The Very Angry Tea Party (Part 2)

Themon,

But of course. I am always out here as you put it. I am just not always as noisy as I might like to be. Then again, as I find myself saying the same cynical things repeatedly, I might just be sick of hearing myself talk—or write as the case may be.

As to the Tea Party, I do happen to have some connection. It seems that the People’s Press Collective (PPC) is now considered one of the foremost conservative news and commentary organization in the nation and THE foremost such organization in Colorado. Given our traffic numbers, and the number of times national news organizations and columnists have cited us, I suppose that perception is not without justification. It mattered enough that the people, having lost faith in Republican leadership, asked PPC to verify the voting process at the state Republican assembly. As it turns out, it was not actually corrupt, just wildly incompetent. Surprisingly, Julian Dunraven, as a board member and editor of the PPC, is also thought of as a leading member of the conservative movement here in Colorado. Thus, I have been invited to damn near every Tea Party event in the state, sometimes as a journalist, sometimes to consult, frequently to train activists, and occasionally to edit or review books for conservative publishers. The fact that I am pagan and bisexual is quietly ignored as the Tea Party members, who draw from social conservatives, social libertarians, fiscal conservatives, and independents, all try to come together on issues of limited government, free markets, and individual rights. Thus, while I am not a part of the Tea Party myself, I am heavily connected with it here in Colorado and well acquainted with all of its organizing members and opinion leaders.

Thank you for the article. It was . . . strange. Bernstein is clearly no natural law philosopher. I found it rather ironic that a man who asserts that we have no value but what we find reflected in one another would accuse the Tea Party of nihilism for rejecting such a notion. Normally the assertion of natural law rights is considered the very opposite of nihilism. Odd.

Of course, he may be arguing high points of theoretical philosophy rather than practical politics and economics, neither of which he seems to grasp. The Tea Party does not want nothing, though. The economic crisis has indeed made them aware of how thoroughly our government has intruded into every aspect of human life and they object to such encroachment. The monetary policies have undermined their wealth and savings, ensuring that we must work harder and longer for less. Though few people can articulate the actual causes for that, most understand the basic premise that government is meddling in everything and everything sucks as a result. That is hardly irrational. Austrian Economics and Natural Law Philosophy both have many noteworthy scholars articulating the finer details of that general premise.

He is also incorrect in asserting that the Tea Party movement wants “radical independence” or the overthrow of civil society. Though I do have the dubious pleasure of knowing a few anarchists, they have yet to hold up in an argument with me and are universally ignored by the rest of the conservative movement as harmless fools. I have yet to encounter any of their ideas in the Tea Party movement. Far from the overthrow of civil society or radical independence, the Tea Party seems to call for an adherence to a constitutional legal framework and a reliance between people to live by that contract without overstepping and to help protect one another’s rights. Thanks to people like Glen Beck assisting the Tea Party Movement with the 9-12 groups, there is even a call for constitutional and historical education in the movement. Some of the history they have uncovered has surprised even me (which, especially as a lawyer, is quite embarrassing). Though it came as a shock to many in D.C., the latest surveys show Tea Party members tend to have above average educations and income levels. Also surprising to many in D.C., blacks and minorities are leading figures in many Tea Party movements (including here in Colorado). These are not forces of chaos. They are forces of order. In fact, at every Tea Party event, the only reported violence thus far has come from those opposed to the Tea Parties. That was certainly true in Denver, where 5000 Tea Party members were overseen by three police officers while the liberal counter-protest of 70 people across the street drew the attention of dozens of officers due to vile slogans and attempts at rushing the officers. To most Tea Party members, our current government is the true threat to civil society and they are actually trying to restore civil society.

As to the positions of the Tea Party, Bernstein seems to mistake it for an actual political party. The Tea Party is not. It wants a constitutional limited government. It wants government rolled back and spending under control. That is it as a movement. Republicans might want to preserve Social Security and Medicare, but the Tea Party movement has no such policy positions to speak of. Some of the members might even agree with Republicans. Some might realize those programs are ultimately doomed. But policy positions are not what the Tea Party is about. The name refers to the Boston Tea Party of old—not a political party.

Where I agree with Bernstein, though, is that the Tea Party, at its roots, is an almost metaphysical expression of anger. I also agree that, if things continue as they are, that anger is likely to boil over beyond the peaceful demonstrations of the Tea Parties and into street violence. In fact, I am quite certain that will happen in the very near future. It has already begun in California. Unlike Bernstein, though, I have no confusion as to why people are angry. Is it so hard to understand that government is too big? Does he really need a complex Hegelian analysis of the illusion of independence? Doesn’t it make more sense to look at the past millennia or so of human history and see that every time government gets too big and lives beyond its means economies tend to start collapsing and people tend to get really angry? A wonderful book called This Time Is Different: Eight Centuries of Financial Folly charts that process rather nicely. In America, we are fortunate to have a constitutional system to fall back on which can—hopefully—mitigate some of the destruction that typically erupts from such situations.

I tend to agree with you that we are not likely to escape violence and traumatic collapse, though. Another thing about Tea Party people is that they are all new to politics. They can elect all the solid conservatives they want. If those conservatives don’t know what they are doing, though—and at this point I will only give one statewide or federal candidate in Colorado credit for knowing much of anything—then it won’t make a bit of difference. Frankly, even if all conservatives currently running knew what they were doing, it would be difficult to elect enough of them in time to make any real difference.

That said, I do not think you have an illusion of independence. Perhaps complete autonomy would be an illusion, but I do not think we are all so dependent upon the state as you maintain. Oh, we are not without problems, but huge chunks of government could be chopped away and few people would ever even notice the change save that the deficit was smaller, there was less paperwork, and more money in the real economy. The teat of government produces remarkably little actual milk. Wouldn’t you agree?

Julian

The Very Angry Tea Party (Part 1)

Julian!

Good to hear you are still out there!

I’m forwarding this article, which Jim sent out to the drumming group. The author has some interesting observations. I don’t think you have to agree with him much to extract value from it.

As we’ve both noted, the Republican party (like the Democratic party) is deplorable in its hypocrisy and bad faith. I don’t know what kind of personal identification you feel with the so-called Tea Party movement, but it seems equally deplorable if not worse as a social movement, as it seems dominated primarily by irrational rage and nihilism. That seems consistent with the general tenor of rank idiocy going around the Web right now regarding BP and the Gulf oil spill as well as any number of other issues. All issues that are going to sort themselves out in the next few decades the hard way, our mortal opinions be damned.

What I find interesting here is the author’s take on our complicit agreement to keep our true dependency upon the state invisible and out of public discourse. In its place we have manufactured a sociopolitical fantasy — a dogma, even — of radical independence. That rings particularly true to me.

You read about the occasional individuals who are truly independent: they live in a tent; they hunt, trap, fish, and forage for food; they are invariably young and in excellent health. There are even fewer truly self-sufficient sustainable farmers. Most “intentional communities” that strive for self-sufficiency — monastic communities have the longest experience at this — have a very difficult time of it. The rest of us? Squalling infants on the community teat, every one of us.

I’ve been pondering this a lot, lately, because I’m not terribly hopeful that the US is going to make a graceful transition into the post-oil world. If so, we’re going to see the invisible hand of government handouts crumble and go away, along with everything else the government represents, good and ill alike.

I’m concerned because I happen to like the fantasy of independence, though I do recognize it as a fantasy. I’m not psychologically very well suited to community life. My skills, outside our fragile construct of high-tech interdependence masquerading as “independence,” are not terribly useful. I’m a lousy salesman.

This all came to a particular focus this past weekend in the mountains, and I’m trying to let the experience mellow enough to write about it without totally pissing off everyone I know. Because that’s important in community settings: you cannot afford to piss off everyone you know. You can only do that within the illusory world of independence — meaning a world where our interdependence has been radically depersonalized.

— Themon

June 13, 2010, 5:15 pm
The Very Angry Tea Party
By J.M. BERNSTEIN for the New York Times

Sometimes it is hard to know where politics ends and metaphysics begins: when, that is, the stakes of a political dispute concern not simply a clash of competing ideas and values but a clash about what is real and what is not, what can be said to exist on its own and what owes its existence to an other.

The seething anger that seems to be an indigenous aspect of the Tea Party movement arises, I think, at the very place where politics and metaphysics meet, where metaphysical sentiment becomes political belief. More than their political ideas, it is the anger of Tea Party members that is already reshaping our political landscape. As Jeff Zeleny reported last Monday in The Times, the vast majority of House Democrats are now avoiding holding town-hall-style forums — just as you might sidestep an enraged, jilted lover on a subway platform — out of fear of confronting the incubus of Tea Party rage that routed last summer’s meetings. This fear-driven avoidance is, Zeleny stated, bringing the time-honored tradition of the political meeting to the brink of extinction.

It would be comforting if a clear political diagnosis of the Tea Party movement were available — if we knew precisely what political events had inspired the fierce anger that pervades its meetings and rallies, what policy proposals its backers advocate, and, most obviously, what political ideals and values are orienting its members.

Of course, some things can be said, and have been said by commentators, under each of these headings. The bailout of Wall Street, the provision of government assistance to homeowners who cannot afford to pay their mortgages, the pursuit of health care reform and, as a cumulative sign of untoward government expansion, the mounting budget deficit are all routinely cited as precipitating events. I leave aside the election of a — “foreign-born” — African-American to the presidency.

When it comes to the Tea Party’s concrete policy proposals, things get fuzzier and more contradictory: keep the government out of health care, but leave Medicare alone; balance the budget, but don’t raise taxes; let individuals take care of themselves, but leave Social Security alone; and, of course, the paradoxical demand not to support Wall Street, to let the hard-working producers of wealth get on with it without regulation and government stimulus, but also to make sure the banks can lend to small businesses and responsible homeowners in a stable but growing economy.

There is a fierce logic to these views, as I will explain. But first, a word about political ideals.

In a bracing and astringent essay in The New York Review of Books, pointedly titled “The Tea Party Jacobins,” Mark Lilla argued that the hodge-podge list of animosities Tea party supporters mention fail to cohere into a body of political grievances in the conventional sense: they lack the connecting thread of achieving political power. It is not for the sake of acquiring political power that Tea Party activists demonstrate, rally and organize; rather, Lilla argues, the appeal is to “individual opinion, individual autonomy, and individual choice, all in the service of neutralizing, not using, political power.” He calls Tea Party activists a “libertarian mob” since they proclaim the belief “that they can do everything themselves if they are only left alone.” Lilla cites as examples the growth in home schooling, and, amidst a mounting distrust in doctors and conventional medicine, growing numbers of parents refusing to have their children vaccinated, not to mention our resurgent passion for self-diagnosis, self-medication and home therapies.

The events precipitating the Tea Party movement demonstrated the depths of the absolute dependence of us all on government action.

What Lilla cannot account for, and what no other commentator I have read can explain, is the passionate anger of the Tea Party movement, or, the flip-side of that anger, the ease with which it succumbs to the most egregious of fear-mongering falsehoods. What has gripped everyone’s attention is the exorbitant character of the anger Tea Party members express. Where do such anger and such passionate attachment to wildly fantastic beliefs come from?

My hypothesis is that what all the events precipitating the Tea Party movement share is that they demonstrated, emphatically and unconditionally, the depths of the absolute dependence of us all on government action, and in so doing they undermined the deeply held fiction of individual autonomy and self-sufficiency that are intrinsic parts of Americans’ collective self-understanding.

The implicit bargain that many Americans struck with the state institutions supporting modern life is that they would be politically acceptable only to the degree to which they remained invisible, and that for all intents and purposes each citizen could continue to believe that she was sovereign over her life; she would, of course, pay taxes, use the roads and schools, receive Medicare and Social Security, but only so long as these could be perceived not as radical dependencies, but simply as the conditions for leading an autonomous and self-sufficient life. Recent events have left that bargain in tatters.

But even this way of expressing the issue of dependence is too weak, too merely political; after all, although recent events have revealed the breadth and depths of our dependencies on institutions and practices over which we have little or no control, not all of us have responded with such galvanizing anger and rage. Tea Party anger is, at bottom, metaphysical, not political: what has been undone by the economic crisis is the belief that each individual is metaphysically self-sufficient, that one’s very standing and being as a rational agent owes nothing to other individuals or institutions. The opposing metaphysical claim, the one I take to be true, is that the very idea of the autonomous subject is an institution, an artifact created by the practices of modern life: the intimate family, the market economy, the liberal state. Each of these social arrangements articulate and express the value and the authority of the individual; they give to the individual a standing she would not have without them.

Rather than participating in arranged marriages, as modern subjects we follow our hearts, choose our beloved, decide for ourselves who may or may not have access to our bodies, and freely take vows promising fidelity and loyalty until death (or divorce) do us part. There are lots of ways property can be held and distributed — as hysterical Tea Party incriminations of creeping socialism and communism remind us; we moderns have opted for a system of private ownership in which we can acquire, use and dispose of property as we see fit, and even workers are presumed to be self-owning, selling their labor time and labor power to whom they wish (when they can). And as modern citizens we presume the government is answerable to us, governs only with our consent, our dependence on it a matter of detached, reflective endorsement; and further, that we intrinsically possess a battery of moral rights that say we can be bound to no institution unless we possess the rights of “voice and exit.”

The great and inspiring metaphysical fantasy of independence and freedom is simply a fantasy of destruction.

If stated in enough detail, all these institutions and practices should be seen as together manufacturing, and even inventing, the idea of a sovereign individual who becomes, through them and by virtue of them, the ultimate source of authority. The American version of these practices has, from the earliest days of the republic, made individuality autochthonous while suppressing to the point of disappearance the manifold ways that individuality is beholden to a complex and uniquely modern form of life.

Of course, if you are a libertarian or even a certain kind of liberal, you will object that these practices do not manufacture anything; they simply give individuality its due. The issue here is a central one in modern philosophy: is individual autonomy an irreducible metaphysical given or a social creation? Descartes famously argued that self or subject, the “I think,” was metaphysically basic, while Hegel argued that we only become self-determining agents through being recognized as such by others who we recognize in turn. It is by recognizing one another as autonomous subjects through the institutions of family, civil society and the state that we become such subjects; those practices are how we recognize and so bestow on one another the title and powers of being free individuals.

All the heavy lifting in Hegel’s account turns on revealing how human subjectivity only emerges through intersubjective relations, and hence how practices of independence, of freedom and autonomy, are held in place and made possible by complementary structures of dependence. At one point in his “Philosophy of Right,” Hegel suggests love or friendship as models of freedom through recognition. In love I regard you as of such value and importance that I spontaneously set aside my egoistic desires and interests and align them with yours: your ends are my desires, I desire that you flourish, and when you flourish I do, too. In love, I experience you not as a limit or restriction on my freedom, but as what makes it possible: I can only be truly free and so truly independent in being harmoniously joined with you; we each recognize the other as endowing our life with meaning and value, with living freedom. Hegel’s phrase for this felicitous state is “to be with oneself in the other.”

Hegel’s thesis is that all social life is structurally akin to the conditions of love and friendship; we are all bound to one another as firmly as lovers are, with the terrible reminder that the ways of love are harsh, unpredictable and changeable. And here is the source of the great anger: because you are the source of my being, when our love goes bad I am suddenly, absolutely dependent on someone for whom I no longer count and who I no longer know how to count; I am exposed, vulnerable, needy, unanchored and without resource. In fury, I lash out, I deny that you are my end and my satisfaction, in rage I claim that I can manage without you, that I can be a full person, free and self-moving, without you. I am everything and you are nothing.

This is the rage and anger I hear in the Tea Party movement; it is the sound of jilted lovers furious that the other — the anonymous blob called simply “government” — has suddenly let them down, suddenly made clear that they are dependent and limited beings, suddenly revealed them as vulnerable. And just as in love, the one-sided reminder of dependence is experienced as an injury. All the rhetoric of self-sufficiency, all the grand talk of wanting to be left alone is just the hollow insistence of the bereft lover that she can and will survive without her beloved. However, in political life, unlike love, there are no second marriages; we have only the one partner, and although we can rework our relationship, nothing can remove the actuality of dependence. That is permanent.

In politics, the idea of divorce is the idea of revolution. The Tea Party rhetoric of taking back the country is no accident: since they repudiate the conditions of dependency that have made their and our lives possible, they can only imagine freedom as a new beginning, starting from scratch. About this imaginary, Mark Lilla was right: it corresponds to no political vision, no political reality. The great and inspiring metaphysical fantasy of independence and freedom is simply a fantasy of destruction.

In truth, there is nothing that the Tea Party movement wants; terrifyingly, it wants nothing. Lilla calls the Tea Party “Jacobins”; I would urge that they are nihilists. To date, the Tea Party has committed only the minor, almost atmospheric violences of propagating falsehoods, calumny and the disruption of the occasions for political speech — the last already to great and distorting effect. But if their nihilistic rage is deprived of interrupting political meetings as an outlet, where might it now go? With such rage driving the Tea Party, might we anticipate this atmospheric violence becoming actual violence, becoming what Hegel called, referring to the original Jacobins’ fantasy of total freedom, “a fury of destruction”? There is indeed something not just disturbing, but frightening, in the anger of the Tea Party.

J.M. Bernstein is University Distinguished Professor of Philosophy at the New School for Social Research and the author of five books. He is now completing a book entitled “Torture and Dignity.”

The Gini Coefficient

Julian,

I recently ran across a book which, despite the cover (and the awful title) has brought up some interesting issues and some questions. The book is America on the Brink: It Could Happen Here, by Bruce Judson. (I told you it was an awful title.)

There’s a statistical measure called the Gini coefficient that measures the “spread” of any concentration throughout an abstract population. When applied to concentration of wealth among a population of people, a Gini coefficient of 0.0 would mean that everyone has exactly the same wealth, while a Gini coefficient of 1.0 would mean that one person gets all the wealth, and everyone else gets nothing.

The Gini coefficient shows a U-curve during the past century. It stood at a high of 0.450 in 1929, had dropped to 0.397 by 1947, reached a low of 0.386 in 1968, and had climbed to an all-time high of 0.470 by 2006. This is one statistical measure (of many) that illustrates the general fact that FDR’s New Deal brought about a significant redistribution of wealth from the elites to the masses (which is why those elites hated him so bitterly), and the Free Market exuberance that began with Reagan in the 1980’s brought about an equally significant concentration of wealth. Every measure of wealth indicates that wealth has become far more concentrated in the United States since 1980 than it was between WWII and 1980 — if you don’t like Gini, use something else, all measures show the same trends.

The rich get richer, the poor stay poor, and the middle class is getting pinched out of existence.

There is no sensible reason to believe this trend should have been otherwise. Under FDR, income tax climbed to roughly 90% for the top tax bracket. Reagan dropped it to 50% in 1982, and to 28% in 1988. When you tax the top income at 90% and redistribute it to returning GI’s (education), farmers (agricultural subsidies), unskilled laborers (CCC, WPA), and the elderly and indigent (Social Security), you’d certainly think that it would result in redistribution of wealth from the rich to the poor — it would be very surprising if it didn’t. Conversely, when you systematically reverse government barriers to wealth-building and seek to “privatize” massive sections of government, as has been happening since 1980, you would expect the rich to take advantage of that and become richer very quickly.

The concept of “trickle-down” was always counter-intuitive — that’s why Bush I called it “voodoo economics.” Had it worked the way it was sold, we would have seen “all boats lifted” by the rising tide of investment. That didn’t happen. The Gini coefficient rose (it did not fall), along with all other measures of concentration of wealth. Far from lifting all boats, Reagan’s “free market” preferentially lifted the highest boats.

Every political commentator from Aristotle to Will Durant has noted that economic inequality and political instability go hand-in-hand. It is one of the few correlations in history that stands out repeatedly in the fall of governments and civilizations. The absolute level of the economy doesn’t matter — what matters is the relative difference between the rich and the poor.

So here’s the reality-disconnect I’m continually suffering while reading Libertarian views. The “free market” so obviously benefits the rich more than the middle class or the poor, and it demonstrably increases the distance between rich and poor. Yet increasing the disparity between rich and poor is one of the best ways to court political instability and revolution. Do Libertarians want to bring down the government?

The religious ones do, of course. You’ve mentioned that they seek a Sharia-style government. I don’t think they actually have that much respect for law or social stability. The rank and file wants Jesus to return and kick unrighteous butt (others), then sit and drink non-alcoholic grape juice with the righteous (them), but their eschatology says this will not happen until the world collapses into terror and ruin. So they are willing to act (or passively refrain from acting) as agents of ruin — as nihilists, expecting a Deus ex Machina to “save” them, hopefully in a Rapture that pulls them bodily out of moving vehicles before they have to suffer, but certainly seven years later after they’ve “toughed it out” in their mountain redoubts. The religious leadership, I suspect (very strongly) is also willing to cultivate ruin because it creates personal political opportunity for them that does not exist in a stable democracy. So it makes perfect sense for them to encourage disparity between rich and poor, especially since many of them are already members of the wealthy class anyway.

Even the non-religious Republicans — including yourself — speak of the government with such a scathing contempt that I have to wonder if you really think we’d all be better off entirely without it. How much nihilism does the party platform harbor?

I’ve felt that way myself in the past — I’ve noted that the human misery that would be caused by releasing every thief, murderer, child-molester, and drug-user the government has ever “protected” us from doesn’t amount to a fart in a windstorm compared to the human misery caused by even a small war. But the more I look into where the “free market” takes us, the more I realize that without law and government, we’d be living incredibly impoverished lives. By “we,” I mean (of course) the middle class and the poor. The rich would be fewer and much richer, but they’d actually be more miserable as well — they would have much more trouble protecting their wealth in such a world, and would, like Lorenzo de Medici, bemoan that fact bitterly.

What is the answer to this disconnect? Do Libertarians believe wealth is not concentrating, contrary to common observation and every measure available? Do Libertarians agree that it is concentrating, but it is the fault of that standard bugaboo, government regulation — and therefore, do they believe that regulation actually decreased in the 1940’s under FDR and has increased since the 1980’s, accounting for the shape of the trend? If not government regulation, then what? Do Libertarians agree that wealth is concentrating, but believe it’s completely harmless (at worst) or beneficial (at best), in defiance of history? Or do Libertarians agree that wealth is concentrating, it is harmful to the nation, and that’s okay?

What did I miss here?

— Themon

Response to A Lesson in Self-Control

Themon,

In some ways I quite agree with you. Human behavior is not reducible to a collection of equations and charts. It is not always rational or informed. This is the problem with Keynesian Economics, and why I think it is little better than alchemy. Why, after all that has happened, anyone bothers listening to a word they say anymore is beyond comprehension.

I do believe you have misunderstood Austrian Economics, though. In many Austrian texts, you will not find a single chart or equation. Austrian Economics is dedicated to logical principles of natural law as revealed through the study of human action and objective reality (for instance, increasing the supply of money will inevitably cause prices to rise more than they would have without the supply increase). Nor are Austrians terribly concerned with efficiency as espoused by the Chicago School. Their focus is on freedom and justice.

I am terribly confused by your assertions. You claim that free markets are inherently unstable and do not self correct, but you then go on to criticize the brutal market manipulations of government that cause instability, impede corrections, and ultimately cause collapse. This is a contradiction. If markets cannot self correct then they need government guidance. If government guidance is the cause of distortions, though, then it interferes with the market’s ability to self correct.

Look back over history at the collapse of economies and you will not find market failures. You will see government interference acting as cancerous tumors in economies. For a wonderful Austrian view, read Murray Rothbard’s essay, “Economic Depressions: Their Cause and Cure.” Another work which, while not entirely Austrian, correctly identifies the causes of collapse is Manias, Panics, and Crashes: A History of Financial Crises by Charles P. Kindleberger. What are these collapses, though? They are the violent and painful expulsions of the hardened tumors. The market, even if it is a black market, will reassert itself.

Your example of the Jaguar automobile illustrates this perfectly. If the state controlled the means of production, could it possibly anticipate the demand for such a thing? If, by some chance, it managed to procure an oracle who could accurately channel all of human desire (and I guarantee you this oracle is not to be found anywhere near our government), how could it possibly know how best to produce it? Knowing nothing about cars, let us say there is another sudden bursting of the dykes in New Orleans, placing a sudden demand on steel supports. However, the government, which controls production, and has divorced itself from the medium of exchange, has declared that a set amount of steel shall be set aside to make Jaguars while dykes, which have already been built, get no steel allocation. It is possible that a savvy agent will push through a change in the ponderous government agencies before New Orleans is flooded again, diverting all steel away from cars and into dykes. This inevitably causes other problems.

In a free market, the demand for steel in the dykes would push prices up. Fewer jaguars would be made because fewer people would be willing to pay the higher prices. New Orleans, which needs it urgently, though, would pay. They would get the steel they needed. Some, however, would remain behind to build expensive luxury cars. Other auto manufacturers would begin to use cheaper and lighter metals. The market self-corrects because thousands of people are acting on their goals given the reality they are faced with. These thousands of actions cannot be matched by a government overseer even in this one instance, much less an entire economy. All it could manage in its ponderous way would be to respond too slowly to the dykes while causing massive shortages in automobiles.

Taking another example I like from Thomas E. Woods, after the 9/11 disaster, government stepped in to limit hotel prices to prevent what it called gouging. It froze hotel prices. As such, there were hundreds of people with no place to stay. Those who had hotel rooms in NY City obtained them simply by being first in line. Had government not stepped in to interfere, prices for rooms would have risen quickly. A family of four, instead of taking two rooms with double beds, may have taken only one with double beds. Business people traveling together may have chosen to share a room. People who could have driven a little further to stay with family or friends would have done so, rather than paying the higher prices. People who had nowhere else to go, though, and needed a room, would have been able to get one—at the higher price. As a result, fewer people would have been left without lodging while suffering a government imposed race to hotels at prices which do not reflect reality.

The market does not solve all problems. However, it is the best system with which people can make choices given the reality they face and the resources available. On the other hand, socialism and government control of production is quite simply a poison.

The healthcare debate is no different. Although I am no expert in health policy, it is not hard to see that the bill Congress is debating represents nothing but financial ruin. It is an absurdity that they claim that this, the largest expansion of entitlement programs in history, will actually decrease the deficit. It is even more absurd that, after seeing how all our other entitlement programs go bankrupt and cause financial chaos, or just by looking at U.S. finances right now, anyone actually believes their claim. The human effects are perhaps even more terrifying than the financial ones when you consider the inevitable rationing and shortages that will flow from this horror.

That does not mean there is nothing government can do, though. I recognize that it is easy, really easy, to point at the health care bill and cry that it is a monstrosity. People don’t want to be told, “No,” they want to hear solutions. Dr. Ron Paul, a congressman from Texas, is a medical doctor, a staunch adherent to the Austrian School, and a tireless defender of the Constitution and our individual liberties. I have been impressed with his solutions, which clearly and simply address the problem, remain within the bounds of the Constitution, and preserve free market and individual liberties. They also cost us very little as they do not rely on government solutions.

Lowering the Cost of Health Care
Healthcare
Healthcare & Big Government: A Marriage Made In Hell
How to Solve the Healthcare Crisis

At a time when national bankruptcy and total collapse of the dollar is a real possibility, it seems insane to me that we would not try these free market solutions before leaping off the socialist cliff to commit national suicide.

Julian Dunraven.

A lesson in self-control

Julian,

As I read the various articles by free-market enthusiasts, I’m struck by a consistency, which is a rather blind belief in the absolute self-correcting powers of the market. This is naive. Self-correcting systems are not nearly that well-behaved.

Let me illustrate with a very simple model: the thermostat. The thermostat is an example of what engineers call a “negative feedback control loop.” The term “negative” means that the response is opposite (negative) to the stimulus. When pushed, the system corrects by pushing in the opposite direction. This contrasts with a “positive feedback control loop,” which responds in the same (positive) direction as the stimulus: when pushed, it pulls in the same direction, amplifying the effect.

So when the room gets warm, the thermostat also warms up, which tells it to turn down the heat. When the room gets cool, the thermostat cools off, which tells it to turn up the heat. The result is to keep the room temperature constant, regardless of the weather outside. The temperature is “self-correcting.”

Let’s introduce a simple change to the system: a time-delay. Let’s say the thermostat is on one wall, and the heater/air-conditioner is on the opposite wall in a different room. When the thermostat gets too cold, it turns on the heater, which begins to heat the other room. However, it takes a long time for the heat from that room to reach the thermostat, which remains cold and keeps the heat on. By the time the heat reaches the thermostat and it turns off the heater, the other room is unbearably hot. The unbearable heat from that room gradually moves into the room with the thermostat, which senses the warmth and turns on the air-conditioner. The other room now begins to freeze. By the time the thermostat gets the first wave of chill and turns the heat back on, ice is beginning to form on the windows in the other room.

Any time-lag between stimulus and response generally creates oscillation in a negative-feedback control loop. You see this in thermostatic control systems, robotic control, and even in natural systems like predator-prey cycles.

Now let’s introduce a non-linearity on top of the time-delay. Instead of just turning the heat/cold on or off, we have an “advanced” thermostat that can give the heater some extra kick if it gets too cold, or turns the air conditioning up higher when it gets too hot. Without getting into the mathematics, the time-delay now causes amplification on each cycle. The room gets hotter with each hot cycle, and colder with each cold cycle. We have created a situation where a negative feedback loop has become, overall, a positive feedback loop.

Nearly everyone has experienced positive feedback in the phenomenon of a “feedback howl” from live stage loudspeakers. It happens when you move the microphone in front of the line of the speakers. The amplified sound from the speakers enters the microphone, causing it to be amplified and “fed back” to the microphone at an even higher level. The cycle rapidly escalates until it consumes the entire power output of the amplifiers, producing a howl at the maximum volume the speakers can produce. The howl is self-sustaining: you have to turn down the amplifier gain, or cover the microphone, to shut it down. Without intervention, it will howl until something burns out.

This is a typical example of a system that is driven to what is called a “stable boundary case” solution. Instead of self-correcting, the system moves to one of the constraints (the maximum power output of the amplifier) and stays there, unable to adjust or adapt. Most negative feedback control loops experience this when moved too far from their equilibrium position.

Non-linear systems frequently display two other baffling phenomena: complex self-organization, and chaos. In complex self-organization, the system becomes reasonably predictable, but according to a new set of “meta-rules” that have no obvious connection to the underlying rules of the system. In chaos, the system becomes unpredictable, requiring an infinite degree of information to make even the most basic predictions. The former is where evolutionary scientists pin their hopes of explaining how life arises from non-life — the latter is where you get the so-called “butterfly effect,” where a seemingly insignificant stimulus (such as the beating of a butterfly’s wings in China) has huge responses (the formation of a hurricane in the Gulf of Mexico).

Physicists were always very lucky, in that all of the physical non-linearity that arose in the early systems they studied (pendulums, planetary orbits, electromagnetism, thermodynamics) was relatively unimportant. As a result, they could “linearize” their equations, and come up with a useful approximation that they could actually solve, mathematically. When there is significant non-linearity (as in Einstein’s theory of general relativity, or modern string theory), physicists aren’t so lucky: in general, they don’t know how to work with the equations. The whole of mathematics and physics is currently just pecking around the edges of non-linearity.

Which brings us back to economists and the free market. Economists, like physicists, have invested a lot of time and effort in “linearized” theories of the economy. Unlike physics, however, it isn’t clear that these economic equations have any relationship whatsoever to reality, because the economy is highly non-linear. Economists, for instance, generally assume that buyers are rational, informed, and adaptive — assumptions needed to linearize the models. All three of these assumptions are completely false. Buyers are emotional, ill-informed, and brand-loyal. All three of these realities impose a “stickiness” to economic behavior that would necessarily be represented by significant non-linearity in the models. Since economists are no better at non-linear math than physicists and pure mathematicians, they go back and polish their linear models and concepts, even though these have little bearing on the real economy.

As in the example of the thermostat, it doesn’t take a whole lot of change in the system to turn self-correction into oscillation or self-destruction — or self-organization or chaos.

As a general observation, economies are not inherently stable. Historically, they collapse frequently, much more often than empires and governments. So I can’t even begin to swallow the argument that the marketplace is inherently “self-correcting.” My impression is that any economy is a fragile thing poised on the edge of chaos, held together by spit, string, and a whole lot of wishful thinking. It is brutally manipulated by everyone who has a stake in it, and no deception is too low if it results in a short-term profit at the end of the day. Every economy eventually collapses and is replaced by a new economy.

The precise behavior of any market segment is different, depending on the product. Why do Jaguars (the cars) even exist? How can something like a “pet rock” or “virtual real estate in Second Life” make anyone a million dollars? The stock market… well, there’s another whole post, there.

This is precisely what I would expect, given the sensitivity of feedback systems to underlying conditions. It strikes me as extremely naive to expect that the market will “sort things out” indiscriminately, particularly when we come to something like health care and insurance, both of which have some distinctive driving forces.

Some answers — Public Education

Republicans are widely perceived as being opposed to public tax-funded education and in favor of private or home schooling, as evidenced by the recurring “vouchers” theme. Is this true, and why? — Themon

Themon,

Public Education v. Vouchers

Dislike of standard public education is a mixed issue, not limited to Republicans. Notice that some of the strongest support for charter schools comes from poor urban minority Democrats. Why? Because they see more clearly than most that our public education system has failed. I do not think I need spend much time arguing that point. Everyone, including the teachers unions, seems to agree on that point. The question is what to do about it.

The Democratic Party, heavily influenced by the teachers unions, tend to argue that we just need to spend more money on education. In Colorado, Amendment 23 of the state constitution may eventually consume the entire state budget. We have also had more educational ballot questions and mill levies than I can count. Our ‘at risk’ schools get boatloads of money dumped upon them before being closed. Yet, all of this money has done little or no good whatsoever.

The only places where we see noticeable success stories are in charter and private schools where the administration is free from much state interference, free from union regulations, and free to innovate according to what works for their students and demographics. This makes sense. Charter and private schools are not guaranteed funding. Their pupils must show results as good as or superior to normal public schools in order to stay in business. This forces them to maintain good practices that are simply unimportant or impossible at normal public schools given the regulatory scheme and culture under which they operate. This is especially true of private schools, where parents must be convinced to spend money beyond the taxes must pay anyway in order to send their children to such institutions, effectively paying twice.

Competition breeds success in the market. Providing education is just one more service provided in the market. The state has simply created a monopoly and, like all monopolies, it provides stagnant, subpar service at a crushing price that always goes up but never provides better service. I never understand why people can so easily see the dangers of a monopoly and then turn around to passionately defend the public education system we suffer in this country.

While charters are a nice step in the direction of competition, educational vouchers would be a greater step still. They would still allow us to ensure that every child had funds to attend school. However, it would leave the choice and type of school to the parents. If they were willing to drive a long distance for a particular school they liked, that would be possible. If they thought their child would benefit from an all boys school, so be it. If they had a child gifted in the arts, and another gifted in the sciences, well, we would have schools which specialize in such areas. Similarly, there would be schools better suited to the needs of the disabled, just as students of exceptional intelligence would no longer be limited by the ‘average’ public school pupil.

Would the poor have the same opportunities as the rich? No. But they never do. The rich have always had the benefit of choice. If they want their children to attend Eaton, they can do so. Even in our current system of funding schools via property taxes, the rich benefit from high value areas such ads Cherry Creek. Vouchers, however, would beget many good schools competing for the children of middle class and poor families. The poor would certainly be no worse off than they are now. Currently, the middle classes and poor are stuck with the one-size-fits-all style of education the teachers unions see fit to provide, and I have already discussed the problems with unions at length. Vouchers give the poor and middle classes a chance to make choices of their own. And yes, if they chose to subsidize their vouchers with money of their own, would that not be more just than our current system where they must fund the public schools whether they use them or not? This would allow them to use their money in support of the school their children actually attend. True, the rest of us are still paying for the vouchers whether we have children or not. It is not a perfect free market. I, however, am willing to invest in children, whose market wealth under their parents may be far less than their own potential. And a world that values and extends potential is one I am willing to pay for—so long as I know it is being well used.

Vouchers would also put an end to the innumerable debates over state educational standards. The state could simply watch as the market drove standards up and costs down. It could then fairly accurately acknowledge a basic level of competence to accredit schools if it wanted to be involved at all.

The value of vouchers seems so obvious to me that I am utterly confused whenever I see someone erupt in outrage at the mere mention of a vouchers proposal. Does the state provide better education than private business? When has the state ever done anything better than private business? It is the monopoly argument again, but there is plenty of empirical evidence for those who want to look. And if the state is really worried, it can always set basic standards, which will be quickly exceeded by the market.

Moving right along to more interesting topics, I have also heard that private schools might teach religion. So what? The Supreme Court has already decided that the states can provide vouchers, even to religious schools, so long as the primary purpose is secular education. A bit of sectarian instruction is nothing more than the exercise of personal choice. While the U.S. Constitution forbids the state to establish or endorse any one religion or several, it also prevents the state from prohibiting the free exercise of religion. Vouchers clearly do not violate either prohibition.

The only real objection I see to vouchers is that it destroys the power of the teachers unions. So far as I am concerned, this is a good thing—both for the quality of education and for teachers themselves. Again, see my answer regarding unions. Under a vouchers system, it is entirely possible that quality teachers could even be making higher wages, with far more freedom to innovate, than they enjoy in public schools today.

For all these reasons, most Republicans support vouchers. What I fail to understand is why anyone would not support the idea of vouchers. Whether their analysis makes use of empirical evidence, logical deduction, or both, the support for vouchers is clear and unequivocal.

Julian Dunraven

Some answers — Deregulation

Republicans were (in my memory) opposed to business regulation in almost any form during the Reagan years, when the term “deregulation” came into currency. Republicans are widely perceived as continuing support for unlimited deregulation of all business activities. Is this still true, and why? — Themon

Themon,

Deregulation.

No. Republicans do not hate all regulation. They simply recognize that, if it is not limited, it has the effect of crushing business and stifling innovation. Good regulation guards against fraud and theft. Fraud, theft, and dishonesty tend to skew markets. At best, they lead to a hostile atmosphere for investing and stagnant growth. At worst, they can lead to large financial collapses. Thus, without interfering in the operation of the market, the state plays a vital role in ensuring contracts are met and the terms are honest.

Bad regulation, on the other hand, tells businesses exactly what they can and cannot do. While perhaps benign on first glance, when a business practice is enshrined in law, it creates a huge barrier for further innovation. It may also create inefficiencies which drive up costs for both consumers and investors. Though regulators often say these are necessary costs to ensure good practice, the free market and our courts tend to ensure good practices on their own that often achieve the goals we seek without the inefficiency resulting from regulation.

Consumer Products:

Let us take the case of seatbelts, because you mention Ralph Nader, whose dedication to auto safety is without question. Everyone wants their car to be as safe as possible. Most people think it is vitally important that every car come equipped with a standard safety restraining belt. That desire has gone beyond the point of consumer demand and into regulation, which promptly enshrined the best design at the time, now close to 30 or more years ago. Since that time, designs for seat belts have improved. There are some that have a much better safety rate. They are not used, though, because law requires the old model first produced in 1959. Does anyone still use car designs from 1959? No. They are better, lighter, safer, and more efficient because innovation was permitted.

Now, let us consider what would happen without seat belt regulation. We don’t even have to be theoretical. Ford had to pay a $30 million judgment for failing to provide a three point safety harness in the center seat of the back bench of a minivan, which had only a lap belt, and thereby knowingly risking severe lumbar injury. Karlsson v. Ford Motor Co., 140 Cal. App. 4th 1202 (2006). This standard practice standard was imposed without any regulation at the time. It was simply known by the industry that lap belts alone could cause damage and it had become standard to include three point restrains in back seats. As you can imagine, Ford quickly adapted best practices. Imagine how much safer cars might be if they were permitted to innovate beyond the three point restraint. You might say regulation was required to start the practice that eventually led to the industry standard cited in the above case, but that is not true. Consumer demand for safer cars and competition to offer the safest car on the road would be a far better motivator than any stagnant regulation.

Now then, let us consider an example of positive consumer product regulation. The FDA will not allow the sale of poisonous substances for use as medicines. Nor will they permit homeopathic merchants to claim that tiger’s claws can cure cancer. Instead, these merchants are limited to saying their products imbue general wellness, a term so vague that the merchant cannot be prosecuted for false advertising. Now, the FDA has standards I think go too far in some cases (they have forbidden a virtual cure for Alzheimer’s because it has a 6% chance of brain hemorrhaging–which would seem entirely worth the risk to most people). Nonetheless I say they provide a good service in preventing outright fraud. There are some libertarians who argue that the courts could just as easily impose penalties. However, if you take a poisonous snake oil, you will be dead and the merchant company dissolved and vanished by the time your estate sues. Known fraud should be prevented. Similarly, homeopathic remedies, which have not one jot of science behind them (and I say this as a practitioner of many other natural healing methods), should not be permitted to advertise as medicines until they can prove that is what they are. Here, again, the regulation is preventing fraud.

Business Practice Regulation;

Moving from consumer products over into business practice, take a look at good securities regulation. The SEC’s Rule 10b-5 is arguably the only regulation the modern securities world of instant communication really needs. It prohibits fraud of any sort in the purchase or sale of securities. Enforce this vigorously and you don’t need anything else for Madoff, Enron, et al. The quite period that so frustrated Google’s IPO, though? That is a provision of the Securities Acts which truly show their age (1933 and 1934 respectively). It is sheer idiocy today.

Now look at the banking and securities regulations that have landed us in our current mess. Is it really lack of regulation which caused the problem? No. Policy from the government led to the wretched lending practices of Fannie and Freddie. The lack of regulation was when general banking was allowed to combine with investment banking. That would have been okay, though, if banks had to be responsible for their own behavior under such a system. But FDIC’s mere existence promised risky behavior from banks, and this only compounded with the bailouts. We also permitted a leveraging level and fractional reserve banking that cannot be called anything but fraudulent. We then set regulations actively encouraging fraud when we set interest rates so low that any responsible investment and saving was unprofitable. The further regulations we pass to try to fix the already broken regulatory scheme, such as Sarbanes-Oxley, have done nothing to solve the underlying problems while they have driven costs up to crippling levels.

When government sticks to ensuring open markets, enforcing honorable contracts, and preventing fraud, it does well. When it tries to say exactly how things should happen, it succeeds only in stifling innovation, distorting markets, and creating toxic economic problems. A good Republican should recognize this truth.

Julian Dunraven