Regulated competition is the wellspring of our revolution

The hot new Evonomics site offers some of the best writing about fresh  economics perspectives around. I was one of their first writers and now they have published another piece on "The Fairness Divide" making a clear distinction between equality-of-opportunity vs. equality-of- outcomes.  I think it will set some familiar perplexities in a much clearer light.  

Along related lines, Lawrence Lessig has joined others in questioning one of our laziest assumptions: that capitalism is the same thing as corporate oligarchy, and that the secret to a healthy capitalism is zero regulation.  

Anyone who actually reads Adam Smith - or who knows a thing about the last 6000 years - knows that oligarchy is the worst enemy of flat-open-fair-competitive and creative market enterprise. 

Here's a passage from Lessig's recent review: 
“Theorists and principled souls on the Right are free-market advocates. They are convinced by Hayek and his followers that markets aggregate the will of the public better than governments do. This doesn’t mean that governments are unnecessary. 

"As Rajan and Zingales put it in their very strong pro-free-market book, Saving Capitalism from the Capitalists, 'Markets cannot flourish without the very visible hand of the government, which is needed to set up and maintain the infrastructure that enables participants to trade freely and with confidence.' 

"But it does mean that a society should try to protect free markets, within that essential infrastructure, and ensure that those who would achieve their wealth by corrupting free markets don’t.”

"Rajan and Zingales further describe:

“Capitalism’s biggest political enemies are not the firebrand trade unionists spewing vitriol against the system but the executives in pin-striped suits extolling the virtues of competitive markets with every breath while attempting to extinguish them with every action.”

== Must markets be 'blind'? ==

Way back in the last century, I was pointing out that those proclaiming “Faith in Blind Markets” — or FIBM — mostly ignore those 60 centuries, when lack of market regulation simply meant “those who have, rule.” Across that era, laissez faire inevitably led to feudalism and stunningly stupid governance. The last 200 years have been an exception to that brutally nescient and incompetent span. This was Adam Smith’s foremost complaint.

Does this validate the opponents of FIBM? Those who proclaim Guided Allocation of Resources, or GAR? Surely the examples of Leninism, Maoism and Japan and China show that central control has severe limitations. Without any doubt, the FIBM guys have a point — that there’s such a thing as too much regulation. (Ironically, which U.S. political party actually de-regulates obsolete agencies and loosens regulation, as often as it tightens it? Democrats, by far.)

I go into the tradeoffs of GAR and FIBM elsewhere.  But the outlines are clear.  Both cults want control and allocation by elites. The FIBM crowd (who call themselves “libertarians” but in fact are not) differ only in which elite they would make all-powerful allocators — not bureaucrats, answerable to an electorate, but a secretively-incestuous CEO caste of 5,000 golf buddies.  

That’s not flat-open-fair-creative market competition, and it certainly isn't Hayek. That is hypocrisy. It’s the tired old way: feudalism.

But read the Lessig article.  He's an economist and has lately earned some real cred from us.

== More on Hayek ==

Others are weighing in on Hayek, and the rampant misinterpretation that he favored zero regulation. As economist David Sloan Wilson put it:  "Hayek had two way-ahead-of-his-time insights. First, that economic systems have a distributed intelligence that cannot be located in any individual. Second, that this intelligence evolved by cultural group selection. Contemporary science — complex systems and multilevel evolution — validate those claims. But Hayek fans are mistaken to believe that his insights mean markets should be unregulated."

Or as Evonomics pundit Jag Bhalla says: "Hayek’s right that no “central planner” can know what’s distributed among people in markets. But computer scientists have studied distributed processing’s limits. Many tasks can’t be efficiently distributed. Most still need central coordination. Aren’t market computations similarly limited?" ... and "Effective market regulation should heed biology’s regulatory lessons. Economies, like complex organisms, need distributed reflexes and a central nervous system. They need more than one price-like signal to prioritize and regulate for the whole, and to manage systemic risks. That doesn’t happen automatically."

== Libertarianism and conservatism, redux ==

Let's look at this same issue from another angle.

The real problem with today's versions of libertarianism and conservatism isn't "selfishness" per se. As Adam Smith showed. competitiveness is one wellspring of human creativity and leftists are fools to deny it. 

No, the problem is that conservatives and libertarians almost never mention the word "competition," anymore.  Because they know people sense a contradiction with the modern religion that has taken over libertarianism. Idolatry of unlimited personal property. 

At best, these two concepts - competition and propertarianism - are tense partners, with some genuine property rights necessary, in order to foster competitive drive. But they can become often diametric opposites, even enemies.

Yes, property rights are essential, but they become toxic when overly concentrated. (Just like any other good thing, e.g. water, oxygen and food.) Adam Smith knew this. To him, the true enemy of market enterprise  - across 99% of societies - was feudal owner aristocracy.  And it is true today. 

Let's stick this point: Idolatry of unlimited personal property is the same thing as declaring hatred of flat-open-fair competition.

See my classic essay on this, appealing to all -- especially libertarians -- to get over their voluptuously silly Ayn Rand solipsism kick and actually read Smith, a philosopher who understood so much more than slimplistic left or right credit him with, and who changed the world.

See this recent essay about Ayn Rand's cult of selfishness and the real world cases where it has been put into practice... Sears/KMart and Honduras, both of which were suddenly converted to Randian principles of cut-throat internal competition.

Both are now teetering on bankruptcy.

== A useful innovation that can sour ==

Let's try this from yet another perspective: George Friedman, founder of Stratfor the strategic analysis firm and now working with economist John Mauldin, discusses the modern, limited liability corporation:

“The very idea of a corporation is a political idea. That someone should be able to own part of a company but not be liable for all its debts is a very modern idea. It's also a very radical idea. Many people, including Adam Smith, did not trust the corporation. Smith argued that unless you were an owner of a corporation, you were not committed to its interests. ... It is the state setting liability. 

The notion that there can be limited liability doesn’t flow from the free market. It flows from the state, which says you can have this kind of corporation”

To be clear, Smith was not all-knowing.  The limited liability corporation has definitely had its uses and allowed more bold risk-taking in pursuit of economic dynamism.  But the moral hazards mount up over time.  Not only should LLCs be fundamentally limited to prevent monopoly and conniving duopoly etc, but there are good arguments for assigning them lifespans, so they will not become immortal and toxic.

== A plethora of angles on a problem ==

To be clear, something like a modern political economic system is a lot like the proverbial elephant, being groped by blind pundits, each proclaiming a single, linear metaphor to be THE thing itself. In fact, these perspectives -- like the hoary "left-right axis" - are only useful to the degree that users bear in mind: the map is not the territory.  And our metaphors can lobotomize.

So let's restate "left" and "right" not in obsolete terms from the French Revolution.  Instead, I think conservatism vs progressivism is all about the process of "horizon expansion" that I talk about here and here. Wherein the circle of inclusion in society keeps being pushed outward, a process that gained momentum in our Great Experiment gradually, for the last 250 years.

A process that the left has made their core religion! So much so that they despise and denounce anyone who disagrees even slightly about the pace of tolerance/inclusion expansion and openly question whether old loyalties are still pertinent.

The right, in turn, despises those who push hard on inclusion-expansion and hates to be nagged to do it.  They like their old loyalties.

LIBERALS are a third type, totally different than leftists. They tend to like the general process of inclusion expansion ... but they also like their old loyalties.  They are the only ones conceiving this as a positive sum, win-win process. Again, liberals are neither lefties nor righties. They want new kinds of citizens!  But they also don't mind keeping some older ways around.

You see the same thing when it comes to the concept underlying our great competitive ARENAS... markets, democracy, science, courts and sports ...All five innovative systems achieve positive sum cornucopias of output because they nurse vigorous competition... but regulated in order to minimize cheating and maximize opportunities for creative rivalry.

Leftists despise the word "competition" ignoring (1) that is is the source of fecund wealth we use then to help people and expand inclusion! Moreover - oh the irony - (2) they they are themselves being very very competitive!

Rightists are worse!  They claim to love the word "competition" but hate REGULATION... without which competitive processes are always always always and always ruined by cheaters.  (In fact, enabling cheaters is now the main purpose of the Republican Party.)

Again, liberals are the only ones who see no dichotomy.  Who see the combined word "regulated-competition" as the wellspring of our revolution and bold new way of doing things.

Which brings us full circle.  Sure, regulations - even well-meaning ones - can stifle enterprise. (And dems are better at eliminating those.) But without a regulated marketplace we fall back upon 6000 years of cheating - and FIBM soon becomes just another excuse for GAR.

It's complicated, and not very satisfying to those who want simple prescriptions.  Rather, our role as adults is to accept that it is complicated.  To embrace all this complexity! To keep fine-tuning a role for regulation in enhancing infrastructure and science, education, health etc -- things that increase the overall number of skilled and confident competitors!  But also to back away from those well-meaning regulations that try to impose nit-pickery outcomes.

Militantly moderate, ferociously reasonable, courageously contingent... it is the liberals who seem less passionate, but who have the closest thing to an adult perspective. One that might bring us to even greater heights.

The True Origins of the American Revolution

A few weeks ago, I was one of the headlined speakers at Freedom Fest, the big libertarian convention in Las Vegas. Do I seem an odd choice, given my past thorough and merciless dissections of Ayn Rand?

In fact I’ve done this before, showing up to suggest that a movement claiming to be all about freedom might want to veer away from its recent, mutant obsession — empowering and enabling the kind of owner-oligarchy that oppressed humanity all across the last 6000 years. Instead, I propose going back to a more healthy and well-grounded libertarian rootstock — encouraging the vast creative power of open-flat-fair competition…

…a word that libertarians scarcely mention, anymore. Because it conflicts fundamentally with their current focus — promoting inherited oligarchy.

With that impudent, contrary attitude, would you believe I had a fine and interesting time? My son and I dined at the VIP table with publishing magnate and former presidential candidate Steve Forbes. Along with humorist P. J. O'Rourke and John Mackey (Whole Foods and an avid SciFi reader.) Also at the table? Grover (I kid you not) Norquist, founder of Americans for Tax Reform and a guiding force beyond the American right’s current-central obsession — that government of/by/for the people must perish from the Earth.

Would you be surprised that I was the most-liberal voice at this gathering? And yes, I managed to poke without being rude. (I've been known to poke in other directions, too!) I even learned a few things. See an addendum, below, offering more about the Freedom Fest event.

Foremost, though, I want to focus on one piece of polemic that Grover Norquist thrust upon us over dinner, concerning the origins of the American Revolution.

== A different American Revolution... or it’s not easy being green ==

Grover N. asserted that, in 1770, the British people put up with being taxed above a 20% rate, while folks in the colonies were taxed at roughly 2% of their average income. Yet, those colonists reacted fiercely and rebelled when/because they saw that burden doubled to 4%!

What an interesting assertion. It turns out that the statistics are generally true, that is, when it came to taxes passed by Parliament - though Mr. Norquist leaves out levies enacted separately by colonial legislatures. But my real quibble concerns which word is correct in the preceding paragraph: “when” or “because.”

Norquist says “because.” Implying that American colonists - unique by their irascibly independent nature - were eager to shuck all old loyalties, to risk hanging, to endure devastating war and deprivation, because 4% was beyond all forbearance. And therefore, today’s American populace, enduring many times that rate of taxation must be inferior, devolved creatures, unworthy of such a founding generation.

May I be frank? That assertion is utter, howling malarkey. In fact, the Founder generation in the 1770s was willing to pay many times as much tax, if only they were treated as full citizens, with representation. The Tea and Stamp and other taxes were convenient ignition sparks, But the fuel for a real fire was far more significant.

==  True Grievances Behind the American Revolution ==

The American Revolution serves as a Rorschach test that reflects the obsessions of each succeeding generation. In the 1920s, Marxist notions of class struggle dominated and thus even anti-communist historians viewed the rebellion as a phase shift from monarchal domination to empowerment of the bourgeoisie. In the forties, literalist scholars started instead taking the Founders at their word — that the Revolution was an idealistic exercise in limiting the scope of government.

During the cynical 1960s, fashions changed again, to viewing the rebellion as a manipulative putsch that allowed local gentry — the caste of Washington and Jefferson — to displace others at the top of the heap. A lateral coup, with just enough populism to keep the middle class placid.

What these generations of scholars all seemed to agree upon was that the colonists weren’t rebelling over the raw magnitude of taxes. Indeed, many expressed puzzlement that there were any grievances worth fighting and dying over! Certainly it all seemed rather far-fetched, given how comfortable life had been for most American colonists, especially compared to the mountain of crimes committed against the people of France, by the Bourbon ancien regime.

In fact, despite the hairsplitting obsessions of academic scholars — and the puerile tendency of textbooks and politicians to mention only tea and stamp taxes — it is pretty clear in historical records that the colonists revolted for a host of genuine grievances:

1) Monopolies such as the East India Company had been granted exclusive trading rights, cutting out American merchants,crushing competition, funneling commerce through ports and markets controlled by the top one hundred British families -- the one-percent of one-percent of one-percent. Colonial goods had to be carried in cartel ships and sold through cartel agents. Thus Americans were viewed as cash machines for the Crown and nobles. Those who had the gold made the rules, and those rules ensured they would get more, an ancient and deeply human pattern that Adam Smith denounced with the publication of Wealth of Nations, in 1776.

2) The insanely destructive 1764 Currency Act, which forbade the colonies from issuing paper currency and required use only of coinage released by the cartel, in London. This devastated the velocity of money, making it difficult for colonists to pay their debts and taxes, even if they had plenty of non-liquid wealth, and forcing thousands into bankruptcy. Contemporary accounts tell that until the 1764 law, you could scarcely find a jobless or poor person in British America.  After the colonies were banned from printing money, the economy tanked. Suddenly there were homeless and beggars everywhere.

That’s a helluva lot less abstract than a tax on tea. Alas though, it does not suit today's tea-party narrative. Note also that there has always been an obsession, in society's aristocratic class, with lowering the velocity of money, a policy that always devastates the middle class. We'll get back to that.

3) Almost half of the land in the colonies was owned by absentee lords. The main reason Franklin was sent to London (around 1760) was to attempt persuading the Penn family (also later the Baltimores and other members of the aristocratic cartel) to allow themselves to be taxed, even at very low rates, so that the colonies could function. Their refusal to contribute (based on ancient feudal privilege) was identical to the rigid stance of the aristocratic First Estate in 1789 France. The “legal” basis was exactly the same.

(Note: those French nobles lost their heads because they clutched obstinate, unreasoning greed. In contrast, the Penns/Baltimores and other lordly families with vast American holdings merely lost their lands, which the Founders seized and redistributed, like the "socialists" they were!

(Hence let me put a side wager on the table: care to bet how the Kochs/Murdochs will behave, as they push exactly the same privilege-line to its inevitable conclusion? Never tax the “job creators!” Which of those two outcomes is likely to befall them, when that propaganda line finally loses its distraction effectiveness and America's lower middle class remembers their grandparents' tales of earlier phases of class warfare? Will the final outcome be the bloody French or Russian or Chinese result? Or the moderate-reformist American? Either way, these fellows are nowhere near as smart as they think they are.)

4) Coming in at number four, at last: taxation without representation! Yes, it is the classic. Only let's dive deeper into this one, because true history is nothing like what we’re told by the Norquist/Teaparty narrative.

The British Parliament was at that time hugely "gerrymandered,” to apply a modern term. There were many Rotten Burroughs where a lord and a few dozen tenants got to elect their own MP, while the masses in Birmingham and London were steeply under-represented… and Americans had no representation at all. Reforming this mess (it eventually happened) would have prevented the explosion, keeping the colonies loyal. But it would also hurt the short-term self-interest of those lords and MPs. So, the blatantly unjust system was maintained and American grievance ignored.

Did you catch the parallel? Today’s Republican Party relies utterly upon two kinds of gerrymandering. In red state legislatures and the U.S. House of Representatives, it is the blatant twisting of electoral districts. (Some blue states do it, too, but more of them are abandoning the foul practice; not one red state has.)

In the U.S. Senate, gerrymandered-unfair representation is even more deeply embedded. It derives from the cynical drawing of state boundaries, so that — for example — Dakota Territory was split in two and given four Senators, despite having minuscule population, then and now. That problem is much harder to fix and must await a truly angry era - one that is evidently coming.

An aside: just to make this perfectly clear — anyone defending this wretched cheat (gerrymandering) is - himself - thus proved to be a cheater and liar and an enemy of the Republic. There is no matter of ambiguity or opinion over that. No rationalization to save you from what you see in the mirror. Reform will happen (as it eventually came to the British Parliament, after the damage was done). Those who delay reform of this dastardly practice are little better than thieves, and stupid ones, blind to how much worse they are only making the inevitable backlash.

The crux: you claim the American people despise their government and taxation? How about letting our elections be fair and proportionately representative, then let the people decide. Because... eventually... they will.

5) British laws against settlement beyond the Appalachians. At surface, this rule was to protect native tribes. Indeed, resentment against this restriction, particularly by Scots-Irish immigrants and transports  arose because they wanted to go over the mountains to grab farmland from peoples already living there. But the Crown and Lords weren't doing this to be nice to the tribes. They had a real problem on their hands.

The frontier provided an easy haven to which tenant farmers, indentured servants and slaves might flee, and/or remake themselves. That escape option - unavailable in old Europe - made it very hard to maintain a bottom-caste peasantry. For all its faults, the frontier forged the deeply libertarian American soul.

(Again... I am talking about older libertarianism... not the weirdly-mutated thing the movement has become.)

Note that factor #5  came to roost in two of the most important battles of the Revolution, King's Mountain and Cowpens, when those Scots-Irish frontiersmen bloodied Cornwallis and helped take back the South from Charleston tories. (Note to nation. Please, next time, let Charleston secede!)

6) Egalitarianism. Some historians anchor the American Revolution upon a single day, when Ben Franklin was summoned before the King’s Privy Council for a public berating and humiliation… the day that the smartest man in a century was converted from an impudent-but-loyal subject into a dedicated conspirator for independence. The colonies were already home to a new spirit and ethos - part cantankerous, part ebullient and hopeful, and part-scientific, with all those portions combining to demand one core question:

“Why should I have to bow down, or be bullied, by another mere human… just because of who his father was?”

The irony is rich. Those today citing the Founders most often are folks who are most vigorously helping propel us back into a world of inherited status, dominated by clans and cartels of aristocratic families. 

(Indeed, this problem -- recreating feudalism -- is the reason why Ayn Rand never once portrays any of her several dozen beloved uber-characters reproducing or raising children. The reader would come to realize that her prescription is, after all, a very old story.)

Was egalitarianism as strong in reality as it was in the Founders' hifalutin documents? In his book, The Radicalism of the American Revolution, historian Gordon Wood emphasizes this aspect, pondering that the new idealism crystallized by Thomas Paine might have built into a breakthrough not seen since Periclean Athens — the invention of the dedicated modern citizen. Wood parses this idealism into many permutations, dissecting variations of republicanism, none of which matter to us here. Suffice it to say that a general quality of fervent belief in a New Man clearly did take hold, taking over from earlier grievances.

In Our Declaration: A Reading of the Declaration of Independence in Defense of Equality, Princeton professor Danielle Allen ponders every sentence of the seminal American document and sometimes every word, examining five facets that revolve around the notion of political equality, including, as Gordon Wood describes: “the importance of reciprocity or mutual responsiveness to achieving the conditions of freedom.”  In other words, providing the back and forth of accountability that no individual can apply to him or herself.  Our enlightenment "secret sauce": the reciprocal accountability that enables science, democracy and markets to function... and that was strenuously avoided and quashed by every ruling caste, in almost every other society that ever existed, and that is perpetually under attack, in our own.

Make no mistake. The Charleston tories became Confederate plantation lords, who aimed to re-establish inherited-landed-ownership nobility, the classic human pattern that ruined competition and freedom and social mobility in every society other than ours.

And that torch is now carried by hirelings of a new oligarchy, diverting libertarian passion away from flat-open-fair competition over to worship of absolute property rights, no matter how inherited or how much this re-creates the Olde Order that sparked our Revolution.

History rhymes.

== What about hatred of taxation? ==

Were there other reasons for rebellion? Sure. For example, as in all civil wars, many felt their blood boil over local and personal grievances, spurring groups of neighbors to call themselves “tory” or “patriot” while riding forth to settle old scores. But for our purposes here, it suffices to demolish the pat and absurd narrative of today’s right, that the rebellion was all about… or indeed had much of anything to do with… the basic amount of taxation.

Oh, sure, there were earlier versions of Grover Norquist, in those days. But few.

For example, take the Whiskey Rebellion, which is often cited by radical libertarians as a failed but glorious attempt to finish the revolution.

How inconvenient to point out that the Whiskey Rebellion was not against the Whiskey Tax, per se! Rather it expressed resentment that state authorities refused to let farmers pay the tax... in whiskey! Which was their only cash commodity. They had no silver, but were willing to pay... in 'shine!  (Which was freely traded about as currency, in those days.) Instead, domineering officials demanded coin, and thus bankrupted a number of farmers, driving others into a fury.

(Note the exact parallel with Parliament’s foolish 1764 Currency Act. Indeed, the very same principle was at stake in the much later Free Silver platform of William Jennings Bryan. And it is seen in those who urge us to “return to the gold standard." Indeed, this same effect is manifest in Congress's obstinate refusal to fund desperately needed infrastructure repairs that would have employed 300,000 Americans, saving thousands of bridges and highways while circulating high velocity money... a far better form of economic boost than the Fed's bond buying program, whose inefficient "stimulus" poured half a trillion dollars into low-velocity uses, like inflating asset bubbles.  Again and again, the pattern repeats: aristocrats use their political influence to bring down the velocity of money and to beggar the middle class.  An old battle, indeed.)

And yes, the Whiskey Rebellion was a case where state bureaucrats were genuinely bossy, insensitive, impractical and ruinous of the people they were supposed to serve. I told you, I have a libertarian streak! Government is a perpetual threat to freedom - even if today’s right exaggerates the current danger, a hundred-fold. Sincere civil servants can metastasize into overbearing bureaucrats! It isn’t only oligarchy that threatens us. All accumulations of power must have accountability!

The upshot of the Whiskey Rebellion was that Washington and his troops established the lawful power of the state to tax. But there also ensued hurried changes in law, easing the farmers’ debt crisis, based on a principle we should always remember. That the state’s power should never become destructive of its citizens.

== The Underlying Agenda of the Narrative ==

I will hand it to Grover Norquist. He is honest about his goal, which is to starve government, then strangle it and then bury it. (Did I leave out the step of incineration?) He makes no pretense otherwise. Reiterating: Norquist and his co-religionists precisely want “government of the people, by the people, for the people” to perish from the Earth.

Now, as a science fiction author… and as a child of Adam Smith and George Orwell and Robert Heinlein... I openly avow that overweening and over-reaching government can be one of the Great Failure Modes! We need an active libertarian side of the national and world conversation, focusing skepticism on the potential for bureaucrats and armies and police to betray and oppress the citizens who hire them! Just as we need others to remind us that the greatest enemies of markets and enterprise and freedom — across 6000 years — have far more often been cartels of owner-oligarch-lords.

Cheaters can arise from any direction, aiming to end our Great Experiment and return us to the old pyramid of privilege, and it does not matter much if the masters call themselves “civil servants,” “job-creators,” feudal lords or communist commissars. It is the same cheating impulse. And it may erupt straight out of genetic nature. Unless we constantly resist all would-be lords, whatever direction they come from and whatever rationalizations they offer.

Which is why we need moderate libertarians who will constantly demand proof that any statist “solution” will both solve the problem at-hand and not take us toward Big Brother. Just as we need moderate liberals to remind us that the best capitalism is one that is flat-open-transparent and broken into units that are small enough to fail. A capitalism that benefits (as Hayek preached) from maximizing the number of skilled, eager and ready competitors! And hence, a society in which all children grow up healthy, educated, well-fed, hitting age 25 prepared to… compete! From basically equal starting gates. Not based on who their fathers were.

(Competition. There’s that word again. If only it were, once again, a libertarian touch stone.)

A plague on both the simplistic, lord-loving entire-right and a patronizingly-bossy and pushy-PC far-left, both of which despise even the notion of flat-open-fair competition. Indignant dogmas are a plague, crippling our genius at negotiating an agile and sophisticated and wise civilization.

== We have a revolution to uphold… ==

As for Grover and his agenda. Sorry. Adam Smith and the Founders knew what our parents and grandparents in the Greatest Generation knew… that a government that is warily watched can serve us. And it can serve as a counterweight to other, older and just-as-dangerous centers of power. We remain free by siccing elites against each other! And that cannot happen if government completely vanishes. Or is neutered.

A lean and leashed government is the only tool citizens have to counterbalance the inevitable cheating by aristocracy that ruined every other human renaissance. Adam Smith And the Founders knew this. Every generation of Americans rebelled against cheaters... generally through calm reforms, but twice violently... though never falling into the intemperate rage of the Russian, French or Chinese revolutions.

Again I keep coming back to the 'greatest generation' -- that fought the Great Depression and crushed Hitler and made the flattest but most successful capitalist society… one that got rich so fast that it could then afford to start toppling ancient injustices, like racism, sexism and all that. Do you admire that generation?  Well, that 'greatest generation' revered and adored one man, above all others. He was the same man that the Cato Institute and Heritage Foundation, the Koch brothers and Fox News all now want us to call Satan Incarnate.

Franklin Delano Roosevelt. Who spearheaded that generation's great work, saving America as a flat-fair-open market economy, from monsters of both left and right. (As his cousin - Teddy - helped us thwart another, earlier oligarchic putsch.)

And yes, many of FDR’s solutions were not appropriate for our era. I prefer looser approaches, that leverage on the vastly higher levels of education that our tech-savvy populace has achieved — in part because of what the Greatest Generation accomplished.

But I will proudly stand up for the founding father of both liberalism and libertarianism. Adam Smith, author of both Wealth of Nations and The Theory of Moral Sentiments, was almost as smart as Ben Franklin! And both of them proposed that the future will be won by moderate, undogmatic people, who are passionately reasonable! Militantly moderate! Aggressively eager to negotiate. I preach relentlessly for agile, citizen-level power, a burgeoning Age of Amateurs, for Smart Mob ad hoc networks, and for local action.

I will continue preaching to liberals that they should rediscover their Smithian libertarian side.

Meanwhile, though, libertarians, you must stop the ranting and lapel-grabbing dogmas that were spoon-fed to you by "think tanks" operated by a fast-rising caste of oligarchic-feudal cheaters! The great enemy of freedom across 6000 years, returning with a vengeance. Escape your hypnotic, Platonic catechisms and realize… that the true, healthy heart of your movement is far more liberal than you ever realized.

We are still the rebels. So fill a glass and raise it high! Here is to ongoing, militantly-moderate Revolution, forever

=

See my collected articles: Libertarianism: Finding a New Path. 

** (NOTES ON THE FESTIVAL: My hosts, Mark and Jo Ann Skousen, were lovely, their Freedom Film Festival was intriguing/challenging, and the evening’s talent show, a libertarian re-telling of Camelot, was a hoot. Oh, and the Janis Joplin impersonator was terrific! Hey, it’s Vegas; you can hire anyone or anything.

(Clearly, the top organizers of FreedomFest wanted to toss a grenade at the Randians and Rothbardians, and I was that grenade, I guess. In fact, I found it all very interesting… and proof that I don’t need a political chiropractor! I can turn my head and look all ways, seeking value, and listening well enough to understand what I refute. (Can you?)

Propertarianism III: Revisiting the Estates General

I must constantly make clear that these are not lefty-rants I am offering. If you think that, then you are seeking comfort in reassuring delusions. You are not actually reading or exploring, and you are not trying to see things from a fresh angle. (As if this "you" applies to any of the modernists who haunt this place! ;-)

In fact, I'm a big promoter of market-based solutions to problems. Like many of my honest-modernist conservative friends, I deeply believe that expanding a sense of market involvement among the world's poor will help us all. My paper on accountability arenas focuses specifically on the vital importance of Liberal Competition, not only markets but also science, democracy and courts, which enhance progress through reciprocal accountability. ("Liberal" in this case is in the classic and truer usage, going back 200 years.)

But that's the point. Mystical Propertarianism is not about markets. Nor is it about achieving practical aims; like reducing deficits, propelling research, spurring the economy, stimulating investment, or any of the other surface rationalizations.

No, Propertarianism is a romantic-dogma, a faith-based cult that pushes an agenda of cheating markets in order to re-establish the traditional aristocratic social order.

And make no mistake, you cannot avoid the historic fact. I will reiterate it till you yell uncle! Across 4,000 years, vastly more markets were destroyed by aristocratic cheaters than were ever destroyed by socialists.

---

May I re-state this in a clear historical illustration?

Let's go back in time to the origins of the insipid and horrifically stupid left-right-political-axis which is currently hobbling all subtlety in 21st Century social thinking. At least back when it started, left-vs-right bore some marginal relevance... to the French Assembly in 1789, right after it was formed out of the older Estates General.

What were the Estates General?

In 1789, facing bankruptcy, Louis XVI called the Estates General in a desperate hope of raising money. The Estates General had three chambers, one for each of society's three "estates" or status groups. The nobility, the churchmen (including vastly wealthy monastic orders), and the commoners. Of these three, only commoners paid taxes - lots of them - even though the aristocracy and monasteries held nearly all the land and money.

Louis had already erected walls around French cities to collect levies and tariffs on goods entering and leaving... a restraint of trade that we now know to have been impoverishing madness. Every other attempt to squeeze the farmers and tradesmen and workers proved just as counterproductive... as British mercantilism had only spurred the American colonies to revolt.

Now, in desperation, Louis turned to the gentry and bishops and monks, asking them to vote an end to their tax exempt status.

A few saw what was happening and were willing. Most dug in their heels, calling it "Our money"... or "our ancient privilege"... or "God's money"... The few who weren't blind walked across a tennis court and joined the Commons in forming the new Assembly. But it was too little, too late, to stanch the anger - and the rage.

I could cite a myriad other examples - from Czarist Russia to the Old South - from Babylon to Charles I - but the pattern is simply too common, too banal, too predictable... and yet too-commonly ignored.

It is human nature for dogmatists and aristocrats to join forces, finding lovely phrases and justifications for taking over the machinery of the state and then using it (and the distraction of war) to enforce a pyramidal hierarchy of privilege. Suppressing true markets and finding excuses to quash competition from the lower orders. Taxing everybody but themselves. Granting themselves contracts and/or even gifts from the state treasury. Justifying secrecy and closed courts and cronyism and evasion of every kind of accountability.

It is - alas - boring old human nature. Church and nobles and the State - wedded against the people who make and build and think and grow and toil. Remember, this is me talking, not some socialist. So you cannot dismiss this as a socialist rant. You know it is what nearly always happened. And you know it's happening now.

In fact, the only surprising thing is that - for a few hundred years - we seemed to evade this repetitious pattern... of aristocrats combining with clergy to take over government and use it for their own ends. Destroying markets because true markets engender upward mobility. Wrapping themselves in the flag. Evading accountability. Thinking themselves smart, while their every move is too staggeringly stupid to believe.

===Continue to Part IV

or return to Part 1 of this series

See also: Class War and the Lessons of History

Propertarianism II: Pause to reflect (again) upon the relentless pattern of history

Last time we discussed how - sadly - it is unlikely the world will enact the reforms called for recently by Hernando de Soto, to vest usable property rights in the vast numbers of Third World poor who do own some land, but who cannot now borrow or develop it using capital markets. This seems a wonderfully practical and achievable "right-handed solution" which calls for establishing clear title rights and open, honest banking systems that should benefit everybody.

(This is part of a generalized interest in institutions as facilitators of practical development. According to one of my philanthropy correspondents: "Douglass North, in his recent book Understanding the Process of Economic Change, acknowledges that we just don’t know understand the process of economic change. At the same time, he acknowledges that we have made some substantial progress. Part of the progress that we have made is that we know that institutions matter, but that those institutions are not merely formal institutions such as banking laws and tariffs, but that those institutions include “soft institutions” such as social norms and cognitive styles. It might well turn out to be the case that successful economic development depends on several necessary but not sufficient conditions. Insofar as judicial independence and even property rights enforcement may, at the local level, depend on such soft institutions, it may be very difficult to implement or evaluate the effectiveness of both formal and informal institutions from the outside."

 For a different approach to the same issue, see: "Disputation Arenas: Harnessing Conflict and Competition for Society's Benefit."

Nevertheless, it is unlikely that de Soto will be heeded in any meaningful or large-scale way, because we appear to be headed back into an era of class warfare and radicalization that will increasingly resemble Europe in the 1780s and 1840s and Russia at the dawn of the 20th Century. I know this sounds dour for a "Prince of Optimism". But the very same social features that decreased radicalism in the lower and middle classes, during our lifetimes, do seem to be in retreat, while the inequalities and injustices that exacerbate class bitterness appear to be on the rise.

"Property Rights" movements will be stunted because the world's masses will increasingly, across the coming decade, see "propertarianism" as the great mystical push by this generation of aristocrats toward justifying a re-institution of aristocratic rule.

(The similarity in names encourages conflation of two very different concepts. But then, parasites are like that. They are uncreative, so they develop mimicry in order to live off others.)

In order to properly understand "propertarianism" we must take some asides into human history. We'll begin by confronting, directly, a bald fact that our friends on the right are always at pains to obscure.

==The thing that destroys market competition==

We have been told all our lives that socialism is the chief enemy of markets. Hm, well, that was true for a little while, I guess. Indeed, Ronald Reagan was right to call the Soviet Union an "evil empire." But for how long? From 1917 to 1989?

Big deal!

For most of the rest of human history -- 99% of urban cultures -- the great enemy of accountability and market systems consisted of conspiratorial aristocratism. The deliberate collusion of those with power, money and influence to take over the organs of the state and use the state's power to enforce their family privileges. Their right to cheat and own other people. And then to ensure those privileges would be inherited. This happened so consistently, across all cultures, that it must be one of the core human traits that modern civilization is challenged to overcome.

Seriously, conservative friends, look over the paragraph above and try your best to evade it.

There is no way you can. It is the salient fact concerning every human society that achieved metallurgy and agriculture. Big men - assisted by fast-talking priests or ideologues - picked up iron swords and took other mens' women and wheat, then conspired to arrange things so that their sons could do the same. If you cannot start by admitting this was true 99% of the time... and that we are seeing similar aristocratic moves today... then puh-lease, just go back into your holodeck fantasy.

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A defining moment: Let me make clear something that I've said many times. Being a wealthy "aristocrat" in today's world does not automatically make you a class enemy of everybody below you. Nor does it mean that you are programmed, automatically, to cheat or repress market competition, now that you've got yours. True, this is the historical pattern. But many of today's wealthy seem to 'get it' about the modern world. Elsewhere I have called them the 'satiables' - or those capable of feeling gratitude and loyalty toward a new style of civilization. One that has given them so much. Satiability does not mean they cease seeking even more money! But they tend to do this with a joyful sense of market participation - creating more goods, services and/or financial efficiency - rather than clamoring for state-protected rents and state-subsidized profits. A good example might be the 'world's greatest investor' Warren Buffett. Newer candidates: Jeff Bezos and Sergey Brin. The new-style aristocrat appears to want the rest of us to become ALMOST as rich as they are, and does not mind if his sons and daughters have to compete a little, showing what they've got inside. This isn't simple goodness; they are also smart enough to see what happened to dismal cheaters, like the Czar. Alas, there remain plenty of the old kind, doing what history says they always do, who are too stupid to see where their long term self-interest lies.

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So what about that distinction I made, between a Property Rights Reform Movement and those who might be called Propertarians? It is one more case where superficial left-right differences in dogma are less important than matters of personality.

Property Rights is a movement aimed at pragmatic, modernist reforms that will give poor farmers and tradesmen in the Third World the ability to leverage a bank loan off their collateral in flourishing and creative capital markets. While this concept has been proved and is generating excitement in development circles, it also faces towering difficulties, especially in corruption by local elites. (One reason for my claim that transparency and systems of universal accountability must precede any broad effort to register property titles.)

Propertarianism, in contrast, is a quasi-platonist, quasi-religious, mystical romantic cult with an underlying agenda aimed at destroying markets. The way that aristocratic wealth always destroyed markets, elsewhere and elsewhen.

Go ahead. Ask some of today's "insatiable-style" aristos and propertarian mystics how they can support tax cuts for the rich in good times and in hard times...

...tax cuts for the rich during peace and during war. Tax cuts during huge deficits and tax cuts during surplus...

...tax cuts to "supply side" us into prosperity through investment in research and factories...

... and then -- when the aristocracy demonstrably does not invest their tax gifts in capital -- they switch to "demand side" justifications, calling for yet more tax cuts, so that the aristocracy can spend it all on employment-generating toys.

(Hint, the last thirty years have shown that direct tax cuts to the rich are just about the LEAST effective economic stimulation of any kind. Proportionate to any other social class, they do not spend. (Hence their support of consumption taxes.) And they do not invest in risky factories or startups. (Venture capital languished even as the Bush cuts sent torrents into wealthy pockets.) They most certainly do no research! In fact, they mostly use any fresh infusion of money simply to be richer.)

When you probe through all the contradicting justifications for this universal rationalization of tax cuts for the rich - especially refusing to pay when your country is at war - the surface reasons all unravel and you'll easily get to the reductio answer.

"It's not the government's money. It's my money."

Try it and see. These old-fashioned aristocrats (and their apologist ideologues) are generally pretty honest about it, after a good push, readily admitting that "supply side" and all the other flummeries were just window dressing. To them, "it's our money" is a deeply-felt and indignantly moral position. A platonic essence, grounded on a purely self-referential axiom. And, like all axioms, it is not subject to question or doubt.

Also (like so many fellow hypocrites on the left) they refuse to ever consider how wonderfully convenient it all is. That their principled, moral stand just happens to support their own, personal self interest.

What a coincidence.-

==Continue to Part III  or return to Part I