The Quotable Hayek
I feel like the Austrian economist Friedrich Hayek gets a bad rap from today's liberals and progressives, mainly because his support of free markets (particularly free global markets) made him the darling of Republicans from the beginning and especially the Reagan administration. I recently re-read his essay "Why I am Not A Conservative", which
( Read more... )
Where both progressives and conservatives tend to disagree with liberals is within the statement "moral beliefs concerning matters of conduct which do not directly interfere with the protected sphere of other persons do not justify coercion", as both the conservative and the progressive feel that actions that affect society as a whole may indeed justify some intervention. Though they disagree on the particulars.
And I realize that he doesn't suggest a total lack of social welfare, and speaks out against state-enshrined monopolies and privileges(not mentioning market generated ones). But this misses the point I feel.
The question is, indeed, which direction society should move. The question I ask is, what should be the deciding value? That which best suits those who best play the game of markets? Or that which brings the greatest benefits to the people as a whole?
Reply
What we think we observe in the world is that that is a false dichotomy in practice - that our experience of the world is that the more a society optimizes for greatest benefits to the people as a whole, the less successful they have actually been at delivering those benefits, and that the more societies have optimized for best suits those who best play the game of markets, the more they've delivered opportunity, liberty, and broad material wealth. Certainly self-determination is its own goal, but I'd be much, much happier with it being trampled on if it looked like trampling on it actually worked.
Liberty is important. But I feel -opportunity- is at least nearly as important. And sadly, free markets tend to create vast gulfs of difference in opportunity. And since you are a fan of evidence-based theory, it turns out there is a high correlation between inequity and many social ills.
Indeed. To the extent that we have achieved liberty without producing opportunity, we have failed. My problem is that when I look around at recent history (the last century, the last 40 years), all of the examples I have of countries and societies that chose to focus on minimizing inequity ended up casting the existing social and economic structure in amber. The people who started out at the top stayed at the top, the people who started out at the bottom stayed at the bottom, and the people who started out in the middle stayed at or below where they started. And growth across the entire population was suppressed and they ended up with a large number of people living on the dole leading permanently disenfranchised lives.
And in North America we produced the largest, most well educated generation the country had ever seen.. who promptly voted themselves largely out of paying taxes.
Reply
The majority of northern Europe has consistently preformed well despite being deeply engaged in wealth redistribution. And they are currently actively draining America's brain trust. Japan, though we like to think of them as a 'free market', has held tight government regulations over their economy, and is one of the wealthy nations with the least wealth inequity, and has tended to perform rather well. Heck even examples like Yugoslavia, and it's 'market socialism' experiment was doing excellently right up until they took IMF money and had a bad year, spiraling them into debt and economic crash(followed by ethnic wars). Before then they had been outperforming all of their fully capitalist, also developing neighbors.
In fact, nearly every time the market is opened up for more opportunity for the market kings, we end up in trouble. Every crash we've had has come on the heels of deregulation, and those who've cheated in each instance walk away wealthier.
Casting society in Amber? You realize that amongst the wealthy nations, America has just about the -Lowest- social mobility? We are the nation whose social and economic system is cast in amber.
Reply
Northern / Western Europe - that was actually the part of the world I was thinking about when I was making observations about large permanent dole. Who are you thinking of a strong counter-examples? There have certainly been periods of time when Europe has outperformed the US, but none of them have lasted that long, and being a few percentage points of growth behind adds up when you do it for a few decades.
Reply
As for Northern/Western Europe and the permanent dole, they have done rather well, barring wide systematic crashes that have disproportionately harmed smaller nations(and nations who don't control the worlds reserve currency). And they have far, far higher social mobility than us. No amber clad society at all. Norway has actually passed us in GDP/capita. Though to be fair, a good deal of the that has been oil money. But they've reinvested it very, very well. They have amongst the best education systems in the world, and are pouring vast amounts of money into new technology.
Sure America has vast wealth. Keep in mind though that we were basically the only wealthy nation not to get bombed back into the 19th century during WWII. The post war phase was a huge boon for us, competitively, not because of the surge that war gave us, but simply because everyone else was crippled.
America continues to grow apace... except, if you look at the median wealth in this country, it is stagnant. And has been for 30 years now. We have more stuff, but that is balanced by greater debt, and if one looks at actual wealth, the median wealth has been completely stagnant, and the quarter median has -dropped-. All of the growth in wealth has occurred in the top. This rising tide did not lift all ships, in fact it's sinking the poor.
Reply
Yes. Very much, yes. It's extremely frustrating trying to talk with people who think of the post-war (1945 - 1960) period in the American economy as a baseline, who seem to have missed out on the fact that that was the period during which we first brought the US fully online as an industrial economy, and during which we were fripping rebuilding Western Europe. Of Course we were going gangbusters, don't reset your notions of 'normal' to one of the greatest booms in history and then be surprised that your economy is performing below par.
Reply
Yes.. but.. the standard of living at that median level has, in fact, increased substantially, at least, it has if you're counting square footage people are living in, calories they're choosing to consume, or life expectancy. (I'm not arguing that relative wealth has not diverged, that's extremely well-documented, I'm pointing out that what's happened is that life at the bottom has improved and life at the top has gone off the charts.)
Reply
Reply
Citation, please?
Yeah, but as we've been seeing, those increases have been built entirely out of debt
They've certainly been built by taking on a lot of debt (in the aggregate), but your logic seems broken in specific - the poor largely don't and haven't had access to credit, with the noteworthy exception of the most egregious excesses of subprime lending. US food prices will go up as petroleum prices rise in dollars, because US agriculture uses a lot of petrochem per ton.. but even there, and the big story in agriculture over the last four decades has been about food prices being so low that farmers couldn't make a living, not about being so high that people couldn't afford to eat.
Similarly, we've flushed a terrifying amount of capital down the drain, building houses in parts of the country that are resource-expensive to live in and in really dubious land-use decisions, but even if we posit a complete devaluation tomorrow, that doesn't leave us with less housing stock per capita than we had in 1970.
Reply
Reply
Brazil? Chile?
Reply
Reply
But I have to say, US meddling in South and Central America looks a damn lot more like Faction than it looks like Policy - being aligned with (existing, Colonial) Power has been a much, much better predictor of how tough a row people had to hoe than what sorts of policies anyone in particular was promulgating.
Reply
Reply
Well.. ish. Tax cuts are a lousy way to create jobs, big public infrastructure is necessary when you don't have any, but also a really efficient way to hemorrhage capital to no good effect (cf China building empty megalopolises in Mongolia). If your tax rates are high enough that they're stifling growth, tax cuts are great. I'm not sure that any of the first world has had that particular problem since 1982, and there's certainly some legitimate argument about before that.
Reply
Reply
Leave a comment