Ruthi raised quite a few topics in her most recent post. I'm not going to add thoughts to all of them, but I will focus on a few subjects I felt were particularly key.
I'm sure we've all heard "you're an idealist" before. It's a classic example of a statement absent an argument. Simply saying that a point of view is idealistic is, of course, not enough. One must explain why this is the case. For that, one needs a theory. I'll return to this shortly.
Now, it's worth pointing out that Ruthi's fellow passenger seemed to be an idealist of sorts himself. These days in particular, we hear a very pressing call for more regulation, a desire that the government "do something." But governments can't just do something. They have to do something specific. And 95% of the time, that's when the conversation will get very fuzzy. It's taken as an article of faith by most Americans that the government can and should make things better. But press the issue a bit, and the conversation falls apart. What exactly should the government be doing? Why will this make it better? What will be the effects on incentives faced by other parties, in the short term and the long term? How much influence will special interests play in the decision making process? These questions are rarely asked, much less answered.
I find it somewhat disturbing that it is so commonly taken for granted that government intervention is equal to improvement. "Markets can fail," we are told. Indubitably. There is nothing easier to do than show how something involving human beings is imperfect. But governments can also fail. A perfect government could certainly perform more efficiently than the actual market. And a perfect market would perform better than the actual government. What's missing so often from the conversation is a comparison of actual verses actual.
Joseph Stiglitz had the following to say:
The fact that markets with imperfect information do not work perfectly provides a rationale for potential government actions. The older theory said that no government, no matter how well organized, could do better than markets. If that was true, then we had little need to inquire into the nature of government. The modern theory says that government might improve on matters, but to ascertain whether or not this is the case requires a closer examination of how governments actually behave, or might behave under various rules.
The opening sentence of that paragraph put me on red alert on my first reading. But by the last sentence, Stiglitz sounds much more reasonable. Unfortunately, I don't think he's ever lived up in his other writings to carry out an "examination of how governments actually behave."
A pattern commonly found among the political left is a tendency to assume the reason their plans don't work out well is because the wrong people are in charge. And there seems to be eternal optimism that if only the right leaders were at the helm, a plethora of problems could be solved. But disappointment often frustrates their desires. Stiglitz has had nothing but harsh words for the Obama administration. The prime movers of President Obama's economic policy are described by Stiglitz as "either in the pocket of the banks or they’re incompetent." He complains bitterly about the administration talking counterproductive measures, covering politically connected interests, and generally holding "a strategy trying to recreate that bubble...That’s not likely to provide a long-run solution. It’s a solution that says let’s kick the can down the road a little bit."
My only question for Stilitz and his fellow travelers is why they would expect anything else. Thomas Sowell constantly points out that politician's incentives don't go past the next election, so a strategy which only kicks the can down the road is exactly what one should expect. And the idea that those making policy would be in the pockets of the banks shouldn't surprise anyone. Milton Friedman said that "one of the reasons I am in favor of less government is because when you have more government, industrialists take it over, and the two form a coalition against the ordinary worker and the ordinary consumer." None of this should be a surprise to anyone familiar with Public Choice economics.
This is where I make my return to the need for theory. An old cliche about socialism is that "it's good in theory, but it doesn't work in practice." I think that this cliche misses a very important point. If an idea fails to work in practice, then there is no way it can be described as good in theory. Rather, the fact that it fails in practice shows that the theory itself is bad. Similarly, the ideas of Stiglitz and those of like mind fail to work in practice because they are based on a bad theory. Their theory tells us that, at least some of the time, government should be able to bring about substantial improvement. But in practice, the government always does more of the same, to their continuing and bitter disappointment. It never seems to register to them that, like the scorpion of fable, government does these things because this is it's nature. Why the failure of their ideas in practice never seem to give them doubt is a subject for another time.
All of this seems extremely tangential, but it brings me back to another point Ruthi raised. She asks, "Am I really an idealist because I think that entities such as the US government can change for the better? Have there not been such changes in the past to suggest this possibility? And even if I am an idealist, couldn't enough idealists working towards a similar goal achieve better results than are currently being achieved?"
I'll take these in reverse order.
Absolutely enough idealists working towards a similar goal can indeed change things for the better. The American Revolution is a good example of that. But, it also raises an uncomfortable realization. Out of the American Revolution, we had small government with limited power, and a straightforward Constitution without the creative interpretation we find these days. Plus, the Tenth Amendment seemed to still exist. But even with that start, we have been slowly moving away from that, in bits and pieces, with the occasional Great Leap Forward. This is an inherent tendency of government; it can shake off its Constitutional shackles in ways that would confound Houdini. We can push the tide back, but lovers of freedom, I fear, are doomed to recreate the life of Sisyphus, forever pushing the boulder up the mountain.
No comments:
Post a Comment