Public Choice — What Is Wrong With It?

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I have just chanced on a post containing a critical assessment of the theory of Public Choice. I have not yet read the article. Before I look at it, it might be fun to try to remember what I still know — after all these years — and how I feel about Public Choice today.

Personally, an intriguing exercise since it was my attempt to probe deeper into Public Choice that eventually undermined my confidence in libertarian ideas.

My memories are vague, though.

Actually, I had planned to give a lecture on Public Choice but cancelled the event by the end of 2012, I think, owing to a feeling that I had not enough of a command of the subject. It was a gut feeling that turned out to reveal a growing dissatisfaction with an approach that was too partial to be convincing.

As far as I remember — and I may be wrong — two aspects in particular bothered me about Public Choice (PuCh).

(1) PuCh seemed too eager and to spell out a foregone conclusion: the state is bad.

(2) PuCh seemed to reiterate its belief in the economy, free economic activity (whatever that actually is) as being the legitimate and best force to shape society — as opposed to politics and the state — by couching its analyses of collective decision making in terms of models based on the economic theory preferred by critics of "statism".

It was a prejudiced theory that built its bias into the premises from which it arrived its conclusions.

I suppose, what changed my fundamental view of the matter was the insight that any advanced society, especially one with a high degree of freedom, does require (a lot of) politics and the state, and that the criticism of these makes only sense against the backdrop of appreciating the indispensable positive role that politics and the state play in ensuring a free society.

So, let us see what is in

Steven Pressmann on Public Choice Theory.

Well, Presmann's conclusion is pretty similar to the one I would arrived at:

At bottom, the problem is that public choice begins with an ideological aversion to government and a religious worship of the market. This antigovernment ideology has blinded the entire public choice school. It has become the study of government failure, a set of assertions that governments are too big, and a criticism of all political decision-making. These biases keep public choice advocates from seeing the self-refuting and self-contradictory nature of its arguments. (Pressman 2004: 15–16).

Here is the analysis that I developed upon emancipating myself from Public Choice: The State and Politics. 

The Left and the Right — Two Halfs of a Bad Circle

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A note jotted down in a tired state at the end of the day, on having read this post.

In order to act as economic agents, humans must enforce political decisions. Try to set up a farmer's market, you will quickly find that markets cannot exist without political action. And by politics I mean the attempts at and results of defining what is legal or socially accepted and enforceable in a community. Most economic activities and in particular the functioning of markets depend on people working out the political substratum in which economic activities are embedded. In that sense every economy is a mixed economy, if by "mix" we mean the simultaneous presence of strictly economic activity (such as trade) and politically determined constraints without which the former could not come about. 

In other words, the liberal ideal of market activities as providing an alternative to politics, a means of depoliticising society, is fundamentally ill-conceived. That is what the "right" must learn. 

The "left" should return to its roots which are closely intertwined with liberal themes — such as (a) to (d) see below — and rediscover that, in an inevitably political world, the quality of politics is significantly improved by 

• (a) genuine pluralism, 

• (b) democracy, 

• (c) the rule of law and 

• (d) constitutional provisions bolstering the former three factors.

The "right" are hypocritical in that

• (a) by insisting on "market solutions" they pretend to be abstaining from political influence (when, in fact, they are not, because markets are political creatures and therefore political lobbyism is eagerly pursued by them) and 

• (b), they gladly accept state intervention of any kind and scale when these intrusions serve their purposes.

The "left" are equally hypocritical in that they are willing to

• ignore the broader concerns of a pluralistic democracy  — (a) to (d) — and

• champion an authoritarian state as long as it enforces their agenda.

The "left" think politics is unproblematic, even ideal, when it becomes the tool of their desires.
In their rhetoric, the "right" pretend to believe that politics is naturally bad, deserving to be replaced by "the good market", failing to appreciate the good that can be done by politics. 

Enticed by the irresistible prospect of the government enforcing their goal, the "left" lose their critical distance visà-vis the state too easily.

Both deny a fundamental truth about the economy, namely its inevitably mixed nature as partly a political and partly an economic enterprise.

The "right" cannot be trusted to further and protect the state's capacity for serving socially desirable purposes. 

The "left" cannot be trusted to guard against the state's totalitarian potential. 

Desirable is a balance of the spontaneous developments and the purposeful inroads. Too much political forcing is no less detrimental than overreliance on spontaneous forces. Yet the dangers of imbalance will not be understood by those ignorant of the mixed nature of the economy. 

See also A Note on Socialism and the Mixed Economy.

The Diesel Scam Is So Bad Even Germans Wake Up to It

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...well, or perhaps the protest is just a flash in the frying pan.

German summary below / deutsche Zusammenfassung unten

On reading this post Germany’s War On Diesel Takes A Setback…Environment Ministry Activism Exposed, Absurd Risk Claims (with German links), I decided to offer this comment at NoTricksZone:

Government-backed pseudoscientific fraud is extensive and numerous in this country, not least because the Greens have successfully usurped the deep state (ministries, Behörden, NGOs.) The green-minded are exceedingly adept at acting behind the scenes, while defining the politically correct Weltanschauung in Germany, leaving the traditional parties to act as followers of the green cult, while shedding their own principles [espouse the values and views of the political CDU/SPD/FDP-centre of the 1970/80s and your apt to be called a Nazi today] and serving mainly as access points to the institutions of power in Germany. The Grüngesinnte have grown so sure of their license to deceive that they may have finally overdone it with the attack on Diesel. I hope real political opposition returns to Germany, after decades in which it was absent. For the time being, however I think, this still describes the sad status quo in the country — republishesd from the post (available in English and German): Abuse of Governmental Duties in Germany — The New Normal:

It is the new normal for the German government to violate a number of its most fundamental duties — I am old enough to remember the times when they would not have gotten away with it.

The government is not protecting the freedom and other conditions required for the pursuit of science. Instead of ensuring that the requirements of science remain intact, it requires scientists to provide results that correspond with the government's ideological preferences. By contrast, the US-administration understands that it is the duty of government to guarantee the orderly scientific process. It is prepared to institute "red and blue teams" to ensure that scientific exchange and controversy is not suppressed. Germans are outraged at that, insisting on government-directed "science".

Another governmental breach of duty results from partisan manipulation of the scientific process. If government judges projects from the point of view of ideological preferences rather than according to scientific criteria, it loses the ability to properly vet policy proposals, including large-scale undertakings like the Energiewende that amount to a comprehensive transformation of society and the economy.

Had the German government heeded its constitutional obligation to exercise diligence, it soon would have become clear that the hypothesis underlying the Energiewende — the theory of catastrophic global warming supposedly induced by the small contribution of humans to overall CO2-emissions — was, and is to this day, so rudimentary, insubstantial, and uncertain (and demonstrably flawed) that it cannot possibly form the basis of government policy, let alone a scheme designed to fundamentally alter society.

But Germans have rediscovered their taste for gigantic campaigns intended to put the entire world in order. The population is caught in the old thrill to serve the authorities — so-called experts, the government and its organs  and media — with passionate obedience and sacrificing fervour and a reawakened lust to merge with the collective. The uniformity in this regard among the German people is as eerie as it is daunting.

Deutsche Zusammenfassung:

Ich habe folgenden Kommentar bei NoTricksZone eingestellt (siehe Links oben):

Betrug von der pseudowissenschaftlichen Art ist häufig geworden in Deutschland und findet regelmäßig in Projekten von großer Tragweite statt. 

Dies nicht zuletzt, weil die Grünen/Gründgesinnten die Tiefenstruktur des Staats (Ministerien, Behörden, NGOs) wirkungsvoll durchdrungen haben. Sie sind Meister darin, hinter den Kulissen zu schalten und walten. 

Sie geben vor, was als politisch korrekte Weltanschauung heutzutage vom politischen Konsumenten angenommen wird. Die traditionellen Parteien sind nur noch Mitläufer des grünen Kults. Längst haben sie die Grundsätze über Bord geworfen, die sie früher unterscheidbar gemacht hatten. 

Vertreten Sie heutzutage mal die Werte und Prinzipen der von CDU, SPD und FDP beherrschten politischen Mitte der 1970er und 1980er Jahre. Tue ich das, werde ich als Rechtsradikaler oder gar als Nazi beschimpft. Schönes Erlebnis. 

Ohne eigenen Überzeugungen sind die traditionellen Parteien Deutschlands zu Einstiegstüren in das System politischer Macht verkommen. 

Die Grüngesinnten sind sich nach Jahrzehnten ideologischer Vorherrschaft und verborgener aber sehr wirksamer Machtausübung inzwischen ihrer selbst so sicher, dass sie es mit dem Fahrverbot für Diesel nun schließlich sogar für die ökoverblödete deutsche Bevölkerung zu weit getrieben haben — zumal der Deutsche zwar mit grünen Apokalypsen und Heldentaten politisch unterhalten sein will, aber nicht, wenn das politische Theater ihre ureigensten persönlichen Interessen verletzt. Über den Weltuntergang politisch korrekt "jammern so im Allgemeinen" ist eines, der Absturz des Restwertes deines Autos etwas anderes. Ich hoffe, dass nach Jahrzehnten ihrer Abwesenheit,  echte politische Opposition bald wieder (mit ausreichend heilsamer Wirkung) in Deutschland stattfindet — andererseits schauen Sie nur: wir haben schon wieder ein Große Koalition, derer, die in den 1960er Jahren noch auf die Straße gegangen sind, um diese Aushöhlung des politischen Wettbewerbs zu verhindern. Einstweilen aber befürchte ich, dass folgende Ausführungen den Status Quo in Deutschland weiterhin beschreiben:

Abuse of Governmental Duties in Germany — The New Normal

Abuse of Governmental Duties in Germany — The New Normal

 

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See English summary below/Siehe englische Zusammenfassung unten

Die Bundesregierung lässt sich eklatanten Amtsmissbrauch zu schulden kommen, wie man an folgenden zwei Gesichtspunkten schon erkennt: Sie kommt ihrer Pflicht nicht nach, den freien Wissenschaftsbetrieb zu gewährleisten. Stattdessen beteiligt sie sich an „Gesinnungswissenschaft“, d. h. sie bevorzugt in parteiischer Manier Wissenschaftler, die die von ihr erwünschten „wissenschaftlichen Befunde“ hervorbringen. Wegen ihrer Gesinnungsbindung kann sie abweichende Ergebnisse nicht gleichbehandeln. Damit leistet sie einer ausgeprägten Tendenz Vorschub, wissenschaftliche Zielsetzungen und Resultate anhand ideologischer Gesichtspunkte zu bewerten.

Demgegenüber ist jede Regierung dazu verpflichtet, den offenen und freien Wissenschaftswettbewerb zu gewährleisten. Die Trump-Administration hat dies verstanden und wird nötigenfalls den wissenschaftlichen Wettbewerb mithilfe von „roten und blauen Teams“ befördern, sodass Kontroversen nicht mehr politisch unterdrückt werden können, sondern den Schutz der Regierung genießen.

Das stößt auf große Empörung in Deutschland, wo man eine regierungsgesteuerte Wissenschaft bevorzugt.

Nun, dies führt unweigerlich dazu, dass die deutsche Regierung eine andere grundlegende Verpflichtung mit Füßen tritt.

Die Energiewende beruht auf einer wissenschaftlichen These, die so rudimentär ist, dass es verantwortungslos ist, sie zum Anlass eines erzwungenen Gesellschaftswandels zu nehmen. Selbst, wenn ein derartiges Vorauseilen in Anfängen zustande kommt, ist es die Pflicht der Regierung die Qualität dieser Theorie im Vergleich mit konkurrierende Theorien und die Qualität der empirischen Befunde sorgfältig prüfen zu lassen, bevor auch nur daran gedacht werden kann, besagte Hypothese zur Basis des Gesellschaftswandels zu machen. 

Eine gewissenhafte Vorprüfung dieser Art war der deutschen Regierung aber nicht möglich, weil sie ideologische Kriterien und nicht wissenschaftliche zur Bewertung der Theorie von der katastrophalen menschengemachten Erderwärmung herangezogen hat. Hätte man wissenschaftliche Kriterien zugrunde gelegt, wäre schnell klar geworden, dass die abenteuerliche Weltunterganghistorie mit einem einzigen Wirkfaktor – Menschen erzeugtem CO2, einem Bruchteil des gesamten weltweiten CO2-Ausstoßes und bloß ein Faktor neben zahlreichen anderen, nachweislich wirkungsstärkeren Bestimmungsgrößen – völlig untauglich ist, um wissenschaftlich tragfähige Aussagen zu beglaubigen, ganz zu schweigen von der Eignung als Leitidee eines gesellschaftlichen Umschwungs.

Wir haben es allein in diesen zwei Punkten mit einer beängstigenden Pflichtvergessenheit der deutschen Regierung zu tun, die auf ideologischer Einseitigkeit beruht und nur dank eines gefährlichen Maßes an Gleichschaltung und unkritischem Mitläufertum seitens der Bevölkerung über geraume Zeit und bis heute noch weitgehend unwidersprochen geblieben ist.  Um es nochmal sehr deutlich zu sagen: Dieser gewaltige fortwährende Regierungsskandal wird bestenfalls übertroffen durch die Gleichgültigkeit einer im Weltmaßstab fast einzigartig gebildeten Bevölkerung gegenüber der täglichen Verletzung der Dienstpflichten des Staats, der Missachtung der Anforderungen einer pluralistischen Gesellschaft und des politischen Systems der Demokratie.

Der politische Wettbewerb, die Demokratie in Deutschland sind in einem desolaten Zustand. Auch, weil die Bevölkerung wie ehedem mehr Interesse am fanatischen Schulterschluss bei der Verfolgung mystischer Projekte als an einer funktionierenden Demokratie zeigt. Der Deutschen liebste Mär, die von der apokalyptischen Erderwärmung, ist der Ausdruck einer schwerwiegenden politischen Krise, und hat nichts mit einer wahrhaftigen Klimakrise zu tun. Während die Demokratie in Deutschland einen Niedergang erlebt – ausgehebelt durch die undemokratische EU und dem seit Langem schon alltäglichem Schulterschluss der parlamentarischen Kräfte –, fühlen sich die Deutschen wieder angezogen von der Heldentumsromantik gigantomanischer Feldzüge, an denen die Welt genesen soll. Der gleichgeschaltete politische Mainstream in Deutschland hat die Stirn, in bestem Orwellschen „Neusprech“ jene Kräfte als gefährlich rechtsradikal zu beschimpfen, die sich für eine wiederbelebte Opposition und echte Demokratie einsetzen.

Nachdem die Generation fast ausgestorben ist, die die unmittelbare Vorgeschichte, den Aufstieg, den Zenit und den Fall des Nationalsozialismus miterlebt hat, zeigen sich die Deutschen noch immer magisch angezogen von Projekten des Größenwahns – denn noch immer lieben sie das schwelgerische Aufgehen des Einzelnen im Volkskörper („alle eins im Glauben an die Rettung der geschändeten Natur“) und den Untertanenrausch leidenschaftlichen Gehorsams und opferbereiter Inbrunst für kühne Visionen, zu denen die Obrigkeit – vermeintliche Experten und die Regierung mit ihren Behörden und ihren Medien – sie aufhetzt und einspannt.

⃟ 

English summary:

It is the new normal for the German government to violate a number of its most fundamental duties — I am old enough to remember the times when they would not have gotten away with it.

The government is not protecting the freedom and other conditions required for the pursuit of science. Instead of ensuring that the requirements of science remain intact, it requires scientists to provide results that correspond with the government's ideological preferences. By contrast, the US-administration understands that it is the duty of government to guarantee the orderly scientific process. It is prepared to institute "red and blue teams" to ensure that scientific exchange and controversy is not suppressed. Germans are outraged at that, insisting on government-directed "science".

Another governmental breach of duty results from partisan manipulation of the scientific process. If government judges projects from the point of view of ideological preferences rather than according to scientific criteria, it loses the ability to properly vet policy proposals, including large-scale undertakings like the Energiewende that amount to a comprehensive transformation of society and the economy.

Had the German government heeded its constitutional obligation to exercise diligence, it soon would have become clear that the hypothesis underlying the Energiewende — the theory of catastrophic global warming supposedly induced by the small contribution of humans to overall CO2-emissions — was, and is to this day, so rudimentary, insubstantial, and uncertain (and demonstrably flawed) that it cannot possibly form the basis of government policy, let alone a scheme designed to fundamentally alter society.

But Germans have rediscovered their taste for gigantic campaigns intended to put the entire world in order. The population is caught in the old thrill to serve the authorities — so-called experts, the government and its organs  and media — with passionate obedience and sacrificing fervour and a reawakened lust to merge with the collective. The uniformity in this regard among the German people is as eery as it is daunting.

Energiewende — Dangerous Mania and Complete Failure

 

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In the below remarkable article written in German, (for an English version go to this site), the national chairman of the German nature protection initiative unmasks the throughly anti-ecological nature of the dangerous mania and utter failure called Energiewende.

Die installierte Nennleistung von Solar- und Windenergie wäre schon jetzt in der Lage, genügend Energie zur Stromversorgung bereitzustellen. Da diese aber volatil und nicht speicherbar ist, macht ein weiterer Ausbau keinen Sinn. Auch mehr Anlagen produzieren bei Windflaute und fehlender Sonne nicht mehr Energie. Windindustrieanlagen sind ineffizient und nicht in der Lage, die Stromversorgung sicherzustellen. Trotz circa 30000 installierter Anlagen sinkt der CO2-Ausstoß nicht, sondern steigt weiter an

Beim Ausbau der erneuerbaren Energien wurde versäumt, im Vorfeld Belastungsgrenzen für Natur, Arten, Menschen, Wälder und Landschaften festzulegen. Somit konnte es mithilfe des Erneuerbare-Energie-Gesetzes (EEG), der Privilegierung nach dem Baugesetzbuch, eigens dafür geschaffener neuer Rechtsgrundlagen und der Ausschaltung eines kritischen Diskurses zu den bekannten Auswüchsen kommen. Dem politisch-industriellen Komplex geht es nicht um Natur- und Klimaschutz, sondern um das Abschöpfen von Milliarden-Subventionen und eine ideologische Umdeutung von Natur- in „Klimaschutz“

Keine Industrie ist auf eine solche Menge an sogenannten Gutachten angewiesen, um sich ihre vermeintliche Unbedenklichkeit bescheinigen zu lassen. Die Ziele der nationalen Biodiversitätsstrategie werden durch den zügellosen Ausbau der Erneuerbaren, insbesondere Windenergie und Biomasse, konterkariert und können nicht mehr erreicht werden. Erhalt und Verbesserung biologischer Vielfalt sind jedoch die wichtigsten Herausforderungen im 21. Jahrhundert. Bedeutendere Faktoren für das Artensterben als die Klimaveränderung sind die Übernutzung der Ressourcen, die Zerstörung von Lebensräumen und Wäldern, die Versiegelung von Flächen, die industrielle Landwirtschaft, der Pestizideinsatz, die illegale Jagd. Die Energiewende setzt an falschen Stellen an und ist gescheitert

Windkraftindustrie und Naturschutz sind nicht vereinbar. Die ersatzlose Abschaffung des EEG sowie der Privilegierung nach dem Baugesetzbuch sind erforderlich, damit Landschaften, Wälder, Wildtiere und unsere Lebensräume nicht noch weiter unter die Räder kommen. Das EEG und die Privilegierung behindern die Erforschung alternativer und naturverträglicher Energietechniken. 

The source. 

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EF (9) — The Ultimate Challenge

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Writes Bill Mitchell,

In 1932, Stuart Chase published his book A New Deal (Macmillan), which became the totem for Franklin Roosevelt’s response to the Great Depression.

Stuart Chase is an early champion of the view that fiscal space (the potential for non-inflationary government spending) is solely constrained by resource availability, and therefore should not be regulated by threshold ratios (as laid down in the Maastricht Treaty for instance) for government outlays and national debt supposedly representing long-term standards of budgetary prudence independent of the prevalent stage in the economic cycle. Government should not be unnecessarily held back in spending on a large scale to fund the public purpose, notably full employment. To the critics of ample government spending Stuart Chase replies (in 1942):

Where’s the money coming from? Out of that one hundred million man-years of work wasted; out of that two hundred billion dollars of production which never was produced. It will come from the same place that the bombers, tanks and battleships are now coming from – out of the full employment of people.

For the time being, I am convinced he is right. I am even convinced that it may not be unusual to register huge unused spending capacity on the part of government, and that for this reason a lot that is beneficial to the individual and her community fails to be provided owing to an unnecessary denial of funding.

However, I shall add on my part, no less important than the recognition of untapped fiscal space is the need to insist that spending is supported by a sound democratic order whose restraints and monitoring capacity will not be easily circumvented.

It must be possible to at all times to effectively challenge and control political power and subject it to peaceful succession - for more see here.

I suspect that the idea of modern demand management was greatly inspired by the experience of unprecedented economic extravagance exercised in the two World Wars. The idea of fiscal space has been discovered in the context and for the purpose of war. As Keynes has pointed out in the foreword to the German edition of The General Theory, lavish use of fiscal space is easier to effect in a totalitarian society (or one overwhelmed by a drive toward totalitarian goals) than in a robust democracy, simply because the degree of ideological diversification and political resistance is so much greater in the latter.

Emerging from this tradition, fiscal space has proved to be a two-edged sword that has helped us build the golden age of capitalism (1945-1980), but has also brought about untold misery, carnage, and global conflagration, as the below lengthy quote amply demonstrates. Clearly, the extensive use of fiscal space cannot be recommended without strict conditionality in terms of a democratic-pluralistic order designed to keep our societies open and free.

IN 1925, Russia had been through a devastating war and a violent internal revolution. Her currency had been destroyed in a runaway price inflation, she was the world’s worst financial risk abroad and she had very little gold. Yet by the end of the first Five Year Plan in 1933, Russia had invested some 60 billion rubles in factories, new cities, cities, hydroelectric developments, armaments, houses, schools. There stood the new plant, ugly and solid. Without it Russia could never have met the onslaught of Hitler’s armies.  

Where did the money come from?

In 1933 it was freely prophesied that Italy could not invade Ethiopia. She had no credit abroad and almost no gold. The effort would bankrupt her. Italy went ahead, conquered Ethiopia, and emerged without financial collapse. 

Where did the money come from?

Hitler took over a Germany which was technically bankrupt. It had defaulted on its foreign obligations. When he proposed to build a powerful army, together with all kinds of grandiose public works, he was laughed at in London and New York. Germany was insolvent, and the whole idea was preposterous. The nations of Europe which have trembled under the thunder of panzer divisions know that Hitler built even more terribly than he promised.

 Where did the money come from?

When Japan began to rattle her sword in the direction of Indo-China and challenge the United States and the British Empire, wiseacres said it was a bluff. The long years of the war in China had reduced the Japanese economy to a bag of bones. She was bankrupt and could not sustain a real fight. Yet she opened a new attack with devastating fury, and with military equipment in planes, tanks, artillery, ships, that was as excellent as it was unexpected.

Where did the money come from?

In 1939, the United States Congress declined to appropriate $4 billions for highways, conservation, hospitals, freight cars, in the bitterly contested “lend-spend” bill. It was widely held that the bill would lead to ruin and national bankruptcy. Yet since the fall of France in 1940, Congress has appropriated almost $300 billions for armaments – seventy-five times as much as the lend-spend bill – and a large fraction of it has already gone into tanks and guns. Far from being ruined, our national vitality has never been more vigorous, and great financial moguls assure us that we shall be able to swing the national debt.

Where did the money come from?

After the war America will need to maintain full employment, operate its industries at substantial capacity, provide the essentials of life for all its own citizens, and help foreign peoples who are starving and unable to pay for the supplies. There will be a towering political demand for a world delivered from chronic depression.

Where will the money come from?

It is clear from these examples that what a great nation can “afford” in periods of crisis depends not on its money but on its man power and its goods. Russia, Italy, Germany, Japan, the United States, all used money in the situations mentioned, but money was obviously not the dominant factor. Man power and materials were the dominant factor. Yet at other times, when crisis was not so acute, the money for necessary tasks could not be found. Unemployment, insecurity, want, dragged on. This is a puzzling paradox. At certain times a nation can afford what at other times, with no less money, it cannot afford. At certain times we are afraid of national bankruptcy, and at other times we give it hardly a thought.

Notes Winston Churchill:

A requisition, for instance, for a half-million houses would not have seemed more difficult to comply with than those we were already in process of executing for 100,000 airplanes, or 20,000 guns, or 2,000,000 tons of projectiles. But a new set of conditions began to rule from 11 o’clock onwards. The money cost, which had never been considered by us to be a factor capable of limiting the supply of the armies, asserted a claim to priority from the moment the fighting stopped.

Adds, Bill Mitchell: 

11 o’clock was on November 11, 1918, when the peace was declared after WWI.

Chase noted that in the Depression there was idle labour and other productive resources – the “money cost became a brake on the whole economic machine” – despite the availability of these resources and unsold goods. 

War is the ultimate common motif which compels us and makes us willing to surrender to one overarching goal; but this is not the condition of civil society, and we should never elevate (though ideologically exalted politics loves to do this) any of the objectives that may arise in civil society to the staus of "the ultimate common motif and the one overarching goal". 

I do not know to what extent limiting fiscal space to a level appreciably below non-inflationary feasibility might be a necessary proviso to which civil society must be subjected under conditions of peace and robust democracy. 

However, the ultimate challenge to us being engaged in the discourse of political economy is to find a way to use fiscal space to the utmost without turning it into a catalyst of ideological zealotry and totalitarian control.

Polluted Minds

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Usurping the dignity of science for the political purposes of creating a totalitarian eco-religion (criminalising scientific dissent) — or insulating other political schemes from public challenge — is really what is behind the alarming new fad of resuscitated state censorship. It is entirely logical to extend belief in one's infallibility into more and more areas.

The risk of fake news is far less than the risk of being force-fed sanitized news, without dissent, approved by the CIA and government leaders.

Read more here:

Fake News Police Arrives in Germany.

The more absurd the "scientific" claims of a totalitarian faction / actractor of interests are, the more aggressively will it seek to control public opinion and public institutions or institutions of public-dominating effect but merely legitimate appearance, such as the EPA and no doubt any number of similar institutions all over the world which have been usurped by totalitarian-minded interests:

Consider the story of the lies and egregious exaggerations that have been effective in all of us believing inthe perniciousness of particulate matter and other hyped forms of pollution or puported pollution — not to forget the scandalous designation of C02 as a pollutant. 

Writes Charles E. Battig,

Milloy notes that “The key to the value of epidemiology as an investigative tool is that a researcher must be looking for a relatively high rate of a relatively rare event in a human population… Epidemiologic results are essentially correlations and, as we all learn in Statistics 101, correlations do not equate to causation.” The “devil is in the details” aphorism comes to life as Milloy exposes the EPA’s use of any minute level of correlation as evidence of statistically significant correlation to justify its definition of Clean Air standards.

Milloy’s latest book documents his multiple attempts in multiple formats to hold the EPA to basic standards of ethical epidemiologic theory and practice. His book details the quixotic nature of that quest.

An executive order by President Richard Nixon in 1970 unified federal environmental activities into a single new organization, the U.S. Environmental Protection Agency. Though the EPA was never officially organized by Congress as a Presidential cabinet-level department, Nixon’s new federal bureaucracy undertook the writing and implementation of Clean Air Act (1963) laws. This unique status of the EPA as an all- powerful federal agency lacking cabinet-level status continues to present. It has developed itself into a self-perpetuating rouge agency which defies congressional oversight attempts, as Milloy documents. From its $1 billion annual budget and 4,000 employees in 1970, the EPA expanded into a $6 billion annual budget with 16,000 employees by 1991.

Milloy began working on a variety of environmental issues involving the EPA in 1990. However, his quest for truth in statistics in identifying such impacts on human health has identified one issue at the top of the pile of EPA “malfeasance” actions. That is the matter of air quality standards.

Milloy:” When EPA began regulating PM in 1971, it regulated relatively large pieces of dust and soot that were anywhere from 25 to 45 millionths of a meter (one to two thousandths of an inch) in diameter. In 1987, EPA revised its rules to focus on smaller bits of dust and soot that were 10 millionths of a meter in diameter (about half the width of a human hair)—so-called PM10 (pronounced P-M-ten). In November 1996 under Administrator Browner, EPA proposed to regulate even smaller bits of dust and soot, particles that were 2.5 millionths of a meter in width—so-called PM2.5 (pronounced P-M-two-point-five).5

The EPA’s PM2.5 proposal wasn’t particularly interesting except that the agency claimed its regulation of PM2.5 would save 20,000 lives per year, or in EPA parlance, prevent 20,000 premature deaths. Who knew that outdoor air in America was killing anyone, let alone due to something called PM2.5, which is both a naturally occurring and manmade substance?”

Quoting Milloy: “This is a type of air pollution that the EPA calls

‘fine particulate matter,’ or PM2.5 (pronounced P-M-2-point-5). PM2.5 is very small dust or soot in the air, some of which is released by natural sources like volcanoes and forest fires and some of which is manmade. The EPA’s view of PM2.5 essentially is that it is the most toxic substance known to man. There is no safe exposure to PM2.5 and any exposure can kill you within hours—according to the EPA, that is. Fittingly, PM2.5 has been central to the EPA’s regulatory agenda for the past 20 years. The EPA’s most prominent, burdensome and expensive regulations all are based on it. PM2.5 is an issue that the EPA has exploited to exercise complete control over the energy, transportation and industrial sectors—in short, a large and vital part of the U.S. economy.”

Thus while a major effort has been undertaken by skeptical scientists (i.e. traditional fact-verifying scientists) to disprove EPA claims that fossil fuel usage and CO2 production are driving catastrophic global warming and global climate change, the agency has been toiling away in the background using air quality standard-making as the more effective destructive tool in its regulatory zeal to control our energy production and usage at all levels.

What EPA claim is at the center of power for its regulatory onslaught? It is linked to September 22, 2011 when EPA Administrator, Lisa Jackson, testified before a subcommittee of the House Energy and Commerce Committee.

Administrator Jackson stated: “Particulate matter causes premature death. It doesn’t make you sick. It’s directly causal to dying sooner than you should…If we could reduce particulate matter to levels that are healthy, we would have an identical impact to finding a cure for cancer.” At the time that would have been almost one in four deaths in America. Yet there were no standardized criteria to identify such a “cause of death” at autopsy, nor a way to separate out other contributing factors.

The Clean Air Act bars the EPA from considering costs when setting air quality standards. The Supreme Court has held that the EPA can only set air quality standards based on scientific determinations that provide an adequate margin of safety so as to protect the public health. With no limits on the economic costs of its air pollution remedies, the EPA had the potential to ratchet down PM standards to levels below natural background levels. A succession of presidential regimes attempted to put some rational cost limits in place. The last one standing is from September 1993, when then-President Clinton cancelled Executive Order 12291 of President Reagan, and replaced it with his own Executive Order 12866, which only required that “the benefits of the intended regulation justify its costs.”

Merely a passing challenge to the EPA was this issue of cost benefits of their air quality standards. As Milloy explains: “Economists have a methodology called ‘contingent valuation’ that fabricates values virtually out of the imaginations of randomly selected and surveyed people. The EPA then estimated that by reducing PM2.5, albeit indirectly, as many as 11,000 lives would be saved every year—with every life worth $9 million or so, the EPA estimated the benefits of the rule to be worth as much as $90 billion per year. And since $90 billion in benefits is a lot more than $11 billion in costs, EPA had solved its cost-benefit problem. Never mind that the $90 billion in costs were imaginary in nature while the $11 billion costs were actual in nature.” Problem solved.

Criticism by Milloy and others of the EPA’s refusal to provide the original data used to make such claims, lead to independent studies by Milloy and by James Enstrom (UCLA) of actual hospital admissions in California. When patient admissions were cross-checked with particulate matter levels, no statistical correlation was found. Smoggier air was not killing the elderly or young. The Clean Air act only mandated healthy air; it did not mandate esthetically pleasing pristine air.

Faced with mounting criticism of its air pollution claims based solely on epidemiological studies, which were merely statistical computer trolling of data of dubious quality, the EPA ventured into human subject testing. Milloy documents the use of human subjects, both young and old, in gas chamber experiments funded by the EPA at the University of North Carolina, the University of Michigan, the University of Washington, the University of Rochester, the University of Southern California and Rutgers University. Aiming to prove its claim of “death by any level of particulate matter” in ambient air, Milloy documents that such experiments were unethical and in defiance of the Nuremberg Code. In spite of numerous articles in the press, Congressional hearings, and appeals to state boards of medicine by Milloy, none of the perpetrators have been punished.

Milloy:

“The EPA has become quite simply a part of the federal government that is a law unto itself. It holds itself above the rules of science and, worse, above the rules of law, even where there is some relevant statutory language. Between its political and ideological bent and fat wallet, the EPA has established an enormous base of support it can call on whenever threatened. It has gotten away with the PM2.5 charade because no one has ever seriously tried to put a stop to it.”

I encourage readers to read Milloy’s book and share the dismay attendant to such overt manipulation of science and the political system by an essentially rogue agency. It is a fond hope that the Trump administration will restore science to its rightful place in federal policy making, and restore our trust in the regulations imposed on us.

Once again: The Source.

Staatsverschuldung (3) - Schuldendienst

Image credit.

Fortgesetzt von hier.

Sind die USA in der Lage, Ihren Schuldendienst zu bedienen, wenn die Zinsen steigen?

Wie die Dinge stehen, und wie uns das Beispiel Japans lehrt (siehe unten), dürfte einstweilen wohl weiterhin gelten: Wenn sie darauf bestehen, sind die Vereinigten Staaten durchaus in der Lage, die Kosten, welche ihnen im Zusammenhang mit ihrem Schuldendienst entstehen, nach Belieben zu kontrollieren. Denn es ist dem Gutdünken der amerikanischen Regierung überlassen zu entscheiden, welche US-Schuldtitel zu welchen Konditionen emittiert werden.

Niemand kann sie daran hindern, die Fristen- und Zinsstruktur der aufgelegten Anleihen nach ihren Vorstellungen zu verändern. Niemand kann die Vereinigten Staaten daran hindern, ihre gesamten am Kapitalmarkt emittierten Verbindlichkeiten auf Titel zu reduzieren mit, sagen wir, einer Laufzeit von 30 Tagen und einer Rendite von 0,35%. Solange die Bonität der USA nicht in Frage steht, dürften sich immer Investoren finden, die ihre unverzinslichen Bargeldbestände gerne gegen risikolose Papiere mit positiver Rendite eintauschen.

Betrachtet man Japan, so stellt man fest, dass selbst ein exorbitanter Anstieg der Staatsverschuldung durchaus einhergehen kann mit stark fallenden und dauerhaft niedrigen Zinsen. Länder wie die USA und Japan dominieren den Markt für ihre eigenen Staatsanleihen, wie oben angesprochen, und sind so in der Lage, die Kosten ihrer Verbindlichkeiten unter Kontrolle zu halten. Immer vorausgesetzt, dass die Wirtschaft in einem einigermaßen guten Zustand, insbesondere im Vergleich zu anderen Volkswirtschaften, verbleibt.

Zudem ist es so, dass die Staatsschulden der USA seit Längerem einen rückläufigen Trend (gemessen am BIP) aufweisen. Sie waren schon sehr viel höher, und der Staat ist nicht nur gut mit ihnen fertig geworden, er hat sie auch dienstbar zu machen gewusst für sinnvolle Zwecke (Bewältigung der Weltwirtschaftskrise, Kriegsfinanzierung im 2. Weltkrieg). Ein Anstieg des Zinsniveaus auf 5% würde den Schuldendienst auf etwa 7% des BIP anheben — deutlich weniger als die 10%, die während der Großen Finanzkrise zu berappen waren, oder die 30% während des zweiten Weltkriegs oder ähnlich hohe Zahlen in der Zeit als man die Weltwirtschaftskrise bekämpfte. Die Crux ist eben: werden die Mittel so eingesetzt, dass sie eine starke oder eine erstarkende Wirtschaft begünstigen oder werden sie missbräuchlich eingesetzt?

Befürchtungen, der Anstieg des Zinsniveaus in den Vereinigten Staaten werde zu einer unerträglichen Zinsbelastung führen sind auch schon deshalb fragwürdig, weil sie einen grundsätzlichen volkswirtschaftlichen Sachverhalt außer Acht lassen. Wann steigen denn die Zinsen? Wenn die Wirtschaft wieder zu florieren beginnt. In diesem Fall greifen die "automatischen Stabilisatoren", die in einem Wirtschaftsabschwung weniger Steuereinnahmen und mehr Staatsausgaben bedeuten, nun in ungekehrtem Sinne: die Staatseinnahmen erhören sich und die Notwendigkeit von Staatsausgaben verringert sich. 

Angesichts der japanischen Stagnation auf hohem Niveau, der volkswirtschaftlichen Selbstverstümmelung Europas durch die Einführung des Euro und in Anbetracht des Umstands, dass China ein ganz unsicherer Kantonist bleibt, ist nicht zu erkennen, dass Amerikas führende Stellung als leistungsfähigste Volkswirtschaft der Welt und somit als sicherer Hafen für Anleihe-Investoren in absehbarer Zeit ernsthaft gefährdet ist.

Fortgesetzt hier.

Misunderstanding Liberalism (2) — A New Paradigm for Human Solidarity

Image credit.

Continued from here.

Liberalism Is about a New Paradigm for Human Solidarity

The essential point that I am trying to get across in the present post is that the pioneers of liberal thought did not present a philosophy intended to idealise the individual. To the contrary, in recognising her position in the dawning age of individualism, they hoped to outline the contours of a new form of community. Liberal society was to give rise to a form of human solidarity adapted to the specific features of the new individual, who was increasingly detached from preordained status and increasingly had to take responsibility for countless aspects of his life that used to be predetermined for her by tradition, custom, status, and absolute authority.

Liberalism Gives Expression to an Inexorable Historic Trend

While there is a voluntaristic element in the emancipation of the individual — with liberals playing a leading role in demanding rights that strengthen the autonomy of the individual — individualism emerges as a historical force that no one intended, let alone designed, to take the specific forms it was going to take or to advance to the point of total cultural dominance that it has achieved in the Western world.

In that sense, original liberalism was part of a broader historical reaction, rather than an intellectual whim or conceit; it served the general adaptation of mankind to the ascent of individualism whose propagation began to accelerate once the decline of the feudal world had set in, giving way to the rise of the money economy and the opening up of new avenues for social mobility that freed men from the feudal manor, confronting them with a growing frontier of personal options in determining the course of their lives. 

This is also why in its latter career as an ideology, liberalism would become ineffective and marginalised—it no longer gave expression to an inexorable historical trend, but became a flawed commentary to its original meaning, a philosophical whim and conceit with no roots in reality. 

Liberalism Is about a New Form of Human Community — It Is Not about 'Rugged Individualism'

Liberalism is about coordinating the brotherhood of self-interested men. It is about answers to the question: how can we live together, form a peaceful and productive community, when everyone of us enjoys unprecedented scope for autonomous action? In the original liberal vision the "I" is always conceived of in its agreeableness with the "We". Hence, liberalism' s support for a strong state capable of delivering unheard-of public goods, its support for mass political participation, and its support of the right of everyone to pursue their self-interest in peaceable, mutually respectful, and coordinated fashion—as I have argued in Misunderstanding Liberalism (1) —State, Individual, Constitution, Democracy , and Self-Interest.  

Liberalism Is about the Most Politicised World There Ever Was

Ultimately, what I am most interested in presently are the implications of all this for the relationship between freedom and politics (being occupied as I am with writing up the chapter "Politics" of my manuscript Attempts at Liberty).

I had defined politics as activities aimed at gaining social acceptance for one's projects, thoughts, and and values. Politics is the strong human disposition of influencing your social environment in your favour taken to the level of community or society at large. 

The crucial point is this: individualism means that ordinary humans are constantly called upon to express, defend, and assert their interests in a world where everyone else does the same. In pre-individualistic times, we were far more other-directed (fremdbestimmt) than we are today. There is still a non-trivial residual of being other-directed today, but the pressure and the need is stronger and the range of options incomparably wider to act in self-regarding, self-interested ways.

The core impulse of politics, the exertion of influence so as to make people comply with and socially accept one's desires and interests is being exercised by every individual every day  as  a matter of course.  We have become, more than ever, the zoon politikon, the political animal.

Our society is more politicised than any other society before, and this is due to liberty, the form of adaptation that we have stumbled upon to cope with the inexorable individualism of our epoch. This holds true irrespective of the degree to which ordinary citizens actively partake in public politics. We all expect to be entitled to question, challenge, correct and change the social status quo either by exercising our rights in private environments or in the public. To be an individual, a free individual entitles one to practice politics both in our private spheres and in the public arena.

Which ties in with my definition of freedom as an effort at striking a balance between (a) the practice of mass dissension and (b) engaging in rites and rituals of pacification robust enough to prevent mass dissension from becoming explosive and disruptive. It is hard to extend the meaning of freedom beyond achieving such a dynamic equilibrium, and it becomes exceedingly problematic to make claims on behalf of liberty with regard to specific ideological preferences, say, regarding the minimum wage or abortion etc.

Continued here.

Misunderstanding Liberalism (1) — State, Individual, Constitution, Democracy and Self-Interest

Image credit.

In a quaint alliance, both adepts and detractors of classical liberalism—by misreading it— have built a public image for the venerable school of thought that makes it insupportable to most people. 

Among the cornerstones of the distorted reading of classical liberalism we find

the purported irreconcilability

between 

• (1) the state and the individual, and derivatively,

between

• (2) constitutional restraint and democracy (unhampered self-rule), and

between

• (3) public purpose and self-interest.

(1) The State and the Individual

In the popular reading, liberalism is based on the idea of a fundamental rivalry between the state and the individual. The state is the natural enemy of the freedom-seeking individual.  

It is thought that classical liberalism conceives of the state as the Leviathan, a man devouring monster, which must be firmly tied down lest it develop inordinate abusive powers—which is the meaning of negative constitutionalism according to which a constitution has the negative purpose of incapacitating the powers of the state to a manageably low level. 

While it is true that, according to the liberal vision, coercive constraints must be placed on the state, what is left out of the picture is that liberalism adheres to a wider concept of the constitution, following the insights of what might be called positive constitutionalism: binding the state to certain restrictions is a means to making it strong enough so it is able to defend and administer freedom. No less than a totally unconstrained individual, the state will end up weak and out of control unless it finds orientation in principles that reign it in, channelling arbitrary and diffuse powers into orderly and well-monitored streams of dedicated energy.

In short: classical liberalism favours a strong state, and believes that the only way to build a sufficiently powerful government is to subject it to appropriate rules.

I have substantially expanded on this theme here.

(2) Constitutional Restraint and Democracy

Liberals worry that majoritarian rule may sweep away the rights of freedom. Their opponents accuse liberals of being inimical toward democracy, hampering the self-rule of the people.  

In actual fact, the true attitude of the classical liberals toward popular self-rule must be seen as a special case of positive constitutionalism. In order to enjoy the benefits of democracy, it is necessary to restrain the demos in exercising its democratic power. We are not dealing with the rejection of democracy but with a realistic philosophy aimed at ensuring conditions under which popular self-rule will be as conducive as it possibly can. As with the state, the idea is to strengthen democracy by restricting it.

If participation of the broad populace and the expression of its will are to serve as systematically constructive contributions to the public purpose we need to curb the exuberant, disorderly spontaneous exercise of self-government, and make it subject to rules that accord with the agreed principles of the common weal. In no other way is its conceivable to ever approximate outcomes that may be characterised as truly democratic. We do not condone the lynching of a person on the grounds that a majority has decided to kill him in an act of direct democracy, in an act of unrestrained self-rule by the majority. And in a populous society, the majority of people will not recognise the purposes that they support in majoritarian decisions unless these bear a reasonable relation with constraining principles. Or else Robespierre will rule.

The genuine impetus of classical liberalism is deeply democratic—after all, it is the philosophy that demands the emancipation of the individual, which is tantamount to political freedom for every citizen.

(3) Public Purpose and Self-Interest 

Perhaps the most common accusation levelled against the liberal tradition is that it relies on "rugged individualism," that it campaigns for the pursuit of egregious self-interest. 

It should stand to reason by now, the classical liberal's commitment to positive constitutionalism, political freedom and democracy clearly militates against her putative sympathies for inconsiderate individualism.

To put the issue into perspective, it is indispensable to consider the historical context in which the liberal emphasis on self-interest had arisen. Unlike its caricature in modern neoclassical economics, the classical liberals did not regard the human being as the epitome of rationality. They were strongly impressed by a world in which human passions and emotional excesses were at least as dominant a feature of life as  the results of cold human calculation. Think of the the Thirty Years' war (1618-1648). Religious wars and the blind hatred between rivalrous factions, the cruel indifference to the fate of those outside one's own narrow circle—the world from which liberalism sought deliverance was chock full with human behaviour governed by unmitigated passions. The starting point of liberalism was a differentiated analysis of human nature allowing for the enormous destructive potential of our species, and the task therefore was to create institutions and conditions that were capable of taming destructiveness and transforming it benignly, and open up outlets for the good and constructive in the human being.  

It is in this context that liberalism would become interested in human egotism. Self-regard is a force within the human being that is naturally capable of orderly effects and productive outcomes. It induces the person to think and calculate and consider consequences beyond the first step. Self-interest has the potential of self-restraint and mutual considerateness. Of course, it needs to be accompanied by other institutions such as positive constitutionalism and democracy to create an all-embracing, cohesive, and resilient network of incentives that tends to bring together isolated individuals in a new form of community, the brotherhood of self-interested individuals. Only on the basis of considered self-regard can there ever be a society in which people are willing to accept the new phenomenon of a peaceful public. This is how self-interest ties in with constitutional restraint, a strong state dedicated to the public purpose, and democracy, as being the expression of a people committed to allow each member of society to add the requirements of her self-regard to communal decision-making. 

Classical Liberalism — A Progressive Tradition

The fundamentals of this tradition do not point toward anything like a political philosophy embodied in certain variants of liberalism that espouse the

• primacy of commercial relations in ordering society (market fundamentalism), or the 

• denigration of societal design effected by political participation (anti-democratism), or the 

• rejection of collectively organised human compassion and social welfare (opposition to the welfare state).  

Social democracy of the type prevalent in the 20th century appears to be the logical extension of 18th century's classical liberalism. While the latter did not prove viable after the mid-19th century, owing to the very misunderstandings explained in this post—see especially the last three bullet points above— social democracy is in danger of losing its identity and cultural dominance if it gives up its classical liberal moorings as appears to have been increasingly the case in the last decade or two.

See also The Paradox of Freedom, The State, Das Paradoxon der Freiheit, Toward a Theory of Feasible Freedom (5.1 Lessons for Freedom), and Negotiable Freedom.

Continued here.

Prelude to Politics (8) -- The Self-Binding of Government and the Public -- A First Chain of Points - An Emerging Thread of Arguments

Image credit. Yesterday was the first warm day in April, after a stretch of rather dismally overcast weeks. From the window it looked a cold and ghastly day, but once in the outside it turned out a real spring day with vibrant chirping and the caressing of warms currents in the air. Today is a warm April day, with sun and rain coming and going.

Continued from here.

Politics (7) - Politics (18):

(7)

• no pristine, incontrovertible standard of freedom or other issues of public concern, 

• rival views give impetus to political competition 

• even shared premises are likely to lead to diverging and eventually competing interpretations that deed political rivalry and competition

• the institutions of freedom envisaged by liberals depend on political initiative and support: markets, for instance, cannot create their own preconditions. Hence, they will be shaped by political influences, on which disagreement exists 

• institutions of freedom therefore do not betray features of unique determination often implied in liberal visions of freedom - which more often than not are stronger on critiquing a lack of such uniformly determinable freedom than on working out concrete conditions of freedom

• caught up in a dynamics of optimising its material base and political support, the state evolves rational strategies of political inclusion 

• the state becomes engulfed and permeated by a stream of politics comprising a public constituency (as opposed to a power elite)

• the state becomes a liberal state by opening up, eventually encouraging and adapting to diversified public demands on it

• the state becomes more powerful and efficient by constraining itself so as to have to answer to a demanding public, one that forces more intelligent, more public-regarding, more service-like solutions on the state

• the state binds itself to the demands of the public

• the public binds itself to the needs of a pluralistic discovery and rectification process (orderly political competition and political institutions apt to keep tensions high yet sufficiently diffused to avoid blockage of political compromise by irreconcilable conflict)

• hence, democracy does not mean direct rule by the people, but stands for an entire culture and network of institutions that are liable to soften and coordinate divergences to a level of rivalry that is compatible with, in fact, productive of long-term political cooperation within the community 

• It is this dynamic of self-binding both by government and the public that brings about and maintains freedom, rather than the clarion calls of political heroes blessed with exceptional political wisdom or the force of ideologies of unassailable truth and consistency

Continued here.