The Self-made Man is the Symbol of American Possibility

By Gilbert NMO Morris

To what do we owe the chic, but serious intemperance of the (curiously named) “Occupy” movement in America, also exploding, if not metastasizing across the world?

In a word: Unfairness.

Liberal market capitalism – according to its romantic narratives – is meant to be elegant, as in Ayn Rand’s Fountainhead. There the lead protagonist – Howard Roark - driven by the innate majesty of his singular vision, resists the world’s facile standards, not by disobedience to law or by devilish deceit upon those to whom he has obligations. Rather, it is he who demands, maintains and advances standards, which underscore the primacy of human value.

Liberal-market capitalism, in America, is the theology of the self-made man.

And for such a man, there are dangers from both political types in America: Conservatives and Liberals. Liberal spirits are in want of an idea of government limited in its power over citizens. It is mildly paradoxical that those most amenable to the notion of rights, are so often hostile to the prominence of individualism, which rights undergirds. Moreover, Liberal spirits must accept that the world they seem to imagine, in which all are provided for, anticipates the success of the very entrepreneur against whom they seem to bear so much antipathy.

The abovesaid being extant, if we hone our attention to the iterations of Liberal minded perspectives in America, for example, I must reject the notion that business begins with labour. Liberals must attune themselves to a true appreciation of the risks borne by those who tempt failure; daring to set out upon their own to win a fortune from fate.  

On the other hand, it is notable that much of the Conservative proto-paladin invective is directed at what they perceptive to be “Keynesianism”. And whilst I am not a proponent of Keynes’ views, it would be well to remember Keynes underlying motivation for his views. A high Victorian spirit, Keynes was concerned – as any aristocrat with a sense of noblesse oblige – for the distemper of the great unwashed (the masses). His was an economic theory – in large part – termed and tempered to drain the vitriol from the perception of the masses that their unhappy economic situation was owing to a selfish wealth class; cosseted and cloistered apart from the Dickensian misery in which they wallowed. 

It is consummate wisdom – which was held broadly once – to which Conservative must return: That “wealth” in its essence implies and extends a network of noble and ennobling habits. Consider a distinction between Mr. William Gates, Mr. Warren Buffet, and say Carlos “Slim” Helu, the three richest men in the world. Both Buffet and Gates have created thousands of very rich people with and in whom their wealth – as such – is inextricably leveraged and extended.

It is in the nature of self-made wealth that it deepens economic well-being apart from its initiator. By contrast Carlos “Slim” Helu’s record in this regard is apropos of his nickname.

That is to say, it is a practical principle that extreme wealth and extreme poverty may be arrived at in an economic system only by the deceit of the many by the few, and is what – in part – America arose in opposition to defeat. That I am wealthier than my neighbour is no cause for apoplexy, so long as the rules of acquisition are open to my neighbour, should he care to husband the risks along the path of opportunity.

As Mr. Walter Isaacson makes clear in his rightly celebrated biography of the late Steve Jobs, Mr. Jobs’ own perception of his greatest achievement was not any particular product. But in having created a ‘Darwinian nexus’ in Apple, Inc., in which the entrepreneurial spirit of creative collaboration between individuals could flourish.

Apple. Inc., is what America was meant to be.

Let me put the matter thus: When I defend liberal market capitalism, it is the entrepreneurial spirit, its impulse and impacts, which I defend and celebrate. I do not defend sun-roasted inheritors of antecedently earned riches, nor do I defend the hucksterism of “new money”, acquired by thinly allowed chicanery at great speed, with its foul adumbrations of the protocols of taste and fair-minded traditions.

   

Prospects for American Recovery: Cutting Spending Isn’t Enough

by Professor Gilbert Morris

There is a word missing from the “solutions” offered by both Democrats and Republicans to the searing economic crisis visited upon America by a combination of craven financial speculators, complacent regulators, feckless politicians and not a little bit of greed amongst many borrowers.

That word is “sell.”

It is only in the selling of surplus manufactures – as Adam Smith taught us – that new income enters the economic system, with the corollary effect of demonstrating, maintaining and advancing the  institutional and operations frameworks for national competitiveness.

So we must ask ourselves, what is America selling to the world?

The answer is, apparently, not much. It is critical that since the rise of countries such as China beginning in 1975, more recently India and now South Korea, the American political and commercial establishment have seemed frozen in their understanding of the meaning of China’s rise in particular and its implications for America’s manufacturing decline.

In the politics of the question, Republicans generally argue for cuts in spending, whilst Democrats insist that increased spending and new taxes – either targeted or benign – are a proper way forward. Both are wrong. A credible economist, whilst he or she may be committed to low taxes in principle (as I am, genetically), does not immediately fly to tax cut solutions, unless high taxes are the specific impediment to business development, competitiveness or growth.

Oftentimes, tax cut evangelists cite President John F. Kennedy’s 1960 tax cuts and the impact those cuts had on economic expansion.

However, the “positive” impact of the Kennedy tax cuts was because high taxes was the specific “pent up” cog in the wheel works preventing economic growth.

On the Democratic side, the demand for increases in taxes – however targeted or benign – seems unscrupulously insidious in the midst of an economic collapse born of a financial crisis. In my view, even payroll tax relief and infrastructure spending are little more than freshwater in a mirage.

If there is an intention to put America right, spending discipline is certainly necessary because confidence must be given to the markets and economic partners around the world. But if Americans are serious about correcting the increasing downward economic spiral, American manufacturers must be able to and begin to sell their products to the world.

If one reasons backwards from a commitment to an export-led economic solution, one will have addressed the structural impediments in the national economy that induce and sustain economic decline.  That is to say, an export-led solution means taxes are low or at least competitive. It means also that facilitation infrastructure is sound and efficient and it must mean that the American worker is educated, skilled and productive in comparison to the rest of the world.

The fact is if you cut taxes and spending to the bone, it will do nothing to correct the current lack of growth because none of it brings new income into the system. To the extent that the government wishes to “prime the pump” by putting cash into the system, it should concern itself with whatever is necessary to lay irons on the export-led track. If we look at the best performing economies in the world – China, South Korea, India, Brazil, Germany – we find that they have mastered the combination of education and skills development, which begets innovation and competitive production quality, which begets streamlined, efficient infrastructure, which begets international orders, leading to exports and thus new income.

There is a caveat; of the countries cited above, only Germany may serve as a true example for the US since it is a democracy with transparent, uncorrupted institutions. For instance, Americans will never be open to mistreating their own people the same way China would or, in some respects, Brazil. As such, wage levels and labor markets in general in such places are incongruent exemplars for America if it is to remain America. The solution to America’s current economic problem is competitiveness. Germany’s approach, specifically training of the labor forces, robust trade agreements, and increased exports is more compelling in this respect and is a third move beyond mere spending cuts or tax raising, if we care at all for intellectual honesty on this question.