The Benefits of Economic Freedom Require (guess what?) An Economy

In 2003, Iraq was turned into a nation of people with no jobs and no way to get jobs, no daily routine, and essentially nothing to lose. However, the existence of an occupying power, and a few fanatic demagogues filled the void for many of those newly directionless people, and what happenned next is pretty well known.  It should have been predictable


Let me take a stab at a rough division into sectors of economies in the modern world:

• Government proper - military, police, courts, postal service, tax collection, ...
• Government-industrial complex - i.e. most manufacturing in the USSR as well as in Saddam Hussein's Iraq, but should we also include road building and maintenance in the U.S.?
• Education - may well belong to some larger category - to be determined.
• Private goods-creation (industry but also building, restaurants, ...)
• The business of exchange of everything else
• The Primordial Soup, from which new political life forms are apt to emerge. The people with nothing to do and nothing to lose.

So you could say one factor in Iraq was that half or more of the population got thrown into the primordial soup overnight. A similar thing happened in post-Soviet Russia.

Iraq seems to have been approached with the simplistic idea that, with the help of the "invisible hand":


  Toppling the dictator ==>
          Freedom and Democracy ==>
                  Things will be "normal" like in the U.S.

Had our government instead done a sober analysis of the institutions that kept peoples' lives from falling apart, and tried to preserve their continuity (with improvements to be made over time), we would not have set up such a breeding ground for both plain criminality (first looting and trashing the infrastructure) and later, a multi-headed beast of a terrorist insurgency.

These institutions included "inefficient" state run industry (by the quotes I'm not asserting it was efficient, but compared to what? To nothing being manufactured, and people having no place to go to work?), which I gather the occupying forces tried to disband overnight, as well as the military, which was either disbanded or non-functional during the period when most of what was left of Iraq's infrastructure was destroyed, which made it far more difficult to bring back any sort of normal economic life, which in turn multiplied the number of people being dumped into the primordial soup.

The disbanding of the state industrial complex was done in the name of Free Marketism, but it took the Iraqis further away from the ideal of a humming society of people producing and exchanging goods.

"Free marketers" tend to be fixated on noninterference and nonparticipation by government to the point of overlooking the destruction of the closest thing to a market that there was, and leaving a chaotic vacuum, as happened in Iraq and Russia.  The Russia case is well described in Sale of the Century: Russia's Wild Ride from Communism to Capitalism.

[this is an update of a previous post]

Bipolarism vs Radical Centeredness

"There are two kinds of people in the world,
     people who think there are two kinds of people in the world,
     and people who don't."
                    --source unknown

"You're either with us or against us".  --George W. Bush

"You're either part of the solution or part of the problem." --Eldridge Cleaver

Usually, when you hear "There are two kinds of people in the world...", you can expect to hear two characteristics one of which the speaker approves of and thinks he or she has, and the other is bad in any of an infinite number of ways (lazy, greedy, stupid, elitist, ...).

When confronted with a problem, our minds are always tempted to find out who is to blame, and, if possible, do something to them -- in the mild case, maybe putting them out of office.  When we can't do much directly, we take inordinate pleasure in labeling, ridiculing, and disparaging those we think are to blame; we often compete to see who comes up with the best zinger, or put-down.  Frequently, I read comment sections of blogs, and that is practically all that I see going on -- clever and not so clever put-downs of some favorite target or class of people.

What is the purpose of all this labeling, ridiculing or satirizing of some perceived villain or fool, that goes on when like minded people get together?  I think it sharpens the consensus on who the people to blame are.  They are the people with nice clothes and their noses in the air, or the people who pay us too little, well no, they are the rich, or a further refinement: they are the capitalist ruling class or especially the defense contractors or oil magnates or bankers or the international Jewish conspiracy.   Or we may start out talking about rude, lazy and immoral teenagers, well particularly the, you know, inner city type, or well it's them, but what's behind them are the "politically correct" teachers, and "Did you know that political correctness is really cultural Marxism, and really, it is the Marxists and other totalitarians (Fascists, Marxists, they're all the same) who are behind everything, and anyone who wants government to solve problems has at least one foot in their camp?"

How likely is this to really solve our problems?  It may be that for most of the last 100,000 years of human existence, it worked really well (for reasons that we might consider later), and even in modern times it may have served well - when the world was rapidly being conquered with brute force by a German Nazi and Japanese militarist coalition, and it was feasible to totally demolish that juggernaut.

But what if the threat propagates not through brute force, but through ideological or religious seduction, and is diffuse, with small outposts and cells in friendly and neutral countries, and even our own country.

And what if the problem is a breakdown in the smooth functioning of the economy, and any analogy to invading armies with distinct geographical bases or anything remotely like that only occur because our minds just leap to that sort of image when we feel threatened or anxious?

Political and other belief systems tend to be more than belief systems.  Like fashion statements among teenagers, they become inseparable from our identities.  And at the same time, a counter-identity is formed in our minds, especially in troubled or anxious times, of those people that believe that other thing.  And you can tell them by the way they talk, dress, what they eat, what sports they enjoy if any, and so on.

In times of fear and anger at least, most people go around mentally dividing the world into good (or sane, or calm, or clear-headed, or angry-as-they-should-be) people like me vs those others who are screwing things up -- acting as if that was their purpose in life -- that they were absolutely born for the purpose of screwing up the world.

There are many stories of people going around confused, their lives having no meaning until that aha moment when one realizes "I am a proud member of group A, and the noblest thing to do in life is to battle those other people, of group B".

The more alarmed and fearful we are, the more clear and distinct we want the distinction to be.

[to be continued?]

Extremism is a Boring Rut. Try Radical Centeredness

Why centeredness, and not, say Radical Centrism?  Part of my sense of something pulling me towards "the center" is just that it doesn't pretend to some sort of ideological purity, when I see "-ism", especially some fresh "ism" whose corners have never gotten worn and smoothed by reality, I am on the lookout for the sort of fervent ideology that can lead to disaster, such as Bolshevism in Russia in 1917, and free market fundamentalism in Russia in the 1990s.

Funny thing.  In the comment section of a Jonah Goldberg column, (one which vividly illustrates my point in "Intimations of Bipolarity" about taking "inordinate pleasure in labeling, ridiculing, and disparaging [the other side]" and competing to comes up with the best zinger/put-down ... 60 comments and counting, a real zinger-fest at the expense of Joe Biden.  To be fair, it reminds me of Dan Quale, and all the silly unproductive ink spilled over him) Um, as I say, in the comment section of a Jonah Goldberg column, I read "After [somebody's debunking of Biden] isn't this just one more nail in the coffin of liberals' self-regard as rigid empiricists?".  Yeah, just poll 100 liberals and see how many of them confirm "Yes, I'm a proud rigid empiricist."

Except for the 100% faith based types, don't all stripes like to say "Just look at the facts".  That's "rigid empiricism" in case you weren't familiar with the phrase.  But "rigid empiricist" sounds so much more pompous, and somewhere there must be a style sheet that says "Right-thinking patriots should be presented as wanting to 'just look at the facts' while Leftist rascals should be quoted as wanting to take a "rigidly empirical" approach to the world.

Um, did I just change the subject?  Well, I was thinking of the 50s especially when "consensus" and "pragmatic" were words used fondly to describe the traits of early Americans, as in the work of  Daniel J. Boorstin, especially in his The Americans series.  Back then it was the far left who had no use for lily-livered pragmatism.

Nowadays, the right coalition is more prone to attack "pragmatism" (Not that the Trotskyites wouldn't, but they are down in a deep well where no one can hear them).  Jonah Goldberg has done a good job of this.  I picked up my copy of his Liberal Fascists, and though I haven't touched it in weeks, it happened to be bookmarked to page 52, where he says: "Crudely, Pragmatism is a form of relativism which holds that any belief that is useful is therefore necessarily true.  Conversely, any truth that is inconvenient or non-useful is necessarily untrue.  Mussolini's useful truth was the concept of a 'totalitarian' society ... The practical consequence of this idea was that everything was 'fair game' if it furthered the ends of the state".  By this (crude indeed) definition, I would say there is a tremendous amount of pragmatism in movement conservatism.  For examples, see The Integration of Theory and Practice: A Program for the New Traditionalist Movement by Eric Heubeck.

[to be continued?]

Why Subsidize Solar, etc? Fragment of debate on Grist.org

The debate is on grist.org at http://www.grist.org/politics/2011-10-18-conservatives-end-support-americas-fastest-growing-industry.

Q: if this industry is so great, why does it need governmental support?

A: The space industry got billions in government support for years
before it began to make huge contributions to weather prediction,
communication, GPS.  The first computers were built for government
applications.  The Transistor, laser, micro-circuits and much more came
out of Bell Labs, a sort of R&D mega-university that would only have
existed in the regulated world of the old AT&T.  Jet planes were a
product of government military investment.  The Internet was a purely
governmental creation, developed as a robust worldwide platform that
happened to be able to support an open networked marketplace while
Microsoft and AOL were developing centralized command and control based
networks.

Sun-based (including wind and hydro) power will succeed
in time even with no support.  Solar is largely a product of
semiconductor physics and materials science which have huge momentum if
only more of it would be focused on photovoltaic capture, and we already
see solar power cost-effectiveness growing much much faster then the
GDP.  If it takes a decade or two longer for it to make a big impact,
due to lack of gov't support, we will be asking ourselves why we had to
blow up so many mountains, and keep pumping up the accidental and
inordinate powers of Saudi princes, and Venezuala, Russia for those
decades, and maybe fight a couple more avoidable wars, and yes maybe
accidentally transform the climate system in disastrous ways.

Trickle Up Economics - It's Not a Joke

I thought of the phrase  "trickle up economics" at least as far back last June, when I wrote about it in More on my sad state PLUS Trickle up Economics.  Others have thought of it before me, but only now do I see the phrase used much in public debate, as we hear it from the "Occupy Wall Street" and its associated movements.  I have no idea if that movement will do any good.  I do notice the right is having a field day scaring people with "Class Warfare" talk.

But as Warren Buffet said “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”  The remark was noted in 2006 by Ben Stein, who in many ways seems far-right, but here he was favorably recalling a conversation with Buffet about guess what?  The fact that he pays so much less tax percentage-wise than his secretaries and other staff (apparently Buffet has been on this subject for at least 5 years)  And here is Stein providing a fact-check on the claim that lower taxes are sure to bring in more revenue by stimulating the economy:

This is supposedly proved by the history of tax receipts since my friend George W. Bush became president.

In fact, the federal government collected roughly $1.004 trillion in income taxes from individuals in fiscal 2000, the last full year of President Bill Clinton’s merry rule. It fell to a low of $794 billion in 2003 after Mr. Bush’s tax cuts (but not, you understand, because of them, his supporters like to say).

But enough on the "fair share" argument.  I want to talk about examples of the ultra-upper-class relaxing some of their tight grip on wealth improved the lives of the poorer classes, and how that "trickled up" to the ultra-upper-class in the form of tremendous improvements in their quality of life.

Once upon a time, Barons and such were vastly richer than the common people who were illiterate and lived in squalid huts.  But these Barons still had to live in drafty stone castles, and be subject to the black plague and the most awful lingering diseases of old age that started at around age 40.  Also, due to the scarcity (and indivisibility) of privileged positions, they tended to get murdered by their peers.  They could certainly not eat strawberries in the winter or fly to warmer climates.

Why do today's richest .01% live so much better lives?  Why can they live in climate controlled houses bigger and more comfortable than the old castles?  Why do they enjoy all the exotic and wonderful food of the world, fly all over the world, suffer so little from disease; enjoy life to the age of 80 and older, with new hips and knees when they need them?  It is because over the last several centuries, the nations of the world (sometimes to the dismay of their 18th, 19th and 20th century counterparts) found ways to educate most; perhaps the vast majority of people, not just the rich few who could have multiple tutors.  And the nations invested in public works, and public transportation, and finally in the 19th and 20th centuries, limits were placed on the working hours of the laboring classes which allowed the creative and energetic to better themselves.  All of this involved the nation spending for the common good

What's that got to do with improving lives of Barons? Some of the former peasants with the help of literacy became printers producing more books than had ever been seen before.  With the Industrial Revolution, some of them rose to be manufacturers, inventing new mechanisms for efficiency and far better transportation.

Also, quite recently, in the U.S. in particular the GI bill and highly subsidized state colleges helped make the technological explosion of the last few decades possible, which has benefited everyone's quality of life, including the lives of the richest .01% -- probably benefited them far beyond what they gave up in taxes.

Around 1970, I went to college in my home town and paid $150 tuition (state subsidized) for a semester.  Now their tuition is over $4,000.

It takes a huge educated middle class to create the world that we in the most developed countries live today.

That is trickle up economics.  I hope to see the day when thousands of right wing think tanks and movement and pseudo-movements stop waging war to bring about a government that can be "drowned in the bathtub", and allowing the advantages of the rich to snowball and snowball (by the way Snowball is the title of a book by Warren Buffet) until they are in a totally different world from the rest of us.  I believe broad based prosperity (not the widening gap between rich and poor of the last several decades) is in everyone's interest, and think there has to be some way this will penetrate even the minds of most of the inhabitants of Richistan, and their political allies.

How Consensus is Shaped by Pivotal Events and How Consensus Defines What is Possible

The consensus view of reality generated in earlier times by the much maligned mainstream media, or MMMSM (esp. in the days of the big three television networks) had massive flaws and deficiencies, but at least they never stampeded Americans into the sort of madness that German culture and institutions underwent during the 1930s, which lead to World War II.

I'm afraid this faint praise may represent an achievement far more difficult and fragile than we would imagine or wish.  My impression is that most of us had a "good enough to get by" sense of who or what institutions to trust, more or less, and our institutions were structured such that trusting them would not lead to civilization's collapse.

Very recently, I learned something new about the structure of the institution which would become the Nazi Goebbels' propaganda ministry, which shaped the worldviews of true believers prior to 1933, and soon after that, shaped the worldviews of the German people as a whole.  According to Prof. Thomas Childers, in his course of lectures on tape, Europe and Western Civilization in the Modern Age, at Goebbels' direction, the Nazis went to taverns and beer halls and got people to talk about what issues they were angry about, in order to fine tune the Nazi message.  Goebbels said "That propaganda is good which leads to success, and that is bad which fails to achieve the desired result .. It is not propaganda’s task to be intelligent, its task is to lead to success."  The ideas the Nazis put in their speeches and newspapers were mostly about Germany's humiliation, the idea that the whole world was out to get Germany, the sense of humiliation and outrage of ordinary Germans, including their being looked down on by elites, and unemployment and the like.  Even when in power, some early attempts to go after the Jews had to be rolled back until the German people were better conditioned.  It was not until 1938, 5 years after Hitler became Chancellor that the Nazi government launched Kristallnacht, which was the real beginning of  a relentless centralized policy of persecution (after years of centrally encouraged thuggish persecution).

[To be continued]

Elizabeth Warren, George Will, Social Contracts, and Paying it Forward

Elizabeth Warren's unplanned YouTube appearance ("nobody in this country ... got rich on their own" and "you take a hunk of that and pay forward for the next kid who comes along") has gotten George Will, the Von Mises Institute, (I seem to get 17,900 hits googling "Elizabeth Warren" + site:mises.org -- your mileage may vary), and the right from coast to coast quite steamed up.  It looks as if they think they've found a "teachable moment".

George Will draws on a William F. Buckley quip ("a pyromaniac in a field of straw men"), and says she "refutes propositions no one asserts", then refutes a proposition that Warren never asserted: "that the collectivity (Warren’s 'the rest of us') is entitled to take as much as it pleases of the results of the striving".  Much of this is pure spin - some creepy thing called "the collectivity" vs the "rest of us", but there is one clear-cut and bold distortion: "entitled to take as much as it pleases"? Where does that come from?

Amartya Sen, in The Idea of Justice breaks with the idea of the social contract (mentioned elsewhere by Warren), which, according to Sen, anchors our ideas of justice to some grand view of the ideal state and/or society in which contradictory impulses must be rigorously resolved. By "grand view" I do not especially mean one of "big government", but one rigorously based on some theory (whether of of "big government" or government which "gets out of the way").

Will seems to view any concept of "fairness" as incompatible with freedom to create and exchange.

Often, there are two or more values that would appeal to most people's common sense, but there are always situations where one value can only be favored at the expense of the other.  In this situation, people who want everything to be governed by a simple and absolute set of axioms (from Ayn Rand and von Mises to Karl Marx) have embrace one value and treat the other as nonexistent or wicked.

Anyone but a highly doctrinaire socialist can see value in the empowerment of individuals to produce and exchange freely, and not to have possessions taken away arbitrarily.

On the other hand, I think that anyone whose mind has not been closed would see a great deal of arbitrary injustice in the world, and feel some urgency about addressing the most exceptional cases.  Such closed mindedness can have many origins:

• rigid ideology,
• excessive fear that "the path to Hell is paved with good intentions" (Good intentions frequently don't lead to Hell, and sometimes the path to Hell is paved by obviously bad intentions, like those of Adolf Hitler)
• fear of putting ones foot on the "slippery slope".
• the natural human tendency (often cleverly manipulated) to dismiss people unlike us as not really human.
• the tendency to think "there must be a good reason for it", often assisted by clever rationalizations (e.g. Malthusianism, Social Darwinism, and much religious thought).

Suppose you are walking along a path by a river, and on your left you spot a man a couple of dozen feet off shore, drowning, and to your right, on someone else's lawn, a length of rope, and no owner in sight.  Do you grab the rope and throw one end to the man?  Or do you say "no, I can never commandeer someone else's property that way, because that is the slippery slope to socialism and the Gulag.  I think common sense dictates the former.  On the other hand, if you happened to be carrying a gun to assert your support for the second amendment, and a gang of kids was passing by watching the man drowning and laughing (and no rope) would you point your gun at them, and say "You have to help me save that man", and threaten to shoot them unless they formed a human chain in the water to reach out and grab him?  Probably not.

What I am saying is, without even imagining the grand social contract that everyone ought to agree to for making the world as just as possible, you can see cases of unwarranted suffering and dying where common sense and common humanity demand you take some action.  I have used the provocative word demand in an emotional sense, meaning to express some disapproval of a person who passed by the drowning man and the rope and did nothing, not that I imagine some ideal world in which that person would be punished as a criminal.

There are so many exceptional cases of people suffering and dying through little or no fault of their own (and yes, the man in the river might have done something stupid to get there), and I think it is wrongheaded and foolish not to vote for (because I believe in democracy, not Big Brother) some actions to help the very unlucky, whether they are born in a desperately poor country, or are children with poor, uncaring, or foolish parents.

Property is a wonderful thing, but it is not a god to be worshiped, as some people do, in my opinion.  Like it or not, the reason we can call something "our property", is due to social agreement and to enforcement by a democratic state, and a secure and respectful society which makes it possible to create and exchange, and largely keep what is acquired in that manner.  But there is some cost of maintenance of the government and civil society that makes this possible.

Education can assist the children of the poor (through no fault of their own, that is, of the children) to prosper and take part in a flourishing economy.  But we all ("liberals" especially), get carried away with patting ourselves on the back and thinking that the things we believe in are virtuous.

Education of our own and other people's children (and for some of us, only other people's children) is also our insurance for not growing old in an ignorant and uncivilized world.  Some of us should be wondering if we bought too little insurance, or paid too little attention to its nature and effectiveness.  At one time, everyone was solely responsible for the people who would take care of them as they grew older.  When this is the case, people will have many children to give themselves better odds.  All in all, I don't think it worked very well, and I think some system (which could certainly differ in many ways from the present one) for keeping up the quality (moral and practical) of the children we will have to live with as adults in 10-20 years is a completely practical thing.  But if it was completely voluntary, and I could choose whether or not to contribute (and obviously very little would be effected strictly by my choice), we might well, through millions of individual choices, give up on the idea.

There is a very good case, with which I at least 90% agree with, for setting up a world where the hardworking productive adult has more than the lazy or those who want to produce something nobody wants.  But what a child deserves is not a function of the quality of their parents.  And unless we want to practice enforced eugenics (which I don't and almost nobody does today), we will have to live in a world where the children of the very poor get only as much education (moral and practical) as we are willing and able to provide. 

Failing this, we might at worst get a society where no amount of money can pay for "good help" (so much for insuring ourselves by saving gold).  Or we may have to keep millions of badly raised and educated adults in prison (We might wish them away -- execution was at one time so much cheaper than having a prison system, but it always had its problems, and now, with so many safeguards in the form of appeals, I think it is the most expensive kind of punishment).