What Was I Thinking?

Doing an interview with Peter Schiff, a radio host, adviser to Ron Paul, advocate of the gold stndard, and all-around lunatic, was a big mistake.  All it did was bring out the zombies at the Amazon site: there is such a thing as bad publicity  Why, then, did I do it?

Two reasons.  First, I wasn’t thinking about consequences.  I thought this was just another radio interview.  I didn’t know the man was a shouter as well as a fool, someone who would invoke Robinson Crusoe as the basis of a conversation about the function of consumer spending in a modern, post-industrial economy.  Actually, I was the one who dismissed Defoe as the proper groundwork of discussion, after Schiff had suggested that my program was the equivalent of dropping money on tribes in Africa.

I should have gone further and characterized his utterance as quite possibly racist.  I should have noted that Crusoe’s island is a paradigm of new world slavery, not free labor, fee soil, free men.  Or rather, it’s a place where abstract social labor hasn’t yet happened—on Daniel Defoe’s island of imagination, as on Peter Schiff’s desolate reef of humanity, you produce of yourself, by yourself, and for yourself.   How does Marx put it in Capital?  “All the characteristics of Robinson’s labour are here repeated [in “a community of free individuals, carrying on their work with the means of production in common”], but with this difference, that they are social, instead of individual.  Everything produced by him was exclusively the result of his own personal labour [until the encounter with the Other], and therefore simply an object of use for himself.” [1: 90]

Better yet, there’s Marx on Jeremy Bentham, the theoretical perfection—or should I say personification?—of Robinson Crusoe.  The first time I read this, forty years ago, I laughed out loud.  Honest to god, Karl Marx is a pretty funny guy, for all the carbuncles and the sectarian strife.

“This sphere that we are deserting, within whose boundaries the sale and purchase of labour-power goes, is in fact a very Eden of the rights of man.  There alone rule Freedom, Equality, Property and Bentham.  Freedom, because both buyer and seller of a commodity, say, of labour-power, are constrained only by their free will. . . .Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own.  And Bentham, because each looks only to himself.” [1: 195.  See also 1: 668 n. 2 for even more gleeful asides on utilitarianism]

Second, I was thinking like a good liberal.  Everyone owns the truth-tracking faculty called reason, I thought, and so even an all-around lunatic could understand why my arguments were better than his.  I know better than this, why did I subject myself to someone who also knows better?  Because I still harbor the strange illusion that there’s a body of fact independent of any methods, values, and desires—even as I argue against this illusion in every course I teach.  The gravitational pull of the idea that we share the same facts is too powerful.

But just to let myself off the hook, I was also thinking with Alasdair MacIntyre—I can produce commensurability by showing how rival accounts of the very same events produce questions they can’t answer, in other words, by narrating the evolution of these accounts and demonstrating that my version of the events includes the rivals.   Not a chance.

Like I said, the man is a shouter as well as all-around lunatic.  Abolish the Fed, repeal all income taxes, get back to the gold standard, and then, if anybody’s left standing, let’s also do away with the 20th century!  How can you argue with a man this delusional?  Well, you can’t.

But there’s a serious downside to engaging with creeps like Peter Schiff.  I use the word advisedly, as a technical designation.  He’s a moron and a bully: he makes Donald Trump sound erudite and insightful.  That downside comes with his following, the zombies who haven’t read my book but proudly post vicious reviews at Amazon because they know, from listening to Mr. Schiff, that my ideas are dangerous.  Communist propaganda and all that.

I’ve actually complained to Amazon about these reviews.  Not the three that cite the book and explain their disagreement, no, I mean the four “reviews” that cite the interview with Schiff and/or announce that they were written without reading the book.  The Customer Service crowd at Amazon has gone over these reviews and decided that only one of them must be permanently deleted.

The moral of this story is pretty simple: it doesn’t matter how smart you are, or how good your arguments might be.  The truth is fungible, malleable, and marketable.  Don’t be arrogant or stupid enough to believe that your truth is inviolable.



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14 responses to “What Was I Thinking?

  1. Jim B.

    Such are the perils of the public intellectual. Cuidadoso, Jim, cuidadoso, por favor.

  2. David

    James, you have this blog and every opportunity to make your argument here, uninterrupted. Why did you choose to make these ad hominem attacks instead, calling Peter names instead of addressing the issues? He didn’t call you names and now you’re just acting childish. Then you go on quoting Marx of all people and then wonder why people think you’re a Marxist / Socialist. And you wonder if you should have played the race card, which would have been even more embarassing and shows that you have no real argument. In your response here you seem like the typical government paid professor with no knowledge worth anything in the real world, you’re doing your very best to fit that stereotype, and having reviews and comments removed from Amazon doesn’t exactly help your case. Neither does your introduction video on ratemyprofessors.com where you happily admit bs’ing your students. Please elaborate on your points and stay on topic.

    • David,

      Thank you for your sentiment–which I take to be the urge to rational debate and discussion rather than ad hominem exchange. But I must say that your sentiment rings entirely false: it sounds like the sniffing of an 18th-century courtier silenced by a law student from the provinces.

      I have, in fact, made my argument here at the blog, in many radio interviews, in two op-eds for newspapers with international circulation, and in the book itself, which Mr. Schiff hadn’t read when I appeared on his show.

      In that “interview,” Mr. Schiff paid no attention to my arguments. I was able to complete approximately four sentences in a half hour, while he bellowed on, assuming my arguments were already discredited. He didn’t call me any names, but he treated me as a hostage to his own brand of true belief.

      I quote Marx all the time because I’m still something of a Marxist and still a socialist–not a communist, a social democrat. If you had read the blog, the book, or the op-eds, or just paid minimal attention, you would know that my purpose is to make markets work better, not to abolish them. But, like sectarian leftists, you can’t understand how anyone could be in favor of markets and agnostic about capitalism. That makes you a hostage to Peter Schiff’s beliefs, or to the next loud voice that wanders into range of your limited experience of the world.

      Now as for the “race card,” as you call it. What kind of man–what sort of mind–compares my argument about the necessity for income redistribution to dropping money on tribes in Africa? I’ll tell you. The kind of man and the sort of mind that believes, along with Charles Murray, that “welfare,” transfer payments, and “entitlements” reward minorities (a.k.a. members of the “underclass”) for their bad habits. There are no empirical grounds for this belief, so I must conclude that some irrational fear drives it, and that the best candidate for an explanation of the fear resides in the problematic of race.

      There are no government-paid professors in the United States, speaking of the real world. Otherwise students wouldn’t pay tuition at state universities like Rutgers, where I teach. Taxes pay part of my salary, of course, but I’m no more an employee of the state than you are, regardless of your position: we’re all sustained by public spending, no matter how deep we are in the pockets of private enterprise.

      Finally, I think you need some irony or ambiguity or stand-up comedy in your sheltered life. That “introduction video” at ratemyprofessor was a lark–a response in kind to snarky student evaluations. My daughter sat right off stage while the thing was taping, laughing hysterically. Hers was, and is, the appropriate response.

      So please, David, spare me the sermon and read the book. Maybe also lighten up, try on a sense of humor. Oh, and stay on topic.

  3. David

    Hi James,

    first of all, thanks for your reply, after the overall mood of your blog post I didn’t expect you to allow my post on your blog. I apologize if I sounded a little odd to you – English is not my mother language and I’m doing the best I can.

    Well, you admit to being a Socialist, which takes some of the wind out of my sails already, so at least I don’t have to convince you of that. As a German, all I have to do is look at former East Germany, where you can still see what Soviet-style Socialism has done to the country and shake my head in disbelief that these ideas are still popular today. I have relatives that grew up in the former DDR and they would tell you a few things about that system and how even today – 20 years after the collapse you can still see where the border was. It’s just terrible. But that’s not my point today, I just wanted to admit that I’m biased, too, and why.

    I don’t want to go off topic too much, so I have thought about which question would be best to ask you.

    By the way, Peter’s helicopter analogy was not racist and has nothing to do with race, I assure you, he uses it all the time, to the point of calling Ben Bernanke ‘helicopter Ben’ for printing money. Peter has also written a book called “How an Economy grows and why it crashes” which is about an island with a handful of people fishing all day – he uses this analogy to illustrate his point that ‘printing money’ does not help the economy but fishing more fish does. It’s easy to grasp, maybe even a bit dumbed down, but it has a simple and clear logic which is hard to argue against in that setting. Your point that spending is what drives the economy does not look very compelling before that background, wouldn’t you agree?

    Your response was that principles that work for a complex modern economy do not necessarily apply to a small scale economy on an island – the two are not comparable. Did I get that? So my question to you would be,

    “At what size of an economy does math reverse itself?”

    Or let me rephrase the question: What’s a theory worth that looks good in a complex setting with many variables but falls apart when you examine its parts more closely, with simple logic, on a basic level?

    I’ll take your answer off air and wish you good look with your book. I’m warning you, I might read it one day and post a bad a review on Amazon, see, I can be a pretty funny guy, too. All the best. David.

    • Ian P. MacDonald

      Additionally, Schiff’s position on “raining money on Africa” is problematic because it treats Africa as a single state. South Africa has a functioning economy, as does Namibia and Botswana. For Schiff “Africa” is just a place with poor people and “tribal leaders” which is as ignorant as it sounds, and that someone is allowed to dismiss the 50+ states of Africa as a single primitive concept has something to do with race.

  4. Jonathan Lackey

    Sometimes it is just better to go on the attack in this kind of situation. Bullies like him Schiff can’t handle getting bullied themselves.

  5. Ian P. MacDonald

    As an audience to this discussion, I’d note a few problems with the logic of your response, David.

    Invoking East Germany as a blanket counterargument for socialism is an easy reaction but not very convincing. Which kind of socialism? West Germany was “socialist” too during the 80s, inasmuch as it had single-payer government health care among other features of what Schiff, certainly, would call a socialist economy; yet, by your own evidence, the border between the two states could not be more marked, so to bandy “socialism” as a single unified concept seems disingenuous. I might respond, by similar logic, that Russia’s collapse following market transitions (or Kenya’s, or Argentina’s, or or or) proves the failure of capitalism. It doesn’t, obviously, and you might respond that comparing Russia’s capitalist experiment to capitalism, per se, would represent an unfair comparison. You’d be right. As is comparing the Rousseau-ean noble individual represented by Crusoe to a 300 million+ multifaceted global economy (an economic structure that Defoe could not, in the 18th century, have conceived of). That Crusoe retells the story of colonial activity in the 18th century that helped industrialize Europe is also well established. (Remember, the colonized wanted Europe there so they could be “civilized”. Their gratefulness abounds). So let’s put aside the hasty generalisation that anyone who reads Marx is Stalin. It unfairly pigeonholes the history of ideas and it represents a poor or non-existent reading of Marx.

    And spending *is* what drives the economy–the consumer sector represents nearly 70% of the US’s–but it doesn’t necessitate monetary expansion by the Fed. To put it in simplified terms, if I buy at my local store, they make money; if they make enough money, they may want to expand operations to keep up with demand, so they build a new wing and hire a few new people. If I don’t spend money there, they don’t have the capital to expand. Nothing in that relationship requires my money supply to be given me as a result of a Fed fix. It could just be my paycheck. Jim wrote a book on the Fed, as it turns out, so I would recommend reading it before representing his views of/knowledge regarding the Fed. QE may or may not be a wise move, but it’s not an inseparable feature of Jim’s argument and therefore arguing against it doesn’t preclude the claims in _Against Thrift_.

    In any case, the Fed does what it does and I don’t always agree with what it does, but neither do I agree with deregulation and upper-tier tax cuts as a fix all for economic woes or the self-styled purity of libertarian individualism (what I like to call the two-year-old’s “mine!” stage recast as government policy). JP Morgan, Exxon, or Time Warner making record profits while cutting jobs, raising prices, and limiting competition doesn’t have much to do with a village fishing, unless Schiff’s argument includes a portrait of one villager having all the fish and denying the other villagers access to fishing as the happy ending. Jim’s saying that if net private investment hasn’t been the driver of growth in 90 years (and he makes that case more than adequately in his book), and if the burden for growth has been picked up by the consumer sector (another case he makes pretty well) then the responsible thing to do is to empower the middle class to continue spending and therefore funneling money into the business sector–especially the small businesses that those on the right claim to so revere. Yes, that requires a fix on the amount of restless surplus capital that piles up in the corporate sector–money that *isn’t* reinvested and doesn’t spur growth. You want your small business to grow? You’d better hope the middle class has some spending budget. You want to reward too big to fail? Gut the middle class. The latter is the course of action right now, and that’s because of the myth that it’s the giant banks, the macro energy firms, and the monopolistic insurance companies that drive growth. If it turns out that they don’t, then the movement of the US’s income discrepancy to it’s current woeful global position (we’re on level with the former-3rd World) becomes an inexusable moral lapse in the name of self-satisfying political dogma.

    Schiff is part of the movement behind this, and he’s not a fair interviewer, nor a fair disputant on the complexities of world economies. Yes, math doesn’t reverse, but addition isn’t advanced calculus, and the myth the economics is a science, a mathematical science, is a little eye-rolling-inducing anyway. Smith wasn’t a mathematician; he was a sociologist. Economics is about the way rational people react–but if people are irrational, the numbers game is off the table. Schiff has the opportunity to really discuss and debate complex issues for the education and edification of his audience. He doesn’t do that, and it’s a shame.

  6. David

    Hey Ian, thank you. When you say

    „Spending *is* what drives the economy“

    We can of course say this is correct, wrong, or meaningless, depending on the context and the semantics we attach to it. Let me try and be a little more specific. You were saying that

    „The consumer sector represents nearly 70% of the US’s–but it doesn’t necessitate monetary expansion by the Fed. .. if I buy at my local store, they make money; if I don’t spend money there, they don’t have the capital to expand.“

    That’s true. But you can’t consume something that has not been produced yet. So whatever you buy at the store must have been produced first. So in the sense of what happens first, the act of spending money on something is not what drives the economy, production is.

    But I’ll give you that much: We can look at both sides of the issue. Before a company produces anything, let’s say, a new kind of car, it needs to find out what kind of car their customers want. In that sense, yes, the money being spent in order to buy these cars gives the economy a direction, because ultimately it’s always the consumer who should determine which products are needed and even how much of them. When consumers are directing the economy to produce the goods they want, in the quantities they need – that’s when a market works well for everybody, and much better than a top-down, centrally planned economy – like there was in the former Soviet Union, the GDR, North Korea or let’s say Cuba.

    But my point is having a demand for a car does not magically make car factories appear. Before cars can be built, the factory must be built and paid for, so first there needs to be investment capital, which comes from savings, either your own savings or someone else’s savings (in form of loans). Savings come from underconsumption – which means, less spending in the short run for the gain of making an investment later. So, in a sense, sometimes consuming less is what drives and helps the economy, because before the store owner can grow his business he needs to consume less than what he earns, i.e. create savings, only if that happens he can go and invest these savings in his factory, hire new workers, buy machines.

    So I would have agreed had you said „consumer spending is ONE important factor in an economy“. That would be alright with me. But if you’re hinting that spending is THE most important factor, or the ONLY factor, or ALWAYS the determining factor, or something in that sense I would disagree with you. Have a good one!

    • Marcelo Corrales

      For god’s sake David. What are you implying here? How did you come up with these conclusions about consumer demand? Your statements sound naive and very confusing, even archaic. Perhaps you need to read more to develop sound arguments worth being posted here. If my words sound harsh, it is only because you began this thread with very negative comments. You asked James to elaborate and stay on topic. How ironic. The more you elaborate, the more off-topic you sound.

  7. David

    Marcelo, if you think all my arguments and statements are invalid, why don’t you pick one or two and prove me wrong? Can you do that?

    • Marcelo Corrales


      Of course I can do that. But it is hard to prove someone wrong when their statements are so confusing. I don’t know if your interpretations derive from classical economics, if you are confused about the categories you are employing in your arguments, or both.

      For example, in the second to last paragraph of your response to Ian’s post, why did you begin by talking about car factories and end up mentioning store owners (who, borrowing your words, then “create savings so they can go invest them in their factory”)? Does that make any sense? When you name car factories I immediately think of corporations, and when you talk about store owners I imagine a mom and pop store.

      Furthermore, when talking about savings and assuming a “store owner” or a “factory owner” (whatever you mean by that) needs to consume less than what he earns to be able to invest, it seems you don’t understand the role and the link between investment and consumption in a modern and progressive corporate economy. And when I am talking about investment I mean indicative planning or productive public and/or private investment, not net investment.

      Instead of joking about maybe one day reading Jim’s book (or books) and posting a bad review on Amazon, why don’t you read it, make sure you pay attention to his analysis (specially when it comes to savings, investment and consumer demand) and then come back with sound arguments to this site.

      Before I finish, and in response to your challenging and bold question, I don’t need to prove your statements are invalid. You already did that yourself. Now, if you decide to organize your ideas and rephrase your arguments to make them clear, even less theoretical — in other words, based on historical and socioeconomic grounds — maybe I can prove you wrong then.

  8. David

    Hi Marcello,

    sure, let me clear things up a little. First of all, my example goes for store owners and factories, owned by corporations alike. You are aware that there are store owners that are also corporations, like Wal-Mart. For the point I was making it makes no difference, so pick one, and I admit it would be easier had I just picked one.

    You’re not really addressing my point I was making, that investment drives the economy rather than spending, all you’re saying is I don’t understand economics (‘the link between investment and consumption’), but you’re not backing that statement of yours up with anything. So I don’t see how merely stating your conclusion invalidates the point I was making. You ignored my argument.

    If you still don’t understand my argument, feel free to ask me to clarify things. Have a wonderful day.

    • Marcelo Corrales


      I am addressing your point (investment vs spending) when I mention indicative planning or productive public and/or private investment. What kind of investment are you talking about?

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