You’ve Been Conned!

The word “con” derives from the word “confidence” in that the perpetrator of a con first develops in you an attitude of confidence, which is then used to exploit your trust in him to your detriment, such as promoting a fraudulent investment. Unfortunately, it is often the case that we have succumbed to multiple con games which have their genesis in attitudes arising from Progressivism in the late 19th century. They exist because we would not willingly accept the conclusions the con imposes in the absence of its deception.

Con #1 – Climate Change. Put briefly, there is a concerted effort to gain your confidence in the notion that the earth’s average temperature is increasing at a rate that will have serious consequences in the relatively near term; this warming is said to be directly related to the increase in atmospheric carbon dioxide, a byproduct of recent industrialization. The remedy is immediate and drastic reduction in CO2 emissions by the developed countries.

The arguments for accepting this include: (1) a purported consensus among “scientists” of its truth; (2) denigration of critics as “climate deniers”; (3) the assertion that the “science is settled” with respect to climate change.

To which I reply that the so-called consensus is among a group, the vast majority of whom are not climate scientists, who belong mostly to academe and whose livelihood and project funding depend on going along with this conclusion. And, of course, denigration and name-calling are not arguments, and the tone of the discussion recalls accusations of apostasy, i.e. climate change has become a religion of sorts. Finally, it is fundamental that, for any given theory, the science behind it is never fully settled, and is always open to new discoveries. The gist of the proponents here is that they are overwhelmingly correct and any dissent should not be tolerated. Viewing an interview with one of the more rabid proponents should convince you where they are coming from; just view the YouTube video of Tucker Carlson interviewing Bill Nye, the Science Guy. The appeal here is not to logic or facts, but authority.

It should be noted that most of the climate change scare is predicated on computer models which purport to predict the magnitude and timing of increase in global average temperatures. It should also be noted that recent satellite and other temperature data in recent years has not conformed to the predictions that the models delivered for those time periods; also, each successive publication of the UN IPPC (Intergovernmental Panel on Climate Change) has contained downwardly revised historical temperatures and the text produced by the actual scientists involved is much more “conservative” and cautious than the Executive Summaries which constitute the bulk of the material quoted by the media and by climate activists. Forbes has an article that discusses the efforts of companion, Non-governmental International Panel on Climate Change (NIPPC) to compare and contrast the IPPC promulgations. 1

The bottom line: adopting hugely disruptive (and coercive) policies based on computer models’ predictions is, frankly, ridiculous.

One should also recall the similarly strident calls for action to deal with the so-called Population Bomb in the 1960s and the high level of concern about Global Cooling in the 1970s. Regarding the population problem Paul Erlich’s book made egregiously exaggerated claims for the relatively near future, to wit:

The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate…

Note how frantic tone of the above is very similar to the assertions of Al Gore, Micheal Moore and others regarding the urgent need to respond to the climate change predictions. In 2006, Al Gore was heard to say:

unless drastic measures to reduce greenhouse gases are taken within the next 10 years, the world will reach a point of no return.”

Sound familiar? I leave to the reader to ascertain whether the predictions just discussed above have proven accurate.

The reason why rejecting the Progressive view of climate change is so important is that the proposed remedies are drastic and would likely take the developed countries back to the beginning of the 19th century by denying us the continued use of fossil fuels, and prevent the developing countries from achieving anything beyond their current standard of living. Just witness the hostility to coal, to the new extraction method of “fracking”, to pipelines, and to most new developments generally. The Progressives are in danger of becoming the new Luddites.

Con #2 – The Nature of Economics . We are all subject to the gigantic con that current methodologies and policies are well founded in a mainstream economic theory based on concern for aggregate economic performance (e. g. GDP) and ways to intervene in the economy to influence outcomes. Fully 90% or more of economists you might hear from are of this school of thought, which derives from the writings circa 1930 of English economist John Maynard Keynes; additionally, economics has largely become a mathematically based discipline which attempts to accurately predict events.

Once again, the appeal here is to authority because the results in practice have been abysmal. The worst case is the recent severe downturn of 2008; most economists blamed greed and excessive risk-taking combined with insufficient regulations for the crisis, which some claim is inherent in capitalism. For the Keynesian school, the boom-and-bust cycle is a natural phenomenon that can occur spontaneously and whose causes are not understood.

The actual facts regarding 2008 are these: the central bank (the “Fed”) kept interest rates historically low during the recession of 2001-2; when combined with government policies that mandated the creation of heretofore unknown volumes of high risk mortgages for low income buyers, the results were perfectly predictable— a housing bubble, i.e. more houses built than there was a legitimate demand for. Add to that the innovation of certain relatively new types of mortgage securities which pooled these riskier mortgages together, we have the ingredients for a crisis. Almost all the impetus for this was supplied by government intervention: the Fed, the Congress, and the housing GSEs Fannie Mae, and Freddie Mac. Sorry, not capitalism’s fault. 2

There exists an alternative body of economic thinking — the Austrian School, which is largely non-mathematical and sees economics as predicated on peoples’ choices, i.e. on human action. This school of thought asserts that economics is a social science, not a “hard” science like physics, chemistry or biology, and hence, the move to introduce mathematics in attempt to provide predictive accuracy is nothing more than an extension of the Progressive philosophical conviction that is not only possible, but desirable to exercise “scientific” control over society and the solution of social problems.

The Austrian School emphasizes the study of individual human decision making in formulating the laws of economics, and shows how such laws provide understanding of the tendencies of things to occur, but not the magnitude of the occurrences. Just because it avoids the use of mathematics and is suspicious of the universal mainstream tendency to view all macro-economic activity as the study of aggregates ( e.g. “aggregate demand”, which is so central to the Keynesian point of view), does not mean that it is unsophisticated or invalid. It does assume, however, that mere mortals like you and me can understand the arguments presented, i.e. economists are not ( or at least, should not be treated as ) “high priests”. If you want an altogether different view of the economic crisis of 2008, please view the YouTube presentation by Tom Woods on “Austrian Business Cycle Theory”3

Climate Change and Economics are examples of how we are being conned into accepting a bad situation, which benefits some but damages most of us. Worst of all, these cons extend and exacerbate the control that Progressives can exercise over every aspect of our lives! Next, we discuss two cons that claim the services they offer are so unique that they are special cases.

Con #3 – Schooling should be Free (and Compulsory ). Most people nowadays consider public schools to be a norm that was always present, and, moreover, that it represents the way things ought to be because education, unlike most services, is somehow unique and different.

The history of education in this country does not support this view—schools were mostly private until around 1850. An article at FreedomWorks4 explains: “It must be pointed out here that the United States had not previously been a nation of illiterate citizens. Estimates reveal that 90% of all whites in the mid-19th century were able to read, write, and perform basic arithmetic. These statistics like nothing else reveal that the impetus behind compulsory schooling was always more political than educational.”

The political considerations here were essentially a somewhat bigoted reaction to the influx of Irish and Italian immigrants whose children were attending Catholic parish schools, partially funded in many cases by local governments. Attempts were made to pass a Constitutional Amendment prohibiting such funding, but it failed; there were, however, successful attempts at the state level in around 38 states.

So, it was not the case that public schools were founded on the failure of private schools to educate. Nearer the end of the 19th century, Progressives like Horace Mann and John Dewey promoted universal, compulsory, free education as something not intended primarily to benefit the individual but to mold the society, to wit: “…through education society can formulate its own purposes, can organize its own means and resources, and thus shape itself with definiteness and economy in the direction in which it wishes to move.” Dewey also allowed that

“The Russian educational situation [post 1917] is enough to convert one to the idea that only in a society based upon the cooperative principle can the ideals of educational reformers be adequately carried into operation.”

Consequently, the idea that education is really no different than any other service, and hence, can be voluntarily bought by the actual consumers based on satisfaction of their desires, was replaced by the notion of coercion, one-size-fits-all uniformity ( and conformity). And, of course, one of the biggest cons of all is the idea that state-sponsored education is free. No, it is tax-paid, a form of coercion applying even to those without children to educate.

The major contemporary argument promoting public education is that education is a public good, by which we mean that the free market would either under-produce or fail entirely to produce the good because of (1) “jointness of consumption” which more simply put means that once the good is produced, additional consumers may enjoy the good without any increments of additional cost, and also because of (2) “non-excludability”,i.e. the inability of the producer to exclude potential users. Ergo, the free market, it is said, will generally not be interested (have no incentives) in providing the good or service in question. This is the argument that undergirds a whole host of public goods for which, it is asserted, the only legitimate provider is the state, including roads and major infrastructure.
Even though a close examination does not very well meet the criteria in (1) or (2) above, education has nevertheless been argued to be a public good and hence in need of government funding by taxation. The reason is that it is in the interest of the state to be the nearly exclusive agent in charge of education in order to legitimize the state and the arguments in favor of the status quo and the validity of democratic choices. All the participants (teachers, administrators, researchers, et al ) are beholden and hence supportive of state goals, not individual learning. The mastery of bodies of knowledge and acquisition of intellectual skills is entirely secondary to the influence public educators exercise in favor of the state.5

Con #4 – Health Care is a Right. Here too, the idea that health care should be a private transaction between one or more providers and the individual needing care has been supplanted, at least in democratic socialist quarters, by the notion that health care is somehow unique and so different that only the state is competent to make health care decisions.

Proponents for its uniqueness claim that it is different than most services in that: a) if you don’t utilize it, you may die; b) providers know more about your health problem than you do (“Asymmetry of information”); c) consumers sometimes have difficulty in determining the value of the service even after delivery.

It seems to me that the gist of these arguments is that “others in authority” know better. So, the state with its access to “ expertise” is a better bet to control what happens. The defect with this approach is that all decisions are then based on aggregate judgements about welfare, costs vs. benefits, etc. Such utilitarian decisions are fine, as long as it is not your care that is denied.

The essence of this con is, of course, that a cursory examination shows that health care, while it may present the consumer with problems that are not universal, is still a service that the recipient needs to control.

The notion that either health care or education are rights runs contrary to the concept of rights supported by the Constitution, where rights are prohibitions on government, not promises to deliver a service.

Just as with education, government involvement in health care is justified with the same bogus public goods arguments that we have explored above. That potential consumers can be excluded is obvious, and it is hardly the case that providing care to additional consumers is a cost-less event. However, one risks absolute vilification if exclusion (for non-payment or supposed inability to pay) is even suggested, hence the automatic distribution of emergency room care costs across entire populations.

There is a rational way of dealing with the emergency room syndrome: first let it be known that only serious or life-threatening issues will be dealt with–no colds or flu or ingrown toenails and that a fee will be charged for the triage necessary to determine the need for a visit if it turns out not to be an emergency, i.e. restore the true meaning of “emergency” in Emergency Room medicine. Second, let the patient or those with him know that the cost of care will be ultimately be billed to him; reasonable efforts will be made to recover costs, except that the hospital may not bill the ER patient any more than the least cost it has negotiated with any entity ( e.g. an insurance company ) for that service. It is well-known that the full “retail” cost for hospital procedures charged to individuals is typically several times more than to other classes of payors.

In addition to a likely substantial reduction in ER costs which have to be reflected in increases to hospital fees generally, it is imperative that legislation and policies be put in place which will tend to revive the fully implemented concept of insurance: payments are made by individuals based on the size and composition of the risk pool and any individual risk characteristics. Other forms of insurance ( auto, casualty ) presuppose that the insured-for event may not even occur in the policy lifetime, hence a paucity of claims; health insurance has evolved such that it has instead become an ongoing health care payment mechanism that encompasses all types of care, serious or routine, rather than the classic insurance situation. The advent of this mode was incident upon the government intervention that allowed employers to deduct the cost of insurance premiums for their employees circa 1942.6

To address the problem of of employer provision, the deduction put in place for this cost should be phased out and we should endeavor to eliminate all restrictions on the insurance contract and allow insurance sales nationwide, with emphasis on contracts which are oriented primarily towards catastrophic as opposed to routine care .

Con #5 Debts and Deficits are not a Problem. Most people are aware that when the federal government spends more than it takes in, there is a budget deficit for that year, which amount is added to something called the National Debt. You may even have heard that the current value of this debt is about $ 19.5 trillion, about 105% of the value of the entire annual economy (GDP).

The vast majority of us have made a studied effort to ignore this situation, some because they consider it irrelevant to their daily life, and others because they feel that ultimately there will be some horrendous reckoning in the far future.

Because almost all politicians and economists refuse to focus on this, many of us are conned into believing that near term inaction to reduce or eliminate the debt is probably OK. They would be wrong.

Economists of the Keynesian persuasion ( go back and re-read Con #2) declare the debt not problematic because “we owe it ourselves”, i.e. U.S. residents own most of the Treasury Bonds. However, a debt this size has strongly deleterious effects in the here and now. Specifically, all those who depend on fixed income investments, directly or indirectly, are affected by the government’s deliberate combination of interventions—controlling the interest rate and keeping it very low, and fostering a moderate but continuous rate of inflation, both of which, operating in concert, reduce real appreciation of pensions, retirement accounts, and all fixed income instruments. Much of the time we experience negative real interest rates ( e.g. a 1.5 % nominal rate combined with 2.5% inflation is a negative 1% real rate—you are losing value in that investment ). Governments adopt this strategy because its pernicious effects are harder for the public to perceive than austerity programs and large tax hikes, yet the result is the same: the debt is gradually devalued along with the currency. So, it is not the case that the only impact will be on your grandchildren having to repay this huge amount in some distant future. No, it’s right here, right now. The state is using private savings to pay down public debt using these stealth tools.

Con # 6 – Economic inequality is harmful and unfair. We hear much nowadays about the so-called 1%, i.e. that group of people who are at the top of the heap income-wise and the implication is nearly always that this is a bad, very bad thing! If you are a dyed-in-the-wool egalitarian who thinks everyone should be equal in all things, then yes, this could be a source of angst for you, but in fact there is almost nothing of consequence in what leftists generally think of as a mal-distribution of income.

The most common objection to unequal incomes is that, if less of the total income went to the top (10%, 1%, 0.1%, take your choice ) then more of that amount would wind up in the hands of the rest of income recipients. The first thing to note about such thinking is that it suggests a static situation, i.e. that the income pie is not growing. If such is the case, then it is probably much more important to think about and deal with factors stagnating growth than to limiting the top incomes. Furthermore, these factors are inevitably traceable to some government policies—policies that take money away from capital investments, policies that cause monetary inflation, policies that result in substandard education, etc. etc.

If the income pie is growing, then the question becomes one of whether the living standards of the non-top-income group are increasing or not, and this is frequently not alone a function of taxable income received.

In any event, the bottom line here is that those who think a particular income distribution is unjust and/or unfair always seem to have in mind some coercive remedy as suggested by the following discussion:

When we talk about a social injustice – not just the unfairness of bad luck – what we mean is that there is an inequality which is unfair and which could be remedied if our social institutions were different.7

( I have written extensively about Justice and Fairness—see the three-part series of posts by that name in this blog.)

As a parting thought on this matter, consider the amount by which the incomes of the non-top-income group could be augmented by seizing (Yes, seizing! ) the entirety of the income of the top group, whichever option you have selected. In the case of the top 10% vs. the remaining 90%, dividing the top group’s total of $ 4.3 Trillion income by the number of taxpayers in the bottom 90% only adds an increment of about $3,500 to the adjusted gross income of each taxpayer in the bottom 90%. This is only significant for the three lowest brackets (i.e. those having Adjusted Gross Incomes less than $20,000); for the rest it augments their income by at most 20% before any additional taxes resulting from a move to higher bracket. To accomplish this magnanimous feat, you will have essentially eliminated (!) an entire class of entrepreneurs and small business people who demonstrably provide most of the jobs in this country. Nice going, you magnificent social justice warriors!

Summation. Let’s now discuss the implications of the five cons discussed. What if you refuse to be conned?

If you reject the Climate Change con and refuse to have the clock turned back 100 years on your standard of living, then vote the proponents out of office!

If, having an open mind, and having investigated the Austrian School of Economics, you realize that you have been conned big-time into thinking that the layman simply cannot understand economic theory, then, having educated yourself at the hands of the likes of Tom Woods and Bob Murphy next time someone blames “greed” and lack of regulation for the 2008 meltdown, why you can pipe up and set him straight; then go vote for someone who is willing to abolish the “Fed” and return to free market monetary regulation. 8

If you can get up the courage to resist being shunned, then dare to suggest that maybe your school choice should not be determined by your zip code! Maybe the demonstrably low performance of American students in all types of school districts ( i.e. not just inner-city schools) is directly related to the substandard performance of tax-paid public educators. And to the fact that the primary motivation for educators is not mastery of subject matter, but molding children into social beings. Time to suggest and then support a fully private alternative and remove taxpayer funding from the formula.

If you can get past the absurd notion that health care is some kind of right or entitlement, ask yourself: Was there ever a time when health care was delivered on a fee-for-service basis and the costs were manageable and you had personal relationships with your care providers? And you, the patient, were mostly in charge of the situation? Well, you have been conned into accepting a situation where, because you are no longer the one who pays, many others are making decisions for you about your care. The increase in costs we now experience was driven largely by the existence, first of Medicare, then later MedicAid, and by employers becoming the responsible payment entities. It is analogous to the situation in education when a large pool of taxpayer money ( in this case, government funded student loans) is set before them, providers will increase their prices to meet this artificial demand. Instead of replacing the ACA with something similar, you should demand the gradual elimination of all government intervention into health care, and the dropping of all regulations that keep insurers from selling across state lines, or otherwise creating a multitude of competitive insurance contracts, which could allow abundant consumer choice among various cost alternatives.

If you will stop and think about it for a second, you may find it easier to quit being conned by egalitarians who insist on having you accept their undefined notions of fairness and their unilateral declarations about justice. Justice and fairness are sometimes related but are not identical concepts as they would have you believe.

The most essential, most bare-bones, most stripped-down essence of the concept of fairness is contained in the phrase “equal treatment”; note well, this does not mean failing to get an equal distribution of income and wealth, which, the egalitarians posit belongs to us all equally.

The most essential, most intuitive, most reasonable interpretation of the notion of justice is based on the concept of entitlement. Note well, this is an utterly different idea from the concept of a social entitlement like Social Security or Medicare. The entitlement concept of justice deals with who rightfully may lay claim to resources and what it is that justifies this claim. In other words, who has a right to property and why.9

The very bottom line here is to recognize who is conning you and to utterly reject them! Yes, it’s the Progressives! Every con discussed above can be traced directly to one or more well-known Progressive personages.  Who woulda thought?

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  1. See the following discussion at: https://www.forbes.com/sites/realspin/2014/03/31/the-ipccs-latest-report-deliberately-excludes-and-misrepresents-important-climate-science/#7561ddfb428e []
  2. See the book by Peter J. Wallison , “Hidden in Plain Sight” where he discusses how the bail-outs of 2008/2009 were not necessary, and how the only way to minimize risk-taking behavior is for there to be consequences for the individual firms. There never was a “systemic risk”. []
  3. See it at:https://www.youtube.com/watch?v=9a-eUKjnDfM. []
  4. See “A Brief History of Public Education: School Choice in America Part II“ found at: http://www.freedomworks.org/content/brief-history-public-education-school-choice-america-part-ii?page=6 []
  5. An excellent discussion of the bogus nature of the public goods argument can be found in the podcast at: (( http://tomwoods.com/ep-864-the-bogus-public-goods-rationale-for-government/. []
  6. The Economic Stabilization Act under the Roosevelt administration sought to prevent inflationary wage increases during wartime by allowing employers to compete by offering an additional non-taxable benefit–health insurance. This is a great example of an unintended consequence shaping the delivery of care for generations afterward , and putting the patient in second or third place in the healthcare equation because the patient was no longer the source of payment and that what kinds of care could be reimbursed became the subject of consideration primarily between the employer and its insurance company. []
  7. The quote was taken from “Thinking about fairness and inequality” which can be found at: http://www.ssc.wisc.edu/~wright/ContemporaryAmericanSociety/Chapter%2010%20–%20inequality%20&%20fairness%20–%20Norton%20August.pdf. []
  8. See Murphy’s blog at: http://consultingbyrpm.com/blog and his bio at: https://mises.org/profile/robert-p-murphy []
  9. See the excellent discussion of Robert Nozick’s Entitlement Theory of Justice in his famous book Anarchy and Utopia. See also a similar theoretical approach by legal scholar Randy Barnett in his Liberal Conception of Justice to be found the his book entitled The Structure of Liberty. []

1 Comment

Filed under Progressivism---the Giant Step Backwards

One Response to You’ve Been Conned!

  1. Anonymous

    Even though I don’t agree completely with everything you’ve said, it is a well written post!

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