Money, politics, and the ideologies I’ve gone through

So, I’ve been thinking a lot about economics. Now, with tent camp protests across Israel and a 40,000-person march over the price of housing just a few days past, I find myself getting involved in discussions of free market vs. socialism on a very concrete level, and I’m guessing there will only be more of these. I’d like to tell you a little about the different positions I’ve held on these matters, and to try to figure out where I stand now. I haven’t read all that much, I could be much more knowledgeable than I am, and wish I were, but somehow I’ve managed to go through quite a lot of ideologies since middle school.

The first time I recall taking a stance on free market vs. socialism was in the eighth grade, when I made friends with a ninth-grader who was in the Israeli Communist Youth Alliance. I went to their meetings for a while and remember arguing for the ideal of “from each according to their ability, to each according to their need”, which seemed like a very nice idea. Then at some point I had an epiphany that in practice, this would require going against human nature, as it takes away the fruit of people’s labor.

I don’t really know what my point of view was after that happend; these matters probably weren’t very central to me at the time, but I just don’t really remember. I do remember that I started getting a more libertarian perspective as I got involved with democratic education. I suppose I could have been described as a left libertarian, but I thought of myself as a social democrat.

Then, at eighteen, I read a book arguing for libertarianism, and became a libertarian. And a few months later, I read a couple of texts leaning towards anarchism, in particular T. A. Z.: The Temporary Autonomous Zone, and became a sort of anarchist. Very quickly, however, I acknowledged the limited applicability of anarchism in the reality around us today, and became what might be called a realistic anarchist, which is basically someone who is an anarchist at heart but doesn’t do much about it.

That must have been the point where I stopped paying attention to the economic side of things, which is unfortunate because it was also the time when I was probably first able to grasp the way that side of things works. I quickly slid into a kind of apathetic agnosticism about the whole thing, no longer calling myself an anarchist. I always stayed committed to personal freedom when it came to opinion and behavior, but for years now I have been unable to truly pick a side on the free market vs. socialism debate. I do believe that free-market capitalism is a highly effective and “smart” method of allocating resources. But there are two principal problems: that we never start with a flat playing-field, and that money brings along political influence.

It’s worth noting that every single socio-economical or political ideology seems to commit itself to some kind of idealized concept of the citizenry. Libertarianism assumes people are empowered, independent, and generally rational. Capitalism tends to assume the same. Communism assumes the people are committed to the joint effort. I think each of these systems does work well when the assumption is met. It’s just very unusual that it is.

In the case of free-market capitalism, I can imagine it being quite perfect if the playing-field were flat; if everyone were more-or-less equally rich, equally empowered, equally able to make an informed decision, obviously there would be no need for a welfare state. Everyone would be free to do what they want, with money just as with anything else. Nobody would have to be a loser. But this is an imaginary scenario we are never likely to encounter in real life.

When you combine this with the second problem, you have a real problem for libertarianism or free-market capitalism. In every present or past polity I can think of, money has been able to influence politics.

Sticking just to democracies for now, the influence of money on politics seems almost inevitable. Donations are only the most obvious part. The media is a more tricky aspect – those with big money can directly influence public opinion, and there’s no reason to expect this would always be done in an equal and balanced way, under any system. The result is quite simply that my opinion is less influential than that of a multi-millionaire, because my opinion can only reach people I know and people who read my blog, but I cannot easily get it into print media, onto large mainstream websites, or onto physical advertising of any kind. (Yes, I could afford a small print ad, but nothing major that’s likely to reach a whole lot of people, and not in a sustained campaign of any sort.)

So since we start with a tilted playing-field, our free-market economy ensures that the democracy is tilted towards those who start off with more resources. It seems to me that while laws might limit the tilt to a degree, they cannot eliminate it. Money is needed for effective political action, so political interests with moneyed supporters inevitably have an edge on the competition.

That’s more or less where my thoughts are now. I hate the idea of limiting people’s right to do what they want with what they work for and what they own, but I hate even more the idea of politics helping those who need help least urgently. Moreover, any system that creates and maintains social classes full of people who are essentially condemned to be losers is not the kind of system I want to be in.1 And when we look at Israel, we see a place where there are remarkably many people who are extremely rich, but far more people who are incredibly poor. And public policy does not seem to be able to alleviate their hardship, nor even make a reasonable standard of living and independence accessible for middle-class twenty-somethings.

Like it or not, the government is deeply involved in directing the flow of money in Israeli society, as in most if not all modern democracies. Whether or not this is ideal, it seems clear to me that we should be demanding that the government tilt the economy towards those who need most help, not those who need the least. In recent years, especially under Netanyahu, it seems to be doing its best to allow the rich to get yet richer, while the poor grow poorer and more numerous. (And those who think the income gap is only a problem for the poor, maybe inform yourself about effects it has on crime rates and the spread of epidemics.)

Footnotes

  1. Before someone comes and tells me that even the poor can work their way out of poverty, let me preempt: yes, individually they can, but in practice being born into poverty makes it very likely you will never feel you have the power to change the situation you live in for the better. You will also likely have neither the connections, nor the education or the background to climb the social ladder. While some individuals do manage to do it, it’s quite telling that those born into poverty tend to stay in it, and this tells me it’s a systemic problem, not the individuals’ own fault. []

9 thoughts on “Money, politics, and the ideologies I’ve gone through”

  1. Hi Michael,

    Free market does not always sway towards corporatism (which is what you described). It does so only if the government is big and powerful enough to be able to use it’s influence for it’s own interests, such as helping big corporations.

    For instance: saving failing businesses, subsidizing them, giving them tax-cuts are all very harmful acts and are not related to free market at all. Those businesses are protected from the fear of failure, the key ingredient of free-market.

    A small, limited government simply could not subsidies any business (it wouldn’t be within it’s abilities) and it’s tax laying abilities would be limited anyway. Therefor such distortions would be dimmed illegal.

    Other then that there’s the whole even playing field.
    We all are born different, with different skills. We are unequal and unique, we can never have an equal playing field.

    Regarding the second point, the equal playing-firled.
    Why shouldn’t a man who worked for his money be able to use that money to give his son a head-start? (which is what you implying, you cannot give everyone a head start, the number of really good schools is limited)

    The only thing that should be guaranteed is that we are all playing by the same rules (which means not hindered by the government) not that we are starting from the same place.

    You are correct that the current system is somewhat corrupted but it is not because of free-market running loose but because of the opposite: big governments doing what they want. And it does not matter for what purpose the government uses that power the fact that is has that power means it will eventually get used for it’s own advantage.

    Doron

    1. I totally see the logic in what you’re saying, and on the first part (corporatism) I actually agree entirely.

      But about the level playing field, I disagree. This isn’t about every individual having the same starting conditions and the same chances. It’s about not creating classes of people who have little to no chance of living a fulfilling life. I agree that the blame lies with big government, but it doesn’t only lie there. Poverty has been around for a very long time, and I believe it is in everyone’s interest to end it.
      In addition, I see one of the only core roles of government in protecting its citizens – this includes protecting them from one another, even from abuse and exploitation. Poverty and low wages go hand in hand, and essentially an economy that has poverty exploits a class of people who are desperate enough to take any paying job, even if the pay is less than what they need. This should not be allowed. I know, enforcing a minimum wage drives inflation and makes things more expensive for companies. But I don’t think an economy that is based on exploiting people while giving them the short end of the stick is an economy worthy of existing. If we in the middle-upper classes pay a little more so that the lower classes can live in dignity and experience freedom and independence, then so be it. In the end we stand to gain from it.
      And this is what I was getting at with libertarianism/capitalism’s idealized concept of the citizenry. Ideally, the minimum wage is whatever lowest wage a citizen would agree to take. But this assumes that all citizens are able to stand up for their rights and refuse an unfair wage. The reality is that many people, especially those who grow up in poverty, never attain that feeling of empowerment, and there are masses of people who will take an insulting pay if you don’t, putting quite a lot of pressure on the individual to give in and take the insulting pay because it’s “better than nothing”. It’s not better than nothing in the long run, it’s much worse than nothing because it occupies you with something that doesn’t give you what you need, keeping you from finding what you need, but in the short run, you have a strong incentive to take it.
      And I could write a whole extra post about how the education system seems connected to this, but I won’t right now. Maybe later. The bottom line is, we don’t yet have the empowered citizenry needed for a free market to produce fair wages.

  2. You make a good point when you state that all the theories make assumptions about how people will act. Therefore, lets take a look at the reality of how people actually act in each of these systems, by looking at various societies that have tried these various systems. You talk about the problems with free market being that some have more influence and that it isn’t a level playing field. True; however, do you think it’s any different in a communist system? Only in theory. In reality, In the former Soviet Union or in Mao’s China, did people have a level playing field or was there a privileged group who were wealthy and well connected? In fact, in any system you create this will be the case because this is human nature. The same people who are ruling in a free market society would be ruling in a communist society. So what’s the difference? Here’s the difference. Did you ever notice that the Soviets went broke; that their people went starving while standing on block long bread lines. How many tens of millions starved to death in Mao’s China ( and how the creative energies of their people has been unleashed since they moved more towards capitalism). In all societies there is never true equality, however, in societies which are oriented more towards the free market end of the spectrum, you have a small percentage of well connected wealthy individuals with more clout than others and you have the rest of the people living relatively stable economic lives with the ability to enjoy the fruits of their labor. Whereas, in a society that tends toward the communist end of the spectrum, what you end up with in reality is a few well connected individuals just like the other economy; except here the rest of the population is starving and without any power at all. The reason for this is that it is in peoples nature to strive for themselves and their family. Though we may want to help others, we will not work and sweat day after day for strangers we’ve never met (and definitely not nearly as hard) as we would work to provide for our children or spouse or parents or even extended family. Therefore, communism removes the incentive to work, while the free market builds on that incentive. Who would start a business where they take a risk that it could fail and they put in effort to build it from scratch, if their results will be redistributed? Almost no one. Then what happens to the economy if no one is unleashing their creativity? It fails; everyone suffers, cycle…. Whereas with the free market system( and I’m not arguing for a pure free market system, just a system that is alot closer to free market than the other side) you work with human nature and build on the motivation and drive that people have to succeed or be the best or take a chance or just provide for their family or themselves. This allows people to take risks, start business ventures, try to educate themeselves so they can get better jobs, unleash their creative potential- since they know that they will be able to keep (at least most of) the fruits of their labor. I can talk about this without end, so i’ll just give one more example of a key difference between these two ends of the spectrum. Let’s ask the question: When is money better spent and used more productively? And when is money and resources more likely to be wasted and given to well connected instead of those who deserve it. Well, to find the answer, let’s ask this question: Who would be more prudent with your money, You or someone else? Obviously you. The problem with communism (or anything toward the spectrum which takes the decisions further away from the individuals) is that instead of the individual deciding how to best spend his/her money, you end up with bureaucrats making the decisions. In essence strangers far away deciding how someone elses money should be spent. Since it’s not their money, they will not be as careful with it as you would. They will waste it, steal from it – or give contracts to their friends and those well connected.. So the more you can keep the persons money with them the better. Now obviously there are exceptions but as a general rule towards the spectrum of the individual and his freedom is superior than the collective – especially since the collective doesn’t exist in that sense ( we are not a colony of bees) and the “collective” just ends up being the privileged individuals and the impoverished – far more than the free market system produces, for many reasons including those stated above.

    1. But it’s not a choice between a completely free market or a completely planned market. There are many things in the middle, and in fact all states occupy that middle ground – government manipulates the markets even in the most capitalistic societies, and even in the most restrictive markets, there is also some free trade going on.
      And the problem of other people deciding what to do with your money and making bad decisions is far from a non-issue in supposedly capitalistic America – see the subprime crisis.
      Right now I tend to think that:
      a. Israel and America are more corporatistic than capitalistic, regardless of what leaders claim to believe. Their economic systems are tilted towards allowing the very rich to become even richer at the expense of all others.
      b. The ideal model is something akin to the mixed models of Germany and Scandinavia, in which you have both a strong welfare state and a strong free market.

  3. Oh, and about your money blog which I just read: Why do you restrict that as your option. There may be many other opportunities regarding translating. What about a translator for a court, for the government. What about starting your own translating company where you book people who need translating with translators. What about a business teaching a language or languages to people. Germans who would be interested in learning hebrew for a cheaper price than a university; I hear there are evangelical christians in Germany, maybe advertise this with fliers in their churches, they might be very interested…just thinking off the top of my head. If I’m not mistaken, there are no distinctions between foreigners and germans when starting a business in germany, and I don’t think there is any red tape regarding repatriation of profits. What about writing and publishing an e-book about democratic schools and selling copies of that at your democratic school meetings… think creatively; with the head on your shoulders you can do better than survive you can thrive God-willing.

    1. Thanks for your thoughts. I have Hebrew teaching and translation in mind as options, though I’m not sure these are my favorites. As for writing a book, I don’t believe that’s something I can make a lot of money from in the short term. It’s something I want to do some day, but I believe the profit will be in speaking gigs that come as a result of the book, not from selling the book itself.

  4. Hi Michael,

    I too have done quite a bit of soul searching in regards to economics. I was certainly attracted to the virtue behind the supportive nature of socialism but have more recently become aware of the benefits of libertarianism.

    I want to address your point when you wrote:

    “Moreover, any system that creates and maintains social classes full of people who are essentially condemned to be losers is not the kind of system I want to be in. And when we look at Israel, we see a place where there are remarkably many people who are extremely rich, but far more people who are incredibly poor”

    I can’t speak of Israel, but I can of the United States, a traditionally capitalist nation. One can look at the growing disparity between the poor in the states and the ultra rich with disdain, but that’s not a whole picture. What is easily forgotten is that thanks to our capitalist-like system, the living standards of the poor – while arguably deplorable – are still leagues better than they have been in the past. Those we consider poor in the US are still within the top 10% of the world’s highest earners. There’s a reason why migrants from South/Central America flock to the United States – even though they live out of the dingiest motels spending 80 hours a week raking blueberries in Maine, and migrating south in the winter to pick oranges – it’s leagues better than the lack of opportunity or subsistence farming in their home country.

    Despite that – I think it’s safe to say the United States does not play the libertarian-capitalist-free trade game. Neither does Israel. Capitalists in the US love to point to our own nation as a grand case study in support of libertarian economics, but forget that we employ tariffs and subsidies for key industries, especially agriculture while promoting free trade to developing countries. We also have a social safety net that some may argue is not enough, but compared to developing nations is quite generous. We have minimum wage laws. We’ve (historically) empowered unions. Our nation has also spent a lot of public dollars on infrastructure including building a complex national highway system and more recently subsidizing phone and internet connectivity.

    It is because of our success that I support a balanced approach – though slightly tweaked to avoid exploitative corporatism. I cannot easily label my stance. Some might call it centrist – but I think “moderates” and even some libertarians have usurped that label in the US. I can’t hang out with US-liberals because I’m too pro-business. I can’t hang out with libertarians because I’m in favor of some (marginal) progressive taxation and public education/infrastructure spending. I’m certainly not accepted in US-Conservative circles because I am of course in favor of more civil liberties.

    Ultimately, I’ve decided to forego a label all together due to the polarization and hostile nature of politics these days. I’d rather people not make assumptions about where I stand on issues.

    1. I guess I’m in a similar place to you right now. I think Israel could use better social services as well as more free trade (though either one would be a good start) and I agree that limits are needed (everywhere) on corporate exploitation.
      One thing I think we should be careful of, though, is looking at poverty in absolute terms. The fact that most poor Americans have a better income and standard of living than most people of any class in the developing world does not at all make it okay that they are poor. There’s ultimately no justification for a system that allow extreme poverty to exist. Making sure every person in the state has access to education, housing, medicine and food would require a relatively small public investment (relative to, say, waging futile land wars in Asia) along with clever economic measures that don’t necessarily have to really restrict the free market – and it’s a good deal for everyone, because people of any class need not live in fear of losing access to these basics, and you also end up with a more able, empowered and free populace contributing to both economy and culture.
      The tendency to put these things in black-and-white terms, casting any system that is more socialist than the US as identical with communism, sometimes obscures the fact that the goals of socialism are both desirable and attainable under a free system.

 

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