Posts tagged The New Republic

Column on The Keynesian Non-Answer

The Keynesian Non-Answer

Tibor R. Machan

The New Republic editorialized recently about the current economic mess and it is worth quoting it because the central passage is largely non-hyperbolic, non-polemical: “The classic response to [our current economic] situation, put forth by John Maynard Keynes in the 1930s, is for the government to spend money. During the Great Depression and then World War II, the Roosevelt administration and its allies did this in part by employing people directly, an idea that still makes sense even if it’s utterly unfashionable. But there are other ways to prime the pump. Government can invest in public works, whether it’s building roads or fixing up schools. It can put money in the hands of those who will spend it, by increasing public assistance or by targeting temporary tax relief to the poor and middle class. It can also supply money to state and local governments, which because of balanced-budget requirements are busy laying off first-responders, teachers, and other employees—making the unemployment problem worse.”

Notice that of course, the editors simply take it for granted that governments are authorized to engage in this kind of economic regimentation. Never mind that when citizens decide not to spend money they are doing it with what belongs to them and may indeed know what they are doing. But this doesn’t matter to the advisers of master planners. Such moral issues are to them trivial. They think like statists have always thought–what matters for them is only what the king, czar, or some other government aims for.

The history in the passage is wrong. Roosevelt’s Keynesian schemes didn’t work, as it has been shown by numerous economists. (See The Critics of Keynesian Economics [1960] edited by Henry Hazlitt, and Hunger Lewis’s Where Keynes Went Wrong [2009], among many works that critically and mostly dispassionately address Keynesian economics.)

Investing in public works is a complete illusion–most of such spending by government is directed politically; it’s nearly always graft, and what else could it be since government officials haven’t the faintest clue as to what the money they have extorted from the citizenry should be spent on. So the spending will be a response to the pleas of lobbyists and others who can be of help in reelecting the politicians.

Of course, balanced budgets are very rarely implemented. Politicians do not want their hands tied.

The citizens who taxes are extorted could, of course, spend their own funds or invest them or place them in banks that can lend them out all of which would end up employing people for purposes that actually fulfilled what the public wants. Indeed, it is only such spending that amounts to support for public works since the so called public works are nothing but made up projects that serve the agendas of the politicians and bureaucrats. (The editors are evidently unfamiliar with public choice theory for which Professor James Buchanan received his Nobel Prize. The idea is, simply put, that politicians and bureaucrats do not spend on public projects but on what they regard is important. It should also be considered that even those who would try to serve the public interest stumble upon the difficulty of knowing what that might be, seeing that the public is made up of millions of people who have hardly any common interests or objectives.)

I have never managed to appreciate why these people keep assuming that the judgments and actions of government officials are superior to those of the citizenry throughout the world where these Keynesian proposals are being made and followed routinely. I keep asking, “Who are these people whom we can trust with such tasks as running a country’s economic affairs?” Somehow thousands of intellectuals who would never entrust government with tasks such as censoring literature and newspapers nevertheless have no compunction about entrusting them with the very delicate and idiosyncratic tasks of directing people’s economic affairs. (I tend to think it is the ancient governmental habit, left over from feudal times.)

Column on Ignorance Amidst Erudition

Ignorance Amidst Erudition

Tibor R. Machan

Stanley Kauffmann is the film reviewer of The New Republic and his work in this area is worth the time it takes to read it, at least for me. He is what I would consider an erudite film critic, drawing on a vast familiarity with the history of cinema. Indeed, while the magazine has been turning more and more statist–in it early days it was actually an interesting ideological hybrid, guided by old or classical as well as new or modern liberal values–most of its good stuff comes from the back of the book, namely, the reviews it publishes. And from Kauffmann’s comments on films.

So I was taken aback when in a recent review of the movie Too Big to Fail by Curtis Hanson translation of Andrew Ross Sorkin’s book on the recent financial fiasco, Kauffmann opines that “The economy requires radical political intervention and we ducked that.” Just goes to show you that being knowledgeable and smart about movies can go hand in hand with utter ignorance of economic theory and history.

One need not be what Paul Kurgmann and even President Obama likes to refer to, disdainfully, as a market fundamentalist–i.e., someone who holds that as a general policy it is better to rely on free market processes than to trust the bureaucrats–to see that Kauffmann is way out of his depth. For starters, political intervention has been part of the norm in the American economic system from the beginning, with but very few lulls in that approach. (I once ran across a book published in the 1840s in which the author severely criticizes government involvement in the American economy and for its thwarting of free trade on innumerable fronts!) Alexander Hamilton, one of the prominent founders, had supported many measures that run against the principles of a free market economy and involve extensive and “radical political invention” in the economy. What is it that Kauffmann refers to when he states that “we ducked” such intervention? Does he mean the country never did opt for out and out socialism? On that score he is correct but such a remark assumes that financial and other economic messes are avoidable under a socialist economy. Yeah? Tell that to the former Soviet Union and its colonies and to the many European near-socialist governments that have been struggling with such problems.

Of course, Kauffmann’s idea is rather routine among intellectuals who take their economic education from the likes of the late Paul Samuelson (whose introductory text, Principles of Economics, was the main source of readings in college economics course for decades). While there have been some free market economists whose influence has been felt throughout higher education–and this is true now as well–the majority of students who take econ courses get mostly lessons in the wisdom of the mixed economy, the kind we see in most of Europe, North America, New Zealand and Australia. Such systems are riddled with political intervention!

The idea that such intervention is what an economic system needs so as to be functional itself rests on the myth that some people–politicians and bureaucrats–have special talents for guiding the economic conduct of others. This is quite literally a fascist conviction! It is diluted by mixing in democratic and capitalist and other features in the system–that’s why it is called a mixed economy–and it seems Kauffmann does not hesitate to embrace it.

Now mind you, what is really off in Kauffmann’s remark is the association with political intervention with radicalism. In fact it is the free market system that has brought to the fore a radical economic idea given that political intervention has been around from time immemorial. Mercantilism, which was the dominant economic doctrine prior to Adam Smith’s writings, especially his The Wealth of Nations (1776), is a thoroughly politicized economic system! Feudalism and nearly all the economic ideas and policies of the old order were nothing if not completely political.

So it seems that Mr. Kauffmann, who must be at least as old as I am by now, needs to go back to night school and take a good course in economic history. He would then perhaps admit that his comments about what the economy needs could at least use serious revision.

Column on Tea Party Strategy Anyone?

Tea Party Strategy Anyone?

Tibor R. Machan

My involvement in Tea Party matters is virtually nil. I follow the movement’s doings by reading both pro and con comments on its candidates and leaders, as well as listening to what some of the active members say in public forums. (Let me tell you the snooty Left is scared stiff of the Tea Party and rolling out its heavy guns to demean it, with Glenn Beck and Sarah Palin serving as convenient targets whose lack of academic erudition is held against them in massive articles in prominent magazines like The New Republic and The New York Review of Books!)

As far as I can determine, the Tea Party is a kind of Right Wing populist assembly of people who have disparate ideas and objectives but are united in being disgusted with the leadership in Washington. There is among them room for nearly anyone who shows a positive attitude about main street America. Social conservatives, especially, seem to be welcome, what with pretty heavy moralizing as their central pitch; free market champions, too, tend to be accepted but not if they are also committed civil libertarians who might stand up for illegal immigrants and oppose the vicious War and Drugs; certainly members of the religious Right are not only welcome but often take leadership roles; and there are others, including those loyal to the American Founders and their central documents, such as the Declaration of Independence and the Bill of Rights. (Sometimes they express themselves in questionable terms, such as swearing loyalty to the U. S. Constitution; but that document is now so watered down, so far from the principles stated in the Declaration, that it scarcely says anything about what the country’s political system and public policies ought to be all about.)

I am no spin doctor and do not have my finger on the pulse of the electorate, although I do try to keep abreast. It occurs to me that if the Tea Party is to have a solid chance at influencing American politics and public policy it will have to pare down its message to certain fundamentals and express this publicly in palatable ways.

The one principle that is truly representative of America as the Founders conceived of it is limited government, limited by the principle of individual liberty. Perhaps turning to this message with a clear emphasis on not trying to impose anything else on the country could be successful. If a Tea Party candidate or leader is pressed for views on matters other than the proper scope of government, the answer should be: “No comment on that since it isn’t a part of politics proper, not in a free country!” Yes, it is judicious, prudent to simply refuse to get caught up in all the issues that people may bring to the political table by teaching the lesson that they really aren’t political, even if they are on the minds of millions of people.

Tea Party members, leaders, candidates and the like may well succeed by adhering to this strategy of not allowing their detractors to involve them in everything. They could point out that this country isn’t supposed to be a totalitarian system in which politics takes over everything, addresses all issues on the minds of the citizenry. No, one need not have an opinion on creationism, intelligent design, child reading, drug use, and yes, even abortion. Let most of these topics be part of our social discourse, not our political thinking. That way the central Tea Party theme of reigning in the scope of government is kept in focus and the pluralism of the movement can also continue to flourish but within its proper domain, namely, the variety of social positions the huge tent of those who love liberty makes possible.

Yes, this way of going about things might link the Tea Party too closely with its libertarian faction but that could be a political asset if intelligently put (during interviews, press conferences, etc.). Do not permit the detractors to draw Tea Party people into discussions about matters that are not the proper concern of politics and public affairs. Therein might lie a way to victory, especially now that suspicion with governmental meddling is rife throughout the citizenry.

And this attitude can easily be linked to the central, crucial tenets of the American political tradition, the founding documents and the thinking of the Founders. That they may not all be entirely palatable in our age will not matter if discussions and proposals are kept to essentials. What is exceptional about America is its limited government tradition and moving away from this is wrong, inefficient, and, yes, un-American.