Curmudgeonocracy 5—More of "What’s In A Name?"

Classical Liberalism

“Now, Professor, I trust that we’ll talk about classical liberalism.”

“Just as I promised, Julie.  Classical liberalism refers to the political and economic teachings in books by F. A. Hayek (1), Milton Friedman (2) and others.  The etymology (origin) of classical liberalism is described in p. 5-6 of Friedman’s book: ‘In the late eighteenth and early nineteenth centuries, the intellectual movement that went under the name of liberalism emphasized freedom as the ultimate goal and the individual as the ultimate entity in the society.’  ‘After 1930 in the U.S., the term liberalism came to be associated with a readiness to rely on the state …to achieve objectives regarded as desirable.’  ‘In the name of welfare and equality, the 20^th century liberal has come to favor…state intervention and paternalism.’  ‘Because of the corruption of the term liberalism, the views that formerly went under that name are now often labeled conservatism.’ “

“Wow, Curmudge.  If Friedman were alive today, he might say that the progressives arrogated (took without justification) the term liberalism.  In fact, in his book Friedman continued to use liberalism with its original meaning.”

“You know, Julie, for busy people like us, the Introduction of Capitalism and Freedom contains statements that provide a short preview of Friedman’s teachings.  Here are some examples: ‘The scope of government must be limited.  Its major function must be to protect our freedom both from our enemies outside our gates and from our fellow citizens: to preserve law and order, to enforce private contracts, and foster competitive markets.’  ‘The second broad principle is that government power must be dispersed…better in the county than in the state, better in the state than in Washington.’  ‘The great advances of civilization have never come from centralized government.’  And then he named examples such as Newton, Einstein, Edison and others.  ‘Government can never duplicate the variety and diversity of individual action.’ ”

“I’ve been reading some of the clippings in your file, Old Guy.  Here’s what Friedman said back in the 1960’s: ‘There’s no such thing as a free lunch.  If the government spends a dollar, that dollar has to come from producers and workers in the private economy.’  And about the Keynesian multiplier, ‘There is no magic “multiplier effect” by taking from productive Peter and giving to unproductive Paul.”

“Here, Julie, is a comment by Robert Barrow in 2011: ‘Food stamps were an economic stimulus such that every dollar of benefits was supposed to generate $1.84 in the economy in terms of economic activity.’  ‘There is no theoretical or empirical support for the Keynesian position.’  ‘There are two ways to view Keynesian stimulus through transfer programs.  It’s either a divine miracle—where one gets back more than one puts in—or it’s the macroeconomic equivalent of bloodletting.’ (3)“

“And in a clipping from Hayek’s Nobel Prize lecture: ‘If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible.’  Translated, this means that in a large, diverse nation like the U.S. (a complex system), the central government can’t have enough knowledge to properly control the economy, or for that matter, anything else.  Finally, in Hayek’s book: ‘What socialists have sought ever since the French Revolution is not equality before the law but rather equality of outcome.’ “

“So it appears, Julie, that classical liberalism is the antithesis of modern liberalism, socialism, and progressivism.”

The Administrative State

“It’s interesting, Curmudge, that before we started our Curmudgeonocracy discussions I had never heard the term ‘administrative state.’ “

“That’s understandable, young lady.  Both of us have lived our entire lives in an administrative state.  It’s the only life we have known; there has been no need to give it a special name.  It was started during the presidency of Franklin Roosevelt.  He had to have an army of bureaucrats to administer his New Deal programs.  Basically, the Administrative State is the way that progressivism is implemented.”

“Please tell me about it, Professor, although I may not like what I hear.”

“Well to begin with, the Administrative State is under the Executive branch of our government, and it includes the cabinet-level departments such as State, Defense, Interior, Labor, Treasury, Agriculture and others.  Then under the departments are services, bureaus, and agencies such as Internal Revenue, Fish & Wildlife, FBI, and a seemingly never-ending list of others.”

“Much to your surprise, Herr Professor, I’ve been doing my homework. These bureaus and agencies have effectively become a fourth branch of the federal government, encompassing the roles of the Legislative, Executive, and Judicial branches specified in the Constitution.  When Congress passes a law without a lot of detail, an agency fills in the details (called rules), enforces them, and one who doesn’t obey finds himself before an administrative law judge.”

“You’ve got it as usual, Julie.  This provides a way for members of Congress to avoid responsibility for unpopular rules.  And pinning down accountability within agencies is often difficult.  This may be the ultimate example: ‘A centerpiece of the Dodd-Frank financial reform legislation was the creation of a new Federal Consumer Financial Protection Bureau (“CFPB”) within the Federal Reserve. Few bureaucratic agencies in American history, if any, have combined the vast power and lack of public accountability of the CFPB. It is an independent agency inside another independent agency, presided over by a single director who is insulated from presidential removal. Additionally, the Board is outside of the congressional appropriations process.’ “

“Golly, Curmudge, the Administrative State sounds like a progressive’s dream, but to strict constructionists it’s a nightmare, as it would also have seemed to James Madison.  In Federalist No. 47 he wrote, ‘accumulation of all powers, legislative, executive, and judiciary, in the same hands, may justly be pronounced the very definition of tyranny.’ “

“Regrettably Julie, we’ve been stuck with the Administrative State for a long time.  I spent much of my professional career helping industry comply with Environmental Protection Agency regulations.”

“Then, Old Guy, you must have some personal comments about the Administrative State, which we’ll discuss in our next posting.”

Kaizen Curmudgeon   ealtha borL 

(1) Hayek, F. A. The Road to Serfdom (1944); The Constitution of Liberty (1960).

(2) Friedman, Milton Capitalism and Freedom (1962).     ere are some examples ‘:;;   

(3) Barro, Robert J. The Wall Street Journal, August 24, 2011.

Link to posting from blog archives: Evidence-Based Medicine 3—10/14/10

http://kaizencurmudgeon.blogspot.com/2010/10/evidence-based-medicine-patients.html

Curmudgeonocracy 4—What’s In a Name?

Progressivism

“You’d be proud of me, Curmudge; I’ve been studying again.  Instead of a government that protects natural rights through limited decentralized powers, Progressives envision an expansive government and the rule of experts in nationally centralized administrative agencies.  These concepts were originated by Jean-Jacques Rousseau in France, developed by G. F. W. Hegel in Germany, and supported by prominent Americans including Woodrow Wilson, Theodore Roosevelt, and Robert La Follett.  Hegel embraced a new form of freedom where individuals give the government unlimited authority over their lives.”

“They called that freedom, Julie?  It’s hard to believe.  Long ago I had a college roommate who studied Hegel and a professor who called himself a Progressive.  I must have been a stone’s throw from Progressivism, but I dodged the bullet. Here’s more from the article that you read: ‘The progressives favored a much more active role for the government in overseeing civil society, regulating the economy, and redistributing wealth.’  ‘Progressivism forms the roots of modern American Liberalism.’ “

Socialism and Liberalism

“It’s time for some clarification, Professor.  As we mentioned in our Curmudgeonocracy 2 and 3 postings, strict socialism involves government ownership of all means of production, and that occurs now only in totalitarian countries if at all.  An example was China between 1958 and 1962 when the state was the sole employer; ‘36 million Chinese succumbed to famine.’ (1) Currently the practice of socialism in democracies allows private ownership of manufacturing, but it employs government-run cradle-to-grave social welfare programs.”

“Right as usual.  That has been the case in Western Europe and Scandinavia, as we described in Curmudgeonocracy 2, where it has been an obstacle to economic growth as well as an opiate for their young people.  Here are some observations by Arthur C. Brooks (2) in which he compares traditional American exceptionalism and earned success with learned helplessness in social-democratic Spain: ‘The recession, rigid labor markets, and excessive welfare spending have pushed unemployment to 24.4%, with youth joblessness over 50%.  Unable to earn their success, Spaniards fight to keep their unearned government benefits.’  This is an extreme example of an outcome that could result from the contemporary understanding of liberalism; the government grants benefits and advantages in order to give everyone the ability to achieve a certain standard of living and reduce inequalities.  It’s interesting that the Europeans are trying to improve their economies by cutting back on social welfare programs while the U.S. is going in the opposite direction.”

“But what about classical liberalism, Curmudge?”

“Hang in there, Julie.  We’ll get to classical liberalism after we note the current variations of socialism.”

Keynesian Economics

“You told me, Professor, that you earned an ‘A’ in Econ. 101.  I’ll bet it wasn’t Keynesian economics.”

“That’s for sure, Julie.  Keynesian economics is the concept that involves influencing aggregate demand through intervention policies implemented by the government.  A familiar term is the so-called ‘Keynesian multiplier,’ which depicts an increase in economic activity resulting from a government expenditure or ‘stimulus.’  ‘For example, a $100 million government project, whether to build a dam or dig and refill a giant hole, might pay $50 million in pure labor costs. The workers then take that $50 million and, minus the average saving rate, spend it at various businesses. These businesses now have more money to hire more people to make more products, leading to another round of spending. This idea was at the core of the New Deal and the growth of the welfare state.’ “

The New Deal

“And the New Deal was…”

“I’ll get to it, chère etudiante.  The Great Depression began in the United States with the stock market crash on October 29, 1929.  Before that date unemployment was 3%.  On June 17, 1930, when Herbert Hoover was President, Congress enacted the Smoot-Hawley Tariff.  Other nations retaliated, igniting an international trade war that exacerbated what had become a world-wide depression.  By 1933 U.S. unemployment had risen to 24%.  Franklin D. Roosevelt (FDR) was elected President in 1932, and he called his initiative to revive the economy the New Deal.  It was an alphabet-soup of federally funded programs to put people back to work with names like National Industrial Recovery Act (NIRA), Tennessee Valley Authority (TVA), and Works Progress Administration (WPA).  The NIRA gave so much power to the government that it was declared unconstitutional.  Despite all of these stimulus programs (as we would now call them), in 1938 unemployment was still at 19%.”

“I know what happened in 1934, Old Guy; a future curmudgeon was born in Ohio.  And in 1941 World War II came to the U.S., and our country switched from concern about the economy to winning the war.  In 1945 Roosevelt died, Harry Truman became President, and the war ended.  Truman tried to resurrect the New Deal, calling it the Fair Deal, but Congress—recognizing that the war and not the New Deal had ended the Depression—wouldn’t go along.”

“Julie, I hope that you appreciate the commonality among these programs—Progressivism, Socialism, Liberalism, Keynesian Economics, and the New Deal.”

“I’ve got it, Curmudge.  They are all dogs from the same kennel.  They cost a lot, take away people’s freedom and initiative, and don’t work very well.  Obviously they won’t make the cut to be a part of Curmudgeonocracy.”

“Jaded Julie, you sure do have a way with words.”

Kaizen Curmudgeon   arry Trfuman became Presidentg, and the war endedHh 

(1) Yang Jisheng The Wall Street Journal, May 25, 2013.

(2) Brooks, Arthur C. The Wall Street Journal, May 9, 2012.

Link to posting from blog archives: Evidence-Based Medicine 2—9/30/10

http://kaizencurmudgeon.blogspot.com/2010/09/evidence-based-medicine-patients_30.html

Curmudgeonocracy 3—More Socialism

Socialism in Great Britain

“I’ve been reading British history, Curmudge.  Right after World War II the Labour Party was voted into power, and the Prime Minister, Clement Attlee, was committed to nationalizing Britain’s main industries.  Thus the State took ownership of the gas, coal, steel, electricity, rail, airline, and auto manufacturing industries.  This helped rebuild the country’s infrastructure that had been damaged in the war.  The welfare state was also established, including a national insurance system and the National Health Service (NHS).  There was a belief at that time that government could play a positive role in promoting equality through social engineering, e.g., progressive taxation and redistributive welfare spending.”

“That seemed to work well for a while, Julie.  But then by the 1970’s many of the nationalized industries encountered problems.  They were managed inefficiently, and those (‘too big to fail’) were bailed out by the taxpayers.  There was increasing labor unrest, and even the gravediggers went on strike.  The U.K. was termed ‘the sick man of Europe,’ with targets for blame including outdated attitudes on the shop floor (‘us and them’) and irresponsible trade union power.  The winter of 1978-79 became known as Britain’s ‘winter of our discontent’ (from Shakespeare’s Richard III).”

“I know what happened then, Old Guy.  In 1979 the Conservative Party returned to power with Margaret Thatcher as Prime Minister.  By the late 1970’s and throughout the 1980’s most of the U.K.’s State-owned industries (but not the NHS) were sold off to the private sector.  This signaled the end of the era of strict socialism and of following Keynesian economic policies, i.e., attempting to stimulate the economy with government spending.  Thatcher adopted the ‘new ideas of economists Friedrich Hayek and Milton Friedman—advocating a greater scope for markets and limited government.’  We’ll talk more about these concepts in a later posting.”

“We now recognize this as supply-side economic policy.  The result of this was that the ‘economy was growing steadily and Britons could once again look into the future with optimism.’  This was largely due to Thatcher’s militant classical liberalism (now termed conservatism) and strength of character.”

“You know, Curmudge, the labor unions in postwar Britain had considerable influence over the Labour government.  Any group in power in a national government would be expected to govern fairly and equitably.  That might have put the unions in an awkward role.”

“How so, Bright Lady?”

“By their nature, unions seek preferential benefits for their members at the expense of the rest of society.  It seems to me that a union would be the epitome of self-centeredness on behalf of its members and wouldn’t even be expected to govern a whole nation in an equitable manner.  So I’m not surprised that the Labour government made ‘a dog’s breakfast’ out of Great Britain.”

“Said like a true Brit, Julie.  And it’s worse than that.  A union’s higher-ups often aren’t fully supportive of the working people.  A union contract gives a union monopoly power to provide workers to a business, giving others who wish to work no choice but to join the union.  Furthermore, the union bosses can use members’ dues to support causes that some members might not wish to support.  And finally, politicians with strong union support may be corrupted to advocate policies that favor the union to the detriment of the general public.  Thus it is conceivable that a union can abridge the political as well as the economic freedom of the populace.”

“Wow, Curmudge!  It certainly appears that socialism is not a good choice for most societies and certainly not for our Curmudgeonocracy.  A possible exception would be a small country with a monolithic population and lots of money, like Norway.  Let’s end with your favorite Margaret Thatcher quotation: ‘The problem with socialism is that, sooner or later, you run out of other people’s money.’ “

Kaizen Curmudgeon

Link to posting from blog archives: Evidence-Based Medicine—The Patient’s Perspective—9/23/10 http://kaizencurmudgeon.blogspot.com/2010/09/evidence-based-medicine-patients.html