When the Ruling Class Gets It Wrong

What do you do when you are ruled by an upper crust that is getting it wrong, and doesn't know what to do?



Our ruling class has messed up the financial system, has messed up the health care system, has messed up the education system.  But they don't know what to do about it, except keep on keeping on.



That's the reality of life today.  Our ruling class, from liberal to semi-conservative, believes in a top-down administered society.  The ruling class sets up programs, from pensions to banking to health care, using the ideas from the best minds available, and then goes on to the next gig, on the assumption that they have solved the problem in question.



But the basic problem of human existence is that you can never just set up things and then go on to the next gig.  Human life is a constant adaption to changing conditions, whether it is life as a hunter gatherer, an agricultural worker, or an industrial mass-production worker.  Someone has a bright idea, and everyone adapts.  But the bright idea is not the answer to everything; it is not even the answer to one thing.  Pretty soon people realize that the new idea, while good on the whole, has created some unexpected problems.  So we need to change and adapt.



But the problem with government is that the Stage 2, the unanticipated consequences, are almost impossible for government to deal with.  The system is already in place.  The ruling class has gone onto the next gig.  What do you mean there is something wrong?



The problem is that politics and government have a very small bandwidth.  Whereas millions of consumers and thousands of producers can make daily adjustments in their behavior, a national government is a committee of 535 people.  And its laws direct the government bureaucracy to produce uniform decisions based on a rulebook of regulations.  Forever.



People in government respond to all problems as a loss of control.  Soaring health-care costs are due to out-of-control insurance companies.  Financial crises are caused by greedy bankers or reckless speculators.  What's needed is a more rigorous system of control, to make sure that the bad actors don't go rogue.  So we get Sarbanes-Oxley when a couple of corporations start cheating when things go south.  We get Dodd-Frank when the government's subsidies of home mortgage lending put the whole economy underwater.  We get Obamacare when people respond to the natural incentives to their first-dollar health insurance by treating health care as a free resource.



But what do you do about it?  Here we are marching to disaster, and nobody is doing anything about it.  The truth is that there is nowhere for all of us to hide from the march of folly.  When the bust-up comes we will all suffer the consequences.  And we will all be called upon to help those utterly devastated by the collapse and the turmoil.



I guess that the only thing to do is to keep your ship ship-shape, with the masts properly stayed, the rigging properly renewed, the sails new, the hull caulked, the engine properly maintained, the food well protected.



And you keep telling the world that it doesn't have to be like this.  We know how to keep an economy on an even keel.  We know how provide for the poor.  We know how to protect the environment.  And we know how to do it all without big government.



So why don't we just do it?  Because we are all too human.  We believe in a world of good and evil, and we are eager to punish the evildoers identified by our leaders, be they bigots, greedy bankers, Marxists or union thugs.



Maybe we should stop searching for villains and just get to work.

Jack Kemp and Minority Outreach

Let's get back to the days of Jack Kemp, says Larry Kudlow, and reach out to minorities.

Nobody, in my lifetime, in either party, has reached out with a message of hope, growth and opportunity to minorities better than Jack Kemp. 

While Jack Kemp reached out to middle-class whites with tax rate cuts, he reached out to minorities with goodies like Enterprise Zones in big cities.  You got big tax breaks if you moved a business into an Enterprise Zone.  With that sort of policy, Kemp could reach out to black liberal pols like Charlie Rangel and race-based interest groups like La Raza.



But that misses the point.  Great: Jack Kemp could get blacks and Hispanics to buy into free stuff, Republican style.  But did it do a blind bit of difference to move blacks and Hispanics off the Democratic plantation?  Not at all.  The fact is that the overwhelming majority of black and Hispanic voters respond to free-stuff and racist identity politics.  Maybe Republicans can peel off a few percent of the vote to make a difference in a close election.  Nothing wrong with that.  It just doesn't change the politics of America.



The fact is that blacks and Hispanics think in terms of patronage politics.  They think in terms of attaching themselves to a powerful patron and dining off the scraps from his table.  They experience themselves as weak and helpless in the brutal business of the city, like every newly-arrived immigrant group in the US for the last 150 years.



Typically, after a generation or two of struggle, the immigrant group rises into the middle class and its members begin to experience themselves as competent and responsible selves.  Then they find that the Democratic Party doesn't do it for them; they say, like Ronald Reagan, that they didn't leave the Democratic Party, the Democratic Party left them.



Thus the Religious Right came over to the dark side when the Dems went anti-religion, and now working-class white men after the Dems decided that working-class whites were the ones to pay the price for centuries of racism.



The strategic problem for conservatives is that liberal politics amounts to a cunning plan (whether deliberate or not) to keep "women and minorities" in a permanent dependency status, sucking on the government teat forever.  So it seems that they will never rise to a competency, and come to believe that the government is a wasteful cesspool of corruption.



So what should conservatives do?  Well, one thing would be to wreck the finances of the welfare state. That's the subtext when David Stockman, Reagan's Budget Director, rails at Republican policies in his new book, The Great Deformation: The Corruption of Capitalism in America, excerpted in the New York Times. He even takes off after Ronaldus Magnus:

The destruction of fiscal rectitude under Ronald Reagan — one reason I resigned as his budget chief in 1985 — was the greatest of his many dramatic acts. It created a template for the Republicans’ utter abandonment of the balanced-budget policies of Calvin Coolidge and allowed George W. Bush to dive into the deep end, bankrupting the nation through two misbegotten and unfinanced wars, a giant expansion of Medicare and a tax-cutting spree for the wealthy that turned K Street lobbyists into the de facto office of national tax policy.

Gosh, you'd almost think the evil Republicans wanted to crash the government's finances!



But maybe it's working.  After all, President Obama, like a deer in the headlights, has kept the entitlement state going full speed ahead towards the icebergs of Greece and Egypt, without a thought of shaving a bit off the government fisc to make room for growth.  Without a course correction, Captain Obama will crash the welfare state, and women and minorities will be hardest hit.



Make no mistake.  A rising middle class of African Americans and Hispanics needs economic growth.  Newcomers to the economy need newcomer opportunities.  They need spaces left by the established classes, leads in the ice, into which they can rush and grow and thrive.  Think of the Jews creating the movie industry.



The problem is that newly arrived immigrants have never believed in the capitalist road to economic competence.  They always believe in the charismatic leader, the FDR, the Hugo Chavez, the Barack Obama.  And very often they keep on believing in face of the evidence.



But there is hope.  Usually, by the middle of a second term the "low-information" voters are ready for a change.  Things just don't seem to be working out for them, and they get restless.  With Obama safely reelected we are now reading that black leaders are starting to get restless about black unemployment in the Obama economy.



And in the end, the folks that believe in a miraculous political solution to their problems give up on politics and go back to work.



Jack Kemp was a great guy, and a great supporting actor in the Reagan era.  But the fact is that he couldn't turn his Kempism into a presidential campaign.  That may tell us something about the politics of minority outreach.

Remember, The Left's God is Liberation

Conservatives are the People of the Responsible Self.  We believe in the dogged and responsible life, working and relating in the real world of growing up, working, reproducing, and leaving an inheritance, material and spiritual, for the next generation.  We do not expect perfection or completion in this life.

But the Left is different.  They are the People of Liberation.  The continuance of struggle is, for them, a scandal.  For instance, Herbert Marcuse in One-Dimensional Man writes that "new modes of realization are needed" in today's society.

Economic freedom would mean freedom from the economy -- from being controlled by economic forces and relationships, freedom from the daily struggle for existence, from earning a living.

You can see that this attitude is at the basis of all the liberal programs to regulate society, from wage-and-hour laws to social welfare programs, to minimum wage laws.  Liberals want to liberate people from the necessities of life.  But for conservatives economic freedom is not liberation but merely the right to conduct the struggle for existence on your own terms.

Meanwhile the true artist, for Marcuse, is transcending brute society in his artistic alienation.

Fiction calls the facts by their name and their reign collapses; fiction subverts everyday experience and shows it to be mutilated and false.  But art has this magic power only as the power of negation.  It can speak its own language only as long as the images are alive which refuse and refute the established order.

This is, of course, the conceit at the heart of the leftist religion: that the left is a movement of protest and refusal against the monstrosities of exploitation and inequality.  What the left wants is a humanity utterly plucked out real life and dropped into a fantasy life, a permanent evening consciousness-raising meeting.

But the human condition is irreversibly one of birth, struggle and rebirth.  We have seen what happens when people get relieved of the struggle for material necessaries:  they invent new struggles to challenge themselves.  Half a millennium ago the rich prided themselves on their leisure and the poor suffered in their work.  Today the rich are incredibly hard-working and the poor repose on their welfare benefices.  What does the successful businessman do after he has made his pile?  He creates a philanthropic foundation and goes to work to give his money away to help other people.  Something is happening in the modern world that is not comprehended in the lefty theology.

We cannot know when the liberal movement of liberation will exhaust itself.  Anyway, the yearning for salvation, according to Eric Voegelin is always in danger of the "immanentizing of the eschaton," the attempt to achieve salvation in this life rather than the next one.  So the current secular religion of liberation will, in time, be replaced by another.

But the current culture war between conservatives and liberals does expose the important issues.  How far should we go to soften the struggle for existence with our mechanical gadgets and our force-multiplying technology?  At what point do we cease to be living humans in time and become something else.  And if we did become something else, what would that mean?

The bottom line for conservatives is that we would rather face these challenges on our own terms, and not be bullied by liberals into their vision of the future.

The Real Deniers

When the global warming enthusiasts started talking about "climate deniers" that was the moment that we all knew that global warming wasn't a science.  It was politics and religion.  Because science doesn't care about good and evil, about right and wrong.  It just cares about the instrumental results: does it work?



Still, science isn't everything.  It may be, as science seems to propose, that the universe has no meaning, but clearly, humans as social animals depend on the notion that life has meaning: they act as if it does.  There may not be "free will" but the cultural meme of the "responsible self" seems to have clear cultural benefit in human culture.



Sometimes, in other words, denial has its virtue.



But the denial of marginal economics and the price system by the Left is not one of them.



It was the classical economists that elucidated the remarkable social benefits of the price system, how it motivates people to serve others and how it corrects mistakes -- the wrong product at the wrong price -- through the cleansing effect of losses.



It was the marginal revolution of 1870 that placed the capstone in the powerful arch of modern economics.  If you need a reason to embrace the importance of the marginal revolution, here's a good one.  About four economists discovered this solution to the problem of use value vs. exchange value at about the same time.  There was Carl Menger in Austria, then Stanley Jevons in Britland, Leon Walras in Switzerland, and John Bates Clark in the US.



Significantly, this revolution cut the ground out from underneath Marxian economics -- with Das Kapital published ten years earlier in 1860 -- which had spun a brilliant labor theory of value and exploitation out of the contradictions between use value and exchange value.



The point is that there is no such thing as absolute value, in use or exchange.  Funny how liberals can opt for absolute transcendental values when needed.  And we thought they were all relativists.



In the economy there are just prices from buying and selling, and people make decisions about buying and selling based not on labor unit or usefulness or the exchange value but on a decision to buy or not to buy at a certain time and a certain place at a certain price.

• Does someone decide to work an extra hour?  It depends on the return on that marginal hour of labor, taxes included, and the perceived value of the forgone leisure, on that day.


• Does someone decide to buy a product?  It depends on the price, and other things that might be bought instead.

If you accept the basic science of the price system and the marginal revolution then you cannot be a Marxist and you cannot be a Progressive and you cannot be a supporter of the liberal administrative welfare state.  Because all these fashionable doctrines require a denial of the truth of the price system and the truth of the marginal revolution.

That's why liberals in the 1980s refused to admit the ideas of supply-side economics and called it "trickle-down" economics.

Arthur Laffer's famous curve in particular had to be marginalized, because it hit liberals right where they lived.  The Laffer Curve says that, if you are a big-government liberal and want to maximize the return on taxes, you ought to realize that higher tax rates do not mean higher tax collections. But, of course, the whole point of progressive politics is to demand that the "rich" pay more.  So the Laffer Curve cannot be true.

The problem with the deniers of the price system is not merely academic.  We have today a nice little piece about Venezuela and the cratering of the economy under Hugo Chavez.

The country that Chavez left us is a country that is financially ruined. True, we still have a lot of oil under our feet and good management can bring us back to a semi functional state in as little as half a decade. But the bonanza of the last decade will have been spent with very little to show for it.  It has been swallowed by corruption, inefficiency and gifts because what Chavez has done is to distribute cash around, never establishing anything productive and sustainable over time. Nothing.

The point is that the price system does a much better job of bringing the poor out of poverty than egalitarian politics -- let alone the particularly thuggish version practiced by Chavez.  Because the only way you bring the poor out of poverty is with the price system constantly jogging businessmen and consumers to improve their game.  Under chavismo nobody improves their game.



Then there are the disappointing returns from the financial transaction taxes recently imposed in Europe, reported by Daniel J. Mitchell.  These taxes, taking about 0.1 percent on the value of each financial transaction, seem to be collecting about 50 percent of the expected revenue.  Faced with the tax, people are doing fewer financial transactions.  Marginalism in action.  Who knew?



Lastly there is the peerless Sen. Elizabeth Warren (D-MA).  She had a lefty up before the Senate Banking Committee to discuss the virtues of the minimum wage laws.  As one critic wrote: "Leave it to an academic to be totally ignorant of the workings of the economy."



There are a lot of liberals running around calling people that disagree with them "deniers" and "bigots."  But for some reason there are a lot of liberals running around that can spout absolutely ignorant things about the workings of the economy without being sent to the dunce's corner.



We know why that is.  Nothing is left of liberal politics if you accept the basic notions of the price system and marginal economics.  And that nobody can deny.

Liberals on the Wrong Side of Main Stream of Life

I agree with Roger L. Simon.  The problem is not gay marriage, it's marriage, and marriage is declining sharply among low-income Americans.



That's the whole point of Charles Murray's Losing Ground.  We, the top 20 percent, the educated class, the ruling class: we are doing fine.  We are educated, married, credentialed, prosperous.  But the middle-income folks are not doing so well, and low-income folks are not doing well at all.  Low-income women are not getting married, not much,  and low-income men are not working, not as much as their upper-income betters.



We know why low-income women aren't getting married.  It's the benefits.  If you are a single woman there are all kinds of government benefits out there for you, Julia, so why not get yours?  Why not marry the state instead of a low-income man who is disinclined to "get out and get me some money / like some other men do," as the song goes.



But if you don't get married and have children more or less in that order you are cutting yourself off from the main stream of life as a social human.



And if you, Julian, don't get a job, and don't marry the mother of your children and support them into adulthood you are cutting yourself off from the main stream of life as a social human.



Same goes for gays and gay marriage.  Look, if you decide to live with a same sex partner, our modern society says OK.  And it makes sense that it should make tolerant accommodation for people that make that choice.  But gay marriage, or "marriage equality" is not going to wish away the basic fact that gays  cut themselves off from the mainstream of life as a social human.



And that is true whatever the settled science about homosexuality eventually tells us about the "gay gene" or the notion that almost everyone is instinctively bisexual.



Last Fall, I voted in Washington State for gay marriage.  But I still think it is stupid.  I am taking the Benjamin Franklin attitude: experience keeps a dear school, but they will learn in no other.  Gays are politically powerful.  They won't leave us alone until we give them gay marriage.  OK.  So now you got it.



What gays will want after gay marriage, God only knows.  Because once a political cadre gets a movement organized, it seldom walks away from political power once it has got what it wants.



And that is the larger point.  Liberals are drunk on political power.  That means that liberals always need a political issue to divide the country, because Politics is Division.  It always means that they are dangling free stuff in front of the voters, because the basic originary form of politics is the warrior band marching through the world looting and pillaging.



But liberals are tempting people off the main stream of life with their glittering free baubles from gay marriage to welfare.  It's not an easy life being poor, but the payoff from marriage is huge if you are poor.  A Brooking study says that

the poverty rate among families with children could be lowered by 71 percent if the poor completed high school, worked full-time, married, and had no more than two children.

Yeah.  The Census Bureau data shows that the lowest-income household quintile has the least number of people working, and the top quintile has the most people working.



So the more that liberals subsidize single parenthood the more they are encouraging poverty.



You could say the same about divorce.  Speaking as a divorced man, I probably would not have got divorced if it had meant paying support to my ex-wife for the rest of her life, as it used to be before "no-fault" divorce.  And who has benefited most from "no-fault" divorce?



One of the reasons for morality and social norms and social control is to provide guide rails, to shepherd people along the main path of life and make it difficult to go off at a tangent.  In many ways, the whole point of the modern era is to remove the stigma for jumping the tracks of the main line of life.  You can say that it starts with the Romantic movement and the German cult of creativity.  We seem to be determined to deny that there is nothing more creative in this world than creating children and raising them to independence.



But if you are a ruling class you rather like the idea of a dependent and grateful peasantry, tugging at forelocks, or even shouting hosannas at politicians speechifying in front of Greek columns.



Apart from the moral question of living a meaningful and socially useful life on the main stream of life, there is the practical side.  If you build yourself a life with skills, and spouse, and children, and a reputation for kindliness and helpfulness, then you are probably in a good position if the government runs out of money and you are thrown back on your own resources without any lovely government entitlements to smooth your way.



A notable feature of all Democratic voters is that, one way or another, they have voted for plugging into government, just like a plug-in hybrid.  But if you are unmarried, childless, low-skilled, then you are really vulnerable if things go south and the wonderful wind farm can't juice your hybrid because there is no wind.  In the end, it isn't going to do you any good by voting for big government.  In the end, government will take care of itself, not you.



That's a big difference from life in the main stream of life.  Because if you get into trouble on the main stream of life then probably your spouse or your children will take care of you.  It's the social human thing to do.

The Liberal Generation That Knew Not Carter

For a geezer like me it's hard to understand the new generation of liberals and their renewed push for big government.  Haven't they learned the lessons of the liberal failures in the stagflation of the 1970s?  Don't they realize just how the Reagan Revolution turned things around?



Well, actually they haven't; they don't.  Because if you are a chap like Ezra Klein, born 1984, or Markos "Kos" Moulitsas, born 1971, you weren't there.  Klein wasn't even alive!  Nor could they have reached political consciousness in the early 1980s when against all fashionable opinion, the amiable dunce Ronald Reagan turned around the US, economically and culturally, from the existential despair of the late 1970s.



It was in the late 1970s that liberals, having failed to maintain a vibrant economy and culture, reckoned that nobody could do it.  It was a huge embarrassment when Reagan actually did it, and it demoralized a whole generation of liberals.



The truth is that if you cut government spending, cut regulations, and stabilize the credit system, you get big-time economic growth.  That's what Reagan did in the early 1980s.  It took a couple of years for the economy to take off, but when it did...  Well, it shut liberals up for a couple of decades.



But then a new generation came along that knew not Carter and the utter futility of big government politics in the Carter era.  Golly gee-willikins, they began to say, how come we don't have comprehensive national health care yet?



Well, the new generation will find out in due course.  They will discover, as Obamacare grinds the nation to a halt, that the administrative liberal welfare state is a terrible idea, at least as far as comprehensive, centralized, bureaucratic, administrative "affordable" health care is concerned.  Probably the Medicaid problem (where up to 90 percent of Medicaid beneficiaries can't get a doctor) will metastasize across the whole health care system, and liberals will blame the insurance companies.



In Reason today, they are talking about the new crew at The New Republic.  The magazine started out in the 1910s as an unapologetic cheering section for big government.  But in the 1980s it had some second thoughts, as thoughtful liberals realized that something had gone wrong.  The New Republic started to get a bit skeptical of big government.  But now, with Obama and the Kos and Klein generation, it's back to full-throttle big government, and damn the torpedos!



How clueless can you get?



But don't despair.  The fact is that things are already going badly wrong.  The Great Crash of 2008, blamed on greedy bankers, was really a failure of politicians mucking around with the credit system.  The current Federal Reserve money-printing exercise is a full-on admission of political failure, the failure to reduce spending to fit the national revenue.  Atlantic today has a piece on the explosion of the Social Security Disability program, now at $128 billion a year and counting.  Way to go, liberals!  The entitlements are on course to crash in ten years.  Government education is lousy, and government pensions are going to bankrupt the states.



Why Worry!



If President Obama were a Republican the mainstream media would be screaming bloody murder.  But as it is, we will have to wait until the current generation of Democrats hits the wall, and the American people recoil in disgust.



Although Republicans are pretty discouraged right now, things are really not so bad politically.  FDR in the 1930s ran full-speed-ahead for six years before hitting the wall of a 60 seat reversal in the 1938 House midterms.  He won 57% to 40% in 1932 and 61% to 37% in 1936.  Obama, lest we forget, won 53% to 46% in 2008 and 51% to 47% in 2012, losing the House in 2010.  There is a difference!



The facts are that just about everything the Obama adminstration has done economically has hurt the nation's economy, from stimulus to Obamacare to energy regulation to putting off entitlement reform to cranking up the printing press to proposing a higher minimum wage.



But, you say, the American people are clueless on economics.  They don't understand how the Obama Kos Klein generation is hurting them.  That's true.  But the American people do know when it is Time for a Change.  And they will be knowing it good and hard by November 2014 and November 2016.



You can already feel the change in the air.  The fact is that Democrats have been on a forced march for the last 12 years, ever since the insult of Bush's "selection" in 2000.  After the reelection of Obama they reckon it is time to enjoy the fruits of office and relax a little.  They are only human, after all.



But the thing about government is that Government is Force, and for people that support the opposition, the incumbent government is always experienced as unjust.  The longer the incumbents are in power, the angrier they get.  Those are the kind of people who will be turning out in 2014 and 2016.  Liberals may swan around in their liberal bubble, but outside the bubble people are hurting, and pain is what motivates people to get to the polls.



But it is a shame that we have to relearn the lessons of the 1970s.  Because it is always the little people that get hurt.

The Future for Men

The Instawife Dr. Helen Smith asks about the silence of the men.  It's pretty obvious today that the corporate world discriminates against men.

Here's an example from James Taranto today.  Girl at Python (that's a scripting language used in Linux) conference hears two nerds making sexual jokes about big dongles and fork redos behind her.  Complains about it in a tweet.  Guys get fired.

Hey lady!  Yer think you might have spoken to the guys yourself instead of going crying to the teacher and having the little squirts sent to the principal's office?  And boasting about it on your blog?

So what are men doing about it, asks Dr. Helen?

Nothing.  Because they know that in corporate-land they will just get squashed, as "the entire weight of the organization and society come down on the uppity man for questioning a powerful woman."

But there is a solution, and it is the obvious one.  Men, real men, don't belong in big administrative organizations.  Administration is domination.  Big, relational organizations are ideal for women, who are good at managing complicated human relations.

So what do men do?  Isn't this obvious?  Women are lovers, relaters, carers, but men are fighters.

Men have to get out of the big bureaucratic organizations and do something else.  In other words, the future for men is to form startups.

Think about the Taranto-reported episode if all the participants were in a startup firm.

1. The participants would know each other.  So the woman would probably have the balls to tell the guys to knock off the adolescent smuttiness.
   
2. The participants would all be important members of the startup team.  They wouldn't be replaceable cogs in a machine.  So nobody would be getting fired just to make the problem go away.  Instead, the firm's owners would come down on all of the participants: the nerdly men for risking the success of the startup, the woman for not dealing with it on the spot and telling the guys to knock it off.

Needless to say, when you are the startup there is no Human Resources that can fire you.  There's no corporate politics, there is no manipulation of the "system."  There is just the band of brothers (and a sister or two if they can take the heat of battle) all working together trying to win the big one.

Let's get a bit of perspective on this.  Men don't belong in government schools.  They don't belong in government universities.  They don't belong in government bureaucracies.  That stuff is for girls and sissies.  And men probably don't belong in big corporations.  Big corporations are for semi-sissies.

Real men get out on their own and start something new.  That's what fighters do, and real men are fighters.

The great thing about the Internet is that even if you are not a two-fisted fighter you can make your mark.  You can create your own app or website in the basement, and if it hits the spot you can make a fortune, or at least a chunk of change, without actually having to get involved in hand-to-hand combat.  I know, because I did it.

And really, it's about time.  For decades cultural critics have been sneering at the "organization man" the "one-dimensional man" and the like.  Frankly, they have a point.  When you are walled up in a big organization you are living in a kind of plastic Disneyland; you are about as divorced from reality as a liberal reading the New York Times or listening to NPR.  We men are better than that.

Of course, real men don't indulge in sniggering smut within earshot of beautiful women.  And gentlemen don't indulge in sniggering smut within earshot of any woman.  But that is another story.