Tuesday, January 22, 2008

You Too Can Think Like Hillary Clinton

In contrast with the hedge fund guy, we have this piece by Roger Kimball, who is not a fan of Hillary Clinton's ideas on intervening in the economy:
Well, government intervention into the economy (and just about everything else, come to that: tobacco, transfats, you name it, they want to control it) seems to be back in season. Even President Bush is talking about a five-year freeze on raising the rates on all those adjustable-rate mortgages bankers were passing out a few years ago.

This is not, of course, a new idea. “We were the first to assert that the more complicated the forms assumed by civilization, the more restricted the freedom of the individual must become.” So thought Benito Mussolini, who did what he could to restrict the freedom of the individual.

Admittedly, Mussolini was a rank amateur compared, say, to V.I. Lenin, but when it came to curtailing individual freedom by expanding the coercive power of the state, they worked from the same songbook. Back in the heady days of 1917, Lenin boasted that when he finished building his workers’ paradise “the whole of society will have become a single office and a single factory with equality of work and equality of pay.” A single jail cell was more like it, but who thought that at the time?

In The Wealth of Nations, Adam Smith noted the paradox, or seeming paradox, of capitalism: that the more individuals were left free to follow their own ends, the more their activities were “led by an invisible hand to promote” ends that aided the common good. Private pursuits conduced to public goods: that is the beneficient alchemy of capitalism. In The Road to Serfdom and other works, Friedrich Hayek expanded on Smith’s fundamental insight, pointing out that the spontaneous order created and maintained by competitive market forces leads to greater prosperity than a planned economy.

The sentimentalist cannot wrap his mind, or his heart, around that datum. He (or she) cannot understand why “society” shouldn’t favor “cooperation” (a pleasing-sounding arrangement) over “competition” (much harsher), since in any competition there are losers, which is bad, and winners, which may be even worse.

Socialism is a version of sentimentality. Even so hard-headed an observer as George Orwell was susceptible. In The Road to Wigan Pier (1937), Orwell argued that since the world “potentially at least, is immensely rich,” if we developed it “as it might be developed … we could all live like princes, supposing that we wanted to.” Never mind that part of what it means to be a prince is that others, most others, are not royalty. (Or, as that admirable logician W. S. Gilbert put it: “When every one is somebodee, / Then no one’s anybody!”)

Roger's circling around an important truth here. All the good things that derive from free markets are largely second order effects. They require understanding that the immediate unfortunate effects of capitalism ("bad men" making obscene amounts of money, people getting fired as their markets dry up, great disparities in income) still contribute more to the common weal than managing the market to overcome those unfortunate characteristics.

Of course, telling people, "All the lousy things that are happening to you are better than what would happen if we tried to fix them" is pretty bad politics. Gotta get elected before you can wield all that power to Do Good...

1/22/08 Update: Here's the NYT's interview with Clinton on economic policy from yesterday.

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