Planning Has a Limit

This way lies charlatanism and worse. To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.


But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims.

- F.A. Hayek, from the essay The Pretense of Knowledge

We flatter ourselves undeservedly if we represent human civilization as entirely the product of conscious reason or as the product of human design, or when we assume that it is necessarily in our power deliberately to re-create or to maintain what we have built without knowing what we are doing. Though our civilization is the result of a cumulation of individual knowledge, it is not by the explicit or conscious combination of all this knowledge in any individual brain, but by its embodiment in symbols which we use without understanding them, in habits and institutions, tools and concepts, that man in society is constantly able to profit from a body of knowledge neither he nor any other man completely possesses. Many of the greatest things that man has achieved are the result not of consciously directed thought, and still less the product of a deliberately coordinated effort of many individuals, but of a process in which the individual plays a part which he can never fully understand. They are greater than any individual precisely because they result from the combination of knowledge more extensive than a single mind can master. -
F.A. Hayek from pages 149-150 of the 1979 Liberty Fund edition of Hayek’s 1952 study, The Counter-Revolution of Science

　

Hayek made the point outlined in the quotations above on many occasions and in many ways. Associated, but not exactly the same, Milton Friedman wrote a book and did a ten-part PBS series entitled Free to Choose. The point being made by Hayek and Friedman is that in the aggregate, in the real world, in the real time world where a zillion decisions are made daily.....it's mainly a spontaneous order phenomena [the plans of the many in an environment of free choice] that brings greatest satisfaction, value, wealth, etc. to the greatest number of people.

A confusion that reins supreme surrounds the idea of "planning". Yes, you can make dinner plans, plan the family's evening meal for the evening or even the evening meals for the entire week, you can make wedding plans, plan production, make shopping plans....you can plan your brains out...BUT those plans are, in fact, the plans of the many and are in fact the zillion decisions mentioned above.

Some want to transpose the concept "plan" or "planning" as a second coming of the concept "plan". That is to say, a plan exists ahead of the already conjured up plan -or- as a second coordinating factor ahead of those plans, that are in fact, the plans of the many and are in fact the zillion decisions mentioned above. Somehow a value exists in a second plan, the-plan-of-the-plans, a plan not of emergent order, rather a plan of mass coordination. Stated alternatively, the concept that if the conjured up plans yield value, then certainly the-plan-of-the-plans adds more value.

If you think about it, to plan the zillion plans is to undo the zillion plans in some shape or fashion to meet the supposed super coordinated plan which is the-plan-of-the-plans. Greatest satisfaction of all is now reduced to a third party satisfaction. The third party being the few that authored the-plan-of-the-plans.

Moreover, the zillion decisions resulting in a zillion plans are made in real-time, with real information based on current conditions of alternatives. Any super coordinated plan, the plan-of-the-plans, would be after the fact based on post information and post conditions of alternatives. Further the knowledge of the many making the zillion decisions/plans would be supplanted by the few. The few, no matter how smart, knowledgeable or expert, have less total knowledge than the total knowledge of the many.

Hayek and Friedman's observations are counterintuitive: that planning has a limit.

Occasionally history records the coming of politico-ideologist they believe they can plan the zillion plans, that in essence, planning has no limit, and they have the-plan-of-the-plans . They merely plan to restrict, with their monumental plan-of-the-plans, the spontaneous order phenomena that brings greatest satisfaction, value, wealth...you name it...to the greatest number of people.

The result? The plan-of-the-plans is abysmal.

Choice, Limited Choice, and Not Choosing Limited Choice

If one is familiar with Milton Friedman one is likely familiar with his mantra of “free to choose”. You may well be familiar with his book and subsequent PBS series of the same title Free to Choose. (1) (2)

If one is -or- is not familiar with Milton Friedman, the following is an observation of one of his core views for the unfamiliar, and an excellent reference for the familiar:

“Friedman’s core view of economics and matters of economic policy was fully developed by the time he undertook the massive of his monetary history of the United States. Nevertheless, the events recounted in a key part of that work, his horror story of the Great Contraction , strengthen his convictions and formed much of the theme song he sang for the rest of his life. His viewpoint was remarkably simple, especially for an economist.

Freedom of decision, Friedman believed, was the necessary condition for the economic system to deliver the highest standard of living to the largest number of people. He was convinced that individuals as a group would make consistently better choices for themselves than bureaucrats who aimed to make decisions for those individuals. The Federal Reserve was just one government agency out of the many he would have preferred to see go out of existence or at least be relegated to just maintaining the money supply at a steady level.” - Peter L. Bernstein, Introduction, 2008 edition of The Great Contraction 1929-1933.

Its been restated many times that a free people, in a free market, free to choose among freely available choices, will make exchange at mutual self interest hence the pie expands. That fallacy exists based on zero sum thinking in that exchange is only a zero sum in that only one party gains at the expense of another party. The fallacy is exposed, in part, due to mutual exchange. If both parties do no perceive a gain, exchange will not occur.

"Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another."- Milton Friedman


One may find insight by considering/constrasting the opposite proposition of Friedman’s free to choose, which is those advocating limited choice:

(1) proponents of limited choice advocate limited choice as the advocates know that the many and several would never choose the limited choice.

(2) advocates of limited choice have in fact chosen the particular limited choice.


Utility, or satisfaction, varies among everyone. Some people derive grand satisfaction by traveling the world while others love to be homebodies. Some love the beach others love the mountains. In each instance the person is free to choose among alternatives that derive the greatest satisfaction for that particular individual in that particular individual’s real time circumstances.

Advocates of limited choice have chosen to limit choice among infinitely dynamically changing choices, of which, yield maximum utility for particular individuals in particular individual circumstances. By extension, individual utility or satisfaction has been thus limited. The “limit” is imposed by limited choice advocates as without the limit the limited choice advocates know that the many and several would never choose the limited choice as they would seek particular-instance maximum satisfaction by way of the many other choices which have now been preempted.

What criteria would one use if one were an advocate of limited choice? Among many “choices” the advocates of limited choice hang their hat upon is “society”. An immediate problem arises in that “society” is an abstract concept. Have you ever met society? Shook hands with “society”? Regarding the abstract concept of “society”, one finds infinitely dynamically changing choices in what society means to particular individuals in particular individual circumstances. Hence the only way “society” can be an argument for limited choice - is if “society” itself becomes an abstract concept of limited definition and meaning.

Note: is society the summation of all the individuals freely choosing -or- is society a top down concept of certain individuals with a pre-chosen vision of society and the now the once free to choose individual must surrenders free choice to fit the pre-chosen vision of certain individuals?

One can quickly see limited choice becomes the plans of the few superseding the plans of the many. That advocates of limited choice want a limit based upon their choices of how they perceive what a limited choice of what “society” should mean to all. (3)

That is, a certain group wants to be free to choose to limit another group’s choice. Choice is used to preempt choice.

　


Notes:

(1) http://www.amazon.com/Free-Choose-Statement-Milton-Friedman/dp/0156334607/ref=sr_1_3?s=books&ie=UTF8&qid=1329543856&sr=1-3

(2) http://miltonfriedman.blogspot.com/

(3) http://www.econlib.org/library/Essays/hykKnw1.html
　

　

Contraceptive Compromise? Betsy McCaughey vs. Igor Volsky

In the video above note that Igor Volsky states the “free” contraceptive is paid as “part of the premium” paid, then reframes his position as “straight from the insurer…out of the reserves of the insurer”. Volsky might want to consider he doesn’t understand the difference between insurance premium and an insurer’s reserve. That Volsky first argues part of the premiums is a cost and hence no free lunch then turns around and argues that an insurance company’s “reserve” pays and hence it is free lunch time.

Later in the video Volsky attempts to frame ObamaCare as the ability to freely choose. First of all if freedom of choice was the overriding concept then there would be no reason for ObamaCare. What Igor Volsky is attempting to frame as free choice is: choice by a central authority [the plans of the few] has authorized as the choice ObamaCare, and then one can choose from a predetermined choice. Hence choice is framed as choice of a predetermined choice which by definition is not choice. It’s an argument of political dupery.

And About Those Vehicle Sales Trends

Current public policy, also known as notional visions of elites through their particular politico enablers, is that auto makers should create small vehicles with greater gas mileage. In other words, the paramount purchasing criteria for consumers should be gas mileage regardless of consumer preference. However, the revealed preference of consumers is pickups, vans, and SUV’s. Go figure!

Truck sales, which includes pickups, vans, and SUV’s amounted to 51.2% of total new vehicle sales during 2011. During December 2011 the rate was even higher at 54.8% of total vehicle sales. (1)

Hence those third parties, your betters, those with the elite-knowing vision who know exact what is best for you are going to be very disappointed.

Meanwhile, back on the sub-compact gas mileage frontier, a small-claims court is about to hear a case regarding a hybrid buyer’s complaint that gas mileage is not as advertised:

“She alleged that Honda misrepresented the $25,400 car because it initially got 20% less than the 49 miles per gallon in the city and 51 mpg on the highway promoted on its window sticker and in promotional materials. She says the mileage worsened as the battery deteriorated — and a software update only exacerbated the problem. She sought compensation for her lost gas mileage, the premium she paid for a hybrid and diminished resale value.” (2)


One may find Honda’s counter to the allegation of interest. Honda merely is taking the wonderful government regulations that always accompany the notional visions of elites through their particular politico enablers, and stating:

　

“A Honda representative, however, countered in court that Honda followed government rules regarding gas mileage and that the automaker clearly states that fuel economy will vary depending on how owners drive the car.

"We have no choice," said Neil Schmidt, a technical specialist for American Honda, who brought in a blown-up copy of the car's window sticker. "We have to put these numbers on the label." He noted the small type on the label, which gave a listing of 41 to 57 miles on average, saying, "This is more toward the real world." He said the software update was aimed at extending the life of the battery and should not have affected gas mileage.”(3)


Ah, the evil of it all!



Notes:

(1) Truck sales revving despite high gas prices, us today, James R. Healey, 01/05/2012

http://www.usatoday.com/money/autos/story/2012-01-04/truck-sales/52381866/1


(2) Honda goes to small-claims trial over gas mileage claims, us today, Chris Woodyard, 01/04/2012

http://content.usatoday.com/communities/driveon/post/2012/01/honda-taken-to-small-claims-court-over-gas-mileage-claims/1

(3) Ibid.

　

　

　

Upon Further Review: “the aristocracy of labor”.

Milton Friedman referred to unions and their particular associated unionized labor as “the aristocracy of labor”. In other words a special class of labor with special wages, special benefits, and special political clout. That the remaining non-unionized labor pays directly and indirectly for the aristocracy class, in this case “the aristocracy of labor”. (1)

If ninety percent of private sector labor is not associated with a union, what about that ninety percent? Why not an argument about the economy of the ninety percent? Why is the argument always about the economy of the ten percent that is unionized?

Consider the following from William Graham Sumner:

A trades-union raises wages (aside from the legitimate and economic means noticed in Chapter VI.) by restricting the number of apprentices who may be taken into the trade. This device acts directly on the supply of laborers, and that produces effects on wages. If, however, the number of apprentices is limited, some are kept out who want to get in. Those who are in have, therefore, made a monopoly, and constituted themselves a privileged class on a basis exactly analogous to that of the old privileged aristocracies. But whatever is gained by this arrangement for those who are in is won at a greater loss to those who are kept out. Hence it is not upon the masters nor upon the public that trades-unions exert the pressure by which they raise wages; it is upon other persons of the labor class who want to get into the trades, but, not being able to do so, are pushed down into the unskilled labor class. These persons, however, are passed by entirely without notice in all the discussions about trades-unions. They are the Forgotten Men. But, since they want to get into the trade and win their living in it, it is fair to suppose that they are fit for it, would succeed at it, would do well for themselves and society in it; that is to say, that, of all persons interested or concerned, they most deserve our sympathy and attention. (2)

Now consider the public sector unions and their particular associated unionized labor as “the aristocracy of labor”. In the public sector the rate of unionization is 36.2% [three and one-half times the rate of private sector labor]. (3) As the argument goes, no one wants to be a public sector employee, hence as the argument goes there would be no excluded class of labor as exogenous labor, as well as current public employees, loath and despise, in the main, employment in the public sector. Stated alternatively, considering the highly used talking point of “no one ever entered a public sector job to get rich”, then logically the talking point argument is that the public sector is an employer of last resort.

Why a three and a half times larger unionized work force in the public sector than private sector? Why unionize if, as the argument goes, the union need not exclude potential workers [the forgotten man] as no one really wants the public sector job? Merely unionizing against a straw man?

In the public sector union arrangement the forgotten man is transposed. The forgotten man is not the excluded laborer who would like the job, the forgotten man is the taxpayer. The highly diffused , unorganized, and largely unrepresented taxpayer who pays for this particular brand of “the aristocracy of labor“. (4)

　

Notes:

(1) Free to Choose, PBS 1980, "Free To Choose 1980 - Vol. 08 Who Protects the Worker?"

(2) What Social Classes Owe to Each Other, 1883, William Graham Sumner, chapter nine, pages 78 and 79.

(3) Bureau of Labor Statistics, Union Members Summary, 01/21/2011.

http://www.bls.gov/news.release/union2.nr0.htm


(4) Wisconsin is coming to a state capital near you!, 02/19/2011.

http://thelastembassy.blogspot.com/2011/02/wisconsin-is-coming-to-state-capital.html#!/2011/02/wisconsin-is-coming-to-state-capital.html

Third Party Satisfaction Bandits

The term “Utility“, in economics, is basically the amount of satisfaction one receives from the consumption of a good, service or action. Marginal utility is the amount of satisfaction one receives from consuming additional units of the same good, service, or action. Since marginal utility drops off regarding consumption of additional units of the same good, service or action, the general proposition is that consumers consume a basket of goods, services, and actions of which each item has maximum utility hence reaching maximum total utility.

For example, rather than a basket comprising twenty identical packages of chocolate chip cookies with diminishing marginal utility regarding each addition package of cookies, one has a basket comprising a variety of items such as cookies, milk, coffee, lettuce, tomatoes, a haircut and a book with each item having maximum marginal utility thus yielding maximum total utility for the particular basket.

Let us assume on a given day consumer A acquires basket X of goods, services, and actions and has achieved maximum total utility. That the particular basket yields maximum satisfaction given price and the allocation of scare resources with alternative uses. All is tidy and neat as consumer A has reached maximum total utility!

-Or- did A not reach maximum total utility due to market intervention-distortions by third parties? The assumptions in the example above is that A reaches maximum utility given “market constraints“. However, if market constraints become market constraints and market intervention-distortions by third parties, does A reach maximum total utility?

What if third party decisions, resulting in market intervention-distortion, cause consumer A to acquire basket X3P [where X3P represents the assortment of goods, services, and actions available due to third party market intervention-distortion]. That is to say, consumer A wanted to reach maximum total utility by having the freedom to choose and hence acquiring basket X of goods, services, and actions. However consumer A was unable to actually find X.

Consumer A could not find X as third party market intervention-distortion precluded X and substituted X with available option X3P.

　
Therefore consumer A does not reach his particular maximum total utility as he never acquired X. In essence, A acquires X3P due to third party market intervention-distortion. A is not at the point of maximum total utility. If A is not at maximum total utility where did the difference go?

Before we examine the missing maximum total utility, we need to consider a statement by Harold Demsetz, department of economics UCLA, from his book From Economic Man to Economic System, Chapter 10, pages 141 -159, entitled The Public Corporation: Its Ownership and Control. Demsetz writes on page 158:

‘A tax levied on corporate profit reduces the care and effort owners put into its operation, since part of the return that would have been received by owners will go to the state. Defacto, private owners of the corporation are saddled with a shirking partner, the state, which takes part of the revenue and provides none of the effort to improve the firm’s return. Consequently the greater is the corporate tax rate, the greater the incentive for corporate owners and management to pursue the “quiet life”.’
If state [government] acts as a “shirking partner” (which takes part of the revenue and provides none of the effort to improve the firm’s return) then do third party market intervention-distortions also act as a “shirking partner” in regards to A‘s quest for maximum total utility? Since A is not at maximum total utility did the difference go to the shirking partner represented by a third party advocating market intervention-distortions?

Now examine these observations by Thomas Sowell from his book The Vision of the Anointed, pages 74 and 75:

‘One of the problems faced by “consumer advocates” in general is how to make the consumers’ own preferences disappear from the argument, since consumer sovereignty conflicts with moral surrogacy by the anointed.’

‘Displacing responsibility from the consumer to the producer has been a crucial part of consumer advocacy.’

‘…approach boils down to is that third parties should preempt the consumer’s choice…’

Sowell is basically stating that third parties that advocate their particular choices know its poor politics to attack the consumers’ particular preference hence they preempt the consumers’ preference at the producer level. That its much better politics to attack the producer. By attacking the producer the third party advocate superimposes their particular choices on the producer and hence preempts the choices of the consumer.

Now we return to the question:
If A is not at maximum total utility where did the difference go?

The missing utility is captured by the third party. The third party might merely be do-gooders that capture utility in the form of “satisfaction” [utility] that they have somehow, some way, solved/improved the consumer’s preference by morphing the preference into their particular preference. Other third parties, acting as economic rent seekers, benefit from the morphing preference. Stated alternatively, a second set of third parties directly benefit from the preference being directed to the preference they in fact produce.

Globular Objects

The Light Bulb Cops

The budgetary gridlock in Washington in the final legislative days before Christmas took on a farcical atmosphere when Senate Majority Leader Harry Reid refused to move a government-funding bill because, among several other features he objects to, it would overturn a de facto federal ban on incandescent light bulbs.

But late last night Mr. Reid and House Speaker John Boehner agreed to terms on the spending bill, and Republicans won on the light bulb issue. The ban is suspended for one year. The GOP also prevailed on its prohibition of funding for abortions in the District of Columbia, though most of their deregulatory policy directives were stripped from the legislation.

The fact that the light bulb ban even made the list of Mr. Reid's grievances indicates how captive Democrats are to the anti-carbon police. Fluorescent light bulbs are more energy efficient, and though they cost more they last longer than traditional incandescent bulbs. But many consumers just haven't taken to the curly cue bulbs and prefer the older, cheaper kind. So Congress decided to take away the choice for consumers by requiring that all bulbs meet energy efficiency standards. This has meant that stores like Wal-Mart and Home Depot have been clearing the shelves of the traditional bulbs.

The new "green" bulbs can cost as much as $40, which in these tough times is a financial pinch. It's also the height of global warming hysteria to think that letting a family screw a traditional light bulb into the bedroom lamp is going to melt the Arctic ice caps. For another year, at least, American consumers can still by the light bulbs they want. It was a rare victory for liberty on Capitol Hill.

-- Stephen Moore, The Wall Street Journal,  Political Diary, 12/16/2011

Curb excessive drinking? Sell beer!

"West Virginia University says it has found a profitable way to curb excessive drinking at home football games: sell beer at concession stands.

By tapping kegs at Mountaineer Field, West Virginia has added $700,000 to the athletic department and reduced the number of incidents in which police were called because of excessive drinking by around 30 percent, Athletic Director Oliver Luck said in an interview".

http://www.bloomberg.com/news/2011-12-09/football-beer-taps-add-safety-700-000-to-west-virginia-university-sports.html


"Consider this—in 1989, Playboy magazine purposefully excluded WVU from the top ten list, noting that the magazine does not rank professional partiers".


http://www.onlineuniversities.com/rankings/10-biggest-party-schools/


Update 01/11/2012

“The same ethic applies to road games: In September, LSU and its fans traveled to West Virginia, which has one of the few college stadiums that serves alcohol.

According to a school spokesman, Mountaineer Field sold over $120,000 in beer alone that night—even though parts of the stadium sold out of cold Bud Light around halftime. Not only was that figure 33% higher than the figure for the next-highest game, it accounted for 23% of the season's total beer sales over seven games.

"The whole line was LSU fans buying four beers at a time," reports Judson Sanders, a 31-year-old Tigers fan who works in electrical contracting. “ - You Can't Spell 'Lush' Without L-S-U, The Wall Street Journal, 01/05/2012

http://online.wsj.com/article/SB10001424052970203471004577141180847382556.html

University of Free Marketeers.....in Guatemala??

Elitists

In political discourse you will see a reference to “elitists”. Generally the term elitists is used to designate the few somehow, someway enlighten individuals of the political, intellectual, or academic
classes who’s particular vision of society is somehow, some way more enlightened than the vision of others.

Some award the political term of “elitist” to Karl Rove. (1) However, Rove by no means was the first to refer to the label elitist. Milton Friedman referred to an “elite class” when discussing the emergence of the modern welfare state in his classic 1979 book Free to Choose. (2) Whereas
others argue the elitist label is merely anti-intellectual.  That is, people use the term in the positive
or negative. (3)

Is there a better definition, less political /more empirical, more thoroughly researched definition of “elitist”? Yes there is such an animal. Its most likely related to Thomas Sowell’s definition of
“special knowledge” as it appears in Sowell’s books A Conflict of Visions and Intellectuals and Society.

The term “special knowledge” as used by Sowell appears related to F.A. Hayek’s discussion of central planning and the inability of any one individual to have enough information to organize economic activity and associated outcomes.

F.A. Hayek’s discussion of decentralized knowledge trumping centralized knowledge is nicely summed up by Harold Demsetz as follows:

“…the historically important central puzzle of economics was to explain how independently acting people in an unplanned decentralized, private ownership economic system allocate their resources and, in particular, to explain how it is that the uses they seem to make of resources seem to be
well coordinated”.(4)

What is “special knowledge”?

An expert might be categorized as someone who is perceived to have acquired the most knowledge in one particular field of study such as geology or mathematics. Moreover, other participants within a particular field of study consider a particular person as an expert in the field of study. “Special knowledge” is when one leaves his/her particular field of expertise and acquires a self-designated position as an intellectual.

The self-designated and self-appointed intellectual designation is an attempt to transfer particular expert knowledge from an unrelated field to another field and instantaneously acquire “special knowledge” in a completely unrelated or mildly related field of study.

Special knowledge, the self-appointed intellectual, and political-economy?

Most notably, as pointed out by Rove, Friedman, and Sowell, the self-appointed intellectual , the elite as it were, want to comment and shape opinion specifically in the field of political-economy. For example, Paul Krugman trying to transfer his expertise in trade economics to political-economy commentary on society as a whole. Bill Gates trying to transfer his expertise in the field of computers to political-economy commentary on society as a whole. Barack Obama trying to transfer his expertise as a community organizer to political-economy commentary on society as a whole.

The once expert in a particular field, now a self-appointed intellectual in an unrelated field, has somehow, someway acquired “special knowledge” in the unrelated field. That is, the expert knowledge in a particular field becomes “special knowledge” in an unrelated field. Hence
“special knowledge” is merely notional propositions of the way things ought to be of a particular self-appointed intellectual with the premise being that an expert in one field is surely an expert in an additional field, that being most notably the political-economy.

Elites as the self-appointed intellectual?

Hence the definition of “elitist” as merely anti-intellectual misses the mark. It’s not that an elitist is anti-intellectual; it’s that an elitist is a self-appointed intellectual making political-economy
commentary on society as a whole through use of special knowledge which is in fact no knowledge. That is to say, we have a group of people, self-appointed people that have no expert knowledge in the field of political-economy, making notional statements which are in fact statements of “the way things ought to be”. That is, an elitist is a non-expert, making notional comments and putting forth
the notional propositions as fact, when the actual case is the notional propositions are merely their particular non-expert view of the way things ought to be and hence painting the world in one’s own self-image or self-vision.

(1)http://www.associatedcontent.com/article/1031684/elites_elitists_and_rove_politics.html?cat=9

(2) Free to Choose, 1979, Milton Friedman, chapter four,
page 98

(3) http://www.newsandsentinel.com/page/mboard.detail/fNav/71/What-does-the-term--elitist--rea---.html

(4) From Economic Man to Economic System, Harold Demsetz.

Obamanomics: An Edward Bellamy Replay.

Obama's socio-economic policy aka Obamanomics seems familiar? Just can't place the exact time and place? Try this one on for size.

The Gilded Age ended in the Panic of 1883 and a severe recession followed lasting until 1887. The Gilded Age was followed by The Progressive Era until 1920. Does the 1883 panic and severe recession until 1887 sound familiar to the demise of Lehman, the ensuing banking crisis, and present day? Keep this point in mind for a moment. (1) (2) (3)



Edward Bellamy and Milton Friedman

In 1887 Edward Bellamy wrote his fictional utopian novel Looking Backwards from 2000 to 1887. The book was a best seller. (4) Now see the following excerpt from Milton and Rose Friedman's book Free to Choose:


'The members of FDR’s brain trust were drawn mainly from the universities—in particular, Columbia University. They reflected the change that had occurred earlier in the intellectual atmosphere on the campuses—from belief in individual responsibility, laissez- faire, and a decentralized and limited government to belief in social responsibility and a centralized and powerful government.


It was the function of government, they believed, to protect individuals from the vicissitudes of fortune and to control the operation of the economy in the “general interest,” even if that involved government ownership and operation of the means of production.


Cradle to Grave. These two strands were already present in a famous novel published in 1887, Looking Backward by Edward Bellamy, a utopian fantasy in which a Rip Van Winkle character who goes to sleep in the year 1887 awakens in the year 2000 to discover a changed world. “Looking backward,” his new companions explain to him how the utopia that astonishes him emerged in the 1930s—a prophetic date—from the hell of the I880s. That utopia involved the promise of security “from cradle to grave”—the first use of that phrase we have come across—as well as detailed government planning, including compulsory national service by all persons over an extended period.’ Coming from this intellectual atmosphere, Roosevelt’s advisers were all too ready to view the depression as a failure of capitalism and to believe that active intervention by government—and especially central government was the appropriate remedy. Benevolent public servants, disinterested experts, should assume the power that narrow-minded, selfish “economic royalists” had ‘ abused. In the words of Roosevelt s first inaugural address, “The moneychangers have fled from the high seats in the temple of our civilization.” In designing programs for Roosevelt to adopt, they could draw not only on the campus, but on the earlier experience of Bismarck's Germany, Fabian England, and middle-way Sweden."


The New Deal, as it emerged during the 1930s, clearly reflected these views. It included programs designed to reform the basic structure of the economy. Some of these had to be abandoned when they were declared unconstitutional by the Supreme Court, notably the NRA (National Recovery Administration) and the AAA (Agricultural Adjustment Administration). Others are still with us, notably the Securities and Exchange Commission, the Na- tional Labor Relations Board, nationwide minimum wages.


The New Deal also included programs to provide security against misfortune, notably Social Security (OASI: Old Age and Survivors Insurance), unemployment insurance, and public assistance. This chapter discusses these measures and their later progeny.


The New Deal also included programs intended to be strictly temporary, designed to deal with the emergency situation created by the Great Depression. Some of the temporary programs became permanent, as is the way with government programs.


The most important temporary programs included “make work” projects under the Works Progress Administration, the use of unemployed youth to improve the national parks and forests under the Civilian Conservation Corps, and direct federal relief to the indigent. At the time, these programs served a useful function. There was distress on a vast scale; it was important to do something about that distress promptly, both to assist the people in distress and to restore hope and confidence to the public. These programs were hastily contrived, and no doubt were imperfect and wasteful, but that was understandable and unavoidable under the circumstances. The Roosevelt administration achieved a considerable measure of success in relieving immediate distress and re- storing confidence.


World War II interrupted the New Deal, while at the same time strengthening greatly its foundations. The war brought massive government budgets and unprecedented control by government over the details of economic life: fixing of prices and wages by edict, rationing of consumer goods, prohibition of the production of some civilian goods, allocation of raw materials and finished products, control of imports and exports.


The elimination of unemployment, the vast production of war materiel that made the United States the “arsenal of democracy,” and unconditional victory over Germany and Japan—all these were widely interpreted as demonstrating the capacity of government to run the economic system more effectively than “unplanned capitalism.” One of the first pieces of major legislation enacted after the war was the Employment Act of 1946, which expressed government’s responsibility for maintaining “maximum employment, production and purchasing power” and, in effect, enacted Keynesian policies into law.' (5)

Summary 

Obama socio-economic policy is no more than a replay of a golden oldie. Somewhere between FDR policies and Edward Bellamy's utopia.

One point that never receives any press time is that in 1516 Sir Thomas More named his ideal social system “Utopia,” which is Greek for “no place”.  (6)

notes

(1) http://www.answers.com/topic/gilded-age

(2) http://www.answers.com/topic/progressive-era

(3) http://thehistorybox.com/ny_city/panics/panics_article10a.htm

(4) http://librivox.org/looking-backward-2000-1887-by-edward-bellamy/

(5) Free to Choose A Personal Statement, Chapter Three, The Anatomy of a Crisis

(6) http://www.answers.com/topic/sir-thomas-more