The unofficial, unintentional theme of this week’s posts have been about economics in general (other than Tuesday’s SCOTUS piece)—the power of tax cuts, the potential upsides to tariffs, etc. In that spirit, I thought for week’s post about diving back into a piece that reflects my gradually evolving thinking about economics.
The summer before my sophomore year of college, I read the second edition of Milton Friedman’s Capitalism and Freedom, a work that completely revolutionized how I thought about the world and economics. Free-market principles became my lodestar, and colored my ideology for a decade. Indeed, I still adhere to these principles when it comes to economic questions.
However, as I grew older and (hopefully) more experienced, I began to realize that neoliberal economic theory, while elegant, is not always hard-and-fast, and that there are many more wrinkles to economic issues than appear at first glance. I don’t believe in overcomplicating things—again, cutting taxes tends to stimulate economic growth—but most issues contain a frisson of nuance that is easy to miss.
I’d long held to the idea that free trade is a largely unalloyed good, and that the short-term costs of lost jobs or reduced wages in some industries domestically would be made up for by increased efficiency of production and the rise of new, better industries. Sure, there’d be some friction in the duration, but people will manage, and we can always throw some funds for reeducation their way.
While I think such disruption is inevitable, I don’t think we should embrace it so blindly that we forget about the people who find themselves out of work, or in a position that they can’t modify their skillsets to find a new job. I live in the rural South, and there are hundreds of little towns that dried up once the mill the left, the railroad shut down, or the big family farms sold off. Part of that story is the onward march of Time and economic progress—and the drama of human history. But part of it is the story of globalist elites selling out Middle America.
This situation is not one merely of tariffs, taxes, and the like, but also of a radical ideology that would see national borders dissolved and massive immigration—even illegal immigration—encouraged. I am libertarian on many issues, but the pitfall of modern economic libertarianism—and there are many—is that it only conceives of issues in terms of economic efficiency (and, if you get right down to it, it’s inverted Marxism, to the extent that, for Marxists, everything is about economics—or, more properly, materialism). And, yes, generally greater efficiency means greater quality of life, but economics is not always the clean, elegant science that its proponents claim it to be.
To that end, I argue that economics, properly considered, should be considered part of the humanities, as it deals in a direct, visceral way with the people’s lives.
I don’t know the precise balancing act, or what should be achieved. I highly recommend reading Patrick J. Buchanan’s The Death of the West for a more complete treatment of how to revive wages for workers while maintaining a high degree of quality and efficiency. I don’t agree with all of Buchanan’s proposals, which are heavily influenced by Catholic social teachings, but there is an appeal to the idea that, if the government is going to interfere in the economy (and it is, and does), then it should be in favor of workers and families, not at their expense.
Finally, I wrote this essay in the context of the Brexit vote—which I intend to write an eBook on soon—and the arguments I was hearing about the economic catastrophe Brexit would be (that hasn’t been the case yet). I argued, essentially, that the liberty and national sovereignty are more important than sweet European Union bennies and transfer-of-wealth payments. The EU is a despicable organization as it currently operates, and as a lover of liberty, I’m thrilled to see nationalist-populist movements rising in major European countries. I don’t agree with all of these groups or their policies (many of which are socialistic in nature), but the impulse towards greater national sovereignty is, in general, a healthy one in our age of excessive globalization and unelected supranational tyrants.
With that lengthy introduction, I give you 24 June 2016’s “Economics: A Human Science“:
If you’ve read my blog the past couple of weeks, you know that I am strongly in favor of Brexit, or Great Britain voting to “Leave” the European Union. I’ve laid out my reasons here and here. As I write this post, results are trickling in on that historic vote, and I am intermittently checking them with great interest–and not a small bit of trepidation. Right now (about 10:30 PM EST/-5 GMT), “Leave” has a slight edge, but the outcome is too close to call.
Already, though, the British pound and the euro have taken a beating in value, as gold prices soar (this blog is conservative in viewpoint, so I probably should start urging you to buy gold, guns, and freeze-dried food reserves; source: http://www.bloomberg.com/news/articles/2016-06-23/pound-surge-builds-as-polls-show-u-k-to-remain-in-eu-yen-slips). One of the major bogeymen of the “Remain” side in the referendum was the threat of economic downturn. As I conceded in both of my previous posts on Brexit, there will no doubt be major economic disruption should Britain vote to “Leave.” However, a (likely temporary) drop in the value of the pound sterling is a price well paid for restored national sovereignty.
As conservatives, we’re accustomed to viewing economics–or, at least, economic growth–as a positive good. After all, we believe in the power of free markets to satisfy human needs and desires, and to innovate new ideas and products that alleviate human suffering, drudgery, and toil. Conservative politicians tend to focus on job growth and prudent deregulation–often coupled with tax and spending cuts–as perennial, bread-and-butter issues that directly affect voters’ pocketbooks for the better.
“…these [fiscal] policies are not about making gobs of cash… but about what those gobs can do to improve lives.”
But economics, like much else, is not a means unto itself. The reason conservatives like economic growth–besides, well, making money–is that it demonstrably improves people’s lives. Deregulation, similarly, can work beneficially (if you doubt me, just ask anyone who has ever dealt with the Affordable Care Act and the Department of Health and Human Services). In essence, these policies are not about making gobs of cash–although that is certainly nice–but about what those gobs can do to improve lives.
Thus, we have a stark contrast between the organic, healthy, occasionally unpredictable economic growth of a free market and the regimented, inequitable, limited economic growth of progressive corporatism. Our current economic environment, I fear, is far closer to the latter than the former. Complex, heavy regulations benefit larger firms and discourage the formation of smaller, newer firms by raising the upfront costs of entry. Perverse incentives raise the costs of healthcare for young, fit Americans, while making it unrealistically cheaper for older, sicker, chubbier patients. Overly-generous social safety benefits (some of which, like the food stamp program SNAP, the government actively advertises and encourages people to use) discourage able-bodied Americans from pursuing work.
I could go on (and on… and on). In short, conservatives are used to being correct on principle and on economic outcomes. Typically, conservative fiscal policies align with, rather than try to manipulate, economic realities, so the outcomes of those policies tend to be both principled and positive.
“As fiscal conservatives… let us never lose sight of the human side of economics.”
In the case of Brexit, however, the quest for restored sovereignty–a stand on an important first principle–will result in some negative economic outcomes. A major argument of the “Remain” side is that staying in the European Union will preserve Britain’s economic stability and ensure it a place in a European common market.
Such an argument is seductive, but it leads to a gilded cage. Nobel Prize-winning economist Milton Friedman famously said that economic freedom is a necessary precursor to, though not a guarantor of, political freedom. With Brexit, the axiom is almost reversed–by reclaiming its political freedom, Britain will then be able to pursue renewed economic freedom.
As fiscal conservatives–or those that support free markets, freer trade, and light regulations–let us never lose sight of the human side of economics. We too often treat economics as a science. Instead, it should find a home alongside the humanities.
Our chief aim should be to unleash human potential. So liberated, its creativity and ingenuity can lift human life to greater heights.
We already have a model: we’ve been doing it in the United States for over 200 years.