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My takedown (er… rebuttal) of Russell Brand’s ‘Revolution’ video…

25 Oct

I’m going to take a break from my series on rights to briefly address the Russell Brand video that has been shared around the interwebs quite heavily lately. I’m doing so because I’m seeing friends cheering it on… good hearted, well meaning, empathetic friends… and given the overall thrust of what Brand says, I find this disheartening and disconcerting.

To start, let me say I have no problem with celebrities expressing their opinions on politics, or whatever. They are in a position where their voices will be heard, and they are utilizing it. Great! However, I DO have a problem with them (or anyone, really) strongly voicing their opinion about something as if they understand the subject they are talking about, while clearly displaying the opposite. Is it their right to do so? Damn straight it is! Should they be called out strongly on trying to pass of their ignorance as enlightened thinking? Damn straight they should!

Side note: this is not to say I agree with the interviewer. He’s a complete knucklehead… or at least he is handling himself as such here… so let’s pay him no mind for now.

A POINT OF AGREEMENT

Now, I also do not have any issue in the slightest with Brand’s stance on not voting. I do not vote any longer either, and I wish a lot of people would actually refrain from doing so for a variety of reasons. I think he gets it mostly right here.. in a very loose way. The idea that your views on political or economic matters is irrelevant because you didn’t vote is complete nonsense. Anyone with the slightest bit of political sophistication should understand that there are many valid objections to voting, not least of which is (and perhaps mostly because of) an understanding, even on a surface level, of public choice economics.  In this area, the interviewer is simply repeating rhetoric that almost all of us have had indoctrinated in us since birth. That doesn’t mean it’s right.

MAJOR DISAGREEMENT (or: HE’S VERY, VERY, VERY WRONG)

“The very concept of profit should be hugely reduced.  David Cameron says profit isn’t a dirty word.  I say profit is a filthy word, because wherever there is profit there is also deficit.”  –  Russell Brand

This is so, so wrong, on so many levels, and so dangerous of an idea for the very people Brand wants to help, that it’s hard to know where to begin and what to address without making this post way overly long.  I’ll start by saying this: Not all profit is equal, and he doesn’t seem to understand the great distinction between profiting via a free market, in which both parties entering into a voluntary exchange have a reasonable assumption that they will be better off than they were before the exchange (ie: they will both profit), versus profiting via rent-seeking, wherein some parties achieve profits at the expense of others by utilizing politically coercive means. The former is defined by positive sum transactions. The later is defined by negative sum transactions (this is where profit for one party would indeed equal a deficit for another).

What’s even more disturbing than the seemingly complete ignorance of this distinction (as is evidenced both by what follows in the rest of this interview, and on his simple labeling of profit as ‘filthy’ in an all encompassing sense) is that the very broad ‘solution’ for these evils (real and perceived) he puts forward is a steroidal version of what has created the massive culture of rent-seeking that we are now suffering under: government intervention in markets via regulations and redistributive schemes. This is where the zero sum game is.  This is what, when taken out of the realm of rhetoric and put into the realm of practice, benefits the few at the expense of the many.

And let’s look at how massively ignorant and irresponsible on its face it is to axiomatically state ‘wherever there is profit there is deficit’.  If this were true, advances in material human welfare would be impossible. It would mean that person A could only ever profit at the EXPENSE of person B, C, or D.  Therefore, if A, B, C, and D each had one unit of a generic economic good, for A to end up with two units, B, C, or D would have to end up with zero. Overall increases in material wealth in this state of affairs.. one in which ‘wherever there is profit there is deficit’… could never happen. That is not a misreading of Brand’s words, it is a matter of drawing the logical conclusion from exactly what he said!  But it doesn’t take a whole lot of mental energy to recognize that the overall capital stock in the world, let alone the U.S., and the overall material well being of human beings not only at the top of the economic ‘food chain’ but especially at the bottom, is almost incomprehensibly greater today than it was 50 years ago, let alone 100 or 200 years ago.  Even 20 and 30 years ago, truth be told, and even with the tremendous barriers governments have increasingly erected in many areas over many years which have slowed this process down (though there are other areas where governments have removed barriers they had once erected, and in doing so have had the exact effect one would think: progress in material well being across the board).

At every step in advancement in material human welfare, in increased living standards for all, there has been capital investment, technological innovation, and… *gasp*… profit!  If we took the profit part out of this equation, material progress would come to a grinding halt, and reverse.  If ‘the very concept of profit’ were ‘hugely reduced’, as Brand advocates, the material well being… especially for those on the lowest rungs of the economic ladder…. would be hugely reduced.

OK… WHY?

I’m going to put aside the fact that earning whatever profit the market will bare is a fundamental right regardless of the consequences and focus instead solely on the utility aspect for the sake of this post.  In a pure utility sense, prices and profits serve a vital purpose. In a world of millions of people with varying wants, needs, dreams, desires, values, knowledge, perceptions, etc., all trying to utilize whatever means are at their disposal in an effort to achieve their disparate ends in a world of scarce resources (including time), prices and profits serve as a decentralized knowledge base. They transmit vital information and signals to market participants about where precious capital is most valued based not on the projected biases of an ‘overseer’, but through millions upon millions of voluntary exchanges over vast geographical expanses which reveal the preferences of other market participants.  In a free market, rising profit margins in any given area of the market tell market actors where additional resources are desired, and where the expected return on capital outweighs the risk inherent in either moving resources from a less profitable areas of the market to ones with greater profit potential, or bringing new resources into play.  It tells them that the trade off has a high likelihood of resulting in both a bettering of their condition, and the condition of those in the area of the market they hope to serve.

In short, prices and profits paint a picture that helps us identify how best to serve each other in the most peaceful, voluntary, mutually beneficial way possible.  In order to function to its greatest benefit, this picture needs to be as undistorted as is humanly possible.

Admittedly, this is a bit of a clunky description of a complex topic that I’ll probably address and readdress over and over again in the course of coming posts, but hey, I’m trying to work quickly here!

THE BOTTOM LINE

It is for these reasons and more (hey, it’s a blog post, only so much I can cover in such a limited space and time) that it is precisely the areas of the market that we find so essential…. healthcare… housing… wages… food… stuffed bunnies… classic rock t-shirts… that you want prices to flow completely unencumbered and you want people to be as free as possible to seek as much profit as the market will bear so long as rights are respected in doing so.

And again, because it can’t be said enough:  No one benefits from this state of affairs more so than the poorest and most vulnerable amongst us.  Please do not fall prey to demagoguery and rhetoric to the contrary.

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3 Comments

Posted by on October 25, 2013 in Celebrity Rebuttals

 

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3 responses to “My takedown (er… rebuttal) of Russell Brand’s ‘Revolution’ video…

  1. Jenna

    October 25, 2013 at 4:08 pm

    I thought this was a nice treatment of the interview that touches upon why the poorest are not benefittting from a profit-seeking system as it stands. http://www.theguardian.com/environment/earth-insight/2013/oct/25/russell-brand-crisis-civilisation-what-now

    However, if your critcism is that Brand’s use of the word “profit” conflates the concepts of mutually beneficial profit making and rent seeking, please note that even if he had used the rather recondite term in place of the more colloquial, that would still constitue an enormously radical entreaty (i.e. Eliminate rent seeking).

    However, why I believe profit to be the appeopriate term is that a wealth-generating and mutually beneficial contract is being entered into between corporate parties, its just that the negative externalities fall upon the disenfranchised populace who are not contemplated as true parties to the transaction, or if they are they are “contracting” from a place of such severe disenfranchisement that they have no meaningful choice, rendering de facto rent seeking relationships (e.g. Working for ten cents an hour in India may be better than the alternative, but still vastly inadequate when the metric is whether basic human needs are met. Free market principles are extremely lovely in a vacuum-mutually beneficial wealth generation IS the definition of abundance-but we are kidding ourselves that such is possible for most contracting within a system of vastly inequitable distribution of power and we nust not ignore that the conceptual acontextual benefits accruing from profits to contracting parties often translate in reality to negative externalities for those that hold no seat at the bargaining table.

     
    • colegentles

      October 25, 2013 at 5:34 pm

      Hi jenna. I read the article you linked to, but again, the writer only talks about corporatism and the resulting profit-seeking spiral that results from it, and rails against that. He never address the alternative of freed markets.

      That said let me address your points best I can (to be completely honest, I’m having a hard time understanding a lot of what you posted):

      “if your critcism is that Brand’s use of the word “profit” conflates the concepts of mutually beneficial profit making and rent seeking, please note that even if he had used the rather recondite term in place of the more colloquial, that would still constitue an enormously radical entreaty (i.e. Eliminate rent seeking).”

      My issue is not that he conflates rent-seeking with profit (as it certainly is a means of profiting at the expense of someone else), but rather by not making the distinction, he conflates two polar opposite ways of profiting as if they are one in the same, which is either extremely ignorant of the subject matter, or intellectually dishonest. As to your point that making that intellectually honest distinction “would still constitue an enormously radical entreaty (i.e. Eliminate rent seeking).”: Good, I say! That would be fantastic! Being as I’m a free-market anarchist (libertarian anarchist, anarcho-capitalist… whatever-ya-wanna-call-it), radical thinking and drawing logical conclusions is kinda my thing. But my radicalism is based on economic truths, not utopian thinking.

      “However, why I believe profit to be the appeopriate term is that a wealth-generating and mutually beneficial contract is being entered into between corporate parties, its just that the negative externalities fall upon the disenfranchised populace who are not contemplated as true parties to the transaction, or if they are they are “contracting” from a place of such severe disenfranchisement that they have no meaningful choice, rendering de facto rent seeking relationships (e.g. Working for ten cents an hour in India may be better than the alternative, but still vastly inadequate when the metric is whether basic human needs are met. ”

      As I mentioned earlier in this post, I’m honestly not entirely clear on what you are getting at here. You seem to be re-describing rent-seeking in a corporatist state. Yes, the person working for 10 cents an hour or whatever in India is better than the alternative, and the economic reality of the matter is that by using government force to insist that his employers pay him 15 cents an hour will not likely result in him making 5 cents an hour more than he was, but rather losing his job and therefore making 0 cents an hour. But there are other things to consider here: why is it better than the alternative? Why is his country still mired in poverty, in comparison to somewhere like the U.S.? Why is their capital stock so low? Well, at this point it’s because their government was extremely anti-market, very socialist, for decades until quite recently. And while it has made progress in recent years (a lot when compared to the past), it is still rife with cronyism, corporatism, major corruption, and the resultant rent seeking that goes along with those things. This is not a free market by any means.

      “Free market principles are extremely lovely in a vacuum-mutually beneficial wealth generation IS the definition of abundance-but we are kidding ourselves that such is possible for most contracting within a system of vastly inequitable distribution of power and we nust not ignore that the conceptual acontextual benefits accruing from profits to contracting parties often translate in reality to negative externalities for those that hold no seat at the bargaining table.”

      Free market principles are not just extremely lovely in a vacuum, they are also so in reality, both because of their relative economic virtues, and the fact that they are the only principles that are compatible with the non-initiation of physical aggression with otherwise peacefully acting individuals. you are bringing up things like ‘disenfranchisement’ and ‘inequitable distribution of power’ but no where are these things more prominent than in the places that diverge the most away from freed markets. What could frustrate and disenfranchise a potential entrepreneur more.. someone set on meeting consumer needs better than anyone else currently in that area… than deciding to compete with a bloated company but finding out that the massive maze of rules and regulations supposedly set up to ‘protect consumer’ has instead made it impossible to enter the market as the cost of attempting to comply would be too large of a financial burden? Look into these things. THIS is where consolidation of industry comes from. THIS is the nexus of disenfranchisement.

      As for negative externalities… that is not limited to free markets. Interference in markets has far greater, tremendous negative externalities as well, which make the ones inherent in free markets look like child’s play when you consider the realm of unseen consequences and the depths of public choice economics. There is virtually no transaction two parties can make that doesn’t have some effect, positive or negative, on a third party. The only limitation that is valid is whether or not it violates the rights of a third party, not simply whether it offends out personal biases. The ultimate difference is, in an imperfect world, in a free market system, the positives outweigh the negatives to a tremendous degree. And one last thing: nothing could do a better job of reducing that power discrepancy that worries you than a completely unfettered free market.

       
    • colegentles

      October 25, 2013 at 5:39 pm

      Also: on the subject of ‘negative externalities’ or ‘market failure’ I highly recommend this lecture by David Friedman: http://www.youtube.com/watch?v=J5maguX5x8c

       

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