Bastiat’s The Law – 4th Session
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Writer
Liberalism Reading Group for Beg
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November 30, 2020 (Mon), 4th session
Today again, the meeting began with small talk about current events. People said they could not understand the lawless actions of the Minister of Justice, who has been ignoring due process these days.
Mori analyzes that, in fact, their behavior is not simply a matter of doing whatever they please, but part of the intense and meticulous construction process by planners seeking to create the kind of society they want to achieve.
The separation of powers and procedural rules of democracy devised in the United States are, in essence, braking mechanisms designed to keep state power from doing just anything.
That is because the more the state does, the more individual liberty is infringed upon.
Accordingly, government power pushing ahead with social planning is easily frustrated by these procedures.
In the end, a government with a strong desire to realize its plans chooses methods that ignore and neutralize procedure.
In the past, when Germany’s international socialists were unable to push planning all the way through because they took democratic procedures seriously, German fascism emerged, rode a wave of enthusiastic support, neutralized those procedures, and drove totalitarianism through to the end.
A similar phenomenon is appearing in Korea as well. There are people who deceived themselves into thinking socialism is a tool for realizing freedom, and who took the lead in deceiving the public, contributing greatly to electoral victories. These are the sort of socialists who value individual liberty enough to take democratic procedures seriously (the Jin Jungkwon type).
But they cannot accept the reality that, for socialism—defined as the realization of social equality and redistribution—to be realized, one must trample on the procedures that limit government power.
Those whose desire to realize socialism is stronger are the socialists who ignore procedure. In the end, the procedure-minded socialists quietly get dragged along by their abuses, and at some point begin, one by one, to raise objections. Of course, by then their voices are ignored by a public already addicted to the spoils of plunder under the name of redistribution.
Four years ago, Mori wrote on Facebook that we needed to find an alternative that could solve the problems of capitalism. At the time, seeing so-called progressive policies of social redistribution being pushed forward, Mori felt that something was off, but had only gotten as far as wondering whether there might be a problem with their method and pace of reform, which seemed bent on tearing down the entire existing system.
So Mori called himself a conservative. But “conservative” by itself offers no alternative for what should be done. That is why conservatism is not an ideology.
Only after encountering liberalism as a clear alternative ideology was Mori able to completely step away from his old left-wing worldview. Simply opposing the current government’s policies cannot eliminate the planning mindset and left-wing worldview within us. Only when a complete alternative ideology takes root within us can we graduate from a left-wing worldview. Only then can the real fight begin.
Fortunately, in Mori’s case, even without meeting any study guide, it took only four years. And the harder we work, the less time other people’s awakening will take.
Yuron also says he began from similar concerns and came to liberalism through UBI (Universal Basic Income) and the thought of Ayn Rand. Everyone probably has their own grand story in the ideological journey of growing toward liberalism.
Conservatism: no particular ideology; seeks gradual change; respects the existing order
Yuron says: Conservatism is not a direction. It only cares about speed.
Taejun says that leftists dislike being called left-wing.
Mori, who has experience with the strategies and tactics of the left, testifies as follows. The frame of conservative vs. progressive is a naming strategy created by the left. The name “left-wing” carried a strong image of bloodthirsty reds who murdered the nation and committed terror.
As an extension of the strategy of supporting and electing Kim Dae-jung—who was not fully satisfactory to them—in order to broaden the left’s sphere of activity, they gave the broad left the name “the progressive camp.” As a result, the other side ended up with the name “conservative.”
Yuron: In a world without liberalism, aren’t we the real progressives?
Mori: I think Korea’s leftists studied many overseas cases. They worked hard to change the image of socialism.
This progressive naming strategy did not begin in Korea. In Europe, where disgust toward socialism had already spread in the past, the left employed a strategy of hiding its identity by calling itself “progressive.” Right after the collapse of communist states, Korea’s left studied hard in order to survive.
Liberalism: In Korea, it is still not well understood. Also, in the United States, because the left appropriated the name “liberalism” for itself, the right, which values individual liberty, adopted the name “conservatism” as the label for its ideology. Mori thinks this mistaken naming may ultimately have caused the global crisis in which liberty is under threat.
8. Machines
“The legislator prohibits competition from foreign countries and blocks competition from machines. Could anything more thoroughly suffocate the natural inclinations of mankind than depriving man of freedom?”
This passage discusses a case in which an entrepreneur introduced machinery, laid off half his workers, and saved on wages. What is seen is the dismissal of workers.
But we must pay attention to what is unseen. The wages that were saved are used to hire other workers. Also, because competition exists, there is pressure to reflect the reduction in production costs in lower selling prices.
There is a theory that “machines lower production costs and lower product prices. The fall in production costs induces an increase in consumption. And this increase in consumption inevitably brings about an increase in production. In the end, after the invention, as many workers as were needed before the invention—or even more—come to be employed.”
But Bastiat suggests looking beyond that—at society as a whole.
Because the entire fund previously paid out as wages remains intact, this fund will exist within the savings realized by all consumers. These surplus funds will be used to consume something else. In other words, all the labor made unnecessary and released by machinery will be paid through wages in other fields, bringing about new development across all industries.
“Saving in one area benefits every area. The important thing is to understand clearly that saving never, ever reduces jobs or wages.”
Kangyoung says this text seems like an appropriate example for persuading people against the vague fears surrounding AI these days.
Mori points out that we must not forget the existence of “competition,” which causes product prices to fall.
From the capitalist’s point of view, the profits from introducing machinery or innovation are only temporary—as long as competition exists.
; existence of competition -> introduction of machinery (innovation) -> temporary initial profit -> once competition emerges, product prices must also be lowered, and as competitors imitate the innovation, the amount of profit gradually shrinks back toward its original level.
In other words, introducing innovation is only an unstable, temporary way of securing gains.
So erecting barriers to prevent the emergence of competitors is a more stable way to preserve gains. For this, they come to seek the government’s help (which is why they lobby).
Excess profits do not last. In the end, they converge toward zero.
Ways to prevent this: continuous new challenges, or elimination of competitors by using the state.
It is also worth thinking about the consumption of the groups that benefit when excess profits arise.
This is the aspect in which “luxury goods” contribute to social development.
What we commonly call the “money-spreading antics” of the rich is consumption that looks irrational to people who do not have that much money. But for wealthy people, those “luxury goods” are rational expenditures in their own way. And that spending becomes a factor in the emergence of new products in the form of “luxury goods.” As they consume and test those new products, and their usefulness is proven, capital and innovation are gradually投入 into production, prices fall, and the products become widespread.
In the past, people said that saving rather than consumption was the way to increase society’s wealth. Mori says that in a society with developed finance, all spending passes through banks, so buying goods can also create employment and increase society’s wealth.
The worst case is when people do not trust banks, conduct cash transactions directly with one another, and hoard money without saving. The current situation in which 50,000-won bills are disappearing from circulation means that hidden consumption and transactions—in other words, the underground economy—are not increasing society’s overall wealth.
The fundamental force that advances civilization -> paying money and thereby causing someone to work -> advances civilization
When the rich purchase luxury goods -> they later become mass-market products that anyone can use
In reality, many things once enjoyed only by the rich have become popularized.
As an example, Mori talks about a personal tonkatsu experience.
Not long ago, he visited a long-established tonkatsu restaurant in Namsan and was surprised at how luxurious it was, unlike the typical tonkatsu places of today.
Then it occurred to him that in the past, dining out was something done only on graduation days or other special occasions. And at those times, the high-end dish one ate at Western-style restaurants was tonkatsu.
Now tonkatsu is an everyday food that anyone can enjoy to a full stomach, and it is far tastier and cheaper than the tonkatsu of the past. Unlike before, dining out has become an ordinary part of life for everyone.
Yuron raises the question whether putting emphasis on consumption is not the same as the Keynesian position. But Keynesianism only superficially imitates the pattern of surplus gains obtained through innovation and the rewards that follow, and the consumption, investment, and circular development generated by those gains.
That is why it makes the absurd claim that if consumption is artificially stimulated, production will follow—even though production and consumption move together and cannot be separated.
So Keynesian economics, in which the state simply gives out surplus money and tells people to spend it, rather than surplus gains obtained as a reward, is merely “wealth transfer.”
The key is surplus gains, consumption, and investment that arise together with greater production.
In matters of technology, the socialist attitude is fear. Unexpected variables disrupt the plan. In the end, planning leads to an anti-progressive, anti-civilizational attitude.
Taejun makes an apt point.
He says that, if anything, we are in a better position than people of Bastiat’s time to understand what Bastiat was saying. Through the history that followed, we have witnessed countless times what miracles occur when Bastiat’s ideas are actually realized. It must have been much harder to persuade people in his day.
Ford automobiles vs. carriage repairmen, coachmen, and horse owners
9. Credit
“No one borrows money for the sake of the money itself. One borrows money to obtain products.” “Products are the true substance of a loan.”
“In no country can more products pass from one hand to another than actually exist.”
Lending money, under a state guarantee, to someone without the ability to repay simply means that the state has given to one person the tools of production that ought to have gone to someone else.
The unseen victim here is the person who has lived diligently and proven his ability to repay debt.
State intervention aimed at increasing lending is in reality not an increase in lending but merely a transfer of lending.
Taejun is reminded of the 2008 financial crisis.
The state supported mortgage loans and lent money against weak collateral. Then the bubble in loans extended far beyond the true value of the houses burst, shaking the U.S. economy and the global economy.
That shock then gave rise to voices in American society calling openly for socialist policies.
In Korea, too, debt created by state intervention is accumulating.
When young people plan their family futures, they always take special government-backed loans into account—for example, jeonse deposit loans that offer interest-rate benefits.
In the end, this has created a structure in which the younger generation hangs on to the state’s beneficent policies.
The current government is building many rental apartment complexes on the sites of public hospitals or public parks. In other words, it is transferring public property to specific groups. It makes people dependent on state policy and unable to make autonomous plans.
At this point, Mori, who is currently fixated on analyzing Sweden’s welfare system, once again shows off what he knows.
Sweden is one of the countries with the strongest real-estate bubble. Although taxes are enormous, Sweden has no inheritance tax, so the only path to increasing and passing on wealth is to buy real estate.
Also, because the state pursues full employment, situations frequently arise in which jobs are assigned by force. Commuting six hours round-trip by train is not a romantic scene. State-provided rental housing is limited, and workplace assignments do not take housing issues into account, so this happens often. It has become a social problem that people cannot remain long in local communities because of job issues.
Policies that prevent people from owning their own homes are socialist policies. They do so while insisting that a house is for living in, not for owning.
Tax policies that obstruct home ownership are highly anti-liberal in that they infringe on private property.
But there is an even bigger problem. Private property means the right to dispose of what is yours as you wish and with ease. The current government’s tax policy makes it impossible to either buy or sell a house.
Being able to choose easily the area where I want to live is a basic principle of local self-government.
Also, the desire to take good care of one’s own home, and the affection for a community that grows as family memories accumulate in the area where one’s home is located, are the beginning of local self-government.
Mori thinks that encouraging home ownership (and easy resale) is the beginning of local self-government.
As the meeting ended, someone suggested having a year-end party. If not for the COVID situation, it would be nice to gather sometime and talk about how much our thinking has grown through our studies.
If the COVID situation continues, we would like to hold a seminar-cum-gathering sometime early next year.
Of course, in accordance with our group’s operating principles, with the proposer, Taejun, serving as chair of the organizing committee, haha.
If you would like to join the online reading group every Monday evening, we invite you to the open chat room at the link below.
https://open.kakao.com/o/gX3OIqtb
Original title: 바스티아 <법>-4차
Author: Jayujuui Ibmun Dokseotoronmoim
Date: 2020-11-30
Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=7&idx=23275