Backward Stumble in Laissez-Fairyland

Ron Paul and the TP are fond of saying you can’t spend your way out of debt. Or you can’t borrow your way to prosperity. There is a huge error hidden in a small truth there.

You can’t “spend” your way or “borrow” your way out of public debt crises, but you cannot cut or save your way out of them, either. You have to INVEST your way out of them. That’s how real capitalism is supposed to work. If you can’t borrow your way to prosperity, how did most of the now-thriving businesses in the world first get started?

Austrian/libertarian/laissez-faire/Tea-Party economics is wrong. Ron Paul is wrong.  But the Koch brothers hope you buy the deregulation, government is baad (ok?), every-man-for-himslef part of the story.

What progressives want to do is invest in new industries and enterprises that will create millions of good jobs and get revenue flowing into households first and then into the public treasury. The old, vested-interest money doesn’t want competition from green energy, local organic food, credit unions, housing coops, or any of that stuff, and that’s why they bankroll the libertarian/TP laissez-fairyland movements.

I think, I hope, that many in those movements just haven’t thought it all the way through. Some TP’ers only seem to think in terms of bumper-sticker slogans and sound-bite sized ideas. Others are extremely smart but may have arrested personality development (i.e. they are sub-clinical sociopaths).  A lot of young people seem to fall into that category. Self-absorbed and with chips on their shoulders to start with, they want nothing from the busy-bossy, self-absorbed establishment.  Some have conflicts between their financial interests and the better angels of their nature. Some are just decent, ordinary people who have been sold a huge load of crap. They are mad, but may not know who they should really be maddest at.

On the other hand, it doesn’t take a rocket scientist to see that we went from a budget surplus at the end of the Clinton administration to where we are now entirely under GOP leadership. . .

Note: If you hold some of the Laissez-Fairyland beliefs but don’t think you fit any of those categories above, please let me know. I am open to finding common ground.

Poor Richard

Related PRA 2010 posts:

Libertarian Fundamentalism

Green Free-enterprise

Economical Bestiary

At Other Blogs:

Critiques Of Libertarianism

A great web site with the following topics and much more:

A Non-Libertarian FAQ [More...]

A general introduction to discussion with libertarians, with an extensive discussion of arguments commonly used by libertarian evangelists. This is the original FAQ, little changed from when it originated in 1994.
What Is Libertarianism?
Twenty views of the big picture of libertarianism.
Notorious Failures of Libertarianism
Claims widely adopted by libertarians that are spectacularly wrong.

(many more topics)

October 9, 2011, 3:14 pm

IS-LMentary

A number of readers, both at this blog and other places, have been asking for an explanation of what IS-LM is all about. Fair enough – this blogosphere conversation has been an exchange among insiders, and probably a bit baffling to normal human beings (which is why I have been labeling my posts “wonkish”).

[Update: IS-LM stands for investment-savings, liquidity-money -- which will make a lot of sense if you keep reading here]

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The following web site has some examples of how the super-rich pay for phoney academic opinions and propaganda to support their fraudulent financial schemes. (Entire universities are becoming little more than hired PR firms.) ~PR

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Brad DeLong and Paul Krugman school Tyler Cowan

There is a huge demand for rebuttals to Keynesian arguments about how to fix the economy. Anti-government right-wingers and libertarians oppose Keynesian interventions, and they have vast wads of money to throw at such issues.

Tyler Cowan, at the George Mason University Economics Department, is employed by the Kochs for just that purpose. Apparently, one of his jobs is to undermine rival economists’ arguments.

Now, it is well known that no economics model is perfect, and it is easy to assemble a list of problems and a list of people describing those problems. But the fallacy is to use this list to denounce an imperfect model in favor of worse models or none. Voltaire wrote “the perfect is the enemy of the good”, meaning that we should not discard effective solutions for pie-in-the-sky perfectionism.

It is interesting to note Cowan’s typical strategy, which like most public relations strategies is not aimed at “proof” but at convincing onlookers with incessant repetition of ideas such as “problems with IS-LM”. Cowan throws a bombshell, and then echos supporters without answering any questions about his own position at any point. A ploy to attempt to retain academic credibility in the midst of vigorous dog-whistling. He wishes to use his academic authority without being responsible to the academic community.

It looks to me as if Cowen has won. He has achieved his goal of repeating his memes numerous times and showing that there are other academic supporters of his criticisms. Basically, this is a variant of the tarbaby strategy from Uncle Remus. Trick your opponent into a fight with a tarbaby. The opponent may get in all the good licks and totally destroy the tarbaby, but afterwards you are exhausted, helpless, coated with goo, but the rabbit that set up the tarbaby is untouched and laughing.

(this web page has many links for the technically inclined)

Libertarian Fundamentalism

“When plunder becomes a way of life for a group of men, they create for themselves, in the course of time, a legal system that authorizes it, and a moral code that glorifies it.” – Political economist Frederic Bastiat, The Law [1850]

Such a code is laissez-faire or “free-market” capitalism and libertarian fundamentalists are its zealots. Anti-competitive, predatory, monopoly capitalists and robber-barons in the USA promote this ideology because the word libertarian resembles the word liberty and US Americans have a cult of individualistic freedom.  The crux of libertarian fundamentalism (or extreme libertarianism) is how differently it treats the issues of coercion and tyranny in the private and public sectors.  The ideology asserts (on theoretical rather than empirical grounds) a natural bias towards freedom and justice (and against coercion and tyranny) in the former and the opposite in the latter; and it generally turns a blind eye towards the concentrations (and abuses) of power in the private sector that can be observed in weak states just as often as in strong ones.  Libertarian fundamentalism asserts, again without empirical evidence, that courts of law are more dependable regulatory mechanisms of social and economic justice than democratic legislatures. Many of the most powerful promoters of libertarian fundamentalism are themselves unscrupulous crony capitalists who gain advantage by corrupting and manipulating our legal and political institutions.

Look, I’m all for liberty, freedom, individuality, etc. but on some level these are optimized under a regular order of some kind. Rules. We have these even in war and football. The solution to cronyism is not smaller government, fewer rules, fewer referees. The best alternative to corrupt government is not no government, its uncorrupted government. Solutions are those that reduce corruption and increase accountability.

“Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from those rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous and frequently fatal to the banking company which attempts it.” — Adam Smith

Taxes

adam smith on taxes“The subjects of every state ought to contribute toward the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state ….[As Henry Home (Lord Kames) has written, a goal of taxation should be to] ‘remedy inequality of riches as much as possible, by relieving the poor and burdening the rich.’” — Adam Smith

 

Let us settle this question once and for all with nothing but common sense. Government is the captive of big business. If government were the boss, why would it outsource its police and war powers to private contractors and surrender public property to private entities? The person who is being mugged or raped is the one who is forced to surrender his property and weapons, not the one who does the mugging and raping. Is this clear?  — Poor Richard

No pundits were harmed or jargon used in the production of this message.

Individual responsibility

When I was a schoolboy,  back in the day when “civics” and “social studies” were taught, we heard over and over that freedom or liberty always came with responsibility. But that is too nebulous. As the final words of the US Declaration of Independence solemnly affirm, we must “mutually pledge to each other our Lives, our Fortunes and our sacred Honor.”  Individualism must be tempered with an equal measure of cooperation and service to the community of life on earth. We owe a debt to all that has come before and all that will follow. Individualism without an equal measure of formal, committed cooperation and service literally has no place in the modern world. This is the pathology and poverty of the libertarian fundamentalists’ one-sided individualistic position.

Libertarian fundamentalism’s “rugged individualism” is almost impossible to espouse without hypocrisy– at least not without becoming grotesquely Machiavellian and sadistic, as when Tea Party fans cheered Ron Paul for suggesting that uninsured sick people should seek help from the church or shut up and die:

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Susan Grigsby’s brother Steve died a painful death fighting for care as an uninsured American. Susan watched, horrified, as the GOP Presidential Candidates on CNN’s Tea Party Debate stood silent when the the audience cheered for the idea that we as a society should just let an uninsured man die. Now Susan wants an answer from each and every GOP candidate.

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Mike Huben writes at the Critiques Of Libertarianism blog:

“That’s what freedom is all about: taking your own risks”

That’s how Ron Paul described his campaign manager’s early, uninsured death.

However, “When he died on June 26, 2008, two weeks after Paul withdrew his first bid for the presidency, his hospital costs amounted to $400,000. The bill was handed to Snyder’s surviving mother…who was incapable of paying. “

This is a classic case of libertarians claiming that they are taking their own risks, but somebody else ends up having to pay.  There is a simple reason why libertarians routinely lie this way: their ideology claims they are independent, but the reality of human socialization is that we are interdependent in many ways.  Through families, churches, friendships, professional associations, employment, etc.  We routinely and informally assume responsibility for each other.

Another example from among the hundreds that might be found is this:

“In an interview on Hardball With Chris Matthews on MSNBC, Republican Senator Mike Lee of Utah admitted that he wants to bring America to its knees if an amendment is not passed in Congress that would force Americans to live under conservative governance despite which party the people elects. Here is the transcript.

Its too bad for these libertarian fundamentalists that Niccolo Machiavelli, the Marquis de Sade, and Ayn Rand were not among the founders and philosophical progenitors of the United States.

Another error of libertarian fundamentalism, American style, is to abhor the capacity for tyranny in the state and ignore the capacity for tyranny in its alternatives.

Our libertarian fellow travelers are especially fond of asserting, as a characteristic of that entire American school of thought, that governments are awful. In this they are largely correct, since governments exist to serve the needs of those who can afford to constitute them, run them, maintain them and benefit by their operation. Unfortunately, this libertarian willingness to generalize about the organization of governments as thinly disguised protection rackets does not extend to the necessary and inevitable concentration of power, wealth and bad faith in those successor organizations which would follow the collapse of the state-as-Leviathan. Intent as they are upon dismantling and escaping one obvious despotism, libertarians at the same time rather studiously ignore the more direct consequences of the weakening of the welfare functions of the states we have now; chief among those ramifications is the accelerated transfer of wealth, armed staffers, expertise and training functions to corporations, transnational exchange regimes and market affiliations, a one way flow which would result in the eventual reconstitution of states and state-like hierarchies from within corporate associations. (Crow, No Escape)

Naturally there are values and ideas  in classical libertarian thought that I share, but its seductiveness can’t be explained by these alone  (or I guess I might be a libertarian). This post mostly talks about libertarian fundamentalism the way it is found in the US today. It might better be called neo-libertarianism, juvenile libertarianism, or euphemistic libertarianism . As Noam Chomsky explains in the following brief video, a US libertarian fundamentalist is the opposite of a libertarian in the rest of the world, where much of  what we call libertarian fundamentalism might be called neo-liberalism.

Like fundamentalists of all ideologies, libertarian fundamentalists are the unwitting dupes of “the powers that be” (TPTB). Despite their claims to idealism, they are at best the inadvertent enablers of oligarchy.

THE POWERS THAT BE (click image to enlarge)

The main problem that I have with libertarian fundamentalists is that underneath the faith-based, laissez-fairyland dogma they are often (naively or accidentally) anti-democratic, anti-social, anti-scientific and even un-American. Their proposition that all taxation amounts to theft by a corrupt, rogue state does not square with the views of  prominent American Revolution patriots.

Libertarian fundamentalists are also unintentional anarchists.

In their single-minded preoccupation with the very real dangers of state tyranny, they would leave the door open and unguarded against private cartels, robber-barons, and warlords. The power of concentrated mass media (in the “invisible hands” of private puppet masters) to persuade the public against its own self-interest would be unopposed by any representative of the collective public interest.

Ship of Libertarian thought slips over the edge

Scholars have observed “Libertarianism began with some pretty radical thinkers.” Yes, and I have some resonance with  early libertarian thought, but since in all the intervening years they haven’t managed to substantiate any of their theorizing with empirical evidence or real-world examples, their ship has listed sideways off the edge of the real world. Where is an example of a successful fundamentalist libertarian society? The Sudan? Somalia?

Libertarians will protest that their Austrian & Chicago schools of economics have produced a great deal of scientific economic theory in support of free markets, the invisible hand, the rational agent, etc. The problem is that much of this is propaganda, in support of the ruling corporate regime, wrapped up in academic-sounding jargon. It is science fiction, fantasy, and half-truth. Some of this economic mythology is debunked in the Economical Bestiary. Other rebuttals can be found among the links below.

Some libertarian fundamentalists also display the character traits of both Narcissists and sycophants, seeking to garner unearned authority, importance, or financial gain by associating themselves with business leaders, corporate think tanks, or eccentric cult figures such as Ayn Rand who pose as maverick philosophers. Rand devotees accumulate points towards sado-masochistic favors from the mistress in the afterlife by endlessly carping at everyone else in the public square (which they want to privatize). They should never be seated with the adults.

(click image to enlarge)

Poor Richard

Related:

Covering  the following topics and much more:

A Non-Libertarian FAQ [More...]
A general introduction to discussion with libertarians, with an extensive discussion of arguments commonly used by libertarian evangelists. This is the original FAQ, little changed from when it originated in 1994.
What Is Libertarianism?
Twenty views of the big picture of libertarianism.
Notorious Failures of Libertarianism
Claims widely adopted by libertarians that are spectacularly wrong.
What Is Wrong With Libertarianism
Libertarianism is based on bad arguments. Here’s a list of some common problems with libertarian arguments.

Dispatches from Libertopia: An Anthology of Wingnut Chestnuts and Democratizing Remedies (Amor Mundi)

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Gallery

(click or hover over images for sources)

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