Saturday, June 27, 2009

The Nonsense of "A new world order"

Tibor R. Machan

Business Week reports--July 6, 2009, page 8--that Roger Altman, Deputy Treasury Secretary under President Bill Clinton, now CEO of an investment banking boutique (Evercore Partners), has, like President Sarkozy of France, concluded that it's the end for capitalism. As Business Week tells it, Boltman wrote in Foreign Affairs magazine that "The era of laissez-faire economics is over, and statism, once discredited, is making a comeback--even in the U.S. Also out of vague is globalization."

Yes, Virginia, there are still many grown up people who believe that there has been rampant laissez-faire economics around the world, especially in the United States of America and especially during the last few decades. Business Week's account of Bolton's opinions also seems to accepts, without any skepticism, that statism is something novel while the laissez-faire is old.

Sadly this is all wrong. Statism has been the norm for thousands of years, what with countries throughout history being ruled from top down and with their economies being managed as if they were firms instead of societies. It is only in the last 400 years or so that the classical liberal idea of a relatively free economy has caught on here and there, and even then mainly in the rhetoric of various, sometimes admittedly prominent academic economists, not in the public philosophies of nations. To its credit, Business Week does suggest that any move away from globalization is going to prove to be "an especially hard toll on developing nations." It might have added the plain historical fact that prior to the emergence of the halting policy of very partial laissez-faire most of the world lingered in utter poverty. Apart from the rulers and their minions, few people had any wealth to speak of. Only in the most recent and brief period of history has the limited measure of global free trade managed to bring forth prosperity for ordinary people who are constantly being badgered about it, what with all the denunciation of commercialization, greed and such in light of some degree of enthusiasm for this new development. Statism, which has retarded not only commerce but nearly every decent human endeavor way in discernibly brutal ways, has been the norm, just as one of the few--relatively speaking--prominent champions of laissez-faire, the late Milton Freidman observed. And Thomas Jefferson made it clear to that governments tend to expand in power and freedom tends to be in retreat more than not.

So, the point to get clear on, is that the current retreat from the small measure of laissez-faire around the globe and, especially, America, is quite routine. Such reactionary developments do not deserve to be designated as the dawning of "a new world order." Properly put, these developments would be a return to the miserable political economies that have dominated the world for over centuries but with a few short periods of relief here and there. And such statism has usually been promoted by those in the ruling classes, like Mr. Altman, who see in it the makings of a rightly ordered universe. It is the idea that you and I and all people ought to be in charge of their own lives and ought to pursue our various projects freely, in voluntary cooperation instead of as regimented by these rulers, that is new.

But those who insist on directing the rest of us even when no one asked them to, have no interest in getting the historical facts right. The idea of laissez-faire economics arises from the long suppressed and struggling idea, finally asserted by the American Founders, that no one may rule another or, as Abraham Lincoln put it, that “No man is good enough to govern another man, without that other’s consent.” The rulers, of course, would not hear of this, in large part because living by that principle would deprive them of the opportunity to rule. (This, more than anything else, is the source of anti-Americanism in the midst of the world's upper classes, given that America is closely linked to the idea Lincoln gave voice to, even if in reality it hasn't followed that principles by a long shot!)

Thursday, June 25, 2009

Hope versus Reality

Tibor R. Machan

In his column in The New York Times on June 25, 2009, Judge Richard Posner wrote that "The most promising reform would be to give the Federal Reserve, the National Economic Council or the president’s Council of Economic Advisers the ability to collect and analyze financial intelligence and do emergency planning. Regulators failed to prevent the financial collapse not because they lacked adequate powers but because they lacked information, a culture of inquiry and a contingency plan." But then he immediately adds that "There were abundant warnings of impending economic disaster. Had they been investigated rather than ignored, we might not be in the fix that we are in today."

The confidence shown in regulators in the first statement seems to me to be plainly undermined by the historical claim in the second, one that seems to follows from a certain plausible understanding of public choice theory, actually--ignoring rather than investigating warnings would come naturally to those who are, whether consciously or not, embarking upon vested interest dealing, in this instance working for regulations to continue instead of doing what might make them unnecessary in time. Regulators have a good job and it is no surprise that they might work not so much to fix problems they perceive in the market place but to keep working at what keeps them employed and well fed.

In free markets, to the extent that they exist, such vested interest dealings are checked by competition and budgetary constraints (to the extent these are not thwarted by government policies that often produce monopolies). A shoe repairer may be tempted to fix shoes not quite as well as they need to be fixed but just enough that they will last a while but need to be returned for further repair. Indeed, automobile repairers are often suspected of this. What, apart from conscientiousness, keeps such folks on the straight and narrow is competition, the knowledge that if they don't do the work well enough someone else will jump in to do so. One main reason that bureaucracies are generally sluggish and unenthusiastic about serving the public--as distinct from private vendors--is this element of constant competition, combined with the fact that bureaucrats gain their income from taxes which can often be raised with impunity by those who hire them.

What public choice theorists claim is that bureaucrats have a far better opportunity to yield to the temptation of malpractice than are those in the private sector. The theory does not claim that all bureaucrats are cheats and all those in the private sector are professionally responsible. But it identifies an evident tendency and shows it to exist through the study of economic and political history. Common sense supports this, as well, when most people notice that if they go to, say, the Department of Motor Vehicles (one of the more visible government outfits), they mostly get a reluctant, bored, at times even curmudgeonly treatment, whereas in the private sector the routine tends to be eagerness to serve, to generate and keep business.

There is an element about public choice theory that economists do not emphasize often enough, namely, that the objectives of regulators are often very obscure, unclear, even contradictory. For example, governments often embark on historical preservation but at the same time they are supposed to make sure that building and other facilities are properly managed, kept safe, etc. But historical preservation mostly require keeping things in their original form, while the pursuit of safety involves making use of the most up to date technology and science. One can generalize this kind of conflict within government policies all over the place--which is what accounts for vigilant propaganda against smoking while tobacco farmers keep receiving government subsidies.

As far as I can tell, entrusting to government officials anything other than the job the American Founders understood as theirs, namely, securing our basic rights, is seriously misguided. Not only is most government regulation a violation of due process, meaning it acts preemptively by restraining professionals in various fields of endeavor who have not done anyone any wrong. But it is also an ineffective devices, just as Judge Posner points out in his article.

Tuesday, June 23, 2009

Why We can But You or I cannot be Great

Tibor R. Machan

The evidence for this is overwhelming and out there for most to observe. Take the Academy Awards, where those receiving Oscars routinely disclaim personal credit but claim it aplenty for the team, the association, the group. Or take most team sports where any mention of one's own superb contribution is suppressed in favor of how great the team has been.

America or Germany or any other country is often praised for superior achievements while individual Americans or Germans need to show humility lest they be deemed braggarts. Even in sports such as tennis, where there's a dominance of individual performance, taking credit for doing well is rare. Either bona fide or feigned humility appear to be what's acceptable and practiced, albeit sometimes with a wink.

But why? What's wrong with laying claim to one's achievements provided one is honest about them? Yes, one can get ridiculously arrogant, such as the late great chess master Bobby Fisher was. And here and there, close up to a good shot, most tennis players exhibit pride on the court, at least with body language. Still, the idea that "we are great" is far more easily put out there than "I am great," even though it is rare that we can be great without those who make up us also being great.

My suggestion is that most folks are too intimidate by all the preachings that surround us concerning how we must be unselfish, how taking credit is vanity or conceit, while praising our fellows is nearly always deemed to be appropriate, commendable. Some of this goes hand in hand with the practice of judging people as ethical or moral only if they benefit their fellows, not when they do well for themselves. The Princeton University philosopher and famous animal liberation champion makes a great deal of how we must all be altruistic--recently he chimed in on the current economic downturn with an essay on how despite suffering setbacks, we all have the obligation to send resources to people in poor countries. That is what will make us decent people, not being prudent and attentive to our own needs and wants and those of our intimates. Which of course raises the issue of why other people are so deserving of support while those urged to provide the support are not. (Which once again brings to mind W. H. Auden's quip that "We are here on earth to do good for others. What the others are here for, I don't know.")

What seems to underlie much of this is that for centuries the major religions tended to denigrate people as sinners, mostly, who need to redeem themselves by serving other people (who then needed to do the same, on and on, ad infinitum.) And this probably came from comparing people to angels and God, mystical entities who certainly had it all over us "mere" humans. Even in the increasingly secular modern era, the view of the human self didn't see all that much improvement. I have in mind, for example, the English philosopher Thomas Hobbes' very influential idea that people are mostly power hungry and if not restrained by a supreme authority would just as soon destroy one another than live together creatively and productively. Original sin got transformed into basic (vicious) instinct! And with that many human tendencies and activities also got besmirched. Sex, which is human as well as animal about us all, is a good case in point. Rarely has it gotten a sensible, levelheaded treatment in the major religions or philosophies. (So much if it got driven underground and lingers in back alleys or on the bizarrely labeled adult cable TV programs.)

But when you consider it without prejudice, are human beings really so bad? Sure, they can be and often are but on balance they would seem to be rather decent, hard working, conscientious, and kind, at least most of them most of the time. And they are also quite self-regarding--most of us get up in the morning thinking first of ourselves and our loved ones, not of our neighbors. So basic decency and self-regard can easily go hand in hand--indeed, it is difficult for me to imagine people loving their neighbors who lack love for themselves.

But then why make all those gestures of humility, of self-abnegation? Maybe because, in addition to some very bad teachings from various sources, there is the desire to be liked by others who might not appreciate demonstrated self-regard, pride, and self-esteem. Whatever the best explanation, though, one thing is clear enough. It is not a good thing to have a general, overall demeaning opinion of oneself. It tends to undercut what one does in one's life on many, many fronts, as a professional, friend, spouse, parent, and the rest. A little--maybe a lot--more frank admission of one's worthiness, if justified, would seem to be warranted.

And while most people are reluctant to give themselves even deserved credit, they show that some such acknowledgement is necessary for them as they do not hesitate giving credit to the group of which they are a member!