May 2009


STALE UPDATE 2: More on the irrelevance of ideas when it comes to macroeconomic policy.
This is a post I’d been thinking about for some time, rounded up a few links for back in February, and then dropped it. Here is where the procrastination comes to an end. The point I’d like to make is that intellectuals don’t matter. Murray Rothbard followed Etienne de la Boetie (to whom I prefer Franz Oppenheimer) in believing that governments only existed because people have been bamboozled into supporting them by court intellectuals. His solution was a Leninist cadre that would replace the statist propaganda with the truth. Although Bryan Caplan says Rothbard went too far, in the main he seems to agree with him and thereby find hope for anarcho-capitalism. Caplan is also a fan of the political economy of two of Rothbard’s greatest influences (Mises and Bastiat) and elsewhere quoted Keynes saying “[T]he ideas of economists and political philosophers… are more powerful than is commonly understood. Indeed the world is ruled by little else.”

I argue instead that their ideas are LESS powerful than is commonly understood, but are instead more commonly the result of the material forces to which Marx attributed ideology. I will use both Keynes and Marx as cases in point. As John T. Flynn pointed out in As We Go Marching, “Keynesian” policies of using deficit spending to boost economies were popular well before Keynes wrote his General Theory (and Rawls after-the-fact justification of New Deal egalitarianism is even more obviously an epiphenomena). I expect many people would use Marx as a counter-example of how much suffering can be caused by one person’s ideas, but I’m not convinced. First, there is a folk-Marxism which preceded Marx and made communism relatively congenial to our natures. Furthermore, there were a great many revolutionary ideologies of his time, he just happened to win out and wind up with his name associated with the relatively successful ones. Louis Blanqui and Proudhon preceded him in France, carrying on the legacy of the Jacobins. The anarchists Bakunin (Marx’s rival in the First International) and Kropotkin as well as the nihilists could quite plausibly have succeeded in bringing revolution to Russia had Marx & Engels never existed. After that Marxist revolution spread to other (mostly backward agricultural, rather than industrial as Marx predicted) countries, often in a malleable combination with nationalist anti-imperialism/colonialism. Western europe had undergone its own waves of nationalism after the printing press enabled previously distinct localities to identify with each other and stronger centralized states displaced the Catholic Church, the rest of the world followed suit in the 20th century. Beginning with the Iranian revolution and accelerated by the collapse of the Soviet Union, islamism came to replace the Marxist and secular-nationalist ideologies that previously held sway in muslim regions. These islamists don’t always behave as a “true muslim/scotsman” should, but according to most religious believers are completely ignorant of the dogma (generally the product of elite intellectuals) they claim to profess, and I would say the same was true of Marx.

Now on to psychoanalyzing people who disagree with me to explain away their disagreement. As Bryan Caplan himself has noted, referencing “The God That Failed”, it was very upsetting for people who vested their hopes in communism to give up belief in it. The hope for a libertarian change and the possibility that intellectuals/economists will contribute to it will naturally appeal to people like Rothbard & Caplan. A quote from Steve Jobs: “When you’re young, you look at television and think, There’s a conspiracy. The networks have conspired to dumb us down. But when you get a little older, you realize that’s not true. The networks are in business to give people exactly what they want. That’s a far more depressing thought. Conspiracy is optimistic! You can shoot the bastards! We can have a revolution! But the networks are really in business to give people what they want. It’s the truth.” I share the same opinion of the media, with Megan McArdle contra Glenn Greenwald. Why do the people want what they want? Largely it’s the result of a long process of evolutionary selection. Ideology and religiosity are highly heritable, but few people will be willing to admit that and thereby make their beliefs less tenable. If political ideology were actually about ideas, we’d see a lot more diversity of opinion and pulling the rope sideways, but instead a one-dimensional model of it does a pretty good descriptive job.

One of the ways that historical selection pressures have distorted our view of reality is to make us believe appealing narratives with important protagonists rather than a long process of material forces (like evolution itself). Fashion may seem an area easily dominated by fads and trends created by high-profile celebrities imitated by the masses, but as agnostic points out, even there they are generally jumping on a bandwagon whose success is later attributed to them. Will Wilkinson, who scoffs at intelligent design in religion or economics, still thinks that a wonkish consensus of intellectuals like him that a policy is inefficient will result in its removal. Again I agree with Megan McArdle that people’s circumstances (including that of the wonks) override intellectual activity in determining preferences and policy.

STALE UPDATE: This from Drezner touches on both my impersonal determinist point here and the recent hubub about “structural” vs “policy” approaches (though it doesn’t mention libertarians).

In a comment on a recent post I mentioned a study I had read about the effect on economic growth of regulation vs spending/taxes/redistribution. The take-home message was that the latter is considerably more weakly associated with reduced growth than the former and so it makes more sense to focus on reducing or restraining regulation than shrinking the fiscal footprint of the feds. My first question is whether any reader recalls seeing such a study and can provide a link, because I forget where I read it. My second is why this might be so. One possibility is that taxation/spending is relatively easy to define and so obviously stupid moves are unavoided, whereas regulation is much more likely to have unintended consequences. Another is that many less developed countries have a symbiosis of regulation and corruption where it is extremely difficult to pass through the hoops of a license Raj to, say, set up a business if you don’t have the right connections or grease enough palms. Bryan Caplan notes that in these countries perceptions of corruption increase hostility toward business and spur demand for more regulation, which will just beget more corruption.

Some unrelated musings that I didn’t feel merit their own posts are below the fold. (more…)

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