Archives for category: Public Choice

The concluding pages of Politics in Plural Societies: A Theory of Democratic Instability (Rabushka and Shepsle, 1972) are interesting, and shed much light on recent American history. 

Alvin Rabushka and Kenneth A. Shepsle (1972), p. 217.

The reasons for the instability of democracy in what we today call “multicultural” societies is pretty obvious from even the most basic economic point of view:

  1. A set of wealth transfer programs expresses a basic set of values, but every culture and ethnicity has a different complexion of values (so do individuals, of course, which makes any forced wealth transfer scheme unstable even in a monoculture, but this problem is ramped up another notch in the plural society). When we force different groups to conform to a patterned set of wealth transfers and other ‘public goods,’ we compel folks to compromise on their values, with some people getting programs more in accord with their values than others. This breeds resentment and conflict and even violence.
  2. Disparate values also disenable cultural checks on the Tragedy of the Commons. If we see the public goods that a State attempts to provide as a commons, then the communal checks on abusing the common resource work less well when there are separate ethnic and other cultural communities. As a good Swede you may feel some compunction about mooching off the taxpayers, but add Finns and Muslim immigrants to the mix, and that moral check on over-use and over-access — the ‘over’ leading to instability, to draining the resource — may turn to a beggar-thy-neighbor approach, as separate groups aim to game the system by abuse. Further, in a democracy where the people set policy to some degree, there develops a beggar-thy-neighbor approach to rig the system in favor of each group at the expense of others. This of course leads to outrageous taxation and financial work-arounds, like central bank credit manipulation.
  3. Our naturally limited empathy becomes even more limited when we deal with different and hard-to-understand out-groups, and forcing us into collective solutions across cultural divides actually makes for more friction not less because of over-stressed empathy.

So, what to do? The authors’ final three options for culturally pluralistic societies are (a) reduced levels of public goods provision, leaving such goods to markets (laissez faire) [and non-political community action], (b) nation-building to create homogenous ethnic societies, and (c) finding enemies to fight against, thus uniting the populace by forcing in-group solidarity among disparate elements via upping the general fear level, finding commonality because of “existential threats.”

Alvin Rabushka and Kenneth A. Shepsle (1972), p. 216.

People generally do not want laissez faire because it means they have to provide value for value, and government constantly tempts them to seek benefits at others’ expense. This is why we have welfare states, for wealth transfer systems promise magical solutions and allow folks to channel their greed in socially acceptable ways, farding it up as “social justice.”

Nation-building to achieve ethnic unity requires either genocide or partitioning down to possibly really low levels. The former is of course horrible and the latter has the same problem that laissez faire has: it removes temptation to gain at others’ expense. People demand to yield to temptation.

But there is more!

Alvin Rabushka and Kenneth A. Shepsle (1972), p. 217.

Finding enemies to fight has been of course the dominant route for America for the past century, and the success of World War II has stuck the country in the mythology of a unifying righteous war, with everybody still hating on the Nazis, despite no obvious widespread Nazi sympathies, for instance. But since WWII, however, the plausibility of constant warfare has become shakier and shakier, while attempts to focus on causes like “global warming” are marred by the transparency of the political interest, the obvious problem of the science being dubious, and the disturbing spectacle of lying scientists and lunatic religiosity among the political pushers. An extraterrestrial threat — either from comets and asteroids, on the one hand, or UFOs on the other — are apparently being worked on now in the Deep State. But in a global society all these options are difficult to achieve because they depend on creating a consensus where consensus is not rationally warranted. Hence the continual disinformation and psy-ops. Which can be seen in the recent pandemic menace. And all this helps explain why we have a warfare-welfare state in America, not just a welfare state.

If you cannot obtain stability in a large population via normal democratic methods, then we see attempts to use anti-democratic means, such as orchestrated protests and riots, all-or-nothing political machinations, the increase in Executive discretion, cultural totalitarianism (p.c.), policy making by judges, and the very existence of an administrative state and its secretive operations (Deep State).

Localizing democracy and promoting federalism in a general context of laissez faire is, to me, the most obviously humane solution. But people are greedy and angry and resentful, as well as well-programmed by deeply partisan and increasingly anti-educational schooling, so such options find few adherents. It is a pity that this “easy way out” comes at great enough cost that few people see any advance in such a “minimax.”

Of course, Rabushka and Shepsle wrote 50 years ago, and their insights did not win the day. What seems to be winning is a very different program: “multiculturalism.”

Today’s much-touted multiculturalism, as I see it, isn’t what it says it is, i.e., for multiple cultures co-existing. Instead, it is a political movement that uses a set of out-group cultures as an excuse to revolutionize the State and inflict an ideological monoculture, using techniques familiar from limited access societies of the distant past, and from more recent totalitarian states. 

A workable multiculturalism worthy of the name would decrease (not constantly increase) the general level of legal obligations and the amount of public goods provided, not requiring disparate individuals and groups to share resources with people of different values. The rule would be toleration, not compulsory “acceptance” and marginalization of all who resist.

This is very basic stuff. I did not need to read Rabushka and Shepsle to have a handle on it. Indeed, a number of years ago I wrote an essay on “The Comedy of the Commons,” and floated it by a few friends. It covered most of this. Or, I think it did. I cannot now find it!

The upshot of all this is not hard to understand. I have no problem with multiple churches in my neighborhood, or a vibrant pop music scene featuring music I’ve no interest in, or a variety of family structures, from nuclear families, single-parent families, clans, and chain marriages. The idea is I don’t have to contribute to your cause, and you don’t have to contribute to mine. That would be true, tolerant multiculturalism.

The doctrine that currently goes by the name, however, is a changeling creature designed to destroy diversity in the name of diversity.

Indeed, it is no shock to witness a de-stabilizing ideology leap to deeply anti-social attitudes: street violence on the one hand, and ingratitude to benefactors (the rich, who pay the bulk of the taxes) on the other.

To witness post-modernist multiculturalists embrace policies that are obviously de-stabilizing suggests not only that some deep quasi-religious, even chthonian impulse is in play — a societal death wish? — but also that the Rabushka-Shepsle treatise needs more attention from today’s sociologists, social psychologists, historians and Public Choice economists.


Why is not more made of the fact that the supposed Trump economy is really just a chimera based on a loan against the future that serves the rich very well, while mortgaging the middle class’s future and especially that of their children?

…as answered on Quora….

Is that a fact or a theory?

I am not saying it is not true. But the likelihood of a default on the debt is very high, so who ultimately pays may be a bit of an open question. The incidence of the burden shall shift.

Why is not more made of this, though? Great question.

The answer is easy: it is not just about the “Trump economy.”

Economic policy madness is a truly bipartisan effort. The recent and quite unhinged “stimulus” bills that Trump signed ran through the House of Representatives under control of the Democrats, as well as through the GOP majority Senate.

Fiscal irresponsibility is the basic position of both major parties.

Any attempt to characterize this as a mere partisan or personal failure is a nonstarter. The truth of our predicament is that our rush into the future is chaotic and crazy and by consensus. Confronting the truth of government today? Americans simply cannot handle the truth.

Which is perhaps the real reason our politics is so . . . mad. The double bind we have collectively embraced must have some effect. The effect is a kind of schizophrenia. All Americans are implicated. All. And thus politics is basically the drivel of madmen.

Herbert Spencer’s Synthetic Philosophy, my set.

Is it possible to reduce the world population by 50%? Isn’t world over-population the cause of all the problems in the world?

…as answered on Quora:

Two questions, eh?

  1. Is it possible to reduce the world population by 50 percent?
  2. Isn’t world overpopulation the cause of all the problems in the world?

The answers are simple:

  1. Yes.
  2. No.

But there are complications:

  1. Many of the ways to decrease populations quickly, especially by half, are of the Thanos-or-worse variety. We do not want to decrease populations quickly. Gradually could be another story.
  2. As economist Theodore W. Schultz explained — and as Julian Simon demonstrated in a more daring and popular form — population is not the huge problem that neo-Malthusian alarmists say it is. Human beings, if they do not rely upon predation and parasitism, and have plenty of opportunities for market coöperation (trade), are what Simon calls “the ultimate resource.”

When we rely upon trade, we must be of service to one another. We engage in trade only when we expect to gain, that is, when both parties to an exchange expect to gain from it. I help you out if you help me. And the more trades occur, the more that competition for each others’ business hones our productivity. The more productive, the more advances in technique and technology we bring to the stock of civilization. This is progress.

Thomas Robert Malthus’s worry in his Principles of Population (1798) was that (a) the rate of agricultural advance would be outstripped by (b) the natural rate of human population growth. He was stumbling towards a modern conception of external economies, of the “market failure” focused on in neoclassical economics. That is where options seen by the individuals as in their best interest yields widespread effects not in the interest of people generally. (Malthus was arguing against the anarchist rationalist William Godwin and his belief that moral progress would lead to an ethical utopia of excellence everywhere.) Basically, the Malthusian fear is that people would be incentivized to reproduce at a socially dangerous rate. Reason would fail — in effect be upended by circumstance.

But Malthus had an interesting analytic mind, and he handled the problem with something more than a glib pessimism. He noted that these two diverging trendlines (agriculture expanding at an “arithmetic rate” versus population expanding at a “geometric rate”) were offset by other forces, at least on the reproduction trend line.

There were, he wrote, natural checks on reproduction rates, including famine and pestilence and infant death by malnutrition; and there were artificial checks, including sexual abstinence in several forms, most of which he regarded as moral, and some gruesome means, such as infanticide and abortion and eugenics. His worry was that populations would grow to bring misery, and also a rise in immorality out of perceived prudence. He rightly saw that crude measures of packing people in close together, as happened in cities, often breed plague and sexually transmitted diseases. And it is in his spirit — and often inspired by reading his treatise — that many modern prophets of doom have developed the popular anti-population mania. And theirs is indeed a harrowing philosophy, turning otherwise nice and smart folks into anti-humanist immoralists, praising horrific measures of (aack) mass death or (ugh) government repression. This sort of thing inspired the modern environmental movement, where you will find some folks advocating reducing humanity to “a size twice the population of bears.”

But all this misses the “miracle” of modernity: progress.

Malthus failed to see what Herbert Spencer saw in the early 1850s: coöperative humanity can indeed fight against the Malthusian trap, flipping the trend lines so that agriculture can grow exponentially more productive than the rate of population reproduction . . . and in turn spurring increased populations to be increasingly productive. The only thing we would have to give up? The militant, regimented means of social organization, instead embracing “industry.” Which in this case was the predecessor to the industrial recolution, the agricultural revolution. Spencer saw trends on Malthus’s agriculture forecast that would raise the line several orders of magnitude.

Interestingly, Spencer almost came up with the theory of natural selection in this work. But he only applied his notion of a ratcheting up of living standards by means of competitively coördinated coöperation to the social world, not to the long-term cycles of plant and animal descent. “Missed it by that much,” as Agent Smart said in Get Smart. It is for this reason that sociologist Jonathan Turner inverted the infamous “Social Darwinist” charge against Spencer: Darwin, really, was a “biological Spencerian.” Spencer spiffed up his approach a decade later, for the final section of his Principles of Biology. And in the process he gave us the turn of phrase “survival of the fittest.” Though it has been trendy (for a full century, actually) to look upon Spencer’s viewpoint as a ghastly exercise in cruel theoretics, Spencer was actually emphasizing peaceful coöperation and presenting humanity with a remarkably positive vision. J.D.Y. Peel, in his study of Spencer, said that the British philosopher-sociologist “out-Godwinned Godwin”! But Spencer did this not by hoping for a triumph of Reason, but by merely noticing the flourishing that is possible with distributed patterns of collaboration sans an over-arching plan.

The amazing thing? He was basically right.

Spencer was actually presaging what today’s more realistic economists and demographers understand perfectly well. And, what is more — less: today’s best researchers notice that as human societies get wealthier, the rate of reproduction goes down.

In Schultz’s terminology, parents swap “quantity of children” for “quality of children.” In mere agricultural societies, children can be productive in farm life and in resource extraction; in industrial societies, for people to be productive they have to decelop their skillsets more markedly, so parents opt to expend resources to “invest” in their children’s “human capital.” So, that old black magic of having scads of children ceases to increase the chances of family success, but, instead, tends to reduce it.

That is one big reason why people, today, tend naturally to produce fewer children than in the past.

One might think that this would be completely scuttled by the lowering of childhood death rates, but for a number of reasons, this does not appear to be the case.

And, yes, populations are indeed declining in the First World — and as the rest of the world catches up (and in my lifetime the poverty rate has declined markedly with the expansion of the extent of the market), the general reproduction rate will level off. In Europe, the white population is veering to the opposite-of-“Malthusian” trend: demographic collapse. In the United States, were it not for immigration and recent immigrants’ higher reproductive rates, America, too, would see population decline.*

Demographic collapse is actually probably going to be a bigger problem in the future than the “population explosion.” It is the implosion that would more likely destroy civilization.

But here we have another offsetting trend: technological progress.

The great heterodox genius Samuel Butler, not long after publication of Charles Darwin’s On the Origin of Species (1859) argued that the next form of evolution will be machine evolution. This was played for science-fictional interest in his dystopian romance (or is that utopian comedy?) Erewhon (1872), but now we are really seeing this kick into high gear, as we approach something like a social Singularity (see Ray Kurzweil).

About the time of Malthus, there arose the legendary “Ned Ludd,” who saw only devastation in the destructive creation of technological advance. And since then there have been worriers who see mainly the death of labor in “labor-saving devices.” And like Malthusianism, Luddism, if true, would have meant the death of free labor and our whole civilization a century ago. The opposite is the case: technological advance increases worker productivity, leading to a general increase in wealth and welfare. The “trouble” is, people have to adapt to the machines.

Perhaps the challenge of population decline will not be so bad, as machine evolution makes our lives better and better. Maybe, in Richard Brautigan’s poetic lines, we shall be “watched over by machines of loving grace.

The real challenge will be political.

* The downward trend line is exacerbated by welfare state interventions, and the high rate of abortions, too. But for this analysis I need not get into to it.

Additional thoughts:

I wonder if there is not a third major danger playing here besides Malthusian and Luddite, but the belief in scientific management of the human livestock, which inevitably buys into Malthusian and Luddite predictions, then uses untold cruelty to violently whip the human population towards a better condition. Our OP demonstrates it.

Timo, do you agree that there is this third strain and from whom do you think it originates?

Dennis Pratt, replying to my answer, May 30, 2018.

Yes. These are the intellectuals I call Social Galtonians, after Darwin’s cousin Francis Galton. There is a great irony embedded in this social engineering movement. Inspired by Darwin’s tough-minded biological theories, these scientists and activists invented eugenics. But it wasn’t natural selection they advocated, or even sexual selection (the two key concepts Darwin marshaled to help understand speciation), but, instead, the everyday concept that Darwin used to explain natural selection, by analogy: “artificial selection,” or breeding.

Basically, these people see the apex of advance in an elite that would engineer society for further advance. It is profoundly anti-Darwinian, really. They wanted to “take charge of evolution.” But Darwin was trying to explain spontaneous order, advance without Plan. The Social Galtonians wanted to Plan, in all-caps: PLAN.

And here we can see the contrast with the thinker usually called the major “Social Darwinist,” Herbert Spencer. His view was that in the course of super-organic evolution various interpenetraing and almost-indistinguishable institutions (like religion and The State) would diversify and integrate simutaneously. The state would get smaller to accommodate countervailing, offsetting institutions like religions and industrial organizations and markets and the like. That is not what happened, but he thought that was what needed to happen for the kind of progress that would work best for the greatest diversity of people.

And what was important and “Darwinian” about this was not the scope for “natural selection” (a factor in explaining man and society at every level) but the primacy of individual selection selection. Voluntary breeding.

The social engineers and eugenicists wanted to clamp down on this decentralized, distributed reproduction technique and replace it with top-down breeding. Artificial selection as a super-elitist activity justified by a mis-reading of evolutionary science.

So, Spencer was more Darwinian and less crude in his preference for sexual selection over anything like social engineering. The State should be peeled back to a limited role, not expanded to mimic the reductionist and naive view of organisms as top-down, total-conscious mechanisms.

The social engineers, of course, are hubristic. They make a huge error in their basic world view. But it “feels” scientific, to themjust as the maroons who wax enthusiastic over “the scientific consensus” get all the good feels from their mania.

It is scientism.

But it is not our current problem. Not really. For sentiment transformed eugenic-minded progressivism after the Hitler debacle into an incoherent welfare state-cum-churning state. And what dominates now, in combination with the feminist cult and cultural Marxism, is dysgenic. Policies leading to the cultivation of vast hordes of near-criminals and parasites.

That is hardly a Social Galtonian view, or Social Darwinist. It is its own satire.

The Hegelian dialectic as it spins society through the rinse-repeat cycle is something of an ironist.

The primary political reaction to the Darwinian challenge, then, comes down to this: how we conceive of responsibility in the management of human reproduction. Should folks be regarded as their own people, responsible for their own couplings and reproduction strategies (per sexual selection) or should they be treated as breeding stock (per artificial selection)?

The Progressive Era, with the rise of socialism and fascism, chose artificial selection, which led to the sterilization of “the unfit” and unwanted — and those perceived as dangerous. I have called this Societal Galtonianism. The old liberal idea was simply the Smithian “natural liberty” and Spencerian “Law of Equal Freedom” approach, where people were let alone to choose for themselves. Call this alternative Independent Adaptation.

So, which will be “the ultimate recourse”? Freedom and the division of responsibility, or force and social engineering?

But note that Independent Adaptation, which I obviously prefer, is now developing to a new level of sophistication, where the sexual selection of partners can be boutique and even commoditized. Instead of letting the ablest swimming sperm capture the egg immediately after an act of coition, now we enter a world where

  • fertilized eggs can be chosen for viability according to various criteria
  • eggs can be pre-selected
  • sperm can be pre-selected
  • DNA can be altered in pre-nates

which certainly will all have huge social consequences, making the “problem of children” all the more interesting.

The modern fear of the breeding stock approach led to a few famous dystopias, such as Aldous Huxley’s Brave New World, and many not-so-famous ones, such as the late J. Neil Schulman’s The Rainbow Cadenza. And in the world of open-source science fiction — that is, in ufology — the fear of humanity being reduced to breeding-stock status becomes a major cultural meme.

None of this expresses the core truth of our time, though.

In reaction against eugenic breeding programs of the Progressive Era, modern “liberals” and (post-modern) progressives have embraced the dysgenics of the unstable pairing of free sexual selection with tax-funded subsidy. This is our current paradigm, in which freedom and responsibility are kept separate. This is part of the dominance of left versus right politics, where the two flavors de-link freedom and responsibility issue by issue, and the compete in the political marketplace to set policy in an ad hoc way. It is quite messy, and we live under the chaos of freedom-without-responsibility and responsibility-without-freedom as the two option against which society constantly lurches in drunken sailor fashion.

Trouble is, the pure social engineering, totalitarian approach, which might be more culturally stable than our current kludgy dysgenic approach, strikes most people, including me, as horror-show repugnant. While the libertarian/responsibilitarian approach strikes most people, excluding me, as freaky unsettling.

So we will probably be stuck in the intelligentsia-approved compromise system until our civilization crumbles.


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.


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.


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.


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.


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.