Friday, 17 October 2014

Brand Buffoonery

From what I can see from a brief perusal, Russell Brand really is an incompetent buffoon whenever he pontificates about economics and politics. His misunderstandings of the market are beyond ludicrous. I don't know (and have no interest) in what his comedy is like (or however it is he makes his living), but his political and economic ramblings would be genuinely hilarious were they not so apparently influential among half-witted enthusiasts who seem to be craving the Brand brand. It's also unsurprising to find that Brand’s so-called ‘revolution’ has the support of fellow half-witted commentators like Johann Hari and Owen Jones. These are people who, like Brand, get it wrong just about every time they open their confused little mouths. They are like 14 year old Trotskyites awaiting the mental epiphany that most teens experience before they hit adulthood.

Whatever this 'revolution' is that Brand is trying to propagate, it's a revolution based on a peculiar misunderstanding of what's actually happening in the world. Brand’s revolution (hardly an original one) is what he refers to as:

“A socialist egalitarian system based on the massive redistribution of wealth, heavy taxation of corporations and massive responsibilities for energy companies exploiting the environment.”

He also thinks profit stinks, telling us that:

“David Cameron says profit isn't a dirty word, well I say profit is a filthy word.  I think the very concept of profit should be very much reduced because wherever there is profit there is also deficit. This system currently doesn't address these ideas.”

Oh dear oh dear – what a mess. I’ll leave the environment part because I’m going to do a series on green issues when I get time, and in previous blogs I’ve addressed the fallacy of heavy taxation of corporations and the misleading notions surrounding massive redistributions of wealth. What I want to do here is correct this self-proclaimed revolutionary’s misapprehension about the ‘evil’ nature of profits.

Here’s the reality. Try to picture all the voluntary transactions going on in the world today. The entirety of all market transactions is producing mass amounts of societal value. We know all those transactions produce societal value for one simple reason. The people who parted with their money to transfer some of their cash towards a profit for the sellers or providers did so because they thought that the goods or services being sold were worth more than the money they parted with. Similarly the vast majority of workers in the world do so because the alternatives are less desirable. Profit, far from being a filthy thing, is exhibition of huge societal benefits across the world. Profits give exhibition to value in the same way that losses give exhibition to lack of value.

It’s true that some profits are excessive – but that doesn’t make profit filthy, it means something else. If a business is making a huge profit it means there is room for competition to come in and enter the market. Where there is a lack of competition it is usually because of poor governmental systems – either a corrupt government (like in many African countries) or a government that regulates too heavily. You’ll have to ignore the irony that Russell Brand, Owen Jones, and their kind want a world with more government regulation, not less. You could also be kind to Brand and overlook the irony that it is thanks to profit that Brand was able to make his money in the first place. But make no mistake about it; free trade and competition are the principal things that engender economic prosperity – and where they are being unhelpfully stifled or retarded by exogenous forces, human prosperity is being stifled and retarded too.

Another notion of Brand’s revolution is the assertion that “Capitalist, consumer culture inures us to unfairness,”. Even leaving aside the fact that evidence of human psychology shows the contrary (and that in places where capitalism is not so prominent the results of the same experiment showed people to be ‘more’ selfish not less), Brand speaks the very opposite of the truth here. In most cases, a free market of voluntary transactions proves to be terrifically efficient at diminishing or eliminating unfairness. Consumers are alert to the practices of businesses to which they part with their money – they will penalise poor quality (be it goods, services, cleanliness, prices, treatment of workers, and so forth) and this puts selection pressure on businesses to up their game. In a free market of mutually voluntary transactions, fairness, customer concern, employee rights, and good general business practice make up the foundations on which a capitalist society function.

* Photo courtesy of The Guardian