Friday, July 23, 2010

Hungary's Malaise:
(Introduction to A Brief On Business Ethics, Hungarian Edition)

by Tibor R. Machan

Shortly after Hungary set off the fall of Soviet-style socialism in 1989, when that country's rulers allowed visitors from what then was East Germany to leave without any hindrance for West Germany, my mother, who had lived there for all of her life before being allowed to leave in 1975, made some interesting predictions. The decision by the Hungarian rulers was the first step toward the dismantling of the Soviet Empire. But my mother thought it wouldn't necessarily lead to panacea.
Her idea came back to me during the last few days when Prime Minister Ference Gyurcsany, identified by some as "the golden boy" of Hungary's Socialist Party, got himself into serious trouble with many Hungarians for having admitted, in a leaked closed-door party conference speech, that during his two years term as Prime Minister and the Socialist (post-communist) Party leader for the 2006 election which he and his party won, he was lying about the country's economy "morning, evening and night." Given that this was said in a recording that captured his own voice, Gyurcsany could not and never did deny that he made that statement.

What my mother said to me back after the fall of the Soviet-style socialists was that unless all those who were part of the old, communist regime were put in jail, the country would eventually be retaken by the former bosses because there was no group of classical liberal leaders ready to lead the country away from its dismal socialist past. She was confident that without such a group of new leaders, with genuinely new ideas, Hungary would slowly return to its old socialist ways.
What my mother said seemed to me to echo the more scholarly reflections of Professor Janos Kornai, in his book Road to the Free Market Economy: Shifting from a Socialist System the Example of Hungary (Viking, 1990).

What Kornai focused on, in particular, is the temptation faced by the newly reconstituted but unreconstructed socialists -- who were welcomed by the post-Soviet regime to take part in Hungary's political affairs -- to produce a nominal free market system that is, in reality, merely a bit different from the old socialist economy. In short, they would attempt to forge a powerful welfare state, promising to provide all the impossible perks of the old regime, only without the accompanying totalitarian politics. Kornai warned that this is going to be impossible and will simply lead to economic collapse. As the saying goes, you cannot squeeze blood out of a turnip. A broken economy like that produced under Soviet-style socialism simply cannot sustain the burdens of a welfare state. Why?
Because where there is no wealth, one simply cannot steal much. While Kornai was too polite to put it just this way, the plain fact is that a welfare state depends on there being a sufficient number of wealthy enough people from whom the government can steal so as to provide the perks the politicians are always tempted to promise to the voters.

Hungarians are arguably experiencing the consequences of not heeding Kornai's advice, and of failing to come up with a genuine free market political leadership. Instead, for more than two decades, the country has been trying to make do with a hodge-podge post-Soviet regime that fails to actually give up the socialist dream. Most recently a new tax was voted in on banks, never mind that taxes are, as in most places, choking the country already and the credit crunch is killing economic growth.

While a country such as the United States of America can get away with such a hodge-podge system, since its basic infrastructure has for many decades provided reasonably firm protection to basic classical liberal institutions -- e.g., the right to private property, freedom of contract, civil liberties, etc. -- in Hungary there is no comparable history to fall back upon. So once the barrel has been scraped, there is nothing more left to steal. There are no rich companies, rich individuals, rich investors and so on who could be conscripted to come up with the funds to sustain the welfare state.

Given this reality, what else can a socialist do but lie, lie and lie some more? And once the citizens of the country discover this -- and that's one benefit of having left the Soviet-style system behind, namely, considerable openness about what politicians are doing -- the regime will meet with plenty of opposition. And this is why the PM was urged to resign. He was reluctant to do so but it is difficult to see where he could go after this. The jig is up, as the saying goes.

There is no socialist miracle. Unless the country generates some solid non-socialist leadership and these will persuade the citizenry to have some patience while the economy recovers, prospects for peace and prosperity are dim.

Tuesday, July 20, 2010

Obama’s Professor Yoo

Tibor R. Machan

Don’t believe it for a moment. The American Left, as a whole, does not support civil liberties. All that protestation of about Bush and Cheney’s allegedly unconstitutional expansion of presidential powers was just a bunch of empty hand-waiving. The New York Times has made it abundantly clear now that the recent protests by the Left against Professor John Yoo’s efforts to help former president George W. Bush to garner extensive presidential powers had nothing to do with opposing expanding governmental power.

When Mr. Bush and his team wanted the power to deploy water-boarding techniques against suspected terrorists or those who could provide information about such people, those on the American Left were outraged. How dare this law professor offer advice to the Bush White House about what legal reasoning to use so as to make a convincing case for the powers the president and company believed they needed so as to fight the war on terrorism effectively and possibly successfully? Of course, Bush & Co. may very well have been grasping for what is constitutionally impossible but never mind that. If a legal whizz could make the case for such powers, so be it. Lawyers are supposed to pull rabbits out of the hat for their clients, never mind truth, logic and the U. S. Constitution.

Now it is evident that as so often before, the American Left was quite hypocritical about its outrage at the shenanigans of Bush & Co. There was nothing about this Republican Administration’s policies that the Obama Administration could consistently disapprove of. As The New York Times made clear in its Tuesday, July 20, 2010, editorial in support of Elena Kagan's nomination to the Supreme Court, Professor Kagan did exactly what Professor Yoo was being accused of, namely, give advice to various parties in support of dubiously expanding the powers of the federal government.

In particular, Professor Kagan had urged that several proposed pieces of legislation that would help the government expand its powers over the American people be tied cleverly to the interstate commerce clause of the U. S. Constitution even though the substance of the position being advocate

had nothing at all to do with interstate commerce. But, as Professor Kagan made clear, it could be made to look like it did and therefore Congress could gain the power it sought so as to acquire the legal power to override the liberties of citizens who did not want to be regulated, ordered about, forced to comply with Congress’ wishes.

The New York Times, of course, hailed Professor Kagan’s efforts to rationalize Congress’ powers under the interstate commerce clause as a case of helping to promote various welfare statist and social democratic government measures, ones that a strict application of the philosophy of limited government, the sort the American Founders advocated, would not justify. Indeed, there is even a credible argument to the effect that the interstate commerce clause’s use of the term “regulate” had nothing to do with the kind of meddling in the free market that the American Left supports. (Instead, the Constitution meant only to promote the regularization of commerce between the new states of a united country!)

But however one ultimately comes down on that issue, one thing is for sure. The Obama Administration and its cheerleaders in the legal profession do not have anything against increasing the powers of government. That’s not what these folks dislike about efforts to justify water boarding. It is only that this particular power of government might be used for purposes, such as catching terrorists, they do not approve of. If the power is used to regiment people’s economic affairs, go for it!