Archives for category: Public Choice

Cultural diversity means conflict when the individuals and groups see themselves as competing for scarce resources in the Commons, and the access is a zero sum activity.

The meaning of said conflict is clear in the El Paso anti-immigrant shooting, in the group-righteous racism of intersectionalist hectoring, and . . . well, one could read about it in the pages of this book, Politics in Plural Societies, by Alvin Rabushka and Kenneth A. Shepsle, who begin their treatise listing ethnic conflict around the world.

“Outright killing frequently takes place,” is a typical topic sentence in the first chapter.

The key concept is that of “the plural society,” coined by J. S. Furnivall, who defined the concept as a mixed-group society “comprising two or more elements or social orders which live side by side, yet without mingling, in one political unit.”

Because of his training as an economist, Furnivall naturally focused on the economic aspects of the Dutch colony. Observing that each community possessed a distinct set of values incompatible with those of other cultural groups, he characterized the plural society as one lacking consensus or, in his terms, one without “common social demand.” To illustrate his point, Furnivall constructed the following example. The buying of cathedrals involves an expenditure of resources much like the purchase of groceries. In a homogeneous society, the purchase of a cathedral provides an indivisible “public good,” i.e., every citizen may benefit from its construction. In the plural society, however, the erection of a Chinese temple constitutes a “public bad” for Muslims; in a similar manner, Muslim mosques provide few or no benefits for Chinese. Therefore, in the plural society social demands often result in public expenditures with benefits for one community and opportunity costs for the others. The plural society thus isolates the demands of its separate communities, and fails to aggregate, in Furnivall’s terms, common social demand.
Furnivall points to the presence of separate ethnic demands as a basis for differentiating a plural society from its homogeneous counterpart.

Rabushka and Shepsle develop what is basically a familiar theory, a Classical Liberal Theory of Competing Interest Groups, the basic idea being that if you want diversity, you must have limited government — and if you want big government, you must possess or (more ominously, create) a monoculture.

And if you fail to create a monoculture, you will get violence.

There is a reason today’s “multiculturalists” are such hectoring, moralistic ideologues: they are trying, rather desperately, to create a monoculture, an ideological one. And that is why they tend to look upon their political opponents as “deplorables” — because they resist the multiculturalists’ creation of a utopian society based on left-moralism.

Drolly, “right-wing” nationalism and its relentless pushing of flag worship and patriotic rite amounts to much the same thing, if on a much more limited scale — after all, nation-building is what nationalists do, and its element of doctrinal monoculture (in America, anyway) is the major competitor to multiculturalism.

Furnivall’s major contribution lies in his observation that plural societies are qualitatively distinct from homogeneous ones, and that the different communities of the plural society can meet only in the marketplace. His insistence that outside force is required to maintain order implies that plural societies are inherently prone to violent conflict.

This should be familiar to anyone who has immersed themselves in the sociology of Spencer and Sumner, or of the less ideological conflict theorists. That it is not familiar to most folks today is largely the result of bad education all around.

twv

To members of a proud in-group, those in the out-group tend to look like Yahoos. Not Houyhnhnms.

To believe that “deficits don’t matter” and “public debt is no problem” requires one to believe that government, and government alone, has solved the problem of scarcity.

Furthermore, governments have mastered this magic by doing the one thing that politicians most like doing: bestowing benefits on some constituents without immediately raising taxes on others.

Suspicious. Stretches the credulity, if you ask me. I have never been shown the mechanism how this could possibly work.

Most defenses of deficit spending are Keynesian, and Keynesian fiscal prescriptions only make sense on their own terms when counter-cyclical, that is, when deficit spending is parlayed in bad times to be offset by budget surpluses used to pay off debt in good times. But that no longer ever happens. If it ever did.

Politicians just get too few rewards from paying down debt.

So, as near as I can make out, the modern State’s “solving” of the “problem of scarcity” is not a solution at all, but is, instead, a con job. It depends wholly upon misdirection. As is so often the case, we come back to Bastiat’s “the seen and the unseen.”

The populace? Blind to it. But politicians and their pet economists? They squeak and take their politic soundings for mastery of flight.

Batty.

Cultic behavior is not limited to marginal groups.

Indeed, it has become increasingly clear in recent years that the social controls we associate with cults are the prime drivers (with interesting differences) of almost all center-dominant cultural organizations, institutions and movements.

Most people adopt center-dominant beliefs not because of the beliefs’ truth-values, but for pragmatic reasons and for signalling. Think of it as “innocence by association.”

We should expect nothing else.

And it is for this reason that whole cultures can lurch into extremely perverse directions, whether they be Aztec mass sacrifice, communist political centralism, or even dietetic “science” and eating habits.

My favorite modern example is usually deficit spending by governments and debt accumulation — often excused by half-adopted, half-assessed Keynesianism while being driven by very different but very obvious Public Choice factors.

twv

I asked a question about Menippean satire and the works of Jack Vance, in a Facebook discussion group, and in the conversation that followed I encountered this:

What is remarkable about this passage from a fellow Vancian is how easy it would be to satirize, in Menippean fashion.

But instead of doing so, I will just explain: the truth of the matter is almost precisely the opposite of the notions for which my interlocutor expresses certainty.

“We” do not destroy the environment to enrich the “1 percent.” This “1 percent” works mightily to fulfil our desires, and in the course of the process some damage is done to the “environment.” Trendy progressives — by which I mean “trendy anti-progress doomsayers” — never seem to understand how the world works. They seem to think that if the 1 percent goes about enriching themselves, we allow them to do that because we are suckers. Not quite. We allow them to invest, and to build businesses, so that those businesses can increase the quality of our lives. The dreaded Greenhouse gases do not come, primarily, from the recreational activities of the very rich. They come from all of our driving in automobiles, heating our domiciles, and eating meat. Sure, many people get rich providing us with cars and fuel, electricity and natural gas, and raising beef animals that fart up methane. It is because we engage in consumption that production is developed, and some people — serving vast hordes of consumers — get very rich.

Capitalism is mass production for the masses.

It is a defect of leftist thought that what leftists object to is the great successes of the most productive, not the real drivers of the market system, consumers.

I find it hysterical coming from folks who readily parrot Keynesian doctrine, since Keynesians fixate almost wholly on consumer spending as the driver of market activity. I think the actual implementation of capital is way more complicated than Keynesians think, but nevertheless I more than acknowledge the consumer sovereignty idea embedded (perhaps precariously) within Keynesian dogma.

But leftists and environmentalists and other responsibility-evaders must always shift blame for unfortunate social patterns away from themselves and onto the dreaded Rich.

I guess this allows them to justify their lust to tear away at other people. And because they do not see the integral role of entrepreneurs in markets, or recognize the symbiotic relationship of all market participants, including between “classes,” they eagerly attack one sector, in vulgar fashion, while inflicting harm more generally.

Then, of course, they blame the rich for not being more productive.

This general attitude is what I think of as a satirizable — and is satirized in some of the character types to be found in many of Vance’s best work, such as Wyst and Emphyrio.

It is not just the attitude that is bothersome, however. Also latent in my interlocutor’s sort of complaint is lack of recognition of a fairly basic truth: it is only the comparatively rich societies that find ways to make industry cleaner. America and Europe developed strategies for cleaning up industrial excess only after a level of wealth was reached, far in advance of what big polluters in India and China now possess.

This may be a sad truth, but it is a truth regardless.

Environmentalists so rarely recognize it.

And yet they often do so tacitly, by focusing their ire on First World polluters more than in China and Africa, for instance.

Pure comedy gold.

twv

Modern economic policy is a game of trickery and deceit. Today’s standard-brand economist plays the part of wizard, bolstering his pronouncements with the arcane magic of his models. His chief function is to aid politicians and their vast bureaucracies to continue pulling the wool over the eyes of the populace.

That is, the reason economists get paid what they get paid is largely to support the general policy of the age, that taking wealth from the people (in taxes, mainly) and giving it back in dribs and drabs in the form of earmarks and sinecures and grants and handouts and so forth, while skimming off the top to maintain the vast corpus of institutional governance. The pretense of this policy that all this taking and giving and skimming makes us all better off.

Nonsense, of course. But the job of the economics profession is largely to justify that. It’s no wonder that otherwise sensible folk, such as trade specialist Paul Krugman, appear in public mostly as a shill for Keynesianism and redistribution: The trade theory is his scientific work, the shill-work is the professional duty to the establishment. And it seems that he really enjoys this latter over the former. Too bad.

The game of “magic” is pretty obvious in both theory and practice, but, like in religion, pious people pretend that it all makes sense. So many lives and careers are on the line.
My favorite example of pandering to baser motives and instincts, to keep the whole affair rumbling along, is the modern policy of inflationism. We cannot have a free banking system, or a gold standard, or any metal standard, because then we would have general price deflation. And what is so bad about prices gently falling?

Well, Tyler Cowen explained this to Russ Roberts of EconTalk, not too long ago. The people are stupid, you see. If prices fall then wages — the price of labor — must fall too. And the average Joe does not understand the difference between nominal and real wages. So he objects. He balks at having his wages lowered over time, and considers himself getting poorer, even if he is getting richer because of the general fall in prices.

Now, there is certainly a germ of truth to this. People are very stupid about economics.

At the end of the 19th century and the beginning of the 20th, even as living standards were quickly rising, the pressure keeping nominal wage rates low from the adherence to the gold standard gave rise to all sorts of nearly insane working men’s movements: communistic anarchism, syndicalism, communism, Progressivism, trade unionism and the like. These various forms of vague (and not-vague-enough) “socialisms” were wreaking havoc across the civilized world, and being exported into the semi-civilized world (that is, Russia) to disastrous effect.

In contrast to Marxist revolution, our serpentine wise elites offered up the modern model of constant tinkering with the economy, and their crowning achievement was in central banking. And what the new central banking theory was a repackaging of seigniorage to fit the modern modes: inflationism.

And, says Tyler Cowen, it’s all to fool the fools. They simply cannot understand that a gentle deflation is an increase in wealth. So, in its stead, a “gentle (and often not-so-gentle) inflation” becomes the rule. The monetary rule.

But pandering to this poltroonish stupidity has its costs. Abandoning a stable monetary system for managed money of centralized banks set up a system whereby savers tend to be penalized and short-time-horizoned consumers get rewarded, crippling the economy in several very crucial ways, and corrupting society in general, mainly by politicizing economic processes.

By pandering to human error, and to the illusion of nominal wage rates, managed money encourages forms and depths of class exploitation not possible under honest monetary regimes. If I am being hurt, in my savings, then I must marshal more of my savings into riskier investments. Many of these do not pay off, so my desire to get a political guarantee increases, too. Much of the current “too big to fail” policy stems from the “little guys are too stupid to accept the truth” argument of the monetary policy.

This sort of thing riddles the whole of today’s economy. And it is mighty hilarious to read “sophisticates” who have graduated from college superficial econ and poli sci courses lecture us about how important our “safety net” and “regulatory systems” are to the basic populace. Most of the evidence for this is pure bluster. The science behind it? Pseudoscience, scientism, based on hasty readings of surface evidence, a lack of studied understanding of long-term and widespread effects.

Against the modern regime of constant bureaucratic management — which lurches between micromanagement and crude negligence, in reactive waves of trendy analysis and political pressure — must be pitted the ideal of an honest rule of law. A few simple principles carefully applied, with rigor, is enough to establish a voluntary social order where co-operation provides a vast panoply of goods and services to increase all our wealth. Making the regulatory system complicated doesn’t allow for more complexity in the voluntary order, it discourages and throttles it.

I suspect that even dimwits can be trained — by policy and a little good education (not necessarily, of even likely, provided as “public schooling”) — to understand the difference between real and nominal wages, just as even accountants come to glory in the difference between the rate of a tax or a profit and the gross and net amounts of such things. And, generally, people can wise up.

But this will only happen if wise folk like Tyler Cowen stop propping up lying as a way of life. The modern state is drenched in lies. I see no reason to encourage economists to bend over backwards to bolster up such indecency and folly.

And this seems true, especially now, since it appears that the cost of the new order is a system that goes ever-more out-of-control and perilously close to insolvency. The repeated historic end of inflationism is the liquidation of the spontaneous order of markets.

Back in 1980, when I first began to read economic theory (I juggled Mises and Friedman tomes, with increasing interest), I had a fascinating chat with a budding young economist (I forget his name; it would be interesting to know who he was). We were discussing Misesian and monetarist approaches to sound money. He pushed the Misesian pretty hard, and I, in catholic spirit, stated that “I’d be happy with a simple, consistent monetarist policy.” And, what do you know, that’s what we got. Volcker and then Greenspan basically kept inflation low, but “positive.”

The trouble with a mild inflationism, it seems to me now, is not that it is so horrible for the economy as such (though I think a mild deflation would be better), but that it is, like a whirlwind, impossible to contain. It is institutionally supported by forces that will, periodically, push it out of balance, crowding out good theory with bad. That’s what happened under the late Greenspan/Bernanke watch, and it will happen again, if the Federal Reserve survives the current crisis.

Now, like Hayek later in his career, I am thinking we need to put money out of the hands of politicians and central bankers.

And we should try to avoid establishing “fooling the fools” as the basis of our policy. Fooling folk as a way of life has this tendency to come around and poke you hard in the posterior. As Herbert Spencer wrote, years ago, in his one great essay in monetary theory, “The ultimate result of shielding men from the effects of folly is to fill the world with fools.”

Yes, that great line came from an essay called “State Tampering With Money and Banks.”
Such is the lesson. May we all learn it.