The Principles of Weisbergian Political Economy

The actually-existing system of institutions at any given moment is the result of a wickedly complex interaction of forces. In particular, the character of heavily government-regulated market institutions, like ours, is the outcome of set of bargains between public opinion-sensitive legislators in the democratic body, between competing ideological constituencies within regulatory agencies, between possible targets of regulation and legislators, and on and on and on.

This is in fact the system Weisberg seems to demands. He's at least OK with it. His problem with the status quo apparently has nothing to do with the deeper structure, or the chronically unstable strategic character, of this system. His problem is simply that the wrong bargains sometimes get struck. Weisberg correctly notes, in the vacuous manner characteristic to this immensely popular but truly sophmoric conception of political economy, that the last disastrously bad set of bargains wouldn't have been struck had the contents of the minds of key players been different in certain ways. Indeed. So… what? So when the bargaining outcome leads to instability and massive structural failure, the correct response is simply to attempt to ensure that, in the future, people who believe certain things are not key players. This is preferably accomplished by ensuring that, in the future, no one of significance believes those things at all.

Is there any reason to believe this is not Jacob Weisberg's way of thinking? Is there any reason not to think it is monumentally stupid?

The most obvious objection goes to the “hack” charge. There are an indefinite number of beliefs without which the actual bargain would not have been struck. Some of them are more causally fundamental than others. For example, remove the idea that the government ought to encourage and subsidize homeownership, and what do we have left of the main forces behind the financial crisis? I'd say we have nothing left. So there's our culprit, right? And so in terms of Weisbergian political economy, we ought to shore up our system by discrediting that idea, which we can do in part by pointing out its crucial role in the crisis. “Down with the American Dream!” Is this what Weisberg does? It is not. Why not? Cough.

The deeper objection is that it's just retarded to implicitly affirm a system so easily destabilized by ideological diversity. If a smattering of libertarian ideas can bring it all down, then the problem isn't really libertarian ideas, is it? If the integrity of the economy in your preferred model requires a high level of ideological conformity, you might think to reconsider the wisdom of harnessing it so thoroughly to democratic political institutions meant to accomodate pluralism.

Weisberg's implicit model seems to involve witty magazine writers ensuring the stability of our economic institutions by declaring some ideas out of fashion. We libertarians can only covet this level of intellectually maturity.

Readings for Jacob Weisberg

Larry White in The Freeman [pdf].

Oh, wait. I'm sorry. I'm being silly. Weisberg doesn't need to read this. The Freeman is a libertarian publication, and so you know in advance that Larry White's a utopian ideologue simply in denial of what we all already know. Sure, he may seem to cogently rebut a Paul Krugman column calling for increased government intervention in financial markets. But seriously, Larry White: Haven't you people done enough harm already?

Weisberg FAIL

Brink Lindsey gives it to Jacob Weisberg good and hard.

Brink's right: If you think “libertarianism” caused the financial crisis, you're either stupid or dishonest. Weisberg's argument comes down to the single, simple thought that but for the resistance of Greenspan, Gramm, and Cox to certain regulatory proposals — a libertarian resistance — the crisis would not now be upon us. And so libertarianism is to blame. Accept or reject that thought as you will. It remains that, on Weisberg's own accounting of things, the crisis would not now be upon us but for countless other contributing causes. So what to make of the light-years-from-libertarian ideological assumptions behind the rest of the regulatory regime? Why, nothing at all! And that's what it means to be a hack.

What's going on here? I think Weisberg rightly sees that control over the popular narrative about the causes of the financial collapse could have a big effect on public opinion. And Democrats are about to win the White House together with a robust Congressional majority. So here's the main chance! The long-awaited dream! The desperate desire! The rightful claim of establishment liberals to the commanding heights is imminent! Now is the time! The sense of entitlement is about to meet title! And the GOP is in utter disarray, having long ago lost any semblance of a coherent philosophy of government. The field is almost clear. Only the utopian punter, holding a tattered copy of Atlas Shrugged, guards the goal line. The embittered professors and graying editors-in-chief cannot bear to wait another season. They will wake to their triumphant dawn. The cry goes up: “Smear the libertarian queer!” And never mind the rules.

Bring it, Weisberg.

Joe the Plumber 2008

My mind is made up. I am writing in Joe Wurzelbacher. (As long as I don't find out what else he thinks.)

I imagine this video was posted by the folks at TPM on the assumption that Joe's entirely sound judgment about the deeply flawed American Social Security system is some kind of disgrace. I invite Joe the Plumber, and especially those who find Joe's opinion disgraceful, to consider the argument of my paper “Noble Lies, Liberal Purposes, and Personal Retirement Account.” The argument grown ups should be having is between getting rid of the Social Security system and replacing it with means-tested welfare benefits for retirees, or forced savings programs. I'm on the forced savings side, which Joe might see as unduly paternalistic. But there's not really a serious argument for not getting rid of the status quo Social Security system. It's just darn effective democratic politics for the Democratic Party to continue defending it as if it was the last bulwark against Hobbesian brutality. (Not even exaggerating!) And so those of us who would like a policy more like Australia's or Sweden's will continue to be characterized as running dogs of Capital, enemies of the Volk, and grandma-haters to boot. Meanwhile, Joe the Plumber will continue to have the right idea.

I still think privatizing Social Security would basically ensure Obama's legacy, and could be massively popular if the rest of the Party and the intellectual/media types decided to get behind it. The main question for the Party is whether being able to take credit for it would sufficiently compensate electorally for taking the issue off the table. I think it would. And it might help them get more of what they want on health care. The question for the op-ed axis is whether the need to preserve some semblance of intellectual integrity  would allow them to turn on a dime. Obama may need to ease them into it, but if anyone could, he's the guy.

Also: Does market volatility debunk personal accounts? No.

Jive Blogging

8:33 – Obama: We can't characterize each other as bad people. We got folks on payroll for that.

8:36 – McCain: From a tiny ACORN grows a mighty choke.

8:37 – Obama: Was in swaddling clothes when Ayers went boom. Couldn't pick the guy out in a lineup. I've heard of ACORN, I'll let you know what I know. I gave them legal advice in their efforts to dilute the quality of voters. So what? McCain, you're sad and desperate.

8:38 – McCain: Bill Ayers is your mother. Is too. Facts are facts. ACORN.

8:40 – Obama: Biden perhaps finest public servant to serve public in a capacity of service to the public. Having come from Scranton, he sticks up for the little guy.

8:42 – McCain: America knows and loves Sarah Palin. I don't, exactly. Here are some things we agreed to say about her, such as: “She's a reformer.” A bref of thresh tear. Would be President of special needs. First dude. Right on!

8:44 – Obama: Qualified? LOLZ! Trig's screwed if you freeze spending.

8:45 – MCain: Joe's in fact not qualified in some respects. Obama couldn't describe a dollar he spends it so fast.

Why? WHY?

8:45 – McCain: If Canada buys oil from Venezuela we can buy from them. Tiny flags visible on oil molecules in barrels. Easily in 7,8,10 years we can not buy some things.

8:48 – Obama: Yeah. Me too. If you ever doubted that I am insufficiently backward to be an American president, let me repeat. Borrowing from slopes to payoff camel jockeys mortgages our children's future! Subprime mortgages our children's future. I'm in favor of free trade except I am totally not. I favor trade war with Koreans.

8:51 – McCain: Free trade, yeah! Obama never been south of Duluth. Doesn't understand no brainer trade with Colombia unless its up his nose.

8:53 – Obama: I get Colombia. Labor leaders under the gun. I stand for agreements larded with political demands irrelevant to trade, thereby ensuring less trade, and fewer gains therefrom. For justice! Energy independence is a magical magic that will magically make magic money.

8:54 – McCain: Obama sucks like a Hoover.

8:56 – Obama: Health care the issue that breaks your heart. And my plan will put it back together. FOR FREE! In fact, you could get cash back for every heart repair. Points to put toward vacations, or the latest electronics. Health problems make you RICHER in the Obamacracy.

8:58 – McCain: I'm convinced we should do a lot of things to make health better. I am alarmed by young fatties and will implement programs to make them jog at gunpoint. Hey! Joe the plumber. Obama wants to fine you if resist his wortwhile Canadian initiative.

9:00 – Obama: Cash back for the little guy! Ding the big guy. Joe! You still there? I have a plan to give money to plumbers who make under $250,000. I won't tax your free money. McCain wants to increase your pretax income, stupidhead.

9:03 – McCain: Joe, you're rich! Obama will thieve you blind. Senator Government wants to be boss of you Joe, but I want Joe to be the boss of you Joe.

9:05 – Obama: Free!

9:07 – McCain: No litmus test. I will find the best American judges in the world, babykillers included except not.

9:08 – Obama: I won't shit you. It's gotta be my boy Sunstein.

9:11 – McCain: We've got to squash the values of the people I disagree with. You know, change the culture. Obama votes present on precious little babykilling.

9:14 – Obama: I support a ban on abortions in the 10th month. Let's prevent unintended pregnancies. Against cavaliers.

9:15 – McCain: “Health of the mother” code for MURDER. What a stretch. Mother's don't even have health.

9:16 – Obama: We can't invade Pakistan with dummies, so we close the achievement gap by seizing children from crib before idiot parents can ruin them. Also pay teachers more, accountably. Make college even more superfree. And hey, parents have got to…

9:18 – McCain: Choice and competition against educational Jim Crow. Throwing money at the problem like Alabama cop with a firehose. Kill people, then destroy childen's hope.

9:20 – Obama: Tradition of local control is great, and the Feds should help control the locals so they can control themselves like they want. Younger kids in the meat grinder. More money for the blades. Vouchers won't work because… yeah, no. Youth are not an interest group. The future. And marketing demographic.

9:23 – McCain: Washington DC. Vouchers. NCLB great except for the all the CLB. More money isn't the answer. Head Start is great, but let's reform it! Transparency, accountability, rewards alakazam! Precious little autistic children with autism which Sarah Palin knows about and we'll hire Lysenko to find a cure with transparency, accountability, and rewards.

9:26 – Obama: Shut up about the vouchers pest. Don't you know who I work for?

9:27 – McCain: Healthy discussion. Friends, it's difficult for you so you need a new direction and my record of taking on those who offend my honor will make health care and education happen while spending less which is 30-year adjustable rate mortgage on your progeny. McCains don't even KNOW how not to put country first. I'll secretly be relieved if I lose.

9:29 – Obama: Risky to not have fundamental change. You people are awesome. Love you. I will give you things. And energy economy will be magically delicious. We've got to come together to sacrifice to pay for for the free stuff I will tirelessly work to make you sacrifice for.

9:30 – Moderator: Vote for a false sense of efficacy.

Verdict: Obama: D.E.F.E.N.S.E. McCain: Hey, I tried.

I am disgusted with my weakness and democracy.

Fearful Asymmetry

Maybe I'm missing something, because almost all arguments to the effect that people have no moral right to their pretax income  (such that taxation would require a special moral justification) and therefore taxation is legit, are plain non-sequiturs.

For instance, Ronald Dworkin argues in Is Democracy Possible Here that the status quo system of political and economic institutions is the result of what he calls “the political settlement.” Because the distribution of incomes is to a large extent a function of these institutions, it is to that extent a function of the political settlement. But the political settlement is either morally justified or it is unjustified. At this point the argument goes something like this (and please correct me if this is too vulgar or innacurate a sketch):

(1) If you have a moral claim to your pretax income, then the political settlement is justified.

(2) The political settlement is not justified.

So (3) You have no moral claim to your pretax income.


(4) If the political settlement is morally justified, then it implements X scheme of income redistribution.

(5) If a justified political settlement implements X scheme of income distribution, then there is no moral right to pretax income.

So (6) No justified political settlement is one in which there is a moral right to pretax income.

Suppose you think this is a drop-dead valid argument. What does it NOT imply?

(7) The government, under the status quo political settlement, may legitimately confiscate pretax income.

Because, of course, the legitimacy of state coercion also depends on the moral justification of the political settlement. For example, if runaway economic inequality has led to political inequality, which has led to takeover of the state by oligarchic elites resulting in a mere shell of genuine democracy, then obviously that government lacks a mandate to use force legitimately.

If (1) Is true, then so is

(8) If the exercise of state coercion is legitimate, then the political settlement is morally justified.

(7) really doesn't follow because Dworkin explicity argues that a certain scheme of redistribution is a necessary condition for the legitimacy of government, and that we are now falling short of it! So then the government is not legitimate, right? And that's just to say that it is not justified in its use of coercion. So Dworkin seems offer an argument to the effect that (a) You don't have a moral claim to your pretax income and (b) it would be wrong for the government to collect taxes. An illegitimate government has no moral claim to your income either, no matter how illegimate your claim! But Dworkin thinks his is an argument to the effect that it is morally mandatory that the status quo government take more in taxes. Puzzling.

Dworkin does allow for degrees of legitimacy. But it seems like he's still stuck with the problem that if things get too bad, according to his lights, then it's wrong for the government to do anything about it. And if the government has a pretty secure mandate to legitimately act, things can't be all that bad, and peoples' moral claims to what they're now left with post-tax must be more or less secure.

What am I missing?

For me, the general lesson is that political philosophy is rife with unprincipled violations of analytical symmetry. If luck vitiates rights to incomes, then it also vitiates rights to hold and exercise political power. If there are common preconditions for the legitimacy of property rights and the legitimacy of political power, then the failure of those preconditions cannot be part of an argument for the legitimate government expropriation of illegitimate property. Etc.

Herb Gintis on Naomi Klein

Herb Gintis is one of my favorite thinkers, and I find his Amazon reviews more interesting the the NYRB. So I'm sorry I missed his August review of the Shock Doctrine, and maybe you are too. Here it is. The peculiar thing about the review is that Gintis is rather gentler with Klein than he is with today's big winner, Paul Krugman. He basically savages Krugman, but seems to extend to Klein the warmth of comradeship, apparently seeing in her traces of his own dissapointed socialist radicalism. He joins in on the Friedman bashing, heartily derides “free market economics,” and then quietly suffocates Klein's own ideological dreams (so like his, once!) with a pillow and a sigh.

[Klein] reveals her own sympathies towards the end of the book, when she remarks that “Democratic socialism, meaning not only socialist parties brought to power through elections but also democratically run workplaces and land holdings, has worked in many regions, from Scandinavia to the thriving and historic cooperative economy in Italy's Emilia Romagna region. It was a version of this combination of democracy and socialism that Allende was attempting to bring to Chile between 19870 and 1973.” (p.569) 


… it would be nice if Klein's alternative were generally viable. Thomas Jefferson's vision of forty acres and a mule would be vindicated, albeit in a more socially organized manner. But it is not. Worker's control is a great dream (I dreamed it myself for many years), but it founders on the reality of capital diversification, which the worker-owned firm cannot handle. Cooperative land holding is just a myth, pure and simple, and always has been, throughout human history. 

Like many progressives, Klein's instincts are anti-market (although even her precious cooperatives are marketing cooperatives, after all). It is a plain-faced fact that poor countries that have attempted to compete in the world market place rather than shelter themselves from it have done quite well, China and India being the most prominent. The idea that socialist cooperatives might outcompete capitalist firms has little going for it. Perhaps a country with mountainous oil revenues can play at sounding anti-capitalist (e.g., contemporary Venezuela), but the future of prosperity in virtually all poor countries depends on developing markets and state institutions that support markets in a synergistic and democratic manner. It is up to us to dirty our hands (and hearts?) to help them attain this, rather than remaining pure but ineffectual, fighting for a socialist world that, far from struggling to be born, simply cannot exist.

It's the narcissism of small differences, I guess. Krugman gets it good and hard for being the wrong kind of market-friendly egalitarian liberal social democrat. Klein gets a lovingly exasperated “Oh Naomi!” for her benighted advocacy of the dangerously impossible. Yet, in the end, Gintis does not allow his sentiments to overcome his final judgment. Krugman and Klein both get two lousy stars.

Krugman's Nobel

It is incontestably well-deserved. My reaction was like Tyler's. I was surprised that he got it while Bush was still in office, since that signals to many that he's being rewarded for his ideology, not his work, which is a shame. But I very much like the idea of the committee honoring publicly-engaged economists. I'd like to see more economists (and philosophers, too!) of Krugman's caliber taking such an active role in public intellectual life. I think he's been a source of more confusion than clarity on economic inequality and politics, which is why I'm finishing a paper on the subject with Krugman as the foil. But if my paper is of any worth, it will be partly because Krugman has raised the issue so forcefully and brought it so much more attention. Of course, his heightened prestige certainly doesn't make my job any easier. But that's cool.

Also like Tyler, Krugman's piece on “Ricardo's Difficult Idea” is one of my favorite pieces of lucid economic explanation.