Cafe Hayek - Latest Comments in Social Engineering Vs. Piecemeal, Competitive Creation

Re: Social Engineering Vs. Piecemeal, Competitive Creation

vikingvista — Wed, 01 Apr 2009 09:32:46 -0000

"People die. Governments take a whole lot longer to. That's why government can borrow with cheaper interest payments."

What blatant utter nonsense. Corporations have indefinite lifespans but given a debt load the size of Uncle Sam's, there is no way a company's bond rates would be anywhere near as low as t-bills.

It's the government's power to steal almost with impunity that keeps its interest rates low.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

vikingvista — Wed, 01 Apr 2009 09:16:06 -0000

"The question: How to make people see that their best interests lie in the wealth creation mechanisms of the market and not in a large bureaucratic government?"

It's easy enough to explain how a free economy allows people to gain sometimes immense wealth without being at the expense of others. I think this is a concept still favored by most Americans.

But when people see the existence of an apparent moneyed class being defined by government favoritism and high taxes, they are skeptical about the extent to which a free economy exists, versus a nationwide plantation economy on the backs of taxpayers.

So for the political stability of the country, and the preservation of liberty in our economic decisions, separation of economy and state is vital.

And of course now we're going in exactly the wrong direction.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Guest — Wed, 01 Apr 2009 09:08:51 -0000

Garrett, "solution" might be a little strong. They'd sure as hell improve, however. I guess I'm just not the panacea type.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

indianajim — Wed, 01 Apr 2009 08:53:55 -0000

Don,

I used you post (above) as a lead in to a lecture I gave this morning; thanks! It worked quite well I think in motivating students to think about the importance of the Smithian perspective relative to the simplistic machinations that are often held out as economics by folks (like Krugman) who frequently seem to suffer from appears to be a messiah-complex.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

John — Wed, 01 Apr 2009 08:32:02 -0000

"trust, rebellion, realism?"

From what I've gathered you went back to trust. Perhaps in a more limited way, but still back to trust.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Garrett Schmitt — Wed, 01 Apr 2009 08:13:29 -0000

I'm similar to MnM and Krugman in that I was drawn to economics by the prospect of being able to "fix" things. I saw what natural order and prosperity there was in the world and asked whether, with a conscious effort (also known as interventionism), we couldn't have even more of it.

I couldn't pinpoint when I saw through that "fatal conceit", and I may be too young to be a good case study. I was frustrated by macroeconomic theories supporting interventionism, the more fanciful saying government or banking could create wealth from thin air, the simpler seemingly all but banishing the prospect of growth outside of exogenous shocks. However, my change of mind could equally have been some natural refinement of values.

Nonetheless, I'm sure many here would agree that there is, in fact, one push-button solution to many social problems: ending political interventionism in the economy.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Daniel Kuehn — Wed, 01 Apr 2009 08:12:25 -0000

John -

I fortunately never had to go through the liberal phase... took it from conservative to libertarian to moderate (trust, rebellion, realism?). Anyway "grew out of it" was meant to bait and tease... nobody needs to be concerned over it. I very much appreciate the insights of the libertarian perspective.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

John — Wed, 01 Apr 2009 08:09:40 -0000

"grew out of that though"

Funny, I was a liberal while in college but I grew out of that.

Without telling you my life story, suffice it to say that circumstances forced me to question and finally relinquish any faith that I had in government, kind of like a Christian realizing that man created god.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Daniel Kuehn — Wed, 01 Apr 2009 08:05:57 -0000

John -

Well absolutely. I'm not a libertarian. I don't think I ever claimed to be (actually, I did at one point for a couple years in undergrad... grew out of that though)

Re: Social Engineering Vs. Piecemeal, Competitive Creation

John — Wed, 01 Apr 2009 08:04:14 -0000

DK,

I think Joe has a valid point.

Any use of government force that is not to prevent force or fraud, however well intentioned, goes against the core of libertarianism.

You seem to see "legitimate" uses of government force outside those narrow boundaries, which puts you immediately at odds with those who call themselves libertarians.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Daniel Kuehn — Wed, 01 Apr 2009 07:58:38 -0000

Sam -

RE: "No household run by sensible people would attempt to run at a 70% debt in perpetuity."

That's because people die and governments live for centuries. We've had a public debt since before the ink on the Constitution dried. It CLEARLY hasn't hindered us.

This is basic public finance stuff. People die. Governments take a whole lot longer to. That's why government can borrow with cheaper interest payments. That's why governments can run in perpetual debt. That's why Treasuries are considered safer than just about anything on the market. It's apples and oranges. Maybe I should have just left it at that in the first comment - it's apples and oranges.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

John — Wed, 01 Apr 2009 07:56:11 -0000

I'm trying to remember when, other than the repeal of Prohibition, that our government has admitted fault (attacking the opposition party doesn't count).

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Daniel Kuehn — Wed, 01 Apr 2009 07:55:56 -0000

Lowcountryjoe -

RE: "we kind of wonder why trained economists try to make sense out of killing Homoeconomicus (the individual) prefer to direct and control the economy to their whims instead of letting individuals determin the path of the economy"

Yes, clearly I was mistaken - you never argue over caraicatures of what people actually say, think, and do.

RE: "you are amongst many more men and women that enjoy their freedoms -- AND the freedoms of those around them -- more so than you seem to."

And there's another one!

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Sam Grove — Wed, 01 Apr 2009 07:50:10 -0000

When you pretend that all that these people want is more regulation - no matter whether it makes sense or not - then of course they come out looking ridiculous.

I'm not saying they want more regulation, that's a side issue.

They want to attain a particular goal, and though they may not live long enough to see if it works or not, others will come along and use whatever power has been accumulated for that purpose to attempt to attain other goals.

Government is not an eternal wise man that can see these interventions from above and make corrections as we go along. The process is haphazard and, I think, destructive to the social fabric (whatever that is).

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Sam Grove — Wed, 01 Apr 2009 07:42:56 -0000

If a household restricted itself to borrowing 70% of it's annual salary to buy a house it would be considered prohibitively and unreasonably frugal. Now, perhaps the best statistic isn't federal debt over GDP - maybe it's the annual deficit as a percentage of revenue.

People usually do that with consideration of their income and the expectation that the debt will decline over a known period.

When government does it, it seems to be a perpetual policy.

No household run by sensible people would attempt to run at a 70% debt in perpetuity.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

LowcountryJoe — Wed, 01 Apr 2009 07:39:46 -0000

When you pretend that all that these people want is more regulation - no matter whether it makes sense or not - then of course they come out looking ridiculous.

Who's pretending, Daniel? And I don't think that you'd find many here that would accuse the asshats of knowingly advocating/passing regulations that do not make sense. Most of us can imagine that these asshats are well meaning and think that their ideas make sense.

Most of us just do not agree that these proposals and legislation make sense. Further, we kind of wonder why trained economists try to make sense out of killing Homoeconomicus (the individual) and prefer to direct and control the economy to their whims instead of letting individuals determin the path of the economy; there has got to be a character flaw in those that would impose their own will on others. Are you not seeing that this is where the debate leads each and every time? Are you that blind to the foundation of the arguement?

Of course, these people (yourself included, it seems) come out looking ridiculous the way that we libertarians are framing the arguement with you. But more than ridiculous, you come off looking like advocates of tyrrany, central planners, and no friend of liberty.

So, it's like this, Daniel, you either enjoy your freedom and have a high tolerance for the freedom of others (particulrly economic freedom) or you do not. Yes, you can look for your safety gray area fence that you like to straddle, but in this forum, you are amongst many more men and women that enjoy their freedoms -- AND the freedoms of those around them -- more so than you seem to. For anyone who is willing to sacrfice their neighbor's freedoms [because the neighbor's choices don't seem to jive with your own, for example] is going to have their's taken away in short order, as well.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Daniel Kuehn — Wed, 01 Apr 2009 07:22:10 -0000

kingstu -

RE: "You people don't seem to understand something. When an individual borrows too much to spend on things he can't afford, that is bad. When the entire nation borrows too much to spend on things they can't afford, "aggregate demand" is stimulated, which is good."

The operative word here being "too" much. How much is too much? National debt is something like 70% of GDP. By most reasonable standards, that isn't "too much". If a household restricted itself to borrowing 70% of it's annual salary to buy a house it would be considered prohibitively and unreasonably frugal. Now, perhaps the best statistic isn't federal debt over GDP - maybe it's the annual deficit as a percentage of revenue. But regardless which you use, the point is that by leaving "too much" nebulous and undefined, you aren't addressing the real question.

I'm a deficit hawk - I don't like all this debt either. But it's the long-term debt projections that scare me, not the current debt level or a counter-cyclical fiscal policy. Is this nation over-leveraged? Sure it is. But let's be more explicit about how overleveraged we are. The federal government's borrowing habits aren't nearly as atrocious as some of the banks or households that we've been hearing about the last couple months.

The big question for me is - are we going to keep it that way, or let it explode? The current budget plan raises big doubts about that in my mind.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Daniel Kuehn — Wed, 01 Apr 2009 07:14:50 -0000

John -

RE: "Take the violence associated with black market drug sales or the overflowing prisons that wouldn't exist if the drugs were legal.

This is not a reason to repeal puritanical legislation, but rather an opportunity to impose greater restrictions on firearms as well as increased monitoring of citizens' private lives."

Perhaps. But I think the point is that that scarier solution is being put forward by politicians that get votes from law-and-order machismo. Social scientists like Krugman who take a more "social engineering" stance on these problems almost universally say "gee - we oughta release all the non-violent drug offenders", and I'd be a huge portion of them would also say "gee - we oughta legalize these drugs".

The scheming of politicians does not automatically refute a general "social engineering" perspective among social scientists. And as I said above, the adoption of a "social engineering" perspective doesn't prevent someone from recognizing the fundamental power of markets and liberty that Don points out.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

kingstu — Wed, 01 Apr 2009 07:12:32 -0000

You people don't seem to understand something. When an individual borrows too much to spend on things he can't afford, that is bad. When the entire nation borrows too much to spend on things they can't afford, "aggregate demand" is stimulated, which is good.

Any questions?

Re: Social Engineering Vs. Piecemeal, Competitive Creation

John — Wed, 01 Apr 2009 07:06:05 -0000

"What they don't realize is that many negatives were produced by previous attempts at social engineering (alcohol prohibition and organized crime, drug prohibition and violent crime in the U.S. and Mexico)."

I'm cynical enough to believe that the negative effects of social engineering are looked upon as opportunities for more social engineering.

Take the violence associated with black market drug sales or the overflowing prisons that wouldn't exist if the drugs were legal.

This is not a reason to repeal puritanical legislation, but rather an opportunity to impose greater restrictions on firearms as well as increased monitoring of citizens' private lives.

Trust me, these people know exactly what they are doing.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Daniel Kuehn — Wed, 01 Apr 2009 06:55:21 -0000

Sam -

RE: "Social engineers decide that they don't like various manifestations and seek to impose their vision of order through force of arms."

When you sensationalize this idea of "social engineering" of course it sounds crazy. Same with the "they never make the connection" hyperbole. When you pretend that all that these people want is more regulation - no matter whether it makes sense or not - then of course they come out looking ridiculous. And Krugman and his ilk aren't Plato's philosopher-kings or Galbraith's technocrats.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

LowcountryJoe — Wed, 01 Apr 2009 06:49:03 -0000

Heinlein quotations from fictional characters in his book The Moon is a Harsh Mistress

- Thing that got me was not her list of things she hated, since she was obviously crazy as a Cyborg, but fact that always somebody agreed with her prohibitions. Must be a yearning deep in human heart to stop other people from doing as they please. Rules, laws— always for other fellow. A murky part of us, something we had before we came down out of trees, and failed to shuck when we stood up. Because not one of those people said: "Please pass this so that I won't be able to do something I know I should stop." Nyet, tovarishchee, was always something they hated to see neighbors doing. Stop them "for their own good"—not because speaker claimed to be harmed by it.

- What I fear most are affirmative actions of sober and well-intentioned men, granting to government powers to do something that appears to need doing.

- Seems to be a deep instinct in human beings for making everything compulsory that isn't forbidden.

My personal favorite, though, in not about the busybody types in society that like to plan and dictate but rather on how to best organize a legislative body:

I note one proposal to make this Congress a two-house body. Excellent— the more impediments to legislation the better. But, instead of following tradition, I suggest one house of legislators, another whose single duty is to repeal laws. Let the legislators pass laws only with a two-thirds majority... while the repealers are able to cancel any law through a mere one-third minority. Preposterous? Think about it. If a bill is so poor that it cannot command two-thirds of your consents, is it not likely that it would make a poor law? And if a law is disliked by as many as one-third is it not likely that you would be better off without it?

Have fun with those, pro-government, pro-bureaucrat types.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Sam Grove — Wed, 01 Apr 2009 06:41:19 -0000

Who gets to decide the goal of social engineering?

In the spontaneous order of society and market, everyone gets to have a hand via their participation and choices.

Social engineers decide that they don't like various manifestations and seek to impose their vision of order through force of arms.

What they don't realize is that many negatives were produced by previous attempts at social engineering (alcohol prohibition and organized crime, drug prohibition and violent crime in the U.S. and Mexico).

Worse, they never make the connection.

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Jeremy — Wed, 01 Apr 2009 05:20:15 -0000

What first appealed to me about economics, was that it provided an abstract window into the world around me, and gave me the only reasonable means not to control things, as Krugman describes, but to understand things. This, of course, was all long before I really had a firm grasp on what an abstraction really is. The simple explanatory power of a few lines on a chart soon got my mind seeing it everywhere and in everything.

Unfortunately, this is not an insight that everybody possesses. I remember once talking with my mom about money. She of course was disgusted by my fascination with money because, as she understood it, money was the language of Ted Turner and all the evilness in the world. Although she was not interested in the finer points of a Carl Menger treatise, she still had formulated an opinion about money and how the world had a lot of it but she had none of it.

Don't get me wrong, I love my mom very much. But I think it highlights the gap that free market economics has to overcome against the people who side with the Paul Krugmans and the rest of the intellectually arrogant.

The question: How to make people see that their best interests lie in the wealth creation mechanisms of the market and not in a large bureaucratic government? I think it needs to be tied back to happiness. Nobody was ever made happy by government. If people are happy, it's because they manage to be happy IN SPITE of the government; not because of it!

Re: Social Engineering Vs. Piecemeal, Competitive Creation

michaelsmith — Wed, 01 Apr 2009 04:15:32 -0000

Don wrote:

I was attracted to economics for a reason quite the opposite of the one that appealed to Mr. Krugman, namely, because it helps explain how incalculably complex and productive social orders emerge from billions of individual actions, where no one of these actions is meant to achieve anything more than improvement in the welfare of the individual actor.

A fundamental reason why this productive social order emerges is that when physical force is banned from all relationships, men must deal with one another by voluntary, mutually-beneficial trade, exchanging value for value in a transaction that leaves both parties better off as a result. The cumulative effect of these on-going exchanges is the gradual, but steady, improvement in the standard of living of all those individuals willing to put forth the effort to produce (or earn) a value for which others are willing to trade.

At root, what the social-engineer wannabes like Krugman seek is the power to veto these voluntary exchanges and impose their own terms and conditions on the exchange -- thereby substituting by force of law their judgment for the individual trader‘s judgment. So make no mistake about it -- the desire to “tinker” in the economy, to “push buttons” -- is at root a lust for power over other men’s lives, no matter what macro-ecospeak jargon is used to justify it.