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The Slide To Collapse Is Greased With Self-Interest

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Self-interest is intrinsically self-liquidating on a systemic level.

One enduring if rarely stated principle of Neoliberal Democracy is that the single-minded pursuit of self-interest magically produces an equilibrium which serves everyone's interests well enough to avoid the destabilization of rebellion or systemic collapse.

 
Let's start by defining Neoliberal Democracy: neoliberalism sees markets as the only efficient, fair and durable method of organizing resource extraction and the social order: governance, employment, distribution of income, etc. Turning every social and economic function into a marketplace ensures that market forces provide the discipline and transparency participants need to make prudent choices and investments.
 
Democracy is a political marketplace in which votes replace investor and consumer decisions as the mechanisms that enforce discipline and transparency.
 
The melding of these two ideologies is clearly natural, as both see a transparent market as the best possible system for both governance and and the economy.
 
The key characteristic of a market is that all participants exclusively pursue their own self-interest. No one need sacrifice their own self-interest for the good of the whole system because by definition the system of competing interests naturally organizes itself to maximize the choices of each individual and the equilibrium of the system.
 
The transparency, fairness and stability offered by this ideological system is very compelling: the advantages of a system that transparently discovers the price of everything while offering roughly equal opportunity to all participants to seek self-fulfillment (i.e. the pursuit of happiness) via a dogged focus on self-interest are self-evident.
 
Looking out for Number One is thus the foundation not just of personal self-aggrandizement but of systemic stability and fairness.
But let's move from ideological abstraction to the pragmatic--what happens in the real world? What we find in the real world is that participants seek to transfer their own risk to others while minimizing their productive work and maximizing their gain/skim.
 
Risk inevitably introduces the possibility of loss--both fair and unfair. Let's say a participant in the market invests in a scheme to produce the Acme Brand widget. 
 
Unfortunately, the widget fails to find a market and the enterprise closes its doors. The investors lose their investment: this is fair because any enterprise in a market is at risk of losing favor from changes in fashion or the emergence of more agile competitors.
 
Unfair risk is loss incurred through no fault of one's own. Let's say an employee of Acme Widget Corporation gave his all to the company, and was laid off anyway--not through some failing in his efforts or talents but as a result of dynamics beyond his control: the marketplace found little value in the Acme Widget.
 
The rational, self-interested participant will naturally seek to offload risk of loss to other participants. Employees of the state (i.e. the government) transfer most of the risk of being laid off to the larger group of taxpayers: in a recession, the state can raise taxes on everyone in the system to guarantee its employees get paid. In effect, the risk of loss is distributed to everyone paying taxes in order to guarantee the employment of state employees.
 
Financiers have learned that making bets big enough to render their enterprise too big to fail effectively transfers the risk of loss to the taxpayers. We see the same mechanism in action: those who manage to transfer the risk of loss to others guarantee their self-interest can be pursued risk-free.
 
The rational, self-interested participant will also naturally seek to minimize his productive contribution while maximizing his income/gain. The state employee will (for example) game the system to retire early on a fake disability claim, or manage to evade work, accountability or responsibility with little risk of loss because the system makes firing a slacker employee almost impossible.
 
A financier will use free money for financiers issued by the Federal Reserve to buy assets everyone needs to live: private water systems, rental homes, parking meters, etc.--what are known as rentier assets because the financier isn't adding or creating any value in his ownership; he is skimming a fee from those who pass through the gate he owns.
 
The rational, self-interested participant will minimize his own expenses and maximize his income/gain by exploiting the commons--assets shared by all participants. The rational, self-interested participant will thus let his sheep out into the common pasture to graze for free, dump his waste into the river and the smoke from his works into the air, all free of charge.
 
This dynamic of everyone pursuing their own self-interest destroying the commons was articulated by Garrett Hardin in his paper The Tragedy of the Commons.
 
There is another dynamic at work called tyranny of the majority.
 
Imagine a ship with 100 passengers and crew drifting down a river that eventually cascades over a 1,000 foot waterfall. It's easy to plot the ship's course and the waterfall ahead. You might think 100% of those onboard would agree that something drastic must be done to either reverse course or abandon ship, but before we jump to any conclusion we must first identify what each of the 100 people perceive as serving their self-interest.
 
If life onboard is good for 60 of the 100, they may well rationalize away the waterfall dead ahead. Why risk the treacherous river currents by abandoning ship? As a result, the majority vote to tweak the ship's course slightly, thus dooming the 40 others who can hear the thundering cascade ahead but who are powerless to change course in a democracy.
 
This is the tyranny of the majority feared by some of the American Founding Fathers.
 
If 60% of the voting public is dependent on government spending, then they will vote to continue that spending regardless of its unsustainability, source or unfairness to those who will suffer most when the entire contraption collapses in a heap.
 
 
To the degree that government revenue is a form of public commons, then the siphoning of that resource to serve individual gain leads to the loss of the commons, as well as the loss of any notion of the common good.
 
With 60 of the 100 voting to continue the present course of State borrowing and spending to support their piece of the largesse, the ship is doomed to end up in pieces at the bottom of the waterfall, despite the utter obviousness of the catastrophe just ahead.
 
In other words, democracy functions when a sustainable equilibrium can be maintained with slight adjustments in course/policy. But when a dramatic change of course is required to save the system, a change that upends all the rentier skims and redistributes risk of loss to all those who reckoned they'd successfully offloaded all risk onto others, then there is no political support for the necessary radical change of course.
 
Those collecting a piece of State spending will vote to keep the ship firmly heading for the waterfall, because they fear the consequences of changing course or abandoning ship. Any radical change of course reintroduces the risk of loss that each self-interested participant offloaded onto the system itself.
 
Enterprises that haven't offloaded risk or secured guarantees from the State are forced to make radical changes when their survival demands it. Recent history is full of examples of corporations that were riding high and then failed to change course radically enough; those companies lost their way and were acquired for a sliver of their former value.
 
The political marketplace of democracy fails when the State has transferred risk and guaranteed the skim of enough voters.
 
The political marketplace of democracy also fails because self-interest is best served by influencing the State to protect one's private rentier skims and gains.The highest-leverage, highest-return investment is buying political favors and influence from politicos.
 
If average citizens could buy a semi-permanent escape from taxes for, say, a $20,000 "contribution" to the right politico, anyone with a tax burden of $10,000 or more annually would make this easy calculation: in a single decade, I'm going to pay $100,000 in taxes if I do nothing. If I buy the political favor for $20,000, I will save $80,000 over a decade.
 
That's a four-fold yield (400% return) on the initial investment. Where else can you reap that kind of guaranteed return?
 
It turns out to be remarkably easy to evade the transparency required to make democracy and the market function fairly. The political favor is buried in hundreds of pages of legalese jargon in a legislative bill or regulatory statutes. No one will ever discover the favor unless they know where to look.
 
Self-interest is intrinsically self-liquidating on a systemic level, something I analyze in depth in Resistance, Revolution, Liberation, for without an understanding of the distorting mechanisms of self-interest, we cannot understand why people will continue supporting a visibly imploding Status Quo: they will do so as long as they are getting a piece of that Status Quo that is free to them.
 

This is how systems collapse: those who have offloaded risk (a.k.a. skin in the game) to the system itself and guaranteed their job, income, pension or rentier skim via the State will continue to support the Status Quo that has benefited them so handsomely even as the ship tumbles over the waterfall to its destruction.

 
 

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Mon, 08/04/2014 - 10:31 | 5043548 RiskyBidness
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Whats in it for you........is Ebama!!  The first dumb black president......Those that voted for this jackass have insured the destruction of the US from the inside!!

Mon, 08/04/2014 - 12:00 | 5044022 gatorboat
gatorboat's picture

Anyone voting for O has a 3rd world mentality anyway, so living in 3rd world conditions O will bring to America should be no problem.

That's the core problem, most Americans these days have a 3rd world mentality, "just git all I can git for me, screw everybody else".

It's why America isn't worth saving.  Americans have turned to shit.

Mon, 08/04/2014 - 13:10 | 5044461 linniepar
linniepar's picture

Is it me or are some comments dissappearing today?

Mon, 08/04/2014 - 11:59 | 5044072 rogerramjet
rogerramjet's picture

RiskyBidness,

Have you bought new sheets for your KU KLUK KLAN outfitfit yet?

Mon, 08/04/2014 - 12:02 | 5044091 rogerramjet
rogerramjet's picture

Burning Cross kits avaliable at $29.95!   Ten percent (10%) discount for KKK members.  Must show membership card.

Mon, 08/04/2014 - 13:47 | 5044653 ZH Snob
ZH Snob's picture

what the elitist have done is to stack the deck in their favor, thus destroying any formerly fair market with a manipulated one that makes their self-interest the loudest voice of all.  this is destructive to all facets of life, the very definition of facism.

Mon, 08/04/2014 - 19:46 | 5046571 grunk
grunk's picture

Obola.

Infects everything he touches.

Mon, 08/04/2014 - 10:32 | 5043553 SelfGov
SelfGov's picture

So this can all be blamed on the rugged individualists who cherish private property over all else.

I knew it. :)

 

I still blame resource depletion though...

Mon, 08/04/2014 - 11:34 | 5043952 TheReplacement
TheReplacement's picture

A free market would account for resource depletion.  A free market with hundreds of millions of people making uncountable numbers of decisions based on what is best for the individual is the ONLY natural mechanism for enforcing variation.  Variation is the only thing that guarantees the species survival against non-world ending events.

 

Mon, 08/04/2014 - 13:06 | 5044150 Oscar Mayer
Oscar Mayer's picture

Well, if you believe in free markets then you should drop that bullshit ideology of Capitalism, because it's all about the capture and subjugation of markets.  Humans gather together and form societies for the primary purpose of mitigating economic competition.  Capitalism is all about artificially instigating economic competition, which destroys society from the bottom up by consolidating control over economic resources until only the top remains.  That's also why true Capitalists (not you, you're just a dumbass) support the welfare state and the magic of bankster credit creation.  We need to get back to a true Free/Private Enterprise market economy, guided by enlightened self-interest, and honest money.

Mon, 08/04/2014 - 11:35 | 5043959 TheReplacement
TheReplacement's picture

Duoble post.  Bad connection.

 

Mon, 08/04/2014 - 10:34 | 5043557 Cognitive Dissonance
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The definition of a good 'deal' is one where neither side feels they got exactly what they wanted, but no one is suffering great pain. On the flip side, what "We the People" have been experiencing over the last few decades, and particularly since the turn of the century, is what they call a unilateral agreement where one party can make changes without the consent of the other. It makes for lopsided agreements and eventually a dissolution of the contract.......read that revolution in this case.

Mon, 08/04/2014 - 10:39 | 5043584 Spastica Rex
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"The question isn't who is going to let me; it's who is going to stop me."

- Ayn Rand

Mon, 08/04/2014 - 10:43 | 5043605 Cognitive Dissonance
Cognitive Dissonance's picture

At one time the powerful were kind enough to offer us the illusion of government asking for forgiveness rather than for permission. Even that illusion is no longer sustained.

Mon, 08/04/2014 - 13:53 | 5044693 Amish Hacker
Amish Hacker's picture

No more happy face for dot gov, CD. The masks are coming off, and what follows, historically, is the application of naked power and control, without pretending there's some veneer of democratic process.

Mon, 08/04/2014 - 11:02 | 5043727 JRobby
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Such a forceful woman. Alan just loves her.

Mon, 08/04/2014 - 13:28 | 5044547 Landrew
Landrew's picture

Strange isn't it, Ayn Rand died living on welfare. I guess she didn't  live by her stated principles, just liked writing stories?

Mon, 08/04/2014 - 15:07 | 5045047 PoliticalRefuge...
PoliticalRefugeefromCalif.'s picture

@Landrew

So that means her many pointed and astute observations are of no value because she was human?

..let me do a little research on your life, I bet I can come up with a shitload of inconsistencies along with precious little insight.

Mon, 08/04/2014 - 17:50 | 5046070 Raging Debate
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CD - Correct. Even Larry Summers called for a new social contract. Believe that was 2010.

Mon, 08/04/2014 - 10:36 | 5043570 Seasmoke
Seasmoke's picture

You should have realized this when those with no skin in the game, were allowed to steal your houses and call it foreclosure. 

Mon, 08/04/2014 - 11:33 | 5043595 813kml
813kml's picture

Banksters have all skin in the game:  YOURS

Mon, 08/04/2014 - 12:06 | 5044109 rogerramjet
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Threw the family in the street.  Foreclosed on the house and then sold it at a profit for the bank.  Love capitalism.....

Mon, 08/04/2014 - 10:58 | 5043572 LawsofPhysics
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Wrong.  "Full faith and credit" bitchez...

 

What is the actual product of your labor, is it of real value?

 

Fuck the motherfucking paper-pushers...

Mon, 08/04/2014 - 10:39 | 5043585 TalkToLind
TalkToLind's picture

Here is THE biggest clue that we are steaming full speed towards that 1000 foot waterfall:

http://www.fdic.gov/bank/individual/failed/banklist.html

The MSM NEVER reports on this.

Mon, 08/04/2014 - 10:41 | 5043589 q99x2
q99x2's picture

Any self respecting murdering military would have taken the self-interested globalists as enemies and used the national stability thereby created to increase their coffers. Instead the UN's mercenary forces, also known as the US military, is laying off thousands of Captains and hundreds of Majors.

Time for another bankster to jump please.

Mon, 08/04/2014 - 10:40 | 5043593 Muh Raf
Muh Raf's picture

Me First and the Gimme Gimmes - you can't cheat karma, Karma Chameleon that is. http://www.youtube.com/watch?v=72SBsy325G0

Mon, 08/04/2014 - 10:41 | 5043596 krispkritter
krispkritter's picture

Reminds me of that old BB cartoon where DD is screaming "Mine! Mine! It's all mine!..."

Augmenting the FSA with an open border, millions of Public pensioners, and millions of Public employees... Vote "It's All Mine 2016".

Mon, 08/04/2014 - 12:34 | 5043990 TalkToLind
TalkToLind's picture

I've always liked the part where the genie reduces Daffy down to the size of a mosquito;  then Daffy chases after a pearl which is now the size of a beach ball to him.  He thinks he's rich because the pearl is huge.  He doesn't realize that HE has shrank.  It works exactly the same way when the Fed reduces the value of its fiat currency with endless printing and the creation of digital currency from nowhere.  It sucks but why should they care?   The sheeple continue to fall for it just like Daffy Duck did.

Mon, 08/04/2014 - 10:45 | 5043598 Ghordius
Ghordius's picture

the gist of this article is the old "what if the people find out they can give themselves free money". it's a fine starting point for a debate, yet I'm irked by this:

"Democracy is a political marketplace in which votes replace investor and consumer decisions as the mechanisms that enforce discipline and transparency."

if the US political system is supposed to be like a "political marketplace", then sorry, it's a market with an oligopoly

then there are two parties only, and no alternative

oligopolies are a hallmark and tell tale sign of corrupted markets. and the reasons for this corruption are twofold: machine politics coupled with redistricting and inadequate, creaking old voting systems which allow only one voice to be heard... that of the winner

add political funding laws as the icing on the cake...

machine politics is very difficult to eradicate. but voting systems are easy. some european countries are constantly tinkering with theirs. when was the last time the US added an Amendment to it's Constitution again?

Mon, 08/04/2014 - 10:54 | 5043656 NoDebt
NoDebt's picture

Why mess with perfection, baby?

Kidding.

But if you think passing new amendments, laws or tweaking voting procedures is going to fix what's happening, you're kidding yourself.  We have always been oligopolistic in our near-uninterrupted 2-party structure since the Constitution was written.  It worked reasonably well for a pretty long time, but now it doesn't.  What changed?  Not the structure to any great degree.  What happened is exactly as feared- we have reached the tipping point where too many are dependent on the government (from welfare queens to multinational corporations) as they vote themselves gains and special favors from the public coffers.  

Successful countries always proceed from more conservative to more liberal.  Never the other direction.  The other direction would never win anybody an election.  But it will eventually win them a revolution.

Mon, 08/04/2014 - 11:18 | 5043833 Ghordius
Ghordius's picture

your's is exactly the attitude I'm railing against. corruption is a matter of degrees, with tipping points. what you have today is not the political system of twenty or one hundred years ago. in fact, it was the XVII Amendment that radically changed how your country functions, as much as the "political money" laws of the last years

your country is unique in the belief that there are only two ideologies, or that "progress" is unidirectional from "conservative" to "liberal" with revolutionary resets... even though you are the only nation that even uses this terminology... in a radical different way from all the others

have a look what liberals, conservatives and socialists are, in the rest of the world. you'd be surprised

Mon, 08/04/2014 - 13:01 | 5044410 El Vaquero
El Vaquero's picture

Try the 16th Amendment and Wickard v Filburn.  Party politics are bullshit, but if you want to see where the rubber meets the road on the federal government going full retard, those are some important events.  The politics was corrupt before the 17th amendment.  The 16th Amendment and Wickard v Filburn are two events that allowed the federal government to usurp as much power as it has.  Without that power, things would look a lot different.

Mon, 08/04/2014 - 11:43 | 5043992 KickIce
KickIce's picture

In order for our system to work lady justice must be blind; unfortunately lady justice has become nothing but a whore, from the Supreme Court which has transformed itself into another arm of the Executive branch to any of the lower courts where the wealthy can buy favors.  The system also relies on compromise to get things accomplished, compromise enough and you forget where you started which I think is why Jefferson stated that "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."  The bailouts are a prime example where the system should have reset on its own but where the oligarchs and politicians stepped in to save their own skins all cloaked, of course, in the cover of the American flag.

Self interest (imo a good thing) and immoral people have been around from the beginning of time, in order for a society to be successful a a society must first recognize corruption (Again Jefferson "Enlighten the people generally, and tyranny and oppressions of body and mind will vanish like evil spirits at the dawn of day." and "Whenever the people are well-informed, they can be trusted with their own government.") and then properly deal with said corruption.

Mon, 08/04/2014 - 12:55 | 5044371 Oscar Mayer
Oscar Mayer's picture

The political structure of the U.S. was dramatically changed by the Article 5 violating, unconstitutional 17th non-Amendment.  That changed us from a correcting and manageable Republic into a insane Democracy, locking into place the single purpose, two party system.  The state's repudiation of the unlawful 17th and seating their selection of senators would go a long way in a start to alleviating our oligarchic induced problems.  Keep in mind; Senators selected by, and answerable to, state's legislators do not need campaign contributions.

Mon, 08/04/2014 - 15:14 | 5045075 malek
malek's picture

The previous responders fell into the usual convenient thinking of tipping points and single-causes.

What changed?

The language was redefined until it meant what the meddlers wanted it to mean.
Very prescient by George Orwell, and his most important point in "1984" (not universal surveillance.)

Mon, 08/04/2014 - 10:45 | 5043602 The Wizard
The Wizard's picture

 

Very astute obervations. If the waters appear to be unknown and too treacherous, it may be safer to stay on the ship with the captain hoping he can save it from disaster. Most people will place more value on the captain's expertise than their own intuition.

Mon, 08/04/2014 - 10:46 | 5043627 Cognitive Dissonance
Cognitive Dissonance's picture

The cult of (worshiping) authority.

Mon, 08/04/2014 - 11:04 | 5043737 ThroxxOfVron
ThroxxOfVron's picture

"The cult of (worshiping) authority."

Observation # 1: many of the passengers/sheeple have been hauled on board agaisnt their will and locked in the hold like the farm animals that they are regarded as by the bureaucrats/crew and rentier collaborators; and are being lied to about the course, destination, intended duration, and hazards of the journey.  

 

Observation #2: The distractions engineered by the bureaucracy/crew and rentier collaborators include all the cherished religeous and ideological and social customs and exuberent condemnations of victemless crimes that the state/ship should be preculuded from addressing in any manner in the first place.

Mon, 08/04/2014 - 14:00 | 5044734 Amish Hacker
Amish Hacker's picture

Authority is respected because it allows the individual to offload his personal responsibility onto the captain. And usually, if the captain has any integrity at all, his expertise carries the day better than the passengers' emotional responses would have. But sometimes you find yourself on the Concordia...

Mon, 08/04/2014 - 11:38 | 5043609 falak pema
falak pema's picture

Self Interest is John Galtism par excellence.

The ideal hero of industrious self aggrandisement, the ULTIMATE aim of humanity. 

We revere "going Galt" and refusing to pay marginal income tax that exceeds 8%, like Apple does! No more handouts to the needy. 

CHS is now being forced to burn his own iconic matinee idol created by Ayn Rand. 

If democracy were the fiction where only the exercise of "market impulses" reign, which by definition are short term --something that fits the agenda of a populist politician who loves to feed the knee jerks of his constituents--, then all reference to perennial values, such as rule of law and respect of ethics, becomes collateral of practical expediency whose loss can be compensated for by a CDS instrument ! 

Hey Mr Tambourine play me a song on moral hazard now blowing in the wind. 

Mon, 08/04/2014 - 10:46 | 5043610 Renfield
Renfield's picture

<<without an understanding of the distorting mechanisms of self-interest, we cannot understand why people will continue supporting a visibly imploding Status Quo: they will do so as long as they are getting a piece of that Status Quo that is free to them.>>

And therein lies the hope. At some point the system stops benefitting the majority, then the significant minority. Meanwhile the disadvantaged side gradually crowds up, until it reaches a tipping point of power.

There is no chance for a "global government". There is no logic that supports the concept. There are only shifts in power, and we are undergoing a big one now which of course takes a few years. Those who think any market "goes up forever" have not thought through hyperinflation.

I think as powerless peasants our goals in life (these days) should be simple: 1) survival and 2) integrity. During a collapse, these may be mutually exclusive but only for the (painful) short term. In short, we should just try to stay out of the way and avoid being co-opted, by anyone.

Mon, 08/04/2014 - 10:47 | 5043636 mastersnark
mastersnark's picture

The corollary to the above is "The minority must then volunteer to be bound by the majority rule."

The whole system is dependent on continued obedience by the minority and the moment they say "no" we have Lexington and Concord 1775.

Mon, 08/04/2014 - 10:50 | 5043649 ThroxxOfVron
ThroxxOfVron's picture

"The political marketplace of democracy also fails because self-interest is best served by influencing the State to protect one's private rentier skims and gains.The highest-leverage, highest-return investment is buying political favors and influence from politicos."

Lobbying and payola, carve-outs and exemptions, aren't features of a healthy democracy but are distinctly associated with fully private transactions of various flavors.  Private rentier income streams derived specifically from the commons are indicative of oligarchy disguised as democracy.


Of course this does not preclude the failings of democracy itself as described:

"If 60% of the voting public is dependent on government spending, then they will vote to continue that spending regardless of its unsustainability, source or unfairness to those who will suffer most when the entire contraption collapses in a heap."

 

Mon, 08/04/2014 - 11:02 | 5043709 Emergency Ward
Emergency Ward's picture

Is it axiomatic that government corruption is democracy in action?

Mon, 08/04/2014 - 11:26 | 5043895 messymerry
messymerry's picture

We have seen the enemy and the enemy is us...  'nuff said.

Mon, 08/04/2014 - 10:55 | 5043672 PeeramidIdeologies
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Prefect example of how the "state" transfers it's obligations unto an unaccountable identity. They simply imply though manipulated statistics that said investment was unable to provide enough return to cover all participants and sadly we've been forced to choose "winners' and 'losers'.
Being that you haven't legal discourse to support your claim, you are a loser.

What a fuckin joke

Mon, 08/04/2014 - 10:56 | 5043677 Dr. Engali
Dr. Engali's picture

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.” 

Alexis de Tocqueville

 

 

“Democracy extends the sphere of individual freedom, socialism restricts it. Democracy attaches all possible value to each man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.” 

Alexis de Tocqueville
Mon, 08/04/2014 - 10:59 | 5043699 icanhasbailout
icanhasbailout's picture

Lumbricus Terrestris appears to be undergoing a vector modification

Mon, 08/04/2014 - 11:10 | 5043775 GreaterFool1965
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Carly Fiorina ripping into US tax and regulatory structure live CNBS.  "crony capitalism is the combination of big business, big government and big labor all being able to handle big complexity.  And so what's happening in this economy is, yes big businesses are understandably complaining about an environment that is no longer competitive globally, but in fact big businesses are doing far better than small businessses."  She earlier also made the point that the Fed's policies have helped big businesses, and in general 'equity owners', while hurting small businesses and Main St.

Mon, 08/04/2014 - 14:22 | 5044858 Imagery
Imagery's picture

Big Biz is doing MUCH better than small biz 'cause small biz, just like individuals, have no paid whores on K Street bribing US Congressmen on the take.....just as CHS says!

Mon, 08/04/2014 - 11:12 | 5043785 gcjohns1971
gcjohns1971's picture

"One enduring if rarely stated principle of Neoliberal Democracy is that the single-minded pursuit of self-interest magically produces an equilibrium which serves everyone's interests"

 

This is one of them most ironic statements I have ever read.   It is supposed to convey the idea that self-interest is not a good thing, that people would be better-off looking out for 'others' needs than their own.  This begs the question of whether it is even possible to know others' physical, psychological, and social needs to the degree needed to attempt to fill them.

Central planners world-wide, and over centuries, have proven time and again the answer - NO IT IS NOT POSSIBLE TO KNOW ANOTHER PERSON'S NEEDS ADEQUATELY TO PRICE AND FILL THEM.

So the first problem with the statement is that by implication it presents a false alternative.

The second problem is logical.

Q: Why does the author of this phrase imply that self-interest is not beneficial?

A: Because so-called 'Capitalist' economies (which are actually socialist economies, whose single largest expense item is social redistribution payments) are crashing.

Q: Why are those economies crashing?

A: In a word:  THEFT.      Various oligarchs and entities contrive to structure socieity to provide them with unearned wealth from other people's production.  Common people solicit government, and other social organizations - gangs by any other name, though they pose as legitimate political parties - to seize property acquired through production, and redistribute it to those who did not engage in production.

Q:  In what way is THEFT an example of self-interest?  Is it in any person's self-interest to assemble a society consisting only of thieves and murderers?

THE AUTHOR HAS IMPLIED THAT IT IS.

A: Imagine what that world would be like for the thieves.  No production. Only theft.   They would be in caves.  Of course that is not self interest!!!!  With that one ironic phrase the author has prescribed as medicine the same 'public interest' (redistribution, unlimited grants of authority to figures that can only be accurately called oligarchs) which brought us to the edge of civilizational collapse.

 

Civilization has no room for primitives.  Those who would take 'welfare'  or vote themselves cash give-aways from the 'public' purse are not being self-interested, they are displaying PUBLIC INTEREST - specifically interest in the PUBLIC PURSE.  They are being PUBLIC MINDED - all of these schemes rely on the PUBLIC SECTOR NOT THE PRIVATE ONE.

Name one such scheme that is destroying civilization right now, that has no government program behind it, and or which is not based on theft.

Theft is not self-interest in the human thinking sense.  It is simply animalistic 'grab the fruit and run' behavior.  Absent a public sector to subsidize such behavior, those who engage in it starve.

Mon, 08/04/2014 - 13:03 | 5044413 daemon
daemon's picture

" It is supposed to convey the idea that self-interest is not a good thing, that people would be better-off looking out for 'others' needs than their own. "

What is a society ? What can make it cohesive ?

 

 

" This begs the question of whether it is even possible to know others' physical, psychological, and social needs to the degree needed to attempt to fill them. "

You don't have to know the needs of others. You create them, then, and only then, you fill them. That works quite well, ....  that's, in part, what culture and advertising are for .

Mon, 08/04/2014 - 11:18 | 5043838 messymerry
messymerry's picture

 This is an excellent article. How many times did Charles mention “”””transparency””””. How many times has Obrama blama ding dong promised just this??? The rats and the cockroaches scurry for cover at the first hint of light. The rats is big media and big business and the cockroaches is .gov.
Oblama also promised us a civilian military force on par with the standing military. On that promise he has kept his word. The streets are going to be stained red.

Mon, 08/04/2014 - 11:20 | 5043845 The Capitalist ...
The Capitalist Review's picture

This can't be reitereated enough, a democracy is nothing more than 6 out of 10 people voting to take 4 people's things.  

Read Hoppe more than Smith.  

Mon, 08/04/2014 - 11:51 | 5044026 Eyeroller
Eyeroller's picture

More like 5.1 out of 10 voting to steal 4.9 people's stuff.

Mon, 08/04/2014 - 12:09 | 5044127 Almost Solvent
Almost Solvent's picture

Or 2-3 lobbyists getting a vote to steal everyone's shit that didn't hire the lobbyists

Mon, 08/04/2014 - 14:02 | 5044741 Amish Hacker
Amish Hacker's picture

Or two wolves and a sheep voting on what's for lunch.

Mon, 08/04/2014 - 11:20 | 5043857 gcjohns1971
gcjohns1971's picture

"The rational, self-interested participant will minimize his own expenses and maximize his income/gain by exploiting the commons--assets shared by all participants"

 

Here is the logical flaw again.

If everyone is pursuing their self-interest exclusively, what is this 'commons' thing?  It doesn't exist.

This is a straw man.  It says, when everyone is private, and governance lacks authority over property - only behavior, specifically the behavior that violates property - then each will exploit the commons.

WHAT COMMONS?  When everyone is private there is no commons.

Mon, 08/04/2014 - 11:24 | 5043881 KnuckleDragger-X
KnuckleDragger-X's picture

Same as it ever was....

Mon, 08/04/2014 - 11:39 | 5043973 goldpercent
goldpercent's picture

While I see arguments in this article regarding how groups fail to scale, how being forced to stay with a group is a problem and how employees of government are corrupt, I don't see anything successfully critiquing the pursuit of self-interest. 

Mon, 08/04/2014 - 11:46 | 5044011 damicol
damicol's picture

Why do people suffer the tyranny of the majority.

I really cannot understand that, They whine about it, they complain about it, they whinge, kick the wife, do stupid things, get apoplexy and heart attacks but till they pay their fucking taxes,  still kow tow  to bureaucrats and other fucking Nazi  bastards , fill their fucking forms in and moan like little girls at the same time.

It s your fucking freedom for fucks sake, Tell them all to fuck off, stoup paying taxes  get the fuck out of their, move do anything but stop letting scum rule your fucking lives.

Be devious, stop filing tax returns, burn everything that remotely looks official unopened, get a bank account off shore, Yes, fuck off abroad just to open it if necessary, set up an off shore company.Tell no one anything, move house often, renting never owning, and use a proxy,  if you want property buy something off shore with the tax money you don't pay now.

Once you are off the radar , you can stay off for decades. The longer you are off the more invisible you become.

Stop your criminal activities, stop taking chances, its not hard to not get get arrested, even with the Nazi thieving scum  calling them the fucking police.

I know, you won't do it because already you have found a thousand excuses as to why not.

It is why I lose sympathy, because I do it and I know dozens more of what must be literally tens or hundreds of thousands that do it.

Even I can hear that waterfall roaring like crazy now and I left the ship years ago, my little lifeboat only has room a very few, but we are tethered very securely to the  bank now, and truth is that no one  from where I stand seems to leaving the party below decks let alone  uncovering them and untying the gripes

 

 

Mon, 08/04/2014 - 11:53 | 5044043 gatorboat
gatorboat's picture

Wow, lots of words to say insiders are looting America.

Mon, 08/04/2014 - 11:54 | 5044046 Eyeroller
Eyeroller's picture

Teflon Barry: 

My fellow Americans, ask not what you can do for your country, ask what your country can do for you.

Mon, 08/04/2014 - 12:15 | 5044159 Loophole
Loophole's picture

People trade because each sees himself better off because of it, and most of the time they are. The idea that it's always just "offloading risk" is stupid.

The modern world is a consequence of production and trade.

Mon, 08/04/2014 - 12:55 | 5044344 besnook
besnook's picture

free systems encourage self interest. unbridled self interest always eventually leads to self destruction. what is the solution? there is none. humans are hotwired for self interest, therefore self destruction.

buddhists understand this and understand the only remedy is diminished self interest or if i am interested in your interests and you are interested in my interests then all of our self interests are fulfilled and the commons is used most efficiently. it is not perfect in practice but it beats the free for all nature of western culture for efficient allocation of resources. an example is the social structure of japan. the country comes first, the employer second, the village third, the family fourth and the individual last. it is a socialist dream, not a legislated distopia but a social contract the entire culture is built upon.

Mon, 08/04/2014 - 15:07 | 5045044 malek
malek's picture

Charles and besnook:

That's an oversimplification.
Unbridled short-term self interest eventually leads to self destruction.

If we could get more people to think for themselves about long-term consequences... (and not confusing blind following of deception artists such as Paul Krugman as sophisticated thought)

Mon, 08/04/2014 - 13:54 | 5044698 LongSilverJohn
LongSilverJohn's picture

Blind to the fury of their own self-destruction.

Mon, 08/04/2014 - 14:04 | 5044760 DOGGONE
DOGGONE's picture

PRIME EXAMPLE OF SELF-INTEREST IS:
The powers-that-be keep these histories out of sight!
http://patrick.net/forum/?p=1246619

In short, "F___ the people!".

Mon, 08/04/2014 - 14:19 | 5044835 Loophole
Loophole's picture

besnook wrote,

". . . unbridled self interest always eventually leads to self destruction."

This is a simple contradiction.

Mon, 08/04/2014 - 16:29 | 5045586 TRN
TRN's picture

Excellent article. The question it raises is: how do we establish and maintain an effective political and economic structure?

Mon, 08/04/2014 - 22:34 | 5047317 Minburi
Minburi's picture

This would make more sense if there were a sound currency involved.

With the funny money we are forced to use, this analogy does not apply.

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