synthetic zero

March 29th, 2010

Polls show the core of the Tea Party movement are hard-core conservatives, not independents, but polls also show the strength and fervor of their politics is, in fact, influencing the views and votes of independents. The problem is, of course, their fight against “big government” appeals to a fundamental American rebellious streak, a desire to fight the power, and that rhetoric sounds good when you are angry at the status quo. However, fighting against “big government” is, in our society, equivalent to fighting for big corporations; government in a democratic society is one of the few institutions that can be changed by popular opinion. The whole idea of the old establishment class was to counter the influence of liberals by invoking this phrase “big government” — yet this is simply code for less regulation of large corporations. The working class people who have bought into the Tea Party rhetoric are now fighting for the preservation and expansion of the very system which has thrown people out of work and held down wages with increasing force for decades.

I’ve spent a lot of time trying to engage in dialogue with people on the right. Basically, they have bought the idea that what they’re doing is “fighting big government” 100%. It never occurs to them that there’s anything missing, whatsoever, from their pantheon of evildoers; that corporate malfeasance could be anything like government power. Their arguments are simple, the same arguments libertarians have used for years: that government has the power to force you to do things whereas corporations do not.

Entirely missing from their analysis is the fact that a democratic government can be influenced by the people and thus can act as a popular counterbalance to the power of money. They’ve bought the Chicago School malarkey hook line and sinker. They quote Friedrich von Hayek as though he were a god.

Their basic notion is that ANY deviation from libertarian orthodoxy is a step towards Stalinism. They refer to Hayek’s analysis of the economic calculation problem as definitive proof that government ought to be restricted to simply enforcing contracts and rooting out fraud, and NOTHING else.

The funny thing is, there’s something to these arguments. Hayek’s analysis is correct when applied to the Soviet Union. He argued that even the most altruistic central planners could not possibly allocate resources anything like optimally because they would face an information bottleneck. I came up with this very same argument when I was in college, as an argument against Soviet-style central planning.

The problem is, Hayek’s analysis, the Chicago School analysis, leaves out one gigantic piece of the puzzle: the problem of local versus global optimization. A purely libertarian world can and does optimize better than central planning because it follows, essentially, the path of least resistance. And path of least resistance optimization can lead a system to a dead end (i.e., total depletion of renewable, but slowly replenishing, resource, like fish in a lake) or to various other suboptimal outcomes which actually turn out to be suboptimal for the system as a whole (i.e., massive income inequality leads, I believe, to a drag on the economy as a whole as the poor are unable to fully contribute to the economy, their children are disadvantaged and cannot reach their potential, people die or go bankrupt from health problems, and so on).

The solution is government regulation: not to micromanage the economy a la central planning, but to monitor the system and bias it to avoid dead ends, systemic instability, and too much inequality. None of these systemic biases run into the problem Hayek notes because they continue to use the market to do local optimization, they just take away the market’s dictatorial power.

In other words, to prevent unrestricted corporate power from destroying lives, you use a democratic government to restrain it.

I really think that we haven’t done what we need to do to spread the message. Fighting against “big government” means fighting FOR “big corporations”. It means further empowering the already powerful. People were mad about the bank bailout, but if the government had let banks fail in a straightforward way that would have been just more of the same “small government” stupidity that got us into this mess. What we DON’T need is simply to “let the market decide” — the market by itself is unstable, that’s the way it is! Sometimes you need massive intervention to stabilize the system. What you need to do after that is reintroduce meaningful regulation — yet that part is now stalled in Congress.

What the world needs now is someone to fight to restrain the adolescent beahavior of big corporate power. Unrestricted corporations are not the friend of the working class, yet so many of them are being influenced by the populist message of the Tea Partiers.

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