Thoughts on Hayek:Notes in the Margins of an Encylopedia.

For the past few months, Lev Deych and I have been intermittently doing battle over Friedrich Hayek.  Lev is a ardent admirer of the Austrian economist whose ideas he finds relevant and applicable to our present day economic problems, while I am, to put it mildly, a skeptic.  First I took Lev to task on historical grounds arguing that the dire predictions Hayek makes in his "Road to Serfdom" simply haven't come to fruition.  Then I presented an article by the well-known historian Timothy Snyder who sees the current right-wing embrace of Hayek (along with Ayn Rand) as evidence of an ideological indoctrination akin to Marxism.   Lev, it's fair to say, found this more than a little bit objectionable and made the point that Snyder (and me by extension) were not dealing with the real Hayek at all, only with a kind of grotesque set of misconceptions with little relation to Hayek's true beliefs.  Perhaps to remedy this shortcoming, Lev posted on Facebook a link to a new article in the Stanford Encyclopedia of Philosophy that explains Hayek's ideas in a way that meets his approval.   The philosophical lingo made the article a bit tough going at times, but I think it did help me to better understand Hayek's theories.  What follows are some more or less random thoughts that occurred to me as I was reading the piece.

1)  This is a rather strange way to write an encyclopedia article.   Ordinarily I would expect an encyclopedia article to present a neutral overview of the subject's life and career along with a survey of major works and ideas.   This article in contrast is more of an interpretive essay that seeks to advanced a particular position--i.e. that Hayek's rejection of "social justice" was an integral and inevitable outcome of his core ideas.   I was also slightly taken aback by occasional off handed quips that made it quite clear the author was writing from the libertarian point of view.  I thought writers of encyclopedia articles weren't supposed to do that.  Where were the editors?

2)  Hayek, at first glance, comes across as much more moderate and reasonable than his current day disciples.  Even his libertarian interpreter feels obliged to use words like "community" and "common interest" in describing his ideas.  Moreover, it turns out that Hayek had no problem with basic welfare state functions, thought the state had a legitimate rule to play in establishing the "rules of the game" and even believed that citizens should be guaranteed a basic income.  Ouch!  That sounds like socialism!   Hayek's core theoretical teachings on spontaneous order, the limitations of economic knowledge and market price mechanisms also seem reasonable and uncontroversial.  So why all the fuss?  Most of the time Hayek seems to be charging through an open door.  There must be a reason for this...

3)  Hayek's ideas are the ideas of a bygone era.   Hayek died in 1992, the year after the fall of the Soviet Union, and if he felt some satisfaction, even vindication, in his final days at this turn of historical events, it was for good reason.  The entire edifice of his economic theory seems to be directed against Soviet style economic planning.  He spends a great deal of time, for example, talking about prices and why they must be set through the market.  He also makes a fairly compelling argument on he limitations of knowledge: since we can never know enough to predict how an economy will actually behave, it is a delusion to think that government can fully and unilaterally structure and manage all aspects of an economy.  Who would argue with these points in this day and age?  How many governments still think that they can arbitrarily fix prices and plan all aspects of economic activity?   But back in the 1930s, when Hayek came of age as an economist, these ideas were taken very seriously indeed.  Westerners were flocking to the Soviet Union on guided tours and coming back saying "I have seen the future, and it works!"  A theoretical case against the planned economy was an important contribution back then, and Hayek's points, its fair to say, were largely vindicated.  But those were very different times, and its hard to see how Hayek's arguments against economic planning are applicable in the present day.   There is after all, a world of difference between the Soviet planned economy and modern capitalism in which the state acts within the context of the market to regulate economic activity and facilitate growth.  So how can Hayek's ideas be made relevant to the present day?  Hayek's present day right wing admirers have made an attempt, and I'm not all that impressed with the results.

4)   To apply Hayek's thinking to the present day his followers need to show that his criticisms of the planned economy are applicable to any and all government intervention in the market.  This is problematic if for no other reason than the fact that Hayek himself openly endorsed a number of these interventions. (I have to admit, I'm still a little puzzled by this point.  My recollection of Road to Serfdom is that it was addressed mainly to economic planning, but the popular takeaway always seems to be presented as welfare state+government regulation=totalitarianism.  Is this really what Hayek meant?)  So how to separate legitimate government action from improper intervention?  Hayek, according to  author of the article, suggests a distinction between end-directed action, intended to create a specific outcome, and process-directed or procedural actions intended to establish the rules of the game, the framework within which spontaneous order can emerge.   It seems to me, however, that this is really a distinction without a difference.  When are actions ever not to some degree end-directed?  Even purely regulatory measures are promulgated with an end in mind--the existence of a regulatory system which is deemed to be more advantageous than other possible regulatory regimes, and will presumably be beneficial to society.  Hayek's supporters would probably respond by saying that actually they are only referring to a particular type of end-state involving redistribution of wealth--taking from the makers to give to the moochers to fulfill a vision of social justice.  But is that what social justice really means?  I have my doubts.

5)  It seems to me that in their struggle against "redistribution" modern-day Hayekians are once again battling with Bolsheviks.    Redistribution evokes the image of Leninist calls to "expropriate the expropiaters, exploit the exploiters."  I imagine the scene in Dr. Zhivago when the hero returns from the front to find his family's home filled with gruff and grimy workers.  "Yes, Comrades," Omar Sharif murmurs,  "it is only fair that you should have more and we should have less."   But is this really the way that modern day welfare state programs work?  I don't think so.   I believe, social programs are best envisioned in two ways neither of which involve outright redistribution of wealth.   The first way to think of social programs is as a sort of insurance policy.  I may not need unemployment benefits right now, since I am gainfully employed, but it is important to me to know that should I lose my job, I will receive support so that my family will not face total destitution.  One could view food stamps, welfare, disability and social security in much the same way.  I don't need these things now, but as a member of the middle class all that separates me from destitution is a few turns of bad luck.  Should this happen I'm very glad that there will be something there to cushion the fall and help me get back on my feet.  This is no more a distribution of wealth than my car insurance which takes money from me (a safe driver, I'd like to think) and gives to people who drive like maniacs and get into accidents.  But should one of those maniacs hit me, I'll be awfully glad I paid for the insurance.   "But wait!" the Hayekians say. "taxes are involuntary and therefore using tax revenues to pay for a social safety net is forced expropriation of wealth from the rich to be redistributed to the irresponsible moochers."  But is this really such a coercive set-up?  People who don't want to pay taxes to support social programs do have an option--they can emigrate.  Nothing is forcing them to stay in this country.  I hear there's some great real estate in Mogadishu going cheap.  "Oh, but you don't want to live in a country with no law and order, no infrastructure, no education, where corruption is out of control and dire poverty and misery confront you everywhere you turn?"   Then, pay up!   Paying for a social safety net is not coercive redistribution of wealth; it's the price of admission to a civilized society.

6)  Getting back to my point on social justice, David Schmidtz, the author of the piece on Hayek, drawing, I believe, on the ideas of Robert Nozick, condemns social welfare program on the grounds that they are intended to create some kind of artificial "end state" based on an abstract notion of justice.  Again, it seems to me the Hayekians are substituting Leninist visions of a communist utopia (along the lines of State and Revolution) for the actual functioning of the modern state.  Social programs, as I understand them are designed not to equalize the end result of participation in the market but rather the initial conditions.  To use the 'rules of the game' analogy that Hayek's followers seem to like, the idea is not to weigh the dice, making winners out of losers, but rather to allow as many people as possible to play in the first place.  This is why so many social programs are directed toward the needs of children and young people.  It's about equal opportunities, not equal outcomes.  Social justice does not mean taking from those with more and giving to those with less; it means insuring that the rules of the game apply evenly to everyone involved.  You would never have a baseball game in which one team comes in with state of the art bats and gloves and the other team plays with broom handles and oven mitts.  But when one sector of the population is expected to enter the economic fray of the market having grown up undernourished, undereducated, surrounded by crime and disease, it amounts to the same kind of unequal game.   Granted, it will never be possible to completely level the playing field, and even under the best of circumstances, not everyone will succeed.  But it is clearly in the best interest of society as large for as many people as possible to have the opportunity to participate in the market with a reasonable chance of success.   This is what is meant by social justice.

7)  To sum up, I see Hayek as an interesting and productive thinker whose ideas took shape in the context of the anti-communist struggles of the mid 20th century.  Applying Hayek's ideas to the present day requires certain interpretive leaps displacing Hayek's teachings from their original setting and placing them on new and much more shaky ground.  Present day Hayekians tend to envision a state pared down to almost nothing in which even the most basic public functions such as education, law and order and infrastructure are entrusted to the power of the market.   There is almost a kind of quasi-religious faith that in all cases, under all conditions, the market will find the optimal solution.   We don't really know why this is or how this works (Hayek taught that we could never really know) yet we believe that what the unfettered market produces will always be the best outcome in the best of all possible worlds.  In this regard, I do think that there is a utopian strain to Hayekian/libertarian thought that is comparable (though certain not identical) with orthodox Marxism.  Both claim to have uncovered the mechanism that governs all economic and social relations past, present and future and which, if allowed to function without interference will result in the emergence of an optimal state of existence.   The fact that this optimal state has never actually been achieved, does not deter the believers from seeking its realization in the future through a program of purposeful political action.  We've seen this before.  It did not turn out well....

Ron Paul, Israel and lost opportunities

Ron Paul's presidential campaign, while bringing an exciting visibility for libertarian ideas, is also an utter disappointment on several levels. A lot has been said recently about his affiliation with paleolibertarians and courting of the ultra right, and how this old decision of his and of his "handlers" at the von Moses Institute misrepresented and hurt the image of libertarians. However, for those willing to look past his "youthful" indiscretions, his campaign provided an interesting opportunity to talk about distinctions between conservative and libertarian positions on American place in the world. This is a large topic, and here I want to focus on only one issue: American relations with Israel. Apparently, I cannot agree with Paul's anti-Israel and pro-Palestinian position, but I think that his candidacy provided an opening for honest discussion of this issue. Unfortunately, this opportunity has not been seized by the pro-Israel camp, whose attitude was that it is so obviously wrong that there is nothing to talk about.

Unfortunately, for a large part of electorate it is not so obvious as Paul's surge in the polls demonstrate. Candidacy of Ron Paul brought to the surface uneasiness of American population about US foreign policy in general and US -Israel relations, in particular. He essentially gave political cover and the aura of respectability to views, which lurked for many years under the surface of public debate, expressed mostly by both right- and left-wing fringe elements. These views can be shortly summarized in the following statement: America has no true national interest in allying itself with Israel, and America (and the world) would have been better off if Israel somehow disappeared. Proponents of these views believe that USA supports Israel only because American politicians are controlled by all-powerful Jewish lobby empowered by Jewish money and Jewish press.

As repugnant these views can be for supporters of Israel, I believe that they must be openly discussed and refuted on strictly rational grounds by explaining to Americans why allying itself with Israel, USA, first of all, serves its own self-interest.

One can discern several narrative lines of non-Jewish supporters of Israel. The one coming from evangelicals justifies support for the Jewish State by their faith in the coming of the prophet, which is hardly constitute the basis for rational discussion. Another is based of the notion that the enemy of my enemy is my friend, and is coming out of the people who do not believe in the possibility of peaceful co-existence with Islam. While this narrative is more rational, it's rationale is hardly sustainable politically and economically. Bush understood it as he went out of his ways to distinguish the war on terror from the war on Islam. However, in the absence of the global war with Islam, the justification for friendship with Israel based upon commonality of the enemy becomes significantly weaker.
Yet another narrative in favor of US-Israel alliance is based on the notion that Israel is the only democracy in the Middle East and for this reason alone deserve to be supported by US. This argument, which is not completely without merit, is based on the idea that only countries politically, economically, and ideologically compatible with the North-Atlantic type of societies do not present a threat to US and should be, therefore, be supported. While it is hard to argue that alliances between countries are forged on the ground of common interests, which often, while not always, arise from shared ideas about society and economy, it is not quite obvious how this argument applies to Israel. Indeed, let's us not to forget that Israel was created by socialists with the idea of creating a socialist state. Present day Israel is not of course a socialist paradise of centrally planned economy, but it is also very far from Anglo-Saxon economic model in its American reincarnation. I think that under different circumstances, Israel would have been a darling of left-wing liberals with its supers-strong labor unions, socialized medicine, and extensive social safety net. Why liberals choose to support Palestinians rather then Israel is a different story, which I partly discussed here.

Unfortunately, I am yet to find a satisfactory rational explanation of the US-Israel relationship based upon clearly formulated American interests. I do not fill competent enough in these issues to give here any positive version of such an explanation, but I fell that any attempts to justify US-Israel alliance based upon ideas of "moral obligations" or such are demeaning to Israel, and cannot be used as basis for foreign policy in any region, leave alone the one as controversial as Middle East. I am positive, however, that US does have crucial interest in maintaining friendship with Israel, and I call on those more knowledgeable in this problem to invest time and efforts into actually explaining it to American public.

Obamanomica or how to get rid of rich people

Latest Obama speech, which I did not have patience to listen in its entirety, but read enough exerts from to form an opinion, once again confirmed lack of intellectual honesty in his approach to problems facing this country. Or may be it is just the lack of understanding of these problems, and it is not clear, which is worse.

So, what are the main points of his speech? First is concerned with disproportion between growth of the incomes between very rich and the rest of us. Is it a valid point? It could have been, if instead of focusing on "income inequality", the President talked about "income stagnation" of the middle class. While the latter is a real economic and political problem, the former is a populist slogan smelling of the class warfare, no matter how many times he denies it. Indeed, the focus of Obama and cheering him progressives on the "inequality" betrays their thinking about economy as a zero sum game, which is the essence of Marxist thinking. Within this framework, the labor and capital are enemies in constant struggle for a fixed amount of resources, therefore, when one side wins, the other side looses. Luckily, the economy does not work this way as any serious economist would confirm. Capital and labor are dependent on each other and their rewards are supposed to grow in sync as they create wealth together. A physicist in me cannot resist to pointing out that there is no law of conservation of wealth; it can be created from productive energy and skills of people or destroyed by their incompetence and stupidity, both of which are much worse offenses than greed - the main enemy of populist charlatans and their cheerleaders.

There is a certain consistency in progressive's use of "comparative analysis" when discussing county's problems. They do not talk about poor quality of American education, they prefer to discuss "achievement gaps" between white and black, rich and poor, boys and girls, etc. The notion of the "income inequality" fits right here in this "comparative" narrative. The main problem with this approach is that it does not deal with real problems while wasting time, money, and public energy on unnecessary discussions of phantoms. The problems formulated in terms of "inequalities" or "gaps" have quite simple "solutions". One just needs to make wealthy poorer, strong students weaker, and the problem of inequalities goes away. In the area of education it is already happening, and Obama's latest speech signifies an attempt to apply the same template to economics. It reminds me of an old joke from Soviet times stating that the goal of Russian Revolution was to create a society, in which there are no rich people.

Joke or not, but the second point of Obama's speech, where he proposes a solution to the problem of inequality is quite consistent with the above mentioned goal of Russian Bolsheviks. Indeed, the main point of his proposal is to reform the tax code, such that rich will pay more. While it is not obvious how this proposal will increase income of the middle class, it clearly will make, if successful, rich people poorer. Thus, I think that I am entitled to believe that this is the main goal of the policy.

But let give the man a benefit of a doubt, and let assume that he does want to help the middle class out by increasing their income rather than by making them feel better because their rich neighbors suffer. The speech was, not surprisingly, devoid of any specifics about how taxing the rich will make middle class better off. While it is easy to imagine, how the redistribution of wealth can benefit poor (extension of welfare and medicaid programs), it is much less clear cut with respect to working middle class who live off the wages. To improve their situation these wages must be made to go up. The question how government can achieve this with extra money, collected from the rich. Government does not yet have a direct control of wages for those of 99% who works in private sector, and the idea that taxing the employers more will somehow induce them to pay better wages to their employees seems somewhat counter-intuitive. This leaves the government with only one option - create more and better paid public sector jobs. This proposition, however, raises lots of objections of philosophical ( Do we want to become a nation, where the State is the main employer?), political (Population of a country, in which most lucrative jobs come from the government cannot be free) and economical nature. I will not dwell on the first two objections, they are quite clear, so let me focus on the last one. Economically speaking, this simply would not work for several reasons. First, being deep in debt, government would not have the money even if it raised taxes on the rich by 100%. Second, let's assume for the sake of argument, that the money is not an issue for now. What can be the result of the government creating more and better paying jobs in public sector? If our economy were isolated from the rest of the word, it could, in principle, put pressure on private sector and force them to increase wages of their workers to remain competitive in the labor market. But we do not live in a closed system. The direct result of the employees run from private enterprises to governmental jobs will be shifting even more private jobs outside of the country. This process will be further exacerbated by the fact that increased taxation of investment income (the main portion of Obama's tax plan) will make domestic investment less attractive resulting in the flow of capital to other ,more attractive markets. This will create a vicious circle, with government having to keep stepping in to compensate for job losses in the private sector. It will end, though, pretty soon, with government going completely broke, and the entire system disintegrating. All rich people will flee the country with their money at the first sign of the troubles, and USA will finally become a country of only poor people, the dream of the progressives, I guess. No income inequality anymore, but is this what we all actually want?

One final note. Invoking T. Roosevelt ghost as a champion of progressive agenda is a bold political move, given a number of controversies surrounding his presidency. One that cut my attention in particular, is Roosevelt's fondness of eugenics (source - Wikipedia article on eugenics, where one will find Roosevelt in a fitting company of Keynes). Now we might find this attraction unbecoming, but at that time, where ideas of planned economy were on everybody's mind it was quine a natural sympathy. After all, if one can plan economy, why not to plan humans as well? Another popular idea of that era has also found its way to Obama's speech. It is not good, says he, than everybody plays by its own rules. Everybody will be better off if we all act together. This is, obviously, a poorly disguised attempt at promoting collectivism, from which it is just a small step to any kind of collective type of economy, be it socialism or fascism (not to confuse with Nazism). This part of his speech is wrong on so many levels, that it is even difficult to decide where to start. Interpreting individualistic philosophy as a game where "everyone is playing by its own rule" shows a gross misunderstanding of the nature of American individualism. It does not imply that there are no commonly accepted rules, it means people use their own individual judgements based upon their individual preferences to choose which moves to make in the game. And mantra of "we will be better off if we do it together" has never been anything more as a disguised attempt to force most productive part of society to work for the benefits of the less productive one. I hope that people will see right through this demagoguery.

Socialism and welfare state

A great deal of confusion going on in current political discussions. Such terms as socialism, welfare state, social safety net, free market, lassies fare capitalism are thrown around as monikers and used to frame users political positions but without actually giving them any real meaning. Most of political conversations these days are conducted not with real words but with their ghosts devoid of any stable meaning, which take any shape dependent on political preferences of their users. This phenomenon is not limited to just one ideological group as everyone, liberal and conservative alike throw around words and ideas in a very incongruent and confused manner.

In this post I want to focus on words socialism, welfare state and social safety net, which are often thought to be almost synonyms. Let me begin by stating that while socialist economics requires establishing the welfare state (population devoid of any rights to private ownership and free economic activity is at complete mercy of the State), the reversal of this statement is not true. Ironically, the first welfare state was conceived and realized by Bismarck in Germany to prevent spread of socialist ideas. The substantial social safety net developed in Nazi Germany played a huge role in ensuring popular support for Hitler. In neither of these cases existence of welfare state implied socialist type of economics. It should be noted, however, that Hitler's economics model was much closer to socialist ideals than current proponents of socialism are ready to admit. Hayek in his "Road to serfdom" gave very convincing arguments to support this point. In contemporary liberal political commentary successful socialism is often mentioned in relation to welfare states of protestant Europe such as Denmark, Netherlands, or Germany. For obvious reasons Greece, Spain or Portugal are talked about by modern proponents of socialism less frequently. At the same time, conservatives do not waste time pointing out to these states as examples of failure of socialism and by extension deny successes of the "Low Countries" and Germany in providing their citizens with free medicine and education.

Any kind of objective analysis must point out, first of all, that neither Denmark, nor Germany have socialist economies. Denmark, for instance, have been rated by Heritage Foundation as a country with most favorable for free markets economic system for several years in a row. Serious economic growth in Germany had began only after Germans significantly liberalized their labor laws. Let me clarify it for particularly stubborn liberals: liberalization of labor laws (making it easier for businesses to fire workers and freeing wages from dictate of the Unions), i.e. freeing labor market from regulations, means more capitalism and less government intervention in economy. Thus, in both examples of Denmark and Germany economic growth is directly caused by more and not less capitalism.

As a side note I would like to point out that discussions about socialism versus capitalism is often framed in terms of Keynesian versus Austrian school economic paradigms, which is undoubtedly wrong. Keynesianism may be an example of economists' equivalent of the delusion of grandeur, when economists believe that they can actually manage economy, but it is not equivalent to socialism.

Returning to the main point of the post, I hope it has become clear by now that presence of well developed social safety net with free medicine and education is not neccessarily imcompatible with free markets economy. This statement, of course, should be qualified because social safety net does create disincentives for productive particpation in the markets, and deflect resources form their most effective use. However, it is wrong to think about people as "pure homo economicus". No society can be built using economic efficiency as an only criterion. Political consideration, which sometimes require redistribution of resources to ensure political stability of the system, also play an important role. Thus, the main question is how much of safety net is too much? The answer to this question cannot be given by economists alone, as it depends on a great deal of local factors such as cultural traditions, the etnic homogeneity of population, the size of economy, economic inspirations of the populace etc. In short, in a democratic society, the extent of the safety net is determined by local social compact, and its success depends on ability of the citizens to resist the calls of the "sirens" of dependent life. It have been working for Dutch and Danes, and I happy for them, but combination of the welfare state with different cultural traditions of Italy and Greece resulted in a complete disaster. The selective use of European experience to promote liberal political agenda is a clear cut example of intellectually dishonest behavior of our progressive "intellectuals". However, when conservatives refuse to address successes of such countries as Denmark talking only about politically more convenient Greece and Portugal, they demonstrate shallowness of their political thinking.

Conservatives and undoing of America

I started writing this right after the debt ceiling debacle, so the beginning of this post is somewhat outdated. Still I decided to keep everything as it was written. Enjoy (or not).

So, the historic stand-off around the debt ceiling is
over and the sides started tending to the wounded and burying their dead, all while asking a traditional question:"whose fault is that?" Predictably, neither side of the political spectrum is satisfied with the results, while reaction of the liberal wing of the democratic party shows that they have much more corpses to bury than the conservatives. Their attitude toward the deal ranges from complete disgust to attempts to dismiss it as "smoke and mirrors". One ought to enjoy the
irony as one realizes that a big chunk of a recent article in New Yorker
written by a very liberal John Cassidy can be easily attributed to Michele
Bauchman. Anyway, no matter what democrats or more radical elements of the Tea Party say, the conservatives did score a victory if not in terms of actual budget cuts but in terms of redefining the national discourse.

At the same time, this debate has once again highlighted significant weaknesses in conservative movement, which are being happily exploited by liberals all over. In addition to being portrayed as angry, racist, undereducated, if not outright stupid, rednecks, the Tea Party adherents are routinely described as ruthless carrying about nothing terrorists. No matter how baseless all these accusations are, a sober observer must recognize that conservatives did supply enough ammunition to liberals to use against them. I myself, being a student of classical liberalism of Haeyk's
type have a long list of grievances against contemporary conservative political
movement. Apparently, I am not alone in my dissatisfaction as according to a
recent article in Politico, "conservative intelligencia" is not happy with any of potential republican candidates.

So, let me lay down a few issues, which I believe are hurting anti-liberal anti-socialist political movement in this country.

Let me begin with the issue of religion. Americans are religious people, but it does not necessarily mean that the majority of them are ready to embrace the idea that a particular brand of Christianity is essential to American success as a nation. To me the idea of defining USA as a "Christian nation" seems to be not just ounterproductive politically, but more importantly, false intellectually. Religions in general emphasize collectivist approach to life, and are, therefore much closer to
socialist ideas than to individualistic capitalist worldview, which used to be
the cornerstone of American psyche, and which Tea Party conservatives apparently want to restore. Still, there is no doubt that religion played an important role in development of American society, and this creates an impression of a direct link between Christian believes of American settlers and success of American capitalism. This link, however, is illusory. The unique nature of American religious experience stems from its protestant roots. Protestantism with its ideas of personal God and detachment from central papal authority is the least collectivist of all religions, and is, therefore, most conducive to capitalism. Protestantism, therefore, can be considered an important factor in American success only in the sense, that it did not stay in the way of capitalism as, for instance, Catholicism would have. Thus, I see no reasons, ideological or political, why the movement to restore creative force of capitalist enterprise in US should drive away people whose relationship with
God is much more complicated than that prescribed by the standards of
conservative evangelism. Also using adherence for a particular set of religious
views significantly decreases the pool of potential anti-socialist candidates
this country is so much needed.

Another big disappointment is a significant anti-academic and more general anti-intellectual bias of the conservative movement. I understand and share conservative's displeasure with usurpation by liberals of intellectual discourse on nation's campuses and in Academia in general. Way too often what is being passed for intellectualism has very little in common with genuine intellectually honest discussion. It is indeed intolerable that liberal art education has become in many instances an instrument of ideologically driven indoctrination and brain washing. Just a few weeks ago, I listened on NPR an interview with an author of the book on race. The woman was extremely upset with biologists whose work on human genome project indicated that there exist genetically identifiable differences between races. Because this finding contradicted her ideological convictions that the idea of race was invented by whites in order to suppress the rest of the world, she declared genetics to be in service of pharmaceutical corporations. This was really painful to hear since it resembled too much of Soviet's rhetoric of late fortieth of the last century. For those who do not know - at that time Soviet genetics was destroyed for being "a Servant of capitalists" with many geneticists imprisoned or killed. Unfortunately, this is not just a single example of one misguided person. It reflects the trend in social "sciences” to subjugate academic discourse to ideologically predetermined positions.

This, however, does not mean that conservative politicians must reject the very idea of academic discourse and alienate people in Academia who can be their natural allies. Plenty of faculty, especially in natural sciences and economics, support ideas of free market capitalism but are being driven away from conservative politics because of it real or perceived anti-intellectualism mixed with religiosity. This is not to say that conservative politicians and commentators are somehow intellectually inferior to their liberal counterparts. They are definitely not. But after listening to different conservative talks show hosts including celebrated and brilliant Rush
Limbaugh, I got an uneasy impression that they do not trust intellectual abilities of their listeners and dumb down their programs to cater to the level of intellectually lazy.

This lack of intellectual rigor is responsible for conservatives routinely losing the propaganda game to the liberals even on purely economic front, where conservatives are supposed to be at home. For instance, liberals are talking about Keynesian economics as though it is as established as the law of gravity. Anyone rejecting this notion is being branded as a lunatic. They make it look like the entire economics profession agrees about Keynes and his orthodoxy. This is not so, but I am yet to see a serious substantial discussion by conservative politicians and commentators of why Keynesian prescriptions rarely work in real life. I am sure that there are plenty of conservative bloggers and websites doing this, but the main stream conservative media and conservative political events definetely avoid getting involved in serious discussions of this topic. The same is true with regard to discussions of the role of government, social safety net, regulations: virtually
all aspects of public discourse. It seems that conservatives still live in the glory days of the end of the cold war, when socialism as idea seemed to be buried under the remnants of Soviet Union and Warsaw Pact. They failed to realize that socialist ideals are very attractive for the public, and that these days socialism is associated not with horrors of Gulag but with free medicine and education of Denmark and Netherlands. Refusal to recognize achievements of European countries in creating social safety net for their public opens conservatives to charges of being deological dogmatists not able to reconcile their views with real world. More importantly, it prevents them from defending conservative economic views by providing detailed analysis of the European situation. It is not sufficient now to just label something as socialist or “big government” to have it dismissed as unacceptable. It is also not sufficient to simply point out to the Europe debt problems and dismiss the entire European experience as failed experiment. They actually have to do the hard work of explaining why they think that Hayek’s approach to economics is better than the one advocated by Keynesians. This is not an easy task as they have to overcome people’s tendency to get addicted to governmental handouts and act against what they may perceive as their self-interest. Liberal in this situation has a much easier task as it is not that difficult to convince people that it is a good thing to take money from those who have them and give it to them. And it is much more difficult to explain why such a policy would be disastrous first of all for those whom it is intended to help. However, if the leaders of conservative movements would not start doing it immediately, they will participate in undoing of this country. It might happen that Ayn Rand was correct once again, when she said that conservatives and not liberals would eventually destroy America.

Carnival on the Wall Street

I decided to present my response to Nathan's thoughts on the meaning of OWS protests as a separate post. Due to time restrains I would not be able to offer as well written exposition as those of Nathan's and Vladimir Davidenko's, thus I will limit myself to expressing a few poorly connected thoughts.

Let me begin my iterating once again that Vladimir's description of OWP (see link in Nathan's post to his piece written in Russian) as a carnival is amusingly exact. Indeed, masked people with painted faces and bodies demonstrating behavior, which would not normally be considered socially acceptable, ritualization of the process (drums, human "microphone", all have standard characteristics of purely ritualistic actions), and finally the activity, in which process is everything and goal is nothing.


While the view of the OWS protests as a carnival-like action is quite deep and insightful, the protest has also a different side to it. I would describe this other side as a raucous high school party that completely got out of hand in the absence of any meaningful adult supervision. Some adults neglected to pay attention to this party for way too long, while other adults played the role of the cheerleaders and encouraged this raucousness. As a result, the kids imagined that they actually have something smart to say, something that only they can see or have audacity to express. They started "making history". In reality, from what I have seen and heard, none of them have ever done anything productive in their lives, and I doubt that they are capable of it. This carnival will be over once adults wake up from lethargy and tell the kids that sleepover is over and everybody has to go home.

Anyone with unbiased attitude and some brains would see how ridiculous everything that is happening at this party is starting with their incoherent list of complaints and ending with their General Assembly meetings, which are the focal point of the whole action. Presumably, according to the interviews I heard, the process, by which this organ works, is the main goal of everything. They advocate for participatory rather than representative democracy, in which everything is decided by consensus.It invokes direct associations with socialist anarchism, as it was pointed out by one professor of economics at a reasonably respected University who worked for 40 (!) years developing economic model based on this idea. Should I spend more time on this, or it is clear that socialist anarchism can survive only in the make-believe world of stoned high school kids or their older reincarnations?

All this would be amusing if it were not so damaging to the country. The country has got some serious problems which require serious adult discussion. Attention paid to OWS folk actually distracts from this discussion substituting it with some childish games. Those politicians, who give credence to their "grievances" and call them legitimate and deserving serious consideration, are consciously engaged in dangerous populism to frame the discussion of the country's problems in terms most acceptable to them politically. This simply delays finding real solutions making situation much worse. All this agitation against banks, corporations and their CEOs does not offer any constructive solutions unless, of course, you think that destroying corporations as a form of business organization, imposing regulations on compensation structure of private businesses, and massive wealth redistribution via forceful expropriation, is the solution. As far as I know these are the only ideas consistent with the views exposed by majority of protesters.

And on the top of all this, the folk at this protest are simply disgusting, at least the most of them, and I despise them. They descended on my City, which I love, uninvited, as foreign occupiers, and desecrated it with their filth, and litter. They do not understand New York, they do not understand this country, they do not represent anyone whom I know, including you, Nathan. You, unlike them, studied and worked all your life and paid your bills, and did not ask anyone to forgive your debts.

What to make of Occupy Wall Street?

Everyone is talking about the Occupy Wall Street protests and what they mean for American politics and culture, so it seemed to make sense that Lev and I should do the same.   Last week, at the invitation of my colleague Maxim Matusevich, I published a short piece on the Russian site "Balt-Info" with my impressions of the protests as of the end of September.  Here's the link.  And for anyone who doesn't read Russian, my original English text, which, I should note, is rather different from the Russian version, follows below.  But Lev suggested that some balance would be appropriate here and offered the following text by the blogger Vladimir Davidenko to provide a conservative counterpoint. 

Oct. 3, 2011

Not long ago, I found myself rather unexpectedly amidst the “occupiers” of Wall Street. My reasons for being there had nothing to do with politics, although their protests against the greed and impunity of the titans of American business arouse in me no small degree of sympathy.   But no, it was music that drew me to Zuccotti Park on a warm late September afternoon. 

That morning rumors starting to crop up on the internet that the group Radiohead, well known for their anti-corporate views as well as their innovative compositions, would be making a surprise appearance at the demonstration.   My daughter is a big fan of Radiohead, and I like their music too.  Our attempts to procure tickets for a rare concert appearance a few days earlier ended in disappointment.  So when we went to the protester’s web site and found a notice confirming that Radiohead would appear we had the same reaction – Let’s go!   We rushed down to the train station just in time to catch the commuter train into the city and were on our way. 

Less than an hour later, we were wandering around the encampment.   The park turned out to be fairly small—about half the size of a football field.  A huge orange metal sculpture stood at one end, trees poked out of holes in the brick pavement in the middle and at the other end a set of steps led to the street just around the corner from “ground zero” where the twin towers one stood.   One could imagine how in ordinary times employees of Wall Street banks and investment funds might come out here on their lunch breaks or relax in the park at the end of a long day.   But now the park was filled with a motley assemblage of young people—probably about a thousand—accompanied by the thunder of drums echoing off the walls of the surrounding skyscrapers.   It was clear right away that a concert was out of the question—there was no stage, no sound system, not even electricity—it seems we were victims of a hoax.   On the other hand we had the opportunity to observe this rather colorful scene.

For someone of my generation with faded childhood memories of the 1960s and 70s, the appearance of the protestors immediately evoked familiar associations—long haired youths, unwashed, bruised and beaten, shirtless, with beads and tattoos; girls in long skirts with pierced noses and multicolored hair; earnest, sincere faces—the usual style of American nonconformist youth.   One second glance, though, other types emerged from the crowd—veterans in camouflage, well dressed men in ties, elderly ladies.  Who were these people and what were they doing here?

Judging by the content of their signs, which were displayed in abundance around the perimeter of the park, the protesters themselves didn’t seem to know what exactly they were protesting.   The slogans ranged from the strident (Eat the Rich!) to the naïve (I love everyone. Let’s figure this all out together!) to the downright bizarre (I am a goat.  Ignore me.  Go  Shopping).   When the first reports of the protests appeared it was easy to dismiss them as a bunch of latter day hippies and muddle headed leftists trying to get attention.   But over the past week or so, to the surprise of the participants themselves, the movement has caught fire.  Every day more articles and reports appear in the news and more people make their way, as I did, down to Zuccotti Park to see what all the excitement is about.
  
In part the success of the protesters may be due to pure persistence—if you stay in one place long enough and make enough noise (they make plenty!) someone is sure to notice.   On the other hand, the protesters had one of the best publicity agents anyone could possibly ask for—the New York City Police Department.   For the most part, the police have exercised restraint in their dealings with the occupiers. In part they have no choice.  The Park which the demonstrators have occupied is technically private property.  The owner was given permission to build a skyscraper next door on the condition that he create the park and keep it open to the public 24 hour a day.  Without permission of the owner, the police do not have the authority to clear the premises.   So the police stand around the edge making sure traffic isn’t blocked, but leave the park to the young people. 

There have been a few occasions, however, when the protesters have left the refuge of the park and the police have abandoned their restraint, inflicting excessive force, and applying questionable tactics including mass arrests.  Invariably videos showing police misconduct surface right away and go viral on the internet arousing a wave of sympathy and support.   After two or three such events, the protests had become national news and inspired analogous protests in cities throughout the country. 
But all police brutality in the world could not have helped the Wall Street protesters gain support if their message had not resonated with a set of widely held, if not always clearly articulated, beliefs about contemporary American life. 

Three points in particular come to mind.  The first is that something has gone terribly awry with our financial sector.   Instead of providing necessary services and investment opportunities for ordinary Americans, Wall Street has become a crazy game of smoke and mirrors conjuring unimaginable wealth out of thin air through arcane and opaque instruments with names like credit default swaps and collateralized debt obligations.  

Of course, such games could not continue forever.  Eventually the whole thing came tumbling down in the crash of 2008, and giving rise to a second widely held belief--Wall Street walked away from the mess it made leaving ordinary Americans to suffer the consequences.  All throughout America people are losing their jobs, losing their homes, struggling to stay afloat under mountains of debt.  Meanwhile the great banks and investment firms have received generous government bail-outs and are back to making record profits at the expense of the very people who are suffering the most.    Huge banks are deemed “too big to fail” and given help at the tax payer’s expense while ordinary people are abandoned to their fate.   

As if this wasn’t enough, Wall Street is clamoring for Congress to remove the few regulations that still remain in place.  Hence a third key idea— American political life is controlled by large corporations and ordinary people no longer have a say.   Corporations spend millions of dollars on powerful lobbyists and campaign contributions without which no politician can even hope to be elected.   Naturally, after the elections, the corporations collect the political returns on their investment and although the politicians come and go, nothing really changes.  

In part this perception reflects the disillusionment that many people feel with Barack Obama who came into office promising change only to pack his cabinet with Wall Street insiders and give the banks everything they could ask for and more.   The banks, far from being grateful, responded by financing the Tea Party, setting the stage for the decisive victory of the extremist wing of the Republican party in the last congressional elections.    As a result, the activists feel that if any change is to occur it must come from outside the framework of the traditional political system.    This may be one reason for the lack of specific demands or goals on the part of the protesters.   Unlike the Tea Party, to whom they are often compared, the protesters show little interest in supporting political candidates, organizing referendums and otherwise participating in the give and take of American politics.   This may come later.  But for now they have already made a more profound contribution.  By drawing attention to the abuses of Wall Street and its impact on ordinary people, the protesters have given voice to a deep frustration felt throughout the country and opened a new framework for discussion and action.  No one knows how long the protesters will remain encamped in Zuccotti Park, but their message has already left its mark.