Thursday, November 21, 2013

Where the Dogma Dogs Usually Stray

Take any subject you can think of and you'll find people arguing about it from every point along the spectrum of positions. Usually we visualize the spectrum as extending from left to right, but that does not necessarily mean the political Left or the political Right. In fact, we may as well visualize the spectrum of debates in the same way that we do the spectrum of the electromagnetic wave which extends from top to bottom; from the super-energetic shortwave that is the gamma ray down to the long infrared heat wave.

It is interesting to note that around the mid-portion of the electromagnetic spectrum sits the part that is visible to the human eye; the part we call light which can be broken up and spread into the colors of the rainbow. Likewise, there is a mid-portion on the spectrum of positions we may call the enlightened part precisely because it comprises the moderate positions. These can be any number of positions serving each topic as they develop to offer a rainbow of insights and useful ideas.

But the fact that there is a useful middle says also that there can be an extreme at each end; one that may or may not be all that useful. In fact, we encounter people in everyday life that harbor extreme positions of one sort or another. We are exposed to their thoughts when they leave a paper trail, or we read about them when they become so notorious as to catch the attention of a historian. The interesting part is that some of these people start at one extreme when they are young, then mellow with age and move toward the middle. You can observe such people in real life situations, and you can read about them in the books.

But there are people who never mellow and never budge from an extreme position no matter how much they get on with age. We call these people dogmatic or doctrinaire; and I must reveal that they fascinated me so much; I made it a point to study them – something I have been doing for several decades. I am convinced that these people get to be what they become because they are incapable of producing ideas of their own. They cannot even modify the ideas they have absorbed at a young age; ideas to which they continue to hang on like a dog hangs around the territory it was trained to protect.

Throughout history, the ideas that lent themselves to big debates have varied from time to time and from society to society. But it seems at this time that the subject of economics is gaining so much interest, and spreading so widely that we must regard it as becoming the universal subject of conversation where the topics relating to the distribution of wealth are the most popular. Also, since governance is a subject that is closely related to economics, the two are discussed at the same time.

When you speak of governance you speak of the law, and speak of the legislative process by which the laws of the land are formulated. In fact, what is happening at this time throughout the planet is that the local thinkers, pundits and legislators are wrestling with ideas they hope will help create a legal system that will result in the fair distribution of the wealth that is produced by their societies. All sorts of ideas are developed, and all sorts of experiments are conducted but nothing that comes close to perfection has yet been devised.

One of those societies is Switzerland about which the American Wall Street Journal ran an editorial under the title: “Class Warfare in Switzerland” and the subtitle: “The politics of envy in one of the richest countries in the world.” It was published on November 19, 2013. It deals with the ratio between the highest paid and lowest paid workers in a given enterprise, a debate that is also taking place in Egypt at this time.

If the title and subtitle of the article did not convince you that the editors of the Journal are of the extreme dogmatic type, you will be by the time you're finished reading the first few words: “Switzerland's referendums have been used to advance a populist agenda that put the nation's prosperity at risk.” In other words, they are saying that the people of that society do not know what is good for them; those who exploit them do.

And the editors explain why they made that determination: “The country will vote on a measure that would cap the ratio of the highest-paid and lowest-paid employees of a firm at 12:1 ... based on the idea that no one should make more in a month than the lowest-paid makes in a year.” And they argue that this will lead to the outsourcing of jobs, the break-up of companies and the brain drain of the nation's talent. With that, they reject not the 12:1 ratio as did the Swiss and Egyptian debaters that asked for a higher ratio, but reject the very idea of placing a cap of any level on the highest-paid employees.

To support their stance, the editors of the Wall Street Journal explain that Switzerland has become one of the richest countries in the world on a per capita basis because it has a predictable legal regime, a good geographical location, neutrality and a relatively hands-off corporate-law regime. The mystery they do not explain relates to how the legal regime, the geographical location or the neutrality of the country will change if a cap is place on someone's earnings – or for that matter, to what relative extent the relative hands-off law regime will be turned upside down.

The Journal editors are dogmatic, after all, and so they should be allowed to keep the mystery to themselves. And they also maintain the right to herald to the world the good news that in Switzerland “the most recent polling shows 54% opposing the pay-equality measure.” They still have trepidation, however, as to how the vote will go when held in a few days. And for this reason, they remind the world of the dogma that powers their thinking: “No one got rich by making the rich poorer.”

Alas, I have news for the editors of the Journal in that regard. There was a time when I was relatively rich. I teamed up with a partner, and we started a business. He swindled me and got rich by making me poorer. I hired a lawyer who froze his account and got me the money back before we even got to court. And so, I became rich again and he became poorer. Thus, the principle (not the dogma) that powers my thinking is to the effect that in every zero-sum game, the poor get to be rich by making the rich poorer.