comic strip paranoia

I have a black friend who grew up in the hood.

(The South Bronx, not the predominantly white neighborhood I grew up in on the upper Upper West Side.)

My friend has just accepted a position with Martha Stewart.

Between today’s Boondocks and yesterday’s, I’m beginning to suspect that Aaron Mcgruder is spying on us.

(Click to Enlarge)

(Click to Enlarge)

For more of my thoughts on conspiracy theories (also inspired by a Boondocks strip), see here.

diseconomies of scale

Kevin Carson, the interweb’s leading voice of hardcore mutualism (i.e., Benjamin Tuckerite individualist anarchism) is contemplating his next project, which will draw on the works of Ivan Illich, Paul Goodman, and Robert Anton Wilson. I note this sentence in particular:

“The organizing theme, as I understand it so far, is that the state subsidizes the diseconomies of large scale, and thus encourages the growth of business firms far beyond the size that could possibly survive in a free market.”

The State’s role in encouraging oversized corporations is not just in subsidizing particular diseconomies of scale (i.e., “corporate welfare”) but much more pervasively in penalizing optimum scale.

For instance, by taxing dividends, the government discourages the dispersal of profits. Investors and shareholders prefer growth in stock price for a postponed capital gains payoff to an ongoing share of profit. Thus profits are artificially redirected back into growth where entrepreneurs see no need for further growth.

(This example in particular works me up, because Marxoids and statist leftists in general believe that the free market has a natural tendency toward centralization and monopoly. It’s the State, baby! It’s government that puts the Big into Big Business!) (more)

Another f’r’instance: central banking (i.e., state-sponsored and -protected fractional reserve banking), by keeping interest rates artificially low, encourages both malinvestment (which is seen in inappropriate size as well as inappropriate direction, etc.) and now also in a culture of consumer debt and spending rather than savings and investing. I’ve already commented on the State’s role in the “consumerism” decried by the Left, but I believe there is another subtle and pernicious effect from this same phenomenon: the dichotomizing of the spending and investing classes.

In a free market, with externalities internalized, the tendency is toward lower time preference and greater investment on the part of everyone. Only newcomers to a free economy have to work hand-to-mouth. But under political capitalism, with price signals and rewards warped and redirected, only those who already have a great surplus are encouraged to invest. With artificially low interest rates, the average worker is steered away from savings and investing and toward borrowing and spending. The culture of the credit card.

The firms begin to feed themselves on the dividends they’re not dispersing (see above), and the general population works ever harder to deplete capital rather than develop it. We have less and less synergy between producers and consumers and more and more dichotomy between capitalists and workers.

Classical liberalism does have a class-conflict theory: the productive (economic) class versus the parasitic (political) class. This theory predates Marx, who perverted it into working class versus capitalist class. But the grain of truth in Marx’s version — political capitalists versus the masses — should still be blamed on the State.

In the free market, capitalist and laborer are roles played within the economy. Under state capitalism, the roles played by individuals become classes of individuals.