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Realtors must know how to choose between collectivism & individualism

The thing about economics is its almost universal vulnerability to subjectivity. Subjective Economics – an oxymoronic concept if ever there was one. Those serious about it though, understand empiricism not only leads to credibility, it allows one to
separate wishes from reality. Sometimes what we wish/hope to be true, simply isn’t, and usually for good reason.

From the editor: please welcome Jeff Brown to AGbeat. Jeff is a real estate investment expert specializing on helping people retire with full pockets, is well known as the “Bawld Guy” and is a second generation broker who became licensed in 1969 and has already trained the third generation in his family. Jeff is a personal friend of ours and we are among those who call him to discuss the business of real estate as he is one of the few who has weathered every storm and remains standing in a very successful position. Please welcome him in comments.

There are basically two schools of thought in economics, though seemingly endless shades of each. One is what I’ll simply call the Collectivist school of thought. The other is the Austrian school. There’s a gigantic ocean between them, including those who’d love us to think they’re not simply a variation of Collectivism or Austrian Economics. For the record, this is my personal view of economics – these two schools.

All effort is for the good of the group

It all boils down to the power of the individual being allowed to act in their own self interest on one hand – OR – all things being based upon the good of the collective group on the other hand.

The former believes if we all act for our own benefit, we’ll adjust our behavior based upon how the market responds to our efforts. The latter believes all things economic should be considered in terms of, as their hero, Karl Marx put it, “From each according to his ability, to each according to his need.”

In other words, all effort to produce is for the good of the group, not ever the individual, and the individual is granted only what they need, nothing more. The ability (freedom) for the individual to choose – even to fail – is simply not a factor in the equation.

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Individuals decide for themselves

The Austrian school of thought allows individuals to decide what’s in their best interest. Friedrich Hayek is probably the most widely known economist from that school.

The various would-be schools found between those two disciplines, ultimately favor one or the other.

Besides the obvious difference in emphasis – The Individual vs The Group – one can discern shades of so-called moderation, by testing what the proffered system deems more important: Equality of opportunity – OR – Equality of Results. The Austrians are staunch believers in the former, while the Collectivists are equally committed to the latter.

Austrians allow you and I the opportunity to succeed OR fail on our own merits. They believe it’s axiomatic that you and I are not created equal in the literal sense. That is, IQs vary. Desire and motivation differ. Each individual has different aptitudes.

Two different aptitudes:

You’re a math whiz, while your brother excels in the arts. You’re 7’ 2” tall, with world class hand/eye coordination, while your best friend can’t walk and chew gum at the same time, but can solve architectural problems in minutes. He’ll never play for the Lakers, and you’ll never build the next generation of skyscrapers.

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Given the obvious differences between individuals, they opt to let us choose to be pro athletes or architects. Then they teach us to let each individual rise to the level their efforts, skill, and the market allows. Equal opportunity also allows each of us to fail miserably. One might say, “To each according to their own efforts, to each according to their own strength of character.”

The value of the farmer

Collectivism says the farmer who successfully produces higher quality wheat, more abundantly, isn’t valued by the group any more than his neighbor who’s barely competent to sweep out the barn.

The Austrian says the individual’s value to the economy is in direct proportion to the level of difficulty required to replace them. A janitor is more easily replaced than a highly trained heart surgeon. Therefore, the janitor is paid less – as determined by market demand — for his skills than is the doctor.

What about the middle of the road?

That’s where you find road kill, another article altogether. Bottom line? We must all decide whether we prefer equality of results – Collectivism – or equality of opportunity – the right of the Individual to succeed – or fail – on their own merits. Do we like living off of the efforts of others? Or would we rather earn our own way?

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Written By

Jeff Brown specializes in real estate investment for retirement, has practiced real estate for over 40 years and is a veteran of over 200 tax deferred exchanges, many multi-state. Brown is a second generation broker and works daily with the third generation. With CCIM training and decades of hands on experience, Brown's expertise is highly sought after, some of which he shares on his real estate investing blog.

16 Comments

16 Comments

  1. Benn Rosales

    March 7, 2011 at 4:28 pm

    It’s funny that we have to have this lesson to understand there is a choice, but didn’t our founding fathers already decide this one for us? What changed? Was it using a crisis to it’s fullest potential? Saving the housing market or to prop it up, means we should just let it fail and let the markets eat the remains? Fastest way to health?

  2. Matthew Holder

    March 7, 2011 at 5:07 pm

    Not sure what the point is? I think the article is missing the ‘why’ and what the article is relating to. Are you relating to agents working in teams v. as individuals? Are you making a case for increased competition among brokers?

    I think you have an important point to make…but I can’t figure out what the point of the econ. theory lesson.

    • Lani Rosales

      March 7, 2011 at 8:58 pm

      Matthew, Jeff is laying out general economic theory to bring some readers up to speed and the title says “Realtors” because that is who the audience is. I believe Jeff’s point is that major economic theories are playing a role in how our country is being governed which ultimately dictates the housing sector, the very industry most readers here live in.

      That said, do you lean more Collectivist or Individualist? 🙂

  3. Arn Cenedella

    March 7, 2011 at 5:08 pm

    Who is John Gault?
    I say Ayn Rand and Jeff Brown have it right.
    Can’t wait for the movie to come out April 15th. Hppe the movie is true to the book.
    To all those that favor collectivism, I suggest they read Atlas Shrugged or Fountainhead. In my mind, these stories clearly lay out the logical and natural outcome resulting from collectivist policies.
    I may be over-stating the case a little but not much when I say our nation’s future hangs on the outcome of the current political battle between the forces of collectivism and individualism.
    Immigrants for over 300 years have come to America for opportunity not a guarranty.
    Immigrants come here to pursue their dreams and to reap the rewards of their own efforts.

  4. Ken Brand

    March 7, 2011 at 9:24 pm

    The good stuff.

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