Road conditions

A recent article on NPR stated that it would take $2 billion over the next decade to repair roads in Maine and "[t]he congressionally appointed National Surface Transportation Policy and Revenue Study Commission estimates that the cost of needed repairs is $220 billion -- at a minimum -- per year" to repair all of the nation's roads. This is seen as a crisis that requires federal subsidization and massive increases in federal and state funding. They are therefore starting to look at increasing gasoline taxes.

The last substantial increase in federal gasoline taxes took place in 1993. Given that we "only" used about 142 billion gallons of gasoline in 2006 (and similarly for 2007; high prices have caused a stagnation of fuel consumption), that means the federal government "only" collected about $26 billion. Given that the aggregate state collection is similar (state fuel taxes vary considerably, but average right around $0.18 as I recall), then "only" about $50 billion or so of the $220 billion is being collected. Your fuel taxes therefore need to climb from a combination of around $0.36 per gallon to something more in the neighborhood of $1.62, an increase of $1.26 per gallon.

May I suggest something else? What about supporting tolls? Though perhaps not very practical for intracity driving, they are eminently practical for freeway and bridge traffic. But first, there is a substantial obstacle to overcome: the belief, widely held in the US, that driving cars is a right and that roads should always be free. Clearly, we understand that roads and bridges are not really free, but the costs are hidden rather than explicit [1]. Tolls are a way of making those costs explicit.

As an exercise in noting how bad the anti-toll and especially anti-private infrastructure bias is, I will cite the Forbes article cited recently in the comments at MR as an example. The Ambassador Bridge is a privately built, privately owned bridge from Canada to the US near Detroit. It is the most popular bridge in the Great Lakes region: 3.3 million cross on the Ambassador vs. 3.6 million on the other four bridges combined. On 9/11, local government officials closed off the nearby car tunnel, and traffic subsequently backed up on the Ambassador. Truck wait times went to 12 hours because of the lack of border Patrol and Customs inspectors.

The tone of the article is as follows: Because some private person had the foresight to build a bridge at that location 75 years ago, and because it is the most popular truck crossing today, and because the state has not built a competing bridge nearby, somehow the owner is a bad guy. And because 9/11 brought about panic and security precautions that caused backups, the owner is a bad guy. And most of all, because he doubled toll rates for trucks and quadrupled them for cars in the past 25 years, he is a bad guy. Bottom line: private infrastructure is bad [2].

The point about toll raises is misleading. If there are four hour weight times at rush hour, this is a sure signal that the tolls are not high enough; perhaps they should consider higher tolls during the rush hour, the same way commuter trains do. If cars are Teh Bad because of pollution and AGW, then tolls should be higher everywhere, not just at the bridge (that's essentially what a carbon tax is). Here's the Environmental Defense Fund on the subject. Furthermore, bridge and road tolls have increased nearly everywhere in the past few years, not just on this private bridge. The tolls on the publicly operated San Francisco Bay Bridge were $1 in 1988, but are currently $4. That's a quadrupling in twenty years, quicker than the cited period of 25 years for the Ambassador. And London has famously begun charging congestion tolls to enter the gridlocked inner zones.

I think we can all agree that we rely on the transportation infrastructure and that we would like for it to be properly maintained. That is essentially a public good (not a pure public good, though). Every unavoidable pot-hole creates potential additional maintenance for the car owner. We would also like to see traffic reduced to the point that we don't experience delays and frustration. But fuel taxes are just one of several responses. Tolls that are reinvested in the roads are a better way of both directing the money to the most used infrastructure and directing the traffic to the best infrastructure. For example, if you had to raise tolls on a freeway to keep up the maintenance due to heavy truck usage to the point that shippers began shifting more of their traffic to more efficient railroads, that would be a good thing, no?

Oh, you did remember that railroads in the US are (for the most part) privately operated and maintained, didn't you?


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[1] Note the parallel to education: we all know that school buildings, teachers, and books cost money, but the phrase "free education" is used without irony. May I also suggest a small, means-tested toll at public schools? You can call it whatever you want -- "tuition" or "user fee" -- so long as you collect it.

[2] Don't tell the people who believe that private infrastructure is impossible. They prefer the impossibility theorem to the malevolence theorem, but will fall back to the latter when it suits them.

Nth best, Posner-inspired

There are people out there who believe in this simple model:










This is a decision tree that says there are two choices: transactions with no problems -- no institutional failures, no externalities, a perfect market transaction -- and those that must be regulated. Of course, any regulation can be justified after the fact. If nothing else sticks, you can always invoke asymmetric or imperfect information, the last refuges of scoundrels.

But Posner makes an interesting point in Economic Analysis of Law that is rarely acknowledged by fans of regulation. He says,

Monopoly, pollution, fraud, mistake, mismanagement, and other unhappy by-products of the market are conventionally viewed as failures of the market's self-regulatory mechanisms and therefore as appropriate occasions for public regulation. This way of looking at the matter is misleading. The failure is ordinarily a failure of the market and of the rules of the market prescribed by the common law [emphasis added]. Pollution, for example, would not be considered a serious problem if the common law remedies, such as nuisance and trespass, were efficient methods of minimizing the costs of pollution. The choice is rarely between a free market and public regulation. It is between two methods of public control -- the common law system of privately enforced rights and the administrative system of direct public control -- and should depend upon a weighting of their strengths and weaknesses in particular contexts.

We can diagram this as:










But wait: it would be rare that a transaction would have a single institutional (market) failure, would it not? In fact, many if not most transactions are subject to multiple failures. The problem for the knee-jerk regulator is that they don't all work in the same direction. As I argued here, they may frequently cancel:

The state ownership of oil and the corresponding ease with which OPEC should be able to cartelize should raise the price, while externalities imply an artificially low price - which dominates? We know that the cost of our interventions in oil-producing regions is not accounted for in the price, but the risk premium brought about by the unstable regimes and regions that happen to possess the oil and our interventions in them is. Now add Hotelling into the calculus, and figure that the cartel members are going to cheat to drive prices downward, while federal taxes and regulations (not all of which are rational or efficient) raise the price.

So our decision tree now has four branches: no failure, self-canceling failures, common law, and regulation.









We can also add in the self-enforcing means open to private actors as suggested by Second Best Economist Dani Rodrik: repeated interaction, reputation, and collective punishment.













And since we're differentiating between types of self-enforcing agreements, why not differentiate between regulations? There are at least four; regulating inputs (as in the original Clean Air Act which mandated scrubbers), regulating outputs (as in mandating the use of MTBE in boutique fuels), taxation (alcohol) or user fees, and cap & trade (exemplified by sulfur dioxide markets created by the 1990 Clean Air Act).














This now looks like a rich spectrum of responses, many of which are open to private actors and therefore anarchists. I think it should be apparent now why I believe that regulations -- especially of the inputs or outputs -- are frequently a simplistic, unimaginative response to the particular class of institutional failures, real or perceived, known as market failures. True, not all are appropriate in a given situation, but it is rare to find a politician or state enthusiast who even recognizes that there are other options.

Promise of American Life (again)

In The Promise of American Life (part I here), Croly seems to accept the moral basis for socialism, but soundly rejects the Marxist formulas. Maybe this is what is meant by American exceptionalism?

In Socialism: Utopian and Scientific, Engels makes demands for gradual state takeover of private property. "In any case, with trusts or without, the official representative of capitalist society -- the state -- will ultimately have to undertake the direction of production. This necessity for conversion into State property is felt first in the great institutions for intercourse and communication -- the post office, the telegraphs, the railways." This nationalization was expected to lead to the whithering of the state:

Whilst the capitalist mode of production more and more completely transforms the great majority of the population into proletarians, it creates the power which, under penalty of its own destruction, is forced to accomplish this revolution. Whilst it forces on more and more of the transformation of the vast means of production, already socialized, into State property, it shows itself the way to accomplishing this revolution. The proletariat seizes political power and turns the means of production into State property.

But, in doing this, it abolishes itself as proletariat, abolishes all class distinction and class antagonisms, abolishes also the State as State. [1]

Croly would have nothing to do with that; in his estimation, the men (Hill, Harriman, Morgan) who built the great industrial concerns contributed to the national efficiency. Rather than banishing them, Croly wanted to harness them (and maybe control the amount of money they made [2]). His methods of regulating therefore consist of removing impediments to them, including the Sherman Act, and replacing it with a system of commissions who would review their decisions and make them more transparent. To what end? National efficiency, of course (the man had an efficiency fetish). But Croly was unsatisfied with the idea of a commission, since efficiency would normally require responsibility to be placed with one man; but by favoring national commissions, at least it gives him a way to preserve private property even as he expands the scope of the national government. Sounds like ... ?

The constructive idea behind a policy of the recognition of semi-monopolistic corporations is of course the idea that they can be converted into economic agents which will make unequivocally for the national economic interest; and it is natural that in the beginning legislators should propose to accomplish this result by rigid and comprehensive official supervision. But such supervision, while it would eradicate many actual and possible abuses, would be just as likely to damage the efficiency which has been no less characteristic of these corporate operations. The only reason for recognizing the large corporations as desirable economic institutions is just their supposed economic efficiency; and if the means taken to regulate them impair that efficiency, the government is merely adopting in a roundabout way a policy of destruction. Now, hitherto, their efficiency has been partly the product of the unusual freedom they have enjoyed. Unquestionably they cannot continue to enjoy any similar freedom hereafter; but in restricting it, care should be taken not to destroy with the freedom the essential condition of the efficiency. The essential condition of efficiency is always concentration of responsibility; and the decisive objection to government by commission as an efficient solution of the corporation problem is the implied substitution of a system of divided for a system of concentrated responsibility.

This objection will seem fanciful and far fetched to the enthusiastic advocates of reform by commission. They like to believe that under a system of administrative regulation abuses can be extirpated without any diminution of the advantages hitherto enjoyed under private management; but if such proves to be the case, American regulative commissions will establish a wholly new record of official good management. Such commissions, responsible as they are to an insistent and uninformed public opinion and possessed as they inevitably become of the peculiar official point of view, inevitably drift or are driven to incessant vexatious and finally harmful interference. The efficient conduct of any complicated business, be it manufacturing, transportation, or political, always involves the constant sacrifice of an occasional or a local interest for the benefit of the economic operation of the whole organization. But it is just such sacrifices of local and occasional to a comprehensive interest which official commissions are not allowed by public opinion to approve. Under their control, rates will be made chiefly for the benefit of clamorous local interests, and little by little the economic organization of the country, so far as affected by the action of commission government, would become the increasing rigid victim of routine management. The flexibility and enterprise characteristic of our existing national economic organization would slowly disappear, and American industrial leaders would lose the initiative and energy which has contributed so much to the efficiency of the national economic system. Such a result would of course only take place gradually, but it would none the less be the eventual result of any complete adoption of such a method of supervision. The friends of commission government who expect to discipline the big corporations severely without injuring their efficiency are merely the victims of an error as old as the human will. They "want it both ways." They want to eat their cake and to have it. They want to obtain from a system of minute official regulation and divided responsibility the same economic results as have been obtained from a system of almost complete freedom and absolutely concentrated responsibility.

This section of the book reminded me of those sections of Gabriel Kolko's Triumph of Conservatism, in which he traces Teddy Roosevelt's preference for regulating behavior by the Good Ol' Boy method. TR, the renowned trust-buster, didn't really like to bust trusts, but preferred to try to persuade the less civilized among them (read: non-Harvard men) to change their ways. Those who didn't go along, such as J. P. Morgan and (IIRC) John D. Rockfeller, felt his wrath and it was upon their necks that Roosevelt's mythological Trust-Buster reputation was built. Perhaps it was no coincidence that Croly expressed admiration for Roosevelt (one chapter features a comparison between Roosevelt, William Jennings Bryan, and William Hearst as reformers, with TR as the hero), and later, after the publication of TPoAL, Roosevelt based his New Nationalism upon some of Croly's ideas.

And it was much the same when discussing unions. First, the Sherman Act should be repealed, and second, unions should be recognized with a deal that brings their activities in line with the national efficiency. The highest accomplishment to which a man can aspire in the Crolyist world was to place his talents at the service of the nation. You know, for the sake of efficiency.

The alternative [preferred] policy would consist in a combination of conciliation and aggressive warfare. The spokesman of a constructive national policy in respect to the organization of labor would address the unions in some such words as these: "Yes. You are perfectly right in demanding recognition, and in demanding that none but union labor be employed in industrial work. That demand will be granted but only on definite terms. You should not expect an employer to recognize a union which establishes conditions and rules of labor inimical to a desirable measure of individual economic distinction and independence Your recognition that is must depend upon conformity to another set of conditions imposed in the interest of efficiency and individual economic independence. In this respect you will be treated precisely as large corporations are treated. The state will recognize the kind of union which in contributing to the interest of its members contributes also to the general economic interest. On the other hand it will not only refuse to recognize a union whose rules and methods are inimical to the public economic interest, but it will aggressively and relentlessly fight such unions. Employment will be denied to laborers who belong to unions of that character. In trades where such unions are dominant, counter-unions will be organized and the members of these counter unions alone will have any chance of obtaining work In this way the organization of labor like the organization of capital may gradually be fitted into a nationalized economic system.

...

[T]he union should have the right to demand a minimum wage and a minimum working day. This minimum would vary of course in different trades in different branches of the same trade and in different parts of the country and it might vary also at different industrial seasons. It would be reached by collective bargaining between the organizations of the employer and those of the employee. The unions would be expected to make the best terms that they could and under the circumstances they ought to be able to make terms as good as trade conditions would allow. These agreements would be absolute within the limits contained in the bond. The employer should not have to keep on his pay roll any man who in his opinion was not worth the money, but if any man was employed he could not be obliged to work for less than for a certain sum. On the other hand, in return for such a privileged position, the unions would have to abandon a number of rules upon which they now insist. Collective bargaining should establish the minimum amount of work and pay, but the maximum of work and pay should be left to individual arrangement. An employer should be able give a peculiarly able or energetic laborer as much more than the minimum wage as in his opinion the man was worth and men might be permitted to work over time provided they were paid for the over time one and one half or two times as much as they were paid for an ordinary working hour. The agreement between the employers and the union should also provide for the terms upon which men would be admitted into the union. The employer, if he employed only union men should have a right to demand that the supply of labor should not be artificially restricted, and that he could depend upon procuring as much labor as the growth of his business might require. Finally, in all skilled trades there should obviously be some connection between the unions and the trade schools, and it might be in this respect that the union would enter into closest relations with the state. The state would have a manifest interest in making the instruction in these schools of the very best and in furnishing it free to as many apprentices as the trade agreement permitted.

Translation: The state must control industry, preferably monopolies, and then control the labor that works in those monopolies. If the unions won't go along, we'll start state unions (where have we seen this?). And the state won't countenance any shenanigans from you workers: you can bargain for a minimum wage and then shut up. This isn't for you, it's for the nation.

I am reminded of Chris Nyland's article, "Taylorism and the Mutual Gains Strategy" (Industrial Relations, Vol. 37, No. 4, Oct 1998), in which he describes Taylor's attempts to reconcile with various labor unions and convince them that efficiency was something they ought to embrace. The alliance between the Taylorists and unionists is attributed to (among others) Louis Brandeis: close associate of Croly, the coiner of the term "scientific management", and the leading spark for the Efficiency Movement. One of those unionists, Sidney Hillman of the Amalgamated Clothing Workers Union, entered into collaboration with members of the Wisconsin school of industrial relations [3], but disagreed with them over the scope of union-management negotiations. The Wisconsinists believed that the scope should be limited to wages and hours, but the unionists believed the scope should include more, including investment, plant layout, and promotions.

These dalliances between labor and the Taylorists continued right through the 1920s and the Depression, during which the Wagner Act was passed. In 1940, the creation of a bargaining agreement between GM and the UAW was influenced by the back and forth between unionists, Taylorists, and the Wisconsin school. According to Nyland,

In 1940, George Taylor [not Frederick Winslow] was appointed umpire of the newly signed UAW-GM contract. At the time, this development must have appeared a great opportunity to extend the mutual-gains model. Optimism that the model would be extended was common not ony within SAM, the AFL, and the CIO but also in wider industrial relations circles. For example, Sumner Slichter in 1941 devoted some two hundred pages of Union Policies and Industrial management to an examination of the history of union-management cooperative schemes for increasing production, quality improvement, and cost reduction. Slichter was aware that such schemes tended to have a high mortality rate and had been embraced by only a small number of employers. [...]

The hope that unionization of the automobile industry would assist the growth of the mutual gains model was, of course, not realized. As in the 1920s, it tended to be small, unionized enterprises experiencing difficult times that took up the mutual-gains option. As Leichtenstein [...] notes, while GM took much from the bargaining model that George Taylor had helped develop in the garment industry, the company was very selective as to the parts of the garment program it adopted. As a consequence, the company institutionalized a form of union-management closer to the model advocated by the Wisconsin school than that favored by [the Society for the Advancement of Management, or SAM, the name the Taylorist Society had chosen when it absorbed the Society of Industrial Engineers], and it was this model that was subsequently widely emulated through industry. Leichtenstein [...] has explained why this was so:

General Motors had a very different conception of how the grievance system and umpire machinery might function. the company, which had closely observed the way in which [George] Taylor handled disputes in the hosiery industry, wanted to avoid the freewheeling, all-inclusive style pioneered there. The largest corporation in the world had no need for the kind of economic tutelage so often meted out by those industrial relations "fixers" who had pioneered in the economically chaotic clothing trade.

In short, GM rejected "joint management" and instead institutionalized that amalgam of work practices, formalized grievance procedures, limited seniority, and constrained bargaining that subsequently became known as "New Deal Industrial Relations."

So Croly and his friend Brandeis got their way after all, at least with regard to unions. The Wagner Act, far from being the labor success it is frequently claimed, was a means of restricting labor's control over their work environment. Those aspects of work that today we call Taylorist should have been called the GM-Wisconsin model. As I argued in this article, it was GM's size and an accident of history rather than any special power of efficient management that led the world to adopt their accounting system, and so it is with their labor control system. In both cases, the adoption has been assisted by the federal government: in the first case by its adoption as the GAAP and the SEC, in the second by Wagner and the NLRB.

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[1] I guess I was wrong about the terminology of socialization and nationalization in this post, but the outcome is the same: fascists must have the state, Marxists seek to abolish it.

[2] At that time, they still naively believed that the Constitution had to be amended before you went off and assumed a power like taxing income. We have learned so much since then.

[3] Somewhere, I read that the ILGWU instituted the first Industrial Engineering program, but I don't recall where. I think Kevin Carson would suggest that the "mutual-gains strategy" will be effective right after the workers take ownership of the factory. But then it's a "worker-grains strategy," isn't it?

The Promise of American Life (long)

As luck would have it, I was browsing around in the local used book store recently and stumbled across a copy of Herbert Croly's The Promise of American Life (1909). I have plenty of other reading projects on my plate, so I didn't dive into it right away. However, when I had a moment or two, I thought I would give Cowen's approach of reading books in reverse order a try. No good - Croly's prose reads like Emerson's, only without the wit and charm. One bald assertion after another with seemingly no particular goal in mind. Not to mention that it seems so dated.

Still, I was left wondering why the was book so influential, so I started jumping around more randomly. Lo, and behold! -- Was there really a chapter entitled, "Nationality and Democracy: National Origins"? Indeed, there is, so I finally hunkered down to try to grasp the gist of his thoughts on the subject. From there, I came across another, earlier passage in which he defines the "democratic purpose". So what follows is my attempt to distill the man's program based on a few disjointed readings from the book ...

Croly asserts that "The salutary and formative democratic purpose consists in using the democratic organization for the joint benefit of individual distinction and social improvement." By this, he means that the organization must both support individual freedom and resolve the social question equally. Noting that these appear to be contradictory and mutually exclusive, he then goes on to press the third element of the French revolutionary slogan ("Liberty! Equality! Fraternity!") into service; the liberty and equality are presented as subordinates to the third principle, brotherhood. But what is the source of this brotherhood?[1]

Croly's subsequent argument is that nationalism and democracy are distinct yet crucial elements which must be used to advance efficiency. More to the efficiency in a moment, but national identity is the bridge by which socialism and democracy are brought together without sacrificing individuality (in fact, that is the title of this part of the book: "The bridge between democracy and nationality"):

The majority of good Americans will doubtless consider that the [policy of democracy] already indicated is flagrantly socialistic both in its methods and its objects and if any critic likes to fasten the stigma of socialism upon the foregoing conception of democracy, I am not concerned with dodging the odium of the word. The proposed definition of democracy is socialistic if it is socialistic to consider democracy inseparable from a candid, patient, and courageous attempt to advance the social problem towards a satisfactory solution. It is also socialistic in case socialism cannot be divorced from the use wherever necessary of the political organization in all its forms to realize the proposed democratic purpose. On the other hand there are some doctrines frequently associated with socialism to which the proposed conception of democracy is wholly inimical and it should be characterize not so much socialistic as unscrupulously and loyally nationalistic.

In a nutshell, he is arguing that in order to realize his vision of democracy, which has less to do with majority rule and much to do with defining and obtaining "the common good", we must appeal to and have recourse to that bond between people which is national in character. From here he goes on to something I found astonishing, and astonishingly familiar:

A democracy dedicated to individual and social betterment is necessarily individualist as well as socialist. It has little interest in the mere multiplication of average individuals except in so far as such multiplication is necessary to economic and political efficiency; but it has the deepest interest in the development a higher quality of individual self expression. There are two indispensable economic conditions of qualitative individual self expression. One is the preservation of the institution of private property in some form, and the other is the radical transformation of its existing nature and influence. A democracy certainly cannot fulfill its mission without the eventual assumption by the state of many functions now performed by individuals and without becoming expressly responsible for an improved distribution of wealth; but if any attempt is made to accomplish these results by violent means, it will most assuredly prove to be a failure. An improvement in the distribution of wealth or in economic efficiency which cannot be accomplished by purchase on the part of the state or by a legitimate use of the power of taxation, must be left to the action of time assisted of course by such arrangements as are immediately practical. But the amount of actual good to the individual and society which can be effected at any one time [emphasis in original] by an alteration in the distribution of wealth is extremely small; and the same statement is true of any proposed state action in the interest of the democratic purpose. Consequently while responsible state action is an essential condition of any steady approach to the democratic consummation, such action will be wholly vain unless accompanied by a larger measure of spontaneous individual amelioration [emphasis added]. In fact one of the strongest arguments on behalf of a higher and larger conception of state responsibilities in a democracy is that the candid, courageous, patient, and intelligent attempt to redeem those responsibilities provides one of the highest types of individuality -- viz. the public spirited man and a task which be enormously stimulating and edifying.

Yes, we are going to have socialism, but a socialism that preserves private property ... for now. This means of course that we are going to control the use of private property by controlling the way people think. And why not? Changing the way they think and feel will be exhilarating as they learn new modes of "individual expression". Perhaps we can forgive Croly of his naivete, since in 1909 he could not have known how this would have come out in practice as it did in the Cultural Revolution or any of the other attempts to purge people of their unfortunate bourgeois individualism.[2]

But the worst problem with socialism, according to Croly, is its unfortunate internationalism:

The great weakness of the most popular form of socialism consists however in its mixture of a revolutionary purpose with an international scope. It seeks the abolition of national distinctions by revolutionary revolts of the wage earner against the capitalist; and in so far as it proposes to undermine the principle of national cohesion and to substitute for it an international organization of a single class, it is headed absolutely in the wrong direction. Revolutions may at times be necessary and on the whole helpful, but not in case there is any other practicable method of removing grave obstacles to human amelioration; and in any event their tendency is socially disintegrating. The destruction or the weakening of nationalities for the ostensible benefit of an international socialism would in truth gravely imperil the bond upon which actual human association is based. The peoples who have inherited any share in Christian civilization are effectively united chiefly by national habits traditions and purposes, and perhaps the most effective way of bringing about an irretrievable division of purpose among them would be the adoption by the class of wage earners of the programme of international socialism. It is not much to say that no permanent good can under existing conditions come to the individual and society except through the preservation and the development of the existing system of nationalized states.

Now, this is the kind of thing that makes someone say that Croly and the acknowledged fascists share some of the same sentiments. The response to this is typically, "Yes, but he didn't share any of their other sentiments, so you are wrong to identify Croly as a fascist, and therefore you are wrong to in any way associate him with fascism." In the first place, saying that he shares some ideas with fascists and saying that he is a fascist are two different things, so claiming that I am wrong in asserting the former by proving that I would be wrong in asserting that latter is a non sequitur combined with a strawman. Secondly, I am curious as to how Croly, Hitler, and Mussolini could have all arrived at the same conclusion on this topic: is there a common influence for all three? And why aren't self-identified Progressives curious about this? And how influential was Croly's thinking on this topic? For example, it is well-known that Teddy Roosevelt based his New Nationalism on his interpretation of this book, but how much did Brandeis and, subsequently, FDR get out of it?

There are more areas in which the ideas of Croly and the actual fascists arrive at similar places. For one thing, there is his rejection of individualism and his association of that with the Manchester school. There is also his admiration for non-democratic means of arriving at his preferred state of efficiency. The chapter on nationality and democracy (VIII) is broken into segments that provide an overview of the relationship between the two; the effect on history and development on the national character; nationality and democracy in England,France, and Germany; and militarism. His synopsis of the English experience is:

The monarchy was reconstituted as the symbol of the national integrity and as the crown of the social system. The hereditary aristocracy, which was kept in touch with the commoners because its younger sons were not noble and which was national, if not liberal, in spirit, became the real rulers of England; but its rule was supplemented by an effective though limited measure of general representation. This organization was perfected in the nineteenth century. Little by little the area of popular representation was enlarged, until it included almost the whole adult male population; and the government became more and more effectively controlled by national public opinion. As a result of this slowly gathering but comprehensive plan of national organization, the English have become more completely united in spirit and purpose than are the people of any other country. The crown and the aristocracy recognize the limitations of their positions and their inherited responsibilities to the gentry and the people. The commoners on their side are proud of their lords and of the monarchy and grant them full confidence. It is a unique instance of mutual loyalty and well-distributed responsibility among social classes, differing widely in station, occupations, and wealth; and it is founded upon habit of joint consultation, coupled as the result of the long persistence of this habit, with an unusual similarity of intellectual and moral outlook.

The result, until recently, was an exceptional degree of national efficiency; and in scrutinizing this national efficiency the fact must be faced that the political success of Great Britain has apparently been due, not merely to her adoption of the practice of national representation, but to her abhorrence of any more subversive democratic ideas. On the one hand, the British have organized a political system which is probably more sensitively and completely responsive to a nationalized public opinion than is the political system of the American democracy. On the other hand, this same nationalized political organization is aristocratic to the core -- aristocratic without scruple or qualification. What is the effect of this aristocratic organization upon the efficiency and fertility of the English political system? Has it contributed in the past? Does it still contribute? And if so how?

Is the disdain for democracy shocking at all? To his credit, despite his admiration for the aristocracy, Croly seems to recognize that a problem subsequently arose because of them: although the aristocracy began bargaining with the new middle class of industrialists, they also moved to protect their privileges and in so doing froze the system in an organizational form that was appropriate to an era when their particular interest -- land -- was the most important productive asset. He continues:

This bargain appeared to work very well for a while; but indications are accumulating that a let-alone economic policy [EH: laissez-faire] has not preserved the vitality of the British economic system. The English farmer has lost ambition and has been sacrificed to the industrial growth of the nation while the industrial growth itself no longer shows its former power of expansion. The nation passed the responsibility for its economic welfare on to the individual and the individual with all his energy and initiative seems unable to hold his own against better organized competition. Its competitors have profited by the very qualities which Great Britain renounced when she accepted the anti-national liberalism of the Manchester school. They have shown under widely different conditions the power of nationalizing their economic organization; and in spite of the commission of many errors, particularly in this country, a system of national economy appears to make for a higher level of economic vitality than a system of international economy. "At the present time," says Mr 0. Elzbacher in his "Modern Germany," "when other nations are no longer divided against themselves, but have become homogeneous unified nations in fact and nations in organization, and when the most progressive nations have become gigantic institutions for self-improvement and gigantic business concerns on cooperative principles, the spasmodic individual efforts of patriotic and energetic Englishmen and their unorganized individual action prove less efficient for the good of their country than they were formerly." The political leaders of England abandoned that is all leadership in economic affairs and allowed a merely individualistic liberalism complete control of the fiscal and economic policy of the country.

The problem as Croly sees it is that the English foolishly allowed individuals to try to compete with strong, foreign competition. That competition was cooperative and bound to win. In other words, since individuals cannot compete with state capitalists, Croly believed that the United States should embrace state capitalism. We also get a little taste of a recurring theme: that Croly's idea of hell is that we would leave anything to the chaos and chance of a free market.

In this passage, and in many others, we see Croly using "efficient" and "efficiency" without defining them. In some contexts, he seems to mean that the institutions are strong (an efficient nation), while in others he seems to mean that they are the least-cost producers. This is something that requires further study, as efficiency appears frequently throughout the text as one of the goals of his system.[3]

Croly then proceeds on to France.

Even the most loyal friend of France can however hardly claim that the French democracy is even yet thoroughly nationalized. It has done something to obtain national cohesion at home and to advance the national interest abroad, but evidences of the traditional dissociation between French democracy and French national efficiency and consistency are still plainly visible. Both the domestic and the foreign policies of the Republic have of late years been weakened by the persistence of a factious and anti-national spirit among radical French democrats.

The most dangerous symptom of this anti-national democracy is that an apparently increasing number of educated Frenchmen are rebelling against the burdens imposed upon the Republic by its perilous international position. They are tending to seek security and relief not by strengthening the national bond and by loyalty to the fabric of their national life, but by personal disloyalty and national dissolution. The most extreme of democratic socialists do not hesitate to advocate armed rebellion against military service [emphasis added] in the interest of international peace. They would fight their fellow countrymen in order to promote a union with foreigners. How far views of this kind have come to prevail, an outsider cannot very well judge; but they are said to be popular among the school teachers, and to have impaired the discipline of the army itself.

Here we see a consistency between his support for nationalism and his distrust of international socialism that betrays what would usually be called a bedrock characteristic of socialism: Croly is no peacenik. He thinks France needs a military draft and condemns those opposed to it. And he goes on to further emphasize his distaste for individualism in a way that forewarns of the coming totalitarian nature of planned economies. Where everyone is expected to do their share to advance the national, ... uh, ... efficiency, then shirking and laziness and failure to bring forth children to advance the interests of the nation is not just a matter of personal choice, but evidence of immorality, a threat to order, and possibly a sign of subversiveness. After lamenting France's lack of raw materials and the unfortunate inability to establish autarky, Croly has a surprising take on how France's unique character is a problem of too much individualism:

At first sight it looks as if France was something like a genuine economic democracy, and ought to escape the evils which threaten other countries from an economic organization, in which concentrated capital plays a more important part.

But the situation is not without another and less favorable aspect. France, in becoming a country of small and extremely thrifty property owners, has also become a country of partial economic parasites with very little personal initiative and energy. Individual freedom has been sacrificed to economic and social equality; and this economic and social equality has not made for national cohesion. The bourgeois, the mechanic, and the farmer, in so far as they have accumulated property, are exhibiting an extremely calculating individualism, of which the most dangerous symptom is the decline in the birth rate [emphasis added]. Frenchmen are becoming more than ever disinclined to take the risks and assume the expense of having more than one or two children. The recent outbreak of anti-militarism is probably merely another illustration of the increasing desire of the French bourgeois for personal security, and the opportunity for personal enjoyment. To a foreigner it looks as if the grave political and social risks, which the French nation has taken since 1789, had gradually cultivated in individual Frenchmen an excessive personal prudence, which adds to the store of national wealth, but which no more conduces to economic, social, and political efficiency, than would the incarceration of a fine army in a fortress conduce to military success. A nation or an individual who wishes to accomplish great things must be ready, in Nietsche's phrase, "to lived angerously" -- to take those risks, without which no really great achievement is possible; and if Frenchmen persist in erecting the virtue of thrift and the demand for safety into the predominant national characteristic, they are merely beginning a process of national corruption and dissolution.

Wow, strong language. So if the British and the French fail to achieve the necessary balance of nationalism and democracy (Croly's definition, not the standard one), who does? It should be no surprise at this point that the section on Germany is almost entirely devoted to a fawning review of the career of Otto von Bismarck, the German Junker who forged Germany on the Prussian model with blood and iron.

German nationality as an efficient political and economic force has been wrought by skillful and patriotic management out of materials afforded by military and political opportunities and latent national ties and traditions. During the eighteenth century the Prussian monarchy came to understand that the road to effective political power in Germany was by way of a military efficiency, disproportionate to the resources and population of the Kingdom. In this way it was able to take advantage of almost every important crisis to increase its dominion and its prestige. Neither was Prussian national efficiency built up merely by a well-devised and practicable policy of military aggression. The Prussian monarchy had the good sense to accept the advice of domestic reformers during its period of adversity, and so contributed to the economic liberation and the educational training of its subjects. Thus the modern German nation has been at bottom the work of admirable leadership on the part of officially responsible leaders; and among those leaders the man who planned most effectively and accomplished the results was Otto von Bismarck.

After explaining how Bismarck saw that the path to German unification led to war between his native Prussia and Austria and then France, and that in turn led to some compromises with the democrats whom he hated, Croly writes about Bismarck's return to the task of actually forging the nation:

It remained now to organize and develop the new national state; and the government, under Bismarck's lead, made itself responsible for the task of organization and development, just as it had made itself responsible for the task of unification. According to the theories of democratic individualistic "liberalism," such an effort could only result in failure, because from the liberal point of view the one way to develop a modern industrial nation was simply to allow the individual every possible liberty. But Bismarck's whole scheme of national industrial organization looked in a very different direction. He believed that the nation itself, as represented by its official leaders, should actively assist in preparing an adequate national domestic policy, and in organizing the machinery for its efficient execution. He saw clearly that the logic and the purpose of the national type of political organization was entirely different from that of a so called free democracy as explained in the philosophy of the German liberals of 1848, the Manchester school in England, or our own Jeffersonian Democrats; and he successfully transformed his theory of responsible administrative activity into a comprehensive national policy. The army was, if anything, increased in strength so that it might remain fully adequate either for national defense or as an engine of German international purposes. A beginning was made toward the creation of a navy. A moderate but explicit protectionist policy was adopted, aimed not at the special development either of rural or manufacturing industries, but at the all-round development of Germany as an independent national economic unit. In Prussia itself the railways were bought by the government so that they should be managed not in the interest of the shareholders, but in that of the national economic system. The government encouraged the spread of better farming methods, which have resulted in the gradual increase in the yield per acre of every important agricultural staple. The educational system of the country was made of direct assistance to industry, because it turned out skilled scientific experts, who used their knowledge to promote industrial efficiency. In every direction German activity was organized and was placed under skilled professional leadership, while at the same time each of these special lines of work was subordinated to its particular place in a comprehensive scheme of national economy. This "paternalism" has moreover accomplished its purpose. German industrial expansion surpasses in some respects that of the United States, and has left every European nation far behind. Germany alone among the modern European nations is, in spite of the temporary embarrassment of Imperial finance, carrying the cost of modern military preparation easily, and looks forward confidently to greater successes in the future. She is at the present time a very striking example of what can be accomplished for the popular welfare by a fearless acceptance on the part of the official leaders of economic as well as political responsibility, and by the and intelligent use of all available means to that end. [emphasis added]

How can you not recognize so much of what shows up 16 years later in Mein Kampf? There is the nationalism; the leadership principle (Fuhrerprinzip); the skepticism of democracy, individualism, internationalism, and Manchesterism. In other places in the book, we find that the highest ambition for all men would be to use their talents to efficiently advance the national cause. There is the admiration for war as a means to promote the national spirit.

What, really? Do I exaggerate? The next section of the chapter is called "Militarism and Nationality", and consists in equal parts of a claim that colonization is good for the colonized (in Asia and Africa), good for the colonizer, and not in any way at all contrary to Croly's brand of democracy.

The nations of Europe are to all appearances as belligerent as were the former European dynastic states. Europe has become a vast camp, and its governments are spending probably a larger proportion of the resources of their countries for military and naval purposes than did those of the eighteenth century. How can these warlike preparations, in which all the European nations share, and the warlike spirit which they have occasionally displayed, be reconciled with the existence of any constructive relationship between the national and the democratic ideas?

The question can best be answered by briefly reviewing the claims already advanced on behalf of the national principle. I have asserted from the start that the national principle was wholly different in origin and somewhat different in meaning from the principle of democracy. What has been claimed for nationality is not that it can be identified with democracy, but that as a political principle it remained unsatisfied without an infusion of democracy. But the extent to which this infusion can go and the forms which it takes are determined by a logic and a necessity very different from that of an absolute democratic theory. National politics have from the start aimed primarily at efficiency -- that is, at the successful use of the force resident in the state to accomplish the purposes desired by the Sovereign authority [emphasis added - here is the definition of efficiency!]. Among the group of states inhabited by Christian peoples it has gradually been discovered that the efficient use of force is contingent in a number of respects upon its responsible use; and that its responsible use means a limited policy of external aggrandizement and a partial distribution of political power and responsibilities. A national polity, however, always remains an organization based upon force. In internal affairs it depends at bottom for its success not merely upon public opinion, but, if necessary, upon the strong arm. It is a matter of government and coercion as well as a matter of influence and persuasion. So in its external relations its standing and success have depended, and still depend, upon the efficient use of force just in so far as force is demanded by its own situation and the attitudes of its neighbors and rivals. The democrats who disparage efficient national organization are at bottom merely seeking to exorcise the power of physical force in human affairs by the use of pious incantations and heavenly words. That they will never do. The Christian warrior must accompany the evangelist; and Christians are not by any means angels. It is none the less true that the modern nations control the expenditure of more force in a more responsible manner than have any preceding political organizations; and it is none the less true that a further development of the national principle will mean in the end the attachment of still stricter responsibilities to the use of force both in the internal and external policies of modern nations.

War may be and has been a useful and justifiable engine national policy.

You see the emphasis on force as the organizing principle? That is not something of which the Progressive normally admits. War is not only good for building Christian nations, it is good for colonizing non-Christian ones:

Inimical as the national principle is to the carrying out either of a visionary or a predatory foreign policy in Europe, it does not imply any similar hostility to a certain measure of colonial expansion. In this as in many other important respects the constructive national democrat must necessarily differ from the old school of democratic "liberals". A nationalized democracy is not based on abstract individual rights no matter whether the individual live in Colorado, Paris, or Calcutta. Its consistency is chiefly a matter of actual historical association in the midst of a general Christian community of nations. A people that lack the power of basing their political association on an accumulated national tradition and purpose is not capable either of nationality or democracy, and that is the condition of the of Asiatic and African peoples.

No doubt modern Progressives can overlook this "era appropriate" view of the Asians and Africans to be conquered. But can they overlook the way in which Croly is intentionally trying to redefine liberal? Much ink has been spilled, chiefly by those of us who wish to reclaim the mantle of liberalism, about the change in the definition from one of "someone who defends liberty" to "someone who defends statism", and much defense has been made by the statists that they are the true heirs of Hume, Voltaire, Montesquieu, and Mill, but here we catch Croly with his finger on the scale.

He is using one interesting phrase - "national democrat" - to denote himself, while placing quotation marks around "liberals" to call their claims into question. What if he were instead to have used the phrase "national socialist"? By his own admission it would have meant the same thing, given his own definition.

Why are liberals "old school"? Why are we to question their liberalism? The answer, in this context, is that they oppose colonization because they don't understand nationalism and its relationship to democracy. And why shouldn't we oppose colonization? Here Croly has a curious answer:

The truth is that colonial expansion by modern national states is to be regarded, not as a cause of war, but as a safety-valve against war. It affords an arena in which the restless and adventurous members of a national body can have their fling without dangerous consequences, while at the same time it satisfies the desire of a people for some evidence of and opportunity for national expansion.

Got that? Colonial expansion is fun and brings us together, just like television would do in the 1950s and 60s.

No, I don't get the same impression from reading Croly that I do from reading Hitler or Mussolini. Hitler was animated by hatred, Mussolini by power, but Croly seems to have been animated by something else. But still, there is an element in each that recognizes the social question as the excuse for the implementation of a variety of other dubious programs. The Croly revolution would definitely be a top-down rather than grassroots-up movement. As it distrusted international socialism, individualism, Manchesterism, democratic liberalism, it had the appearance of being an anti-intellectual revolution, too. When you combine this with his worship of efficiency, which he defines as the successful use of force by a centrally planned state -- and notably, not by the people governed -- you can't help but think that what he most wants and needs is an action-oriented leader rather than an intellectual like William Jennings Bryan or Woodrow Wilson. Perhaps we were lucky that the Depression did not hit while TR was in office?

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[1] Note Bastiat's formulation of the problem: "Mr. de Lamartine once wrote to me thusly: 'Your doctrine is only the half of my program. You have stopped at liberty; I go on to fraternity.' I answered him: 'The second half of your program will destroy the first.'"

[2] Again, Bastiat comes to mind:

Socialists look upon people as raw material to be formed into social combinations...

In the same manner, an inventor makes a model before he constructs the full-sized machine; the chemist wastes some chemicals -- the farmer wastes some seeds and land -- to try out an idea.

But what a difference there is between the gardener and his trees, between the inventor and his machine, between the chemist and his elements, between the farmer and his seeds! And in all sincerity, the socialist thinks that there is the same difference between him and mankind!

It is no wonder that the writers of the nineteenth century look upon society as an artificial creation of the legislator's genius. This idea -- the fruit of classical education -- has taken possession of all the intellectuals and famous writers of our country. To these intellectuals and writers, the relationship between persons and the legislator appears to be the same as the relationship between the clay and the potter.

...

Oh, sublime writers! Please remember sometimes that this clay, this sand, and this manure which you so arbitrarily dispose of, are men! They are your equals! They are intelligent and free human beings like yourselves! As you have, they too have received from God the faculty to observe, to plan ahead, to think, and to judge for themselves!

[3] It probably appeared self-evident to him, as efficiency quickly became the goal of his allies (including Brandeis) in the Efficiency and Technocracy movements that sprang up shortly after the publication of Promise.

Mental Health

This news story reminded me about a post I started a few weeks ago.

I have long believed that the existence and treatment of mental illness poses a tough political problem for libertarians generally (including the Civil Libertarians in the ACLU). I once attended a lecture given by Thomas Szasz; I could not accept his claim that mental illness is not really a disease. He claimed that it could not be legitimately called a disease since there was no cell pathology, e.g. no germ had been found to cause schizophrenia. Neither sickle cell anemia nor scurvy is caused by a foreign organism, so that doesn't seem to be the best argument to take. Furthermore, he seems to have fallen into Taleb's round trip error: "no germ found to cause disease" has become "no germs exist to cause the disease" [1]. However, he made a good case that the state has historically been given powers too broad for locking people up on the basis of insanity, for reasons that once included a wife's disobedience.

The problem as I see it with mental illness is that it is tough to construct a mechanism for treating the patient when the patient does not necessarily agree with either the prescription or the diagnosis. It seems easy to say that we should treat patients against their will when they are a danger to others, but what about when they are only a danger to themselves? Who gets to decide that? And on what basis? Is not a mortally obese person a danger to themselves? What about an extreme sport enthusiast? What about bicycle messengers? Abused, this could become a thin veneer for a state that wants to lock up the merely idiosynchratic. These people might include Howard Hughes, most physical science researchers (physicists), and Andy Kaufman. I'm afraid of its abuse by a government that already wants to assert broad powers for locking people up and holding them for indeterminate periods of time without a trial on the basis of secret evidence. [2]

The involuntary treatment solution is also known as Assisted Outpatient Treatment or AOT. The State of New York, among other places, has passed a form of this in Kendra's Law. Kendra's Law failed the gentlemen described in "Free to Die in Iowa" (Michael Judge, WSJ, 22 Dec 2007) (hattip: fashion-incubator) because the doctors apparently didn't know that they could have treated the man involuntarily. Kendra's Law is so-named for a girl killed by a man in the NYC subway. The man apparently had some limited access to treatment (199 treatments in two years and $95k in one year is hardly a lack of access), but he refused treatment on many occasions.

The primary advocate of Kendra's Law is a researcher by the name of Edward Fuller Torrey. Torrey is a former adviser to the National Alliance on Mental Illness (NAMI), an education and advocacy group. NAMI was founded in 1979 in the wake of the deinstitutionalization movement of the 1970s. NAMI advocates community treatment, a comprehensive approach involving the "consumer", their family and friends, civil authorities, medical professionals, and other orgranizations.

The deinstitutionalization movement started in the 1950s and 1960s, and achieved success in the 1970s. The Community Mental Health Act (CMHA) of 1963 is said to be a significant milestone in the history of the movement, though it isn't clear whether the measure was taken to address concerns for the rights of patients or for fiscal reasons (probably both). Another significant event in the history of the movement was the success of the book and subsequent movie, One Flew Over the Cuckoo's Nest. The movement has elements of Post Modernist Michel Foucault's thoughts on the cultural and social meaning of "sanity" as well as ACLU opposition to involuntary incarceration and the anti-psychiatry movement. The anti-psychiatry movement itself is fueled in part by Scientology and in part by legitimate recognition of some of its shortcomings, such as the fact that homosexuality was listed as a mental illness by the American Psychiatry Association as recently as 1974. More recently, the finding of increasing numbers of children to have ADHD in order to control their behavior with Ritalin seems to have some merit as legitimate criticism. Additionally, it is noted that many clinicians are also stakeholders in pharmaceutical interests.

I think that much of the thinking that goes into this subject is too simplistic. In part, this may be because the entire debate is locked up on the left end of the political spectrum between those who have never met a federal program they didn't like and those who don't believe the state should ever have a police function. There is broad overlap with the former group and socialists, and between the latter group and libertarians. I'm skeptical of both. [3] At the other end of the spectrum, we frequently find people like Michael Medved ranting about the injustice of failing to lock up everyone who poses a danger to anyone without any apparent consideration of whether jail is the appropriate environment for people whose main problem is bad genetic luck.

What are the meta problems?
- Who will watch the watchers?
- How do you take politics out of defining what "risk to oneself" means?
- Where do you draw the line on risk to oneself? 1%? 10%? Imminent danger? Isn't the latter the most obvious category, and one that is mainly detected too late no matter how much we spend on the problem?
- Can we recognize that we are talking about locking people up, but we simply aren't calling it jail? We can call it a hospital, but that doesn't mean it is any less oppressive than jail. The patients are still at the mercy of the staff and to a large extent other patients.

I have very little problem with funding mental health initiatives. As usual, I would rather see it done at the private, then the local, then the state level, but not at the federal level at all.

To some extent, this is exactly what is happening. NAMI is private. The local chapter of NAMI has obtained some sponsorship of temporary communal living quarters. That has been augmented with City and State funding. I think it is underfunded, but that should only drive the creativity of the advocates that much harder (isn't this what they say when they advocate unfunded mandates on various industries?)

We also know that action in the private sphere is moving faster than in the public sphere, due in part to consumers who are demanding more of their employer-sponsored health packages. "During the past three decades, per enrollee spending for a common benefit package has grown at a slightly slower average annual rate for Medicare than for private health insurance," according to this. To be sure, this doesn't help people who are unemployed, but it does help those teenagers whose parents are employed and insured to get early treatment, keeping them off the public programs.

The money is spent on doctors, nurses, support staff, facilities, and medication. Not as much money is required if stabilization can be achieved quickly. That means having a very effective, broad program that directs people into the system quickly.

I doubt social medicine works any better on this score. Homelessness and schizophrenia are significant problems in both Europe and Canada. Recall the recent riots in the Netherlands as homeless people were evicted from squatting in abandoned buildings? Or the recent problems with moving the homeless in Paris?

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[1] E. Fuller Torrey has been looking at the possibility that a parasite found in cat feces may have something to do with schizophrenia.

[2] And if you think secret evidence and holding people without trials started with George W., I have a bridge to sell you. The Clinton Administration also locked up foreign suspects without trial on the basis of secret evidence (see, for example, this article). I doubt this problem started in the 1990s, either. In fact, Wilson's Palmer Raids come to mind.

[3] I am reminded of the claims that Ronald Reagan is primarily responsible and the Republican party partially responsible for the lack of mental health care in the United States. This claim is due to the fact that Reagan happened to sign an 1981 Omnibus Budget Reconciliation Act that repealed another law, National Mental Health Systems Act of 1980, that had never gone into effect. In fact, that 1980 Law would have reduced federal expenditures on mental health care. In addition, the 1981 Omnibus bill kept the cuts, but "converted them to block grants disbursed with few strings attached. New York State, which used block-grant monies to fund community-based programs, and other states [had] to cut mental health programs." The issue then was not that the Reagan Administration was cutting funding for these programs, but more specifically, they were cutting some funding and then cutting the strings attached to that funding. The local authorities were given broad powers to use the money, and apparently failed to direct it to mental health. The blame for that failure should fall on the entire spectrum, from left to right, but it doesn't.

I think any reasonable person could conclude that Reagan's involvement was incidental since the deinstitutionalization movement preceded him, guided Congressional action on the 1963, 1980, and 1981 Acts, and led to the founding of NAMI, and that furthermore nobody has come along since and proposed replacement legislation at either the state or the federal level despite the fact that Democrats occupied the White House for 8 years and controlled Congress for 15. It seems apparent to me that there is broad recognition of the problems laid out at the beginning of this piece: that involuntary treatment of adults is a difficult problem with no easy solutions.