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Source link: http://archive.mises.org/9624/love-the-state-says-madrick/

Love the State, Says Madrick

March 17, 2009 by

Madrick’s historical argument fails for exactly the same reason as his contention about post-World War II prosperity. That fact that government intervened in a prosperous economy does not show that the economy needed that intervention to prosper. Moving a fallacy back in time does not make it better….

Madrick displays sufficient incompetence in reasoning to qualify as a chief speechwriter on economic affairs for President Obama. I commend him for this position, if he has not already been snapped up for it. FULL ARTICLE

{ 16 comments }

Austroglide March 17, 2009 at 9:40 am

Excellent, Mr. Gordon, excellent. Thank you.

Barry Loberfeld March 17, 2009 at 10:11 am

Madrick seems to be only channeling New Republican Jonathan Chait’s spiel. From Modern Liberalism at Wit’s End:

Chait insists that conservatism and liberalism differ in “not just goals but epistemologies” (p. 235). And what could that possibly mean at this point? “Conservatives,” he elucidates, “believe government simply has no right to insert itself into economic life the way it has since the New Deal” — evidently even when the party they “have taken control of” enacted “the largest expansion of entitlements in nearly forty years.” He quotes as a representative of this belief Milton Friedman — that’s right, the same man earlier portrayed as a thinker discarded by today’s conservatives. (Taking in the book’s proliferating contradictions, you have to wonder if editors these days worry about anything other than dangling participles.) So, what does he have Friedman say? This: “Freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself.” Chait tells us that this (sans-context) statement shows that conservative beliefs about the harmfulness of government intervention in the economy, “while deeply held, are not necessarily determinative.” And as for what that means, he pulls his trump, a quotation from Andrew Sullivan: “If faster growth were caused by a bigger government, a conservative would still back smaller government and individual freedom. Similarly, my hostility to a progressive income tax is because I believe it’s hubristic over-reach. Why should a government have the power to penalize some individuals for their relative success while rewarding others for relative failure?” Now Chait reaches for the jackpot:

So while conservatives believe, say, that progressive taxes inhibit incentives to work, they would not change this view even if it were proven wrong, because buttressing their position is a deeper belief about the immorality of big government.

Liberal support for bigger government, on the other hand, is entirely rooted in what liberals believe to be its practical effects. They support regulations on pollution because they believe it will improve air quality. They support tax credits for the working poor because they believe they will raise income for such workers. If liberals were to be convinced those programs failed to achieve their intended goals, they would withdraw support for them. Increasing the size of government does not, in and of itself, serve any greater purpose. Conservatives regularly cite the size of government as a measuring stick — bigger government means they are failing, smaller government means they are succeeding. Liberals don’t think this way. For them, bigger government is a means, not an end.

This is what we’ve been waiting for, isn’t it? “Liberals” are open-minded and humanitarian; “conservatives,” fanatically committed to their one nostrum and thus ultimately indifferent to its possible harmful effects on human well-being. For Chait, the conflict of the present age isn’t between ideas true and false, but between people good and evil.

It is perverse that an author who so focuses on economics should essentially dismiss, rather than refute, the economic (i.e., “practical effects”) argument of his opponents — even when they are economists (e.g., Friedman, who in fact has always been a strong proponent of empirical falsification). The caricature that Chait draws from Sullivan’s idiosyncratic statement — an entity who would champion the market economy even if it were shown to starve the masses — reflects no capitalist economist, from Adam Smith to Mark Skousen. Even the “moralist” defenders of the free market, those who do indeed maintain a “belief about the immorality of big government,” do not ignore “practical effects.” After all, what was Atlas Shrugged but a demonstration of the consequences — for everyone, not just the John Galts — of a collectivized economy?

On the flip side: Do liberals resemble Chait’s portrait of them? Consider the nature of economic debate to date. Free-market economists still explain why, for example, the minimum wage won’t help the poor, and “practical effects” liberals still respond that we need the minimum wage because the poor need help. So, does the hope that it helps the poor prove that it helps the poor? Does it prove at least that liberals are good people? (It is beyond the pale to speculate whether liberals are limiting their benevolence to the special interests of Big Labor.) Can liberals “be convinced [such] programs [have] failed to achieve their intended goals”? In his Everything for Sale (which contains just such an it-helps-the-poor-because-the-poor-need-help advocacy of the minimum wage, including a total failure to address any of the arguments against it), Robert Kuttner seems to regard the law of unintended consequences not as a sober reality, but as a self-evident absurdity, which he mocks as the “Perversity Thesis”: Claim a law will do something and “conservative” contrarians reflexively assert it will do the opposite. (Kuttner and kind might care to ponder the late-2007 AP reports that the “shortage of National Health Service dentists” in the U.K., which began when “[m]any dentists abandoned Britain’s publicly funded health care system after reforms backfired in April 2006,” has left a “growing number of Britons without access to affordable care.” The reforms, e.g., a guaranteed income for dentists, were an “effort to increase patients’ access.” Even more thought-provoking is “Health Status, Health Care and Inequality: Canada vs. the U.S.” from the National Bureau of Economic Research.)

So now the question about “bigger government” liberals becomes: Is there no “deeper belief” — the immorality of a “common good” that’s only the “sum of selfish individual goods” (Kuttnerese for any values pursued by free individuals) and the superior ethic of a “collective good” (ditto for anything imposed by majoritarian state coercion); uniformity of wealth/poverty; punishment for the sins of “materialism” and “greed”; or the above implied — buttressing their position? As for Friedman, he was by no means declaring (at the very beginning of Capitalism and Freedom) that “economic freedom” is the supreme value irrespective of its “practical effects” on people’s lives; rather, it is not only “an end in itself,” but “also an indispensable means toward the achievement of political freedom” (emphasis added). He rejected further the false dichotomy between freedom and “material welfare,” and libertarians today reject in turn that between morality and practicality — fundamentally, I would contend, between ethics and economics. That’s because the two sciences are studying merely different aspects of the same reality, the same nature — human nature. They can no more conflict than physics and chemistry. It is a “deeper belief” (explicit or implicit) in some standard of morality that determines both “intended goals” and the means to achieve them. As one liberal conscious of the need to account for the morality-practicality nexus, Kuttner subtitled another book False Choices Between Prosperity and Social Justice. Now, as to which ethic — individual freedom or “social justice” — truly coexists with economic abundance, one answer has long been clear: the contrast between the pro-prosperity Old Left and the pro-austerity New Left and its fellow travelers (e.g., affluence foe John Kenneth Galbraith, the Salieri of economics, now so irrelevant as to not even merit a mention from Chait). Here the supporters of “bigger government” continued to “back” it despite the demonstration of its actual relation to “growth.”

Had Chait tried to understand his free-market subjects, he would have seen that for them limited government is not a fetish, but the yin to the yang of a thriving civil society — in whole, a “free and prosperous commonwealth” (Ludwig von Mises). But he preferred to scribble his caricatures. Ultimately, Chait is not an FDR, JFK, LBJ, or even Clinton liberal — he’s a Norman Lear liberal. His conception of “conservatives” and “liberals” is no less one-dimensional than the characterization of Archie Bunker and son-in-law Mike. As stereotypes, they work not to educate or challenge others, but only to confirm one’s own prejudices.

Gary Hall March 17, 2009 at 10:45 am

I requested this for my birthday recently (along with Keynes’ General Theory… and, to offset, a full boxed set of Human Action) and it is a tough read despite it’s size; infuriating at every turn.

To think about ten years ago I would have lapped this up. His casual dismissal of Austrian economics was to be expected, I suppose. He has no argument against it bar a feeling of it being ‘unconvincing’. Ridiculous.

Sans Superhighways March 17, 2009 at 12:08 pm

Aha! Mr. Madrick is another supporter of the interstate highway system? Supporters of big government love to point that one out as an example of better living through big government.

Where would we be without the government imposed superhighways?

At a minimum, all that annoying, polluting, dangerous truck traffic on our roads might be routed by rail instead. Air travel killed passenger traffic on railroads in a naturally competitive way. But freight traffic on railroads has prospered in spite of government favoritism to truck transport. Arguably, there would be fewer trucks and more trains if people had to pay for highways as an investment.

And without government subsidized commuter freeways, perhaps white flight would not have been economically attractive and our inner cities would be integrated and vibrant instead of decaying cancerous blight. Once the government built the exit roads, the population fled from the cities. Arguably, this would not have happened if the people had to pay for the roads themselves–more likely they would have invested the money in their current communities.

Where would we be without government imposed highway? Probably living in much more pleasant cities with much less pollution and much cheaper transportation and travel costs. And whatever we had instead would be vastly superior to what we have now. If a federal program were desirable, the government wouldn’t have to force it on us.

Bob Stafford March 17, 2009 at 1:34 pm

I am in severe disagreement with the majority of negative reviews like this one. We owe much of our current prosperity to the dissemination of major breakthroughs that have been accomplished with more, not less, centralization and planning.

Enjoy Every Sandwich March 17, 2009 at 1:47 pm

Bob, which “breakthroughs” are you referring to? And can you show that these breakthroughs 1) were the best approach or solution, and 2) could not have possibly happened except via central planning?

Other than world wars nothing really comes to mind.

Bob Stafford March 17, 2009 at 1:53 pm

Enjoy Every Sandwich,

Try infrastructure.

Enjoy Every Sandwich March 17, 2009 at 2:01 pm

Bob, you can’t be more specific? The word “infrastructure” covers a lot of territory. And again, to make your case you have to show that the infrastructure created by the central planners was actually a good idea.

For instance, as another poster above pointed out the interstate highway system is not necessarily the boon that many people make it out to be. It is true that without it our transportation infrastructure would be quite different; but different is not always necessarily bad.

As an aside, I find it weird that many leftists who hate the privately owned automobile and what it is supposedly doing to the environment nonetheless support federal government bailouts of the auto industry and the building of more roads. (I don’t know if you fall in that category; I’m just saying that those who do strike me as either confused or disingenous.)

Steve Hogan March 17, 2009 at 2:16 pm

Bob,

That the review is negative is irrelevant. What’s important is whether it’s correct or not. If the review is illogical or mistaken, make a cogent argument for why this is so. This requires that you do more than make blanket assertions.

Unlike the lovers of big government, you need more than trite campaign slogans to persuade most people on this site.

Sukrit March 17, 2009 at 7:14 pm

I can’t believe someone actually wrote a book that so explicitly makes the case for fascism (Big Government)!

Austroglide March 17, 2009 at 8:00 pm

Bob,

You commit THE VERY FALLACY which Mr. Gordon points to as the flawed thesis of the book’s author: coincidence does not equal causation.

I don’t pretend to know the causal connections between the existence of publicly-funded infrastructure and economic prosperity, but until you can demonstrate them, neither should you.

Jaycephus March 17, 2009 at 9:00 pm

BS: “I am in severe disagreement with the majority of negative reviews like this one. We owe much of our current prosperity to the dissemination of major breakthroughs that have been accomplished with more, not less, centralization and planning.”

So you say, but have not a clue of how to prove.

Is there some computer technology that was ‘centrally planned’? How was it better than what has arisen on its own?

(I’m sure we’re all familiar with the Soviet contributions, state-of-the-art that it was… for vacuum tube technology, anyway.)

You suggest ‘infrastructure’.

What ‘major breakthroughs’ in INFRASTRUCTURE have been accomplished by central planning?

Jay

waywardwayfarer March 17, 2009 at 10:02 pm

Even assuming there were breakthroughs in infrastructure under central planning, how are we to know that these were superior to what might have been done with the same resources left in private hands? It’s of course impossible to determine this empirically, since there is no way to observe an alternate time line in some parallel universe. Logically, it makes sense to lean toward the opposite being true: That central planning, which is imposed by force, inflicts a net loss of value relative to what otherwise would have been.

fundamentalist March 18, 2009 at 8:43 am

Bob Stafford: “We owe much of our current prosperity to the dissemination of major breakthroughs that have been accomplished with more, not less, centralization and planning.”

Economics teaches that our prosperity comes from capital accumulation. Technological advances help, but they require capital accumulation.

Later you give infrastructure, such as roads, as an example of good central planning. But you probably know that our current interstate highway system was the child of Ike, who wanted it to transport troops across the country instead of relying on trains. It had no economic purpose. Because the state decided to subsidize highways and airlines, those methods of transportation developed at the expense of railroads. Railroads are far more efficient forms of transportation, but they haven’t been able to compete against subsidized air, truck and car travel. Of course, railroads were subsidized in the 19th century, but the 20th century state preference for air and highway traffic severely damaged railroads. Had the state remained neutral, we would see far more travel by rail for medium distances, with cars and trucks reserved for short hauls and airlines for the longer hauls. Central planning is always less efficient that market planning, as transportation demonstrates.

waywardwayfarer: “…how are we to know that these were superior to what might have been done with the same resources left in private hands?”

Add up all of the bridges to nowhere and the roads to nowhere in any state. Infrastructure (highways and bridges) are a cynical way for politicians to fool people into thinking they are doing something for the economy. My state, Oklahoma, has dozens of nice, four-lane highways out in the middle of nowhere going nowhere. Politicians built the roads in order to buy votes from people in the counties where they built the roads.

Vanmind March 18, 2009 at 8:58 pm

Madrick says: “Be hip like the Nazis”

Matt R. March 19, 2009 at 10:50 am

I agree that railroads are a good option, but they are subsidized. It’s called Amtrak, and Joe Biden is a big supporter.

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