By Russ Nelson, on November 3rd, 2009
Tom Slee has written a book entitled No One Makes You Shop at Wal-Mart. The introduction of the book ends with “why we need to rely on collective action rather than individual choice to take us to where we want to be”.
Poor Tom! He fantasizes that once the tools of coercive collective action are created, intellectual such as himself will be in charge of directing the action. And yet, when you point him at collective action gone wrong (e.g. Jim Crow laws, or the War in *, or the War on Drugs), he’ll just tell you that the wrong people (e.g. George Bush) are in charge.
No, it’s far more likely that when powerful tools are created, powerful people (politically and/or economically powerful — which you surely must acknowledge doesn’t include intellectuals) control them. That’s why I oppose the creation and ongoing maintenance of these tools. Not because you can’t do good things with them — you can — but it’s more likely that bad things will be done with them.
By Winton Bates, on September 15th, 2009
In his comments in “The Australian” (8 Sept. ’09) on Paul Kelly’s new book, “The March of Patriots”, Kevin Rudd attempts to make a distinction between the economic reforms of the Hawke-Keating Labor governments and those of the Howard conservative government. Rudd describes the Hawke-Keating reforms as “modernising our economy to make it more competitive in a rapidly globalizing world”. He describes the Howard reforms as “neo-liberalism” or “a form of free market fundamentalism that has little in common with the philosophy and policy of the reforming centre of Australian politics to which we belong”.
This attempt to associate the Howard government with free market fundamentalism is typical Rudd-speak. This time, however, Rudd seems to have spun himself into a corner by also claiming that the Howard government was lazy. Rudd states: “we would describe our opponents as indolent: perhaps not always opposing the great transformational reforms engineered by Labor during its 13 years in office but hardly adding to that reform agenda during their 12 years in office”. Can an indolent conservative government be guilty of excessive zeal in promoting market-oriented reforms?
Peter van Onselen noted this apparent contradiction (in an article in “The Australian” on 9 Sept. ’09). He also updated a table in a book by Andrew Charlton (senior economic advisor to the PM) to enable the economic reform records of the Hawke-Keating, Howard and Rudd governments to be compared. The table suggests that the Howard government made some substantial reforms and that the Rudd government has tended to roll back previous economic reforms. (Unfortunately the table does not seem to be available on line.)
The table prepared by van Onselen is informative, but it would be nice to be able to compare the economic reform efforts of the three governments quantitatively. This is attempted in the chart below using economic freedom indexes constructed by the Fraser Institute and Heritage Foundation.
The chart confirms that the Hawke-Keating governments had strong neo-liberal credentials, but the two indexes provide a somewhat contradictory picture of the Howard government. The Heritage Foundation index even suggests that the Rudd government has made positive contributions to economic freedom. It might be interesting if someone could investigate why this is so and why two indexes seem to tell different stories about the Howard government.
However, while the history is interesting, the future position of the Rudd government on economic reform will be far more important to the future well-being of Australians. The one hopeful sign in Kevin Rudd’s latest graceless contribution is his praise for the reforms of the Hawke-Keating era. When he was elected to government Rudd seemed to want to be indistinguishable from John Howard in all important respects. Then he wrote an essay in which he seemed to have adopted the attitudes and language of Hugo Chavez. Perhaps he has now recognized that it is not necessary to choose between John Howard and Hugo Chavez (to paraphrase some infamous Rudd-speak).
Would it be too optimistic to interpret Rudd’s latest spin as a signal that he has now adopted Paul Keating as his role model?
By Winton Bates, on June 3rd, 2009
The Gallup World Poll has asked people in a large number of countries: “Are you satisfied or dissatisfied with your freedom to choose what you do with your life?” Recent research has shown that, even after controlling for other relevant variables, people tend to be more satisfied with their lives in countries in which a relatively high proportion of the population are satisfied with their freedom to choose. (See: John Helliwell, Christopher Barrington-Leigh, Anthony Harris and Haifang Huang, ‘International Evidence on the Social Context of Well-being’, Working paper 14720, NBER, 2009.)
This is hardly surprising. People who feel relatively satisfied with their lives could generally be expected to be satisfied with their freedom to choose what they do with their lives. Do the results have more profound implications? Is the proportion of people who are satisfied with their lives related to economic freedom (encompassing personal choice, voluntary exchange, freedom to enter and compete in markets and protection of persons and their property from aggression by others) and civil liberties? Alternatively, is satisfaction with freedom an emotional state that is unrelated to objective circumstances?
The Figure below has been obtained by matching the Gallup data on satisfaction with freedom with the Fraser Institute’s data on economic freedom and Freedom House’s data on civil liberties for 121 countries, and then ranking countries according to the percentage of people who are satisfied with their freedom to choose what to do with their lives. The results suggest that economic freedom and civil liberties tend to be substantially greater in countries where people are more satisfied with their freedom to choose.
Regression analysis suggests that economic freedom and civil liberties have a positive influence on the degree of satisfaction with freedom in different countries but only explain a modest proportion of the variation in this variable. In some countries (including China) the degree of satisfaction with freedom is much higher than predicted and in some countries (including Hungary) it is much lower than predicted.
In order to test whether there is a link between satisfaction with freedom and emotional states, another data set has been constructed which incorporates data on inner freedom (percentages who feel they have a great deal of choice and control over their lives) from the World Values Survey. Unfortunately the inner freedom data was collected for a smaller number of countries, so the matched data set only covers 70 countries. (Another problem with the inner freedom data is that it does not match very well in terms of the time at which it was collected. It was collected around 2000, substantially earlier than the other data.)
The second Figure, including inner freedom, provides a similar picture to the first one. Countries in which relatively high proportions are satisfied with the amount of freedom in their lives tend to have relatively high proportions who feel a great deal of inner freedom.
Inclusion of the additional variable in the regression analysis results in a substantial increase in the proportion of variation in the degree of satisfaction with freedom explained by the model, but reduces the coefficients on the other variables. This is not surprising in view of the apparent links between economic freedom and inner freedom discussed in an earlier post.
This simple analysis does not enable me to conclude to what extent perceptions of freedom are based on objective factors. The important point that emerges is that all four varieties of freedom tend to go together.
By Dan McLaughlin, on April 17th, 2009
David Cay Johnston has written a book on a very important topic, the corporate welfare that occurs on a massive scale. Unfortunately, Mr. Johnston takes a very important topic and shoots it so full of populist sensationalism that it is hard to take him seriously. One of the main building blocks of his hype building is the grossly flawed study by Pickety-Saez, which attempts to use income tax data to prove radical changes in the distribution of income, but instead proves that people respond to changes in the tax laws.
The core of the book is the corporate-government partnership, where greed and malice on the part of business people siphons off mountains of money from taxpayers in the form of subsidies and protection for favored businesses and industries. Very surely, that modern day mercantilism is one of the primary problems in most modern societies. Mr. Johnston, however, puts on very thick blinders to the fact that the mercantilist partnership involves two sides. Government is the other partner, and for sure, the more egregious offender.
Business people are in business for profit. It is not all that unexpected that people will try to use whatever tools are available to increase that profit. Politicians and bureaucrats, on the other hand, are elected and hired as servants of the people. The primary legitimate role of government is to protect the rights of the individuals in society. They operate under the expectation that government is there to protect the members of society. Thus, when a politician or bureaucrat aids business at the expense of the individual citizens and taxpayers, they are forsaking their fundamental reason for being, they are worse than the businessman seeking handouts.
The book was hard to read, in spite of the fact that Johnston has a great, easy-to-read writing style. So many times throughout the book, a sentence would stand out as pithy, straightforward and true. Then, a few sentences later, he would make conclusions that didn’t follow or somehow destroyed the credibility that he may have built up. Quotations from Adam Smith are generously sprinkled throughout the book, and made to sound as though the champion of free markets would have supported Johnston’s proposals for big government and heavy regulation of business.
According to Johnston’s analysis, the problems that modern America faces are due to alleged “deregulation”. The author summarizes his confusion early on when he says “In the past quarter century or so our government has enacted new rules that have created not only free markets, but rigged ones.” If the markets are “rigged”, they are not free in any sense. The regulators rig the market and make it un-free. It shouldn’t be that hard to make the connection. The regulation that he longs for has always been written by the regulated, to the detriment of competitors, taxpayers and the buying public.
His conclusion is that people should bring pressure on elected officials, to enact regulation necessary to bring us back to the good old days. That conclusion invites the fox to guard even more henhouses. He plays into the hands of the very people he seeks to control. Economic freedom is the source of progress and prosperity, and limitation of government is the only possible way to limit the power of mercantilists to rip us off. Without government enablers, bad businesses would be punished, either by the market or, if they actually used force, fraud or violence, by government, using its limited power to protect people against those obvious violations of individual rights.
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