Sunday, November 02, 2008

Fair, rich, excess profits? Morality under attack

The populist (i.e. unresearched and irrationally contrived) response to the current economic crisis is that the economic system is unfair because it is too free. It rewards "rich" people, and evil corporations earn excess profits. This leads me to a question:

What are the definitions of fair, rich, and excess profits?

From dictionary.com:

Fair - free from bias, dishonesty, or injustice
Rich - having wealth or great possessions; abundantly supplied with resources, means, or funds; wealthy

Excess profits is not in the dictionary; but a decent definition could be: profits earned that are above the normal economic profit

The problem with all of these definitions is that they are relative definitions. What is fair to me or fair to you may be completely different. Rich may mean something completely different. Excess profits is a completely illusory term. It implies that it is "fair" to earn a normal profit, but it is "unfair" to earn profits above the normal person. What if the excess profit earner has discovered a new manufacturing technique that lowers the cost of production? Is the earner not entitled to the intellectual property and the benefits of developing new methods of production? What is the incentive to keep prices low if an "excess profit" can not be earned?

"Fairness", is mentioned in the constitution and is based on personal liberties. It is the ability to choose a path, without undue obstruction by people, businesses, or governments. You should be able to have a somewhat level playing field if you so choose to participate in a venture. This does not mean it is not a difficult game and that anyone is good enough to participate in it. You have the opportunity to participate but not the right to be successful. "Fairness" does not necessarily exist in our pseudo-capitalist system. Instead people and businesses are burdened by taxation, regulation, and corrupt politicians. "Fairness" should be equated to freedom because it is a derivative of freedom.

Politicians fighting the class warfare game make arbitrary definitions on fairness and richness. This is done through the tax code. High income earners are defined as rich. As your income increases, you are punished on the margin for making "too much" money. This seizure, to me, is not fair. Most likely, you have earned the extra money fairly. For some bureaucracy to determine what is "too much" income is asinine. Their collective decision is based on no rationality; it is based on the perception of them and their constituents that some people (usually their employers), are too rich and they should be punished for being rich. In fact, these rich people have probably worked 80 hour weeks running their businesses, climbing the corporate ladder, studying for their medical and legal exams, etc. They have achieved, and for this they are punished.

At some point, the complexity of the game reduces the incentive for people to achieve and provide the best medical, legal, financial, manufacturing, and technological services. These people are rational. They ask themselves, "Do I love my profession enough to keep putting up with the BS or should I just retire and enjoy what I have?" My employers have done just this. They have made their millions, and now they are ready to stop playing the game because it is just too much BS to put up with.

Morality has been under attack by people who think government is the solution to all of our problems. Why should people think that a politician 2000 miles away knows how best to run your life and interfere in your decision making? You have your own dreams and ideals. There are lessons to be learned in this game called life. Don't let others perceptions alter your decisions. To do this, we need more choice, more liberty, and more morality. With some luck we will be able to fight off this attack on morality and return to the founding fathers' concept of free will and inalienable rights; most important among them, the rights to life, liberty, and the pursuit of happiness.

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