Monday, October 18, 2010

The moving fulcrum

In a previous post I talked about some signs of a slow retreat from statism in terms of an ebbing tide. But I'm thinking now, because of the cyclic aspect of tides, that wasn't quite the right metaphor. It's not that there aren't cycles in historical change, because there are, in political change especially, as we can see in the oscillations between left and right in most democratic polities, and in, for example, US Presidential politics over the last few decades. But those cycles tend to obscure deeper movements that are more directional -- a spiral would be a better model than a simple cycle, and a pendulum whose hinge or fulcrum is moving would be better still. A pendulum swing, after all, is a familiar trope in politics, and we saw it illustrated in the 2008 election that swept not just Obama but Democrats everywhere into power after the Bush years. The swing seemed to have enough momentum that liberals and so-called "progressives" could be excused in thinking it would carry them and their statist agenda into a new era. But when the pendulum's fulcrum itself is moving, and moving in a direction contrary to the swing, the momentum is dampened considerably -- and that's exactly what the statist liberals have run into, with the startling rise of the Tea Party phenomenon and the sharp resistance to additional state intrusions, spending, and taxes.

In other words, the primary movement of the American polity, over and above the usual back and forth oscillations, is to the right, and this is shifting the terms of the debate on both right and left. Marxist terminology, once common on the left, has now almost completely disappeared, apart from some zombified remnants on college campuses, and Hayek and markets are at least more widely understood than ever -- as Brad DeLong nicely illustrates with this post, "How Much Does the Market Organization of Economic Life Matter?", and its revealing little chart of the results of an historical experiment. And even more telling is this confessional article by Kevin Drum, in Mother Jones, on "Schools and Poverty":
I'm going to get the ed people mad at me again — and I guess I'll add the poverty people too this time — but I continue to think that the biggest problem here is simply that no one has any really compelling answers. Movies like Waiting for Superman (which I haven't seen), along with an endless stream of credulous punditry, keep suggesting that the answers are out there if only we'll fund them and take them seriously. But they aren't.
His despair goes beyond the usual left lament that people are maybe tapped out when it comes to yet more tax increases -- he actually begins to question whether the taxes would do any good anyway:
... the tolerance of the middle class for raising its own taxes to improve education is pretty low. One reason, I suspect, is that people have largely lost faith that their taxes are being used for anything useful. If they pay more, they won't get better schools, they'll just get higher teacher salaries as the teachers unions hoover up all the dough.
And this is in Mother Jones!

Of course, as Adam Schaeffer says, in the post from which I got the link ("Why Won’t this Pig Fly? We’ve Tried Everything to Fix Education and Poverty. . ."), there actually are some answers or approaches that can address these problems:
We know what improves education, allows success to scale quickly, and saves money as well; a real market in education, aka private school choice, the freer and broader the better. The education problem is intractable only if the government continues to monopolize education services.
But getting to such solutions will still require a change in fundamental political mindset -- the hinge of the pendulum still has a distance to go.


  1. The first comment to Herr Doktor DeLong's pro-market essay sums it up well: "I don't think this sort of comparison serves as a general advocacy for markets; it serves to say they work better than this other thing, and that's useful (if the current advocates of the other thing are willing to consider rationality and utility in their decision making, anyway) but it doesn't get markets away from their failings, it's evidence that they don't screw up as badly as despotic industrial command economies do.

    I would go farther and say DeLong overlooks the real comparison, which would be the economic life of the average Russian or Chinese person (ie non aristocratic) pre-Revolution, and economic life post-revolution. Of course there were horrible atrocities, mass killings and so forth, but the bolsheviks for example brought many workers and peasants out of poverty and gave them some sort of work, even if they paid them in bread and potatoes (ie, a SOL index doesn't really seem applicable, if the economy doesn't use currency as capitalism does--ie, the Bolsheviki gave people housing, small plots of land, eliminated mortgages, etc).

    Morever, DeL. doesn't prove that markets are the best way to organize economic activity but merely that they seem to be on the average "better than Maoism" --for some. Another commenter correctly points out that wealthy nations such as Sweden and Germany (and most EU, really) have mostly socialist policies in place --the comparison's skewed by focusing on the bad socialist nations rather than successful. There are other points--for one a few dozen millionaires skews the GDP per capita, even if there are millions of people living in poverty.

  2. Morever, DeL. doesn't prove that markets are the best way to organize economic activity but merely that they seem to be on the average "better than Maoism" --for some.

    Well, better than Maoism, better than Leninism, better than Stalinism, Khrushchevism, Brezhnevism, Titoism, Pol Potism, Ho Chi Minhism, Castroism, Dear Leaderism, etc., etc. -- for everyone but the nomenklatura. I.e., better than all attempts to implement "actually existing socialism" that have ever been made. As for the EU, these are obviously market economies with just higher taxes and more regulations than currently seen in the US, and recent elections are showing a trend there too away from even that much "socialism" -- see this earlier post. No, I think it's pretty clear, even to most of the left these days (though you do see some "bitter clingers") that markets are easily the best way to organize economic life, and that freeing markets, even as it increases inequality, is the best way to eradicate poverty.

  3. My one cent:

    Markets are good as a necessary constituent of free market capitalism, which itself is entirely to the good, so long as it's reasonably regulated. Subject to cataclysm coming in the form of some terrible devsatation from Jihad or some radical economic change coming from true global competitiveness and the outsourcing of jobs for cheap labour, the framework for markets within the frame of liberal democracy will be oscillations between more and less regulation on the basis of oscillations between ideology and pragmatism. There is, subject to the same subject tos, no steady move to or away from statism, that I see, unless Tom Friedman has his way.

    That's my understanding of the Third Way, the only way of understanding these matters that makes sense to me, subject to etc. etc.

  4. So, as I understand it, your "one cent" is to say that the fulcrum isn't moving, and the pendulum just oscillates forever between "more and less regulation". But I think the last part of that sentence itself suggests otherwise. "Pragmatism" just opts for what's possible and useful at any given time, but in itself it has no preference for either more or less regulation -- "ideology", on the other hand, does, and ideology will be a steady push. The question is, in which direction will ideology push, and my -- tentative, but hopeful -- answer is, in the direction of reduced regulation, open markets, and freer human beings. I.e., despite the oscillations, the fulcrum itself is moving.

  5. Two things, maybe three.

    I thought my comment was so good I'm upping it to 2 cents.

    I'm dizzy from all the oscillations and the fulcrum's movement.

    I'd say that given relative stability there will be no steady ideological direction and that within the framework I briefly hinted at sketching, ideology will ebb and flow as will the resort to the pragmatic analysis of particular problems. What might be interesting is to think through the conditions under which each ebbs and flows.

  6. Well, yeah, "given relative stability" (emphasis added). But I don't think you can give yourself that, even with the extra cent. I think, in other words, that history has not yet ended, and, on the basis of the indications provided in this post and its previous one, among many others, I'm hopeful, as I say, that it's moving in a good direction -- it's why I'm a progressive, after all. In the true sense.

    P.S. I'll happily up your comment to 3 cents, but also immodestly suggest this little parable as an aid toward thinking through those conditions -- no oscillations, I promise.

  7. All the third wave hype aside, morf's basically saying "trickle down's always the best" without empirical/evidential support. (Then DeLong nearly says that as well). So much for economics as a whole.

    The word "market" itself is misleading, if not entirely bogus. Look around a suburban area. What "market"? Walmart? The Ford/Chevy/Toyota dealerships? The massive corporate retail chains, selling only Microsoft gear? Fast food rackets? etc. It's only a "free market" to the minds of academic economists--who usually mean...stockmarket. Brad DeLong, investment consultant......

  8. a) It's third way, not third "wave".

    b) I'm basically saying that, by all historical evidence, "gusher" or "fountain" is a far more accurate term than "trickle", whether the direction is down, up, or sideways.

    c) If you look around a suburban area and you don't see what you want, then first of all I think you may just be chronically unsatisfiable, but second of all you might also be on the verge of an exciting new entrepreneurial start-up, providing just that missing good(s) or service(s)!

  9. With the right politicians in place, yes the market could be a gusher--as with Bush II, and his executive and investor cronies in the oil business, once the Iraqi war started. The price of crude goes up $20 a barrel in a few weeks, and ...their oil futures and stocks were worth triple or more in value. Far better odds than vegas.

    Which is to say, you don't appear to understand the market fluctuations either (at least stocks, futures, bonds, etc). Some stocks/commodities are relatively stable--grains, lumber, old blue chip stocks. Others oscillate wildly (NASDAQ stocks, indexes, energy, etc). The hotdog traders crave the oscillations.

    AS far as entrepreneur-ship---some game when Wallymart with massive inventories can undersell everyone in town, and for that matter, few other businesses have anything like W-mart's resources--capital, inventory, cheap labor, brand name, etc. And start-ups fail about 95% of the time--another of the dirty secrets of US business. You note only a few success stories, but not the thousands of non-success stories. The PollyAnna business model

  10. The free market, aka capitalism, has historically provided a gusher of wealth in all forms to everyone, including the poorest of the poor. Maybe Google it.

    And I'm not talking about the stock market.

    Either Walmart is selling whatever you and similar customers want at a good price -- in which case, what's your complaint? Or they're not, in which case you have a good opportunity to be one of the few entrepreneurs who actually succeed.

  11. BEtter, maybe google all the criticism of Reagan- era supply-side models. Or for that matter, google Gingrich/Gramm, and the Clintonites (Summers, Rubin, et al) who put together de-reg and thereby led to the mortgage crisis.

    You really don't understand this game. Of course, for a machiavellian business type, distortions of the historical record and Pollyannaish praise of the "free market" may serve his ends as well as truth does.


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