One issue that I didn't make clear in the last post was that I can definitely  see areas that could cause a break down or collapse of our present social development. These would be things like protectionist trade wars, immigration leading to social instability, climate change, or the spread of a epidemic. But what I would say is that the way to overcome these issues is by adopting more 'high end' solutions. By this I don't necessarily mean more government, rather government at a higher level. Things like a reformed UN, or other intergovernmental bodies to help mitigate the destructive tendencies that these issues would unleash.

Libertarian States

This post by Noah Smith, coupled with Governor Perry's thoughts on federalism outlined by Mathew Yglesias here, have left me wondering just what kind of state conservatives and their libertarian allies would build. Noah's post takes a passage from a book that I loved, Why the West Rules--For Now, dealing with the need for 'high end states' in order for societies to advance and overcome the social, economic, and political problems that their size and complexity generated. Ian Morris, the author of  the book, compares these 'high end' states, which have larger bureaucracies and use higher taxes to pay for this increased government role, to 'low end' states that are based on a form of tribal or military allegiance that has a basically no centralized bureaucracy and consequently less need for the high taxes of the 'high end' state. As Noah points out, Mr. Morris does not think the fact that high end is more advantageous than low end need any explanation. To which Noah replies, 


"Econ 101 provides a perfectly plausible theoretical reason why "high-end" strategies might succeed better than "low-end" ones. That reason is public goods. The tax money that governments take in doesn't all get wasted or mailed off as Medicare or welfare checks. Some of it goes to pay for roads, courts, police, schools, research, and a bunch of other very important things that private companies cannot or will not provide in sufficient quantity. If high-end states outperform low-end ones, it is because they provide the public goods that low-tax, low-spending governments can't create. 


This, to me, is almost self evident, though I do wonder what a libertarian would think in this situation. High end states certainly out-competed low end ones, and the reason for this was their ability to mobilize public funds for public goods. These public goods, like irrigation systems, allowed for increased productivity as compared to their low end brethren. So while roads, or universal education might come about in a low end world using only private initiative, they come about much sooner by government action. 


But as Mr. Morris points out, "Rising social development generates the very forces that undermine further social development. I call this the paradox of development". And this is were it gets interesting. Could it be that the high end states that have been built are being fundamentally undermined by the growth that they created. That is, does the welfare state in something resembling its current form need the growth that was generated by the industrial revolution in order to sustain it. As Noah notes, 


"High-end states that succeed in times of economic expansion can fail dramatically in times of stagnation or contraction. As growth hits its limits, the big bureaucracies that helped generate and stabilize the growth are no longer needed...but institutional momentum keeps them around past their sell-by date, dragging the economy down with inefficiency until a breaking point is reached, and a high-end state collapses into a new low-end equilibrium."


He makes the case that this can be seen as something like the libertarian perspective; that the growth that came from the the discovery and use of fossil fuels has led to the rise of massive bureaucracy for the redistribution of the wealth that has been created by this unprecedented increase in productivity, and that as this growth slows the inefficiency of the governments resource allocation will become more apparent as all the simple public goods have already been done. Which leads to the eventual default of the government. 


While Noah points out evidence that this is not the case, he never the less acknowledges that he could be wrong. To this I say hogwash. To me there seems to be no reason that the U.S., or any other developed government for that matter, could not maintain something close to its present size while still funding itself into perpetuity. Let's look at the U.S.; for the last 10 years we have spent considerably more than we have brought in through revenues. Though the key point would be that this does not have to be the case,i f we would have avoided the two drawn out wars, the two tax cuts, and the unfunded Medicare Part D our finances would have been in very good shape, while growth would have stayed about were it was. Going forward all we need to do is reform our health care system and SS while raising taxes slightly and we should be solvent for decades, if not centuries. I am not an economist but it seems to me that growth should not be a prerequisite of a fiscally sound country, that is, that we should be able to putter along at some sort of equilibrium until the next spurt in growth. I think that if most people, meaning non-libertarians, looked at what the government spends money on they would come to the conclusion that most of it is not only necessary but desirable. We spend the largest amount on insurance for the old, poor and disabled. Then comes the military, which should shrink by the most. Finally we get to the rest of the government, which it turns out is only about 19% of the budget, and this is where the government still does some real good. The repair and maintenance of roads and infrastructure, the installation of new infrastructure (such as electric charging stations), basic R&D, law enforcement and the courts, and education have all been shown to be areas that the government provides real services that the private sector wouldn't, or couldn't, come up with the necessary funding. 


And this core component of what the government does, coupled with the pared down military and the entitlements, not only are affordable but also speed the up the process of reaching the next stage of growth.  To a libertarian I would say, what institutions are going to bring us down? Welfare? The entitlements? Other discretionary spending? I think not. We can fund these things with a relatively modest tax rate, so while we could certainly kneecap ourselves fiscally, this doesn't have to be the case. Though on a more troubling note the right has been looking at a good kneecapping bat, so who knows.

Interesting Times

Over the last few months it has become clear to anyone who cares to look over our political scene that the Republican party is going a little insane. The rhetoric over basically any initiative that Obama proposes has gotten to point that it seems impossible to accuse him of worse without bringing in the words 'pure evil'. They have elected a slew of new members that are, for lack of a better term, ideologues, and seem slightly unstable. The article in the New Yorker about Michele Bachmann drove this point home, she seems to have a warped sense of history, economics, and policy that is in large part driven by her uncompromising christian faith. It seems like the way in which many of these Republicans engage with the world is through a faith based mental process that reasons logically from divinely inspired universal truths, or said another way, truths that are not subject to verification by evidence or fact. This, I think, is the reason that it is so hard for our political system to reach any sort of compromise, one party is refusing to acknowledge the legitimacy of the others position.

I try to read differing opinions on various issues, mainly libertarian because movement conservatives are offering basically nothing these days, and it has become almost impossible to talk with some members of the conservative movement. This inability to communicate is in large part because they refuse to budge on the starting premises, there is no amount of evidence that can sway them from their belief in the truth of their belief. So for example the meme that we don't have a problem with the deficit, we have a spending problem. Now if you believe that the government spends to much money that is a perfectly legitimate argument, but to convince others you are going to have to show that the US spends significantly more than other similarly situated nations, and that we also have tax rates that are on the high side. To say that there can be no revenue increases, even though we as a country are on the low end of the individual tax burden, while holding our nation hostage to slash spending that was enacted in a democratic fashion shows an ideological fanaticism that is terrifying to truly contemplate. These people are capable of convincing themselves that basically any means are legitimate to reach their objectives, and it is becoming harder to imagine a situation in which they act with some self restraint.

So to finish up quickly with what is the most troubling aspect of the Republican world view at this point in time, I think it has to be that the actually present reality bears so little resemblance to their ideological worldview. It is hard to argue with these charts which show that the policies that they enacted are the largest cause of the deficits that they now rail against. They drove the deficit to astronomic levels, their policies helped cause the financial crisis, and obstruction hampered the recovery, and then they choose the most harmful way to demand spending cuts to programs that they dislike. It is irresponsibility on an epic scale, and it should be called out by everyone with an ounce of sense.

How can the party that worships at the feet of capitalism not understand their patron saint.

This post from Rortybomb got me thinking about the how the fundamental assumptions of people determine the immediate goals that they pursue. I have dealt with semi-related topics in the last few posts on libertarians, dealing mainly with how their belief in the unequivocal nature of the right to personal liberty leads to all sorts of undesirable places. It seems important here to clarify what I mean by fundamental. What I am driving at is the basic ideas that a person (or a group of people) think are of paramount importance in the working of a economic, political, or social system. So equality before the law seems to be a principle that all people believe to be a necessity in structuring a society. This idea is of the kind that influences how people think about the way in which we structure the legal system, or even the services that we provide to our rural residents. In short it colors broad swatches of the intellectual debate that determines what our actual policies are going to be.

Which brings me to who the Republican party thinks is the engine of our capitalist economy. I think it is at this point general knowledge that Republicans have bought into the Randian notion that the capitalist and innovators at the top of our economic pyramid are that driving force, that they are both necessary and (probably) sufficient to the continued growth of our shared prosperity. The post at Rortybomb makes the point that this directly contradicts the analysis of Adam Smith, who saw the cooperation of huge amounts of people as being the means by which capitalist societies were able to provide material comforts for their members. The author of that post does a great job quickly laying out Smiths position as opposed to that advocated by Rand and Carnegie, and which has subsequently been appropriated by the Republican party. I want to leave that issue aside and focus on how this fundamental assumption has led to many of the current troubles of the country.

It seems to me that the assumption that the first principle when dealing with economic, political and social policy concerns should be their affect on the 'job creators' is the underlying cause of many of the seemingly intractable problems that are plaguing our society. I think you can see this dynamic at work in the debates over the deficit, welfare programs, or even campaign finance reform. To use the deficit as an example, in arguing against any a tax increases on the already affluent, Republicans make the case that tax the rich and business would penalize the job creators, thereby harming the interests of society in general. As an aside I take the recent Republican fulminations against Obama's payroll tax cut as evidence that they are only concerned with the tax rates of the wealthy. Now it has to be said that if the job creators are who really power our continued economic growth and progress than it logically follows that their interests and well being should be given added weight when determining public policy. So while in broad outline The Republican party and I share the same basic goals, continued economic growth and prosperity for a ever growing share of the worlds population, the mechanisms that we would choose to achieve those goals are decidedly different because the assumptions about what drives said growth are so far apart. Because starting from a different principle can lead to such different places it is worth asking whether or not the underlying assumptions are accurate representations of reality.

Now seems an opportune time to acknowledge that the interests of those at the top of the pyramid should be considered when debating policy, while maintaining that living, working, and material conditions of the vast majority of people is the factor that should be given the most consideration. At this point I am going to leave this empirical question of whose fundamental assumptions are closer to reality for another day, though I will leave you with the question of why the patron saint of capitalism has such a different take than the party that is supposed to revere him.