Month: February 2010

Interview on Capitalism, Freedom and the Future

An interview where I am asked some nice open-ended softballs on liberty, regulations, and the future.  The blog where the interview is posted is apparently supporting a particular politician, but I do not personally support or endorse any politicians, and the fact that the interview is posted to this blog should not be interpreted as support.

Oh, and I am referred to in the post as an “economist” and “Dr. Morehouse”, neither of which I am.  Full text of the interview below.

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Josiah Schmidt: Thank you for agreeing to talk with us, Dr. Morehouse!  Tell us how you came to hold such a liberty-oriented philosophy.

Isaac Morehouse: I grew up in a typical Midwestern conservative home and I was taught responsibility, hard work and initiative.  In high-school, my brother told me about this book he was reading called “Capitalism and Freedom” by Milton Friedman.  I liked the ideas in the book, since I was sort of predisposed towards free-markets.  As I began to read more I eventually (after a long road and lots of rabbit trails) realized that, at bottom, government is force, and everything it does is backed by force.  It made me realize that so many things I wanted done in the world–good things–should not be done by force, but peacefully and voluntarily.  Not only did it sit right with me from a moral standpoint, but I learned through studying economics that voluntary actions have better results than centrally planned attempts by government to make the world a better place.

Josiah Schmidt: How would you define capitalism, in short?

Isaac Morehouse: Technically, capitalism is simply an economic system where individuals own the “means of production”, rather than government.  In popular usage however, capitalism has come to mean a lot of different things, some of which I support (property rights, free-markets, etc.), some of with I do not (bailouts, subsidies, regulations against competition, etc.).  I’m careful how I use that word, since people give it different meanings.  To me, it means simply free-markets.

Josiah Schmidt: Why, fundamentally, does capitalism work?

Isaac Morehouse: Capitalism works because without private property and the right to reap the gains and losses of our own efforts there is little incentive to produce or to innovate.  Property and free-trade also allow prices to form, which provide some of the most valuable information on the planet such as where demand and scarcity are and where surpluses are.  Prices, which form spontaneously as a result of free-exchange, allow for the most impressive coordination in the history of man; billions of people and resources constantly adjust their individual behavior in a way that benefits society, not because they are trying to or would even know how if they were, but because they are responding to signals sent through the price system.  No “rational” system of central planning can even come close to replicating that.

Josiah Schmidt: Is it meaningful to advocate a “mixed economy” of capitalism and socialism?

Isaac Morehouse: No.  Any coercion in the peaceful, voluntary and spontaneously coordinating market reduces it’s efficiency, not to mention it’s a violation of individual rights.  An only partly “planned” economy may be degrees better than a fully socialist one, but a free economy is magnitudes better than both. [For more on “mixed” economies see this article.]

Josiah Schmidt: How does capitalism, as opposed to socialism, accept human nature as it is, accounting for the flaws and fallibility of man?

Isaac Morehouse: It avoids what F.A. Hayek called the “Fatal Conceit” by recognizing that no one has enough knowledge to know where to put all the resources in the world all the time.  It recognizes the dignity of each individual by allowing anyone to justly obtain and use property, but it recognizes the limits of each individual by not allowing any one person to control all others by force.  If people are corrupt, the last thing we want to do is give a small number of them monopoly control over the rest, which is what government is.

Josiah Schmidt: Do government “consumer protection” measures actually protect consumers?

Isaac Morehouse: What is called “consumer protection” is almost always a special privilege or protection for some politically favored business or industry over their competitors.  Since government hands out favors and makes regulations, instead of competing in the marketing place by trying to better serve customers, many businesses go to government and lobby for regulations that they can afford, but that will cripple their smaller competitors.  The result is higher priced products, fewer choices, less competition, corruption in government agencies, and often times less attention to safety by consumers and producers who believe the government will do the work for them.

Josiah Schmidt: What is one of the most egregious examples of “consumer protection” measures that actually harmed consumers, in your view?

Isaac Morehouse: Oh boy, there are so many.  It’s hard to say which is the most egregious, but certainly some very silly examples that really bug me are things like requiring decorators, hair stylists, yoga instructors or lemonade selling kids to get state licenses and pay fees just to offer their goods and services.  These examples all exists in at least some states, and in every instance the laws were passed at the behest of some industry lobby that didn’t like lower priced competition.  It’s very sad for the people who just want a chance making a living by offering their skills to consumers.  They aren’t forcing anyone to buy, yet government is forcing them not to sell.

Josiah Schmidt: What advice would you give to libertarians reading this interview?

Isaac Morehouse: Take heart.  It’s too easy to see all the violations of liberty around us and feel things are always getting worse.  If you keep the big picture in mind and study some world history you will see that, in so many ways, freedom has advanced tremendously and there is no reason it cannot continue to do so.  Don’t follow the news too closely or you’ll be angry all the time, and angry people are rarely good advocates of the ideas they believe in.  Be optimistic and never stop learning about and fighting for freedom.  It’s worth it.

Josiah Schmidt: Anything else you’d like to say to our readers?

Isaac Morehouse: Sometimes it helps to remember that really, liberty is all around us.  We often feel that it would require such a radical change in our everyday existence if government were not so invasive.  While I do not want to downplay the destructive effects of government meddling, it is instructive to stop and think about what really makes the world tick.  Why don’t people run through the shopping mall naked?  I’ll give you a hint: it is not because they are afraid of indecent exposure laws.  That may play some very small part, but it is primarily because they would be embarrassed.  They are afraid of the social consequences.  This is just one example of how society remains orderly without the use of force; without government mandates and rules and regulations.  In fact, nearly all of the order, cooperation and coordination we see around us is not the result of government edicts, but of the forces of spontaneous order that emerge in a voluntary society.  In many ways, government is less important than even libertarians think.  The message we need to send to our big-government friends is not that government is so bad (even though it often is), but that society voluntarily produces so much good that we don’t need to use the blunt instrument of government.

Josiah Schmidt: Very insightful thoughts.  Thanks again for taking the time out of your schedule to answer some of our questions.

Worldviews Matter

This is an article I wrote during the last presidential election for the Western Standard Shotgun Blog.  The election-specific parts are really not the crux of the post, so I think it’s still relevant.

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A colleague sent me this article by Michael Knox Beran for the City Journal, titled, “Obama, Shaman”. The article is fantastic, not because it is a critique of one candidate from one party, but because the insights are far broader and can be applied to nearly any political or cultural folk-heroes of today. Beran draws upon strains of thought throughout ancient and classical literature and philosophy to highlight two very different worldviews.

America has a strong tradition of the worldview that sees man as fallible and existence as including pain and discomfort. Indeed, this worldview sees any life without some form of pain being a life without cause and effect, without choice; a robotic reality that would really be no existence at all.

The other worldview, the author points out, has surfaced in various forms throughout history and is the impetus for movements that nearly always result in a great deal of concentrated power. Since man need not be fallible, giving “the right person” unlimited power to do what is good for all is not viewed as dangerous, but rather necessary. From Machiavelli to Saul Alinsky, strategists have created a playbook for an ascent to power by those believing pain can forever be alleviated if only they are given the absolute power to enact their reforms. But the strategists only lay the plan; the philosophy that engendered the belief that such a plan could (or should) actually work came first. In the article, Beran describes many of those who have championed a paradigm which makes this belief possible.

As I’ve written before, paradigms are powerful, and hard to change. The lens through which one views the world, especially the human world, will determine the conclusions drawn from any set of data. Data, sensory perceptions, are completely devoid of actionable meaning without a theoretical framework through which to interpret them. For this reason, establishing and continually re-evaluating one’s framework becomes the constant task of the honest intellectual.

All good political philosophy and economics is essentially an effort to synthesis data and extract some kind of meaning from it – to create from observations a viable paradigm of human action. Knowing human nature is the most important and foundational element of ethics, political philosophy and economics. As the old adage goes, “knowing thyself” is the best place to start. I submit that the best way to know thyself is to find out what your worldview is (you have one, whether you know it or not).

What kind of lens do you look at the world through? What are the assumptions you take with you into every situation? Know your worldview, analyze it for logical consistency, test it against observation, discard or reform it if need be; this is the most difficult, rewarding and necessary task of human understanding.

Some snippets from the Beran article below should whet your appetite to read the entire piece:

“In his unfinished treatise Economy and Society, Max Weber defined charisma as “a certain quality in an individual personality by virtue of which he is set apart from ordinary men and treated as endowed with supernatural, superhuman, or at least specifically exceptional powers or qualities.” Weber was able to do little more, before he died in 1920, than give a pseudoscientific élan to an idea that had been kicking around for centuries. Most of what he said about charismatic authority was stated more cogently in Book III of Aristotle’s Politics, which described the great-souled man who “may truly be deemed a God among men” and who, by virtue of his greatness, is exempt from ordinary laws.

What both Aristotle and Weber made too little of is the mentality of the charismatic leader’s followers, the disciples who discover in him, or delusively endow him with, superhuman qualities. “Charisma” was originally a religious term signifying a gift of God: it often denotes (according to the seventeenth-century scholar-physician John Bulwer) a “miraculous gift of healing.” James G. Frazer, in The Golden Bough, demonstrated that the connection between charismatic leadership and the melioration of suffering was historically a close one: many primitive peoples believed that the magical virtues of a priest-king could guarantee the soil’s fertility and that such a leader could therefore alleviate one of the most elementary forms of suffering, hunger. The identification of leadership with the mitigation of pain persists in folklore and myth. In the Arthurian legends, Percival possesses an extraordinary magic that enables him to heal the fisher king and redeem the waste land; in England, the touch of the monarch’s hand was believed to cure scrofula.

It is a sign of growing maturity in a people when, laying aside these beliefs, it acknowledges that suffering is an element of life that sympathetic magic cannot eradicate, and recognizes a residue of pain in existence that even the application of technical knowledge cannot assuage. Advances in knowledge may end particular kinds of suffering, but these give way to new forms of hurt—milder, perhaps (one would rather be depressed than famished), yet not without their sting. We do not draw closer to a painless world.”

And…

“The danger of Obama’s charismatic healer-redeemer fable lies in the hubris it encourages, the belief that gifted politicians can engender a selfless communitarian solidarity. Such a renovation of our national life would require not only a change in constitutional structure—the current system having been geared to conflict by the Founders, who believed that the clash of private interests helps preserve liberty—but also a change in human nature. Obama’s conviction that it is possible to create a beautiful politics, one in which Americans will selflessly pursue a shared vision of the common good, recalls the belief that Dostoyevsky attributed to the nineteenth-century Russian revolutionists: that, come the revolution, “all men will become righteous in one instant.” The perfection would begin.”