Topic: Political Philosophy

Training Economic Illiterates in France and Germany

A fascinating Foreign Policy article explores the anti-capitalist propaganda that is force-fed to students in France and Germany. Recalling the glorification of the New Deal that I was exposed to during my younger years and the environmental nonsense my kids deal with (even in private schools!) on a frequent basis, I know American students also get some statist misinformation, but the article makes it appear that American textbooks are written by Friedman, Hayek, and Mises compared to what passes for economic education in Europe:

Millions of children are being raised on prejudice and disinformation. Educated in schools that teach a skewed ideology, they are exposed to a dogma that runs counter to core beliefs shared by many other Western countries. …Just as schools teach a historical narrative, they also pass on “truths” about capitalism, the welfare state, and other economic principles that a society considers self-evident. In both France and Germany, for instance, schools have helped ingrain a serious aversion to capitalism. In one 2005 poll, just 36 percent of French citizens said they supported the free-enterprise system, the only one of 22 countries polled that showed minority support for this cornerstone of global commerce. In Germany, meanwhile, support for socialist ideals is running at all-time highs—47 percent in 2007 versus 36 percent in 1991.

Many of these popular attitudes can be traced to state-mandated curricula in schools. It is there that economic lessons are taught that diverge substantially from the market-based principles on which the Western model is based. The phenomenon may hardly be unique to Europe, but in few places is it more obvious than in France and Germany. A biased view of economics feeds into many of the world’s most vexing problems, from the growth of populism to the global rise of anti-American, anti-capitalist attitudes.

The past 20 years have “doubled wealth, doubled unemployment, poverty, and exclusion, whose ill effects constitute the background for a profound social malaise,” the text continues. Because the 21st century begins with “an awareness of the limits to growth and the risks posed to humanity [by economic growth],” any future prosperity “depends on the regulation of capitalism on a planetary scale.” Capitalism itself is described at various points in the text as “brutal,” “savage,” “neoliberal,” and “American.” This agitprop was published in 2005, not in 1972. When French students are not getting this kind of wildly biased commentary on the destruction wreaked by capitalism, they are learning that economic progress is also the root cause of social ills. …Germans teach their young people a similar economic narrative, with a slightly different emphasis. The focus is on instilling the corporatist and collectivist traditions of the German system.

Bosses and company owners show up in caricatures and illustrations as idle, cigar-smoking plutocrats, sometimes linked to child labor, Internet fraud, cell-phone addiction, alcoholism, and, of course, undeserved layoffs. The successful, modern entrepreneur is virtually nowhere to be found. German students will be well-versed in many subjects upon graduation; one topic they will know particularly well is their rights as welfare recipients.

The not-so-subtle subtext? Jobs are a right to be demanded from the government. The same chapter also details various welfare programs.

Like many French and German books, this text suggests students learn more by contacting the antiglobalization group Attac, best known for organizing messy protests at the annual G-8 summits. One might expect Europeans to view the world through a slightly left-of-center, social-democratic lens. The surprise is the intensity and depth of the anti-market bias being taught in Europe’s schools. Students learn that private companies destroy jobs while government policy creates them. Employers exploit while the state protects. Free markets offer chaos while government regulation brings order.

…training the next generation of citizens to be prejudiced against being enterprising and productive is…foolhardy. …If countries like France and Germany hope to get their nations on a new economic track, they might start paying more attention to what their kids are learning in the classroom.

What’s So Funny about P. J. O’Rourke?

I decided to give a young colleague a post-graduate course in political science and economics – P. J. O’Rourke’s books Parliament of Whores and Eat the Rich. So I went to my local Barnes & Noble to search for them. Not in Current Affairs. Not in Economics. No separate section called Politics. I decided to try Borders. But first – to avoid yet more driving around – I went online to see if my local Borders stores had them in stock. (An excellent innovation that Barnes & Noble should copy, for customers who like to look at the actual book before buying it, or who don’t do their Christmas shopping far enough in advance to shop online.) Sure enough, they did, in a couple of stores just blocks from the Cato Institute. Checking to see where in the store I would find them, I discovered that they would both be shelved under “Humor–Humorous Writing.” Oh, right, I thought, they’re not books on economics or current affairs, they’re humor.

Yes, P.J. is one of the funniest writers around. But what people often miss when they talk about his humor is what a good reporter and what an insightful analyst he is. Parliament of Whores is a very funny book, but it’s also a very perceptive analysis of politics in a late 20th century democracy. And if you read Eat the Rich, you’ll learn more about how countries get rich—and why they don’t – than in a whole year of econ at most colleges. In fact, I’ve decided that the best answer to the question “What’s the best book to start learning economics?” is Eat the Rich.

On page 1, P. J. starts with the right question: “Why do some places prosper and thrive while others just suck?” Supply-and-demand curves are all well and good, but what we really want to know is how not to be mired in poverty. He writes that he tried returning to his college economics texts but quickly remembered why he hated them at the time–though he does attempt, for instance, to explain comparative advantage in terms of John Grisham and Courtney Love. Instead he decided to visit economically successful and unsuccessful societies and try to figure out what make them work or not work. So he headed off to Sweden, Hong Kong, Albania, Cuba, Tanzania, Russia, China, and Wall Street.

In Tanzania he gapes at the magnificent natural beauty and the appalling human poverty. Why is Tanzania so poor? he asks people, and he gets a variety of answers. One answer, he notes, is that Tanzania is actually not poor by the standards of human history; it has a life expectancy about that of the United States in 1920, which is a lot better than humans in 1720, or 1220, or 20. But, he finally concludes, the real answer is the collective “ujamaa” policies pursued by the sainted post-colonial leader Julius Nyerere. The answer is “ujaama—they planned it. They planned it, and we paid for it. Rich countries underwrote Tanzanian economic idiocy.”

From Tanzania P. J. moves on to Hong Kong, where he finds “the best contemporary example of laissez-faire….The British colonial government turned Hong Kong into an economic miracle by doing nothing.”

You could do worse than to take a semester-long course on political economy where the texts are Eat the Rich and Parliament of Whores. So, bookstore owners, leave them in the Humorous Writing section for sure, but also put copies in the Economics, Politics, and Current Affairs sections.

Cringe-Inducing Confusion at TNR

Over at The New Republic, Josh Patashnik responds to my post on Gov. Arnold Schwarzenegger’s (R-CA) universal coverage plan. Over at Washington Monthly, Kevin Drum gave Patashnik Tuesday’s quote of the day.

It would be an understatement to say Patashnik and I don’t see eye to eye. I don’t even think we speak the same language. For example…

Market-friendly reforms?  Patashnik describes the Schwarzenegger plan as a collection of “market-friendly” health care reforms. Really.

The plan would banish market prices for health insurance. It would override market allocations of wages and benefits. It would let the state, rather than the market, decide what share of health insurance premiums will be spent on administrative costs vs. claims. It would expand government coverage at the expense of private markets. Every plank of Schwarzenegger’s plan would reduce the number of decisions made by the market and increase the number of decisions made by government.  

Certainly some insurance companies and employers would benefit, because the plan would cripple their competitors. But that makes the plan anti-competitive, special-interest legislation — not market-friendly. 

Patashnik claims the plan contains a “variety” of market-friendly reforms. If he can find even one, I’ll buy him lunch.

Libertarians = conservatives? Patashnik writes:

I can’t say I’m surprised Cato doesn’t like [Schwarzenegger’s plan], though. The conservative health care strategy works like this…

Patashnik perhaps believes that conservatives and libertarians are the same thing, or that the latter are a subset of the former. This is a source of irritation for libertarians (and probably conservatives too), for the same reasons it would irritate TNR staff to be called communists: not only is it dismissive, it’s just plain inaccurate

…endorse subsidies in theory, since it would seem unacceptably heartless to simply say that people who can’t afford medical care shouldn’t get it….

Libertarians endorse voluntary subsidies, in the abstract and the concrete, for those who cannot afford medical care. This is not because “it would seem unacceptably heartless to simply say that people who can’t afford medical care shouldn’t get it,” but because that is unacceptably heartless. 

Libertarians oppose coerced subsidies, such as the Medicaid program that Schwarzenegger proposes to defraud, because it is immoral to put someone in jail if he doesn’t want to contribute to Medicaid. Coerced subsidies are also counter-productive. (Need evidence? Look around.)  

Mind you, we don’t think these things because we’re libertarians; we’re libertarians because we think these things. 

Patashnik continues:

…Then, whenever anybody proposes a plan to actually implement subsidies, vehemently oppose it without offering any alternative plan to expand coverage.

Three things: First, a libertarian who opposes coerced subsidies is being entirely consistent. Second, libertarians have no obligation to offer an alternative plan to expand coverage, because libertarians reject that as a legitimate role for government. Third, were Patashnik to peruse the offerings of Cato health policy scholars, he would notice that most of our proposals nevertheless would expand coverage — simply because more people would have health insurance if government got out of the way.

State experimentation  Patashnik concludes:

…In other words, let states experiment — except when they actually do.

Yeah — if libertarians (or conservatives?) prefer state-level economic regulation to federal regulation, why do they complain about it when they see it? Two responses:

First, one might believe that gay marriage is an issue for the states rather than Congress, but still oppose a particular state’s proposal to suppress that freedom. My guess is that Patashnik sees hypocrisy only because he does not value the freedom to choose his health insurance or how to provide charitable care as much as he values the freedom to marry someone of the same sex. 

Second, Schwarzenegger is experimenting with the money of non-Californians. By law, half of California’s Medicaid budget comes from the feds. So the non-Californians funding his grand designs have every right to object. Moreover, Schwarzenegger proposes — in broad daylight — to further pick the pockets of non-Californians by defrauding Medicaid

I wonder, does that bother Patashnik? I’m interested to know the answer.

The Man with the Plan

The Russian government’s monthly propaganda insert in the Washington Post includes this headline today:

The Man with the Plan/President Putin Has Got the Nation’s Future Mapped Out

It reminded me of an article I wrote a few years ago with the same title, “The Man with the Plan.” (In Liberty, July 1996, or you can read it in my forthcoming book The Politics of Freedom.) I was writing about Clinton adviser Ira Magaziner, whose various planning schemes, while scary, are certainly not as bad as the ones that have been tried in Russia over the past century. Though this idea, expressed by presidential candidate Bill Clinton on the campaign trail in 1992, might come close:

We ought to begin by doing something simple. We ought to say right now, we ought to have a national inventory of the capacity of … every manufacturing plant in the United States: every airplane plant, every small business subcontractor, everybody working in defense.

We ought to know what the inventory is, what the skills of the work force are and match it against the kind of things we have to produce in the next twenty years and then we have to decide how to get from there to there. From what we have to what we need to do.

Five-year plans not having planned out so well, Clinton and Magaziner decided the problem was their short-term focus. Whether Bill or Hillary, Putin or Magaziner, when I hear the phrase “the man (or woman) with the plan,” I think of Adam Smith:

The man of system, on the contrary, is apt to be very wise in his own conceit, and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests or the strong prejudices which may oppose it: he seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board; he does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

Big Money Lurches Left

Last Friday, the Federal Election Commission ruled that money raised for John Edwards’ presidential bid by an organization called ActBlue was not eligible for matching funds from taxpayers. ActBlue is registered as a federal political action committee which means its fundraising cannot be matched by the presidential taxpayer financing program. The loss is not trivial for Edwards. ActBlue’s fundraising composed 15 percent of his total fundraising.

The facts of this case and the FEC’s technical ruling are not especially important. Edwards was unlikely to become the Democratic nominee, and this turn of events will not change the race for the presidency.

But the world is changing. The traditional story about money in politics goes like this. Rich people and corporations – overwhelming conservative and Republican – contribute almost all the money candidates need to run, thereby tilting the government toward their interests. Noble “reformers” enact campaign finance restrictions to limit the power of business and the rich. Then the little guy (that is, the Democratic party and especially its left wing) can rule in pursuit of everyone’s interest, a category that does not include the interests of the rich, the conservative, and the non-liberal, all of whom have no legitimate standing in a democracy.

Now the “little guy” has become Big Money. ActBlue and the Democratic party in general are raising money hand over fist. Republicans are far behind and appear to have little idea how to catch up. But the old rules which were designed to harm the “bad guys” reached out and harmed John Edwards, populist extraordinaire. This is not a new irony. The struggle over regulating the Internet in 2005 saw the left opposing campaign finance strictures. The left used 527 groups to work around campaign finance rules that threatened their political activities. And so on.

The traditional story about money in politics is starting to lose credibility. When reality has completely undermined the traditional story, how long before campaign finance deregulation becomes politically correct?

California Speaker Confuses Taxation with Wealth Creation

California is facing a budget shortfall, and one of its most powerful lawmakers thinks the state legislature can meet that shortfall by creating wealth. According to the Los Angeles Times:

Assembly Speaker Fabian Nuñez (D-Los Angeles) said lawmakers would have to consider raising a host of taxes, including those on Internet purchases and on foreign companies that do business in California.

“We’ve got to close those tax loopholes,” Nuñez told reporters at a news conference. “We can generate billions by doing that.”

According to Dictionary.com, the first three definitions of “generate” are:

  1. to bring into existence; cause to be; produce.
  2. to create by a vital or natural process.
  3. to create and distribute vitally and profusely.

No doubt the speaker wants to distribute those billions vitally and profusely. But raising taxes won’t create billions of dollars. 

Taxes find wealth that others have already created and take it. As in pilfer.  Lift.  Ransack.  Plunder.  Loot.  Steal.  Jack.  Nab.  Grab.  Purloin.  Swipe.  Snag.  Extract.  Nick.  Confiscate.  Seize.  Pinch.  Usurp.  Arrogate.  Dispossess.  Expropriate.  (Yoink.)

Cato Launches Innovative Web-based Programs

The Bush administration made the promotion of democracy and freedom a key part of its foreign policy but has become far more muted on the subject of the benefits of political liberty overseas in recent months as it became clear that democracy can be messy and lead to the elevation of those who do not necessarily share the policy goals of the United States. While strongly opposed to the neo-conservative vision of the Bush administration and its actions in the Middle East, the Cato Institute believes that the promotion of the classical liberal ideals of liberty, free markets and peace is an essential effort.

As a result, on December 12, Cato launched six innovative foreign-language web-based programs. These new programs will publish in Chinese, Portuguese, French, Persian, Kurdish, and on the continent of Africa in English and Swahili. They join our other three highly-successful programs in Spanish, Arabic and Russian.