Dependency Politics

Von Hayek taught that conservative principles are the tested product of an evolutionary social process. He taught that (libertarian) policies which support this trial-and-error progress serve society best. His teachings offer hope and direction to conservatives fearful that "dependency politics" are now permanently entrenched. In the end, truth can be counted on to prevail.

Strauss taught concern with the fundamental alternative: That western culture is the product of centuries of cultivating human nature and that America is exceptional because of the unusual alignment of history and tradition with libertarian principles (and the unlikely marriage of Virtue and Democracy). The classics, according to Strauss, taught that the best regimes came into being only by chance and that history is cyclical not linear. These teachings animate conservative fears that we are close to a tipping point where the culture of too many hyphenated Americans undoes that exceptionalism.

This blog has argued: "to believe in Freedom is to see in American history ample evidence of how malleable and ever-changing "culture" can be and how people, left to their own devices, lift themselves up." It is helpful to remember that Political Conservatism was a minority view for much of the twentieth century. In the end, what Strauss suggested -- and Reagan demonstrated -- is that a Conservatism that that confidently appeals to individual dignity can never be permanently suppressed.

Reading the Torah

Writing in Haaretz, Rabbi Shai Held divides the world "between those who acknowledge that they read selectively, and those who do not - or who, given their assumptions, simply cannot." He believes the Torah can be just as well read advocating "universal humanism" as "radically particularistic chauvinism." Given that we "have to decide" the manner in which we read, the most "urgent religious question" is: "How do we build religious lives in which our care for others is intensified rather than attenuated?"

Rabbi Held's philosophy undermines his intention. Religion which acknowledges it reads selectively subverts itself. The statement "The Torah can justly be understood advocating chauvinistic nationalism, but I prefer to read it humanistically," simply does not carry the power of "Those who read the Torah as advocating chauvinistic nationalism pervert it's teaching." As Rabbi Held does acknowledge that "no religious thinker could embrace" a view which puts "human beings rather than God at the center of the universe," it is hard to see how he understands otherwise his view that the fundamental teaching of the Torah -- Revelation -- is whatever a human being decides it is.

Better is the traditional teaching, amplified by Strauss, that we have to choose between Reason and Revelation.

The Land Which I Will Show You

And G-d said to Avram: Take yourself (Lech Lecha) from your nation, your community and your father’s house towards the land which I will show you. And I will make you a great nation, bless you and exalt your name; it will be for a blessing. And those who bless you shall themselves be blessed, those who curse you shall themselves be cursed and, through you, all the nations of the world shall be blessed.

These three verses-- the first in which G-d addresses a Jew -- may well, on that account, be the most critical in the Bible. In them, G-d presents to Avram, and, one presumes, his descendents, the mission and purpose that G-d has in store.

The precise nature of G-d’s command may be hard to grasp. One complication is the odd, double, phrase Lech Lecha. Rashi understands it as “Go, for yourself, for your benefit”, as if G-d was not appealing to the better angels of Avram’s nature. Another, easy, observation is that the command is ordered backwards. One must first leave his parent’s home before leaving his community, and his community before leaving his nation. This can be understood, then, as a psychological, rather then geographical, command. If so, however, it could lead to its being understood as more generally applicable. In any case, as Rashi notes, Avram had already left his homeland, taken by his father, and was en-route to Canaan, which, lo and behold, turns out to be just the land G-d had in mind. While Avram would hardly be the last to hear G-d sanctify an undertaking anyways underway, one would like to imagine that there was more at play here.

It is tempting – one cannot but question whether the land we call Israel is indeed what is here promised – but probably ultimately foolish to read the “I will show you” as forever in the future. Rashi, more modestly, explains that the term was used to make the Promised Land more desirable. This explanation is far from innocent. Something fundamentally undesirable may become desirable when mystery and tension are added, but something fundamentally desirable needs, wants, no such artifice.

Parenthetically, the command of the Posuk is the conceit of the Scientist: A scientist must separate himself from the biases of one’s own and follow the truth where-ever it leads. That Avram is portrayed in the Midrash as a natural philosopher is then not irrelevant. Nor is it irrelevant that the where-ever-it-leads winds up being the original destination and the separation from one’s own in this Posuk, becomes the creation of a new nation – a new subjectivity – in the next.

The blessings of the second verse – fecundity, wealth and fame – are not, Rashi points out, blessings in their own right, rather they are compensations for the rigors of travel. One can go farther then Rashi and note that the three blessings roughly map to the three goings-out in the first Posuk.

Be that as it may, it leaves the third verse as, ultimately, the explanation of the purpose of Avram’s mission. The verse appears not entirely self-consistant – if nations are cursing Avram and, thus, themselves, cursed, then all the nations of the world are not blessed. Perhaps the first two clauses can be understood as a historical process through which the final one will come about.

Strauss writes the following: “The emergence of nations made it possible that Noah’s Ark floating alone on the waters covering the whole earth be replaced by a whole, numerous, nation living in the midst of the nations covering the whole earth.” The limit of that comparison is precisely the difference between Noah – the Tzadik im Peltz – and Avram.

Political Meta-Cognition

Polls that indicate many Americans believe Obama to be a Muslim have the media agitated and self-critiquing, in a way that similar polls indicating larger numbers of Americans believed W Bush complicit in 9/11 never did.

Lapsed conservative, David Brooks, a-historically, sees contemporary culture as the problem:

...[contemporary] culture places less emphasis on the need to struggle against one’s own mental feebleness. Today’s culture is better in most ways, but in this way it is worse.

The ensuing mental flabbiness is most evident in politics. Many conservatives declare that Barack Obama is a Muslim because it feels so good to say so... Issues like tax cuts and the size of government, which should be shaped by circumstances (often it’s good to cut taxes; sometimes it’s necessary to raise them), are now treated as inflexible tests of tribal purity.

To use a fancy word, there’s a metacognition deficit... Of the problems that afflict the country, this is the underlying one.

Strauss taught that there is a natural friction between philosophy (or "metacognition") and -- in particular, but not exclusively, democratic -- politics, ultimately symbolized by the political death of Socrates, the first philosopher. He was skeptical of liberalism on precisely this point: its faith in -- actually, its bet on -- the real possibility, or even the inevitability, of a rational, "enlightened", (democratic) politics. To his critics, this is evidence of his anti-democratic project.

On the other hand, there is no shortage of evidence -- these sorts of polls included -- of the correctness of Strauss' critique. Confronted like this, liberal commitment to democracy wavers:

Churchill said: 'The best argument against Democracy is a five minute conversation with the average voter.' That was England back in the 1940's. Tragically -in the USA of 2010 - that conversation would only need to be 30 seconds.....

Read carefully, Strauss provides an approach towards upholding democracy as it apparently is, and not as one may wish it would be.

Obamanomics

I meant to comment on Obama's news conference Monday night. Drudge linked to a very good article that touches on some of the misgivings I had, but also, the reason I still feel more comfortable with Obama in charge then McCain.

...On being presented the Nobel Prize in economics in 1974, Friedrich von Hayek devoted his Stockholm lecture to acknowledging the severe limitations of his profession. “It seems to me,” he said, “that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences—an attempt which in our field may lead to outright error.”

Tangentially, a few years ago, I attending a financial risk management conference where, I think it was Emanuel Derman made a similar point about the financial models that have since proven inadequate.

Government simply cannot know enough to direct an economy successfully, and when the President claims that his fiscal stimulus plan will create (or save) at least three million jobs, he is taking a wild, and dangerous, leap.

One of the things that has reduced my confidence in the President is the manner in which he has held up this "create (or save) at least three million jobs" formulation. He has to know that there is no real way to measure that, which leads to the conclusion that it has more to do with politics then economics.

Said Hayek:

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.

I think there is an essential, common sense, wisdom in Von Hayek's argument that the Government ought be more a gardener and less a sculptor. Strauss, I think, makes somewhat of a similar argument in On Tyranny.

Government-as-gardening is obviously more difficult then government-as-sculpting in that it requires greater understanding and patience, which is to say: wisdom.

What is that environment? ...Third, it recognizes that Americans have undergone a financial calamity and that we need time to adjust; we cannot, like a car battery, be shocked back to life, and we aren’t in the mood to have someone blow in our ear.

I don't really agree with the author's prescription, which is why I snipped out First and Second, but there is some truth to Third. Obama, Monday night, described the vicious cycle which he argued can only, or best, be broken by Government. <metaphor-alert>But there is a timing game. If government shoots its wad and fails, there is no second chance. The author may well be correct at least to the extent that the public now might not be as responsive to a stimulus package as required, and it may make sense to save bullets in the gun.</metaphor-alert>

In fact, stimulus may be precisely the wrong metaphor. Rather than getting jazzed up, we need to be calmed down and to take the time to learn from the Great Depression, a time when government did too much, not too little. Amity Shlaes makes the argument in The Forgotten Man, her book about the Great Depression, that the constant experimenting and meddling of the New Deal froze investors and business operators in fear: “Businesses decided to wait Roosevelt out, hold on to their cash, and invest in future years.”

One doesn't have to dig too deeply to see plenty of instances of that dynamic -- private sector activity frozen awaiting Government decisions/intervention -- at play in out current crisis.

I think, perhaps, the most promising thing in the Presidential transition, was Obama's stated desire to avoid insular groupthink. For that reason, the most disappointing part of his initial press conference was when he derided those who question the efficacy of the New Deal.

Despite the warnings of Keynes, the experience of the past half-century indicates that today’s low interest rates will start having a positive effect, though it still will take many months. Meanwhile, left alone, what Hayek called “spontaneous order” will find its way forward. Using a different metaphor, James Grant, in his history of credit, Money of the Mind, wrote, “The cycle of decay and renewal is as much a part of capitalism as it is of the forest floor.” But, in the 1930’s, “something in the normal regenerative process was missing. There was no decisive recovery from the business-cycle bottom. People had lost their speculative courage, and the more government legislated and taxed, the more that credit sulked.”

This is, I think, the key point here. It seems that the Bush and Obama economic teams have identified problems -- eg: "credit is not flowing" -- and pursued government-as-sculptor policies intended to directly fix the problem. The presidents description need for government action to break the vicious cycle is a perfect illustration of that approach. More often then not the scope of the problem and the consequences of the policy surpass the policymakers grasp and so the policy proves ineffective.

The wiser course of action, again, would be governing-as-gardening. In this case, the focus would not be on directly fixing direct problems, but on identifying and targeting the reasons why the natural regenerative processes are missing.

To give one concrete example, previously discussed on this blog:

In a functioning cycle, creditors work with borrowers to renegotiate terms such that creditors get a more certain cash flow and borrowers get to keep their homes. That is not happening as much as it should in this cycle, largely because mortgages are pooled and tranched, renegotiation is contra the interests of the lower tranches. Pool managers may themselves own lower tranches or face lawsuit from lower-tranche-owners if they renegotiate. As this failure to renegotiate results in far more uncertain cash flows, the securities derived from those pools are far harder to accurately price. The pricing difficulty is, of course, at the heart of why these securities are "toxic" and, therefore, why credit is crunched.

A government-as-gardener might, then, pursue policies that unblock loan-modification that would lead to greater cash flow certainty. It could create conflict of interest laws and protect managers who renegotiate from the threat of lawsuit. If need be, it could adjust tax laws to ensure the pool managers incentives are properly aligned. And so forth. With more certain cash-flows, the derived securities would have a more certain price and the process of sorting out winners and losers and starting a-new could begin in earnest.

Instead, the sculptor-policy-makers have pursued erratic ham-handed policy using borrowed money to subsidize market players whose main effect has been to create a line out the door and round the corner of private sector actors who now demand to be subsidized before they do what they would do anyways and raise market expectations of serious inflation, interest rate and tax hikes in the not too distant future. What attention has been paid towards encouraging renegotiation results in sculpting-policy-proposals involving government actively engaged in the actual renegotiation rather then gardening-policies along the lines outlined above.

There is no doubt in my mind that a President McCain would be pursuing government-as-sculptor policies as, if not more, aggressively then President Obama. President Obama prides himself on being thoughtful and non-ideological and so there is at least a chance that he will, better belatedly then never, come to understand the wiser course.

On the other hand, I am not quite sure that President is as non-ideological as he presents himself and there is a serious ideological point in play. It is a matter of liberal faith that FDR "saved capitalism from itself," which, can be understood as believing that markets, without the intervention of Government, do not naturally self-correct. From his press conference, it seems likely Obama adheres unquestioningly to this faith. And that it will be quite the stepping out of the bubble for him to consider the possibility of alternatives.