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Another blatantly ideological post that has little or nothing to do with investing

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March 04, 2010 – Comments (7)

Okay, so if you made it past that title, you will probably enjoy this article, if you haven't already:

Why Cronyism Doesn't Explain the Free Market's Unpopularity by Bryan Caplan

As you may have guessed, I came across this article after reading David's article and following the link, then poking around a little. I enjoyed it, but I disagree with one thing: underlying the whole piece is the assumption that most people have for an underpinning of their beliefs and feelings about politics either a somewhat decent to impressive foundation of knowledge or a conscious ideology. Based on my experience, I would say this is not the case. And those who have knowledge it is usually of lies, distortions, and slanders that they have never cultivated the critical thinking skills to examine.

For example, for those of you who want to argue with me but won't read the article I linked to: if you ask someone whose education primarily derives from public school to identify the longest-lasting recession in the U.S. before the Federal Reserve was established, you would likely elicit the guess "The Great Depression?" or perhaps even a blank stare. Mark Dice went around trying to give someone a 1oz solid gold coin if they could correctly guess - within 25%! - what the spot price of gold was. The answers, as I recall, mostly ranged from a few cents to about $80. Examples of popular ignorance abound. 

With that in mind, it hardly seems surprising that many libertarians, including myself, believe that education would bring many people to a belief in freedom, particularly property rights. The widespread hatred for laissez-faire free markets is not semantic, I'll agree, but neither is it based on some carefully thought-out devotion to Keynesian principles of aggregate demand or Marxist idealism or command economies or luddism or Star Trek Utopianism. It's just people being ignorant. They hear a thousand voices (CNBC, Michael Moore, Jon Stewart, politicians, SNL, Conan O'Brien, David Letterman, CSI, Law & Order, ER, etc. - I'm not exaggerating) insinuating that free markets are bad, and allow rich people to hurt little people, and they just believe it. They don't study, they don't read Krugman's article, they didn't take a Keynesian economics course in college - they just instinctively believe what's been insinuated to them almost every minute of moron media they've subjected themselves to.

I'm not talking about the Devoishes of the world, or TMFBent, or dwot, and I'm obviously not talking about Krugman. They're peas in a pod, and all miss the forest for the trees. I'm talking about people who don't even see trees. I would just take a wild guess that about 80-90% of this country is functionally economically illiterate. I'm not asking you to act on that guess, but just suppose with me. If I'm right, and people are almost all unable to think about economic issues without a lot of help, then why would rejection of capitalism necessarily be due to any kind of firmly-held belief on the part of the hoi paloi?

No, the problem is not opposition to free-market principles or free-market solutions, it's the utter aimlessness of the bulk of the voting public. If you have true opposition to free markets, from truly inculcated Keynesians and dyed-in-the-wool socialists, what you have is like France, where unemployment is pretty much everybody under 35, and even the unemployed take to the streets in protest any time government-mandated severance packages (which subtly act as hiring freezes) are curtailed. On the contrary, here you are much more likely to find people who staunchly support capitalism, as far as they know, but also vote for the hot new government program and subsidies for businesses and farmers, vote against base closings, Medicare cuts, and "RINO's" like Ron Paul.

So going after cronyism really can help. Maybe if we do a scandalous exposé of sugar tariffs, or farm subsidies, or the obvious waste of pork barrel army bases, and expose that these are cronyism and not capitalism. (Trust me: there are a lot of people who actually don't know that.) If only we had some sort of systematic education in this country....

7 Comments – Post Your Own

#1) On March 04, 2010 at 4:53 PM, whereaminow (42.34) wrote:

Flea,

You nailed this one.  This is one of Mises' main contentions in Planning for Freedom.  Most people do not have the time, interest, or capacity for abstract thought that is required to give critical anaylsis to complex ideas, especially economics. 

Why economics?  Because economic action happens after choice. You can't see the choice until the action has already occured.  This fundamentally separates economics from sciences that do not have an element of choice, such as physics. 

So economic science has always been about intellectuals shaping ideas, stamping them with their seal of approval, and passing them onto the mass public who could scarcely care.  It's quite better if they don't understand at all (fancy, useless equations and modeling serves this purpose.) 

This is why the strategy of the dominant class in every country in history has been to arrange the intellectual class around the ruling elite. From the Intellectual Bodyguards of the House of Hohenzollern to Paul Krugman, they serve a very important purpose to those with power to gain and prestige to pass out.

David in Qatar

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#2) On March 04, 2010 at 6:25 PM, brickcityman (< 20) wrote:

While I cannot argue with you regarding the economic illiteracy of a large swath of the population, I also think you must understand the context in which you have formed this view and from which you are speaking.

 

The fact that any system of economics produces winners and losers is not lost on most.  And I doubt that anyone would argue it (feel free if you must).  

 

Now the crux of the opposition is this...  It's the notion that the losers in an less restricted market will suffer more than the losers is in a more restricted market.  This concern is only augmented when you consider that most people also intuitively know that the world is not flat...  By that I mean that there will always be certain advantages (informational, structural, inborne, etc) that a select few can parlay into dominance. 

 

Many people (rightly or not) see government intervention, and regulations, as a bulwark for countering excessive power in any one organization or person's hands.  I say rightly or not because it should also be universally recognized that our present government is failing miserably at serving this role.

 

In the end this whole thing boils down to a religious argument.  Each side has theories, and suggests unprovable outcomes based upon firmly held beliefs and little more.

 

See it for what it is and you will start to take on my view... which is that the optimum solution is to ensure that neither side gets to live out their dreams.

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#3) On March 05, 2010 at 2:20 AM, FleaBagger (29.19) wrote:

brick - thanks for your thoughts. But "the optimum solution is to ensure that neither side gets to live out their dreams?" I know you're referring to those you consider extremists and ideologues, but you have to admit that that sounds abysmal. (If you take that approach to the rich and the poor, you have the basis for Communist redistributionism.) Don't you think a better approach would be for both sides (and all sides, and the various points in the middle) to live out their dreams, and for none to be allowed to force their dreams on anyone else?

So, for example, you could have a moderate government, Devoish and those with his view could have universal healthcare, Wall Street would have no one to despoil, unless Devoish's crew took them in, and David, David, and I could live on our gun-totin' anarchist enclave, and practice free trade with y'all and Iran, and whomever.

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#4) On March 05, 2010 at 2:28 AM, FleaBagger (29.19) wrote:

That is, if Devoish's country doesn't attack us and claim our land, proving once and for all that anarchy is an unworkable idea.

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#5) On March 05, 2010 at 10:26 AM, brickcityman (< 20) wrote:

@ Fleabagger...

 

We tried that once before... The civil war (or war between the states if you prefer) that followed shortly thereafter is how that one ended.  That may not be a perfect fit for what you suggest (there was way more nuance to the civil war period), but it could certainly be a likely outcome.

 

I guess my point is that the optimum solution is to have each side aggressively championing their ideas, but willing to strike compromises in the interest of forming a more perfect union.  I tend to think that each side of debates like this can ultimately find ways to complement one-anothers goals...  When neither side can jubilently claim victory you have probably reached the best solution. 

 

Sectioning off into factions only produces a favorable outcome if you assume there one particular worldview is gauranteed to provide an optimal solution which in turn is adopted by all.  I remain unconvinced that this is the case.

 

I don't know when or why compromise got such a bad reputation, perhaps its really just a function of how intellectually limited our politicans (and people) have become...  In that they come to the table religiously convinced of the superiority of their ideals and do not have the capability (or worse yet desire) to think outside the boxes they have created for themselves.

 

A clock works best when the pendulum swings.

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#6) On March 05, 2010 at 11:25 PM, FleaBagger (29.19) wrote:

The pendulum metaphor is vivid, but I believe it is irrelevant. My point is not so much that one way is so perfect that we need to be allowed to try it, but that freedom, self-direction, and allowing experimentation works for everything else, so why not societal organization? To have 51% of the inhabitants of any given plot of land claim the right to use force to control the lives of the other 49% is morally bankrupt in my view, just as having a king rule over the other 99.99% of the people.

That said, if people want democracy or monarchy, that's fine with me, as long as I don't have to participate with my labor or my taxes, or even my neck. Isn't it inherently better if everyone is free to choose what milieu they want to live in, instead of no one being free to choose?

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#7) On March 06, 2010 at 12:21 AM, AvianFlu (35.29) wrote:

Get this.
My daughter's college roomate was an economics major. I talked to her in her last quarter. She had NEVER HEARD of Milton Friedman. She was in a major university. She had excellent grades.

Agree with him or not, you should be aware of one of the major economists of the last 100 years if you are an economics major. But maybe the teachers would rather not have students read his work...

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