Re: Jude Wanniski (RIP) on the Market

The following piece was recorded on July 25, 2001. Wanniski writes:

The [Wall Street] Journal editors look down from their mountaintop and proclaim that the free marketplace will sort things out, with the help of technological advance.

From his prison cell, I think Unabomber Ted Kuczinski is closer to the truth, that technology plus the jungle of the marketplace is a mindless combination that is increasingly wrecking the lives of most of the ordinary people on earth -- always excepting those who live and hold their meetings at the top of the mountain.

Wanniski, to me, did not seem like someone who studied economics either formally or informally. And just like David Horowitz, he remained a commie in his heart, as manifested in Wanniski's fondness for Marx even after his conversion to supply-sidism and in ridiculous metaphors like "the mindless jungle of the marketplace."

At any rate, the editors of the WSJ are neocons, not libertarians. Hence their support for free markets is severely attenuated. There is no such thing as free markets during a war or a nationalist frenzy.

Our author goes on:

When I ask the leaders of the ordinary people what they want, they tell me "access to capital and credit." That is shorthand for "opportunity to get from the bottom of the ladder to the top, if at all possible."

This is a crass misrepresentation of the market order. Under any system it is possible to get to the top. Even in the most regimented societies a man with a gift for political intrigue, who is unscrupulous enough to murder and steal and lie and generally excel at the sort of things that governments do, can ascend into the ruling class, e.g., become High Priest of the socialist empire of the Incas. But it is only capitalism that requires the elites and extraordinary men to serve, rather than subjugate and loot the rest of us, if they want to advance to the top. Conversely, men who are good at lying and stealing are as likely to end up in prison as in government. The idea is not to reshuffle the social hierarchy (does it matter whether Jack or Jill is at the top?), but to allow for progressive improvement in our standard of living. We allow good entrepreneurs to become as rich as they can (or should allow), because in the process they cannot help but benefit us all.

Thus, the purpose of a "fluid society" is not social mobility per se, but to discover and use those individuals who are best at fulfilling consumer wants. The entrepreneurs who are most successful at any given moment at filling the needs of the consumers become part of the "fluid" natural aristocracy. As an "ordinary person" (in the sense of not a millionaire), what I want is access to capital and credit not necessarily for myself, but for those few people who have sufficient entrepreneurial talent to succeed in business. I want all capital to be "high-powered," i.e., in the hands of the best of the best.

Furthermore, cheap credit coupled with fiat currency and Fed-induced inflation results in malinvestment and business cycles, something I don't think our author realized or would want.

Wanniski makes another bizarre error of is his writings. He imagines society as a pyramid, with the poorest at the bottom and the richest on the top. Perhaps feudal Japan looked this way, though I doubt even that. The American society looks like this:

  /\
 /  \
/    \
------
\____/

The widest part of this figure is the middle crass, the "bourgeoisie." It's a bell curve.

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