On Populism, The Tea Party, and Politics

The American political scene since its inception has constantly been riddled with problems. The question of what the present-day problems are cyclically arises in political discourse. In the past two years in particular, it has become an almost universal observation that the political discourse is bitterly partisan in ways that we have never seen as a country.

Those in the punditry business have presented a number of hypotheses, some good, some bad, as to how or why all that we are witnessing is taking place. The content of such speculation is hardly unexpected: President Obama has made a number of strategic errors; the Republicans are just sheer obstructionists with no ideas or solutions to anything; partisanship in Washington is just too great on both sides of the aisle due to the Democratic supermajority; the overflow of ideological partisanship to 24-hour chattering cable-news stations is making the nation more partisan because each side chooses their news source, their associations, etc., in alignment with their own views, reinforcing their own habits of thoughts and therefore we collectively fail to challenge to substantively confront counterviews; disagreement over the Senate filibuster has caused a ruckus because it has either halted or changed the political dynamics of Democratic policy initiatives due to delay— is this a mechanism of checks-and-balances or an unreasonable threshold, in present time,  requiring a supermajority for any important legislation?

There are many other explanations commonly put forth, but what is perhaps the most underlying problem of all, the truest explanation and biggest culprit of all, indeed, the biggest threat to democracy, goes unnoticed: the apathy, the ignorance, and the growing incoherence of the American public. This may be called, for the lack of better terms, the “populist problem.”

The Tea Party movement is interconnected with the current manifestation of the “populist problem,” though the Tea Party itself is not the problem. Some time ago, DarwinCatholic raised concern over what seemed to be the blatant intellectual dissonance of the American public.

Traditionally, according to the logical principle of non-contradiction, when two irreconcilable realities collide, it is impossible to have it both ways. In a number of ways, the American people, collectively, have rejected this elementary fact. A simple glance at a myriad of public opinion polls seem to add credibility to this observation. For example, according to a USA Today/Gallup poll in February 2009, 59 percent of Americans favored the Democrats’ economic recovery plan. In July 2009, a USA Today/Gallup poll found that a majority of the same size believed that President Obama and the Democratic Congress were spending too much money and over-reaching in terms of government expansion.

No reasonable mind would assert that there is something wrong with a change of heart. But public opinion polls have come to reflect a troubling trend that moves far beyond the hypothesis that the American people simply changed their mind. The American public, it seems, simultaneously demand and reject government action on unemployment, deficits, health care, and a host of other policy matters. 60 percent of Americans in November 2008—at the climax of the Obama “hope and change” populist movement where “ordinary Americans” would no longer be, as Hillary Clinton put it, “invisible” to their government—believed that regulations on financial institutions should be more strict for the good of the economy. Strikingly, roughly the same proportion just over a year later seemed to believe our financial woes were due too much regulation on business and financial institutions.

The inanity of the American people, or at the very least, the public’s susceptibility to rhetorical manipulation by politicians and interests groups is actually what cements our nation into the grip of the status quo. The heart of the problem is America’s historical ambivalence about government, which is not a problem in and of itself. The problem is Americans want the federal and state governments to play a role in solving social and economic problems with impossible speed whilst simultaneously shrinking itself in size, spending less, reducing taxation, and effectively “getting out of the way.”

An extensive CNN public opinion poll revealed alarming cognitive dissonance by the American public.

  • In January 2010, 55 percent of Americans believed that President Bush is more responsible for our economic woes than President Obama. When asked in a series of polls from January 2009 to January 2010 whether Republicans, Democrats, or both parties together are largely responsible for our economic downturn, Republican blame has consistently beat out the other two options (the other options being, Democrats mostly the blame or both parties are to blame, respectively). However, the 2010 Midterm elections are shaping up to be in favor of the Republicans (for what are politically obvious reasons).
  • In February 2009, 60% of Americans favored the economic stimulus package. In January 2010, 56% of Americans opposed the economic stimulus package. In stark contradiction to the American public’s change of opinion on the stimulus plan, another January 2010 poll found that the majority of Americans believe that the economic stimulus package prevented economic conditions from “becoming worse.” Despite this belief, in yet another January 2010 public opinion poll 63% of Americans said that government economic recovery spending will have no impact on the economy. This latter majority opinion obviously raises the question of how a similarly sized majority could also think the stimulus package stopped the economy from becoming worse.
  • Despite the growing discontent with President Obama and the Democratic Congress, the majority of Americans in a December 2009 public opinion poll believed that the Democratic party was more likely than the Republican party to create jobs.

To review: large majorities oppose the spending cuts that would reduce projected deficits (expressly preferring stimulating recovery even if it meant little deficit reduction in the short term); nearly half the public wants to cancel the government’s ongoing stimulus spending and rein in public spending. But 80-plus percent of Americans polled reported that they wished to extend and expand unemployment benefits and invest in infrastructure, which, in effect is more stimulus spending. Most notably, Americans are so fed up with the Democrats they are ready to re-elect the Republicans—for whom, according to the polls, the nation has even greater contempt!

According to a recent NBC-Wall Street Journal poll, the Democratic party’s “favorable” rating has fallen to 33 percent. However the Republican party’s favorability is a mere 24 percent. The Democrats retain a slight edge in general favorability (not electability) and the Republicans, to date, are quite unpopular—and a series of polls reflect this fact. Despite this consistent trend of an edge in popularity for the Democrats, registered voters, according to a recent Gallup poll, have given the GOP an astounding 10-point margin in a generic congressional  ballot. A number of respected analysts are predicting that the Republicans will capture somewhere between 45 and 60 seats in the House (and the majority with it) and the Democrats’ Senate majority is now at risk.

Admittedly, opinion polls are not infallible and there is difficulty in assessing both their reliability and credibility. But the polls consistently point, to some degree, in the same general direction, in terms of national political sentiment and electoral intentions. Such a body of evidence, despite these challenges, should not be disregarded casually.

Reflecting upon present trends, it becomes obvious why great conservative thinkers, from Burke to Tocqueville, have generally been wary of democracy, let alone populism. Needless to say, in a true democracy, the people, even the unreasonable and “crazy” people, have to be heard. But the task of those with a vocation to public service by means of elected office is to respond to the occasional rage of the populace with minimal demagoguery and to work with fellow elected officials for the common good, which might include throwing the populists a “few bones” to calm them down. The bottom line is that civility, sanity, and prudence prevail as the Founding Fathers seemed to intend.

But it is quite possible that the populist impulse is now too powerful for the elected elite to reassert control, as we have seen with the Tea Party—and this point need not be wholly negative. Previously there were no partisan, omnipresent news and talk-radio channels nor a blogosphere to keep the populists riled up with the passions of a mob, constantly outraged. Until very recently in our nation’s history, American political leaders could pretty well manage national policy conversations and keep them on reasonable simmer, relatively speaking. But comparatively, new technology has, perhaps permanently, turned up the heat in our political discourse to instant-boil.

This has played heavily across the political spectrum into the mass politics borne of irrational sensationalism. Liberals and conservatives both attempt to bind national majorities not by convincing people of the intelligibility and coherency of their political philosophy and policy initiatives, but by evoking hatred against “them”—typically through a series of unsubstantive straw man arguments, gross generalziations, and mass-advertising campaigns painting the other side as ideological, corrupt, and “out of touch” with America. In short, contemporary politics rests in the vulnerability of democracy to demagogic manipulation and populism plays right into that gambit. In practice, the words of John Lukacs bear a certain truth: “The people do not speak, or they very seldom speak…but other people speak in the name of the people.”

The Republicans are presently exploiting this very phenomenon. The Tea Party represents a mouth-watering opportunity to capitalize on the growing anti-Washington sentiment for the sake of the short-term, short-sighted goal of regaining a political majority. Perhaps this view is too cynical. But the current debate about the future of America, in the political world, seems to be more about the immediate future: who is governing? The movement to “Restore America,” what ever the differences it has has in aim and philosophy with what we saw in the last election cycle, has a number of remarkable similarities to the Democratic populist campaign in 2008, led by then-Senator Obama, to “Renew America’s Promise.”

But there is more at stake than the November elections. The Republicans by maintaining their just-say-no strategy—not that the Democrats were being bipartisan angels (it is just irrelevant to the point at hand)—the result of the next two election cycles should they go Republican should be the least of our concerns nor be seen as any sort of victory. The greatest threat now is a threat to the American republic due to a paralysis in governing because any instance of refusal to broker any deal, even legitimate deals, has become a virtue. The most extreme, practical nihilistic divisiveness might become even more so the norm for both parties.

Kurt Anderson articulates a certain aspect of the current problem without missing a beat:

The tea-party movement takes its name from the mob of angry people in Boston who, in 1773, committed a zany criminal stunt as a protest against taxes and the distant, out-of-touch government that imposed them. Two years later, the revolution was under way and—voilà!—democracy was born out of a wild moment of populist insurrection.

Except not, because in 1787 several dozen coolheaded members of the American Establishment had to meet and debate and horse-trade for four months to do the real work of creating an apparatus to make self-government practicable—that is, to write the Constitution. And what those thoughtful, educated, well-off, well-regarded gentlemen did was invent a democracy sufficiently undemocratic to function and endure. They wanted a government run by an American elite like themselves, as James Madison wrote, “whose wisdom may best discern the true interest of their country and whose patriotism and love of justice will be least likely to sacrifice it to temporary or partial considerations.” They wanted to make sure the mass of ordinary citizens, too easily “stimulated by some irregular passion…or misled by the artful misrepresentations” and thus prone to hysteria—like, say, the rabble who’d run amok in Boston Harbor—be kept in check. That’s why they created a Senate and a Supreme Court and didn’t allow voters to elect senators or presidents directly. By the people and for the people, definitely; of the people, not so much.

So now we have a country absolutely teeming with irregular passions and artful misrepresentations, whipped up to an unprecedented pitch and volume by the fundamentally new means of 24/7 cable and the hyperdemocratic web. And instead of a calm club of like-minded wise men (and women) in Washington compromising and legislating, we have a Republican Establishment almost entirely unwilling to defy or at least gracefully ignore its angriest, most intemperate and frenzied faction—the way Reagan did with his right wing in the eighties and the way Obama is doing with his unhappy left wing now. Glenn Beck, Sean Hannity, Rush Limbaugh, and their compatriots are ideologues who default to uncivil, unbudging, sky-is-falling recalcitrance, as Keith Olbermann does on the left. Fine; in free-speech America, that’s the way we roll. But the tea-party citizens are under the misapprehension that democratic governing is supposed to be the same as democratic discourse, that elected officials are virtuous to the extent that they too default to unbudging, sky-is-falling recalcitrance and refusal. And the elected officials, as never before, are indulging that populist fantasy.

Just as the founders feared, American democracy has gotten way too democratic…

This new la-la-la-la-la-la refusenik approach to politics is especially wrong in the Senate, which was created to be the “temperate and respectable body of citizens” that could, owing to its more gentlemanly size and longer terms, ride above populist political hysteria…[e.g.] On the issue supposedly animating the post-Bush GOP and the tea-partiers, the massive deficit, a bipartisan Senate bill to establish a bipartisan commission to rein in future budgets was just defeated with 23 of 40 Republicans voting no—including a half-dozen of the bill’s original co-sponsors.

From a Christian perspective this is a sheer prevalence of nihilism. This issue exists across the political spectrum and is obviously more than just about the election before us as a nation. In fact, it is regularly exploited by politicians who subscribe to the live-for-today mentality and politics of pandering to the public’s ignorance on political matters. The Republicans became the champions of Medicare in the health care debate despite opposing the creation and endurance of the program for over four decades—and this sentiment undoubtedly has not changed. The Democrats now wish to change the rules of the filibuster for political advantage, though it was only five years ago that such an act (by the Republicans) was so politically unthinkable that the Democrats threatened to shut down the Senate, halting all routine and legislative business.

The most important point, however, is entirely another matter. Consider, for example, that the Tea Party presently does not seem to have much of a consensus on foreign policy; the unity, if it is there, rests primarily on agreement on goals involving domestic policy. The Tea Party though it has diverse members, in terms of political belief, is primarily a conservative, and specifically libertarian, movement against the over-reach of the federal government. Consequently, one might argue that in only one economic realm does contemporary populism neatly coincide with Republican politics: the less taxes, the better. But Republicans strategists know their candidates would not be elected if they pushed to make actual cuts to, say, Social Security and Medicare. To do it is political suicide and the public is likely to oppose it (despite wanting to cut the budget).

The conventional wisdom of the last 30 years for the Republicans has been to abandon the core principle of prudent budgeting to become the do-not-tax-but-spend-anyway party of fantasy economics. After all, a good number of Republicans who voted consistently for the Republican deficit-spending spree under the Bush Administration are now howling the loudest, with credibility, at least to the minds of those ignorant of their voting records, against the Democrats’ Bush-spending-spree-on-steroids.

John Medaille of The Distributist Review, in addressing how politicians get away with such reckless spending habits points to a core problem that often goes unaddressed:

This is the hallmark of the “gimme” generation, the problem with the Politics of Ingratitude…This by now is a time-honored tradition, dating back to Ronald Reagan, who convinced the public that he could finance his tax cuts by eliminating “waste, fraud, and abuse.” That is, no one need fear that their subsidy was in any danger. Anybody who actually advocates a particular service cut will not be elected, and anybody who actually makes a cut will not be re-elected. But…you cannot cut taxes without cutting expenses. That just drives up borrowing, and borrowing is also a tax, just a tax shifted to the next generation. The Tea Baggers are perfect representatives of this mentality. While I certainly respect their righteous anger, I marvel at their incoherence.

We are all taught by the consumerist mentality, a mentality reinforced by the relentless propaganda known as advertising, to seek instant gratification, to live beyond our means, to live our lives on credit and not let anything stand in the way of our pleasures, to demand tax cuts without budget cuts. It is unfortunate that the Tea Party movement is not the antidote to this mentality, but just another sign of it.

In the punditry business, it is bad form to question the wisdom of the American people. In the moral world, it is not.  Indeed what is most lacking from current populist trends, and political discourse more generally, is honest self-criticism on behalf of the American people; put differently, we need to stop solely blaming the rascals we elect to office and look to ourselves.

As a nation we demand what is impossible: quick, painless solutions to long-term and deep structural problems. While running for office, politicians from both parties encourage this kind of magical thinking. Two years ago it was President Obama standing atop of a wave of Democratic populism, built on the edifice of cheap bumper-sticker politics, of single word phrases like “hope” and “change” that were essentially (as we can see now) void of meaning. It was obvious in the opinion polls that showed noticeable gaps between the President’s popularity and the policies he endorsed. Undoubtedly, President Obama regrets, to some degree, the sky-high idealism of populist rhetoric that now lays as a record of broken and half-met promises, unique in that the resultant anger is because people had such high expectations and high hopes.

Yet, President Obama (or anyone for that matter) can point to any number of occasions on which he told America that getting our nation back on the right course was going to be a difficult, demanding project that required collective participation and sacrifice. He said it both in his victory speech on Election Night and in his Inaugural Address. But the President’s campaign message was primarily: “Let’s go change the world!”—not “Let’s go change the world, slowly, incrementally, sometimes met with frustrations and obstacles, perhaps waiting even years before seeing the fruits of our labors.” This is all people remember, not calls to be patient or highlights of the necessity of sacrifice.

The President, like all politicians, who ride populist waves into office, finds himself forced to try to explain—despite already having warned the public—that things are not so simple, that fixing our broken economy, repairing our national infrastructure, regaining America’s positive standing in the world, and the host of other challenges we face as a nation are going to require years and perhaps even generations to see through. (We should not doubt that we will soon see this with Tea Party candidates who are elected). But it is my observation that We The People, in the instant-gratification world of modernity, do not want to hear any of this. We want someone to solve all of our problems, now.

It should be said that the populist impulse is not always or altogether bad. No one should be pleased, in the slightest,w ith the way the American government is being run or has been run. It is self-evident that something must be done, something must change. It is essential for the American public to be vocal in their concerns and involved in the political process. Historically, America has seen many positive populist-inspired changes particualrly in the late nineteenth and twentienth century with the progressive movement.

But this “new” emerging populism manifest in the Tea Party movement, its numerous positive elements notwithstanding, is another story. This movement seems to have has stitched together conflicting concerns and goals into a single we-are-mad-as-hell-and-demand-to-be-appeased quilt. We The People have spoken. But do we make any sense? And that is precisely a chief populist problem: collectively “the people” do not have a harmonious single mind or voice, but rather a great multitude of many minds and voices that are often in contradiction to one another. The Tea Party, like all political movements, inevitably has visible leaders who to some degree “direct the narrative” and focus attention to a certain number of issues. But with such a large, diverse group, without a working intellectual infrastructure (that everyone agrees with), as it were, the unity that binds inevitably must be animosity, vague slogans, and a short list of “quick-fix” solutions—and these latter things will most certainly not “restore America.”

The Tea Party quite arguably is the counter-populist movement against the one we saw two years ago, both built upon frustration with the governing Presidential Administration and Congress. Like the other, it attracts a number of people from all walks of life. Like the other, it lacks an intellectual foundation and any unity not contingent on phrases, emotion-invoking images, and opposition to some common enemy. Lastly, like the previous populist movement, it will probably see its goals unrealized not because of lack of effort but because those in the political world exploit the real world frustrations of the populace for the sake of short-term gain.

In summary: the collective illogic of Americans is mostly negligent rather than intentional or militant. The most compelling explanation is the moral predisposition of Americans toward a host of specific vices (individualism, consumerism, instant-gratification, materialism, etc) has left the American public in Candyland, where it is conceivable for the government to tackle the bring problems and get out of the way at the same time. But what we as people want to hear and talk about are “solutions” and other people (not us) who will do the solving, while we are left unchanged, unbothered, free to continue with our moral attitudes and behavior patterns, whatever they may be. We cannot consider how we contribute to our national problems. Most importantly, we do not want to seriously consider, as a nation, sacrifice or trade-offs—except as flattering descriptions by our civil leaders about how ready we, as a people, are, or have been in dire times, to accept such things. We like the idea of hard choices in theory. When was the last time we made one in reality?

—————————————————————————————————-

“This is the arresting and dominant fact about modern social discussion; that the quarrel is not merely about the difficulties, but about the aim. We agree about the evil; it is about the good that we should tear each other’s eyes out…the common sociological method is quite useless: that of first dissecting abject poverty or cataloguing prostitution. We all dislike abject poverty; but it might be another business if we began to discuss independent and dignified poverty. We all disapprove of prostitution; but we do not all approve of purity. The only way to discuss the social evil is to get at once to the social ideal. We can all see the national madness; but what is national sanity? I have called this book ‘What Is Wrong with the World?’ and the upshot of the title can be easily and clearly stated. What is wrong is that we do not ask what is right.” – G.K. Chesterton

175 Responses to On Populism, The Tea Party, and Politics

  • This should go without saying, but I will say it anyway.

    Nothing I have said should be construed as a “condemnation” of the Tea Party. I do not participate in Tea Party activism and am not a personal fan of the Tea Party to be honest; this is particularly true of its leaders.

    Though I am friends with a number of people who support the Tea Party. They are good, noble people. I think they are largely mistaken and their political analysis, to my mind, is incoherent, but I hold no ill-contempt for such people.

    Again, this should go without saying and my position really should come as no surprise to anyone who knows my political inclinations. But to say the very least, my contention is made with good will and good intent. Realizing the conservative predisposition of TAC and its readers, a presumption of good will and charity is all that I ask of anyone that wishes to add to this discussion.

    Argue away.

  • Eric,

    You’re a fine writer and there’s certainly merit to your arguments.

    I find it rather unfortunate, however, that you couldn’t for whatever reasons quote a single representative of the Tea Party movement, or even really engaging a single argument of it.

    The names that are mentioned – Beck, Hannity and Limbaugh – had absolutely nothing to do with the original movement, and as far as I know only Beck really claims to be a part of it today.

    The Tea Party dates back to 2007, to Ron Paul’s campaign. It was then that events in support of Ron Paul called “Tea Parties” began taking place, no matter what anyone says. And there isn’t much inconsistency in his ideology.

    Of course the merger of the fringe libertarian and mainstream conservative movements (yet again) will produce “incoherent” results. The unity, as always, is found in an originalist interpretation of the US Constitution. Anyone really arguing for the eternal existence and goodness of Medicare doesn’t really belong to the TP; on the other hand, it is possible to argue that now isn’t the best time to get rid of it without hailing it as a positive good.

    Paul has always spoken of a “transition” period, for instance, as opposed to an abrupt cessation of benefits, and I don’t see anything “inconsistent” about that, unless the mere intrusion of reality into some mythically and perfectly “consistent” philosophy counts.

    It is perhaps the vaunted elites obsession with abstract ideas, and the great unwashed’s unwillingness to engage them, that accounts for their respective defects in the political realm. Which is why what we need, and what we have always needed, and what we will always need, is a truly and properly conservative intelligentsia, and not this strange idea of “conservatism” cooked up by Vox Nova, but rather a conservatism that finds the proper balance between abstract and concrete, between the need for visionary thinking and the need to accept certain given realities for what they are, something no one in that camp is able or willing to do.

    It used to be called the Catholic Church. Now it is called neoconservatism, and that’s not good for any of us. If Brooks, Frum, Gerson, Kristol are our “intellectuals”, we’re finished.

    Its also unfortunate, and disgusting, finally, that John Medaille has taken to using the phrase “tea baggers”.

  • Krauthammer comes pretty close, though, and what he said in this column is spot on:

    http://www.nationalreview.com/articles/244882/last-refuge-liberal-charles-krauthammer

    Though he is identified as a “neo-con”, I could never put him in the same column as a hack like Gerson.

    I hope Mark Steyn, though he isn’t an American, continues to brighten our days as well.

  • Joe — might you say something I can disagree with, not something that I’d merely clarify or argue for distinctions? ;)

  • “I find it rather unfortunate, however, that you couldn’t for whatever reasons quote a single representative of the Tea Party movement, or even really engaging a single argument of it.”

    The point of interest, at least here, was actually not to offer some sort of evaluation of the Tea Party. As you can see from the generality, I only focused on populist dynamics and focused only on that aspect of the Tea Party insofar as it was related.

    I don’t think grassroots movements should be discouraged because, in a fallen world, undesirable trends might occur. There are a number of “movements” in the United States and I couldn’t evaluate them all on their merits in terms of what solutions or course they suggest we take as a nation.

    If I were doing that then I could only do so by actually citing what Tea Party representatives say and engage their arguments.

    Though there is a distinction to my mind — the Ron Paul Tea Party movement and the subsequent Glenn Beck, Sarah Palin, and “We-Have-All-Thought-This-All-Along” opportunist Tea Party. The former you might get my vote, with some reservations, the latter is really what I regularly criticize. Perhaps that distinction helps.

  • It is unfortunate that loyalty to Party or at least ideology colors our public discourse. As far as not disparaging the people who participate in Tea Parties – you cannot merely state that you are not disparaging, while you actually are, and somehow think that makes it OK.

    Joe pointed out the origins of the Tea Parties and whether this is what he envisioned or not is precisely why Ron Paul ran for president. He knows that he will never be president, but he did put many necessary and obscured issues on the table of national debate.

    As for the Republicans, which are you talking about. The corporatist establishment RINO’s or true conservatives? Sure the establishment is trying to take advantage of Tea Parties, but most people know that. Of course, you think we are all too stupid to not be managed by our masters and only enlightened liberal intellectuals can think for themselves – that is unfortunate and incorrect. Some Republicans have put forward plenty of ideas and are usually shouted down by Democrats, ignored by establishment RINOs and the media. People like Paul Ryan, who is brilliant. I can’t say I agree with all of his proposals, but he has some great ideas. Naturally, when the country has been on this death spiral for so long, no one is going to like some of the hard choices we have to make. But the brush you are using to paint the American people and conservative Republicans is unfair.

    Of course, America is infected with Calvinism, Freemasonry and relativism and most people have been ‘educated’ in government schools to have a complete lack of any necessary knowledge. Yet, in the hearts of most Americans who participate in Tea Parties is an almost unconscious desire to know the truth and most are beginning to learn the true history of this great nation and what limits the Constitution places on those in power and why. Of course, some other people think that is an antiquated and naive view of a useless document, but some of us do believe in timeless truths and unchangeable principles – especially those of us who belong to a 2,000 year old body established by Christ Himself.

  • Republicans are unpopular but conservatism, embraced by 40% of the American people, compared to 20% who call themselves liberal, is quite popular.

    The number of people identifying as Democrats has been shrinking while the number of people identifying as Republicans has been growing.

    http://www.rasmussenreports.com/public_content/politics/mood_of_america/partisan_trends

    The Democrats are going to be beaten decisively in the upcoming election because what they have attempted in regard to economics has not worked, and much of the rest of their agenda, most notably Obamacare, is unpopular. The Republicans will be swept into power due to the complete failure of the Democrats. If the Republicans convince the American people that they are serious about slashing spending and shrinking government, they will be in power for a generation. If they govern as the Democrats have governed, only with somewhat more restraint, 2012 will not be a good year for them. The Tea Party movement is a golden opportunity for conservatives within the GOP to stress to their colleagues that there will be dire electoral consequences unless the Republicans can convince the members of the Tea Party that their agenda is being enacted. If Obama vetos spending cuts, fine, but the effort must be sustained and serious.

  • In such discourses it is important to remember that at least 90 percent of our populace is not terribly concernedcwith politics – the opposite of Primarily Political People, who dominate blogs and cae television. This is a good and healthy thing, but it makes for strange polls, behavior, and opinions.

  • http://www.politico.com/news/stories/0910/41777.html

    Not a single Democrat incumbent in Congress is running ads touting the accomplishment of passing Obamacare. Think about that. The grand achievement of this administration and no Democrat, even in an icy blue district, is celebrating the accomplishment. This shows just how badly the Democrats miscalculated this time around. The Tea Party is a result of Democrats embracing bad policies and refusing to engage in a course correction when the public was continuing signaling that they needed to alter course. In a democracy there is a word for a party that engages in this type of conduct: defeated.

  • I admit to drinking the Ron Paul Cool Aid and though I still agree with much of what he says, I’m now cognizant of his inconsistencies. His positions suffer from the same something-for-nothing disease. He wants to eliminate the income tax and replace it with nothing. That necessarily means that he would raise excise taxes and/or tariffs. Hardly libertarian.

    I’m convinced the root of the problem is lack of humility. The conservative principle that bureaucrats don’t know best is expressed by populists as “I know best.” The same lack of humility exists in religion. Give a man the Road to Serfdom and the Bible and he thinks he’s an intellectual equal to Bernanke and the Holy Father.

  • Ach. Nearly 4,000 words of this. You’ve earned thirty days in the cooler with Bob deClue and American Knight.

    The populace is not ‘inane’. The thing is, about three-quarters do not follow public affairs and many who do are news junkies who lack an internal filing system to track things properly, so they forget. This is nothing new. Michael Kinsley wrote columns like yours a generation ago on these themes. Polls are generally conducted quickly and over the telephone and respondents are not given the task of making real decisions and real trade-offs with consequences. These sort of questions differ in kind from surveys asking people to state a discrete preference from a mutually-exclusive set of alternatives (e.g. candidate A v. candidate B).

    The man who founded the Roosevelt Center for American Policy Studies many years ago was distressed at the weakness of survey research in this regard and so attempted to run simulations instead. You had in this the loss of valid sampling of respondents but the gain of having teams of respondents hash out choices between a reasonable facsimile of actual options. Unfortunately, his cross-country series of simulations (given the name ‘Debtbusters’) had no effect on Congress or the President.

    The reason it did not may have very little to do with the response of Congress to public opinion. Recall that at that time, 98% of incumbents could expect re-election. William Proxmire used to spend a three-figure sum on his re-election campaign and said most members of Congress could get by with that if they so chose. They did not cut the bloody budget because they liked it just the way it was.

  • Greetings from the cooler,

    I found the article to be a good general synopsis. It should have mentioned the fact that the Tea Party is bought and paid for by the billionaire Koch brothers, and when people buy something, they generally intend to use it for their own purposes.

    The Founding Fathers never envisioned the type of Democracy we have today. They set up a system in which only their definition of qualified people vote. These qualified voters elect representatives at their local level to the House and the Electoral college. State legislatures elected Senators and the Electoral College elected the president. This was supposed to be a system where the best and theoritically brightest governed the country. How it almost immediately degenerated into a two party system is beyond me. They never intended us to be perpetually stuck with Tweedle Dee Tweedle Dum choices.

    No educated man of that century would ever have approved of the type of universal suffrage Democracy we have today, especially since it mimics the Greek system that brought their empire crumbling down. Jesus tells us many times in the New Testament that the large majority of people follow the wide road to hell, meaning quite simply that the majority of people choose evil when given choices. Majority rule could logically then have no good result.

    The seeds of our own destruction are written into the Constitution, mainly through its ammendments. Bush and Obama can wrap their arms around each other and preach about how peaceful Islam is until they are blue in the face. It won’t change the fact that Islam seeks to subjugate the world to Shia Law. Our 14th ammendment says we have to let them come here and take over if they can. Our “allies”, the Saudis, Egyptians, etc., legally execute any citizens who convert to Christianity. Our constitution requires us to let them build a memorial on the site of their greatest strike against us.

    I am a firm believer in the rule of law and believe the Constitution should be followed strictly, whether I agree with or disagree with any part of it. The Founding Fathers gave us means to ammend it, and it should be ammended frequently as the world changes, to meet new challenges, but it should be obeyed strictly until ammended.

  • Polls are designed to shape public opinion, not measure it.

    How’s that for pithy?

  • t should have mentioned the fact that the Tea Party is bought and paid for by the billionaire Koch brothers,

    It really impresses me how a narrative develops in the world of politics, and people blindly parrot said narrative reflexively and without thinking about the subject matter. To those who think that the MSM still does not have some influence, I present to you the above comment.

  • Polls are designed to shape public opinion, not measure it.

    Certain types of push-polling conducted by politicians during campaigns, perhaps. Some sorts of news organizations with an agenda, perhaps. Otherwise, no. The people who conduct surveys are seeking insight into public opinion. The trouble is that surveys are not omnicompetent for that purpose.

    t should have mentioned the fact that the Tea Party is bought and paid for by the billionaire Koch brothers

    You didn’t used to go by the name “Robert Welch”, did you?

  • Art,
    The name Robert Welch rings a bell, but I can’t quite place it.

  • As something of an elitist with regards to politics, there’s a lot here I’m sympathetic to — though I have to admit that falling on the right side of the spectrum I’m also very much enjoying watching the Democrats get hit with the next pendulum swing of populism after the one they rode to victory in 2008.

    Trying to do the “let’s all be adults here” thing doesn’t always work well in politics — as the GOP found out to its chagrin with the Social Security reform effort after 2004. Though with sufficiently talented leaders it can work beautifully.

    On the bright side — I’m not sure I’m convinced that crazy populism is all that new a development in our history. After all, though we have the internet and cable news now, it used to be that basically every newspaper was an over-the-top partisan rag for one side or another. And in the days before electronic media it was harder to research what had actually happened hundreds of miles away if your local paper was giving you a line.

  • Darwin, you recall the Lincoln-Douglas debates? Six instances of thousands of people crowding into little towns to hear three hours worth of public speeches. They did this even though it was the legislature, not the electorate, who would be voting on the candidates. What has changed since 1858?

    1. Formal schooling is much more extensive;

    2. We amuse ourselves to death; Civic events no longer function as public diversions;

    3. We have a permanent government that is almost impervious to the results of electoral contests.

    4. Aspects of public policy have gotten quite esoteric.

    It is no wonder people are disengaged and when some egg salad sandwich calls them on the phone during dessert and asks their opinion of whether to spend more, less, or the same on various projects (much less an academic question like whether they think the Democratic Party is better or worse equipped to fellate the pollster’s preferred clients), they give an unserious answer.

  • Fair point, Art. There are always some great examples one can pull out of past rabble-rousing. (From accusing John Adams of wanting to set himself up as a despot to questioning Andrew Jackson’s parenthood.) But serious political debate of the past made the attempts at serious debate among our current leaders look pretty pathetic.

  • Darwin, you recall the Lincoln-Douglas debates? Six instances of thousands of people crowding into little towns to hear three hours worth of public speeches. They did this even though it was the legislature, not the electorate, who would be voting on the candidates. What has changed since 1858?

    The invention of television, movies, internet, radio, etc.

  • Excellent article. To The person who complained that there were no quotes from prominent Tea Party leaders, I agree, and for two reasons: One, I would like to know who the leaders are, and two, I would like to know what they stand for. I know what they stand against; Obama and the Democrats, and Obama and the Republicans. And also Obama, Obamacare, or being in the same country with Obama. And Pelosi. But what they want is just a little obscure to me. I was hoping the Glen Beck rally would clarify that point, since he seems to be popular with Tea Partiers. But that didn’t clear things up either. That rally seemed have two points (correct me if I am wrong): One, that religion doesn’t matter, and; Two, everybody needs to have one. Anything along the lines of moralistic, therapeutic, deism is fine, and actual doctrines (like deficits) don’t matter.

    For me, the classic tea partiers are the ones who carried signs that said, “No Socialized Medicine–Hands Off Medicare!” That captures the spirit. They say they are against taxes (even though they are among the least taxed people in the world), but they can’t seem to say what they want cut. It certainly isn’t the military (gotta support our troops; just don’t want to pay for them). It isn’t medicare. But whatever it is, it’s some service that somebody else uses. The only other positive points I can get is that we need more guns, and everybody ought to pay for their own medicine, unless you’re on Medicare. But I am sure that I am missing something.

    I think it’s a group ripe for manipulation. And with no actual programs to cause dissension, they can be very successful this fall in the congressional elections, and in 2012 with the presidential elections (we can safely assume that things will not improve by then.) I just hope that are as happy with President Palin, or Beck, or Pawlenty, or whoever, as they were with Bush.

  • Mr. Brown,

    Your excellently written and thoughtful article fails pretty early on in that you series of widely divergent polls to buttress an argument that the TEA Party people are incoherent. I hate to play the part of the crusty, old political veteran, but there are polls and there are polls, you know? Or, there are things which look like polls, but aren’t. There are also “facts” which aren’t facts (the “No Socialized Medicine–Hands Off Medicare!” is probably either a complete myth, or was a sign put out by a liberal infiltrator trying to make TEA Party activists look like fools, eg – there really is no limit to perfidy in politics…and as the left believes in situational ethics, its not like they’d feel a twinge of guilt over such a deception). The only polls of any real worth are polls consistently done by outfits which use the same methodology over time – such as Gallup and Rasmussen, and even then their primary value is in spotting trends, not in picking out what people are really thinking or doing. A snapshot poll of “do you want Program A cut?” taken by who knows heck what organization using goodness only knows what methodology is mostly worthless – though fun to play with in punditry.

    The first step in understanding the TEA Party phenomena is to understand that the MSM is full of nothing but party-line spin…even allegedly conservative Fox News (which isn’t conservative, at all – it just passes for such in comparison to, say, CNN or MSNBC). Some times the BS is pure, some times adulterated with a smattering of truth – but the bull is in there, and has to be carefully separated out from the reality.

    In assessing the TEA Party, as in determining the truth of any theory about human actions, it is always best to look at what people do, rather than what they say. This is even more true when choice between looking at what they’re doing and listening to someone talk about what other people are supposedly thinking. What have the TEA Party people done?

    Well, they’ve routinely got thousands – and some times hundreds of thousands – of people to show up at non-partisan political events. I was present at one of the most stunning of these events – 10 to 20 thousand people showing up in the middle of the Nevada nowhere to kick off the TEA Party Express for 2010. A well behaved, polite and good humored collection of Americans who have jobs and families – who have served in our military, who do the work which keeps things going…who carry the freight for this nation. You don’t do that if you’re just a bunch of nativist, racist yahoos. You also don’t do that if you’re incoherent and want both spending cuts and Medicare.

    You do that if, after working hard your whole life, you see all you hold dear at risk of destruction, and you’ve decided to do something about it. And as such people, you’re not a sheep for anyone to dictate to – there is no shadowy group behind these people coming out; no secret, Neo-Con billionaire, nor any radio talk show host…slaves do the bidding of such, but retired Marines, fiercely independent businessmen and non-nonsense wives and mothers aren’t slaves.

    The proof, in the end, will have to be in the pudding. If the TEA Party can help boost the likes of Sharron Angle, Rand Paul and Marco Rubio in to office, then it will be conclusively demonstrated that the desire to return to constitutional government – including the explicit and implied cuts to government spending this will require – is the motivation of the TEA Party activists. If this were a GOP Establishment effort, you wouldn’t see the resolute desire for a repeal of ObamaCare – and you wouldn’t see the TEA Party repeatedly overthrowing Establishment-backed GOP candidates (for goodness sakes, the TEA Party has ousted two sitting GOP Senators already – you’d think that would be sufficient proof for everyone…but, I guess its not). But we’ll have to let time do its thing – until it becomes unmistakable, I think that even a lot of people with general good will towards the TEA Party will continue to misunderstand or misinterpret the movement.

    Once the proof is in, however, I do hope that we can get more and more people in to the TEA Party movement. This is, after all, the golden moment for anyone who subscribes to Distributism or, indeed, any shading of Catholic social teaching – while the TEA Party has people who will mouth words in favor of “capitalism”, this is mostly a reflection of habit, not of conviction…and I’m convinced that the TEA Party people can be convinced to go down a Distributist path, if they are led that way, and have it explained to them with due care and skill.

  • Not only are the “Hands off Medicare” signs real, I have personally talked to retired tea partiers who do not view their Medicare or Social Security benefits as “socialism,” and anyone can verify this for themselves by talking to a retired TP-er. The only definition of “socialism” for these people seems to be “a government benefit that somebody else gets.” I will take the TP-ers a bit more seriously when they demand that the gov’t cut their own benefits, but I haven’t seen that yet. I would also take their “constitutionalism” more seriously if, for example, they demanded a pullout of all unconstitutional wars.

    You take electoral success as sign of their seriousness about the constitution. That doesn’t follow at all. You can only determine their seriousness by what they do once they are elected. And they certainly will be, both now and in 2012. We shall see. Conservatives so-called have dominated gov’t since 1980; the gov’t is larger and so are debts.

    The TP-attitude was given, I think, by the Sarah Palin Hand Jive flap. In case you’ve forgotten, she had to write the answer to a softball question on her hand. People had great fun with that, but they missed the point of what she had actually written on her hand. She first wrote “budget cuts” and then crossed that out to write “tax cuts.” IOW, she is continuing the Reagan tradition of telling people that tax cuts can be financed by eliminating “waste, fraud, and abuse”; no actual programs need to cut.

    You tell me that they are not incoherent, but are rather closet distributists who support capitalism out of force of habit. That in itself sounds incoherent, but in any case you can’t tell if they are coherent without hearing what they are for. At this moment, we only know what they are against. So nobody can make an actual judgment. But I have my suspicions. While this movement began with some outliers on the libertarian right (who are at least consistently libertarian) it is now a corporate-fueled movement that has no intention of ending the lucrative benefits they get from gov’t, and will only cut things like health and safety inspectors.

    But we shall see.

  • I have personally talked to retired tea partiers who do not view their Medicare or Social Security benefits as “socialism,”

    Probably because, unlike most other government programs, the people collecting these benefits have actually paid their share of what they are collecting into the system.

    Conservatives so-called have dominated gov’t since 1980

    Really? We had two terms of a conservative president in Reagan, one term of a moderate-conservative in George H.W. Bush, and two terms of somewhere in between George W. Bush. The Republican party had a majority in the House for 12 of those 30 years, and a majority in the Senate for 16 of 30. The Supreme Court has hardly a bastion of conservative jurisprudence, though it has improved somewhat under Chief Justice Roberts. All in all, hardly evidence of conservative “domination” of the federal government.

  • I am the TEA Party leader you’ve been searching for. I should be easy to find. There are hundreds of thousands of me.

    I want to thank you for your interest in knowing what we stand for.

    Here it is: http://www.archives.gov/exhibits/charters/constitution_zoom_1.html

    It is only four pages and it is in pretty clear early American-English. If’n y’all have any trouble following it, I recommend the exegesis conducted in the Federalist and anti-Federalist papers, written by the same authors as the TEA Party Manifesto (referenced above). For further elucidation, I recommend the Virginia and Kentucky Resolutions (1798-99) and the Virginia Report (1801).

    Thank you for your interest. We are accepting new members/leaders right now. We have one simple requirement. I’m sure you can figure out what it is.

    God bless America.

  • The Republican party had a majority in the House for 12 of those 30 years, and a majority in the Senate for 16 of 30.

    They had a wafer thin majority in the House of Representatives for much of that time and were further stymied by the Senate’s asinine procedural rules.

    George Bush pere’s motors were rather obscure. The one thing he seemed to care a good deal about was the capital gains tax. George Bush fils is an evangelical who one can say identifies with the vernacular culture in a straightforward way. His manifested policy preferences bear more relation to those of Nelson Rockefeller than those of Barry Goldwater.

  • Here we see an illustration of the problem. An anonymous poster proclaims himself a “leader” and for their “program” he posts the constitution. Aside from the problem of shadowy “leaders,” everybody can claim to be a “constitutionalist” because afaik, nearly every act of congress has been held to be constitutional by the courts. So instead of saying what the actual program is, you get vague platitudes. That’s very dangerous. IOW, “Elect us, and we’ll tell you what we’ll do later.” Hmmm.

    Paul, Medicare benefits have nothing to do with payments, which are apportioned to the ability to pay, not the coverage received. But if that’s all that’s required, then all objections to Obamacare must fall away, for that is also something you have to pay for. In fact, Obamacare would be less socialistic under that standard, not more so, since the benefits vary with the payments, and are all made by “private” companies.

  • Art:

    I was trying to be as liberal (pun kind of intended) as possible in looking at the political landscape for conservatives over the past 30 years, but you’ll get no argument from me. Any way you slice it, the idea that conservatives have dominated government over the past 30 years is farcical.

  • Mark,

    I mention quite early on that there is an issue with public opinion polls that must be acknowledged.

    I never argue against people being politically active. That would be absurd. I’m African American, the Civil Rights movement was a populist movement.

    My only point is how in modern political discourse, populist movements are at risk to demagogic manipulation. I didn’t argue that the Tea Party isn’t real and is just a GOP hoax. So I am not sure what gave you that impression.

    Unfortunately, I don’t think Tea Party candidates winning offices ultimately refutes my point. I even explicitly stated why I thought electoral victory in the next two election cycles don’t undermine my point — because I was talking about something beyond this election and 2012.

    Please forgive me if I delay in replying or don’t reply, I’m a law student and I have to come to find that time is something I rarely possess.

  • John,

    I suppose my sarcasm was not received well. By stating that I am the TEA Party leader, I was merely bringing attention to the fact that there is NO TEA Party leader, or for that matter a TEA Party. This is a movement and not an organization. Just simple, plain old American people who have been too busy living their lives, running their businesses, raising their kids and maybe overindulging in the excess of our great states and have finally woken up to the long, slow slide (accelerating now) toward tyranny.

    To be clear, I am not running for any office and I am not asking anyone to vote for me, neither are most people involved. I am looking for representatives who will adhere to the Constitution and respect the sovereignty of my Commonwealth. I am not so sure what is so dangerous about American citizens exercising their political rights. Why does that frighten you?

    Do you really think the US Constitution is a platitude? That is actually frightening. The public discourse that some seem to think is dissonance in the ‘Tea Party’ is merely they way things are supposed to work. We ALL are supposed to follow the Constitution and have debates about all the issues within its purview. Additionally, the Supreme Court is merely designed to be the judicial branch of the General Government, not the whole country. It is designed to check the other two branches and the states against each other.

    The interpreter of the Constitution would necessarily have to be the creators of the Constitution. Since the Supreme Court is a creature of the Constitution and the Constitution is a creature of the states and commonwealths, it is up to the states to determine Constitutionality. Pretty simple.

    What this national government has done and is doing now, probably more than ever, is NOT Constitutional. Notice the national government has negated the very Constitution that formed it and yet the people of the states are working within the Constitutional framework to restore it; rather than accepting the negation of the Constitution by the national government as a call to anarchy and revolution.

    This movement is uniquely American and quite unlike any other populist movement ever before. Notice the clear lack of violence, the plurality of those involved and the single mindedness of accepting the US Constitution as the supreme law of the land. What other movement has ever resembled this one?

    Why are you so bothered by it?

  • Oi vey. the “WE-HAVE-NO-LEADERS-WHY-ARE-YOU-FRIGHTENED” defense. But of course, you do have leaders; the money to manage these things does not fail, like manna, from heaven, nor is it funded by the nickels and dimes from boys saving their bottlecaps; it is funded by corporatists like the Koch brothers who have more in mind then defending the constitution. When the leaders are hidden, and even hide behind pseudonyms, we are permitted to think that something very sleazy is happening. And when an organization refuses to mention its aims, we may assume that its aims are unmentionable.

    The constitution is not a platitude, but a vague invocation of it is. Unless you tell us exactly what that means in programmatic terms, we can only assume that either it has no meaning whatsoever, or that it means something you are ashamed to mention. Does the Constitution mean that we should get out of Afghanistan, or go in big to win? Does the Constitution mean we should have absolute un-tariffed trade, or that we should protect against unfair competition? Does the constitution mean unrestricted corporate power, or limitations on corporate power? Does the constitution permit the common good, or only private interest?

    You claim that these questions can be answered by consulting the founders, but since that is impossible, you can only mean consulting someone who claims to speak for the founders, a suspicious claim on its face. Men of good will can have many opinions on what the founders would have wanted; but the ones who claim to know this absolutely are indeed frightening. And it doesn’t help that these people refuse to tell us what they mean, refuse to tell us what programs or laws they will pass or repeal. So it is a fair assumption that they fear that their view of what is “constitutional” is not a view that would be accepted by the public.

    So why does this all “frighten me,” as you put it? Well, I hadn’t thought of it in those terms, but now you mention it, it does frighten me when shadowy figures with vague aims direct mass crowds with unfocused anger to ends that are not clear. It sounds an awful lot like Europe in the 1920′s and 30′s, which I think is our most likely near-term future; Americans think they are exempt from history–or even that history has ended–but history is rapidly catching up with us. The major difference is that with the decline of our manufacturing base, we will have to import our brown shirts.

  • t does frighten me when shadowy figures with vague aims direct mass crowds with unfocused anger to ends that are not clear. It sounds an awful lot like Europe in the 1920?s and 30?s,

    Oi vey indeed.

  • it is funded by corporatists like the Koch brothers who have more in mind then defending the constitution. When the leaders are hidden, and even hide behind pseudonyms, we are permitted to think that something very sleazy is happening. And when an organization refuses to mention its aims, we may assume that its aims are unmentionable.

    it does frighten me when shadowy figures with vague aims direct mass crowds with unfocused anger to ends that are not clear. It sounds an awful lot like Europe in the 1920?s and 30?s, which I think is our most likely near-term future;

    Yes, yes, of course. Shady financiers are funding shadow conspiracies that harness the unfocused anger of the masses into a recapitulation of horrors of the early twentieth century. Or maybe you’re just uncomfortable with the political prospects of your political adversaries, and are prone to phrasing that discomfort in apocalyptic rhetoric.

    To a committed partisan or conspiracy nut, every political moment looks like Europe in the 1920′s and 1930′s, and anyone who funds causes they dislike is by definition nefarious. Your comments suggest a disturbingly unbalanced assessment of the current political situation. Do you have any evidence for these claims other than the fact that some rich people fund think tanks whose ideas you dislike? Here’s a test: are you as concerned about the neutrally-named organizations Soros funds (and Jane Meyer cites without identification in her piece on the Koch’s) as you are about the Koch brothers?

  • I have no problem with the rich funding think tanks, or anything else they like. I do have a problem with “leaderless” mobs and unstated aims. There is more than reasonable grounds for fear in the public mind about the direction of the country and the economy, and I respect (indeed share) the fear and anger of the TP-ers. But then, there were equal grounds in the last presidency. You didn’t see the mobs because you didn’t see the funding.

    When Palin crosses out “budget cuts” to write “tax cuts,” you know she been warned not to be specific; don’t tell the people what you are up to. That’s the path to power.

    But what do they want to do with the power?

  • But what do they want to do with the power?

    What does anyone want with power? What did Barack Obama want? What did George Bush want? What did Bill Clinton want? People are complex; their motivations run the gamut from a genuine desire to help the country to petty narcissism. Obviously, these qualities are present in different degrees in different people; but, in general, politics doesn’t attract the people with the best, purest motivations. As to Palin crossing out budget cuts to write tax cuts…isn’t that what Barack Obama did in 2008 when he unveiled a domestic policy platform composed entirely of free-luncherism in the following formula: More Spending + Lower Taxes = A Smaller Deficit?

  • John Henry, Once again, you talk about what you’re against, but remain vague on what you are for. So what do YOU want? What will you cut to bring the budget in line? You are right about what Obama said; it is exactly what Reagan said, and this “free-lunchism” (as you correctly term it) has become the path to power for a venal nation. But all that says is that the Tea Party is not a corrective to this attitude.

  • You didn’t see the mobs because you didn’t see the funding.

    What, it’s scary when large groups of people with shared political ideas gather at a rally?

    Was it equally scary when record numbers of people were gathering to be told that they were the change they had been waiting for?

    I’m not particularly supportive of the Tea Party (though conservative, I’m a bit too elitist) but to shudder that it’s a mob politics movement seems odd, given that Obama routinely drew rather larger crowds than the Tea Party rallies do. (Though perhaps the reason for concern is that the dangerous political movements of the early 20th century were all leaderless and vague, rather than being rallied around a single highly charismatic politician…)

  • John Henry, Once again, you talk about what you’re against, but remain vague on what you are for. So what do YOU want? What will you cut to bring the budget in line?

    I’m for measured rhetoric and constructive conversations, and I believe the latter is not possible without the former. I’m not a fan of the tea party crowd, but I’m not really into most large-scale political movements in this country, and I try to treat all of them fairly. Pro-lifers (like myself) with social democrat leanings aren’t an effective coalition in the U.S. As to what I would cut to bring the budget in line, I confess I don’t have a clear idea, aside from means testing Social Security, cutting defense spending, and heading off the impending financial train wreck that will be ObamaCare (note: I would have been in favor of it in 2004 – without knowledge of the housing bubble, maybe – just not given our current economic circumstances).

  • For my part, I don’t think Americans are as susceptible to the influence of demagogic leaders as Europeans were 100 years ago. I think we have a tradition in this country, going back to George Washington’s refusal of sole dictatorship, of rallying around the Constitution instead of a personality. An originalist interpretation of the Constitution, to be exact. Of course the founding fathers had their disputes, but all of them would likely be opposed to the modern warfare-welfare state.

    As John Adams said, the republican form of government is a nation of laws, not men.

  • I suspect we can provide our Brown Shirts though not so much from the Tea Party as unions and academia. Though the latter would more likely be the leaders rather than actually getting their hands dirty.

  • Yes, but there was no question about who the leader was and what the aims were. then you could just agree or disagree. This is different.

    Of course, in reality, Obama wasn’t the leader; he was just the front man. When he got elected, he appointed an “economic team” that was no different from the one that went before it. In fact, some (like Geithner) were the same persons. Politicians run for office because they think that they will then run the country; they discover that the country runs them. Or rather, the oligarchic powers that actually control the funding. The freedom of movement is limited, and Obama’s hope for “reform” will go down to defeat in a big way. Then you will get a President Palin, or a like-minded individual. At that point, the fun really begins.

  • Reagan said, and this “free-lunchism” (as you correctly term it) has become the path to power for a venal nation.

    I would suggest that you look at people around you and insert their name in a sentance such as this and ask yourself in all seriousness if it is warrented. Start with a clerk in the mailroom at the University of Dallas (“Christy is an example of this venal nation”) and move on from there.

    So what do YOU want?

    We can start by dispensing with crony capitalism (business subsidies), crony philanthropy (the whole menu of discretionary grant programs operated by HHS), the marriage of crony capitalism with crony philanthropy (HUD), academic pork barrel (NIH, NEH, &c), actuarially-unsound and heavily subvened pensions for public employees, excess compensation for public employees…..

  • I think the quality of a Palin regime will depend entirely upon whom she surrounds herself with.

    I’m hoping Rand Paul can pull an Obama and make a successful run for the presidency after a brief stopover in the Senate. He’s not as ideologically doctrinaire as his father, and he is aiming higher politically.

  • At that point, the fun really begins.

    No, it just continues, same as it ever was. Sure, the U.S. will eventually go the way of every other civilization, but, as you note, the President’s powers (for good and evil) are vastly oversold to the electorate – at least with regard to domestic policy, which is the only place that there is much difference between them. I’ll note that there is a tension between your comment that Obama was powerless to rescue us from the oligarchy (presidential impotence!), and your fears about President Palin (evil Presidential omnipotence!). Btw, I think the odds of President Palin are very low, fortunately for all of us.

  • Of course, in reality, Obama wasn’t the leader; he was just the front man. When he got elected, he appointed an “economic team” that was no different from the one that went before it. In fact, some (like Geithner) were the same persons. Politicians run for office because they think that they will then run the country; they discover that the country runs them. Or rather, the oligarchic powers that actually control the funding.

    I think part of the issue here may simply be that you have a much more authoritarian view of how the world works than the average bear.

    I would agree that politicians end up having less latitude in office than they imagine they will, but I think that’s mostly because they run up against the limits of their knowledge and power, and against how the world works, not because of some shadowy oligarchy that determines What Shall Be Done.

  • not because of some shadowy oligarchy that determines What Shall Be Done.

    We can see that they have already gotten to Darwin.

  • Yeah, he can’t see those black helicopters above his house.

  • Though perhaps the reason for concern is that the dangerous political movements of the early 20th century were all leaderless and vague, rather than being rallied around a single highly charismatic politician.

    Nice.

  • John Henry, you are having way too much fun in this thread! :)

    The Tea Party Movement is really simple to understand. The Obama administration comes into office and engages in spending on a scale compared to gross national product that we have not seen since World War II. The Tea Party arose as an expression of the concern that many Americans had with this fiscal fecklessness. Rather than heed the warnings that they were alienating a large portion of the American people through their economic policies, the Obama administration stayed the course. Staying the course has failed to get the economy out of the ditch. Now the Democrats are going to pay a heavy price for this in the midterm elections. No shadowy plutocrats caused this, no puppet masters are pulling strings behind the scene. This is American Politics 101: The party in power gets the blame for a lousy economy. Go against a large segment of the public in regard to policies and there will be a price to pay at the ballot box. When you are in a hole stop digging, or the bottom will fall out for your party at the next elections.

  • Actually, the public wouldn’t care about the spending, if the economy were working. Which it isn’t. And it won’t.

    But there doesn’t seem to be too much concern for a large group with immense power, lots of money, and ill-defined program and shadowy leaders. In fact, many seem to be putting their hope in these rather shadowy princes. And I, for one, hope that they are right. We shall certainly find out, for baring a miracle in the economy, they will certainly come to power.

  • Mr Brown,

    No sweat on the delay – I blog, too, and if I were to carefully answer each and every comment I wouldn’t get much done.

    That said, I was trying to respond not just to you, but to a couple other points I read in the comments. I should have been more clear about that.

    But my basic point remains – the TEA Party is not controlled by anyone; it is not racist or nativist or even remotely screwball. It is just the regular folks – the people who man our productive businesses, pay the majority of our taxes and fight our wars. These are the people who get married and stay married. Who have more than one or two designer children. Who know that God really is watching and really wants us to do the right thing.

    Any human undertaking is liable to be corrupted – our Fallen nature ensures that. One day, we can rely on it, the TEA Party movement will stray from its primary ideals. At that point, it will undergo crisis and either self-reform, or fade away. But that day isn’t today, and likely won’t be for some time to come, given that the nature of things is for a slow disintegration. One only needs to see how badly the Civil Rights movement has deteriorated to the point where it is now no more than a “Shout Racism!”, Democrat-controlled pressure group to know what can happen to even the most honorable groups over time.

    These people have gone after, with gusto, corrupt members of the Ruling Class – and they have started with the GOP’s political barnacles. The activists show a clear appreciation for the nuances of politics and the fact that everything won’t be made perfect in one fell swoop. They know that their biggest task will come in January when, with greatly increased GOP numbers in the House and Senate, it will be time to really pressure the GOP to come through on government reform. And these people will drop the GOP like a bad habit if they are thwarted by the Old Guard (I suspect some form of a Christian Democrat party would be founded for 2012 if the GOP fails to deliver…and I’d probably be part of it, even though I’ve been a Republican since I was 18).

    And these people, I’m sure of it, will go Distributist if they are presented with it – I already give heaping doses of it in my own blogging and I only get small quibbles from everyone from the center to the right (liberals tend to not even understand what I’m talking about). After all, what the heck does a self-employed landscaping contractor care about multi-national corporations? Not a bit – and such people will listen to talk of bringing things down to the local level and having a far larger and more widely distributed manufacturing, farming and mining base.

    This is the moment we’ve all been waiting for – when the back bone of America has awakened and is about to clear out a Ruling Class which counted on people never getting sufficiently angry about what they do.

  • John,

    Oh, for pity’s sake – the “no socialized medicine, hands off my Medicare” canard was first floated by President Obama in July of 2009. Its the merest of talking points – a liberal view that everyone wants their government goodies. A reflection of liberal cynicism which asserts that everyone can be bought.

    It is possible there is someone stupid enough to make such a statement, so there may be some thin thread of semi-fact behind it, but the fact of the matter is that such an opinion is not held by TEA Party activists…not just “not on the whole”, but “not by anyone who has above room temp IQ”. I know another false claim about the TEA Party activists is that they are stupid…the only thing I can do about that is suggest you attend a few TEA Party events and talk to the people yourself…keeping in mind that in any crowd of 10,000 people you will be able, by diligent search, to find a selection of fools.

  • Actually, the public wouldn’t care about the spending, if the economy were working. Which it isn’t. And it won’t.

    For the record, the rate at which goods and services were being produced in the economy declined (between the 2d quarter of 2008 and the 2d quarter of 2009) by 3.9%. This contraction has been largely reversed by the economic growth which has occurred over the last year.

    The labor market is in bad shape. The Democratic Congressional caucus has injured it further by raising the minimum wage, privileging public employment, and introducing more severe uncertainty in the direction of labor costs through prospective changes in the regime of health care finance and labor relations.

    There is also an unusual degree of uncertainty as regards future economic performance, in part because banks and secondary brokers have not completed the process of acknowledging losses on mortgage loans and in part because of the prospect of sovereign defaults, prospects driven by the deficit, which is driven by the spending.

  • Mark, that is simply not true. Not only have I seen the signs myself, I have personally talked to TP-ers who held this view, and held it with no little heat. In fact, I heard Michael Novak say the same thing. He is no TP-er to be sure, but he does represent a substantial body of opinion on the right. But that even begs the larger question: If they are against “socialized” medicine, why aren’t they campaigning against Medicare/Medicaid/VA? Sarah Palin caught the spirit exactly by crossing out “budget cuts” to write “tax cuts.” She knew what she was doing. I am suspicious of a group that wants “smaller gov’t,” but won’t say just what they will cut.

    Art, that sounds like Obama’s defense. But in truth, the economy needs to create 15 million jobs in the next few years, and there just is no source for them under the current institutional arrangements. Indeed, the economy for the last 10 years at least has been a matter of smoke and mirrors, sustained by an artificial bubble; without that, we would have been in this situation in 2000. The truth is, the current system is non-functioning, and has been for some time; we are just now getting the word.

  • Art, that sounds like Obama’s defense.

    I think if I were working in The One’s PR apparat, I might just be able to contrive a more enticing sales pitch than calling attention to how the Congress and the President have exacerbated trouble in the labor market or how current fiscal policy raises the specter of sovereign default.

    But in truth, the economy needs to create 15 million jobs in the next few years, and there just is no source for them under the current institutional arrangements.

    Where you dredged that figure (which implicates a 10% expansion in the size of the labor force over ‘a few years’), I have no clue. There has been from natural increase no secular increase in the sum of the population of cohorts of working age and both immigration and labor force participation rates are going to respond to some degree to demand and real wages. I cannot imagine what sort of revised ‘institutional arrangements’ you imagine will alter patterns of labor demand, real wages, and the degree of flexibility in the employement of labor, much less arranges ments which can be implemented over the span of ‘a few years’.

    Indeed, the economy for the last 10 years at least has been a matter of smoke and mirrors, sustained by an artificial bubble; without that, we would have been in this situation in 2000. The truth is, the current system is non-functioning, and has been for some time; we are just now getting the word.

    John, we are producing (in 2005 currency) some $13,16 tn dollars worth of goods and services in this country. Something is functioning. Domestic product in the year 2000 was 15% below what it is today, so you are positing a contraction in output of that magnitude. Quite a number of countries have experience banking and financial crises over the last 35 years, and that is a response of atypcial severity for a country whose economy has achieved some baseline of size and sophistication. Argentina suffered a contraction of 19% during the period between 1999 and 2004. We have no currency peg to abandon and our debts are denominated in our own currency, so I would not anticipate that.

  • John,

    “But that even begs the larger question: If they are against “socialized” medicine, why aren’t they campaigning against Medicare/Medicaid/VA?”

    One doesn’t follow from the other. Medicare et. al. have been around for a long time, and many have grown dependent upon them. In many cases, they paid for them with their own tax dollars. So they may as well get what they paid for.

    Why this should oblige them, or anyone, to support their further expansion into full-blown “socialized medicine”, is something you haven’t explained. Consistency doesn’t demand it; it is possible to, for whatever reasons accept the quantity you have and then to say “no more – this is enough.” In their own way, without articulating it particularly well, they recognize that at a certain point quantity transforms into quality, and government assistance becomes government takeover and dictatorial control.

    It is also possible to argue that while the old folks of this generation may need their Medicare/aid, we can gradually transition off of it and replace it with private alternatives. This has always been Ron Paul’s position.

    And no, private alternatives doesn’t mean “everyone is on their own” – it means the sort of voluntary, cooperative organizations that Catholic social teaching has always preferred and encouraged, institutions of civil society that are not appendages of the federal bureaucracy or purely creations of the market.

  • Art, the 15 million number is extremely conservative; that’s the number that the BLS says is currently unemployed, and that by the optimistic U3 number. That doesn’t even account for the natural growth of the workforce or the low labor force participation rate numbers. I was trying to sugarcoat it. I do understand that you cannot imagine any institutional changes, which is precisely why the system will collapse, since there is obviously no source in economy for such a huge number of jobs.

    Of the current $13T economy, 35%, at a minimum, is from the gov’t, just what you propose cutting. And if you actually delve deeper into the numbers, most real sectors of the economy are collapsing; only things like finance, gov’t, and health-care, are expanding. Absent the artificial housing bubble, there was no real growth, only shrinkage. Greenspan got the blame–which he certainly deserved–but he knew what he was doing; he knew that a bubble was the only game in town, and might as well let it go on. There was nothing else to do.

    I am told that if were “No Socialized Medicine–Hands off medicare” signs, then it must have been infiltrators or oddballs, but not the real core of the movement. To prove the point, Joe H. argues, “No socialized medicine–hands off medicare.” The argument seems to resolve to two points: it is old and it is payed for. The first proves my point about “modern conservatism,” whose content is always old liberalism. Indeed, “libertarian” is just an alternate spelling of “liberal.” And the old name for what they push is “economic liberalism”; “capitalism” was originally the Marxist epithet.

    As to the second point, if this is true (which it isn’t), then all opposition to Obamacare must cease, since it is also paid for.

    The great irony of the situation is that the current bill is largely identical to the bill the republicans proposed when they were fighting Hillarycare. Obama thought he would be clever by adopting the Republican plan and grafting on a public option. Now the public option is gone, and only the Republican plan remains in law. The Republicans use their own bill to drive out the democrats, and win on both sides of the argument.

    The TPers think they are going to get this law repealed. They will not. Their financial backers, Big Pharma, Big Insurance, Big Medicine, Big equipment suppliers, etc., LOVE THIS BILL. It is the biggest source of subsidies they have ever had and they are not about to give it up.

    Finally, Joe finishes with a fantasy about private medicine and charity covering everything. Well, if charity could have done it, charity would have done it; nothing prevents anybody from doing so today. Joe seems to suggest that the Church is opposed to any public involvement in health care; if he can show me an authoritative source for that, I will recant all my views and burn all my books.

    I DO have a way of providing a largely non-governmental health care system in my latest book. But it is impossible under current institutional arrangements because there is no “free market” in health care; it is a series of oligarchies and monopolies protected by patent, license, and “certificates of need.”

  • John,

    That’s quite typical of you unfortunately. First you engage in an absurd fallacy that contradicts your own historical narrative. The Church used to provide medical care on a wide scale throughout Christendom, and still does today. Then the Church was expropriated by the evil capitalists, and left people without any place to go – so modern liberals cooked up the modern welfare state.

    Charity has done it, and charity can do it again – and it is a shame that you don’t realize that the reason charity DOESN’T do it is because the very existence of the welfare state creates the idea in the minds of most people that “someone else” will take care of the poor and the sick. Their own basic charitable responsibilities are then shifted to someone else, as long as they “pay their taxes” and stay out of the way. So that in itself “prevents” people from doing it.

    For all the talk your crowd does of a Catholic view of man, I can’t help but notice an underlying early Protestant pessimism, a view of man as inherently selfish and sinful. Either the state forces everyone to contribute, or nothing will get done because men are so inherently and irredeemably selfish. I reject that view of man, and so does the Church.

    “Joe seems to suggest that the Church is opposed to any public involvement in health care”

    I didn’t say that. You are so uncharitable, so coarse and prideful.

    “I DO have a way of providing a largely non-governmental health care system in my latest book”

    Oh wow. So after castigating me, you go ahead and basically agree with the basic idea. I didn’t say anything about how it could or should be done – only that, quite naturally, if the state isn’t providing health care, someone else will. All of the insolent nonsense that preceded this was entirely unnecessary.

  • I mean, did you even read my last paragraph? Did I say anything about oligarchies? Did I not mention solutions outside both the state AND the market?

    Your pride and arrogance – and that of some of your colleagues – are the root of 90% of the phony and unnecessary blustering disputes you have with sincere Christian libertarians. It’s more tragic than anything else. Get over yourself.

  • “30. Thus, by degrees, came into existence the patrimony which the Church has guarded with religious care as the inheritance of the poor. Nay, in order to spare them the shame of begging, the Church has provided aid for the needy. The common Mother of rich and poor has aroused everywhere the heroism of charity, and has established congregations of religious and many other useful institutions for help and mercy, so that hardly any kind of suffering could exist which was not afforded relief. At the present day many there are who, like the heathen of old, seek to blame and condemn the Church for such eminent charity. They would substitute in its stead a system of relief organized by the State. But no human expedients will ever make up for the devotedness and self sacrifice of Christian charity. Charity, as a virtue, pertains to the Church; for virtue it is not, unless it be drawn from the Most Sacred Heart of Jesus Christ; and whosoever turns his back on the Church cannot be near to Christ. ” — Leo XIII, Rerum Novarum

  • It’s not clear to me why the U.S. economy adding 15 million new jobs in the next few years should be considered absurd. I’m not saying it’s likely, but it would hardly be unprecedented. It happened under Reagan and Clinton.

  • Black A, it isn’t absurd, or shouldn’t be. But it has become absurd. A nation with our resources should be able to provide meaningful work for all its citizens who want to work. But instead, we have elected to provide work for others, through “free trade” agreements which are neither free nor (technically speaking) even trade. There is no way out of this without learning, or rather re-learning, how to make stuff for ourselves. Trade really isn’t trade unless it is more or less balanced; we buy stuff from them and they buy stuff from us, in relatively commensurate amounts.

    Joe, whenever I see you argue, you always call anybody who disagrees with you bad names. Now, they may indeed all be bad people, but disagreeing with you is not the sign of this. And it would be helpful if you would actually address the issue, instead of communicating your hurt feelings. What prevents charity from fixing the problem today? No law that I can see. If it could be done, it would be done. But it can’t be done when medicine is largely a closed market.

    And I certainly can’t make sense of your last paragraph. You seem to be complaining that I am agreeing with you, at least in part. I merely point out that a market that is dominated by patent, license, and CONs. This is not in any meaningful sense a “private” market, but one that operates under gov’t guaranteed monopolies and oligarchies. In order to make even charity work, you must free the market. But you can’t have it both ways; you can’t demand that gov’t protect a monopoly and that gov’t butt-out.

    And your quote doesn’t say what you want it to, and no competent authority has ever interpreted it that way. Indeed, further in the encyclical we read, “Justice, therefore, demands that the interests of the working classes should be carefully watched over by the administration, so that they who contribute so largely to the advantage of the community may themselves share in the benefits which they create-that being housed, clothed, and bodily fit, they may find their life less hard and more endurable. It follows that whatever shall appear to prove conducive to the well-being of those who work should obtain favorable consideration. There is no fear that solicitude of this kind will be harmful to any interest; on the contrary, it will be to the advantage of all, for it cannot but be good for the commonwealth to shield from misery those on whom it so largely depends for the things that it needs. ”

    We read encyclicals with the Church, not as a matter of private interpretation. And no Church authority reads it that way, certainly not the most recent encyclical, nor any of the others on the subject, nor the Compendium. So where does your interpretation come from?

  • Though even when one reads encyclicals with the Church there is broad leeway in application. On this blog I don’t know if anyone is denying that workers should be protected. The question becomes what protection should be afforded, what protections should be afforded to those who provide the capital, and at what level this should be done.

  • Phillip, absolutely, therefore trying to prove that the Church supports only charity and not public support–as a matter of justice–would be a rather formidable task, not one to be settled with a isolated quote. One must show a tradition of readings. There is certainly no “Catholic” system, in the sense of one system supported and dictated by the Church. There are any number of systems and conditions which are excluded, and some that meet the requirements better than others.

  • A nation with our resources should be able to provide meaningful work for all its citizens who want to work. But instead, we have elected to provide work for others, through “free trade” agreements which are neither free nor (technically speaking) even trade.

    The high levels of unemployment in the U.S. right now don’t have anything to do with free trade agreements. If anything, protectionism is associated with higher unemployment. But for the most part protectionism doesn’t affect the number of jobs in a country, just their composition.

    There is no way out of this without learning, or rather re-learning, how to make stuff for ourselves.

    The U.S. does make quite a bit of stuff for ourselves (manufacturing output, for example, is higher today than it was back in the 1960s or 1970s). But I find the implicit autarky behind the statement unconvincing. I’m guessing, for example, that you didn’t make your own computer. Does that mean you are headed for disaster?

  • John,

    I call things by their right names. Your behavior is arrogant and prideful, and I know for a fact that I am far from the only person who has told you this, or whom you have driven away with your frequent outbrusts.

    You can stuff your patronizing BS. This isn’t about hurt feelings – it is about your permanently aggressive posture towards anyone you engage in discuss with. You put words in my mouth, made insolent insinuations, and then deny it. It doesn’t hurt, it’s just pathetic and annoying to have to endure.

    “What prevents charity from fixing the problem today?”

    I already answered that. The assumption that someone else – i.e. government bureaucracy – will take care of those in need, along with the assumption that one’s tax dollars are a sufficient replacement for charity, and finally, the reasonable argument that giving charitably AFTER being taxed would make it more difficult if not impossible for people to fulfill moral obligations to their own families.

    That said, charitable giving in this country is among the highest in the entire world:

    http://www.guardian.co.uk/news/datablog/2010/sep/08/charitable-giving-country#data

    If the assumption that the state will take care of the needy were no longer widely-held, I don’t believe for a moment that Americans in their generosity and by their values would simply allow people to rot in the street or die of preventable disease. Well, maybe in the big cities on the Left Coast…

    “You seem to be complaining that I am agreeing with you, at least in part.”

    Sigh.

    I was complaining that by your patronizing, arrogant response, you completely ignored the fact that we do agree – in part.

    I don’t disagree with anything you said. Which is why when you originally said:

    ” Joe finishes with a fantasy about private medicine and charity covering everything”

    and

    ““Joe seems to suggest that the Church is opposed to any public involvement in health care””

    These were deliberate distortions. Why? I never said anything about private charity “covering everything”; I was talking about, for instance, arrangements such as these:

    “And there are not wanting Catholics blessed with affluence, who have, as it were, cast in their lot with the wage-earners, and who have spent large sums in founding and widely spreading benefit and insurance societies, by means of which the working man may without difficulty acquire through his labor not only many present advantages, but also the certainty of honorable support in days to come.” (Rerum Novarum, 55)

    Meaning, it isn’t ONLY charity – it is a number of voluntary, cooperative institutions established for the benefit of the poor and the working class. These institutions are essentially private:

    ” The State should watch over these societies of citizens banded together in accordance with their rights, but it should not thrust itself into their peculiar concerns and their organization, for things move and live by the spirit inspiring them, and may be killed by the rough grasp of a hand from without.”

    To me, “watch over” means occasional support, not bureaucratic management.

    ” your quote doesn’t say what you want it to, and no competent authority has ever interpreted it that way”

    Show me what the “competent authorities” say, then. I suppose you’re one of them, right? What my quote says is simple: that the state cannot replace private charity. What you go on to add does NOT contradict my interpretation (really, isn’t it self-explanatory?) of the quote. You’re still stuck on this idea that I am arguing for anarchism, for no state at all. What you think my “interpretation” is is clouded by your uncharitable and hasty prejudgments.

    How do you interpret “watch over”? If your “competent authorities” interpret the phrase “watch over” as “forcibly redistribute billions of dollars of wealth through regulatory bureaucracies”, then I’d say your understanding of “competence” is severely flawed.

    Finally, these appeals to authority are so tiresome. You have a brain, you have reason – use it. The pope didn’t address his encyclical to “the competent authorities, to interpret and then disseminate to the unlearned masses.” It is for all us. And if you disagree with my interpretation, just say why, instead of arrogantly dismissing it as at odds with your “competent authorities.”

    Pathetic.

  • Though I would agree with a number of systems which are excluded, I’m not sure one can easily make the argument that requirements are met better by some than others. That ultimately comes to prudential judgment which people can disagree on but still remain good Catholics. Thus why I think the Church points out the merits of the free market, the need for state interventions at times and the need for alternative economic initiatives.

  • Surely, we can make a judgment that some systems better and some worse. I don’t see why that would be a stretch.

  • I actually think that the current administrations efforts are inferior to previous practices and that the Tea Party has latched on to that. That includes current health care reform etc. A better example might also be the current immigration debates. CST allows for immigration and also limits on this. People will disagree on what the balance shoul be but that people will disagree I have no problem with. I don’t think there is a scorecard here that can help us given the depth and complexity of the different pronouncements of CST.

  • “The high levels of unemployment in the U.S. right now don’t have anything to do with free trade agreements. If anything, protectionism is associated with higher unemployment. But for the most part protectionism doesn’t affect the number of jobs in a country, just their composition. ”

    Simply not true, on all counts. In fact, there is not one single historical example of a country that got rich on free trade. They all got rich by protecting their own markets while forcing others to open theirs. see http://distributism.blogspot.com/2008/04/free-trade-and-alternative-history.html

    Protectionism (which I don’t support, mainly because I have no idea what it means) must have some effect, because trade has some effect. If trade expands jobs, then not-trading implicitly shrinks them. But trade doesn’t always expand jobs, especially when it is not really trade at all. If you have to finance your imports at $2b/day, it’s not really trade, and it really does detract from jobs. I haven’t spoken for autarky, but I have spoken against national suicide.

  • In fact, there is not one single historical example of a country that got rich on free trade. They all got rich by protecting their own markets while forcing others to open theirs.

    There has never been a country that that has practiced 100% free trade. Every country has some tariff on some good, though the amount and importance of tariffs differs radically from country to country and from one era to another. So it will always be possible to dismiss an example of a free trade success by pointing to some deviation from the principle. This is basically what Chang does in Bad Samaritans: yes, places like the UK and Hong Kong and Singapore got rich without much reliance on trade protectionism, but they weren’t 100% pure so they don’t count. Of course by that standard the U.S. doesn’t have free trade now and never will, so arguments that we have doomed ourselves by adopting free trade are beside the point. If you adopt a more realistic standard for what counts as free trade (such that, say, the U.S. today practices free trade despite having some tariffs), then there are plenty of examples of countries that have gotten rich while practicing it: The UK, Hong Kong, Singapore, Ireland, some of the Scandinavian countries, Chile, etc. The U.S. had high tariffs during the 19th century, but it was also separated from trading partners by an ocean, which would have functioned as a tariff in any event. The fact that trade between the states was completely free was much more important.

    It’s also the case that if you look at countries that have gotten rich while practicing trade protectionism, the most successful sectors are often not the ones that are protected (I believe this is true, for example, for South Korea).

    In any event, the question was whether trade barriers lead to more employment, and the evidence is that they don’t. Countries with high trade barriers have higher unemployment, on average, than countries with low trade barriers.

  • Simply not true, BA. England didn’t have “some protection,” it had the highest protective tariffs in the world, and that doesn’t even count the implicit protections of the trade restrictions on its colonies. And America overtook Britain as the largest economy while we had the world’s highest trade barriers. The same is true for every successfully developed nation. Free trade is something rich nations enforce against poor ones; it is not a development strategy, but an enslavement strategy. Tariffs were not peripheral to growth, but essential, at the heart of the any nation’s trade strategy. There are no exceptions.

    by the way, have you actually read the book, or are you just surmising?

  • The United States Constitution says that the Federal government shall fund itself with tariffs. I don’t recall any ammendment repealing that clause.

  • England didn’t have “some protection,” it had the highest protective tariffs in the world, and that doesn’t even count the implicit protections of the trade restrictions on its colonies.

    It depends on which time period we’re talking about. Britain started with high tariff rates, which came down over time. Chang says, for example, that “the US has never practiced free trade to the same degree as Britain did during its free trade period (1860 to 1932)” (p. 55). Britain was relatively prosperous in 1860, but not nearly as prosperous as it was seventy years later.

    America overtook Britain as the largest economy while we had the world’s highest trade barriers. The same is true for every successfully developed nation.

    I’m not sure what you mean here. Surely it is logically impossible for every developed nation to have the world’s highest trade barriers.

    As I mentioned before, the America’s high trade barriers weren’t a huge factor in the 19th century because the cost of transporting goods across the Atlantic was so high. The fact that the entire continent was basically a free trade zone was more important.

    by the way, have you actually read the book, or are you just surmising?

    I started it, but didn’t finish (as I alluded to earlier, I wasn’t impressed).

    Btw, as I look back at the book I note that even Chang concedes that Hong Kong is an exception to his thesis about trade, and he concedes that Singapore grew rich with free trade policies too, though he notes that neither had a totally free market. So even he doesn’t say that “there are no exceptions.”

    Also, IIRC, Chang’s argument is that countries need trade protectionism in order to develop, but that once this has occurred they are better off adopting free trade, except perhaps for things like IP and immigration restrictions (what do you think about immigration restrictions, btw?). Chang thinks that rich countries advocate free trade now because it benefits them, which seems in tension with your view that free trade policies are leading us to disaster.

    Have you read the book?

  • The United States Constitution says that the Federal government shall fund itself with tariffs.

    Where does it say that, exactly?

  • “I’m not sure what you mean here. Surely it is logically impossible for every developed nation to have the world’s highest trade barriers.”

    lmao… its about time he got a little of what he routinely dishes out

  • Art, the 15 million number is extremely conservative; that’s the number that the BLS says is currently unemployed, and that by the optimistic U3 number. That doesn’t even account for the natural growth of the workforce or the low labor force participation rate numbers.

    Your original reference was not to cyclical unemployment, but to the size of the whole workforce. Currently, the rate of unemployment stands at 9.6% of the workforce. Why you consider it ‘extremely conservative’ to regard it as a social imperative to reduce the rate of unemployment to zero over the space of three years, I have not a clue. Frictional rates of unemployment (the rate consistent with price stability) vary a great deal over time, during my lifetime varying between 4.5% and 7.5%. It has never been zero, ever. The labor market is recovering from this contraction only very slowly, characteristic of the British experience after 1983.

    I was trying to sugarcoat it. I do understand that you cannot imagine any institutional changes, which is precisely why the system will collapse, since there is obviously no source in economy for such a huge number of jobs.

    There have been dozens of banking crises all across the globe over the last 35 years. There have also been instances of severely elevated unemployment borne of sclerosis in labor markets. Much of western Europe suffered in this manner for a dozen years or so after 1983. An address to these problems is an address to these problems making use of the extant literature and experience on the resolution of banking crises (and a complaint of Charles Calomiris and Nouriel Roubini has been that H. Paulson et. al. ignored that literature and took to mad improvising). An address to your troubled labor market is to repeal policies that artificially reduce employment (Casey Mulligan has been cataloguing some of these). What addresses neither is commencing some project at constructing a New Distributist Jerusalem.

    Of the current $13T economy, 35%, at a minimum, is from the gov’t, just what you propose cutting.

    The ratio of public expenditure has averaged about 0.35 over the last 20 years or so. In the last three years it has risen to about 0.4, I believe. ‘Public expenditure’ is not to be identified with ‘public purchases of goods and services’. It is the latter that is a component of statistics on domestic product. Much public expenditure consists of income transfers, which are then allocated by recipients to private consumption, investment, and net exports. If I am not mistaken, ‘public purchases of goods and services’ ordinary accounts for about 18% of domestic product; per the U.S. Bureau of Economic Analysis, it is just shy of 20% as we speak. The thing is that public spending partially crowds out private spending and their are efficiency losses from substituting public spending for private spending. The idea of stimulus spending is to maintain aggregate demand; the problem the government has confronted is that the effectiveness of public spending in such circumstances is contingent on particulars. I should note that some of Christina Romer’s academic work suggests that tax increases to reduce fiscal deficits are not particularly contractionary.

    And if you actually delve deeper into the numbers, most real sectors of the economy are collapsing; only things like finance, gov’t, and health-care, are expanding.

    The Federal Reserve supplies statistics on industrial production and capacity utilization here:

    http://www.federalreserve.gov/releases/G17/Current/default.htm

    These indicate that capacity utilization is subnormal. They also show that the decline in capacity utilization ceased more than a year ago and that improvement has been registered across all named sectors.

    Absent the artificial housing bubble, there was no real growth, only shrinkage.

    The U.S. Bureau of Economic Analysis (http://www.bea.gov/)
    produces a handy data series under the title “Table 1.2.6. Real Gross Domestic Product by Major Type of Product, Chained Dollars”

    The annualized statistics derived from the most recent quarter’s production are as follows:

    Goods: $3.988 tn
    Services: $8.234 tn
    Structures: $0.923 tn

    Those for the calendar year 2000 are as follows:

    Goods: $3.056 tn
    Services: $6.919 tn
    Structures: $1.245 tn

    All of which is to say a real increase of 13% in goods production, an increase of 19% in the production of services, and a decline of 26% in the production of structures.

    Greenspan got the blame–which he certainly deserved–but he knew what he was doing; he knew that a bubble was the only game in town, and might as well let it go on. There was nothing else to do.

    Neither the Federal Reserve nor the Bureau of Economic Analysis have been issuing reports on Dr. Greenspan’s interior dialogue with himself.

  • Bob, The 16th amendment didn’t change that?

    BA, exactly Chang’s argument; I know that because I’ve got the book right here. Countries grow rich on tariffs, then switch to free trade to make sure nobody else will. Singapore and Hong Kong were British colonies. HK became British in the treaty of Nanking, which deprived China of the right to set its own tariffs, which the British set for them at 3%. It was the British gateway into the control of China (for the purpose mainly of selling opium). It grew rich as an extension of Britain. The case of Singapore is even more bizarre, and not at all an argument for liberal markets, since they didn’t have any. The Gov’t owns 77% of the land and heavily subsidizes industry and housing.

    “Free Trade” is a way of preventing other countries from growing, and growing countries don’t use it. They were only useful when dealing with undeveloped countries, to keep them from developing. However, we are in need of growth, and not of abstract theories that never worked in practice. We need 15 million jobs just to get back to where we where, and free trade isn’t cutting it. This is a prudential matter, not an ideological one. A country makes good deals, “good” here meaning good both sides.

  • Simply not true, on all counts. In fact, there is not one single historical example of a country that got rich on free trade. They all got rich by protecting their own markets while forcing others to open theirs.

    That is a logical fallacy distinct enough to have an ancient proper name.

    I think you will likely see a greater propensity to make use of tariffs at earlier stages of economic development because these sorts of taxes are technically simpler to collect than direct taxes.

    I would refer you to the (theoretically grounded) empirical work of Bela Balassa, which provides the evidence for the static and dynamic benefits of a liberal trade regime. The benefits of free trade can be oversold. Discrete factors you can name each individually (a given industry or a given policy) make small contribution to overall welfare and economic dynamism. The dissidents on this question have not been economists but sociologists and historians (e.g. Andre Gunder Frank) whose suppositions are difficult to verify empirically. I was taught many years ago a model for an optimal tariff, but it presupposed no retaliation on the part of the other party (which is not likely to obtain for long).

  • “Free Trade” is a way of preventing other countries from growing, and growing countries don’t use it.

    You produce goods, and sell them abroad. Others produce goods, and sell them to you. It does not enhance the productivity of those on either side of this transaction to interpose an excise tax between them.

  • You produce goods, and sell them abroad. Others produce goods, and sell them to you. It does not enhance the productivity of those on either side of this transaction to interpose an excise tax between them.

    In the first place, that describes a sitaution of balanced trade, which we do not have. In the second place, it can increase productivity, in cases where “outsourcing” is used to create externalities, such as avoiding pollution controls, or used to oppress workers, which is inefficient. (Oppression merely externalizes the cost of producing families.) In the case of externalities, you adjust them with taxes. This discourages offshore movement merely to create an externality.

  • Art, you seem to be agreeing that countries that actually develop have tariffs; you merely ascribe it to “ease of collection.” Well, maybe. But there seems to be a pattern here, and in any case, having taken that position you cannot then argue that a nation can’t develop with a tariff regime. But in fact, less efficient, developing economies do need protection. This is because an economy is not about providing the lowest price for a good, since price does not encompass all social costs. People need work. It is the business of an economic system to provide it.

    Nor is it true that The dissidents on this question have not been economists but sociologists and historians… We have already been discussing the work of Ha-joon Chang, and his work is endorsed by Joseph Stigler, who has his own book on the subject. It is true that 90% of economists would agree with you, but that would be the same 90% that missed the coming of this disaster, which was the same that missed the last one and the one before that, ad infinitum. Economics is, or should be, the most discredited profession, one that rarely gets it right and seems to have no descriptive, predictive, or prescriptive power. If your doctor had the same track record as your economist, you’d be dead by now. And I’m afraid our economy has had one “doctor” too many.

  • Maybe protectionism is better than free trade, but if it is, you’re failing to convince this layman John. It doesn’t seem logical to me that a country gets rich from protectionism but then switches to free trade to prevent others from getting rich. That sort of greed is best served by retaining the tariffs and closed market and simply getting richer by the day. It seems that would work more towards keeping the little guy down.

    I also consider China. It was a pretty isolated and poor country until it started the process of opening up. North Korea sure doesn’t seem to do well. Russia seems to be benefiting from trade with Western Europe.

    I think BA’s point about the US being a a number of states with very free trade is quite valid. In fact, I’m hard pressed to figure out why free trade between Michigan and Idaho would be a benefit to MI yet free trade with Ontario would be detrimental to MI.

  • Art, you seem to be agreeing that countries that actually develop have tariffs;

    Excise taxes are a common feature of economic life. I cannot figure why you attribute economic development to their presence.

    in cases where “outsourcing” is used to create externalities, such as avoiding pollution controls, or used to oppress workers, which is inefficient.

    Most of our foreign trade is with other developed countries and our trade with poor countries is biased toward the importation of primary products.

    It is true that 90% of economists would agree with you, but that would be the same 90% that missed the coming of this disaster,

    Why not produce a literature review that would demonstrate the degree to which developments in recent years have been unanticipated by economists?

    Relatively few academic economists produce empirical forecasts of macroeconomic activity. Only a modest minority research financial economics, either. In the course of their research and publication, they would not be producing what you fault them for not producing. Business economists are forecasters. Their work product is also proprietary information.

    All of the foregoing is largely irrelevant to the theoretical and empirical work on international trade, which concerns abiding features of economic life, not transient phenomena like this or that asset bubble.

    Economics is, or should be, the most discredited profession, one that rarely gets it right and seems to have no descriptive, predictive, or prescriptive power.

    So you’re just gonna wing it?

  • In fact, I’m hard pressed to figure out why free trade between Michigan and Idaho would be a benefit to MI yet free trade with Ontario would be detrimental to MI.

    If we wanted to become really rich, I suppose, we could erect intra-state and interstate tariffs; that way our cities and states would stop inflicting poverty on each other. I’m not a huge fan of the EU, but I never realized how much poorer it would make all of the involved parties – you’d think that would have occurred to them.

  • It doesn’t seem logical to me that a country gets rich from protectionism but then switches to free trade to prevent others from getting rich.

    Waal, he is positing some optimally-sized field for unconstrained production and exchange, but giving no one any indication of the theoretical underpinnings of the concept or how it might be verified or even its relevance to the problems and possibilities of international trade given that sovereign units vary wildly in their populations and factor endowments.

  • Most of our foreign trade is with other developed countries and our trade with poor countries is biased toward the importation of primary products. Not true (you seem to be consistent in this; you must be an economist.) Our biggest trading partner is China, which is 2/3rds undeveloped, a low wage state with high externalities and an artificial exchange rate.

    But this is my favorite comment: Relatively few academic economists produce empirical forecasts of macroeconomic activity. In other words, a person with a Ph.D. in Economics has no better tools when reading the daily papers about news in his profession than does the untrained reader? He is therefore just as surprised as the general public? Wow! What you said about economists is 10 times worse that what I said; I just said they were ignorant; you’re saying they’re stupid. And Art, if they couldn’t see this train wreck coming, I see no reason to take their word on trade, or taxes, or anything else.

    RL, trade works when the terms of trade are equal, or tending towards equality. It doesn’t when they are not. Trade within the US, or with states like Canada, is likely to be beneficial to both sides. Trade with states that are developing with some justice, may cost us a little up front, but eventually we build a trading partner on equal terms. Trade with states were oppression, high externalized costs, and rigged currencies, imports poverty along with cheap goods.

  • John,

    You’re building your anti-Palin sand castle on what she had written on her hand? Oh, my! But, we’ll leave that alone as you and others seem to have gone off on a trade tangent…

    Rather than protectionism, better just to lower the tax and regulatory burden on making, mining and growing things inside the United States. There is not that much cost savings between making it in Shanghai and making it in Akron – so, take away the tax and regulatory burden, and it will once again become cheaper to just make it here, and so it will be done.

    Our problem: while we are continuing to pile up debt, the government simply will not agree to any policy which could crimp Chinese purchases of US bonds…so, we’re geared and will continue to be geared towards exporting our wealth to China. Until the government changes and our debt is brought under control, nothing else we do will be of any worth.

  • Not true (you seem to be consistent in this; you must be an economist.)

    The International Trade Administration

    http://www.trade.gov/mas/ian/build/groups/public/@tg_ian/documents/webcontent/tg_ian_003071.pdf

    reports that Canada is our largest trading partner. Some 85% of the value of merchandise imports and exports is accounted for by trade with one of thirty countries. A list of 18 affluent countries receives about two-thirds of our merchandise exports we send to the 30 on that list and produces about 55% of the merchandise imports from those thirty countries. Among the dozen or so underdeveloped countries on that list are three which specialize in oil production.

    In other words, a person with a Ph.D. in Economics has no better tools when reading the daily papers about news in his profession than does the untrained reader? He is therefore just as surprised as the general public? Wow! What you said about economists is 10 times worse that what I said; I just said they were ignorant; you’re saying they’re stupid. And Art, if they couldn’t see this train wreck coming, I see no reason to take their word on trade, or taxes, or anything else.

    Actually, what I implied, but did not precisely say, is that they produce research in subdisciplines other than financial economics and applied macroeconomics. Some do strictly theoretical work, others study resource economics, agricultural economics, international trade, development economics, economic history, econometrics, game theory, &c. Their professional publications are in those areas and do not incorporate macroeconomic forecasting. They may have classes in macroeconomics on their teaching schedule, can certainly read the newspapers with ample critical engagement, and speak to confederates who do publish macroeconomic forecasts. It is not, however, their research specialty to produce such forecasts themselves.

  • Oh, Art, you just keep making it worse. It is not, however, their research specialty to produce such forecasts themselves. IOW, they would remain oblivious to what is happening unless they were actively involved in producing a forecast for business or academic purposes? Normally, I don’t wish no bad on nobody, but if there is any group that deserved to have their retirement funds crash and burn, you just described it.

    Wow. And wow. I’m a theologian, and I predicted it five months in advance, and predicted it would be the worst recession since the depression. And I arranged my retirement fund so I actually made money in the crash.

    And Mark, ah low taxes. Is there any problem they won’t solve? Never mind we have the lowest tax rates already, save for places like Mexico, and it doesn’t seem to help. Surely hasn’t helped Mexico.

  • John,

    Singapore and Hong Kong were British colonies. So was Jamaica. When Singapore became independent in the mid 1960s, it was one of the poorest countries in the world. Now it’s one of the richest. Likewise, Hong Kong grew rich after the Communist take over in China. Both countries practiced free trade to a remarkable degree, as Chang himself notes. It’s true that neither country is completely free market. As you and Chang both note, for example, in both cases the government owns most of the land. How this is supposed to nullify the otherwise destructive effects of free trade, however, is not clear.

    If you don’t think Singapore or Hong Kong are examples of countries that practiced free trade, then I wonder what countries there are that you think has practiced it. If no country has ever met your standards for practicing free trade, then it’s hardly surprising that no country has grown rich while meeting your standards for practicing free trade.

    “Free Trade” is a way of preventing other countries from growing, and growing countries don’t use it. They were only useful when dealing with undeveloped countries, to keep them from developing.

    Did Britain not grow between 1860 and 1930?

    Chang’s theory isn’t that rich countries use free trade as a means of keeping other countries from developing (why would they want that?) He accepts the standard economic theory of free trade for a static economic model, just not a dynamic one. As he says on page 47:

    Ricardo’s theory [of comparative advantage] is absolutely right – within its narrow confines. His theory correctly says that, accepting their current levels of technology as given, it is better for countries to specialize in things that they are relatively better at. One cannot argue with this.

    His theory fails when a country wants to acquire more advanced technologies so that it can do more difficult things that few others can do – that is, when it wants to develop its economy. It takes time and experience to absorb new technologies, so technologically backward producers need a period of protection from international competition during this period of learning. Such protection is costly, because the country is giving up the chance to import better and cheaper products. However, it is a price that has to be paid if it wants to develop advanced industries.

    The argument you are making against free trade seems almost the complete opposite of Chang’s. He says that trade barriers should be used temporarily by poor countries to protect new industries, whereas you seem to be arguing that they should be used permanently by rich countries to protect old industries.

  • I would also point out that Mr. Medaille is basing his argument against free trade here on the need for economic growth. I point this out because, in other contexts, distributists are often derisive of arguments that attempt to justify this or that policy based on the need for economic growth, and accuse those who make such arguments of reductionism, materialism, etc.

  • you seem to be arguing that they should be used permanently by rich countries to protect old industries. No, I am arguing they should be used prudentially, depending on the situation. You need to have a way to think about when and where the theory applies and when it doesn’t. That’s much better than treating everything as an ideological absolute. I don’t think we should have to compete against an artificially low currency, and may legitimately tariff goods from a country that does that, and even Ricardo and Smith would agree there, because they both make precisely that exception.

    Besides which, free trade as it is practiced is a perversion of Ricardo’s theory, which had three conditions attached. (all theories of the material world are contingent theories, and you have to look at the starting conditions to determine their domains.) 0ne, that capital is immobile; two, that there is balanced trade between the two countries, and; three, that there is full employment of all resources in each country. If one is not fulfilled, you don’t really have trade, you have arbitrage of labor rates; if two isn’t fulfilled, then there is a winner and a loser in the trade, which is contrary to the theory; and the theory only applies at full employment because at less than that, traders seek absolute advantage, not comparative advantage. Not understanding a theory means that it will be misapplied.

  • Since we are off on a tangent about trade and economics, I must point to the work of Dierdre McCloskey, a chicago-trained economist, who says that ALL of economics will have to be re-done, all of it. It is all wrong. She makes a specific point about the economists’ misunderstanding of statistics, but a much more general point about their misunderstanding of knowledge itself, and what kind of knowledge economics is. It is humane knowledge, and human knowledge. I think the problem is even deeper than Dierdre suspects.

    Economics ceased to be a “science” at all the moment it grasped at being a physical and mathematical science. It died in 1891, with A. E. Marshall’s The Principles of Economics. Although in its way an excellent text, the title had a word that people didn’t use, so Marshall began by saying, Political economy, or economics is… Until that moment, it was usually referred to as Political Economy. After that, the old term would hardly be heard again, and the unified science split into two incomplete disciplines, neither of which is capable of giving a complete description of its own domain, much less the unified domain, which is the only kind of economies we actually see. At that moment, economists became superfluous to anything that was happening in real life and real economies.

    And there is an even deeper problem. Much deeper. Economics is a humane science that deals with the material provisioning of society. As a class of human relations, it is regulated by justice, not as and exogenous principle, but as something at the core. It is of some irony that Marshall’s work was published within six months of Rerum Novarum, which took the opposite tack, and insisted on a moral dimension, one evidenced by a just wage.

    As a result of a specious scientism in economics, we end up with the modern vice of absolutising the contingent and relative, and relativising the absolute. So it is no wonder that we take a contingent model like comparative advantage as an ideological absolute, and an absolute truth like the sanctity of life and marriage, and make them relative. This is the proper scope of discussion for the American Catholic, do you not think?

  • BA, I would prefer it if you would base your arguments against me on what I say, and not attribute to me what others say. As a mere conversational courtesy. But to your point, A single minded devotion to growth, in disregard of all other social values, is reductionist and materialistic. That doesn’t mean you should never talk about growth, in its proper context and in relation to other and more important values. Values such as providing meaningful work to all who want it. It would, however, be useful to understand what real growth is, and not confuse it with mere monetary “growth,” which isn’t the same thing at all.

  • Be nice if he could make a discrete factual statement that was not demonstrably false.

  • Well, you know you’ve won the debate when the only answers involve ad hominems.

  • Maybe you should look up the definition of “ad hominem”.

  • Besides which, free trade as it is practiced is a perversion of Ricardo’s theory, which had three conditions attached. (all theories of the material world are contingent theories, and you have to look at the starting conditions to determine their domains.) 0ne, that capital is immobile; two, that there is balanced trade between the two countries, and; three, that there is full employment of all resources in each country.

    None of these conditions are met for trade between the states. Capital is highly mobile, there are large and persistent trade deficits/surpluses between different regions (I believe it was Paul Krugman who pointed out that the U.S. could eliminate its trade deficit overnight if New York City would declare independence), and of course we don’t have full employment right now. Not only that, but the volume of trade between the states is far greater than the volume of trade between the U.S. and foreign countries. No wonder things are so screwed up.

    Incidentally, one common error people fall into when discussing trade theory is to treat comparative advantage and absolute advantage as if they were conflicting concepts, when in fact they presuppose each other. Comparative advantage is when Country A is better at producing X than Y. Absolute advantage is when Country A is better at producing X than Country B. People sometimes think that if Country A is better than Country B at producing everything, then Country B has no comparative advantage. But that’s a mistake. Even if A is better than B at everything, B will still be better at some things than others (as will A), and it will still be to the benefit of both countries to focus on what they are best at, and trading for the stuff that they are comparatively worse at producing.

  • BA, I would prefer it if you would base your arguments against me on what I say, and not attribute to me what others say.

    I wasn’t attributing this view to you. I was laying down a marker so that in the future if you do make such an argument I can simply refer back to this conversation.

  • Since we are off on a tangent about trade and economics, I must point to the work of Dierdre McCloskey, a chicago-trained economist, who says that ALL of economics will have to be re-done, all of it. It is all wrong.

    “She” is actually a tarted-up he. (And if that is a correct rendering of D.N. McCloskey’s position, that is a passable reason to not pay too careful attention to D.N. McCloskey).

    Besides which, free trade as it is practiced is a perversion of Ricardo’s theory,

    Just to point out, elementary theories begin with a set of simplifying conditions (e.g. restricting your model to a case of just two parties trading). Subsequent generations of theory elaborate on them and subsequent applied researchers (e.g. Belassa) subject them to observational studies. Theoretical economists have not been twiddling their thumbs for 200 years.

  • So you’re just gonna wing it?

    Thank you, Art Deco!

  • So you’re just gonna wing it?

    And if I was winging it, could I possibly do worse than the economists? Is there even a way to do worse than a group that’s batting zero?

    But in fact, I have three books on the subject, I address economic conventions, I have the respect of economists whom I respect. And just this morning, I received a very kind note from an economist about an article I wrote predicting that this recession would be worse than anything we have experienced since the depression, and that at a time when most economists were giving the same bland assurances that Art is still giving us. And I didn’t take a loss when things collapsed (maybe the ultimate test.) So I’m not too worried about getting your approbation, Art.

    Take the case of Nouriel Roubini. Now he’s a rock star among economists. Why? because he correctly predicted the causes and depth of the current problems. But he was reviled and vilified by his colleagues as a Cassandra, a Dr. Doom. It is not the case, as Art claims, that they just were making predictions, they were, and they were all wrong. But why should Roubini be a star? Why did not all economists reach similar conclusions about such an obvious catastrophe? Instead, you have a profession where failure is so normalized that it is unremarkable, and where success is so rare it earns the undying hatred of one’s colleagues.

    When someone like McCloskey does try to point out the methodological failures, all we get from people like Art is an ad hominem. Typical. Same thing Roubini got. Art gives us the same bland assurances his colleagues do, and did before this crises. But since they were wrong last time (and the time before that, and before that, and before that…) why should we believe them know? So everybody knows where I stand on this crises, I predict, you ain’t seen nothin yet; this is just beginning and we are not even through the first act of this sad play. There is no precedent in American History for what is happening now. This will get ugly.

    And Art, regardless of what Belassa says, whatever it is, it couldn’t possibly change the fact that any material proposition will still have starting conditions and a proper domain; such propositions cannot be absolutized. It is possible that he might have changed the domain or the conditions; it is impossible that he could have done away with them. And if you cannot understand that, you do not understand not only economics, but the very nature of science itself.

  • You know, the hated Austrians, including Ron Paul, predicted this whole mess too. And these hated Austrians reject the mathematical models of mainstream economists, and have been their consistent critics.

  • “And if you cannot understand that, you do not understand not only economics, but the very nature of science itself.”

    Ah, the epitome of charity and humility, once again. And then you balk and whine when people rebuke you.

    Like I said, you create 90% of your problems with the people you disagree with.

  • Joe, Can material statements be absolutized? Does a person who absolutizes a material statement understand science?

    BA, you are right, it doesn’t matter whether the trade is offshore or within the same polity. The wealth can still be drained away. Hence, during the great deflation, when the wealth of the West was drained to New York, it didn’t matter that the plains and the port were in the same country; one was still so much poorer and the other still so much richer.

  • You know, the hated Austrians, including Ron Paul, predicted this whole mess too. And these hated Austrians reject the mathematical models of mainstream economists, and have been their consistent critics.

    ———
    Those pesky Austrians, always accurately predicting bad things. Why don’t they just stop! Then everything will be OK. Someone, please stop the Austrians.

    You know those Fabians always predict sunshine and roses, maybe if the Austrians weren’t around, the Fabians would actually be able to deliver, then we’ll all be saved. Yeah!

  • Well, Peter Schiff did, as did Mark Faber. But then Faber (and the Austrians in General) are always predicting disaster, so their “successes” are rather in the nature of the stopped watch’s successes. Faber at least engaged in some actual analysis and made a convincing case (at least he convinced me).

    I’m not sure Schiff did. Schiff did predict the collapse of the sub-prime market, which most everybody understood, but he couldn’t say why it would bring down the larger economy, so he was largely unconvincing. The response to Schiff was that the sub-prime market was simply too small, at $1.4T, to bring down the whole economy. And this is correct. To blame the crises on sub-prime loans is to blame the explosion on the fuse rather then the dynamite. What neither Schiff nor his critics understood was the vast number of leveraged bets that had been placed on the market by the shadow banking system. Roubini and Faber, I think, had a better grasp of the situation.

    They certainly grasped it better than Bernanke, who thought that it was a problem limited to sub-prime, and could be solved with a little bit of QE, to the tune of $38B (if memory serves). This was long before the better publicized bailouts.

  • And if I was winging it, could I possibly do worse than the economists? Is there even a way to do worse than a group that’s batting zero?

    1) Remember that 70% failure is considered good in baseball.
    2) Economists are probably not batting .300, but then again, your fetish for predicitive macroeconomic forecasting accuracy is not what the profession is primarily about. Most economists do not have pretensions of being “scientists”, yet you perpetuate this myth that they lack the proper humility. Maybe if one’s primary exposure to economists is Paul Krugman’s writing in the NYT, one might believe this.
    3) Based solely on some of the sillier stuff you’ve written in this thread, I’m fairly certain you’d be batting well below the Mendoza line.

    When you and Prof. McCloskey “get it right,” please let us know. I am eagerly awaiting the new mathematical formalism of your theory that will show why statements such as 1>0 were such a gross error of classical economics. And if you don’t feel the need to rewrite such axioms, then you aren’t really changing economics from its foundations, you’re just stating the objective function differently.

  • Well, if the science is not predicative, than neither can it be descriptive, unless you are denying cause and effect and asserting that economic events are purely random. And if it is neither descriptive nor predicative, then neither can it be prescriptive. Which is to say, economists have no function whatsoever. It is funny how the “defenses” of economics just make the situation worse.

    And do I understand you to be saying that the only possible scientific form is mathematical?

  • And since Art finds McCloskey morally untenable, then he might look at this: http://www.iasc-culture.org/publications_article_2010_Summer_mirowski.php

    I don’t always agree with Mirowski, but this is excellent, and raises some questions that economists need to face.

  • Well, if the science

    There you go, using that word again. Yes, it’s commonly called a social “science,” but how many economists do you know who actually think they are measuring phenomena that have the same regularity and properties of physical laws? There are certainly many economists with scientific pretensions, but then there are many Catholic thinkers with economist pretensions, too.

    If we’re not talking about a branch of the physical sciences, then the rest of your objection doesn’t follow. Otherwise we should hold other disciplines, arts, and engineering to the same standard. (The fact that a phenomenon might have a random component doesn’t disqualify it from some attempt at formal study. The NTSB can discover why a plane crashed, prescribe remedies to prevent crashes, and still not predict a specific crash.)

    And do I understand you to be saying that the only possible scientific form is mathematical?

    And do I understand you to be saying the the only possible form of economics is ad hoc?

  • Are social sciences not sciences?

    I have argued all along that economics is a science of human relationships, specifically, those human relationships necessary for the material provisioning of society. So I don’t know what you are getting at.

    And last I heard, cause and effect applied to airplane crashes. I’m no aviation engineer, but I can safely predict that if a plane in the air losses thrust, it will descend rapidly. Do you disagree with that?

    And are you saying that our only choices for form in science are mathematical or “ad hoc” (whatever you mean by that.)

  • BA, you are right, it doesn’t matter whether the trade is offshore or within the same polity. The wealth can still be drained away.

    In that case why aren’t you advocating trade barriers between the states? After all, the volume of interstate trade is far greater than the volume of international trade. On the other hand, if free trade is so harmful, one wonders how the U.S. managed to become so prosperous without having any interstate trade barriers.

  • Well, trade barriers between the states are unconstitutional, which leads to a discussion of whether the anti-federalists had a point.

  • And not all sections of the country shared in the prosperity.

  • Uh-huh. I’m sure that if Appalachia had erected tariffs against Silicon Valley imports we’d all be living in a MUCH more prosperous nation.

  • And not all sections of the country shared in the prosperity.

    Which parts of the country do you think are poorer today than in 1789?

  • Appalachia produces an enormous amount of wealth. Unfortunately, it doesn’t stay in Appalachia.

    Which parts of the country do you think are poorer today than in 1789?

    Wow! Talk about lowering the bar for success. By that standard, even the communist countries were successful.

  • Wow! Talk about lowering the bar for success.

    Well, isn’t your argument that free trade impoverishes already poor regions? If we’ve had 200+ years of free trade between the states, shouldn’t that mean there are regions in the U.S. that are at least as poor at the time of the Founding?

  • Well, isn’t your argument that free trade impoverishes already poor regions?

    No. I have never made such an argument. I have made the argument that trade which doesn’t meet Ricardo’s conditions doesn’t qualify as trade, but tends to exploitation. You seem to be looking for economic absolutes, one size fits all rules, a sort of economic categorical imperative. But such Kantian economics would be the death of science. Humane sciences rely on judgment as well as calculation, and there is no rule which makes all judgments in advance. It is a prudential science, demanding that one look at the actual circumstances to see what ought to be done in that particular situation.

    Let me ask you this: Have you ever been cheated on a trade? Have you ever spent your money and found the product was not as advertised, or didn’t work, or was a piece and junk and you had wasted your money. If the answer is yes, then obviously trade does not always enrich both sides. If the answer is no, then you have led a charmed life.

  • Blackadder, I think an aspect of the difficulty we are having in this discussion is that we treat John Medaille’s remarks on the state of the economy (current and historical) as testable assertions of a descriptive character. We might consider that that is not what they are intended to be.

  • I have never made such an argument.

    John, when you makes statements like:

    “there is not one single historical example of a country that got rich on free trade.”

    or

    “Free trade is something rich nations enforce against poor ones; it is not a development strategy, but an enslavement strategy. Tariffs were not peripheral to growth, but essential, at the heart of the any nation’s trade strategy. There are no exceptions.”

    or

    “‘Free Trade’ is a way of preventing other countries from growing, and growing countries don’t use it.”

    it kind of sounds like you’re arguing that free trade impoverishes poor regions. Perhaps your warnings about the dangers of one size fits all rules would be more credible if you weren’t yourself using absolutist language (“no exceptions” etc.)

    I would note that while West Virginia may be poor compared to the rest of the United States, it is rich compared to the rest of the world or to the U.S. historically (per capita GDP for West Virginia is about the same as for Japan).

  • Let me ask you this: Have you ever been cheated on a trade? Have you ever spent your money and found the product was not as advertised, or didn’t work, or was a piece and junk and you had wasted your money.

    Sure. When that happens, though, I generally don’t trade with that business again. I certainly wouldn’t continue to do so year after year if I was cheated every time.

  • Testable? This from an “economist” who still thinks Canada is our major source of imports, not China. He can’t even read the charts from the site he directed us to. From his own source, we import $296B from China, and $226B from Canada. Our trade balance with Canada is minus $22B, but with China it is minus $227B.

    Testable? Call me when you can read a chart, Art.

    But then maybe you’re right, since the Canada trade, being closer to balance, really is trade, while shipping off $227B to China isn’t; it’s just insanity. It’s draining the wealth of the nation to get a cheap pair of sneakers at WalMart; it’s giving up the productive capacity of the nation to get some slightly lower prices on a few goods.

  • So everybody knows where I stand on this crises, I predict, you ain’t seen nothin yet; this is just beginning and we are not even through the first act of this sad play. There is no precedent in American History for what is happening now. This will get ugly.

    Given that John Medaille has such a strong opinion of his prognostication abilities in this regard, I’d be curious to know some specific economic predictions he’d be open to making along these lines as to how the economy will do in the next 3-5 years, and how much money he’d be willing to bet on the truth of his predictions at what odds.

    Given that I am rather more skeptical of his ability to make such predictions, this might well be a mutually beneficial trade (he gaining wisdom, me cash.)

  • Let me see if I understand you, John. In 2009, China sent us $296 billion in goods, in exchange for which we sent them $70 billion in goods and a bunch of green bits of paper. And this is supposed to be an insanely bad deal for us how?

  • But then maybe you’re right, since the Canada trade, being closer to balance, really is trade, while shipping off $227B to China isn’t; it’s just insanity. It’s draining the wealth of the nation to get a cheap pair of sneakers at WalMart; it’s giving up the productive capacity of the nation to get some slightly lower prices on a few goods.

    This represents something of a misapprehension about how a lot of trade with China works. For instance, When Apple has an iPad built, it trades with China by having a purchase order sent over to procure large numbers of iPads from their factories there. The iPads are built for a cost (to Apple) of roughly $260. Apple has 3.5 million units of the thing built, and they sell very few iPads to China, so in the process of building these iPads, Apple has incurred thus far a roughly $1B trade surplus with China.

    However, Apple then turns around and sells the iPads in the US for $499. They can do this because the work of designing, programming and patenting the iPad was done in the US. So Apple captures an additional $230 in revenue due to it’s own contributions to the total iPad value.

    Now, when one looks at this entire set of exchanges, is the US or Apple being impoverished by the trade with China involved? It hardly seems so. They are not simply “shipping money” off to China, they are using trade with China to enrich themselves, while China also is benefiting from being able to provide materials and services to the US market.

    Plus: The Chinese manufacturers end up making a razor thing profit, because all they’re really providing is scale and cheapness. While Apple files records profits and thus benefits its workers and investors.

  • Wow! This must be the Dick Cheney school of trade: “Deficits don’t matter.” But if that is true, why make anything at all? Why not live on the credit card forever?

    But of course, these “bits of paper” represent claims the wealth of the United States. Some day, the bill must come due; sooner or later, every debtor learns this truth.

    And no, I didn’t say free trade was always bad. Free trade that doesn’t meet certain conditions is bad. Let me make the point again: there are no “one size fits all” rules; there are no Kantian imperatives.

  • Maybe you should just learn to read, full stop, John. Art Deco said that Canada is our largest trading partner, not “our major source of imports,” as you claim he said. On that account he is correct ($431b in total trade for Canada vs. $365b in total trade for China).

    Also, you disagreed with his statement that most of our trade is with developed nations. Following his link to the table of top 30 U.S. trade partners, at least 57% of total trade is with developed nations, and 43% with less developed nations on that list. That’s being conservative about what qualifies as a developed nation, too.

    He is factually correct. You are wrong.

  • But of course, these “bits of paper” represent claims the wealth of the United States. Some day, the bill must come due; sooner or later, every debtor learns this truth.

    A trade deficit is not the same as a debt. The fact that dollars are desireable in China is actually a positive statement about the US economy, not a problem. Thinking that China wanting dollars is akin to credit card debt is like thinking that buying Microsoft’s stock hurts Microsoft.

    Now, the US government’s habit of borrowing endlessly (from China and from others) could definitely be a serious fiscal problem in the future. There the credit card analogy may better apply. But in regards to the trade deficit your worry is misplaced.

  • This must be the Dick Cheney school of trade: “Deficits don’t matter.” But if that is true, why make anything at all? Why not live on the credit card forever?

    Okay, let’s think about this. Canada sends us goods and we send them goods in return. This, apparently, is balanced trade, which is good. China, however, sends us goods and we send them green bits of paper. This is bad because China can use those green bits of paper to, uh, buy goods from us. Which is what you want to happen in the first place.

  • Blackadder is correct. In the long run, not much value to green pieces of paper unless they are used to buy goods.

  • As is Darwin. When China decides to cash in those green pieces of paper, we will happily provide goods and services in exchange therefor.

  • Or American real estate. American companies. etc. etc.

  • When Apple has an iPad built, it trades with China by having a purchase order sent over to procure large numbers of iPads from their factories there. The iPads are built for a cost (to Apple) of roughly $260. Apple has 3.5 million units of the thing built, and they sell very few iPads to China, so in the process of building these iPads, Apple has incurred thus far a roughly $1B trade surplus with China.

    Is this really considered “trade” in the “official” numbers?

  • Testable? This from an “economist” who still thinks Canada is our major source of imports, not China. He can’t even read the charts from the site he directed us to. From his own source, we import $296B from China, and $226B from Canada. Our trade balance with Canada is minus $22B, but with China it is minus $227B.

    I was referring to the sum of the export and the import data in rank-ordering our trading partners according to the value of our commerce with them. Not too hard to figure.

  • I was referring to the sum of the export and the import data in rank-ordering

    Well, since the question dealt with whether our goods were made by countries on the same level as we are, that was somewhat evasive.

    This truly is the “deficits don’t matter” school. As pb notes, it is not our goods they will buy, for the simple reason that we don’t make enough. They will buy our productive assets. A nation that turns its assets over to foreign powers, threatens it own future; a nation that thinks it can consume more than it produces is already servile, tea parties or not.

    How’s your Mandarin?

  • Is this really considered “trade” in the “official” numbers?

    Yes.

  • it is not our goods they will buy, for the simple reason that we don’t make enough. They will buy our productive assets.

    If it were true that America doesn’t produce anything anymore then our “productive assets” would be worthless. The fact that people in other countries rather than in their home countries suggests that they at least think we have a rosy economic future ahead of us.

  • I wonder how much of trade-skepticism is based on the fact that an excess of imports over exports is called a trade deficit as opposed to an “import surplus” or some such. After all, we know that deficits are bad, so a trade deficit *must* be really bad.

  • Re; your example — it would appear that many (all?) of the iPads are made in factories owned by Foxconn, which is a Taiwanese company, not a Chinese company. Perhaps this is just a minor detail, but it does underscore a more important economic and moral points about the outsourcing of manufacturing, the mobility of capital, and global labor issues, all of which discussion of numbers, especially a specific set of numbers, obscures.

  • The above was a response to Darwin Catholic.

  • “The fact that people in other countries rather than in their home countries suggests that they at least think we have a rosy economic future ahead of us.”

    How much of a choice is there, really.

  • a nation that thinks it can consume more than it produces is already servile, tea parties or not.

    I guess the question is: Is the movement of manufactured goods the only way to account for what it means to produce or to consume?

    Also, I have to wonder how well this dictum can be applied. For instance, I would assume that, as a distributist, you are fairly comfortable with an anciene regime type arrangement. Would you say that aristocrats and monarchs were servile because they consumed more than they produced?

  • Would you say that aristocrats and monarchs were servile because they consumed more than they produced?

    That’s what did in the ancien regime; their costs exceeded their benefits. Where there is wealth without work in one place, there must be work without wealth in another.

  • But in fact, I have three books on the subject,

    Gary Allen wrote books on 20th century American history.

    Take the case of Nouriel Roubini.

    Dr. Roubini was in the employ of the International Monetary Fund for a number of years. The different dimensions of this crisis were specific to the subdisipline within economics. He was also willing to compose topical commentary. Neither is the case for most economists. They write for academic journals and, again, work in other departments of economics (economic history, resources, public economics, urban economics, labor economics, &c). I cannot help but note you have not in this discussion made reference to any review of the literature concerning what economists were forecasting in various fora over the years running from 2004 to 2008.

    When someone like McCloskey does try to point out the methodological failures, all we get from people like Art is an ad hominem.

    The term ‘ad hominem’ does not mean what you think it means.

    As is, I have no particular comment on D.N. McCloskey’s body of work. I recall him as an economic historian who specialized at one time in the study of the British economy. That is what I have read of his work.

    I am capable of rummaging through a bibliography of his trade books and publications and see a line of work on the validity of reasoning in theoretical and applied economics. I tend not to take seriously people who contend they have overthrown an entire academic discipline. I do not know that that is the burden of McCloskey’s arguments. That is your rendering of his body of arguments (and no I do not trust you to make a precise summary of anything he has said). As is, I note his arguments on these matters are a.) not without critics and b.) are addressed to other economists, though they are more in the realm of statistics or philosophy of science.

    Typical. Same thing Roubini got. Art gives us the same bland assurances his colleagues do, and did before this crises. But since they were wrong last time (and the time before that, and before that, and before that…) why should we believe them know?

    I usually make minimal biographical references in these fora. To clear up any confusion: a.) I am not an economist, merely someone who has some academic background in the subject and b.) I have no macroeconomic model and make no forecasts. I merely note that what you posit will occur is fairly unusual and what you state has occurred has not, in fact, occurred.

    So everybody knows where I stand on this crises, I predict, you ain’t seen nothin yet; this is just beginning and we are not even through the first act of this sad play. There is no precedent in American History for what is happening now. This will get ugly.

    Whatever.

    And Art, regardless of what Belassa says, whatever it is, it couldn’t possibly change the fact that any material proposition will still have starting conditions and a proper domain; such propositions cannot be absolutized. It is possible that he might have changed the domain or the conditions; it is impossible that he could have done away with them. And if you cannot understand that, you do not understand not only economics, but the very nature of science itself.

    Thanks for your input.

  • I think John is about to take his ball and go home.

  • The term ‘ad hominem’ does not mean what you think it means.

    Since your knowledge of logic seems to be about as deep as your knowledge of economics, let me give you an example of an ad hominem statement: “She” is actually a tarted-up he. Now, you may be objectively correct that the shade of his lipstick is “tarty,” or even object to the fact of his wearing it. That has nothing to do with whether his arguments are correct. You meant the statement to cast doubt on his work. Then admitted that you had no idea of what his work was in this area. On a subject of which you admit to know nothing, it is best to remain silent.

    It is not the case that economists were not making predictions, it was the case that they were making the wrong predictions. And heaping abuse on Roubini, calling him bad names. He is a rock star merely for doing the job that each and every one of them should have done. But this is the history of the modern economics; they are never able to give a warning about impending crises; they are taken by surprise as much as is the layman. And since that is the case, the layman may dispense with them until such time as they get their own house in order.

    You make a contemptuous remark about the mention of the philosophy of science, but without knowing what science is, they cannot judge whether they are performing properly as scientists.

  • My comment on McCloskey’s affectations is what is known as an ‘aside’. I offered no criticisms of his published work, ad hominem or otherwise. I have no reason to do so because I have read just one collection of essays he has assembled (on British economic history) and that was perhaps 16 years ago. I did say I am disinclined to pay to much attention to someone who says economics has to be comprehensively reconstituted. I have no knowledge that McCloskey said any such thing; you said that he said that.

    I made no contemptuous remarks in connection with the philosophy of science, either. I merely noted that the optimal audience to critically assess an argument about the validity of (say) regression analysis was not the audience he chose.

    I have done a fair amount of reading of the topical commentary of academic economists in the last three years and I have to say (Paul Krugman and Bradford deLong the exceptions) it is quite unusual to see a discussion of issues degenerate into a discussion of persons. The world being the way it is and the flow of information being the way it is, I assume you could find examples of people ‘vilifying’ Dr. Roubini rather than criticising his method or conclusions. It has not been my experience that this sort of thing is at all common (bar from the pen of the two named individuals).

    Mr. Hargrave, and only Mr. Hargrave, has offered you an explicit assessment of your manners. I figure someone of your age is pretty much a finished product, and, of course, we often do not see ourselves as others do. The discussion we have had has been neither profitable nor pleasant. It did not have to be the way it has been. The responsibility for the character it has taken on has not be widely dispersed. I believe it is time for Eric Brown to shut the discussion down.

  • So it wasn’t an ad hominem; it was just a comment offered for no particular reason about person of whose works you had no particular knowledge. Interesting.

    And when a critique of the philosophical groundwork of economics is brought up, you say whatever. It is the term high-school girls use to dismiss unwanted information.

    And I can certainly understand why you would find a critique unpleasant. Is it supposed to be? What is more distressing is that faced with the critique you mostly take evasive action. Of course, there is no requirement that anybody respond to a critique, or to anybody they don’t choose to; but if one responds at all, it should be with something better than that.

    I really don’t care what you think about me; this is not a beauty contest. But I am concerned with group that preaches “deficits don’t matter” and that they are just “import surpluses,” or that we don’t need to find people jobs (7.5% unemployment would be okay) just give them cheap imported junk. And does all this under the name “Catholic.”

  • Well, I think on the other side, John, the frustration is that you seem to gloss over any clear correction of your thinking. For instance, several people have pointed out why your critique of trade deficits is ignorant in economic terms, and yet you gloss over these to go on about other points.

    (As an aside, from what talks of McCloskey’s that I’ve heard, you’re significantly simplifying his/her point.)

    Though I’ll continue to stand by my offer that if your allegedly superior grasp of what’s supposedly going on in the economy allows you, as you hint, to make clear projections as to how bad the economy will be in 3-5 years, I’d be happy to entertain the possibility of a wager. Given that you are sure it will be far worse in a few years, surely you have something you’re willing to put a few hundred dollars on. 15% unemployment? 20%? What odds are you offering?

  • Darwin, I’ll write this at some length, though I don’t anyone is listening.

    I think I have responded to every argument on trade. But surely you cannot think that “deficits don’t matter” and “it’s only bits of paper” are convincing arguments; it would certainly need a high theory to support such claims. If we are talking about challenges to economic orthodoxy, the “deficits don’t matter” school is at the extreme fringe; very few people with any right to an opinion believe that this can be prolonged indefinitely without a collapse, even of the entire global trading system. Indeed, it is only a peculiar combination of circumstances that has allowed it to continue this long, and these situations cannot continue much longer. Nor does it give me particular comfort to know that our most important assets are being bought up with money we shipped overseas. That kind of money floating around in foreign hands is nothing less than a threat to our very sovereignty.

    As for betting on the future, I have no problems; I do it every day with my retirement account. But betting on a specific unemployment number I won’t do, and neither would anybody who understood what that number is. Basically, it is a vague construct that becomes very unreliable in times of turmoil, and there are any number of careful people who say it is unreliable now. Even the Official U6 number is already near 17%, while John Williams of “Shadow Stats” claims it is 22% (http://www.shadowstats.com/alternate_data/unemployment-charts) Williams is pointing to the fact that the Clinton administration changed the way the numbers were reported to make them look smaller than they had in the past. The numbers supposedly represent those who are actually searching for a job. It would be very easy to lower the unemployment rate very quickly; just drop coverage after 26 weeks. Then those who are in fact “discouraged” but only keep looking because it is a requirement of the dole will stop looking, and therefore will not be counted. Both the labor force participation rate and the unemployment rate would fall, but the situation would not improve. Further, cutting the benefits would decrease demand, which would further increase unemployment, maybe to the point of a death spiral.

    Here are some real numbers, regardless of what “rates” you care to quote:

    Total working age population: 238.099million  
    Total Working Full Time: 111.832 million
    Total Part Time Workers: 27.418 million.
    Total Working: 139.25 million
    Total not working: 98.849 million
    Total Searching “Unemployed”: 14.86 million
    Total Not Working Full Time: 126.267 million (not that “unemployed” is only 1/6th this number.)

    In the next 24 months, we would have to have 3.6 million more jobs just to keep up with population growth, at a minimum, and I think the number is closer to 5 million. So that gives us something like 18 to 20 million jobs that we need in the next 2 years. Do you know of any industry or combination of industries that can absorb that many workers?

    Nor is that all. The welfare claims, already high, are about to explode. In addition to the unemployed, the businesses getting subsidies and bailouts, and such things, we have an aging population. This year, the Social Security fund, which has been subsidizing the general fund for 30 years, will require a subsidy (pay back of the so-called bonds) from the general fund; it will go cash-negative. And we have rising Medicare claims and rising healthcare costs, with or without the Bill.

    Traditional measures have not worked and will not work. We are trying stimulus. This has worked for the better part of 70 years, perhaps the best 70 years in our economic history. But it works best in an economy that is closed or has balanced trade. Not only does more of the stimulus lead off-shore, but without a larger manufacturing base it is harder to reach “escape velocity” (as Bernanke puts it). After all, the Bush years were pure stimulus with little results. Bush added $6T to the debt, which is a lot of stimulus, and that’s not even counting the monetary stimulus from Greenspan’s Fed policies. And yet for all that, the results were anemic, even before the crash.

    All of that would be enough, but it is not all. There is a worldwide crisis shaping up. Sovereign debt spreads in Europe are increasing, and the PIIGS are getting shakier. And you can bet on some commodity shocks.

    Nor is there anything in current thinking that can fix the problems. Indeed, you cannot fix any problem with thinking on the level that created it, which is what we are trying to do.

    You want some predictions? Obama will not be able to fix this. The democrats may do better in November than most people think, but it won’t matter. By 2012, he will be a dead man walking, and may not even get re-nominated. The Republicans will take the elections, but they have no answers either; and there will be a general looting of the treasury by the well-connected before things collapse (see the Soviet Union for a model of what this looks like). And then things will get bad. Under current arrangements and current thinking, there is no way out this side of social chaos.

    Is that scary enough?

    There are ways to save the system, but there is neither knowledge nor will nor sufficient dedication to the common good that such solutions require. Partisanship will win, which means we all lose.

  • Out of curiosity, how many of the people in the “not working” category are housewives and/or retirees?

  • Don’t know. Any of the retirees would be of the early kind. And unfortunately, people not working for money are counted as “not working” even though they may be working very hard indeed, such as mothers. In truth, one of the problems is that housewifery is counted as a leisure time activity, which only proves that the statistics are drawn by men. In the last 40 years, we have tried to commercialize the work of women (and it’s even considered chauvinistic to call it that) in order to “free” women for the workforce. Of course, what starts as a “freedom” quickly becomes an obligation, so that frequently women are no longer free to stay and home and raise the children, and expectation they have had through most of history, and must take that on as a “spare-time” obligation.

  • I think I have responded to every argument on trade. But surely you cannot think that “deficits don’t matter” and “it’s only bits of paper” are convincing arguments; it would certainly need a high theory to support such claims. If we are talking about challenges to economic orthodoxy, the “deficits don’t matter” school is at the extreme fringe; very few people with any right to an opinion believe that this can be prolonged indefinitely without a collapse, even of the entire global trading system.

    Several people have explained to you in different forms why a trade deficit is not the same as a debt — it’s just that you’ve tended to ignore these explanations or mischaracterize them. But then, you seem to have executed some rather odd thinking on the topic if you have managed to convince yourselves that “few people with any right to an opinion” believe that a trade deficit can be maintained without economic collapse — perhaps via radically redefining who has the right to an opinion. (After all, you’ve also insisted that no one actually trained in economics knows anything about it — which leaves you with a rather odd talent pool.)

    Your use of the “deficits don’t matter” taunt in this circumstance is particularly odd, as there’s absolutely no similarity between a US budget deficit and a trade deficit. Cheney’s comment was in fact pretty stupid, and endless US budget deficits are a fiscal problem that needs to be resolved, but that has nothing to do with and is nothing like the “trade deficit”.

    As for betting on the future, I have no problems; I do it every day with my retirement account. But betting on a specific unemployment number I won’t do, and neither would anybody who understood what that number is.

    So in other words, you’ve said a great deal about how you know everything is going to get much worse because the world isn’t organized as you think it should be, but you’re not actually prepared to back that up.

    I agree that the official labor department unemployment numbers are not some deep and mystical source of all knowledge, but they are at least consistently calculated. To say that the number goes from 9.7% to above 15% represents a real change of the sort someone who claimed to have clear knowledge of how much worse the economy was likely to get and why. The number need not cover every aspect of unemployment and underemployment in order for it to be a useful measure of whether or not things have got worse and to what degree. I would imagine someone who really thinks he knows with surety that things will get much worse would be willing to commit to some specific minimum increase by a target date, like say over 15% by the end of 2012.

    In truth, one of the problems is that housewifery is counted as a leisure time activity, which only proves that the statistics are drawn by men. In the last 40 years, we have tried to commercialize the work of women (and it’s even considered chauvinistic to call it that) in order to “free” women for the workforce.

    So, actually, you’d consider only half the working age population to be a sign of societal health, even though you just called it out as alarming, yes?

  • Several people have explained to you in different forms why a trade deficit is not the same as a debt

    Just wish to point out that deficits on current account in the balance of payments are financed with foreign borrowing. There can be a very rude economic shock if there is an abrupt loss of confidence in your currency (as happened to Mexico in 1994). It would be ameliorated in our case as our debts are denominated in our own currency. For now. It is an economic pathology that we have run current account deficits since 1982 (I think averaging 4% of domestic product or so). If I understand correctly, the remedy in terms of policy would be the imposition of a consumption tax, not something specific to the realm of foreign trade.

  • Darwin, I am sure that in your own mind, your answers were sufficient, but when we give banknotes or bonds for the goods we don’t produce, they represent a claim on the assets of the United States. Now, it is true that if they used those to buy our output, thereby completing the trade circuit, it would be beneficial. But that is unlikely for the simple reason that we don’t make enough to cover the debt, and we make very little that they don’t or couldn’t make themselves. Even distinctively American products like the 787 are somewhere between 70-90% foreign content.

    To say that deficits don’t matter and are not the same as a debt would take a very high theory; two theories, in fact: one of finance and another of trade. But you have presented no such theories; you have merely made assertions, and no reasonable person is persuaded by assertions. Presumably you’ve done some research, and have authorities who tell you that deficits don’t matter. I would like to know who these authorities are; I will gladly read them and give you my comments. But I am certain that any such authorities will be fringe figures at best. They could still be right, but it would take some pretty sophisticated arguments to pull that off.

    Even Art says that the deficits are pathological. He believes they can be cured by tax increases. I have my doubts. A consumption tax would reduce consumption, thereby by increasing layoffs and reducing returns to capital. A tobin tax would make more sense, but no tax means anything in the face of insufficient production to cover the tax.

    The obvious truth is that one can only pay one’s debts from one’s income. And there are only two ways of getting an income: earn it or steal it. Excluding the second possibility, you earn an income by making something. In the case of our debts, a lot of somethings. But this is difficult if you have outsourced your production and financed your consumption. Had we replaced the outsourced production with new production that we could sell to our trade partners, we would complete the trade circuit and everything would be fine. But we haven’t; we’ve just put it all on the tab.

    We have confused financial wealth with real wealth, and shifted our base to the FIRE economy (Finance, Insurance, and Real Estate.) A nation’s wealth lies in its primary resources: its fields, farms, forests, fisheries, factories, and mines. Whatever happens, these must be protected. We might trade away industry a for an expansion of industry b, where there is a comparative advantage in doing so, but we should never trade an a without getting a b of equal value. But for trade to be trade, you have to complete the trade circuit. Buying everything on credit isn’t trade; it’s bankruptcy and slavery.

    As to your last comment, in order for just half the population to be working they would have to be paid a much higher rate, enough to support the non-wage-earning person. But the median wage of the white male worker has been stagnant since 1973, even though productivity has exploded for all classes of labor in the same period. (Other groups have seen gains, but from a much lower base.) This problem was first “solved” by putting more family members to work. But the median family wage has been stagnant for 12 years. Then people tried to borrow their way out (it seemed to be the thing to do.) Now both “solutions” have reached their logical ends.

  • On Singapore, JC Medaille has got it right. I’ve lived in Singapore for most of my fifty years and what he says rings true. The industrialisation and modernisation of Singapore bears very little resemblance to the textbook examples of laissez faire development. It was directed from the very top with concerted action by all the organs of government. Education was geared to providing skilled labour for the factories and strikes were disallowed. Huge incentives were provided to multinationals to relocate to Singapore. Land being scarce can at anytime be bought over by the government and nearly 80% of us, including myself live in government built housing. As the Singapore economy moved to first world status, there is a move to less government interference in the economy but the original framework undergirds the economy. The difference between socialism Singapore style and that of other countries, is that it is very performance oriented and lives by a profit making ethos. Singapore Airlines, Singapore Telecoms and DBS are all very successful government-owned corporations.

  • John,

    I apologize, perhaps part of the divergence here comes from having different ideas of what the consensus is. My economic education is somewhat spotty as I’m a Classicist by training, though my work is as a pricing manager, so I have obviously developed an interest in economics and keep up with it in my spare time. Dealing with pricing, it is obviously the micro aspects that I deal with most directly and have the most knowledge of.

    That said, my impression has been that the trade deficit does not tend to be a matter of major concern in modern economics. Smith brushed it off as something not worth worrying about a great deal. Friedman argued that it would self correct with time and as a result of monetary imbalances. The Austrians (generally favorites of mine as a listener of the EconTalk podcasts out of George Mason University and because I find Hayak particularly congenial on how he addresses issues of knowledge and how it relates to data) similarly do not seem to worry a great deal about forcibly correcting trade imbalances:

    http://mises.org/daily/1955

    On the other side of things, I read Paul Krugman as well, and I don’t recall him getting alarmist about the balance of trade either — at least not to the point of advocating tarrifs and such. Indeed, he’s the one who said, “If there were an Economist’s Creed, it would surely contain the affirmations ‘I understand the Principle of Comparative Advantage’ and ‘I advocate Free Trade’.”

    There are certain sense in which it seems to me that the trade deficit of symptomatic of things about the US I could wish to be other than they are (for instance, the fact that our savings rate is so low compared to export powerhouses like Germany) but the solution there is to encourage savings, not crack down on exports.

    Other elements, however, are comparatively good signs of the health of the US as an economy. For instance, the desireability of the US Dollar is one of the reasons why we have been able to run trade deficits so long — the demand for dollars has grown over the last few decades and continues to be large (all the talk about the Euro taking over seems to have hit a rough patch over the last year) and so long as people elsewhere are eager to get hold of dollars it works for us to send people “little green slips of paper” in return for goods.

    Also, given that I’ve spent a few years now working in the consumer electronics industry, I know that activities which look trade-deficit-ish often end up making US companies a fair amount of money. I gave the Apple iPad example, and that’s actually pretty common for how US-based electronics companies operate. High value work such as engineering, finance and marketing is done in the US while manufacturing is done overseas. The result is that plans and strategies go out from the US and finished goods or parts come back in. It may be a trade deficit in how its accounted for, but it makes products more affordable and profitable.

    So if it seems like I’m simply asserting, it’s primarily because all of the authorities that I’m aware of thoroughly reject the idea of trying to reduce imports as you seem to be advocating — and because in my admittedly uncomprehensive experience, it mostly tends to be non-economists who get worked up about the balance of trade, not people who actually know what they are talking about.

    Nor, as a side note, does it strike me as accurate to talk about the US not producing anything any more. We’ve actually increased our total manufacturing production since the manufacturing “golden age” in the 50s through the 70s. The difference is just that far fewer people are employed in doing the manufacturing, and our consumption has gone up based on lots of other people elsewhere also doing lots of manufacturing.

    On the two income family question — I’ll drop that thread for now, as it’s something I keep meaning to write a post on.

  • A nation’s wealth lies in its primary resources: its fields, farms, forests, fisheries, factories, and mines.

    Factories are not primary resources and returns to labor generally constitute around 70% of national income at any given time. Hong Kong is not affluent because it cooks the books. It is affluent due to the quality of its human resources.

  • Darwin, you are correct, the consensus is for free trade, but it is also against the deficit. The consensus is somewhat confused, since economists are taught from the time they are toddlers that markets are self-correcting. So a deficit this high and this persistent makes no sense. The problem is that markets aren’t self-correcting, and the theories that proclaim them so are all conditional (as are all practical theories). Thus an abstract model gets converted into an ideology, to be applied whether or not the conditions are in force; they aren’t.

    One of the problems is that free trade isn’t free. China’s artifically low currency acts as an export subsidy, thereby violating FT conditions, and the Euro-zones border adjusted VAT acts as a tariff. And that’s only the beginning of the problems. To apply a theoretical model in cases where the conditions of the theory are not met is a kind of insanity; it is also a standard practice for economists.

    A Word about Smith: he was arguing against a theory (Mercantilism) which proclaimed that trade always had to be unbalance, and in Britain’s favor. This, BTW, is the only place he uses the invisible hand metaphor, which has come to stand, inaccurately, for the whole of the Wealth of Nations. But Smith made three exceptions to free trade, which together are large enough to include the entire American economy. Not that we should, but the point is that Smith was not a narrow ideologue. He was practical, which means he was willing to examine actual circumstances to see if the pure theory applied.

    Nor is it true that we have as much manufacturing as we had in the 50′s. In 1953, manufacturing was 28.3% of GDP and today it is 11%. And lot of what remains is in non-tradable or not easily tradable goods. We can only pay our international debts off in things, not in money; money only represents a claims against our “things.” If those aren’t things that we make, then it will be our assets. At that point, we become everybody’s colony.

    Krugman sure didn’t support free trade in today’s column.

    And yes, outsourcing increasing the profits of the outsourcing firm. While some consider profits the only measure of success, this is not true from a economic standpoint, especially if you are trading profits for jobs. The theory is that the profits will be used to create new jobs, but like a lot of neat ideology, it just isn’t working.

    And yes, we have been able to get away with a lot because the dollar is an international currency, with some markets, like oil, denominated in dollars (Saddam Hussein wanted to start a Euro market for oil). But that only delays the day of reckoning, and makes it worse. John Mueller, the Director of the Ethics and Public Policy Institute, will be publishing a book this month (“Redeeming Economics”) which argues, among other things, that having an international currency is a curse which lulls people into a false sense of security. I think he has a point.

    Art, the issue is the distribution of the 70%; we have a highly concentrated distribution, with most rewards going to the top 10%. The distribution was the same in 2007 as it was in 1929. I don’t think that is a coincidence. The median wage for the white male worker has been flat since 1973. The bulk of the rewards have gone to a very small group; that is economically untenable.

  • “One of the problems is that free trade isn’t free”

    People say this is as if it couldn’t be.

    If actual free trade isn’t the problem, when why denounce free trade at all?

    What is so unreasonable about the Austrian position of calling things by their right names, such as corporatism and managed trade? Why insist upon agreeing with the establishment’s instance that corporatism is capitalism and that managed trade is really free trade?

  • Why insist upon agreeing with the establishment’s instance that corporatism is capitalism and that managed trade is really free trade?

    Because it’s the only capitalism that there is. Ever. It was the only capitalism there was in Smith’s day, and the only capitalism there is today. The defense of capitalism is identical to the defense of communism: This isn’t real (capitalism/communism)! Maybe not, but it is as real as it ever gets. Both Marx and Mises run smack-dab into the law of unintended consequences. When every attempt to implement a system turns out the same way, at some point we are permitted to say, “this is the way it must turn out.”

    Capitalism/communism remain romantic ideals, with no actual historical implementations. The truth is, freedom is rule-bound, and markets are made by rules. These rules will be made by the community, or the rule-making power will be with the possessors of capital.

    For example, when Jay Gould had a monopoly on the railroads going into New York, he used it to create another monopoly in building materials by forbidding his railroads to carry any competing products. This worked until the gov’t imposed the common carrier rule on the railroads. So which market was freer? One in which Gould treated the railroads as his personal property, or one with the common carrier rule?

    Ironically, the only place you will see anything approximating the libertarian ideal is in the distributist community of Mondragon. They run a whole set of social services, schools, safety nets, training institutes, R&D centers, a University, etc., all without gov’t help.

  • John,

    The only point I want to make is that distributism, as even Belloc notes, is also unlikely to succeed; it is not that he denies one should strive for it, but he points out history shows such societies quickly degrade as well. Distributism itself is also an idealism. I say this as someone who respects much of its ideals — in the way a Tolkien does.

  • Nor is it true that we have as much manufacturing as we had in the 50?s. In 1953, manufacturing was 28.3% of GDP and today it is 11%. And lot of what remains is in non-tradable or not easily tradable goods.

    That simply means that the other parts of the economy have grown faster, and that manufactured goods are worth less than they used to be. In absolute terms, the manufacturing output of the US is higher than it was in the 50s or the 70s, it’s just that our productivity is so much higher that it doesn’t take nearly as much of the nation’s total labor to produce those manufactured goods. And honestly, even if we manufactured far more manufactured goods by putting a large percentage of our workforce back into manufacturing (And really, is that what we want? Do you want to stand on a manufacturing line all day?) all that would do is produce more goods than we know what to do with, making us, on net, poorer than we are today.

    And yes, outsourcing increasing the profits of the outsourcing firm. While some consider profits the only measure of success, this is not true from a economic standpoint, especially if you are trading profits for jobs. The theory is that the profits will be used to create new jobs, but like a lot of neat ideology, it just isn’t working.

    Certainly, there are other important means of measuring whether something is what one ought to do, such as considering whether an action is moral, whether it conforms to one’s idea of how society should work, etc. However, all other things being equal, increased profit (especially in the long term) is a pretty good way of measuring whether a business move is successful. Nor is the idea that these increased profits via specialization some sort of abstruse theory. It’s a basic application of comparative advantage, and the US economy has continued to, overall, add jobs even as large numbers of jobs have been “shipped overseas” during the last 30+ years.

    The median wage for the white male worker has been flat since 1973. The bulk of the rewards have gone to a very small group; that is economically untenable.

    I tend to think that this line of thinking is flawed at a number of levels, since it ignores other factors (such as the fact that many families have chosen to become two income families — whether they are conscious of having done so willingly or not — and such as the fact that the same inflation adjusted income as in 1973 will buy your a much more materially rewarding lifestyle in 2010 than it did then) but even leaving that aside: Why should we, as non-materialists, necessarily see it as the greatest tragedy on earth if people make roughly the same amount as their fathers did? Certainly, people have come to expect that each generation will be more well off than the previous, and personally, I think that has pretty clearly continued to be the case — in material terms. But if it isn’t, why aside from defied expectatin should we as Catholics see that as an utter tragedy?

  • When every attempt to implement a system turns out the same way, at some point we are permitted to say, “this is the way it must turn out.”

    And yet, the imperfect free markets that do exist have performed so much better, in the main, than the attempts at centrally controlled and directed markets that it would seem that imperfect free trade is better than attempting to chase other imperfectly implemented goals.

    The truth is, freedom is rule-bound, and markets are made by rules. These rules will be made by the community, or the rule-making power will be with the possessors of capital.

    Or, as Hayak points out, the rules may be the semi-arbitrary bounds of culture which provide a consistent, fair and predictable playing field for commerce. Free trade of the sort economists tend to advocate is not a “there are no rules in the marketplace” type of situation. Indeed, it would be impossible to have a market place if there were truly no rule or customs as regards exchange, because rules are required in order to give the predictability and stability necessary for people to engage in trade.

    Though part of the problem is, much of what is most needed in this sense is cultural, not simply regulatory in the government sense. And it’s very hard to create from scratch without the right antecedants, as the experience of trying to “build markets” in post-communist Europe has shown.

    For example, when Jay Gould had a monopoly on the railroads going into New York, he used it to create another monopoly in building materials by forbidding his railroads to carry any competing products. This worked until the gov’t imposed the common carrier rule on the railroads. So which market was freer? One in which Gould treated the railroads as his personal property, or one with the common carrier rule?

    One in which the alliance between government regulation and corporate power hadn’t allowed him to establish the monopoly on transport into New York in the first place.

  • One of the problems is that free trade isn’t free. China’s artifically low currency acts as an export subsidy, thereby violating FT conditions

    The economic arguments for free trade aren’t dependent on other countries practicing free trade. It’s bad if other countries are subsidizing their industries and putting tariffs on imports, but you’re still better off practicing free trade yourself than responding in kind.

  • John,

    In response to my question,

    “Why insist upon agreeing with the establishment’s instance that corporatism is capitalism and that managed trade is really free trade?”

    You reply,

    “Because it’s the only capitalism that there is.”

    Your answer doesn’t logically follow from my question, first of all, and secondly, who is responsible for defining capitalism?

    I think you’re just pandering to the radical left, to be honest. The vast majority of Americans who own and operate the small businesses that Distributists love so much are capitalists by any definition. They are private owners exchanging goods and services in a relatively free market.

    To say, moreover, that crony, corporate state capitalism is the only kind of capitalism there is, is to also say that free, voluntary exchanges without any special privileges or swindles have never or could never occur, which is an absurdity.

    Who ever denied that markets have rules? Not even anarcho-capitalists believe that.

  • It occurs to me that what unites four of these responses is that conditional statements are being elevated to absolute statements, even quasi-moral absolutes. For example, the statement that we should practice “free” trade unilaterally is justified by no theory that I know of. In fact, I can’t even think of a possible theory that would do this. Trade is about reciprocation, and unreciprocated trade is like unrequited love: not likely to end well.

    Profits may be a good way to measure the success of a business, but not of an economy. In fact, they are not necessarily a way of measuring business success, since you can make profits by strip-mining a company, by gaining a monopoly, by fraud, by asymmetric information, etc. As any engineer will tell you, there is never a single measure of success for any system; engineering involves trade-offs, and a single measure results in sub-system optimization, which leads to overall degradation.

    Darwin, you seem to be arguing that stagnating wages are good for the workers; makes them less materialistic. Aside from the fact that it isn’t true, the proper moral argument involves distributive justice, and the economic argument involves equilibrium. If workers get a declining share of the output, then capital markets will be over-supplied and consumer markets under-supplied. The result will be as it has been: a debt-based distribution system. And that is a recipe for disaster.

    Roads, rail or otherwise, will always be a monopoly; you can’t have two roads on the same route. If the one who “owns” the road denies you access, it cannot be a free market, but a controlled one, and the fact that the controller is private rather than public makes no difference from the standpoint of the excluded shipper.

    Since we agree that markets are dependent on rules, then the whole discussion of the market’s relation to public authority; the question is not whether the authority should be involved, but how should it be involved.

    If the total of manufactured goods are worth less than they were in the 50′s AND contribute less to GDP, then I don’t understand the basis for your judgment that they are higher in absolute terms. What is the “absolute” term you are using, and how should we measure it?

    That’s enough for now.

  • For example, the statement that we should practice “free” trade unilaterally is justified by no theory that I know of. In fact, I can’t even think of a possible theory that would do this.

    Not to be snippy, but the first statement here simply suggests your lack of familiarity with the subject, whereas the second just suggests a lack of imagination.

  • (I’m assuming that if people bore of this, they’ll drop off, but it’s serving as an engaging distraction from the general busy-ness for me at the moment.)

    For example, the statement that we should practice “free” trade unilaterally is justified by no theory that I know of. In fact, I can’t even think of a possible theory that would do this. Trade is about reciprocation, and unreciprocated trade is like unrequited love: not likely to end well.

    Sure it is, it’s justified by the theory of comparative advantage. If Country A applied a tariff on certain imports from Country B, that hurts Country A’s economy because it sends bad pricing signals to businesses and consumers. People pay more than they need to for certain goods or services, and the result is deadweight loss.

    However, in such a situation, Country B is best off if it does not apply retaliatory tariffs but instead engages in free trade. True, it won’t sell as much to A of the products which A is applying tariffs to, but it can continue to sell those products to countries C, D and E, and if it applies retaliatory tariffs to products which A produces more cheaply than comparable products in B, that will only serve to inflict deadweight loss on the residents of B. Everyone in both countries would be better off if A dropped its tariffs, but B would be even worse off it applied punitive tariffs in return.

    In fact, they are not necessarily a way of measuring business success, since you can make profits by strip-mining a company, by gaining a monopoly, by fraud, by asymmetric information, etc.

    I certainly understand and agree with this — which I attempted to emphasize by specifying long term profitability. There are all sorts of dumb things a company can do to boost short term profitability as the expense of long term.

    However, although they are clearly an imperfect measure, they remain a moderately good measure. And while I could lay out some clear examples where outsourcing is not a way of boosting long term profitability, there are many other instances where it is.

    Darwin, you seem to be arguing that stagnating wages are good for the workers; makes them less materialistic. Aside from the fact that it isn’t true, the proper moral argument involves distributive justice, and the economic argument involves equilibrium.

    No, I didn’t argue that at all — I’m not even sure where you’d get that from what I said. And obviously, one of the basic things that drives economic behavior is that most people would prefer more of a good to less of it, if they can get it. So clearly, people want to make more than previous generations.

    There are a number of problems that interest me as to why it is that it’s primarily the richest portions of society which have reaped the largest gains over the last couple decades, and I hope (though I’m not sure) it’s possible for things to develop differently in the future. But I do think it’s worth asking:

    If making say 50,000 in constant dollars in 2010 is a more comfortable lifestyle than making the same amount in 1950 (because of technological depreciation, more productive economy, etc.) and if the complaint is the group of people who previously had the highest incomes (white men) have seen stasis rather than growth while all others groups have experienced growth, why exactly should I as a Catholic freak out about this?

    Roads, rail or otherwise, will always be a monopoly; you can’t have two roads on the same route. If the one who “owns” the road denies you access, it cannot be a free market, but a controlled one, and the fact that the controller is private rather than public makes no difference from the standpoint of the excluded shipper.

    But you can have multiple roads to the same destination, even if they don’t follow the same route. And if there is so little space available for building roads to a given destination that only one entity has total ownership of that one possible road — then it seems obvious that the way that route was acquired was through the use of some sort of governmental power. If that was the case, then I think it should clearly be administered as a common rather than handed over as a monopoly to a private entity.

    Since we agree that markets are dependent on rules, then the whole discussion of the market’s relation to public authority; the question is not whether the authority should be involved, but how should it be involved.

    Yes. No one, to my knowledge, has claimed that there should be no rules enforcement by the government.

    If the total of manufactured goods are worth less than they were in the 50?s AND contribute less to GDP, then I don’t understand the basis for your judgment that they are higher in absolute terms. What is the “absolute” term you are using, and how should we measure it?

    GDP is not a fixed number. You’re looking at percentage of GDP. If you look at the inflation adjusted value of US total manufacturing since the 50s, it’s up. Way up.

    Don Boudreaux explains this here:

    http://cafehayek.com/2010/07/up-is-not-down.html

    Here’s the methodology behind the data:
    http://www.federalreserve.gov/releases/g17/ip_notes.htm

    And here’s he data:
    http://www.federalreserve.gov/releases/g17/iphist/iphist_sa.txt

    How is it possible that the value of individual manufactured goods (say, a toaster) is going down while production is going up and yet manufacturing as a percentage of GDP is going down? Easy. The economy as a whole is getting larger. The amount of stuff being made is going up, but the combination of its increased production and its decreasing value means its percentage contribution to the total economy is going down even as it’s going.

    Isn’t math fun? :-)

  • For example, the statement that we should practice “free” trade unilaterally is justified by no theory that I know of. In fact, I can’t even think of a possible theory that would do this.

    Just to expand on this one tiny bit more, the way to think of this is as follows: It makes sense for me to trade with you if you can produce a good X and provide it to me as a price lower than the price it would cost me to acquire that good from another source (which would be either some other trading partner, or making the good myself.) If you decide to refuse to buy some of the products I make, it still makes sense for me to buy anything from you which it is cheaper for me to procure from you rather than elsewhere.

  • Breaking windows is both fun and good for the economy!

Follow TAC by Clicking on the Buttons Below
Bookmark and Share
Subscribe by eMail

Enter your email:

Recent Comments
Archives
Our Visitors. . .
Our Subscribers. . .