Friday, October 02, 2009

Must Corporations Be In Bed With Government?

Tibor R. Machan

For Karl Marx one reason laissez-faire capitalism would not last is that he believed big corporations would always subvert governments. The idea in support of such an economic system is that government can and must stay out of economic affairs. Economics, for champions of the fully free market, should be like religion, completely separate from government. Only that way would there be a level playing field in the economy, at least as level as that is realistically possible. (Clearly some people are born more talented, of parents with more resources than others, with physical advantages others don't have--so the idea of a completely level playing field is ridiculous.)

But critics of capitalism maintain that this level playing field is impossible to obtain when big corporations can appeal for support from governments. After all, even the most fair minded politician in a democracy requires support so as to get elected to office. And big corporations are in a better position to supply such support that small shops, universities, or other special interest groups. Which means big corporations will always be able to gain unfair advantages from governments. And so there really is no hope for a system of pure laissez faire capitalism, a fully free market such as advocated by libertarians. Business will always have the government on its side with all the powers it can offer to help out.

And this does sound like a good point. It is made these days by the likes of Ralph Nader, Michael Moore and others who claim that capitalism is inherently corrupt. Except for the fact that such a system is not actually a free market capitalist one, they are right. Once the government is legally allowed to accept favors from the citizenry, it is no big wonder that the richest of those citizens, mostly corporations, will be favored by governments. The task for those who support the idea of a genuine--bona fide free market, laissez faire--capitalist system is to establish legal bans against government and business coziness. Again, this is in principle akin to the ban on cozy church and state relations

Is this some kind of pie in the sky aspiration, to have a system in which it is illegitimate for business and government to get into bed together? Well, it would appear to be difficult, of course, since corporations do have the resources to seek out government favors--although so do some other institutions, such as unions and universities. But just because they can, it doesn't follow that they have to and will. Quite possibly laws and public policy can be established that make the ties between business and government illegal. What this requires is vigorous education, plain and simple, just as do all the provisions that make a political system less and less corrupt. Corruption is always a temptation and there is never any guarantee against it. All that is available to guard against corruption is citizenship vigilance and intelligence.

But many difficult objectives have been achieved throughout human history, so why not this? Slavery, which is so tempting for some, got abolished. The military draft is gone, at least in America. There is a first amendment in the USA that prohibits government censorship and any religious influence in government. Such improvements, and many others that rendered legal systems more and more just, could be accomplished and have been, despite enormous resistance. So why not the separation between business and government?

There is much to be said for such separation, even for big corporations--leaving them all to compete in a genuine free market without special help from government would seem to be something desirable all around. Yes, some will try to defeat that kind of system, thinking they can gain advantages not available to others. But over the long haul this is a myth. Corruption tends to undermine the whole system and produce harm to all those who are part of it, at least intermittently. So the case for cleaning up the system, for vigilant opposition to favoritism even when big powerful moneyed interest are vying for it, is a good one.

So while it is undoubtedly true that freedom is always susceptible to being undermined, in the last analysis there really isn't any better alternative. Such modern thinkers as John Maynard Keynes have tried to deny this--check out Kaynes' little 1926 book, The End of Laissez Faire--but they could present no alternative, nothing but the myth of the educated ruling elite. Yet throughout history this alternative has proven to be even more vulnerable to corruption than capitalism has ever been.
My Economic Vindication

Tibor R. Machan

When I was an undergraduate at Claremont Men's (now McKenna) College back
in the early 1960s, I took introductory economics from the now late
Professor Proctor Thomson, one of the less well-known Chicago Boys,
economists who studied under the late Milton Friedman and his colleagues at
the University of Chicago. He was a fascinating teacher and worked very
hard at explaining to us the mysteries of contemporary neo-classical

One of his lessons I recall well dealt with the concept of marginal
utility. He illustrated it by his own coffee drinking, pointing out that
the first cup for him was far more important than the next, and the next
was more important than the one that followed, etc. "More important" meant
pretty much the same thing as "of greater utility," utility in economics
being something entirely subjective, determined by the individual consumer
of goods and services, with no possibility of what was referred to as
"interpersonal utility comparison," which is to say of comparing one
person's preference with those of others. (I was a bit skeptical about
this myself since I thought my own preference for a painkiller when I have
a powerful headache might indeed be more important than your preference
for an M&M. Though this doesn’t by any means imply that I may take your
M&M away so I could get a painkiller!)

Another lesson that Professor Thomson tried to teach us had to do with
what was then considered to be a powerful concept of the famous British
economist, John Maynard Keynes, namely, the multiplier. This is the idea
that when the government injects funds into the economy, those funds
actually turn out to multiply and thus amount to greater economic value
(stimulus) than what they initially amounted to as taxes collected or
money borrowed. This is one reason that contemporary champions of
Keynesian economics such as Princeton University's Nobel Laureate in
economic science--and very influential columnist for The New York
Times--Paul Krugman are enthusiastic supporters of government stimulus
packages, so much so that they are critical of President Obama for not
injecting even more such stimulus into the economy (via public works,
borrowing, and such projects as clunkers for new cars).

When I was being instructed in the workings of the multiplier way back
then, I was a skeptic. I could not grasp how something could come from
nothing--if one injects $5 billion by way of government spending, how
could one get $7 billion worth of economic run for one's money? Never
mind that the entire scheme seemed thoroughly immoral to me--taking from
Peter to beef up the economic welfare of Paul just doesn't square with
admonitions such as "Do not steal."

But most economists--especially macroeconomists who focused on the total
economic system of the country and even the globe--were not very
interested in morality back then and few are interested in it now, come to
think of it. Yet even as a part of pure, value-free science the
multiplier just baffled me. You rob Peter of $5 and hand it to Paul and
it becomes $6 or $7. How is that possible? Especially when those who
administer the process will take their own bit from the original
amount--politicians and bureaucrats certainly don't do their part in all
this without compensation and are also prone to waste a lot of resources!

Professor Thomson nearly flunked me--I got a gentleman's C--in the course,
despite my having grasped well enough most of the rest of micro and
macroeconomics he taught us. (He was memorable, by the way, for
encouraging debates in class--I recall having many arguments with one
classmate who was an avid socialist!) He thought, however, that I had
this blind spot and didn't want to reward it, while I thought I would be
betraying my own loyalty to the metaphysics of Aristotle who thought
something couldn't come from nothing (as opposed to the modern philosopher
David Hume, who believed that if we could imagine it, at least it is
conceivable that something would emerge from nothing).

Well, I read this piece in the October 1 issue of The Wall Street Journal,
by Harvard Professor Robert J. Barro and recent graduate Charles J.
Redlick in which lo and behold the multiplier is debunked, good and hard.
According to the authors "The available empirical evidence does not
support the idea that spending multipliers typically exceed one, and thus
spending stimulus programs will likely raise GDP by less than the increase
in government spending." Moreover, they add, "there is empirical support
for the proposition that tax rate reductions will increase real GDP."

I must say I feel vindicated!

Wednesday, September 30, 2009

The Price of Compromise

Tibor R. Machan

Politics is sometimes said to be the art of compromise and this rings true enough, given the messiness of contemporary politics. Over the centuries those who aspired to rule and the later govern others had to contend with the fact that many don't like to be ruled and when it comes to being governed, they hold that certain standards apply to those who would govern. So compromises became the norm between the two factions. (There is no necessary progress revealed toward a just and free world in human history although there has been some. Compromises may just give away the bit of progress that has been made.)

The most important standard for making progress in governance is to institute a legal order that amounts to the protection of the rights of citizens, to secure their individual human rights. However much matters may vary from time to time and place to place, so long as what is at issue is human community life, some matters remain the same and this is such a one, namely that human beings require for their flourishing in life to be free of coercion. Oppression, regimentation, forcible manipulation are all enemies of humanity, even when many people fail to acknowledge this and placidly submit. (In personal relations, too, people often refuse to assert themselves but this doesn't make their subservience a good thing for them!)

The principles of human liberty, however universally valid for all individuals, are always under threat from people who would rather subdue others than deal with them on mutually agreed to terms. This is evident today in nearly all the controversies that dominate public affairs. Take that horrible war on drugs. Here is a cause that is mostly pushed by conservatives and it is a clear compromise of the principle of individual liberty. Or take such by now complied to policies as social security and Medicare. For the sake of some people running some other people's lives to secure them certain apparent benefits--often promoted under the banner of the public or common good--freedom is tossed aside.

Oh, there are numerous excuses for this, yes, but one thing is for sure. Once the compromise is accomplished, it is nearly impossible to recover the principle that is being violated. Consider, for example, that one argument in favor of a public option--that is to say, government provision of health insurance paid for by taxpayers whether they choose to or not--is that Americans have already accepted Medicare and many other government welfare measures, so how can they insist on rejecting government interference in this case? Surely not on principle! So why now, why here?

Yes, perhaps the answer is that enough is enough but this just will not work. The logic of the slippery slope defeats it. Once you accept that government ought to take care of our personal, private, and social--as distinct from public--problems, there is no principled reason to reject the next step toward further government encroachment. It may cost too much but then it is always possible to soak the rich or something, since no principle protects them or anyone else whose resources can be confiscated to fund it all--or just borrow against members of future generations who aren't around to even vote!

Republicans who protest that the public option is socialized medicine have no leg to stand on, given AMTRAK and the US Postal Service and hundreds, even thousands of other measures they accept which amount to robbing Peter to pay Paul in our society. That is the price of compromise--you have lost the argument since you have no principle on which to base it. Once you have accepted just a little slavery, a bit of involuntary servitude for the citizens of your community, why not go further? Why not conscript their labors and resources whenever you see something important to pursue, just go for it. The pragmatists say, you need to judge things on an individual basis but this is basically nonsense, like saying we should judge rape that way.

Without principles there is no way to judge, to evaluate. All that's left is power--do you have it to get your way or don't you?

Tuesday, September 29, 2009

Public Funding Morally Odious Projects

Tibor R. Machan

Reportedly representative Bart Stupak, a Democrat representing Michigan's 1st Congressional district who opposes abortion, wants to impose a ban on federal health care funding for abortions. The reason, obviously, is that he and those who agree with him consider it objectionable that they are being forced to pay for something they find seriously morally odious, something that as they understand it amounts to the murder of "unborn children." (This is, of course, a question begging way of referring to the early fetuses slated for most abortions.)

But let me not enter the morass of the abortion debate but stick to the issue of public funding of projects many members of the public find morally wrong. Of course Mr. Stupak has no legal case, not the way our federal system works these days. A great many people object to all kinds of projects funded by the federal government. Some even consider such funding morally objectionable even when they support the projects since it involves robbing Peter to support Paul, a practice that is arguably wrong. Yet in our bloated, illiberal democratic system of governance such practices are ubiquitous and legally authorized.

In order for Mr. Stupak to be credible in his stance on the issue of federal funding of abortion, by whatever method this is brought off, he must oppose all such transfers of resources from citizens to projects these citizens oppose. And that is hardly going to work since as a politician he is routinely involved in supporting such transfer of resources. Why privilege the abortion issue, then? Yes, abortion is a hotly debated matter, very controversial. But then so is the war in Iraq, even in Afghanistan. The war on drugs is perhaps opposed by the majority of Americans, both because it is evil to convict citizens who have violated no one's rights and because it is a colossal failure. Yet I have not read anything about representative Stupak protesting these policies. Why?

I gather Mr. Stupak is not a very principled person and from what we know about most contemporary politicians, this should be no surprise. So his stance on federal funding of abortions isn't likely to bear on his moral conscience. It probably has to do with his particular constituency. And then it is mostly about trying to win their support for his continued service in the U. S. House of Representatives.

Notice, by the way, that Representative Stupak seems to have no objection to a government managed health insurance/care system per se. I doubt he ever objected to Medicare and he doesn't seem to be opposed to the current efforts either. All he frets about is whether abortions will be funded federally. But how about whether citizens will be forced to pay for liposuction or fixing up someone who got into an auto crash because of reckless driving? Many citizens would rather not fund such treatments. Indeed, there are millions of us who oppose vigorously, on moral grounds, federal involvement in medical care or insurance. Does this politician give that any thought? Or is he merely trying to capitalize on his own constituency's agenda?

The big problem with the bloated, illiberal democracy so prominent across the globe is that it lumps us all into a mob that's to be dictated to by those who are most politically active and savvy within that mob. Democracy should never have been expanded to be so applied. It should have be left to the limited task of selecting representatives who were to expand the provisions of the U. S. Constitution to new areas, ones impossible to anticipate fully by the Founders and Framers.

Yes, there are some gray areas there but what we now have, where majorities can dictate to us about nearly everything, is absurd. It is spawning a citizenry at constant odds with itself, where no individual realm of sovereignty is left, where individual rights are treated as grants of privilege from the government with no other basis (say, in human nature).

Well, I suppose Mr. Stupak should not be expected to think of all this but when he mouths off about his own pet projects, he should expect that he will be called upon to account for his inconsistencies.
Why are our selves demeaned?

Tibor R. Machan

If there is a common theme among nearly all political factions here or abroad it is that selfishness is bad, unselfishness is good. Yet, at the same time, no one can fully live up to this idea. We wake up and endeavor to take care of ourselves and those we love, not our neighbors, let alone strangers. As the poet W. H. Auden pointed up this paradox, "We are here on earth to do good for others. What the others are here for, I don't know."

One plausible explanation is that the human self had suffered from a very bad reputation via the theological doctrine of original sin. If we are corrupt at birth, we should reject ourselves and care for others most. We aren't worthy of being benefited except to the extend necessary for us to serve others. Yet this is odd, just as Auden noted, because why are others worthy of all the care we ought to give them when we aren't?

In addition to the original sin besmirching of the human ego, there was also the 17th century English philosopher Thomas Hobbes's very influential idea that the human self is a bundle of unruly passions, mostly vicious or psychologically troubled. Hobbes argued that all of us live in fear of death, mainly, from which all our other motivation flows. Only by means of an absolute monarch will we behave peacefully toward one another.

With such a pedigree, which went against the ancient Greek idea that human beings are rational animals and their emotions are shaped by their good or bad thinking--which is up to them to initiate--no wonder opinions about the human self or ego became nearly all negative. But for the control over us by the government, we could all turn out like the Marquis de Sade! What a prospect!

To mitigate this, nearly all subsequent moral philosophy, especially the influential system developed by the German philosopher Immanuel Kant, advanced ideas that meant to tame us, to contain us, to make us more sociable and direct us away from selfishness (which meant something insidious). Of course, if the self is so bad, then the selves of those who were to tame us couldn't be so nice either, so government slowly became something to be feared, too. But that fear is now subsiding and intellectuals and even most of the general population is putting its faith in government again, in the chief of state, essentially, who knows best. Sure, there is democracy but how could the population keep a check on the huge Leviathan effectively? So government is getting out of hand. But anyone who points this out is branded selfish and greedy and insensitive and all because of the ego's bruised reputation over the last several hundred years.

Too bad because, in fact, people are innately neither good nor bad but free to become either or somewhere in between (like most are). And such people fare best in a fully free society, not in one the bullies run pretending that they can do so well and wisely. If the human ego's reputation could be improved, the belief that people need to be regimented, regulated, nudged and so forth might change. (Yet, of course, even with its current undeserved bad reputation, there is no justification for all the regimenting since those who would do this job must also, then, have corrupt egos.)

One option that is being floated by some people is that no self or ego exists at all, that it is all a myth, that what we are is cells in the body of humanity or society, not in any respect independent, sovereign individuals. This will not work for one reason, among many, namely that those who are advancing the idea are also individuals and pitted against, in this view, many other individuals. Human nature is individualistic, although by no means anti-social--our egos are both social and individual. We have wills of our own but we flourish best among others like us.

If only this constant badgering of the human self ended, there would be hope for much better relations among us.