Mental Mistakes

Chapter 7
The Rule of Should

If we need should committees to keep interest rates at the right level, and wage rates at the right level, and housing prices at the right level, and transport prices at the right level, and a host of other prices at the right level, then why not just empower one central committee to keep all prices at the right level? If this would mean that all production would have to be mandated, and all work, and all consumption too, then why shrink from it? Russia did not shrink from it and—well, never mind about Russia

If, as subjectivists claim, the essential of socialism is fairness, then control by a central committee should achieve that. If you look at such a society and see the essential as injustice, then analysis shows that the subjectivist agrees with you. After all, there have to be winners and losers. The losers will naturally feel an injustice, but that's only fair. Someone has to be favored, and someone disfavored. Any decision goes in favor of some, and against others.

Subjective thinkers assume all decisions are subjective decisions. For them, to think is to compare things to the wish list. To decide is to rank things in order on the wish list. On one level, they do grasp that trade has to be voluntary, because traders have to agree. On another level, that seems phony, because it implies an objective decision, which is not quite personal, but not quite impersonal. Does it have something to do with "balance"?

If Subjectiman used essentials instead of preferences, objective decisions would not be a mystery. If you jump out of the way of a truck, is that a subjective decision? No, the subjective decision would be to defy the truck. Who the hell does he think he is? I've got just as much right to be here as—well, subjective decisions can kill you.

Objective decisions are done by essentials rather than preferences. They are based not on what I want, but on what is. An objective price is one at which a trade took place. Since the trade was voluntary, all parties to the trade were better off after the trade than before the trade. We trade to improve things.

In socialism, exchanges are not trades but theatrical shows, since they are not voluntary. To get your allotment of bread, do this: take some of the rubles they passed out, stand in that line, and exchange some rubles for whatever they give you. It's a bookkeeping thing.

Is there a market under socialism? You could go to Cuba and look. A writer for the Economist magazine did that, and reported in the issue for January 2, '99: "Cubans have become wary and secretive. Most do not keep bank accounts (because the government would then know how much money they have). The black economy is huge, and more efficient than the state sector." (page 32)

Illegal markets are called "black markets," or "gray markets," or "informal markets," or sometimes "flea markets." There are markets in Cuba, in spite of the government. A restaurant owner is quoted: "As soon as something begins to work, it is halted. As soon as anything becomes profitable, it is stopped." That is the rule of should.

Since people have been starving under socialism for most of a century, it has become a cliché that "socialism cannot feed its people". Why bother to examine it, then? Because that saying takes for granted two of the worst mistakes of passive minds and subjective minds: the idea that a government or "system" is supposed to feed people, and the idea that it owns people.

When the president "takes credit" for "creating" a million jobs, what on Earth does he mean? A job is a voluntary exchange of effort for money. It is a trade on the labor market. The trade takes place when, first, I need something done that you can and will do; and, second, we can decide on a price. An interesting thing about the labor market is that there is no limit to the things I need done. It follows what is called "Say's Law", an economic induction showing that there are always more needs to be satisfied, because of the insatiable nature of humans. To see a dramatic instance of this, think of the race to be first to sail a balloon around the world. Think of the thousands of jobs being done, of the money being spent, of the effort traded. Socialists call it "anti-social waste". Balloonists call it prosperity.

Another interesting thing about the labor market is that the unlimited demand for workers is subjectively called a "restricted supply" of jobs; and the restricted supply of workers is subjectively called an "unlimited demand" for jobs. Talk about subjective confusion!

You can see the origin of this confusion at the flea market. You are looking for a heater. Aha! Perfect! But you have run out of money. So now you look for a job. Unless you actively check the differences, you can lump "job" in with "heater" as a good thing to have. You could take the essential as getting a job rather than selling your effort. A passive mind would feel more comfortable with the idea of "landing" a job than with the idea of "marketing" oneself.

Subjective thought sees jobs as desirable, so it demands jobs, to be provided somehow. It is like a merchant demanding customers, to be provided by somebody somehow. "What?" you might say to the merchant. "You regard customers as a commodity to be provided?" But it is not polite to say, "What? You regard jobs as a commodity to be provided?"

When a politician claims to have "provided" jobs, however, that's what he is doing. He has willed this valuable commodity into existence. He has "lowered interest rates," to "stimulate demand," which "causes" job formation. It is as if by a wave of the hand, he has produced a host of brand new things to be done.

Actually, he lowered interest rates by passing out more money, so the increase in supply made the price of money drop. He has expanded credit, which is being used for money. So there is more money to be used in trading the same supply of goods, which means more of it gets used for each item. In other words, while the price of money goes down, prices in general go up. When the price level goes up, the minimum wage is less in relation. Presto! There are more jobs! The new things to be done were there all along, not getting done. Now that the minimum wage has become relatively lower, people can afford to get them done.

People who are looking for jobs often do not realize that they are looking for customers. If they are passive, they think they are being assigned to a niche. If they are subjective, they think they are communicating demands. The price goes down as the demands go up. As long as the price can go down without limit, though, they can still work.

To see if the demand for workers is limitless, go to the flea market and offer to help set up booths. "You want this put over here?" "Yeah! Thanks!" If the price is zero, demand is always there. Notice that in most cases, if you help set up a booth, that guy will help set up your booth. Trading effort for effort is easy, since effort is divisible, and portable, and valuable.

Now try this: "So you do taxes! Tell you what: do my taxes and I'll help you set up your booth the rest of the year." Now you're trading effort for skill, which takes more bargaining. The objective way to decide would be to find a money price for your effort and a money price for his skill. Then you would know the truth about how much your effort was worth in comparison to his skill.

You have discovered why socialism always fails. Without voluntary exchange, there are no prices. Without prices, there is no way to compare skilled labor to unskilled labor, or to settle countless other trading dilemmas. When socialism tolerates the black market, that is not generosity, but a way to find out real prices.

In killing the market, socialism kills the division of labor. Everybody has to actually learn everything needed for survival. People who cannot do self-surgery end up with nothing to trade for surgery. Socialism cannot feed its people because it does not allow its people to feed themselves. In the end, since it regards the people as "its" people, it gives up any pretence of respecting rights, and degenerates into chaos. It stops being a society, let alone a government.

With half the world as object lesson, subjective thinkers do not often deny the disaster of full socialism. What they demand instead is "equal outcome", which means "fairness", which means, "Do not ignore the wish list!" Should committees, they say, should not be abolished, but watched by a "should-not committee", so that in making things fair, they do not make things too unfair—a tacit acknowledgment that should committees are workable only when their decisions are the same as market decisions, which means only when they are unnecessary.

What would happen if all should committees were abolished, thus finally getting rid of socialism? The ones that worked would not be missed, since they made market decisions anyway. The absence of a minimum wage would get rid of any unemployment, and most homelessness. The absence of maximum rents would cause rents to rise at first, and then fall as the housing shortage was cured by building and renovation. Businessmen would save trillions in regulation costs, which would encourage them to try new ventures, which would increase the demand for labor, and multiply wages.

Passive non-thinkers would suffer at first because of their gullibility. They would learn, as always, the hard way. They would learn to check things out for themselves instead of waiting for a committee to do it. Their minds would become more active, and their spirits would lift.

Subjective thinkers would live in fury. If they wanted to save a forest, they would have to raise money and buy the forest. If they wanted more money, they would have to trade more effort. If they wanted space travel, they would have to pay for space travel. If they wanted money given to the poor, they would have to earn money and give it to the poor. They would have to use their own money to meet their own demands, instead of stealing other people's money.

As their fury spent itself, subjective thinkers would find that the market now gave them objective truth. They would experience that as at first a confusion, and later a very great value. They would find themselves getting things right the first time. They would come to appreciate efficiency, since less waste would put money in everyone's pocket. They would find that as society got richer, all demands became easier to satisfy.

How do we know all this would happen? Because it already did. At one time, subjectivists lived in huts, and demanded safety not from sharp-edged toys, but from rape and pillage. Then active minds established property rights, which brought on the Industrial Revolution, which raised living standards at a breathless pace. Where once a scribe turned out a book a year, now a publisher turned out a book a second. In those books were methods for increasing the efficiency of production, not by factors of two or ten, but by factors of a hundred and then a hundred again. Subjectivists could not think of demands outrageous enough to keep up.

In markets that are relatively free, that is still true. Demanders are afraid to buy a computer, lest they miss out on the greater demands satisfied by the newer one. Do you demand a telephone for all? How about a telephone in every pocket? Do you demand a really accurate compass? How about one that shows you a map, tells you where you are, shows where you want to go, and tells you how to get there?

If such wonders come from Silicon Valley, why do only horrors come from City Hall? If such wealth is created in one place, why is it stolen in another place? Why are those who once demanded protection from rape and pillage now demanding protection from Uncle Sam?

It is because of the worship of the great god should.

What is the essential thing here? "Well, I know what it should be." What is the true price? "Well, I know what it should be." What is the objective value? "Well, I know what it should be."

Living standards shot up in the past when there was wide availability of factual information, and the freedom to use it. When you substitute an arbitrary should for a fact, you are saying "I want" in place of "I know". So an economy that once grew ten percent in a year now grows two percent. The fast growth was "unbridled" and "rapacious". The slow growth is more what it should be.

An economy controlled by a central committee is supposed to, finally, have to do what it should. Instead, it collapses. The problem is that every individual has an entirely different should, so any market controlled by shoulds is in chaos. The problem of social cooperation is to combine extreme variations of want and need into a smoothly working division of labor that satisfies all. No central committee could ever figure it out. Markets, however do it all the time, by letting individuals trade as they choose. Since each trade satisfies those traders, and all trades interlock, the totality of trades satisfies the totality of traders.

If you think about it, why would it not work that way? Either humans are able to produce enough to live on, or not. If not, the species died out long ago. If so, why not just let people do it? Why not kick out the tyranny of subjectivity? Why not overthrow the rule of should?

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