Social Justice: the mirage of decisions by an abstract concept come to life, otherwise known as “society”

Weltschmerz

It is impossible to imagine the universe run by a wise, just and omnipotent God, but it is quite easy to imagine it run by a board of gods.- H.L. Mencken


　

Taking five economists, F.A. Hayek, Milton Friedman, Thomas Sowell, Robert Lucas and Thomas Sargent, and boiling down many of their observations, one might make the following consolidated-compact summation:

Markets never clear perfectly. Why? Serially uncorrelated errors. Hence no perfection can occur. The imperfection is the "entry point" by the collectivist in the "all markets will clear" phenomena. "Entry point" meaning the entry point for the market intervention argument. Paradoxically, intervention-distortion advocated by collectivists merely creates an environment that magnifies serially uncorrelated errors. That "imperfection" is the entry point and "perfection" is the argument.... when in fact perfection become additional imperfection. (1) (2) (3) (4) (5) (6) (7) (8)

Sowell has made the observation that collectivists have a common thread debate point which is: comparison of a perfect world with the real world outcomes of free people in a market based economy. The debate point is that of perfect vs. real. That somehow, someway market intervention of central planning by a central authority will move one toward perfect from the actual/real outcome. Keep that in mind for a moment.

Enter Robert Nozick. In his book Anarchy, State, and Utopia a grand argument is put forth that limited government, property rights [the rule of law] with free people in a market based economy is very likely utopia. Please keep this point in mind for a moment. (9)

Specifically, the collectivist debating point of perfect vs. real purposely paints the chasm between the supposed perfect world and the real world as Gotham: a dark, “unfair”, “unequal” world. Its an argument of depression to the audience, that one should be depressed that perfect is not achieved.

Returning to the consolidated-compact summation [above] and Sowell and Nozick’s proposition, one unfortunately finds the evidence over the last five decades is that intervention-distortion advocated by collectivists merely creates an environment that magnifies serially uncorrelated errors -or- more succinctly dystopia. In other words, the grand notional experiment of The Great Society, for example, has fallen flat on its collectivist face resulting in differing shades of dystopia. The grand experiment may well have proven Robert Nozick’s theory.


Weltschmerz [Velt-shmairts]:

Noun, often capitalized

(1) mental depression or apathy caused by comparison of the actual state of the world with an ideal state,

(2) a mood of sentimental sadness. (10)





Notes:

(1) The Fatal Conceit: The Errors of Socialism. F.A. Hayek.

(2) After Keynesian Macroeconomics, Robert E. Lucas and Thomas J. Sargent, 1978.

(3) A Conflict of Visions, Thomas Sowell.

(4) The Visions of the Anointed, Thomas Sowell.

(5) Milton Friedman, Richmond Federal Reserve Economic Quarterly, volume 83/2 Spring 1997.

(6) The Invisible Hand in Economics and Politics, Milton Friedman, Institute of Southeast Asian Studies, 1981.

(7) Intellectuals and Society, Thomas Sowell.

(8) The Road to Serfdom, F.A. Hayek.

(9) Anarchy, State and Utopia, Robert Nozick

(10) Merriam-Webster

ObamaCare: the repeal of first stage economic thinking

The government solution to a problem is usually as bad as the problem. - Milton Friedman

Thomas Sowell has written extensively that politicos have a short political time horizon i.e. the next election cycle. Politicos then match their short term political time horizon to first stage economic effects of policy proposals. Matter-of-fact, Sowell wrote an entire book regrading first stage economic thinking entitled Applied Economics, thinking beyond stage one. (1)


Government solutions and the ObamaCare Repeal vote Wednesday 01/19/2011

The vote next week to repeal ObamaCare is odd out. That is, Friedman's advice is coming home to roost. Politicos always cave-in or never can quite muster a vote on the concept: "The Government solution to the problem is usually as bad as the problem". Never quite bring ourselves to test Friedman's quote. Ah, but the evil of it all.....next Wednesday Friedman is coming to bat.

Political time horizons and first stage economic consequences

Friedman's observation above and Sowell's "thinking beyond stage one" are worth considering regarding ObamaCare and much legislation in general. The basic premise is that legislation can have immediate economic consequences that are favorable. This short term favorable economic consequence matches the short term political time horizon of politicos. However, the exact same legislation has long term unfavorable economic consequences (known-knowns) as well as long term cascading unintended economic consequences (known-unknowns).

The long term economic consequences of legislation is not a concern of politicos as their focus is on a short term political time horizon i.e. next election. Hence legislation becomes a tool to create first stage favorable economic consequences to match a short term political time horizon. The problem immediately arises that legislation in fact creates long term economic consequences. These long term consequences are what James and Jane Goodfellow, their children, grand children, and so on must live with for years and decades to come. The Politico on the other hand merely wants to win the next election.

Therefore we have policy making politicos of the short term world creating long term economic consequences for the long term world that James and Jane Goodfellow live within. Real life examples abound. Social Security had major short term favorable economic consequences and hence matched the short term political time horizon of legislators of the time. Decades later James and Jane Goodfellow find that the unfunded future liabilities of Social Security are daunting. Merely take the term Social Security in the prior sentence and plug in Medicare, Medicaid, welfare, food stamps, public sector pensions, etc., etc.. The legislation created short term favorable economic consequences followed by cascading unintended economic consequences.

Behind the curve, ahead of the curve, and the 70 year dream

An odd out item with ObamaCare aka socialized medicine is that certain political groups have been pushing for socialized medicine for decades and decades stretching back at least seventy years. The socialized medicine scheme, when debated in 2009 and 2010, was referred to as a "dream" by proponents. A seventy year old dream.

Exactly what grand scheme had been developed and tested during these seventy years of dreaming? If one wants an item for seventy years wouldn't one have developed a comprehensive plan with details? Apparently not. In essence seventy years of a dream of socialized medicine was kept right in the dream world with nothing more developed than a fuzzy theme with no plan. For a group that wants to rely so heavily on government central planning it seems odd that for seventy years they forgot to develop a central plan. You might say proponents were/are seventy years behind the curve as ObamaCare was/is a cobbled together plan that boils down to a scheme of centralized price fixing. Problem is: central planning fails miserably and price fixing schemes have never worked in all of economic history. (2) (3) Brilliant! A failed delivery system delivering a known failed result!

However, there appears to be a vast majority of James and Jane Goodfellows that have looked ahead of the curve. You might even say, that for once, politicos have been caught with their hands in the short term political time horizon cookie jar. One might even speculate that James and Jane Goodfellows have come to the point of clearly understanding and adopting the classic essay by William Graham Sumner "The Forgotten Man". That is, the Goodfellows clearly understand they have in fact become the Forgotten Man: "He is the victim of the reformer, social speculator and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him". (4)

So many social insurance and social welfare plans have exposed themselves as failures. That their long term economic consequences and cascading unintended economic consequences are failures for all to see. That massive hulking failures such as Social Security, Medicaid, and Medicare, have shown the public that long term dire consequences await them and their children. That the dreams of certain politicos become nightmares of the first order.



Behind the curve, politico's political time horizon, and a failed delivery system with known failed results.

The repeal vote, which is a vote on HR 2, becomes an affront to proponents of ObamaCare. How could anyone want to repeal a dream they have held for 70 years? A dream that in their view has become a reality.

The repeal vote is more reality than dream. The seventy year dream was really a theme with no plan. Then the plan was cobbled together based on politico's using first stage economic thinking to match their political time horizon. With the entire plan based on using a failed delivery system with known failed results. The problem is that the plan does not even have first stage favorable economic consequences. That the plan right out of the gate failed. Hence a cobbled together plan that was suppose to have, at the very least, first stage favorable economic consequences became an immediate cascading unintended economic consequence nightmare. That is, the politico's that are proponents of ObamaCare were so silly as to produce a plan that doesn't even create the illusion of favorable results to match their very own short term political time horizon. In other words, proponents of ObamaCare by their very own design produced the stage, set the stage, and generated the momentum for the repeal vote.

Collectivism's long history of failure

One only needs to examine history to see how collectivist plans fail. First we have the dawn of recorded history up to the Agricultural Revolution that was century-in, century-out of collectivism. Yes, collectivism is the oldest of economic systems. The results of collectivism up to the agricultural revolution was that mankind lived in an environment of constant starvation. Life was basic subsistence. Basic subsistence handed down from one generation to the next.

Collectivism's results were so poor that Malthus developed his theory of the Malthusian Population Trap. That mankind was stuck in a perpetual environment of basic subsistence and starvation as population was growing faster than food production. That mankind was stuck in a never ending battle to merely sustain life.

What changed the Malthusian Population Trap? The advent of private property agriculture in the Agricultural Revolution. Private property farming suddenly produced abundance in agriculture and man could for the first time feed himself. Out with Malthus in with abundance. (5)

Along the way private property, private property rights, and the price system developed. Note that private property, private property rights, and the price system "developed". That is, no central authority decided upon private property, private property rights, and the price system. Mankind merely stumbled into the systems. The systems occurred due to decentralized means. (6)

A basic premise should appear very quickly to the reader: decentralization created abundance and collective centralized planning created never ending subsistence results.

A major source of objection to a free economy is precisely that it ... gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

If collectivism is a failure why do collectivist propositions such as ObamaCare continue to be proposed?

The answer goes back to the constrained vision of mankind and the unconstrained vision of mankind.
The unconstrained vision of mankind, held by most collectivists, is that the nature of mankind can be changed, improved, and molded only by institutions of state. That a central authority [state] through governmental institutions is the only way to improve the nature of mankind.(7)


A review of the basis for repeal and first stage economic thinking

Prior to the repeal vote next week its likely a good idea to review the laundry list of basic errors within ObamaCare. Although this is not a complete list it should suffice to say that the problems are those of a plan doomed to fail:


(1) Federal bureaucrats overriding state rights and circumnavigating the McCarran-Ferguson act.
(2) The demise of consumer directed health-care.
(3) ObamaCare purposely designed to collapse into a single payer system.
(4) Another unsustainable entitlement atop of current unsustainable entitlements.
(5) A central planning scheme that is a known failed delivery system.
(6) A plan based on price fixing that results in quantitative and qualitative reduction in supply aka rationing.
(7) Ultimate third party decisions removing consumer choice.
(8) An unconstitutional individual mandate.
(9) The error of categorical risk management.
(10) A plan based on reverse risk management.
(11) A plan that fails to address let alone bend the cost curve.
(12) A plan that is based on the fallacy of universal coverage as universal coverage does not mean universal access and access will deteriorate.
(13) A plan with massive administration needs at a massive price.
(14) A plan that fails to address the allocation of scarce resources with alternative uses.
(15) A plan that fails the risk management matrix which is an axiom of insurance theory.
(16) Shifting costs to states in the form of massive increases in Medicaid that will bankrupt already stained state budgets.
(17) Massive tax increases.
(18) Lose of individual freedom.
(19) Add your basis for repeal here ---> ________.

Also, one sometimes will refuse to let issues stay settled by the adverse decision of such a procedure, specifically when the wrong decision is worse even than the disruption and costs of refusing to accept it, when the wrong decision is worse than conflict with those on the other side. - Robert Nozick

Summary

If one wishes to reform, improve, stream line, create more efficiency, allow for freedom of choice, reduce costs then ObamaCare needs scrapped. The ObamaCare plan has so many built-in failures that beginning anew is the only course of action. Ford once built the Edsel and they scrapped it. Howard Hughes built the H-4 (The Spruce Goose) and he scrapped it. There comes that point that a failed plan needs scrapped and a new course of action is desirable.


Notes


(1) Applied Economics, Thinking Beyond Stage one, Thomas Sowell.

(2)At 35, Nixon freeze still chilling, William Neikirk, The Swamp. http://www.swamppolitics.com/news/politics/blog/2006/08/at_35_nixon_freeze_still_chill.html

(3) Nixon, Price Controls, and the Gold Standard, excerpt from Commanding Heights by Daniel Yergin and Joesph Stanislaw, 1977, ed., pp. 60-64. http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_nixongold.html

(4) The Forgotten Man by William Graham Sumner, 1876 http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=1654&layout=html

(5) From Economic Man to Economic System, Harold Demsetz

(6) Hayek: His Contributions to the Political and Economic Thought of our Time, Butler and Riggenbach.

(7) A Conflict of Visions, Thomas Sowell.

ObamaCare: the general public is misinformed?

ObamaCare has become increasingly out of favor with the general public. As more and more information surfaces regarding what is actually inside the ObamaCare bill, the general public has become increasing called for repeal of ObamaCare.

The following infamous statement by Nancy Pelosi, although a sadly uninformed statement, may have paved the future path of discontent with ObamaCare: "We have to pass the bill so yo can find out what is in it". (1) As the general public "finds" what is within the ObamaCare bill the more they dislike the content.

The general electorate is misinformed?

The counter argument of the framers and supporters of ObamaCare to the rising voices in support of repeal is that those opposing ObamaCare are merely misinformed. The argument has overtones of "they don't know what is good for them". Some framers and supporters of ObamaCare have gone so far to argue that ObamaCare was not "presented" correctly to the general public. In other words, ObamaCare needed "sold" to the general public.

Special Knowledge and Experts

Below is a link to EconTalk with Russ Roberts from 10/25/2010. The interview is with Thomas W. Hazlett a Professor of Law & Economics at George Mason University School of Law. (2)

The entire segment is very interesting however take a moment and listen to the five minute segment of 36:43 - 41:30.

http://files.libertyfund.org/econtalk/y2010/Hazlettapplevgoogle.mp3

The segment mentioned above is about buying consumer products that "signal". That is, the proposition you are what you buy, eat, listen too, etc.. Its related to the concept of conspicuous consumption. Roberts and Hazlett get into a discussion regarding Thomas Sowell's observations that self appointed experts within a field (cameras in this example) despise mass marketers and despise those that buy from mass marketers (Kodak cameras). That self appointed experts view buying from a mass marketer as saying something about "you" with moral tones attached. That buying from the mass marketer, although in the self interest of the novice camera user, is somehow making the purchaser a lesser person.

Lets take this notion and transpose it onto the field of political-economy and in particular the anointed/intelligentsia. That the self appointed anointed/intelligentsia think of themselves as experts of special knowledge. (3) That they alone come up with unique ideas. That they are the center of the manufacturing of unique, knowledgeable, and insightful ideas. In other words, they are the experts in Sowell's camera example.

The self anointed/intelligentsia only have one product to sell and that is “ideas”. As pointed out by many, the ideas are not empirically tested ideas but rather ideas based on “the way things ought to be”. That is to say, ideas based on “the way things ought to be” that basically paints the world in their author's own self image. Do the anointed/intelligentsia, who’s only product is ideas, attempt to shape their ideas as the "signal" mentioned above? The extension of which, is that if you espouse and repeat the ideas of these self appointed experts then you "signal" that you are a purveyor of unique, knowledgeable, and insightful ideas as well.

Conversely, propositions that challenge the ideas of the self anointed/intelligentsia are, as discussed above, labeled "mass marketed ideas". That buying into these labeled "mass marketed idea" says something about "you" with moral tones attached, as perceived by the self appointed experts within the field of ideas. That somehow you are a lesser person as you reject or counter the "signal".

In practice the anointed/intelligentsia want to frame counter arguments to their signal as being "the status quo". More specifically, the "cling to their bibles and guns" vilification exercise is merely an argument-with-no-arguments to create a baseless debate counter point to the long standing empirically tested ideas of the anointed's opposition aka the emperically based camp. In essence, what the anointed/intelligentsia label "the status quo", is really the widely held common sense and empirical arguments of their opposition.

For example, ObamaCare is based upon a price-fixing scheme. It widely known that price-fixing schemes result in quantitative and qualitative reductions in supply aka rationing. Therefore one might say that this particular emperical point and/or axiom is in fact a very important "status quo". Rather than the anointed/intelligentsia countering the price-fixing scheme argument they merely label the counter argument as "the status quo" which results in an argument with no arguments.

In the final analysis, emperically tested ideas and common sense ideas put forth by those countering the "signal" are bundled into the phrase "status quo" (with the conotation that the "status quo" is some sort of mass marketed idea). Next "status quo" is arbitrarily and purposely given negative overtones by the anointed/intelligentcia. However, and in fact, "status quo" is a totally baseless tag line used to put forth an argument with no agruments rather than an argument of facts.

Are Some Politicians the Self Anointed/Intelligentsia?

Many politicos fancy themselves as self anointed/intelligentsia and/or align themselves with those producing the "signal". A problem emerges that if your ideas are not empirically based and merely based "on the way thing ought to be" and consequently painting the world in your own self image, then what if the ideas are presented as a politico?

Robert Nozick in his book Anarchy, State, and Utopia discusses moral side constraints at length. He poses the question of do we know of a being with no moral side constraints? Yes we do: animals. That humans attach no moral side constraints to animals i.e. the law of the jungle. Hence the lion eating the zebra, the hawk eating the field mouse, the scavengers eating the remains of carcass…humans accept this behavior and add no moral side constraints.

Yet we have humans wanting to add moral side constraints regarding humans killing animals e.g. we should not eat meat with the argument based not killing the animal should be a moral side constraint. Hence we have the paradoxical argument of having a set of beings with no requirement of moral side constraints yet a separate set of beings are required to have moral side constraints regarding the set of beings with no moral side constraints.

Keeping the above mentioned paradoxical moral side constraint argument in mind, have humans allowed the same paradoxical argument to exist between politicians and the general electorate? In other words, falsifying, misrepresenting, and espousing half truth are not moral side constraint of politicians yet are moral side constraints of the general electorate.

If politicians have a separate set of moral side constraints, and have often been reported to falsify, misrepresent, and espouse half truth, then what if this same group tries to "sell" non- empirical ideas based on "the ways things ought to be" which consequently paint the world in their own self image? That is to say, would politicos falsify, misrepresent, and espouse half truths in order to paint the world in their own self image through the idea of "the ways things ought to be"?

Summary

The general public is misinformed in regards to ObamaCare? -Or- conversely, has the general public been purposely misinformed about ObamaCare?

Notes:

(1) http://www.youtube.com/watch?v=d-ESBSAqvvk

(2)http://files.libertyfund.org/econtalk/y2010/Hazlettapplevgoogle.mp3

(3)Thomas Sowell, Intellectuals and Society

(4)Robert Nozick, Anarchy, State, and Utopia

ObamaCare and the government delivery system

Why choose a government delivery system?

Who can forget the above flow chart of the bureaucracy associated with ObamaCare. Tens of thousands of additional government workers will populate a new mega bureaucracy produced by ObamaCare and another 16,000 IRS agents to enforce ObamaCare penalties/fines.

The above flow chart begs a question: why choose a government delivery system? That is, why choose a delivery system that is managed by a monopoly, that is very well known as a highly inefficient system, a system that has been known to breed corruption and waste, that is full of red tape that frustrates the end users of the system?

The government delivery system as the first choice rather than last choice

Robert Nozick in his book Anarchy, State, and Utopia puts forth the following observations:

(a) people tend to forget about the possibilities of acting independently of the state,

(b) presumably what drives people to use the state's system of justice is the issue of ultimate enforcement,

(c) similarly, people that want to be paternalistically regulated forget the possibilities of contracting into particular limitations on their own behavior or appointing a particular paternalistic supervisory board over themselves. (1)

What Nozick is observing the use of the state as the first choice rather than a last choice. That the state is used for enforcement. That those subscribing paternalism have a quest to broaden their paternalism to all individuals rather than focusing upon themselves.

Conflict of Visions

Thomas Sowell has described a conflict of visions. That two broadly defined groups exist: the empirical camp vs. the anointed/intelligentsia camp. The empirical camp is based on the concepts that the vast collection of mundane knowledge possessed by individuals based on experience and empirical evidence, individual and property rights, and individual freedom to choose - is in direct conflict - with vision of the anointed/intelligentsia group who's position is based on "special knowledge" which is a non-empirically proposition based upon "the way things ought to be" delivered through verbal virtuosity resulting in painting the world in one's own self image. (2) (3)

The mega state vs. the small state

Although the two groups described by Sowell are clearly in conflict of visions, both groups subscribe to Nozick's points (a) and (b) described above. To one extent or another both groups choose the state to deliver their vision. The difference being that the empirical group wants a smaller state to deliver and enforce their vision whereas the anointed/intelligentsia adds Nozick's point (c) yet wants everyone to subscribe to paternalism through an all encompassing state to deliver and enforce their vision (rather than self imposed paternalism upon only themselves).

Delivering the vision

ObamaCare is in fact a "vision" of the anointed/intelligentsia. Beyond the laundry list of short comings associated with ObamaCare, beyond an attempt to mold a health-care system based on "the way things ought to be", the chosen delivery system, the state (government), will never deliver the "vision". That is to say, no matter how well a construct or how poorly a construct, the "vision" can not be delivered through a monopoly, that is a well known highly inefficient system, a system that has been know to breed corruption and waste, that is full of red tape that frustrates the end users of the system.

Notes:

(1) Richard Nozick, Anarchy, State, and Utopia. Page 14.

(2) Conflict of Visions, Thomas Sowell.

(3) Intellectuals and Society, Thomas Sowell.