Tuesday, August 20, 2019

THE WEALTH OF THE WEALTHY: A RESONSE TO BERNIE SANDERS' RETWEET AT http://bit.ly/31VsjnQ


The Walton family (the owners of Walmart) is currently worth about $190 billion. The Koch Brothers and Mars families (candy bars) are both worth over $100 billion. Such facts are intolerable to socialists, communists, “progressives,” and, sad to say, today’s Democrats.

Bernie [Senator Bernie Sanders] wants a tax of 77% on estates over $1 billion. He relishes the prospect of the Waltons having to pay $147 billion in estate taxes.

Bernie and his followers simply don’t know that the wealth of capitalists is not in their refrigerators, pantries, and wardrobe closets, and not even in their automobiles or homes. IT’S IN THE MEANS OF PRODUCTION.

The means of production are the foundation of the supply of goods that everyone buys and of the demand for the labor that wage earners sell. The greater this wealth, the more abundant and lower priced is the supply of goods and the higher is the demand for labor and thus wages.

For example, the Walmart family’s fortune is invested in 11,000+ stores, each one of which is full of vast amounts of merchandise and requires a large building and plot of land. $191 billion are easily accounted for by an average investment of less than $17.4 million per store.

In addition, these stores employ a total of 2.1 million workers, more than two-thirds of them in the US. If their average wage, including benefits, was just $400 per week, this would imply a weekly payroll of $840 million and an annual payroll of $42 billion.

Walmart’s main contribution to wages, however, is not through its payrolls, but through its low prices. Its low prices increase the buying power of wages throughout the economic system.

It thus raises the real wages of the tens of millions of workers who are its customers or who are the customers of other retailers who charge lower prices because of the competition that Walmart gives them.

Bernie and his gang want to take away the equivalent of more than three-fourths of these stores and correspondingly reduce Walmart’s contribution to the supply of goods and demand for labor. Thus, they want to largely undo the lower prices and higher real wages that Walmart is responsible for.

To whatever extent the wages that Walmart pays its workers may be low, those wages will be lower still if Bernie and his gang can seize three-fourths of them to spend on their cockamamie schemes. Walmart (every business) makes wages higher than they would have been without its payrolls.

Bernie’s spokesman refers to Walmart’s workers’ wages being so low that the government has to subsidize their housing, food, and healthcare. (See http://bit.ly/31VsjnQ.) In reality, of course, the government doesn’t have to do any of these things.

The fact that it does so and largely pays for it with funds that otherwise would have been spent on means of production and wage payments, thereby keeping prices up and wages down, is exactly the sort of thing that keeps workers poor.

Workers are kept poor because ignorant politicians like Bernie are constantly preventing them from being better off. They enact laws, such as minimum wage and pro-union legislation, that prevent employers from employing workers they otherwise would have employed.

In particular, these laws prevent less capable workers from successfully competing with more capable workers. For example, a half-as-productive worker can outcompete an average worker if his wage is less than half, but not if it’s compelled to be more than half, let alone equal.

Compelling employers to provide benefits or improvements in working conditions that don’t pay for themselves reduces workers’ take-home pay. Instead of being paid a wage equal to the employer’s cost of employing them, they’re paid a wage that is less by these extra costs.

Bernie and his gang believe that because the Walton family is rich, Walmart can afford to do whatever Bernie et al. would like it to do, such as raise wages to $15 per hour.

Actually, apart from a relatively small cash reserve, Walmart has already spent all of its money and doesn’t have the means of substantially increasing its expenditures until additional sales revenues come in. It’s spent its money in building and stocking its stores.

Walmart could borrow. The Walton family could sell some of its shares and make a gift of the proceeds to Walmart. The effect of that would be to deprive other firms of the use of the funds involved, i.e., to reduce their demand for means of production and labor.

Bernie wants us to fear billionaires. Actually, the billionaires work for us—for the great mass of average people. They want to acquire money from us. Unlike the government, they cannot simply come and seize our money.

We have to want to give it to them, because we value what we receive more than the money. They have to make their product such that we will value it more than the money they ask. One of the best examples is a delicious Snickers or Milky Way bar for a mere dollar.

Any force in connection with such a voluntary transaction would be force to prevent it, not to compel it. Bernie and his gang know only the gun and the club. They want to destroy the free market and replace it with the brute force of socialism.

For an introduction to what’s wrong with socialism and right with capitalism, read my essay whose title appears directly below. It’s available for 99¢ at https://amzn.to/2N44uTu.




For an in-depth, comprehensive explanation of the workings of capitalism and critique of Marxism/Socialism, read my Capitalism: A Treatise on Economics.

It’s available at http://amzn.to/2PM19ut in both Kindle and hardcover formats and at www.capitalism.net in both hardcover and as a free non-printable, non-copyable pdf replica capable of download.



ADDENDUM: Bernie’s spokesman kept stressing how rapidly the Walton’s et al. gained financially. The most important part of these gains was the result of the saving and reinvestment of profits made on the basis of lower costs and better products, and doing this on a growing base.

But a substantial part was also the result of a flood of new and additional money and credit manufactured by the Federal Reserve System and pouring into the stock market and driving up stock prices.

This process is a government racket. It causes both financial gains and higher prices. The financial gains are taxed. The after-tax gains are then insufficient to buy as much at the higher prices as the original capital could buy at the original prices.

This principle applies within the operations of business firms and is a major reason for the economic stagnation of the last two generations. Alongside large paper profits has been a reduced ability to buy capital goods and labor at prices that rise more than do after-tax funds.

Saturday, August 17, 2019

Greenland Ice Melt


The enviro-socialist “climate emergency” crowd was busy earlier this month trying to launch the human equivalent of a cattle stampede by getting people to plunge into socialism to avoid bad weather.
There were headlines such as “Greenland is on track to lose most ice on record this year and has already shed 250 billion tons.” (https://wapo.st/2Z1ECgl)
It turns out that this amount of water is equal to slightly more than 60 cubic miles. (http://bit.ly/33tnVhf) The total volume of water in the world’s oceans is approximately 320 million cubic miles. (http://bit.ly/2N2yl1x)
If we divide the 60 cubic miles of water added by the ice melt in Greenland by the 320 million cubic miles of water already in the oceans, the result is 0.0000001875. This is the relative increase in the volume of water in the oceans.
The absolute increase is the relative increase times the pre-existing average depth of the oceans, which is approximately 12,100 feet (idem), or equivalently, in terms of inches, 145,200 inches. The results of these multiplications are .0023 feet and .027 inches. That’s 23 ten-thousandths of a foot and 27 one-thousandths of an inch.
To put these numbers in proper perspective, recall that a quarter of an inch is 250 one-thousandths of an inch. So what the fake media were trying to frighten us with is a rise in the sea level of little more than a tenth of a quarter of an inch (i.e., .027/.250).
And let us not forget that much or most of the 60 cubic miles of melted ice from Greenland will refreeze come Winter.
Today’s press and other media simply cannot be trusted. They themselves are ignorant and fully at home with taking advantage of the ignorance of their audiences. One of their favorite tricks is claiming that one “large” thing explains another, simply because both are “large.”
So, get ready for 250 billion tons of melting ice (wow, that’s large) to explain the Atlantic Ocean wiping out New York City and New Jersey. It never occurs to these numbskulls to check just how much water is actually involved and what difference it actually makes.
This kind of fake news has been going on for generations. It was especially prominent in the days of the Arab Oil Embargo, when the press claimed practically every day that the rise in the profits of the oil companies was responsible for the rise in the price of oil. (See pp. 231-234 of Capitalism, at www.capitalism.net.)
Despite the utter triviality of the Greenland ice melt, we’d better hurry up and sacrifice Industrial Civilization, according to the enviro-socialists, because centuries more of such increases may amount to something more significant. (Of course, if it does, we’ll be helpless to deal with it because we’ll have destroyed our industrial base if we listen to these enemies of the human race.)
I say, if global warming is coming, let it come. If it does come, it will come as an act of nature, because no individual human being or voluntary association of human beings is responsible for it.
At most, it’s the unintended by-product of the separate, independent actions of billions of human beings across a period of almost ten generations.
Something for which no actual acting human being is responsible is an act of nature.
We can cope with global warming. What we can’t cope with is global central planning, which seeks to manipulate the world’s climate by prohibiting the self-interested actions of billions of people—of everyone but a handful of alleged government experts, such as Al Gore and AOC.
Turning our world into one in which practically the entire human race is prohibited from acting for its self-interest, on the basis of everyone’s independent intelligence, is a formula for mass extinction. Al Gore and AOC are not a substitute for billions of independent human minds.
In fighting for the preservation of Industrial Civilization, our first demand should be NO GOVERNMENT CLIMATE MANIPULATION! Government officials are typically not smart enough to run their own lives very well. That’s why they’re working for the government in the first place.
They should not have the audacity to try to seize control of the planet and force billions of people to sacrifice their well-being in service to the fantasies and delusions of the enviro-socialists.
Environmentalism and socialism are a match made in hell. Socialism (government ownership/control of the means of production) to prevent global warming will certainly achieve its inevitable result of a massive decline in living standards.
But thanks to environmentalism, that will be considered success! Environmentalism sets a standard of “success” that socialism can meet. Poverty is the goal of environmentalism. Socialism is certainly the means of achieving that goal.
To Hell with environmentalism and socialism! Let us achieve a world of full, unhampered capitalism and resume the economic progress and rising living standards of the Industrial Revolution.
For more, see my essay “The Toxicity of Environmentalism,” available in Kindle format at http://amzn.to/1HZ4a0c for 99¢.
For still more, see Chapter 3 “Natural Resources and the Environment” in my Capitalism: A Treatise on Economics. This book is available both in Kindle and hardcopy formats at http://amzn.to/2PM19ut.

The book is also available as a free non-printable, non-copyable pdf download at www.capitalism.net.

Friday, August 09, 2019

My Blurb Review of the Carol Burnett Show

This show enables me to fall asleep with a smile on my face and laughter in my heart. Carol Burnett is not only one of the greatest comedians in the history of the world, but also, even if unrecognized for this, a truly great actress. In the same show, she can go from a skit in which she's an upper-class English woman contemplating an affair with Roddy McDowall to another skit in which she's "Eunice" (the main character in the world's most dysfunctional family), first as a virtual demon and then within minutes as "Eunice" projecting child-like innocence and joy. Her takeoffs on well-known movies were incredible, e.g., "Gone with the Wind," "Mildred Pierce," and "The African Queen," to name just a few.
Her supporting cast, especially Harvey Korman and Tim Conway, was also fantastic. This was a show of three comedic giants.
Nothing, before or since, surpasses it. Reruns of half-hour segments of the show currently appear on "MeTV."

Thursday, August 08, 2019

Answers to a Pair of Marxists on Twitter


The irony of accusing socialists of wanting "free stuff" is that capitalism lives on free stuff: labor, nature, the work of social reproduction. Capital exists because something is unpaid: if capital ever paid a worker the whole value of their work, it would cease to exist—Ben Tarnoff @bentqarnoff https://twitter.com/bentarnoff/status/1156598698907971585?s=12
Labor is not free, except one’s own. To get other people’s labor, you have to pay them wages greater than the profits they could earn on their own and greater than the wages any other employer would pay them. Previously unowned land is free, which is how it should be. "Social reproduction" is the same as production. And the labor, capital goods, and land owned by others all have to be bought and paid for.

The original and primary form of labor income is PROFIT, not wages. Without capitalists, workers producing and selling commodities earn SALES REVENUES, not wages. Without capitalists, there are no wage payments or expenditures for capital goods. Hence, NO COSTS to deduct from sales.

Thus, in the absence of capitalists, 100% of sales revenue is profit. And because without capitalists, accumulated capital in money terms is zero, the rate of profit on capital is infinite.

Capitalists create wage payments and expenditure for capital goods, hence costs to deduct from sales revenues. They also accumulate capital on the balance sheets of their firms. Their activity thus reduces profit both as a percentage of sales and of capital and raises wages.

Capitalists are the primary producers. Wage earners are the capitalists’ HELPERS in producing the CAPITALISTS’ products. Just as we credit Columbus with the discovery of America, and not his crew members, we should credit Ford, Rockefeller, et al. with the products of their firms

It is they who supply the guiding, directing intelligence at the highest level, who set the goals and assemble the means to achieve them. Thus, it is they who are responsible for what is accomplished. The wage earners are fully paid for their help when they receive their wages.

For additional antivenom treatments for Marxism/Socialism go to https://amzn.to/2N44uTu and for 99¢ buy and read the title immediately below.

The labor theory of value generates predictions about long-term trends in the evolution of capitalist economies.—Jack Angstreich @Angstreich2 https://twitter.com/angstreich2/status/1158918239054905344?s=12
Unfortunately for Marxists and fortunately for everyone else, the predictions are FALSE, such as the claims about a falling rate of profit and the progressive impoverishment of the masses.

The labor theory of value has almost zero explanatory value. For proof, see my tweet-thread turned blog post “What's Wrong with the Labor Theory Value…” at http://bit.ly/2GwqB3Q.

A quasi-legitimate application of it, which the Marxists would certainly reject, is that to the extent that the capitalists reduce the quantity of labor required to produce goods, they enable the same quantity of labor to produce more.

This increases the supply of products relative to the supply of labor and thus reduces prices relative to wages, thereby increasing the buying power of wages, i.e., real wages.

This, in turn, enables workers to afford to accept lower paying jobs that offer shorter hours and better conditions of the kind that don’t pay for themselves, and to keep their children home longer.

But don’t expect Marxists ever to acknowledge that capitalism raises real wages, shortens hours, improves working conditions, and abolishes child labor. Hell will freeze over first.

Meanwhile, here’s some more points concerning the inapplicability of the labor theory of value: futures prices, different grades of land and mines, countries with different degrees of economic development, the value of paper money, and land prices.

COMMODITY FUTURES PRICES
Anyone who takes the trouble to look at the prices of commodity futures can observe that a new crop of any agricultural commodity sells at varying prices depending on when delivery is to be made. Thus, e.g., there are different prices for Sept., Dec. and succeeding months’ wheat or cotton.

This is despite the fact that coming from one and the same harvest, the quantity of labor required to produce wheat or cotton for delivery in the various future months is the same for all of the months.

(Granted, there are extra storage costs for later delivery, but the differences in price substantially exceed the extra storage costs.)

Like that of aged whiskey, this is a case of equal quantities of labor used to produce products but the products’ values permanently differing from one another based on the role of time and the rate of profit in determining value.

LAND AND MINES OF DIFFERENT QUALITY
The belief that goods are valuable in proportion to the labor expended to produce them implies the obvious absurdity that goods will be the more valuable the more wasteful and inefficient is their production.

The Marxists believe they have an answer to this objection. No, no, they say. It’s not just any labor expended in their production that determines the value of goods. It’s only the “SOCIALLY NECESSARY” labor.

Unfortunately for the Marxists, there can be more than one “socially necessary” labor time required to produce one and the same good—as many as there are different grades of land or mineral deposits necessary to produce a desired quantity of output.

As Ricardo explained in his classic chapter "On Rent,” people first bring into production the most productive land and mineral deposits. If their output is insufficient to meet the demand, people resort to land and mineral deposits of the second quality, and so on.

Each succeeding quality of land and mineral deposits requires more labor per unit of output. That’s what makes them land and mineral deposits of inferior qualities.

Thus, there is no one quantity of labor required to produce a bushel of wheat or pound of cotton, but a range of quantities. And yet all the bushels of wheat or pounds of cotton in a given market at a given time sell for the same price. The different quantities of labor do not result in different prices.

COUNTRIES WITH DIFFERENT DEGREES OF ECONOMIC DEVELOPMENT
One and the same good is often produced in different countries with different degrees of economic development. In the more advanced countries, less labor per unit of output is required than in the less advanced countries. Yet the price of the product tends to be the same in both.

The cost of production of the product also tends to be the same in both countries, with differences in the quantity of labor required accompanied by opposite differences in wage rates. Thus, half the quantity of labor tends to go with double the wage rate and vice versa.

Please note: insofar as the prices of products are determined by their cost of production, differences in wage rates are fully as important as differences in the quantity of labor in determining the products’ relative value, irrespective of the labor theory of value.

THE VALUE OF PAPER MONEY
According to Marx, “Commodities, therefore, in which equal quantities of labour are embodied, or which can be produced in the same time, have the same value.” (Capital, vol. 1, pt. 1, chap. 1; [reprinted, New York: Random House, The Modern Library, p. 45.])

A logical implication of this is that since a one-dollar bill and a one-hundred-dollar bill require the same amount of paper and ink and the same printing press time, etc., etc., and are thus products of the same amount of labor, they should exchange one for one.

The labor theory of value cannot explain the exchange of irredeemable paper money, which requires hardly any labor to produce, for commodities that require more labor, usually vastly more labor, to produce.

For example, it cannot explain how a $100 bill, which requires all in all perhaps just one or two minutes to produce, is able to exchange for real goods requiring hours of labor to produce.

The labor theory of value might appear to have some explanatory value in a hyperinflation, in which the quantity of paper money that had to be given in exchange for a roll of toilet paper at least contained an equal amount of paper and thus, to that extent, perhaps an equal amount of labor.

THE VALUE OF LAND
Not long ago an acre of unimproved real estate in midtown Manhattan sold for $90 million, a huge sum not only in terms of paper money but also terms of the actual exchange value of that money, e.g., 1,800 new $50,000 automobiles or the labor of 900 men at $100,000 per year each.

Nevertheless, according to Marxism, that land was VALUELESS. Why, how? It wasn’t the product of human labor. According to Marx, “As values, all commodities are only definite masses of congealed labour-time.” So, no labor, no value.

Of course, what’s actually valueless is not the land but Marx and Marxism.

Indeed, Marxism is much worse than valueless. It’s been responsible for well over a hundred million deaths in Soviet Russia and Communist China alone. It’s served as the equivalent of a massive plague, or series of plagues.

Its destructiveness has been fueled by its delusional belief that capitalists steal their profits from wage earners. For a refutation of this claim see my recent tweet-thread turned blog post “TURNING MARX AND THE EXPLOITATION THEORY UPSIDE DOWN” at http://bit.ly/2XmBGir.

To go to the next level, buy and read my essay whose title appears immediately below, on the image of its cover. It’s available for 99¢ at https://amzn.to/2N44uTu.


For the ultimate critique, go to http://amzn.to/2PM19ut and buy and read my magnum opus Capitalism: A Treatise on Economics, especially chapters 11 and 14. This book is also available as a free non-printable, non-copyable pdf download at www.capitalism.net.
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A Final Note: The Marxist to whom I am responding here appears to be a follower of Saul Alinsky. That means he deliberately uses the tactic of ridicule in place of logical argument and is totally unrestrained by considerations of fact.

For example, while calling the great Böhm-Bawerk an “ignoramus” in an earlier exchange, he claimed that vol. III of Marx’s Das Kapital was written before vol. I. The fact is, of course, that vol. III was put together by Engels from Marx’s notes, following Marx's death.