JANUARY 19, 2010

Book Review: Money, Greed, and God

Jay Richards' book Money, Greed, and God offers a defense of capitalism from a Christian perspective. Richards goes further, noting that capitalism depends on a virtuous society.

A market economy needs not just competition but rule of law and virtues like cooperation, stable families, self-sacrifice, a commitment to delayed gratification, and a willingness to risk based on future hope.

Richards discusses several myths used a criticism of capitalism. In a chapter titled, "What would Jesus do?" Richards discusses the "piety myth" - i.e. that good intentions are not enough. He outlines the failure of numerous policies - "living wage" laws, "fair trade," the welfare state, and others intended to help the poor, that fail to do so.

Richards combines a bit of theology with basic economics - discussing the value of trade (both internationally and between any two partners seeking mutual benefit); the merits of expanding the economic pie, rather than just redistributing wealth; as well as a biblical presumption of property rights.

Richards cautions that capitalism need not be based on greed, noting the discrepancy between misers, and entrepreneur capitalists, who make wealth by meeting the needs of people. He also notes that capitalism has many flawed outcomes, such as conspicuous consumption. However,

We shouldn't expect the economy, free or otherwise, to instill virtue in people. ... It can't take the place of the family, church, synagogue, and the Boy Scouts.

Note that he doesn't list the government among those - "there's no evidence that state control of the economy makes a citizenry more virtuous."

The interaction between charity, virtue, and economics in a common theme (see here and here) in debating the role of government. Money, Greed, and God offers a useful discussion of these issues.

posted by NATHAN BENEFIELD | 08:42 AM | 0 comment

JANUARY 4, 2010

Book Review: Liberal Fascism

I finally got around to finishing Jonah Goldberg's 2007 tome, Liberal Fascism, a compelling and important read. Goldberg both attempts to make the case that fascism has always been a left-wing (or "liberal") phenomenon, while also presenting a history of fascism in the 20th, and 21st, century. In doing the latter, he gets a bit repetitive in making his case, but nonetheless it is a worthwhile read to understand the intellectual roots of past and present ideologies.

Goldberg takes great care to note that he is not saying that all liberals are fascists, and Goldberg takes pains to separate the anti-semitism and mass murder of the Nazis, noting those were unique to the Third Reich (indeed, even Mussolini protected Jews, while he was able). Rather, Goldberg attacks the misconception that contemporary "conservatives" have much in common with fascism. At the same time, Goldberg focuses on the common roots of fascists and modern liberals or "progressives."

Goldberg traces the roots of fascism in politics back to Woodrow Wilson - and notes the commonalities between American progressives and European fascists like Mussolini (and later Hitler). Highlighting not only the fact that American progressives and socialists of the time admired and praised European fascists, but they had the same political agendas. He says, with great sarcasm, regarding the Nazi platform and the implication that they were conservatives:

So, we are supposed to see that a party in favor of universal education, guaranteed unemployment, increased entitlements for the aged, the expropriation of land without compensation, the nationalization of industry, the abolition of market-based lending - a.k.a. "interest slavery - the expansion of health services, and the abolition of child labor as objectively and obviously right-wing.

Beyond economic policy, fascism involves government oversight of nearly every aspect of individual lives.

[T]he Nazi antismoking and public health drives foreshadowed today's crusades against junk food, trans fats, and the like... What is fascists is the notion that in an organic national community, the individual has no right not to be healthy; and the state therefore has the obligation to force us to be health for our own good.

Much of Goldberg's research traces the history and common ideas of Woodrow Wilson (and progressive writers like Herbert Croly), Mussolini in Italy, Hitler, and Franklin Roosevelt. Later he discusses fascists of the 1960s. The corporatism of today is also intrinsically a fascist phenomenon:

It's find to say the incestuous relationships between corporations and governments are fascistic. The problem comes when you claims that such arrangements are inherently right-wing. If the collusion of big business and government is right wing, the FDR was a right-winger. If corporatism and propaganda militarism are fascist, then Woodrow Wilson was a fascist and so are the New Dealers. If you understand the right-wing or conservative position to be that of those who argue for free-markets, competition, property rights, and the other political values inscribed in the original intent of the American founding fathers, then big business in Fascist Italy, Nazi Germany, and New Deal America was not right wing; it was left-wing, and it was fascistic. What's more, it still is.

Among today's liberals, Goldberg spends a full chapter discussing Hillary Clinton, and how the ideas she presents in It Takes a Village are utterly fascists. Specifically, he points to Clinton's notion that everything is within the state, that the state is the true parents of children, and that "for the children" can justify any action by the state, even circumventing traditional political processes.

Goldberg falls short of calling George W. Bush a fascist (note that Goldberg wrote before the Wall Street bailouts and the nationalization of automakers and major banks), but does criticize "compassionate' conservatism as "a repudiation of the classical liberalism at the core of American conservatism."

Most importantly, Goldberg describes the nature of fascism, starting with the concept of a moral equivalent of war. This term, coined by William James, refers to the unifying effect of war on citizens, and often the ease of making profound social change in times of wars. Indeed, Mussolini and Hitler, not to mention Wilson, used war and militarism to push their agenda. But absent a true war (which many contemporary progressives would opposed), what is needed is a moral equivalent of war:

From health care to gun control to global warming, liberals insist that we need to "get beyond politics" and "put ideological differences behind us" in order to "do the people's business." The experts and scientists know what to do, we are told; therefore the time for debate is behind us.

Goldberg writes, almost prophetically (emphasis mine):

[L]iberals have manufactured one "crisis" after another in their quest to find a new moral equivalent to war, from the war on cancer, to global warming, to countless alleged economic crises. Indeed, a brief perusal of the last hundred year of economic journalism from the left would have you believe that the most prosperous century in human history was one long, extended economic crisis.

The fascist playbook, as Goldberg identifies it, also hitting too close to home, includes:

the creation of crises, nationalistic appeals to unity, the celebration of martial values, the blurring of lines between public and private sectors, the utilization of mass media to glamorize the state and its programs, invocations of a new "post-partisan" spirit that places the most important decisions in the hands of experts and intellectual supermen, and a cult of personality for the national leader.

Liberal Fascism is a must-read for anyone interest in the recent history of political philosophy, and provides an important contribution to a political discourse that suffers from a lack of understanding of our intellectual roots.

posted by NATHAN BENEFIELD | 09:53 AM | 1 comment

NOVEMBER 11, 2008

Book Review: The Best-Laid Plans

Fans of The Road to Serfdom will recognize the dangers of government planning. Unfortunately, government planning has become even more prevalent in the US since Hayek's warning. Randal O'Toole's book The Best Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future offers a 21^st century look at the failure of government planning in the United States.

The Best Laid Plans, though organized into seven parts, really has three themes: case studies of failures in government planning, explaining why planning fails, and alternatives to planning.

The first theme features numerous examples—many of which are outrageous—of government failure in forest planning, smart growth and housing planning, and transportation planning. O'Toole using his hometown of Portland for numerous case studies, as the city, in an attempt to not be like Los Angeles, instead became just like LA. The length of this section, and number of examples, grows a bit tedious—though his chapters on The Rail Transit Hoax and Transportation Myths are very informative.

The final section, on recommendations, is the weakest part of the book—perhaps because it takes 300-pages to get to, but more like because it could be some up, "Don't Do Planning."

The real strength of the book was the section on why government planning fails. Though The Best Laid Plans was published in 2007, reading it in context of the recent mortgage crisis and financial bailout offers as much insight as the application to land use and transportation planning.

Government is run by people who are just as human—which means just as self-interested—as the people who run private business. Legislators primarily aim to get reelected. Bureaucrats mainly want to increase their budgets and power. As soon as government begins to exercise power over people or resources, special interest groups rise up to influence that power. Though everyone in and around government is careful to use terms like "the common good" and "the public interest, " even those with the best intentions are biased by their experiences and incentives.

That passage basically sums up why government fails, and why government can't be the solution to every problem, and why the Turnpike Commission should be eliminated. O'Toole's explanation of "how special interests get handouts" proved to be particularly prescient:

Interest Groups have developed a number of techniques to be most persuasive: 1) Generate a Crisis … 2) Build a coalition … 3) Develop warm-and-fuzzy terms … 4) Be as bipartisan as possible.

Sound familiar?

Best Laid Plans is a lengthy read, but one that adds to the evidence—and explanation why—of the failure of government planning, regulation, and management of the economy. At a time when more government planning, regulation, and management of the economy seem to be en vogue, it is a worthwhile read.

posted by NATHAN BENEFIELD | 09:05 AM | 0 comment

NOVEMBER 10, 2008

Book Review: Income and Wealth

Alan Reynold's Income and Wealth offers a primer on data on income, taxes, and the economy, and counters some of the most popular myths, usually circulated by left-wing groups advocating for redistributing wealth.

For instance, Reynolds points out the importance of work when comparing "the rich" to "the poor". Those in the top fifth of household income commonly feature two income-earners; those in the bottom fifth mostly have no wage-earners (including senior citizens).

Another myth Reynolds dispels is "the vanishing middle class." Reynolds notes that reports claiming a decline the percentage of households earning $30,000 to $50,000 is because more households are earning above $50,000. That Americans are getting richer is hardly a problem.

Reynolds takes on the myth of wage stagnation, which we have touched on here.

And among my favorite myths Reynolds dispels—the myth of growing income inequality. Since most income inequality are based on tax return data, tax policy plays a huge role. Reynolds points out that almost all of the "rich getting richer" occurred in the two years following the 1986 tax reform. That is, because of lower income tax rates, the rich began reporting more of their income, avoiding tax shelters, and switching for corporate income to individual income.

Income and Wealth is not leisure reading for the lay person, though number-crunching policy wonks will love it. Yet everyone—students, media, and voters—should understand the facts behind the myths of class warfare.

Alan Reynolds will be a guest on The BOX Program this Saturday.

posted by NATHAN BENEFIELD | 09:26 AM | 0 comment

APRIL 18, 2008

"Easy" Real Change, by Newt Gingrich

As promised, here is my review of Newt Gingrich's latest book, Real Change.

This was a frustrating read for me. For starters, Newt's premise is how we need to move past "red and blue" and "partisan shrillness" to get to real change. Then he launches into attacks on Democrats. He goes on to criticize the use of campaign consultants that tell candidates/lawmakers what their priorities should be. His solution? Lawmakers should do what public opinion polls say are popular – he proceeds to list a number of these policies with the poll numbers to back it up.

His overall plan is to "transform government", but his premise that "transforming government" involves using more technology and collecting more data. He doesn't discuss reducing the size or role of government (or for that matter, new government programs), he doesn't offer free-market solutions, and he lacks any notion that Government may not be the solution to our all problems. All of the "change" he presents are non-controversial (and supported by polls)—essentially he isn't offering "Real Change" at all but "Easy Change", which is what this book should be named.

Gingrich points to the response to Hurricane Katrina as a failure of government; no one would question that. Gingrich's lesson: government bureaucrats didn't use data. (Here is a better analysis of why government fails to respond to natural disasters).

Gingrich feels that public education is another example of the failure of government, and that "the crisis is not about money." Again he has the diagnosis right. His prescription is we need "a new set of metrics" so we can understand if children are learning along with "modern learning systems". Now performance measures, whether it be test scores or graduation rates, don't measure student performance very accurately. But they do tell us enough to know that our public schools aren't doing an adequate job of educating a large proportion of students. Having "new metrics" won't improve schools, changing the incentives will.

Gingrich goes on to hold Giuliani's administration in New York as a model for "transforming government" for using metrics to evaluate performance and creating "evidence-based government." Giuliani, while running for president, touted his use of data as well. But Giuliani also campaigned on (and Gingrich ignores) the role of tax cuts in bolstering the NY economy, the role of welfare reform in getting individuals off dependency on government, and community policing and the "broken-windows" strategy in reducing crime.

Gingrich's chapters on immigration and tax reform/economic prosperity are no doubt the strongest in the book, and he does propose some "real changes" in those areas. But he quickly reverts back to the theme of "easy change."

He suggests personal accounts in Social Security - but with government guarantees (i.e. the government will reimburse individuals if their invested personal accounts lose money). And he proposes making personal accounts optional - people can chose to stay in Social Security and get the same guaranteed benefit, even though the system is already going bankrupt and many individuals will opt out, paying less into the system. His "real change" is a slight tweak, watered down to pander to the AARP.

His balancing the budget section is weak. He suggests eliminating pork projects and earmarks, but beyond that he proposes "prioritizing spending" and "smarter spending". Essentially he is back to the technocrat, efficient government idea, rather than recognizing that government is spending in areas it should not be involved in at all. He also recommends cutting taxes "to increase revenue". He falls into the trap of overstating the Laffer Curve effect. In the words of Milton Friedman, "If a tax cut increases government revenues, you haven't cut taxes enough."

In talking about space exploration and energy policy, Gingrich proposes "large prizes" for breakthrough technologies. Does Gingrich really think that "prizes" are needed to persuade researchers to come up with solutions that would make them rich without the prize? And he continues to push tax credits for ethanol, even though ethanol has largely been discredited as an energy solution. Indeed, it doesn't matter whether we are talking direct subsidies, tax credits, or "prizes", government does a poor job of picking winners and "investing" in the future.

Finally, he proposes "transforming" health care. He proposes mandating that everyone have coverage (a bad idea, based on a flawed premise). Much of his "transformation" revolves again revolves around new technology, better data, and more information. While price and quality disclosure and electronic medical records are among the reforms needed, they won't transform health care. In contrast, if we were to transform health care with market-based, consumer-driven solutions, the information revolution would follow.

In short, save your money, don't buy the book, you can basically get the gist by watching his speech at last year's Pennsylvania Leadership Conference.

posted by NATHAN BENEFIELD | 08:04 AM | 0 comment

APRIL 15, 2008

Book Review: Leave us Alone

I am blogging from Seattle, where I am attending a conference on government transparency. One of the best aspects of flying across the county is catching up on some reading.

One of the books I read on the flight over – Grover Norquist’s Leave Us Alone – I heartily recommend (look for a less than stellar review of Newt Gingrich’s newest book shortly).

Norquist describes the political dynamic as being between two coalitions. The “Leave us alone” coalition, which wants lower taxes, economic freedom, gun rights, religious freedom – and the groups (taxpayers, small business owners, etc.) who support that. The “Takings” coalition thrive off big government – typically working for government or receiving subsidy from it.

Here are some highlights:

Norquist notes two kinds of government employees - those that protect lives and liberties, and those that suckle at the teat of Big Government. The former (part of the “leave us alone” crowd) want their friends and neighbors to know how much they earn and how hard they work—they will be thanked. The latter (members of the takings coalition) want to keep their pay and benefits a secret, because they make more than the people paying their wages and don't produce.

On Government “creating jobs”:

The Government can take money out of the real economy (defunding a job in the private sector) and drag the money into the government’s coffers and spend it to create a new job. This is the economic equivalent of taking a pail of water out of one side of a lake and walking around the lake – spilling some of the water – and the holding a press conference surrounded by cameras to be
filmed pouring what is left of the budget back into the lake.

Norquist argues that people of faith are largely Republican because of how Democrats look on them, “with a hostility that is difficult to believe from people who think of themselves as devoid of prejudice.”

On government reform issues:

But the best way to stop the government from giving out goodies is not to put fences around elected officials. It is to cut government spending and government power so that they cannot give anything away. If a congressman had no power to hand out earmark or pork-barrel spending, there would be no need for a law forbidding taking him out for a three-martini lunch or flying him to Tahiti.

Norquist spares no sympathy for the trial lawyers, trade unions, or Republicans that rely on patronage rather than principle. He summarizes the “moral argument” against welfare (i.e. welfare keeps people dependent on government and causes them real harm) quite well. His analysis of the growth of the investor class (more than half of all households) and the entrepreneur class is insightful, as are many of his discussions of the demographic and political trends that are coming. And his discussion of the growth discrepancy between high- and low- tax states bears repeating, as does his discussion of earmarks (they are misspent funds used as bribes to encourage more misspending of funds).

His policy prescriptions on tax reform (though he gets a little over-the-top in his praise of ATR’s Tax Pledge), health care reform, and entitlement reform are eloquent.

The biggest gripe is typos, which I will be sending to the publisher to correct by the second edition.

posted by NATHAN BENEFIELD | 05:26 PM | 0 comment