The Flip-side of Economic Inequality

Robert Reich provides a detailed account of how wealth disparities have widened since Ronald Reagan took office. However, he neglects to mention a single fact about the economic malaise that plagued his predecessor, Jimmy Carter. Economic trends do not emerge over one or two presidential terms and a single Presidential Administration does not have the power to fundamentally widen or bridge the income gaps. He also credits the Eisenhonwer Administration with diminishing the wealth gaps without addressing any connection between their policies and the Structural Crisis that emerged during the Carter Administration.

The Great Recession that we are in has been caused by a concatenation of events spanning for multiple decades. FDR's NIRA may have provided jobs for certain government cronies, but they have actually prolonged the Great Depression because the costs of obeying regulations disproportionately affected small businesses. Large companies that are well-connected with the government can more easily absorb these costs and even negotiate the enactment of policies that lessen the severity of the regulatory burden. However, what merely impedes the growth of big-time government cronies can bankrupt smaller enterprises. That is one reason why NIRA is widely recognized as a failure. With varying degrees of applicability, the same can be said about many other programs of the New Deal because they were founded on similar principles: forcing companies to act more responsibly by imposing regulations upon them that the elite and well-connected enterprises can manipulate to their own advantage.

What Reich has not mentioned about the Eisenhower Administration is that it continued governing in the same fashion. How would he like to tell his liberal friends that the top bracket was taxed at 91%? Would Professor Reich's students still support him politically if he revealed that fact about the Presidential Administration he idolizes? Would this eminent "public intellectual" dare to even begin speculating about the causes of the Structural Crisis of the 1970s? I am sincerely curious how he would go about blaming the Republicans for that debacle because none of the Presidents between the New Deal and Carter endorsed any economic doctrines that even superficially resemble the economic principles of the contemporary Republican Party.

To his credit, Reich was correct that the wealth disparities have widened since Reagan. Yet, what he overlooked was that this outcome was a trade-off for more severe economic plights that plagued the nation. Under Carter, inflation and unemployment were both in the double-digits and keeping the highest tax brackets at over 70% did not help matters. The American citizenry spoke loudly and clearly in the 1980 Presidential Elections where Reagan claimed 44 out of 50 states. I can imagine that Reich would remonstrate that Reagan deceived the general public about his policies regarding wealth inequalities, but that leaves one to wonder why he was re-elected carrying 49 out of 50 states.

Reich is not your typical naive liberal that you'd find among the Occupy Wall-Street movements. He is well aware that despite the income inequalities that the Reagan administration commenced and perpetuated, it solved a broad range of economic problems that have been unheard of for decades. There is nothing that could be said about his decision to suppress these facts other than that he was intellectually dishonest.

Modern Education and the Harlotry of Minds

Spectacular, millennials prefer a free-market economy to a government planned one, but at the same time sympathize with socialism more than capitalism. They want tax cuts, but at the same time do not want to eliminate or diminish the institutions of the welfare state. They want more government services to provide everyone with a "decent living", but at the same time oppose policies that lead to greater public sector interference in their lives.

Other than mental illness, what could explain why their worldview is so hopelessly ensnared in irreconcilable contradictions?

It appears that today's youngsters display the "I want to have my cake and eat it too" and that is the attitude of an entitlement complex. However, arguments could be made that the foregoing generations such as the Baby Boomers and GenXers displayed similar moral deficiencies. When adjusted to inflation, the minimum wage of 1968 can be deemed roughly equivalent to the value of a $25 per hour salary today.

The average millennial does not enjoy nearly as much material comfort as his parents and grandparents did in their youth. Hence, the entitlement complex alone cannot explain this bizarre assortment of ideologically incompatible ideas.

I propose that the true answer to this riddle lies in the problem of education in this country. It is a well-documented fact that grade inflation began increasing dramatically in the 1970s . Correspondingly, it has become typical for students to spend much less time on homework and the most intellectually challenging aspects of academic curricula were modulated or eliminated.

For example, literature instructors no longer called for students to understand the universal themes in stories and instead encouraged them to reflect on the emotional reaction this experience evoked. Fewer students majored in hard science, engineering or even philosophy and more displayed a distinct preference for softer academic disciplines such as Women's Studies or Ethnic studies.

Professors, students, deans and campus radicals alike categorically rejected the doctrines of individual rights. By the same token, they dismissed philosophies concerning the objectivity of knowledge and morality  as "intolerant", "bigoted" and "uncool". They then replaced the philosophy of individual rights with doctrines of cultural relativism, subjectivism and other tenets of postmodernism implying that all knowledge is relative to perspective, cultural prejudice and arbitrary opinions.

Consistently with this point of view, the leftist ideologues who taught the soft classes codified these intellectual intuitions in clear-cut ideologies of Political Correctness and Identity theory. The former posits that because all cultures are equal, it is always wrong to criticize demographic groups belonging to ethnic minorities or their cultural values. Identity theory implies that because there is no such thing as objective moral values, the individual cannot define his character through his own achievements. Instead, his identity is defined in whole by his affiliation with ethnic or political groups he belongs to.

Relativism and its two aforementioned tenets emerged as the centerpiece of the mainstream university ideology and this dramatically accelerated the trend of massive grade inflation. In 1988, grade A’s represent 43% of all letter grades, an increase of 28% since 1960 and 12% since 1988. With the massive proliferation of online degree mills such as Strayer, Ashford, Kaplan, DeVry and University of Phoenix, it is evident that grade inflation increased by an even wider margin in the last two and a half decades. Additionally, this is becoming increasingly evident in light of the fact that conventional four year schools are emulating the degree mill paradigm by offering more online classes and replacing tenured professor positions with callow TAs. At the very least, today's average academic institution bears a much closer semblance to University of Phoenix than to a traditional University where nearly all intellectually gifted students coveted admission in the 40s and 50s.

Today, professors can be dismissed for entertaining ideas that can be construed as offensive to certain minority groups and could even encounter serious problems with the Dean for not awarding sufficiently high grades to enough Black students. In most cases, they simply have no choice but to continue softening their academic curricula and discourage students from pursuing intellectually challenging majors.

The blame should not rest squarely on the shoulders of university professors because the problem is fundamental to our system of education in general. Young students who received their early education in European public schools or American private schools can attest to the fundamental differences in how public schools educate the young here and there. By the age of ten, most European youngsters have already memorized the table of multiplication, learned the basic rules of grammar by heart and retained basic facts about history, geography and social studies. These students have undergone arduous memorization sessions where their memory was rigorous was on exams that were closely invigilated. These studies were supplemented by basic training in arithmetic, elementary logic and vocal discussions. As the minds of these students mature, they discover that the nascent years of their education laid down the foundation on which their worldview can be built. Not only were they capable of interpreting new facts within the context of the information that was indelibly seared into their memories at a very young age, they also had the basic intellectual tools for organizing, analyzing and synthesizing the incoming material.

By contrast, American public school students are rarely subjected to such "useless memorization" and such "draconian fascist" techniques as elementary logic or arithmetic. Many have not even learned the table of multiplication by the time they've reached High-School and a significant percentage of college students struggle to grasp even the most rudimentary tenets of English grammar. Open book exams displaced classroom activities that tested the general knowledge of students and logically rigorous undertakings gave way to post-modern curricula that urged students to share their personal feelings about assignments.

All of this was justified by the premise that critical thinking and creativity are the true hallmark of intellectual achievement. For obvious reasons, route memorization is much less lofty and seemingly less conducive to the student's growth as a person, artist or a thinker. The reality is quite the opposite: route memorization is the foundation of deep learning, critical thinking and creativity. Youthful minds cannot understand logic, arithmetic, rules of language or any other instrument of intellectual activity without first memorizing the essential facts about these systems. Similarly, they cannot organize, analyze or synthesize information about history, politics or society without first knowing basic facts about these fields of study.

As a result, the academic relativist ideologues achieved the opposite of their intended results. Instead of freeing the students from the drudgery of "useless memorization", they now have no choice but to resort to memorization. In the absence of the ability to logically organize ideas and conceptualize them, students simply cannot retain any information other than by storing it in their short-term memory and forgetting it. Psychologists have long been familiar with the term "chunking" which refers to one's ability to retain ideas by developing a framework with which they can be organized in a logical order. That is why chess masters can provide a move by move account of hundreds of variations simply be memorizing a limited number of positions. By contrast, they are not capable of memorizing nearly as many arbitrary facts. Similarly, car mechanics can often provide a detailed account of what supplies the repair of each automobile will require, yet seem to have a deplorable memory in many other walks of life. The chunking technique even explains the "absent-minded professor" phenomenon that involves scholars who can memorize a myriad of scientific facts in their field of specialization, but could never recall what they ate for breakfast the day before, even if their life depended on it.

In his famous treatise on Classical Economics, George Reisman trenchantly observed that it would not be an exaggeration to claim that our system of education strives to "unencumber students of as much knowledge as possible". Instead of laying down the foundations of their worldview, it encourages students to simply learn whatever they wish to learn. Barring a few cases of exceptionally gifted children, most students naturally elect to learn nothing at all. In place of teaching them to look for logical order in information and develop strategies for recalling it quickly and using it as a foundation of new material. Such miseducation again encourages them to respond to the studied material with incoherent non-sequiturs and therefore, it debauches their minds. As a result, students are not only compelled to pass their examinations by memorizing notions that strike them as arbitrary, if not meaningless, they essentially have no choice but to regard all doctrines as ideas they must accept on faith. In plain English, they become incapable of understanding the underlying rationale behind theories and have no framework based on which they can judge an idea's merits or demerits. For this reason, many of them truly can be convinced of just about anything.

With these factors in consideration, there should be no question that the deplorable quality of education in this country is the leading factor behind the millennials' inability to form a coherent ideology. These trends took root in the early 70s and will soon reach their culmination point when the University of Phoenix defines the standards of academic rigor in American classrooms. At the very least, one has a compelling reason to expect that the intellectual ineptitude of the next generation's youth will be even more prominent.

Why taxation should be voluntary

The Republicans and the Democrats disagree about the role that the government should play in providing social services. The former insist that it should be smaller and intervene less in the economy. In contradistinction, the latter maintain that the public interest would be better served by a higher degree of government involvement in our institutions.

The Republicans are more likely to excoriate politicians who pioneer inefficient government programs than the Democrats, but they stop far short from conceding that all forms of taxation constitute theft.

Even the most intransigent conservatives will staunchly assert that taxation for some government services is legitimate. Who could argue that the government perpetrates theft by taxing all citizens to build schools, roads and police departments?

The problem with this rationale is it involves an element of coercion that could be construed as a violation of individual rights. This engenders a peculiar asymmetry in our moral outlook that creates a double-standard. Both orthodox schools of political thought prohibit individuals from coercing each other in such a manner but allow the government to do so.

Suppose you're back in school and I discover that you have several college papers to write. When I solicit you offering my services, you promptly turn me down because you do not need my help. Instead of respecting your wishes, I employ hackers to gain access to all of your virtual accounts and complete several assignments for you. In return, I'll withdraw twice as much money from your bank account as was necessary to cover the market fee for the service I've rendered. Since I now know that I will always have you as a client, I'll have no incentive to meet your deadlines or make an honest effort to fully maximize the quality of my work. In this case, you would be justifiably aggrieved, yet this still seems insufficient to show that the government is culpable of the same moral transgression.

Prima facie, it appears that I am making a category mistake. It is clear that you never authorized me to render a service to you, but all citizens entered an implicit social contract with the government that grants them such an authorization. That's quite a questionable counter-argument because most citizens do not understand what the contract is about and certainly did not consciously acquiesce to it.

In effect, the argument you would be espousing is an off-shoot of Rousseau's General Will that can be summarized as follows. The government should provide the public not with the services they vocally demand but with those that reflect their true general will. In other words, the government should analyze the cultural values, attitudes and the general ethos of the nation's collective consciousness in order to determine what their unspoken "General Will" is. History is replete with examples of how such political philosophy gave rise to totalitarianism on the left and the right and there is no need for me to go into them here.

If you are going to argue that taxation is not justified by Rousseau's General Will, then there is no reason to impose criminal penalties upon people who evade taxes. If the people truly did consent to government services, they should have no problem voluntarily paying for them. Taxation constitutes coercion and that is a fundamentally immoral act and coercion begets inefficiency. In turn, the government overcharges the citizenry for the services it renders in the same manner all monopolies do. This is a very subtle, albeit a pervasive and a clear-cut form of theft.

This leaves the establishment ideology with just one defense: mandatory government services are necessary to preserve public order. This position can be defended by the premise that a strong centralized government is necessary for preservation of social order and such a politico-economic infrastructure can be supported only by coercive taxation. Indeed, an environment of complete mayhem is often pejoratively referred to as anarchy. The fear that radical decentralization leads to a disastrous pandemonium is comprehensively supported by a plethora of historical examples. In the aftermath of the emergence of the Italian state in the 19th century, the southern territory was embroiled in incessant confrontations between mafia clans. India's lack of a centralized government has historically been associated with the nation's failure to achieve stability or economic progress until the British colonization.

Although it is possible for de-centralization to completely destroy social order, that outcome is far from inevitable. History is also fraught with examples of successful de-centralization including the Ancient Greek and autonomous city-states or polises. Even the nascent United States achieved considerable freedom and prosperity in part because of decentralization. Instead of dogmatically accepting the position that decentralization either strengthens or undermines political order, it is necessary to examine this question empirically. The only way to do so is to begin experimenting by slowly introducing minor changes to our politico-economic environment by making some forms of taxation voluntary. It is possible that this practice will engender desirable results where the consumers will opt to support the centralized government services or replace them with superior private services.

In the event where the worst fears of the establishment proponents are confirmed, mandatory taxation can be restored. It would then be clear that this form of coercion  maximizes the well-being of the largest number of people by preserving public order in the only way it is possible to do so. In that case, this course of action will be supported by a robust Utilitarian argument that's corroborated by compelling empirical evidence. Although this would be a paternalistic argument with its own authoritarian undercurrents, it would be much less dangerous than the appeal to Rousseau's General Will. Here, the government would have a clear-cut rationale for financially coercing the public and it will set a precedent for future policies that will require similarly rigorous justifications for future legislation involving coercion. At the very least, intellectual honesty behooves us to understand that the current institution of taxation is profoundly immoral because it involves theft and coercion. If it truly does serve the public interest, this hypothesis is too important to be accepted on faith and it should be subjected to rigorous social experimentation. 

Decoding the Immigration Reform Propaganda

Jeb Bush proudly volunteers the fact that his wife is from Mexico and fashions himself a champion of a "comprehensive immigration reform". In his most recent statement, he pontificated ""Immigrants are more fertile, and they love families, and they have more intact families, and they bring a younger population. Immigrants create an engine of economic prosperity."

Decoding: America needs more low-skilled migrant workers who are not interested in achieving socio-economic mobility. This way, the nation's leading corporations can exploit their labor-power by paying them less than minimum wage. Thereby, they will gain a competitive advantage over smaller businesses who have a more restricted access to the pool of such undocumented workers.

While this would be the ideal situation for Bush III and his coterie of Rockefeller Republicans, it is taboo to openly encourage illegal immigration. Thus, he is settling for the next best thing that will place the low-skilled Hispanic workers on a fast track to citizenship.It is not a coincidence that Reagan's "Immigration Reform and Control Act of 1986" was followed by the massive widening of wealth disparities that continued well into the Clinton Administration.

Bush and his corporate cronies do not want ambitious immigrants who will rapidly cultivate highly lucrative skills to begin contributing to our economy. This is anathema to his party because the innovative accomplishments of such foreigners can challenge the reign of the corporate lobbyists.  ""Immigrants are more fertile, and they love families,"" It is interesting that Bush cited the fertility of immigrants as one reason to reform the nation's policy on this issue. When low-skilled immigrants raise six or seven children on a minimum-wage income, is it likely that their children will become entrepreneurs, doctors or engineers?

Let's just be honest here, do the CEOs of Wal-Mart, Goldman Sachs and Monsanto want immigrants like Sergei Brinn and Carlos Slim? Clearly, these individuals posses exquisite entrepreneurial talent that less than a million of newcomers will have.

At the very least, however, the ambitious immigrants will likely help the small businesses more than the large corporations. Hundreds of foreigners are small-time entrepreneurs who operate gas stations, convenience stores and virtual enterprises. If they do not start their own business, most of them will not settle for dead-end jobs in corporate bureaucracies. They've sacrificed far too much and have come way too far to settle for a mere mediocre living at a job they don't find sufficiently lucrative or intrinsically fulfilling. They will become the kind of workers who reward new entrepreneurs for their ingenuity, boldness and morally upstanding conduct. Clearly, most modern corporations are clearly lacking these virtues and the ambitious immigrants will likely support their competitors because of that.

Why the Democratic Political Platform Creates Poverty

While one may describe this meme as propagandistic and one-sided, it carries an important insight.

The Democratic Party has always been notorious for employing the strategy of machine politics to maximize their influence. Andrew Jackson instituted the spoils system where the government provided political privileges to voters in exchange for their support.

The Democrats were able to perpetrate such blatant fraud with impunity because this country was significantly more corrupt than it is now. However, the increased political transparency compelled them to merely refine their strategy as opposed to abandon it. In other words, they simply discovered subtler and less conspicuous methods for achieving the same objective.

Instead of explicitly handing out government positions to the most steadfast party loyalists, they reward supporters by expanding government programs that benefit them. Two obvious examples of this phenomenon include the invidious "military-industrial complex"  and the aggrandizement of welfare programs.

While both appear benevolent because they have the potential to generate income, they are problematic because they disincentivize the private and the public sector from contributing to economic growth. Today's welfare state can hardly be described as anything but a spoils system in disguise: it hands out special privileges to the underclass in exchange for their support. Although this course of action diminishes the incidence of extreme poverty, it does little to provide its beneficiaries with resources necessary to enter the middle class. In part because of this, the government has an incentive to increase rather than decrease the poverty rate. For this reason, the image cited in the opening sentence provides relatively accurate description of the frequent consequences of the Democrats' long-term political triumphs.

While government contracts for large corporations create jobs, they are fundamentally anti-competitive because they allow these organizations to thrive without outperforming their rivals in the market. As a result, economic growth is stifled because these institutions reward alliances with the government more than efficiency and innovation. As a result, higher barriers to market-entry are created and the surviving enterprises often produce fewer jobs than the genuine victors in market competition would. This clearly contributes to poverty because government contracts eliminate more jobs than they create.

Since FDR's New Deal, the appeal to pity has always been the centerpiece of the Democratic political platform. However, it is a little known fact that this rationale is fallacious and famously so: it is known as the logical fallacy of argumentum ad lazarum. It is always a mistake to assume by default that acts motivated by the intention to assist the most unfortunate are morally justifiable. While very few could reject the moral premise that it is commendable to help the poor, there is a gap between people's actions and intentions. That is why the ostensible acts of compassion that the Democrats profess to engage in frequently lead to disastrous outcomes.

Pinochet Coup and The Disastrous Consequences of American Global Hegemony

This is an informative documentary on the indictment of Chile's former military dictator, General Augusto Pinochet for crimes against humanity. With ample financial and political support from the United States, Pinochet seized power in the September 11th coup d'etat of 1973. This event laid down the foundations of the U.S hegemonic foreign policy that subsequently led to 72 foreign interventions provoking a massive proliferation of anti-American sentiments in a myriad of underdeveloped nations where interventions have taken place. For all of the 20th century, the U.S was able to pursue these policies with nearly full impunity and minimal casualties. Nonetheless, the disastrous consequences of America's heavy interventionism in foreign countries reached this country's shores 38 years after the Pinochet coup, evincing the disastrous consequences of our hegemonic foreign policy.

Under Pinochet's aegis, Chile was transformed from an indigent Marxist state to a dynamic market-oriented democracy it is today. The junta accomplished this remarkable feat by comprehensively uprooting all political opposition through massive incarceration, torture and execution. Extra-judicial incarceration was perpetrated on over 30,000 innocent civilians, 3,000 were murdered and over 10,000 permanently displaced. Nonetheless, Chile remains the most stable, the most prosperous and the most democratic nation in South America.

Whether you applaud or decry General Pinochet's radical reforms, the relevance of this event to modern American foreign policy is worth noting. The democratization of foreign authoritarian regimes and the revitalization of their moribund statist communist economies often comes at an exorbitant cost.

The era of light skirmishes and casual conflict is over, no-one is fully immune to the threats of modern war. 

The University is the New Church

In the Leviathan, Thomas Hobbes repeatedly expressed concerns that the Church and the University had the potential to undermine the sovereign's authority. When I first read that passage as a naive college student, I saw no reason to challenge Hobbes' position regarding the subversiveness of the University. After all, I thought that the University was home to many massive protests and it seemed obvious to me that the primary purpose of institutions of higher learning was to promote critical thinking.

Yet, I did not quite understand why Hobbes thought that the Church could be equally subversive. I was confounded by that bizarre assertion because the Church appeared to have the opposite influence upon young people from that of the University. Instead of promoting critical thinking, it encouraged its patrons to adhere to a religious dogma and instead of participating in protests, it promoted obedience to authority. Then, sobering realization dawned upon me: I've thoroughly misunderstood that passage from the Leviathan. 

Hobbes was not saying that the University was potentially seditious because it promoted critical and independent thinking. In fact, he was saying the exact opposite: the University undermined the authority of the State in nearly exactly the same way the Church did. In the "Origins of Political Order", Francis Fukuyama documented how the political power of the Catholic Church diminished the strength of the centralized governments across Western Europe. By contrast, the Orthodox Church of Russia enjoyed considerably less power and for that reason, the Tsars were able to govern with an iron-fist. He documented a similar contrast between the deeply religious medieval India that lacked a strong centralized government and the relatively secular China that has been deeply authoritarian for most of its history. 

Hobbes' point was that similarly to the Sovereign, the University and the Church had tremendous potential to inspire unconditional obedience to their authority. In so doing, they can persuade their followers to developer deeper loyalties to institutions of religious practice or "higher learning" than to the government. Unlike mere craftsmen and ordinary people who serve to provide practical benefits for others in exchange for monetary rewards, the Church and the University claim that they serve a higher purpose in society. The former generally maintains that they help people obtain salvation, find meaning in life and throughout the epochs, it has been nothing short of the vanguard of public morality. In the deeply religious Europe, it was often presumed that it was impossible for one to be moral without being religious. However, in the secular Westernized society, the average citizen clearly adheres to a different set of values more akin to those espoused by the University. Such values include participating in a democracy by voting or protesting, thinking for oneself and serving the public good. While these ideals sound great on paper, the University has only been as effective at compelling people to abide by them as the Catholic Church has been at the prequel to the Protestant Reformation. 

In light of the fundamental changes to the Western collective consciousness, the University wields far greater moral authority than the Church. The traditional Christian values are often seen as antiquated, parochial and altogether out of tune with the sensibilities of the modern society. By contrast, the University emerged as the bastion of forward looking values where all sorts of causes for social justices are championed. Thus, Hobbes' insight is quite relevant today because the University remains a politically active institution. Although most protesters on college campuses believe that their actions are driven only by their independent thought, they've been more influenced by the culture of the University than they realize. This becomes apparent in light of the fact that most students struggle to form coherent arguments in defense of their position. We all know it, only a few students are critical thinkers and even fewer base their political attitudes on facts or defensible rationales.

I think we should seriously consider the idea that the University indoctrinates students just as much as the Church used to and Hobbes' wariness of the University was quite justified. Today, his fears are becoming a reality as the University poses a more formidable challenge to the U.S government than the Church did to the governments of medieval Europe. At the outset, this seems like a good thing because the government's power must be challenged as otherwise it becomes corrupt and oppressive.

 The problem is, however, the Church and the University are not immune to this problem. The Catholic Church compromised its integrity at the heyday of the sales of the indulgences and we're beginning to see a similar problem with the modern Academia. Rampant grade inflation and the proliferation of online degree mills likens the process of acquiring a degree to that of paying priests to reserve one's place in heaven. Similarly to the Catholic Church, the University promises its students extraordinary results such as "the joys of the life of the mind" and superior employment prospects, yet they rarely honor these promises. Only graduates with a small number of highly marketable degrees tend to reap the full rewards of a college education while the majority of their peers get buried deep in debt. As for the life of the mind, I can only refer you to William Pannapacker.