Archives for category: Economics

In the early and middle 1980s, “comparable worth” became a celebrated cause of the feminist left. The idea was to equalize wages among occupations, particularly between, for example, a well-paid occupation that tended to be manned mainly by men and a more poorly remunerated occupation mainly performed by women. The examples given at that time were often truck drivers vs. secretaries.

I witnessed several public debates on the subject, way back then. And having just begun to study economics, I quickly came to regard proponents of the “comparable worth doctrine” (CWD) as utopian lunatics. Their glee in concocting regulatory schemes was over the top, and their arguments were always and in each case economically illiterate. They looked upon all wages as mere artifacts of custom and power, never productivity. Notions like “marginal product” and “imputation” and even “supply and demand” never rose to coherence, or even the level of mere mention.

I remember one absurd discussion, where a young man argued against a then-current objection commonly made to the CWD — that comparing truckers to secretaries was comparing apples to oranges. (That is, the occupations were different enough that no wage equalization effort could make sense.) He said that the beauty of CWD was that (quoting from memory) “we mix the apples and oranges and get fruit punch, and then divvy out equal amounts!”

You see what I mean by economic illiteracy.

Now, I did not go on to become an economist. It never became my job to investigate the statistic artifacts of the period to test the doctrine. Or any other. But I did notice that in the State in which I lived, the CWD became the official doctrine of one institution: government.

My guess is that many a low-wage government and contractor job were upped to a higher level, according to some “comparable” “worth” (of a labor theory of value variety) and that taxes were quickly increased to cover.

It might be good to check to see whether this did actually happen. I would be surprised if it did not.

I am getting at something here. There is a difference between government wages and business wages. They are figured and set differently. Unlike in the market sector, politicians can and do set State employee wages. And take credit for the hikes.

The taxes? They tend not to talk much about the taxes hiked to pay for the greater drain on resources. In markets, wage hikes must be merited by business success in voluntary markets, within a context of competition for scarce consumer attention. In politics, the checks and balances are much less integral with the process. There is a high degree of arbitrariness to government worker remuneration.

I suspect something similar happens in government regarding minimum wage jobs. I know of a number of positions paid by tax funds through contracts with the state. Many of them — particularly the temporary ones — are minimum wage jobs. (Elder care, some seasonal fishery services, and a few others come to mind.) When the minimum wage requirement is raised, budget requirements are raised, and politicians shrug “cost of living” and approve a budget hike, leading directly to raised contract worker wages.

We often say, with varying degree of inaccuracy, that “consumers pay” for minimum wage hikes. (Consumers do pay, but usually indirectly.) More accurately, taxpayers pay. Quite directly.

twv


One of the more interesting arguments for socialism is the argument from sectoral successes, that is, with particular socialistic enterprises, the prime example being roads. As libertarian economist Walter Block chided Milton Friedman once, Friedman’s support for public roads amounted to a “road socialism.” And most folks, upon hearing that, would raise an eyebrow and pull out of the driveway and say, “if this be socialism, make the most of it.” That is why socialists bring up the roads as an example of how all-sector socialism could work. 

And they have a point: our road system is awfully socialistic. Of the main features of socialism, it has all but two*: the economic good, road access, is not now provided on an egalitarian or needs basis, but instead (1) to all permitted drivers as much as they want, (2) funded by a fairly efficient set of use taxes, on fuel and licensing, etc.

Now, Professor Block has done important work showing not only that private roads do work and have worked, here and there, and could work if universalized. But, let us admit it, his (and similar) writings notwithstanding, road socialism has not been a complete disaster, and is widely popular, unquestioned.

Does road socialism provide a good blueprint for generalized, all-sector socialism? No. But instead of providing the many usual reasons given, I will suggest another way to look at it.

Road socialism in America is an excellent example of how we tend to “regulate a commons”: ruthlessly and with special attention to prosecution (and overburdening) of the poor.

Have you ever been to a traffic court? It is apparent: every unwanted or slightly dangerous behavior is criminalized. The cops are oppressive. The rules are numerous. And the system is exploitative, often nothing more than a shake-down operation. Pleading before the court, the general run of those who challenge the system tend to be abject in their petitions. And the general theme of oppression stinks up these venues, as the states and municipalities nickel-and-dime the least successful in our society.

Think of that system writ large!

On the private roads, there is a perceptible tendency for road owners to provide help, not deliver beat-downs and stick-ups. Road service is more useful than cops, in most cases. Suggestions and highway engineering that encourage safe driving have been found to be more effective than patrolling, but our commons regulators insist upon tickets, property confiscations, and even prison terms.

So there you have it. Road socialism provides a blueprint for social tyranny.

For the good of society at large, the roads should be privatized, just to make life more peaceful and less deadening. Driving need not be regulated by fear. The fact that our most socialistic sector of society is run along  authoritarian and exploitative lines should indicate what a bad idea imitating public roads would be for yet more sectors of society.

Go to traffic court, and come to your senses: no more of this! No more socialism. Please.

twv


* Not counting sector limitations, of course.

img_1980

I just watched Lisa Kennedy Montgomery cave on repealing ObamaCare — see tonight’s Kennedy, Fox Business Network, 2017-01-12.

It looks to me like the putative libertarian is following Sen. Rand Paul and President-Elect Trump in doubling down on the core principle of ObamaCare itself.

They do this by insisting that the people newly covered by ObamaCare must remain covered under some new scheme before the old scheme be repealed.

This ensures that no real progress can be managed, for it commits the federal government to guaranteeing a transfer of wealth that (a) is nowhere authorized by the Constitution; (b) can only send medical costs spiraling further upward for the non-subsidized and eventually even the subsidized; (c) must increase the ranks of the subsidized as time goes on; (d) will become increasingly insolvent and demanding more taxes, eliciting further damaging regulation, as well as further stress the U. S. debt load; and, last but not least, (e) commits the nation to a principle utterly at odds with the best method for progress in medical services delivery. A better, free-market system, would simultaneously improve technology and capacity while leading to a secular trend of price reductions.

img_1981The Rand/Trump/Kennedy ploy gives the game away — the whole enchilada — to the socialist-minded Democrats (and Republicans, for that matter), which means that there could never be a rollback of government. At least, not on their watch.

It also shows that Kennedy and Rand and Trump all believe, just as do progressives and socialists and Fabians and fascists and ignoramuses (but I repeat myself) that once one has given a treat to someone else, that treat must be considered as a sacrosanct “right.”

Further, it indicates that they do not understand the economics of health care and medical insurance, especially not the damage done by decades upon decades of subsidy, mandates and regulations.

In other words, it means they do not really believe that free markets can work. Which is almost certainly true in Donald Trump’s case.

In Rand’s and Kennedy’s case, it ultimately means cowardice.

twv

img_5132

Thomas Sowell retired from writing his syndicated column a few weeks ago. And so the tributes have been coming in. As they should.

img_1961I note that Paul Jacob at ThisIsCommonSense.com, and Gene Epstein on the Tom Woods Show, both have praised Sowell for his astute and well-explained economics popularizing while expressing their chagrin that Sowell never seemed to apply the same “thinking beyond Stage One” approach to foreign policy.

This was a point I made in one of my earliest published reviews, of Thomas Sowell’s A Conflict of Visions, to be found in the premiere issue of Liberty, way back in 1987. (Which you can read on this site, now — O, lucky you!)

So, if we are all pretty much saying the same thing, what can I say differently?

Well, I could mention my favorite Sowell book, his first: Say’s Law: An Historical Analysis. This is probably his most difficult book, in no small part because Say’s Law is itself a surprisingly difficult concept. It has been years since my last reading — and I have read it at least three times, even now wishing to return to it, give it another go.

I first read the book in tandem with W. H. Hutt’s quirky A Rehabilitation of Say’s Law. Each book helped me understand the other.

One of the really tricky things about Says Law is that it is a macro theory; but many authors found its chief resonance on the micro level. Indeed, though Say’s Law was first marshaled to debunk one theory of economic depression, the general glut theory, W. F. Lloyd, in his classic essay on value, tied that macro problem very closely to what became the theory of marginal utility, the micro theory par excellence. And Say’s Law according to Say’s disciplines — the Third School, or Catallactic economists — turned into a theory of “harmonies,” not equilibrium. It was another macro approach based on a micro insight that in turn was used against not merely general glut theories, but also protectionism and socialism. Sowell, if I remember correctly, does not extend his analysis into the third school, except insofar as he deals with Walras’s Identity.

As an economic popularizer and as an economic historian, particular of race and cultures, Sowell was magnificent. Yes. But as a social philosopher he was perhaps even better. More necessary.

There is a caveat to this judgment, however. Jacob and Epstein and Woods all discussed their favorite Sowell contributions. I have done the same, with his recondite Say’s Law survey. But let me offer a balance: his worst book, something neither Epstein nor Jacob bother with.

I nominate Marxism: Philosophy and Economics (1985). This book is easier to read than Say’s Law, my favorite, and it probably packs more punch . . . at least in terms of surprise value. But one of the big surprises is a huge whopper of an error. It is an error, of all things, about value.

Sowell asserts, in Marxism, that Eugen von Böhm-Bawerk was wrong on Marx’s labor theory of value.

When I read this, I had not only read Böhm’s classic “Zum Abschluss des Marxschen Systems,” translated under the provocative-if-puzzling title Karl Marx and the Close of His System (first English language edition, Alice MacDonald, 1898), but also two other important books related to the subject: Destutt de Tracy’s A Treatise on Political Economy (Thomas Jefferson, 1817) and a crucial chapter in Karl Marx’s infamous Das Kapital (1867).
img_1966

You might be wondering: what the heck — what’s with the Tracy? Well, Tracy makes much of the Condillac thesis of both parties to an exchange gaining value in the transaction. So when I read Marx’s obscurantist dismissal of that thesis, wherein the old socialist crank mocks Condillac and Tracy’s mutual gain thesis, I was prepared for Sowell’s disagreement with Böhm.

The key Marxian error, in my opinion, is that repudiation of mutual gain through trade. It was there that Marx necessarily went off track, not seeing how value is increased as goods flow through the market nexus. The marginalist view of value is intricately entangled with the mutual gain concept, and by rejecting mutual surplus of value in each trade, Marx took his most decisive turn the wrong way. Adam Smith and David Ricardo and the British economists had sent economics down the wrong path in 1776, and Marx took their labor theory of value to its absurdist conclusion. Sowell basically apologizes for Marx. He insists, without much evidence (and with the evidene right there in Das Kapital, on the pages citing Condillac and Tracy), that Marx’s formalistic definition of value as (somehow) incorporating socially necessary labor time was indeed compatible with marginalism. This thesis seems not in the tiniest degree defensible.

A few years later (if memory serves), David Ramsay Steele cleared all this up in his magnificent book on the socialist calculation problem, From Marx to Mises (1992), speculating that Sowell was merely regurgitating the views of his Marxist-apologist professors in the days before his conversion.

In any case, Sowell has, since his conversion from Marxism under the influence chiefly (I think) of Milton Friedman, remailed too closely tied to the British Classical School. He seems uninterested in, perhaps dismissive of the Third School tradition starting with Condillac and moving through Tracy, Comte and Dunoyer, Bastiat, Perry, Henry Dunning Macleod, and Gustave de Molinari. (Half of these economists are French or Belgian or Swiss, so the tradition is often called the French Liberal School. But that is too narrow a reading of this dissident, proto-marginalist tradition.) The later Third Schoolers ran off-track, too, in not accepting the important proof of the basic idea in the marginalist advances of W. S. Jevons, Carl Menger, and Leon Walras. While Menger did not go on at length about what he owed to the Third School economists, Jevons sure did, while heaping scorn upon the Ricardians. And Walras, it is worth noting, was himself the son of a Third School economist, Auguste.

This lack of interest in these economists seems especially strange to me, since Sowell has repeatedly dipped into the rhetorical well so ably primed by Third Schoolers Frédéric Bastiat and Yves Guyot. (See my forewords to Bastiat’s and Guyot’s classics, available on Amazon/Kindle and iBooks.)

But it has been a long time since I read Sowell’s Marxism. Perhaps my memory is fuzzy. And my view of the Marxian surplus value and exploitation theories needs refreshing. So, after just now re-reading my three decades’ old review of A Conflict of Visions, I won’t direct my attentionimg_1963 to The Vision of the Anointed: Self-Congratulaton as a Basis for Social Policy (1995), which I had been planning to do. I will go back and re-read Böhm-Bawerk’s take-down of Marx, instead.

So perhaps I will follow up this post with a corrective, soon. I should not be this fuzzy on something so basic as “surplus value.”

twv

img_0056The defining features of capitalism are

  • the widespread acceptance and defense of private property;
  • mostly free labor (no chattel slavery);
  • established markets in both consumer goods and producer goods (including sophisticated financial markets); and
  • the use of mass production through the division of labor primarily for consumption by the masses themselves.

Key features necessary for the onset of capitalism include

  • the accumulation of capital through savings (“abstinence” from consumption, as Nassau Senior put it);
  • respect for (or cultural valorization of) work and trade;
  • tolerance of natural inequality, a general culture deprecating envy;
  • a willingness (even eagerness) to form voluntary associations for mutual and general benefit;
  • a widespread-enough sense of justice to undergird the division of responsibility; and
  • a culture that encourages and expects its members to take charge of their lives at fairly young ages, to control sexual appetite, regulate population growth through something like marriage and family, and foster education and the cultivation of human capital.

Some or all of these factors must begin outside of a capitalist context, which evolves and, in some cases at least, presumably reinforces the bulk of them by self-subsumption.

In our real-world experience of capitalism, for instance, some of the necessary limitations on the scope and power of governments arose for a variety of reasons; religion played a key role in the early development of education and the habit of voluntary co-operation, as well as the enforcement of sexual practices that allowed some stability in families.

It is crucial in such discussions to distinguish two antagonistic poles of government policy towards capitalism, neatly expressed in the French terms “laissez faire” and “dirigisme.”

Many people mean by “capitalism” the former policy — and there is some reason for that. However, a word of caution: mercantilism (Adam Smith’s term for the variant of dirigisme popular in his day) was almost universally present as industrial capitalism took off in the 18th century. Laissez faire was an alternate policy approach advocated chiefly by intellectuals based on extrapolations they made from observing how trade works, and what the complete consequences of mercantilist policy were. The laissez faire economists ably demonstrated that mercantilist practice did not intellectually back up social outcomes of the policy.

Though some of the first advocates of laissez faire’s hands-off policy argued for it in terms of its “natural” quality, it is worth noting that laissez faire is a policy designed to limit the natural activity of state control of economic life. It is a rule-of-law policy to curb “corruption” and inefficient-to-the-public rent-seeking and zero-sum wealth transfers. It is not a description of our system, or any previous governmental policy, as such.

Modern capitalism has mostly evolved in the context of sovereign states, which have practiced, to varying degrees, protectionism, wage and price controls, a myriad forms of taxation, goofily partisan operations of industry and “security,” vast wealth transfers, plunder and confiscation, corvée labor, monetary manipulation and credit control, and occupational licensing, not to mention the historical defining features of the State, conquest and war.

It is obvious that “capitalism” covers a lot of ground, and also that there is a lot of “ruin in a nation” (h/t Adam Smith) ruled by states of whatever kind.

To repeat: laissez faire (“let them act”; “let-alone,” as a later economist translated it) might best be seen as a system of controls (limits) upon government. It is in an important sense a regulatory regime, only the target of regulation is largely government itself, which is seen as dangerous beyond a certain level and scope. (The regulation of the minutia of economic life is left to individuals and groups vying with each other to serve each other’s values. The order exhibited by markets, especially left free, is a sort of cybernetic, emergent property of decentralized decision-making. Adam Smith offered a powerful and influential metaphor to explain this tendency to order: “the invisible hand.” Frédéric Bastiat referred to this observable phenomenon as “economic harmonies.” Economists of a more theoretical bent have tried to capture some of the ideas, here, in various notions of “equilibrium.”) Even a cursory glance at history shows us that these controls on government have, historically, tempted fewer folks than those enamored of controls by government.

For a variety of reasons, most people “naturally” tend to prefer over laissez faire more arbitrary and malleable systems — systems that allow for mass coercion, intricate political hierarchy and the constant game of positioning to gain at the expense of everybody else. Via force.

This is to say that “dirigisme” (political control of markets and private property) wins most policy battles, and sometimes extremist versions of it, such as socialism, make huge (if temporary) gains.

The current system in America, along with most places elsewhere, is dirigisme. Such systems entail an interventionist state that usually receives the appellation “welfare state,” since the common justification for its vast wealth transfers is human betterment, or “welfare.” But its characteristic policies are probably best described as “mercantilism with a socialist face.” The policies are very old, a revival of ancient, closed-society practice. The difference of today’s mercantilism from that of the 18th century lies mainly in that the group interests appealed to tend to be radically different. Which groups that are actually served, on net, are arguably very different.

The open secret of modern society is this: the representative political systems governing the regulatory and redistributive programs of modern states tends to be captured by what used to be called “the monied interests” is under-appreciated by dirigisme’s most enthusiastic public supporters, who, instead, blame “the free market” (a non-existent creature nowadays) for our apparent plutocratic structures.

Also not appreciated? The sheer unwieldy volume of transfers both outright and hidden (regulations), which scuttle any realistic accounting of who wins and loses by the system.

It is not for nothing that political philosopher Anthony de Jasay offers an alterternate name for the modern welfare state: “the churning state.” As Jasay sees it, there is a constant churning of policies — with each turn of the crank creating new advantages and disadvantages. This constant shuffling yields a kind of chaos, a feature prophesied in the 18th century by C-F Volney, who identified the nature of such systems as examples of “an intestine war.”

The modern state incorporates the all-against-all warfare of the theorized “state of nature” into the fabric of government policy, the better to bind participants to the state.

To advocates of laissez faire, the whole edifice of modern ideology and politics looks like nothing other than a long con.

Meanwhile, the system does not fall into utter chaos because of the resilience and productivity of the markets — the freedoms — that are allowed. It is obvious that our modern churning states have survived for decades, though their sustainability over a long run (which we may be approaching an end to) is certainly questionable.

Unquestionable is the extent to which these policies have altered human culture and moral perspectives. The changes in this latter have been vast . . . some good, some bad.

The dream of laissez faire still remains a mirage-like goal, on the whole.

twv

In any election in which the complexion of the major-party campaigns makes a minor-party run look plausible and more hopeful than usual, multiple minor-party and independent candidates will see that advantage and dilute the effect, thereby diminishing the minor-party advantage.

I wrote about this years ago, though I cannot find where it was published. Back in my Liberty days. Oh, well. The Evan McMullin gambit in this election, as in the John Anderson media-backed run in 1980, shows why the minor-party strategy is such a nonstarter. And surely this wisdom should inform Libertarian Party strategy.

The law, above, by the way, should sound very familiar to economists. It looks a lot like the Efficient Market Hypothesis, doesn’t it? Or Stigler’s Equilibrium Always position.

Yes, I know. This is a fairly obvious point, but I’ve not seen it made in the Public Choice literature I’ve read.

twv

picture-4

A Paul Krugman column is usually a carefully constructed memetic trap. If you accept his terms and assumptions, he will nab you.

Krugman’s Monday column is a fine case in point. He is trying to shill for Hillary Clinton, again, and he is doing so, this time, by attempting to dissuade youngsters from voting for Libertarian Gary Johnson. As I start typing, I have only read the first paragraph and the title. Still, I can already say what one often can say about this “economist’s” columns: he is not thinking like an economist.

First, the title. Normally, one should not blame a writer for a published title. Magazine and newspaper editors usually reserve titling for themselves. But Krugman is a Nobel Laureate. He surely has control, here. He is one of the New York Times’s true “stars” . . . which says a lot about the state of the New York Times. But I digress.

The title is “Vote as if It Matters.” Now, whenever you see, in print, a command — particularly a command to you, the reader — ask why. Challenge it.

This applies to my command, above. You, the reader should question my authority. And certainly Krugman’s.

“As if” constructions imply pretense. In football we were screamed at, by coaches, “hit as if your mean it!” I did not mean it, I can tell you. So I pretended to pretend I meant it.

The title gives you a clue: your vote doesn’t matter . . . in the way you might be inclined to think. Indeed, it does not matter in the way the author, Krugman, assumes. You can tell by the terms used: do x “as if” y matters. But what if y — contrary to assumptions — doesn’t matter? You are not supposed to think that.

But: think that.

One of the most important contributions economists have made to the theory of democracy is the realization that votes are not valued for their ostensible utility in producing an outcome, not like spending one’s dollars. You spend a dollar, you get what you pay for. You vote, and . . . you get what a plurality or majority of voters at large voted for, not necessarily, or in any way causally, what you voted for.

When you spend money, your money is productive of the goods received. Votes do not have that same instrumental value . . . to the voter. (Votes en masse of course have value to politicians and partisans and ideologues. But that is very different.) A single vote does not decide an election. Therefore, its value has to derive from something else. An expression of one’s preference, a signal to other voters, a rite that one goes through to feel at one with a movement outside oneself? All plausible. But the value of a vote, in terms of its direct economic benefit, is well nigh zero.

So when Krugman tells you to “vote as it if matters,” he is telling you to treat your vote in an unrealistic way, to vote in a manner in which efficiency and productivity can mean nothing to you directly.

Some economist.

Why does he want you to vote unrealistically? Because he wants you to over-value your vote, to make you feel responsible for an outcome you did not cause.

Keep this in mind as you consider his argument, set out clearly in the first paragraph:

Does it make sense to vote for Gary Johnson, the Libertarian candidate for president? Sure, as long as you believe two things. First, you have to believe that it makes no difference at all whether Hillary Clinton or Donald Trump moves into the White House — because one of them will. Second, you have to believe that America will be better off in the long run if we eliminate environmental regulation, abolish the income tax, do away with public schools, and dismantle Social Security and Medicare — which is what the Libertarian platform calls for.

Now, I do believe that there would be a difference between a Hillary and a Donald presidency. Most people do. But what that difference is, I have only a few clues.

With Hillary you get a corrupt warmonger in dubious health and mentality, and with Trump you get a shoot-from-the-hip mudslinger with goofy protectionist ideas. Whether their administrations would be light years apart in policy and tenor, or just a few inches, we cannot know. My suspicion that Donald Trump is in reality a mere centrist Democrat, perhaps as far left as Jimmy Carter, has not been falsified by much. His rhetoric sounds different, but remember: Trump is mostly pretense. He is the former star of a TV reality show. He has put on an act. And run with it. For reasons saddening to me, American men, especially, have fallen for it. Hillary, on the other hand, is not a good actor, but she is a liar. A known liar. A proven liar. But then, she is a politician, and while it is not true that all politicians, like Cretans, always lie, all politicians do lie. And she has learned how to get away with it. Partly she has gotten away with it because so many women of the professional and educated classes want to see a woman in the Top Banana seat, to the exclusion of all sensible standards.

But the crucial thing is, regarding voting: no vote you cast, for Hillary, for Trump, for Gary Johnson, for Marvin the Martian, will give the election to either Trump or Clinton. The assumption that Krugman’s first point rests upon is that you, the voter, are somehow responsible for the outcome of an election, and that to prevent something bad from happening, you must do something about it.

Nonsense. And Krugman, being an economist, knows it. He has laid a trap. You, the reader, are supposed to walk into it, and do as he says.

Krugman’s second point is even more absurd. Not only does he hold a voter responsible for the outcome of choosing a candidate, to guilt or shame or spook the voter to voting in a certain way, in his second point he not only does that, but holds a candidate responsible for his party’s complete platform. Since Gary Johnson has publicly repudiated some elements of the Libertarian Party platform — he has reassured us that he has no interest in getting rid of the safety net, Medicare and Social Security especially, that we just have to keep the welfare state intact — Krugman’s second point is hardly plausible at all.

Consider: if it had been discovered, in 2008 or 2012, that Obama was at heart a communist, should non-commie Democrats have not voted for Obama? Maybe they liked a halfway measure like Obamacare, but not full single-payer healthcare. Would Krugman have discouraged those Democrats from voting for Obama? No. He would have argued with them that, even if Obama had wanted to turn most of the economy over to the State, he could not get away with it, there being checks and balances in American governance, after all — so, well, don’t worry!

Most Americans are not libertarians. So why should a young non-libertarian vote for Johnson and Weld?

Well, that is a good question. Why should any non-warmonger vote for Hillary Warmonger Clinton? Why should any free trader vote for Donald Protectionist Trump?

And yet many of each type do.

Krugman is not asking deep questions of motives and democratic systemics. He is trying to persuade his younger readers not to look behind the curtain. For, it turns out, that title was his, no doubt. For he reiterates its instructions:

So I’d like to make a plea to young Americans: your vote matters, so please take it seriously.

The truth is, your individual vote does not matter. What matters is what vast hordes of voters do. So politicians on the stump and ideologues in the newspapers want as many people as possible to vote their way, not necessarily your way, and will use bad arguments to get you to jump into one voting pool rather than another.

I could use economic jargon to explain this, but I think by this time, there is no need. What people thinking about voting have to ask themselves is: why are they voting?

It is not to determine the outcome of an election. If it is, they are fools, dupes. Democracy is nothing like a supermarket. Your “votes” at the Piggly Wiggly yield you positive results, and you can hone your next purchase based on your evaluation of this purchase, just as this purchase was based on your evaluation of the last. But your votes, not determining what you get, become weird signals the precise meaning of which cannot be determined by ballot counters, statisticians, or . . . anyone, including perhaps even yourself, with any precision.

But still, many of us do vote. We engage in a pretense that what we do, individually, counts. In some way. On some level.

When it comes to voting on an initiative and referendum, I vote for the outcome I prefer. But if I neglect to vote in an election, my conscience is clear. I know that my vote has never decided an election. And never will.

Indeed, a few years ago it almost did! I voted for a county commissioner, and the vote count was a tie! Had it been, say, 481-480, with the one extra vote going to my candidate, I could have ascribed some utility to my vote. (How to do that math is, ahem, tricky.) But it was a tie, and the election was decided by a coin toss! My guy picked the reverse, not the obverse. I had voted one way, and got the opposite.

Do you see how much the system is set against any single vote deciding anything?

When it comes to candidates, anyone with a brain in their heads realizes that no one can perfectly represent even one other person, much less all who vote for that other candidate — and no way for all the voters. But the conceit of democracy is that representation does happen.

Since no one represents all of my ideas, I choose the candidate who comes closest, at least on the most important issues to me, offsetting this against a very different criterion, that of who embarrasses me, or offends me, or frightens me least.

For my part, foreign policy and trade policy are the big issues. I believe that a bad foreign policy makes where I live unsafe, and can harm the rest of the world the most, and cause the most moral horror, so I rank that highest. And free trade makes those around me the wealthiest, overall, and leads to greater peace, globally, and greater wealth, globally. That is second.

So, I would never vote for a protectionist, like Trump, or a warmonger like Clinton. The Libertarians represent a move towards peaceful globalism, and that is a distinct good, in my book. So I tend to overlook Johnson’s and Weld’s obvious flaws, on these issues and others, simply because they are generally anti-war and pro-trade.

Krugman is really appealing to this kind of attitude when he talks about, say, privatizing Social Security. He assumes that most of his readers will look at the mere mention of getting rid of (or even reforming) Social Security as crossing a clear taboo boundary.

Amusingly, it was Social Security that really grabbed my attention when I contemplated my first Libertarian candidate, years ago. For Social Security, I saw, was a raw deal: with each generation it increased the burden of paying into it, thus increasing the amount of sheer servility in society, while also increasing the lust to live at others’ expense. But most folks do not understand how Ponzi schemes work, or how a modified tontine might work. And what happens when the government enforces such schemes on everybody. So, Krugman is out to scare youngsters. Whereas I see the Libertarian case against Social Security as just good common sense.

My big advice to young voters is to forget writers like Krugman, who are out to manipulate you with specious arguments and long-ago falsified paradigm assumptions.

Think for yourself.

And vote for the person you want, for the reasons that make most sense to you.

Just do not get caught in tribalism, into thinking that your vote defines you and your commitment to a group, barring other considerations. Of course, groupthink is the norm in politics. For most of the ardent participants, partisanship overrides nearly everything. But look where all that has led us: Democrats offering up Hillary the Corrupt, Republicans offering up Donald the Dubious, and Krugman offering up anti-economic blather.

Because your vote does not matter to you in the same way it matters to others, take the opportunity this opens up to rethink what you have been taught, and the opinions into which, by nature and circumstance, you fell. In other words, think “seriously about what you want to see happen to America.”

But please, first grasp the reality of what is happening, without the prejudicial nonsense from prevaricators and base rhetoricians like Paul Krugman.

 

 

image

The increase in noticeable economic activity caused by new money and below-“natural” interest rates* is often mistaken for progress. But no wealth is increased by these maneuvers. As in all “get rich quick” schemes, in currency and bank manipulation wealth gets shifted from difficult-to-notice holdings into easy-to-notice bustle.

In the case of increasing debt, where the money seems to arrive from the future, this is also an illusion. The money lent comes from some people’s current savings, and, by being loaned at interest, constitutes an investment.

But there is a sense in which wealth does come from the future.

What cheap interest rates accomplish is entice loans that are less likely (than at natural rates) to be paid back in full. The “not paying back” happens either by outright default or partial default-by-inflation.image

So some of the people with holdings lose those holdings to procure for others the present utility of obvious “economic activity” — either consumer spending (in consumer loans), business activity (commercial loans), or infrastructure spending (the problematic investment in “public goods,” usually by contract with private providers — contractors, sometimes the lowest bidders, but often “cronies”).

New money influx and cheap interest rates seem magical. But remember: Magic is all about illusion, about parlaying limitations in attention and our natural cognitive biases to focus on “the wrong things,” thus misconstruing what is really happening.

Most of the magic, er, savvy scheming, promised by politicians is just a form of public fraud.

Such machinations work by misdirection and rely upon our natural attention to “the seen” bustle of industry, not “the unseen” costs and “non-chosen alternate uses”** — and time-lines. The complexity of everyday life thus becomes an impediment to ready understanding, and sets up the substructure that supports modern dirigiste economic policy.

Mundus vult decipi.


* The natural interest rate is the equilibrium rate theorized by Knut Wicksell and his immediate followers, Ludwig von Mises and F. A. Hayek. It is an inter-temporal rate, balancing future and present values. We have reason to believe that markets exhibit some tendencies to find this rate, but some influences on the market, particularly central banks and their political backers, work mightily to scuttle the instantiation of this rate.

** We cannot see counter-factuals. And yet it is by imagining alternate courses of action that we appraise the advantages and disadvantages thrown open to us by our alertness to opportunities. We are creatures for which the non-existence of counter-factuals is a defining feature of our actually experienced reality.

This may be the most astounding thing about what it means to be human. And it because of this that positivism, as is usually conceived, goes off-track. Positivists conceive of facts — facticity — as pertaining to existence. But for beings who choose, contemplating possibility in terms of alternate courses of action, and comparing chosen courses with the unchosen, brings into the world of our consciousness the crucial element of non-existent states of being, states that never actually exist, but upon which our very lives are judged.

twv

image

RobertOwen

How much better for the world would it have been had Robert Owen’s original formulation of socialism been studied and debated in full, rather than overshadowed by the looming monstrosities of writers like Marx and Engels?

Consider the following selection from Owen (see below). There is much that is wrong, here. Much. But it is wrong in interesting ways — far more interesting than the pseudo-intellectualism of Marx’s idiotic inversion of Hegel, or his misguided, historically embarrassing wrong path on track of value. Further, Owen’s own success at making a profit while improving the living conditions for his workers was an interesting example of managerial entrepreneurship. Had he not distracted himself from  out-competing more callous businesses, and thereby spreading a new way of looking at hiring and firing help — and its great utility — he might have changed Britain for the better earlier on.

And killed state socialism in its crib. Read the rest of this entry »

An “Inclusionist” contra Liberty


IMG_5119


In 2011*, Psychology Today presented us with a screed against libertarianism, an absurd array of cliché and error. All this from a man who — to judge by his credentials — should know better. He is an academic who specializes in complexity theory. Yet he seems entirely unaware of the importance that complexity has played in the development of ideological individualism.

It becomes painfully obvious that the author of this sad screed did not do much research. Indeed, the author appears not to understand that his central case against libertarianism was the case for liberty in the classic writings of Adam Smith and Herbert Spencer.

Here is the most relevant passage:

We evolved as intensely interdependent social animals, and our sense of empathy toward others, our sensitivity to reciprocity, our desire for inclusion and our loyalty to the groups we bond with, the intrinsic satisfaction we derive from cooperative activities, and our concern for having the respect and approval of others all evolved in humankind to temper and constrain our individualistic, selfish impulses (as Darwin himself pointed out in The Descent of Man).

Well, yes. As Adam Smith “himself” pointed out in The Theory of Moral Sentiments over a hundred years earlier, and as Herbert Spencer elaborated in many of his books, most especially the Principles of Ethics. Darwin was not advancing a wholly new thesis. He was developing a theme already well-established among his contemporaries. It was, in fact, “settled science.”

Yes, I know, of course: the word “empathy” hadn’t been coined yet. Eighteenth and 19th century writers used “sympathy.” Smith and Spencer were the leading theorists of sympathy in their respective centuries. Their work was well known, and, if a modern sociologist or psychologist appears oblivious, it is usually the result of never having read Smith and Spencer. Few modern sociologists have bothered with Spencer, for instance, since Talcott Parsons pronounced his reputation “dead” in the first pages of The Structure of Social Action. (Later in his career Parsons revived many of Spencer’s ideas, but without citation, without any recognition of what he was doing.)

Herbert Spencer was the first evolutionary psychologist — though this is rarely acknowledged by today’s EP crowd. They do not need to burden themselves with a reputation declared toxic. But Spencer advanced a very complex theory of complexity. And it encompassed ideas his critics pretend are theirs — but usually Spencer’s treatment is more sophisticated.

Consider the obsession with inclusion, which is now the official focus of campus radical ideology, a watchword of the cult of “social justice.” (Spencer wrote merely of justice, and Hayek later followed in his footsteps to criticize social justice as a “mirage.”) Spencer called the inclusionary and loyalty aspects of human cooperation “the ethics of amity,” in the first chapters of The Inductions of Ethics. What our critic misses is what all modern progressives shield from their eyes: in parallel to this in-group allegiance exists a chthonian out-group antagonism, which is just as much a part of our evolutionary heritage empathy and the general sense of cooperativeness.

Spencer called this contrasting set of historically demonstrated imperatives “the ethics of enmity.”

Throughout the history of human civilization, the ethics of enmity has had a huge part in the foundation and structure of social systems. It is inevitable in eras of vast social conflict. And it has always uneasily existed in parallel to loftier, more charitable-sounding pronouncements of amity. And what the liberal tradition — modern libertarianism, especially, which in a sense grew out of Spencer’s work —always tried to do was solve the problems of human discord by rationalizing the terms for peace, making the standards of justice public and limited to a few tasks, mainly regulating when force can be used in society. And the key contribution of this form of individualism, not addressed anywhere in our critic’s analysis, has become the bedrock position of the modern libertarian position: the same standards that apply to individuals must apply to groups of individuals, including people working in the State.

For it is not just selfishness that morality and law must contend with as criminal, but group frenzy and tribalistic suppression of individuals, as well as group-to-group antagonism.

Liberalism, like libertarianism, is an attempt to minimize and control the impulse to go to war, in part by limiting the number of issues over which force may legitimately be used.

Liberty, in the libertarian system — as, more loosely in the classical liberal order of an extended civilization — serves as the moderating middle-point, a marker of equilibrium, among competing interests. It is a constraint not only on the excesses of egoistic self-serving at the expense of one or all others, it also serves as the rational regulator (in rule-of-law terms, in Weber-speak, it possesses rational-legal authority) of in-group/out-group antagonisms. It constrains communal misbehavior as well as individual misbehavior.

From our critic, no peep about this possibility. He appears to be a utopian, hinting that group action is pristine, placing human sin entirely in the “selfishness” category. Blink after reading, and see: the man has a limited view of human nature, apparently thinking that only selfishness is an evil.

To believe this is to be a fool. And a tyrant, perhaps, at heart.

There is one excuse the man could marshal, to explain his witless and inaccurate take-down: Ayn Rand. She muddied things up with “egoism” and “the virtue of selfishness.”

Combined with the author’s Econ 101ish misunderstanding of the place of Homo economicus in market theory, his calumny makes sense . . . in terms of the filiation of his ideas.

But this set of intellectual errors does not justify — cannot be justified— for Liberty is all about constraining both selfish criminality in the individual and the “altruistic” horrors perpetrated by mass man and his obsession with hierarchies.

And the author’s closing gambit is droll, in the context of debate about liberty:

A more serious concern is that the libertarian fixation with individual freedom distracts us from the underlying biological purpose of a society.  The basic, continuing, inescapable problem for humankind, as for all other living organisms, is biological survival and reproduction.

When Herbert Spencer is acknowledged for his extended analysis in this vein (that our critic suggests), he is derided, declared a Social Darwinist.

The level of cluelessness here is astounding.


This particular hit piece popped into my consciousness as a Facebook posting, a blast from the past. Belatedly, I bite. It is a good example of barely intellectual nonsense that academic folks periodically bring out, to  beat back, if they can, skepticism about the nature and functions of the State. They really dislike skepticism about the State, and basically freak out when confronted with an ideology that encourages resistance to allegiance to the modern state, in part by frankly discussing the perils as well as difficulties associated with collective action. The modish progressive, today, looks at “inclusion” as a solution, not as a problem also meant to be solved by the institutions of a free society.

The original draft of this essay appeared on the Herbert Spencer’s Shade Facebook page.

twv