Sunday, January 31, 2010

Sex, gender and bigotry(1): John Finnis and the rationing of orgasm

This is the first part of a two part consideration of Law, Morality, and "Sexual Orientation" (pdf) by John Finnis (an advocate of the "new natural law theory" of natural law without its Thomist metaphysical underpinnings) arguing for Catholic natural law sexual morality and its (highly selective) legal implementation. The second part will be in my next post.


Reading Martha Nussbaum’s Platonic Love and Colorado Law: The Relevance of Ancient Greek Norms to Modern Sexual Controversies I came across this quote from John Finnis:
In classical Athens, there was amongst the Athenian upper classes an ideology of same-sex "romantic relationships" which were specifically man-boy relationships (inherently lacking the genuine mutuality of equals) and which in a certain number of cases doubtless resulted in sexual conduct (p.1538).
What caught my eye is the phrase:
… inherently lacking the genuine mutuality of equals.
For any support of traditional Catholic doctrine (as Finnis most certainly is) to talk of a sexual relationship “lacking the genuine mutuality of equals” is fairly shameless. First, there is the simple reality that, under Catholic doctrine, only men can make binding decisions about doctrine. The notion that this has not operated to the disadvantage of women is a nonsense—starting with the denial of any legitimacy to any priestly vocation among women.

The issue being not the notion that truth is complete and coherent (so, in some important sense, singular), but that there is a single, definitive, all-encompassing point of view on truth. One that is, moreover, the possession of the notionally celibate males running the Catholic Church who somehow completely transcend human epistemic frailty.

Second, the development in the modern era of something approaching genuine equality between men and women in marriage is a product of the breakdown of social notions of the public space as being a male domain. A domination that Catholic control, and later influence, over marriage law supported.

What this illustrates is how one cannot analyse matters of sex without considering matters of gender. Some conservatives object to gender-talk as an evasion of the biological reality of there being two sexes. This is wrong on several counts. First, even among humans, the biological reality is more complex than that (consider the recent Caster Semanya case). Second, defining gender as perfectly coterminous with the form of one’s genitals is far from a universal human norm. Third, conceptions of what it means to be ‘male’ and ‘female’ (such as their “typical” emotional characteristics) change over time.

Indeed, that the term ‘homosexual’ was coined in the year John Stuart Mill published The Subjection of Women is a nice historical congruence, as homosexual liberation has marched behind women’s liberation precisely because the shift towards a strong moral norm that sex should be between equals (hence paedophilia becoming the epitome of sexual evil) allows sex between men (sex between women raises less status issues) to become much less problematic. If—as has been the general pattern in many human cultures—sex is only legitimate between unequals (man and woman, man of higher status and man of lower status) then any male-male sex which fails to uphold the required status hierarchy becomes illegitimate. It “un-mans” them: a claim that is certainly not entirely absent from our age. (I remember one commentator in Commentary referring to homosexual activity as “men using men like women” in what was clearly completely unconscious misogyny.)

It is also fairly shameless for any modern Catholic supporter of natural law moral theory to cite comments attributed to Socrates or written by Plato or Aristotle as blanket condemnations of homosexual conduct. First, their sexual ethics were very clearly not the same as that of Catholic natural law theory (for example, on abortion, contraception and even infanticide). Indeed, that natural law theory in their hands had rather different conclusions is one indication of moral natural law’s malleability: the way normative essentialism operates to select its own premises, thus allowing practitioners to draw such conclusions which are congenial by selecting those parts of the relevant phenomena which are convenient and dismissing the rest as “improper”.

Second, because the condemnations of homosexual conduct were typically not blanket condemnations, but applied to particular acts in particular contexts—usually based on contradictions of status roles or concern about the strength of sensual passions—some of which applied equally to heterosexual acts. Moreover, often it was not even a full condemnation, but simply a rating as inferior compared to goals deemed higher. At no point did it actually feed (at least in the Greek case) into law. Given that the first civic statues in Athens not of divine subjects were of a same-sex couple, it was not likely to.

The pertinent classical Roman law seems to have been a law to protect the status of male citizens (that is, to not have young citizen males be the “passive” partner and so perform a sexual role felt incompatible with their status as citizens: they could legally penetrate lower status males all they wanted) for which no prosecutions are recorded.

What people such as John Finnis and Ed Feser are attempting to establish are rational, non-Christian grounds to support a very Judaeo-Christian natural law blanket moral condemnation of homosexual conduct and the barring of any legal support for homosexuals to live as openly in legally acknowledged ways as “practising” homosexuals. Because, of course, if it is merely a religious antipathy, then it is has no justifiable role in the public law of any state without an established church (or one with an established church but whose theology does not have any determinative status in law).

So citing Greek thought that was very concerned about a structure of status which definitely does not apply in modern societies, and incorporating a concern for excess of passion which certainly is not appropriate for modern law (and was not deemed at matter for actual law even then), is hardly much support. It is a case of “look, these people condemned some homosexual acts for completely different reasons in support of a very different sexual morality so there are non-religious grounds to engage in a blanket condemnation of homosexual conduct”. No, all the Greek cases do at most is support the sexual condemnations and rankings that they actually engaged in.

But there is much worse than that going on. Let us consider the issues of “homosexual conduct” and the notion of “practising homosexual”, particularly in the context of this published article (pdf) by John Finnis arguing for Catholic natural law sexual morality and its (highly selective) legal implementation.
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The unfortunate reality of sexual diversity
In the paper, Finnis holds that:
… states do have the authority to discourage, say, homosexual conduct and “orientation” (i.e. overtly manifested willingness to engage in homosexual conduct).
He is concerned to defend:
The concern of the standard modern position itself is not with inclinations but entirely with decisions to express or manifest deliberate promotion of, or readiness to engage in, homosexual activity/conduct, including promotion of forms of life (e.g. purportedly marital cohabitation) which both encourage such activity and present it as a valid or acceptable alternative to the committed heterosexual union which the state recognises as marriage. Subject only to the written or unwritten constitutional requirement of freedom of discussion of ideas, the state law and state polices which I have outlined are intended to discourage decisions which are thus deliberately oriented towards homosexual conduct and are manifested in public ways.
So, without being concerned with inclination or entirely private acts, nevertheless Finnis believes the state should continue to make it clear to the same-sex attracted that they should not exist as persons with such sexual natures, as such attraction is inherently wrong. (Because if they are fully entitled to exist, with such erotic orientations and all, so are those erotic orientations entitled to equal protection of the law: subject to standard constraints about protection of others.)

Given the reality of human sexual diversity, societies have a range of possible responses. At one end is to acknowledge that reality and incorporate it into their social forms and mores. At the other is to treat it as something that just should not be the case and so repress it as much as possible. Finnis is not advocating the death penalty for same-sex acts or same-sex marriage, so is not upholding the traditional Catholic position. But he is certainly operating on the premise that same-sex attraction should not exist, has no legitimate expression and should be repressed (both by those who experience it and by the state, at least in the public realm). To Finnis, a heterosexual is inherently a preferable sexual citizen than anyone who is same-sex attracted: particularly if they act on that attraction.

So, Finnis’ position on the ranking of sexual conduct has an obvious selling point. It asks heterosexuals to give up nothing (since they are not attracted to members of the same sex) and the same-sex attracted to give up a great deal (any acting upon that attraction), particularly in any public way. Providing a large majority with a sense of effortless virtue against a small minority has historically often been a very easy sell. The Catholic Church engaged in it for centuries against the Jews, for example. The remarkable thing is not that the sort of position that Finnis advocates does not have significant popular support: it is that its popular support has declined so much.

Consistent with the position Finnis wants to uphold, he supports not listing sexual orientation among the anti-discrimination categories. Indeed, ‘sexual orientation’ is a concept he is firmly against:
For the phrase “sexual orientation” is radically equivocal. Particularly as used by promoters of “gay rights”, it ambiguously assimilates two things which the standard modern position carefully distinguishes: (I) a psychological or psychosomatic disposition orienting one towards homosexual activity; (II) the deliberate decision so to orient one's public behavior as to express or manifest one's active interest in and endorsement of homosexual conduct and/or forms of life which presumptively involve such conduct.
Yes, “gay activists” want to be treated as fully legitimate manifestations of the human, the bastards.

The distinction Finnis wishes to defend only makes sense if same-sex attraction is not a legitimate manifestation of the human. Which is, of course, what the entire argument is over. As many people, implicitly or explicitly, have come to realize: hence the decline in popular support for the position Finnis wishes to defend, with majorities tending to support recognition of same-sex relationships (recognition of same-sex marriage tends to have a lower level of support but the trend is upwards).

Beware of classicists bearing misogyny
On what basis does Finnis uphold what he calls the standard modern position? On the grounds that homosexual acts are immoral. Why are they immoral? After defining homosexual acts as:
… bodily acts, on the body of a person of the same sex, which are engaged in with a view to securing orgasmic sexual satisfaction for one or more of the parties.
Finnis detours to attempt to recruit Socrates, Plato, Aristotle and Xenophon for blanket condemnation of all homosexual conduct so defined, including the remarkable statement:
Although the ideology of homosexual love (with its accompanying devaluation of women) continued to have philosophical defenders down to the end of classical Greek civilisation, there equally continued to be influential philosophical writers, wholly untouched by Judeao-Christian tradition, who taught that homosexual conduct is not only intrinsically shameful but also inconsistent with a proper recognition of the equality of women with men in intrinsic worth.
First, the implication that it was general position in classical philosophy to defend female equality is risible. Second, the connection between attitudes to women and attitudes to same-sex activity were much more complex than that, even in the ancient world. Sparta, for example, was notorious both for formalizing same-sex relations and giving women what many other Greeks felt was a positively “unnatural” status and freedom of action. Finnis’ later reference to:
… Aristotle's representation of marriage as an intrinsically desirable friendship between quasi-equals, and as a state of life even more natural to human beings than political life …
indicates that some difficulties are being glided over here. Finnis also refers to:
Plutarch's severe critiques of homosexual conduct (and of the disparagement of women implicit in homosexual ideology).
Let us pause and consider the breezy misogyny of that statement. Apparently, Sappho does not count. In fact, at no stage does Finnis ever stop to consider same-sex attracted women directly in his text. One could think of many possible reasons for this. I suggest a simple one: he finds what male homosexuals do to each other repellent, he does not find what female homosexuals do repellent, so he fixates on the former and ignores the latter. He is, of course, following in a long (Biblical) tradition here, St Paul providing the only reference to female-to-female sex in Scripture. What males do really, really matters (particularly if it has implications for their status as males): what females do, not so much. But this sits very badly with his breast-beating over male-female equality.

Some (though not all) Stoics did feel that procreation was the only justifiable point of sex: this was typically about restraining the passions. But, whatever your reasons, it is true that if procreation is the only justifiable point of sex, then same-sex activity is ruled out.

Finnis puts his position what makes sex legitimate or not very succinctly:
Genital intercourse between spouses enables them to actualise and experience (and in that sense express) their marriage itself, as a single reality with two blessings (children and mutual affection). Non-marital intercourse, especially but not only homosexual, has no such point and therefore is unacceptable.
In other words, no one is entitled to a deliberately induced orgasm unless they are engaged in unobstructed penile-vaginal sex within marriage. Clearly, a wide range of heterosexual sex (including masturbation) is barred by this: so what distinguishes the same-sex attracted is not that they break this sexual morality (huge numbers of people do, including millions of happily married opposite sex couples). What distinguishes the same-sex attracted is that, if they have a public persona as “actively” homosexual, as a “practising” homosexual, then they must be breaking this sexual morality. With heterosexuals, one can largely pretend that they are keeping to it. This is absolutely not so with the openly erotically same-sex active.

Hence the wish to have the law, at the very least, not concede any status or legitimacy to the same-sex attracted as erotically same-sex active. Indeed, they can perform a very useful scapegoating role: denouncing “practising homosexuals” provides public proof of one’s own commitment to moral rectitude, cathartic release of concern about one’s own foibles and a public statement of where the moral boundaries “ought” to be. Particularly given following the sexual rule Finnis is proposing would require a massive restriction of sex compared to what actually occurs: which makes the openly same-sex active an extremely useful set of scapegoats.

Indeed, Finnis is clearly himself using the same-sex attracted as scapegoats. He does not require that the state impose his rule about sex on heterosexuals whether or not they are married. He also does not propose for the state to impose the burden of that rule on the private lives of the same-sex attracted. The rule only comes into to legal play to bar same-sex couples any standing in law as couples: making them scapegoats for the offense their existence as same-sex attracted people causes his theory of sex.

One might note that this sexual theory requires human agents to agree to a massive restriction of their human agency: a small problem. In fact, a large problem given all the benefits they are expected to forgo, the control over their own lives and pleasures to be denied, in the service of a metaphysical claim: hence the Catholic Church’s notable failure to get people to adhere to it.

One might wonder why such a set-up-for-failure morality might be preached in the first place. Part of it could be a group of celibate males may well not be in the best position to see how it is set up to fail. A more cynical view (particularly given how erratic such celibacy can be) is that, within certain limits, such failure is useful. It gives priests the power of guilt. It certainly establishes their role as “gatekeepers of righteousness”, saying who is “in” and who is “out”. But it also makes scapegoats so much more useful—the “fallen woman”, the “abominable sodomite”. Which is why it has so much more power when it sells “effortless virtue”, as it does against the whore and the queer.

What the adoption of natural law sexual morality did is make priests commissars of natural law. (Just as commissars were priests of Leninism.) They get to decide who is “in” and who is “out” and why. The implications of that, and of the position John Finnis defends, is examined in my next post.

Thursday, January 28, 2010

As the radical Enlightenment retreats the Counter-Enlightenment advances

I am always sceptical of critiques of “the” Enlightenment since, following Gress, I divide the Enlightenment into two streams. One is the sceptical Enlightenment—human nature is consistent throughout history, which is why history is such a source of useful understanding: the issue is to apply reason to the facts of the matter, which include the enduring characteristics of human nature.

The other stream is the radical Enlightenment—human nature is malleable/has been deformed by the burden of the past and the path to the glorious future is to transform/release “true” human nature. The radical Enlightenment has been the path to tyranny, mass murder and failure with its utopian wars against people-as-they-are in the name of people-as-they-are-allegedly-supposed-to-be.

These are rather different beasts, even if both are impressed by the claims and possibilities of human reason.

Then there is the Counter-Enlightenment: the rejection of those claims on behalf of human reason, a wish to go back to an imagined “authentic” and “organic” past which is, in fact, irrevocable because the Enlightenment cannot be entirely undone: however much one may wish to reject it, its perspectives and insights are irrevocably part of the cognitive landscape. We cannot go back to the cognitive world before Copernicus, Galileo, Newton, Einstein and (especially) Darwin nor, for that matter, before Adam Smith. The paradox of the Counter-Enlightenment is that it rejects, but has to react to, the Enlightenment. Emotion, faith, identity and nature are the touchstones of the Counter-Enlightenment: the things that put limits on, or trump, human reason.

The C20th’s great three-way Western Civil War (1917-1991) between the two wings of the Enlightenment and the Counter-Enlightenment each had its champion ideology-states. In the sceptical Enlightenment corner was the Anglosphere: the alliance between that great creation of the sceptical Enlightenment, the US, and the birthplace and disseminator of so much of the sceptical Enlightenment, the United Kingdom and its Empire. In the radical Enlightenment corner was the Soviet Union and Leninism. In the Counter-Enlightenment corner was Nazi Germany.

The champions of the radical and sceptical Enlightenment’s ended up in alliance against the Counter-Enlightenment. Having won, they then struggled for mastery of the human future: a struggle that ended with the collapse of the Soviet Empire, whose ruin brought down the radical Enlightenment as a serious contender.

With the triumph of the Western alliance, we in the developed world live largely in a world created by the sceptical Enlightenment. Which means, if oppositional critique to the existing, surrounding society is the path to virtue—a grand path to virtue, since the imagined future can be so much more morally “pure” than any grubby existing reality, and the more oppositional, the grander the virtue—then such critique needs to be based on quite different premises from those of the sceptical Enlightenment: hence on the radical Enlightenment or the Counter-Enlightenment, the historical streams of thought on offer.

But the lustre of the radical Enlightenment is besmirched by too much grotesque failure. There is a certain intellectual cabaret Marxism still around, but—however emotionally satisfying for its adherents—it is nowhere near the serious basis for critique and oppositional virtue it used to be. Internationally, we live, apart from a few pathetic holdouts, in a post-Leninist world. The transform-society-by-controlling-language ambitions of political correctness represent the radical Enlightenment’s last sputterings: albeit noxious sputterings, as the trial of Geert Wilders is demonstrating and previous contretemps, such as the campaign against the Encyclopedia of Homosexuality, illustrated.

Which means those wishing for premises to support maximally virtuous oppositional politics are driven to the Counter-Enlightenment: particularly to the romantic stream of thinking. So, we see among “progressives” retreat from cultural politics that Lenin and his disciples (Stalin, Mao, the Kim family dynasty, etc) are the ultimate exemplars of and advance towards cultural politics more like those of Hitler’s—cultural politics very concerned with identity, authenticity and nature.

Not that they are the same cultural politics as Hitler’s. They cannot be, because they are from people whose stream of thinking has passed through the radical Enlightenment first. Hence, for example, they make a fetish of equality. (A fetish because equality is exalted as a nominal virtue while all sorts of deep inequalities—of ascribed causal agency, of cognitive understanding, of moral status, of substantive power—are happily tolerated, exemplified or advocated.)

The area of debate that well exemplifies this shift in the balance of oppositional politics against the sceptical Enlightenment from the radical Enlightenment to the Counter-Enlightenment is the change from conservationism to environmentalism. The conservation movement dates back to the C19th and included such luminaries as Teddy Roosevelt. It was largely a product of the sceptical Enlightenment (though there were tinges of Counter-Enlightenment romanticism of nature). The conservation movement saw things in terms of practical stewardship. It was about what was worthy to care about, understood as being a concern for what works.
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Environmentalism is, by contrast, very Counter-Enlightenment. Not only do concern for things such as “organic food” and “food miles” come straight out of blood-and-soil mysticism of about 1900, but it sees a trumping moral value in its conception of the “natural order” that is, at deep level, anti-reason, using science only when convenient and, even when it does, engaging in a quasi-religious fervour which is fundamentally anti-science human it is anti-open-ended scepticism.

And, indeed, anti-human. Environmentalism has been a serial policy disaster because effects for people are so massively discounted, because it is a substitute religion (with all the intolerance, arrogance and self-righteousness that goes with that), because it has all that mystical anti-reason concern for “authenticity”, “naturalness” and allied to the politics of noble intention—intentions its discounting of concern for reasoned consequences make trumping.

This is not what the radical Enlightenment, for all its manifest flaws, was about. Hence the antipathy to environmentalism of radical Enlightenment folk such as Alexander Cockburn (who has compared the recent Copenhagen Climate Summit to the Council of Nicea) or Martin Durkin the director of The Great Global Warming Swindle.

A piece by Ian Abley of Audacity about the effect of environmentalism on housing policy in the UK in particular attacks the Counter-Enlightenment thinking of environmentalism in the name of more Enlightenment concerns (such as affordable, decent housing for ordinary folk: modern environmentalists indignantly insist they “care” about such matters and then demonstrate, by the policies they advocate, that they do not—the fetish of equality operating, not the reality).

The Counter-Enlightenment surge of the later C19th and early C20th appealed to those whose status was threatened, or otherwise made uncertain, by the mass society of industrialization. Particularly aristocracies, established Churches and fearful middle classes: people who looked at the changes all around them and either saw their traditional position threatened or simply were very unclear about where they would fit. The notion of being “grounded” in the past, and that there were things greater than the threatening offshoots of human reason and human ingenuity which adherents were part of, was very comforting. The jihadi movement in Islam represents another go around for this response to modernity.

Back in the West, with the collapse of the radical Enlightenment, a lot of its former scions were left homeless. Stephen Hicks has splendidly detailed the impact of that in philosophy with his very historically grounded and philosophical acute dissection of post-modernism. Their problem was straightforward: to just accept the triumph of the sceptical Enlightenment left them too ordinary. There was no summit of moral and cognitive superiority from which to look down on their fellow citizens. There was also a certain free-floating moral concern. An environmentalism grounded in the Counter-Enlightenment solved all those problems. It is splendidly oppositional to the sceptical Enlightenment, having quite different premises, and systematically discounts both the “vulgar material” concerns of their fellow citizens (particularly working class citizens, such as affordable houses-with-garden and liberating cars: it is a perennial middle class concern to differentiate themselves in status from the working class) and casts “vulgar commerce” as destructive (while giving a way for denizens of “vulgar commerce” to buy moral indulgences by going green).

It is a rather pale reflection of the surge that led to the Nazi ascension in Weimar Germany, largely because life in the West is very comfortable, and those taken by these cultural politics are particularly comfortable. It is a status-moral indulgence of the comfortable class, rather than of fearful classes. It also eschews ethnic narcissism: partly because patriotism is vulgarly working class, but also because Nazism itself so discredited overt ethnic narcissism. Having passed through the radical Enlightenment, an ostentatious internationalism is much more congenial. Particularly to those who career paths are cosmopolitan rather than limited to a particular country.

This is why multiculturalism works so well for them. It appeals to a sense of cosmopolitan chic, differentiates them from the vulgar masses, identifies them as being loftily aware of the flaws of their own society and allows to engage in a romantic exaltation of (other people’s) ethnic identities. In ways that typically deny the marginal in those cultures (particularly, women) the Enlightenment benefits multiculturalist sentimentalists so happily grab for themselves. All tied together in an arrogant (though largely unthinking) assumption that the patterns of history apply neither to them nor what they believe (something that is very radical Enlightenment, with its belief that transforming humanity frees one of the legacies of the past).

The radical Enlightenment failed because its belief in its capacity to transform humanity turned to be brutal and hollow nonsense. A vile war against people as they are in the name of people as they were deemed to ought to be. The Counter-Enlightenment failed because its claims to trump human reason also turned out to be destructive nonsense that exalted some humans brutally over others. The modern progressivist melding of the two may be much less brutal and oppressive than either, but it is a melding of vices rather than of virtues. The radical Enlightenment and the Counter Enlightenment both had the virtues of their vices: that is what made them so attractive and destructive. Modern progressivism has the attraction of easy virtue, of an easy sense of superiority, it wants its moral toys. But it is less threatening in itself than either of its precursors. Where it is more of a problem is in getting in the way of dealing realistically with those problems that genuinely confront us, rather than those which are overblown creations of frustrated, status-driven cultural oppositionism.

The latter have rarely been better dissected than in this splendid comment:
The whole of Australia was aware of the burgeoning multi-ethnic melting point Australia had become. …
So when all these white middle class people who read The Age like The Bible start jumping up and down about how racist Australians are, the rest of the country looks around their suburb, their shopping centre, their place of work, their customers, their clients, their deli workers, their buses, their trains, their spouses, their in-laws, their school playgrounds, their university lecture halls, their doctors, and says “WTF are you talking about”.
(Note that over a quarter of Australia’s population was born overseas about twice the proportion of Americans who were born overseas.) But, since these cultural politics are driven by status-convenience more than anything else, a certain pervasive unreality is to be expected.

Wednesday, January 27, 2010

The Power of Ideas

This book review puts two positions about the power of ideas up against each other.

One is:
Rahe believes that "ideas have consequences," that they have the power to guide and even make events, and therefore that they are not mainly caused by the conditions of their time or context but are, on the contrary, mainly the cause of these conditions.
The contrasting position is:
In [Skinner and Pocock’s] view, often called "historicism," ideas can be traced to prior conditions that are not ideas, such as economic forces or, more particularly for them, political interests. Ideas are essentially defensive; they justify, defend, and protect the established interests of various regimes and of their opponents, for example the defense of the American colonists in the Declaration of Independence.
Ideas cannot cause events because they themselves are caused; so the colonists were not moved to act by the ideas in the Declaration, but those ideas merely expressed what they thought to say after the fact. Ideas are no different from ideology in which you say what you are forced to say in your situation, or your "context," like a defendant speaking through a clever lawyer.
Both these positions strike me as wrong: the former because it gives ideas too much causal importance, the latter because it gives them too little.

Ideas have consequences
Against the second view, consider the question of why do people propound ideas? If it is all just a causal epiphenomenon on more basic structures, why bother? Why not appeal to those more basic structures?

And, if you were going to appeal to those more basic structures, how would you go about it without using ideas?

We can see immediately that ideas are absolutely necessary for communicating. But why are they so necessary? Because we cannot have any sort of even mildly abstract communication without them.

So, ideas are needed for communicating. Which immediately gives them some independent power, because obviously communication which is more resonant with the audience is far more successful than communication which is not.

That would appear to lead back to more basic structures. And, to some extent, it does. But consider what it is you are appealing to. Yes, people have interests, and those interests can be motivating, indeed, powerfully so. But are people only motivated by material and social interests? And do those interests manifest according to set priorities and set conceptions?

If people can and do have motives other than their material and social interests, and if even those interests can be construed in different ways and according to different priorities, then clearly ideas will have consequences. Clearly people do, clearly interests can be, so clearly ideas have consequences. So the second view is wrong because it is too simple.

Ideas have to resonate
But the first view is wrong because it is too simple as well. Even if we cannot match interests and ideas on a one-to-one basis, clearly there is some connection between the two. Ideas do not manifest randomly across time and across societies. They clump together in patterns of belief that are clearly somewhat connected to material and social interests.
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Such as support for free trade or protection, for example. As the Stolper-Samuelson theorem would predict, relatively scarce factors of production tend to support protection (because it protects their scarcity against foreign competition), relatively plentiful factors tend to support free trade (since it raises their incomes by lowering the prices of goods they purchase). So C19th Britain was free trade because that advantaged labour and capital in a situation where land was scarce and labour and capital was plentiful, Britain being an exporter of both. (Hence the fights over the Corn Laws.) C19th US and C20th Oz were protectionist because that advantaged labour and capital in a situation where land was plentiful and labour and capital were scarce, both countries being importers of both. Later C19th and early C20th continental Europe tended to be protectionist, since that advantaged land and capital over labour in a situation where labour was plentiful (and being exported) but capital and land were scarce.*

Similarly, anti-Semitism occurs among gentiles, hatred of homosexuals among heterosexuals and contempt for getting income from commerce among intellectuals (particularly tenured academics, and would-be tenured, academics)—to take three sets of ideas which have be used to murder thousands or millions. Note that all three cases were based on notions of “false form”—Jews were adherents of a "false form" of religion or were a “false form” of the human (or both), same-sex activity a “false form” of sex and same-sex orientation a "false form" of the human, business ownership a “false form” of economic activity and being an owner a "false form" of social being. So, extermination was justified because, as “false forms”, they needed to be eliminated: a patent example of ideas, of the logic of belief, having consequences.

To suggest ideas trump social context is belied by experience. Ideas have to resonate in order to have power, and social context, including social and material interests, are powerful sources of such resonance.

But not the only ones: after all, not all gentiles are anti-Semitic, not all heterosexuals hate homosexuals and not all tenured or would-be tenured academics have contempt for getting income from commerce, while all the laws which improved the status of women, blacks and Jews were originally passed by white male gentiles. Hence both the above positions are wrong because they are too simple.

* Note, all this still leaves open the possibility that the net effects of protection were still negative overall: particularly in terms of long-term and intangible effects.

Tuesday, January 26, 2010

Alternative history

Given my love of speculative fiction and of history, the genre of alternative history should be something that really appeals to me. Sometimes it does (anything by S. M. Stirling for example).

But often it does not. Apart from The Two Georges and The Toxic Spell Dump I generally find Harry Turtledove a bore. Characters I am not interested in and stories which I cannot bother with. At least his history is coherent, however. Sometimes, I find I just cannot get past some historical implausibility. Kim Stanley Robinson’s Years of Rice and Salt for example, just does not create reasons I find plausible for an Islamic Scientific Revolution in central Asia. The competitive jurisdictions, institutional stability and relatively easy access to a wide range of places and peoples that the mountainous peninsula-of-peninsulas of Europe possessed (and made them very idea-adaptive long before they became idea-inventive) are not likely to be replicated in an inland region subject to erratic waves off pastoralist conquest. Not to mention the small difficulty of al-Ghazali’s successful intellectual counter-revolution against Aristotelianism.

But, as an intellectual tool, I agree with Geoffrey Blainey. One needs to have a sense of the possible alternatives to have a real sense for history.

Having recently finished Claudia Koonz’s excellent The Nazi Conscience and Norman Cohn’s Warrant for Genocide (which I reviewed here and here), has led me to think about what would have happened if the Whites had won the Russian Civil War.
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Part of the question is “which Whites?”—White disunity was one reason the Reds won. But Lenin’s regime did come close to defeat more than once so it is a perfectly reasonable historical question.

Part of the value of Cohn’s book is that it reminds one of what a noxious autocracy late Romanov Russia was. The horrors of the Soviet Union make the previous horrors of Romanov rule pale, but there were good reasons why Tsarism was something of a moral pariah. Reading through Koonz’s careful dissection of the process by which mass murder became entirely thinkable, and able to be at least acquiesced in, in Nazi Germany, it struck me that they applied if anything more strongly in Tsarist Russia.

And not just as a theoretical possibility. Tsarist Russia was notorious for its violent pogroms, after all. During the Civil War, things got worse: perhaps as many as 100,000 Jews were massacred by Whites during the Civil War.

So, the possibility of a triumphant White regime engaging in its own “mini” Holocaust against the Jews is not to be dismissed.

The wider knock-on effects of the overthrow of Lenin’s regime would have been enormous. Leninism would not have been established as a successful mechanism for seizing and maintaining power. Mussolini may well have less inclined to continue with his adaptation of Lenin’s political methods to his national project. The spectre of Leninist revolution would have been a less fearful one, lessening Mussolini’s support. The “March on Rome” might well not have been attempted. If attempted, it might well have not been successful.

Without the Leninist and Fascist models, Hitler would have been less inclined to adopt Lenin’s model of political action to his racial project. Without the Bolshevik spectre, Hitler could well have garnered less support. Fascism and Nazism needed their Leninist enemy, as both spectre to oppose and model of politics to emulate. If Leninism had been “throttled at birth” in Russia, revolutionary socialism would not have had the aura of success to inspire adherents or frighten opponents. The likely consequences of Leninism losing the Russian Civil War are enormous.

But that does not mean that Russia might not have ended up with a quite noxious, even megacidal, regime. That, of course, might have had the same effects for forms of counter-revolutionary politics (likely grounded in religious traditionalism) that the success of the Soviet Union had for revolutionary socialist politics. By its noxious example, and its wider effects, it might well have driven liberal opinion leftwards in reaction.

Thinking through the possibilities rapidly spirals off in all sorts of imponderable counterfactuals. The Russian Civil War was an enormous tragedy. A tragedy made all the more terrible by the possibility that there were no good outcomes on offer.

The Call of the Entrepreneur

Monday, saw another film put on by the film society I recently joined. The film, The Call of the Entrepreneur was produced by the Acton Institute and based on a book by its director, Father Robert Sirico, who was one of several “talking head” commentators during the film.

The narration put the framing question early: are entrepreneurs virtuous or vicious? Is being an entrepreneur a virtuous activity or just selfishness?

The film is organised looking a three different entrepreneurs. As someone commented in the discussion after the film, one of the virtues of the film was being able to watch an entrepreneur’s mind at work.

We start with Brad Morgan, who talks about turning a losing-proposition dairy farm into one of the most productive herds in Michigan. Then milk prices plummeted.

So he went into composting in a big way: he can now turn manure into compost in 50 days. He produces a range of different compost products. Manure that was costing him about $25,000 a year to get rid of was now producing turnover over about $1.5m a year (including manure from other farmers).

Interspersed with this (and continuing with the other entrepreneurs), we get comments from Father Sirico (Acton Institute) on virtues of what entrepreneurs do and what it requires. Including the comment that regulation was a restriction on creativity. We also get comments from writer Samuel Gregg and Michael Novak.

They articulate a vision of the entrepreneur as patient, displaying perseverance, having faith and vision, being other-directed, creative and risk taking. Including that the risks involved are real, given most new businesses fail.

A point that is not made directly, is that if we take away risk we also take away achievement—one of the more subtle dangers of government intervention.

The film presents as a counterpoint for what the commentators have to say various excerpts of religious leaders denouncing the business class. The film is very much aimed at an audience that is used to religious terms framing public debates. In particular, it is a conversation within Catholic debates over social justice.

One of the points made in the film is that greed is universal: it is not specific to businesspeople. Another is that the success of the entrepreneur seems inevitable after the fact, which is a quite false way to look at wealth creation and what an entrepreneur does.

The next example moves into the world of the money-lender—the film deliberately uses the term with its negative Biblical connotations—and Frank Hanna, merchant banker.
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Hanna talks about going around with his father as a boy, collecting rent, doing maintenance work on properties and being taught by his father how business works. Hanna argues an entrepreneur has to be a bit of an engineer: the question of “how does this thing work” is fundamental.

Hanna studied law, then practised for a couple of years. He examined the law firm he worked in, and went to a junior partner and talked about how compensation worked in the firm (something which was a tightly held secret). The partner ended up asking him “how do you know this?” to which the response was that the law firm was still a business and he had worked out how it worked as a business.

Hanna and his brother pooled some funds, borrowed further money with it as a down-payment, then loaned out the funds and kept doing that. They were now managing about $1.5bn in funds. (I did wonder, during the film, how they had weathered the Global Financial Crisis.)

In the process, we are treated to a very clear explication of the basics of how capital markets—which Hanna has a very clear grasp of and could explain well—interspersing his explanations with narrated animations.

The entrepreneur gathers information and then decides where the capital should be employed: good decisions mean more wealth. “If he makes bad decisions, he will not be making such decisions for very long”. (Unless, of course, government subsidises failure by bailing firms out: but this film predates the recent bailouts.)

Hanna explains credit as a time-transfer and how spreading the risk allows more capital to be lent, so no one bears the entire cost of an individual failure. “Hopefully you create wealth, and hopefully money is a representation of the wealth created”. The key is to understand the time value of money and the benefits of risk diversification.

Hanna waxes lyrical about the role of insurance—specifically maritime insurance—in creating the United States. It is a nice discussion of the role of insurance (particularly Lloyds of London) in commercial shipping. Calculating risks allowed risks to be shared (and thus dispersed).

In the discussion after the film finished, it was pointed out that Lloyds was started by religious refugees (Anabaptists, Quakers, Jews: mainly from Catholic Europe) who met in a cafe.

Back in the film, we are treated to a denunciation of the picture of capital markets put in the film Wall Street as the most insidious mis-representation of the market. Markets are not a zero-sum game. Wealth “did not come from someone else, it was created.”

Commentator George Gilder argues that the notion of zero-sum economy is the most evil economic idea: leading to violent, confiscatory, destructive behaviour and social arrangements. In other words, to death, oppression and unnecessary poverty.

Frank Hanna is so articulate on how markets and entrepreneurship works, he continues to comment throughout the rest of the film.

We then meet the person with the most moving story, Jimmy Lai. He was about four when the People’s Republic and Mao’s revolution came to his village. His family was a rich family, so “enemies of the people”. Their property was confiscated and their mother allowed home from the labour camp only on weekends to look after her three young children (who otherwise had to look after themselves).

Jimmy Lai tells us how, in communist society, surrounded by all the lies, the outside world is a scary place. But he worked in a railway station, so he got to see outsiders. They were information carriers: they were well-dressed, and treated railway porters much better than local people did (in China, carrying bags meant you were a marginal person). Then, as part of a tip, one of the outsiders gave him a chocolate bar. He was (as normal) hungry, so he bit into it immediately. It tasted wonderful, the best taste he had ever had. So he asked what it was. When the man, who was from Hong Kong, explained it was chocolate, Jimmy Lai decided he had to go to Hong Kong (he was 11 ½ years old). It took him a year to convince his mother that he had to escape to Hong Kong (who was frightened that, if he left, she would never see him again).

At the age of 12 ½, he got a visa to Macau from a policeman friend, and (at 12 ½!) went in crowded fishing junk to Kowloon. His mother’s sister paid $HK370 to smugglers even though they were very poor people. Jimmy was sent to work the night he arrived. There he smelled food he had never smelled before. He worked long hours, eating and sleeping in the factory, but he remembers it as a very happy time because he knew he had a future.

He noticed that English was an advantage in getting ahead, so he learnt English, and could read and converse in it when left factory at 14. At 18, he got a job as garment salesman. He arrived in New York, a new place for learning and experience. He had mentor, and he stayed with him and his wife. In 1967, at a dinner at a retired Jewish lawyer’s, Jimmy says he was “speaking rubbish” but, as he left, the lawyer lent him a book and said “read this, it will be good for you”.

The book was Hayek’s The Road to Serfdom. Jimmy Lai tells us, with tears in his eyes, “that book changed my life”. He said that he could “read between the lines his [Hayek’s] passion for freedom.”

Back in Hong Kong, he became a manager at garment factory, where he got bonus ($HK7,000) which he invested in stock market. Before doing so, he bought a lot of books on the stock market. With the profits from that, and a wealthy business partner, he built a clothing factory and then went retail, starting in, 1981, a clothing store chain (Giordano: named after an Italian restaurant in New York).

Things went well, and Jimmy Lai made lots of money. Then the Tiananmen Square protests and massacre occurred. The protests (and their repression) affected him greatly. Jimmy Lai tells us that he had always run away from China, particularly emotionally. “All of a sudden, it was like my mother was calling in the darkness of night”.

He did things such as printing supporting t-shirts, then he went into the media business founding a monthly magazine, Next. As he says “the media delivers information, which is choice, and choice is freedom”.

Next ran pieces critical of the Chinese regime, including Premier Li Peng. The CEO of Giordano told Jimmy Lai that he had to sell his shares in the business otherwise it was finished, so he did.

He launched a newspaper year later, Apple Daily and is a significant player in the crowded Hong Kong/Taiwan media market. As Lai says, “Taking a risk is dashing into hope”.

Interspersed with Jimmy Lai’s story, the film makes the point that, when he got to Hong Kong, Hong Kong was booming while millions were starving in China. The differences were property rights and rule of law.

Jay Richards and Peter Boettke are added to the interspersed commentators. Boettke makes the point that, in much of the world, the threat of government or neighbour confiscating wealth leads to economic activity being largely limited to “bazaar” (immediate swap) markets.

The film also criticises mainstream economics for ignoring entrepreneur. Gilder complains that defenders of capitalism exalt free markets, not free men or free ideas. Boettke says that capitalism begins with enterprise. Father Sirico that an entrepreneur is like a orchestra conductor coordinating people some of who he will never meet, that being an entrepreneur was not a purely individual activity.

Frank Hanna tells us, “an entrepreneur is hopeful, flexible and adaptable,” while Brad Morgan observes, “the success of what I have done will be assessed after I am long gone”.

The film moves back into the religious mode, talking about God as creator, and the creative impulse as connected to the divine., that what calls the entrepreneur is the desire to create. Father Sirico explains the theological conception that humans are called to work with God in a continuation of the creation of the world.

In the discussion after the end of the film, the comment was made that the film was about the moral re-armament of entrepreneurs, to give them a sense of what they do as a moral, and morally worthy, activity. Quite so.

The film was very clear that wealth is created by human action. It was also clear in the discussion that the religious element jarred somewhat on Australian sensibilities. But, of course, the target audience is a rather different (and much more religious) society.

There was also criticism of the film as not making enough of a case for self-interest—for making selfishness (characterised as greed) too much of the thing defined against—and basing its arguments too much on virtues and not enough on beneficial outcomes. The argument being that a framing in terms of altruism gives too much away to the critics of capitalism, that a framing implicitly against self-interest gives too much sustenance to the anti-capitalist impulse.

Perhaps, if that is the only way the argument is ever made. I am less convinced it was a flaw in the film, since contesting the language of virtue and other-directedness also seems appropriate.

It was also suggested during the discussion that that much more could have be made of the Judaeo-Christian notion of personal responsibility for actions.

Owning morality
It was clear in the discussion that one reason that the religious element jarred on people is that they objected to any implication that religion was needed for ethical behaviour. That ethical business behaviour in particular is not religion-based.

This raises wide issues. It seems to me one aspect that makes the “culture wars” so poisonous is the competing claims to “own” morality. One gets it both from the progressivist-pc-left and the religious-right. It is a status claim that offends people it is made against strongly: indeed, it more than offends. We are status-concerned beings and part of what morality is about is binding us in a moral community. The claim to “own” morality both makes a hostile status claim and implies that those who disagree are outside the moral community: the former invokes resentment and the latter a sense of hurt; a sense that their personhood has been denigrated, even in some ways denied.

But that is, of course, precisely how bigotry strikes at one. The trick is to not drink the bitter wine offered: but that can be a very hard trick to learn. The harder, indeed, the more other-concerned a person one is.

The discussion also touched on other aspects of US culture and law. People noted that, in the US, work is honourable (in a very overt way) and that access to venture capital in the US is high. That failure is permitted: the people who try are generally worth supporting. The further point was made that about 30 states had “non-recourse” laws. That, once you handed the asset you borrowed to buy back, the lender had no further recourse. Naturally, those states also had higher interest rates.

The power of anti-capitalist sentiment was noted—such as President Obama responding to the upset Republican Senatorial win in Massachusetts by attacking banks and crashing the stock market 400points in two days. It was doubted how genuinely popular such antics were.

Speaking as a (very) small businessperson, I enjoyed The Call of the Entrepreneur lots. It did make me feel much more positive about what someone like me does. But it was also uplifting in its sense of celebration of human endeavours and the efforts of others. I also appreciated how intelligently informative it was. I enjoyed the film, and the discussion afterwards, a great deal.

Monday, January 25, 2010

Visions of God and visions of authority

This extends a comment I made here.


Americans often have a tendency to interpret things rather too much through the prism of American concerns, actions, perspectives and history. It is a natural error: particularly easy for a country which looms large in the rest of the world, let alone own in its own concerns. It is a mistake, for example, to forget that the jihadi movement, however described, has a history and a reach which extends beyond the post-2001 changes in US foreign policy which, after all, were a response to it.

But it is also a mistake to think that Islam is somehow "outside history". The notion that the logic of belief has to be the logic of believers does not fit the historical facts. Yes, Islam has an underlying logic to it and yes that it is such a scriptural-based and all-of-life religion gives that underlying logic recurring power. But that still leaves room for lots of changes. Including how many people actually think that underlying logic has to be the most important thing in their, and their children's, lives.

Moreover, at the centre of that logic is a notion of authority (particularly what constitutes Good Authority) and of God (as the ultimate Good Authority). Al-Ghazali's victory over Ibn Rushd (Averroes), which saw doctrinal absolutism supplant philosophical questioning, was not inevitable. It was in large part due to conceptions of God flowing from conceptions of authority. This is why the potential social change from a burgeoning Middle Eastern middle class may well be extremely significant. If your notion of authority changes, so does your conception of God (as the ultimate authority). Latin Christendom had essentially the same debate as that between al-Ghazali and Ibn Rushd but the victory went to the philosophers/Aristotelians and not to their opponents in large part, I would argue, because of different conceptions of God from different conceptions of authority.

To Latin Christendom, God, as the ultimate Good Authority, could not be an arbitrary tyrant. Hence the rule-bound universe of Aristotelianism fitted. To tribal-autocratic Middle East, to put any limits on God insulted his honour. Hence the rejection of Aristotelian reason and rules in favour of doctrinal absolutism. If the middle class revolution shifts people's views of Good Authority, it will change their views of God. Much flows from that: particularly in a civilisation that still defines itself religiously. So yes, the potential middle class transformation of the Middle East does really matter: in a sense, not despite Islam having an underlying logic but because it does.

Sunday, January 24, 2010

Bubbles: going where angels fear to tread ...

There has been a lot of discussion about "bubbles" post the global financial crisis and the great recession. I believe bubbles exist: I believe that they are only clear in retrospect. (A useful discussion is on Scott Sumner's always worth reading blog.)

I believe bubbles are only clear in retrospect as an application of the efficient market hypothesis (EMH). If it was obvious prices were going to crash, people would not invest in ways which led to the price rises in the first place.

(BTW, like other things in economics, such as rational expectations, EMH needs a better name. It is really something like the "all-information-is-incorporated hypothesis" just as rational expectations is really consistent expectations. If they had more descriptive names, people would not misconstrue them so easily and there would be less argument about them.)

It is all very well to argue that people do know they are going to crash they just get their timing wrong, but that flatly does not work for the one area I have some detailed knowledge, which is housing bubbles. People invest so much of their wealth in them because they have become established as inflation-beating assets. People are not taking out decades-long mortgages and moving in because they "know" the prices are going to crash.

I also really dislike macro-explanations of housing bubbles which do not incorporate the micro-economics. Paul Krugman's moderately famous 2005 piece on Zoned Zone versus Flatland is correct. Housing bubbles are typically crucially on constrained supply of housing land, usually due to regulation of land use (i.e. zoning). Though there are exceptions: Ireland was a case of privately constrained housing land supply. While, at the peak of the Freddie Mac/Fannie Mae/Community Reinvestment Act madness in the US, there was clearly oversupply of housing in some housing markets not suffering constrained land supply. But generally, constrained land supply for housing is the key to housing bubbles.

Which is why some US housing markets had bubbles (notoriously California) and others did not (notoriously Texas). Internationally, Australia is all "Zoned Zone". Since Australia did not have (apart from the minor nonsense of the First Home Buyer's Grant) governments encouraging risky lending and our prudential regulation of financial markets worked, Australian housing prices have stayed up, apart from some adjustment in Sydney a few years ago.

Germany, on the other hand, is all "Flatland". The federal German constitution incorporates a "right to build". It is very hard for officials to stop people building what they want when they want [provided they follow the established laws: the discretionary power of officials is very limited and the tax system penalises local authorities who block movement into the locality]. The consequence is that German housing supply responds directly to German housing demand, so German house prices move at about the rate of inflation (less, when the substandard East German housing stock was added in after reunification).

New Zealand is "Zoned Zone" country. As an indication of how much zoning affects land prices, a study found that growth limits are elevating Auckland land prices:
… land just inside Auckland’s MUL, or growth limits, was valued at approximately 10 times land that is just outside the boundary.
Britain is also "Zoned Zone". Indeed, it was from Britain that Australia (and I presume New Zealand) "caught" zoning. The madness that is British housing prices follow directly from its zoning regulations (as the comparison with Germany shows quite clearly). Regarding zoning in the US, there is quite an enlightening paper on the economic history of zoning (pdf).

The point that one has to start with micro, not macro, explanations of housing bubbles comes quite clearly in this recent US Federal Reserve Chair Ben Bernanke speech, which reviews the evidence across a range of countries.

Part of what gets in the way of thinking about bubbles is that people often have some notion of "correct" prices. (Rajiv Sethi's piece I linked to above talks about that.) The notion of "correct" prices is a notion that is not able to be "cashed out" in advance. [There is a nice discussion here and another here.) If we could, it would be obvious that prices had "overshot" and people would not invest in ways which create the price rises in the first place. Certainly, prices can have long term trends and a surge in prices well above long term trends may make one suspicious. But long term trends also change.

In other words, if there was some reliable way of predicting bubbles, they would not occur.

All of which makes me sceptical about adding "bubble popping" to the task of central bankers. Trying to get them to attend to deal with things that are clear only in retrospect seems to me a policy nonsense.

This is not to say bubbles do not matter. They do. It is clear, particularly from the Australian Treasury's series on net private wealth, that Australia had a "bubble economy" during the mining boom of the late 1960s to early 1970s. Australian markets, particularly labour and financial markets, were highly regulated in a policy regime designed to suppress risk. Given the apparent lack of "downside" risk, the addition of mining income to a risk-suppressed economy led to a huge surge in share prices. After the mining bubble crashed in 1973, Australia had a "flat" economy for the next decade until economic reform got underway from 1983 onwards. A generation of economic reform has since led Australia to have one of the most flexible economies in the world, which has led it to be able to deal with the Asian Economic Crisis of 1997 and the more recent global difficulties relatively easily. (Though there is a respectable argument that monetary policy was Australia's big advantage in the recent downturn.)

Japan notoriously had a "bubble economy" which crashed spectacularly in 1991. It had highly regulated land and financial markets where downside risk was apparently suppressed. Australian journalist Peter Hartcher wrote some revealing analysis for The National Interest which he turned into a book. Since the collapse, Japan has had a "flat" economy where enormous amounts of "pump priming" have failed to restart serious economic growth.

Various commentators have made comparisons between Japan of the lost decade and the current situation, particularly in the US (Krugman does here, for example). Indeed, Federal Reserve Chair Ben Bernanke has consistently failed to do what American commentators (such as himself) told the Japanese they should do. I think it is fair to say that US policy should not be attempting what was tried and failed (again and again) in Japan.

So, that bubbles cannot be reliably identified in advance (indeed, one can happily identify pundits who failed to do so) means that they are only clear in retrospect. But that does not mean they do not occur (indeed, they occur because we do not know they are going to crash) and it certainly does not mean they are not a problem.

The solution? Get your micro economics right to start with. Do not regulate markets so as to give one-way bets. Do not (pdf) inject moral hazard with "too big to fail". Do not expect fiscal stimulus to work as any sort of [ongoing] solution. As for monetary policy? Perhaps Scott Sumner is right and it should simply target a set growth rate in NGDP (nominal GDP).

ADDENDA As a result of comments here, just to clarify, by 'bubble' I mean when asset prices surge and then collapse. Part of what has made housing prices surge is the belief that housing is an inflation-beating asset (otherwise more people would rent, as in Germany). So expectation of future rises is what drives the investment. Now, whether that expectation is well-grounded, or only grounded in the experience of rising prices, that is why bubbles are clear only in retrospect.

I have also amended the post to delete a sentence on the objectives of central banking which I now strongly disagree with. (It was only an aside, so does not change the argument at all.) I have also clarified how the German system operates.

FURTHER ADDENDA: I liked the comment here, about the EMH, that:
... when arguments have such structure, it is an indication that we are asking bad questions. Its similar to the Calvanist vs. Anabaptist debate in Protestant Christianity. They debated whether or not we have free will, when that isn't the real question. The real question is if we have responsibility or not.
In the same way EMH answers are bad question. The question shouldn't be "are markets efficient," the real question is "Can certain individuals given power consistently make better choices for a society than a market."
A friend who takes a generally "Austrian" line on economics also made the point about the EMH that Markets are dynamic. So they have pockets of disinformation and un-information. What government intervention typically does is to "stir the pot", creating a “fog of war” with regulation and intervention being “gamed”.

Saturday, January 23, 2010

Attitudes of voters and candidates: examining the political class

Given the recent political upset in the Massachusetts Senate election, the problematic connection between voter attitudes and those of what is sometimes called ‘the political class’ has particular resonance.

Katharine Betts’ 2004 article People and Parliamentarians: The Great Divide in People and Place looked at data for the 2001 Australian federal election from the surveys of voters and candidates. Using that data, she examines attitude differences between candidates and voters. She found, amongst other things, that:
Coalition candidates are quite close to their voters while Labor candidates are quite distant from theirs (p.73).
And that, overall:
… many people who run for federal parliament have strong opinions on economic and social questions and that these opinions are not shared by a high proportion of voters (p.74).
I found the piece useful and informative. There was, however, a persistent problem in it which is common to so much academic analysis of contemporary events, even those well-above the academic ruck such as Katharine Betts and Judith Brett.

This is the persistent mischaracterisation and misconstrual of the nature of the economic reforms that have so marked the last 25 years across the developed world (and beyond).

Getting economic reform wrong
The first is the use of that peculiarly Australian term of art ‘economic rationalism’. This is strictly an Australian term whose usage is very unhelpful, since it encourages the (completely erroneous) implication that we are dealing with an Australian-specific tendency in public policy. It has also become associated with a lot of abusive and misleading baggage.

Like most academic commentators, Betts also displays no understanding of the fiscal pressure of an expanding welfare state (in 1965, 3.5% of working-age Australians were on government income support; by 2001 16% were) in motivating economic reform by increasing the premium on economic efficiency.

Then there is the use of that unfortunate academic term ‘neoliberal’ and its cognates. ‘Neoliberalism’ is just economic liberalism applied in the context of large welfare states. There is nothing ‘neo’ about it. It is not an ideology – governments right across the political spectrum have engaged in economic liberalisation. There has been no break in the liberal tradition, particularly not economic liberalism. (For example, Ludwig Erhard’s ‘bonfire of the regulations’ in postwar West Germany belongs firmly in this policy tradition, and is indistinguishable from policies since labelled ‘neoliberal’, but doesn’t ‘make the cut’ in the normal usage of the term because it happened before 1973 even though the term ‘neoliberal’ was sometimes used in Gernany to describe such views.) Furthermore, to the extent that economic liberalisation has been applied (as it frequently has) by social democratic governments, it simply represents a very long-term process in social democracy.

Patterns of social democracy
Social democracy is the merging of liberalism with socialism. The long-term tendency has been for the liberal element to increase and the socialist element to decrease because of the fundamental problem: socialism doesn’t work.

Stage one was the adoption of liberal politics (electoral politics, parliamentary government, etc.) Since the only ‘socialist’ politics were either mass agitation in the hope that something would turn up (Kautsky), revolutionary vanguardism (Lenin) or catalytic violence (Bakunin – even if he was an anarchist), this was hardly a surprising development in constitutional states, though it did generate huge and bitter ideological debates. Bernstein gave this adoption a Marxian gloss, but it was the choice adopted by mass socialist (and labour) parties everywhere that votes mattered.

Stage two was the abandonment of nationalisation as an active policy (the first stage in the acceptance of economic liberalism) when it became clear that public ownership didn’t create more efficient and effective economic units. This was the stage reached by Anglosphere Labour Parties in the late 1940s, the SPD in the late 1950s and the French Socialists in the mid-1980s under Mitterand.

Stage three was the adoption of privatisation and de-regulation (the second stage in the acceptance of economic liberalism) when the huge expansion in the welfare state increased the premium on economic efficiency to the extent that governments were faced with little choice. Antipodean Labor Governments (Hawke-Keating in Australia from 1983-1996, Lange-Douglas in NZ from 1984-89) were at the forefront of this because they also suffered export squeezes at the same time, greatly increasing the relative premium on economic efficiency. Betts notes the change (p.65), but the lack of understanding of the domestic fiscal pressure element means she misses the full significance – which would actually reinforce her point that the change was not made for ideological reasons. Similarly, that economic reform has allowed an expanded welfare state to be funded makes much more explicable the apparent antimony she finds between economic reform policies and candidates’ preferences for increased redistribution (pp69-70).

Stage four is the abandonment of the nationalisation of the household, as ‘passive welfare’ is equally discovered not to be the path to social improvement. Latham has been at the forefront of advocacy this but the most dramatic example of this is the welfare reform under Clinton in the US, under pressure from a Republican Congress. (Which, by the way, is yet another way the US has greatly improved its long-term position vis-a-vis Europe.)

The use of ‘neoliberal’ cuts events off from their history, both that of economic liberalism generally and trends in social democracy more particularly.
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Economic reform as electoral benefit
Betts also claims that the adoption of ‘neo-liberalism’ (sic) ‘almost certainly’ lost Labor votes (p.70). Huh? The incumbent Government with the best vote-retention performance since Federal politics became evenly competitive after the 1966 election until the Howard Government was the Hawke-Keating Government of 1983-1993. The average two-Party-preferred swing against the incumbent Government in the period 1969 to 2001 is -2.6%pts. The Hawke-Keating Government managed -1.5%pts, -0.9%pts, -0.9%pts, +1.5%pts for an average of -0.4%pts, by far the best performance. Even including the 1996 debacle (after Keating had adopted a very unpopular cultural program, had taken back the L-A-W tax cuts and could be punished for the 1992 recession without immediately getting a GST), the average was -1.4%pts. (Howard’s average 1996-2007 was 1.6%pts.) (For a more detailed discussion up to the 2001 federal election, see Incumbency as Wasting Asset: Structural shifts in federal politics, Australasian Parliamentary Review Autumn 2002 17(1), 17-25.)

The ALP is currently in power in five States and both Territories, in all cases on a promise of not screwing up the finances. Betts’ own data shows that certain key elements of economic liberalism are more accepted by voters (including Labor voters) than candidates (especially Labor candidates: compared to Labor candidates, Labor voters are more keen on tax cuts, less keen on more social services spending, less keen on income redistribution and more likely to believe high taxes have negative effects). How can adopting economic reform be said to have ‘almost certainly’ cost Labor votes?

Candidates as ‘cosmopolitans’
Where Betts is actually relying on her own analytical skills rather than following unfortunate academic fashion (for why academic fashion might tend to be unreliable, see this post), the content is much better. Betts’ thesis is that the ‘new class’ has developed a ‘cosmopolitan’ ideology that has become strongly attached to the ALP. In talking about the move of the ‘cosmopolitans’ of ‘new class’ to being firm Labor supporters, Betts stresses, citing the work of Brett, the effect of Whitlam and his 1975 dismissal. That may well have been an aggravating factor that may well help explain some of the intensity of intelligentsia conformity in Australia. Surely, however, there are similar patterns of adherence to left-of-centre parties by this group elsewhere in Western democracies.

Since Betts has provided full tables, one can examine the data oneself. It is notable, for example, that candidates tend to keener on redistribution than voters. Not so surprising, gives a bigger role for people like them. Candidates are much less impressed with capital punishment than the general electorate – capital punishment means a more horrifying role for people like them.

By far the largest and quickest shift in voter sentiment was the collapse of hostility to the present level of migrant intake between 1996 and 2001. In 1996, 63% of voters thought too many migrants were being allowed in. In 2001, 34% did. This suggests that Howard had significant success in defusing immigration as an issue. (I noted the strong evidence from Robert Fogel of how negative the effects of mass immigration were for resident workers in the US in the C19th.)

The general trend of opinion is moving in favour of the views of the ‘cosmopolitans’. Given that their views dominate the universities, the school system, the national broadcaster, the ‘quality’ media and is a strong presence in much of the popular media, it is hard to know whether to be impressed by their success in moving opinion in their direction or by their failures to convince a majority. (The political saliency of some of these issues has also shifted somewhat.)

In 1987, 80% of voters thought high taxes reduce work effort.
In 2001, 68% did.

In 1987, 45% of voters thought income and wealth should be redistributed to ordinary working people.
In 2001, 55% did.

In 1987, 65% of voters preferred reducing taxes to increasing social services.
In 2001, 42% did.
(As Betts notes, more recent figures that specify more spending on education and health get stronger results. Such spending is more clearly of general benefit than transfers to more marginal sections of society.)

In 1987, 19% of voters thought equal opportunities for women hadn’t gone far enough.
In 2001, 38% did.

In 1987, 60% of voters thought that the dealth penalty should be re-introduced for murder.
In 2001, 56% did.

In 1990 (the question wasn’t asked in 1987), 58% of voters thought too many migrants were coming in.
In 2001, 34% did.

In 1990 (the question wasn’t asked in 1987), 21% of voters thought equal opportunities for migrants had gone too far.
In 2001, 34% did.

In 1987, 70% of voters thought that govt. assistance for Aborigines had gone too far.
In 2001, 47% did.

In 1987, 69% of voters thought that Aboriginal land rights had gone too far.
In 2001, 50% did.

As an aside, who thinks that coverage and commentary on the ‘national broadcaster’ comes even remotely close to reflecting the spread of opinions among those whose taxes pay for it? This is, of course, a general problem for public broadcasting.

Voters and candidates
But the ‘headliner’ data is the gap between Labor candidates and Labor voters. With the exception of their ranking of environmental issues, Labor, Democrat and Green candidates are essentially a homogeneous group, all very distant from working-class voters. As Betts says:
The most marked division within Australian politics is not between different groups of voters (working versus middle class) but between a majority of voters, including the traditional working class, and candidates for the Labor, Green and Democrat parties (p.79).
Not only are there smaller average differences between Coalition and Labor voters than between Labor voters and Labor candidates, the average differences are smaller between Labor voters and Coalition candidates. On economic issues (effect of taxes, redistribution, tax cuts or social service expansion) the average differences over the 14 years from 1987 to 2001 were:
ALP candidates and voters: 35%pts
Coalition candidates and ALP voters, 29%pts
ALP voters and Coalition voters, 16%pts
Coalition voters and Coalition candidates, 13%pts.

The pattern of ALP candidate differences from their voters being greater than Coalition candidate differences from ALP voters is even starker on cultural questions (govt. help for women, death penalty, immigration intake, govt. help for migrants, govt. help for Aborigines, Aboriginal land rights). There the average differences were:
ALP candidates and voters: 38%pts
Coalition candidates and ALP voters, 14%pts
Coalition voters and Coalition candidates, 12%pts
ALP voters and Coalition voters, 11%pts.

(Calculations by me from the data supplied in the article.)

If democracy is about representing the preferences of voters, then the ‘new class’ has stolen the working-class’s Party from it. And the Coalition is more ‘democratic’ in that sense than the ALP.

An even more stark example is the average differences in 2001 between ALP candidates and:
Democrat candidates, 6%pts
Greens candidates, 7%pts
Greens voters, 19%pts
Social professionals, 26%pts
Democrat voters, 28%pts
Labor voters, 37%pts
Working class voters, 48%pts.

ALP candidates are closer to Green and Democrat voters than they are to Labor voters and a long way from the views of working-class voters. Hence, the rarity of Labor politicians sticking up for working-class values, and the denunciation of Martin Ferguson, on the last significant occasion that happened.

As Betts’ says:
But the old meanings of left and right have changed to such a degree that the clearest way for these [Labor] politicians to see their constituents is not as old comrades whom they are proud to lead and protect, but as narrow-minded strangers tending towards the racist right (p.80).
Betts makes the point that the gap between the private views of ALP candidates and their voters is not necessarily disabling, provided Leader and policies can bridge the gap. Where, however, such bridging is not seen as sincere (as over border control in 2001, despite identical policies), there may be a price. (Betts points out the biggest gap between Coalition voters and candidates is over immigration – One Nation provides an obvious cautionary tale there. One that the recent success of the BNP in Britain suggests the British political class has not learned.)

Betts wondered whether Latham’s attempt to strike a more independent notion over the American alliance will be all that successful. In 2001, those prepared to put ‘not very much’ or ‘none at all’ trust in the US helping Australia if our security was threatened were:
Coalition candidates, 5%
Coalition voters, 8%
All voters, 16%
ALP voters, 18%
Labor candidates, 44%

Latham’s stand may have accorded with Labor candidates, but was more likely to have ended up just accentuating the difference between them and the bulk of the electorate.

The data makes quite clear how rational the adoption of anti-democratic politics by the ‘cosmopolitans’ is: their attempts to acts as opinion ‘gatekeepers’ excluding alternative views from legitimacy (thus, bipartisanship in immigration is praised when it excludes popular preferences and denounced when it reflects them), their preference for increased judicial activism, for increased internationalisation (reference of decisions to unelected international bodies and use of such decisions to delegitimise dissenting local preferences) and so on.

Betts stresses the conflict between the internationalist views of the ‘cosmopolitans’ and the national loyalties of most voters. You can read this as a sign of the 'cosmopolitans' more elevated moral sense. Alternatively, it is a product of status-seeking against the society around them by asserting themselves as superior to it and most of their fellow citizens. Typical reactions to international events suggest strongly that the latter is more important. Consider the case of the Falklands War, where a military junta which had conducted a ‘dirty war’ which involved killed thousands of people like those same cosmopolitans militarily seized a territory to which it had no valid claim and whose residents did not want them there. Yet the effort to military retrieve the Falklands was widely denounced within ‘cosmopolitan’ circles: apparently being anti-Western was enough, nothing was so evil as defending the West with military force against a murderous military junta. (Whose defeat, we note, has resulted in Argentina being a democracy ever since.)

Examples have multiplied since. ‘Cosmopolitan’ ideology expresses a sneering superiority to the society around it, it does not engender it. There is no requirement from simple global humanitarianism to see the most democratic, free, prosperous, societies in history only in terms of moral failing. (To the extent that they are denounced because other societies are poor yet also denounced for being rich – thus being guilty of both being rich and because other people aren't – while any suggestion that less successful societies may seek to use the societies who successfully achieved mass prosperity as positive models was long regarded as risible.) Particularly not for the emotional heat so often involved.

If the 'cosmopolitan' outlook is a matter of status-seeking through assertion against the societies around them, clearly hostility to right-of-centre politics, and culturally assertive and confident right-of-centre figures (and the most powerful Western society), are going to be inherent parts of the package. There is still much to be learnt from Katharine Betts’s analysis.

Clearly there is also an issue in gaps between the ‘political class’ and the general electorate. And not only in Australia: a recent Washington Post poll found (question 40) that 58% want smaller government with fewer services, 38% what larger government with more services. Perhaps not quite what the Washington Democrats are currently delivering or the Republicans previously delivered.

ADDENDA: A wonderfully cynical view of the politics are big-spending, big-regulating government produces:
Any government that annually spends $3-plus trillions of dollars, and regulates trillions upon trillions of dollars worth of other resources, will inevitably be targeted by special interests and their lobbyists. And any government manned by persons capable of the duplicity, pandering, and cheap theatrics required to win elections will inevitably and without shame put itself at the service of these special interests.