A Quick Hit from Hayek

On January 29, 2010, in Culture, Economics, History, Politics, by marc

The Road to Serfdom, page 174:

…wherever liberty as we understand it has been destroyed, this has almost always been done in the name of some new freedom promised to the people.

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Tending Towards Totalitarianism

On January 19, 2010, in Culture, Economics, History, Politics, by marc

In honor of the most important by-election in the history of the Unites States of America, I picked up Hayek’s The Road to Serfdom once again.  As usual with this book, I almost immediately ran across a passage worth quoting:

The Road To Serfdom

The Road To Serfdom

No doubt an American or English “Fascist” system would greatly differ from the Italian or German models; no doubt, if the transition were effected without violence, we might expect to get a better type of leader.  And, if I had to live under a Fascist system, I have no doubt that I would rather live under one run by Englishmen or Americans than under one run by anybody else.  Yet all this does not mean that, judged on our present standards, our Fascist system would in the end prove so very different or much less intolerable than its prototypes. There are strong reasons for believing that what to us appear the worst features of the existing totalitarian systems are not accidental by-products but phenomena which totalitarianism is certain sooner or later to produce. Just as the democratic statesman who sets out to plan economic life will soon be confronted with the alternative of either assuming dictatorial powers or abandoning his plans, so the totalitarian dictator would soon have to choose between disregard of ordinary morals and failure. It is for this reason that the unscrupulous and uninhibited are likely to be more successful in a society tending toward totalitarianism.  Who does not see this has not yet grasped the full width of the gulf which separates totalitarianism from a liberal regime, the utter difference between the whole moral atmosphere under collectivism and the essentially individualist Western civilization.

Emphasis mine.  We are currently ruled by a collection of miniature tyrants who believe that they can plan our economic life and have little concern for individual liberty.  Today’s election in Massachusetts is an opportunity to discipline said tyrants and send the message that the citizens may be ready to reassume control over their own lives.  I’m hoping and praying for a Scott Brown win, and ultimately a resurgence of individual liberty in the country that did more to bring that concept to the world than any other.

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“Liberal Fascist Economics”

On November 18, 2009, in Culture, Economics, Politics, by marc

One of the best – and creepiest – books I’ve read in the last year and a half was Jonah Goldberg’s Liberal Fascism. I recall being very unnerved, perhaps surprisingly, by the chapter on economics.  A taste:

In Nazi Germany, businesses proved their loyalty to the state by being good “corporate citizens,” just as they do today.  the means of demonstrating this loyalty differed significantly, and the moral content of the different agendas was categorical.  Indeed, for the sake of argument, let us concede that what the Nazi regime expected of “good German businesses” and what America expects of its corporate leaders differed enormously.  That doesn’t change some important fundamental similarities.

Liberal Fascism by Jonah Goldberg

Liberal Fascism by Jonah Goldberg

Consider, for example, the largely bipartisan and entirely well-intentioned Americans with Disabilities Act, or ADA, celebrated everywhere as a triumph of “nice” government.  The law mandated that businesses take a number of measures, large and small, to accommodate customers and employees with various handicaps.  Offices had to be retrofitted to be wheelchair compliant.  Various public signs had to be written in Braille.  Devices to aid the hearing impaired had to be made available.  And so on.

Now imagine you are the CEO of Coca-Cola.  Your chief objection to this law is that it will cost you a lot of money, right?  Well, not really.  If you know that the CEO of Pepsi is going to have to make the same adjustments, there’s really no problem for you.  All you have to do is add a penny – or really a fraction of a penny – to the cost of a can of Coke.  Your customers will carry the freight, just as Pepsi’s customers will.  The increase won’t cost you market share, because your price compared with your competitor’s has stayed pretty much the same.  Your customers probably won’t even notice the price hike.

Now imagine that you own a small, regional soft drink company.  You’ve worked tirelessly toward your dream of one day going eyeball-to-eyeball with Coke or Pepsi.  Proportionally speaking, making your factories and offices handicapped-friendly will cost you vastly more money, not just in terms of infrastructure, but in terms of the bureaucratic legal compliance costs (Coke and Pepsi have enormous legal departments; you don’t).  Plans to expand or innovate will have to be delayed because there’s no way you can pass on the costs to your customers.  Or imagine you’re the owner of an even smaller firm hoping to make a play at your regional competitors.  But you have 499 employees, and for the sake of argument, the ADA fully kicks in at 500 employees.  If you hire just one more, you will fall under the ADA.  In other words, hiring just one thirty-thousand-dollar-a-year employee will cost you millions.

The ADA surely has admirable intent and legitimate merits.  But the very nature of such do-gooding legislation empowers large firms, entwines them with political elites, and serves as a barrier to entry for smaller firms.  Indeed, the penalties and bureaucracy involved in even trying to fire someone can amount to guaranteed lifetime employment.  Smaller firms can’t take the risk of being forced to provide a salary in perpetuity, while big companies understand that they’ve in effect become “too big to fail” because they are de facto arms of the state itself.

Remember, this was all written well before stimulus- and bailout-mania, or the effective nationalization of GM and Chrysler.  There are certainly lessons in this passage for those on the right and the left – Republicans have a nasty habit of using the state to advance their interests, too.  But examining the current political philosophies popular across the spectrum, one has to note that when those on the right try to utilize the government to advance their agenda, they are usually acting hypocritically, because at least in theory, they believe in limited government and checks and balances.  In contrast, when leftists use the power of the state to push their agenda, they are actually following their principles. And that’s really what we’re seeing right now – the left has control of the levers of power in Washington DC, and is using the mechanisms of government to entrench and empower themselves, often at the expense of our individual liberty and well-being (as in the health care debate).

Lord Acton reminded us that power tends to corrupt; as responsible citizens, we need to remember that axiom when we vote, and must guard against the tendency to leave things we could – or should – do ourselves to people in Washington, or the state capitol, or anywhere else.

This reminds me – I need to dig back into Hayek’s The Road to Serfdom and pull some quotes from him about the dangers of economic planning…

Hayek on Exchanging Liberty for Security

On November 4, 2009, in Culture, Economics, by marc

From The Road to Serfdom, Chapter 9 – Security and Freedom:

F.A. Hayek (1899-1992)

F.A. Hayek (1899-1992)

There can be no question that adequate security against severe privation, and the reduction of the avoidable causes of misdirected effort and consequent disappointment, will have to be one of the main goals of policy. But if these endeavors are to be successful and are not to destroy individual freedom, security must be provided outside the market and competition be left to function unobstructed. Some security is essential if freedom is to be preserved, because most men are willing to bear the risk which freedom inevitably involves only so long as that risk is not too great. But while this is a truth of which we must never lose sight, nothing is more fatal than the present fashion among intellectual leaders of extolling security at the expense of freedom. It is essential that we should re-learn frankly to face the fact that freedom can be had only at a price and that as individuals we must be prepared to make severe material sacrifices to preserve our liberty. If we want to retain this, we must regain the conviction on which the rule of liberty in the Anglo-Saxon countries has been based and which Benjamin Franklin expressed in a phrase applicable to us in our lives as individuals no less than as nations: “Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.”

My emphasis there. Think of our current situation: bailouts for companies “too big to fail,” government ownership of failing automakers, the desire for state-provided universal healthcare, demands for more and more regulation of businesses and executive salaries, “windfall” profits condemned and threatened with confiscation, the demonization of productive classes, etc. Are we really better off after massive government intervention to protect our economic security – much of which has since proven to be wasteful and ineffective anyway? What have we given away in exchange? Was it worth it?

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Books I’d Like, Vol. 1

On October 23, 2009, in Economics, Reformed Theology, Theology, by marc

This seems like as good a place as any to start keeping a list of books I’d like to add to my library, so let’s rock and roll.