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Smitty, Stacy, and others calling for the abolition of the Federal Reserve are treating the symptoms, not the disease. It’s the equivalent of curing gout by having leeches drink the excess blood, or treating schizophrenia by relieving the pressure on the brain.

Now hear this: We have a fiat currency, and we will have fiat currency for the foreseeable future. “Hard” currencies have failures and drawbacks of their own. It’s just been so long since anybody lived under a hard-currency regime that we’ve forgotten why we went to fiat currencies in the first place.

The only choice we really have is who is to manage the fiat currency, and the problem there isn’t that it’s fiat currency, it’s slapping Maserati badges on it and turning it over to incompetents who aren’t quite sure which end has the headlights but are absolutely certain that they need no further training or experience behind the wheel. To be scrupulously fair to Bernanke & Co., it is perfectly possible, even likely, that the combined wisdom and expertise of every economist since the concept became current would not be sufficient to manage the situation created by people who Want It Now and are blithely unconcerned about the cost — Daddy will whip out the credit card, as usual.

People with Great Ideas quite often fail to ask themselves, “What happens after I succeed?” Eliminating the Federal Reserve has exactly nil, nada, zero, zip, no chance whatever of returning us to the Good Old Days of a gold double eagle in every pocket and a chicken freshly killed by a virtuous libertarian hunter in every pot; to begin with, the Good Old Days are largely mythical, based on remembering the chicken and forgetting the chicken shit. There will be fiat currency, and it will be managed, and trading the Federal Reserve for the Bank of the United Nations does not strike me as a well-thought-out transaction.


Social advances have been so (relatively) common in the past two centuries or so that they have spawned a movement, sometimes labeled “Progressive”, that posits the indefinite continuation of the trend. Changes in society in ways that we consider more moral, more ethical, or both — abolition of slavery and child labor, women’s suffrage, tolerance of homosexuality, and a thousand others — have become so commonplace that many of us tend to expect such changes to keep happening, and conservatives, who by definition oppose radical changes, are sometimes demonized for standing in the way.

Advances in social justice are often attributed to moral or ethical improvement led by thinkers of conscience. That makes a nice platform on which the intelligentsia can preen in the glow of their Advanced Goodness©®™, but it simply isn’t the case. However vile his predictions may have been, Marx’s main insight will live forever: social upheavals are a response to economic changes rather than improved Goodness. His mistake was to assume that this was only true in a negative sense, that “the Proletariat” would respond to diminishing economic status by pressing for social change, and that was the only factor to be considered. In fact the trend has been the other way since the 1700s at least — social improvement follows economic improvement. The true advances in the past two centuries or so have been economic, and social goods came because the society could afford them, being wealthier.

The clearest example of that, because the most egregious, is slavery. The slaves we see in historical accounts, the bodyservants and urban laborers, were a sideshow — the toiling masses of slaves labored on farms and plantations, growing food to supply the cities and the rise of the artisan, bourgeois, and aristocratic classes. Slavery did not exist because people thought it morally or ethically right; it existed because of economic conditions, specifically agriculture in an era before machine power or decent understanding of biology. We, today, routinely expect that the return from agriculture will be enormous — 500 or a thousand to one, cultivated and harvested by a tiny minority of relatively well-paid people using machines. It is almost impossible for us to imagine crop yields of as little as ten to one — for every ten pounds of crop harvested, they had to have a pound of seed — and that requiring continual backbreaking labor throughout the growth and harvest phases, but that’s how our ancestors lived.

It’s not as if our predecessors thought slavery good or right in any absolute sense. It’s true that there weren’t many who argued against it from a moral or ethical standpoint, but they did what people always do: they rationalized it. One of the bedrock assumptions of human society everywhere is that it is acceptable, or even virtuous, to do bad things to Bad People. It follows that if you want to do something bad you have only to define your victims as Bad People, whereupon you have a free hand. Opponents in war are Bad Guys, so it’s OK to chain them up and make them work. Some ethnic groups are too stupid or too primitive to live as civilized beings, so it’s good and honorable to put them to uses they’re suited for — that one was developed considerably by whites in the U. S. South, but they didn’t invent the concept; the very word “Slav” derives from the Roman perception that those pale-skinned folk from the North and East were fit only for grunt labor. In any case, the very concoction of such a pretext is a tacit admission that its formulators want to do something morally or ethically questionable (at best) to somebody.

But if there were to be an intelligentsia at all, if there were to be anybody anywhere to do art and buy it, to create laws and enforce them, to think about things like emancipation and how the World worked, slavery was necessary, because the society simply wasn’t productive enough. If you went back by time machine and waved a magic wand over, e.g., the Roman Empire, giving everybody an equal share of the wealth of society, the median slave or slave-equivalent would barely see any increment of well-being, and shortly after that everyone would starve. Management, often derided because done badly, is necessary in order for production to occur, and if nobody has enough food or leisure to think about methods, procedures, and goals, production will be limited at best. If anybody at all was going to eat, there had to be overseers to direct the workers; the overseers needed planners and managers, and so on up the ladder. At each stage of the climb the individuals on that rung got more resources than the ones below, in effect a tax on the productive to support management of production; their families shared in the wealth, and at the top there were people with enough food and leisure to become educated and start thinking about moral and ethical issues.

Abolitionists and advocates of Social Justice didn’t free the slaves. Trevithick and Watt and McCormick and a host of others did, by inventing and producing machines that could do the work. The wealth produced by slaves was no longer necessary, because wealth could be produced by other means. People were then free to consider the moral and ethical issues involved, and could begin to abandon the rationalizations that made slavery possible without at the same time staring poverty and starvation in the face. It goes back before machines, too. Serfdom, however vile, is de minimis an advance over slavery, but didn’t become possible until domesticated animals largely displaced human labor — and slavery returned with a vengeance when the plantation system, essentially the Roman latifundia with more effective management, came along and vastly increased the productivity of society on the average.

Abolishing slavery was expensive, because the slaves’ production, their contribution to the overall wealth of the society, went away; it was affordable because the additional wealth created by providing machines to do the work compensated for it. Only a highly productive society, hence a wealthy one, can afford Social Goods, because in every case the practice whose abolition is a Social Good is one that contributes to societal wealth, and the society can’t afford to do away with it until and unless there is enough wealth from other sources to pay for it. Child labor went away because increasingly capable machines contributed enough wealth to pay for the loss, a continuation of slave and serf emancipation; women’s suffrage arrived because better medicine meant more babies survived, and more babies weren’t necessary because society no longer needed child labor. Pick a Cause, any Cause, and you will find that the Downtrodden are making a contribution to society as a whole; the Cause cannot succeed until and unless that contribution is made by some other source of wealth.

If society is to Progress, new sources of wealth to substitute for the contributions of the Downtrodden (however defined) must be continually found and introduced. What we have seen in Western society since the Thirty Years’ War (more or less) is a cycle: people use physical labor, mental agility, and the tools available to them to implement a new source of wealth, or to wring additional production from an older process; some of that new wealth gets fed back to support better management of labor, more knowledge yielding further increments of mental agility, and better and more powerful tools, which result in new sources of wealth or additional production from the old ones; rinse and repeat. The rest of it goes to consumption, including Liberating whatever segment of the Downtrodden no longer need be forced into production because a substitute is available. Details of how that cycle is managed, let alone names (“capitalism”, “socialism”) are much less important than that it be encouraged and supported if enough wealth is to be accumulated to support additional Social Goods.

Much of modern Progressivism appears specifically designed to break the cycle rather than support it. That isn’t the case, of course, except in a very few instances; the majority of people see a Social Good to be implemented and what appears to be the wealth necessary to support it, and insist that it be achieved right away. The problem is not evil, it is impatience and a childish ignorance of the process by which Social Goods may be attained — it is said, and truly, that the real slogan of every revolutionary is “Why Not Right Now?” Impatience leads to rationalization. Taking things away from people is clearly a Bad Thing; Progressives see the wealth that could be used to accomplish Good Things, but which the possessors don’t readily yield; the people who won’t give up the needful are obviously Bad People, and it is virtuous to punish Bad People by doing bad things to them. The problem is not that this, like most rationalizations, is evil in itself, although it is; the problem is that it breaks the cycle of production yielding feedback that encourages more production.

On top of that we see a concerted attempt to reduce or eliminate sources of wealth coming from outside humanity. Saying “machines” is perhaps misleading. Machines require energy to function, and wealth production has largely been shifted from requiring multiple thousands of 200W meat machines — people, slaves and serfs — to getting that energy input from rocks and goo taken from the ground. Clean air and water is a Social Good, which must be paid for somehow. If Saving the Environment requires abandonment of energy input from non-human sources, including eliminating Exploitation of Animals, that energy must come from somewhere, or be given up, with consequent loss of wealth to support Social Goods. The Roman Empire and the Chin Dynasty, among many others, enjoyed clean air and water except in a few instances of extreme concentration, purchased for the privileged few by the toil of multitudes who got very little for their labor. Imagining that Other People will get to be slaves, serfs, and peasants while you enjoy a comfortable lifestyle is shortsighted at best.

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March 2011