Saturday, August 1, 2015

Poverty Depends On Disregarding Demand

Reply to: The REAL Story of Wealth Creation


I appreciate and share your concern regarding poverty… but your story is fundamentally flawed. According to your story…

  1. capitalism is to blame for poverty
  2. both began around the 1700s

Except, here’s Aristotle discussing poverty…

It is also advantageous for a tyranny that all those who are under it should be oppressed with poverty, that they may not be able to compose a guard; and that, being employed in procuring their daily bread, they may have no leisure to conspire against their tyrants. The Pyramids of Egypt are a proof of this, and the votive edifices of the Cyposelidse, and the temple of Jupiter Olympus, built by the Pisistratidae, and the works of Polycrates at Samos; for all these produced one end, the keeping the people poor. — Aristotle, The Politics

Aristotle lived from 384 to 322 BC… a full 2000 years before you claim that poverty and capitalism began.

In order to understand the ACTUAL cause of poverty and the REAL story of wealth creation… let’s borrow the pyramids.

Imagine an ancient Egyptian market. Bob has an idea to bake bread. Consumers benefit from bread so they voluntarily give him their money in exchange for his bread. Peter, on the other hand, has an idea to build pyramids. Consumers don’t benefit from pyramids so they do not voluntarily give him their money in exchange for his pyramids. Does this prevent Peter from building pyramids? No. But it does effectively prevent Peter from building very large pyramids.

As we already know, Egypt has several very large pyramids. Clearly they were built outside of the market. Massive amounts of society’s limited resources were mobilized and allocated…. regardless of the demand. The size of the pyramids did not reflect the size of the demand. There was an epic disparity between supply and demand.

Poverty depends on disregarding demand. You disregard demand. You disregard consumers’ valuations. You think that the most valuable allocations of society’s limited resources can be determined by taking consumers’ valuations out of the equation. You’re a proponent of exclusive valuation. Therefore, you’re inadvertently responsible for the prevalence of poverty.

When people such as yourself definitively discontinue their disregard for demand... then, and only then… will poverty be destroyed. Once we no longer waste massive amounts of limited resources on the modern day equivalent of pyramids… then there will be a Cambrian explosion of better opportunities. The inherent diversity of demand will no longer be diminished by being diverted to a narrow range of less beneficial endeavors. Instead, a fully diverse demand will freely flow to find and support the widest possible variety of the most valuable discoveries.

In order to truly undam demand, people must be free to choose where their taxes go. The supply of public goods would be determined by the demand for public goods.

Right now we don’t know the demand for war. We have never known the demand for war. Creating a market in the public sector (pragmatarianism) would clarify the demand for war. Will everybody be happy with the answer? Probably not, but how can we effectively improve the answer when we don’t even know what it is?

Demand opacity is just as applicable to conservation. Just recently a white rhino died. The director of the zoo where the rhino had been living had this to say…

It is a terrible loss. Nabiré was the kindest rhino ever bred in our zoo. It is not just that we were very fond of her. Her death is a symbol of the catastrophic decline of rhinos due to a senseless human greed. Her species is on the very brink of extinction. — Přemysl Rabas, Female Nabiré, one of the last five northern white rhinos, died

I wanted to laugh, scream and cry when I read this. What Rabas said is funny because he clearly wants more white rhinos. How many more? Maybe 10 more? Or 100 more? Or a 1,000 more? What about 10,000 more? Yes? Rabas most definitely wants an abundance of rhinos. But… isn’t that greedy of him? Isn’t it greedy to want more and more and more? Of course! Yet, there he is shaking his fist at greed!

Human greed really isn’t the problem… it’s the solution! Human greed is the solution to human greed. The greed to consume more must be checked and balanced by the greed to conserve more. Right now the balance is heavily weighted in favor of consumption. This is simply because human greed has been largely limited to the private sector.

We don’t have a market in the public sector. Rabas isn’t free to choose where his taxes go. The government takes his taxes and a small group of elected representatives decides how to spend them. But there isn’t a single elected representative that can come even close to matching Rabas’ in terms of rhino greed and knowledge. No representative cares more than Rabas does about effectively increasing the supply of rhinos. No representative feels the loss of rhinos more deeply than Rabas does. No representative frequently dreams of endless herds of freely roaming rhinos.

It’s a travesty that Rabas’ rhino greed/knowledge is blocked from the public sector. Just like it’s a travesty that my epiphyte greed/knowledge is blocked from the public sector. How many similar travesties are there?

We expect our elected representatives to effectively embody humanity’s greed and knowledge. There has never been… and will never be…a more harmful absurdity.

What is the demand for rhino conservation? We don’t know. We really should know… but we don’t. How long will it take for people to grasp the problem with not knowing the truth? How long will it take for people to grasp the benefit of human greed?

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