And yes, that is 'please' not 'plz'. Winston is vastly superior to an unlettered cat.
And Calvin Coolidge is vastly superior to any living American politician:
[HT: David Beito]
And yes, that is 'please' not 'plz'. Winston is vastly superior to an unlettered cat.
And Calvin Coolidge is vastly superior to any living American politician:
[HT: David Beito]
I love Robin Hanson's pithy account of signal-centric Hansonism:
Food isn't about Nutrition
Clothes aren't about Comfort
Bedrooms aren't about Sleep
Marriage isn't about Romance
Talk isn't about Info
Laughter isn't about Jokes
Charity isn't about Helping
Church isn't about God
Art isn't about Insight
Medicine isn't about Health
Consulting isn't about Advice
School isn't about Learning
Research isn't about Progress
Politics isn't about Policy
And blogging isn't about… what?
This morning on Marketplace, I praise Canada and lament the U.S.'s increasingly pathetic support for freedom.
I've become interested in writing a longer essay on the freest country in the world. That's a deeply ideologically freighted question, and that's part of what interests me. What would it mean for someplace to be freer than another overall? On the account of freedom, and the weighting of various forms of freedom, that I think is most appealing, I guess Canada or New Zealand would take the top spot. I think it is important for Americans to recognize why the U.S. wouldn't. Anyone want to publish that?
We take him home next week.
Here's how it starts:
There’s a popular historical legend that goes like this: Once upon a time (for this is how stories of this kind should begin), back in the 19th century, the United States economy was almost completely unregulated and laissez-faire. But then there arose a movement to subject business to regulatory restraint in the interests of workers and consumers, a movement that culminated in the presidencies of Wilson and the two Roosevelts.
This story comes in both left-wing and right-wing versions, depending on whether the government is seen as heroically rescuing the poor and weak from the rapacious clutches of unrestrained corporate power, or as unfairly imposing burdensome socialistic fetters on peaceful and productive enterprise. But both versions agree on the central narrative: a century of laissez-faire, followed by a flurry of anti-business legislation.
Every part of this story is false.
You will be more intelligent after reading the rest of this masterful post.
Suppose Bernanke and Co. skillfully steer the economy through the meltdown. They succeed in propping up confidence in the markets, lubricate financial markets by taking on toxic assets, and then carefully selling them off as valuations improve, etc. etc. Bernanke will be hailed as a genius, and the whole episode will be taken as vindication of technocratic economic policy-making. This will drive a bunch of people crazy. Austrian foes of central banks, for one. Small "d" democrats, for another. We the people certainly never agreed to buy AIG!
Now, the democrats leave me mostly cold. If the government is going to be in the business of regulating and insuring markets, I'd much rather a bunch of ultra-elite economists do it that than a democratic body. Vetting these kinds of appointments is democratic enough. What we're seeing these days with unusual clarity is the structure of the de facto American constitution. The best universities in the world select for ability and turn out highly elite economists. Informal but powerfully entrenched professional networks draw many into government service, which is assigned high status within the profession. A combination of reputation, connections, and political ability puts people like Bernanke into the Fed. This is simply incredible, since Bernanke is perhaps one of the two or three most qualified people in the world for this job. And the Fed's de facto power is evidently immense.
But would we be better off without Bernanke's job? I sincerely don't know. I am torn about the strong version of the Austrian story. I think they might be right that none of this would have happened had there been a free market in money, etc. But I half-suspect that we wouldn't be able to sustain such complex, globally-integrated financial markets in the absence of a relatively active government regulatory role. That is, we might not be as rich as we are now had we been living in a world of financial laissez faire. And if, as I half-suspect, I am wrong about that, I wonder how relevant it is. I very generously put the probability of the abolition of the Fed in the next twenty years at .10. If my dreams of awesome intellectual influence were suddenly realized, my advocacy of its abolition I think moves the probability of it to about .20. But there are other hopeless crusades that matter rather more to me. I leave this one to Ron Paul.
So what can I really be for in the present circumstances. Merely that the Fed do better. That ice catch fire and the Fed disappear? I guess there's no reason I can't be for both.
It seems some folks try to have it both ways when talking about “the market.” They are right to remind us that “the market,” so beloved of free-market types, does not simply exist in a state of nature. Much of the extended market order is enabled — even constituted — by rules that define property and regulate the terms of exchange. Many of these rules are created and/or enforced by government. If markets were “out there” in the wild, just being all efficient and stuff, the poverty of humanity down through history would be completely vexing. This is just neo-institutionalist economics 101, and I'm down with it.
In particular, the American economy is so far from textbook laissez faire that it is well-nigh-impossible to find a breakdown in market institutions that does not have some bit of government policy as a chief contributing cause. As I said in an earlier post on a similar theme, “The American economy is in fact a byzantine amalgam of market and state institutions enmeshed in a thicket of regulation.” So when part of it goes KAPUT it's cheap to blow ideological notes on the trumpet of market failure, especially if you're the sort of person who likes to go on and on about how advanced markets cannot even exist except within the framework of government law.
If you doubt the centrality of the government side of this, let me give you James Pethokoukis:
The more you look at the history of the housing-spawned credit crisis, the more you notice Uncle Sam popping up, Zelig-like, in every scene. Fannie Mae and Freddie Mac were government-birthed entities that decided to buy securities tied to subprime loans. And it was government officials on Capitol Hill, the recipients of millions in campaign donations from the F&F lobby, who decided not to rein in those entities. You had the government ' s Community Reinvestment Act nudging banks to make unsound loans. Government banker Alan Greenspan pushed interest rates too low for too long earlier this decade, creating an extreme financial situation that made the crazy Wall Street strategies look temporarily reasonable. And for decades, government has pushed higher homeownership as a national goal, via F&F as well as through the tax code, siphoning off resources that might have been better devoted to other economic sectors.
And now, folks like Barney Frank pretend government just showed up on the accident scene moments ago like an innocent passerby who wonders aloud, “Anyone here know what happened? Anyone?” I mean, how can we try to prevent future financial crises, or least minimize their damaging effects, if we delude ourselves on the causes of the current one?
We're seeing the apocalyptic failure of some huge markets. Yes, those markets have failed. And those markets are what they are because government made them what they are. We need better markets, and therefore we need better government. I can't say exactly what that means at this point, but surely Sarah Palin can.
Tyler Cowen writes, “The economic fallout from these events [the crashes, the bailouts, the nationalizations] is dominating the headlines. The intellectual and ideological fallout we are just beginning to contemplate.” Here's what I'm beginning to contemplate.
If a high level of income inequality is a side-effect of voluntary exchange according to just rules, then what's the problem? Market liberals tend to suspect there is no problem. What I'll call “democratic liberals” think there's a huge problem: the threat of economic inequality to democracy. Market liberals support democracy and democratic liberals support markets. The main disagreement, I am convinced, concerns views over the point of democratic institutions and their function in securing liberal values.
Some apparent democratic liberals are so fixated on the intrinsic value of deciding things collectively that any liberal commitments they may have turn out to be completely incidental. (Benjamin Barber is a good example. There's a good bit of liberal rhetoric, but he is a Rousseauvian “forced to be free” democratic communitarian — a straightforwardly illiberal view in my book.) I think of those people as “democracy fetishists” and I set them aside.
Non-fetishistic democratic liberals see a certain ideal democratic system as either instrumental to or constitutive of a society guided by authentically liberal values. In either case, sound democratic institutions are necessary to the security of our basic liberties. Democratic equality, according to which each citizen has an equal voice in determining the rules under which they must live, helps ensure that no group is able to dominate, oppress, and exploit other citizens. “One man, one vote” is a fundamental principle of democratic equality, but it's usually seen as insufficient. Adult citizens may be on equal footing when it comes to votes, but we are very far from equal in “political resources” — all the means at our disposal for shaping the ultimate product of the democratic political process. Campaign finance rules are generally meant to secure relative democratic equality by limiting the inequality in certain political resources. One of the chief arguments for public financing of primary education is that citizens require some development of their intellectual capacities and a certain fund of knowledge in order to be able to effectively defend their interests in concert with others my means of the democratic process.
And then there is the idea that simply limiting economic inequality through redistribution will limit inequality in political resources, and thereby limit the ability of the rich to rig our institutions to their advantage. Paul Krugman, an archetypical democratic liberal (and one who understands markets very well, thank you), thinks this is already happening. For Krugman, it is so urgent to combat economic inequality because the liberties of most are threatened if the super-wealthy few are able to capture the institutions meant to secure the liberties of all.
But I don't get it. First, there is often an assumption of class interest that is clearly false. The self-interested voter hypothesis does not do well generally. And the wealthy are very far from unified in their politics. As Gelman et al point out, the poor tend to vote pretty much alike (Demmocrat) but the rich are quite divided. Judging from their book, the best way to cut it I think is this: rich people who go to church are Republicans. Rich people who don't are Democrats. But isn't this a distraction?
It seems to me that money is a relatively insignificant source of inequality in political resources. I've shared a house with two different guys who have clerked for the Chief Justice of the Supreme Court. Those guys probably had more influence in determining the effective policy of the U.S. government, just as a matter of doing their day-to-day work, than it is ever possible to buy with campaign ads. A JD from Yale, Harvard, Chicago, etc. is a ticket to professional networks that exert immensely disproportionate influence on the political process. Or consider Tyler's other former debate partner, Randall Krozsner, now on the Fed Board of Governors. Could the wealthiest man in the world hope to influence American economic policy more than Krozsner? Unlikely. Indeed, Ben Bernanke's Fed is basically unilaterally controlling the American and world economies without asking any of us for input. But the point is not the Bernanke is the most powerful man in the world. The point is that MIT and Harvard economics Ph.D.s have political resources that money cannot buy. Neither Marty Feldstein nor Paul Krugman need be in government to matter more to economic policy than a billionaire could dream. I don't mind this. I like the technocratic elitism of the U.S. economics and legal bureaucracies. But then it's hard to get exercised simply because some people are really really rich.
It strikes me as comical that our economy is now more or less ruled by a benign technocracy almost entirely outside democratic control, but most democratic liberals choose to complain that some billionaires are getting bailouts. If the problem with economic inequality is the threat to democracy due to large inequalities in political resources, shouldn't democratic liberals be freaking out over the fact of the Federal Reserve, or about the immensely disproportionate influence on public opinion and policy by New York Times columnists and ulta-elite academic economists? It seems to me that if you're not completely fliping out over these things, you can't be genuinely interested in democratic equality. So if you insist on flipping out over income inequality anyway, it can't be a certain ideal of democracy that's animating you. You're going to need a different story to tell.
Here's my story. Roughly meritocratic inequalities in political resources are OK. We want the democratic process, which cannot be counted on to yield high-quality policy, to be constrained and guided by legitimate experts. But then if wealthy people are better-educated, and better-educated people are more likely to make quality decisions about policy, than a democratic system more responsive to the wealthy than to the poor is more likely to deliver quality policy (i.e., policy that does what it is intended to do). And if wealthy, better-educated people are more likely to be committed to liberal values overall, and there's evidence that this is the case, then money-based inequalities in political resources may deliver liberal goods more reliably than a system under strict and comprehensive democratic equality.
[Warning: This post assumes a lot of background, and may not be generally accessible.]
I've been re-reading bits of Justice as Fairness to try to nail down Rawls' take on the relationship between the difference principle and the value of the basic liberties. But I got sidetracked.
The story on the development of the doctrine of “justice as fairness” is that Rawls saw that he initially grounded the argument for the stability of his ideal system on a particular comprehensive conception of the human good — one that is neither all that broadly shared, nor rationally mandatory. The argument in A Theory of Justice failed to take into account the inevitable pluralism in such conceptions in a free society. So Rawls famously changed the structure of his argument in Political Liberalism to better accomodate the unavoidable fact of pluralism in free societies.
It has been frequently pointed out that it's pretty remarkable, and suspect, that this rather fundamental change in the argument entailed no really substantive change in Rawls's conclusions. And that is remarkable, and suspect. Rawls just never does get his head around real pluralism, and his account of stability always seems to revert to the assumption that people brought up within a just social order will end up believing and valuing the same thing when it matters to the argument.
What I have in mind is his brief discussion of the strains of commitment in Justice as Fairness. The question is why won't the rich always try to renegotiate the principles that govern our basic social institutions to their benefit? If they do clamor for more, the principles won't last, and so won't be stable, which they must be if they are to be adequate principles of justice. So why won't the relatively rich try to get a better deal, if raised under the right institutions?
First, EVERYBODY shares an idea about the point of society and political institutions. Impossible. That idea — free and equal people engaged in mutually advantageous cooperation — entails a certain idea of reciprocity. Sure. And that principle of reciprocity is the difference principle, Rawls says. Remember, the idea is that all rich people raised under just institutions will think this. Unlikely. But it gets more implausible the more he drills down:
We also suppose that in addition to the reason which all have [that the difference principle is the principles of reciprocity implied by the abstract political conception everyone will allegedely share], the more advantaged have a second reason … The point here is that the more advantaged see themselves as already benefited by their fortunate place in the distribution of native endowments, say, and benefited further by the basic structure (affirmed by the least advantaged) that offers them the opportunity to better their situation, provided they do so in ways that improve the situation of others.
You know you're in trouble if your argument (intended to be adjusted to the inevitably roiling pluralism of a free society) depends on all-but-universally-shared ideas about “the distribution of native endowments.” A bit earlier, Rawls notes that “this idea of reciprocity is implicit in the idea of regarding the distribution of native endowments as a common asset.” That's also part of what, come the reign of justice, we'll all understand.
I'm sorry. Even granting Rawls' badly undermotivated framework stipulation that the strains of commitment cannot be expressed through emigration or capital flight, this is a total failure if the aim is to take reasonable diversity of thought seriously. These passages read like a reductio of the attempt to reconcile justice as fairness with the fact of reasonable pluralism. By Rawls' own account, JAF seems to have no hope of passing the compliance/stability test without simply positing a level of agreement that makes a mockery of the whole idea of reasonable pluralism.
Remember, Rawls' project is to outline a realistic utopia — a society that could really exist given actual human nature. So his stability arguments amount to predictions about, among other things, the beliefs and desires that would prevail among people brought up under institutions that satisfy his two principles of justice. The principle with the very highest priority here is an inviolable right to free thought and expression. And Rawls' prediction is, what? That in that kind of society — in which freedom of thought, speech, conscience, etc. are paramount — rich people won't try to get a bigger piece because they will all agree, more or less, that the “distibution of native endowments” is a common asset, that they've got it plenty good, and there could be no justification for wanting more.
We'll never be in a position to see this prediction play out, but knowing what we know about the way actual human minds work, I would bet the farm against it. Even when he weakens his Kantianism, Rawls leans hard on it, and is undone by it. For all the talk about pluralism, he's really depending on some assumptions about the universal structure of the “two moral powers” — rationality and the moral sense — that make his yearning for a kind of stability that is more than a fragile, contingent modus vivendi seem plausible. But it just isn't plausible.
Sigh. Moreover, a cigarette is suicide, the minimum wage is chattel slavery, and novels are full of lies, lies, lies! Kerry points out the insulting, should-be-obvious implication of the Douthatian position:
It would follow that almost all of us have experienced monogamy as a series of small treacheries and degradations of which we are barely aware. We lack the cognizance to understand that porn constitutes a breach of trust; we don’t understand the agreements we’ve entered into, their terms having been set without our knowledge. Our relationships are constantly under attack, our closest bonds assailed, and we carry on in a cloud of misbegotten contentment.
This is silly.
Indeed. Ross's position still completely mystifies me in terms of psychology, morality, logic, and if there is something else in play, it mystifies me in those terms, too.