Economics and the Future
"As long as there are rich
people in the world, they will
be desirous of distinguishing
themselves from the poor."
Jean Jacques Rousseau
people in the world, they will
be desirous of distinguishing
themselves from the poor."
Jean Jacques Rousseau
"Everything is politics."
Thomas Mann
Thomas Mann
“The first lesson of economics is scarcity:
There is never enough of anything to satisfy
all those who want it. The first lesson of
politics is to disregard the first lesson of
economics.”
Thomas Sowell
There is never enough of anything to satisfy
all those who want it. The first lesson of
politics is to disregard the first lesson of
economics.”
Thomas Sowell
“The gap in our economy is between what we
have and what we think we ought to have -
and that is a moral problem, not an
economic one.”
Paul Heyne
have and what we think we ought to have -
and that is a moral problem, not an
economic one.”
Paul Heyne
“Economics is a subject that does not greatly
respect one's wishes.”
Nikita Krushchev
respect one's wishes.”
Nikita Krushchev
“Economics is the science which studies
human behavior as a relationship between
ends and scarce means which have
alternative uses.”
Lionel Charles Robbins
human behavior as a relationship between
ends and scarce means which have
alternative uses.”
Lionel Charles Robbins
"What matters is that decisions by the state
should be predictable - the rule of law, rather
than arbitrary dictatorial whim, or the opaque
bending of justice according to private
interest."
Michael Reid, Forgotten Continent
should be predictable - the rule of law, rather
than arbitrary dictatorial whim, or the opaque
bending of justice according to private
interest."
Michael Reid, Forgotten Continent
"Extreme inequality provides fertile ground for
populism...one lesson (is) that if capitalism
is to thrive it needs to be underpinned by
effective state and social policies, which have
to be paid for with an adequate level of tax
revenues. Another lesson for the privileged
(is) that in a democracy the rule of law
applies to everyone - even to them."
Michael Reid, Forgotten Continent
populism...one lesson (is) that if capitalism
is to thrive it needs to be underpinned by
effective state and social policies, which have
to be paid for with an adequate level of tax
revenues. Another lesson for the privileged
(is) that in a democracy the rule of law
applies to everyone - even to them."
Michael Reid, Forgotten Continent
"The proposition is not that
America's future should depend
on an elite that is educated to run
the country, but that, whether we
like it or not, America's future does
depend on an elite that runs the
country. For practical purposes,
the nation is run by an elite that
we do not choose."
Charles Murray, Real Education
America's future should depend
on an elite that is educated to run
the country, but that, whether we
like it or not, America's future does
depend on an elite that runs the
country. For practical purposes,
the nation is run by an elite that
we do not choose."
Charles Murray, Real Education
"It is time to recognize that even
the best schools under the best
conditions cannot overcome the
limits on achievement set by
limits on academic
ability...(educational
romanticism) pursues
unattainable egalitarian ideals
of educational achievement
(e.g., all children should perform
at grade level) at the expense of
attainable egalitarian ideals of
personal dignity. We can do
much better for children who are
below average in academic
ability, but only after we get a
grip on reality."
Charles Murray, Real Education
the best schools under the best
conditions cannot overcome the
limits on achievement set by
limits on academic
ability...(educational
romanticism) pursues
unattainable egalitarian ideals
of educational achievement
(e.g., all children should perform
at grade level) at the expense of
attainable egalitarian ideals of
personal dignity. We can do
much better for children who are
below average in academic
ability, but only after we get a
grip on reality."
Charles Murray, Real Education
Purpose of This Page:
As anyone who might be observing would quickly notice, I am a quotation junkie. But then consider that most of what I know about
what I write comes from what I read. So my method is to read books that add to my understanding, highlight passages that strike my fancy,
and then collect them to reproduce them here. In the process I massage them in my mind and, slowly, gain a personal understanding - or
opinion, if you would prefer. The first part of the methodology is to read, the second it to collect, and the third is to formulate - in writing -
what I have gleaned from the first two steps. I suggest that is what learning is about.
One of the positions that I have come to accept is that our simplistic beliefs about democracy are, well, simplistic. Thomas Mann
stated that everything is politics; I would suggest that everything is economics. But then the two are intrinsically connected, that is, politics
is about economics. So the democratic freedoms and liberties we so cherish are essentially to pursue the economic goals that matter to
us, in our own way. But therein lies the problem: some do better than others in the process, and inequalities develop - economic
inequalities - and many of us don't like that. That's where politics come in, the politics of envy if I might use that phrase (I shall, whether I
might or not). To understand that we have to understand differences among us at one level, and the hierarchical sorting at the next level.
The clever, or Charles Murray's elite, create and build so that others may find their place within the hierarchy; that is what happens in
a free market system. It does work, but not perfectly, so there must be regulation, which is where politics comes in. But politics is also not
perfect - the human condition is all too prevalent - so we are constantly whipsawed: too much freedom of markets results in economic
despotism of the elite; too little freedom, or too much regulation and "leveling, or spreading of the wealth" stifles the engine of economic
generation. In the first, only the elite win; in the second, no one wins, but all lose more or less equally. The goal is balance - or that
middle ground to which I keep trying to point.
This page in my website is for the purpose of trying to analyze and explain all that. A place to begin is to discuss economists and
politicians, their rolls, and how they interact in this process. Though I shall quickly stray beyond that, as I always do.
As anyone who might be observing would quickly notice, I am a quotation junkie. But then consider that most of what I know about
what I write comes from what I read. So my method is to read books that add to my understanding, highlight passages that strike my fancy,
and then collect them to reproduce them here. In the process I massage them in my mind and, slowly, gain a personal understanding - or
opinion, if you would prefer. The first part of the methodology is to read, the second it to collect, and the third is to formulate - in writing -
what I have gleaned from the first two steps. I suggest that is what learning is about.
One of the positions that I have come to accept is that our simplistic beliefs about democracy are, well, simplistic. Thomas Mann
stated that everything is politics; I would suggest that everything is economics. But then the two are intrinsically connected, that is, politics
is about economics. So the democratic freedoms and liberties we so cherish are essentially to pursue the economic goals that matter to
us, in our own way. But therein lies the problem: some do better than others in the process, and inequalities develop - economic
inequalities - and many of us don't like that. That's where politics come in, the politics of envy if I might use that phrase (I shall, whether I
might or not). To understand that we have to understand differences among us at one level, and the hierarchical sorting at the next level.
The clever, or Charles Murray's elite, create and build so that others may find their place within the hierarchy; that is what happens in
a free market system. It does work, but not perfectly, so there must be regulation, which is where politics comes in. But politics is also not
perfect - the human condition is all too prevalent - so we are constantly whipsawed: too much freedom of markets results in economic
despotism of the elite; too little freedom, or too much regulation and "leveling, or spreading of the wealth" stifles the engine of economic
generation. In the first, only the elite win; in the second, no one wins, but all lose more or less equally. The goal is balance - or that
middle ground to which I keep trying to point.
This page in my website is for the purpose of trying to analyze and explain all that. A place to begin is to discuss economists and
politicians, their rolls, and how they interact in this process. Though I shall quickly stray beyond that, as I always do.
Objective
Economists
Politicians
Economists, in my opinion, are misunderstood. They are
confused with one who can predict the future, and when they
attempt to do that they are criticized when they fail. No one can
predict the future, because with human beings there are too
many variables, beginning with the interaction between emotion
and reality in the brain.
Economists are scientists, engineers whose knowledge is
based on principles demonstrated by scientific method and
history of success and failure. Economic theory will predict what
happens best and what fails, unless unforeseen (political)
variables are introduced - based on observation, and based on
principles. But, of course, no one situation is exactly like another,
so when variables change, so, often, does the result.
They have much to tell us, however, and we should listen. Why
don't we? Because most of us don't understand the principles
and/or are blinded by, not what we should expect, but what we
want to see; in other words: emotion.
confused with one who can predict the future, and when they
attempt to do that they are criticized when they fail. No one can
predict the future, because with human beings there are too
many variables, beginning with the interaction between emotion
and reality in the brain.
Economists are scientists, engineers whose knowledge is
based on principles demonstrated by scientific method and
history of success and failure. Economic theory will predict what
happens best and what fails, unless unforeseen (political)
variables are introduced - based on observation, and based on
principles. But, of course, no one situation is exactly like another,
so when variables change, so, often, does the result.
They have much to tell us, however, and we should listen. Why
don't we? Because most of us don't understand the principles
and/or are blinded by, not what we should expect, but what we
want to see; in other words: emotion.
Few politicians really understand (or try to for that matter) the
science of economics - nor do their constituents. But then their
motivation is different; politicians are interested in power (their
own) and must therefore pander to what voters expect and want
to hear. Often that is not what economists tell them.
And what voters want to hear is what is good for them, so
when economists incline to other than that, politicians make fun
of them for not predicting what all want to hear, or when they tell
them what they want to hear, and it doesn't work out that way.
Beware of economists who stray from principles and attempt to
predict the outcome of situations that stray beyond principles.
Beware of politicians that try to make economics do or say what
they want them to do or say, without understanding the
underlying principles; and beware economists who let them.
science of economics - nor do their constituents. But then their
motivation is different; politicians are interested in power (their
own) and must therefore pander to what voters expect and want
to hear. Often that is not what economists tell them.
And what voters want to hear is what is good for them, so
when economists incline to other than that, politicians make fun
of them for not predicting what all want to hear, or when they tell
them what they want to hear, and it doesn't work out that way.
Beware of economists who stray from principles and attempt to
predict the outcome of situations that stray beyond principles.
Beware of politicians that try to make economics do or say what
they want them to do or say, without understanding the
underlying principles; and beware economists who let them.
Pathetically, we insist on seeing things as extremes - something that is critically divisive. The extremes are the highly motivated very rich
and the totally unmotivated dependent poor. The very rich are cast as they were (often, but not always, unfairly) in the nineteenth century:
selfish, grasping and uncaring. The dependent poor are cast as those who have no initiative, no inclination to do anything for themselves
and a desire to live indolently from the largess available to them, often not true, but sometimes true. Both are extremes; how extreme, one
might have to determine on a case by case basis; it is also a fact, however, that neither are static, and both rich and poor do not always
remain in that category - moving continually in and out of it. The vast majority live somewhere in between. However, economic policy will
have an impact on which way they lean. Leaning one way will encourage dependency; leaning the other will encourage independent
initiative. No one policy will achieve one or the other, so we compromise and try to achieve a balance - or we don't. The principles of
economics will suggest which policies will achieve the best long term results - the principles of politics will be more likely based on what
might appear most popular to voters. The challenge is BALANCE. Are we capable of it?
and the totally unmotivated dependent poor. The very rich are cast as they were (often, but not always, unfairly) in the nineteenth century:
selfish, grasping and uncaring. The dependent poor are cast as those who have no initiative, no inclination to do anything for themselves
and a desire to live indolently from the largess available to them, often not true, but sometimes true. Both are extremes; how extreme, one
might have to determine on a case by case basis; it is also a fact, however, that neither are static, and both rich and poor do not always
remain in that category - moving continually in and out of it. The vast majority live somewhere in between. However, economic policy will
have an impact on which way they lean. Leaning one way will encourage dependency; leaning the other will encourage independent
initiative. No one policy will achieve one or the other, so we compromise and try to achieve a balance - or we don't. The principles of
economics will suggest which policies will achieve the best long term results - the principles of politics will be more likely based on what
might appear most popular to voters. The challenge is BALANCE. Are we capable of it?
"The proposition that irrational beliefs lead to foolish policies
is largely correct...The main caveat is that if the public got
exactly what it asked for, policy would be a lot worse.
The United States is more market-oriented and open to
international competition than you would expect after
studying the economic beliefs of its inhabitants, whose
aspirations seem more in tune with those of Latin American
populists like Peron...Ubabashed populism plays well at
first, but once the negative consequences hit, voters will
blame me, not themselves."
Bryan Caplan
is largely correct...The main caveat is that if the public got
exactly what it asked for, policy would be a lot worse.
The United States is more market-oriented and open to
international competition than you would expect after
studying the economic beliefs of its inhabitants, whose
aspirations seem more in tune with those of Latin American
populists like Peron...Ubabashed populism plays well at
first, but once the negative consequences hit, voters will
blame me, not themselves."
Bryan Caplan
"The economic role of the government has
greatly expanded since the New Deal, but the
percentage of congressmen with economic
training remains negligible."
Bryan Caplan, The Myth of the Rational Voter
greatly expanded since the New Deal, but the
percentage of congressmen with economic
training remains negligible."
Bryan Caplan, The Myth of the Rational Voter
"A good politician tells the public what it want
to hear; a better one tells the public what it is
going to want to hear."
Bryan Caplan The Myth of the Rational Voter
to hear; a better one tells the public what it is
going to want to hear."
Bryan Caplan The Myth of the Rational Voter
"Politicians have as strong an incentive to
think rationally about their popularity as
capitalists have to think about their profits."
Bryan Caplan, The Myth of the Rational Voter
think rationally about their popularity as
capitalists have to think about their profits."
Bryan Caplan, The Myth of the Rational Voter
"Many desirable things are advocated without regard to the
most fundamental fact of economics, that resources are
inherently limited and have alternative uses. Who could be
against health, safety or open space? But each of these
things is open-ended, while resources are not only limited
but have alternative uses which are also valuable...Many
beliefs which collapse under scrutiny may nevertheless
persist indefinitely when they are not scrutinized, and
especially when skilled advocates are able to perpetuate
those beliefs by forestalling scrutiny through appeal to
emotions or interests."
Thomas Sowell
most fundamental fact of economics, that resources are
inherently limited and have alternative uses. Who could be
against health, safety or open space? But each of these
things is open-ended, while resources are not only limited
but have alternative uses which are also valuable...Many
beliefs which collapse under scrutiny may nevertheless
persist indefinitely when they are not scrutinized, and
especially when skilled advocates are able to perpetuate
those beliefs by forestalling scrutiny through appeal to
emotions or interests."
Thomas Sowell
“I have never known much good done by those who affected to trade for the
public good.”
Adam Smith
public good.”
Adam Smith
“Little else is requisite to carry a state to the highest degree of opulence from
the lowest barbarism but peace, easy taxes, and a tolerable administration of
justice: all the rest being brought about by the natural course of things.”
Adam Smith
the lowest barbarism but peace, easy taxes, and a tolerable administration of
justice: all the rest being brought about by the natural course of things.”
Adam Smith
"By a continuing process of inflation,
governments can confiscate, secretly and
unobserved, an important part of the wealth
of their citizens.”
John Maynard Keynes
governments can confiscate, secretly and
unobserved, an important part of the wealth
of their citizens.”
John Maynard Keynes
"The contest now (1936) was not Democrat
versus Republican but rather the classical
republic versus the classical democracy.
Government was less a representative
republic than it had once been, more directly
controlled by the people. The change had
started back in the 1920s with the
constitutional amendment to permit the
electorate to pick senators directly, rather
than through their state legislatures,
suffrage for women had accelerated it. And
the Depression had accelerated it again -
people who might not have had an interest in
government before now found that hunger
concentrated their minds. Instead of asking
what government was doing on behalf of the
general welfare, voters were asking in a very
democratic way what Roosevelt was doing
for them."
Amity Shlaes, the torgotten man.
versus Republican but rather the classical
republic versus the classical democracy.
Government was less a representative
republic than it had once been, more directly
controlled by the people. The change had
started back in the 1920s with the
constitutional amendment to permit the
electorate to pick senators directly, rather
than through their state legislatures,
suffrage for women had accelerated it. And
the Depression had accelerated it again -
people who might not have had an interest in
government before now found that hunger
concentrated their minds. Instead of asking
what government was doing on behalf of the
general welfare, voters were asking in a very
democratic way what Roosevelt was doing
for them."
Amity Shlaes, the torgotten man.
"On the political side of development, the United
States ought to set as its objective the
promotion of good governance, not just
democracy."
Francis Fukuyama, America at the Crossroads
States ought to set as its objective the
promotion of good governance, not just
democracy."
Francis Fukuyama, America at the Crossroads
"The problem comes from politicians who
want to use public money to maintain
patronage networks that are critical to their
political survival."
Francis Fukuyama, America at the Crossroads
want to use public money to maintain
patronage networks that are critical to their
political survival."
Francis Fukuyama, America at the Crossroads
"The simplest explanation for a new
democracy's political success is its
economic success - or, to be more specific,
high per capita national income."
Fareed Zakaria, The Future of Freedom
democracy's political success is its
economic success - or, to be more specific,
high per capita national income."
Fareed Zakaria, The Future of Freedom
"First, a government
must be able to control
the governed, then it
must be able to control
itself."
James Madison
must be able to control
the governed, then it
must be able to control
itself."
James Madison
"Never let a
serious crisis
go to waste."
Rahm Emanuel
serious crisis
go to waste."
Rahm Emanuel
We in the United States all assert the importance of free market
economics, agreeing that "free" does not mean completely without
regulation. The difference between progressive and conservative is the
degree to which government should exert that regulation. Too little
control begs grossly unequal excess; too much control destroys
initiative.
economics, agreeing that "free" does not mean completely without
regulation. The difference between progressive and conservative is the
degree to which government should exert that regulation. Too little
control begs grossly unequal excess; too much control destroys
initiative.
America's Political Confrontation
In an article entitled “Will Someone Steal This Book” Ron Charles, Washington Post Book
Editor, quotes several professors concerning the lack of passion students have for reading and
politics, and their (and their colleges’) “intellectually stultifying, politically correct atmospheres
that pretends to diversity.” And one professor (Eric Williamson) blamed this “squarely on the
unfettered expansion of capitalism.” This, and a passage from Samuel Huntington’s book
Who Are We?, led me to thinking about much I have read lately about the polarization of
political thinking in the United States. Huntington’s passage was, “In the absence of an
external enemy, individual self-interest trumps national commitment,” leading toward greater
emphasis on ethnic and sectional differences. That in turn reminded me of articles and book
reviews concerning how people choose where they live based on how lobbyists and political
fund raisers exploit differences in the interest of political power, creating enclaves of political
sameness. Cal Thomas and Bob Bechel pursued a similar theme in their book Common
Ground. What’s going on?
It might seem that politics is getting nastier. Reading a little further back in history, however,
would suggest more likely it is returning to where it has always been. Madison suggested that
faction cannot be eliminated except by eliminating liberty itself. And more than one foreign
observer has been shocked – and frightened – by the chaos that is democracy. Nevertheless,
the extent of recent polarization is concerning in that it seems deliberate, increasingly effective
and is generating what appears to be important changes in the drift of American democracy, if
not the basic fabric of the model; a drift that, regardless of the party in power, has been
occurring for almost a century. The drift is left, or in the direction of what I would prefer to term
elitist paternalism.
There are likely many causes, but I think the major one is economics and perhaps Professor
Williamson, a card carrying liberal, is on to something. Capitalism, or more accurately free
markets, has done two things: whetted appetites and driven up the cost of almost everything,
because of the whetted appetites; we want more and more and it has to be paid for; no, let’s be
more explicit: we feel that we are all entitled to whatever is available and what “everyone else”
has – and there is more and more out there to want and get. That is an interesting
combination of egalitarianism, greed and envy; but not simple egalitarianism, greed and envy.
Consider, for example, the two major entitlement processes that are currently pushing us
toward bankruptcy: social security and Medicare. Realistically we have reached the point where
very few can survive in our current economic environment after reaching the age of retirement
without access to both. But certainly need for automobiles under spread-out living conditions,
food costs (it’s not realistic for most to produce everything they need themselves), housing
costs, taxes and fuel for both transportation and heating contribute. There are enough other
and more basic causes, such as increased urbanization (suburbanization), longer life- spans,
improved (and increasingly costly) health care, higher expectations and taxes, and increased
immigration.
The circularity of some of this (expectations and taxes) is obvious, but they are there and they
are not likely to go away quietly. Why did I include increased immigration? Why do people want
to come to the United States? Primarily because of opportunity, including health care, rule of
law and entitlement payments – all of which are part of the reason for high taxes – but not as
high as some would like to see them, which brings us to the confrontation, and I would argue
the most important reason economic reasons for the drift and the polarization. Simply stated
the opposing ideologies are more government (paternalism) and less government
(individualism). But it’s anything but simple.
Going back to Williamson’s capitalist statement: we want (and expect) because it is before
our eyes; it is before our eyes because our highly sophisticated system of marketing puts it
there; but marketing can’t put it out there unless it exists; and it exists because there is a
perceived demand for it. Williamson deprecates that free-market model in terms of what is has
wrought; but he overlooks the fact that throughout, the process creates jobs that makes it all
possible, and those jobs are not only what has created such incredible opportunity in our
country, but what has raised the standard of living across the board - as well as the
expectations. Ah, Williamson would say, but it is the unfettered expansion – the excess – that
is wrong. But you can’t have one without the other, so where would one stop the expansion
and begin the retraction? After all, that is exactly what leads to recession: when demand
retracts, jobs are eliminated.
Yes, it must be balanced. But how? Williamson, and those of the persuasion of the left
would say balance comes from “spreading the wealth,” or arranging it so that paternalistic
government takes from those who have been rewarded by capitalism (through taxes) and
spreads it out to those that have not, Robin Hood style, or as communist doctrine would put it:
from each according to ability and to each according to need. Unfortunately this doesn’t work
because there is a third dimension: incentive. Those with the ability tend not to want to work to
it because there is less incentive to do so, but also those with need but limited ability have no
need to work at all. One is reminded of the ancient Chinese proverb: give a man a fish and he
eats for a day; teach him to fish and he feeds himself for all time. There is, however, another
saying, and that is that if you confiscated all the wealth and distributed it equally, in a relatively
short period of time it would be concentrated again, for the same reason: capability fed by
incentive. You cannot have full effort from either the capable or the less than capable without
incentive, and excessive confiscation deprives both of incentive. That word excessive again.
And we are back to Williamson’s statement. Capitalism yields both excessive demand and
excessive supply – but it does not spread the wealth evenly. So how is that achieved? That is
the challenge to government and it is the basis of the controversy. Free-market rules suggest
(rightfully) that the large number of players, all working in their own self interest, making
millions – billions – of continual tiny decisions do it best. Paternalism is not willing (rightfully to
a point) to countenance the pain that might ensue – for anyone. Paternalistic government
wants to take care of everyone; market driven government, in the interest of ultimate best for the
most, feels that risk is both necessary and self-correcting. The question is how much care-for
in exchange for how much incentive? Where is the sweet spot? It can never be exactly
achieved, so the controversy will roil forever – hopefully. Hopefully, because at some point
excessive care can irrevocably destroy incentive just as excessive pandering to incentive can
wreak wide individual destruction to those who are less capable, or less lucky. We would all
like it both ways, but since that’s not possible we’ll wrangle over which offers the greatest
chance of success. However, in an interview in the Wall Street Journal, Peggy Noonan quotes
Nobel economist and University of Chicago professor Gary Becker: “When the market economy
is compared to alternatives, nothing is better at raising productivity, reducing poverty, improving
health and integrating the people of the world.”
But then one must know something about the free market system, which is without a doubt
complex. Bryan Caplan, in The Myth of the Rational Voter, points to a natural disbelief in it – we
fear most what we don’t understand. Lawmakers, on the other hand, are generally not well
versed in economics; it’s not a normal part of their learning curriculum; and when the two are
put together with distressed voters, free market is a hard sell. Yet, from Charles Murray: “The
proposition is not that America’s future should depend on an elite that is educated to run the
country, but that, whether we like it or not, America’s future does depend on an elite that runs
the country.” So we finally come back to political confrontation and hope we can get it right
enough to continue to prosper; best guess is that we will – painfully and inconsistently, as
always - but that is not a sure thing.
In an article entitled “Will Someone Steal This Book” Ron Charles, Washington Post Book
Editor, quotes several professors concerning the lack of passion students have for reading and
politics, and their (and their colleges’) “intellectually stultifying, politically correct atmospheres
that pretends to diversity.” And one professor (Eric Williamson) blamed this “squarely on the
unfettered expansion of capitalism.” This, and a passage from Samuel Huntington’s book
Who Are We?, led me to thinking about much I have read lately about the polarization of
political thinking in the United States. Huntington’s passage was, “In the absence of an
external enemy, individual self-interest trumps national commitment,” leading toward greater
emphasis on ethnic and sectional differences. That in turn reminded me of articles and book
reviews concerning how people choose where they live based on how lobbyists and political
fund raisers exploit differences in the interest of political power, creating enclaves of political
sameness. Cal Thomas and Bob Bechel pursued a similar theme in their book Common
Ground. What’s going on?
It might seem that politics is getting nastier. Reading a little further back in history, however,
would suggest more likely it is returning to where it has always been. Madison suggested that
faction cannot be eliminated except by eliminating liberty itself. And more than one foreign
observer has been shocked – and frightened – by the chaos that is democracy. Nevertheless,
the extent of recent polarization is concerning in that it seems deliberate, increasingly effective
and is generating what appears to be important changes in the drift of American democracy, if
not the basic fabric of the model; a drift that, regardless of the party in power, has been
occurring for almost a century. The drift is left, or in the direction of what I would prefer to term
elitist paternalism.
There are likely many causes, but I think the major one is economics and perhaps Professor
Williamson, a card carrying liberal, is on to something. Capitalism, or more accurately free
markets, has done two things: whetted appetites and driven up the cost of almost everything,
because of the whetted appetites; we want more and more and it has to be paid for; no, let’s be
more explicit: we feel that we are all entitled to whatever is available and what “everyone else”
has – and there is more and more out there to want and get. That is an interesting
combination of egalitarianism, greed and envy; but not simple egalitarianism, greed and envy.
Consider, for example, the two major entitlement processes that are currently pushing us
toward bankruptcy: social security and Medicare. Realistically we have reached the point where
very few can survive in our current economic environment after reaching the age of retirement
without access to both. But certainly need for automobiles under spread-out living conditions,
food costs (it’s not realistic for most to produce everything they need themselves), housing
costs, taxes and fuel for both transportation and heating contribute. There are enough other
and more basic causes, such as increased urbanization (suburbanization), longer life- spans,
improved (and increasingly costly) health care, higher expectations and taxes, and increased
immigration.
The circularity of some of this (expectations and taxes) is obvious, but they are there and they
are not likely to go away quietly. Why did I include increased immigration? Why do people want
to come to the United States? Primarily because of opportunity, including health care, rule of
law and entitlement payments – all of which are part of the reason for high taxes – but not as
high as some would like to see them, which brings us to the confrontation, and I would argue
the most important reason economic reasons for the drift and the polarization. Simply stated
the opposing ideologies are more government (paternalism) and less government
(individualism). But it’s anything but simple.
Going back to Williamson’s capitalist statement: we want (and expect) because it is before
our eyes; it is before our eyes because our highly sophisticated system of marketing puts it
there; but marketing can’t put it out there unless it exists; and it exists because there is a
perceived demand for it. Williamson deprecates that free-market model in terms of what is has
wrought; but he overlooks the fact that throughout, the process creates jobs that makes it all
possible, and those jobs are not only what has created such incredible opportunity in our
country, but what has raised the standard of living across the board - as well as the
expectations. Ah, Williamson would say, but it is the unfettered expansion – the excess – that
is wrong. But you can’t have one without the other, so where would one stop the expansion
and begin the retraction? After all, that is exactly what leads to recession: when demand
retracts, jobs are eliminated.
Yes, it must be balanced. But how? Williamson, and those of the persuasion of the left
would say balance comes from “spreading the wealth,” or arranging it so that paternalistic
government takes from those who have been rewarded by capitalism (through taxes) and
spreads it out to those that have not, Robin Hood style, or as communist doctrine would put it:
from each according to ability and to each according to need. Unfortunately this doesn’t work
because there is a third dimension: incentive. Those with the ability tend not to want to work to
it because there is less incentive to do so, but also those with need but limited ability have no
need to work at all. One is reminded of the ancient Chinese proverb: give a man a fish and he
eats for a day; teach him to fish and he feeds himself for all time. There is, however, another
saying, and that is that if you confiscated all the wealth and distributed it equally, in a relatively
short period of time it would be concentrated again, for the same reason: capability fed by
incentive. You cannot have full effort from either the capable or the less than capable without
incentive, and excessive confiscation deprives both of incentive. That word excessive again.
And we are back to Williamson’s statement. Capitalism yields both excessive demand and
excessive supply – but it does not spread the wealth evenly. So how is that achieved? That is
the challenge to government and it is the basis of the controversy. Free-market rules suggest
(rightfully) that the large number of players, all working in their own self interest, making
millions – billions – of continual tiny decisions do it best. Paternalism is not willing (rightfully to
a point) to countenance the pain that might ensue – for anyone. Paternalistic government
wants to take care of everyone; market driven government, in the interest of ultimate best for the
most, feels that risk is both necessary and self-correcting. The question is how much care-for
in exchange for how much incentive? Where is the sweet spot? It can never be exactly
achieved, so the controversy will roil forever – hopefully. Hopefully, because at some point
excessive care can irrevocably destroy incentive just as excessive pandering to incentive can
wreak wide individual destruction to those who are less capable, or less lucky. We would all
like it both ways, but since that’s not possible we’ll wrangle over which offers the greatest
chance of success. However, in an interview in the Wall Street Journal, Peggy Noonan quotes
Nobel economist and University of Chicago professor Gary Becker: “When the market economy
is compared to alternatives, nothing is better at raising productivity, reducing poverty, improving
health and integrating the people of the world.”
But then one must know something about the free market system, which is without a doubt
complex. Bryan Caplan, in The Myth of the Rational Voter, points to a natural disbelief in it – we
fear most what we don’t understand. Lawmakers, on the other hand, are generally not well
versed in economics; it’s not a normal part of their learning curriculum; and when the two are
put together with distressed voters, free market is a hard sell. Yet, from Charles Murray: “The
proposition is not that America’s future should depend on an elite that is educated to run the
country, but that, whether we like it or not, America’s future does depend on an elite that runs
the country.” So we finally come back to political confrontation and hope we can get it right
enough to continue to prosper; best guess is that we will – painfully and inconsistently, as
always - but that is not a sure thing.
This is an example of why I am not a
successful professional writer - and
have been told so: organization (lack
of).
I know what I want to say but have
trouble in maintaining focus. There is
so much to economics, and
economics leads in turn to almost
everything else, so it is easy to get
distracted. I had considered writing it
and submitting it, but it is not
publishable. And therein lies the rub -
I am also not much of an editor.
But since there are many thoughts
embedded I wish to capture - and
hopefully ponder, I have "published" it
here.
That is what I do.
successful professional writer - and
have been told so: organization (lack
of).
I know what I want to say but have
trouble in maintaining focus. There is
so much to economics, and
economics leads in turn to almost
everything else, so it is easy to get
distracted. I had considered writing it
and submitting it, but it is not
publishable. And therein lies the rub -
I am also not much of an editor.
But since there are many thoughts
embedded I wish to capture - and
hopefully ponder, I have "published" it
here.
That is what I do.
"Barack Obama, even when he's not yukking it up on '60
Minutes,' barely disguises his indifference to economic matters.
He is not an economist, a political philosopher, a geopolitical
strategist. He is the President as social engineer, the
Community-Organizer-in-Chief. His plan to reduce tax
deductions for charitable giving, for example, is not intended
primarily to raise revenue, but to advance government as the
distributor of largesse and diminish alternative sources of
societal organization, such as civic groups. Likewise, his big
plans for socialized health care, a green economy, universal
college education: they're about extending the reach of the state."
Mark Steyn
Minutes,' barely disguises his indifference to economic matters.
He is not an economist, a political philosopher, a geopolitical
strategist. He is the President as social engineer, the
Community-Organizer-in-Chief. His plan to reduce tax
deductions for charitable giving, for example, is not intended
primarily to raise revenue, but to advance government as the
distributor of largesse and diminish alternative sources of
societal organization, such as civic groups. Likewise, his big
plans for socialized health care, a green economy, universal
college education: they're about extending the reach of the state."
Mark Steyn
"All politics are economics."
me
me
Empathy and Sympathy
It is my opinion we have
virtually lost understanding to
the difference, mixing the two
shamelessly, and dangerously.
Empathy is knowing where
another comes from and why
he/she is saying, doing, thinking
what he is. Sympathy is
emotional pity; they lead in
different directions, or at least
can. Empathy leads to
understanding; sympathy can
cloud judgment and lead to bad
decisions.
We need empathy; we need
be very careful of giving in
unquestioningly to sympathy.
It is my opinion we have
virtually lost understanding to
the difference, mixing the two
shamelessly, and dangerously.
Empathy is knowing where
another comes from and why
he/she is saying, doing, thinking
what he is. Sympathy is
emotional pity; they lead in
different directions, or at least
can. Empathy leads to
understanding; sympathy can
cloud judgment and lead to bad
decisions.
We need empathy; we need
be very careful of giving in
unquestioningly to sympathy.
Economics, Politics and the Future
Economists are concerned about economic principles; politicians are concerned about economic results; the
voters are concerned about themselves, and that means economic results. A number of writers today, each in his or
her own way, are pointing to what they see as a growing oligarchic aristocracy of elite that, they are all concluding, are
interested in colluding to manipulate economic results for their benefit - power and wealth. They see it particularly
through the rapid movement of individual elitists (what else could one call them) between the two realms. No, that is
too limiting; there are more than two realms, which makes the United States if not unique, more interesting.
Businesses are a combination of economics, management and marketing, often with pure economics eclipsed.
Media melds business with...what? Ego? Lust for fame and power? Academia is also concerned with fame
and...respect? It is too easy to bog down with words, elite being one that is particularly interesting, because it
continually pushes any boundaries placed upon it. There are other motivations besides wealth, with which power is
so often associated, and few of them eject wealth out of hand, in which case wealth may be relative. But that's a
problem in our culture, wealth is relative.
The latest numbers I have seen suggest that something around $3.5M in assets constitutes being rich. But then
what of one who earns several million a year but spends it, and thus does not accumulate it? Or receives obscene
amounts per year but for only a few years? And what of those whose earnings or assets fall somewhere below those
amounts, but not too much below? Our elite is not restricted to the rich, as defined above. It is very much a flexible
cohort: its boundaries change but so also does its membership, as people enter and drop out. And there are surely a
number of members whose influence is much greater than their wealth who are still members of the elite.
The suggestion of writers who think about it is that elite today is very different from the ancient aristocratic elite, or
even the Italian oligarchic elite. Influence may ultimately lead to wealth, but perhaps not the obscene wealth with
which we are rapidly become familiar. But influence - power - is just as heady, and in the complexity of today's global
markets and incredible temptations both wealth and power accumulation are much more likely to be a corporate effort
than an individual effort. Another word of interest, corporate. The commonly assumed meaning is having to do with a
legal corporate entity - meaning a business not owned by any individual. But another meaning is forming one body of
many individuals (Angelo M. Cordevilla in Character of Nations includes among them: big business, unions, political
parties or a complex of bureaucrats and the interest group they finance). Fareed Zacharia (The Future of Freedom)
cites the growing power of lobbies (of all kinds) in politics, but then points out the growing influence of populism
(something for which the US has always been known), and in so doing makes the case that corporatism (fueled by
money) that spawns lobbies also fuels populism. Robert D. Kaplan (The Coming Anarchy) goes further, suggesting
that corporatism is leading toward increasing decentralization of American politics to the extent that it will ultimately
render the central government irrelevant.
What we are addressing is nothing new; it is the pursuance of power and wealth, but in a more flexible manner, in
an global and volatile environment; and although not a zero sum game, it entails competition, in which there are
winners and losers. And that, simply enough, is the future that we face, with a growing power of a very flexible elite,
chasing fame, fortune, wealth and influence. Thus my growing focus on economics and elites in the fashioning of the
future. I contemplated a book, but it is beyond me frankly, so I attack it a little at a time, continually altering course as a
result of another set of experiences I glean through books read. So much knowledge, leading in so many directions,
mostly beyond the interest and motivation of "the common man" and thus left to the elite whose power and control
continues to grow, through mutual manipulation - as has always been the case, but not nearly as sophisticated as it
now is through computers, communications, global markets and interdependence and vast differences in
understanding, ability opportunity and culture.
Economists are concerned about economic principles; politicians are concerned about economic results; the
voters are concerned about themselves, and that means economic results. A number of writers today, each in his or
her own way, are pointing to what they see as a growing oligarchic aristocracy of elite that, they are all concluding, are
interested in colluding to manipulate economic results for their benefit - power and wealth. They see it particularly
through the rapid movement of individual elitists (what else could one call them) between the two realms. No, that is
too limiting; there are more than two realms, which makes the United States if not unique, more interesting.
Businesses are a combination of economics, management and marketing, often with pure economics eclipsed.
Media melds business with...what? Ego? Lust for fame and power? Academia is also concerned with fame
and...respect? It is too easy to bog down with words, elite being one that is particularly interesting, because it
continually pushes any boundaries placed upon it. There are other motivations besides wealth, with which power is
so often associated, and few of them eject wealth out of hand, in which case wealth may be relative. But that's a
problem in our culture, wealth is relative.
The latest numbers I have seen suggest that something around $3.5M in assets constitutes being rich. But then
what of one who earns several million a year but spends it, and thus does not accumulate it? Or receives obscene
amounts per year but for only a few years? And what of those whose earnings or assets fall somewhere below those
amounts, but not too much below? Our elite is not restricted to the rich, as defined above. It is very much a flexible
cohort: its boundaries change but so also does its membership, as people enter and drop out. And there are surely a
number of members whose influence is much greater than their wealth who are still members of the elite.
The suggestion of writers who think about it is that elite today is very different from the ancient aristocratic elite, or
even the Italian oligarchic elite. Influence may ultimately lead to wealth, but perhaps not the obscene wealth with
which we are rapidly become familiar. But influence - power - is just as heady, and in the complexity of today's global
markets and incredible temptations both wealth and power accumulation are much more likely to be a corporate effort
than an individual effort. Another word of interest, corporate. The commonly assumed meaning is having to do with a
legal corporate entity - meaning a business not owned by any individual. But another meaning is forming one body of
many individuals (Angelo M. Cordevilla in Character of Nations includes among them: big business, unions, political
parties or a complex of bureaucrats and the interest group they finance). Fareed Zacharia (The Future of Freedom)
cites the growing power of lobbies (of all kinds) in politics, but then points out the growing influence of populism
(something for which the US has always been known), and in so doing makes the case that corporatism (fueled by
money) that spawns lobbies also fuels populism. Robert D. Kaplan (The Coming Anarchy) goes further, suggesting
that corporatism is leading toward increasing decentralization of American politics to the extent that it will ultimately
render the central government irrelevant.
What we are addressing is nothing new; it is the pursuance of power and wealth, but in a more flexible manner, in
an global and volatile environment; and although not a zero sum game, it entails competition, in which there are
winners and losers. And that, simply enough, is the future that we face, with a growing power of a very flexible elite,
chasing fame, fortune, wealth and influence. Thus my growing focus on economics and elites in the fashioning of the
future. I contemplated a book, but it is beyond me frankly, so I attack it a little at a time, continually altering course as a
result of another set of experiences I glean through books read. So much knowledge, leading in so many directions,
mostly beyond the interest and motivation of "the common man" and thus left to the elite whose power and control
continues to grow, through mutual manipulation - as has always been the case, but not nearly as sophisticated as it
now is through computers, communications, global markets and interdependence and vast differences in
understanding, ability opportunity and culture.
Robert D. Kaplan, Warrior Politics:
"Because so many states in the developing world have
flimsy institutions, the paramount question in world politics
in the early twenty-first century will be the re-establishment
of order. This Hobbesian scenario will be aggravated by
demographic pressures. While the world's population as a
whole is aging, for the next decade or so many societies
that are already poor and violent will produce increasingly
larger number of young men, for whom there will be
insufficient job opportunities; these youth bulges will be
especially prevalent in places like the West Bank, Gaza,
Kenya, Zambia, Pakistan, Egypt, and so on. This brings us
to Malthus, the philosopher most associated with the
negative consequences of population growth. Like it or not,
crises in many countries in the foreseeable future will be
Hobbesian and Malthusian ones."
"Because so many states in the developing world have
flimsy institutions, the paramount question in world politics
in the early twenty-first century will be the re-establishment
of order. This Hobbesian scenario will be aggravated by
demographic pressures. While the world's population as a
whole is aging, for the next decade or so many societies
that are already poor and violent will produce increasingly
larger number of young men, for whom there will be
insufficient job opportunities; these youth bulges will be
especially prevalent in places like the West Bank, Gaza,
Kenya, Zambia, Pakistan, Egypt, and so on. This brings us
to Malthus, the philosopher most associated with the
negative consequences of population growth. Like it or not,
crises in many countries in the foreseeable future will be
Hobbesian and Malthusian ones."
Meanwhile the youth in developing
countries, ignorant of the governments they
are fortunate enough to have, will rail against
them, demanding change for which they have
no understanding, and less appreciation.
countries, ignorant of the governments they
are fortunate enough to have, will rail against
them, demanding change for which they have
no understanding, and less appreciation.
"It is fully justifiable to have a policy that
places the needs of the nation over and
above its resources. When this tension
becomes a trend, problems abound and
crises ensue.
Natalio R. Botana, "Why Institutions Matter",
Falling Behind
places the needs of the nation over and
above its resources. When this tension
becomes a trend, problems abound and
crises ensue.
Natalio R. Botana, "Why Institutions Matter",
Falling Behind
This, apparently, is the near future for the
United States. How we deal with the
attendant crises will say much about how the
more distant future unfolds.
United States. How we deal with the
attendant crises will say much about how the
more distant future unfolds.