Humans can hijack any theory of economics
March 02, 2009 Edition 1
People who talk about "decent jobs" usually completely misunderstand the concept "job". A job is a contribution to the economy for which a worker is rewarded. And it can only be a decent job if it's a decent contribution. By definition this excludes jobs that aren't needed.
The misunderstanding is part of a bigger pattern of human frailty. There is a simple explanation for the collapse of the Union of Soviet Socialist Republics command economy in 1989 and the present disintegration of the market economy: it's people.
Whatever the economic theory, humans can hijack it.
Socialism requires individuals to sacrifice their own interests to the common good. The theory is that we each contribute what we can to society and take what we need. It comes unstuck because those who contribute more than they take out soon realise they are suckers. They reduce their contribution and increase their take. At that point, the system implodes because there is nothing left to take.
In theory, a free market provides better for this human weakness, by matching rewards to contribution.
But that has proved an illusion, because the system continued to reward people who were messing up. It was defeated by innovations, which masked their mistakes - until the scale of the problem was so great that no one could fix it.
One of the problems with people is that they have hidden agendas - hidden sometimes even from themselves.
Some people espouse socialist causes because they genuinely want to relieve poverty and misery. And it may surprise them that some of those who oppose socialism do so because they believe it won't work - not because they don't want it to work. Both have honest intentions.
However, there are others who cloak their real motives with an economic philosophy: socialists who simply envy people who are better off than they are; advocates of unfettered capitalism who hate to share what they have. The latter are the free spenders with expensive cars and houses, who pay their domestic workers and security guards a pittance because, they will tell you, it's all they can afford.
An area where ulterior motives are exposed is international trade. It's surprising how often those who claim the moral high ground - like the Democrats in the US - show up on the wrong side of an issue.
In the name of the workers, legislators put up trade barriers and unproductively support the efforts of their own constituencies - pork barrel politics.
If they really cared about the workers, they would really care about the poor in other countries as well. Generally US politicians care only about US voters, which is fair enough, as long as they aren't claiming a moral high ground.
Many developing countries are no better, though they justify protection in the name of infant industries and refer to the continued efforts of the US, Europe and Japan to subsidise their very mature industries - like the crippled car makers.
In this philosophical morass, it's not surprising that the term "liberal" is used as a pejorative by both the Right and the Left.
Liberals believe in civil, economic and religious liberties - as well as the right to lifestyle choices. The relative weighting of these ingredients differs - which makes the debate complex. Often people believe fervently in civil liberties and hate free markets, while others espouse free markets and oppose civil liberties.
As for lifestyle choices, the jackboots on both the Right and the Left fear choices - other than their own.
