In his classic defense of free market economics, The Road to Serfdom, F. A. Hayek explains why the expansion of government control over a complex society inevitably shifts power from representative democratic assemblies to boards or bodies of technocratic elites. Democratic assemblies are designed to operate, within limits, on the principle of majority rule. Yet majorities in large bodies can only be effectively forged on the basis of general principles or laws; they are impossible to maintain in the context of the management of a complicated society or economy.
Why? On any given issue requiring management there is an infinite variation of possible policies, each suiting the needs or interests of different parties. Inevitably a representative assembly does not divide merely into two general segments, each seeking to gain the majority against another, but into innumerable factions. The result, as Americans witness constantly in their own government, is gridlock. And the solution to gridlock is the assigning of the particulars of legislation to technocratic elites (i.e., lobbyists and lawyers) who design a policy that will be enforced by another body of technocratic elites (i.e., bureaucrats). As Hayek puts it,
The inability of democratic assemblies to carry out what seems to be a clear mandate of the people will inevitably cause dissatisfaction with democratic institutions… The conviction grows that if efficient planning is to be done, the direction must be ‘taken out of politics’ and placed in the hands of experts – permanent officials or independent autonomous bodies…. ‘It is common ground that the present parliamentary machine is quite unsuited to pass rapidly a great body of complicated legislation.’ (104).
Case in point: Obamacare. The average elected representative in Congress had very little influence over the particulars of the policy; most probably didn’t even know the details of what they were voting for or against. And yet the problem is not with President Obama and the Democratic Party. The same tendency is observable in Republican legislation like President Bush’s signature Medicare Prescription Drug legislation. Any piece of legislation seeking to expand federal control or management of something as complicated as health care or the economy requires the rule of experts.
One need not be a libertarian to accept Hayek’s basic insight on this point. And of course, it is by no means clear what Hayek’s alternative would look like in practice, particularly in a country committed to federalism like the United States. What is appropriate for a body of elected representatives at the local or state level is not necessarily the same as what is appropriate at the federal level.
But Hayek’s perspective is at least worth pondering. From his perspective the unpopularity of Congress today is less the result of the tendency of power to corrupt, or the irresistible need for the politician to do what will get her or him reelected, than it is the effect of the American people having given Congress a mandate it cannot possibly fulfill.
The fault is neither with the individual representatives nor with parliamentary institutions as such but with the contradiction inherent in the task with which they are charged. They are not asked to act where they can agree, but to produce agreement on everything – the whole direction of the resources of the nation. For such a task the system of majority decision is, however, not suited… There is no reason why there should be a majority in favor of any one of the different possible courses of positive action if their number is legion (105).
The delegation of particular technical tasks to separate bodies, while a regular feature, is yet only the first step in the process whereby a democracy which embarks on planning progressively relinquishes its powers… The belief is becoming more and more widespread that, if things are to get done, the responsible authorities must be freed from the fetters of democratic procedure (107-108).
Alexis de Tocqueville warned that when democracy went down this road it would spawn a massive interest group of government officials, bureaucrats, and associated elites whose interest would gradually diverge from that of the people. Tocqueville would not be surprised by the contemporary political battles between public unions and populist reforming governors such as that which took place in Wisconsin this past year. Yet Joel Kotkin points out that both President Obama and Governor Romney represent a set of elites seeking to manage the country in one way or another.
The middle class, we’re frequently told, decides elections. But the 2012 race has in many ways been a contest between two elites, with the plutocratic corporate class lining up behind Mitt Romney to try and reclaim its position on top of the pile from an ascendant new group—made up of the leaders of social and traditional media, the upper bureaucracy and the academy—that’s bet big on Barack Obama.
Kotkin interprets the Tea Party as a populist reaction to the increasingly authoritarian and technocratic character of American government. Yet he by no means conflates a President Romney with the Tea Party.
Of course, Romney himself is the very opposite of a populist. As president, he would offer four years of technocratic, corporate power. Yet at the same time, a Romney administration—contrary to the claims of Democratic operatives and at times also the mainstream media—would not embrace the savage worldview of Pat Buchanan, Sara Palin, or even Rick Santorum. It would be establishmentarian in a “sensible shoes” kind of way.
So what is the choice facing American voters? Hayek would tell us that we have given our democracy an impossible mandate: the management of the most complicated economy in the world. In this case we might want to moderate our hopes for what any politician can achieve. After all, when we go to the ballot box we are not usually voting for particular rules or policies. For most of us we are simply choosing which party, with all of its technocratic expertise, will do the least damage. Good luck with that.
[Note: I am not as cynical about the upcoming election (or some of the issues at stake) as this last paragraph may suggest. I am simply trying to put some things in perspective. Consider it a nod to the book of Ecclesiastes.]
Over at First Things Robert George, whose conservative credentials are not remotely in doubt, suggests that President Obama got a bit of a “bum rap” in the criticism over his “You didn’t build that” rhetoric. While George gratuitously qualifies his defense of Obama so as to clarify to his conservative readers that he utterly rejects Obama’s big governmentism and so thinks that Obama deserved the criticism anyway, his begrudging concession to the president makes a substantive point.
[E]xamined in context, I don’t think it is correct to interpret the “that” in “you didn’t build that” as referring to businesses.
Here, I believe, the President is telling the truth in saying that by “that” he meant the infrastructure (roads, bridges, etc.) that makes it possible for businesses to flourish, but which businesses do not themselves provide.
And of course, Obama is right. Government does far more to shape the context for productive business than many if his critics would like to admit, and even if they might wish things were different, in the real world of American politics and governance there are few sharp lines between the free market and political power.
Take, for instance, the Washington Post‘s recent report that one of the main reasons Obama has as much of an eight point lead over Mitt Romney in the absolutely vital state of Ohio is that the president has showered the state with the blessings of federal patronage in the past four years. To be sure, Ohio is no doubt a very meritorious state, and surely no president would ever use his political clout to sway the merit-based procedure of determining what states or business should receive government grants, loans or tax breaks. Yet, as the Post begins its report,
After President Obama pledged in March to create up to 15 manufacturing centers nationwide, the first federal grant went to a place at the heart of his affections: Ohio.
When the Obama administration awarded tax credits to promote clean energy, the $125 million taken home by Ohio companies was nearly four times the average that went to other states.
And when a Cleveland dairy owner wanted to make more ricotta cheese, he won what was then the largest loan in the history of the U.S. Small Business Administration.
And what about the Fed? In another recent article the Washington Post describes how Ben Bernanke has radically increased the role of the Federal Reserve in bolstering and guiding the U.S. economy.
In what might be his final years as chairman of the Federal Reserve, Ben S. Bernanke is transforming the U.S. central bank, seeking to shed its reclusive habits and make it a constant presence in bolstering the economy. The new approach would make the Fed’s policies more responsive to the needs of the economy — and likely more forceful, because what the Fed is planning to do would be much clearer….
Bernanke has already pushed the Fed far along this path. The central bank this month pledged to stimulate the economy until it no longer needs the help, an unprecedented promise to intervene for years. That’s a big change from the Fed’s usual role as a curb on inflation and buffer against financial crises.
That may have a calming effect on the economy, as the article notes, but it also threatens to politicize the Fed and possibly to increase the likelihood of inflation. Micromanaging the free market, as economic theorists know, is fraught with danger. And according to what principles will the Fed operate? Those of the Democrats or the Republicans? Keynes or the Austrian School?
Unfortunately the problem is not simply with the current administration, the current Federal Reserve chairman, or the Democratic Party. As Joel Kotkin wrote over a month ago, both parties are beholden to Wall Street and to big business, and the common man to whom Ronald Reagan was so committed finds himself with no advocate in the 2012 presidential campaign.
In a sane world, one would expect Republicans to run against this consolidation of power, that has taxpayers propping up banks that invest vast amounts in backing the campaigns of the lawmakers who levy those taxes. The party would appeal to grassroots capitalists, investors, small banks and their customers who feel excluded from the Washington-sanctioned insiders’ game. The popular appeal is there. The Tea Party, of course, began as a response against TARP.
Instead, the partynominated a Wall Street patrician, Mitt Romney, whose idea of populism seems to be donning a well-pressed pair of jeans and a work shirt.
Romney himself is so clueless as to be touting his strong fund-raising with big finance. His top contributors list reads something like a rogue’s gallery from the 2008 crash: Goldman Sachs, JPMorgan Chase, Morgan Stanley, Credit Suisse, Citicorp, and Barclays. If Obama’s Hollywood friends wanted to find a perfect candidate to play the role of out-of-touch-Wall Street grandee, they could do worse than casting Mitt….
Who loses in this battle of the oligarchs? Everyone who depends on the markets to accurately give information, and to provide fundamental services, like fairly priced credit.
And who wins? The politically well-situated, who can profit from credit and regulatory policies whether those are implemented by Republicans or Democrats.
Of course, there are those who believe the significant shift within the conservative movement of our time has been from traditionalist conservatism towards an infatuation with the utopian benefits a free market might bring, but as Joe Knippenburg points out (responding to David Brooks), the Republican Party has always been controlled more by the interests of business and economics than it has by thoughtful conservatism, whether of the traditionalist stripe or of the libertarian version.
In electoral politics, the business-oriented guys have always had the upper hand. The traditionalists … have never been major players in partisan politics. They’ve always been more noticeable in various “ivory towers,” like the Intercollegiate Studies Institute and the editorial offices of First Things (if I may be so bold)….
In day to day politics, the pressing (the unsustainable size of government) crowds out the important (the state of our souls and our civil society). We should not stint in reminding our friends, colleagues, and fellow political disputants of what’s really important. But we have to recognize that the failure adequately and responsibly to address our pressing problem puts what we really care about at risk as well.
But Knippenburg is also wise enough to recognize that the Republican Party’s version of economic prosperity doesn’t always help the little guy and it is certainly not winning the hearts and minds of the working class.
A substantial majority (70 percent) of white working class Americans thinks that our economic system unfairly favors the wealthy…. Connected with working class doubts about fairness is a conviction held by almost half (47 percent) that the American Dream once held true, but does no more… One might ask why those people who mistrust the fairness of markets and society at large don’t turn to government to make things right. Surely they’re tempted to do so. And surely Barack Obama wants them to do so. Their hesitation for the moment might be due as much to the likelihood that government just seems to them to present unfairness in another guise.
But Republicans have to come up with a compelling way of talking about the opportunities provided by the marketplace. To be sure, they can offer a celebration of freedom and a critque of government intervention as “crony capitalism,” but I’m not sure how far that goes with a working class person who doesn’t see an obvious path to prosperity for himself and his family.
I wish I had a magic bullet here, but I don’t. We have to recognize that in our economy, the opportunities for those who lack skills are very limited.
It’s easy to criticize government for being too big or for interfering with the economy too much. It’s even easier to criticize the Democratic Party and Barack Obama. Everything gets a lot harder when we recognize that the Republican Party is not offering very persuasive solutions, and in many ways it is simply another part of the problem.
Joel Kotkin is a shrewd commentator on politics and economics, a pragmatist who is disillusioned with Barack Obama but not by any means an ideological conservative. He has the following to say on the ability of the Democratic Party to win the allegiance of minorities while not helping them. But he points out that the Republican Party has thrown needless roadblocks in the way of minority groups who might consider supporting the more conservative party.
Here’s Kotkin’s take:
Minorities, in fact, have done far worse under this administration than virtually any in recent history, including that of the hapless George W. Bush. In 2012, African-American unemployment stands at the highest level in decades; 12 percent of the nation’s population, blacks account for 21 percent of the nation’s jobless. The picture is particularly dire Los Angeles and Las Vegas, where black unemploymentis nearly 20%, and Detroit, where’s it’s over 25 percent.
Latinos, the other major part of the Party’s “downstairs” coalition, have also fared badly under Obama. This is true even among the aspiring working- and middle-class. Overall, the gap in net worth of minority households compared to whites is greater today than in 2005. White households lost 16% in recent years, but African-Americans dropped 53% and Latinos a staggering 66% of their pre-crash wealth.
So how does the Democratic Party, in Chicago and elsewhere, maintain its support among these groups? Needlessly exclusionary Republican policies play a role, scaring off potential minority voters, particularly immigrants and their offspring. Obama also has used his own biography to appeal personally to these groups, most understandably African-Americans, as a way to divert them from his economic shortcomings. And well-timed election-year conversions on key social issues like gay marriage and amnesty for young undocumented immigrants have helped him outmaneuver the hopelessly clueless GOP.
The point is not that the Republicans should pander to minorities in the way they accuse the Democrats of doing. The point is that they should stop doing things that needlessly alienate such voters, and should start doing the hard work of demonstrating – actually demonstrating – how their own political approach might help them.