Sunday, January 8, 2012


(Clear Disclosure. We’ll be using an acronym because “kind, omniscient, benevolent, omnipotent, just, and good government” is a bit windy. We’ll use kobojagg, instead.)

The legitimate transfer of wealth requires a transfer of goods or services. If you start the career of a nail when it leaves the foundry, you will see that every time it changes hands, someone makes money on it. If that isn’t impressive enough, you can follow its career before the foundry, and look at the iron ore, nickel, coke natural gas, and all the millions of commodities that went into making that silly little nail.

The Keynesians have never understood this. They do not believe that anything has any value other than what people arbitrarily place on it – what they are willing to pay for it. It is certainly true that in a statist economy with fiat currency, like most of the world has today, the value of money is entirely subjective. In their scheme, you could throw our little nail in the trash, and just have people giving each other money.

(The phrase, “Supply-side economics” is a tip of the hat to the Keynesian’s blind spot on the necessity of goods and services in an economy. It is so foreign to them that we have fallen into their linguistic trap of using “supply-side” to describe the alternative to… whatever the hell they advocate - “government-side,” or, “dictator-side,” or maybe just, “off side” economics. Like “trickle-down,” the phrase has become a pejorative used to describe principles that actually allow humans to survive. Operationally, both supply-side and trickle-down are aspects of a free, capitalist economy.)

In a Keynesian system, the government prints the money, and because it is a kobojagg, it assigns to the money a value that will allow everyone in the economy to survive. The kobojagg gives the money to its first-level bureaucrats. They keep what they need and give what’s left to the second-level bureaucrats. This process continues down the steam, with each person who handles the money keeping only what he needs.

The money goes back up the chain through taxation. Everyone has kept only what they need, but then the kobojagg says, “No, you don’t actually need quite that much,” and takes some of it back. When the kobojagg has collected taxes from everyone in the economy, the process starts over; they give the money to the first-level bureaucrats, and it trickles down from there. Note that the last guy in the chain is getting some pretty watery soup, and he’s not going to be happy about having to give some it back. So he raises a stink about it, and the government, being a kobojagg, says, “Okay. Here’s a progressive tax schedule, so that you don’t have to give as much back as the guys upstream from you.”

Now the guy on the bottom is happy, or at least, less unhappy. But the guys at the top are now thinking, “I’m going to have give back more than I used to, so I’m going to cook the books a little bit, and claim that I need more in order to cover the higher taxes.” It doesn’t take a genius to figure out how to play that game. So at every level, everyone who handles the money keeps a little more than before, and by the time the bucket gets to the last guy, it’s down to seeds and stems again. (Yes, I survived 1968.) Since more and more of the money is skimmed off, the government says, “Well, okay. We’ll just print some more.”

Now, even in a Keynesian world, folks have to eat, and not everyone can look really good naked, so we need to look at the production of stuff for folks to eat and wear. Let’s start with a tater. A farmer has some good ground, so he plants taters. He has to eat until the taters can be marketed, but that’s okay because the kobojagg will give him money. After all, it’s just paper, right? Paper to which we stupid, non-degreed commoners are foolish enough to ascribe value.

So the taters come up, and Mr. Farmer takes them to town. He got a dollar a pound for last year’s crop, but this year, Mrs. Farmer has blessed him with another baby. His acreage hasn’t increased, so in order to feed the little varmint, he’s going to have to charge a buck and a dime a pound. Everybody at the market pitches a fit, but because Mr. Farmer pushes the plow without benefit of livestock, and has muscles in places where most people don’t even have places, they give in and pay him.

Guess what happens now? The people in the village, though full of taters, raise a stink to the kobojagg, demanding more money be passed down. The kobojagg now has a choice. It can print more money, or it can send out enough men to whip Mr. Farmer into lowering his prices. It’s a lose-lose situation, because even if they get the evil, one-percenter Farmer to lower his prices, he’s now going to demand more from the kobojagg in order to feed the fruit of his loins. (That's the first time I've used that term in an essay. It may not happen again.)

Has this process gotten incredibly long-winded and cumbersome? What is it going to look like when you add to the taters every, single thing that is produced in the economy, and add to Mr. Farmer every other citizen? And, sure as the world, some sorry sucker near the top of the stream is going to go bad and actually take all the money he WANTS, and what’s that going to do? And if that isn’t mind-boggling enough, let’s throw in a war, or a terrible hurricane season.

The bottom line is that John Maynard Keynes was an idiot, but not necessarily an evil man. All he did was have a stupid idea. However, everyone who presently subscribes to his stupid idea is evil because they have 80 years or so of proof that it really is a stupid idea. People who do stupid things once are just human. People who do them a second time are fools. People who point guns at others and force them to do stupid things are evil. This last group is very heavily represented in the American government, with no regard to party affiliation.

PS – as an afterthought, I should mention that the only way to get otherwise intelligent, moral people to go along with this kind of stupidity is if the kobojagg has a monopoly on gun ownership.