymous with the Soviet Union for being selective in their presentation of history. Yet he is very selective about what he considers “true socialism.” “The socialist left has a great heritage, both in the United States and everywhere else.” “To be a socialist is to take part in a tradition that is intelligent, humane and honorable” (162). An even blacker pot calls the kettle black.

While most socialists are advocates of government control of the economy, Robinson tries to “sweep it under the rug” by saying there are a few socialists who “loathe the government.” This tactic is quite ironic. He calls himself a libertarian socialist, yet several times he says the left needs more political power and better organization. He also strongly endorses Bernie Sanders, an advocate of much more government power and putting chains on private sector businesses. By the way, Bernie Sanders calls himself a Democratic Socialist, but more accurately he is a fascist. Like described here fascism permits some private ownership of the means of production, but subject to extensive controls by government: "As an economic system, fascism is socialism with a capitalist veneer." "Under fascism, the state, through official cartels, controlled all aspects of manufacturing, commerce, finance, and agriculture. Planning boards set product lines, production levels, prices, wages, working conditions, and the size of firms." State control is paramount. This captures Sanders’ proposal for health insurance. He wants to eliminate private health insurance by the U.S. federal government taking over all health insurance, like Josef Stalin took over agriculture in the Soviet Union. More recently he has advocated government takeover of electrical power producers.

Robinson’s praise of socialism is based mostly on wishful thinking inspired by moral outrage. He gives no realistic causal mechanism of how socialism will work in practice. His “theory” boils down to:
- dreaming of utopias,
- moral outrage,
- lecturing by a self-appointed moral authority,
- nobody will need to work at an unpleasant job, e.g. garbageman or roofer (my opinion), or due to a boss, or a boring job, but somehow the work will get done anyway,
- nobody will be poor regardless of whatever else they do or don’t do,
- lots of “free stuff” paid for by others, expropriated,
- who produces what, how, where, and how much of a large, ever-changing, wide variety of goods and services in a society of millions of people with dispersed, yet localized, knowledge is no concern to Robinson. It will happen just fine; no causal explanation needed.

The End

Edit (2/17):

I tried to put a book review of Why You Should Be a Socialist on Amazon and met a barrier that was new to me.

"We apologize but this account has not met the minimum eligibility requirements to write a review. If you would like to learn more about our eligibility requirements, please see our community guidelines." The guidelines say to post a review you must have spent at least $50 on Amazon.com in the past 12 months. I did spend more than $50 in the past 12 months. However, part was with a gift card, and my net spent was less than $50. 🙂

Why You Shouldn’t Be A Socialist #2

Robinson misunderstands limited liability. A key feature of incorporation is that non-employee stockholders have limited liability for actions made by employees. Why should the former, who have minimal control on how the corporation is run, be held personally responsible -- beyond the worth of their stock -- for the actions done wholly by others, employees? Even trying to make them responsible is a big conundrum. The ownership of publicly-traded stocks of big companies is ever-changing. (If non-employee stockholders are personally responsible, then why not lenders, too?)

Robinson abuses the concept of marginal utility. It was developed to explain an individual’s valuation, not different valuations by different persons like he does. He shows no understanding of marginal utility’s importance to market prices or the division of labor.

All but one of his “explanations” of why opponents of socialism are wrong (Chapter 12) are weak or wrong. His response to one alleged criticism of socialism -- that socialists are boring and humorless -- isn’t worth further comment.

He says critics say socialists dislike freedom, but he says “Democratic socialists believe deeply in freedom.” He adds, “capitalism actually restricts people’s freedom. We believe that the choices capitalism gives people -- obey your employer or starve to death -- are not really choices at all “ (234). Huh? They can’t seek a different job, become self-employed (be their own boss), find free food from a charity, or sponge off relatives or socialist friends? He characterizes “free market freedom” as “the freedom to die when your medical bill exceeds your paycheck” (245). Oh my, so simplistic and so wrong.

One “freedom” that Robinson doesn’t mention is that many socialists approve of is a government free to use coercion and bullying against other people they dislike. The freedoms and rights of people they dislike matter little or none to them. When they decide who gets elected, that’s the road to democratic mobocracy, or as Karl Marx said it, the dictatorship of the proletariat.

To be continued.

Why You Shouldn’t Be A Socialist #1

Nathan L. Robinson’s book Why You Should Be A Socialist might convince some socialists they are wrong. It’s that poorly argued.

His critique of capitalism is a harangue and hate speech. Chapter 3 is even titled ‘The Army of Psychopathic Androids: How Capitalism Works.’ He shows at best a superficial understanding of how capitalism works. He shows no understanding of how markets develop and change, the price system, entrepreneurs, division of labor, risk, or the role of knowledge and information in economic production and distribution (see F. Hayek's work). Capitalism (or free enterprise) does not ban ownership by other than stockholders -- worker-owned firms, nonprofits, coops, credit unions owned by depositors, mutual insurance companies owned by policyholders -- none of which Robinson acknowledges. Such firms can exist in capitalism because it’s a voluntary, live and let live system. And if a business were worker-owned like Robinson says all should be, wouldn’t the workers then be capitalists? Or would they somehow operate with no capital, not even borrowing from outside lenders?

He makes many contrasts between capitalism and socialism. One he doesn’t make is voluntary versus coercive. That’s probably because of the following. In capitalism, or a free market, entrepreneurs create goods and services for customers to satisfy the latter's particular needs. They deal with suppliers and employees voluntarily. The entire system is voluntary; coercion is banned. Entrepreneurs are not forced to create, and they don't force investors to give them money, employees to work, or customers to buy their products. Government is the opposite - a system based on coercion. A politician's ability to get something of value for themselves or others is the power to coerce certain people to provide it for them.

“If a corporation were a person, they might be the worst person you have ever met in your life. They might manipulate you into doing things you don’t want to do, take advantage of your weaknesses, lie to you if it benefited them, and show zero regard for basic standards of moral conduct” (78). Does this describe Robinson’s own corporation, Current Affairs, LLC? Anyway, Johnson & Johnson’s reaction to the 1982 Tylenol poisoning contradicts his very biased portrayal. If any business treats its customers and suppliers with zero moral regard, the business will soon fail.

On p. 79 he misrepresents Milton Friedman's position. Friedman did not say a corporation's sole responsibility is to its shareholders and shareholders' only concern is profit. He said a corporation's main responsibility is to its shareholders, and he recognized that shareholders’ desires may include some sort of social responsibility. They also have a means of expressing that, via voting their shares. Some corporations contribute to charities and do charitable gift-matching. Friedman also qualified corporate social responsible action to include the business staying within the rules of the game, i.e., engaging in open and free competition without deception or fraud. Robinson blatantly ignored it. Very likely Friedman made these remarks when others were advocating greater coercion and bullying of business by those in government on behalf of some political view of "social responsibility."

To be continued.

A case for socialism

I am against socialism, but this article and podcast give an informative, modern perspective on the views of people who approve of and even advocate socialism. I have wondered why so many young people favor socialism, what they believe it is, and why they hate capitalism so much. The audio interview is sort of long, near 100 minutes. I listened to over half, but skipped some parts.

The person interviewed is Nathan Robinson, editor of Current Affairs, author, and a strong supporter of Bernie Sanders. He identifies as a libertarian socialist.

He says that for many of its supporters socialism isn't about government ownership of the means of production (which Karl Marx advocated), or even any business being wholly owned by its employees. It's about power, democracy, and solidarity with the many less fortunate when a few others have so much wealth, income, and power. There is a segment starting around 46:00 about Bernie Sanders. He says Bernie Sanders has a "deep moral compass." Huh?? Echoing Ayn Rand, by what standard? There is no mention of his fascist* morality of government bullying and coercion. The sort of democracy they want is in effect a dictatorship by voters, a mobocracy. Of course, a small minority of the population -- politicians -- would do the legislating.

*Fascist economics supported a state-controlled economy that accepted a mix of private and public ownership of the means of production. Industries must uphold the national interest as superior to private profit (link). State control is paramount for fascism and Sanders, and Sanders revels in berating profit.

Robinson doesn't say so, but it seems to me that how much income governments take, how much they spend, and how much power they amass to bully and coerce other people doesn't bother them.

I have not read his book, but peaked at it using Amazon's 'Look Inside' feature. It's fairly short, so I requested it via inter-library loan. Based on what I saw inside, I will not buy it. He will not profit at my expense. He is critical of profit several times in the book. I suspect he hasn't yet realized that workers' wages are profits, like I showed here. Anyway, reading about how capitalism works in his view -- an army of psychopathic androids -- and why I am wrong to oppose socialism -- he says every opponent is wrong -- should be worth a few chuckles. I expect another pied piper of socialism. That's alongside Bernie Sanders, Michael Moore, Larry Sanders, and many actors and actresses.

Robinson is hypercritical of corporations at the start of Chapter 3. Does he believe what he says applies to his Current Affairs LLC? 😉 To nonprofit corporations?

P.S. Shortly after writing the above, I saw this article from the Ayn Rand Institute. It's longer with more criticism of socialism. The spokesman for socialism is Bhaskar Sunkara.  It includes the following about socialism's appeal to many people:  "In the debates, Sunkara argues that socialism is the system that protects people’s “basic rights” to goods and services like health care, education, and nutrition. He also argues that workers should be given democratic control of the firms they staff by being given the right to elect their managers and receive a share of the profits.  This, he says, is necessary to protect freedom from the “tyranny” in the workplace: from the “coercion” of having to take a job under terms set by others."

Addenda 1/18/2020  A Wall Street Journal article (paywalled) includes the following:
"Mr. Glaeser cites polling that suggests most young people’s vision of socialism might be better described as “hyperredistribution.” They don’t seek state control of the means of production, but punishing taxes on the rich to fund programs like free college for all. “They say, ‘Well, there are a whole bunch of projects—a whole bunch of government spending that helps old people. I want mine. If we’re going to spend a huge amount on Medicare, why aren’t we spending a whole lot on education for me?’
       The obvious answer is that redistribution takes money out of the productive economy, which diminishes collective wealth over time. Young socialists dismiss that point, and equate capitalism with greed." [end]

Another answer not in the article is that the elderly on Medicare and Social Security paid taxes to fund them for decades. A young college student doesn't have such a history.

Socialist health care in Venezuela

Bernie Sanders, Ocasio-Cortez and their ilk like to praise socialist health care. Exactly one month ago (link) I wrote that and that Sanders, Ocasio-Cortez, and their ilk describe health care in Denmark and Sweden as ideal, but they say nothing at all about health care in Venezuela, which is very socialist.

This article at a public media website describes how bad health care is in Venezuela. For example: Patients who go to the hospital need to bring their own food and medical supplies like syringes and scalpels, as well as their own soap and water. Cases of measles, diphtheria, malaria, maternal mortality, infant mortality, tuberculosis, HIV infections, and AIDS-related death have all increased sharply.

What the article entirely omits saying is that this is socialist health care. Being the article was written for a member station of NPR (National Public Radio), I am not at all surprised.

Hat tip to Gus Van Horn (link).

Cost of Socialist Healthcare

Pied pipers of socialism such as Rep. Alexandria Ocasio-Cortez and Sen. Bernie Sanders have high praise for Denmark's and Sweden's healthcare systems, while sweeping the cost, government controls, and other negatives under the rug. The government of Denmark's and Sweden's neighboring country Finland, also with heavy-handed socialist healthcare, has collapsed in large part due to it. I much agree with this Zero Hedge article about Finland.

Included: "The Kaiser Family  Foundation found that 58 percent of Americans oppose “Medicare for all” if told it would eliminate private health insurance plans, and 60 percent oppose it if it requires higher taxes, according to a report by the Washington Free Beacon."

Like I asked five days ago, how much higher taxes? Double all taxes -- income, payroll, and sales -- on yourself and all your friends, relatives, and co-workers who pay taxes?

Tax Rates for Socialism

Pied pipers of socialism Rep. Alexandria Ocasio-Cortez and Sen. Bernie Sanders are very popular, and the media's attention on them is very high. They love telling voters about how much the voters will receive if the two's socialist proposals are adopted. Free this. Free that. Tax employers and individuals in the top 1% or 10% of income to pay for at all. They ignore or downplay what they propose will cost, even to those who are in the lower 99% or 90% of income. They posit Denmark or Sweden as ideal. They revel in half-truths that are worse than lies. What they don't say is high taxes for all, Venezuela, and Cuba exemplify socialism, too.

Here is a good article that counters their half-truths. Quote: "To turn most self-described socialists into capitalists you really only need to ask one question; would you yourself be willing to pay more?"

How much more? I believe the question should be more realistic, as follows. Would you yourself be willing to pay twice the taxes you do now? That's double all taxes -- income, payroll, and sales. Also ask, Do you want to also double all tax rates on all your friends, relatives, and co-workers who pay taxes? That would raise taxes to about their magnitude in Denmark or Sweden. See the graph on Wikipedia here.

You may note Sweden's 0% income tax rate on the first 18,800 kronor. At the current exchange rate 18,800 kronor is the equivalent of about $2,000 in U.S. dollars. So the average folks pay a 32% income tax rate on most of their income.