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.
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.