For liberals, income inequality is the new global warming

my radar goes up whenever the mainstream media (read: progressives and/or liberals) begin to argue that some topic is so settled already it is politically incorrect to debate anymore.  global warming has that status.    James Pethokoukis argues that liberals are trying to turn income inequality into a similar kind of taboo topic in an article i've copied at bottom of this blog post titled:

For liberals, income inequality is the new global warming

 

I am not going to say there is no such thing as global warming or that there isn't evidence of rising income inequality in the US.  The debate about whether or not there is global warming obscures the much more important question: can we do anything about these problems?

I can say with the same certainty I have when i assume a ball will fall to the ground if i drop it from a building that liberal/progressive top-down government imposed solutions to either global warming or income inequality will only make things worse such that either the problem is solved by killing the economy -- such that rich and poor are made equally poor, or the problem is not solved and the solution still adversely impacts the economy while leaving the most at-risk households worse off than before the well intended intervention.

There is not such thing as market failures that require government intervention.  So called market failures are natural (albeit negative) unintended consequences of a system of free exchange, private property rights and division of labor.  Income inequality is natural to any market system because markets require division of labor which leads to income inequality.  equality can only be achieved by making everyone equally poor and destitute, such as we see in North Korea today.

When income inequality becomes stretched beyond what would be its natural distribution in a free market economy, the cause of this exaggerated inequality can be assumed with certainty to be some government intervention in the economy that was implemented with all good intentions but that resulted in negative unintended consequences, including facilitating income compression in poor households and wealth accumulation in already wealthy households.  the rich get richer and the poor get poorer not because of any flaw in free markets, but because of well intended government policies that ineluctably lead to negative unintended consequences.

central banking and fiat money is a perfect example:  easy money creates asset bubbles that benefit the rich and price inflation that hurts the poor disproportionally.  the rich get richer and the poor get poorer!!!  and then liberals blame the evil market.  division of labor must lead to income inequality, but it doesn't lead to the sort of exagerrated income inequality we see in modern economies organized around fiat money central banking systems. 

global warming can be understood through a similar analytical lens.  carbon dioxide emissions are a natural feature of the modern economy. (and CO2 emissions are a natural feature of human existence!!!  why do we think of CO2 emissions as artificial when we humans emit CO2!!???)

and who is to decide what is the optimal level of CO2 emissions in a society or economy at any given level of economic development??  are we supposed to believe that we can model the earth climate and economy and calculate what total CO2 emissions should be, and then implement a global policy that delivers the required target results???

It is impossible for humans to model the global economy let alone the earth climate, let alone implement policies that engineer outcomes in either!!!  we have seen what happens when man tries to engineer outcomes in the economy.

remember it was only after the Fed was established in 1913 (ostensibly to eliminate business cycles which were assumed to hurt poor households worst) did we get the largest economic boom and bust cycle in the history of the world!!!  so much for curing business cycles.

should we assume that experts can manage the economy AND the earths climate simultaneously???

Just because we see a problem in society does not mean we can fix it or that we have a moral obligation to fix it.  IF the economy was an artificial construct of humans designed and planned by humans, THEN maybe we would have a moral obligation to fix what we actively created. 

HOWEVER, we have no such moral obligation because the economy is a spontaneously organized complex system of exchange.  it is not artificially man-made like a computer or a car. 

the old proverb "the road to hell is paved with good intentions" is consistent with what we now know about the law of unintended consequences when humans attempt to intervene in natural complex systems. (including and especially with well intended public policy).

why don't we listen to the intuitive logic of proverbs and instead listen to the expert testimony of so called modern science?? 

The conclusion that man must be at fault for global warming and therefore that he has a moral obligation to fix global warming is based on the erroneous assumption that man is responsible for designing and artificially creating the human economy in the first place.

no one designed the economy.  the economy is NOT a man-made artificial construct.  man has designed component parts of the economy like cars and computers.  and there are small islands of central planning and design in the economy, such as we see with corporations and urban planning. 

but no one designed the larger pattern of interaction and exchange that characterizes the larger (invisible) "thing" we call "the economy" or "the market." 

liberals and conservatives fight over whether global warming or income inequality is real while Rome burns.  it doesn't matter if global warming is real.  even if it is real, we cannot do anything about it via direct policy intervention.

the only way to fix global warming is to let the market find its own optimal level of CO2.  that means REDUCING government interventions (like central banking) and other assorted distortions such as subsidies, taxes and regulations.  the road to sustainable growth does NOT entail doubling down on the very failed policies that have caused exaggerated distortions of natural (albeit negative) features of the market with new policies that will only sow new distortions and problems.  the only way to do reduce income inequality or to fix a global warming "problem" (if there is one)  is to identify and REMOVE the well intended government policies aimed at fixing so called "market failures" such as business cycles and income inequality. 

YES, the market is imperfect but it is still the best we can do.  WE do live in the best of all possible worlds if only we would let it emerge without screwing everything up with well intended central planning and public policy interventions.

the fundamental cause of global warming is too much growth fueled by easy money created by central banks.  no central bank = no global warming.  it is that simple.   the human economy is not "artificial" in the sense that it is man made.  there are artificial components that make up what we consider to be the economy.  like i mentioned already we see artificial products everywhere: roads, cars, computers, houses, phones, etc etc.  But just because the components of the human economy are artificial DOES NOT MEAN by definition that the economy itself is artificial.

this is a key point!!!  the economy is a natural system of exchange, just like the amazon rain forest.  

Exchange is the key natural feature of the economy that gives it form and function.  man made artificial components do not define the modern economy.  what defines the economy is exchange and division of labor.  without exchange there is no economy.  

if we let the market work, it will develop in the best way considering the physical constraints imposed by the real world.  will it be perfect?? no.  there will always be natural disasters in the economy same as in the earth system.  We should not try to fix natural disasters (such as hurricanes or earthquakes)???  i read in scientific american that some climatologists are arguing we can reduce the force of hurricanes by injecting aerisols into emergent hurricanes.  This is pure insanity!! what hubris to assume that we humans can micro manage the earth's weather patterns without causing some negative unintended consequence somewhere else in the system.  we cannot fix hurricanes or earthquakes any more than we can fix so called market failures, which are really just negative unintended consequences of a naturally robust and dyanammic system that requires a dynamic process of creative destruction to deliver productivity gains over time. 

can we monitor natural disasters and limit their impact on human society in the natural economy and in the earth system???  yes!!  yes! yes?  but, lets not be so naive as to believe we can fix the natural disasters directly and not adversely impact the larger earth system. 

there are no free lunches.  you don't get to have the positive unintended consequences delivered by the market (e.g. productivity gains, new technology, improving standard of living) if you try to eliminate the negative unintended consequences (such as CO2 emissions, income inequality, pollution, business cycles, etc, etc).  

we CAN make a difference in the world on a micro level.  person to person we can help people in need.  but we cannot engineer and design macro or social pattern outcomes into the economy.   natural systems must be allowed to emerge and to create their own future without intervention.  

another way to say this idea is that humans are like gods in some ways.  humans are creative like no other species on earth.  creativity is the purview of the gods or God.  but just because we can be creative in a certain limited domain on earth doesn't mean we can be creative and god-like in all domains on earth. 

in the domain of natural spontaneously forming systems, like the earth's biosphere or modern economy, we cannot be like Gods.  natural spontaneously forming complex systems have a future that is radically unpredictable.  if we try to enforce certain macro outcomes in a natural system we are begging unintended consequences that can boomarang and result in outcomes completely contrary to our intentions (especially good intentions).  

natural systems are defined by both creation and destruction.  you don't get to have one without the other.  you don't get productivity gains and rising standard of living without the underlying dynamics that lead to income inequality and pollution. 

there are no free lunches in "life" because life occurs within the natural laws that govern the behavior of spontaneously organizing natural complex systems! 

in spontaneously organizing complex systems, there is no order without disorder.  there is no success without failure.  you don't get the good without the bad.   

government promises to eliminate the bad and to maintain the good aspects of society are free lunch promises that can't possibly work in the real world.  the real world behaves according to laws of nature that define the behavior of natural complex systems -- and that do not allow for free lunches!

that is one of the great ironies of the progressive world view:  progressives accuse radical free market types as impractical dreamers.  progressives claim they live in the real world and try to fix real problems.  if liberals understood the rules of natural systems like the economy, they would understand how foolish it is to claim to be able to fix (negative unintended) natural features of a natural complex system like the human economy.  it is true that free market types are out to lunch when/if they claim that all social and macro economic problems can be solved as long as we turn the problem over to the free market.   

the notion that markets solve all problems is as silly as the notion that humans can intervene with enlightened public policy aimed at fixing (or ameliorating) natural market features such as income inequality.  Markets are inherently unfair, imperfect, volatile, dynamic, unpredictable and beyond human control or modelling or prediction.  

the so called "market failures" that are really just natural flaws and negative unintended consequences of free exchange are exactly the features that interact with human ingenuity and hard work and risk taking -- and lead spontaneously and unpredictably in an organic process of creative destruction that ultimately leads to the invisible (but REAL) thing that we call "the economy."      

well, ok, here is Pethokoukis' awesome article after all ....  well worth reading...

For liberals, income inequality is the new global warming

By James Pethokoukis

October 27, 2011, 11:57 am

Liberals think there are lots of ideas that intelligent Americans just aren’t supposed to challenge.

If they do, they’ll be labeled “deniers,” intentionally raising a nasty comparison to Holocaust rejectionists. It’s politics at its absolute lowest.

Among the unchallengeable dogmata: the Obama stimulus created millions of jobs, Obamacare will save trillions of dollars, Dodd-Frank prevents future bank bailouts, and policy uncertainty isn’t an issue hampering the recovery. And, of course, global warming poses an existential threat to civilization and humanity. Make that an “undeniable” threat.

You can now add “income inequality” to the list, thanks to New York magazine’s Jonathan Chait. In a column headlined “The Ideological Fantasies of Inequality Deniers,” Chait writes: “Rising income inequality, like climate change, is an ideologically inconvenient issue for conservatives. … The underlying facts, like the facts of climate change, are stark. Over the last few decades, income growth for most Americans has slowed to a crawl, while income for the very rich has exploded.”

In a way, Chait is correct that income inequality really resembled global warming. Both are issues that, to the extent they are even problems, could be be fixed though faster economic growth. And both serve as handy excuses for the Left to raise taxes and expand government.

The reality about “exploding income inequality” and wage stagnation is far different than what Chait, the Obama White House, and Elizabeth Warren (D-Occupy Wall Street) contend. One example: Brand new research from the University of Chicago’s Bruce Meyer and Notre Dame’s James Sullivan finds “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009. … Our results provide strong evidence that the well-being of the middle class and the poor has improved considerably over the past thirty years.”

Those results aren’t above challenge. But there certainly seems to be legitimate counter-arguments and evidence to the “exploding income inequality” meme. Indeed, differing household demographics and differing inflation measures between incomes levels means the “rise in American inequality has been exaggerated both in magnitude and timing,” according to Northwestern University’s Robert Gordon. That and other studies undercut a new CBO analysis showing massive income gains for the “1 percent” at the expense of everyone else. But maybe Gordon is a denier, too; another guy on the Koch-RNC payroll. Except Gordon is an Obama supporter.

America needs an informed debate on how the American middle class can prosper in the future the way it has in the past—even if it is ideologically inconvenient for Chait and other liberals.