Tuesday, October 14, 2014

The Irony of Anti-Capitalist Movies

According to The Wall Street Journal, a movie called “The Liar,” which was directed by a Kim Dong-myung, won the Daemyung Culture Wave Award, which is an accolade that is awarded to independent movies from local directors.

A scene from “The Liar”
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This movie is supposedly about a 20-something-year-old nurse, who squeezes pimples at a beauty clinic for a living (I suppose there is a niche market for everything) who attempts to live a much more glamorous life than she could possibly afford.

(Disclosure: I have not seen the movie, and considering what I read about it, I don't think I shall ever watch this movie.)

According to the same article, during an interview, Kim Dong-myung, the director, purportedly said that she wanted to critique capitalist society, which she called “an environment conducive to reproducing lies.” To nail the point further, she claimed that after she had finished filming the movie, she “caught herself at a clothing store exaggerating her likelihood of purchasing new clothes to a sales clerk,” thus showing that even she is not immune to it.

For a moment, let's forget that Ms. Kim most likely would not be able to make any more movies if she were not able to secure funding, which can only be done when there is an audience that is willing to pay money to watch her movies. You know, consumers who can choose freely how to spend their own money who live in capitalist economies.

Not a good business plan
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Let's also forget the fact that Ms. Kim most likely did not object to her movie being reviewed by, of all the newspapers in the world, The Wall Street Journal, a newspaper that is very much a cheerleader for capitalism! For goodness' sake, the newspaper actually has the words “wall” and “street,” and in that exact order, in its name!

On top of that, let's also ignore the ridiculousness of her claim that capitalist society is an environment conducive to reproducing lies; like as though, somehow, people who live in non-capitalist economies are more honest.

Finally, let us also pretend to ignore that history has shown that the capitalist economic model has ushered in nearly unabated economic progress, a steady increase in the quantity of capital goods available, and a continuous trend toward an improvement in the general standard of living for the masses. Let us also ignore the fact that it is a tragedy worthy of ancient Greek plays that capitalism even needs spokespersons on its behalf despite the fact that its achievements speak for themselves!

Because prosperity and choice are disgusting!
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If we ignore all of those things, we are left with the silly notion that this movie treats pathological lying, a form of mental illness, as a political/economic illness, which is the direct result of us living in a capitalist economy.

And I thought Michael Bay produced mindless movies.

Wednesday, October 1, 2014

Where John Oliver gets Ayn Rand Wrong and Right

A few days ago, John Oliver from HBO's “Last Week Tonight with John Oliver” presented a three-and-a-half-minute long segment entitled “Ayn Rand – How is she still a thing?”

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To those unaware, I have considered myself a student of Objectivism and have been studying the philosophy for many years. So, when I watched the segment and saw that it was full of the same kinds of ridiculous attacks against Rand that have been around for decades, I simply rolled my eyes and went about the rest of my day. However, I also had the sense that it was only a matter of time before the video would soon spread all over the Internet.

I was right.

There are people who claim that “Last Week Tonight” is a comedy show and that it is meant for a laugh and not to be taken seriously. However, the problem is that people DO take these comedy shows seriously. I have seen a lot of articles that said that Jon Stewart, John Oliver's previous boss, was one of the most trusted names in news (see here and here). And now similar things are being said of John Oliver as well.

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Whether that means that people trust comedians a lot, or they just distrust other news shows a lot is a different question. However, the fact of the matter is that comedian pundits have become one of the most seriously-treated modern-day arbiters of “knowledge.” I find it quite disheartening.

Seeing how John Oliver is a well-known and beloved comedian with his own TV show on HBO and I am but a small-time blogger, it is very unlikely that this (admittedly) lengthy post that details where John Oliver went wrong with his criticisms of Ayn Rand will get nearly as much publicity as his three-minute video.

But, well, I have time on my hands today and this is a topic that I am passionate about. So these are the things that John Oliver got wrong about Ayn Rand and Objectivism.


1. “Ayn Rand became famous for her philosophy of Objectivism, which is a nice way of saying being a selfish asshole.”

The people who made this video are either intentionally or unintentionally misrepresenting Ayn Rand from the get-go. Yes, the word “selfishness” is very much associated with Ayn Rand. But what did she mean by “selfishness?” Did she mean it the way the makers of this video did by comparing it with Drake's song when he said, “It's all about me, don't give a fuck about you,” or when that woman said “I will fucking kill you?”

No, certainly not. To find out what she meant by “selfishness,” check this link here.

One of these things is not like the others
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2. Ayn Rand's quote taken out of context – “Why is it good to want others to be happy? You can make others happy when and if those others mean something to you selfishly.”

This was the part of the video that probably got a lot of people thinking that Ayn Rand's selfishness was, indeed, about “It's all about me, don't give a fuck about you.”

But you have to take the interview into context. The clip was taken from an interview that she gave to Tom Snyder and you can find the entire 30-minute video here. The philosophical topics being discussed prior to her talking about the happiness of oneself and the happiness of others were about sacrifice, altruism, and Immanuel Kant.

Can you imagine modern-day talk shows talking about such heady subjects?  It would be the fastest way to get canceled!
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Now listen to the whole segment of what she said about the topic of happiness in that lecture, instead of the five second clip that those comedians cherry-picked. The segment is from 21:32 to 24:22. It is hardly a case of “It's all about me, don't give a fuck about you.”


3. “Stories of rapey heroes complaining about how nobody appreciates their true genius.” (Part 1)

That snide comment about “rapey heroes” was taken from “The Fountainhead,” when the main character, Howard Roark, supposedly “rapes” the female heroine, Dominique Francon. Thus began the myth that Rand was somehow pro-rape.

I don't have a link to what Rand said about the rape scene so I will copy/paste from the book “Letters of Ayn Rand.”

But the fact is that Roark did not actually rape Dominique; she had asked for it, and he knew that she wanted it. A man who would force himself on a woman against her wishes would be committing a dreadful crime. What Dominique liked about Roark was the fact that he took the responsibility for their romance and for his own actions. Most men nowadays, like Peter Keating, expect to seduce a woman, or rather they let her seduce them and thus shift the responsibility to her. That is what a truly feminine woman would despise. The lesson in the Roark-Dominique romance is one of spiritual strength and self-confidence, not of physical violence.

“It was not an actual rape, but a symbolic action which Dominique all but invited. This was the action she wanted and Howard Roark knew it.”

Now was it unfortunate that she used the word “rape?” It certainly was. The word has some strong meaning behind it and it has gotten much stronger since Ayn Rand used it.

Now there is certainly an interesting factoid about Rand that Professor Jennifer Burns mentioned in her book “Ayn Rand: Goddess of the Free Market.” When “The Fountainhead” had been just published, one of the reasons for the book's success was the torrid love scenes, which some could consider as an early form of BDSM-literature. During a book signing, when a member of the audience asked Rand whether the sex scenes were based on her own sexual experiences, she supposedly uncharacteristically playfully said something along the lines of it merely being her fantasy.

Now, I am a Redditor. And while browsing Reddit over the years, I have come across on numerous occasions when people have made confessions of their BDSM and rape fantasies. The stories were all the same – they were confused, they knew rape to be immoral and illegal, they felt guilty, and they didn't know what to do. Many commenters, however, did not reproach them. In fact, many commenters said that such fantasies were not all that bizarre and that there is a community that engages in “rape fantasies,” all practiced with mutual consent – that the healthy thing to do is to talk openly about it with compassionate people who will not label them as freaks for being different.

People can be very understanding. Until Ayn Rand's name is mentioned. Then she just becomes “rapey.” Seeing how so many people tend to project their life experiences onto out-of-context quotes or misquotes of Ayn Rand, she really is a Rorschach test.

Did you know that this character can also be traced back to Ayn Rand's philosophy of Objectivism?
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4. “Stories of rapey heroes complaining about how nobody appreciates their true genius.” (Part 2)

Ayn Rand's four major works of fiction were “The Fountainhead,” “Atlas Shrugged,” “We the Living,” and “Anthem.” I have read them all and not once have I ever come across any of her heroes complaining that nobody appreciated their true genius. In fact, not caring about the opinions of others is one of their central characteristics.

Case in point, this is a clip from the movie adaptation of The Fountainhead,” which the original clip mocked, that shows Howard Roark having a short conversation with the story's main villain, Ellsworth Toohey.




5. The clip that compares Howard Roark's selfishness to the “selfishness” of spoiled children in “Super Sweet Sixteen.”

The following is what Ayn Rand said about pride.

Obviously, those sixteen-year-old children most likely do not possess the pride that Ayn Rand talked about.

So comparing the selfishness, the pride, and the self-esteem that Ayn Rand advocated to that of spoiled children is simply yet another example of intellectual laziness.


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6. “Ayn Rand has always been popular with teenagers but she's something you're supposed to grow out of like Ska music or handjobs.”

Firstly, this one sentence contains several logical fallacies and it will take more time than it has already taken to tackle each one of them.

Secondly, I prefer not to respond to insults.



7. “Mark Cuban's favorite book is about a misunderstood visionary who blows things up when he doesn't get his way.”

Please, allow me to set up a hypothetical scenario for you. Let's say you are a photographer who wishes to make it big. And let's say that a bona fide expert said that he likes your photos; that there is real potential for getting them published in a fancy magazine or to open your very own gallery in Gangnam. However, there are conditions.

In order to get more Koreans to like and want to buy your photos, you have to take more pictures of white people eating kimchi while giving a thumbs up. And preferably this will all take place on Dokdo while they are stomping on a Japanese flag. He then assures you that those pictures will be a big hit and that you will earn a generous sum of money for them as well as a glowing review in all the major newspapers in the country.

Would you take such a picture for that kind of prestige or honor or money? Or would you refuse and continue to take photographs the way you like?

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Ayn Rand's point was not simply about throwing tantrums if you don't get your way.  Claiming that “The Fountainhead” was a story about an architect and his profession is analogous to claiming that “Animal Farm” was about farm animals.

Assuming that the judgments and decisions that you have made were reached via an intelligent and rational thought process, it was about staying true to your principles; about not giving an inch to those who are mediocre.



8. “Cuban even named his 287-foot yacht “Fountainhead,” because sometimes, having a 287-foot yacht just isn't enough to warn people you're a douchebag.”

Why is owning that big of a yacht a sign of being a douchebag? Now, personally, I have never heard of Mark Cuban before. I don't know him or anything he has said or done. Maybe he IS a douchebag. I don't know if he is or not.

But why is owning a big yacht a sign of being a douchebag? Did he steal it? I think it would be difficult to steal a boat that big and not be questioned by the police, no? Or does being rich automatically make someone a douchebag, no questions asked?

This is what Ayn Rand referred to as Argument from Intimidation.



9. “However, Ayn Rand is an unlikely hero for conservatives.”

The only thing that the video got absolutely right was that she has taken strong positions that conservatives would never agree with, especially in regards to abortion, her atheism, and her opinions of President Ronald Reagan. Conservatives have indeed cherry-picked bits of her ideas that they like while discarding the rest.

The following is what Ayn Rand said about conservatives:



That probably explains why while she was alive, conservatives didn't side with her at all.  Many of them found her views toxic.  Case in point, here is what William F. Buckley Jr., the founder of the National Review, had to say about Ayn Rand:



Modern-day conservatives, who have seemingly conveniently forgotten that they used to abhor her, have attempted a type of revisionist history in their selective embrace of Ayn Rand.

By the way, the people who at least initially attempted to side with her by cherry-picking some of her ideas but discarding those that they did not like were the libertarians. For that reason, Ayn Rand HATED libertarians. To her, libertarians were worse than communists. To use an analogy, she probably would have likened communists to barbarians at the gates, and libertarians to sleeper cells within the besieged walls. She thought that by discarding some of her key philosophical views, which she thought were paramount for Objectivism to work, they were undermining the cause of liberty from within.

It's one of those reasons why I find it annoying when Rand-bashers conflate libertarianism with Objectivism and attack both as one and the same thing.



10. “I do not think they (Native Americans) have a right to live in any country merely because they were born here (the United States) and acted and lived like savages.”

This is the big one – hew view about Native Americans. This was something that the people behind “Last Week Tonight” got partly right. She did say it. It was a response that she gave to a question that she received during a Q&A session at the United States Military Academy at Westpoint. This is the full transcript of what she said.

In her book, “Return of the Primitive: The Anti-Industrial Revolution,” she spelled out that she rejected primitivism and tribalism, and argued that they are symptoms of an “anti-industrial” mentality. As far as Rand was concerned, a proper civilization was one that respected individual property rights, because the right to property was one of the requirements for man's survival in this world.  Furthermore, she was adamant that a rights-respecting civilization is paramount in order to free Man from men.

However, she argued that Native Americans did not practice private property rights; that they practiced communal “rights” to property, which they used to eke out a subsistence-based life. Therefore, as Native Americans' practices were primitive and did not respect individual rights, the sort of thing that people need in order to live rational, independent lives, she argued that they were savages.

Therefore, she argued that Western colonialists who came to the New World armed with the knowledge of rights, ipso facto, had the right to take the land for their own use.

So, when she used the word “savage,” contrary to what the video insinuated, she did not mean that they were redskinned humanoids. She was using the word as the word actually means – a member of a people regarded as primitive and uncivilized.

Regardless of what she meant, however, she was wrong.

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Yes, it's true. I, a student of Objectivism, am publicly stating that Ayn Rand was wrong about the subject of Native Americans.

For one thing, history has shown that Native Americans DID have private property rights as can be seen here.

Furthermore, the United States Constitution, which Ayn Rand was (mostly) a big fan of, can trace its roots to, among other things, the Iroquois Confederacy.

For other views about Native Americans and private property rights, I found this page on Reddit to be particularly helpful.

The only thing that Ayn Rand knew about Native Americans was that when they were still powerful enough, they killed scores of European colonialists. However, she never mentioned how Europeans took part in the ethnic cleansing of Native Americans.

Did that mean she was racist? No. Considering what she thought about racism and what she thought about Native Americans, it is unlikely that she cheered their being slaughtered, but it is also unlikely that she was particularly sorry to see them go the way of history. Either way, she was wrong about them being primitive savages.

Now how did Rand, who was such an intelligent person, get this one so dead wrong?

I honestly don't know. She liked to claim that all of her judgments were based on a rational thought process based on the knowledge that was available. So... was she truly being rational all the time and did she not let bias cloud her judgment at all? Perhaps not. I am of the opinion that no one is really unbiased. We can try to be as unbiased as we can (the key word here being “try”), but I think that our own limitations as human beings prevent us from being completely unbiased.

Or was it because history text books at that time weren't giving accurate information about Native American history? I don't know. I'm not an expert about how American history was taught from the 1920s to the 1970s. Perhaps someone else who does know can expound on that topic.

If the way that American history was taught at the time, especially about Native Americans, was, indeed, inaccurate, then I think we can chalk this one up to her being the product of her times.

However, if the way that the history of Native Americans being taught to the general public in that era was not all that different from the way it is taught today, which I find doubtful, then, at least as far as this topic goes, Rand would have been guilty of being intellectually lazy, too.


Conclusion

So, she was wrong about Native Americans. Was she wrong about other things, too? Certainly. I definitely disagree with the way she portrayed the power-dynamics that occur between men and women. She thought that women always had to be “under” men – that women could not be happy if they tried to be “above” men. I disagree with that.


There are things that Rand said that I, and probably other Objectivists, too, disagree with.

So why do I still like Rand so much? Well, firstly, I have concluded that she tended to be right more often than she was wrong.  Secondly, there's a reason why her philosophy is called “Objectivism,” and not “Randianism.”

This is what Ayn Rand said about thinking.

Rand did a lot of thinking in her day. She was right about a lot of things, and she was wrong about some other things. As a student of Objectivism, I think that I owe it to myself to do my own thinking based on new information and knowledge that is presented to me; and not to rely on everything that Ayn Rand said.

For those who disagree with Rand, there is nothing wrong with disagreeing with her.  However, if you are going to disagree with Rand, perhaps it might be a good idea to actually familiarize yourself with her work, rather than rely on the biased commentary of others.

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Sunday, September 21, 2014

Distorting Reality Part 1: Confirmation Bias

In his magnum opus, History of Economic Analysis, the great economist Joseph Schumpeter said that the first thing a man will do for his ideals is lie.

However, I think it would have been more accurate to have said that the first thing a fool will do for his ideals is lie.  A man of even average intelligence need not lie.  All he needs to do is to filter the facts to suit his own needs.

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And God knows that people of all ideological stripes do this.  The difference is that some do so deliberately while most do it for the innocent reason that some facts, when taken in isolation, confirm their biases.

One of my favorite examples of this is when people who support raising the minimum wage cite a statistical study that seemingly supports their views.  For instance, a few days ago, an American friend of mine, a dyed-in-the-wool progressive Democrat, whom I like to spar with every once in a while, sent me a link to one of his favorite websites – Think Progress – that purported to support his views about the benefits of raising the minimum wage.

My friend ended the email with a quip – “Coincidence?  I think not.”

Sometimes, a coincidence is really just a coincidence.
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(In case there is any doubt, I do not support the minimum wage for reasons that I have posted here.  And no, it's not because I think that hiking the minimum wage will cause the economy to collapse.  I have heard many people who are supposedly on my side of the argument make such claims and I think it's ridiculous.)

I wish I could say that it had been the first time I had seen that link my friend had sent me.  It had been making its rounds all over the media ad nauseum by the time he had sent it to me.

The article that my friend sent me cited a report that was published in the Center for Economic and Policy Research, which in turn cited a simple evaluation that was conducted by Goldman Sachs.  The analysis found that the thirteen U.S. states where the minimum wage went up on January 1st 2014 had shown faster employment growth than the other states where the minimum wage remained at its 2013 level.

However, this study had some serious problems.

For one thing, people who claim that the minimum wage hike caused the greater increase in employment are making a fallacious argument.  That is because the statement is a clear violation of ceteris paribus (i.e., all other things being equal or held constant), which is at the core of any good analysis.

In order for the claim to have any merit whatsoever, all the states that raised their minimum wage rates and those that did not must be identical in all other respects.  In other words, the increase in the minimum wage must have been the only economic condition that changed.  This is clearly not the case.  For example, some states have better quality education; some have more open and friendlier immigration policies; others have higher tax rates; some states have higher concentrations of hi-tech jobs while others have higher concentrations of low-tech jobs, etc. etc. etc.

Due to the violation of the principle of ceteris paribus, it is just as valid to claim that employment figures in those states improved despite the minimum wage hike!

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Another thing that people ought to have noticed about the report was that it was posted on June 30th 2014.  The study was based on data that was collected only for six months!  Six months is hardly long enough to make any kind of credible statement about the economy.  Years of data are required to truly calculate the effects of minimum wage legislation or subsidies or changes to immigration law or tax breaks (and such a study does happen to exist!).  That is because both producers and consumers adapt to changing market conditions by varying speeds and varying degrees.

And have you ever considered how many economic transactions take place in any country at any given moment?  Millions, if not billions, of economic transactions are made at any given moment in time.  Even the most well-trained econometrician who looks at merely one of those data points will be able to come up with only one conclusion – the market is chaos!

This study doesn't even take economic inertia into consideration.  What that means is that not everyone responds to changing economic factors instantaneously.  For example, if you are an owner of a small construction company and you are contractually obligated to build a house within a month, and the government increased the minimum wage by 50%, you're not going to slash your workforce by half the very next day.  You still need to finish building that house within the month.  After you've met your contractual obligations, you might want to rethink your hiring practices, but not before then.

This study alone is hardly proof that the minimum wage leads to job growth.  In fact, considering the unsound structure of the study, even if those states had shown negative job growth, the study would not be an indictment of the minimum wage either.  In order to prove or disprove the benefits of the minimum wage, much more data is required.  Regardless of how these states performed, this study is nothing more than a meaningless statistic.

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Now I am by no means saying that my friend, or all those other progressives who pointed at this study and went “Take that, Republicans/Conservatives/Libertarians/Capitalists!” are deliberately being dishonest.  I think the pundits and politicians who are using that statistic to gain political capital or popularity or ratings or profits are crooks; but the vast majority of laymen who have looked to that study with hope are mostly people with good intentions.

However, Milton Friedman's aphorism about judging policies and programs by their intentions rather than their results being a mistake holds true yet again.

The unfortunate fact of the matter is that many people do not think things through when they see “studies” that confirm their biases.  This is completely understandable.  Most people would rather be proven right than proven wrong.

Bias is a powerful thing, which no one can say one is truly free from.  It offers people a blanket vision that covers disparate things such as their views of human nature, politics, economics, society, religion, philosophy, etc.  So when a person comes across a narrative that fits his vision of reality – when he finds something that validates his opinions – he is content to stop and is unlikely to ask further questions.

And this is exactly how sacred cows are created.

(End of Part 1)

Sunday, August 31, 2014

The War on Hoarders and Misers

According to this report from The Korea Herald, President Park Geun-hye is seriously considering levying a tax on corporations for holding on to its profits. To be specific, if corporations do not spend “enough” of their profits on investments, salaries, and dividends, the government will levy a ten percent tax on those profits.

How much would be considered excess profits and how long a corporation has to hold on to its profits before the taxes are levied have apparently not been hammered out in detail just yet.

On top of that, the Bank of Korea cut interest rates to 2.25 percent just recently, which is the lowest that it has been since November 2010. What's more, further interest rate cuts are expected and it is feasible that interest rates could fall as low as 1 percent. And about a month ago, the Korean government expanded tax deductions for debit card users.

In other words, the Park administration wants us to spend money. And preferably a lot of it.

Ka-ching!
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The government's rationale is that if business owners come to terms that their “excess” profits will be taxed, they will choose to pay higher wages, salaries, and dividends so that people will spend more money, thereby spurring economic growth. Furthermore, assuming that businesses increase workers' wages (instead of diverting more of their profits to off-shore shell companies and tax havens), coupled with low interest rates and tax incentives for debit cards, the government hopes that the people will choose to spend their money rather than save it (instead of investing their money in riskier but higher-yielding investments).

(It is my opinion that the government is either completely ignorant of the concept of unintended consequences or it is aware of the concept but simply does not give a damn about it.)

The government's rationale behind this series of decisions is that savings is deleterious to economic growth. It is an idea that was made popular in the twentieth century by the great (which does not necessarily mean “good”) John Maynard Keynes.

People who subscribe to this economic school of thought often compare money to some kind of metaphor that can be found in the natural sciences. For instance, only just recently someone mentioned to me that money is like water; that it's supposed to flow freely. But does money flow? The words “flow” and “circulate” are often used to refer to the movement of money within a given economy. It allows people to simplify money; something which is far more complicated than people actually think it is.

However, money does not actually “flow” or “circulate.” In fact, I think it is misleading to say that money “flows” or “circulates.” It implies that money is somehow spent independently of human will. Money does not flow or circulate. As boring as it may sound, money is transferred from one person's cash balance to anther’s. And this transference depends entirely on how much people are willing to hold on to their money at any given time.

Believe it or not, this does not happen in reality.
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The basic argument behind the government's series of policy changes is the assumption that “hoarding” money (something that more sober minded people refer to as “savings”) somehow causes economic stagnation. It assumes that if far too many households and businesses save money rather than spend it, the savings will stifle demand for goods and services, thus leading to an economic contraction.

Many Keynesian economists have therefore always urged people, and especially the government, to spend. Even when there is no money to spend.

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However, these policies do more than to simply set the stage to get people to spend more money. It also tacitly makes villains out of people who wish to save money. Though the language used has thus far been benign, what has remained unsaid but expressed tacitly nonetheless was that those who do not spend their money are causing the economy to shut down. It assumes that businesses that choose to save money inevitably lead to reduced sales, which in turn leads to increased layoffs. Then as the total social income decreases, this leads to less money being made available for overall consumption. Then, as individuals begin to fear for their economic well-being, they too will begin to refuse to spend their money. The government's rationale is that hoarding begets more hoarding and that it causes the economy to sink ever deeper into a downward spiral.

In the end, what the government is actually saying is that people who save their money, these selfish hoarders, will eventually doom the economy into a permanent economic stagnation.

DOOM!  DOOM, I TELL YA!
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But is there any truth to this viewpoint? I, for one, do not think so.

There is a question that we have to ask ourselves. Why do people even save their money in the first place?

There is only one answer to that question. People save their money so that they can insure themselves against an uncertain future. Think about it. If the future weren't uncertain, if each and every one of us had the gift of being able to accurately predict when and how much money we will need, none of us would need to save our money. We would simply spend our money and make the necessary investments so that we may receive the amount of money we need to spend on the day we need to spend it.

Fortunately or unfortunately, however, the future is uncertain. We do not know how or when or where we will face our next calamity or good fortune. And the more uncertain and fearful we are, the more money we tend to save. And considering the fact that Korea is the fastest aging society in the world, and further considering all the financial troubles that are associated with aging, Koreans have all the reason in the world to be fearful of the future.

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There is another reason why businesses save money. If businesses expect the value of money to fall in the near future, they will spend their money now while the money is more valuable. However, if businesses expect the value of money to rise, they will wait to spend their money later when it is more valuable.

Milton Friedman once said that there are four ways to spend money. One of the ways to spend money is for an individual to spend his/her own money. When people do that, people try to get the most for their money and tend to be more careful about how they handle their money. Therefore, for the most part, people's decision to save or spend their money tends to be based on very sound reasons.

The Korean government might think that its recent policy changes is for the benefit of the public. In the short-run, the Park administration might just be vindicated. But what happens in fifteen years when Korea becomes a “super aged” society (meaning that more than one-fifth of the population will be over the age of 65), when there will be more retirees, who will have minimal income and will therefore need more government handouts, than there are working people?

For those unaware, Korean subway cars reserve the seats at the end of each train car (where the two kids are seated) for senior citizens whereas the other seats are for everyone else.  This picture asks its viewers to imagine a future when those seats will be reserved for children instead of senior citizens.
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The idea that savings somehow impedes economic growth is a popular one, especially among politicians. However, just because something is popular does not make it right. Saving for a rainy day does not cause negative economic growth or economic stagnation. That is because savings don't take money out of the economy. Savings are an insurance. Therefore, savings is really just another word for deferred consumption.

There is, however, yet another rationale behind the government's series of policy changes. It is the presumption that the more money there is, the more wealth there is. As counter-intuitive as this may sound, that is just not true. The units of money that we have in our wallets or bank accounts do not matter. If such a thing actually mattered, Zimbabweans would be the richest people in the world!

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What people really want is not more money, but more bang for their buck. In other words, they want their money to be able to buy more things. Simply increasing the amount of money, which is all that the Korean government will be able to achieve with its policies (assuming that it is successful), will simply dilute the effectiveness of the money that people do own. It will not improve the people's standard of living.

The only thing that can make the money more valuable is for there to be a fall in prices aka deflation, which is the very thing that every government wishes to avoid. After all, although deflation is what people need, it is not what they want (whether or not deflation is a good thing is an entirely different topic that shall be dealt with on another day).

To be specific, people want the prices of all goods that they buy to fall. However, at the same time, they want the price of the goods that they sell to rise. Therefore, though nobody will actually claim to want it, what their actions often belie is that everyone actually wants inflation. And politicians are only too happy to give people what they want, rather than what they need.

It is possible that the Park administration's war on savings might lead to some short-term economic gains. After all, almost anything can be proven to be correct by resorting to clever statistics. But in the long run, I just don't see how it is anything but doomed to fail.


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