Archive for the ‘Economics’ Category
I just finished watching the third presidential debate. Admittedly, many people will be swayed by what he said. However, any thinking person who has a modicum knowledge of economics and national security as well as respect for all people, regardless of race, creed culture, gender or religion can upon reflection agree with him.
By and large, Trump repeated over and over that he would make America great again but without ever delving into how he would do so. On trade, he said NAFTA was bad, but the completely failed to explain how or what he would do to create better trade policies. Throughout his campaign, he has repeatedly called for isolationist trade policies which would be an economic disaster. The USA relies upon our exports for jobs and economic growth. Granted the TTP and other current proposals fail both the American people and other countries by putting too much power into the hands of major corporations – the reason Hillary Clinton does not support them – but international fair and free trade policies are needed worldwide, especially by mature economies like the US. To put it simply, US full employment cannot be supported without international trade.
On tax policy, Trump doubles down of supply side economics. His tax policy, outsourced to Steven Moore, a penultimate supply-sider who consistently ignores the demand side of the economic equation and is no economist, would increase the national deficit by trillions. Some say as much as $5 trillion. Since the financial melt down in 2007, the US has had an overabundance of supply but not enough demand. In other words, there’s plenty of product but not enough buyers. When wages are low or lowered (as has been the case since 2009 when companies lowered wages in the face of an oversupply of qualified candidates) wages, the demand side of the economic equation has gone down. If people can’t afford to buy, demand goes down regardless of the supply quantity. Thus, continuing the feed the supply side, i.e. Wall Street investors, does nothing to increase GNP (Gross National Product). The only way to increase GNP and, thus, GDP is to build up the demand side of the economic equation. Moore’s tax and economic policies, which Trump bought lock, stock and barrel, utterly fail this test.
On National Security, Trump sounded smart when when you delve into what he actually said but yet again failed to propose any solutions, he’s frightening. Does he want an all out war in the Middle East – a la the Crusades? If so, that is one sure way to push moderate Muslims into the freedom fighter camps of ISIS and the Taliban. Imagine if you will an invading force in the US (intent on stealing our national resources to pay for the invasion). Would any American stand by and let that happen, no matter how moderate they were? Of course not. The same principle applies in the Middle East. Throughout history all over the world, people have always fought against a foreign invader, even when they strongly disagreed with their own government. It would be no different in the Middle East now. Moreover, Trump and his neo-con allies have chosen to make his foreign policy about a clash of civilizations – a clash of religions much like the Crusades. And much like during the Crusades, Muslims would come together, regardless of their internal conflicts, to fight off the invaders. Smart policy, which Clinton advocated, is separating the moderates from the extremists…and backing the moderates who see a better way forward for Middle East countries than a 12th Century ideology in the 21st Century world.
Additionally, the idea of Trump denying or ignoring Putin’s spying and hacking and interference with this election shows his incredible naivety. Of course, his financial records prove, as Newsweek and other legitimate media outlets have shown, he has a huge income stake in protecting the Russian (and thus Putin) oligarchy. Do I think Trump would take his order from Putin the way Mussolini did from Hitler? I don’t know; but I’m not willing that that chance, given that Trump is all about himself and his ego and his fortune even as he sells out other and stiffs his suppliers. Trump’s entire career has been one long running steam of conning and lying and cheating others including failing to pay his suppliers. Believing him is like believing in Hitler’s promise to not to invade the restof Europe after stealing Austria.
On issues of his personal morality and how he think about woman and minorities, what more needs to be said other than that he has offended everyone with his misogynist and xenophobic mindset. Even the uber conservative Utah-based Mormon (Church of Latter Day Saints) has come out against Trump in a public statement.They consider his words and ideas…and his behavior…highly toxic. No matter how much he denies his behavior, the numbers of people coming out against him for how he has behaved and what he has done keeps growing. As a result, he’s proven himself to narcissistic megalomaniac who refuses to accept responsibility for his own behavior. In his words, everything is the fault of someone else…and he is totally innocent. That may go over well in the modern Republican conservative movement, but it doesn’t necessarily sit well with a majority of people who have been raised to believe they have to take responsibility for their own behavior.
On border control and minorities, polling shows that the list of minority voters switching from the Republican side of the ledger to the Democratic side ha gown dramatically since Trump became the Republican nominee. Beyond his polling numbers though is the fact that to implement his wall across the US Southern border and round up & deport every non-citizen (i.e. alien) would cost multiple trillions of dollars. Are you willing to agree to a major increase in your taxes to pay for it all…or are you going to shut your eyes and ears and put it on the national credit card and blame someone else for the outrageous deficit once again?
I could go on ad infinitum on the disastereous affects of Trump policies (or lack of coherent policies) but there is little doubt that committed Trump voters will change their minds. To far too many of them, the world is made up of “us against them” which the GOP has pushed, in various and sundry dog whistles, for over 50 years.
Nevertheless, regardless of how reasonably sounding Trump came off sounding in this third debate, the fact remains that all of his ideas, from every perspective, are extraordinary expensive and a national disaster. Moreover, the fact that the national GOP supports and endorses this caricature of a human being shows the party has descended into the bowels of hell.
Clinton may not be everyone’s favorite candidate…and granted she’s been vilified and lied about by the GOP in the national media for nearly 30 years…but compared to Trump, she’s an angel. Her policies are reasonable, well-thought out, progressive, equitable, and fiscally sound. But, of course, that won’t matter to die-hard Trump supporters who choose to ignore the reality of the man and his ideas by focusing only on his fantastic rhetoric as a way out there circumstances.
It’s time to set the record straight.
The following is from a pdf file of a speech given in Chicago. Although many among the modern conservative movement claim to be direct heirs of Hayek, his own words more closely resemble the ideals of modern Liberals than that of the modern Conservative Movement.
Why I Am Not a Conservative
In The Constitution of Liberty (Chicago: The University of Chicago Press, 1960)
“At all times sincere friends of freedom have been rare, and its triumphs have been due to minorities, that have prevailed by associating themselves with auxiliaries whose objects often differed from their own; and this association, which is always dangerous, has sometimes been disastrous, by giving to opponents just grounds of opposition.” – Lord Acton
1. At a time when most movements that are thought to be progressive advocate further
encroachments on individual liberty, those who cherish freedom are likely to expend
their energies in opposition. In this they find themselves much of the time on the same
side as those who habitually resist change. In matters of current politics today they
generally have little choice but to support the conservative parties. But, though the
position I have tried to define is also often described as “conservative,” it is very different from that to which this name has been traditionally attached. There is danger in the confused condition which brings the defenders of liberty and the true conservatives together in common opposition to developments which threaten their ideals equally. It is therefore important to distinguish clearly the position taken here from that which has long been known – perhaps more appropriately – as conservatism.
Conservatism proper is a legitimate, probably necessary, and certainly widespread
attitude of opposition to drastic change. It has, since the French Revolution, for a century and a half played an important role in European politics. Until the rise of socialism its opposite was liberalism. There is nothing corresponding to this conflict in the history of the United States, because what in Europe was called “liberalism” was here the common tradition on which the American polity had been built: thus the defender of the American tradition was a liberal in the European sense. This already existing confusion was made worse by the recent attempt to transplant to America the European type of conservatism, which, being alien to the American tradition, has acquired a somewhat odd character. And some time before this, American radicals and socialists began calling themselves “liberals.” I will nevertheless continue for the moment to describe as liberal the position which I hold and which I believe differs as much from true conservatism as from socialism. Let me say at once, however, that I do so with increasing misgivings, and I shall later have to consider what would be the appropriate name for the party of liberty.
The reason for this is not only that the term “liberal” in the United States is the cause of constant misunderstandings today, but also that in Europe the predominant type of rationalistic liberalism has long been one of the pacemakers of socialism. Let me now state what seems to me the decisive objection to any conservatism which
deserves to be called such. It is that by its very nature it cannot offer an alternative to the direction in which we are moving. It may succeed by its resistance to current tendencies in slowing down undesirable developments, but, since it does not indicate another direction, it cannot prevent their continuance. It has, for this reason, invariably been the fate of conservatism to be dragged along a path not of its own choosing. The tug of war between conservatives and progressives can only affect the speed, not the direction, of contemporary developments. But, though there is a need for a “brake on the vehicle of progress,” I personally cannot be content with simply helping to apply the brake. What the liberal must ask, first of all, is not how fast or how far we should move, but where we should move. In fact, he differs much more from the collectivist radical of today than does the conservative. While the last generally holds merely a mild and moderate version of the prejudices of his time, the liberal today must more positively oppose some of the basic conceptions which most conservatives share with the socialists.2. The picture generally given of the relative position of the three parties does more to obscure than to elucidate their true relations. They are usually represented as different positions on a line, with the socialists on the left, the conservatives on the right, and the liberals somewhere in the middle. Nothing could be more misleading. If we want a diagram, it would be more appropriate to arrange them in a triangle with the conservatives occupying one corner, with the socialists pulling toward the second and the liberals toward the third. But, as the socialists have for a long time been able to pull harder, the conservatives have tended to follow the socialist rather than the liberal direction and have adopted at appropriate intervals of time those ideas made respectable by radical propaganda. It has been regularly the conservatives who have compromised with socialism and stolen its thunder. Advocates of the Middle Way with no goal of their own, conservatives have been guided by the belief that the truth must lie somewhere between the extremes – with the result that they have shifted their position every time a more extreme movement appeared on either wing.
The position which can be rightly described as conservative at any time depends,
therefore, on the direction of existing tendencies. Since the development during the last decades has been generally in a socialist direction, it may seem that both conservatives and liberals have been mainly intent on retarding that movement. But the main point about liberalism is that it wants to go elsewhere, not to stand still. Though today the contrary impression may sometimes be caused by the fact that there was a time when liberalism was more widely accepted and some of its objectives closer to being achieved, it has never been a backward-looking doctrine. There has never been a time when liberal ideals were fully realized and when liberalism did not look forward to further improvement of institutions. Liberalism is not averse to evolution and change; and where spontaneous change has been smothered by government control, it wants a great deal of change of policy. So far as much of current governmental action is concerned, there is in the present world very little reason for the liberal to wish to preserve things as they are. It would seem to the liberal, indeed, that what is most urgently needed in most parts of the world is a thorough sweeping away of the obstacles to free growth.
This difference between liberalism and conservatism must not be obscured by the fact
that in the United States it is still possible to defend individual liberty by defending long established institutions. To the liberal they are valuable not mainly because they are long established or because they are American but because they correspond to the ideals which he cherishes.3. Before I consider the main points on which the liberal attitude is sharply opposed to the conservative one, I ought to stress that there is much that the liberal might with advantage have learned from the work of some conservative thinkers. To their loving and reverential study of the value of grown institutions we owe (at least outside the field of economics) some profound insights which are real contributions to our understanding of a free society. However reactionary in politics such figures as Coleridge, Bonald, DeMaistre, Justus Möser, or Donoso Cortès may have been, they did show an understanding of the meaning of spontaneously grown institutions such as language, law, morals, and conventions that anticipated modern scientific approaches and from which the liberals might have profited. But the admiration of the conservatives for free growth generally
applies only to the past. They typically lack the courage to welcome the same undesigned
change from which new tools of human endeavors will emerge.
This brings me to the first point on which the conservative and the liberal dispositions
differ radically. As has often been acknowledged by conservative writers, one of the
fundamental traits of the conservative attitude is a fear of change, a timid distrust of the new as such, while the liberal position is based on courage and confidence, on a preparedness to let change run its course even if we cannot predict where it will lead.
There would not be much to object to if the conservatives merely disliked too rapid
change in institutions and public policy; here the case for caution and slow process is
indeed strong. But the conservatives are inclined to use the powers of government to
prevent change or to limit its rate to whatever appeals to the more timid mind. In looking forward, they lack the faith in the spontaneous forces of adjustment which makes the liberal accept changes without apprehension, even though he does not know how the necessary adaptations will be brought about. It is, indeed, part of the liberal attitude to assume that, especially in the economic field, the self-regulating forces of the market will somehow bring about the required adjustments to new conditions, although no one can foretell how they will do this in a particular instance. There is perhaps no single factor contributing so much to people’s frequent reluctance to let the market work as their inability to conceive how some necessary balance, between demand and supply, between exports and imports, or the like, will be brought about without deliberate control. The conservative feels safe and content only if he is assured that some higher wisdom watches and supervises change, only if he knows that some authority is charged with keeping the change “orderly.”
This fear of trusting uncontrolled social forces is closely related to two other
characteristics of conservatism: its fondness for authority and its lack of understanding of economic forces. Since it distrusts both abstract theories and general principles, it neither understands those spontaneous forces on which a policy of freedom relies nor possesses a basis for formulating principles of policy. Order appears to the conservative as the result of the continuous attention of authority, which, for this purpose, must be allowed to do what is required by the particular circumstances and not be tied to rigid rule. A commitment to principles presupposes an understanding of the general forces by which the efforts of society are co-ordinated, but it is such a theory of society and especially of the economic mechanism that conservatism conspicuously lacks. So unproductive has conservatism been in producing a general conception of how a social order is maintained that its modern votaries, in trying to construct a theoretical foundation, invariably find themselves appealing almost exclusively to authors who regarded themselves as liberal. Macaulay, Tocqueville, Lord Acton, and Lecky certainly considered themselves liberals, and with justice; and even Edmund Burke remained an Old Whig to the end and would have shuddered at the thought of being regarded as a Tory.
Let me return, however, to the main point, which is the characteristic complacency of the conservative toward the action of established authority and his prime concern that this authority be not weakened rather than that its power be kept within bounds. This is
difficult to reconcile with the preservation of liberty. In general, it can probably be said that the conservative does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not to be too much restricted by rigid rules. Since he is essentially opportunist and lacks principles, his main hope must be that the wise and the good will rule – not merely by example, as we all must wish, but by authority given to them and enforced by them. Like the socialist, he is less concerned with the problem of how the powers of government should be limited than with that of who wields them; and, like the socialist, he regards himself as entitled to force the value he holds on other people.
When I say that the conservative lacks principles, I do not mean to suggest that he lacks moral conviction. The typical conservative is indeed usually a man of very strong moral convictions. What I mean is that he has no political principles which enable him to work with people whose moral values differ from his own for a political order in which both can obey their convictions. It is the recognition of such principles that permits the coexistence of different sets of values that makes it possible to build a peaceful society with a minimum of force. The acceptance of such principles means that we agree to tolerate much that we dislike. There are many values of the conservative which appeal to me more than those of the socialists; yet for a liberal the importance he personally attaches to specific goals is no sufficient justification for forcing others to serve them. I have little doubt that some of my conservative friends will be shocked by what they will regard as “concessions” to modern views that I have made in Part III of this book. But, though I may dislike some of the measures concerned as much as they do and might vote against them, I know of no general principles to which I could appeal to persuade those of a different view that those measures are not permissible in the general kind of society which we both desire. To live and work successfully with others requires more than faithfulness to one’s concrete aims. It requires an intellectual commitment to a type of order in which, even on issues which to one are fundamental, others are allowed to pursue different ends.
It is for this reason that to the liberal neither moral nor religious ideals are proper objects of coercion, while both conservatives and socialists recognize no such limits. I sometimes feel that the most conspicuous attribute of liberalism that distinguishes it as much from conservatism as from socialism is the view that moral beliefs concerning matters of conduct which do not directly interfere with the protected sphere of other persons do not justify coercion. This may also explain why it seems to be so much easier for the repentant socialist to find a new spiritual home in the conservative fold than in the liberal.
In the last resort, the conservative position rests on the belief that in any society there are recognizably superior persons whose inherited standards and values and position ought to be protected and who should have a greater influence on public affairs than others. The liberal, of course, does not deny that there are some superior people – he is not an egalitarian – bet he denies that anyone has authority to decide who these superior people are. While the conservative inclines to defend a particular established hierarchy and wishes authority to protect the status of those whom he values, the liberal feels that no respect for established values can justify the resort to privilege or monopoly or any other coercive power of the state in order to shelter such people against the forces of economic change. Though he is fully aware of the important role that cultural and intellectual elites have played in the evolution of civilization, he also believes that these elites have to prove themselves by their capacity to maintain their position under the same rules that
apply to all others.
Closely connected with this is the usual attitude of the conservative to democracy. I have made it clear earlier that I do not regard majority rule as an end but merely as a means, or perhaps even as the least evil of those forms of government from which we have to choose. But I believe that the conservatives deceive themselves when they blame the evils of our time on democracy. The chief evil is unlimited government, and nobody is qualified to wield unlimited power. The powers which modern democracy possesses
would be even more intolerable in the hands of some small elite.
Admittedly, it was only when power came into the hands of the majority that further
limitations of the power of government was thought unnecessary. In this sense
democracy and unlimited government are connected. But it is not democracy but
unlimited government that is objectionable, and I do not see why the people should not
learn to limit the scope of majority rule as well as that of any other form of government.
At any rate, the advantages of democracy as a method of peaceful change and of political
education seem to be so great compared with those of any other system that I can have no
sympathy with the antidemocratic strain of conservatism. It is not who governs but what
government is entitled to do that seems to me the essential problem.
That the conservative opposition to too much government control is not a matter of
principle but is concerned with the particular aims of government is clearly shown in the economic sphere. Conservatives usually oppose collectivist and directivist measures in the industrial field, and here the liberals will often find allies in them. But at the same time conservatives are usually protectionists and have frequently supported socialist measures in agriculture. Indeed, though the restrictions which exist today in industry and commerce are mainly the result of socialist views, the equally important restrictions in agriculture were usually introduced by conservatives at an even earlier date. And in their efforts to discredit free enterprise many conservative leaders have vied with the socialists.
4. I have already referred to the differences between conservatism and liberalism in the
purely intellectual field, but I must return to them because the characteristic conservative attitude here not only is a serious weakness of conservatism but tends to harm any cause which allies itself with it. Conservatives feel instinctively that it is new ideas more than anything else that cause change. But, from its point of view rightly, conservatism fears new ideas because it has no distinctive principles of its own to oppose them; and, by its distrust of theory and its lack of imagination concerning anything except that which experience has already proved, it deprives itself of the weapons needed in the struggle of ideas. Unlike liberalism, with its fundamental belief in the long-range power of ideas, conservatism is bound by the stock of ideas inherited at a given time. And since it does not really believe in the power of argument, its last resort is generally a claim to superior wisdom, based on some self-arrogated superior quality.
The difference shows itself most clearly in the different attitudes of the two traditions to the advance of knowledge. Though the liberal certainly does not regard all change as progress, he does regard the advance of knowledge as one of the chief aims of human effort and expects from it the gradual solution of such problems and difficulties as we can hope to solve. Without preferring the new merely because it is new, the liberal is aware that it is of the essence of human achievement that it produces something new; and he is prepared to come to terms with new knowledge, whether he likes its immediate effects or not.
Personally, I find that the most objectionable feature of the conservative attitude is its propensity to reject well-substantiated new knowledge because it dislikes some of the consequences which seem to follow from it – or, to put it bluntly, its obscurantism. I will not deny that scientists as much as others are given to fads and fashions and that we have much reason to be cautious in accepting the conclusions that they draw from their latest theories. But the reasons for our reluctance must themselves be rational and must be kept separate from our regret that the new theories upset our cherished beliefs. I can have little patience with those who oppose, for instance, the theory of evolution or what are called “mechanistic” explanations of the phenomena of life because of certain moral consequences which at first seem to follow from these theories, and still less with those who regard it as irrelevant or impious to ask certain questions at all. By refusing to face the facts, the conservative only weakens his own position. Frequently the conclusions which rationalist presumption draws from new scientific insights do not at all follow from them. But only by actively taking part in the elaboration of the consequences of new discoveries do we learn whether or not they fit into our world picture and, if so, how.
Should our moral beliefs really prove to be dependent on factual assumptions shown to
be incorrect, it would hardly be moral to defend them by refusing to acknowledge facts.
Connected with the conservative distrust if the new and the strange is its hostility to
internationalism and its proneness to a strident nationalism. Here is another source of its weakness in the struggle of ideas. It cannot alter the fact that the ideas which are
changing our civilization respect no boundaries. But refusal to acquaint one’s self with
new ideas merely deprives one of the power of effectively countering them when necessary. The growth of ideas is an international process, and only those who fully take part in the discussion will be able to exercise a significant influence. It is no real argument to say that an idea is un-American, or un-German, nor is a mistaken or vicious ideal better for having been conceived by one of our compatriots.
A great deal more might be said about the close connection between conservatism and
nationalism, but I shall not dwell on this point because it might be felt that my personal position makes me unable to sympathize with any form of nationalism. I will merely add that it is this nationalistic bias which frequently provides the bridge from conservatism to collectivism: to think in terms of “our” industry or resource is only a short step away from demanding that these national assets be directed in the national interest. But in this respect the Continental liberalism which derives from the French Revolution is little better than conservatism. I need hardly say that nationalism of this sort is something very different from patriotism and that an aversion to nationalism is fully compatible with a deep attachment to national traditions. But the fact that I prefer and feel reverence for some of the traditions of my society need not be the cause of hostility to what is strange and different.
Only at first foes it seem paradoxical that the anti-internationalism of conservatism is so frequently associated with imperialism. But the more a person dislikes the strange and thinks his own ways superior, the more he tends to regard it as his mission to “civilize” other – not by the voluntary and unhampered intercourse which the liberal favors, but by bringing them the blessings of efficient government. It is significant that here again we frequently find the conservatives joining hands with the socialists against the liberals – not only in England, where the Webbs and their Fabians were outspoken imperialists, or in Germany, where state socialism and colonial expansionism went together and found the support of the same group of “socialists of the chair,” but also in the United States, where even at the time of the first Roosevelt it could be observed: “the Jingoes and the Social Reformers have gotten together; and have formed a political party, which threatened to capture the Government and use it for their program of Caesaristic paternalism, a danger which now seems to have been averted only by the other parties having adopted their program in a somewhat milder degree and form.”
5. There is one respect, however, in which there is justification for saying that the liberal occupies a position midway between the socialist and the conservative: he is as far from the crude rationalism of the socialist, who wants to reconstruct all social institutions according to a pattern prescribed by his individual reason, as from the mysticism to which the conservative so frequently has to resort. What I have described as the liberal position shares with conservatism a distrust of reason to the extent that the liberal is very much aware that we do not know all the answers and that he is not sure that the answers he has are certainly the rights ones or even that we can find all the answers. He also does not disdain to seek assistance from whatever non-rational institutions or habits have proved their worth. The liberal differs from the conservative in his willingness to face this ignorance and to admit how little we know, without claiming the authority of supernatural forces of knowledge where his reason fails him. It has to be admitted that in some respects the liberal is fundamentally a skeptic – but it seems to require a certain degree of diffidence to let others seek their happiness in their own fashion and to adhere consistently to that tolerance which is an essential characteristic of liberalism.
There is no reason why this need mean an absence of religious belief on the part of the
liberal. Unlike the rationalism of the French Revolution, true liberalism has no quarrel
with religion, and I can only deplore the militant and essentially illiberal antireligionism which animated so much of nineteenth-century Continental liberalism. That this is not essential to liberalism is clearly shown by its English ancestors, the Old Whigs, who, if anything, were much too closely allied with a particular religious belief. What distinguishes the liberal from the conservative here is that, however profound his own spiritual beliefs, he will never regard himself as entitled to impose them on others and that for him the spiritual and the temporal are different sphere which ought not to be confused.
6. What I have said should suffice to explain why I do not regard myself as a
conservative. Many people will feel, however, that the position which emerges is hardly
what they used to call “liberal.” I must, therefore, now face the question of whether this name is today the appropriate name for the party of liberty. I have already indicated that, though I have all my life described myself as a liberal, I have done so recently with increasing misgivings – not only because in the United States this term constantly gives rise to misunderstandings, but also because I have become more and more aware of the great gulf that exists between my position and the rationalistic Continental liberalism or even the English liberalism of the utilitarians.
If liberalism still meant what it meant to an English historian who in 1827 could speak of the revolution of 1688 as “the triumph of those principles which in the language of the present day are denominated liberal or constitutional”  or if one could still, with Lord Acton, speak of Burke, Macaulay, and Gladstone as the three greatest liberals, or if one could still, with Harold Laske, regard Tocqueville and Lord Acton as “the essential liberals of the nineteenth century,” I should indeed be only too proud to describe myself by that name. But, much as I am tempted to call their liberalism true liberalism, I must recognize that the majority of Continental liberals stood for ideas to which these men were strongly opposed, and that they were led more by a desire to impose upon the world a preconceived rational pattern than to provide opportunity for free growth. The same is largely true of what has called itself Liberalism in England at least since the time of Lloyd George.
It is thus necessary to recognize that what I have called “liberalism” has little to do with any political movement that goes under that name today. It is also questionable whether the historical associations which that name carries today are conducive to the success of any movement. Whether in these circumstances one ought to make an effort to rescue the term from what one feels is its misuse is a question on which opinions may well differ. I myself feel more and more that to use it without long explanations causes too much confusion and that as a label it has become more of a ballast than a source of strength.
In the United States, where it has become almost impossible to use “liberal” in the sense in which I have used it, the term “libertarian” has been used instead. It may be theanswer; but for my part I find it singularly unattractive. For my taste it carries too much the flavor of a manufactured term and of a substitute. What I should want is a word which describes the party of life, the party that favors free growth and spontaneous evolution.
But I have racked my brain unsuccessfully to find a descriptive term which commends
7. We should remember, however, that when the ideals which I have been trying to
restate first began to spread through the Western world, the party which represented them had a generally recognized name. It was the ideals of the English Whigs that inspired what later came to be known as the liberal movement in the whole of Europe and that provided the conceptions that the American colonists carried with them and which guided them in their struggle for independence and in the establishment of their constitution.
Indeed, until the character of this tradition was altered by the accretions due to the French Revolution, with its totalitarian democracy and socialist leanings, “Whig” was the name by which the party of liberty was generally known.
The name died in the country of its birth partly because for a time the principles for
which it stood were no longer distinctive of a particular party, and partly because the men who bore the name did not remain true to those principles. The Whig parties of the
nineteenth century, in both Britain and the United States, finally brought discredit to the name among the radicals. But it is still true that, since liberalism took the place of Whiggism only after the movement for liberty had absorbed the crude and militant
rationalism of the French Revolution, and since our task must largely be to free that
tradition from the overrationalistic, nationalistic, and socialistic influences which have intruded into it, Whiggism is historically the correct name for the ideas in which I believe. The more I learn about the evolution of ideas, the more I have become aware that I am simply an unrepentant Old Whig – with the stress on the “old.”
To confess one’s self as an Old Whig does not mean, of course, that one wants to go back
to where we were at the end of the seventeenth century. It has been one of the purposes of this book to show that the doctrines then first stated continued to grow and develop until about seventy or eighty years ago, even though they were no longer the chief aim of a distinct party. We have since learned much that should enable us to restate them in a more satisfactory and effective form. But, though they require restatement in the light of our present knowledge, the basic principles are still those of the Old Whigs. True, the later history of the party that bore that name has made some historians doubt where there was a distinct body of Whig principles; but I can but agree with Lord Acton that, though some of “the patriarchs of the doctrine were the most infamous of men, the notion of a higher law above municipal codes, with which Whiggism began, is the supreme
achievement of Englishmen and their bequest to the nation” – and, we may add, to the
world. It is the doctrine which is at the basis of the common tradition of the Anglo-Saxon countries. It is the doctrine from which Continental liberalism took what is valuable in it.
It is the doctrine on which the American system of government is based. In its pure form
it is represented in the United States, not by the radicalism of Jefferson, nor by the
conservatism of Hamilton or even of John Adams, but by the ideas of James Madison, the
“father of the Constitution.”
I do not know whether to revive that old name is practical politics. That to the mass of
people, both in the Anglo-Saxon world and elsewhere, it is today probably a term without
definite associations is perhaps more an advantage than a drawback. To those familiar
with the history of ideas it is probably the only name that quite expresses what the
tradition means. That, both for the genuine conservative and still more for the many
socialists turned conservative, Whiggism is the name for their pet aversion shows a sound instinct on their part. It has been the name for the only set of ideals that has consistently opposed all arbitrary power.
8. It may well be asked whether the name really matters so much. In a country like the
United States, which on the whole has free institutions and where, therefore, the defense of the existing is often a defense of freedom, it might not make so much difference if the defenders of freedom call themselves conservatives, although even here the association with the conservatives by disposition will often be embarrassing. Even when men approve of the same arrangements, it must be asked whether they approve of them because they exist or because they are desirable in themselves. The common resistance to the collectivist tide should not be allowed to obscure the fact that the belief in integral freedom is based on an essentially forward-looking attitude and not on any nostalgic longing for the past or a romantic admiration for what has been.
The need for a clear distinction is absolutely imperative, however, where, as is true in
many parts of Europe, the conservatives have already accepted a large part of the
collectivist creed – a creed that has governed policy for so long that many of its
institutions have come to be accepted as a matter of course and have become a source of
pride to “conservative” parties who created them. Here the believer in freedom
cannot but conflict with the conservative and take an essentially radical position, directed against popular prejudices, entrenched positions, and firmly established privileges.
Follies and abuses are no better for having long been established principles of folly.
Though quieta non movere may at times be a wise maxim for the statesman it cannot
satisfy the political philosopher. He may wish policy to proceed gingerly and not before
public opinion is prepared to support it, but he cannot accept arrangements merely
because current opinion sanctions them. In a world where the chief need is once more, as
it was at the beginning of the nineteenth century, to free the process of spontaneous
growth from the obstacles and encumbrances that human folly has erected, his hopes
must rest on persuading and gaining the support of those who by disposition are
“progressives,” those who, though they may now be seeking change in the wrong
direction, are at least willing to examine critically the existing and to change it wherever necessary.
I hope I have not misled the reader by occasionally speaking of “party” when I was
thinking of groups of men defending a set of intellectual and moral principles. Party
politics of any one country has not been the concern of this book. The question of how
the principles I have tried to reconstruct by piecing together the broken fragments of a
tradition can be translated into a program with mass appeal, the political philosopher
must leave to “that insidious and crafty animal, vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs.” The task of the political philosopher can only be to influence public opinion, not to organize people for action. He will do so effectively only if he is not concerned with what is now politically possible but consistently defends the “general principles which are always the same.” In this sense I doubt whether there can be such a thing as a conservative political philosophy. Conservatism may often be a useful practical maxim, but it does not give us any guiding principles which can influence long-range developments.
The quotation at the head of the Postscript is taken from Acton, Hist. of Freedom, p. 1.
1. This has now been true for over a century, and as early as 1855 J. S. Mill could say
(see my John Stuart Mill and Harriet Taylor [London and Chicago, 1951], p. 216) that
“almost all the projects of social reformers of these days are really liberticide.”
2. B. Crick, “The Strange Quest for an American Conservatism,” Review of Politics,
XVII (1955), 365, says rightly that “the normal American who calls himself ‘A
Conservative’ is, in fact, a liberal.” It would appear that the reluctance of these
conservatives to call themselves by the more appropriate name dates only from its abuse
during the New Deal era.
3. The expression is that of R. G. Collingwood, The New Leviathan (Oxford: Oxford
University Press, 1942), p. 209.
4. Cf. the characteristic choice of this title for the programmatic book by the present
British Prime Minister Harold Macmillan, The Middle Way (London, 1938).
5. Cf. Lord Hugh Cecil, Conservatism (“Home University Library” [London, 1912], p. 9:
“Natural Conservatism . . . is a disposition averse from change; and it springs partly from
a distrust of the unknown.”
6. Cf. the revealing self-description of a conservative in K. Feiling, Sketches in
Nineteenth Century Biography (London, 1930), p. 174: “Taken in bulk, the Right have a
horror of ideas, for is not the practical man, in Disraeli’s words, ‘one who practices the blunders of his predecessors’? For long tracts of their history they have indiscriminately resisted improvement, and in claiming to reverence their ancestors often reduce opinion to aged individual prejudice. Their position becomes safer, but more complex, when we add that this Right wing is incessantly overtaking the Left; that it lives by repeated inoculation of liberal ideas, and thus suffers from a never-perfected state of compromise.”
7. I trust I shall be forgiven for repeating here the words in which on an earlier occasion I stated an important point: “The main merit of the individualism which [Adam Smith] and his contemporaries advocated is that it is a system under which bad men can do least harm. It is a social system which does not depend for its functioning on our finding good men for running it, or on all men becoming better than they now are, but which makes use of men in all their given variety and complexity, sometimes good and sometimes bad, sometimes intelligent and more often stupid.” (Individualism and Economic Order
[London and Chicago, 1948], p. 11).
8. Cf. Lord Acton in Letters of Lord Acton to Mary Gladstone, ed. H. Paul (London,
1913), p. 73: “The danger is not that a particular class is unfit to govern. Every class is unfit to govern. The law of liberty tends to abolish the reign of race over race, of faith over faith, of class over class.”
9. J. R. Hicks has rightly spoken in this connection of the “caricature drawn alike by the young Disraeli, by Marx and by Goebbels” (“The Pursuit of Economic Freedom,” What
We Defend, ed. E. F. Jacob [Oxford: Oxford University Press, 1942], p. 96). On the role
of the conservatives in this connection see also my Introduction to Capitalism and the
Historians (Chicago: University of Chicago Press, 1954), pp. 19 ff.
10. Cf. J. S. Mill, On Liberty, ed. R. B. McCallum (Oxford, 1946), p. 83: “I am not aware that any community has a right to force another to be civilised.”
11. J. W. Burgess, The Reconciliation of Government with Liberty (New York, 1915), p.
12. Cf. Learned Hand, The Spirit of Liberty, ed. I. Dilliard (New York, 1952), p. 190:
“The Spirit of liberty is the spirit which is not too sure that it is right.” See also Oliver
Cromwell’s often quoted statement is his Letter to the Assembly of the Church of
Scotland, August 3, 1650: “I beseech you, in the bowels of Christ, think it possible you
may be mistaken.” It is significant that this should be the probably best-remembered
saying of the only “dictator” in British history!
13. H. Hallam, Constitutional History (1827) (“Everyman” ed.), III, 90. It is often
suggested that the term “liberal” derives from the early nineteenth-century Spanish party of the liberales. I am more inclined to believe that it derives from the use of that term by Adam Smith in such passages as W.o.N., II, 41: “the liberal system of free exportation and free importation” and p. 216: “allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty, and justice.”
14. Lord Acton in Letters to Mary Gladstone, p. 44. Cf. also his judgment of Tocqueville
in Lectures on the French Revolution (London, 1910), p. 357: “Tocqueville was a Liberal
of the purest breed – a Liberal and nothing else, deeply suspicious of democracy and its
kindred, equality, centralisation, and utilitarianism.” Similarly in the Nineteenth Century, XXXIII (1892), 885. The statement by H. J. Laski occurs in “Alexis de Tocqueville and Democracy,” in The Social and Political Ideas of Some Representative Thinkers of the Victorian Age, ed. F. J. C. Hearnshaw (London, 1933), p. 100, where he says that “a case of unanswerable power could, I think, be made out for the view that he [Tocqueville] and Lord Acton were the essential liberals of the nineteenth century.”
15. As early as the beginning of the eighteenth century, an English observer could remark that he “scarce ever knew a foreigner settled in England, whether of Dutch, German, French, Italian, or Turkish growth, but became a Whig in a little time after his mixing with us” (quoted by G. H. Guttridge, English Whiggism and the American Revolution [Berkeley: University of California Press, 1942], p. 3).
16. In the United States the nineteenth-century use of the term “Whig” has unfortunately
obliterated the memory of the fact that in the eighteenth it stood for the principles which guided the revolution, gained independence, and shaped the Constitution. It was in Whig societies that the young James Madison and John Adams developed their political ideals (cf. E. M. Burns, James Madison [New Brunnswick, N.J.; Rutgers University Press,
1938], p. 4); it was Whig principles which, as Jefferson tells us, guided all the lawyers who constituted such a strong majority among the signers of the Declaration of
Independence and among the members of the Constitutional Convention (see Writings of
Thomas Jefferson [“Memorial ed.” (Washington, 1905)], XVI, 156). The profession of
Whig principles was carried to such a point that even Washington’s soldiers were clad in
the traditional “blue and buff” colors of the Whigs, which they shared with the Foxites in the British Parliament and which was preserved down to our days on the covers of the
Edinburgh Review. If a socialist generation has made Whiggism its favorite target, this is all the more reason for the opponents of socialism to vindicate its name. It is today the only name which correctly desribes the beliefs of the Gladstonian liberals, of the men of the generation of Maitland, Acton, and Bryce, and the last generation for whom liberty rather than equality or democracy was the main goal.
17. Lord Acton, Lectures on Modern History (London, 1906), p. 218 (I have slightly
rearranged Acton’s clauses to reproduce briefly the sense of his statement).
18. Cf. S. K. Padover in his Introduction to The Complete Madison (New York, 1953), p.
10: “In modern terminology, Madison would be labeled a middle-of-the-road liberal and
Jefferson a radical.” This is true and important, though we must remember what E. S.
Corwin (“James Madison: Layman, Publicist, and Exegete,” New York University Law
Review, XXVII , 285) has called Madison’s later “surrender to the overwhelming
influence of Jefferson.”
19. Cf. the British Conservative party’s statement of policy, The Right Road for Britain
(London, 1950), pp. 41-42, which claims, with considerable justification, that “this new
conception [of the social services] was developed [by] the Coalition Government with a
majority of Conservative Ministers and the full approval of the Conservative majority in
the House of Commons . . . [We] set out the principle for the schemes of pensions,
sickness and unemployment benefit, industrial injustices benefit and a national health
20. A Smith, W.o.N., I, 432.
So, the GOP must be in REAL trouble with the young vote if Politico says the report is scathing. As most know, Politico has a Republican bent to its editorials and reporting.
Here’s my assessment. It’s a little long, but bear with me.
I’m a registered Democrat but consider myself fairly moderate. After California changed its primary rules to allow open primary voting, I considered changing my voting status to Independent. But no more. If anything, the modern, conservative movement GOP has caused me to become even more assuredly Democratic in my voting. As an older Boomer, I’ve witnessed the changes in both parties over many decades. But the change in the Republican Party has been so dramatic, and so negative that I no longer trust Republican candidates. And that’s a shame.
Throughout the 50s to early ’80s, Republicans could be counted upon to strong but sensible on defense and rationally conservative on spending. They believed in balanced budgets and taxing at required levels to pay for what was being spent. As a result, spending was controlled because no one really wants higher taxes. (The national credit card hadn’t been invented by latter GOP politicians.) And they had lots of ideas to strengthen the middle class as well as move lower income groups out of poverty.
Mind you, when I was growing up the majority of Republicans were either Eisenhower or Rockefeller Republican who grew up during the Great Depression and fought with everyone else during WWII. Many of that era’s leaders had a wholly different take on economics: they saw America, albeit of diverse background and religions, as one people striving to achieve the fabled American dream of success via education and economic opportunities…which is one reason why they continued to control Wall St’s penchant for unbridled peculation that caused the Great Depression. In their minds, as a result of their experiences during WWII, they concluded that we are all in this together. Moreover, honor, honesty, dignity and integrity really meant something to them.
I remember watching the Watergate hearings during which the only senator that grabbed my attention…and my praise…was Republican Senator Howard Baker from Tennessee. He exhibited all the honorable values and integrity I had come to expect, from my civics education and my youth as a military brat, from members of the Senate. Partisanship seemed not to enter his mind; only seeking the truth.
Following the Goldwater rout in ’64, an extremely conservative, religious, libertarian segment of the Republican Party made a concerted push to take over control of the Party. That segment, from Southern state conservative immigrants to Orange County, California, worked hard to execute an all out campaign to take over the GOP. Both Nixon and Reagan fostered that movement to increase their electoral opportunities until their Republican Party take over was complete.
What Nixon and Reagan began and fostered, as a politically advantageous counter to the Civil Rights and Women’s Rights movements, unleashed a backlash against both government and large segments of the population. Prior to Reagan, most people did not hold the federal government in total distain. Except for a somewhat minor loss of presidential, executive prestige caused by Nixon’s paranoia, from which the federal government recovered nicely throughout Ford’s and Carter’s administrations, the federal government generally was held in high regard.
It took Reagan telling Americans that the federal government couldn’t be trusted…and all of his and Nixon’s old staff to convince conservative and Moral Majority religious Americans to hate the federal government as well as state, county, and city governments. In fact, they unknowingly advanced hatred any government whatsoever at all levels…and thus advanced the libertarian utopian idealism espoused by the Cato Institute.
The Republican Party used to be a party of middle class concerned ideas, i.e., protecting the middle class while helping lower classes enter the middle class, rather than a party that strictly protected the most wealthy in the nation. Eisenhower and Rockefeller Republicans, perhaps because of their WWII experiences, understood that a rising middle class was the secret to American economic success. They lived through the Great Depression and some even remembered via their parents TR’s era. As a result, their policies advanced long term capital investment (five plus years) while penalizing short-term investment gains; strict control of investment vehicles to prevent dangerous speculation; and corporate investment in product and business expansion as well as R&D over short-term stock yields.
For all the racial, religious, ethnic and gender discrimination, Republicans of ’50s through the early ’70s and even some into the early ’80s believed in the party of Lincoln. The party of opportunity even when it meant expanding federal welfare as well as the kind of fiscal responsibility that meant paying for what you spend. In truth, those older, fiscally responsible Republicans held down spending by simply making clear that increased spending meant higher taxes now…not somewhere down the road as our modern GOP chose to exhibit during the GW Bush Administration.
Regardless, the 1980s changed everything.
Modern generation Republicans have forgotten – or never learned – what their parents and grandparents learned. Even those skeptical of the federal government, Southern conservatives who immigrated to So. California during the Dust Bowl and those who stayed in their states eventually came around to asking the federal government for help, as Ken Burns’ documentary on the Depression and Dust Bowl illuminates. After many years of denying federal help, Southern and Midwestern farmers finally gave in, pleaing for federal help. It was the federal government that helped Southern state immigrant families in the West when they found themselves being exploited and Southern farmers who discovered modern federal farm policies could help them save their lands.
When WWII occurred, everyone, rich or poor alike, joined up and served together. Those vets learned about each other – from every sort of community and neighborhood, rich and poor alike – and out of that conflict arose Eisenhower and Rockefeller Republicans. Not unlike their Republican ancestors nearly 80 years before, they sought a better, fairer America in which anyone could succeed if given the opportunity.
Although racism continued, the barriers began to break down. First with Jews and then with Catholics. Finally, as a result of WWII, the barriers along color lines began to break down even as many Southerners refused to permit that breakdown. With Nixon’s Southern Strategy…and Reagan’s expansion of it…racist Democrats (Dixiecrats) shifted from the Democratic party to the Republican. But that wasn’t the only change that occurred.
Unlike 20th century generations, in which everyone, regardless of wealth or class, was expected to participate, we now have a military comprised mostly of poor or lower income people. Richer, upper income people refuse to serve. It’s not the first time in American history that the most-wealthy refused to serve, but that circumstance is new since the dawn of the 20th Century.
As the nation has grown, the separation of income status and communities has become even more stark, becoming a barrier to public unity. I see it all the time in my small, conservative rural community where community involvement and concern for the commons (local businesses, economic development, charities, and involvement in local activities) exists at nearly negligible levels. There is an attitude that says, “It’s not my problem, and I don’t care. Let someone else do it.” Yet, in communities of comparable size with a more liberal bent where I lived, community events volunteers were turned away as a result of the too many volunteers…and community events were packed with resident participation.
I grew up in a military household who voted Republican. I became a Democrat because of Civil Rights and the ERA. I believe in fairness and charity as practiced by government because of the lessons I was taught in Sunday School in Georgia as a small child. “God loves all the little children. All the children of the World. Black and White, Yellow and Red, all the children of the World.” Scripture is not much clearer than those words as I remember them.
There is a lot conservatives could do to put forth policies that seek better results than those proposed by old fashioned Democrats. But they don’t. They seek only to protect the plutocrats even if doing so destroys America’s ability to compete and succeed in the 21st Century.
The US is not Russia, ruled by a corrupt oligarchy whose only concern is their own wealth and power. The US is better than Russia. It always has been…and it always should be. The US should be the land of opportunity for everyone that Lincoln envisioned.
A few – very few – Republican reformers and pundits get it, but they’ve a very hard uphill climb against those Republicans who seek to return to the 1870s or 1890s or 1950s. As Austrian economist Hayek stated in Chicago, he was a classical liberal because liberals looked to the future while conservatives looked back at the past for answers.
The following article is quite possibly one of the best explanations of Keynesian vs classical economics I’ve ever read.
Why Debunking The Austerity Paper Won’t Kill Austerity — And What Actually Could
By Ruy Teixeira, Guest Blogger on ThinkProgress
Yesterday on TP Ideas Zack Beauchamp covered the release of new research showing that a key paper used to justify austerity in a time of economic crisis is so empirically flawed as to be rendered useless as a guide to policy. That paper, by Carmen Reinhart and Kenneth Rogoff, purported to show that countries that cross a 90 percent debt to GDP ratio sustain a big hit to economic growth. Turns out the data were analyzed incorrectly and the alleged relationship does not exist. Out the window goes one of the main intellectual justifications for the current hysteria about bringing down the national debt.
Zack focused on exposing the foibles of journalists who take as gospel studies like Reinhart-Rogoff based on methodology they don’t understand and data they know nothing about. That is indeed a problem and his post does a service by concentrating on it.
I’ll take a different tack here and focus on the idea of austerity. The theory that slashing deficits can revive slumping economies has been a dominant economic theory since the late 18th century and the rise of classical economics. But its claim to be a policy elixir has never been grounded in strong empirical evidence. That is why, despite this serious hit to the academic case for austerity, we should not expect austerity’s vice grip on policy to weaken very soon or very easily.
The theory behind the austerity idea is as follows. Classical economists believed that the overall economy tended toward a full employment equilibrium where all resources were productively employed. While this equilibrium could be temporarily disturbed by wage and price rigidities, misguided monetary policies and other things that distorted the market, the economy would quickly return to a full employment equilibrium once these distortions were eased. The role for government in responding to recession was therefore to do nothing, letting prices and wages fall to their natural levels or, even better, to do less, since government spending simply crowds out the private spending necessary to get the economy back into equilibrium. That is why, prior to Keynes, the orthodox budgetary approach to recessions was to cut, not increase, government spending so as to create the proper business environment and hasten the arrival of a new equilibrium.
Keynes didn’t buy all this, seeing it as inconsistent with the behavior of real world economies, especially the ones he was observing at the time. In his view, the normal state of capitalist economies was not full employment because total demand in the economy could easily fall short of total supply, creating equilibria with high levels of unemployment — the reverse of the classical precept (Say’s Law) that supply creates its own demand. A shortfall of demand could arise, for example, when consumers and investors start to prefer holding cash to spending and investing.
Another reason for a shortfall of demand, according to Keynes, was the instability of investment, the non-consumption part of demand. Investment was unstable because businesses’ expectations fluctuated depending on their assessments of future possibilities for profit which, in turn, were intrinsically uncertain. Classical economists, in contrast, believed businesses precisely understood their statistical probabilities of success and invested accordingly. Keynes rejected this view and insisted that uncertainty was pervasive.
Given shortfalls in demand, only the “animal spirits” of capitalists — confidence and the lack thereof — allowed capitalists to forge ahead (or not) in poor business conditions and were therefore a huge influence on their investment decisions. And if capitalists lacked confidence in their ability to make profits they would seek to reduce costs by laying off workers, thereby reducing demand in the economy and further eroding business confidence. The process of lowering output, employment and confidence would continue until a new equilibrium was reached — an “under-employment equilibrium” rather than the full employment equilibrium of the classical economists.
Keynes argued that because these equilibria were a natural and recurring tendency of capitalism, there was no natural adjustment process that would lead a market economy back to full employment. Nor could monetary policy mechanisms, like lowering interest rates or increasing the money supply, always be relied upon to jolt businesses back into action and increase employment. Instead, government must frequently step in to make up shortfalls in demand through fiscal policy — in other words, through government spending.
This was a powerful idea and powerfully backed up as well by the empirical record. Its influence spread rapidly. As Mark Blaug, perhaps the leading historian of economic thought, remarks “[N]ever before had the economics profession been won over so rapidly and so massively to a new economic theory, nor has it since. Within the space of about a decade, 1936-46, the vast majority of economists in the Western world were converted to the Keynesian way of thinking.” This “Keynesian consensus” underpinned economic policy-making until the 1970s.
But the austerity idea never really went away as Mark Blyth shows in his excellent new book Austerity: The History of a Dangerous Idea (soon to be the subject of a TP Ideas book symposium!). It came roaring back in the 1970’s when Keynesian economics appeared to falter, dominated economic thinking for the decades leading up to Great Financial Crisis and then, after a very brief resurgence of Keynesian economics in 2008-2010, is back again (see this great paper by Henry Farrell and John Quiggin for a blow by blow of how this happened), suffusing our economic conversation with the “expansionary fiscal austerity” chimera — the idea that the way out of an economic slump is to cut spending which will lead to rising business confidence, more investment and strong growth.
It ain’t working and, truth be told, it’s never worked. As Larry Summers put it a review of Blyth’s book in the Financial Times:
In many cases, the idea of expansionary fiscal contraction is not just oxymoronic but plain moronic as well. Blyth’s views on the current situation are also cogent. As he argues, the accumulation of debt by the public sector throughout the industrial world has far more to do with the direct and indirect effects of financial distress than it does with government profligacy. Indeed, countries such as Ireland and Spain had more favourable records of government debt accumulation than even Germany before the crisis.
The author makes a strong case that at times such as the present, austerity can actually be self-defeating in that its adverse effects on growth exceed any direct benefits from reduced borrowing. This is nowhere better illustrated than in the UK, where extraordinary austerity has been coupled with a rapid rise in the debt-to-GDP ratio.
So how can we defeat a powerful idea like austerity given its remarkable ability to persist across time in spite of abundant empirical evidence that it just doesn’t work? The only answer is another powerful idea; just undermining the austerity idea empirically isn’t going to do the job.
Indeed, the entire history of austerity is a testament to the amazing power of ideas. It is a lesson that progressives, focused as we tend to be on the pragmatic, day-to-day struggle, should take to heart.
Conor Friedersdorf has a great editorial over at the Atlantic on California’s political and economic situation. As a Democrat (mostly because I’m too lazy to change my registration to Independent) and as someone who PEW described in a study as a liberal, I agree with most of what he wrote about California. Yet, for all that I enjoy Freidersdorf’s editorials, I think he fails because of his libertarian bent and his understanding of history.
As a few examples of why I agree with Friedersdorf’s editorial, I submit these examples:
Regarding the citizen approved non-partisan redistricting committee, I was absolutely outraged by Democratic party attempts to con, manipulate and impede the independent redistricting committee. It was wrong, immoral and highly unethical. I gather from later news reports that it failed; at least I hope so. No seat should be safe for a party or a legislator through redistricting. All people, regardless of partisan or political views, need to be represented fairly.
Moreover, I voted for Prop 5 and thus against the 3-strikes law for the reasons Freidserdorf stated: its economically wasteful as well as unreasonably harsh. Even Superior Court Judges have stated that the 3-strikes law forces penalties, in terms of prison sentences, that are excessive considering the crimes. But California’s prison system was mostly sold off private prison corporations. Thus, private profit motives nearly preclude any sensible changes like rehab, community monitoring, and ankle bracelet monitors for drug and minor infractions. If California enacted the same kind of reform that Texas did to save money, our prison costs would drop dramatically while leaving plenty of room in our prison system for hardened criminals. I have a few thoughts on them as well: like required real, prison fiscally sustaining work, job training and education rather than inmates spending time weight lifting and body building. For example…and this is my bias…ditch the gyms and create sustainable food gardens.
As for the pension funds, I’d like to see state employees given salaries comparable to private industry for that specific job and then have the employees make defined contributions to CALPers. I’d recommend, too, that CALPers investigate/study pulling the funds out of Wall St. firms to create it’s own investment bank where it loaned money to businesses and bought state infrastructure bonds for a reasonable return, a la ND’s state bank.
If state employees no longer need taxpayer funds, as a result of employee only investments and a CALPers investment bank, then taxpayers would be off the hook for employee pension funds, which would make CALPers and state employees more responsible for their own retirement management.
I also believe state workers should not receive retirement benefits until they meet the Social Security retirement age. My brother, who worked really hard and rarely had a day off for the State as a Budget Analyst, retired at 50 with a really good retirement pension as well as a large payout for all the accumulative vacation time he never took. He’s not worked a day since he retired because he didn’t have to…and he’s living quite comfortably as are all retired state workers who retired long before Social Security retirement ages. That’s absurd.
California’s public employee retirement benefits should match the Social Security retirement age. Another point of my agreement with Friedersdorf is teacher tenure. I hate it.
I had a couple of those bad teachers who ended up being a wasting my time and taught me nothing. I’d scrape tenure altogether along with the entire Civil Service System. Both systems exist because of outdated and disproved social psychology thinking from many decades ago (the 30s or 40s?) in which it was believed that if employees didn’t have to worry about being fired, they would do a better job. We now that is wrong.
The fear of being fired provides the additional incentive to work harder and be more productive while complete protection encourages laziness.
California should lead the nation in determining best practices based on recent research, private industry models and what are the best incentives for employees. Research is needed and should be done but in the short term both tenure and Civil Service guarantees should be eliminated. No more working hard until tenure or civil service employment guarantees occur to then become lazy workers as my mother discovered amongst many of her coworkers after she went to work for the State. All workers should be held to private industry best practices standards. Period.
Where is disagree with Friedersdorf are those areas which he exhibits a seemingly youthful naiveté.
Unlike Friedersdorf, I unfortunately don’t have much faith in California Republicans either to deal with California’s real problems of fiscal solvency and rebuilding the state back to the vibrant, thriving state I remember it being when my family returned to CA in 1959.
Admittedly, the state’s proposition ability has made fiscal constraint and budgeting sense much harder, allowing emotional appeals on spending while leading citizens to believe there is no financial penalty to that spending. In the very same election year, I’ve seen propositions approved by citizens that both increased spending while at the same time demanding higher restraints on taxes.
Californians, like the rest of nation over the last 30 some years, came to believe that spending and taxes were disconnected; deficits didn’t matter and a magical belief in growth (i.e., dynamic scoring) would solve all fiscal problems.
Does any company determine its spending based upon what might happen in a year or three or five years? No, they take a hard look at their market and, if they’re smart, make a strategic decision on where to spend their money. They don’t make fiscal decisions based on magical market predictions, which is exactly what Republicans across the country, and most specifically in Congress, now demand. Dynamic scoring, which the GOP pushes, is a lie based on an unproven economic myth of unknown growth. Yes, budgeting for an entire year is hard to do when no one knows what the future will bring which is why the most accurate numbers and predictions must be available.
That is why the California proposition system must to be reformed to bring some reality to it. Overall, the idea that you can get something for nothing, based on magical growth numbers, has caused much of the state’s fiscal problems. And very liberal Democrats have added to this fantasy along with their Republican fellows who said tax cuts were all that was needed to fix the state’s fiscal woes. Hidden accounts or lock boxed accounts no longer make any fiscal sense. Our Legislature must be free, regardless of voter propositions, to make economically fiscal sense of all money flowing into the state and end those that no longer are fiscally appropriate or feasible or necessary.
Right now, I’m praying the State’s Democratic majority will become more fiscally responsible and demand real, true accounting and be willing to say to the citizens that if voters want more spending, it’s going to mean higher taxes. But I don’t have much hope.
As a result of term limits, few if any legislators understand the budget or the budget process which means that few if any candidates understand the budget and all the hidden accounts. As has been noted in numerous news accounts, legislators now rely upon bureaucrats and lobbyists to teach them about the budget and often to write budget legislation. Our California legislators no longer have the knowledge they need to perform their job, and just about the time they begin to understand it, they’re termed limited out for another neophyte. Nevertheless, California citizens seem to getting that message…slowly.
As studies have begun to show, Californians are beginning to realize that our enormous number of propositions and gerrymandered districts caused legislative problems that have accumulated over the last 30 some years which led our state’s fiscal problems.
But California will never be able to resolve its fiscal problems until the state – and by extension the entire country – ends its reliance on special interest election funding, whether that funding comes from teacher and prison guard unions or from corporations or from other groups whose ideology has been totally debunked by mainstream economics. Citizens United and the whole notion of SuperPacs and lobbying dollars for all special interest groups must be overturned and made illegal.
TR described in his autobiography how a system of campaign financing, which closely resembles that which now exists, corrupted the political system during his early political career and before. He described it quite eloquently in his autobiography and showed examples of how it corrupted the public good. Right now, we are right back to where TR looked onto the political system and saw massive corruption on both sides of the political aisle. Nothing can be accomplished to reform our political process nationally or within California until well-funded special interests are barred from elections and lobbying.
Perhaps Freidersdorf fails to understand the special interest money that historically has led to the state’s fiscal dysfunction, but I’m old enough to have learned the history of it…and it ain’t pretty regardless of whichever side of the aisle you choose.
I object to many of the points in this article published by the American Conservative Magazine…and many of its comments.
According to PEW, I’m a liberal. However, I do not believe in taxing hospitals and providers at extraordinarily (75%!) high levels as the American Conservative article claims all liberals want. Nor do I believe in making all doctors/practitioners state workers. I find these notions shocking and antithetical to our democratic principles. In addition, I do not agree that liberals want someone else to pay for our health care needs. All of my liberal, Democratic friends agree with me on these points. Conservative talking points about what liberals and Democrats is long out of date, thus making them no longer relevant.
I agree that more money should and could be put into health cure research. Curing diseases, as in eliminating them, does bring down cost of health care. However, contrary to what some people posted in the comments section, the fed government via the NIH has provided much of the needed funding for basic research. Health care companies, in general, have reduced their R&D budgets by billions as more me-too drugs and generics hit the market which means the NIH grants become all the more important. I realize this flies in the face of the oxymoronic notion that government cannot do anything right. Would those thinking this way say the same about the DoD and DARPA over the last 30-plus years? Tremendous research is being carried out all across the country by leading research labs and universities as a result of NIH and allied federal research institutes’ funding.
Third, regarding costs. When people talk about how much cheaper it was to get medical care back in the ’50s they fail to note how much medical care has changed since the ’50s. Technologically driven advances drove much of the increased costs. Comparing 1950s medicine to today is like comparing the Model T to today’s automobile. Ain’t gonna work! It’s why a comparison of the 1950s costs to today are totally worthless at best and deceptively ignorant at worst. By the way, health insurance was instituted by companies, as an employee recruitment draw, during WWII. You know, back in the early ‘40s. So, the ‘50s argument about costs is ludicrous on its face as most large companies already offered health insurance to their employees.
The author correctly states in his analysis that hospitals shift cost losses from ERs to all other areas of the hospital. If hospitals failed to do so, they’d go broke rapidly since EMTLA (since Reagan signed the law, hospitals cannot deny treatment to anyone without insurance, regardless of ability to pay cash) is the law for the land. Thus, ERs have become loss leaders even while being necessary as public/community services. But the medical establishment, in conjunction with politicians, has divided up hospital territories upon which, all too often, none shall intervene.
But more to the point is that medical costs are opaque. Even when you ask about costs, most of the time you cannot get an answer. Either the provider refuses to give an answer or says that different insurance negotiating policies provide different pricing so they cannot/will not provide you an answer regarding pricing. In Taiwan, which has a single payer system and a private practitioner system, all prices of all the different providers are printed and posted in every provider’s office so patients can see the prices and can make their decisions accordingly. We don’t have that same transparency here in the US. How can you know you’re getting the best bang for the buck if pricing and comparative quality remain a mystery?
In addition, regardless of emergency needs, how many of us are capable of telling our doctors, “Sorry, I don’t want to do that test you demand I take or take that expensive medicine you prescribe”? Medical care is not like buying shoes or cars, regardless of the libertarian arguments simply because health care consumers – patients – understand they are not medical experts. If the doctor says do x, y, and z, we tend to do it because we believe the doctor is the expert and knows best. And all too often, as I’ve discovered, when you argue with the doctor, he angrily pulls the argument that he’s the professional and you’re not…do it or else! Free financial markets, to work correctly, depend upon access by all to the same information. That doesn’t occur all too often, and most particularly does not occur in the health care market because we’re not all equal experts in health care.
In addition, current regulations preclude the ability of Medicare from negotiating RX prices which means this country subsidizes other countries. We in the US essentially pay higher costs so those other countries can obtain lower prices. As a free market advocate, I object to that subsidy to other countries.
Finally, let me say that I and my liberal friends look forward to the day when health insurance is completely separated from the current employer based system to one that enables a group of like minded individuals to buy insurance on an exchange at market competitive prices. We recognize, as realists, that health insurance is not going away…it’s been around too long and has a huge hold in the mindset of too many people as an appropriate way to spread costs a la all other insurance policies. In addition, many of us liberals hope that once the exchanges are up and working well, a la Reihan Salam, that Medicaid, Medicare and VA outpatient systems can be moved into that singular system similar to Switzerland which spends approximately 11% compared to our almost 18% (17.9% in 2012). Currently, our health care systems are so fragmented that the most needy in those systems cause the highest cost. Moving everyone into the same system spreads the cost across a greater market – which the rest of the insurance market essentially does – to decrease costs for any individual or family.
Further, it should be noted that PPACA, aka Obamacare, does go a long way to fund pilot projects that looks at other health care funding models. Some 27 provisions in the PPACA legislation provide state approved or organizationally approved experimental models. The goal of these 27 provisions is to determine what works to provide the best heath outcomes at the best prices. Many of them are showing such remarkable results that large private companies like Boeing have signed up for.
For the libertarians out there, might I remind you of two things: 1) Friedrich Hayek said he was not a conservative because conservatives look to the past while he looked to the future, and, second, that he believed it was necessary and vital to provide a strong social safety net, including national health care, as societal goods because they promoted social and political stability.
What I believe most conservatives, including many social scientists like Prof. Heidt who claims to lean liberal, get wrong is that modern, post-Clinton Democrats are not adverse to capitalism but rather see the difference between laissez-faire capitalism which never worked for the masses (see Adam Smith, the Irish Famine & British Parliamentary history, early 1900s in the US, Robber Barons, Progressive Movement, TR’s autobiography) and long held Jeffersonian – Jacksonian values of opportunity regardless of the social and economic class into which one was born and regardless of race or ethnicity or wealth. What we liberals don’t demand is equality of outcomes, but rather equity of beginnings, i.e. education.
As a result of our modern belief system, liberals want a medical care delivery system that is fair to all providers while using the best technology and gathered data available to lower delivery system costs including using data from other OECD countries.
Rather than being ideological, we seek pragmatic answers to our modern challenges. Can today’s GOP and its libertarian allies say the same?