The Real Blunder of the Sixties

The sensible Robert Samuelson has a piece out today about the economic blunder of the 1960s.  He writes:

Until the 1960s, Americans generally believed in low inflation and balanced budgets. President John Kennedy shared the consensus but was persuaded to change his mind. His economic advisers argued that, through deficit spending and modest increases in inflation, government could raise economic growth, lower unemployment and smooth business cycles.



None of this proved true; all of it led to grief.

OK.  It's true, as far as it goes.  Although there have always been advocates of "cheap money" and there always will be. Sometimes they get the ear of politicians, and sometimes they don't.



It is true that, by giving itself permission to borrow and print money, America's ruling elite basically exempted itself from rules of prudence.  It swept away an important political excuse, as in "Gee fellas, I'd love to spend more money on your pet program but it would involve deficit spending, and that would be wrong."



But the real blunder is the whole idea that major social functions should be performed by government.  It is just not true that there is a need for a compulsory program of national retirement savings.  Most people are pretty prudent; once they get their kids raised they start to save for retirement.



That goes for health care and education, too.  Women are passionately engaged in health care for their family, and drive family spending to budget for health care.  Ditto education.  If the government weren't delivering health care and education then people would do it on their own, like the middle class did before the invention of the welfare state.



Of course, all these social functions would be different if government didn't do them.  They would involve a lot more personal involvement.  People would volunteer at hospitals and schools and give money to them; they would help their relatives with hospital bills and school fees; they would belong to fraternal organizations that provided social benefits to their members.  That is what middle-class people used to do.



But the ruling elite decided that they wanted to run all these social functions.  They would use government and the tax system to organize and fund it all, and they would use university experts to plan and structure the programs.  And when they got in a jam they would borrow a little money.  When they got into a recession they would print a little money.



That is what Keynesianism is all about.  It is all about the welfare state pitcher trying to get out of a jam.  A little spit, a little scuff, and he should be able to throw a strike and make that last out.



The trouble is that, after a century of spit-balls and scuffing, the Keynesian ball is such a mess that today's pitchers can't deliver that crucial out.



Ten years ago Robert D. Putnam set our liberal friends tut-tutting with his Bowling Alone.  He mourned that America was hollowing out because people weren't "joining" any more.  Of course liberals completely missed the point.  Humans join organizations not because they like joining up but because social organizations help them to live and thrive and help them when they need help.  But with the welfare state and its bureaucratic provision of all the social functions there is no point in joining organizations for mutual benefit.  It's a waste of time as you merely end up duplicating a function that the government provides for "free".  You might as well just stay home and sit in front of the TV.



The truth is that our liberal ruling class has created a monster.  The more that it taxes and spends the less that people feel responsible for getting out and making a difference, and the more people demand "free stuff" like everyone else.



The bottom line with blunders is that it costs a bundle to set a blunder right.  Usually the cost can be counted both in money and in heartache.  Back in the 1980s Ronald Reagan gave us a chance to correct the blunder after the stagflation of the 1970s, but liberals refused to reform their welfare state and their "free stuff" subsidies.  Today, the politics of President Obama amounts to "free stuff" politics on steroids.



So now we have to go through the horrors of 1979-82 all over again.  Only this time it is hurting a lot more than back in the early days of the Reagan revolution.  That is because we are in a bigger hole this time.



Will liberals learn their lesson this time?  We can but hope.  Here is an idea. Eight years of a Republican in the White House and a Republican Congress would go a long way to changing their minds.

Keep On Higgsing

The discovery of the Higgs boson is a great achievement for physics.  Whether the discovery is the Higgs boson or a Higgs-like boson is besides the point.  The characteristics of the products of proton-proton collisions at the energy levels in the Large Hadron Collider near Geneva will doubtless expose anomalies that will partly confirm and partly challenge current theory.



Of course, at the layman's level, with its metaphors of "particles" and "zoo," we really don't have a clue what is going on.  After all, we are dealing with a micro world where there are no particles.  There are quanta of energy and some of the quanta have mass, whatever that is.  The whole thing is a morass of mathematics and the particles and fields are just convenient metaphors.  Everything is a question of probabilities until there is an observable event. The Higgs boson is associated with the Higgs field and is supposed to explain why some quanta have mass and others don't.



In my layman's view, all the narrative around physics is the same as Plato conjuring up his cosmology in the Timaeus.  It takes current knowledge and recklessly extends it towards an explanation of the eternal mystery of the meaning of "life, the universe, and everything."



But all science ever seems to do is unfold even deeper mysteries.  Today, as we wrap up the Standard Model of 20th century physics, we already have a mystery waiting in the wings.  As one physicist put it:

"Even if we find out that this is indeed, to the best of our ability to measure, the Standard Model Higgs boson, there are all these other questions that are unanswered. One of the first questions is: What composes the dark matter in the universe? There's no room in the Standard Model of the universe to make up the dark matter, so we have to look at other candidate alternatives."

So we are at the same position as we were over a century ago when the Michelson-Morley experiment of 1887 revealed that the speed of light always checked out the same.  According to the best physics at the time, it ought to be different, depending on its orientation to the "ether."   If the speed of light is the same in all directions, what does it mean?  A man who was then 8 years old came up with the shocking answer.



Every time we make a big breakthrough in physics, we pretty soon find that there is another mystery confronting us.  That is why philosophy has abandoned "foundationalism."  We don't know the basic building blocks of the universe.  All we know is that we have science that checks out at observable energies.  Knowledge is good until it gets updated with something new and improved.



Meanwhile the physicists need to come up with a rationale to keep their big toys going and maybe come up with a reason for something bigger and better.  I wonder what they will propose.

Why Liberals Like ObamaCare

Last week I picked up a copy of James C. Scott's Seeing Like a State on my way from Seattle to Ashland, Oregon.  It had been on my Amazon Wish List and so when I went into Powell's I was looking for it.



But how had it got on my Wish List?  I checked and I see it's because I read a piece by Jonah Goldberg back in April.  Now that I have read it, I can say that, like Jonah, Seeing Like a State has "left a lasting impression on me."



Let's have Jonah tell the story.

If there were one thing I could impress upon people about the nature of the state, it’s that governments by their very nature want to make their citizens “legible.”...



The premodern state was “blind” to its subjects. But the modern state was determined first to see them, and then organize them.

Sound familiar?  This legibility project involved a host of efforts, from mandatory surnames to changing land tenure from communal to freehold.  Why?  Because a person with a surname is easier to find.  A freehold is easier to tax than a village with a word-of-mouth understanding of who owns what and why.



At a basic level, the state need to be able to "see" its subjects in order to tax them and conscript them.  An Asian state with rice cultivation needs to identify and control the people working in the paddy fields.  A modern industrial state needs to know all about its economy so that it knows how much it can spend on buying peoples' votes, or how much national debt it can afford.



There is no end to this.  The state pretty soon decides it needs to run the education system so it can generate productive workers--and also make sure that they learn the right history.  It decides that it needs to vaccinate to control infectious diseases and know who has and who hasn't been vaccinated.  From there, it decides it needs to provide basic health care to keep its workforce (and possible soldiers) strong and healthy.



Pretty soon you get to Obamacare where the government wants to monitor and control everything about healthcare.  Here's what is in store for doctors under ObamaCare according to Daniel Henninger.

[It's the] Physician Quality Reporting System (PQRS), lodged in the Centers for Medicare and Medicaid.



Here's the Centers' own description of what PQRS does: "The program provides an incentive payment to practices with eligible professionals (identified on claims by their individual National Provider Identifier [NPI] and Tax Identification Number [TIN]) who satisfactorily report data on quality measures for covered Physician Fee Schedule (PFS) services furnished to Medicare Part B Fee-for-Service (FFS)."

See what is going on?  The physicians will be required to report their activities to the government so the government can figure out what is going on in healthcare--make it "legible"--and control it.



It is exactly as Scott writes in Seeing Like a State.  In Scott's view, the way this government imperative works in the modern state is that it wants to reduce everything to a rational system, like mass production in the industrial corporation.  Only, of course, these days the huge bureaucratic corporation is going out of style.  People talk of rapid-response, flexibility, print-on-demand, etc.  And there is F.A. Hayek who argued that big bureaucracy was inherently flawed because it could not know as much as thousands of workers or millions of consumers.



If the government is not to be all-seeing and all-powerful, then we need to restrict its right to know everything about us.  Our liberal friends talk a lot about "privacy," but they usually restrict it to sexual and political matters.  They don't want the government to know what they are doing in the bedroom or in the activist group.



But liberals don't care about privacy in economic matters.  That's why they support massive centralized systems to control pensions, healthcare, education, and welfare.  That's because liberals are the modern ruling class and that makes them "see like a state."



When conservatives call for strengthening civil society they are calling for reducing the legibility and visibility of individual citizens.  That's why Berger and Neuhaus wrote about "mediating structures" to shelter individuals from the "megastructures."   All they are proposing is to restore the protections that village communes and medieval guilds used to provide.  But the modern state did away with the old mediating structures precisely because they prevented the central government from knowing about individuals and controlling them.



Of course, the horse has left the barn on that, centuries ago.  But it is clear that individuals need to be protected from the power of the state.  What other way is there than a civil society that restricts the visibility of the individual to the state and restricts state control?



We also need to see that the market reduces the need for the state to make the individual visible and legible, because the market economy is a system where economic actors produce and serve and buy and sell.  We don't need to see inside the head of a trader, and we don't need to see inside the boundaries of a corporation.  We just need to be able to trust them.  In the market economy it is perfectly OK to have companies and corporations that throw a veil over many of their internal activities.  But certain facts need to be public, such as income, equity, debt, etc.



Back in the Soviet Union they pretty well destroyed the Russian peasant world in a crazed effort to make it organized and visible and to tax it with grain seizures to pay for its forced industrialization.  But many social activities just cannot flourish if they are organized like a bureaucracy and simplified down to one-size-fits-all.



If we learned anything from the Soviet Union it is that an individual that is completely visible to the state is an individual that is completely in the power of the state.



Conservatives have the answer, of course.  It is that the government welfare state should be broken up and returned to civil society institutions.  Government really shouldn't do anything unless it absolutely requires force: national defense and internal policing.  And when it sticks to that it doesn't need complete visibility and legibility, to know everything about every single individual.



The problem is how to persuade the American people, especially those hooked on "free stuff."  Which is just about all of us.

My Faith in America

When plotting to hoodwink White Snake's husband, after he has unfortunately seen White Snake in her true form, White Snake and Green Snake agree, in Mary Zimmerman's The White Snake, to tell him that he didn't see what he saw.  "Believing is seeing," they say.

So it is with these United States of America.  If you believe that "Life, Liberty, and the Pursuit of Happiness" is a good thing then you will look out at America and see that it it good.

Or you could believe that human Life is a disease on this fragile Earth, that Liberty is nothing but selfish individualism, and the Pursuit of Happiness is nothing but feckless hedonism.

The way you look at America depends on how you look at the world.

There are two modern beliefs that dominate men's minds today.  One is the Invisible Hand of Adam Smith.  It argues that, in order to meet our selfish needs, humans must work to satisfy the needs of others.  On this view the "inalienable rights" of Life, Liberty and the Pursuit of Happiness are mild and beneficial, for they urge us to cooperate with our fellow humans, but without the yoke of compulsion.

There is another modern faith; it is the Exploitation theory of the left.  On this view society is irretrievably broken.  The laborer cannot earn the full fruit of his labor because its full value is siphoned off by his employer and only a fraction returned to him in wages.  Workers are therefore coerced into working for others to stave off the pangs of hunger and experience their work as alienation from their true metier.

Notice how these two faiths essentially agree.  If you want to eat, you have to work.  The Invisible Hand idea says that this is a good thing, for it encourages selfish individuals to be social.  The Exploitation idea says it is a bad thing because it forces people into working for others.

So with the American troika of Life, Liberty, and the Pursuit of Happiness.  Human life is a blessing, according to Christians, or a curse, according to environmentalists.  Liberty is a blessing, according to libertarians, or a curse, according to socialists.  The Pursuit of Happiness is all-embracing, according to optimists, or narrowly selfish, according to pessimists.

But we Americans, those of us that believe in American exceptionalism, believe in Life, because that is what living things are for, to live life and produce new life.  We believe in Liberty, because Liberty is creative, expansive, generous and good, while compulsion is cramped, narrow, brutish, and short.  We believe in the Pursuit of Happiness, because that upward, hopeful gaze is the very essence of what it means to be human.

Arthur C. Brooks in The Road to Freedom argues, from modern social science, that the Pursuit of Happiness has two components.  The first is the pursuit of meaningful work and earned success.  Not just any success, for unearned success doesn't make us happy.  The other component is giving.  If you want to be happy then you have to give.  This is not new.  The Methodist creed was: Work all you can, save all you can, give all you can.

Now go back and look at the two modern world views: the Invisible Hand view and the Exploitation view.  What do you think?

Understanding the Intimidation of Justice Roberts

Whether or not Chief Justice Roberts changed his mind about ObamaCare because of liberal media intimidation doesn't change anything.

The fact is that all politics is civil war by other means.  Different groups have different power centers.  When you are fighting the political wars you cannot just do frontal assaults like World War I.

By the end of World War I the Germans figured out how to attack an entrenched line.  You divide up your assault force into small squads, each led by an NCO.  The job of the squads is to find the soft spots in the line, penetrate them, and then call for reinforcements.  You have to hit the enemy where he is weakest.  Otherwise you get defeated.

Same thing goes for conservative politics.  We cannot expect to win with a frontal assault on liberalism in the Supreme Court.  That's because the present ruling class is not a landed ruling class or a business ruling class; it is an educated ruling class.  If the Supreme Court ruled against ObamaCare 5-4 the educated ruling class would combine to utterly destroy the intellectual basis of the ruling.  It wouldn't matter how specious and mendacious the attacks would be.  The conservative court would just get overwhelmed.  And then where would we be?

Whatever the strength of conservatism, it cannot concentrate in the intellectual strongholds of the educated elite.  It has to concentrate elsewhere and then storm the liberal strongholds.

The overriding goal of the conservative movement is to overthrow the current regime of big-government hegemony, the "internal colonialism" of a wise and beneficent Oz that knows better than the people how to organize life in this advanced and complicated world, a world too complex and too bewildering for ordinary people to navigate without expert supervision.  Colonialism is colonialism, whether conducted by the British in India, local strongmen in Africa, or liberals in the United States federal government.

There is a role for experts in our modern society.  But the lesson of the 20th century is that you don't want the experts in an unholy coalition with the politicians.  Why is that?  Because when you build anything, from a building to a social program, you will probably build it wrong and have to change it.  Government is singularly ineffective at responding to problems with timely solutions.  There is a simple reason for this.  Government is force; it can only deal with problems that have got beyond mere disagreement.  It is the agency for imposing solutions, not working them out.

Modern conservatism has build an intellectual system that experiences government as a force that needs to be limited to the problems that really need force, like Commies on a world-wide expansion or single young men on an urban rampage.  But liberals won't listen to us.

So what do we do?

First of all, there is good news on the ideas front. In the last 50 years, many left-wing writers have given us ideas that confirm and validate our conservative instincts.  Horkheimer and Adorno said that the much vaunted Reason of the Enlightenment is a force for domination of Nature and other men.  Juergen Habermas has extended their analysis and called for the development of the person-to-person "lifeworld" of communicative discourse as against the dominative "system" world of instrumental reason.  Now we have professors like James C. Scott taking the ideas of Michel Foucault--originally intended as a critique of bourgeois capitalism--and applying them to "high modernism," the rigid bureaucratic systems of Le Courbusier and Lenin.  We have Jonathan Haidt discussing the various different ways in which moral discourse is developed and how liberals are deficient.  We have the Relational Model of sociality developed by Alan Fiske and the ideas of civil society developed by Lawrence E. Cahoone.  They all show how the bureaucratic centralism of the welfare state is ineffective and fails to conform to mankind's nature of social animals, and they are all ready to blossom when we get into a situation where the Liberal Ascendancy starts to totter.  These thinkers tend to be "esoteric" in the Straussian sense.  They are careful not to offend the educated ruling class, but anyone can take their ideas and apply them directly at the cruelty and injustice of the liberal welfare state.  

Meanwhile we have the conservative movements of resistance.  The notion of "resistance" is another left-wing concept, usually applied to their favorite victims and as often as not used to describe movements that are not movements at all but AstroTurf rent-a-mobs organized by community organizers.  The other day I wrote quickly about three conservative movements of resistance: the pro-life movement, the Second Amendment movement, and the Tea Party.  You will notice that these are all movements that are actively scorned and marginalized by our liberal friends.

But there are other movements of resistance.  There is the home-school movement.  There is the anti-global-warming movement.  What do these movements have in common?  They are all focused in different ways on resisting the centralizing power of the educated ruling class.

A friend once asked why Americans were anti-intellectual.  The answer is that Americans dislike the power of the intellectual ruling class.  They understand that the the intellectual ruling class is a force opposed to them and their way of life.  So they know they must fight it.  Nothing personal, of course..

The Problem with Helping the Little People

It's a wonderful notion, using the power of government to help the little people. Think of the long ages of Man, and how all the time the rich got richer and the poor got poorer. (Actually, everyone below the firstborn rich son got poorer).



Now with beneficial progressive legislation, we can help the little people.



Only the trouble with big government programs is that you always seem to end up benefiting the big boys as well.  Take state government pensions, as described by Walter Russell Mead.

The biggest scam going in American financial life may be the collusive effort by Wall Street, the political class, and public sector unions to use union retirement money to prop up Wall Street speculation.

Come again?  Here's how it works.  Government pension plans assume high returns:  Some states assume as much as 8.5 percent.  Well you can't do that with bonds, so the pension funds hire Wall Street managers to invest in risky hedge funds for a higher return.  And that means that the Wall Street guys charge higher fees.



Unfortunately the Wall Street hot-shots are not bringing in hot-shot returns.  Calpers, the California state pension fund has only delivered 3.4 percent return over the last 5 years.



But the state isn't off the hook, of course.  It is still obligated to pay the pensions.  Only now it doesn't have any money.  So it will raise taxes or cut services. Or both.



See how the little guy does in all this.  Government employees are already well paid, usually earning 25 to 50 percent more than equivalent workers in the private sector.  Then they have almost guaranteed lifetime employment.  The politicians benefit because they get to collect campaign contributions from the grateful government employee unions.



But the little guy, the guy without the bulletproof government job and lifetime job security:  he's the chap supposed to pay for this.  And he is the guy that has to do with less government services when the cuts come.



Then there is Medicare that goes to the richest Americans, and Social Security that goes to middle-class Americans like me that ought to fund their own pensions out of their own savings.  There is university education that is a gigantic middle-class subsidy--both for the middle-class students and the middle-class professors that get to do cool stuff courtesy of the average taxpayer, and the middle-class administrators that direct traffic to achieve nebulous diversity goals.



The problem with government is that, however it starts out, it always ends up tipping cash into the pockets of the powerful.  That's because the powerful have the money to get the attention of the politicians, and money is the mother's milk of politics.



It's such a blooming shame.

How the Left Screws the Poor

The Left is always saying "It's the right thing to do," writes Michael Walsh.  But what does it mean?  Usually, it just means that the Left wants it.

[T]here is in fact no moral basis for the Left’s bogus morality; it’s just its usual lust for power dressed up in Judeo-Christian trappings in order to seduce the gullible, the devotional, and the feeble-minded.

Actually, he's wrong.  The Left does have a moral basis for its program.  It is what I have called the Exploitation narrative.  In the general case, it says that because there is inequality there must be injustice, and the government must act to mitigate the inequality and the injustice.  In the specific case, it says that some people can't afford health insurance, so we must force everyone into a one-size-fits-all government program to ensure that everyone can afford health care.  It's the right thing to do.



On the other hand, he's right.  If you are a political activist with a lust for power, the Exploitation narrative gives you a carte blanche to rage against almost anything and propose an increase in government power as a solution.  You can't really tell whether the lefty in question is really fired by a rage for justice or a rage for power.  He would be saying the same things in either case.



The problem is that the Exploitation narrative doesn't lead to justice.  It leads to ObamaCare.  You may say that you want to help the people who can't afford health care, but you end up with Springtime for the Special Interests.  Jay Cost:

[T]he individual mandate represents an enormous transfer of wealth, completely independent of income or social status. It transfers resources from the healthy to the sick, from the young to the old, without regard to who has more money to begin with.

On top of that, the Obamis, in building support for ObamaCare have had to buy off a whole rainbow of special interests from the docs to the nurses to Big Pharma.

Medicare is like Obamacare too.  It takes money from the workers and gives it to the seniors, irregardless of wealth.  Some seniors are poor, but most seniors have carefully saved for their retirement, and are much richer than the young folks that pay the payroll taxes.

Then there is government education.  Guess which schools are the worst in the nation: the ones that serve the poor.  Guess who don't send their kids to the local schools: middle-class inner-city teachers.





You may start your fight against inequality with the best of intentions, but you end up servicing the special interests.





Now I feel personally that the Exploitation narrative has been rather overdone, certainly where it is invoked to de-legitimize the workings of the free market.  The free market is like democracy.  It is the worst system of economic cooperation you can imagine, except for the alternatives.  The free market is a mess, but it eventually works things out.  Even lefty Juergen Habermas in The Theory of Communicative Action agrees:

The market is one of those systemic mechanisms that stabilize nonintended interconnections of action by way of functionally intermeshing action <i>consequences</i>[.]

If the market will work things out, then we should be careful about applying the Exploitation narrative.  The Exploitation narrative should only be applied to the grossest kinds of exploitation, like slavery and serfdom. 



Once you start applying the Exploitation narrative to affordable housing and affordable health care, you enter a wilderness of mirrors, and you will probably end up comforting the comfortable and afflicting the afflicted.  Guess who made out like bandits in the affordable housing mania?  Wall Street, with big bonuses and bail-outs.  Guess who lost their shirts?  Ordinary American underwater homeowners.



Let's sharpen this idea further.  You should only apply the Exploitation narrative to naked injustice due to direct government policy.  Things like slavery, racism, monopolies, subsidies.  There may be reasons to help people with government programs, but the rectification of inequality is not a good reason.  That's not because inequality isn't a shame, and isn't unjust.  It's just that the record of government on inequality is miserable; it almost always gets it wrong and gets captured by special interests.



On the other hand there is the competing narrative of the Invisible Hand.  Since Adam Smith invented the concept, average daily per-capita income in the developed West has gone from $1-3 per day to $120 per day and more.  What about the US?  According to usgovernmentspending.com, GDP in 2011 was $15.6 trillion and population was 314 million.  That's $136 per person per day.



President Obama is conducting a national experiment to demonstrate what happens when you concentrate on the "the right thing to do" according to the Exploitation narrative and ignore the Invisible Hand narrative.  



What a surprise.  You get a stagnant economy and huge deficits that lead to sovereign default.  And guess what happens then?

It's the same the whole world over

It's the poor what gets the blame

It's the rich what gets the pleasure

Ain't it all a bloomin' shame?

Pity about that.