Tag Archives: Adam Smith

On Government, Morality and Competition

== The age-old enemies of competition ==

As part of my eclectic and contrarian approach to life, I subscribe to a number of conservative and libertarian newsletters and sites… and some rather lefty ones, too. While I am skeptical of all prescriptive-simplistic dogmas, I do keep searching for that germ or core concept are variation that might be worthwhile. As a result, and despite my well-known views about the noxious New Confederacy, I nurse some concepts and notions that shock my left-leaning friends.  Indeed, what follows is sure not to please dogmatists of any stripe. Still, you might learn something.

government-moralOne of the more hard-hitting, Rothbardian-Libertarian sites is Casey Research, headed the brash but smart and sorry-but-I-can’t-help-liking-him master-provocatuer Doug Casey. One of Doug’s Fellows, Mr. Paul Rosenberg, just issued a manifesto assailing the core morality of “government”… a central catechism of the Rand-Rothbard-Cato wing that has taken over libertarianism, for more than a generation. You should read this missive; it will give you a better understanding of the incantations that transfix many of your neighbors. (Hey, you have your own glib and oversimplifying incantations – are you honest enough to admit it?)

I generally shrug off the polemics while sifting for pearls in manure. In this case, however, I felt I simply had to respond. Go have a look… then come back here.

== Hatred of all government – enabling an older enemy of freedom ==

Alas, amid his blanket denunciations of “government” as inimical to liberty, Mr. Rosenberg ignores the elephant in the room — the failure mode that destroyed freedom and competitive markets and enterprise in 99% of human cultures, across the last 6000 years.  Feudal lordships in which owner-oligarchs crushed the hopes of the great masses of peasants below, while quashing any advances that might destabilize their family grip on power.  Steep pyramids of power, in which a few bullies with swords owned everything and used hired priesthoods to declare “it is GOOD that our sons will own your sons!”

Compare the horrific “morality” of any feudal oligarchy to the flawed but often progressively positive morality of a modern, western state.  This is not a comparison that Mr. Rosenberg’s jeremiad can survive… so he evades the contrast, altogether.

Mr. Rosenberg knows darned well that owner-oligarchy is the great failure mode.  The one denounced by Adam Smith as the relentless market destroyer.  The calamity against which our American founders rebelled.  Yet, he is part of the campaign to yell “squirrel!” and point our attention elsewhere.

CompetitionTo be clear, competition is the greatest creative force in the cosmos.  Adam Smith focused on the positive outcomes when competition can be engendered in the best ways.  Competition made us! But in nature it is vicious and inefficient, working slowly, atop mountains of corpses.

It is seldom much better in human affairs. Look across the centuries; we see almost every renaissance of competitive creativity (e.g. in markets) is almost always quickly suborned and ruined by cheaters.  By conniving men with swords or deeds of ownership over everything.  The rentier caste that Adam Smith denounced.  Competition has only survived more than one generation  – anywhere – when it was regulated to minimize cheating. Exactly as Smith recommended.

In fact, that success, getting the good, positive outcomes from creative competition for more than two generations in a row, while excluding the nearly automatic cheating modes that always ruined it in the past, has truly only happened once in all of the history of Homo sapiens… during this marvelous western renaissance we are living in.

COMPETITION-1You’ll notice that my portrayal of the situation fits into neither the simplistic model of the Left nor that of the Right!  One side’s lunacy is to ignore the fantastic fecundity of competition at generating such vast amounts of wealth that we can then afford to do progressive things.  The insanity of the right is to ignore those 6000 years and pretend that the fecundity and productivity can happen amid the usual, festering swarm of opportunist-cheaters!

== Prevention of cheating requires… regulation! ==

sports-regulationThe exact parallel is professional sports, one of the tightest-regulated realms of human experience.  Yes, most of the regulations are decided by cabals of team owners. But I never said regulation has to be “governmental.”  What is key is that most of the regulations in a sporting league are intended to level the playing field and eliminate cheating.  Because if cheating reigns, then the system fails to deliver the desired product… excited fans, eager to buy tickets.  (Do you deny that individual players and teams would cheat, if they could get away with it? Or that the sports franchises become valueless, when the customers notice rampant cheating?)

AdamSmithREgulationAdam Smith knew all of this and recommended state endeavors to balance out the inevitable rise of cheaters and to do what F. Hayek later demanded… to maximize the number of skilled competitors!

You liberals, forget your cliches about Smith!  Actually read and rediscover the founder of your movement.

Smith wanted free public education, state financed infrastructure and health measures, the breaking up of monopolies and other reforms that would ease the way for bright sons of the peasantry to compete with the sons of owner-lords.  The very first acts of the American Founders, after the Revolution, included seizure of half the land in the former colonies from a few lordly families and redistribution, in order to create a (somewhat more) level playing field.

Indeed, many of the reform movements since then have revolved around spreading that circle of fairness.  Not just because it’s nice, but because it is stupid to waste talent and let cheaters stifle competition by the maximum number.

None of which is part of today’s libertarian doctrine!  All talk of level-flat-fair-open competition and Smithian libertarianism is quashed, replaced by the New Dogma — idolatry of unlimited, lordly accumulations of private ownership… which (let me reiterate) was THE failure mode for 6000 years. Property is now the libertarian god! Competition is shrugged off and never appraised for what it is, an explosively creative force that must be maintained, like an engine, lest the grit of cheating destroy it.

WealthNations== To be clear… ==

While I hold many liberal or progressive views, I also proudly and unabashedly proclaim others that are Smithian-Heinleinian Libertarian, in that I deem healthy suspicion of government over-reach to be fit and proper! But I can turn my head and see such dangers – abuse of power – looming from all directions. (Can you?)

Yes, “government” can be captured by crony oligarchs!  That is why the democrats (and never republicans) de-regulated away and erased captured agencies like the ICC and CAB and broke up AT&T and gave an unregulated Internet to the world. And worth-noting: all of those deregulatory measures were opposed by the GOP at the time.

Keeping a close eye on government, skeptical to all over-reach, is a fine role and it inspired my book: “The Transparent Society: Will Technology Make Us Choose Between Privacy and Freedom?

But assuming we do keep the bureaucrats leashed, then it is proper to recall that they… and the scientists too… are “elites” we can use to counterbalance the inevitable cheaters-from-oligarchy who betrayed freedom and competition in every other era.  Indeed, the war on science and all other castes of “smartypants” expertise is being funded precisely by those who want feudal oligarchy to come roaring back.

== But is capitalism a good thing? ==

market-competitionGuardedly, you bet! In that market competition is the engine of our cornucopia and the wealth that enabled us to then take on progressive causes.  Indeed, healthy market capitalism should be viewed as a top victim of crony-oligarchy. Indeed, You liberals need to admit that the issue of “globalization” is not settled and your reflexes were dead wrong.  Aside from the two billion people rising rapidly in China and India…

…read about potential real progress in three more countries that together contain 1.5 billion people.  Nor are these the only such examples.

Have investments in infrastructure, education, science R&D and public health paid off? According to one of the top (still-sane) conservative economics research houses, that “social capital” of shared investment in the future is responsible for most of our current standard of living.

“The United States and the rest of the post-industrial, developed world owe their epic rise in living standards to the underlying “social capital” that properly incentivized innovation, entrepreneurship, and thus technological transformation over the last two centuries.” – says Worth Wray of Mauldin Economics, a noted conservative investment newsletter:

econmics-solowMIT Professor Robert Solow would agree with us on this front. Solow’s work on the US economy – which has become a textbook economics lesson – explains that innovation has accounted for more than 80% of the long-term growth in US per capita income, with capital investments accounting for only 20% of per capita income growth.” 

So much for supply side (voodoo) economics (SSVE), which proclaims that the only way to engender growth and development is huge tax cuts for the uber-wealthy… even at the cost of cutting back on infrastructure, education, science R&D and public health… exactly the opposite prescription cited by Adam Smith.

Funny thing. Not one prediction ever made by SSVE has ever, ever, ever come true.

Liberals, this is your fault too.  Again… until I am blue in the face — instead of bad-mouthing capitalism, embrace Adam Smith and declare true, healthy, flat-open-fair capitalism to be a top victim of the campaign of crony-cabal grabbing by the New Lords.  Investments in infrastructure, education, science R&D and public health are what feed and engender a thriving market economy.

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Filed under economy, politics

Liberals, you must reclaim Adam Smith!

the-theory-of-moral-sentimentsI’ve said it before and must (alas) repeat it ad nauseam. Many of our modern struggles — in the U.S. and across advanced societies — could be altered if both sides actually (for the first time) read Adam Smith.  The left would learn that he  was not the  viciously cruel exploiter of the masses that dopey campus ranters portray him, but rather, the first modern thinker to propose a generally flat and fair (if highly competitive) society, one moderated with many kindnesses that he defended in The Theory of Moral Sentiments. Though yes, he maintained that society could better afford kindness if it maintained a vibrantly creative -competitive marketplace for great new products and services. A forecast of stunning accuracy.

Conservatives would realize that Smith praised competition as the greatest creative force… but that competition’s top enemy is not always a government civil servant!  There is another, older enemy of enterprise and freedom, that crushed opportunity and competition in 99% of societies across 6000 years. The principal enemy of freedom and markets denounced by Smith was monopolistic or conspiratorial oligarchy, of exactly the kind tat the American Founders rebelled-against.

WealthNationsHere’s a summary I found recently:  “Ironically, Smith’s epic work The Wealth of Nations, which was first published in 1776, presents a radical condemnation of business monopolies sustained and protected by the state, in service of a lordly owner-caste. Adam Smith’s ideal was a market comprised of small buyers and sellers. He showed how the workings of such a market would tend toward a price that provides a fair return to land, labor, and capital, produce a satisfactory outcome for both buyers and sellers, and result in an optimal outcome for society in terms of the allocation of its resources.

“He made clear, however, that this outcome can result only when no buyer or seller is sufficiently large to influence the market price—a point many who invoke his name prefer not to mention. Such a market implicitly assumes a significant degree of equality in the distribution of economic power—another widely neglected point.” (excerpted from David C. Korten’s book, When Corporations Rule the World.)

WhenCorporationsRuleIt is an argument made forcefully later by Friedrich Hayek, another genius whom the right idolizes in abstract, while betraying almost everything that Hayek stood for, such as maximizing the number of skilled, empowered and knowledgable competitors and thwarting conspiracies among monopolists and oligarchs, whether those were rooted in government bureaucracy or in narrow owner elites.

This was the point of the Progressive Movement 100 years ago, creating anti-trust laws that shattered the then-looming Gilded Age oligarchy and restored competition to American markets.  It had to be done again in the 1930s and 1940s, resulting in the flattest and most vibrantly entrepreneurial society and fastest-rising middle class the world had ever seen (and shocking the hell out of Marxists, who thought their teleological forecasts could never be reformed away.)

That flattish society (I call it “diamond-shaped) was the product of reforms instituted by the “Greatest Generation” that is much admired on the American Right, for overcoming a depression and Hitler and containing communism.  Alas, for their narrative, the Greatest Generation also adored Franklin… Delano… Roosevelt. Their innovations so reduced class disparities and class friction in America that the Boomer generation grew up assuming that such things were behind us forever.

== But human nature had not been abolished.  ==

ClassWarLessonsHistoryAlas, “class struggle” is a sure theme of our present times. As Smith would tell you, cheaters always find a way to come back, as the flat social order is once again being crushed by skyrocketing (French Revolution-level)  wealth disparities, monopoly and oligarchy.  Raising the question… can Americans do it again?  React not with radicalism or excesses like socialism, but with steel-eyed moderate reforms that restore flat and open competition for another generation? History shows far more instances of the former, than the latter.

“In the real world of unregulated markets, successful players get larger and in many instances use the resulting economic power to drive or buy out weaker players to gain control of ever larger shares of the market. In other instances “competitors” collude through cartels or strategic alliances to increase profits by setting market prices above the level of optimal efficiency. The larger individual and more collusive market players become, the more difficult it is for newcomers and small independent firms to survive, the more monopolistic and less competitive the market becomes, and the more political power the biggest firms wield behind demands for concessions from governments that allow them to externalize ever more of their costs to the community,” writes David C. Korten.

AdamSmithREgulationAdam Smith again said it best, defying the stereotypes and cliched images of him.

“When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.”

He saw a tacit conspiracy on the part of employers “always and everywhere” to keep wages as low as possible.

Does that sound like the guy who you were taught believed only in dog-eat-dog?  Or that only billionaires are “job-creators”?

No wonder today’s “libertarians” — all-too caught up in the hallucinatory web spun by Rand and Rothbard and by Koch-financed “think tanks” like Heritage and Cato — never refer anymore to the “Fist Liberal” and the founder of true libertarianism.  Because Adam Smith would remind them that the real foe of enterprise has — for 6000 years — been owner-oligarchy and monopoly.  The very forces that are rigging our elections and subsidizing propaganda that has driven a third of our neighbors crazy, re-igniting the American Civil War.  So crazy, they proclaim that only government bureaucrats can harm capitalism, enterprise or freedom.

Competition(A side note: I dare anyone to attribute my assertions here to a scintilla of leftism! Competition is the great, creative driver of our positive sum markets, science, democracy… It is in defense of those creatively competitive arenas that we must, today, face down a bizarre madness that has taken over the American Right.)

(But hang on till the end of this posting, to when I cite a very high authority on this!)

== Smith… the judo master ==

The crux is this. If liberals (and not their crazy leftist allies) really want to do a real jiu jitsu move on the mad right, instead of engaging in futile sumo… then liberals should with agility reclaim the “First Liberal” — Adam Smith — and hammer their opponents with him! It is the one move that would take them utterly by surprise, winning over millions of moderates and small businessmen.

“We like competition and open-flat and fair markets!  They are the wealth generators that then enabled us to take on great projects like education and helping the poor. The real destroyers of that healthy version of capitalism were denounced by Smith, and by the American founders. So stop listening to paid shills pushing a return to feudalism! Come negotiate with us over how to keep it all open and healthy and so productive that we can take on the countless challenges ahead.”

== The Cult of the Anti-Smiths ==

Want to see how blatant and hateful the apologists for oligarchy have become?  The latest monstrous rationalization (from Forbes): “Give Back? Yes, It’s Time For The 99% To Give Back To The 1%.”

GivingPledgeYes, it is randianism/murdochianism in full, shameless fury.  Please… please go read the rant, then come back here.  I’ll wait.

Alas, as usual, this screed makes no distinction between the wealthy who actually built companies that coalesced the efforts of thousands of skilled engineers to deliver win-win goods and services — e.g. Jeff Bezos, Larry Page, Steve Jobs —  versus the other clade that became billionaires either via state-subsidized resource extraction or financial connivance among a cheater-cartel of 5000 CEO-caste golf-buddies.

The former group certainly deserve to be rich!  Though note, that most of the creative-goods-and-services billionaires are also … democrats! Who have signed the Buffett Giving Pledge and who express loyalty to the Smithian mixed society.  So much so that they support higher taxes on the rich! (See Larry Page’s most recent effort to use his wealth to help us all in a win-win fight to halt aging.)

Alas, the wealthy lords whom Randians admire most as “job creators” do nothing of the kind. They are those whom Rand herself called “looters” while the tech moguls who are most like Ayn’s beloved characters — creatively brilliant and great managers of other peoples’ brilliance — are the very ones who hold no truck at all with randianism!  Huh.

WealthDisparitiesAbove all, it is in their betrayal of the true libertarian forefather (and also called the “first liberal”) — Adam Smith — that today’s ‘libertarians’ demonstrate the ultimate hypocrisy.  Which matters not a whit to those whose incantations march them (shouting hosannahs) back into chains of feudalism.

 == They hate what works ==

Getting closer to the news…. Hey. If it is so awful, why not let Obamacare run its course?

Economist Paul Krugman at his most cogent: “In a way, you can see why the food stamp program — or, to use its proper name, the Supplemental Nutritional Assistance Program (SNAP) — has become a target.  Conservatives are deeply committed to the view that the size of government has exploded under President Obama but face the awkward fact that public employment is down sharply, while overall spending has been falling fast as a share of G.D.P. 

(News flash, the latest figures show that the US federal deficit has plunged below 680 billion or 4.2% of GDP, well below the 5% threshold that most economists call “safe.”  Look at the Second Derivative of deficits. The second derivative is ALWAYS positive during Republican administrations and almost always negative in democratic ones.  That single fact should make any deficit hawk or person obsessed with fiscal responsibility a democrat. Period.  Flat and absolute.  But let’s get back to Krugman.)

“SNAP, however, really has grown a lot, with enrollment rising from 26 million Americans in 2007 to almost 48 million now.  Conservatives look at this and see what, to their great disappointment, they can’t find elsewhere in the data: runaway, explosive growth in a government program. The rest of us, however, see a safety-net program doing exactly what it’s supposed to do: help more people in a time of widespread economic distress.

“The recent growth of SNAP has indeed been unusual, but then so have the times, in the worst possible way. The Great Recession of 2007-9 was the worst slump since the Great Depression, and the recovery that followed has been very weak….”

Read the rest. But above all recall that the core GOP narrative — that there has been expanding overall federal government under Obama — is a lie that is diametrically opposite to true, as the cutting of food assistance is diametrically opposite to moral.

That whirring sound?  Barry Goldwater wailing and spinning over what has happened to conservatism.

==  Political Ammo! ==

Okay, my periodic political rant is nearly over.  But let’s begin our coda with someone who doesn’t deserve a lot of respect, but who in this case makes a lot of sense:

BenefitAndTheBurdenBruce Bartlett, author of  The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take, held senior policy roles in the Reagan and George H.W. Bush administrations and also served on the staffs of Representatives Jack Kemp and Ron Paul.  So his conservative credentials are complete. And yet, in this article in the New York Times, Bartlett assays the lunatic fringe of the GOP that is now spreading the toxic meme that we should default on the debt as a GOOD thing !

What would drive a right winger like Bartlett to say such things? Michael Goldfarb in SALON appraises the roots of the Tea Party’s radicalism in events of 1973… that a four-decade-long war on the press’s legitimacy began with conservative anger over the “lynching” of Richard M. Nixon from the presidency. The idea that it was a biased liberal press that made the molehill of Watergate into a mountain of Constitutional crisis took root:

“Under Reagan, Republican appointees on the FCC abolished the fairness doctrine, the  obligation for broadcasters to air both sides of controversial issues. This led to an explosion of opinionated propagandists on the airwaves relentlessly attacking “liberal” media. It continues to this day, degrading American public discourse.

“A Nixon media operative, Roger Ailes, discussed starting a Republican-slanted news program with the president pre-Watergate. Later, Ailes invented Fox News for Rupert Murdoch. Fox is one of the prime shapers of the hyper-partisan political culture that has made the U.S. practically ungovernable.”

I found Goldfarb’s insights interesting.  Though ultimately, he is wrong.  The roots lie in the Antebellum or pre-Civil War South.  In the romanticism of Sir Walter Scott that Mark Twain denounced in his own people. In a resentment that simmers like hot, kudzu-scented evenings.  We are still mired in a Civil War that is once more coming to a boil. Do not take it personally. We are not the true target of that rage.  It is the Future.

== Rabbis Explain Why Both Left and Right are wrong. But Smith was right! ==

And finally, a little talmudic study from Lord Jonathan Sacks, Chief Rabbi of the UK…

“The rabbis favored markets and competition because they generate wealth, lower prices, increase choice, reduced absolute levels of poverty, and extend humanity’s control over the environment, narrowing the extent to which we are the passive victims of circumstance and fate. Competition releases energy and creativity and serves the general good.

“… However as the critics of capitalism pointed out, the market does not create a stable equilibrium. It engages in creative destruction, or as Daniel Bell put it, capitalism contains cultural contradictions. It tends to erode the moral foundations on which it was built. Specifically, as is manifest clear in contemporary Europe, it erodes the Judeo- Christian ethic that gave birth to it in the first place.

JonathanSacks“Instead of seeing the system as Adam Smith did, as a means of directing self- interest to the common good, it can become a means of empowering self-interest to the detriment of the common good. Instead of the market being framed by moral principles, it comes to substitute for moral principle. If you can buy it, negotiate it, earn it and afford it, then you are entitled to it – as the advertisers say – because you’re worth it. The market ceases to be merely a system and becomes an ideology in its own right.

“Fourth, no one who reads the Bible with its provisions for the remission of debts every seventh year could fail to understand how morally concerned it is to prevent the build up of indebtedness, of mortgaging freedom tomorrow for the sake of liberty today. The unprecedented levels of private and public debt in the West should have sent warning signals long ago that such a state of affairs was unsustainable in the long run. The Victorians knew what we have forgotten, that spending beyond your means is morally hazardous, however attractive it may be, and the system should not encourage it.”

Heh.  I honestly wrote all of that stuff at the top of this column before reading this rabbinical teaching… which conveys almost the identical message, but with more eloquent persuasiveness.  Maybe I should have studied for another profession.

And now… the political lamp is OUT!


Filed under politics

Is Libertarianism Fundamentally about Competition? Or About Property?

Some folks have heard me beat this drum. But it’s a fresh-enough thought – going to fundamentals that run deep beneath normal politics – so that I am moved to raise it yet again. In part because someone recently asked me, as author of The Transparent Society: “Can transparency and libertarianism complement each other?”

Now let’s have the simple answer first. Yes. A sane, better-focused libertarianism would be utterly compatible with transparency. In fact, it should be the very top priority.

Both Adam Smith and Friedrich Hayek proclaimed that markets are healthy in direct proportion to the number of skilled and knowing player-participants. Indeed, one chief indictment against every  pre-modern economic system is that nearly all of them were based on “allocation” of resources by elites. Allocators are inherently knowledge limited and likely to be delusional, precisely because they are few.

201817627023582025_gCf0T29V_cJust to be doubly clear on that: almost all previous cultures used GAR – or Guided Allocation of Resources – as their guiding economic principle. Whether the allocation was done by kings, feudal lords, priests or communist nomenklatura, it was nearly always the same: decisions over how to invest society’s surplus, which endeavors to capitalize and which products to produce were made by a small clade of delusional elites, as wrong in their models as they were sure of them.

Starting with Adam Smith – and later fervently preached by others, including Hayek – the notion of FIBM, or Faith In Blind Markets, began to compete against GAR.  The core notion? That the mass wisdom of millions of buyers, sellers, voters and investors will tend to emphasize or reinforce better ideas and cancel or punish bad ones. Delusions – the greatest human tendency – will be quickly discovered because no longer will some narrow group be able to nurse them without question.  Hence, getting back to the original question: the more transparency – and the greater the number of participants – the more people can come up with relatively accurate models and act upon them… or acutely criticize flaws in the models of others.

But let’s extend that thought and ask an even more general question.

Isn’t libertarianism fundamentally an appreciation of competition?

CoreEnlightenmentThink about all the core enlightenment processes — entrepreneurial markets, science, democracy and justice. Each of these modern systems produce the modern miracle of positive-sum games… creating win-win scenarios for everybody. The famous rising tide that lifts all boats.

Now sure, there’s a lot more involved than just competition! There are many cooperative or consensus or even moral aspects… read Adam Smith’s The Theory of Moral Sentiments, to see that “competition” does not mean “cut-throat” or the brutal image of social darwinism. Many of today’s libertarians oversimplify, especially the followers of Ayn Rand.

Nevertheless, it is wholly right and proper for a libertarian to emphasize and focus on one main feature of these positive sum processes. The fact that they all arise by harnessing and encouraging fair rivalry among human beings. So let me reiterate.

Competition is the great creative force of the universe.

That’s proved. Competition produced all of nature’s evolutionary marvels… and us.  By far the most successful human enterprise – science – is an inherently competitive process and scientists tend, by personality, to be extremely assertive in going after rivals.  Moreover the arts, supposedly our “highest” endeavors, are inherently – often ferociously – competitive, even when they are lecturing us about cooperation!  And yes, in professing this vast generalization you can see the libertarian in me – (despite my deep disdain for Ayn Rand.)

But the sane libertarian also knows that competition – in nature and primitive human societies – contains an inherent contradiction. A runaway process of self-destruction that historically always led (and I do mean always) to calamity…

Wealth-of-Nations…to the winner turning around and cheating! Victors in ancient combat were never content with incremental or partial success in war. Can you picture the victorious helping their adversaries to their feet and welcoming them to come back to another equal fight the following year? It was human nature, rather, to destroy opponents. The battlefield may have made you great, but you do not want to return there again and again for an endless series of even matches!

Think. In order to have maximum creative output, competition has to go on and on, maximizing innovative aspects and minimizing blood. The clearest example of transforming destruction into endlessly vigorous competition may be the ritualized combat systems called rule-based sports.

Nor is this just about war. Adam Smith saw what had happened in markets and societies for 4000 years. Winners in capitalism tend not to be satisfied with success in the latest market battle, with a cool product or in achieving recent financial or political success. Human nature propels us to use our recent victory to ensure that competitors will fail in future struggles. To bias the next competition. Or to stomp our defeated competitors flat! To absorb their companies. Squat on patents. Create monopolies or cartels to divvy-up markets. Eliminate transparency. Spy on competitors but keep them – and consumers in the dark. Capture regulators and make them work for us. Capture politicians and make the laws favor us.

Suppose that I become rich and powerful. What will I do, if I am one of the 99% who let human nature play out? Then I’ll use wealth and power to game the system so new competitors won’t challenge me! If you deny this, you’re just being silly. It was the way of oligarchy, in 99% of human cultures. The top priority of the owner-lords in all those nations was one distilled goal – to prevent bright sons of the the peasant class from competing fairly with the children of the rich. Admit it. Go ahead, choose a random decade across the last 60 millennia, in some random locale that had metals. And tell me this wasn’t the pattern.

And it worked. It’s in our blood. We’re all descended from the harems of guys who pulled off that trick.

And here is where Adam Smith came in.  He looked around, saw all the cheating by owner-oligarchs destroying the creative effectiveness of markets.  And – in the seminal year 1776 – he called for something new.  A way to get the best, most creative-competitive juices flowing, in the largest possible variety of human beings, while preventing the old failure mode.  And it turned out there was a way.

As in rule-based sports, competition can only becoming self-sustaining… continuing to deliver its positive-sum outcomes… amid a network of transparent, fine-tuned, relentlessly scrutinized — and universally enforced — rules.

The vital importance – and difficult complexity – of “fairness”

Fair competition isn’t just a matter of morality. It is also the way to maximize competitive output, by ensuring that bright people and teams get second, third chances and so on. And creating ever-flowing opportunities for new competitors to keep arising from the population of savvy, educated and empowered folk. That kind of fairness requires rules and careful tending to ensure new competitors can and will always arise to challenge last year’s winners. And that earlier winners can’t cheat. Because… we’ve seen… they will.

the-theory-of-moral-sentimentsLet’s be plain here. The founder of both liberalism and libertarianism – Adam Smith – weighed in about both of these reasons for fairness, To him, they were equally important. All right, liberals and libertarians each emphasize different ones. Liberals talk about the moral reasons for fairness and libertarians the practical, competition-nurturing ones.  They tend to forget that – as followers of Smith – they actually want the same end result!

What they share is something deeper that both movements ought to recognize.  They want every child to hit age 21 ready and eager to join the rivalry of work, skill and ideas.

Liberals should recall that fair competition is the driver, the engine of our cornucopia. The source of the wealth that made social progress possible. And libertarians need to pause, amid their dogmatic, “FDR-was-Satan” incantations, and recall that the word “fair” is the only thing that can make competition last.

Ironically, government can play a role there, if carefully watched. e.g. by ensuring that all poor kids get the care and education needed to become adult competitors! By ensuring that social status – whether poor or hyper-privileged – is never the prime determinant of success or failure. In other words, a sane libertarian who loves competition does not scream “Socialism!” at every state intervention. Instead, that grownup libertarian calmly judges every intervention by one standard.

“Will this help to increase the number of skilled, vigorous competitors?”

And by that standard, suddenly, liberals and libertarians have something to discuss.  Without a scintilla of doubt, measures for civil rights, sanitation and public health, infrastructure, childhood health care  and… yes… the vast increases in literacy wrought by public education… vastly increased the number of citizens capable of independent engagement in markets and innovative goods and services.

Sure, we are finding flaws in our schools! But that judgment (let’s remember) is from the higher plateau of expectations and desires that public education created!  It is only because we achieved 99% literacy that – suddenly – 99% literacy is no longer anywhere near enough. Is it time to bring market tools and competition into education?  Sure. Probably. And I am willing to discuss the assertion that teachers’ unions have “become a cartel.”  Still, when criticism turns into willful dogmatism, a failure to acknowledge the accomplishments and effectiveness of mass society – brought into effect by government, exactly as demanded by Adam Smith(!) – well that’s churlish ingratitude and hardly a basis for saying “let’s move on to something better.”

And there are things government should not do!  Some well-intentioned things that stymie competitive creativity, instead of enhancing it.  “Equalizing all outcomes.  is socialism and I am not on that boat!  But maximizing the number of skilled and ready competitors is a different goal and I am here to hold that conversation. You may be surprised how many liberals and moderates will be willing to discuss it (and occasionally vote libertarian) if you make that the issue, instead of “FDR-was-Satan!”

A Movement based on LOVE of something, not HATE…

Sorry, but this needs to be hammered home, so let me repeat it. Screeching an incantation that government inherently suppresses competition is pure religious cant, disproved by countless counter-examples, from education and public health to the vast stimulative effect of public investments in science and technology and infrastructure. Again, look at 4000 years of history. Instead of simple-minded hatred of government, be more interested in pragmatic ways to enhance creative competition. Then the movement might have the subtlety of a surgeon or mechanic, instead of the sensibility of a berserk lumberjack.  Make it about love of something, not bilious blame and hate.

So… is libertarianism consistent with transparency?

By that standard, transparency is clearly one of the most vital things that libertarians could defend. Hayek himself said that markets (and democracy and science and justice) only work when all participants know as much as possible. Absence of light is death to all four positive-sum games.

Alas, today’s libertarians are (I grieve to say it) in-effect quite mad. They worship unlimited private property, even though it was precisely the failure mode that crushed freedom in 99% of human cultures. And they rage against a system that in general resulted in vastly more wealth, freedom and more libertarians than any other.

This is a quasi-religious idolatry. It makes them complicit allies of the enemies of competition. It makes them murderers of the thing that they should love.


Filed under economy

“Class War” and the Lessons of History

One aspect of our re-ignited American Civil War is getting a lot of air-play. It is so-called “class war.”

That’s the tag-line ordered up by Roger Ailes. The notion: that any talk of returning to 1990s tax rates – way back when the U.S. was healthy. wealthy, vibrantly entrepreneurial and world-competitive, generating millionaires at the fastest pace in human history – is somehow akin to Robespierre chopping heads in the French Revolution’s reign of terror.

That parallel is actually rather thought-provoking! Indeed, can you hang with me for a few minutes? After setting the stage with some American history, I want to get back to the way things got out of hand during that earlier 1793 class war in France.  There are some really interesting aspects I’ll bet you never knew.

But in fact, “class war” has always been with us. If you ever actually sit down to read what people wrote in times past – for example Adam Smith in Wealth of Nations, or even the Bible – then you know struggle and resentment between social castes was the normal state of human affairs for 6000 years, or much longer.  Seriously, randomly choose (or “roll-up”) a decade and locale from across the last few millenia! Tell me who oppressed freedom and competitive markets in that time and place. I’ll wait.

In fact, today’s American perspective that there is no-such-thing as class – so blithely exploited by Fox – seems rather quirky and charmingly innocent.  Baby Boomers, especially, were raised under  unusual circumstances — perhaps the only stretch of time in which a great nation experienced a (fairly) flat social order.

Now this calls for simplifying – so let’s set aside the battles over racial and sexual equality, etc. – but squint with me here, for a minute.  It’s fairly obvious that the period following the Second World War was (for white U.S. males) the least class-ridden of all time.  Disparities of wealth were at an all-time low and the middle class, flush with WWII savings, good wages and GI Bill-fostered competitiveness, experienced a generation of utter dominance over the American experience. A confident dominance that got woven into popular culture through TV and all other media.

= Pyramids and diamonds =

Instead of the classic human social pattern — pyramid-shaped with a tiny, fierce nobility lording it over peasant multitudes — ours was diamond-shaped with a well-off middle that actually outnumbered the poor! A miracle nobody in all the past ever foresaw. Except perhaps Smith. Certainly not Karl Marx! In fact, nothing so undermined the honey-seductive mantras of Marxism so much as the living example of the U.S. middle class. Which the whole world wanted to join.

And now the penultimate point (before getting back to 1793 France). Our post-WWII flattened-diamond pattern did not quash or undermine competitive capitalism!  Not at all. In fact, never before or since has there been such fecund, vigorous entrepreneurialism as during the flattest and most “level” social order the world ever saw.

Those who proclaim these two things – social flatness and vigorous market competitiveness – to be inherent opposites, in perpetual conflict, are simply fools or historical ignoramuses — or outright liars. They are pushing the sick illogic of the zero sum game.  Indeed, Adam Smith himself contended, in both Wealth of Nations and The Theory of Moral Sentiments, that a relatively flat social order — combined with lots of opportunities for the poor to get education, so the total number of competitors is maximized — can vastly increase the total number of people who get rich in the best way, by delivering innovative goods and services.

(Smith held less truck with inherited wealth or dividend-clipping “rents” – the kind of income with the very lowest tax rates, nowadays. In fact, Smith strongly implies that some kind of upper limit to the meaning of “rich” might be called for. But more on that another time.)

= A burden of proof on FDR-bashers =

The final pre-point I want to make here – before tooling off to France in 1789 – is more in the form of a question.  How did we get into a situation where Franklin Delano Roosevelt is portrayed as Satan incarnate?

Yes, yes.  I spend a lot of time around libertarians and I know that their current version is all about hating government.  No other agenda or priority.  See my earlier challenge (two postings back) daring libertarians and decent conservatives to consider taking on a positive goal instead of a purely negative one – fostering competitive enterprise and not just reflexively hating all civil servants, under all circumstances, all the time, while ignoring every other threat to freedom. That may by Ayn Rand, but it sure ain’t Adam Smith.

If government is always and automatically evil, then yes, Franklin Roosevelt was the antichrist, because he sure expanded its reach.  If, on the other hand, you judge by outcomes… defeating Hitler, ending the Great Depression, starting the process of racial justice and – above all – engendering a society that both fostered vast amounts of competitive enterprise and kept the social order flat, then maybe we should consider cutting the man some slack.  (Wasn’t he admired by the “greatest generation”?)  I’d like to see you — or any ruler/leader across all of human time — do better.

Sure, some of FDR’s bureaucracy got cloying. Or else it got “captured” and stifled competition.  Democrats themselves axed many New Deal and Progressive agencies – the Interstate Commerce Commission, the Civil Aeronautics Board, for example, had to go!  Others needed trimming and so did the pre-1960 tax rates that JFK slashed.  Indeed, about half of the Reagan-era government prunings seem pretty much called for… a process culminating in the Clinton-Gingrich Welfare Reform, another time that the moderate-right had a strong point. And was listened-to.

But outcomes comparison is not kind to those who gutted Glass-Steagel and other bank regulations, opening the door to abuses that helped bring our Second Depression.  And since every single prediction ever made by Supply Side Economics proved wrong, well, we can understand why science and outcomes comparison are the Big Enemy, attacked by Fox 24 hours a day.  If facts are inconvenient, well, damn those who live and work with facts.

= Okay, back to France =

All the shouts about “class war” bring to mind images of rabid Jacobin mobs in 1793 hauling brave nobles and gentlemen to the guillotine. But if Rupert & co. really want us pondering that image, we owe it to ourselves to leaf back just a few pages to 1789, when the revolution began as a much more moderate thing, inspired by events across the ocean, in America.

France was broke.  Louis XVI and his ministers were incompetents who deliberately squelched commerce with internal tariffs and policies that crushed innovation. The church owned much of the productive land, tax-free. So did the feudal aristocracy. Top merchants and corporations managed to wrangle exemptions too. After years of quagmire wars, poor tax revenue, bank collapses and mismanagement, Louis needed more money to stave off bankruptcy and save the country. So he summoned the Estates General.

That was the rough French equivalent of the British Parliament, but with much less authority.  In fact, it had last met in 1614. But Louis was desperate. What he needed was for the first and second “estates” — the clergy and  nobles — to vote themselves a temporary levy and join the third estate (the people) in paying their fair share.

That’s how it all started.  The country’s leader asking oligarchs and aristocrats to pay the same rates as common folk, for a while, especially since they already owned damn near everything.  The answer given by the dukes and bishops and marquiseseses?  Heck no! We’re the ones keeping it all together. The managers and investors and owners and job-makers. The government can damn well keep its mitts out of our pockets. It’s our money, not the state’s.

Now you can see where I’m going with this. So I won’t spell out what happened next. (Though a little reading might be in order?  After the last assignment, to learn what the founder of modern market-capitalism, Adam Smith actually said. I promise surprises!) 

And no, I am not predicting tumbrels rolling through American streets, with billionaires holding their chins high as rabid mobs taunt them on their way to chopping blocks! 

What I am telling you is that “class war” has a whole lot more to it than they are telling you with their blithe, two-word nostrums, over at Fox.  As Warren Buffett said: “my side – the rich – have been winning class war for some time, and it won’t end well.”  

= The American Difference =

Across the sea, in America, a different experiment was being tried. The aristocracy over here — like Washington and Jefferson — certainly enjoyed being rich, and wanted opportunities to stay that way! But they also knew the frontier virtue satiability — the notion that getting rich is great! Economic success can both entice and propel innovation, hard work, enterprise, competitive creativity and philanthropy. But that (as Adam Smith proclaimed in the miracle year 1776) there comes a point where enough is enough… and sometimes even too much.

Hold onto your seat, because I’m about to tell you something about Washington and the others that you never knew… that they were “levellers.”

The founders started by banning primogeniture, so no family fortune could sit and accumulate, undivided, as a lordly demesne at the pyramid’s peak. Instead, they would get divided among the large numbers of children that folks had then — an intentional act of “social engineering” and outright “levelling” and don’t you for a moment think otherwise!  They also seized the assets of the Tory lords and even neutral absentees and distributed them to the masses. And they made homesteading easy, with laws that favored Yeoman citizens. (All right, some of the lands they seized belonged to native American tribes – I never called these guys perfect, just smart, with a goal of not repeating the historical mistakes they loathed. Sure, they proceeded to make others.)

Never heard of these “levelling” acts by the founders? Heck, even liberals have forgotten them. Or they’ve become used to simply ceding Washington and Adam Smith to the blustering right, without even putting up a fight.  Stupid-lame liberals.

The point is that we never had the kind of violent class war that erupted in France, because our elites were smart enough to avoid it! After the primogeniture and distribution and land grant tricks started to fade along with the frontier, we entered a dangerous Gilded Age when the pyramid shape began re-emerging and Marx rubbed his hands over the growing urban proletariat….

…but even among the titans of the 1890s, there were men who could see. “I would rather leave my son a curse than the almighty dollar,” quoth Andrew Carnegie, who was the Warren Buffett of his day.  And our agile nation came up with moderate, progressivist solutions like anti-trust laws, that staunched class war without ruining capitalist enterprise.  That kept the goose alive, to keep laying golden eggs.

I’ve already discussed FDR. But now you can see the context of it all!  It is the context of the positive sum game. (Look it up!) The notion that we can get all the benefits of an enterprise-market system — using the allure of wealth to reward innovators and vigorous competition — while somehow preventing the toxic side effect of wealth… the poison called oligarchy.  The same poison that ruined markets and freedom in every culture other than ours, in every other era than ours.

= A wake-up call =

So what now? Well, for one thing, it’s time to rouse yourself from propaganda hypnosis.  History repeats itself. And the last thing that the New Oligarchs want you to do is study history.

After a full generation of innocence, since the Second World War, in which we took for granted some highly unusual circumstances, we seem now to be plunging back toward the norm for human societies. And you – yes, you – need to start asking questions:

— like what degree of wealth disparity would you find discomforting?  Today, unlike 1945 or 1980 or 1999, the top 400 U.S. families own more than the the bottom 50% of Americans. Please, please, please pause a minute and picture that in your mind.  If you can somehow manage to shrug that off, is there some level of disparity that would worry you?

When it’s 75%? Or when it’s 90%? Admit that there is some level that would make even you call yourself the victim of class war. One that’s gone on (with a slight break) for 6000 years.

— or ask what it means when Fox says the top families do pay a lot of money in taxes, despite paying at very low rates.  Can you do the simple algebra in your head, divide and put in an equal sign and draw the obvious conclusion?  If they pay vast amounts, even at tiny rates… doesn’t that mean they are getting most of the money in the first place?  And that’s supposedly a reason for you to… shrug?

— or ask who is financing the propaganda that you watch? When simplistic tag lines are ordered up at Fox News by Rupert Murdoch, Roger Ailes and Prince Waleed, and they are parroted within hours by every politician and talking head on the right, is it time to ask “is this the “conservatism of Barry Goldwater and William F. Buckley, any longer?” What do these New Lords get out of teaching you to hate every American elite of science, intellect or skill… while demanding that you ignore the one elite that threatens everything we love?  Theirs?

— for the first time in American history, we went to war and the rich refused to help pay for it. Isn’t patriotism an issue all the time, and not just when you (or Glenn Beck) pick or choose?

More important: doesn’t this start sounding a whole lot like what the nobles did on the east side of the Atlantic in 1789… and not at all like the smarter elites did in the west?

— is history really so boring to you that you find it completely irrelevant? So much so that you’ll ignore the patterns of 6,000 years?  If so, wow, FDR sure did make a different world that Baby Boomers ignorantly take for granted.

But the Gen-Xers and Gen-Y and Millennials won’t.  As I foresaw in EARTH, they are waking up. So don’t fret, Boomers. Your children will rescue America.  Not with violent class war… what are we, French? But with the kind of tweaking we saw from Washington and Lincoln and Carnegie and Teddy Roosevelt and FDR.  The kind that restores that flattened diamond… while continuing the miracle of competitive markets and freedom.


Filed under economy, society

Libertarians and Conservatives must choose: Competitive Enterprise or Idolatry of Property

Even conservatives now admit that conservatism has changed.  Take the Ronald Reagan who Republican activists idolize in abstract; in real life he raised taxes, increased regulations, signed environmental laws, and (worst of all) negotiated countless compromise give-and-take, pragmatic measures in tandem with a Congress run by the other party. As did Barry Goldwater and William F. Buckley, giants who argued with genteel courtesy and who revered both knowledge and intellect, especially science.  Even the most fervid Tea Party aficionado would avow that today’s GOP has little room for such things – as Goldwater and Buckley themselves proclaimed, to their dismay, before they died.

LIBERTARIANS-PROPERTYIn this analysis, I’d like to focus on one of the directions that conservatism has gone a-wandering.  But note first: I’ll try to do this without taking a single position that could fairly be called even slightly left-of center – by the old standards at least.

My entire critique will be from what used to be a completely conservative perspective. You’ll know this by the historical figure whom I cite above all others.

It begins provocatively, with prominent online commentator John Robb, who offers a simple… and clearly-correct… explanation for the gross mismanagement of the U.S. economy in the 21st Century – an appraisal that seems both tragically on-target and stunningly ironic. Ironic in ways I plan to elaborate — and I expect you’ll not look at the hoary old “left-vs-right” axis in the same way, ever again.

For starters, Robb shows that the patron saints of modern libertarianism and conservatism — including Adam Smith and Friedrich Hayek — were right in their core message…

…. proving that today’s peculiarly myopic libertarians and conservatives are wrong in theirs.

The Smithian Fundamental

In order to grasp that apparent contradiction, let’s start by asking: what did Smith and Hayek say?

No, it wasn’t “laissez faire” or  social darwinism or extolling the virtues of greed. Though both men praised private enterprise and market initiative, they did not share today’s idolatry of personal and family wealth as the fundamental sacrament of economics. Those who most-frequently bandy Smith’s name appear never to have cracked open a page of “The Wealth of Nations” or ‘The Theory of Moral Sentiments.”

Rather, Adam Smith essentially founded our modern phase of the Western Enlightenment by anchoring a central postulate — one that Pericles and Locke discussed earlier, and that others, like Hayek, later embellished. The postulate that human beings are supreme rationalizers and self-deceivers.

Moreover, across 4,000 years we’ve seen that whenever a small group of men become powerful enough to control an economy and command-allocate its resources, they will do so according to biased perceptions, in-group delusions and fatally limited knowledge. Whether they do the normal oligarchic thing — cheating for self-interest — or else sincerely try to “allocate for the good of all,” they will generally do it badly. As a blatant recent example, Robb cites the collapse of the Soviet Union.

The reason for this failure was that the Soviets relied on central planning.  A system of economic governance where small group of people — in the Soviet Unions case bureaucrats — had all the decision making power.  They decided what was spent and where.  Even with copious amount of information, they decided badly. Why did they decide badly?  The massive economy of a modern superstate is too complex for a small group of people to manage.  Too much data.  Too many uncertainties.  Too many moving parts.

Indeed, the transformation of modern China from a Maoist calamity to a mercantilist success story began with their abandonment of nit-picking central planning in favor of capitalist-style enterprise.  Of course, the Chinese ruling caste retained overall control, “guiding” categories of credit and investment while executing a grand mercantilist strategy, the same process that Japan accomplished masterfully, during its own rapid primary and secondary phases of export-driven economic development.

Alas, for Japan, (but as a few of us forecast in the 1980s), national development eventually hits a tertiary phase when simple-minded, predatory mercantilism breaks down. If history and human nature are any guide, the Chinese will hit the same “wall” when economic complexity surpasses the ability of any planner-elite to comprehend or manage.  For all his faults – and the many ways he’s misinterpreted – Friedrich Hayek understood this well. He showed how it turns skilled planners into smug blunderers.

Now this barrier can shift, as computers and sophisticated models let rulers  extend their period of competence a bit longer. (It helps, apparently, that nearly all of the top Chinese leaders began their careers as engineers, responsible for actual goods or services, not as lawyers, politicians or “business majors.”)

Still, however you look at it, there is no way that the old ruling principle that held in 99% of human societies — “Guided Allocation of Resources” or GAR — could possibly work in a tertiary economy as intricate as the United States. As Robb continues:

The only way to manage an economy as complex as this is to allow massively parallel decision making.  A huge number of economically empowered people making small decisions, that in aggregate, are able to process more data, get better data (by being closer to the problem), and apply more brainpower to weighing alternatives than any centralized decision making group.”

Now all of this may sound surprisingly well… “libertarian”… given that both Robb and I are highly critical of today’s right! But bear with us, because what’s at issue is a fundamental conflation and betrayal of the very essence of those movements. The ultimate irony and hypocrisy.

What Robb describes here is the central discovery, not only of Smith and Locke, but of Benjamin Franklin and the American framers… as well as Galileo and the founders of modern science. Ever since civilization began, nearly all societies were dominated by centralized oligarchies, priesthoods or hierarchies who ruled on policy, resource-allocation and Truth for 4,000 years of general incompetence mixed with brutal oppression.

Today, by sharp contrast, all three of the Enlightenment’s great arenasdemocracy, markets and science — feature a revolutionary structure that broke with the oligarchic past. The old, arrogant, top-down approach was replaced with something else. Something that great Pericles described 2,000 years earlier, during the brief Athenian Renaissance.

CompetitionThe most creative force in the universe. The principle that propels evolution, in nature, and that brought humanity into existence — Competition.

Elsewhere I’ve called the Enlightenment’s principal tool Reciprocal Accountability (RA). But it really is just another way to say “get everybody competing.”

By dividing and separating power and — more importantly — empowering the majority with education, health, rights and knowledge, we enabled vast numbers of people to participate in markets, democracy and science. This has had twin effects, never seen in earlier cultures.

1) It means everybody can find out when a person stumbles onto something cool, better or right, even if that person came from a poor background.

2) It allows us to hold each other accountable for things that are wrong, worse or uncool, even when the bad idea comes at us from someone mighty.

Never perfectly implemented(!) — this reciprocally competitive system nevertheless dealt far better than any predecessor with that problem of human delusion. None of us can see and correct all our own errors, past a cloud of rationalizations. But when RA is healthy, then criticism flows. And others will happily point out your errors, for you. (What a deal!) And I’m sure you’re happy to return the favor.

The result? An Enlightenment Civilization fostered by Smith, Locke, Franklin etc., but propelled by tens of millions of eager participants. Inarguably the most successful of all time, cutting through countless foolish notions that held sway for millennia — like the assumption that your potential is predetermined by who your father was — while unleashing creativity, knowledge, freedom, and positive-sum wealth to a degree that surpassed all other societies, combined.

Even the most worrisome outcomes of success, like overpopulation, wealth stratification and environmental degradation, come accompanied by good news. Like the fact that so many of us are aware, involved, reciprocally critical, and eager to innovate better ways.

Lip Service to Wisdom

So, what’s that irony I spoke of, earlier? How does this central principle turn around and bite today’s libertarians and conservatives, proving many of them fools?

Clearly, Everything I’ve said, so far, ought to make a libertarian or conservative happy!  Indeed, my nonfiction book The Transparent Society is all about how open (Hayekian) information flows can empower reciprocal accountability and competition, the things that make democracy and markets and science great. (There have never been humans more inherently competitive than scientists; try talking to one, some time.)

So where’s the problem? The problem is that it’s all lip service on the right! Those who most-loudly proclaim Faith In Blind Markets (FIBM) are generally also those proclaiming idolatry of private property as a pure, platonic essence, a tenet to be clutched with religious tenacity, as it was in feudal societies. Obdurate, they refuse to see that they are conflating two very different things.

Private property – as Adam Smith made clear – is a means for encouraging the thing he really wanted: fair and open competition.  But anyone who actually read Smith also knows that he went on and on about that “fair and open” part! Especially how excessive disparities of wealth and income destroy competition. Unlike today’s conservatives, who grew up in a post-WWII flattened social order without major wealth-castes, Smith lived immersed in class-rooted oligarchy, of the kind that ruined markets, freedom and science across nearly 99% of human history. He knew the real enemy, first hand and denounced it in terms that he never used for mere bureaucrats.

When today’s libertarians praise the creative power of competition, then ignore the propertarianism that poisons it, we are witnessing historical myopia and dogmatic illogic, of staggering magnitude.

The Irony of Faith in Blind Markets

GuidedAllocationWhen Adam Smith gets oversimplified into a religious caricature, what you get is “faith in blind markets” – or FIBM – a dogma that proclaims the State should have no role in guiding economic affairs, in picking winners of losers, or interfering in the maneuvers or behavior of capitalists.  Like many caricatures, it is based on some core wisdom. As Robb points out. The failure of Leninism shows how state meddling can become addictive, excessive, meddlesome and unwise.  There is no way that 100,000 civil servants, no matter how well-educated, trained, experienced, honest and well-intentioned, can have enough information, insight or modeling capability to replace the market’s hundreds of millions of knowing players.  Guided Allocation of Resources (GAR) has at least four millennia of failures to answer for.

But in rejecting one set of knowledge-limited meddlers — 100,000 civil servants — libertarians and conservatives seem bent on ignoring market manipulation by 5,000 or so aristocratic golf buddies, who appoint each other to company boards in order to vote each other titanic “compensation packages” while trading insider information and conspiring together to eliminate competition.

Um… in what way is this kind of market “blind”? True, you have gelded the civil servants who Smith praised as a counter-balancing force against oligarchy.  But the 5,000 golf buddies — despite their free market rhetoric — are still reverting to GAR. To guided allocation, only in even smaller numbers, operating according to oligarchic principles of ferocious self-interest that go back to at least Nineveh.

If you want to explore this further, including how the notions of “allocation” and “faith in blind markets” get weirdly reversed, and how Smith and Hayek are betrayed by the people who tout them the most, see my article: Guided Allocation vs. Markets: An Ancient Struggle with Strange Implications.

Hence, at last, the supreme irony.  Those who claim most-fervent dedication to the guiding principle of competition and enterprise — our neighbors who call themselves conservative and libertarian — have been talked into conflating that principle with something entirely different. Idolatry of private wealth, sacred and limitless. A dogmatic-religious devotion that reaches its culmination in the hypnotic cantos of Ayn Rand. Or in the Norquist pledge to cut taxes on the rich, without limit and despite the failure of Supply Side predictions ever, ever, every coming true.

An idolatry that leads, inevitably to the ruination of all competition and restoration of the traditional human social order that ruled our ancestors going back to cuneiform tablets — Feudalism.

Growing past the “left-right axis”

Let’s be clear. Every aspect of my argument, today, was from the perspective of an admirer of Adam Smith, of market enterprise, science and freedom. Not a single thing referred to socialist or left-wing parts of the spectrum.  Sure, I hinted that some liberal endeavors — e.g. mass education, civil rights, child nutrition and national infrastructure etc. — empowered greater numbers of citizens to join the fair and open process of Smithian competition. But Smith was called “the first liberal” and liberalism isn’t “lefty” anyway.

No. This indictment of today’s right was made entirely from the core postulates of the libertarian right.  Indeed, what Robb points out – and that I elaborated here – is a reason for sincere libertarians and conservatives to awaken and rebel against the hijacking of their movements.

competition-idolatry-cash-brinThis is an internal matter, a cancer within libertarianism and conservatism. If there are still honest and smart men and women within those old and noble traditions, they should think carefully, observe and diagnose the illness.  They should face the contradiction. Discuss the conflation. Choose the miracle of creative competition over an idolatry of cash.

They should stand up.


Filed under economy

The Solution isn’t Left or Right. It’s Citizenship.

First a little call. Vote in NPR’s poll of the 100 best science fiction and fantasy novels! The candidates include older works by Wells, Verne, Brunner, Dick, and Bester, as well as titles by Gaiman, Bear, Banks, Cherryh, and Butler…plus my own Uplift Saga… and Earth.

 Either Read Adam Smith or Stop Misquoting Him 

Adam Smith is often cited by people on the neoconservative right, who call him a founding father of modern markets and competitive/creative capitalism. That is correct so far. Only, when pressed, you’ll find that none of these folks have ever actually read “The Wealth of Nations” or “Theory of Moral Sentiments,” or indeed, anything Smith actually wrote.

Hence, lately, I’ve been urging everybody – liberal or conservative – with an attention span greater than a gnat’s to actually crack open what truly are among the founding documents of our Enlightenment revolution. Published in the very special year 1776, “Wealth of Nations,” certainly does praise competition as the great driver of innovation, productivity, prosperity and human uplift. Smith derides the notion of an extensively planned economy as ultimately foolhardy — a case proved relentlessly by the failures of Leninist-socialist states. Thus far, he seems at least compatible with an older breed of conservatives and moderate libertarians, like Barry Goldwater.

Indeed, lest there be any confusion, try reading my book: The Transparent Society: Make Us Choose Between Privacy and Freedom? whose core point is that openness and transparency empower us to hold each other accountable, through democracy, science and markets.  Competition (that’s kept moderate and human) truly is the great, creative process. Just as a less gentle version propels evolution.

So, why do I maintain that today Adam Smith would be a Democrat?  Try reading his actual words. Smith says many things that would shock and inconvenience those oversimplifying dogmatists who use his name in vain.  For example, he knew that oligarchy was the great enemy of freedom and of competition, across 99% of human cultures and 5,000 years. Think about that, next time you are tempted by the (oligarch-subsidized) line that the only foe of freedom is civil servants. 

=== Civil Servants are the Only Threat? Really? ===

All of which leads into my first suggested link… to the blog of Kent Pitman,  who in turn describes a most-disturbing trend.  

“At an extravagant hotel gilded just before the Great Depression, corporate executives from the tobacco giant R. J. Reynolds, State Farm Insurance, and other corporations were joined by their “task force” co-chairs — all Republican state legislators — to approve “model” legislation. They jointly head task forces of what is called the “American Legislative Exchange Council” (ALEC).

“There, as the Center for Media and Democracy has learned, these corporate-politician committees secretly voted on bills to rewrite numerous state laws. According to the documents we have posted to ALEC Exposed, corporations vote as equals with elected politicians on these bills. These task forces target legal rules that reach into almost every area of American life: worker and consumer rights, education, the rights of Americans injured or killed by corporations, taxes, health care, immigration, and the quality of the air we breathe and the water we drink….

“. . . ALEC apparently ignores (Adam) Smith’s caution that bills and regulations from business must be viewed with the deepest skepticism. In his book, “,” Smith urged that any law proposed by businessmen “ought always to be listened to with great precaution . . . It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

Have a look at the whole posting.  Very interesting stuff.  It is part of a long indictment of the current version of conservatism, from an entirely conservative perspective.

=== Who Generally Saves The Day? ===

Likewise, my complaints about the gun lobby come from the pragmatic middle, not any leftie slant. I am no anti-gun fanatic who fears and loathes firearms. Indeed, I have some extended experience with them.  Moreover I think that a balanced compromise would entail protecting a particular kind of weapon ownership to a very strong and permanently Constitutional degree. There is a level where the gun lobby’s fanatical overkill fear of a “slippery slope” is actually rooted in a valid concern about possible erosion of Jefferson’s “Insurrectionary recourse” and I think those on the left are fools to ignore this concern. Another area where Barry Goldwater and I might have gotten along… while both of us look appalled on recent changes to his hijacked movement. 

Still, recent crazed-mass-killer shootings, like the attack on Congresswoman Gabby Giffords in Phoenix and the slaughter of eighty young people in Norway brought out the loony-tunes arguments, again. “One bystander armed with a concealed carry pistol could have ended this,” Rush Limbaugh opined. “The problem isn’t too many guns, but too few!”

This argument has deep roots in science fiction, in an aphorism pushed by John W. Campbell that “an armed society is a polite society…” based on a romantic view of the Wild West that had no basis in historical fact.  But Robert Heinlein toyed with the notion in one of his best novels BEYOND THIS HORIZON. The assertion certainly has some romantic allure. And I freely admit that, if we were all armed to apply deadly force at an instant’s whim, there would be changes!  Very rapidly, in just a few bloody generations, we would evolve as a species to become more polite! (As the indignant nuts quickly wiped themselves out.) But one has only to live for a while in any slum on Earth to know how absurd the statement is, today in the real world.

Anyway, the mantra is especially inappropriate after one of these mass-killings by crazed gunmen, spraying bullets in all directions, slaying dozens. These events always end in one of three ways: (1) police intervention, (2) the gunman’s suicide or (3) the shooter being tackled by some brave bystander while he reloads. 

The closest that such an event ever came to Limbaugh’s scenario and the only known example of an armed civilian shooting and stopping a mass-killer was… “a lesbian, defending a church that had rejected her.”  (Read the article and be amazed that life keep spilling such ironies at us!) 

Nevertheless, on reading further about that event, I see that she was actually on duty that day, as a part-time volunteer security guard.  Still a heroic civilian jumping into action.  But her status was not perfectly that of an armed-surprised bystander. The record is still clear. There has never, ever been a single case of an American bystander, armed with a concealed-carry weapon, who leaped in and used that weapon to bring down a crazed mass-shooter. Again – most such mad shooters have been brought down by un-armed heroic bystanders, who charged the gunman while he was changing ammo. 

The crux? Recent horrific death tolls, in Norway and in the Arizona Giffords Massacre, were all attributable to the huge ammo magazines that prevented heroes from taking action. Magazines that are indefensible for any conceivable reason except for mass murder.

Seriously. Other than the “slippery slope” catch-all… that ANY restriction will lead to total confiscation… is there any reason why the owner of a weapon shouldn’t have to change clips more often than once a day?

What we need is a society that negotiates, again. And the pragmatic, problem solving result will include insights from a kind of ‘right’ that was often right.


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Isaac Asimov and Human Destiny

Ever notice how many futuristic authors toy, now and then, with the concept of a global overmind? Arthur Clarke and Isaac Asimov both did… and my reply to them, a more subtle and diversity-based version, appeared in EARTH.

Now, have a look at The Living Earth Simulator, or the LES project, which aims to simulate everything taking place on planet Earth, both environmental factors and human influences — integrating real-time data feeds  to model global environment, pollution, population,  as well as financial and political shifts and the spread of infectious diseases.

And who dealt with the scale of human destiny better than the great Isaac Asimov, in his Foundation series?  Elsewhere I’ve said about him: “Asimov served wondrous meals-of-the-mind to a civilization that was starved for clear thinking about the future. To this day, his visions spice our ongoing dinner-table conversation about human destiny.”

My own novel FOUNDATION’S TRIUMPH tied up nearly all of Isaac’s loose ends – with enthusiastic approval of Isaac’s heirs. (Read a sample.) In the afterword, I describe how Isaac would always see the flaw in his most-recent Foundation “solution” and inch along, decade-by-decade to new solutions.

What were his stages?

First, writing for John W. Campbell’s ASTOUNDING in the 1940s, he came up with the lovely conceit that, in large enough numbers to swamp the effects of individuals, human societies can be modeled as if individuals were like gas molecules!  Appealing to Asimov the biochemist… and inspiring many readers to go into fields like economics.  For example Paul Krugman.  (In all honesty, the dream goes farther back, though Karl Marx was no Hari Seldon!)

Then Isaac got a lot of mail.  People had an inkling of something like what would become Chaos Theory – that random fluctuations or exceptions would perturb events until all projections become useless. Isaac’s solution in his galactic universe? Perturbations must be corrected by an elite council or knowing meddlers, the Second Foundation.  Meddlers who soon gain access to psychic powers that they can breed into their gene lines, enabling them to meddle better and keep the Plan on track. Phew! Promlem solved.

Only then: he that realized his Second Foundation will become an inherited human aristocracy! Agh! Loyal to the Enlightenment, he knew how awful oligarchies were, in the past (and today.) So, the next decade, Isaac replaced or subsumed the human meddlers with a deeper layer of controlers who would be like… court eunuchs. Robots who cannot breed and hence could not become a human lordly class. (Aside. His empire was always more Chinese than Roman.) Sounds good?

Only, next decade, Isaac realizes…OMG! I’ve reversed power! The “servants” are now few, all-knowing, all-powerful and the human masters are as numerous and cheap as sand. Agh. So he finds a way for the masters to become mighty again.

His solution? An overmind made up of trillions of human brains, called Gaia-Galaxia! Okay then! Only then he realizes….

See? I had to continue his ongoing cycle of re-evaluation until… well… read FOUNDATION’S TRIUMPH and see how it actually all comes together is a fascinating pattern that winds up turning in… a… circle!

Which brings us to… Adam Smith…
I wrote a lot about this fellow, who liberals should rediscover and embrace, in order to free him from the right wingers and libertarians who always, always always misquote and betray him.  Well, OpenSalon dumped my work, so let me just offer a few quotations and a link to Blogging Adam Smith. Or actually read Adam Smith’s Wealth of Nations, a book that any politically-minded person should read, top to bottom.

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” That could be a slogan for liberalism.

Observe the accommodation of the most common artificer or day-labourer in a civilized and thriving country, and you will perceive that the number of people whose industry a part, though a small part, has been employed in procuring him this accommodation, exceeds all computation.”
The whole tenor of this passage would, or should, outrage an Ayn Rand. Smith certainly didn’t take the view that the important agents of capitalism were CEOs or even inventors.

The monopolists, by keeping the market constantly understocked… sell their commodities much above the natural price… The price of monopoly is upon every occasion the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken….”
Maybe it’s the libertarians who need to read Smith; I’ve heard them denying that monopolies exist, or that they raise prices.

“We rarely hear, it has been said, of the combinations of masters [cartels]; though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour….” Another passage skipped over by the libertarians.

==More about the Economy: Past, Present and Future

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While defending sanity on Saturday — bring along (decent and smart) Capitalism

Folks may be curious how I can avow to be a libertarian (albeit a heretical one who despises Ayn Rand) and an admirer of Adam Smith… while urging everybody in sight to attend the Jon Stewart/Stephen Colbert rallies, this coming Saturday and to “think blue” on election day.

For starters, because contradictions don’t bother “Contrary Brin”… in fact, they’re part of the fun in life! Also because most are illusory contradictions.  (Have you actually read Adam Smith? Today he’d be a democrat.  It’s clear on almost every page.)

One commonly-used crutch that I’ve long denounced is the hoary-stupid so-called“left-right political axis” — a monstrous metaphor that lobotomizes all who use it. It should be abandoned because it’s puerile, misleading, illogical… and because it’s French! (;-)

Seriously, if you’d like to probe everything from several dozen fresh perspectives,that I guarantee you’ve never thought of before, then have a look at this essay series I wrote for a group that wants to transform libertarianism from a fringe-of-flakes into a real force for pragmatic freedom in American life.  I wish them luck! (Though I won’t hold my breath.)

Will the comedians rescue us? To those of you heading for the Stewart-Colbert rallies, October 30 in DC… thank you, heroes! And if you cannot attend the main event in Washington? Then find a satellite rally at www.rallymao.com !

Is American Civilization in a steep decline? So you’d think from dyspeptic ads running on Fox.  But for a broader perspective, historian and diplomat Joseph Nye gives us the 30,000-foot (TED-talk) view of the shifts in power between China and the US, and the global implications as economic, political and “soft” power shifts and moves around the globe.

Me? I am appalled that 99% of American are unaware of what we have accomplished.  And how simple it would be for the United States to remain the rich and influential and respected leader of the world.

=== The Road We’ve Traveled ===

Let’s start with a basic fact that is too-seldom discussed. Nearly all of world development, since WWII,  has been financed by American purchasing power … us buying countless trillions of $ worth of crap we never needed.  US consumer purchases — uplift via Wal*Mart — has lifted more people out of poverty than all the “aid” given by all nations, across all of time.

If we set aside (temporarily) concerns about labor practices, corruption and eco-side-effects, the creation of a nascent world middle class has been one of the greatest achievements of Pax Americana, fully on a par with toppling Hitler and staunching the fever that was communism. By one light, our trade deficits have been sacred and noble things.

Find that boggling?  Compare Japan and Europe in 1945 to now. Taiwan, Singapore, Korea, Malaysia, Brazil… and today, as we speak, even in a recession, we are lifting the economies of China AND India… at the same time.

But how have we afforded to do this?  Every decade, dour pundits predicted that calamity would result, but it never happened…. that is, till now.

The reason is simple.  HALF of all GDP growth – since WWII – occurred because ofscientific and technological advances. Jets, satellites, pharmaceuticals, copiers, computers, the Internet… you name it.  We dealt with IP theft by creating new patents faster than others could steal them!

This is why the right’s endless rants against both science and labor unions are monstrously stupid and self-defeating.  The solution is not to drive working Americans into penury.  Nor is it to hate the smart people who kept us dining on the ‘golden eggs’ of new discoveries and inventions. These were the folks who kept the rising tide that lifted all boats, and allowed the US to stay ahead, and able to pay for it all.

But today we are seeing the result of the Bushite War Against Science.  Ronald Reagan shifted R&D from Carter’s energy program (which would have taken us off of the Middle-East oil teat, by now) and onto frantic overdrive in developing things we prayed that we would never use!  But, even still, at least in those days, Republicans liked technology!  And some science.

Reagan’s version of the War on Science was mild. He funded some research and listened to OSTA, now and then.  In contrast to the neoconservatives, who trashed the OTSA as their very first order of business, I miss Reagan, terribly.  At least he would negotiate.  He called liberals foolish.  He had no truck with labeling his fellow citizens as satanic beings.

The dawn of the 21st century saw the first US leadership that directly and deliberately undermined the basic source of our power and strength, as well as the health of the Middle Class.  The font from which we took IN so much wealth that we were able to uplift the world, through trade.

Can we believe this? Whether this parsimonious explanation is true — that it was done deliberately — or else the preposterous story that is believed by nearly everybody — that such a perfect record of harm to the United States was wreakedunintentionally, out of staggeringly uniform and manic stupidity — either way, the harm has been grievous. And it is ongoing.

The relentless campaign of propaganda that manifests on Fox News and in the Tea Party Movement has one common them… Hatred of All Smartypants.  Fuming, smoking spite toward America’s “creative minority” —

— the same minority of smart folks that the great historian Arnold Toynbee once called the core to any great nation’s success.  The same segment of society that Rush Limbaugh recently spewed venom toward, in openly-declared hatred and in extremely clear, general terms.

Let us be plain.  They want us to cook the goose that laid all those golden eggs.  And serve it to a conniving oligarchy that is almost as profoundly short-sighted and stupid as it thinks itself smart.

An afterthought… preventing this realization is probably the reason that many of the puppeteers have inflicted on us the treason of subsidized culture war.  By deliberately fostering populist, know-nothing confederate hatred of urban/science/blue America and a million other distractions, they get enough political clout to prevent any populist reaction against aristocratism in Congress.

And finally… I repeat it everywhere.  Liberals, get off your butts and RECLAIM THE FIRST LIBERAL!  Adam Smith. The theoretician who despised conniving oligarchs far more than any other enemy of competitive enterprise.

Read Smith!  Don’t take the word of doofus right wingers who proclaim that Smith wanted “laissez-faire” to run roughshod over the poor.  In fact, in his fervent support for public education, social mobility, transparency, open competition and the creation of power centers that can hold the oligarchy in check, Smith provides a litany of neocon-demolishing quotations!

Moreover, by reclaiming Adam Smith, we:

1- emphasize liberalism’s roots in pushing social justice, not just because it is “nice” but because it is totally pragmatic to maximize the number of capable, competitors!

2- anti-monopoly sentiment is fizzing, just below the surface.  Harness it!

3- It is political jiu jitsu!  BE the party of enterprise!  It is about time that competitive markets got a champion, after the Republican Party has spent a generation demolishing them.

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