A Liberal Approach to the Economy

It’s impossible to say, nowadays, if what one reads on the subject of the economy is being said seriously or in jest. See, for instance, “The Golden Laws of Prosperity” from Ian Welsh’s blog. Judging by the comments, I’m not the only one who thought the post was a parody. For now, however, the author seems to maintain he was in earnest when writing the post.

I will give you a few of Welsh’s prosperity rules, and you can go see the rest at the original post.

Implement policy which is as good for as many people as possible.

I thought if history had taught us anything whatsoever it was that the scariest political leaders were the ones who were trying to be benefactors of the majority. Seriously, how can anybody figure out what’s “as good for as many people as possible” without relying exclusively on one’s own personal ideology? Isn’t it time to remove the categories of “good” and “evil” from our economic and political vocabulary already?

Keep the rich poor.

Of course, after this suggestion, one immediately thinks that the entire list is a tribute to Ayn Rand.

Do not allow elites to opt out of the experience of ordinary citizens.

And how is that going to be enforced in practice, I wonder? A representative of the elite would be forced to wear jeans to a burger-grilling beer-drinking Springer-watching party and prohibited from putting on a dress and watching an opera while drinking champagne and eating caviar? Was this going to be done through police involvement? I can just imagine police officers shaking folks out of suits and tuxedos and stuffing them into jeans. Of course, I’m exaggerating. However, the point is that when you start regulating “experiences”, scary things begin to happen.

Do not reward people for winning lotteries (economic competitions someone was going to win, like Facebook winning the social site competition)

This, of course means clamping down on absolutely any new area of development or research. Imagine the people who’ll find a cure for cancer. Those folks will win the lottery like nobody has ever before. Ergo, let’s make sure looking for the cancer cure is completely unprofitable. Who cares about a valuable service to humanity? As long as we can prevent somebody from getting rich, our central goal will be served.

Do not allow anyone to take future profits in the present.

This can easily be translated as kill the economy outright. Gosh, even the USSR didn’t go this far in regulating its companies.

Restrict capital flows significantly.

This, however, is what the Soviet Union was great at doing. Does anybody want me to narrate the results once again?

Treat credit as a utility and regulate all credit grantors as utilities.

Credit rates should be based on utility of the end use of credit.

The problem with this approach is that only a completely insane person will want to be a creditor under these conditions.

Make sure your population eats healthily, there is no such thing as cheap food, cheap food is paid for by death, disease and health care costs.

As most of my readers know, I’m very worried about the low quality of food in the US and have suffered serious health consequences because of that low quality. However, ensuring that the population eats healthily is an obvious infringement on individual rights. If the suggestion was to offer an opportunity to the population to eat healthily, I wouldn’t have a problem with this advice. Making people eat healthy in order to make them live longer sounds like a first step down the very slippery slope of treating human bodies as the property of the government.

Do not allow city folks mores to run the country, nor country mores to run the cities.

The moment we get the government regulating the mores, we arrive at totalitarianism. Maybe people can sort out their mores and ways of being without a prescriptive authority.

Do not allow unproductive suburbs which do not allow light businesses or have covenants.

As we can see, this philosophy is all for giving the rights to allow or not allow to one large body and taking them away from smaller local bodies. Another slippery slope. Besides, “do not allow those who do not allow” sounds a tad hypocritical.

Use competition between the private and public sectors.

Is there still one person under the sun who doesn’t know who will win this competition? (If it’s allowed to be run as a real competition, not a rigged foregone conclusion, of course.)

Do great things, not because of the return, but because they are great.

If only there was any hope of a group of people reaching a consensus as to what constitutes “great things.”

Seek the health and happiness of your citizenry, not maximum income.

Honestly, nothing terrifies me more than a government, an entity or a private individual that seeks my health and happiness. The best system in the world is the one that allows me to seek my own good or ill health and happiness or misery as I see and want them. God save us all from well-meaning benefactors, for they are the scariest people out there. Everybody’s understanding of happiness is so different that anybody who tries to impose their own vision of it always ends up digging mass graves for the millions who are not content with the state-mandated version of bliss.

I have to tell you, people, the liberal approach to the economy isn’t really doing anything for me lately. It’s all based on such do-gooder prescriptions that are supposed to make one feel self-righteous when one pronounces them but that have very little practical value.

The journalist who came up with the list is Canadian. In one of my future posts, I will tell you why I have massive issues with the Canadian approach to the economy.

37 thoughts on “A Liberal Approach to the Economy”

  1. I wonder what Mr. Welsh will have to say to your reading of your post, Clarissa. I have not read his post yet, but from the excerpts you present, the impression I form of it is radically different from yours, because your interpretation of each quoted sentence is completely different from mine. To take the very first example, it is quite possibly to know, in measurable terms, which policy decisions are quantitatively best for the greater number of people. National Sample Surveys, Household Surveys, Human Development Surveys, survey of local resources et al are aimed precisely at aiming Planning Commissions, advisory boards, parliament/senate/congress and other decision-making bodies with the data needed to determine the tangible influence of certain decisions on different sections of the population.

    Is it perhaps true that simple everyday words acquire such unique indexicality in different disciplines, that direct communications across disciplines appear almost impossible? Or are you merely trying to be provocative? 🙂

    I think I’ll read Welsh’s piece as soon as I have a spare minute. This bears investigation.

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    1. No, on this issue I’m not trying to be provocative at all. I’m currently trying to educate myself on the workings of the US economy. I want to elaborate a position of my own. At this point, I don’t really have one because I’m not sufficiently informed. So I’m accessing a variety of sources. This post is an equivalent of me thinking out loud on these issues. I plan to continue doing so. Right now, I have no idea where I will arrive at the end of this learning curve, so any input from my intelligent readers is welcome.
      Sent via BlackBerry by AT&T

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  2. *(1)Implement policy which is as good for as many people as possible….

    (2)Use competition between the private and public sectors.
    Is there still one person under the sun who doesn’t know who will win this competition? (If it’s allowed to be run as a real competition, not a rigged foregone conclusion, of course.)*

    I all fully for the first point, Rimi explained it well. In addition, for example, providing health care for all so far seems to be done only by governments, if they desire it. Israel has it, USA – not. Of course, US private health companies would see offering an option of buying health care insurance from government for everybody as “rigged competition”. Wasn’t such idea shot down?

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    1. There is a universal free healthcare system in Canada. I personally love it and think it’s fantastic. However, I can’t tell you how many people in Canada tell me they hate it and wish for a US-type healthcare. So I honestly don’t know if a majority consensus on this issue is possible. What makes you think that the majority of US citizens are even in favor of it? I kind of get a feeling they aren’t. Especially, if it brings the tax rates to Canadian levels.

      Once again, I personally am in favor of a universal free state healthcare. But is the majority?

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      1. Couldn’t a big part of it be education and learned expectations? F.e. Medicare seems to be well-loved, even Tea Party members go with slogans “Government away from Medicare”, which shows misinformation, but also support. I read that US GDP % spent on medical care is bigger than some other countries, which also have better outcomes. I’ve also heard an Israeli economist expert on medical care specifically talk RE US and say that the system is very problematic, but Obama reform didn’t deal with causes – didn’t touch medical workers’ sector since it was politically impossible, but only talked of insurance side of the market.

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        1. Of course, you are absolutely right. The ignorance about the healthcare system is grievous, I, a very educated and not a stupid person, honestly have a very minimal idea about how Medicare works. And no understanding whatsoever of the differences between Medicare and Medicaid.

          Still, if we are to base decisions today on what the majority wants today – rightly or wrongly – then we have to take into account people’s today’s sentiments on the issue. Otherwise, we get at the “intelligent paternalistic government knows best.” And where does that take us?

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      2. The vast majority of Canadians are for the current system, and if asked if they think it should be more private or more public, the majority answer more public.

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          1. Oh please. Cuba’s healthcare system is an atrocity. An atrocity. They borrowed all the nastiest tricks of Soviet Gestapo doctors. Just horrible.

            All Michael Moore shows in his film about Cuba’s healthcare system is a total lie.

            That’s a topic I’m very emotional about, in case people haven’t noticed.

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  3. There are plenty of countries with universal health care systems that work well. Look at most of western Europe. I have serious questions about the Israeli system. My Israeli ex-wife who was severely injured a couple years ago had to come to this country for surgical care after the lack of prompt competent care (and lack of caring in general) in Israel complicated her condition severely. She is far to the left of me, but she prefers the US system. I am sure she would prefer to be treated in France, Denmark, Sweden, the Netherlands, etc. to the US, but not Israel.

    The US spends 17% of GDP on a healthcare system that is ranked between #18 and #30 in the world based on outcome and how those outcomes are measured. Nobody else spends anywhere close to that. The “socialist” western European systems spend between 7% and 9% of GDP and are ranked in the top 10 based on outcome. We are right up there with Costa Rica based on outcome, and they have universal health care for citizens. So, effectively, we deliver banana republic care for more than twice the cost.

    As to Mr. Welch’s proposals, I can see some “pepitas de oro” in them, but overall, I think that Mr. Welch is someone who is uneducated, uninformed, concerned and politically living in the liberal 1960s. In other words he is well meaning but has little knowledge about the topics he is writing about. I would not take him seriously, except that there are many people writing and talking about macro-economics these days who are ill informed and incompetent and they influence the politicians who are afraid they might vote.

    Both Obama and the entire field of Republican candidates are busy trying to find out what they can say to garner the most votes. Some of them have no macro-economic competency (Michelle Bachman and Ron Paul for example) and the others are a bunch of panderers to the lowest common denominator (Obama and Romney for example).

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    1. I agree completely with what you are saying! I have decided not to be one of those ignoramuses who talk and talk without any actual knowledge of the issue,s so I’m trying to figure things out. It will take me a while, but I’m excited about any learning process. 🙂 I have no doubt that at the end of the process I will have managed to alienate pretty much everybody. 🙂 But I can’t just subscribe to an agenda that isn’t fully and completely mine. As it is, on many issues I’m so far to the left that I can’t even see Obama from there. 🙂 On other issues, however, I’m significantly to the right of even Obama. 🙂 This doesn’t make me a Centrist, god forbid. I think it makes me a person with a worldview of my own.

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      1. The World Health Organization has several good studies of health care systems around the world. To show how difficult it is to practice macro-economics in this country, the standard introductory textbook for most university courses in the subject was written by Ben Bernanke. I was very relieved when Bush appointed him to replace Greenspan due to his knowledge, but I didn’t count on the difficulty of dealing with the strutting peacocks in Washington, DC yelping, “Look at me! Look at me! Look at me!”

        Rimi should be able to identify with that.

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    2. I don’t think comparative performance vis a vis Israel’s terrible delivery of care is the definite measure of ‘good’ healthcare. One can be significantly better than the other and yet be a disaster for most of its own people.

      On the subject of US spending on healthcare, the vast number of people that remain uncovered by it — and the irrationality of poor health conditions globally despite high (and misdirected) spending — I strongly suggest Michael Marmot’s ‘Fair Society, Healthy Lives’ project, which I think is available online. Sir Michael was one of Obama’s (disappointed) advisers on healthcare.

      I wouldn’t say Welsh is an ignorant anachronism quite so easily, Diego. H’s rhetoric is annoyingly abrupt, but most statements — most, not all — can be quite easily interpreted to make quite good economic and social sense. Unless, of course, I am indeed “too far to the left” for mainstream US political culture, so much so that we interpret Welsh’s signifiers completely differently?

      Clarissa, your opinions re. Welsh’s comments actually make your ideology sound very close to Libertarian philosophy. Is this a philosophy you ascribe to consciously?

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      1. I knew that people would start calling me names in the wake of this post. Libertarian, my ass! (Kidding).

        No, I can’t call myself either Liberal or Conservative or – God forbid – Libertarian. I’m opposed to government legislating morality, to censorship of any kind, to paternalistic governmental attitudes.

        But any discussion of abolishing the minimal wage, for example, gives me fits of rage. Abolishing the income tax also makes me angry. That must mean I’m not Libertarian, right?

        I’m for the national postal service and firmly in support of state education system. That’s as anti-libertarian as one gets, no?

        Sent via BlackBerry by AT&T

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    1. Minimum wage law is bad economic policy because low qualified workers have less jobs to choose from.

      However, I support voluntary-based minimum wage in a particular organization, In fact, all workers should recieve the same hourly salary in a particular organization.

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      1. But wouldn’t abolishing minimum wage allow employers the discretion to gouge low-qualified workers even more than is done now? However qualified they are or not for any particular work, people got to eat and live somewhere with a roof. Not that minimum wage laws are doing a bang-up job anyway but what would be the solution to keep workers without special skills decently paid?

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  4. There is only one negative comment in the comment thread on the original post, actually.

    The list is meant primarily for long term readers, who generally have a pretty good idea what each telegraphic point means. Each one could be extended to a full essay, in many cases to a book.

    Am I misinformed? Well, maybe, but my longterm readers know that I’ve made predictions, well in advance of events, and that those predictions have been right far more often than chance would dictate.

    YMMV, I am past the point where I particularly care if I convince people because it’s too late to matter. Bend over and kiss your prosperity goodbye, because the decisions have already been made, and no one in power is even proposing doing enough of the right things.

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    1. It’s nice to have you here, Ian. Of course, it’s impossible to gauge your entire philosophy from just one post, but you have to begin somewhere.

      As for saying good-bye to prosperity, since I left Ukraine, I haven’t been that prosperous anyways, so I can’t say there is much for me to lose. 🙂

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  5. Upon visiting the Golden Laws article, it becomes evident that not all of the telegraphic points have been expanded on by Clarissa. Some which have been left unpanned by Clarissa meet with my enthusiastic approval:

    Punish negative externalities, encourage positive externalities.

    Tax economic rents punishingly.

    Do not allow pipeline companies (app stores, telecom companies, railways, etc…) to extract monopoly profits.

    Enforce the doctrine of first sale (if you buy it, it’s yours) and do not allow items to be turned into services.

    Keep so-called “intellectual property” to an absolute minimum.

    Make it worth doing social work and do not allow the private sector to pillage the social sector (for example, parenting.)

    Do not allow the financial sector to be the tail that wags the dog.

    Allow no financial instruments which are more complicated than the underlying asset or project.

    And a few others. It should be noted that many of the above points are often made by advocates of market economics—specifically the more intellectually honest ones who realize that pro-market politics and pro-business politics can be two very, very different things. Many of Clarissa’s objections (which I share) point to what seems to be a tendency on the part of Ian Welsh to assume shared values when (from what I can see) no such consensus exists—even within urban or rural culture. Other of Clarissa’s objections are borne out of a fierce pro-capitalist attitude which I have come to expect in immigrants from Communist countries. I have anti-capitalist attitudes myself. USA born and bred, I chalk it up to a hypothesized tendency to reserve one’s sharpest contempt for “the devil you know.”

    Concerning “Do not allow elites to opt out of the experience of ordinary citizens:” I have some sentiments leaning in this direction, with the strong caveat that “experience” is narrowly understood to mean “experience interfacing with the political/economic system,” definitely not the full range of humyn experience, watching Jerry Springer, or whatever. I respect the private sphere and the public sphere. What I think is well worth avoiding is public and private becoming lower and upper tiers (or vice versa!) of “experience.” Enthusiastically pro-capitalist David Brin, for example, has been expressing concern for the trend away from “first class” airline travel, with the privileged instead bypassing the airlines entirely and traveling in private jets. When the privileged get so far removed from ordinary experience that they’re effectively living in a different world, I am inclined to think that bad things will happen, especially given that these are the people whose decisions affect the rest of us far more than ours affect them.

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    1. Some of the items you listed were great. But some were impossible for me to understand. These ones for example: “Punish negative externalities, encourage positive externalities. Tax economic rents punishingly.” What do these two even mean?

      “Enforce the doctrine of first sale (if you buy it, it’s yours) and do not allow items to be turned into services.” This I don’t get at all. Why shouldn’t I be able to return, say, a dress, if I bought it and discovered it doesn’t fit? Why punish the consumer this way?

      “Make it worth doing social work and do not allow the private sector to pillage the social sector (for example, parenting.)” This one I don’t get because I don’t see how parenting is “social work.” And how can anybody “make parenting worth doing”? Very confusing.

      “Allow no financial instruments which are more complicated than the underlying asset or project.” Complicated for whom? I find even the simplest transactions in finance impossible to comprehend. And so do most people.

      And, of course, I never denied that I am, indeed, pro-capitalist. It is also true that I acquired this attitude as a result of my cultural experience. You may laugh, but try living without toilet paper for a month, and tell me how you feel about capitalism then.

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      1. Externalities are side-effects of economic activity that are not documented by current accounting methods. The usual example is pollution. Economic rent is something I’m still trying to wrap my brain around, but I’m sure David Gendron can provide an explanation. Mutualists are all about rent-bashing. I don’t think what they call doctrine of first sale means you have to keep it; just that you get to keep it. An example of a product that has been turned into a service is the transition from VCR’s (sold with the understanding that you bought it, you own it) to TiVo-type devices, for which you pay by the month. Technically, you also “buy” a device, but continue to shell out for the ability to use it. And of course there’s the whole “software as a service” fad. I find it a disturbing trend. I don’t object as strongly to the concept as Ian seems to. I only object when licensing is represented as selling, as in the ad copy “own it on DVD this Tuesday”

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        1. Oh, now it becomes clear to me. Thanks for explaining! And I agree with the points you bring up.

          If only Ian Welsh explained things in a less jargony way to begin with. I understand the temptation to use short-hand when you are talking about ideas that are near and dear to you. But this makes your message less accessible to people who are still not very familiar with your ideas.

          I recently realized that I’m guilty of this myself. I started overusing the word MRAs in the meaning of “a sexist, a woman-hater” but many people take it literally in the sense that I oppose men’s rights, which I absolutely do not. And this misunderstanding is fully my own fault for speaking a language many people don’t understand.

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  6. Let’s look at the Lee’s approval list.

    “Punish negative externalities, encourage positive externalities.”

    I’m against state interference in economics, but if the state decides
    to interfere, it should be that way.

    “Tax economic rents punishingly.”

    For corporations, yes, because the concept of corporation is criminal in itself. For other firms, taxation is thief and I’m against that, even though it should be taxed (if such a tax exists) at the same rate than salaries, which is not the case now.

    “Enforce the doctrine of first sale (if you buy it, it’s yours) and do not allow items to be turned into services.”

    I don’t understand this point, in fact. So I’m an idiot.

    “Do not allow pipeline companies (app stores, telecom companies, railways, etc…) to extract monopoly profits.

    Keep so-called “intellectual property” to an absolute minimum.

    Make it worth doing social work and do not allow the private sector to pillage the social sector (for example, parenting.)

    Do not allow the financial sector to be the tail that wags the dog.

    Allow no financial instruments which are more complicated than the underlying asset or project.”

    I agree with all.

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    1. ‘Make it worth doing social work and do not allow the private sector to pillage the social sector (for example, parenting.)”

      -But what does it mean? Will somebody be so kind and decipher this for me? Maybe I also agree but don’t even know it. What does parenting have to do with social work and the private sector??

      Like

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