Legitimacy refers to a concurrence of belief. In American government and politics, political legitimacy has been associated with the Constitution. The traditional American value system, Lockean liberalism, requires a limited state, and the Constitution reflects that value. There has always been debate among Americans as to how limited the state ought to be. Traditionally, special interests, to include the wealthy, manufacturing and banking interests, favored government intervention to further their goals. The working class, while poor, favored greater limits on government intervention to permit their acquisition of wealth. In the early twentieth century to the 1930s the model was modified. A strong element of social democracy was introduced. American social democracy was reconciled to Lockean liberalism in an uneasy balance. A social minimum or floor was established, as reflected in Social Security and Aid to Families with Dependent Children. Standards of professionalism were established in a wide range of fields. For example, with respect to the workplace, laws concerning health and safety, retirement plans, discrimination, and overtime were established. Although the late nineteenth century doctrines of free contract were overturned, a wide latitude for contracting remained. The social democratic laws did not interfere with a wide range of economic activity. Taxes were kept moderately low, at least in comparison with Europe. Where taxes were high, as with respect to inheritance, numerous loopholes were created.
This system is unstable because there is no dividing line between the principles of Lockean liberalism on which the system is based and the system of social democracy that was superimposed on it. To achieve balance Americans needed to constantly reformulate the principles of Lockean liberalism and social democracy. But to reformulate the balance, Americans must understand Lockean liberalism and social democracy. Yet, many Americans never bought into the social democratic system, and many never bought into Lockean liberalism. From the beginning some Federalists rejected principles of limited government. Europeans who immigrated here by the 20th century were unfamiliar with Lockean liberalism. The education system kept their descendants in the dark. On the one hand, Locke is not part of the education of American students today. He is ignored in the curriculum, and the education schools shun him. Therefore, there is no avenue by which many Americans can learn the foundation of one half of the equation.
On the other hand, the scale is heavily weighted toward social democracy. But the American system of business, innovation and progress depends on Lockean liberalism. Socialism and social democracy are incapable of generating progress, and there has been no progress of substance made in socialist or state-dominated countries. Sweden, for instance, grants prizes in innovation to others but itself has been responsible for little in the past century. In Japan, the most famous principles of business, lean manufacturing and total quality management, were created by Toyota's Taiichi Ohno and by the American consultant Edward I. Deming. The government policies in Japan, subsidies to banks, infrastructure, bailouts, and centralized planning have failed.
The educational system has been particularly aggressive in its rejection of Lockean liberalism. But no system of rights is based on logical necessity. The German university, the prototype of the American educational system, claimed to derive the necessity of social democracy from historical forces. Yet in America historical forces tended toward laissez-faire. But the adherents of the German historical school, such as John R. Commons, claimed to derive the necessity of social democracy from historical forces anyway.
Likewise, conservatives claimed to derive the precariously balanced system of Progressivism from tradition. Yet, there was no Progressive tradition. Indeed, there is no American political tradition. American government was created from scratch by colonists in the 17th and 18th centuries. The Declaration of Independence was a logical assertion of Lockean liberalism, and the Constitution imposed a Federalist superstructure. None of these institutions were derived from ancient tradition as in tribal and Roman Europe, the Middle East or Asia.
American conservatism can have meaning only to those who believe that social democracy is the future. To counterpoise "conservatism" to social democracy is to start by stating that you aim to lose the argument. Thus, the American conservative movement failed.
There is no logical coherence to social democracy. Social democracy depends on the mystical assumption that one must obey the state. Yet there is no moral necessity of obedience to social democracy any more than there is a moral necessity of unlimited laissez-faire. As de Jouvenal points out, democracy is attended with increasing levels of state compulsion to enforce the increasingly aggressive dictates of the democratic state. De Tocqueville called this the tyranny of the majority. Social democracy depends on mystical assertions of a "general will" which directly parallels the monarchical "divine will" of Filmer. Social democracy claims a moral foundation based on the logical necessity of risk aversion or minimizing the maximum possible loss, but there is no such logical necessity. Lockeans believe that progress depends on risk, and history has substantiated this opinion. Minimizing maximum loss is the philosophy of tribal cave men, not of free republicans. Yet the cave man theory of government is the one to which social democrats adhere. If many Americans have adopted the minimizing-maximum-loss value system it is because they have never been given a chance to learn what the American philosophy is.
Thus, American higher education has replaced the moral superstructure of Lockean liberalism with the moral superstructure of social democracy. Neither has foundation in logic, but the effects of both can be tested. Germany first adopted social democracy in the 1880s. The century following the adoption of social democracy in Europe and Progressivism in America was the ugliest and bloodiest in Germany's and the world's history. America's adoption of Progressivism in the 1890s led to its foray into imperialism. The adoption of the Federal Reserve Bank in 1913 was followed by the Great Depression of the 1930s.
The progress that liberalism, England and the United States had generated in the 19th century continued to unfold fifty or sixty years into the twentieth century so that the 19th century innovations of television and radio waves provided for continued innovation. But the rapid, universal innovation levels of the 19th century ended. By the 1970s real wages were declining, a result uncharacteristic of any prior period of American history, and firms had decided that the way to profit was by moving plants into low labor cost regions rather than through innovation. Although the personal computer and Internet were notable exceptions, in broad swathes of American industry innovation stalled. Today, once-proud American firms like GM beg for public money. Yet, in the historical context it would seem that innovation should be ever increasing in pace because new ideas generate yet additional ideas. Creativity experts have long observed that innovation begets innovation. That is the process of brainstorming. Thus, the failure of innovation in America suggests not the failure of capitalism, but the failure of social democracy.
The educational system has thus generated a belief system that is empirically unfounded and is likely to disrupt and disappoint most Americans' expectations. The increasing level of taxation since 1950; the transfer of wealth to established businesses and the wealthy via the Federal Reserve Bank and the recent bailouts; the increasing levels of regulation; and the unquenchable expansion of state power to reflect every moral or ethical fantasy of America's elite (so long as the fantasies do not disrupt the investment holdings of the Ochs Sulzbergers, Warren Buffett or George Soros) will all disappoint Americans, who have been told to expect improvement in living standards even though they have not been told how to achieve such improvement or what the system of government and economy is that creates such improvement.
The belief system that the educational system inculcates is mystical in nature. It claims a universal morality of state action; and it holds that the changing and often whimsical beliefs of university professors and newspaper editors morally require blind adherence. It sets up silly "saviors" such as Franklin Roosevelt and Barack Obama, whose divine right to exercise power; deprive Americans of traditionally defined rights and property; and to be believed is rigidly proclaimed as moral. Just as late medieval Europeans believed in a divine right of kings, American social democrats believe in a divine right of state power and the cult of the presidential savior.
An essential part of social democrat mysticism is the replacement of God by the state. Thus, just as a religious Catholic might have a picture of a Saint in their home, social democrats have a picture of their Divine Savior-President Barack Obama in their homes. Just as blasphemous language is contemned by the religious, so is language disrespectful of Savior-Divine President Barack Obama contemned by social democrats.
Thus, the inculcation of blind moral obedience to the state by the Progresssive-Republicans and social democrat-Democrats leads to an inherent instability in the legitimacy of American government. This is seen most clearly in the US Supreme Court. Through a series of judicial decisions the Supreme Court has arrogated the power to legislate. This is not provided by the Constitution. With respect to Dred Scott, in the 1850s, the Supreme Court held that it had the power to regulate contracts. This incursion into state power increased through the 19th century. While cases like Brown v. Board of Education may have had morally laudable results, the arrogation of power by the Supreme Court lacks legitimacy. It is not provided in the Constitution. Many Americans do not believe that the Supreme Court ought to function like a moral dictator. And many Americans do not share the Supreme Court's value system. The Supreme Court cannot function as an overseer of the nation's morals because a sizable percentage of Americans do not share the Supreme Court's values.
The reason again speaks to the failure of America's educational system to educate Americans as to Lockean liberalism. As a result, although I do not question the intelligence and sophistication of the members of the Court, the Court's value system reflects in large part the social democratic training that the Justices received in American schools and universities. Their values are elitist and do not reflect justice as most Americans define it. The court has become increasingly illegitimate. The same is true of other American institutions. Congress's approval ratings are very low, but no one seems to be able to say why. The bailout was opposed by the majority of Americans, and there was no real reason for it save crackpot Keynesian arguments in elitist, pissant newspapers and television stations, but Congress went with the elitist newspapers and television stations.
The end result of the increasing tyranny of social democracy and tyranny of elitist opinion over American values and rights is de-legitimacy of the US government. We live in a period of instability because Americans have refused to confront the failure of social democracy and Progressivism. They continue to accept that conservative insistence on Progressivism and elitist social democracy are the only two options. Yet, the economic policies that the nation has adopted will deprive Americans of the standard of living to which they have become accustomed. This failure will mark the end of the American state as we know it. If the nation were doing as well as it could, reflecting Lockean values to a large degree and striving to balance reason, tradition and innovation in public affairs, minor modifications would be possible. But the two Progressive/social democratic parties have followed an avenue that has led them to the side of a cliff. And the public is going to have to back up and push the two parties over the side.
Showing posts with label social democracy. Show all posts
Showing posts with label social democracy. Show all posts
Sunday, May 31, 2009
Wednesday, May 20, 2009
Failure of Liberalism
In 1960 sociologist Daniel Bell claimed that ideology had ended. It did not. Ideology is but a set of integrated assumptions, hypotheses or theories about the world. Without integration social order would disintegrate, and without assumptions action would be pointless. In the decades following 1960 universities were imbued with a more aggressive ideological tone than that which had preceded 1960. More importantly, the dominant ideology of the post-war period, state-activist liberalism, faltered. Yet its proponents in both major political parties became increasingly shrill about their respective ideological versions. What faltered most was state-liberalism's claim of pragmatism and economic rationality. In failing to consider the outcomes of its own decisions, state-liberalism failed its chief premise of pragmatism. State-liberalism faltered because business was not efficient, rational or pragmatic, but rather was coddled (Lindblom) and benefited from the activist liberal state that acted not in the public interest but rather in firms' private interests. Coddling connotes inefficiency, and inefficiency leads to the failure of state-activist liberalism's chief premise that it can produce economic growth and that the state can ameliorate inefficiencies, the business cycle and the anxieties characteristic of laissez-faire capitalism. Although economic growth in the immediate post-war period was ample and well distributed, by 1970 the liberal-Progressive system had failed to deliver what Herbert Croly called "the promise of American life". Real wages sputtered and income inequality grew in the wake of stock market growth and plant relocations. In the following decades, the decline has been mitigated by borrowing and the increasingly widespread distribution of credit, but little more. In other words, the American economy has been living on borrowed time. A few technological breakthroughs have masked a widespread failure of innovation. As executives have seen plant relocation as the sole avenue for increasing efficiency, they transferred America's rusting infrastructure to the third world. But the activist state displaced the innovation that ought to have replaced the now-globally based manufacturing infrastructure. The result is ever-slower economic and technological progress if not outright permanent declines.
Oswald Spengler argued that the west would decline because of natural historical cycles. The decline of American liberalism is not due to an inevitable cycle but rather to the choices that the American public has made in response to the failure of the progressive ideologies and institutions that came to dominate American politics beginning in the late 19th century and have increasingly dominated liberalism--those of the activist state. The proponents of the activist state claim that it serves the poor and argue for the establishment of large edifices to do so. But they have not solved the poor's problems, and in many cases have intensified them. State activist liberals, on behalf of their altruistic claims, establish a centralized monetary system whose chief result is not just the reduction of unemployment in ever-less productive jobs, but the distribution of credit hence wealth into the hands of large corporations, their stock holders, their executives, their service firms and Wall Street. State-activist liberalism calls itself "progressive" but progress in terms of real wage growth and innovation has fizzled. Hence, while the proponents of state activist liberalism claim to have improved things, much of what they have accomplished has been destructive of the ends that they proclaim. Following more than a century of state activist liberalism, Americans are less economically secure than they were under laissez-faire because job creation has slowed and has been funneled into the kinds of jobs in the kinds of firms to which entrenched economic interests have chosen. These are not the firms and jobs that best serve the public and do not produce sustainable growth. Alternatives have been staunched by the centralized approach to credit allocation that progressivism, backed by banking and corporate interests, has favored.
State activist liberalism has faltered because it has not fulfilled the promise of pragmatism that post-war liberals proclaimed. America's large corporations have not performed, and instead have relied on the public support that efficient private organizations ought to obviate. This is not because the public cannot afford seeing large companies fall or because industry is necessarily inefficient, but because the firms' control of the media is sufficient to forestall intelligent debate about policy options.
The state-activist liberal stance was always present in American history. In the late 18th century it was called Federalism and in the early 19th century it was represented by the Whig Party. The Republicans briefly rejected the state liberal philosophy in favor of social Darwinism in the late 19th century for two or three decades, which had the effect of preempting working class Jacksonian democracy, and then reasserted it in the form of Progressivism. The Democrats under Woodrow Wilson followed. Under Franklin Roosevelt the Democrats made one major change: painting the image that their Whig philosophy was in the interest of the poor and that the redistribution of wealth that Hamilton and the Whigs had advocated was a matter of social justice. At the same time, Roosevelt intensified the power of the Fed to transfer wealth to politically connected investment banks and their client corporations.
Although both political parties are genealogically descended from Jefferson, both advocate the ideology of Hamilton. But management theory has advanced since Hamilton's death. Today's state activist liberalism fails to integrate advances in management theory, and in effect is a relic-ideology that has slowed economic growth and has increasingly crippled the American economy.
It is time to consider alternatives. The current path is one of impoverishment and the failure of the American economic system.
Oswald Spengler argued that the west would decline because of natural historical cycles. The decline of American liberalism is not due to an inevitable cycle but rather to the choices that the American public has made in response to the failure of the progressive ideologies and institutions that came to dominate American politics beginning in the late 19th century and have increasingly dominated liberalism--those of the activist state. The proponents of the activist state claim that it serves the poor and argue for the establishment of large edifices to do so. But they have not solved the poor's problems, and in many cases have intensified them. State activist liberals, on behalf of their altruistic claims, establish a centralized monetary system whose chief result is not just the reduction of unemployment in ever-less productive jobs, but the distribution of credit hence wealth into the hands of large corporations, their stock holders, their executives, their service firms and Wall Street. State-activist liberalism calls itself "progressive" but progress in terms of real wage growth and innovation has fizzled. Hence, while the proponents of state activist liberalism claim to have improved things, much of what they have accomplished has been destructive of the ends that they proclaim. Following more than a century of state activist liberalism, Americans are less economically secure than they were under laissez-faire because job creation has slowed and has been funneled into the kinds of jobs in the kinds of firms to which entrenched economic interests have chosen. These are not the firms and jobs that best serve the public and do not produce sustainable growth. Alternatives have been staunched by the centralized approach to credit allocation that progressivism, backed by banking and corporate interests, has favored.
State activist liberalism has faltered because it has not fulfilled the promise of pragmatism that post-war liberals proclaimed. America's large corporations have not performed, and instead have relied on the public support that efficient private organizations ought to obviate. This is not because the public cannot afford seeing large companies fall or because industry is necessarily inefficient, but because the firms' control of the media is sufficient to forestall intelligent debate about policy options.
The state-activist liberal stance was always present in American history. In the late 18th century it was called Federalism and in the early 19th century it was represented by the Whig Party. The Republicans briefly rejected the state liberal philosophy in favor of social Darwinism in the late 19th century for two or three decades, which had the effect of preempting working class Jacksonian democracy, and then reasserted it in the form of Progressivism. The Democrats under Woodrow Wilson followed. Under Franklin Roosevelt the Democrats made one major change: painting the image that their Whig philosophy was in the interest of the poor and that the redistribution of wealth that Hamilton and the Whigs had advocated was a matter of social justice. At the same time, Roosevelt intensified the power of the Fed to transfer wealth to politically connected investment banks and their client corporations.
Although both political parties are genealogically descended from Jefferson, both advocate the ideology of Hamilton. But management theory has advanced since Hamilton's death. Today's state activist liberalism fails to integrate advances in management theory, and in effect is a relic-ideology that has slowed economic growth and has increasingly crippled the American economy.
It is time to consider alternatives. The current path is one of impoverishment and the failure of the American economic system.
Tuesday, August 12, 2008
Bureaucracy and None of the Above
The Progressive movement and its social democratic system put considerable faith in bureaucracy. In part, this was because the late nineteenth and early twentieth centuries saw bureaucracy as improvement over the paternalism of the early nineteenth century, and they were right. However, by 1940 right as the New Deal reforms of 1932-7 were drawing to a close, it had become evident that bureaucracy does not work so well as its proponents thought. In the 1940s the sociologist Robert Merton wrote an article about the rigidity of bureaucracy and bureaucrats' fetishization of rules at the expense of efficiency. In the 1950s Taiicho Ohno of Toyota pioneered the principles of lean production and total quality management. Even going back so far as the 1920s, Alfred Sloan of General Motors, along with executives in other leading firms, pioneered the use of decentralization, federalized organization, realizing that large firms did not permit global or functional forms of organization. The information and flexibility requirements of large firms are too daunting for anyone to handle.
Strangely, though, the Progressive and social democratic movement continued to emphasize centralization. The result is that increasingly, American life has been dominated by unresponsive, unproductive government bureaucracies that spin regulation and do not care what the public thinks. This is the result not only of centralization but also of the increasing emphasis on expertise in the expansion of government at the expense of the spoils system.
The result is a considerable degree of dissonance between the public's experience and the "facts" it is fed in school, through the news media and through public opinion leaders who are committed to the Progressive, social democratic solution because it enforces their status as professional experts, elite business leaders and the like.
The public has become increasingly alienated from public institutions because they are distant; they do not work; and they are held forth as far superior to the processes and systems that in the public's own experience work. As a result, the public experiences what psychologists call "cognitive dissonance". On the one hand, they are taught that "experts" know better than they do. But when they interact with state government, the department of motor vehicles and the like, they experience systems that do not work so well as ones that they themselves could devise. They are taught that scientists can solve problems. But then they hear that cancer has become an industry characterized by avoidance of effective remedies, politics, waste and regulation of innovative ideas out of existence. They are told that the state equalizes inequity, then they learn that the federal government subsidization billionaire investment bankers through direct bounties and a central banking system that sees its primary role as to support stock prices.
Cognitive dissonance has unpredictable effects, but one of them is potentially withdrawal. Others include anger, attempting to intervene and correct the situation, and denial. All of these are present in today's society.
Both left and right have become increasingly strident as the remedies that they advocate, central banking, expertise in government, efficiency, a corporatist state that supports the public interest, have failed to materialize. Political correctness, left wing intolerance of dissent in universities and other institutions, reflects the left's inability to confront the failure of the mercantilist solution to which it has been wedded since the late eighteenth century. Likewise, the right wing increasingly fights within itself, unable to arrive at a coherent picture of reform. As well, much of the right is in denial about its own Progressive spirit. The split between libertarians and conservatives has permitted mercantilists of the Progressive (Republican) and social democratic (Democratic) stripe to dominate the electoral process.
The public faces declining real wages, yet has refused to confront the decline and has borrowed, consuming about six percent more each year than it creates. There is avoidance of the causes of economic decline. Firms have heavily relied on public subsidy, especially through the banking system, yet corporate executives claim prerogatives of private property in extracting ever-increasing salaries that at most weakly reflect corporate performance. Few in the news media suggest that corporations that do not see a public role ought not to be subsidized by the public, and that the Federal Reserve system is little more than a crutch for inefficient American firms.
Americans increasingly feel alienated. The reason is that the obsession with size and economies of scale has been pursued too far. The large scale of industry; the large federal government have not yielded increases in wealth. Rather, they have become vehicles by which corrupt special interests extract wealth at public expense and as the public has reacted to cognitive dissonance by increasingly withdrawing or by becoming ever more strident in its demand for "change", a noun that describes an unnamed verb.
The remedy for too much centralization is decentralization.
Strangely, though, the Progressive and social democratic movement continued to emphasize centralization. The result is that increasingly, American life has been dominated by unresponsive, unproductive government bureaucracies that spin regulation and do not care what the public thinks. This is the result not only of centralization but also of the increasing emphasis on expertise in the expansion of government at the expense of the spoils system.
The result is a considerable degree of dissonance between the public's experience and the "facts" it is fed in school, through the news media and through public opinion leaders who are committed to the Progressive, social democratic solution because it enforces their status as professional experts, elite business leaders and the like.
The public has become increasingly alienated from public institutions because they are distant; they do not work; and they are held forth as far superior to the processes and systems that in the public's own experience work. As a result, the public experiences what psychologists call "cognitive dissonance". On the one hand, they are taught that "experts" know better than they do. But when they interact with state government, the department of motor vehicles and the like, they experience systems that do not work so well as ones that they themselves could devise. They are taught that scientists can solve problems. But then they hear that cancer has become an industry characterized by avoidance of effective remedies, politics, waste and regulation of innovative ideas out of existence. They are told that the state equalizes inequity, then they learn that the federal government subsidization billionaire investment bankers through direct bounties and a central banking system that sees its primary role as to support stock prices.
Cognitive dissonance has unpredictable effects, but one of them is potentially withdrawal. Others include anger, attempting to intervene and correct the situation, and denial. All of these are present in today's society.
Both left and right have become increasingly strident as the remedies that they advocate, central banking, expertise in government, efficiency, a corporatist state that supports the public interest, have failed to materialize. Political correctness, left wing intolerance of dissent in universities and other institutions, reflects the left's inability to confront the failure of the mercantilist solution to which it has been wedded since the late eighteenth century. Likewise, the right wing increasingly fights within itself, unable to arrive at a coherent picture of reform. As well, much of the right is in denial about its own Progressive spirit. The split between libertarians and conservatives has permitted mercantilists of the Progressive (Republican) and social democratic (Democratic) stripe to dominate the electoral process.
The public faces declining real wages, yet has refused to confront the decline and has borrowed, consuming about six percent more each year than it creates. There is avoidance of the causes of economic decline. Firms have heavily relied on public subsidy, especially through the banking system, yet corporate executives claim prerogatives of private property in extracting ever-increasing salaries that at most weakly reflect corporate performance. Few in the news media suggest that corporations that do not see a public role ought not to be subsidized by the public, and that the Federal Reserve system is little more than a crutch for inefficient American firms.
Americans increasingly feel alienated. The reason is that the obsession with size and economies of scale has been pursued too far. The large scale of industry; the large federal government have not yielded increases in wealth. Rather, they have become vehicles by which corrupt special interests extract wealth at public expense and as the public has reacted to cognitive dissonance by increasingly withdrawing or by becoming ever more strident in its demand for "change", a noun that describes an unnamed verb.
The remedy for too much centralization is decentralization.
Wednesday, July 30, 2008
Social Democratic Fallacies
Social democracy, which has at various times inappropriately been called liberalism and progressivism, is a doctrine that has created problems in the name of problem solving. Among the first to recognize the pattern of social democracy's multiplying and intensifying problems was William Graham Sumner in his essay "What Social Classes Owe to Each Other", first published in 1883. Toward the end of this small book, Sumner describes the "forgotten man", not the poor man who is the beneficiary of proposed regulation, but the third party whom the reformer aims to coerce and who will pay an escalating price for the reformer's fallacious schemes.
Since Sumner wrote the essay, we have seen urban renewal programs supposedly aimed to help the poor that drove jobs and housing from cities, resulting in homelessness and escalating real estate values that destroyed the possibility of urban life for all but the wealthy. We have seen welfare programs that have institutionalized poverty. We have seen massive subsidies to failed corporations that encourage a culture of incompetence and waste in a business community that is already self indulgent. We have seen a housing code in New York City whose aim is to further inflate construction costs. We have seen housing prices rise, and when they declined slightly, a declaration of a "crisis" because bankers, whose job it is to lend intelligently, could not be bothered to screen borrowers. We have seen earmarks and bridges to nowhere. We have seen billions squandered in cancer research that has been politicized to the point where Fortune Magazine asserts that cures have been staunched by senior academic researchers who feel threatened by new theories. We have seen high schools graduate seniors who can barely read, and universities graduate semi-literate college seniors under failed, progressive education theories. We have seen one social democratic blunder after the next, and as Sumner put it, the forgotten man or woman is the one who pays.
What is this social democratic doctrine to which our nation has found itself committed? Social democratic and progressive ideologies dominate both the Republican and Democratic Parties, yet the assumptions that their advocates make deviate from the core beliefs of most Americans, core beliefs that are pragmatic and liberal in the Lockean sense. Social democracy is neither pragmatic nor liberal, yet it uses the terminology of pragmatism and Lockean liberalism to cloak fallacious underlying assumptions:
1. The fallacy of scale. Social democracy argues that bigger is better and that progress involves progressive governmentalization on ever larger scale. Since the 1950s and before, most economic progress has not required large scale, and economies of scale have not been fundamental to new economic and technological advance. Yet, social democracy subsidizes scale through financing mechanisms like the Federal Reserve Bank, political favoritism, direct grants and regulatory systems that freeze out small business.
2. The eschatological fallacy. Social democracy believes that society is headed toward a specific end or purpose related to its model of large scale production, namely enhancement of government control or socialism. The belief that the "problem of production has been solved" characterized the modernist period--until the Japanese showed American firms that they were clueless about production problems and that there will always be improvement in production. Moreover, the solutions to the problems of production require information, not scale. As well, large scale organizations are too rigid to adopt the steps needed to improve production.
3. The predictability fallacy. Social democracy believes that it can solve problems because rationality is the primary ingredient to problem solving. In fact, rationality is but one of several elements in problem solving. Because demand, technology and other conditions change, information specific to time and place is often more important to solving technological and market problems, as the Austrian economist Friedrich A. Hayek argued. Therefore, experts in large governmental bureaus are not only ill-equipped to solve problems, but are guaranteed to fail to grasp what the important problems are.
4. The infinite regress fallacy. Social democrats believe that if business is corrupt, all that is needed to correct corruption is a layer of regulation. But who is to guarantee that the regulators are less corrupt than the firm? Are regulators descended from a special race of especially honest men? Might not regulators develop economic interests in the industries that they regulate? And if so, do social democrats propose regulators of the regulators, and do they believe that this additional layer, or Congress itself, is somehow better equipped or motivated to regulate?
5. The social democratic invincibility fallacy. Social democrats imagine themselves, as Sumner points out, to be smarter, more moral and better equipped to solve problems than others. Few social democrats have solved problems competently. I can state this with assurance because few government programs work. The groupthink associated with participation in the social democratic movement is the social democratic movement's greatest obstacle to pragmatism. The readers of the New York Times imagine themselves "smarter" because they read the Times, and so on. This sort of egotistical delusion precludes intelligent thinking and guarantees a rigidity and closed mindedness among social democrats that ensures the failure of any and all of their ideas.
Since Sumner wrote the essay, we have seen urban renewal programs supposedly aimed to help the poor that drove jobs and housing from cities, resulting in homelessness and escalating real estate values that destroyed the possibility of urban life for all but the wealthy. We have seen welfare programs that have institutionalized poverty. We have seen massive subsidies to failed corporations that encourage a culture of incompetence and waste in a business community that is already self indulgent. We have seen a housing code in New York City whose aim is to further inflate construction costs. We have seen housing prices rise, and when they declined slightly, a declaration of a "crisis" because bankers, whose job it is to lend intelligently, could not be bothered to screen borrowers. We have seen earmarks and bridges to nowhere. We have seen billions squandered in cancer research that has been politicized to the point where Fortune Magazine asserts that cures have been staunched by senior academic researchers who feel threatened by new theories. We have seen high schools graduate seniors who can barely read, and universities graduate semi-literate college seniors under failed, progressive education theories. We have seen one social democratic blunder after the next, and as Sumner put it, the forgotten man or woman is the one who pays.
What is this social democratic doctrine to which our nation has found itself committed? Social democratic and progressive ideologies dominate both the Republican and Democratic Parties, yet the assumptions that their advocates make deviate from the core beliefs of most Americans, core beliefs that are pragmatic and liberal in the Lockean sense. Social democracy is neither pragmatic nor liberal, yet it uses the terminology of pragmatism and Lockean liberalism to cloak fallacious underlying assumptions:
1. The fallacy of scale. Social democracy argues that bigger is better and that progress involves progressive governmentalization on ever larger scale. Since the 1950s and before, most economic progress has not required large scale, and economies of scale have not been fundamental to new economic and technological advance. Yet, social democracy subsidizes scale through financing mechanisms like the Federal Reserve Bank, political favoritism, direct grants and regulatory systems that freeze out small business.
2. The eschatological fallacy. Social democracy believes that society is headed toward a specific end or purpose related to its model of large scale production, namely enhancement of government control or socialism. The belief that the "problem of production has been solved" characterized the modernist period--until the Japanese showed American firms that they were clueless about production problems and that there will always be improvement in production. Moreover, the solutions to the problems of production require information, not scale. As well, large scale organizations are too rigid to adopt the steps needed to improve production.
3. The predictability fallacy. Social democracy believes that it can solve problems because rationality is the primary ingredient to problem solving. In fact, rationality is but one of several elements in problem solving. Because demand, technology and other conditions change, information specific to time and place is often more important to solving technological and market problems, as the Austrian economist Friedrich A. Hayek argued. Therefore, experts in large governmental bureaus are not only ill-equipped to solve problems, but are guaranteed to fail to grasp what the important problems are.
4. The infinite regress fallacy. Social democrats believe that if business is corrupt, all that is needed to correct corruption is a layer of regulation. But who is to guarantee that the regulators are less corrupt than the firm? Are regulators descended from a special race of especially honest men? Might not regulators develop economic interests in the industries that they regulate? And if so, do social democrats propose regulators of the regulators, and do they believe that this additional layer, or Congress itself, is somehow better equipped or motivated to regulate?
5. The social democratic invincibility fallacy. Social democrats imagine themselves, as Sumner points out, to be smarter, more moral and better equipped to solve problems than others. Few social democrats have solved problems competently. I can state this with assurance because few government programs work. The groupthink associated with participation in the social democratic movement is the social democratic movement's greatest obstacle to pragmatism. The readers of the New York Times imagine themselves "smarter" because they read the Times, and so on. This sort of egotistical delusion precludes intelligent thinking and guarantees a rigidity and closed mindedness among social democrats that ensures the failure of any and all of their ideas.
Friday, May 16, 2008
Conservatism, Surgical Radicalism and the Four Party System
The current popular political debate occurs between two kinds of conservatives. The first, called liberals or progressives, argues that the current framework of American democracy, created during the Progressive era and New Deal and now roughly 100 years old, ought to remain in place. In their view introduction of additional institutions, plans and programs like national health insurance along the lines of earlier ones is needed, but today's framework is a good one.
The second kind of conservatives, popularly so called, are not comfortable with the New Deal project---Social Security, government regulation of industry, and large-scale federal social welfare programs, but do not want to repeal these programs either. They follow Edmund Burke, who argued against radical in favor of gradual change. Burke felt that gradual transformation of institutions while protecting liberty was a better path than the French revolution's authoritarianism, political correctness and executions. Rather, he preferred the American revolution's restraint.
Today's conservatives retain Burke's dislike for radical change. But the institutions that exist in America today were radically imposed during the first half of the twentieth century. They did not evolve logically from the market economy of the nineteenth and they did not reflect economic exigencies of the the early 20th century. Rather, they reflected the imposition of a political vision of specific rent-seeking special interest groups and agenda-drive political radicals.
Burke wrote in Britain in the late eighteenth century when barbaric institutions had gradually evolved into more democratic and liberal forms in Britain and to a lesser degree in Europe. Burke did not write about what to do to unravel the harm that the French revolution had caused. Rather, he wrote about how Britain and other liberal nations might best cope with change. This is not the problem that faces America today. An excessive application of Burke is inappropriate. America has had some radical change imposed while partially retaining liberal institutions. Conservatives who wish to create a new liberalism need to be surgical radicals. They need to undo New Deal radicalism's derangement of older versions of liberalism. The derangement has taken a number of shapes, to include social security, urban renewal, welfare, the Federal Reserve Bank, excessive application of eminent domain, and excessive regulation of business. Such radically instituted habits ought to be undone conservatively but radically.
Progressivism and the New Deal were radical upheavals. They rewrote American institutions that were not very old. A radical conservatism is one that is pragmatic, and asks that if radically imposed institutions fail that they be undone. This is a surgical radicalism that devises new liberal institutions where Progressivism and New Deal social democracy have failed.
Conservatives who wish to retain Progressive institutions, who are loyal to the old Federal Reserve Bank and its old-fashioned economic planning, high levels of government spending and support for business are Progressives. Conservatives who wish to retain New Deal institutions like Social Security and the National Labor Relations Act are social democratic liberals.
Perhaps Americans should think in terms of a four-party rather than a two-party system. Perhaps there should be a surgically radical conservative party; a Progressive-conservative Rockefeller-Republican Party; a New Deal Party; and a social democratic radical party. Of these, the surgically conservative radical party would be the most radical, liberal and progressive.
The second kind of conservatives, popularly so called, are not comfortable with the New Deal project---Social Security, government regulation of industry, and large-scale federal social welfare programs, but do not want to repeal these programs either. They follow Edmund Burke, who argued against radical in favor of gradual change. Burke felt that gradual transformation of institutions while protecting liberty was a better path than the French revolution's authoritarianism, political correctness and executions. Rather, he preferred the American revolution's restraint.
Today's conservatives retain Burke's dislike for radical change. But the institutions that exist in America today were radically imposed during the first half of the twentieth century. They did not evolve logically from the market economy of the nineteenth and they did not reflect economic exigencies of the the early 20th century. Rather, they reflected the imposition of a political vision of specific rent-seeking special interest groups and agenda-drive political radicals.
Burke wrote in Britain in the late eighteenth century when barbaric institutions had gradually evolved into more democratic and liberal forms in Britain and to a lesser degree in Europe. Burke did not write about what to do to unravel the harm that the French revolution had caused. Rather, he wrote about how Britain and other liberal nations might best cope with change. This is not the problem that faces America today. An excessive application of Burke is inappropriate. America has had some radical change imposed while partially retaining liberal institutions. Conservatives who wish to create a new liberalism need to be surgical radicals. They need to undo New Deal radicalism's derangement of older versions of liberalism. The derangement has taken a number of shapes, to include social security, urban renewal, welfare, the Federal Reserve Bank, excessive application of eminent domain, and excessive regulation of business. Such radically instituted habits ought to be undone conservatively but radically.
Progressivism and the New Deal were radical upheavals. They rewrote American institutions that were not very old. A radical conservatism is one that is pragmatic, and asks that if radically imposed institutions fail that they be undone. This is a surgical radicalism that devises new liberal institutions where Progressivism and New Deal social democracy have failed.
Conservatives who wish to retain Progressive institutions, who are loyal to the old Federal Reserve Bank and its old-fashioned economic planning, high levels of government spending and support for business are Progressives. Conservatives who wish to retain New Deal institutions like Social Security and the National Labor Relations Act are social democratic liberals.
Perhaps Americans should think in terms of a four-party rather than a two-party system. Perhaps there should be a surgically radical conservative party; a Progressive-conservative Rockefeller-Republican Party; a New Deal Party; and a social democratic radical party. Of these, the surgically conservative radical party would be the most radical, liberal and progressive.
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