Update - at last!

Geez, so I haven't updated this thing since April? Okay, so I've been busy.

The last posts I started to work on but never completed were a review of a variety of dystopian novels and films I had recently experienced and an exploration of misguided demographic findings of correlation. But from there, I got side-tracked onto a couple of projects that I have put off for a while, and those resonated with things that have been going on in my professional life. For one, I finally got around to renewing an interest in linux. My laptop is now a dual-boot system.

The first time I tried it out many years ago, it was still at the "linux is so cool, if you can't find a driver you can write your own and you can even rewrite and recompile the kernel if you want to!" stage. Sorry, I want to use the computer for other ends, not as an end in itself. Open Source is almost there, perhaps the latest release of Ubuntu (Hardy Heron) puts it over the top. I see where even Dell is selling a laptop with Ubuntu installed.

The next thing was to finally read some Neal Stephenson right after Richard Feynman's Surely you're joking, Mr. Feynman. After plowing through Cryptonomicon, I went down to the local book exchange and pulled off the entire shelf, consisting of Snowcrash, Diamond Age, Zodiac, and Quicksilver. Unfortunately for me, one result of these (especially Feynman and Cryptonomicon) was to resurrect a childhood interest in cryptography.

The interest in crypto has tied in to an unfortunate but ongoing relationship with computer security policy. Unfortunately, the more you learn about this type of thing, the more paranoid you become. Yeah, having to memorize lots of strong passwords is difficult, so difficult that many people resort to writing them down and storing that within arm's reach of their computer, but without those and other seemingly overkill measures, you might as well be running a wide-open system. But then again, even if you have the strongest crypto around, the weakest link is usually the human factor, as illustrated by the common knowledge that most password's are within arm's reach of their computer. Comcast recently learned this lesson the hard way. And while it may be hard to pity Comcast, anyone who has read Cliff Stoll's The Cuckoo's Egg should understand that hacking pranks like these create a sense of alarm and lost innocence, sorta like when the residents of a small town have to start locking their doors because someone thought it would be fun to vandalize one house with unlocked doors. But this hardly excuses the overbearing stance of corporate security, who would really rather that you didn't have a computer at all.

Speaking of small towns, photos from our recent visit to Lake Wobegon.

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.

--------------

[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.

Knowledge regimes

The way most sciences are taught is to start with very simple models in which many unrealistic assumptions are made so that students can learn the big picture and major forces, and then the assumptions are gradually relaxed so that you end up with very sophisticated models. It is true of physics and economics. That was what the First vs. Second best debate between Dani Rodrik and several other bloggers was about a few months ago, to which I had three responses (here, here, and here).

I find the claim among the so-called Second Best camp to be over-simplified for several reasons. The first is the problem of vulgar second best-ism in which they spot an institutional failure, propose a correcting policy, and assume success without investigating whether there are multiple institutional failures which counteract each other, whether there is a private institutional response to the failure, whether the policy actually corrects the problem, or whether the policy has unintended consequences which give rise to a new institutional failure. I have a whole category for this.

The second is their assumption of a knowable, static set of affairs. This is an assumption that the Econ 101 theory is correct, but that the real-world solution of some master equation for universal efficiency and total spiritual creaminess requires state intervention because of those chewy chunks of degradation known as "institutional (market) failure" [1]. This presumes an optimal state of affairs that we should strive for -- the "correct" allocations of inputs, outputs, numbers and types of goods to be made, and prices. This seems to me to be impossible not only because of the unknowability of the current set of all knowledge, but because of the unknowability of all possible knowledge. Hayek was only half right: Not only is the sum of current human knowledge unknowable to a single person, but the sum of all possible knowledge is unknowable to all persons or groups except for the group which consists of all humans over all time.

Although the book isn't explicitly about this, Dengjian Jin's The Dynamics of Knowledge Regimes illustrates a relatively simple case in cultural comparisons, a single slice through the cone. The book is Jin's explanation of the competitive differences between the US and Japan. He notes that previous explanations of Japan's rise fail to explain the current stasis of that economy. Those explanations approach the problem from neoclassical, revisionist, institutional, cultural, technological, and complexity schools of thought, among which the revisionist and complexity schools might be counted as Second Best approaches, the former noting the importance of industrial policy, and the latter noting issues like path dependency. Jin, on the other hand, focuses less on trade and transaction and more on the way in which each culture creates, stores, transmits, and uses knowledge. Each culture has its distinctive isomorphic regime (to use his phraseology), and the two regimes are nearly mutually exclusive.

In Jin's description, the cultures can be identified along the relationship and identity axes, with Japanese falling more into connectual and contextual while Americans fall more into contractual and individual. In those terms, Williamson's contractual schema have little to do with the Japanese experience and therefore are relegated to the status of a subset of the possible relationship schema. The American knowledge regime both results in and encourages the creation of isolated, modularized, disconnected, universal knowledge, while the Japanese regime results in and encourages the creation of highly contextualized, tacit, specific knowledge. Jin also notes that the relationship between the state and industry tends to fall into the same isomorphic pattern, with Japanese government working very closely with the affected industries and American government working (or appearing to work) in a universalist relationship, i.e. DARPA awards contracts for knowledge creation in a competitive bid process while MITI would work closely with an alliance on a development project. Jin's book explores these ideas in detail and also shows how this produces competitive advantage for each culture in distinct sectors. For example, the American approach results in leadership in sectors such as software and biotechnology where talent and knowledge can be modularized and reconfigured endlessly, while the Japanese approach results in leadership in complex fabrication and assembly such as automobile and opto-electronics.

So whereas Americans work with a system which emphasizes contracting, Japanese work within a system which emphasizes long-term relationship building. Asymmetric knowledge and opportunistic breach of contract are therefore rarely a problem in Japan. On the other hand, network effects certainly are a strong problem for the Japanese while the creative destruction machine that is modern America blows through network effects rapidly (and the process appears to be accelerating). Thus, a problem that worries the second-besters in one culture doesn't even make it on to the radar in the other regime.

Now pull back a little and realize that Jin was only comparing dominant Japanese and US knowledge regimes. What would be the result of a similar study of all cultures? Or of subordinate cultures within the US, Japan, and other dominant culture types? Also, the Japanese emphasize tacit knowledge, some of which is destroyed by the simple act of trying to objectify and communicate it, so it is not even clear that we could understand all of the institutional failures in our own culture that a Japanese would note, and vice versa. What would happen if we were to be able to look at our own institutions not only in terms of Japanese understanding, but of all existing, or of all possible cultures?

Now, having made those observations, I immediately begin wondering about things like,

• What institutional failures are we failing to note?
• How many failures could there be that have yet to be discovered?
• Are there some failures that cannot be detected or described in terms understandable within our culture?
  
• Since failures may work in both directions, is the net effect of those underprovision or overprovision of the good or service in question? How can we know?
  
• Because we aren't aware of these failures -- indeed, because the state's relationship falls into the same patterns -- isn't it likely that attempts to counteract them will only exacerbate a set of underlying, undetected problems?
• Even if it were possible to detect all of the possible failures, is it possible to counteract those features which are (A) a distinguishing feature of our society, and (B) only detectable to someone outside our society, and (C) solvable only through techniques which are not available to our society or our state-society relationship? In other words, some problems are apt to be an undeniable feature of our society, but their solution is unavailable to us unless we fundamentally change our society ... in which case many of the other institutional failures and the corresponding responses will be rendered meaningless while we simultaneously choose a whole new set of institutional failures for which we have neither experience nor remedy. At best, we could go back, but then all we have is a mono- or bi-stable system in which we never completely eliminate institutional failure, but rather trade one type for another.
  

Don't think of the Stay-Puft Marshmallow Man, Ray!


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[1] pro forma, we ignore failures of the Really Big Institution, The State

Resurrecting the Granary of Rome

It was such a good book title, I had to use it as a post title (link).

Although this isn't what I would normally consider "my" kind of book, I'm glad I picked it up. Mainly, the initial appeal was that I went to high school with the author, though I can't claim to have known her well.

The book has a certain amount of resonance with me, having just completed Tim Egan's The Worst Hard Times, a book about farmers in the Dust Bowl. Diana's [ahem] Dr. Davis' thesis in RtGoR is that the French colonists created a narrative in which Algeria was once a vast green sea of forests and grain, but that the nomads (read: barbaric Arabs) had ruined it with their primitive farming and especially herding methods. This "declensionist narrative" was used to justify the obvious outcome: the French were morally obligated to re-civilise Algeria and restore the region to its former glory.

The trouble was that it wasn't true.

There were three topics in the book that intrigued me. The first was the discussion of various types of property recognized by the indigenous Algerians, including communal property used to rotate grazing animals to allow for leaving some land fallow. The second was the interrelationship between deforestation and dessicationist [1] theories that instructed 19th century environmentalism and their foundation in Christian mythology. The third was the idea of environmentalism as social control.

The first is interesting to me as an example of alternative social organization. Davis describes briefly the concepts of melk, achaba, habous, and arsh [2]. The first is private property, the second is a "pasture contract" exchanging grazing rights for labor, and the third is land reserved for religious insttitutions. The fourth, the idea of communal property (mostly pasture but some cultivation) is curious: if the system is stable, it challenges my notions of the sustainability of commons found in narratives such as this description of the pilgrims' attempts to establish communal agriculture. Perhaps the tragedy is not as inevitable as Hardin would have us believe. Under some circumstances -- perhaps only those of small, nomadic, strictly religious tribes -- communal property may be sustainable and productive.

The second theme is interesting to me because of an embarrassing moment I suffered shortly after university. I had a friend there who was into environmental issues, and he preached that North America had once been entirely covered in forest [3]. I remember the look of bemused disbelief when I professed this at work one day, and realized how silly it was. It is one of the most striking memories I have about how I had acquired what I thought was knowledge, only to discover that it was pseudo-knowledge I had bought hook, line, and sinker based on no more than the strength of conviction of the source. On another occasion, I ran into a co-worker who believed that England had recently been completely barren of forests, the mirror image of my error. It would have been awfully difficult to build half-timbered houses, hide in the Sherwood forest, build pipes out of wood [4], build the world's most fearsome navy in the 19th century, or any number of other things if there were no trees on the island.

Indeed, both ideas are born of the same myth, the idea that the world was once covered in forests (Eden), but since man's fall from grace, the forest has gradually given way to hot deserts (reminiscent of what biblical location?). Because they contribute to this decline through their use of fire as an agricultural tool, natives (Algerians, North American Indians) must be deprived of their traditional ways of life and, not incidentally, of their property. Call them reservations, cantonments, or concentration camps, nomadic peoples must be controlled, "attached" to the land, and turned into farmers if possible and imprisoned if not. In Algeria, they also forced them to use money by forcing them to pay taxes in cash rather than in kind. Having deprived them of their traditional, nomadic, pastoral ways, and having also forced them out of barter and into the cash system, many had no choice but to enter the workforce as a laborer for the new French masters. That is my synopsis of Davis' thesis on environmentalism as social control; I related similar arguments earlier under this post.

The parallels between those conservation-as-state-expansion efforts and the intent of modern Global Warming enthusiasts are too obvious to overlook. Of course environmentalism is about social control. Although there are thoughtful believers who would like to see genuine threats to our future existence mitigated, there are others who latch onto any fad as a means of advancing state power. Sometimes called "watermelons" -- Green on the outside, Red on the inside -- such people move from one cause to another in hopes of finding the magic lever for bringing about a technocratic utopia. It seems to escape their notice that their causes are frequently the cover story for the simultaneous expansion of state-capitalism (which Davis rightly identifies by its simpler name, capitalism). Algeria went from a land of traditional herding and farming to a colony of small farmers to a corporation-dominated extension of France. Likewise, the American Plains transitioned from the land of the buffalo to a land of small land-grant farmers to ADM's central production facility. Both changes happened under cover of conservationist narratives - as it happens, those providing moral cover with a Christian-fall-from-Eden myth were almost literally Baptists to the corporate-colonial Bootleggers.

This revisionist history seems to me to be a great companion to recent responses to Jared Diamond's version of the Rapa Nui myth. Diamond claimed that the decline of Rapa Nui (Easter Island) was due to stupid and greedy human tendencies to destroy their own environment. In his version, they cut down all of their trees in a fit of one-upsmanship, with devastating consequences. The revisionists are finding two alternatives to the story: one is that rats caused the deforestation and that there was no long period of stability followed by collapse. Of course, the rats probably arrived at the island with the natives, but at least the humans intentional actions are off the hook. A second version (pdf) points out that the first Europeans verified trees on the island, were greeted by natives bearing palm leaves, and saw natives living in palm-thatched huts. Shortly after their arrival, the trees disappeared and the natives went into decline; Benny Peiser argues that this was no coincidence. His version, sometimes called The Rape of Rapa Nui, is a direct, though compressed, version of the Algerian story.




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[1] Despite Dr. Davis' dissection of the dessicationist theory, I am under the impression that recent research has indeed shown a relationship between deforestation in the Amazon and decreasing rainfall. Without pulling up lots of research and trying to figure out which findings are most reliable, all I can do is point out that (a) her reference was old (though she cited more recent research on the dessicationist narrative, I think the only physical science paper cited in refutation of the dessicationist theory was from 1982), and (b) her argument still seems correct. That is, I don't believe that the nomads destroyed so much vegetation that they created the Sahara; it seems rather more likely that they adapted to an existing fact. In a future edition, I would like to see her present and then answer stronger versions of the dessicationist theory.

[2] She also notes beylick and mokhzen, properties of the Ottoman state, and muwat, unproductive land that could be cleared, cultivated, and claimed.

[3] It's still a tempting myth given misleading maps like these - what does "virgin" mean? A recent National Geographic described in detail the number of modifications the natives had been making to their environment before the European arrival. The map creators are either unaware of natives' use of fire or unconcerned by it. The latter is consistent with the Noble Savage myth. It is perhaps notable that Rousseau was a popularizer of the myth, and Frenchmen would have been familiar with it even as they conquered the savages in Algeria. In fact, could this explain why they favored the sedate Berbers over the nomadic Arabs?

[4] This is a reference to something I recall reading in T. S. Ashton in which the poor were supposedly confined to neighborhoods where greedy developers couldn't even be bothered to use iron pipe. Ashton found that developers' greed wasn't the problem. It seemed that the neighborhoods in question had been built in the early 19th century, when England was busy fighting someone named Bonaparte. Iron was scarce and expensive, so the inhabitant-builders used wood for their own sewer pipes.

[5] As I noted in the review of Egan's book, Roosevelt's pet conservation method was to introduce forests to the Plains. Not only did that not work, but it made things worse as the trees soaked up what little groundwater there was. The Algerian experience was similar: in the 1870s, Francois Trottier tried to introduce eucalyptus trees throughout the country. The trees interfered with natural springs and soon enough they were removed and forgotten. The first repetition is tragedy, the second is farce.

Bookends

I have been reading Timothy Egan's The Worst Hard Times: The Untold Story of Those Who Survived the Great American Dust Bowl, a book about life in the Dust Bowl. It has been a nice bookend to other information I have read on the Depression. This includes Howard Zinn's People's History of the United States, John T. Flynn's The Roosevelt Myth, Jim Powell's FDR's Folly, and Friedman & Schwartz' A Monetary History of the United States. Egan's book provides a human perspective on momentous times.

My own personal theory, to which I have seen allusions but not the definitive book (surely someone has written it) is that the Depression was the effect of society absorbing the final shift from the agrarian economy. Putting a plow behind an internal combustion engine-driven machine meant you didn't need all those people working on farms. But neither were they finding employment in the cities.

Although Egan alludes to the state's complicity in the conditions that produced those hard times, and at the end acknowledges the bad long term effects of FDR's intervention, FDR, Hugh Bennett, and farm policy are definitely the heroes of the story.

The state's complicity lies in first running the natives out, then establishing incentives to farm the land rather than use it for grazing. The long term effect has been to establish farm subsidies which are detrimental. On the one hand, price supports result in the overproduction of commodities such as cotton, which the government then buys and dumps, further depressing world markets, and further impoverishing African farmers. On the other hand, other convoluted policies such as sugar price supports, ethanol incentives, and ethanol import tariffs, are intended to support corn prices, further impoverishing Mexican peasants. It is a sad reflection on people who worship FDR's policies as the salvation of impoverished American farmers while ignoring the ill effect of those policies on the impoverished farmers in the rest of the world.

Some anarchists claim that defense is the tough problem; I doubt it. I think that The Depression is a tougher problem. The benefit of Egan's book is that it highlights the real stories of real people. In the context of those times, when it seemed reasonable for the state to encourage homesteading and farming prior to the closing of the West, when the prospect of prolonged drought seemed dim prior to 1932, when the invoice for the social cost of their actions was not yet due, what happens to those people in the absence of the New Deal?

Still, one cannot help but think that Egan has absorbed just a little too much of the high school version of those events. The high school version is that the farmers were too dumb to know what they were doing, so FDR hired some smart men who invented and taught contour plowing and the use of trees for windbreaks, and then they paid the farmers to let some fields go fallow. It is an unusually common myth, as seen in this example:

In response to the urgent need for soil and water conservation programs to halt farmland destruction, the Soil Conservation Service was established in 1935. SCS employees set up demonstration plots and taught methods such as contour plowing, terracing, and strip-cropping to retain water on the fields and reduce runoff and erosion. Windbreaks were planted to break the force of the prairie winds, tillage methods were changed to reduce exposed soils, and vegetation or stubble was retained on the fields after the growing season to provide protective cover. With these methods, damaged lands were reclaimed and the dust storms were brought under control.

Also, in the free market banking system of the day, banks ripped everyone off, so FDR instituted banking reforms and federal deposit insurance. The truth? It's a little more complex.

First, the New Deal: FDR ran on the New Deal platform, which was to undo all of the Hoover Administration errors. According to FDR, those consisted of deficit spending, excessively high taxation, and too much government (Flynn). When he actually took office, the first thing they did, of course, was to raise taxes, increase spending, and run a deficit just like Dr. Keynes said they should.

Despite similar conditions in Canada, not a single bank failed there (Powell). In fact, prior to the Federal Reserve Act, the US weathered several similar periods with almost no bank defaults. The FRA was supposed to have made the government the lender of last resort, but the act was truly established to serve the needs of the bankers (Kolko).

Another Hoover policy which FDR had vowed to overturn but then repeated was the destruction of food supplies in the farming states even while people starved in the cities (Flynn and Powell). It is a question of that which is seen (starving farmers helped by the payments) and that which is not seen (starving city dwellers and destroyed crops): the former have much more impact in an era when newspaper photos and newsreels hold sway.

Today, the collective effect of those actions is an agriculture policy which enriches large corporations, leads to a substantial amount of water overuse and water pollution, reduces the quality of our food, and impoverishes poor farmers around the world who have to compete with subsidized American farmers.

Second, there is the problem that conservation measures had been around long before FDR took office. Contour plowing in particular had been around since at least ancient times

Contour farming was practiced by the ancient Phoenicians, and is known to be effective for slopes between two and ten percent. Contour plowing can increase crop yields from 10 to 50 percent, partially as a result from greater soil retention.

Or at least nearly the birth of the Republic

In 1808, Jefferson transmitted a refinement of his design to a Monsieur Sylvestre in France, for the benefit of the Society of the Seine.

The deep tillage could heavily erode the steep terrain of Jefferson's plantations, though, and he discovered that contour plowing around the curvature of the hills, rather than cutting furrows straight down-slope toward neighboring streams greatly reduced erosion.

He wrote to Tristam Dalton in May 1817 about his son-in-law Col. T.M. Randolph’s development of this method, laying off the plow lines in advance using a (wooden) rafter to measure and strokes of a hoe to mark the contours.

Plowing across slope on hilly terrain put a severe strain on the plowman and Col. Randolph modified the plow, fusing two separate shares against their flat sides at a right angle.

Plowing one way with the sod thrown down slope around the hill to the end of a furrow, the plowman would flip over the plow bottom and head back in the other direction with that sod thrown down slope as well. This eventually developed into a widely used "hillside plow."

Jefferson sent Dalton "a bit of paper cut in the form of the double share, which being opened at the fold to a right angle will give an idea of its general principle."

Jefferson's farms, including Monticello, had been losing soil into Chesapeake rivers for years and these new methods resulted in substantial improvements: "Let me beseech you" Jefferson wrote to others, "to make a trial of this method."

These techniques were not unknown to moderns:

As he had always been a voice for the working class, Villa would continue in this facet as the owner of a large piece of land. He attempted tremendous agrarian reform on his land. First, he studied the new, American techniques of contour plowing and crop rotation. His agrarian reform went one step further to include not only the crops, but also the people who tended the crops. Villa remembered the unfair economics used by the hacienda owners and made refreshing changes.

Pancho Villa died in 1923, less than a decade before Egan's story begins.

Egan relies on an article, "Small Farms, Externalities and the Dust Bowl of the 1930s" by Zeynep K. Hansen and Gary D. Libecap, published by the NBER. Among other things, the article discusses erosion as an example of several kinds of externality. In one, suspension, fine particles are blown into and then suspended in the air. To the farmer, this was an internal cost, but the fine particles in the air caused health problems to humans and livestock. Saltation and creep are externalities in which the topsoil from one farm is deposited on another farm, not only killing the wheat but also burying the downwind farm's erosion control stubble. In the article, they note that prior to the creation of the SCS,

The two leading erosion control methods in the 1930s were strip cropping with strip fallow and windbreaks of trees or brush. Both provided barriers to lower surface wind velocity and carrying capacity, but the former was more prevalent because trees could not be grown in many parts of the plains. Strip fallow also had the advantage of building up soil moisture and roughness, which reduced erodibility, whereas tree windbreaks actually absorbed moisture from surrounding ground.

This is interesting because it shows that (1) Dust Bowl farmers did practice conservation before FDR saved them, and (2) one of the fables from the high school version, FDR's commitment to using trees to block the wind, was not only a failure, but potentially could have worsened the situation. Egan also describes the tree idea as a failure.

Further in the article, they explain,

To completely combat regional erosion, all of the cultivated acreage in a topographical area of similarly erodible soil would have to be included in a "wind erosion unit" of 50,000 to 500,000 acres or more. The optimal farm sizes for addressing wind erosion and production, however, were not the same. Most estimates by agricultural economists and extension agents in the 1930s of appropriate production sizes for the region suggested two sections of land, 1,280 acres, depending on location in the plains. Few scale economies could be realized beyond that size. Nevertheless, in the 1930s, most farms were smaller than the prescribed levels for optimal production. The Great Plains was covered by hundreds of thousands of small farms. This condition was largely a legacy of the Homestead Act that limited claims to 160 to 320 acres when the region was settled between 1880 and 1925.

This is the same opinion reported by Egan of Hugh Bennett, the first director of the Soil Conservation Service. The area covered by Egan's story was formerly the domain of Plains Indians who thrived on grass-fed buffalo. The first whites to successfully live on the land ran the XIT cattle ranch. It was government policy to replace both with small claims farmers. According to their report written for Roosevelt,

"Mistaken public choices have been largely responsible for the situation," the report proclaimed. Specifically, "a mistaken homesteading policy, the stimulation of war time demands [World War I] which led to over cropping and over grazing, and encouragement of a system of agriculture which could not be both permanent and prosperous."
[...]
[Egan, continuing to quote from the report] "The Federal homestead policy, which kept land allotments low and required that a portion of each should be plowed, is now seen to have caused immeasurable harm. The Homestead Act of 1862, limiting an individual to 160 acres, was on the wesern plains almost an obligatory act of poverty."

Since the government subsequently wanted farms greater than 500 acres, and most farms of that period were smaller, Hansen and Libecap conclude that the farms were too small. This is consistent with other rationalization schemes of that era in which it was thought that efficiency required government-directed coordination.

Accordingly, collective action among farmers was necessary to address wind erosion. In commenting on strip cropping and recognizing the externalities involved, Charles Kellogg of the Bureau of Chemistry and Soils stated: "Such a practice, to be most effective, must be adopted on a community basis. Isolated farmers following this practice are not greatly benefited if the adjoining land is allowed to blow badly." The large number of small farms on the Great Plains, however, raised the costs of coordination. Indeed, Roland Renne of the Montana Agricultural Experiment Station (1935, 426-9) noted: "Dealing with thousands of different owners slows up the adoption of a planned land use program..."

They try to make a case that small farmers face different incentives than large farms:

Private motivation to invest in strip fallow was reduced when farmers did not internalize the externalities. The problem was accentuated for small farm owners. Each farmer had to consider the benefits of strip fallow with the opportunity costs of lost production. Because small farmers captured fewer of these leeward effects, they were less likely to have any fallow rotation, leaving their land in cultivation and their fields exposed to wind.

It might at first appear that there should be little difference in the proportion of land fallowed on a large or small farm since large farmers would face a correspondingly higher opportunity cost. However, a family faces about the same need for income (fixed cost) no matter how large the farm. Hansen and Libecap find that the proportion of land dedicated to conservation was proportionally larger on large farms.

Dissappointingly, they neglect to account for the possibility that adjoining farmers could coordinate through private mechanisms, in much the same way as the Animas Foundation and Malpai Borderlands Group pioneered the grassbank concept. They make passing references to "mixed incentives" to participate voluntarily and to transaction costs, but do not explain what those are. This could be the loss of reputation that might result from buying out a smaller, less profitable, and more harmful farm in a community where bidding in a bankruptcy auction brought threats of violence. Part of the problem may be that the Dust Bowl and the Depression occurred at the same time; had the Dust Bowl occurred separately, there might have been enough money to buy them out without the concurrent bankruptcy and bank failure problems.

I think this is a case in which there was little appreciation for the problem beforehand, and the immediate crisis was solved in conjunction with deep-pocketed and politically motivated politicians. Afterward, everyone is aware of the problem and at least several solutions, but now the state has become associated with the solution and becomes inseparable from it. Before: ignorance, no state. Afterward: knowledge, solution, and state.

Before	After
Ignorance	Knowledge
Problem	Solution
No state	State
Voluntary	Coercion

The frame then becomes that the state and the solution are one and the same when in fact the knowledge and the solution are independent of the state. We forget how often we have ignorance/no-state/before and knowledge/no-state/after, and also how often we have ignorance/state/before and ignorance/state/after. Celera's being the first to map the human genome is an example of the first (the state eventually joined the party), the S&L meltdown of the 1980s is an example of the second (the 1980 S&L Act signed by Carter precipitated the fiasco by expanding the federal insurance and then encouraging them to invest in local real estate (very non-diversified) and high-risk assets like art, creating a predictable problem), and most agriculture policy is an example of the third (nobody seems to know there is a problem or what to do about it).

As Egan describes the Dust Bowl era, farmers were ready for someone to show them a solution; if that happened to be a government agency that would also come in with money, they weren't going to turn it down. That doesn't seem to be the case: One telling fact that comes from the NBER paper is that the voluntary federal programs largely failed, while the coercive state programs succeeded.

Given the mixed incentives to participate in erosion control, the response to calls for voluntary collective action was limited. Indeed, the SCS noted a lack of voluntary farmer participation in the erosion control programs outlined in the demonstration projects.

Later,

More direct and coercive government intervention came in 1937 with inauguration of Soil Conservation Districts (SCDs) that had the authority to force farmer compliance and the resources (subsidies) to cover the costs of erosion control. The SCDs were local government units and required state legislation for establishment.

Oddly, according to Hansen and Libecap, "Kansas, Oklahoma, and Texas, at the center of the Dust Bowl, enacted wind erosion laws in 1935", but Egan fails to note those changes.

I am frequently accused of being too theoretical. For example, I think that this episode in America might have gone differently if the state had stayed out. People who favor state intervention will pooh-pooh the Malpai Borderlands grassbank initiative, inevitably pointing out that no private action did actually occur at that time, and that the farmers failed to join in the voluntary programs. I say that they are not going back far enough: what about leaving the ranchers and before them the Indians alone? Those are actual policies of the state that created the conditions for the environmental and social disaster. That is not a theoretical, paper claim: even Hugh Bennett agreed that the Homestead policy was a mistake. The Nature Conservancy and not the federal government pioneered the use of prescribed fire to maintain the health of the grasslands. Grass-fed buffalo are being reintroduced to the grass-fire-buffalo ecosystem as a sustainable food source. It turns out that laissez-faire would have been the best policy. But I am the theoretical one?

Deathly Hallows with spoiler

Finished Sunday night during dinner. Not bad, better than the last two I'd say. Didn't last long enough to add to the current reading list, though.

As I commented on Knowledge Problem (also spoilerized)

Are you struck a little by how Rowling uses churches and other icons of Christianity without actually acknowledging what they are? The church by the graveyard, Christmas, etc.? And of course the most obvious Christian symbolism, ala Gandalf and Aslan?

Was this intentional on Rowling's part, or has Christian mythology become this ingrained?

Rockridge Institute's Thinking Points Chapter 4

The background is Jesse Walker's article at Reason, The Man Who Framed Himself.

The chapter is entitled, "Nation as Family".









Childish, yes, but in context it makes for a succinct review.

(Foxit is an open source pdf reader that doesn't require 743 MB and 2.3 minutes to load - it's not perfect, but I like it better than Acrobat. hattip: J. Mazzetta)

Dan Klein and the Impossibly Private Roads

On a usenet exchange regarding private roads, I once posted the fact that per capita investment in the original turnpike movement exceeded that in the contemporary US. My interlocutor said that proved it was a bad idea: they were obviously too expensive. Today, our per capita investment in personal computers far exceeds that in the US in the 1980s - are they are clearly much more expensive now than then?

I believe the source for the turnpike investment factoid came from Gabriel Roth's Roads in a Market Economy. But Roth himself might have gotten it from the Dean of Private Road History, Daniel Klein. Klein has a half dozen papers about private roads in the US on his website. And a lightning shaped scar on his forehead where He Who Shall Not Be Named ... but that's another story.












The history has four basic eras: the Turnpike era (1792-1840), the Plank Road era (1847-1853), the Western roads (1850-1902), and the modern era. Klein's contribution is mostly to the first three though he has looked at the last; Roth's book was a good reference for the modern era, but much has happened since he first published it.

I do not believe that you could take the existing system, slap toll gates onto it, and expect it to operate as well. The turnpikes were means of transportation between discrete urban centers. If we had a geography today similar to what existed then, we could expect much less shunpiking today because whipping your Prius off the freeway and cutting through a field would not be nearly as much innocent fun as doing it with a horse.*

But we don't have a similar geography. We have the stupid megalopolises that occupy the Northeast Corridor (roughly, Boston to Richmond and/or Philadelphia) and the Southwest Corner (San Angeles). Central Texas and parts of the Midwest and Florida are getting that way. In other words, pretty much the area that would see candidates if the Electoral College were abandoned. And guess what they would want: less congestion, more lanes, more roads.

It was in fact with respect to roads that I realized that libertarians have dual problems with many of their ideas: one is to articulate a vision of a better society, the other is to figure out how to get there. Others will reject these ideas until we solve both problems. Having solved them, people won't stop rejecting them since this is one area that definitely reminds us of Howard Aiken's insight, "Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats." For one thing, there's status quo bias.

For another, lots of people stand to be upset by a system of privatized roads:

1. Commuters who believe their now-obvious cash transactions are more onerous than fuel, sales, and property taxation
2. Privacy advocates who worry about electronic tracking via cameras and automated toll collection systems
3. State highway department employees who worry about lost jobs
   
4. State highway department contractors - not all, just the ones who rely on incompetence and corruption
5. State legislatures who divert fuel tax funds into the general fund
6. People who worry about the regressive nature of the toll burden
   

There isn't much to be done about most of these. The fuel taxes are probably going to have their names changed to "carbon taxes" just as they increase, so there can be no enticement of commuters with lower fuel costs to make up for the tolls. The privacy advocates are probably right, if the horror stories Radley Balko is reporting are any indication. Government employee unions are generous donors to Democrats, so they have strong beliefs about which side their bread is buttered on and they simply are not going to be convinced by claims that "In a free society, there will be more jobs for everyone and everything will be cheaper."** Nobody cares if incompetent and/or corrupt contractors are disciplined by the market encouraged to change their ways to become more socially responsible (do I know my Lakoff, or what?). The redirection of fuel ta