Posts Tagged ‘socialism’

A Simple Tale

Wednesday, 19 January 2011

Some time within the last several weeks, I finally got around to reading The Secret Agent (1907), by Joseph Conrad. The novel is interesting for a number of reasons. One of those is that, as with Heller's later Catch-22, events are driven by the characters' unquestioned misunderstandings one of another, and by terrible narrowness of vision. (Unlike Catch-22, Conrad's book is not particularly humorous in its beginnings.) But what most struck me about The Secret Agent is that Conrad identified and unsparingly depicted the mental process that leads most who turn to state socialism to do so, and what essentially propels most of those who proceed on to left-wing anarchism to do that.

One of the characters of The Secret Agent is Stevie. Stevie is a low-functioning young man; operationally a person of very limited intelligence. He is also someone who is concerned — often overwhelmed with concern — about the fate of people and of beasts who seem to be ill-treated. Stevie's concern is illustrated at various points in the story, but it is in Chapter VIII that they begin to take political form.

Stevie's mother, over the objections of her daughter, has had herself moved to an alms-house; Stevie and his sister, Winnie Verloc, see their mother to her new home. The cab-man drives a much-abused horse to pull his carriage, and responds to Stevie's imploring that the horse not be whipped as if it were nearly incomprehensible. But, after the move has been effected, the cabbie tells Stevie that, however hard life may seem to be for the horse, it is harder still for the cabbie, who is a poor man with a family. Stevie is moved by this information. The driver departs.

Stevie is rejoined by his sister; they begin the journey homeward.

Before the doors of the public-house at the corner, where the profusion of gas-light reached the height of positive wickedness, a four-wheeled cab standing by the curbstone with no one on the box, seemed cast out into the gutter on account of irremediable decay. Mrs Verloc recognised the conveyance.[1] Its aspect was so profoundly lamentable, with such a perfection of grotesque misery and weirdness of macabre detail, as if it were the Cab of Death itself, that Mrs Verloc, with that ready compassion of a woman for a horse (when she is not sitting behind him), exclaimed vaguely:

Poor brute!

Hanging back suddenly, Stevie inflicted an arresting jerk upon his sister.

Poor! Poor! he ejaculated appreciatively. Cabman poor too. He told me himself.

The contemplation of the infirm and lonely steed overcame him. Jostled, but obstinate, he would remain there, trying to express the view newly opened to his sympathies of the human and equine misery in close association. But it was very difficult. Poor brute, poor people! was all he could repeat. It did not seem forcible enough, and he came to a stop with an angry splutter: Shame! Stevie was no master of phrases, and perhaps for that very reason his thoughts lacked clearness and precision. But he felt with greater completeness and some profundity. That little word contained all his sense of indignation and horror at one sort of wretchedness having to feed upon the anguish of the other—at the poor cabman beating the poor horse in the name, as it were, of his poor kids at home. And Stevie knew what it was to be beaten. He knew it from experience. It was a bad world. Bad! Bad!

Mrs Verloc, his only sister, guardian, and protector, could not pretend to such depths of insight. Moreover, she had not experienced the magic of the cabman’s eloquence. She was in the dark as to the inwardness of the word Shame. And she said placidly:

Come along, Stevie. You can’t help that.

The docile Stevie went along; but now he went along without pride, shamblingly, and muttering half words, and even words that would have been whole if they had not been made up of halves that did not belong to each other. It was as though he had been trying to fit all the words he could remember to his sentiments in order to get some sort of corresponding idea. And, as a matter of fact, he got it at last. He hung back to utter it at once.

Bad world for poor people.

Directly he had expressed that thought he became aware that it was familiar to him already in all its consequences. This circumstance strengthened his conviction immensely, but also augmented his indignation. Somebody, he felt, ought to be punished for it—punished with great severity. Being no sceptic, but a moral creature, he was in a manner at the mercy of his righteous passions.

Beastly! he added concisely.

It was clear to Mrs Verloc that he was greatly excited.

Nobody can help that, she said. Do come along. Is that the way you’re taking care of me?

Stevie mended his pace obediently. He prided himself on being a good brother. His morality, which was very complete, demanded that from him. Yet he was pained at the information imparted by his sister Winnie who was good. Nobody could help that! He came along gloomily, but presently he brightened up. Like the rest of mankind, perplexed by the mystery of the universe, he had his moments of consoling trust in the organised powers of the earth.

Police, he suggested confidently.

And there one has it. A great many of us would agree that the world is economically harder on many people than it ought to be. A great many of us would agree that society ought to do something about it. But the typical state socialist just unthinkingly grabs for the first social institution that comes to mind, the State; or, as Stevie puts it, police. There's no real thought to what other institutions might be more appropriate. If the point that we are talking about an institution that is first-and-foremost about violence is considered at all, there is little reflection on the question of whether and when violence is appropriate, unless that consideration is to rationalize the conclusion that violence should be used after the conclusion was already implictly embraced. But Stevie isn't drawn to wrestle with the a theory of what ought to be the limits of the State or of the use of violence:

The police aren’t for that, observed Mrs Verloc cursorily, hurrying on her way.

Stevie’s face lengthened considerably. He was thinking. The more intense his thinking, the slacker was the droop of his lower jaw.[2]

And it was with an aspect of hopeless vacancy that he gave up his intellectual enterprise.

Not for that? he mumbled, resigned but surprised. Not for that? He had formed for himself an ideal conception of the metropolitan police as a sort of benevolent institution for the suppression of evil. The notion of benevolence especially was very closely associated with his sense of the power of the men in blue. He had liked all police constables tenderly, with a guileless trustfulness. And he was pained. He was irritated, too, by a suspicion of duplicity in the members of the force. For Stevie was frank and as open as the day himself. What did they mean by pretending then? Unlike his sister, who put her trust in face values, he wished to go to the bottom of the matter. He carried on his inquiry by means of an angry challenge.

What for are they then, Winn? What are they for? Tell me.

Winnie disliked controversy. But fearing most a fit of black depression consequent on Stevie missing his mother very much at first, she did not altogether decline the discussion. Guiltless of all irony, she answered yet in a form which was not perhaps unnatural in the wife of Mr Verloc, Delegate of the Central Red Committee, personal friend of certain anarchists, and a votary of social revolution.

Don’t you know what the police are for, Stevie? They are there so that them as have nothing shouldn’t take anything away from them who have.

She avoided using the verb to steal, because it always made her brother uncomfortable. For Stevie was delicately honest. Certain simple principles had been instilled into him so anxiously (on account of his queerness) that the mere names of certain transgressions filled him with horror. He had been always easily impressed by speeches. He was impressed and startled now, and his intelligence was very alert.

What? he asked at once anxiously. Not even if they were hungry? Mustn’t they?

The two had paused in their walk.

Not if they were ever so, said Mrs Verloc, with the equanimity of a person untroubled by the problem of the distribution of wealth, and exploring the perspective of the roadway for an omnibus of the right colour. Certainly not. But what’s the use of talking about all that? You aren’t ever hungry.

Although it is plainly explained that Winnie is not really out to express a Machiavellian theory of the state, she has done so. Actually, many people from many otherwise very different ideologies would embrace this theory of what the State actually does; many anarchists (and not just left-wing anarchists) would insist that the State is at best unnecessary to all but those who would use to effect or to sustain an unjust distribution of economic power. But, in Stevie's case, in a matter of minutes he's invented state socialism, and then had his statism but not his socialism contradicted, and so heads down a path to left-wing anarchism. Someone else will later help him further down that path.


[1] The poor driver has taken his meager pay not home to his family, but to a pub. Earlier, it is revealed that a scrub-woman frequently plays upon Stevie's desire to help her and her family, only to spend on alcohol the money that he gives to her. Perhaps Conrad was inclined to believe that Work is the curse of the drinking classes. or perhaps he meant no more than to emphasize Stevie's gullibility. In any case, the interpretation is separable from what I seek principally to note.

[2] Note that Conrad has written Stevie as quite literally a slack-jawed fool.

Not a Financial Crisis

Sunday, 3 October 2010

The self-styled SD Planning Committee, formed to fight cuts to state funding of education, health care, and social services, has posted flyers that declare

We face not a financial crisis, but a crisis of priorities,
I don't know why they end that with a comma, as it's followed by a sentence in which it cannot participate. In any case, it's a somewhat puffed-up way of saying that
There's plenty of money for the budget; it's just not being spent well.

Interesting concept, there, that there could be plenty of money in a budget, but that the money is not being well spent. They just might try applying that same concept to just those portions of the budget that are allocated to education, to health care, and to social services. Perhaps, even after cuts, there would be plenty of money, if only it were spent well. And perhaps even if funding to these programmes were increased to the greatest possible levels, it would be spent badly.

Okay, so there's no perhaps to it; that's just how it would be.


On the other hand, I have to grimace when I hear or read of linking teacher pay to performance.

I understand the desire to pay teachers based upon the quality of their teaching. And, outside of the teachers' unions, almost everyone understands that it's not a good thing to link teacher pay primarily (let alone directly) to years of service. But I'm pretty sure that real-world attempts to link teacher pay to ostensible measures of performance are going to increase

  • disincentives for teachers to accept jobs working with less able students,
  • incentives for teachers to teach to the tests by which student achievement is purportedly measured,
  • student time tied-up in taking those d_mn'd tests, which themselves teach nothing to students beyond test-taking skills.

A profoundly different model of education is needed to get something that will work.

A part of that model would be to use markets to price teaching, recognizing (amongst other things) that different teaching contexts correspond to different markets.

Unfortunately, another part of that model is for parents to accept a significantly greater degree of responsibility for ensuring that their children are properly educated. The vast majority of parents seem willing to pass the buck to state-funded schools, regardless of their performance. It isn't sufficient to say Hey, I sent my kid to school! The school dropped the ball, not me!

Quite Different

Thursday, 8 October 2009

Consider two propositions:

  • The first is that markets are smart, to the extent that they cannot be tricked into anything unless one carefully hides most or all of the contrary evidence.
  • The second is that, left unregulated, markets produce some best possible outcomes.
These aren't at all the same proposition. On the one hand, something can be hard to deceive, yet work at purposes contrary to those that one favors. On the other hand, a mechanism can be vulnerable to some sorts of disruption but, in the absence of that disruption, perform some task well. I'm not saying that the propositions are contrary; they could be simultaneously true; none-the-less, they're plainly not identical.

The run-up to the latest economic crisis seems to have been founded in no small part by a confusion of these two distinct propositions. The Bush Administration represented itself — and may well have considered itself — free market, in-so-far as it expected considerable resilience on the part of the market in the face of remarkable levels of state borrowing and considerable other interventions (compassionately conservative or kleptocratic). And Alan Greenspan, who surely considered himself a believer in laissez faire, is these days explaining his optimistic proclamations from before the crisis as stemming from a failure to reälize that investors would not recognize that a boom could not last forever, to which lack of recognition he also attributes the crisis, as if irrational exuberance were simply a Keynesian animal spirit, rather than a product of things such as lending regulations and Federal Reserve interest rate policy.

Meanwhile, many of the Keynesians, socialists, and pragmatic technocrats (long-standing or born-again) are arguing that the fact that the market could be fooled shows that markets aren't clever and that thus various sorts of interventions are needed, as if any defense of free markets must hang upon a belief that markets are simply too clever to be fooled. Left unaddressed is whether the confusion were endogenous or brought on by state intervention, whether those prior interventions that may have been the cause of the confusion produce actual benefits worth the costs of that confusion, and whether more intervention would produce a more clever system or a less clever system.

In fact, there are various long-established free-market schools of thought that attribute economic crises to a propensity of state intervention to fool economic participants. For example, it is difficult to distinguish to what extent interest rates reflect the supply and demand of private savings for future consumption, and to what extent they are an artefact of central bank intervention for other purposes. In the face of Federal Reserve manipulation of interest rates, the market will not be sufficiently smart to see what the price of loanable funds should be, and therefore will almost certainly build too much or too little for the future.

Uhm, No

Wednesday, 16 September 2009

I recently read someone defending socialism on the ground that socialism has the same root as does society. Well, I don't object to society. And I venture to guess that she doesn't object to fathers, yet I go further to guess that she does object to what's called patriarchy. One mustn't over-reach with etymology, with dear old dad, nor with society.

I've previous explained the economic calculation problem of socialism: Rational allocation of resources requires trade-off signals that reflect as much relevant information as practicable. Most of the relevant information is highly decentralized, and some of it (such as the expectations and preferences of participants) is intrinsically so. A market brings that information into play by way of prices (trade-off signals) developed by the give-and-take of would-be consumers and of would-be sellers. Socialists haven't developed an alternative; they correct the market only at the cost of over-all misallocations with their own costs in human welfare.

This point is as true in the delivery of health care as anywhere else. Almost everyone agrees that American health-care delivery is in appalling shape, but there are those who ignore that the problems have grown as state interventions have increased. Commentators frequently note that costs have exploded in the last fourteen years, but then most of these commentators are silent on the fact that the period followed upon the last round of reforms. Of course, the period before those reforms wasn't itself some sort of golden age; the reforms were effected because many things were seen to be worse than once they were, and getting worse still. But, again, due attention was not paid to the rôle of prior state intervention in effecting that worsening. This routine of blaming what remains of a market for the mounting problems of an increasingly state-controlled system began well before I was born.

Many people, even defenders of socialized medicine for the United States, admit that the socialized systems elsewhere have some dramatic flaws. The belief of the defenders is that the United States can develop a better system, perhaps in part by learning from the problems of other states. But the deep problem is, again, that of trade-off signals. And one of the seldom-recognized implications of that is that greater state control here has led and will lead to a worsening of systems elsewhere. A state-controlled system can somewhat compensate for its own inability to formulate rational trade-off signals by being guided (directly or indirectly) by prices generated elsewhere. (This solution is imperfect because the prices of one region cannot be expected to be ideal for another; and, if they were, using them fully would generate exactly the same out-comes as would be effected by a free market, rendering the socialism absurd.) Implicitly, production and distribution of health care in the industrialized nations with more socialized medicine has been significantly guided by the choices made in the United States. To the extent that our prices as well continue to become the guesses of bureaucrats rather that the outcomes of interaction between free consumers and free producers, socialized medicine everywhere will be shooting in an ever-growing darkness.

Even assuming that morality can somehow ignore such practical problems, the morality of the claims for socialized medicine strikes me as utterly bogus. Many people declare health care to be a fundamental right, but that's plainly incoherent as one could exercise any fundamental right without the presence and assistance of other people. There have been very few attempts to build ground-up cases for a moral entitlement to health care — identifying some actual fundamental right from which a right to health care is derived in a social context — and every one with which I'm familiar has been exploded on logical grounds. Mostly people just confuse the appealing proposition that it would be a very fine thing if no one was denied health care for simple lack of resources with there being a right to health care. There are a great many hypotheticals that would be very fine things. I know people such that it would be a very fine thing if they had the companionship of someone of the desired sex, and such that they would like that even more than access to medical care; I hardly think that we should force someone else to provide that companionship though.

Some very fine things become very vile things when delivered by virtue of confiscations, regardless of whether we imagine that the confiscation is effected by society, or recognize that it is by a state or by a gang or by a mob.

I Wish that I'd Said That

Sunday, 9 August 2009
Closer to Home by the Mock Turtle
there is already a government run health-care system within this country, I speak, of course, of the V.A. hospitals

Compromising Health Insurance

Tuesday, 28 July 2009
Senate group omitting Dem health goals by David Espo of the AP
Like bills drafted by Democrats, the proposal under discussion by six members on the Senate Finance Committee would bar insurance companies from denying coverage to any applicant. Nor could insurers charge higher premiums on the basis of pre-existing medical conditions.

[…]

Individuals would have a mandate to buy affordable insurance, but companies would not have a requirement to offer it.

Let's walk through what it would mean if insurers could not deny coverage to any applicant and could not charge higher premiums on the basis of preëxisting medical conditions.

The out-lays of insurers would of course increase, so the they will do one and likely both of two things:

  • Increase premiums for all subscribers: Those without preëxisting conditions would pay more than previously, to off-set the out-lays for those with preëxisting conditions.
  • Reduce coverage for all subscribers: The contractual liabilities of insurance companies would be reduced in the case of conditions that could be preëxisting, so that subscribers who developed such conditions after subscription would receive less treatment or face greater out-of-pocket expense.
So the buck-per-bang price of insurance (and probably the absolute price) would increase. This would occur regardless of whether subscription were mandatory, but I think that the consequent increase in price would be greater were coverage not mandatory.

In the absence of requiring people to purchase coverage, fewer people would buy insurance voluntarily. Those most likely to reduce their demand for insurance would be the less affluent and those who perceived themselves as relatively healthy. A significant share of the latter would indeed be relatively healthy, and their departure would mean that the average out-lay per subscriber would increase, which would push-up costs. The departure of the less affluent would tend to push-down out-lays, as the less affluent tend to lead less healthy life-styles, but it would be unreasonable to expect the less affluent to depart in sufficient numbers to restore the lower price, and I'm not aware of anyone advocating a strategy of pricing the poor out of the insurance market.

In fact, without compulsory subscription, it becomes less reasonable to subscribe until one actually needs treatment. Coverage would no longer function as insurance because it needn't be purchased on a precautionary basis. Instead, subscription would simply be a buy-in for some programme of medical care. When the expected cost of needed medical care were less than the buy-in price, one should not purchase a subscription; when the expected cost of needed care were greater, one should buy a subscription.

The proposal is to make subscription compulsory, in which case it's not clear why insurance companies should continue to be involved at all. Insurance premiums would have been replaced with a tax (regardless of whether it were called a tax or called a user fee or called a premium), and the insurance companies would be functioning as extensions of the state. Possibly a bona fide insurance could be offered to supplement coverage provided under the proposal, but it remains none-the-less unclear what legitimate reason there might be for using insurance companies to collecting a tax or to reïmburse those who provided state-mandated coverage. I'm inclined to interpret the intent in part to be to buy-off the insurance companies, giving them what will seem a guaranteed source of revenue, and in part to give a private-sector façade to a state monopsony.

Returning to the issue of the increase in buck-per-bang price, a consequence is going to be that most people who would insure in the absence of the proposed measures are going to have less coverage in their presence, unless they are required to have as much or more coverage than before, at the greater prices implied by not imposing higher fees on those with preëxisting conditions.

Another Liar-in-Chief

Monday, 9 February 2009

Calvin Woodward, at the AP, calls this an overstatement:

Most economists, almost unanimously, recognize that even if philosophically you're wary of government intervening in the economy, when you have the kind of problem you have right now … government is an important element of introducing some additional demand into the economy.
but it goes well beyond mere overstatement. It's an gross lie.

It's bad enough when people use consensus to argue for a proposition that ought instead to be tested by logic applied to brute fact. But this business of using counterfeit consensus is just actively vile.

Tossing the Economy into the Trough

Monday, 9 February 2009

Any time that the state spends money, there is some cost to the economy.

The state can tax, in which case the cost is obvious. But I put obvious in quotation marks here, because people don't seem to think past the fact that money is taken, without much thinking that the value of money per se is its purchasing power.

The state can print money, issuing new currency to fund its expenditures. The cost here comes because

M · ν = pT · q
where M is the total supply of money in an economy system, ν is the average frequency with which a unit of currency changes hands in the system, q is vector of the quantities of goods and services purchased in the system, and p is the corresponding vector of prices. If M is increased, and there isn't some off-setting increase in the elements of q, or a drop in ν, then elements of p must increase. If prices go up, then the purchasing power of the unit of currency goes down. Ceteris paribus, when the state issues new currency, the value of the holdings of currency that people already had is decreased. (There are some other, potentially far more costly effects than the direct loss of purchasing power, but I don't want this entry to mushroom into some huge treatise.)

In many modern states, printing money is made to look like borrowing, whereïn the ostensible borrowing is from a central bank, a special creature of the state, which prints money and uses this to make the loan to the state.

But the state may also more genuinely borrow money (especially when officials of the central bank think this better than printing more) in the financial markets. In this case, borrowing by the state shifts out the demand curve for loanable funds. Unless the supply curve for loanable funds were perfectly elastic, so that any amount of funds would be made available by lenders at the prevailing price — the rate of interest — that price will go up.

When people lose purchasing power to taxation or to an over-all increase in prices, they reduce purchases of goods and of services, and they save less, so that funds for investment are decreased, and hence investment is decreased. When the price of borrowing is increased, people borrow less for consumer purchases and less for investment. So whenever the state spends, no matter whether it taxes, inflates, or borrows, that spending takes a piece of the economy. Whether there is a net cost turns upon whether the activity funded by state spending is somehow more productive than the private activity that it has crowded-out.

As I have explained, state allocation of resources can be more productive only if private provision is hampered by transactions costs, and the effects of those transactions costs are greater than the combined effects of state transactions costs (red tape and all that) and the loss of economic coördination which results from substituting guess-work for market prices.

Okay, so this gets me to these stimulus bills in the United States legislature. Various numbers are associated with various versions, but the bill that left the House of Representatives was for about 800 billion dollars. And various commentators, both conservatives at institutions such as the Wall Street Journal and social democrats (liberals) at institutions such as NPR, have noted that only about one-eighth of the projects in that bill could be reasonably claimed to be stimulus, with the rest just being pork-barrel projects. Regardless of whether we buy-into the Keynesian hopes for about $100,000,000,000, the loss to the economy associated with about $700,000,000,000 in pork will be vastly greater.

It was claimed that a stimulus bill was necessary because the economy is tanking. The word depression is being bandied-about. And, yet, a majority in Congress and the President are pushing what will plainly be a massive hit on the economy.

To explain the behavior of these parties, we could offer various hypotheses. Many politicians are simply great fools; some politicians might believe that we are indeed on the cusp of an economic disaster, but be so greedy for the political gains associated with these projects that they just won't allow themselves to think. Other politicians might not believe the talk of economic crisis, but be knaves who participate in it, creäting a smokescreen behind which to seek much the same gains as are the fools. Finally, some of these politicians might both genuinely believe that the economic crisis is quite dire, and recognize that a stimulus like those proposed will be greatly damaging, but expect that the effects of the bill can be blamed on other things, especially upon what remains of the market economy, so that those effects become an excuse for even greater expansion of state power.

With regard to one particular politician, the President, I don't at all think that he's so great a fool as to misunderstand what a stimulus bill that is about 7/8 pork would do. He knows that he's pushing a hit on the economy. I don't know whether he is amongst the knaves who don't really believe that the economic situation is all that dire, or amongst those who want to engineer a greater crisis in order to have a greater excuse to technocratically restructure the economy. But when the President speaks of recovery as taking years rather than months, I worry that he is not merely lowering expectations to reduce future criticism, but revealing more ambitious plans.

Driving towards the Brink

Monday, 15 December 2008

I haven't followed everything that has been said about the proposed bail-out of the major American automobile manufacturers, and I don't know whether the principal point that I'm going to make below has been much noticed.

It is quite natural for people to hold that, if the manufacturers are given a major infusion of financial capital, then they should surrender some control to the creditors; that if the manufacturers are given a bail-out by Congress, then Congress ought to be able to impose some changes in practices and in policies, to ensure that tax-payers are in some way repaid.

But ownership is no more or less than a right of control, and to the extent that control is transferred, ownership is surrendered. What we are then discussing, however we might put it, is nationalization, albeït perhaps only partial nationalization, whether it is called this or not.

Once the automobile industry is nationalized, management of that industry becomes another government programme, with a large bloc of voters fairly directly dependent upon that programme for their incomes. A sizeable portion of this bloc will insist upon indefinite guarantees concering employment and income. The industry would likely become another third rail of the political system, virtually untouchable unless it is to expand the benefits received by the beneficiaries. Further, conceptualizing what amounts to a transfer programme (welfare) as a manufacturing programme will consume additional resources, which really ought to go into other projects. It would literally be more efficient to pay some or all of the automobile workers to stay home than to pay them to make some or all of the vehicles that they would make; but, by golly, the illusion of productivity will trump the reälity of waste.

Because the political significance of a transfer programme is positively correlated with its direct economic benefits to recipients, the stronger are the initial guarantees of employment and of income, the more powerful will be the abiding political effect of the programme. The Republican insistance that a bail-out provide for swift wage cuts probably speaks to some awareness that the bloc of voters in-question would more naturally align with the Democratic Party.

Meanwhile, the White House discussion of doing an end-run to provide a bail-out from other funds may be an attempt to head-off later action by Congress when the Democrats assume the more sizeable majorities from the last elections. Giving money to the manufacturers with fewer strings attached puts less of a programme in place.

Steele on Fascism

Sunday, 13 April 2008