- Yalta: one of the greatest wrongs of history David Reynolds, New Statesman
- Individualism does not necessarily imply small government Branko Milanovic, globalinequality
- On socially influenced preferences Chris Dillow, Stumbling & Mumbling
- A better defense of capitalism “djf,” askblog (comments)
Several years ago, I used to watch the television show Bones. The only quote I remember from that show was surprisingly pithy given its origins. Regarding a serial killer the team has finally tracked down and neutralized, the resident psychologist, Dr. Lance Sweets, says: “I was right. He was nobody – angry at history for ignoring him.” Contemplating the second part of the quote, one realizes that the potentially histrionic line holds some alarming applicability today.
Tom Palmer wrote a magnificent article, “The Terrifying Rise of Authoritarian Populism,” which he examined the way that failed individuals and communities turn to a collective identity to bolster their self-esteem, which in turn creates a dynamic conducive to populist ideologies of all stripes. The pressing question is: Why does the majority feel entitled to dictate to the minority, in a form of mob-rule wrapped in the husk of democracy? In order to understand, though never to solve, this question in America, the one country whose founders openly designed it specifically to avoid tyranny, both of the majority and the minority, one must look to a mixture of factors.
In Ayn Rand’s Atlas Shrugged, there is a snippet of story about the history professor “who couldn’t get a job because he taught that the inhabitants of slums were not the men who made this country.” Quite literally because none of the Founding Fathers came from insignificance, outside of Alexander Hamilton, the illegitimate son of a Scottish gentleman, a man who was rather blatantly waiting around for a woman of rank to become available and who didn’t leave his son any of his extensive property.Given that Hamilton’s early promise belied his later invention of the early federal reserve and his apologetics for tariffs, the suspicion of historians – and Hamilton’s own peers if private letters among Jefferson, the Adams, and others are to be believed – that he had some bitterness toward the propertied class on the basis of his childhood is justifiable. Benjamin Franklin was very proud of the fact that he managed to make his own fortune – having parted acrimoniously with his solidly middle-class extended family. To be fair, Franklin never claimed to be “self-made,” just to have had to be self-reliant at an unusually young age for a man of his class. There is much to be admired in Franklin’s rigidly honest self-definition, especially today. To return to the quote from Rand, the idea expressed was not a comment upon the literal Founding Fathers but rather upon the building of identities and the falsity contained therein.
The visualization graphic linked from FEE shows clearly the extent to which incomes have increased over the years. The discontent connected and displayed through dramatic claims about “shrinking middle-class,” “stagnant wages,” “1 percent,” etc. was predicted in 1907 by economist Alvin Saunders Johnson (1874 – 1971) in his study “Influences Affecting the Development of Thrift.” Starting with the question:
If it is proposed, through legislation, to liberate a given social class from some of the uncertainties and hardships of the laissez-faire regime, one of the first questions to be raised is: “What will be the effects upon the habits of saving of the class concerned?”
After laying out in great detail why redistributive policies were bound to fail fiscally and socially, Johnson took direct aim at what he perceived to be the source of the problem:
To-day the working class is rising into an autonomous position. The workingman of to-day repudiates the term “the lower classes.” His position is not the same as that of the property owner, but it is not in his opinion inferior. It follows that any line of conduct rising normally out of his position as a wage earner will be held in honor by him. It is pertinent, therefore, to inquire what attitude toward thrift the exigencies of his situation lead him to adopt.
It is no part of the workingman’s view of progress that each individual should become the owner of a capital whose earnings may supplement those of his labor. No such supplementary income should, in the laborer’s view, be necessary; and the work- man who endeavors to secure it for himself, instead of bending his efforts to the winning of better conditions for labor in general, is likely to be blamed for selfishness rather than praised for self-restraint. […]
Light-handed spending in time of prosperity, mutual aid in time of distress- such appears to be the approved conduct of a permanent body of property-less laborers. And if this is true, we may be quite certain that such practices will in the end be idealized, and that middle-class schemes of cultivating thrift among the working classes will meet with increasing resistance. Already it is easy to find bodies of intelligent workmen who express the greatest contempt for the fellow workman who is ” salting down ” a part of his earnings.
All of these factors, predicted Johnson, would lead to increase inequality, social and financial, and anger with the socio-economic system. The inequality would stem, not from literal economic inequality, but from the loss of the “laborers” to discern genuine investment, in self, family, and business, from mere consumption, leading to a knowledge- and know-how gap.
At the time Johnson wrote his study, the Progressive movement and its acolytes were running rampant in the US, promoting what we would call today a “soft” socialist state, and the campaigners were experiencing unusual popularity in response to an agriculture bubble due to subsidies that inflated land prices and a more general move toward socialism among urban workers. While the prototype socialists blamed consumption, adopting eagerly the vocabulary of Thorstein Veblen’s The Theory of the Leisure Class(1899), Johnson rejected the idea completely:
“Conspicuous consumption” is a proof of economic success, and wherever it is the most telling proof, the standard of economic success is likely to be a standard of consumption. But wherever economic success is better displayed in some other way, as for example by increase in one’s visible assets or productive equipment, the standard of consumption exercises little influence upon economic conduct. A standard of conspicuous possession or of productive power takes its place.
Instead, the root problem was a mass loss of will to be capitalists and to engage in and with the capitalist system. This in turn stemmed from a desire for dignity, a pursuit doomed to failure because it was built not on the dignity of work and the worthiness of independence but upon class identity. Exacerbating the situation, as Tom Palmer explored, is the fact that this identity is collective, which fits with a rejection of capitalist pursuit because entrepreneurship is inherently a singular, individual effort.
Today, we are facing the consequences of the rejection of what Margaret Thatcher called “the strenuous life of liberty and enterprise.” Those who embrace this lifestyle ideal are the ones who have made and continue to determine history. While they may be mappable as a network or a general type of group, all of their achievements lie outside a collective identity. Any set of people can be distilled down to a select set of characteristics that give the impression of a collective unity; for example, one can make a blanket statement along the lines of “the majority of tech billionaires are Ivy Plus dropouts” which would be true in a literal sense and false in its reductionist view.
The collective view of the social peer must fail of necessity. It is what Johnson meant when he mentioned the derision directed by working-men at those of their fellows who stepped outside a collective concept of “place” and tried to become capitalists through saving. The policing of the peer in America has failed miserably as Palmer described when he wrote of individuals seeking solace in the notion that their community is successful, even if they are not. The illogic of this position escapes them: it is impossible for a community of individual underachievers to become successful merely through combining into a collective. History shows many times over that such a situation only increases the multiplication of failure. And it is the inexorability of history – though not, heeding Karl Popper’s admonition, historicism – that is the source of the anger today. The collective from the slums does not make history, and those who make up the collective are now angry at history for ignoring them.
To be fair to Hamilton Sr., not much is known about the circumstances of his estate. It is perfectly possible that it was entailed and therefore could not be bequeathed at will. Hamilton Sr did pay for an elite, in a Caribbean-colonies context, education and funded his son’s early ventures in New York City. Also a good proof for the idea that the bank of mom and dad is NOT a Millennial invention.
Johnson is an American economist who really deserves greater recognition. He grew up on the Midwestern plains, and in these fairly isolated circumstances, he articulated a theory of economics which he later recognized as part of the Austrian School. He co-founded The New School in NYC and was single-handedly responsible for the university becoming a home to Austrian and other central European scholars forced to flee from the Nazis.
- Tensions between liberalism and democracy from a Tocquevillean perspective Ewa Atanassow (interview), JHIBlog
- High theory and low seriousness Gustav Jönsson, Quillette
- Another misuse of Eastern ideas Amy Olberding, Aeon
- The real reason Netflix is cancelling their Marvel shows Mark Hughes, Forbes
In Beyond Good and Evil, written after breaking with composer Richard Wagner and subsequently rejecting hyper-nationalism, Friedrich Nietzsche proposed the existence of a group of people who cannot abide to see others successful or happy. Appropriately, he dubbed these people and their attitude “ressentiment,” or “resentment” in French. His profile of the resentful is most unkind, bordering on the snobbish – though Nietzsche had very little personal cause to feel superior (he was part of the minor nobility but always insisted that, due to his father’s premature death and his mother’s lack of connections, his legal rank was never of much benefit to him). Insanely proud of his classical education and remarkable, even for that time, fluency in Ancient Greek and Latin, the philosopher latched onto these languages as symbolic variables in his descriptions of society and its woes.
Much like the French philosopher Simone de Beauvoir who, a century later, attempted to prove that history was made by socio-cultural gender dynamics (Le deuxième sexe), Nietzsche proposed that all of (European) history since the fall of the Roman Empire was a battle between the cosmopolitan, classically-educated aristocracy and the technician, parochial lower classes. Unlike de Beauvoir who saw the world as oppressor-oppressed, the German believed that the lower orders, motivated by jealousy and feelings of exclusion, tried to pull their superiors down, creating a peculiar situation in which those who believed themselves the oppressed engaged in oppressive behavior.
As evidence of his theory, Nietzsche suggested in The Genealogy of Morals that the Protestant Reformation was the ultimate achievement of the resentful classes; functionaries, unable to understand the Latin of the Roman liturgy, read the writings of the ancient and medieval philosophers, or participate meaningfully in the conversations and society of the Renaissance, responded by turning the Church into the personification of all they hated – not unlike a voodoo doll – and then ousted it from their lives and countries. At least, this is what Nietzsche thought had occurred, adding that the cloddish nationalism that he had rejected would not have been possible without first banishing the Catholic Church and the refinement it introduced through fostering Latin, Greek, and Classical literature and philosophy.
On the practical plane, Nietzsche’s primary concern, post-Wagner, was the advent of Prussian hegemony and the loss of autonomy among the German member states. Before his friendship with Wagner, Nietzsche gave a lecture series on education which he intended to collect and publish as a book. The book never materialized [until 2016, when the Paul Reitter compiled the notes and lecture transcripts into book form under the title Anti-Education], but the philosopher did write a preface that he gifted to Cosima Wagner under the title “Five Prefaces to Five Unwritten Books,” which helped precipitate the quarrel since Nietzsche signaled clearly that he rejected the Wagnerian philosophy of the innate nobility of the (German) savage.
Much of Anti-Education is harsh and unyielding, moreover because there is much in it that is true. In it, one can see the early kernels of Nietzsche’s identification of ressentiment and the genesis of ideas concerning individuality and nobility that he returned to later in life. There is also much that is applicable today.
Why does the state need such a surplus of educational institutions and teachers? Why promote popular enlightenment on such scale? Because the genuine German spirit [that of the Renaissance princes] is so hated – because they fear the aristocratic nature of true education and culture – because they are determined to drive the few that are great into self-imposed exile, so that a pretension of culture can be implanted and cultivated in the many – because they want to avoid the hard and rigorous discipline of the great leader, and convince the masses that they can find the guiding path for themselves … under the guiding star of the state! Now that is something new: the state as the guiding star of culture!
Nietzsche wrote / spoke this on the takeover by the state of the education system, also known as the Prussian public school system, which “reformer” Horace Mann promptly imported to the United States. The false promise of public education, as Nietzsche saw it, was that state schools claimed the laurels and legitimacy of private gymnasia through deceit – speaking to a university audience, he expected everyone to know that pre-state control, there were two types of secondary schools: gymnasium, where the student received a classical education and prepared to enter university, and realschule, where the student learned the three Rs, along with some science, and entered the workforce immediately after graduation. Nietzsche claimed that while the gymnasium curriculum needed a significant overhaul, the only products of the realschule were conformity, obedience, and an inflated sense of achievement. Hence, he believed, when the government took over the education system, officials chose to model the public school on the old realschule, while claiming that graduates had the knowledge and skills of the gymnasium.
It is important to note at this juncture that Nietzsche bore a very visceral hatred of the Prussians in general and of Otto von Bismarck in particular. Viewing the former as unintelligent clods whose threat lay in their stupidity, the philosopher deemed the latter and his eponymous Bismarckian welfare state a greater threat to personal freedom. From 1888 until his nervous breakdown and descent into madness in 1899, Nietzsche called for the trial of Bismarck for treason, along with the removal of Kaiser Wilhelm II, in a sequence of letters and essays which his sister and executors suppressed, both to accommodate their own agendas and to avoid the attention of the censors.
The treason of Bismarck lay in his creation of a nation whose people were unwittingly dependent on the state. The state provided education during infancy and a pension in old age. As Nietzsche correctly saw, when the state controls the beginning of the pipeline and the end, everyone is in its employ. As he also foretold, the situation would end in violence (for Germany specifically; hence his interest in preempting war by removing its figurehead king) and heartbreak for those who placed their faith in the anti-individualistic state.
At a very fundamental level, Nietzsche believed that the public school system, with is inadequate education and contempt for classical learning and languages, was a conspiracy designed to drive a wedge among the social classes, enabling the state to increase control in the ensuing vacuum. The other aspect he identified was the use of public opinion to strip the individual of drive or thirst for a better life through a mixture of flattery and subversion of ambition. The outcome would be war and resentment, he predicted, for any country foolish enough to have faith in the Prussian system. Next week, we will examine whether Nietzsche’s predictions have come true in modern American education.
Recently, the blog ThinkMarkets published a post by Gunther Schnabl about how Friedrich Hayek’s works helped to understand the link between Quantitative Easing and political unrest. The piece of writing summarized with praiseworthy precision three different stages of Friedrich Hayek’s economic and political ideas and, among the many topics it addressed, it was mentioned the increasing level of income and wealth inequality that a policy of low rates of interest might bring about.
It is well-known that Friedrich Hayek owes the Swedish School as much as he does the Austrian School on his ideas about money and capital. In fact, he borrows the distinction between natural and market interest rates from Knut Wicksell. The early writings of F.A. Hayek state that disequilibrium and crisis are caused by a market interest rate that is below the natural interest rate. There is no necessity of a Central Bank to arrive at such a situation: the credit creation of the banking system or a sudden change of the expectancies of the public could set the market interest rate well below the natural interest rate and, thus, lead to what Hayek and Nicholas Kaldor called “the Concertina Effect.”
At this point we must formulate a disclaimer: Friedrich Hayek’s theory of money and capital was so controversial and subject to so many regrets by his early supporters – like said Kaldor, Ronald Coase, or Lionel Robbins – that we can hardly carry on without reaching a previous theoretical settlement over the apportations of his works. Until then, the readings on Hayek’s economics will have mostly a heuristic and inspirational value. They will be an starting point from where to spring new insights, but hardly a single conclusive statement. Hayekian economics is a whole realm to be conquered, but precisely, the most of this quest still remains undone.
For example, if we assume – as it does the said post – that ultra-loose monetary policy enlarges inequality and engenders political instability, then we are bound to find a monetary policy that delivers, or at least does not avoid, an optimal level of inequality. As it is explained in the linked lecture, the definition of such a concept might differ whether it depends on an economic or a political or a moral perspective.
Here is where I think the works of F.A. Hayek have still so much to give to our inquiries: the matter is not where to place an optimal level of inequality, but to discover the conditions under which a certain level of inequality appears to us as legitimate, or at least tolerable. This is not a subject about quantities, but about qualities. Our mission is to discover the mechanism by which the notions of fairness, justice, or even order are formed in our beliefs.
Perhaps that is the deep meaning of the order or equilibrium that it is reach when, to use the terminology of Wicksell and Hayek’s early writings, both natural and market interest rates are the same: a state of affairs in which the most of the expectancies of the agents could prove correct. The solution does not depend upon a particular public policy, but on providing an abstract institutional structure in which each individual decision could profit the most from the spontaneous order of human interaction.
“White supremacy” has become a central part of the left’s narrative. In an hour and a half of casual news watching on television in early October 2017, for example, I heard three references to white supremacy. That’s more than I did in the decade 2005 to 2015, I believe.
One utterance came from the sports channel ESPN’s African-American commentator Jemele Hill who called president Trump a “white supremacist.” She added that he surrounded himself with white supremacists. Perhaps, by implication of the term “surround,” she meant several millions of his 63 million voters, or even all of them. This kind of verbal hysteria is not new and neither are intemperate television commentators but, in the recent past, such breathless declarations would have been laughed out of the park or negatively sanctioned, or both. Not anymore. Ms Hill’s statement was not exactly an isolated incident either.
In the first two weeks of October 2017, I hear the word “supremacist” on radio or television at least once a day. I am sure it has not happened before in my fifty years in this country (as an immigrant). This new tolerance makes some sense in political context.
For the inconsolable of Pres. Trump’s election, I suspect – but I don’t know for a fact – that the claim is by way of passing the baton at a time when the investigation on “Russian collusion” to elect him, now in its thirteenth month, is going nowhere. If he did not betray the country, what can we accuse him of that’s difficult for decent minded people to forgive, they ask? Digging into this country’s complex and troubled past is always a good bet if you are looking for dirt to throw at an American.
Mr Trump’s own intemperate comments – although never directed at the usual African-Americans targets of real supremacists – helped identify a valuable, superficially semi-plausible charge. The sudden emergence in the collective consciousness of unhappy young white Americans on the occasion of the 2016 election also contributed. (“…in the collective consciousness…;” they were around before that.) Unhappy young whites can but with little effort be turned into the racist rednecks of countless movies. Thus, the white supremacy narrative may be part of a half-blind collective endeavor to discredit for the long term the social forces thought to be associated with the sensational defeat in 2016 of a moderate liberal (and a feminist to boot; more on this below).
My first impression of the reality of a white supremacist movement, based on reading and listening to radio – including National Public Radio – about five days a week, besides watching television, is that there isn’t actually much going on nationwide in this respect. Yet, I am mindful of the fact that I live in “progressive” Santa Cruz, in liberal California. In neither place would one expect to bump casually into white supremacists. And if there were one, he would probably just clench his teeth and keep his mouth shut. In lily-white Santa Cruz, on the contrary, a black supremacist would probably be elected mayor on the first try without really campaigning. (OK, I may be exaggerating a little, here.)
I realize also that my reading habits as a conservative may not lead to chance encounters with supremacist tripe.* So, I wonder: What’s the actual situation? To try and explore this question more deeply, I use a two-step strategy. I look first for existing credible empirical reports on the topic. Second, I look for what should be the products of white supremacist groups, the tracks they should logically be expected to leave on the internet and elsewhere. But first, a brief historical detour. Continue reading