Sunday, September 9, 2012

Friedrich von Hayek, Salma Hayek and my Economic Naughty Bits ...

As a former political love child of Margaret Thatcher in the Eighties (now, somewhat more center-left), it is perhaps not surprising that I still score a potential 2 out of 3 in agreement with Friedrich von Hayek, current economic pin-up icon of US Republican Tea Partiers [NY Times article, “Prime Time for Paul Ryan’s Guru”]:

1)  Like Fred, I believe that government has no business interfering with what I regard as the natural flow of economic forces [“Job Creation: Socialism or Social Justice?”].

Government can no more predict what people as a whole are going to do with their money than I’ve been able to determine what my last three girlfriends were going to do with my naughty bits.

It follows, therefore, that action by government to bend the economy to its will, whether by lowering taxes or increasing spending, is more about appealing to political base than actually changing the economy for the good, in any permanent way.

Any interference by government almost always produces some consequence of equal and opposite effect, which then requires corrective action, which then requires … and so on. Just leave the economy well alone.

Occasionally – and only very occasionally – it can be argued that temporary interference in the economy is necessary, not least because the immediate perceived benefit to society out weighs the longer term negative consequences.

I’m bound to say though that 9 times out of 10 the perceived short-term benefit is generally political rather than strictly economic.

2) I take the view that government should restrict itself to providing services that ameliorate the consequences of economic forces upon those least able to compete in the form of economy which most finds favor amongst human beings at the moment, namely the capitalist system.

In which regard, I prefer government programs that take a long-term interest in allowing folks to empower themselves to survive the ravages of the capitalist system.

But, in the meantime, I find myself agreeing with Fred that the best way to alleviate the short-term consequences of disadvantage at the hands of the capitalist system is simply to provide those at risk with the immediate wherewithal to cope. And I have proposed just as much to my very favorite President [“FOCUS On Poverty”].

3) I do not agree with Fred’s proposition of a ‘generality norm,’ where he says that any government program that helps one group must be available to all. I get the economic and philosophical logic. That we don’t want to produce stigma with means testing.

But for all my talk of not confusing politics with economics, the fact still remains that politics is the art of the possible, and it is politicians who implement economic policy, not purist economists – unless you live in a dictatorship.

The only way fully to adhere to Fred’s ‘generality norm’ is either to throw gobloads of the public’s money at folks who simply don’t need it. Which is what you have in the UK. And against which I spoke at the British Conservative Party National Conference in 1986, to a rapturous ovation from farmers and blue rinses, who had no idea that I was telling ’em that you shouldn’t be getting free education and free health care if you drive a Jaguar.

Or, you reduce government programs to an absolute minimum, so as to ensure that sticking to Fred’s admonition (of the same government programs for everyone) actually fits the size of the public purse. Which is why Tea Partiers claim to be such strong Hayekians. This is the cherry pick onto which they latch.

In the NY Times article linked to at the beginning of this Note, Adam Davidson opines that every mainstream economic theory of the past hundred years or so began life as a crackpot sideshow.

So it is that I perceive that the coming economic norm may already be finding favor in some fairly esoteric outposts (the Occupy movement) – along with one or two surprising mainstream ones (the British Conservative Party). It’s called ‘localism.’

It is the notion that people are not ciphers. They are … well … people. And that neither politicians nor economists, acting at the national or even the regional level, can predict what people will do. We are not rationale. We don’t follow patterns. We are bloody-minded. And we do the craziest things in any given situation.

The best way, therefore, to ‘harness’ economic forces so that they best serve the people is to let the people decide for themselves how they would like to design their economic destiny. And to devolve to those people the power so to design as close to them as possible.

One of the natural consequences of such devolution of democracy is the rise of mutualism. Whether in the governance of corporate entities, the distribution of welfare or the administration of public services, such as education and policing.

It is why I continue to have such hope for my own food co-op, even when it seems hell bent on emulating every nasty conventional corporatist antic that Enron, Wal-Mart or Fox News ever dreamt up.

And it is why also, among all the ‘omnishambles,’ I continue to have a wee bit of faith in the British Coalition Government. At least on the face of it, that Government appears to preach a belief in co-operation. A belief which will find considerable underpinning if said Coalition promotes to its ranks in the coming Government reshuffle one of the most ardent Conservative Party proponents of localism and co-operation, Jesse Norman, MP.

In the meantime, with the North Carolina sun pounding down, I think I will allow my mind to dwell more happily on the prospect of an economic policy where the person predicting what happens to my naughty bits is Friedrich von Hayek’s distant relative, Salma…