No Omniscience or Incorruptibility

Tibor R. Machan

Aristotle was a sage and his reply to Plato's presentation of an ideal society, The Republic, which was to have an incorruptible leader--an idea some think even Plato didn't mean for anyone to try to implement--was to admit that in theory a perfect leader might be swell but no one can guarantee incorruptibility. Actually, corruption is most likely in such cases. So it is better to embrace a system closer to one wherein citizens share in governing themselves instead of relying on the great, wise leader.

This lesson of Aristotle should be kept in mind by the dreamers, such as Professor Paul Krugman of Princeton University and of The New York Times, and some other fans of the early 20th century British economist John Maynard Keynes. Keynes liked free markets up to a point but because he associated them with cyclical problems--failing to see, as the Austrians have taught us, that the business cycle is mostly a government induced phenomenon--he also believed that some regulations, some government tinkering is necessary to keep the system stable. Stability is a big deal to the interventionists and since they do not trust that the spontaneous market place is going to be stable enough, they champion government intervention in the expectation that that's going to avert the problem.

I know a fairly famous individual who has recently rediscovered Keynes and seems, based on his latest writings, sympathetic to these notions now even though in the past he has championed the free market, mostly on grounds of its overall superior productivity. By this is meant that free markets enable, even encourage people to make wealth, more wealth than any alternative system. A utilitarian would find this an irresistible reason for embracing a system since wealth to the utilitarian is nearly everything, including freedom. One can buy freedom if one is wealthy enough, goes the argument, so just get a system that is highly productive and have it done with, no need to argue about the individual's right to economic liberty endlessly. But because in relatively free markets there are occasional ups and downs of the entire system, my pal suggests that the Keynesian policy of injecting (artificial) demand into an economy is a good idea, at least in dire enough circumstances.

OK, it is not in much dispute that if there were some omniscient governmental agent or agency that could tell what needs to be done, it could help an economy to recover from down turns. Never mind what caused these down turns, let's just grant they exist now and then. And a super duper economic czar or committee may be just what could come in handy.

But here is the rub and where Aristotle's teaching, along with modern public choice theory, needs to be taken very, very seriously. For one, if the czar is corruptible, which by a sensible understanding of human nature and politics is undeniable, the expected and hoped for wise intervention is not going to be forthcoming. All the bright Keyneses and Krugmans and whoever will not be able to make sure that the best conceivable approach is taken to rescuing the economy, no sir. The best and the brightest can--and when they have massive power at their disposal will--go bad.

Furthermore there is that fatal conceit of which F. A. Hayek reminded us, the belief by the would be leaders, enamored by their smarts, that they can know what the economy needs--public works here, printing some money there, borrowing more somewhere else, funding infrastructure projects, etc. Oh how promising it all looks until you think it through and realize that, just as public works theory predicts, the funds meant for all this good stuff are going to be ignorantly--as well as and in part because of it corruptly--used. What in the imagination of a Plato or Keynes comes off as God sent turns into a disaster or, at most, a pretty messy effort to do something, anything whatever, to help matters.

My acquaintance, who appears to be a new Keynesian now, may find this too pessimistic, even misanthropic. I just think of it as Aristotelian realism and prudence.