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Edmund Burke on the Free Market

20 Mar

In the Huffington Post, Alex Zakaras, a political theorist at the University of Vermont, levels a familiar charge at today’s GOP: they’re not real conservatives.

Over the last several decades, the party has abandoned political conservatism and embraced its opposite: an agenda of radical, experimental reform.

I’ve addressed this argument many times, including in a book now out in paperback that’s selling for $16, so there is no need for me to rehearse my position here.

What drew my attention to Zakaras’s piece is this claim:

As of the 2013 Congress, fortified by libertarian ideological purists, the Republican Party can no longer claim this [conservative] tradition as its own….The dominant faction–among the elites who fund and speak for the party–is now driven by a very different ideology. It believes that the size and scope of government should be vastly reduced, that public services should whenever possible be privatized, and that market principles should be extended into ever more areas of human life–from education to retirement savings to prisons. Whatever the merits of this ideology, it is simply a mistake to call it conservative.

…

Why, then, should true conservatives remain infatuated with unregulated–or minimally regulated–markets?

I thought about composing a long reply, showing how deeply rooted in conservative principles the right’s embrace of free-market capitalism truly is, but a version of that long reply is forthcoming in a piece in the Nation. So I’ll leave that for another day.

Instead, I’ll simply allow someone I trust we all consider to be a true conservative to speak for the team:

The value of money must be judged, like every thing else, from it’s rate at market. To force that market, or any market, is of all things the most dangerous.

Let Government protect and encourage industry, secure property, repress violence, and discountenance fraud, it is all that they have to do. In other respects, the less they meddle in these affairs the better.

Of all things, an indiscreet tampering with the trade of provisions is the most dangerous.

Laws prescribing, or magistrates exercising, a very stiff, and often inapplicable rule, or a blind and rash discretion, never can provide the just proportions between earning and salary on the one hand, and nutriment on the other: whereas interest, habit, and the tacit convention, that arise from a thousand nameless circumstances, produces a tact that regulates without difficulty, what laws and magistrates cannot regulate at all.

The balance between consumption and production makes price. The market settles, and alone can settle, that price. Market is the meeting and conference of the consumer and producer, when they mutually discover each other’s wants. Nobody, I believe, has observed with any reflection what market is, without being astonished at the truth, the correctness, the celerity, the general equity, with which the balance of wants is settled. They who wish the destruction of that balance, and would fain by arbitrary regulation decree, that defective production should not be compensated by encreased price, directly lay their axe to the root of production itself.

The last three of these statements are from Burke’s Thoughts and Details on Scarcity, which he wrote in response to a scheme adopted by the magistrates of Berkshire in 1795 to supplement the earnings of farm laborers with government payments so that they could earn a living wage. The supplement would depend upon a variety of factors: the price of corn, the size of the laborer’s family, the cost of bread. Readers of Karl Polanyi will recognize this plan as the Speenhamland system.

Berkshire was merely the next county over from where Burke lived, and the plan freaked him out. He saw it, among other things, as a portent of the kind of legitimation crisis twentieth-century conservatives would later espy in the welfare state: Extending its commitments to the poor, the state generated expectations and demands it could never meet. The over-extension of the pre-revolutionary French state, Burke argued, generated similar demands and expectations among the poor; that led, in part, to the French Revolution. Or, as Burke put it in his Letters on a Regicide Peace:

This affected pity only tends to dissatisfy them with their condition, and to teach them to seek resources where no resources are to be found—in something else than their own industry, and frugality, and sobriety.

So why should true conservatives remain infatuated with unregulated—or minimally regulated—markets? Because a great many of them always have been.

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The Smartest Guy in the Room

10 Mar

The current issue of Vanity Fair has a profile of William Ackman, the billionaire hedge fund manager who’s trying to bring down Herbalife. Ackman’s friends and enemies call him Bill; I know him as Billy.

You see, Billy Ackman and I grew up together in Chappaqua, New York. He was a year ahead of me in school. Our families went to the same synagogue. I knew his parents, and his older sister and my sister were in the same class. We weren’t friends, and he never made much of an impression on me. He was smart, but in the way many kids in Chappaqua were smart: he got good grades, obsessed about college, went to Harvard.

What I didn’t know was this:

In 1984, when he was a junior at Horace Greeley High School, in affluent Chappaqua, New York, he wagered his father $2,000 that he would score a perfect 800 on the verbal section of the S.A.T. The gamble was everything Ackman had saved up from his Bar Mitzvah gift money and his allowance for doing household chores. “I was a little bit of a cocky kid,” he admits, with uncharacteristic understatement.

Tall, athletic, handsome with cerulean eyes, he was the kind of hyper-ambitious kid other kids loved to hate and just the type to make a big wager with no margin for error. But on the night before the S.A.T., his father took pity on him and canceled the bet. “I would’ve lost it,” Ackman concedes. He got a 780 on the verbal and a 750 on the math. “One wrong on the verbal, three wrong on the math,” he muses. “I’m still convinced some of the questions were wrong.”

Ackman has made billions of dollars since 1984. According to Vanity Fair, he owns a $22 million mansion in the Hamptons, an estate in upstate New York, a co-op in a “historic” building on Central Park West, and a private Gulfstream 550 jet. He started his own hedge fund with a quarter-million dollars from Marty Peretz, who was his professor at Harvard (the only reason I could possibly imagine for taking a course with Peretz is that you think he might some day help you in just this way). He goes bone-fishing (whatever that is) in Argentina. He likes to say things like “Tennis, I practice. Presentations, I don’t.”— which I gather is hedge fund for “shaken, not stirred”—and “You know what? It’s time for me to do something for cancer.”

But with all that, he still remembers his SAT scores—and the number of questions he got wrong—as if he took them yesterday.

You see, Ackman is one of those guys for whom phrases like “smartest guy in the room” mean something. That’s a phrase I’ve been thinking about of late. I know smart people, but their minds are so various and incommensurate, it’d be impossible to rank them according to intelligence. They’re all smart, but in different ways: one sees deeply, one sees quickly, one sees things no one else sees.

But Ackman operates in a world—and it’s not just Wall Street; you can also find it in DC, the media, the law, and some parts of academia—where rankings of this sort mean something. They have to: no matter what the endeavor, someone always has to come out on top or in first. Whether it’s the most money, the biggest house, or the fastest cyclist.

It happened last summer when Ackman decided to join a group of a half-dozen dedicated cyclists, including [billionaire hedge-fund dude Daniel] Loeb, who take long bike rides together in the Hamptons. The plan was for Loeb, who is extremely serious about fitness and has done sprint triathlons, a half-Ironman, and a New York City Marathon, to pick up Ackman…The two would cycle the 20 or so miles to Montauk, where they would meet up with the rest of the group and ride out the additional 6 miles to the lighthouse, at the tip of the island. “I had done no biking all summer,” Ackman now admits. Still, he went out at a very fast clip, his hypercompetitive instincts kicking in. As he and Loeb approached Montauk, Loeb texted his friends, who rode out to meet them from the opposite direction. The etiquette would have been for Ackman and Loeb to slow down and greet the other riders, but Ackman just blew by at top speed. The others fell in behind, at first struggling to keep up with the alpha leader. But soon enough Ackman faltered—at Mile 32, Ackman recalls—and fell way behind the others. He was clearly “bonking,” as they say in the cycling world, which is what happens when a rider is dehydrated and his energy stores are depleted.

While everyone else rode back to Loeb’s East Hampton mansion, one of Loeb’s friends, David “Tiger” Williams, a respected cyclist and trader, painstakingly guided Ackman, who by then could barely pedal and was letting out primal screams of pain from the cramps in his legs, back to Bridgehampton. “I was in unbelievable pain,” Ackman recalls. As the other riders noted, it was really rather ridiculous for him to have gone out so fast, trying to lead the pack, considering his lack of training. Why not acknowledge your limits and set a pace you could maintain? As one rider notes, “I’ve never had an experience where someone has gone from being so aggressive on a bike to being so hopelessly unable to even turn the pedals…. His mind wrote a check that his body couldn’t cash.”

Apparently this story “is so widely known in the hedge-fund eco-system that it has practically achieved urban-legend status.” You might think people who make and break economies over breakfast would have something else to talk about. But when every last activity in life is a race, and someone must always win or lose, a weekend ride becomes just as much a revelation of the whole as a morning trade.

What’s odd in Ackman’s case is how loathed he is by his colleagues. So much so that they’ve banded together to take him down in this Herbalife deal.

Ackman says he suspected, when he “shorted” (i.e., bet against) Herbalife, that other hedge-fund investors would likely see the move as an opportunity to make money by taking the other side of his bet. What he hadn’t counted on, though, was that there would be a personal tinge to it. It was as if his colleagues had finally found a way to express publicly how irritating they have found Ackman all these years. Here finally was a chance to get back at him and make some money at the same time. The perfect trade. These days the Schadenfreude in the rarefied hedge-fund world in Midtown Manhattan is so thick it’s intoxicating.

So why is Ackman the object of such hate?

It’s Ackman’s perceived arrogance that gets to his critics. “The story I hear from everybody is that one can’t help but be intrigued by the guy, just because he’s somewhat larger than life, but then one realizes he’s just pompous and arrogant and seems to have been born without the gene that perceives and measures risk,” says [Robert] Chapman. “He seems to look at other members of society, even legends such as Carl Icahn, as some kind of sub-species. The disgusted, annoyed look on his face when confronted by the masses beneath him is like one you’d expect to see [from someone] confronted by a homeless person who hadn’t showered in weeks. You can almost see him puckering his nostrils so he doesn’t have to smell these inferior creatures.

Notice what Chapman says: Ackman treats his colleagues as if they were the homeless. In other words, it’s fine, even expected, to treat the homeless—and all the other little people—that way. As Ludwig von Mises wrote to Ayn Rand: “You have the courage to tell the masses what no politician told them: you are inferior and all the improvements in your conditions which you simply take for granted you owe to the effort of men who are better than you.” What’s not fine is to treat the big people that way.

Ackman’s mistake is that he takes the “smartest guy in the room” business too seriously. He really thinks he’s that dude. So much so that he’s willing to treat the other guys in the room as if they weren’t. That’s a no-no, and now they’re going to take him down for it.

Nietzsche understood this dynamic all too well. In an essay from 1872, “Homer’s Contest,” he remarked upon the centrality of competition to the Greek state. Not economic competition but other forms of contest: military, athletic, aesthetic, and so on. The idea was that “every talent must develop through a struggle” with one’s peers, but the point of that struggle was to serve the good of the state.

From childhood, every Greek felt the burning desire within him to be an instrument of bringing salvation to his city in the contest between cities: in this, his selfishness was lit, as well as curbed and restricted.

But when a competitor’s ambition is so unhinged, when he not only tries but actually manages to make his way to the top, and stay there, he must be removed. For the good of the state. That, says, Nietzsche, is the origins of the practice of ostracism. And if his competitors can’t do it, the gods will: they step in and take him out.

Why should nobody be the best? Because with that, the contest would dry up and the permanent basis of life in the Hellenic state would be endangered….the preeminent individual is removed so that a new contest of powers can be awakened: a thought which is hostile to the “exclusivity” of genius in the modern sense, but which assumes that there are always several geniuses to incite each other to action, just as they keep each other within certain limits, too.

Back to Wall Street: If the “smartest guy in the room” is going to serve the purpose for which it was coined—to spur little Billy Ackman’s to work hard, get into Harvard, and make lots of money—it has to remain an elusive prize. Something to strive for, never to be claimed.

No one, it turns out, can ever really be the smartest guy in the room. For two reasons. First, to make sure that everyone keeps fighting to get in, and stay in. Second, to make sure that everyone who doesn’t get in is kept out.

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The fiscal cliff is just Act 2 of a 3-Act Play

2 Jan

I’m still mulling over the fiscal cliff deal that’s just been ratified by Congress.

My one thought so far is that part of the reason some progressives are saying it’s not so bad is that the deal, for the most part, focuses on taxes. And while the deal has the unfortunate element of making permanent a great many of Bush’s tax cuts, which were temporary, and not raising nearly the amount of revenue that might have been raised if the tax cuts had simply been allowed to expire ($3.9 trillion over a ten-year period), it does have the benefit that it raises about $600 billion in revenues, eliminates some tax benefits for the rich (though not nearly to extent that allowing the Bush cuts to expire would have), extends unemployment insurance for a year and protects the earned income tax credit for the poor.

But we have to remember that the deal is really only the second act of what seems to be shaping up as a three-act drama.  Act 1 was last summer, when Obama and the Republicans agreed to nearly $1 trillion in non-defense spending cuts over a ten-year period.  That set of cuts is now in place, promising, as the White House said last summer, to “reduce Domestic Discretionary Spending to the Lowest Level Since Eisenhower.”

Act 2 is the fiscal cliff deal. As I say above, it focuses mostly on taxes, and because it didn’t touch things like Social Security or Medicare, which Obama had been pushing for, some progressives feel relief. But it’s Act 2, as I said. If we keep in mind Act 1, what we have so far is $1 trillion in non-defense cuts and $600 billion in tax increases.

Which brings me to Act 3: the debt ceiling and delayed sequester negotiations that are set to begin in late February/early March. Unlike the negotiations over the fiscal cliff, where Obama simply could take away the Republicans’ tax cuts by waiting them out, the debt ceiling negotiations will put the GOP in a much stronger position. Obama wants something, and only the Republicans can give it to him. So now they’ll say to him: all the movement has to be on the spending side. And aside from the issue of cuts to the Pentagon, he’ll have very little to negotiate with.

Ed Kilgore describes the upcoming confrontation over the debt ceiling/sequester thus:

So the supposed moment of bipartisan satori that supposedly culminated with the House’s action last night has increased the already formidable sentiment within both parties to make the upcoming confrontation One for the Ages. I would guess that by sundown today about 95% of the Republicans in both Houses who voted for the “cliff” bill will have made public statements swearing bloody vengeance on the Welfare State in exchange for an increase in the debt limit. And even before the deal was sealed in the Senate, the president was already vowing not to make the concessions Republicans will demand.

When it comes to intransigence, whom are you going to believe? The Republicans or Obama. That’s why liberals, even those who aren’t that ruffled by the specifics of the fiscal cliff deal, are nervous.

Regardless of whom you believe, all of the action is going to happen on the spending side. So when the play’s over, what we’ll have is $600 billion in tax increases, and some number of trillions in spending cuts. Some of those cuts will come from the Pentagon, which is good, but…well, you see where I’m going.

Update (noon)

Here’s a good roundup of reactions to the deal.

Update (3 pm)

Digby has a must-read. She also makes an important point in her conclusion:

So you see what a bind we’ve been put it with this ridiculous austerity fetish? We’re going to be arguing about cutting even larger chucks of the budget at a time when we desperately need to be adding to it.

(Oh, and by the way, it’s not as if the tax hikes they just voted for could be used for any of that. Every penny of it is slated to pay down debt incurred during the time when the Republicans starved the beast and spent like sailors. What a racket.)

I didn’t deal with the whole austerity question here, though I have in the past. In a bad economy, tax hikes are always austerity measures. But the one hope is that the monies they provide will go to funding programs. In this case, the money is solely to pay down the debt. And if history is any guide, as soon as the GOP is a position to wreak their havoc, they’ll just run up the debt again. Unless someone finally makes the case for taxes as something other than a way of reducing debt and deficits, we’ll be stuck where we are.

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Taxes, and Cuts, and Drones: Obama’s Imperialism of the Peasants

17 Dec

In my very first post as a blogger, I wrote the following:

One problem with liberals in the tax debate is that they don’t realize just how little Americans actually get from the government. When the government doesn’t provide you with universal health care, a decent pension, good schools, or accessible and affordable public transportation, why should you want to pay taxes? The answer, of course, is not for Americans to pay less but for government to spend more. As Thomas Geoghegan explains here, “people are willing to pay taxes that they spend on themselves.”

Ezra Klein is now reporting more details on what the impending fiscal cliff deal between Obama and the Republicans is going to look like: among other things, it includes cuts in Social Security benefits, and if this Dylan Matthews post from last week is correct, tax increases that would be slightly regressive in their effects (I’m not talking here, obviously, about the tax increases that would come from undoing some of the Bush tax cuts).

So that’s the deal: We raise taxes. And what do we get in return? Lower benefits. Genius!

As I wrote in the London Review of Books during the Summer 2011 debt ceiling negotiations:

If there’s a master text for this moment, it’s Marx’s Eighteenth Brumaire. Not the over-cited first time as tragedy, second time as farce line, but his astonishingly prescient analysis of the reactionary behaviour of the French peasantry during the Bourbon and July monarchies. Though the 1789 Revolution and Napoleon had liberated the peasants from their landlords, the next generation of peasants was left to confront the agricultural market from small private holdings that could not sustain them. They no longer had to pay their feudal dues, but now they had to pay their mortgages and taxes to a state that seemed to do little for them. What the state did provide, under Napoleon III, was imperial spectacle. That wasn’t nothing, as Marx noted, for in and through the army the peasants were ‘transformed into heroes, defending their new possessions against the outer world, glorifying their recently won nationality, plundering and revolutionising the world. The uniform was their own state dress; war was their poetry.’ This Marx called ‘the imperialism of the peasant class’.

In Marx’s analysis we see the populist underbelly of the debt crisis, indeed of the last four decades of the right-wing tax revolt, from Howard Jarvis’s Proposition 13 of 1978, which destroyed California’s finances by putting strict limits on property tax increases, to the Tea Party. Liberals often have a difficult time making sense of these movements – don’t taxes support good things? – because they don’t see how little the American state directly provides to its citizens, relative to their economic circumstances. Since the early 1970s, with a few brief exceptions, workers’ wages have stagnated. What has the state offered in response? Public transport is virtually non-existent. Even with Obama’s reforms, the state does not provide healthcare or insurance to most people. Outside wealthy communities, state schools often fail to deliver a real education. In such circumstances, is it any wonder ordinary citizens want their taxes cut? That at least is change they can believe in.

And here Democrats like Obama and his defenders, who bemoan the stranglehold of the Tea Party on American politics, have only themselves to blame. For decades, Democrats have collaborated in stripping back the American state in the vain hope that the market would work its magic. For a time it did, though mostly through debt; workers could compensate for stagnating wages with easy credit and low-interest mortgages. Now the debt’s due to be repaid, and wages – if people are lucky enough to be working – aren’t enough to cover the bills. The only thing that’s left for them is cutting taxes. And the imperialism of the peasants.

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The Four Most Beautiful Words in the English Language: I Told You So

14 Dec

It was hard not to think of Gore Vidal’s aperçu when I read this piece on Cory Booker in the New York Times this morning.

When snow blanketed this city two Christmases ago, Mayor Cory A. Booker was celebrated around the nation for personally shoveling out residents who had appealed for help on Twitter. But here, his administration was scorned as streets remained impassable for days because the city had no contract for snow removal.

Last spring, Ellen DeGeneres presented Mr. Booker with a superhero costume after he rushed into a burning building to save a neighbor. But Newark had eliminated three fire companies after the mayor’s plan to plug a budget hole failed.

In recent days, Mr. Booker has made the rounds of the national media with his pledge to live on food stamps for a week. But his constituents do not need to be reminded that six years after the mayor came into office vowing to make Newark a “model of urban transformation,” their city remains an emblem of poverty.

Cory Booker’s promise — captured in two books, two documentaries and frequent television appearances — was to save a city that had been hemorrhaging residents, industry and hope since the riots that ripped it apart 45 years ago. But a growing number of Newarkers complain that he has proved to be a better marketer than mayor, who shines in the spotlight but shows little interest in the less-glamorous work of what it takes to run a city.

…

…Mr. Booker is better suited to speechmaking in Washington than to governing a state.

…

They say Mr. Booker’s frequent Twitter posts to his 1.3 million followers, his appearances on television and at gatherings of moguls and celebrities — he was out of town nearly a quarter of the time between January 2011 and June 2012, according to The Star-Ledger — have distracted him from the local trench work needed to push his agenda. Business leaders say he dazzles at news conferences, but flags on the follow-through. Residents have wearied of the outside fascination for the mayor whom Oprah Winfrey called “a rock star” and Jon Stewart on Wednesday referred to as “the superhero mayor of Newark.”

Taxes have risen more than 20 percent over the past three years, even after the city laid off about 1,100 workers, including more than 160 police officers. Crime has risen, and unemployment is up. Schools remain under state control, and the city’s finances remain so troubled that it cannot borrow to fix its antiquated water system. While new restaurants have risen near the Prudential Center downtown, those in the outer wards were placed under a curfew this year because of shootings and drug dealing.

“There’s a lot of frustration and disappointment,” said Assemblyman Albert Coutinho, a Democrat representing Newark. “People feel that the mayor basically is out of the city too much and doesn’t focus much on the day-to-day.

…

Asked about complaints from residents and business owners that garbage is not picked up, abandoned buildings are not boarded up and public spaces are in disrepair, the mayor talked about a new system that allows him to track which streets need snowplows and which departments are paying for too much overtime — even when he is out of town.

He invited a reporter to see the system in action. He then called to apologize that he could not be there: “I’m in and out of New York all day.”

Instead, his staff demonstrated the system. Mr. Booker was on his way to host a reading at a bookstore on the Upper West Side, filmed by CNN. He then spoke at a benefit at Cipriani and attended a movie premiere at Google’s New York headquarters. Afterward, he announced on Twitter, “I sat on a panel with Richard Branson.”

Yes, I told you so.

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Conservatives: Who’s Your Daddy?

20 Nov

In his column this morning, David Brooks has a roundup of young conservative voices we should be listening to. He divides them into four groups: paleoconservatives, lower-middle reformists, soft libertarians, and Burkean revivalists. I want to focus on the last, for as is so often the case with Brooks, he gets it wrong—but in revealing ways.

Burkean Revivalists. This group includes young conservatives whose intellectual roots go back to the organic vision of society described best by Edmund Burke but who are still deeply enmeshed in current policy debates.

Yuval Levin, the editor of National Affairs is one of the two or three most influential young writers in politics today. He argues that we are now witnessing the fiscal crisis of the entitlement state, exemplified most of all by exploding health care costs. His magazine promotes a big agenda of institutional modernization.

It just so happens that I was reading yesterday a piece by Levin from the summer 2012 issue of The New Atlantis (h/t the kind reader who sent it to me; I can’t now find who you are) on the problem of health care and entitlement spending.

After the usual heavy breathing and hortatory throat-clearing that are characteristic of such think pieces on the right—”Our weaknesses and problems, no less than our strengths and advantages, are reflections of the society we are, and so to understand them we would do well to reflect upon the question of just what sort of society that is.”—Levin sets out the boiler-plate, one part Straussianism, two parts bullshit.

The ancients sought virtue, a life of excellence lived in and through the polis; the moderns (Machiavelli, Descartes, Bacon, Hobbes, and Locke) perpetrate “a lowering of aims.” The moderns see “the preservation and protection of life and of health as the primary functions of society.” Motivated by “safety and power,” they care nothing for the higher goods of religion or morality. Instead, they “assert for health a place at the very top of the heap of human goods.”

It’s the usual hash of modern political thought that you find in certain precincts of the Straussian right. What’s interesting about it is how Levin connects it to our health care debate and the market, and whom he draws inspiration from in doing so.

The health care challenge we face, insists Levin, is not merely the narrow economic problem of ballooning costs; that would be too pedestrian. It’s that we have so lost sight of other goods—excellence, justice, and so on—that we are willing to spend every last dime, and our children’s dimes, on staying alive, the world be damned. Because of “our disproportionate and even reckless elevation of health,” we have become the small people—our society the “vessel for self-absorption and decadence”—that we are.

That concern with self-absorption and decadence should tip us off to where we stand with Levin: not under the bright sun of the ancients or the Founders—or, pace Brooks, Edmund  Burke—but in the shadow of Nietzsche. (Setting aside the connection between Burke and Nietzsche, which I allude to in The Reactionary Mind.)

I’ve argued before that Nietzsche is the master theoretician of the modern right, but Levin makes it especially clear.

In understanding that liberal temptation, our best guide is not Descartes but Nietzsche, who described what could become of us in an age beyond responsibility, an age he believed was the inevitable destination of liberal societies. The degeneration of virtue in such societies, he argues, will atrophy our ability to plan for the future, our drive to work, and our interest in governing. In such a state, people will lack the noble aspiration to a virtuous life, setting their aims far lower, as Nietzsche writes. “One has one’s little pleasure for the day, and one’s little pleasure for the night: but one has a regard for health.”

Our regard for health, it seems, can easily coexist with a society that we would not otherwise be proud of. Unbalanced and unmoored from other goods, such regard can become a vessel for self-absorption and for decadence. It can cause us to abandon our commitment to our highest principles, and to mortgage the future to avert present pain.

What makes Levin’s invocation of Nietzsche even more fascinating is that he sees the market as the antidote to this culture of decadence. Where Nietzsche loathed the culture of the market and of capitalism, modern conservatives who walk in his path have found a way around that hostility. They see the market as the proving ground of the heroic self, as the crucible from which a being of ancient excellence and moral virtue—or, if you’re jonesing for a more modern version, a tragic chooser of incommensurable goods—can arise. In Levin’s case, the market is the instrument by which our ravenous desire for health at any cost will be forced to confront the constraints of cost, leading us to prioritize our values—and creating a space, he hopes, for other values to emerge.

It’s not at first clear why Levin thinks such other values would emerge, given that he thinks we’ve lost sight of them, but at the end of his essay he draws what seems to be an unearned distinction between the people and the government, claiming that it’s not the citizenry that’s corrupt but the state. The institutions of liberal democracy can’t make hard choices, tied as they are to the base drives of politicians. But the market can.

After all, markets don’t just make expensive goods cheaper — they are also extraordinarily effective prioritizers, allowing many individual decisions to be made close to the ground. In the case of health care, that would mean having more critical decisions about spending made by patients, by families, and by doctors, and creating a strong incentive for those decisions that have to be made by insurers to be made in ways that will be perceived as fair by their customers.

Market solutions would by no means eliminate all the grave difficulties involved in prioritizing health care. There would still be rationing, there would still be times when being out of money means you are out of options, there would still be decisions made by insurance company bureaucrats that strike patients and doctors as unjust. But there would be far fewer than under a system that assigned rationing decisions to public officials and gave patients far fewer choices and far less control.

In a properly regulated but competitive insurance market, we would have a much better chance of actually prioritizing health among the goods we value. Because while liberal political institutions are unsuited to such prioritization, we liberal citizens are often up to it. Families, which after all are not liberal institutions, can make difficult choices — balancing the needs of different generations and the importance of different needs and wants — in ways that democratic political institutions often simply cannot.

Read that last paragraph carefully: “We liberal citizens are often up to it.” Why? Because we live in “families, which after all are not liberal institutions.” It’s the family, by which Levin means the anti-liberal or illiberal or non-liberal parental authority unit, that makes the difficult choices. So we have the market as the disciplining agent working with whomever controls the finances in the family (and we all know who that is) to create the conditions for a society that cares about something more than its health.

Over the last year, I’ve been working on a project that seeks to explore the elective affinities between Nietzsche and neoliberalism, the hidden dialogue between the German criticism of decadence and the Austrian School’s celebration of capitalism. In the coming months, I hope to be publishing an article about this, but I’ve already given some hints of my views on that connection in various posts on Tumblr.

In the meantime, I urge you to take a look at Levin’s essay insofar as it gives you a good sense of the Nietzschean dimensions of contemporary conservatism, especially that “Burkean” conservatism which gets praised by the likes of David Brooks.

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Will Obama not only take us over the fiscal cliff but also keep us there?

9 Nov

Is it feasible/plausible that Obama will not only take us to the fiscal cliff, but also push us over it and then keep us there? That is, not negotiate any kind of deal with the Republicans at all, not before or after January 1? Unless you assume Obama doesn’t want cuts to entitlements — which I don’t assume; I believe he’s an austerian of Reactionary Keynesianism — think about what he gets if he allows the sequester to go through: higher tax rates, cuts to entitlements, and cuts to defense. That seems like classic New Democrat/Clinton goals. I recognize it would put the economy in danger of recession but Obama’s not up for reelection and modern Democratic presidents have shown remarkably little interest in the fate of congressional Democrats, particularly at mid-term election time, and in party-building more generally. So, I ask: will he take us over the cliff and then keep us there?

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American Feudalism: It’s Not Just a Metaphor

26 Oct

As many of you know, I’ve been calling our contemporary political order feudal for quite some time. But this post from the Roosevelt Institute’s Tim Price (h/t Alex Gourevitch) really blew my mind:

That could soon be the law of the land in Pennsylvania, where the state legislature has passed a bill that would, as Philadelphia City Paper blogger Daniel Denvir describes it, “allow companies that hire at least 250 new workers in the state to keep 95-percent of the workers’ withheld income tax.” These workers will essentially be paying their employers for the privilege of having a job. Some have called this“corporate socialism,” but it also calls to mind an even older economic model that was once popular in Europe – except back then, the bosses were called lords. It’s a more modern innovation in the U.S., but combined with increased political pressure from employers and a crackdown on workers’ rights, it all adds up to feudalism, American-style.

The Pennsylvania bill is just the most recent example of state income taxes being turned into employer subsidies. It’s already the law of the land in one form or another in 19 states, and according to Good Jobs First, it’s taking $684 million a year out of the public coffers. The theory is that this will boost job creation. But the authors of the Good Jobs First report note, “payments often go to firms that simply move existing jobs from one state to another, or to ones that threaten to move unless they get paid to stay put.” In other words, it’s more like extortion than stimulus. With state governments facing a projected $4 trillion budget shortfall and continuing to cut social services and public sector jobs, they can hardly afford to be wasting money on companies that already have plenty and have no intention of putting it to good use. And the more governments turn over their privileges to businesses, the more the distinction between the two becomes blurred.

But if corporations have state governments over a barrel, they have their employees stuffed inside the barrel and ready to plunge down the waterfall. As I’ve noted before, some conservatives view all taxation as theft, but there’s surely no better term for what happens when employers promise their workers a certain wage or salary and then pocket some of the money for themselves. When you pay taxes to the government, you get something in return, whether it’s a school for your kids or a road to drive on or a firefighter to rescue you from a burning building. When you pay taxes to your boss, you… well, you give your boss your money. Your only reward is that you get to continue to “work the land,” so to speak. The lords didn’t consult with the peasants on which tapestries they should buy with the money they collected from them.

Forced to Choose: Capitalism as Existentialism

18 Oct

I’ve been reading and writing all morning about Hayek, Mises, and Menger. And it occurs to me: the moral secret of capitalism, its existential fundament, is not that we are free to choose but that we are forced to choose. Only when we are confronted with the reality of scarcity, says the Austrian economist, only when we must reckon with the finite resources at our disposal, are we brought face to face with ourselves. In deciding how to deploy those limited resources—whether they be time, money, effort—we’re compelled to answer the great questions of life: What do I value? What do I believe? What do I want in this life, in this world? (“Every man who, in the course of economic activity, chooses between the satisfaction of two needs, only one of which can be satisfied, makes judgments of value,” says Mises.) That decision must not only remain free; it must also remain mine. Most important of all, says the Austrian economist, it must remain a decision. Should what he calls the “economic situation” disappear from the human world, the disciplining agent of all ethical action—the necessity to choose among a limited set of options—would go with it. If our “ends dominate economy and alone give it meaning,” as Mises says, it’s also true, as Menger discovered, that economy alone is what gives our ends meaning. That, it seems to me, is the center of gravity of free-market economics.

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The Kochs’ Libertarian Hypocrisy: It’s Worse Than You Think

15 Oct

In response to my last post, Gordon Lafer sent me an email:

Unsurprisingly, there’s a glaring contrast between the standards that the Kochs and other employers insist on for themselves—i.e., they should be maximally free to tell their employees who’s worth supporting for public office— and what they are trying to impose on workers’ organizations around the country.

For instance, Alabama’s Act 2010-761, an “ethics” law adopted in 2011 which banned payroll dues deductions for unions that engage in any type of political activity, also includes this:

Any person who is in the employment of…any…governmental agency, shall be on approved leave to engage in political action or the person shall be on personal time before or after work and on holidays.  It shall be unlawful for any officer or employee [of the government] to…coerce or attempt to coerce any subordinate employee to work in any capacity in any political campaign or cause.  Any person who violates this section shall be guilty of the crime of trading in public office and upon conviction thereof, shall be fined or sentenced, or both…

The law defines “political activity” very broadly, to include: “engaging in… any form of political communication, including communications which mention the name of a political candidate.”

So…school teachers can’t talk to each other about which candidate their union endorsed, or who attacked teachers’ rights, when they’re on lunch break or in the break room or pissing in the men’s room, without fear of fine and imprisonment.  And certainly an administrator or senior teacher can’t tell junior teachers that they hope they’ll be out there at the rally in support of school funding.

When it comes to public employees mobilizing around politics, the law upholds a very strict standard.  But in the private sector, supervisors and owners telling their dependent subordinates how they should vote—which in pre-Citizens United law was treated as implicitly coercive because it would dissuade employees from wearing buttons, sporting bumper stickers or being seen at events of the opposition candidate—is no problem.  Like Stephen Colbert’s “I don’t see race,” the Kochs, the Chamber of Commerce, and ALEC “don’t see employer coercion.”

When I asked Gordon to clarify the Kochs’ role in the Alabama law, he wrote back:

The bill was co-sponsored by Alabama Senate Majority Leader James Waggoner, a member of ALEC.  It was trumpeted as a key bill by the National Right to Work Committee and supported by the Alabama Policy Institute, a local ALEC-affiliated think tank.  Both ALEC and the NRTW Committee receive financial support from the Koch brothers.  That’s all the smoking gun there is.  But the Kochs support things like this more explicitly in other states. Americans for Prosperity, the most clear-cut Koch vehicle, doesn’t have an Alabama chapter, but in Arizona was a key backer of another bill banning union dues deductions if those deductions were used for broadly construed “political” purposes.

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