America No Longer a Free Country

The tipping point for freedom versus servitude is necessarily vague. Certainly, if we depend on the state for our livelihood, we cannot choose an alternative and so are not free. If James Turk's claim that 58% of Americans depend on some level of government for their livelihood is true, that means that the majority are no longer free. It is no longer a matter of choice as to how we make our living. Like slaves, the majority are compelled to live and die at the behest of masters.

Community and Progressivism

Progressivism expressed the moral impulse of social Gospel Christianity and Populism as well as the social democratic ideas that late nineteenth century American university students brought home from the University of Berlin and other German universities. But the intent of morality is not the same as its execution. We can try to improve a bridge, but if the new bridge does not stand, then we have not helped. Moral action requires efficacy.

Progressivism emphasized large scale. In urban redevelopment, Robert Moses built roads, beaches, highways and public housing, but disregarded the effects on neighborhoods and personal networks within them. Jane Jacobs dissected his work on the Cross Bronx Expressway and New York City's public housing projects in her book Death and Life of Great American Cities. Progressivism aimed to improve efficiency and quality by increasing scale and applying a regularized pattern. But large scale often does not work. It is inflexible and difficult to change.

Robert Putnam has written an excellent book, Bowling Alone, about the decline of community. But the last thirty years has increasingly seen the failure of Progressivism, so it is not surprising that many Americans have chosen to shift from what Daniel Elazar calls the moralistic to the individualistic political pattern. Not only neighborhoods but the individual's relationship to the state, to his family, his employer and his economic future have been modified by the centralizing tendency of Progressivism, resulting in increasing distance from decisions and processes that modify his life. The classic example of this transformation is the Great Depression of the 1930s, which was the first major failure of Progressivism. Caused by a combination of inappropriate central bank tightening (Milton Friedman) or by President Hoover's mistaken attempt to cajole major employers into refusing to cut wages (Murray Rothbard), the Depression followed the establishment of the Federal Reserve Bank by less than twenty years and the implementation of Wilson's World War I economy (in which Hoover played a crucial role as Food Administrator) by less than ten.

Increasingly, government has been centralized and inflexible and incapable bureaucracies have been established. The Progressives claimed that "experts" could solve problems, so a hierarchy of expertise was established, and citizens' opinions became less important. Americans allowed themselves to be convinced that experts knew better. The news media also centralized, in part in response to growing labor costs facilitated by the National Labor Relations Act and the advent of television. The centralized news media became an advocate for government by expertise, the wisdom of Keynesian economics and bureaucracy.

The Progressive policies of urban redevelopment led to near-extinction of urban centers and the subsidization of suburbs, which in turn led to increasing commutes. As well, since the abolition of the international gold standard in 1971, declining hourly real wages have led to increasing hours of work as Americans have struggled to keep up with the declining economic opportunity that central planning has caused. The pure exhaustion of multiple jobs coupled with the distraction of television and the need to decompress has increasingly alienated Americans from their communities.

Moreover, a sense of apathy has set in because the centralized, unresponsive firms and government bureaucracies that Progressivim has established seem to be beyond the efforts of most Americans. As a result, a society that is increasingly stratified between those who benefit from Federal Reserve and governmental subsidies and those who do not has been accomplished in the rhetoric of moralistic, Progressive reform. The dissonance created by the discrepancy between the ideology of Progressivism and its assault on human dignity and living standards leads inexorably to loss of community and economic decline.

Liberalism: The Ship that Does Not Sail

The Mugwumps and Progressives emphasized management issues and execution of programs. Herbert Croly, for instance, discussed scientific management and work restructuring in his 1912 Progressive Democracy. In the late nineteenth century EL Godkin discussed the role of incentives in managing railroads. The Muckrakers discussed management problems and Ida Tarbell, as much as she contemned John D. Rockefeller, favorably discussed his management abilities. In contrast, the post World War II liberals rarely discuss management or execution of programs. Their emphasis is on program advocacy not implementation. The reason may be that in implementing the New Deal, which in part relied on partnership between state and federal government, FDR overlaid federal programs like unemployment insurance on state governments that were often corrupt. The New Deal did not attempt to reform government as Progressivism had (and often failed to do) but rather added broad federal policies to an already corrupt system. This policy of see no evil, hear no evil, speak no evil seems to have been transmitted to subsequent generations of social democrats. Yet, the problem of execution and management is not independent of programs themselves. A social security program that is not well-designed is no better and may be worse than none at all. A welfare system that motivates beneficiaries to become dependent and that motivates despondency and drug addiction may be worse than no welfare program at all. An urban renewal program that creates ugly and alienating city projects that stimulate crime and roads that destroy neighborhoods may be worse than no urban renewal program at all. Government programs that generate high costs and few benefits, that drive out business because of high taxes and yet fail to accomplish their goals are worse than no programs. Management and execution are as much a component of programming as policy ideas. Yet, how often do proponents of new programs discuss management and execution issues? Very infrequently.

According to the French industrial Fayol, management is comprised of five tasks: planning, leading, organizing, coordinating, and controlling. This model was updated in the mid twentieth century by Edward I. Deming who argued that management is the reduction in variability of an output. The Deming interpretation of management is related to that of Taiichi Ohno, Toyota's production guru who created the ideas of lean manufacturing. Ohno argued that management is the elimination of waste. In any management system there needs to be a picture of what is going to be accomplished, a process that is required to achieve that goal, and a means of controlling the process so that it remains focused. The selection of the appropriate technique is not easy and it is not incidental. It cannot be accomplished by just anyone. A political appointee appointed along party or personal loyalty lines is not likely to be able to accomplish the managerial task as well as someone who has spent a lifetime thinking about production problems. An employee who has spent a lifetime focused on a certain process or kind of problem is likely to be best equipped to implement a quality program IF the employee understands the management techniques necessary to do a good job. Without taking such considerations into account, government programs are likely to be wasteful. Without controls, there is little likelihood that they will accomplish the objectives their advocates set out for them. If liberals build a ship that cannot sail, they cannot be said to have accomplished much. When the ship sinks, have they done more good than harm? Yet, social democrats advocate programs without thinking about process or about evaluation methods.

There are a number of natural blockages to the management of government programs. First, the cost of losses is not born by any concentrated interest. Because the costs are diffused, there is limited motivation by managers to reveal losses. Managers who reveal losses risk losing their jobs, but the public is not likely to feel the costs of the losses because they are spread over the entire tax paying population. Second, there are incentives for suppliers to cheat, to exaggerate the need for their products or to overcharge. Third, the customer base is captive. Because government enjoys a monopoly, those who use its services have nowhere else to go. Fourth, there is ideological resistance to criticism of government failure and waste by social democrats. Therefore, critics are likely to be humiliated. Fifth, even if public managers do radically improve programs, they are not necessarily rewarded for doing so. Sixth, waste may create patronage opportunities for politicians who in turn are likely to harass or fire government employees who resist it. Seventh, experts and specialists in government may be self-seeking and so not be motivated to improve programs.

Politics in America became largely a debate between two groups that advocate expansion of government: the Progressives, who are Republican in party and who advocate efficiency and effectiveness in government, and the social democrats (who also call themselves liberals and progressives) who do not. But it is not clear that Americans favor expansion of the state, whether it be the social democratic welfare state or the managerial state of progressivism. Moreover, the ideas that progressivism offers with respect to rationalization of the state do not, and likely cannot, reflect the state of the art with respect to management. Hence, Americans are given the choice between the second-rate services that the Progressives have on offer and the incompetence and chaos that the social democrats and their friends in the media gleefully advocate.

The Federalist No. 13 and Economies of Scale in Government

In the Federalist Number 13 Hamilton argues that an advantage to adoption of the Constitution and establishment of a unified nation as opposed to 13 separate states or three regional confederacies is efficiency that results from economies of scale. Hamilton argues:

"No well-informed man will suppose that the affairs of such a confederacy can be properly regulated by a government less comprehensive in its origins or institutions than that which has been proposed by the convention. When the dimensions of a State attain to a certain magnitude, it requires the same energy of government and the same forms of administration which are requisite in one of much greater extent."

Hamilton was right about the costs of government. The cost of governing 3 million people is much less than twice the cost of governing 1.5 million people. But Hamilton could not have foreseen the increasingly strategic role that government plays in economic development. That is, a range of federal policies restrict and influence business decision making in ways that Hamilton could not have foreseen. These include the creation of money, the social security system, funding of urban renewal, health plans for the elderly. Hamilton did advocate central banking and federal involvement in the economy, such as the creation of a state manufacturing incubator, but he could not have imagined the degree to which government influences economic behavior in our world.

The choice between centralization and decentralization involves two considerations: the economies of scale that Hamilton identified, and the creativity and experimentation that decentralization permits. Thirteen states permit thirteen approaches to regulation. Two or three confederacies would permit two or three approaches. Diversity of strategies permit comparisons and learning. Hamilton was right with respect to the Constitution, but he overstates the value of economies of scale as they might apply to our world.

Time Preference and Political Ideology

Government has a short time preference. Budgets are annual. Current political reality drives decisions. Neither history nor future projections determine choices. In this way the state is different from corporations. Stock prices reflect anticipated earnings. Corporate executives may think short term, but decisions that might impair long term performance will reduce current price if the market is able to grasp the long term effects. Citizens vary as to their time preferences. Some prefer to defer gratification and so earn greater rewards in the future, while others prefer instant gratification. In general, short time preferences are more common than long ones among the general population, but if you weight population by individual wealth, since wealthier individuals have longer time preferences than the average person, the economic return that the market demands for investment is well below the return the average person demands to save. Therefore, in a free society, wealth tends to concentrate in the hands of those who have longer time preference. However, the reaction of short time preference citizens to wealth disparity is often resentment or a sense that there is inequity because of the wealth disparity. In turn, there is demand for taxation of property, inheritance and capital gains.

Skeptics argue that there is no way to prove that one view is fair and another unfair. Is it right that someone who saves for many years and deprives themselves of luxuries should be taxed on gains from the savings? Is that more right than someone who borrows heavily to enjoy themselves should benefit from the saver's wealth through tax transfers? Should the minority that saves support the majority that does not save?

Perhaps the answer is yes, perhaps it is no. Why can't there be room for choice? Why not permit states to determine levels of property, inheritance and capital gains taxes rather than the federal government. Then, Americans could choose what state to live in based in part on preferences for taxation.

Social System Matching and the Expertise Culture

In the twentieth century the idea of convergence was suggested to explain the trend of socialist economies to look more like capitalist ones and capitalist economies to look more like socialist ones. This idea fell on hard times in the 1980s because socialism failed and some capitalist countries deregulated. The idea of convergence is linked to the idea of optimality. The notion that there is one best way to do a job or one best way to solve a social problem was characteristic of the Progressive era. Convergence was a remnant of Progressivism.

But perhaps there is no such thing as optimality with respect to social systems. Rather, there is an infinite array of potential strategies which match citizens' needs to a better or worse degree. Optimality depends on the match between the culture in which people live and the social system. Social evolution involves the search for optimal matching. If a system is suboptimal the system which permits the greatest flexibility with respect to searching for matching arrangement may be most preferable. That is, there are likely an array of systems which match varying cultural configurations, and an approach which provide equal matching but more flexibility will be preferable to an approach which provides less flexibility.

Labor economists have argued that some workers fit some kinds of jobs, other workers fit other kinds. In the same way, some cultures may fit some kinds of social systems while others fit different kinds. Discovering a optimal match depends on how well the social system can change to fit a given region or culture.

If that is so, then the trend toward increasing federal power and centralization during the twentieth century may have been an error since centralized power is more difficult to change than decentralized power. The founding fathers in America had hit upon an excellent formula to exploit regional and cultural differences: permit variations in across state governments so that local match can be optimized. Moreover, variations permit experimentation so that the knowledge base develops much more quickly than with a centralized one.

The centralization of power in America in the past 100 years may have impeded learning through decentralization and so had a crippling effect on progress. As well, forcing regional and cultural uniformity across a large country results in lost opportunities to match sub-systems to sub-cultures. Centralization of power is authoritarian and so as the nation has grown and simultaneously centralized power deviations from optimal points for specific subgroups have become greater. In turn, this has lead to increasing stridency of public debate.

Advances in organization theory that started with James March's and Herbert Simon's 1958 book Organizations have permitted firms to think about the key problem that faces them: information. Organizing information, gathering information, undestanding it and using it is a problem that faces government as well as private firms. In the twentieth century firms decentralized and experimented with increasingly flexible organizational forms. Toyota's Taiichi Ohno took 15 years to develop the process known as lean manufacutring, which includes just in time inventory. No expert had thought of this concept. Similarly, E.I. Deming's total quality management was unknown in business schools until he convinced a number of Japanese firms to adopt it.

In contrast, progressives and social democrats have made an antiquated assumption about rationality based on the ideas of Herbert Croly and Theodore Roosevelt: that experts can discern optimal solutions. Naturally, such experts will see the possibility of convergence toward an optimality in which they believe because of sharing of ideas, peer review and the like.

The corporate world has found that preconceived strategies rarely materialize and that focused or organized chaos results in the spontaneity of creativity that also depends on interaction and supportiveness of change. Supportiveness of change is foreclosed by the expertise culture. If an expert claims an optimal answer, then alternative views are ignored. Thus, fundamental errors in social science and economics have been perpetuated, and the public's ability to debate and innovate has been forestalled by social democracy.

There are many other concepts in organizational theory, such as the learning organization, organizational differentiation and integration and differentiation can be applied to the modern state. However, instead of thinking small and decentralizing, federal power has been increasingly concentrated in poorly performing agencies like the Department of Education and the Social Security Administration.

Adam Clayton Powell IV, Harlem's Hero in the NY Assembly

Jacob Gershman, in today's New York Sun, notes that while some New York Assembly members such as Joseph Lentol have sponsored over 100 legislative bills and others, such as Richard Brodsky, have sponsored over 200 in this session alone, Adam Clayton Powell, IV, has sponsored no, zero, bills in the past three years.

Mr. Powell's performance contrasts sharply with that of his grandfather, Adam Clayton Powell, Jr. (I assume grandfather not only because of the name but also because the photo attached to the article suggests that the acorn didn't fall far from the grandfatherly tree--I've never seen a grandson look more like a grandfather). Wikidpedia notes that Adam Clayton Powell, Jr., the first black Congressman from New York, was head of the powerful Education and Labor Committee and a supporter of JFK's "New Freedom" and LBJ's "Great Society" legislation. Wikipedia also notes:

"Powell Jr.'s committee passed a record number of bills for a single session. That record still remains unbroken. As one of the great modern legislators, Powell Jr. would steer some 50 bills through Congress."

In contrast to his grandfather's performance in Congress in passing the most bills, Powell, IV has apparently set a kind of record for the New York State Assembly in proposing the fewest bills.

Between Powell, Jr. and and Powell, IV I think I'd prefer Powell, IV. Bartleby.com attributes the quote "No man's life, liberty and property are safe while the legislature is in session" to New York Surrogate Judge Gideon J. Tucker in an 1866 decision. Others, such as Phil Maymin of Mayminforcongress.com , John Jerrett of Memorial University of Newfoundland,George Mason's Walter E. Williams, and Jefferson Review attribute the quote to Mark Twain. In any case, perhaps we owe a vote of thanks to Adam Clayton Powell, IV for reminding us that the government is best that governs least. Was it Socrates who said that?