Seth Woolley's Blog

Occasional Musings

jeff lawrence and his incoherent debate response(0)

3rd District Oregon candidate Jeff Lawrence tries to debate the economic meltdown and fails at basic logic:

http://blog.standagainstthemachine.org/2010/04/02/debating-the-econom\
ic-mess.aspx

This is my response:

His first sentence is wrong.  Lopez wasn't the "sponsor".  All three candidates were equal sponsors.  But let's get down to the nitty gritty.

Jeff says that government intervention is to "blame" for the greedy behavior of individuals that led to the economic meltdown with the argument that entities follow laws and regulations rationally.  That assumes that people are rational (no they are not as he is demonstrating now).  Being self-interested is not always the rational thing to do.  People are more self-interested than rational.  Yes, some people will try to get away with as much as they can, which is generally what happens in non-productive financial markets where dishonest work is worth more than honest work. But that dishonesty doesn't mean that it is the fault of those who are supposed to limit dishonesty.  People who are dishonest are first themselves morally wrong, if not legally wrong.  And where they are legally dishonest, that's a failure of the regulatory system to regulate them so that they are not dishonest.  I do agree with him that if the rules are lame the outcome is lame, but that doesn't imply his conclusion.  Big government can become corrupted by big business, but it doesn't make big business right to corrupt big government.  It makes it smart to limit both big business and big government.

That's where Libertarian analysis fails utterly.  Libertarians would demolish big government and leave big business intact, free of any regulation by big government.  The Green ideology of limiting both is much more sane.  If one limits both big business and big government, it decentralizes political power back to the people and individuals and create freedom.  Libertarians are anti-liberty by arguing for policies that help big business to take away people's freedom through economic hegemony, manipulation, and outright deception.

Greens centralize through the creation of diplomacy and protocol negotiation only where necessary to protect the decentralization of the individual and power.  Things like the Internet, for example, which works on common protocols decided by committees of intelligent people under the auspices of government, is an excellent creation and role of government.  Utilities and infrastructure are also examples of good uses of government.

Libertarians would privatize everything, including the Internet, allowing net non-neutrality and big corporations controlling vast amounts of the public sphere and marketplace.  Libertarians don't see how equally distorting big business is compared to big government.

And that is why I could never be a member of the Libertarian Party.

The rest of his analysis is so shoddy I won't even bother with much of it. Blaming Fannie and Freddie, which were an insignificant part of the problem, for example, demonstrates how ignorant he is of how huge the derivative securities problem was and how the removal of insurable interest enforcement created a predictable scenario that actually led to the meltdown.  Neither the Republicans nor Democrats have proposed meaningful regulation of the fiasco, and the Libertarians have their heads so far in the ground so as to only exacerbate the problem were they in power.  Greens consistently opposed the bailouts to ensure not just moral hazard was enforced, but so that the smartly operating small businesses and homeowners like myself were rewarded by being able to buy cheap bank assets in bankruptcy proceedings, keeping the brick and mortar banking system moving forward.

Further, his pathetic attempt to take over the term "sustainability" and claim that enterprise is ipso facto sustainable is shocking in light of the economic  meltdown because it was the financial enterprises, deregulated not by just government, but by all private oversight too (thanks to private rating agencies dropping the ball entirely) that specifically caused the unsustainable bubble.

For those that want responsible government, spending within its means and in a long-term sustainable fashion, the Green Party recognizes that the public sphere saves money in the long run due to leveraging *economies riding on public infrastructure*, not just economies of scale.  It also recognizes that rather than saying one should never tax, that taxes are an important part of ensuring the viability of the public sphere to drive the economy.  Greens also recognize that meaningful government derives from the people and that local, democratic control is more efficient than centralized government that can be manipulated and bought by equally large powerful interests. That being said, Greens also recognize not just where government is useful, but also where business is useful, and that free but honestly regulated markets where the public is informed is the best way to ensure rational markets.

Reactionary thinking from Libertarians opposed to all regulations, taxes, and promoting only private ownership can only lead to an irrational market, free not to create prosperity, but free to be manipulated by those who control large aggregations of capital.  Free markets can be good, but only if they are kept free for everybody to participate in, working under a common regulatory framework designed to create universal transparency into the economic system, to allow people to make rational choices that will be mutually beneficial.  Ignoring the reality that information disparity does in fact lead to failure of the market to create mutual benefit doesn't indicate to anybody that the Libertarians actually understand economics.

Further Greens recognize that information disparity is endemic and to balance out the inability of government to completely open the markets, progressive taxation should be used to redistribute large gains more equitably back to the people, especially through infrastructure reinvesement, so that all can continue driving the economy through novel and innovative ways of using the public-private hybrid marketplace.

Back to Libertarians, in fact, much of the modern Libertarian economic philosophy comes if not from the teenager-trying-to-break-free-from-their-mom magnet Ayn Rand that helped inspire a radical right group of professors in Chicago, from a man named Ludwig von Mises who established the Austrian School of economics.

In conservative circles there are two main schools of economic thought -- the Chicago school, which has recently been completely discredited by the failure of Milton Friedman's Monetarist policy under the direction of Alan Greenspan (if we ignore his fascist support of dictatorial regimes like Pinochet's) -- and the Austrian school, founded by von Mises.

Von Mises wrote a book called "On Human Action", available on a far right website near you, linked by chat rooms frequently, where he used a form of philosophical rationalism to create an economic ontology that starts from one simple fact: Humans Act.  Stealing a page from Descartes, von Mises then claims to derive some very bold statements about how to run a socioeconomic system, stopping short of claiming that god's existence can be proven by it.

As justification, he refers to Kant's analytic/synthetic and a priori/a posteriori distinctions.  Normally, I would respect somebody aware of Kant's philosophy, but von Mises then takes a curious turn.  While Kant claimed that the synthetic a priori exists in a now discarded turn at philosophy of math, von Mises claims that human action is the synthetic a priori despite the general view of philosophers of not just his time period, but in Vienna, that such claims were wholly meaningless.  In his book he makes no attempt to critique the separate critiques of synthetic a priori arguments made by his contemporaries making it a rather shoddy work of scholarship, other than to appeal to ignorance and claim it to be prima facie true.

But what is truly shocking is that after the prima facie arguments are made, it is further argued that economic systems are inpenetrable to analysis, and that only by being left alone completely will they be able to work their divine hand magic.  They don't say if completeness includes deregulating small things like murder and rape -- that would be too much nuance.

After the failure of Republicans and the Chicago School to run the world economy intelligently, the far right has recently found it convenient to resurrect von Mises' ideology, which criticized such Chicago School precepts that economic systems were in fact understandable by analysis and could be controlled (with the application of monetary policy, fiscal discipline, and structural adjustment programs).  Their basis for such critiques?  Besides the utter failure of monetary policy and rise of indigenous populations against foreign intervention in the test bed of Chicago School ideology, South America (the latter they don't even bother mentioning), they write articles assuming Austrian School precepts and then declaring Chicago School ideology wrong.

Personally it's rather fun to read articles by Mises and Cato Institute "scholars" where they arm-chair write about complex economic systems, claim it can't be understood, while claiming to understand economic systems enough to say how they should be run -- or really, not run.  It's a turn very simliar to Creationism, where any incompleteness in any theory of biology turns into insurmountable proof that Creationism is right.  But besides the fun, it is also quite dangerous.  These followers of von Mises are essentially stating that any attempt to investigate and put morality back into the economic system is impossible by ontological definition.

So meaningful regulation of the market to prevent another economic meltdown would be anathema to this new breed of Libertarian.  Where the old Libertarians would wax philosophical of Ayn Rand and cite Milton freely, perhaps throwing in a reference to Rothbard or Hayek, the new guard can get away with merely asserting the correctness of their position.

I actually pine for the days when the Chicago School was taken seriously, when one could actually bring up emperical data to a discussion instead of having to read armchair philosophers like Jeff Lawrence who can make statements in a vacuum without any data, merely asserting that their philosophical ideology is true with a bite or two of an example of how some government involvement, like Fannie Mae or Freddie Mac, spoiled the entire economy.  If only the free market weren't so fragile, maybe we could live in one of their utopian visions of money (or gold really) running everything.

Because, really, if you're Austrian, you believe that gold internalizes the entire human ethic, and that if we just traded with each other without pesky moral and government-enforced boundaries, we'd all be better off.

Maybe I'm reading too much into Libertarians like Jeff Lawrence, and that he's really just parroting some ignorant soundbyte and doesn't have any real philosophy underpinning his ideology other than said soundbytes.

I sure hope not, so I am being audacious and presuming that he's another "educated" Libertarian.

Seth Woolley's Blog

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