Steve Horowitz channels Hayek and Sowell in his posting over on the NPR blog. The ASET book club is reading Knowledge and Decisions and I see echoes of Sowell's thesis throughout Horowitz.
Sowell compares and contrasts informal decision making processes (marriage) with formal decision making process (the draft. His point, I believe is not to judge the desired ends or even the process, but to evaluate the process in terms of costs and benefits. And, he takes the Hayekian stance that individual agents, voluntarily and independently acting will typically select the process that aligns both with value in society and with wealth creation, while a centralized, hierarchial, tops down selection will typically result in decisions withe perverse and unintended consequences that are, clearly unintended by the man or woman at the top making the decision.
I am excited to be reading this book and looking forward to our discussion.
Weaknesses remain in fiscal freedom and government size. Total government spending equals more than a third of GDP. Corporate and personal taxes are high and increasingly uncompetitive. In 2008, the sub-prime mortgage crisis had far-reaching effects, and the government's unprecedented interventionist measures could severely undermine economic freedom in the future.
Featuring the author, Tom G. Palmer, General Director, Atlas Global Initiative for Free Trade, Peace, and Prosperity, and Senior Fellow, Cato Institute; with comments by Tyler Cowen, Professor of Economics, George Mason University, and General Director, Mercatus Center.
On the whole, illegal immigrants are just the sort of newcomers Americans should embrace: self-motivated risk-takers, strivers determined to improve themselves, hard-working men and women willing to take the meanest jobs if it will give them a shot at building their own American dream.
November 18, 2009, 9:00 AM What Makes a Nation Rich? One Economist's Big Answer
Say you're a world leader and you want your country's economy to prosper. According to this Clark Medal winner from MIT, there's a simple solution: start with free elections.
Boyes speculates, over on Liberty, on the underlying causes for what appears to be a shift in the general attitude toward capitalism and freedom.
In part, he wonders what influence the institution of higher education plays in shaping the underlying belief system of the general population. Dan Klein has analysis that plays into this discussion - http://www.criticalreview.com/2004/pdfs/klein_stern.pdf. He concludes that instructors in the social sciences at the college level are overwhelmingly consist in their selection of government driven policies over market driven policies.
Klein in other work, describes the process by which ideologies govern hiring decisions in colleges, that is faculty who serve on hiring committees tend to select colleagues from institutions similar those attended by the incumbent faculty. This would imply that the newly hired faculty have shared beliefs.
This begs the question of the level of impact or influence that college faculty exert over undergraduates. That is, do the beliefs and attitudes of faculty (who in social sciences at least) appear to be heavily weighted toward pro government/interventionist policies and hostile to market policies driven by liberty and freedom have an impact upon undergraduates? This is an important question and the data that Boyes cites suggests that there is in fact a relationship at work that extends the incumbent ideology to students.
So, to the extent that this relationship exists, a part of the explanation may lie with higher education.
I wonder to what extent the institution of the media plays a role in the pro interventionist ideology that seems to be evolving in the US today? That is, can the various channels of the media be seen to have a predominant ideology in regard to freedom, liberty and choice and, if so, is that ideology pro or anti free market?
Another institution that would seem to play a part in the evolution of attitude is religion. Economic freedom and the resulting growth and expansion of choice and standard of living have been limited to a very few countries. The recent discussion over on CATO regarding modernity points out the central role played by institutions and the apparent change in America in attitude toward capitalism naturally raises the question has there been a change in the institution of religion that may have simulated or supported this change?
The intersection of the two above institutions can be seen here:
Boyes motivates us to consider what factors that have lead to an important change in the informal belief systems in the US that directly and indirectly impact liberty and freedom.
Peter Boettke, a professor of political economy at George Mason University in Virginia, likens capitalism's success to a horse race.
One horse, named Schumpeter, represents innovation. The second horse, called Smith, stands for free trade. The third is government "and its stupid decisions," Boettke said.
"As long as the first two horses stay ahead of the stupid horse, the economy's cycles are manageable," he told IBD. "The trouble happens when the stupid horse's nose gets in front by (creating) policies that restrict trade or are anti-technology."
Thomas Sowell has said that economics helps you understand that there are no solutions, only tradeoffs. In that spirit, I want to recommend Arnold Kling’s study of the financial crisis, Not What They Had in Mind. My favorite quote from the essay is a variant on Sowell’s:
The lesson is that financial regulation is not like a math problem, where once you solve it the problem stays solved. Instead, a regulatory regime elicits responses from firms in the private sector. As financial institutions adapt to regulations, they seek to maximize returns within the regulatory constraints. This takes the institutions in the direction of constantly seeking to reduce the regulatory “tax” by pushing to amend rules and by coming up with practices that are within the letter of the rules but contrary to their spirit. This natural process of seeking to maximize profits places any regulatory regime under continual assault, so that over time the regime’s ability to prevent crises degrades.
"Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan, 'Press on,' has solved and always will solve the problems of the human race." —Calvin Coolidge Sobel's biography
Consider the following question, which is not about healthcare per se: Would you favor a substantial increase in marginal tax rates for millions of middle and upper income Americans to provide more resources for those toward the bottom of the economic ladder?
Your answer to this question cannot be determined by positive economics without adding in some normative judgments. But your answer should strongly influence your view of the health reform bill. The bill moves us closer to much of Western Europe by favoring equality and paying the price of reduced efficiency from much higher marginal tax rates.
Arthur Brooks writes about the current reaction to health care changes
Rather, public resistance stems from the sense that the proposed reforms do violence to three core values of America's free enterprise culture: individual choice, personal accountability, and rewards for ambition.
The recent ASET book club discussion and Boyes posting on the challenge of engaging in civil discourse with statists continues to nag at me.
Jonathan J. Bean's post over on Liberty and Power and the recent posting at Mises confirm the importance of both civil discourse and the continuing frustration that advocates of liberty encounter - both in and out of the academy.
Higher education, as Daniel Klein and others have pointed out, is characterized by a lack of intellectual diversity - the overwhelming majority of those who teach hold statist ideology, what Sowell calls the unconstrained vision.
Bean's comments might lead one to conclude that once the current generation of liberty advocates pass on, that the conversation dies. I am not that pessimistic, I work with a few younger faculty and have encountered younger colleagues at Liberty Fund colloquia who are persuasive advocates of liberty.
That said, the current popular and scholarly debate certainly seems framed in such a manner as to generate loud and abrasive attack rather than civil discourse. I wonder to what extent the economic climate has influenced this climate. I am thinking of Benjamin Friedman's thesis in The Moral Consequences of Economic Growth that tolerance, openness and engagement are cyclical qualities.
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