Friday, May 13, 2016

Hooey and History

I have tried to argue, to libertarians, that a truly libertarian federal government in the United States could actually end poverty, completely, if libertarian policies were enacted and a libertarian utopia was created. Not overnight, obviously, but after about 30 to 60 years, which is how long it usually takes for a political sea change to take effect.
The federal budget is about $3 trillion annually, and it seems clear to me that if that budget were cut to $1 trillion/year for military spending and the federal courts only, and $2 trillion worth of value were kept in the economy in the hands of the productive private sector instead of going towards government spending, under the magnification of wealth that comes from increased production (see my recent blog posts about the Upward Spiral Theory), this increased productivity from $2 trillion of capital per year that gets invested into business and otherwise would not have existed but instead would have been spent by the government in waste, might lead to $10 trillion/year of additional wealth in the American economy created over 30 years.
This idea is supported by the common economic theory known as the Time Value of Money Theory: for example (and this has been proven true by economic analysis) if you had invested $1 in the stock market in 1900, your investment could have been worth $1 million in 2000, 100 years later, because invested capital grows exponentially in a typical capitalist economy, so that the monetary value of time is far greater than what common sense would assume. So it is quite plausible and realistic to think that an additional investment of $2 trillion per year today could generate a net surplus of $10 trillion per year in 30 to 60 years, without me even needing to rely on a prediction of technological breakthroughs funded by that investment to lead to vastly increased efficiency to end poverty, such as genetically modified foods that make it much cheaper to feed the hungry, although that too is a plausible argument.
Assume that in 30 years there would otherwise have been 400 million Americans, of whom 200 million would have lived in poverty. This could put an additional $50,000/year in the pocket of every poor person in the country, effectively abolishing poverty. My numbers are estimates, not exact, but you get the general idea.
I have said this and been sharply criticized, insulted, and rebuked, not by liberals and socialists, but by libertarians! The main argument against me is that my theory is "hooey"-- simply naive and unbelievable. So let me reply to the skeptics with a lesson about human history.
Let us posit a simple thought experiment. Suppose you took a European person from the year 950 C.E., back when feudal kings ruled their serfs with horses and iron swords. You tell him that, in the future, there will be no kings nor peasants, but something called democracy, and the people will have televisions and refrigerators and washing machines and cars and vaccines, and that humans will set foot on the Moon. He would either not even understand what you were saying, lacking the concepts of cars and vaccines etc. with which to know the meanings of your words, or he would say that this is unrealistic and improbable to such an extreme extent as to be impossible--in other words, he would accuse you of spouting "hooey", and then he would return to tilling his field for his lord or eating his bowl of gruel.
Do you see the point? Ending poverty seems impossible. But what we have today would have looked impossible to someone even 200 years ago, let along 1000 years ago. The internet and smartphones would have been inconceivable to someone 60 years ago, in 1955. So this idea that I am being naive is itself ignorant of the capacity for historical human progress.
Having established that no reasonable person can rule out the possibility of ending poverty, it simply remains, then, to determine which political policy would achieve it--libertarianism, or socialism? I would have hoped that among we libertarians, the answer to that question would be obvious. If, sadly, it is not, see my recent posts about the Upward Spiral Theory, which explain why libertarian policies are capable of achieving literally exponential economic growth. Once a certain amount of new wealth is created, there will be so much wealth that even those who have little will still have a standard of living that to us we would call middle class, just as the American middle class right now has a standard of living that to European peasants in 950 C.E. would have seemed like literally Heaven on Earth.

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