Recommended Reads: The Paper Wealth Bezzle and Frebezzle, The Human Cost of Socialism and the Menace of Egalitarianism

The first link deals with paper stock market wealth as 'Bezzle' and 'Frebezzle'. 

Professor London School of Economics John Kay at the Project Syndicate explains: (hat tip Zero Hedge) [bold mine]

More than a half-century ago, John Kenneth Galbraith presented a definitive depiction of the Wall Street Crash of 1929 in a slim, elegantly written volume. Embezzlement, Galbraith observed, has the property that “weeks, months, or years elapse between the commission of the crime and its discovery. This is the period, incidentally, when the embezzler has his gain and the man who has been embezzled feels no loss. There is a net increase in psychic wealth.” Galbraith described that increase in wealth as “the bezzle.”

In a delightful essay, Warren Buffett’s business partner, Charlie Munger, pointed out that the concept can be extended much more widely. This psychic wealth can be created without illegality: mistake or self-delusion is enough. Munger coined the term “febezzle,” or “functionally equivalent bezzle,” to describe the wealth that exists in the interval between the creation and the destruction of the illusion.

Applying Bezzle and Frebezzle

There are numerous routes to bezzle and febezzle. In a Ponzi scheme, early investors are handsomely rewarded at the expense of latecomers until the supply of participants is exhausted. Such practices, illegal as practiced by Bernard Madoff, are functionally equivalent to what happens during an asset-price bubble.

Tailgating, or picking up dimes in front of a steamroller, is another source of febezzle. Investors search for regular small gains punctuated by occasional large losses, an approach exemplified by the carry trade by which investors borrowed euros in Germany and France to lend in Greece and Portugal.

The “martingale” doubles up on losing bets until the trader wins – or the money runs out. The “rogue traders” escorted from their desks by security guards are typically unsuccessful exponents of the martingale. And the opportunity to switch between the trading book and the banking book creates ready opportunities for financial institutions to realize gains and park losses.

Rings a bell? 

Read the terse article here

Next link, Austrian economist Dr. Richard Ebeling on the death, terror and destruction from applied socialism: The Human Cost of Socialism in Power

From the concluding section (Epic Times): [bold mine, italics original]

The significance of these accounts is not their uniqueness but, rather, their monotonous repetition in every country in which socialism was imposed upon a society. In country after country, death, destruction, and privation followed in the wake of socialism’s triumph. Socialism’s history is an unending story of crushing tyranny and oceans of blood.

Socialism as the Ideology of Death and Destruction

As the Soviet mathematician and dissident, Igor Shafarevich, who spent many years in the GULAG slave labor camps for his opposition to the communist regime, said in his book, The Socialist Phenomenon (1980):

“Most socialist doctrines and movements are literally saturated with the mood of death, catastrophe, and destruction . . . One could regard the death of mankind as the final result to which the development of socialism leads.”

That twentieth century socialism would lead to nothing but this outcome was understood at the time of the Bolshevik victory in Russia. It was clearly expressed by the greatest intellectual opponent of socialism during the last one hundred years, the Austrian economist, Ludwig von Mises.

Near the end of his famous 1922 treatise, Socialism: An Economic and Sociological Analysis, Mises warned that:

“Socialism is not in the least what is pretends to be. It is not the pioneer of a better and finer world, but the spoiler of what thousands of years of civilization have created. It does not build, it destroys. For destruction is the essence of it. It produces nothing, it only consumes what the social order based on private ownership in the means of production has created . . . Each step leading towards Socialism must exhaust itself in the destruction of what already exists.”

Read the entire article here

Last, the path to towards socialism via egalitarian policies. 

Here is a slice of Ludwig von Mises Institute Llewellyn H. Rockwell’s The Menace of Egalitarianism speech. (bold mine) 

What are we to understand by the word equality? The answer is, we don’t really know. Its proponents make precious little effort to disclose to us precisely what they have in mind. All we know is that we’d better believe it.

It is precisely this lack of clarity that makes the idea of equality so advantageous for the state. No one is entirely sure what the principle of equality commits him to. And keeping up with its ever-changing demands is more difficult still. What were two obviously different things yesterday can become precisely equal today, and you’d better believe they are equal if you don’t want your reputation destroyed and your career ruined.

This was the heart of the celebrated dispute between the neoconservative Harry Jaffa and the paleoconservative M.E. Bradford, carried out in the pages of Modern Age in the 1970s. Equality is a concept that cannot and will not be kept restrained or nailed down. Bradford tried in vain to make Jaffa understand that Equality with a capital E was a recipe for permanent revolution….

Now, do egalitarians mean we are committed to the proposition that anyone is potentially an astrophysicist, as long as he is raised in the proper environment? Maybe, maybe not. Some of them certainly do believe such a thing, though. In 1930, the Encyclopaedia of the Social Sciences claimed that “at birth human infants, regardless of their heredity, are as equal as Fords.” Ludwig von Mises, by contrast, held that “the fact that men are born unequal in regard to physical and mental capabilities cannot be argued away. Some surpass their fellow men in health and vigor, in brain and aptitudes, in energy and resolution and are therefore better fitted for the pursuit of earthly affairs than the rest of mankind.” Did Mises commit a hate crime there, by the standards of the egalitarians? Again, we don’t really know.

Then there’s “equality of opportunity,” but even this common conservative slogan is fraught with problems. The obvious retort is that in order to have true equality of opportunity, sweeping government intervention is necessary. For how can someone in a poor household with indifferent parents seriously be said to have “equality of opportunity” with the children of wealthy parents who are deeply engaged in their lives?

Then there is equality in a cultural sense, whereby everyone is expected to ratify everyone else’s personal choices. The cultural egalitarians don’t really mean that, of course: none of them demand that people who dislike Christians sit down and learn Scholastic theology in order to understand them better. And here we discover something important about the whole egalitarian program: it’s not really about equality. It’s about some people exercising power over others.

Read the rest here

Olympics and the Egalitarian Bunk

Politicians and their mainstream sycophants frequently lectures, directly and indirectly (through media), the public about the supposed necessity of having a society based on ‘equality’ or egalitarianism.

Unfortunately they hardly practice what they preach.

Professor Tibor Machan exposes the egalitarian balderdash.

The Olympic Games come in very handy for those of us who find egalitarianism morally and politically intolerable. The Games show how little appeal there is to forcing everyone into the same mold, how much violence and coercion it would--and where attempted does--take to even toy with bringing about an egalitarian society.

The only place where equality has a decisive role in human social affairs is when it comes to protecting everyone’s basic rights. This is the way the Declaration of Independence finds room for equality. Once everyone’s basic rights are secure, from that point on no room exists for equalization in a just human community.

Sure, there can be special areas where equality can be of value, for example in the application of standards and rules, as shown in athletics. But even there equality will apply in highly diverse ways--one way in the classroom, another in the legal system, and yet another at a beauty contest. General equality belongs only in the protection of individual rights, period.

Elsewhere it is just as it’s illustrated by the Olympic Games, with variety and differences breaking out all over. As long as these are peacefully obtained, as long as ranking comes about without corruption, there is nothing objectionable about inequalities in human affairs. Furthermore, attempting to make things equal achieves the exact opposite since those doing the attempting will enjoy the worst kind of inequality, namely, power over their fellows as they try to manipulate everyone to be equal.

Just as elsewhere in most of nature, in human affairs, too, inequality is the norm. But since human beings are free to establish various rules in their societies, they have the option, which they ought to exercise, to preclude all coercion from human interactions. Beyond that, it is futile to try to exclude inequalities in human affairs.

It is not inequality that needs to be abolished but coercive force. With that achieved, at least substantially, let diversity and difference be the norm. As that old saying goes, “Vive la difference.” Any serious examination of the prospects of an egalitarians polity should reveal just how insidious the idea is. Just consider requiring that all outcomes of the Olympic Games be equal!

The simple point is that Olympics is all about the inequality of human affairs. The fact that governments promote Olympics has been an implicit recognition of such diversity.

Yet in reality, the politics of egalitarianism represents nothing more than convenient excuses to implement social policies of redistribution or interventionism and the rule of philosopher kings.

Quote of the Day: The Real Egalitarians

The real egalitarians are not the people who want to redistribute wealth to the poor, but those who want to extend to the poor the ability to create their own wealth, to lift themselves up, instead of trying to tear others down. Earning respect, including self-respect, is better than being a parasite.

That’s from Thomas Sowell