Kamis, 16 Oktober 2014

Should we privatize the Government?

Just finished reading this book called Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty. It is interesting how I found more to think about in direct continuity from the last post after I read Superfreakonomics which talks about altruism.

The book traces the life of Fred Koch, the founder of what would become the U.S corporate behemoth Koch Industries and the father of the four Koch brothers, the enigmatic billionaires considered to be the power and the money behind the Libertarian movement in America. It is extremely well written, and it helps that the life and times of the Koch family reads like a gripping TV drama. The book is quite impartial and does not take a political stance, which is commendable given the extremely polarizing political profiles of the subjects.
The main side benefit of this book, besides the fascinating story of the Kochs, is a peek into the origins and ideologies of the Libertarian movement in the American politics. The Koch dynasty has funded this movement since the 1950's into its current form. The book depicts them as passionate individuals, who truly believe that the government is source of corruption and the enemy of progress in modern civilization. They believe that anything that a government does can, and should be, done better by a private enterprise. Ironically, in a curious circular argument, the Koch corporations political activities against govt. regulation on private enterprise has become the strongest argument for regulation against corporations like Koch getting too much power and running amok.

Such arguments have quite naturally existed in India as well, given how much more apparent the Indian government's red tape and inefficiency is. With Modi coming to power, many express doubts/fears/hopes (depending on who you ask) that he will attempt to rectify the ineffectual Congress govt by privatizing everything. I will mostly use the American political scene as examples but the main discussion is relevant in every nation in the world today.

Is privatizing everything the solution to the worlds problems? Is government regulation what is holding us back from the progress highway?
Here are my thoughts

The libertarians philosophy, at least for Fred Koch, really stems from a 70 year old communist paranoia. And to some extent, in its time, it was required. Communism as practiced by USSR and its satellites were truly a destructive force and the paranoia was quite justified. However it is important to understand why rather than be blindly paranoid about everything government.

When a company is motivated only by profit, there is nothing really preventing it from taking advantage of unethical means and morally grey areas to benefit from. Even if we assume that all companies obey the basic minimum laws such as do not kill or steal (which they do not) there will always be gray areas to exploit. The idea that the market can self-regulate is quite ridiculous.

An obvious example is De Beers and diamonds. Is it against the law to monopolize, or create artificial scarcity, so that you can extract whatever price you want for your commodity? No one is killed or robbed, no one is forced to buy diamonds so why should it be illegal. All they are doing is making sure there are no competitors and no knowledge of their business process. If either was allowed there would immediately be competitors who could undersell De Beers and the market to stabilize to a better state more friendly to customers. As a result, the producers of the diamonds, hypothetical competitors and the ultimate buyers of the diamonds, all have be kept ignorant of the options available to them.

That doesn't seem illegal, does it? So no regulation is required. Then is it o.k. to lie to keep the ignorance? At what point is it illegal? What if to keep the secret you have to kill one person who knows about this 'technically not illegal practice'? What is the one person's life worth? What if the person is a beggar? What if the company is not De Beers but say Bank of America, which if did not silence the whistleblower would not only lose its money, but likely go under and cost millions of innocent people their life savings and possibly a national/global recession? Surely the lives of those innocent people is worth sacrificing that one person. What if it was the healthcare industry, which can literally kill people by inaction?

By the way, you can see that I have not made this hypothetical scenario up. This is exactly the current situation of the world market and the stakes are exactly that high. I used murder to exemplify that even that extreme step seems almost acceptable, surely smaller crimes can be justified far more easily.

In my opinion, the idea of reducing government regulation on private enterprise, at least in the US, is an idiotic one. India might need reduce government regulation, cautiously. The scale of corporate activity is so large, affecting millions of lives and of trillions of dollars (units of national GDPs) that a few people cannot be allowed, unregulated, to have the power to influence entire nations. The idea that these few people have succeeded in a competitive environment and have thus earned their power or somehow deserve to have this power is flawed in two very fundamental ways.
  1. It can never be true without regulation. Imagine two people, one a billionaire tycoon, and the other a garage start up company who is a direct competitor of the tycoon. If there were no rules, how can the start up ever possibly beat the tycoon. There is simply no way. The only reason it happens in our world, sometimes, is because there are some rules as to what the players of the game can and can not do. Without rules, the rich will do everything in their power to stay rich. Success will be a gift from the existing rich, bestowed more often than not on undeserving relatives and favorites. We do not need to try out this idea, it has been done countless times in history. This path inevitably leads to oppression, suffering and eventually revolution. 
  2. Many times it is true... people might have made it rich through their own efforts and skill. These people truly are special and deserve 'something' more. But if history has taught us anything, it is that 'something' is not power to control other people. Good businessmen make more money, because money is an adequate reward befitting their skills and contribution to society. 
There have been many kings and leaders in history who rose their position due to some skill that made them better than the average droll. Napoleon and Hitler come to mind. It was their skill in exploiting their environment, leadership and belligerence that got them their power. So when they got said power, they continued on, on their exploitative belligerent ways, to great detriment to society as a whole. They might have made great entrepreneurs or inventors or planners, just not great rulers.

Individuals who are great at one thing might not be right about other things. Michael jackson was a great artist. But he also went crazy later in his life. His skill, and all the money accrued in one field should not be allowed to influence public policy on, say, pediatric care. The Kochs' skill in entrepreneurs and engineering, brilliant as it might be, has no bearing on public policy and they should have no more of a say in the political process than the average joe. Therefore, the socio-political system which has enabled the Koch corporation to earn billions of dollars from petroleum products should also insure itself against the influence of said dollars from changing the socio-political system for its own benefit. 

That is the very description of democracy, a system by which the people decide on candidates whose public policy is better by voting for them. Regulation of private enterprise, taxation and really everything that the government does is simply an evolution of that idea. To have a more stable state/nation/world where the selected few are given power not because they are good at math or oration or combat or singing or making money but something that is beneficial for the the long term good and stability of the nation, i.e. framing and implementing good public policy. If richer people have more political power then you have a plutocracy not a democracy.

Therefore any logical argument defending unregulated capitalism/Libertarianism eventually has to dispose of democracy itself to be consistent.
Most libertarian/tea party ideals involve reversing centuries of knowledge and complexity added on the government and going back to 18th century, or at the very least pre-cold-war-era of corporate freedom. I assume then they would have society go through all the mistakes of the last century - slavery, imperialism, labour exploitation, environmental destruction - before rediscovering them.

If the government has become entrenched and filled with corrupt and/or inept bureaucrats then its a good idea to try to cleanse the government, but not by going back a century, undoing all the checks and balances on corporate avarice. Therefore in my opinion the Libertarian ideas are at worst foolish and misleading, or at the very least naive. 

There is, however, a more coherent and persuasive argument than government ineptitude to privatize everything. Which is the proposition that public policy "should not" be different from Darwinian capitalist rules. That the welfare of everyone is not natural, and that democracy is a flawed mutation, a diseased organism that needs to die for humanity to evolve into the future unfettered. This is at least an idea that is logically consistent. For sure, a social welfare system, even basic democracy, is highly unnatural. Such a system does not exist in nature. In nature might is right, irrespective of whether said might was achieved through skill, treachery or random luck.

The question is do you really want to live in that dog-eat-dog world, always watching your back against everyone else? Or do you, like me, think mankind can achieve far more by working together?

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