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Wednesday, November 16, 2005

A Perspective On Where We Are

I thought it might be useful to take a stab at presenting a perspective on where we are historically as seen through the lens of some really big ideas discussed on this blog. As referenced in this post, a competition between traditional religious belief and aetheism (which has been a wellspring for forms of non-traditional worship) has shaped the world at many levels. Ideas from this arena are intertwined with threads of thought in the political and economic realm. Attempts at a more rational and neatly designed realm morphed into brutal authoritarian regimes and somewhat more benign social democracies. Even societies like America developed in the direction of greater government interference and control over more aspects of life. Statism was on the march. The story of this counter-revolution against an emerging trend of political freedom and the growing extended order of cooperation of the industrial revolution, is captured in a terrific book - Against The Dead Hand by Brink Lindsey. Here are some excerpts from a book review by Richard Eberling.

By all outward signs and impressions, the current age represents a dramatic rebirth of free-market capitalism and its institutional foundations. Socialism and the interventionist-welfare state have been defeated. A grand vista of a new century of personal, civil, and economic freedom may be right in front of us.

Perhaps it will be, but there are those who have concerns and doubts about the continuing direction of the global economy. One of these is Brink Lindsey of the Cato Institute, who explains the reasons for his concerns in his new book, Against the Dead Head: The Uncertain Struggle for Global Capitalism. The trend towards a greater degree of economic freedom in various parts of the world over the last 20 years, Lindsey argues, has not been based on any thorough and positive belief in the virtues of the market society or the productivity of it. It has happened by default and with great reluctance in many countries simply because of the abject failure of government planning, regulation, and control.

Lindsey explains this thesis on a broad canvas on which he takes the reader on a journey that covers the political, social, and economic trend of ideas during the last two and a half centuries. He explains how the ideas of the classical liberals and classical economists liberated the world from its centuries-old system of government domination of society. The thinkers of the 18th and first half of the 19th centuries articulated the case for free men, free markets, and international free trade. The success of these ideas revolutionized the world, bringing about more freedom and prosperity than the human race had ever known.

But beginning in the second half of the 19th century, a variety of counterrevolutionary ideas emerged and began to have increasing influence and power over the minds of men and the direction of government policy. These ideas were socialism, protectionism, and the welfare state. Why they had arisen and successfully challenged the free-market philosophy, Lindsey says, was partly owing to the triumphs of the new market society.

Individual freedom, developing industrialism, and the new contract-based society weakened and undermined the traditional cultural and institutional anchors of society. Men were thrown into a new type of social order that created a sense of disorientation in many people and a disconnection from the customary arrangements that seemed to represent stability for many people. Socialism and the new mercantilist system of protection, regulation, and welfare seemed to offer a tamed and more humane industrial society.

But Lindsey tempers the notion that good, free-market policies will slowly but surely supersede the bad, interventionist, and regulatory policies of the past. “Free-market partisans sometimes talk as if they have already won the war of ideas, but the self-congratulations are dangerously premature. They have confused passing a turning point with bringing the campaign to completion.” The opponents of the free-market society still criticize self-interested, decentralized, market decision making and advocate “public interested” political management. And they still argue that the opposite of government planning and regulation is “chaos” and “social injustice.”

Thus, the task of the proponent of economic liberty, Lindsey concludes, is to hope that a change in ideologies and ideas has really begun to take hold but also to remain ever vigilant and determined to fight the large number of battles that still remain ahead if individual freedom and the free market are really to triumph around the world.

This battle of ideas is ongoing. Even though many thinking people acknowledge the failure of socialism, they still have hope for social democracy. If they would only study the lessons of The Fatal Conceit!! Mark Steyn explains in this article, why they should be prepared to see social democracy fail. Excerpts to follow:

As Gerald Ford likes to say, “A government big enough to give you everything you want is big enough to take away everything you have.”

And that’s true. But there’s an intermediate stage: A government big enough to give you everything you want isn’t big enough to get you to give any of it back.

That’s the position European governments find themselves in. Their citizens have become hooked on unaffordable levels of social programs which in the end will put those countries out of business. Just to get the Social Security debate in perspective, projected public pensions liabilities are expected to rise by 2040 to about 6.8% of GDP in the US. In Greece, the figure is 25% - ie, total societal collapse. So what? shrug the voters. Not my problem. I paid my taxes, I want my benefits.

This is the paradox of “social democracy”. When you demand lower taxes and less government, you’re damned by the left as “selfish”. And, to be honest, in my case that’s true. I’m glad to find a town road at the bottom of my drive, and I’m happy to pay for the army and a new fire truck for a volunteer fire department every now and then, but, other than that, I’d like to keep everything I earn and spend it on my priorities.

The left, on the other hand, offers an appeal to moral virtue: it’s better to pay more in taxes and to share the burdens as a community. It’s kinder, gentler, more compassionate, more equitable. Unfortunately, as recent European election results demonstrate, nothing makes a citizen more selfish than socially equitable communitarianism: once a fellow’s enjoying the fruits of government health care and all the rest, he couldn’t give a hoot about the broader societal interest; he’s got his, and if it’s going to bankrupt the state a generation hence, well, as long as they can keep the checks coming till he’s dead, it’s fine by him. “Social democracy” is, in that sense, explicitly anti-social.

Somewhere along the way these countries redefined the relationship between government and citizen into something closer to pusher and junkie. And once you’ve done that, it’s very hard to persuade the junkie to cut back his habit. Thus, the general acceptance everywhere but America that the state should run your health care: A citizen of an advanced democracy expects to be able to choose from dozens of breakfast cereals at the supermarket, hundreds of movies at the DVD stores and millions of porno sites on the Internet, but when it comes to life-or-death decisions about his own body he’s happy to have the choice taken out of his hands and given to the government.

The modern social democratic state is so corrosive of its citizens’ will and so enervating in its elevation of secondary priorities (welfare, paid vacation) over primary ones (family, national defense) that most of them will not survive this great existential struggle. In America, a wartime president should understand that this is no time to increase his own citizenry’s addiction to entitlement. A government big enough to give you everything you want is big enough to take away everything you have, starting with your sense of self-reliance.

National Review, October 28th 2005

The Fatal Conceit Always Fails!

...the nations with the most economic freedom are also the most prosperous.

"The road to growth is paved with liberty."

What generates economic growth, more business creation and more jobs are lower taxes, less central planning and less government, as unambiguously demonstrated by country-by-country analyses and by the widely divergent growth rates within the United States between the different states.

In The Fatal Conceit, the Nobel laureate economist F.A. Hayek writes of the key ideological conflict in economics. On the one hand are "the advocates of the spontaneous extended human order created by a competitive market," and on the other hand, "those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources."

What has failed is the latter, collectivism--the "fatal conceit" that says that a single mind, a single committee, can somehow do things better than the spontaneous, unstructured, complex, and creative forces of the market.

Even as society grows more complex, the arguement is even more appropriate.

It is not a matter of having better data collection and bigger computers. The basic fact is that greater complexity makes the processes increasingly unknowable. "Data" presuppose a scheme of classification, a formulation of categories, a practice of deciding what will be counted as what. Greater complexity makes any interpretation of the whole less complete and less definitive. The economic cosmos is unknowable because the categories of goods and services become so multitudinous and the relations among them impossible to interpret in any useful way by central authority.

Because the hardest part of knowing is, not merely getting the facts, but getting the interpretation right, the complexity that technology brings tends to outstrip the informational capabilities of the regulator. The economy is less "masterable", not more.

Except in the most clear-cut cases of systemic harm, such as pollution, the idea that government officials can figure out how to improve upon the results of decentralized, voluntary decision-making becomes more and more questionable. In his Nobel lecture, Hayek called that supposition the "pretense of knowledge."

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