Monday, July 27, 2009

Peak Column #7: What is to be Done?

Welcome to the final entry of Rules for Radicals, a Libertarian propaganda column blatantly and unapologetically written with the intent of luring wayward Progressives and Conservatives away from their respective flocks. I’d like to think we’ve picked up a few disillusioned members of each camp over the past few months, thus expanding my readership beyond the five or six other Libertarians on campus, possibly well into the double-digits. This may sound modest, but compared to other Libertarians’ efforts to spread free-market gospel, it really is the journalistic equivalent of a three-minute mile.

Today’s column will take your dogmatic faith in free markets as a given, so that we may focus on a more practical matter: Strategy. If you are a Libertarian, you believe in small government, free markets and individual liberty. Unfortunately, governments in the western world have been systematically abandoning these principles over the past 100 years or so. We need to understand this trend if we are to have any hope of reversing it. Why has the past century been so cruel to us?

Libertarianism is a tough sell because it has nothing to offer its potential converts. Saul Alinksy, patron saint of community organizing, taught that successful organizations always address the self-interest of their supporters. This explains the success of movements that seek to increase the size of government, since the expansion of central authority implies an expansion of the ability of that same central authority to reward its members. Lenin was able to stir up violent, chanting hordes of followers because he advocated for the redistribution of aristocratic wealth to those same hordes. What material benefits await supporters of Libertarian public policy? Subsidies? Corporate welfare? Power over the lives of others? Umm, no. Libertarianism simply can’t offer the kind of corrupt incentives necessary for effective mob politics.

This is why Libertarians are so rare, they would qualify for federally-protected wildlife habitats, while you can’t open your car door on campus without hitting a Progressive. (Conservatives are somewhat less common, but rip a few donuts in convocation mall and I’m sure you’ll connect with a few.) The traditional Right and Left are both supported by a critical mass of self-interested recipients of government-allocated privilege. Libertarianism is an ideology fundamentally opposed to such privilege, so our ability to recruit and retain supporters is limited.

Now we understand why free market policies have been losing favour since the advent of democratic governments. The second question is, can we reverse this trend and actually implement Libertarian policies, despite our failure to draw support from interest groups? Even better, can we do this without resorting to politics by other means, i.e. retired generals, tinted aviators and five o’clock shadows? In keeping with the theme of pilfering our ideological opponents’ catchphrases – “Yes We Can.”

Call me naïve, call me insane, or (even worse) call me a Whig, but I am optimistic about the future of Libertarianism in the Western world, for two reasons.

The first is the rise of China and the other East Asian economies, who are adopting free market policies almost as quickly as the west is abandoning them. One of the main reasons why communism collapsed in the USSR was that the capitalist West existed, and was clearly a much better place to live. This discredited the Soviet government in the eyes of its population. The West of 2009 is not a communist wasteland on par with the late-game USSR. But it is also not the dynamic, innovative world leader that it once was, and the situation is not improving. If free-market reforms continue apace in China, and creeping socialism goes unchecked in the West, a day will come when our voters, intellectuals and politicians will not be able to ignore the superiority of capitalist institutions at generating wealth, prosperity and human dignity across the Pacific Ocean.

The second factor is the rapidly decreasing costs to individuals of finding and verifying information. Any curious, intelligent person with an internet connection can compare Libertarian arguments against their alternatives at no cost. Journalists, authors, academics and politicians are now forced to avoid lying, misleading, or contradicting themselves whenever there’s a camera rolling, lest they wind up the PR equivalent of the Star Wars Kid. Bloggers and columnists can call each other out on factual questions in open forums for all to see. Economic growth statistics of free and unfree countries can be compared with a few clicks. If you believe, as I do, that you are on the side of truth, this is a good thing.


Tuesday, July 14, 2009

Peak Column #6: A Propogandist Walks Among Us

I think the secret’s pretty much out after my last column. Rules for Radicals is not written to entertain and enlighten. The column you’re reading is actually pure, unfiltered, 180-proof Libertarian propaganda. Scary stuff, isn’t it? A real-live propagandist at SFU, walking by you in the halls, sitting next to you in class, and even writing a column for your school’s otherwise respectable newspaper. If it’s any consolation, the political movement that I am quite unashamedly shilling for is not particularly prominent or influential – not yet, anyways – so you shouldn’t freak out or anything.

But if you intend to continue reading, you should definitely be on your toes. Remember, I am a demagogue and a charlatan and a hack, if not worse. Apparently you are brave (or foolish) enough to yield several minutes of your attention so that I may practice my chicanery. I assure you I’ll be making the most of it, so be warned: Open your eyes, son and keep those hands up.

My goal today is to convince you to drop whatever political beliefs you currently hold, and become some sort of radical Libertarian. For all my talk of deception and Jedi mind tricks, I am convinced that the Libertarian worldview is self-evidently true, and thus mere exposure to its tenets should be sufficient to generate some conversions.

So really, all I’m asking you to do is become familiar with the Libertarian thought process. Is this really so terrifying? I’m sure your current set of beliefs are robust enough to withstand some temptation. Just think of it as snake-handling, except you’re demonstrating ideological, rather than religious faith. If Libertarians are nuts, than leafing through our holy books will only confirm this. If the Sun-God Ra truly watches over you, the cobras won’t bite. There’s no risk at all, unless you suspect your faith is misplaced. Injections of Libertarian venom are quite painless, in any case.

Moving right along, let’s pull out our first snake: The success of Libertarian public policy at generating wealth, prosperity and material comfort. As Deng Xiaoping said, possibly channeling the late Michael Jackson: It doesn’t matter if a cat is black or white. If it catches mice, it’s a good cat. Xiaoping was talking about the introduction of capitalist, free-market reforms in China. Who cares whether a set of policies is historically defined as capitalist or communist? Use what works. That’s what Xiaoping did, and over the past three decades of Libertarian-themed reform, China has transformed itself into a lean, mean mouse-catching machine. Score one for free markets.

Of course, that’s just one example. Perhaps China experienced unnaturally good weather over the past three decades. Or something. Does this trend exist anywhere else? Fortunately, Wikipedia is kind enough to grace us with an entire sub-category entitled “Economic Miracles.” Click away, and note what kind of policies were implemented immediately before each of these “miracles” occurred . Can you identify the common theme? Hint: It starts with an “F” and rhymes with “Tree Markets.” Any honest evaluation of economic history leads us to the same conclusion: Whence go Libertarian policies, prosperity and wealth soon follow, while Socialism cuts a wide swath of destruction, poverty and tyranny wherever she treads. If you don’t take my word for it – and really, why would you? Your mother warned you about columnists like me – please do look into it for yourself. The internet isn’t hard to use.

The second test of faith we’ll administer is a short reading list expounding the theoretical and moral case for libertarian government. I’m sure you’ve got enough people assigning you reading lists as it is, but as an intelligent and honest seeker of the truth (and thus an elite member of Rules for Radicals’ target audience) you have a moral and intellectual obligation to familiarize yourself with what was until recently the dominant view on economic policies and effective government in the Anglo-American world. If acquiring said familiarity triggers your Progressive wrongthink detector, remember: You’re just reading these books to better understand the mind of the Neo-Liberal enemy. To defeat the Libertarian, you must first understand him - If you understand him, however, it may already be too late. I warned you this would be dangerous.

Our first assigned reading will be The Constitution of Liberty, by F.A. Hayek, available at a library near you. Following that, you’ll be looking into the collected works of Milton Friedman, starting with Capitalism and Freedom. Murray Rothbard’s Man, Economy and State, while not for the faint of heart or short of time, is required reading once you’ve developed a taste for the stuff. Before our next column, your conversion to the Dark side – excuse me, the Light side –should be complete.


Wednesday, July 1, 2009

Canada Day

What better way to celebrate Canada Day than by spending the morning leafing through Wikipedia and Niall Ferguson's Empire for a refresher course on Canadian history? In 2009, there's really no excuse to remain ignorant on this, or any other subject. Unfortunately, as impressed as I am by Wikipedia's performance on Canadian history, I am even more impressed (or would it be unimpressed?) by the length and breadth of their article on light saber combat. With one hand the open-source encyclopedia giveth, with the other it taketh away.

As my American friends are quick to point out, Canadian history is not nearly as sexy as the tale of the brave and plucky 13 colonies, casting off their colonial shackles and demanding independence in a hail of musket fire. Instead of Paul Revere and Fort Ticonderoga, we had the British North America Act (passed 142 years ago today, un-coincidentally) and the Statute of Westminster. No wonder Canadian kids have trouble paying attention in history class.

But I wonder, is this so terrible? Americans are quite proud of their founding myths, but is it possible that the American Revolutionary War was unjust? That is to say, is their a valid case to be made for the Loyalist perspective in Colonial New England? This is an important question for Canadians to address, because the primary difference between Canadian and American history is that the Loyalist perspective won out here.

The intrepid scholar with time on their hands should take a look at one of the leading Loyalist tracts of the era, History of the Province of Massachusetts Bay. I can't claim to have given it more than a skim, but if you want to convince yourself that the American Patriot's were a bunch of crooks, and docile Canadians were the true heroes, Hutchinson is your man.

We can actually do even better than Hutchinson and his fellow 18th-century Loyalists, because we have two centuries of hindsight to sharpen our opinions on. In 1775 North America, you could either be a Loyalist or a Patriot. Whose case is strengthened by the events of the 19th and 20th centuries?

I think any modern-day Loyalists could make a strong case that a loyal America would have jettisoned slavery a generation earlier, and without the need for a civil war that killed over 1,000,000 Americans. Whatever the alleged tyrannies of the British colonial authority (and if you believe Hutchinson, they were negligible) I doubt it was worth 30 years of Slavery and 7-figures worth of casualties.

So let's hear it for Canada's polite, orderly, and wholly legal Declaration (more like a request) of Independence. Of course, by "Independence" I mean gradually declining degrees of dependence, vestigial elements of which still exist today. But I'll take the Queen on my $20 bill over a civil war any day.

Happy birthday Canada. To all her citizens: Spend a moment today reflecting on our peaceful, prosperous, and exceedingly polite nation. Raise a glass in honor of our founder, John A. MacDonald. Better yet, make him proud and raise a few glasses. It's your duty as a Patriot.


Sunday, June 28, 2009

Peak Column #5: Progressivism through the ages

Welcome to week 5 of Rules for Radicals. If you’re just now tuning in, I would suggest you first acquaint yourself with previous installments, starting here. Regular clientele, welcome back for another exciting round of anti-Progressive demagoguery. Today we’ll be looking at Progressivism through the ages. As we’ll see, she was quite attractive in her early years – but the toll of age is steep.

A century ago, the world was full of people who believed in free markets, individual liberty and personal responsibility. We would call them “Libertarians” if they were re-animated today, Jurassic Park-style. We would also keep them in tropical preserves surrounded by electric fences, so out of fashion and practice are their ideals in the 21st century.

Oddly enough, these ancient people called themselves “Liberals.” This raises a few questions, since the 21st century definition of a Liberal is pretty much the polar opposite of what 19th century Liberals such as Adam Smith, David Ricardo and John Stuart Mill meant when they used the label on themselves. Back in their day, Liberals were defined by their support of laissez-faire economics and limited government. Modern Liberals, in contrast, advocate the opposite set of policies: Central planning; state ownership of the means of production; high taxes and lavish social spending. What’s up with that? Have we found a glitch in the English language?

As neat as that would be, no we have not. It may seem unlikely, but the word “Liberal” has been true to itself all this time. There is a clear and direct line of descent between 19th century Liberals like Adam Smith, and 21st century Liberals like, say, Hilary Clinton. This is hard to swallow, since you couldn’t get a 19th-century Liberal to spend 5 minutes discussing policy with Ms. Clinton without them coming to blows, but the common lineage is there, if you know where to look.

Here at Rules for Radicals, we’ve previously defined modern Liberalism (under its synonym, Progressivism) as a preference for centralized government authority over individual liberty. Astute readers may have noticed that this definition is full of holes. In several areas – military power and policing, in particular – Progressives favor a decrease in the power held by centralized governments. Statism is apparently a symptom of Progressivism, and a selective one at that, rather than its defining feature. Clearly we need a new definition of Liberalism, Progressivism, and the Left.

Fortunately, I have just such a definition. I find it simplifies the world, answers questions, and generally matches up quite nicely with reality. Your mileage may vary, of course, but here it is: Liberalism is the political ideology concerned with redistributing power away from those who currently possess it.

Consider the problem of conflicting definitions of the word “Liberal” in the 19th and 21st centuries. 150 years ago the chief proponents of mercantilist (i.e., un-libertarian) economic policies were business and land owners who benefited from tariffs, protectionism and political favoritism. Liberals of the era advocated for free-market reforms at least partially on the grounds that such policies would dilute the power of the wealthy and benefit the working classes. (Google “Corn Laws” for a good example.) Other historical Liberal causes – the abolition of slavery, civil rights, first-wave feminism, replacing monarchal governments with democracies – all can be understood as Liberal attempts to change an existing distribution of power.

I am not a Liberal, according to the word’s modern definition, but I have to admit, their track record is good. Had I been born 50 to 300 years earlier, I would be the era-appropriate equivalent of a Prius-driving, SFPIRG-attending, New York Times-reading, capital-P Progressive. But in the world today, when I look for undeserved power, unearned privilege and unjust authority, I don’t see it in the Corporations, IMF, or whatever other enemy-of-the-week Progressives are decrying with chanting and sign-waving. I see it in the modern Progressive movement.

Certainly, Progressivism has achieved great things in the past. But the men and women who today seek to nationalize our economy, ban dissent through Human Rights Commissions and strangle our public schools with corrupt unions that prevent the firing of incompetent teachers – these are not the same Progressives who created the free, open, and prosperous civilization that we live in, and they don’t deserve the political power they’ve inherited.


Monday, June 22, 2009

Peak Column #4: An Unanesthesized Dissection of Progressivism: Part II

Previously on R4R, we began a savage and merciless attack on the political ideology known as “Progressivism.” She was a cagey opponent however, so the smackdown has spilled over into this week’s column. Hopefully, loyal readers of Rules for Radicals are as patient as they are intelligent and open-minded, and can forgive the two-week delay.

The quality of open-mindedness will be particularly important to my Progressive readers this week, since we will be pulling no punches, barring no holds, and landing every cheap shot we can get away with in our cagematch against their flawed and dangerous ideology. It won’t be pretty, my dear Progressive friends, but I promise you: it’s necessary. As for my Conservative readers, prepare for a treat. Grab some popcorn, set the TiVo, and turn your phone off – in a few minutes, Progressivism will be nothing more than a tie-dyed stain on the heel of your host’s boot.

Let’s begin. Recall, in our earlier attack on the Right, we pointed out that Conservatism, by definition, opposes change. But, we said, change is often necessary and desirable. Therefore, Conservatives are idiots. This cuts both ways, however. Change is often good, but it is certainly not always good. Since Progressivism (by its literal definition) always favors change, Progressives must also be idiots.

Of course, I’m just fishing for hate mail right now. Neither Conservatives nor Progressives are, to a man, idiots. But my point, which I’m sure you’ll grant, is that an ideology that is reliably phobic of change is as philosophically bankrupt as an ideology that always and everywhere fetishizes it. Unless you believe that human societies are constantly changing for the better, literal Progressivism is logically untenable.

This is an excellent argument against my own straw-man definition of the Left. Perhaps I’ve convinced you that “Progressivism ” is a slightly inaccurate name for your beliefs, but I’m sure the beliefs themselves remain firmly entrenched; if you supported a comprehensive welfare state coming into this column, nothing I’ve written here should change your mind. But now that we’ve found a fundamental flaw with the ideological core of Progressivism, it’s worth asking some questions.

Such as: If Progressivism isn’t simply an unflinching love of change, what is it exactly? If we look at the policies proposed and implemented by people who call themselves Progressives, what is the common denominator? Consider a list of ideas any sane and reasonable person would have no trouble identifying as progressive: Publicly provided schools and health care; generous welfare programs; state ownership of major industries; increased regulation of business; and the liberal use of fiscal policy during recessions.

Note that each involves a transfer of power from individuals to a centralized governing authority. Is this a coincidence? Did your host cherry-pick to suit his demagogic purposes? Perhaps. But try this thought experiment: put together a list of Progressive policies that do not involve the expansion and centralization of government power. Once you have tried and failed, the conclusion is inescapable: The ideology of Progressivism advocates a gradual and wide-reaching extension of the powers of central governments.

To me, this discovery is reason enough to condemn Progressivism – I see it as self-evident that ever-expanding state authority in every aspect of people’s lives is abhorrent. It strikes me as painfully obvious that, historically, small governments emphasizing the rule of law and free markets have been orders of magnitude more successful at improving the human condition than governments that did not – there is a reason guards on the Berlin wall had their guns pointed inward at their own citizenry, preventing them from escaping. China’s 10% annual growth is not unrelated to her recent pro-market reforms. If your opinion on this matter doesn’t match my own, please spend some quality Wikipedia time with Dubai, Singapore, Hong Kong, South Korea, Chile and Ireland - see if you can manage to come out the other end with your pro-government sympathies intact.

Realistically though, if you don’t share my preference for small government over large, than there is nothing I can say to change your mind in an 800-word column. I can recommend some authors – Milton Friedman to get your toes wet, then some Hayek once you’re warmed up. An occasional episode of South Park doesn’t hurt. But ultimately, the realization that 60’s-style Leftism is untenable is one that recovering Progressives must come to themselves.

Hopefully the conversion process is complete before our next column, though. Next week, we’ll be focusing on a new question: Since the Libertarian ideals of capitalism and free markets have been responsible for what have unarguably been the most prosperous two centuries of human history – why are those ideals being categorically discarded by Western governments over the past century?


Wednesday, June 17, 2009

The Economics of Friendship

It's blog post titles like this that make people not want to be friends with economists.

(I kid, of course. Everyone wants to be friends with an economist. At least they do today, now that their portfolios have taken a 25% haircut in the past three quarters and their old financial advisor has fled the city to work on an oil rig in Fort McMurray. Now everyone wants some pro bono investment advice from their friendly neighborhood economist. But I digress.)

Today's post will focus on a rigorous, quasi-serious analysis of the economics of friendship.

First, read the inspiration behind this post. Bryan Caplan is one of my favourite economists living today. He is smart, honest, perceptive, and full of integrity. He also strikes me as a fundamentally decent and nice person. Hopefully, in light of all this (very sincere) praise, he will forgive me for pointing out that in his younger years, he was a bit of a nerd. As such, his definition of a successful social strategy sets the bar pretty low.

As I pointed out in the comments to that post, I disagree with his recommendations. To explain why, I'll need to break down a working model of friendship.

Friendships exist because life is full of potential positive-sum interactions between groups of people. Most of these look a lot like unconventional forms of insurance.

- Your friend moves, you help him
- His car breaks down, you drive him around until it's fixed
- He loses his job, you pick up bar tabs until he's back on his feet
- He's single, you introduce him to your girlfriend's hot friends


As I said: Insurance. Except better, because the cost of helping is much less than the benefit received. What does it matter to you if you give up a Saturday to move furniture? You didn't have much to do anyway. But you saved your friend $500 of movers fees. A group of people who are all willing to do altruistic things for one another will always be better off than lone wolves. The closer the friendship, the higher the ratio of (cost to you)/(benefit to them) you are willing to tolerate before the favour becomes "unreasonable." Assuming the number is always less than one, it's pretty easy to see that closer friendships are welfare-enhancing.

So there you have it. The conclusions derived in today's economic analysis: Cherish your friends, offer your help unhesitatingly, and expect them to do the same for you.

The Dismal Science, indeed.


Sunday, June 14, 2009

Textbook Economics

This post is not about Economics textbooks. I've dealt with enough of those in my life that I feel no need to revisit the topic. Instead, I'd like to engage some criticisms Seth Godin has made of the current crop of marketing textbooks. I share his concerns, and I'll add that the textbook situation is only slightly better in other business sub-fields. Luckily, the problem is easy to fix.

But first, let's get the negativity out of the way: The manner in which business departments select, assign and use textbooks is awful. As Seth points out, they are overpriced, impractical, boring, and forgettable. I definitely extracted quite a bit of value from my biz-school undergrad, but at a guess, roughly 80% of my current understanding of marketing has come from writer's like Godin, Cialdini, Tim Ferriss, Ben Casnocha and Tucker Max. Considering I've spent about 10x as many hours with textbooks than I have with all of the above combined, this is a major failure by my undergraduate program to deliver its core product.

The problem with the textbook industry is one of incentives. Professors write them to supplement their income. As writers of both textbooks and syllabi, they are in a conflict of interest - royalties can be increased by releasing unnecessarily frequent new editions, avoiding teaching methods that do not require a text, and so on. The fraction of professors teaching courses using their own textbooks is not large, but there are not many business gurus teaching and writing textbooks at top-tier schools in the world today. A lot of them know each other, and if one can do a favour for the other - well hey, they are business professors after all.

Another problem is the increasingly common practice of textbooks that include supplementary teaching material, such as lecture slides, online quizzes, etc. that make the Professor's job easier. Sometimes this can be perfectly reasonable. Other times - like the 4th year Marketing and OB courses in which the midterm and final exam consisted entirely of pre-written multiple choice questions, all 100% gradeable by Scantron machines - not so much.

Finally there is just the overall low quality of the actual content of the textbooks. One that Godin looked at (Printed in 2009) didn't have an entry in the index for either of Google or Twitter. Yeesh.

So what we have now is suboptimal. How do we fix it?

My proposed solution has two parts:

1) An Open-Source Glossary

For each field and sub field, and sub-sub-field of business (or anything, really) create an open-source Wiki that can be edited by any peer-approved professor in the field. Wiki-Glossary will function as a collection of impartial definitions of terms, theories, people and ideas in the realm of marketing. Basically, it will be Wikipedia, with editing privileges limited to non-anonymous experts in the field. Truthfully, I think Wikipedia already fills this need. But many people are still not 100% comfortable trusting anyone without official credentials, so an elitist Wiki such as this will be an easier sell.

2) Crowd-sourcing Case studies

The best way to learn business is by reading and analyzing case studies. This is recognized by the top-tier management schools in the world, and it suggests an important role for textbooks to fill: a convenient filter and aggregator of case studies.

The best business courses that I took had "textbooks" that followed exactly this approach. You could certainly do a lot worse, as a professor, than to assign your students a set of case studies that they can purchase bound for $30 and go through each in turn. But you could also do better.

Imagine a database of every case study ever used in marketing and strategic management classes, updated and maintained by business school professors. Each professor can rate the case studies according to his or her tastes. Students as well.

Separately, lesson plans for each case study can be submitted by professors, which would also be rated up or down according to the tastes of their peers (or students). These lesson plans would be submitted anonymously to prevent groupthink and deference to established titans. No professor would be obligated to construct a syllabus consisting of only the "best" lesson plans for the "best" case studies, but it would be immediately easy to separate the obviously at-least-decent from the crap.

So there you have it. Professors would save time, students would get a better education, and I would receive enough blog traffic that I could retire on the proceeds of my "Check your credit rating" pop-up ads. Win-Win-Win.


Monday, June 8, 2009

Outsourcing Lectures

We don't expect individual professors to write their own textbooks for every class they teach. That would obviously be an absurd waste of time - it's far easier to use a textbook already written by someone else.

So why do we expect every professor to plan and present their own lectures? Imagine the quality improvements that would occur if we followed the same distribution model for lectures as we do with textbooks: The best, most well-spoken professors in the world, presenting well-rehearsed and polished explanations of their material in Blu-Ray, delivered or streamed to lecture halls and student's laptops all over the world.

You might object that this robs the student of the ability to ask questions if they don't understand something. But do they really have this ability now? In my experience, students are already hesitant to ask questions when they don't understand something. With a pre-recorded lecture, students could pause, rewind, consult their textbook, ask a friend or look something up on google. On the rare occasion that this kind of self-directed learning fails, a student can make use of optional tutorials or their TA's office hours.

I think we would see an immediate and substantive increase in teaching quality if we adopted this model. More importantly though, outsourcing lectures creates an industry that rewards continuous improvement and encourages innovation. If you think we'll be impressed by the first generation of lectures-on-tape, imagine what we'll be seeing after a decade of testing, focus groups and quantitative analysis of different teaching methods and exam performance. Aside from the inglorious transition from chalk to overhead projector, there hasn't been any sort of innovation in teaching and education in the lives of those now living. Outsourcing lectures will create a strong incentive to improve and refine teaching techniques.

Finally, consider the egalitarian implications in a world where an entire undergraduate degree can be obtained from textbooks and videos. Education would no longer be the sole prerogative of the wealthy and privileged. Anyone with access to an internet connection could receive an education of higher quality than is available to 99.9% of the world today. Universities would continue to exist, focusing on their core competency as research institutions. World peace would reign, the blind would see, and there would be a rainbow every day.

The technology exists. The initial implementation would be tricky, but once this takes off, it really takes off. Economies of scale and all that. I'm a little too preoccupied to start Lectures 'R Us right now, but if any of my loyal readers aren't, please feel free to go ahead and make a billion dollars.

Monday, June 1, 2009

Peak Column #3: Progressivism: Not Your Parent’s Radical Ideology

Welcome to another thrilling installment of Rules for Radicals. Last week, I did my best to alienate the Right-leaning half of my readership with a no-holds-barred smackdown of modern Conservatism. It wasn’t pretty. Any Conservatives who have returned – please congratulate yourself. It is a rare person who willingly reads something they disagree with, and your continued patronage of Rules for Radicals speaks highly of your open-mindedness.

As promised, today’s fare is something you’ll feel much more comfortable with - a savage and merciless thrashing of modern Progressivism. In our best impersonations of Ann Coulter, Michele Malkin and Bill O’Reilly, we’re going to hack away at the Progressive movement, until nothing remains but a smoldering pile of patchouli-scented ash and bones. Excited? I certainly am.

Progressivism is ideologically undesirable because it is, quite simply, out of gas. This is not to say it is dead, like Conservatism. Quite the opposite. Progressivism has been the dominant political ideology of the Western world for half a century and counting, and in that time it has achieved near-total control of the levers of power in our world.

Bold claims such as these require some explanation. So says my hate mail, anyways. What’s all this business about the Intergalactic Progressive Empire? Don’t, like, the Corporations and the IMF run the world? Surely Naomi Klein and Michael Moore wouldn’t mislead us on this crucial point. The planet is firmly controlled by a secretive brotherhood of fat, white, Republican men. Barack Obama himself may be one of their cleverly-disguised agents, such is the power of the Vast Right-Wing Conspiracy.

A common narrative, perhaps. But it doesn’t survive close inspection. What is “power” really, in a democratic system such as ours? It seems to rest in the hands of the voters. The people! How noble. But as anyone who has ever met a person knows, they are irrational, whimsical, selfish and unpredictable. Hardly the sort of creatures to be trusted with power. Unfortunately, history has been quite instructive in teaching us that the tyranny of the masses has been considerably less dangerous than the tyranny of the few. Usually, anyways. So we’re stuck with democracy, for lack of a better alternative.

But voters, unlike loyal readers of Rules for Radicals, are not the reasonable, intelligent, open-minded altruists we would like them to be. They are easily led, persuadable, and prone to flights of whimsy. As a consequence, true power is located securely with the people and institutions who can most effectively shape public opinion. Chief among these would be the public schools, Universities, and the media – each of which is a staffed and managed by men and women of an overwhelmingly Progressive disposition. I realize I’m sounding more than a bit like Rush Limbaugh with this, but that doesn’t mean it isn’t true. We can quibble over the extent to which each is dominated by the Left (exceptions abound, particularly in the print media) but it is hard to argue with the conclusion that North Americans receive their information about the world primarily through Progressive-approved channels.

If further proof is necessary, consider the overall trend in public opinion over the past half-century. The increasing power and popularity of Progressivism has been the overwhelming narrative of Western politics since the Second World War. Even if you disagree with my Coulter-like claims of Progressive domination of the information organs of our society, you still can’t escape the fact that something is happening to guide the North American and European citizenry in a Progressive direction. The beliefs of a man who passes for a Conservative today would have been called liberal in 1980, radical in 1950, and treasonous in 1900. Very rarely is a winning team forced to repeatedly lower their standards for what it calls a victory.

So you’ll excuse me for rolling my eyes at the suggestion that the Left is anything but a 100:1 favorite in its perennial showdown with the Right. Of course, demonstrating that a particular ideology has been successful is not sufficient to condemn it. All we have shown today is that modern Progressivism is powerful – hardly a damning claim, though still one that most Progressives would argue against with almost suspicious vehemence. Next week, we’ll continue the case against Conservatism’s longtime rival. As we’ll see, neither belongs anywhere but the ash heap of history.


Dolla Dolla Bills Ya'll

Today's post is about Money. Not about how to make it, how to invest it, or anything like that. Such earthly pleasures are beneath the consideration of your host, whose only goal is to inform and educate. (Pay no heed to the pop-up ads, coming soon) If you've come looking for financial planning advice, I would recommend Macro Man and Snoop Dogg.

Personally, I'd rather spend some time looking at this odd phenomenon of "currency" that has been used in every organized civilization that has ever existed.

First, a little background for the non-economists: Wikipedia will tell you everything you need to know about money although there isn't much there that you won't have already picked up in introductory micro, or even just a few minutes of intelligent thought on the subject. Money serves as a medium of exchange, a store of value, etc etc.

Things only start to get interesting when we start talking about monetary policy. Before we go any further, a brief primer on the two major schools (and one bonus non-major school) of thought on the subject. These are the Keynesian, Chicago, and (least fashionable by a country mile) Austrian schools.

The Austrian view on monetary policy is the simplest to explain, so I'll begin with it. Basically, the ideal Austrian policy is: No policy. Step 1) Create a supply of currency. Step 2) Do nothing else for the next 100,000 years. Contemporary Austrians (there are maybe 10 of them) advocate a return to the gold standard, or the creation of a fixed amount of fiat currency, followed by chaining anchors to the currency printing presses and sinking them in the Mariana trench.

The Keynesian view is that markets are beset by irrationality, stupidity and greed, which leads to booms and depressions. To correct these unnecessary and jarring shocks, the central government must enter the fray and rein in the economy during periods of irrational exuberance, and stimulate the economy during slumps. The preferred Keynesian tool for this is deficit spending, which is to say the government borrows money from it's citizenry (or whoever) and spends it on whatever it is governments spend money on. Personally, I am fairly skeptical of any theory that assumes federal government bureaucrats in cheap suits can do a better job than centimillionaire hedge fund managers of determining what is or isn't rational, but that's just me. The Keynesians hold what is certainly the dominant viewpoint within the economics profession today, and they seem to hold sway over policy in the United States.

The Chicago School, or Friedmanite view of money is similar in many ways to that of the Keynesians. The primary difference is that the Chicago School prefers to conduct stabilization actions through the Federal Reserve, rather than the federal government balance sheet. Friedman and Co., being as they are free-market radicals (not at all a pejorative here at R4R) think that individual consumers and investors will do a better job of allocating resources than a centralized governing body. Rather than massive, New-Deal-style stimulus packages, the Friedmanites would prefer the induced spending to come from individuals, rather than central planners.

Now, I've been a committed Friedmanite for some time now. In a showdown with Keynesianism, I'll still take my boy Milt any day. But lately I've been having trouble seeing exactly why it is that respect for the Austrian school perspective on monetary policy is almost non-existent in mainstream economics. I've been doing some reading on the Great Depression, Monetary history, and the current financial crisis. The Austrian story makes sense, fits the facts, and (I think) has a lot to offer in terms of policy to encourage stability and economic growth.

The bottom line is that contemporary economists should be a lot more familiar than they currently are with Austrian Business Cycle Theory. I'm not asking for a wholesale conversion, mainstream economists, but please: at least figure out why it is, exactly, that the Austrian school deserves the ignominy currently heaped upon it by your profession. Here's a reading program for anyone inclined to take up this offer:

1) Wikipedia. Start at the link, and follow the "Related Topics" to your heart's content.

2) Once you've got the basic ideas, start poking around here. If you're a current events junkie, throw together a little case study of your own. Compare the stories being told by the Austrians and the mainstream and see whose strikes you as more plausible. Just sayin'

3) If you're in the market for some light summer reading, pick up a copy of Rothbard's Man, Economy and State. Skip the first volume if you're short on time, the good stuff is mostly in the back.

4) Not for the faint-of-heart, but Monetary History of the United States is a good primer on the history of money, credit and business cycles. The author is a, uh, Friedmanite, but as a historical account, it makes a pretty solid case against what Rothbard would call "The Inflationists".

I'm not convinced the Austrians have it right. In fact, there are a lot of points on which I'm convinced they are dead wrong. In any discussion of business cycles and monetary policy though, the Austrian perspective deserves a fair showing.

Wednesday, May 27, 2009

On living in interesting times

Some things just don't happen. At least, we can't picture them happening.

The federal government of the United States, for example, will never go bankrupt. It just won't - businesses go bankrupt. Governments of small, poor, third-world backwaters go bankrupt. But the US of A? Not a chance.

This is the prevailing wisdom, anyways. Certainly no respectable opinion leader will openly suggest the United States government is en route to the same fate that GM will likely experience in the next week or so. Luckily, I am not a respectable opinion leader, and am therefor free to pontificate irresponsibly at will.

So here goes: I think there is a non-trivial possibility of the United States government defaulting on its debt in the next 10-20 years. Here is an article by one respectable economist who shares my concern, and by my count, that makes two of us. Maybe we're nuts. I hope we're nuts. Unfortunately, I'm not convinced we are. Consider:

1) The US is currently saddled with massive and geometrically increasing levels of debt, public and private. American consumers and politicians alike seem to have trouble making the logical connection between how much they earn/tax and how much they spend.

2) Medicare, Social Security, stimulus packages, financial sector bailouts and foreign wars are all putting upward pressure on government spending

3) Americans do not like tax increases

1 + 2 + 3 = An almost absurdly irresponsible pattern of spending and consumption by what is (for now, at least) the most powerful nation on earth. Here's a quick visual from the fine gentlemen over at Marginal Revolution:

And another one courtesy of the fine gentlemen over at, uhh, google images:

Scary stuff, huh? I wonder what kind of Debt/GDP ratio we'd have to see for T-bills to hit a AA rating. .80? 1.00? All I know is, we sure as hell don't want to find out.

No matter what, one of three things is going to happen in the next decade:

1) The federal government will make massive and unprecedented spending cuts

2) The federal government will raise taxes up to and above European Welfare-State levels

3) Serious people will consider the possibility of the federal government defaulting on it's debts.

As I said, interesting times.

Saturday, May 23, 2009

The Mismeasure of Well-Being

What kind of metrics should we use to gauge the success of different country's economic policies?

Per capita GDP is the obvious choice, but as many have pointed out, it is imperfect. What about inequality? What about education? Health care? Prevalence of slow drivers in the fast lane? Etc.

Enter the Human Development Index. The HDI aspires to be a more complete measure of the human condition than standard GDP measures. Does it succeed? Bryan Caplan doesn't think so:

So what are the main problems with the HDI?

1. I can see giving equal weights to GDP per capita and life expectancy. But education? As a professor and a snob, I understand the appeal (though a measure of opera consumption would be even better). But in terms of the actual if not professed values of normal human beings, televisions and cars are a lot more important than books.

2. When you take a closer look at the HDI's education measure, it's especially bogus. 2/3rds of the weight comes from the literacy rate. At least that's not ridiculous. But the other 1/3 comes from the Gross Enrollment Index - the fraction of the population enrolled in primary, secondary, or tertiary education. OK, I feel a reductio ad absurdum coming on. To max out your education score, you have to turn 100% of your population into students!

3. The HDI purportedly gives equal weights to three different outcomes, but bounding the results between 0 and 1 builds in a massive bias against GDP. GDP per capita has grown fantastically during the last two centuries, and will continue to do so. In reality, there's plenty of room left for further improvement even in rich countries. But the HDI doesn't allow this. Since rich countries are already close to the upper bound, the HDI effectively defines their future progress on this dimension out of existence.

To a lesser extent, the same goes for life expectancy: While it's roughly doubled over the last two centuries, dying at 85 is not, contrary to the HDI, approximately equal in value to immortality.

The clear winners from this weighting scheme, of course, are the literacy and enrollment measures, both of which have upper bounds that are imposed by logic rather than fiat.

4. The ultimate problem with the HDI, though, is lack of ambition. It effectively proclaims an "end of history" where Scandinavia is the pinnacle of human achievement. Admittedly, I've never visited Scandinavia. But when I see it for the first time this August, I'm pretty sure I won't say to myself, "Wow, it can't get any better than this!"

I'm inclined to agree. Per capita GDP is imperfect, but is it worse than the HDI? I'm all for the idea of better measures of the human condition than GDP. The problem with current measures (see also: The HPI) is that they suffer from a consistent bias in favor of statist, intervention-heavy public policy.

Question for the day: Imagine a team of Hayekian libertarians get together to create their own development index. Which factors would they emphasize to create an index biased in a pro-market, pro-liberty direction?

Wednesday, May 20, 2009

Mind the Gap

People have a natural tendency towards pessimism on the subject of economics. For an example, check out the responses to the first question in this survey of Americans and Economists. This disparity doesn't surprise me, since I've had a lot of conversations with non-economists who think people were wealthier in the 60's/70's, poverty is becoming more of a problem, and so on. Frequently, the pessimists' response to these perceived problems is to recommend a broader role for government in the market economy - we have problems, so we have to "do something" about them.

This kind of pessimism is in fact a central tenet of statism, and has been since Marx. Since we currently live in a market economy, more or less, to admit that things are good and getting better would be to admit that capitalism has a lot to recommend it.

So here's a challenge, to any pro-government Progressives among my readers (who number in the tens of millions, I'm sure): If capitalism is so destructive, exploitative and in unjust, why is it that the world has seen such immense gains in wealth and quality of life since the outset of the modern capitalist era?

Here's the video that inspired this post. It's humbling to consider how lucky we are to have been born where and when we did.

Sunday, May 17, 2009

Peak Column #2: Why I am not a Conservative

Last week at Rules for Radicals, we noted that modern political discourse takes place along a simple left-right axis. We decided – or at least I did – that neither the Right nor the Left is entirely good, true and virtuous. Each have their advantages, of course, but neither is perfect. And one of the benefits of being a Radical is that you are free, unconstrained by popular dogmas, to strive for perfection.

Before we begin this week’s lesson, let’s define some terms. We’re going to start calling the set of beliefs generally associated with the Left “Progressivism” and those associated with the Right “Conservatism.” Hopefully, you are already familiar with these words. If not – well, perhaps this isn’t the column for you. There is a word search on the last page, however, which might be more your speed. Best of luck.

Now that we’ve thinned our ranks (quality of readership, rather than quantity, will continue to be the goal here at Rules for Radicals) let’s get to work. Contemporary political discourse essentially boils down to the competing ideologies of Progressivism and Conservatism. Unfortunately, I’m convinced that neither of these is anything but outdated and useless. A provocative claim perhaps, since everyone reading this column most likely identifies with one or the other movement to some degree. But I’m assuming serious readers of Rules for Radicals are an unusually open-minded and hard-to-offend group. If you lack such qualities, the word search beckons.

We’ll start with Conservatism, because the modern Conservative movement, compared to its Progressive nemesis, is 1) Sillier, 2) More outdated, and 3) Less powerful. Debunking it will hardly require breaking a sweat, but it will get us warmed up in anticipation of our real target, the modern Progressive movement.

If you yourself are a Progressive, you’re probably used to thinking that the world is run by wealthy, three-piece-suit-clad Republicans deciding the fate of the world in smoke-filled rooms. You certainly didn’t think that YOU ran the world, or at least people who think like you. But take a look around; the ideological zeitgeist of the Western world has been shifting leftward for at least 200 years now. If Conservatives were in charge, would they have let that happen? Given that true power in a democracy lies in the ability to shape the opinions of the masses, would they have let the Universities, public schools and print media become overwhelmingly staffed by left-leaning Progressives? The answer is: only if they are incredibly stupid.

Which is certainly not a wild suggestion. Perhaps you’ve heard the name “Sarah Palin”. Take a break from this column and refresh your memory with a half-hour on Youtube, keeping in mind that North American Conservatives, acting through the Republican party, had at one point gotten very excited over this woman’s candidacy for the second-highest position of power in the world. She is reputably a plausible candidate for the 2012 ticket. As President. No matter what your ideological sentiments, there is no argument against this blindingly obvious fact: The modern Republicans have become the party of the word search. Conservatives in the other Western nations are generally not a whole lot better.

So modern Conservatism is anti-intellectual, prone to failure, and generally acting as if it is consciously trying to minimize its influence on policy decisions. Worst of all, the philosophical groundings of Conservatism are laughably inadequate. A Conservative is, by definition, one who opposes change. That is to say, he prefers the present state of the world to any conceivable alternative. Not only is this inconsistent – societies are constantly changing, and to remain a Conservative for any appreciable length of time suggests a deplorably whimsical nature – it is also demonstratably harmful. If true Conservatives had reigned for the past 40,000 years, we’d all still be swinging from trees, hurling spears at each other. Change is often for the better, and an ideology that refuses to acknowledge this doesn’t deserve our support.

So Conservatism is dead. Hopefully, you had figured this out for yourself, prior to reading this column. If you identify as a Progressive – well, you probably didn’t need my help to develop a healthy dislike of Ann Coulter, although you probably enjoyed my cheap shots at Palin. If you identify (or preferably, identified) as a Conservative, things are slightly different. I am asking you, on the basis of 800 hastily-typed words, to renounce your ideological faith. Scary stuff. Fortunately, as we’ll see next week, this doesn’t mean you have to grow your hair out and join SFPIRG. Progressivism, up close and under a bright light, doesn’t look too hot either.


Peak Column #1: Right and Left

You could probably tell me, if I was interested enough to ask, whether you self-identify as right-wing or left-wing. Sure, you might reject the left/right label, preferring to call yourself a Progressive Idealist, Libertarian, Marxist-Feminist or whatever, but trust me: it is simplistic to divide the world into right and left, but it is not inaccurate. The only way to avoid falling into either camp is to be so apathetic as to have never actually fleshed out a set of beliefs about the world beyond your immediate social circle. If this describes you, now would be a good time to turn the page – the grownups are going to talk politics.

Now, absent the riff-raff, let’s see if we can figure out this whole left-right thing. Doesn’t it strike you as remarkable that in the chaotic world of belief systems and ideologies, every possible opinion apparently simplifies to a neat and linear two-dimensional vector? At either end of this spectrum, we find a set of completely unrelated beliefs clustered together. On every topic of conversation that would be impolite to bring up at a dinner with your girlfriend’s parents, there is a right-wing perspective and a left-wing perspective. But why? What exactly do abortion, gun control, taxes, and the occupation of Iraq have in common? Certainly nothing obvious. But tell me how a given individual feels about any one of these topics, and I’ll lay money I can tell you how they feel about the other three.

Why aren’t there any abortion-loving Iraq hawks? Pro-apartheid gay rights activists? Evangelical Christian Neil Young fans? I suppose we could dig up a few of each, if we really looked. But I haven’t met any, and I doubt you have either. Again, this is weird - but for some reason, this strong correlation between beliefs in seemingly unrelated subjects doesn’t surprise us. What gives?

It’s possible that the polarization of Right and Left just reflects the difference between lies and truth, and the conflict between them is simply the noble and righteous facing down the wicked in a battle that has raged since the beginning of human history. (I’ll leave it as an exercise for the reader to assign the “good” and “evil” labels to their appropriate political orientations, depending on your tastes.) Regardless of whether this perspective is true or not, it is a common one. Michael Moore surely feels that modern Conservatives are agents of the Dark Side of the Force, and I doubt Sean Hannity has any trouble picturing a snarling Barack Obama administering a force-choke. Since neither of these men have small followings, we can conclude that their views are not rare.

But while this perspective has popularity to recommend it, it doesn’t have much else. I have many friends who are both Right and Left-leaning in their politics. All are good, decent and sincere people. If you have no friends who disagree with you, I will have to ask you to take my word for it - and maybe try to get out more – there is virtue at both ends of the political spectrum. Similarly, there is obvious and verifiable douchebaggery on both sides as well. You don’t get any further Right and Left than Hitler and Stalin. You also don’t get any more evil.

So the Good-and-Evil explanation is incomplete, at best. What else is there? Perhaps the two perspectives correlate with intelligence and stupidity. Here I will not strike as neutral a pose as with the good-and-evil hypothesis. If it is true that the Left Vs. Right dichotomy comes down to the stupid vs. the smart, the Left comes off looking pretty good. Professional academics, presumably the most educated and intelligent among us, are almost uniformly Left-leaning in their politics. This is especially true among those who actually study subjects such as political science, sociology, anthropology etc, which would seem to be particularly illuminating on the nature of human societies. Journalists, writers, artists, lawyers – basically, those who think for a living – are predominantly men and women of the Left. The thinking classes that trend Right – business owners and such – well, it’s not hard to see how nicely their financial self-interest and affection for free markets line up. So perhaps we’re on to something here.

And now the fun part: we can combine these theories and come up with a two-dimensional ranking system of ideologies; ideologies can be either good or evil, and appeal to either the stupid or the smart. If either the Right or Left is both good and intelligent, choosing to support one and turn our backs on the other is a no-brainer. But if, as I suspect, neither modern Progressivism nor Conservatism meets this standard, we will have to set about constructing (or reviving) a new ideology that does. Unfortunately though, we seem to be out of time, so this exercise will have to wait until next week.