The truth is that there has never been a vibrant economy that it not managed to some degree by the federal government. By ‘manage’ I do not mean that the government controls the market in a rigorous sense, but that the government guides the market. But why does the free market need a guide? Because it is blind. The market is good at generating wealth, but generating wealth can be a dangerous thing if it is not done carefully. Somebody outside of the market has to look out for the market’s impact on the environment (eg: the feds forbidding companies from saving money by dumping chemicals into the river), for individuals who are exploited (eg: credit card contracts with impossible to read legal language for the purpose of tricking you), or for the free market creating inflation or deflation (eg: the Federal Reserve’s task of manipulating the interest rate).
It might seem that I have contradicted myself. I said that the market should be free, but also that it should be guided. How can something be free and guided at the same time? It is like an individual. An individual is free for the most part, but there are some actions that the government has told me that I cannot do. For instance, I am not free to drink and drive. Is this restriction on my freedom justified? Yes, because studies have shown that this particular restriction on my freedom is a good thing for society as a whole.
Fast forward to bailouts of 2008; most people hated them, and many think they never should have happened. First, they were terribly unfair because they saved already rich individuals who had acted stupidly or dishonestly, while many honest middle class people lost their jobs. Second, they were an infringement on freedom, because the federal government took away our private property (in the form of tax dollars) and gave it to people who we really didn’t like very much.
So what if ‘most people’ had their way, and the bailouts had never happened? Well, we would certainly be more free, and isn’t that a good thing? I say ‘no.’ Every reputable economist from the right and left was convinced that the failure of all the major banks would usher in a Second Great Depression that would have no foreseeable ending. Little House on the Prairie was a great book series, but I have no desire to live like that; not having enough to drink, watching my children die of curable diseases, freezing my butt off in the winter. The point is this: what good is freedom if we are all eating out of garbage cans?
If the bailouts had been orchestrated by a Democratic administration, can you imagine what Fox News and Rush Limbaugh would have said? “See, the Democrats’ secret plot to turn us all into socialists has finally come to fruition!” But in fact, they were done by the Bush Administration. But why? Was the Bush Administration part of some secret Commi plot? No, they were not. Here is the gist of what really happened:
Economic Advisors: “Ummm, sir, we’re going to have to give $700 billion tax payer dollars to private banks”
Bush: “But wait, I’m a free market guy who doesn’t believe that the government should do that. In fact, I wrote this really nice essay in college about how taxes are bad and that the government should let institutions fail that cannot make it on their own.”
EA: “Yeah, that theory sounds nice on paper, but unless you want to be remembered as the president who ushered in the Second Great Depression, we have got to do this”
Bush: “Well, OK…”
Last week I highlighted the fact that every society already limits individual freedom in the form of laws when that freedom is dangerous. I see the bailouts as adhering to the same principle. In the end, then, my critique of libertarianism is the same as my critique of socialism: nice sounding theory on paper, doesn’t work in reality.
8.22.2010
Four Theories of Government, Part III: What Kind of Good is Freedom?
Freedom is a good thing, and everyone save a few old people in Russia and a few of the world’s dictators would agree with me about that. Since I’m pretty sure that none of those people read the Orthodox Heretic, I’m not going to talk about the benefits that come from freedom. Instead, I’ll ask a related question: “What kind of good thing is freedom?”
In the Leviathan, Thomas Hobbes describes a state where people are completely free in the ‘state of nature.’ By nature then, we have the right to do whatever it is that we want to do. Unlimited freedom – is that not a good thing? Hobbes correctly points out that it is not. He says that when everyone is free to do whatever they want, like stealing and killing, life would be ‘poor, nasty, brutish, and short.’ His point was that for the sake of happiness, we should be willing to give up some of our natural freedom and enter into a social contract. This contract of laws, of course, places severe restrictions on our liberty; however, given the boost in happiness that we get from living in a society governed by laws, we should be willing to make the exchange. Hobbes’ ideas, via Locke especially, had a deep impact on the Founders.
This simple analysis reminds us what is true about freedom, namely, that it is not an absolute good. If it were an absolute good, it would be good independently of the circumstances or the consequences. But our Founders, like any founders of any society, reject the idea that freedom is good-in-itself. Importantly, when freedom will make us less happy, as is true in the case of the state of nature, we should limit freedom for the sake of happiness.
I’m afraid that our friends the libertarians gloss over this fact and instead think of freedom as an absolute good. I don’t mean to say that they are anarchists who want to overthrow laws and the government entirely, but rather that they have forgotten the principle that freedom must be limited when it severely conflicts with our pursuit of happiness.
Next week I will show how our Founders put this principle into practice not just by instituting laws against killing and stealing, but about bankruptcy.
In the Leviathan, Thomas Hobbes describes a state where people are completely free in the ‘state of nature.’ By nature then, we have the right to do whatever it is that we want to do. Unlimited freedom – is that not a good thing? Hobbes correctly points out that it is not. He says that when everyone is free to do whatever they want, like stealing and killing, life would be ‘poor, nasty, brutish, and short.’ His point was that for the sake of happiness, we should be willing to give up some of our natural freedom and enter into a social contract. This contract of laws, of course, places severe restrictions on our liberty; however, given the boost in happiness that we get from living in a society governed by laws, we should be willing to make the exchange. Hobbes’ ideas, via Locke especially, had a deep impact on the Founders.
This simple analysis reminds us what is true about freedom, namely, that it is not an absolute good. If it were an absolute good, it would be good independently of the circumstances or the consequences. But our Founders, like any founders of any society, reject the idea that freedom is good-in-itself. Importantly, when freedom will make us less happy, as is true in the case of the state of nature, we should limit freedom for the sake of happiness.
I’m afraid that our friends the libertarians gloss over this fact and instead think of freedom as an absolute good. I don’t mean to say that they are anarchists who want to overthrow laws and the government entirely, but rather that they have forgotten the principle that freedom must be limited when it severely conflicts with our pursuit of happiness.
Next week I will show how our Founders put this principle into practice not just by instituting laws against killing and stealing, but about bankruptcy.
8.15.2010
Four Theories of Government Involvment, Part II
I want to start by analyzing the two ideologically pure positions of the role of government: socialism (this week) and libertarianism (next week). Strictly speaking, those two theories are not real opposites, since socialism is merely an economic theory and libertarianism is the theory that government – particularly the federal government - should be absent in all or nearly all areas of social and economic life. So Communism may actually make a better ‘opposite’ to libertarianism, since Communism not only advocates government control of the economy, but also that government control all aspects of social life, such as mandating religion (or lack thereof), who you marry, how many children you can have, etc.
In regards to Communism, my criticism is basically the same as everyone else’s: nice sounding theory on paper, not so great in reality. Marx did genuinely begin his quest for a noble reason: compassion for exploited capitalist workers. It is hard for us to imagine exploitation; we may think exploitation is working an extra 2 unpaid hours a month or something like that. But In Marx’ day, there was no workman’s comp, no overtime pay, no minimum wage (and so workers kept undercutting each other), no unemployment insurance, no unions, no sick leave, no vacations, and no safety regulations. And young women in the workplace? Forget about it – have a baby, you’re fired! Still doesn’t sound so bad? Well, add to that the fact that most work was difficult and extremely dangerous. What you end up with is depressed, sick, and injured workers who can’t feed their families anyway. In order to remedy this, Marx recommended that there be no private property. The hope is that if there is no private property, then no rich person can exploit a poor person. We should never forget this when critiquing socialism.
But as most of the world has now admitted, a government cannot create wealth. Hence, economic equality ends up meaning that everyone is equally poor. My favorite example is from Cuba. Only after Raoul Castro took over were cell phones permitted. ‘What could anyone have against a cell phone?,’ you may ask. Well, remember in the 90s when everyone talked about ‘bling’? Bling, apparently, referred to such things as light reflecting off your gold chains, or the sound that a cell phone would make. Bling was significant because it meant that you had status – that you were more important than your neighbor. Easy solution for Fidel: no cell phones, no inequality (that’s not the whole story, but that’s a part of it).
Well, capitalism wins again. It turned out that after a few years of private economic competition working its magic, everyone got a cell phone. Now, everyone’s life is easier, competing cell phone companies have created a ton of wealth, cell phones are no longer a status symbol, and human beings are still trying to flee Cuba.
I intentionally started this series with an uncontroversial post (unless I have any Communist/socialist/Marxist blog readers I don’t know about), but I’m going to start getting controversial next week. Then, I will argue that a similar critique can be made of libertarianism: sounds nice on paper, but in reality it just doesn’t work. There has never been, is not now, and never will be a successful economy that is not overseen by the federal government. And yes, that does include early America: even the Founders intentionally left many ways for the federal government to intervene in the economy and to place limits on capitalism.
In regards to Communism, my criticism is basically the same as everyone else’s: nice sounding theory on paper, not so great in reality. Marx did genuinely begin his quest for a noble reason: compassion for exploited capitalist workers. It is hard for us to imagine exploitation; we may think exploitation is working an extra 2 unpaid hours a month or something like that. But In Marx’ day, there was no workman’s comp, no overtime pay, no minimum wage (and so workers kept undercutting each other), no unemployment insurance, no unions, no sick leave, no vacations, and no safety regulations. And young women in the workplace? Forget about it – have a baby, you’re fired! Still doesn’t sound so bad? Well, add to that the fact that most work was difficult and extremely dangerous. What you end up with is depressed, sick, and injured workers who can’t feed their families anyway. In order to remedy this, Marx recommended that there be no private property. The hope is that if there is no private property, then no rich person can exploit a poor person. We should never forget this when critiquing socialism.
But as most of the world has now admitted, a government cannot create wealth. Hence, economic equality ends up meaning that everyone is equally poor. My favorite example is from Cuba. Only after Raoul Castro took over were cell phones permitted. ‘What could anyone have against a cell phone?,’ you may ask. Well, remember in the 90s when everyone talked about ‘bling’? Bling, apparently, referred to such things as light reflecting off your gold chains, or the sound that a cell phone would make. Bling was significant because it meant that you had status – that you were more important than your neighbor. Easy solution for Fidel: no cell phones, no inequality (that’s not the whole story, but that’s a part of it).
Well, capitalism wins again. It turned out that after a few years of private economic competition working its magic, everyone got a cell phone. Now, everyone’s life is easier, competing cell phone companies have created a ton of wealth, cell phones are no longer a status symbol, and human beings are still trying to flee Cuba.
I intentionally started this series with an uncontroversial post (unless I have any Communist/socialist/Marxist blog readers I don’t know about), but I’m going to start getting controversial next week. Then, I will argue that a similar critique can be made of libertarianism: sounds nice on paper, but in reality it just doesn’t work. There has never been, is not now, and never will be a successful economy that is not overseen by the federal government. And yes, that does include early America: even the Founders intentionally left many ways for the federal government to intervene in the economy and to place limits on capitalism.
8.10.2010
Four Theories of Government Involvment, Part I
[The Orthodox Heretic finally finished his dissertation. So finally, some more blogs!]
It is common to believe that the Republicans are ‘libertarians-light’ in the same way the Democrats are ‘socialists-light;’ that is, Republicans are generally in favor of small government, but not to the extent that libertarians are, and the Democrats generally favor large government, but don’t want to go to the extremes of socialism.
This is what I used to think. Now, I see things as significantly more complicated – so much so that it turns out my initial analysis was just plain wrong. I want to spend a few weeks 1) describing what appear to be the four major theories of government involvement – libertarianism, socialism, and whatever the Democrats and then Republicans believe, 2) arguing that a morally responsible person should desire a society that considers its most vulnerable members, and 3) arguing that this kind of society is the one that fosters non-state involvement but is willing to involve government when appropriate.
[If you are reading this on FB, there may be some advantages to visiting the actual blog]
It is common to believe that the Republicans are ‘libertarians-light’ in the same way the Democrats are ‘socialists-light;’ that is, Republicans are generally in favor of small government, but not to the extent that libertarians are, and the Democrats generally favor large government, but don’t want to go to the extremes of socialism.
This is what I used to think. Now, I see things as significantly more complicated – so much so that it turns out my initial analysis was just plain wrong. I want to spend a few weeks 1) describing what appear to be the four major theories of government involvement – libertarianism, socialism, and whatever the Democrats and then Republicans believe, 2) arguing that a morally responsible person should desire a society that considers its most vulnerable members, and 3) arguing that this kind of society is the one that fosters non-state involvement but is willing to involve government when appropriate.
[If you are reading this on FB, there may be some advantages to visiting the actual blog]
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