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Many years ago, Robert M. Pirsig's hippy cult novel Zen and the Art of Motorcycle Maintenance was one of my favourites. A few weeks ago I discovered he'd written a sequel in 1991 called Lila: An Inquiry into Morals. I've been reading it as a break from seemingly interminable marking of student essays and exams (now mercifully finished).
Like many a 70s hippy (including me), Pirsig seems to have mellowed and discovered the virtues of market capitalism as he aged, framing it with his trademark notion of Zen "Quality".
I found several interesting things about the passage from Lila reproduced over the fold. One is that Pirsig seems to be channeling Austrian theoreticians (especially Hayek and Popper) without overtly referencing them or seemingly even being aware of their existence.
The other interesting angle, and the main reason for this post, is that it encapsulates a lot of my own thinking about human social and economic organisation especially the role of entrepreneurialism and innovation. The need to avoid stifling innovation as the primary engine of capitalism's remarkable success was Hayek's principal answer to those who argued for socialism or even a strong social democratic welfare state. I attempted to provoke discussion on this topic in a previous post, but it ended up being sidetracked by a prolonged argument about the virtues or otherwise of the libertarian LDP's election policies. It seems to me that the more general issues that Pirsig raises are much more interesting. In particular, if we accept the general thrust of his argument (as I do), what does that say about optimal forms of social, economic and political organisation (particularly when social and economic activity should be regulated and what form regulation should take)? And optimal in what sense?
So Phaedrus had been right in running then. But now -- funny thought -- this was actually his home. All his income came from here. His only fixed address now was right here -- his publisher's address on Madison Avenue. He was as much part of the Giant as anyone else.Once you understand something well enough, you don't need to run from it. In recent years each time he returned to New York he could feel his fear of this old monster lessening, and a kind of familiar affection for it growing.
From a Metaphysics of Quality's point of view this devouring of human bodies is a moral activity because it's more moral for a social pattern to devour a biological pattern than for a biological pattern to devour a social pattern. A social pattern is a higher form of revolution. This city, in its endless devouring of human bodies, was creating something better than any biological organism could by itself achieve.
Well, of course! My God! Look at it! The power of this place! Fantastic! What individual work of art can come anywhere near to equalling it? Sure: dirty, noisy, rude, dangerous, expensive. Always has been and probably always will be. Always been a hellhole if what you're looking for is stability and serenity... But if you're looking for stability and serenity, go to a cemetery, don't come here! This is the most Dynamic place on earth!
Now Phaedrus felt it all around him -- the speed, the height, the crowds and their tension. All the early strangeness was gone now. He was in it.
He remembered that its great symbol used to be the ticker tape, ticking out unpredictable fortunes rising and falling every second, a great symbol of luck. Luck. When E. B. White wrote, "if you want to live in New York you should be willing to be lucky," he meant not just "lucky" but willing to be lucky -- that is, Dynamic. If you cling to some set static pattern, when opportunity comes you won't take it. You have to hang loose, and when the time comes to be lucky, then be lucky: that's Dynamic.
When they call it freedom, that's not right. "Freedom" doesn't mean anything. Freedom's just an escape from something negative. The real reason it's so hallowed is that when people talk about it they mean Dynamic Quality.
That's what neither the socialists nor the capitalists ever got figured out. From a static point of view socialism is more moral than capitalism. It's a higher form of evolution. It is an intellectually guided society, not just a society that is guided by mindless traditions. That's what gives socialism its drive. But what the socialists left out and what has all but killed their whole undertaking is an absence of a concept of indefinite Dynamic Quality. You go to any socialist city and it's always a dull place because there's little Dynamic Quality.
On the other hand the conservatives to keep trumpeting about the virtues of free enterprise normally just supporting their own self-interest. They are just doing the usual cover-up for the rich in their age-old exploitation of the poor. Some of them seemed to sense there is also something mysteriously virtuous in a free enterprise system and you can see them struggling to put into words but they don't have the metaphysical vocabulary for it any more than the socialists do.
The Metaphysics of Quality provides the vocabulary. A free market is a Dynamic institution. What people buy and what people all, in other words what people value, can never be contained by any intellectual formula. What makes the marketplace work is Dynamic Quality. The market is always changing and the direction of that change can never be predetermined.
The Metaphysics of Quality says the free market makes everybody richer by preventing static economic patterns from setting in and stagnating economic growth. That is the reason the major capitalist economies of the world have done so much better since World War II than the major socialist economies. It is not that Victorian social economic patterns are more moral than socialist intellectual economic patterns. Quite the opposite. They are less moral as static patterns go. What makes the free-enterprise system superior is that the socialists, reasoning intelligently and objectively, have inadvertently closed the door to Dynamic Quality in the buying and selling of things. They closed it because the metaphysical structure of their objectivity never told them Dynamic Quality exists.
People, like everything else, work better in parallel than they do in series, and that is what happens in this free enterprise city. When things are organised socialistically in a bureaucratic series, any increasing complexity increases the probability of failure. But when they're organised in a free enterprise parallel, an increase in complexity becomes an increase in diversity more capable of responding to Dynamic Quality, and thus an increase of the probability of success. It is this diversity and parallelism that make this city work.
And not just this city. Our greatest national economic success, agriculture is organised almost entirely in parallel. All life has parallelism built into it. Cells work in parallel. Most body organs work in parallel: eyes, brains, lungs. Species operate in parallel, democracies operate in parallel; even science seems to operate best when it is organised through the parallelism of the scientific societies.
It's ironic that although the philosophy of science leaves no room for any undefined Dynamic activity, its science's unique organisation for the handling of the Dynamic that gives it its superiority. Science superseded old religious forms, not because what it says is more true in any absolute sense (whatever that is), but because what it says is more Dynamic.
If scientists had simply said Copernicus was right and Ptolemy was wrong without any willingness to further investigate the subject, then science would have simply become another minor religious creed. But scientific truth has always contained an overwhelming difference from theological truth: it is provisional. Science always contains an eraser, a mechanism whereby new Dynamic insight could wipe out old static patterns without destroying science itself. Thus science, unlike orthodox theology, has been capable of continuous revolutionary growth. As Phaedrus had written on one of his slips: "The pencil is mightier than the pen."
That's the whole thing: to obtain static and Dynamic Quality simultaneously. If you don't have the static patterns of scientific knowledge to build upon you're back with the caveman. But if you don't have the freedom to change those patterns you're blocked from any further growth.
You can see that where political institutions have improved throughout the centuries the improvement can usually be traced to a static-Dynamic combination: a king or constitution to preserve the static, and a parliament or jury that can act as a Dynamic eraser; a mechanism whereby new Dynamic insight can wipe out old static patterns without destroying the government itself.
Phaedrus was surprised by the conciseness of a commentary on Robert's Rules of Order that seemed to capture the whole thing in two sentences: "No minority has a right to block a majority from conducting the legal business of the organisation. No majority has a right to prevent a minority from peacefully attempting to become a majority." The power of those two sentences is that they create a stable static situation where Dynamic Quality can flourish.
In the abstract, at least. When you get to the particular it's not so simple.
It seems as though any static mechanism that is open to Dynamic Quality must also be open to degeneracy -- to falling back to lower forms of quality.
This creates the problem of getting maximum freedom for the emergence of Dynamic Quality while prohibiting degeneracy from destroying the evolutionary gains of the past. Americans like to talk about all their freedom but they think it's disconnected from something Europeans often see in America: the degeneracy that goes with the Dynamic.
It seems as though a society that is intolerant of all forms of degeneracy shuts off its own Dynamic growth and becomes static. But a society that tolerates all forms of degeneracy degenerates. Either direction can be dangerous. The mechanisms by which a balanced society grows and does not degenerate are difficult, if not impossible, to define.
How can you tell the two directions apart? Both oppose the status quo. Radical idealists and degenerate hooligans sometimes strongly resemble each other.
Oooh, this is why I hated Motorcycle Maintenance so thoroughly (that, and there wasn't nearly enough motorcycling). We can agree to differ, Ken, but I find this kind of cod-political science nail-chewingly didactic and pat.
ORLY? Or perhaps I should say INVISIBLE DIALECTIC? Or how about I CAN HAS JOHN STUART MILL?
Yes his style is certainly a tad irritating and even simplistic in places, but I'm attempting to provoke a discussion on the idea. I'm wondering how many people agree that his (and Hayek's) essential point about the critical role of entrepreneurial/innovative activities in the success of capitalism and the flexible systems they need to thrive is almost self-evidently true?
BTW I used to like Carlos Castaneda in those days too, and on rereading find his stuff irritatingly simplistic/didactic too, as with Pirsig. Too many bongs probably made it seem much more profound than it was. But Pirsig at least makes some good points, even if they're mostly not very original and written in a pretentious style.
It was Marx's point before it was Hayek's, if I recall correctly. And it's only self-evidently true if you frame it as a statement limited by terms (entrepreneurialism+economic freedom=adaptability=flexibility=Quality). Never mind that those terms are, "in the particular", always very laden with concrete and often nasty political agendas. As to majoritarianism and the Robert's Rules of Order, I wonder what Pirsig thinks these days of the People's Republic of China, a thoroughly entrepreneurially free-market economy driven by economic goals pretty similar to his Dynamic Quality, but politically led by tyrannical butchers? Or that his BMW R series from the first book, that emblem of Quality, was designed and manufactured in a West German closed-shop factory in a corporatist state re-built with NATO money and maintained by American bombers?
It's easy to nitpick someone like Pirsig, Liam, but I don't think that does justice to the larger point Ken is making here. To me (and maybe this is fresh in my mind because I've just re-read some of Constitution of Liberty in preparation for an exam tomorrow), this piece is linked to the point Hayek (and Ken) both made on the link between merit and success in a market economy.
In short, there is no neat correlation between merit and success in a market economy. You can be as innovative as you like and still finish up with the seat out of your pants. You can also have individuals of great brilliance in a socialist economy 'second guess' the market and come up with a great idea, as Ferdinand Porsche did before and during the war and other German industrialists did post-war. Acknowledging that is simply to acknowledge the truism that there are very clever people in the world who are very good at solving problems.
Hayek's point (and I think Pirsig's) is that they can't do it forever. The longer innovation is centrally planned (I just realised what a strange phrase that is) or only rewarded on very confined terms, or the link between innovation and market reward is undermined the harder it's going to be.
Liam
Your point about China is interesting but probably a focus for another post. The current success of China (and Singapore) may well show that there's no necessary connection between liberal democratic freedoms and capitalist success (just as they as well as Japan and South Korea show that Weber exaggerated the extent to which Calvinist values are essential to capitalism). Fortunately the earlier and continuing success of the West proves that liberal democratic values aren't inimical to capitalist success either. But the fact you can have a vibrant capitalist economy without either Christianity or liberal democratic freedoms doesn't mean you can have such an economy in the absence of a social, legal and economic system that fosters innovation and entrepreneurial activity. Since I'd rather like to continue living in a society that embodies both liberal democratic values and economic prosperity, I think they're ideas worth exploring.
True, SL, true. I can't help it if I enjoy dumping buckets from behind a keyboard, and I'm sorry for stinking up the thread with my banal sarcasm. To be serious: my criticism of Pirsig here is the same as the one I'd make of the Chicago economists of whom he's a contemporary; that they idealise a form of economic freedom in the abstract, one that works cut loose from any form of democratic freedom or economic justice. I mention the PRC as an illustration that economic freedom by itself isn't necessarily any worthwhile freedom at all. Life in the Shenzen Special Economic Zone would probably fall quite short of Dynamic Quality for a lover of the unpredictable streets of NYC, and certainly would for me. Given the choice between Quality as expressed by someone unconsciously cribbing Hayek (as Ken rightly says he is) and Quality as formulated perfectly well by hundreds of years of Western political philosophy and jurisprudence, I'll take the broad church of thinkers, ta muchly. This is quite a separate matter, of course, to my unfunny criticism of his style. I forswear further lulz.
Precisely. I don't think Pirsig understands liberalism or democracy, without which you wind up with a decidedly suboptimal society, regardless of its economic vibrancy or entrepreneurial spirit. A statement like "democracies operate in parallel" shows that he's ignorant of the rest of the world who manage to make capital-D Democracy work without entrenched binary Parties.
I do. It seems so self-evident that I struggle to say it - that capitalism works because
a) the central planners are simply incapable, no matter how smart, of getting the allocations right;
b) the central planners will always be left in the dust by what the dynamic system chokes up by accident but no-one realised was useful; and
c) the central planners never really motivate most people to achieve, and certainly nothing like the ever-potentially lucrative but constantly driving 'rat race' does.
Sorry, Ken, but by the time I got to the third paragraph of Pirsig's piece I realised I would rather gouge my eye out with a fork than read any further.
I often feel the same way about Marx.
And sometimes Mark Bahnisch: "... relatively conservative developmentalist political science ideology of modernisation ..." http://larvatusprodeo.net/2008/06/30/beyond-the-red-state-blue-state-dichotomy/
But back on topic- I think their might be some value in teaching innovation and entrepeneurship in secondary school. It isn't all or mostly about education but it has to more worthwhile than home economics and PE.
Liam
Accepting (as I'm sure all of us here do) that liberal democratic/civil and political freedoms are precious, do YOU as an individual accept the (almost) self-evident truth of Hayek/Pirsig's point? So far all you've done is avoid the issue. You see, just as I suspect that there are some tunnel vision libertarians who are so obsessed with economic freedoms that breaches of civil and political liberties (which have been far more frequent in the West since 9/11) scarcely register with them, so I think there are quite a few "lefties" who actually don't accept what Hayek/Pirsig are saying (or who feel inherently uneasy about it but would rather change the subject than grapple with it and express a clear view). Obviously Helen D and Jason S and Patrick F and Joe C accept it; I'm much more interested for present purposes in whether "lefties" like you actually do.
Ken,
I think the quality of left-thinking would be improved if those who study the social sciences- a bastion of leftism- were compelled to study some economics.
On the other hand, the quality of economics graduates would be better if they were compelled to study some of the social sciences.
As an old biker(well a young one then) I was immediately attracted to Pirsig's way of thinking, particularly as I was grappling seriously with economics and the Monetarist vs Keynesian debates at the time. I'd define them broadly as the Austrian and Keynesian views of the world now and the dynamic tension that puzzled Pirsig and myself at the time is how to marry the two, which we intuitively suspect is the Holy Grail of the Third Way even today. Naturally the young man had a socialist heart but as he grew older and wiser he gained the market head. It's inevitable that dealing with engineering, the technical and man-made construction, that the pursuit of economic quality would be of increasing interest and importance. How much in terms of resources forgone should we invest in quality over quantity is always at the forefront of technical solutions to needs, but was there some serious shortcoming in the overall paradigm that often forced the sacrifice of quality for quantity, with concomitant lessening of overall social outcomes? Like Pirsig I had the nagging feeling there was and that was always his unfinished dilemma. There is a Third Way Robert meboy and I have glimpsed it, or at least the path by which we truly discover it. It lies in a Keynesian construction of a Constitutional Marketplace, within which the Austrian dynamism can have its full head. The former sets the overall heading but it is the seamanship of the latter that propels the voyage and steers best through uncharted waters. It's imperative to get the overarching constitution of the marketplace right first and foremost. To do that you have to wipe the current slate clean and begin thinking afresh about what best suits us in a Rawlsian sense, given that we start from the here and now. Of course you could start that process from a Mediaeval standpoint, but that would be nonsensical. No, we start from here with the benefit of history and analytical thought that gives us the ability to identify the pressing issues that need to be accommodated today. Pirsig intuitively understood the issues, but he couldn't find the keystone that would lock the two pillars of the Third Way structure together. I have glimpsed just such a keystone, but it came from a long and arduous journey and going back to those first principles over and over again. Pirsig was almost there and that was his great insight for mine. He had pioneered much of the journey.
Care to name a few prominant libertarians that fit the mould? I can't currently think of any. And even if you could name some examples I'm sure that they are such an insignificant minority that they leave your comment still running close to empty.
And why are economic freedoms "an obsession" in the pejorative sense, whilst other freedoms are special? Most people in the west won't have their personal civil liberties violated on a regular basis but they will have their economic freedoms imposed apon on a daily basis. The former may be vastly more severe but the later is vastly more prevalent. And pursuing an agenda for economic freedom takes nothing away from those that pursue an agenda for civil liberties. Your implied criticism is a bit like saying that plumbers don't spend enough time doing carpentary. In fact freedom in one area usually validates and enhances the cause for freedom in other areas. There is good evidence that economic freedom creates wealth. And good evidence that wealth fosters democracy. And good evidence that democracy fosters civil liberties. There is no shame in advocating economic freedom.
Ken you really ought to cut the routine where by you borrow all the key libertarian arguments but wash your hands of libertarianism.
Love the sin hate the sinner? I like Ken but that did make me laugh :)
Terje
I could easily demonstrate exactly what I mean about the tunnel vision orientation of quite a few Australian libertarians. Have a look, for example, at the comment thread to this post by Sukrit Sabhlok or this following one by Sukrit where he satirises the mentality.
However I'm not going to permit this thread to be derailed by yet another interminable discussion about libertarianism. The focus is on entrepreneurialism/innovation, whether readers regard them as critical aspects of a prosperous society, and what social, economic and regulatory arrangements might best promote it. I'll simply delete any further comments seeking to provoke an argument about more general aspects of libertarianism and its strengths and weaknesses.
The last thread you tried to start about this, somebody posted a link to an interesting article quoating a stat that suggested something like 27% of Americans thought about becoming enterpreneurs, but only 9% actually did, whereas in Europe, only 15% thought about it, but 14% actually went ahead (I don't remember the exact numbers, too lazy to find the article).
I think it's not unreasonable to suppose that the safety net provided by a social democracy is a big factor in the level of risk people are prepared to take on - and probably a bigger factor than the level of tax you're likely to pay if your business takes off.
Liam: "I mention the PRC as an illustration that economic freedom by itself isnt necessarily any worthwhile freedom at all"
You might think that Liam, but that's only because you live in a rich country. I'm sure a few hundred million people that used to live in poverty in China wouldn't agree with your statement. Economic freedom is wonderful for people that didn't used to have it, and as KP notes, not orthogonal to liberal/democratic values, and as Terje notes, it tends to lead to more liberal/democratic values -- and that's certainly what is happening in China and has happened in many other parts of Asia. The great thing about money is that once people have enough of it, the smart ones have enough time to start worrying about things.
2 comments by Jason Soon deleted because he ignored my request to stick to the point and avoid derailing the discussion into one about the virtues or otherwise of libertarians. if Jason wants to have a discussion about that he can post on his own blog.
I tend to think that economic freedom leads to civil liberties and civil liberties lead to economic freedom. I'm an optimist.
"I think its not unreasonable to suppose that the safety net provided by a social democracy is a big factor in the level of risk people are prepared to take on - and probably a bigger factor than the level of tax youre likely to pay if your business takes off."
Yes it is. European growth rates are appalingly low. Venture capital has a part to play. So does savings of entrepreneurs.
Sceleoretic growth is called the "European disease" for a reason. Of course, as long as the US fights unfeasible wars, they will grind themselves into poverty.
Another comment by Jason Soon deleted.
Can I ask what economic freedoms of mine are being imposed upon today?
My blip about economic freedom/market fundamentalism is the commodification of human relationships, the eroding of values based on tradition, respect, ethics etc and replacement with an amoral commercial imperative that places profit above the public good and/or environmental cost for example.
So yes I believe they are critical, esp as Conrad notes, in those societies that haven't yet experienced their benefit but this does not translate to carte blanche in those societies that have already developed a strong innovative focus.
Some sort of protection is needed as Hayek noted: "[..]if we were always to apply the rules of the extended order [markets] to our more intimate groupings [families], we would crush them. So we must learn to live in two sorts of worlds at once."
Some sort of balance is required.
I, too, have glimpsed the way and it is called democracy. Democracy is rule by the people and a perfect democracy would be where every citizen has a perfectly equal say in making the rules. I think there is no third way yet a third way is an ongoing necessity. That is to say: one can work out the principles of laissez faire and it is all beautifully coherent, and one can work out the beauties of socialism and it is coherent. In practice either on its own is a disaster, so some third way has to be steered. But this is not something that can be figured out in terms of coherent principles.
If it is not coherent it must be decided on a case by case basis: free market here, Keynesian there. Who may decide? If it be politicians they will have their bias to one or the other. Thus the decision in individual instances should be by the people who are affected.
It is not just theory. Arguably the worlds most prosperous country (higher GDP per capita than ours) operates on this basis. Has been doing so for 160 years. Of course no decision pleases everyone but it pleases the majority and everyone wins sometimes. Suggestions to restrict the democracy are invariably rejected and over time the people have kept extending it in the direction of perfection.
I would not be surprised if it fitted Observas recipe of a Keynesian construction of a Constitutional Marketplace, within which the Austrian dynamism can have its full head, but that is an outcome of accumulated decisions, not a pre-setting. I dont think that the former sets the overall heading but it is the seamanship of the latter that propels the voyage and steers best through uncharted waters. I think that the people make decisions on a case by case basis. Itd be hard to detect any overall heading though one can see themes that persist.
Observas deduction that Its imperative to get the overarching constitution of the marketplace right first and foremost is, on this view, in error. The only required element of the constitution is that it provide for no one to be privileged, for everyone to have an equal say. Expressed like that, it is amazing that anything else could ever be seriously suggested and yet it always is.
Mark, if Western European growth rates are so "appallingly low", then how is it that the standard of living in virtually all of Europe is just as good as that in other Western nations? (indeed, some would argue somewhat better). Or are you claiming that, say, 30 years ago European standards of living were vastly greater than those in the U.S., or Australia, etc.?
And how do you account for statistics indicating that those considering enterpreneurship in Europe are far more likely to follow through with their plans than those in the U.S.? (Admittedly, what's arguably more interesting is how many are successful - does anybody have figures for that?)
Ken - I have to ask, one slightly off-topic post isn't on its own going to derail a thread surely? I'm certainly curious to know what Jason posted.
BTW, according to http://eh.net/encyclopedia/article/schon.sweden,
Annual Economic Growth Rates per Capita in Industrial Nations and the World Economy, 1871-2005
Year Nordic Countries Other Europe US Japan World
1871-1975 2.0 1.7 1.8 2.4 1.5
1975-2005 2.2 1.9 2.0 2.2 1.6
So yes, "other Europe" has lagged slightly behind the U.S. But it doesn't appear to be the strongly social democratic ones.
Mike
I don't really see it as simply a matter of laissez faire liberalism versus socialism, although I have no doubt that doctrinaire socialism is inimical to innovation and entrepreneurial activity. I'm trying to focus (so far with dubious success) on (a) whether people regard fostering innovation and entrepreneurial activity as critically important objectives; and (b) if so, what sorts of policy and regulatory settings can best achieve it? For what it's worth, my own answers are:
(a) yes (and that doesn't mean I don't regard liberal democratic values as equally important); and
(b) Fostering innovation/entrepreneurial activity doesn't require a strictly laissez faire approach. Witness especially Norway, Finland and Denmark. However it DOES require overall policy and regulatory settings that are flexible and not overly prescriptive and generally business-friendly (e.g. rigid anti-dismissal laws are a bad idea IMO; we'd be better served by improving the social safety net and retraining opportunities for displaced workers, while allowing employers a reasonably free rein in deciding who and how many they employ). I was hoping we might be able to explore some such issues here. For example, it's possible to frame regulations that set targets or objectives but leave open the manner of achieving them, thereby allowing for innovative approaches involving collaboration etc. This would involve applying Total Quality Management and similar principles to framing regulations. It's something Nicholas Gruen occasionally posts about.
And there's an antecedent question. Do we actually need regulations in a given area at all? Is the cost greater than the benefit? I suspect that applies to Rudd's FuelWatch policy, for example, which adds an onerous business compliance burden and inflexibility to price-setting mechanisms for very little and possibly no benefit at all.
Was Pirsig a hippy? I thought he was an Academic who cracked up because he lived in his brain so much that he lost track of the rest of life. Perhaps the success of his first book and its popularity with 'hippies' came about partly because of the massive fractures in our interpretations of the world during the Sixties. It wasn't only the criminalised drugs which unravelled many brains, it was also the harsh conventional psychotropic drugs, and the even harsher shock treatments that troubled souls were subjected to then. For all the philosphy in Zen and The Art of Motor Cycle Maintenance, it's a simple theme. Pirsig lost not only his mind but his memory. The word Zen doesn't automatically mean 'hippy'. Zen is an old philosophy focussed on leaving an attachment to thought behind and finding a sort of central awareness which goes beyond interpretation. (It IMPLIES a sort of breakdown, a deliberate cognitive dissonance, but that dissonance is not as desperate or weird as that massive loss of faith which probably began with the Beats or maybe even with the Atom Bomb.) Pirsig used his understanding of mechanical order, his arguments with philosophy, his work as a teacher and the basic aim of defining Quality through conversations with his son in order to regain a functional relationship with the world. It's sad that the book didn't help his son who committed suicide at an early age, partly it's said because he found the book humiliating. I thought that Lila was about a vain attempt to reach out for another lost soul. Pirsig had been lost, he slowly put his life back together. Then lost his son. In Lila, he is reaching out to another lost soul, eventually without success. Lila's addiction to things other than quality is poignant in those terms. Freedom from the constraints of the gross worlds is a part of it all. Remember, the commentary about New York occurs while he is waiting for Robert Redford who wants to film the first book and also as Lila fails to discover any quality in her past life, is robbed and thus begins her fatal descent. The descriptions of the city are also contextual rather than a comprehensive philosophy in themselves.
I agree completely.
The hard part is that this requires, or at least I think it does, very vigorous enforcement powers.
Re Denmark, since I love linking to the Economist, I will link to this article on a Danish entrepreneur - except she's American. Moneyquote, though:
NPOV,
It makes a hell of a difference when it is compunded. Swedish unemployment is always above 12%. Hidden unemployment is equal to or higher than that.
Are you going to tell me having deteriorating skills and no savings helps entrpereneurialism? Sure spare time and inspiration are essential. But they have no savings, weakening skills and less interaction with customers or suppliers.
Yes they have agenerous safety net. America has different levels of a safety net, and private charities do more. I'm not arguing about the efficacy of this, but it is just done differently and more generously than most people assume.
But how many people who live poverty are there because they are failed entrepreenurs? How many who have made it big say "it would have been easier if the dole payments were bigger"?
The Nordic countries have high levels of opennness to external economies. This is their advantage in costs and attracting and generating trade and foreign direct investment in and out. Multinationals engage in FDI, attracting the best managers and financial economies of scale.
"Mark, if Western European growth rates are so appallingly low, then how is it that the standard of living in virtually all of Europe is just as good as that in other Western nations? (indeed, some would argue somewhat better). Or are you claiming that, say, 30 years ago European standards of living were vastly greater than those in the U.S., or Australia, etc.?"
That's err, "very contentious"...
Two strongly libertarian articles which are actaully very fair and balanced:
Denamrk:
http://mises.org/article.aspx?Id=905
Sweden:
http://mises.org/story/955
Who wouldn't agree with allowing employers "reasonably free rein". The key word is surely "reasonably", and arguments over unfair dismissal laws seem to come down to what specific examples would classify as reasonable case for dismissal. The laissez-faire approach is surely to insist that employers should be able to dismiss employees for whatever reason they like, without having to explain why to the employee. After all, employees are expensive to replace, and no employer would just fire somebody because they took a single sick day, or indeed without giving any good reason at all, surely?
"The laissez-faire approach is surely to insist that employers should be able to dismiss employees for whatever reason they like, without having to explain why to the employee."
No you are building up another strawman to beat down.
The contents of the contract are what is important.
Fair and balanced?
"The obsession with equality delivers a crushing, daily blow to anyone with a new idea or the inkling to cultivate an ability that surpasses the norm"
...without any links to stats on enterpreneurship on Denmark.
And FWIW, I don't particular believe Australia would benefit particular from trying to turn itself in Denmark or Sweden. But even from the point of view of encouraging innovation and enterpreneurship I'm less worried about us heading in that direction than the opposite way.
I take on board your skepticism Mike but you might like to think of an overarching CM as like a Magna Carta against the divine right of elected kings. It is simply a blueprint of ideals against which the depredations of the king and his nobles is measured and reined in, or rather better still, uncalled for and glaringly anachronistic. Take Rudd's bestowing of $35 million upon Toyota and its shareholders. Supposedly picking hybrid winners, which Mr Watanabe when asked didn't exactly know what Toyota would do with such pleasant largesse. Oops dumbo! An overarching economic Magna Carta is somewhat overdue and it doesn't have to be all things to all people, just an agreeable direction statement for all. The need for such a blueprint doesn't come along every day, but I'd suggest AGW is a pretty powerful catalyst for one now. Add an impending world economic crunch and that will certainly concentrate the minds. Certainly such an outline of direction will be open to interpretation in practice and perhaps substantial revision should circumstances radically alter, but that's nothing new. It's the underlying tenets that are important rather than some tedious instruction manual for all time. Nothing like a good mission statement to remind us all to constantly separate the wood from the trees, but it's equally important it's not some esoteric claptrap. Focussing on the issues at hand and getting the balance right is the art. In hindsight, Pirsig was always consumed by the quest for striking that balance for mine.
Mark, sure, but the reality is that there will always be employees out there that will sign on to contracts that effectively do give employers completely free reign in terminating the agreement, out of either desperation, ignorance, or carelessness (I've certainly never once bothered to read every last paragraph of an employment contract, have you?).
"And FWIW, I dont particular believe Australia would benefit particular from trying to turn itself in Denmark or Sweden. But even from the point of view of encouraging innovation and enterpreneurship Im less worried about us heading in that direction than the opposite way."
What, you're worried about unfettered markets not delivering innovation?
http://en.wikipedia.org/wiki/Eric_Maskin#Software_patents
"Maskin suggested that software patents inhibit innovation rather than stimulate progress. Software, semiconductor, and computer industries have been innovative despite historically weak patent protection, he argued. Innovation in those industries has been sequential and complementary, so competition can increase firms' future profits. In such a dynamic industry, "patent protection may reduce overall innovation and social welfare." A natural experiment occurred in the 1980s when patent protection was extended to software," wrote Maskin. "Standard arguments would predict that R&D intensity and productivity should have increased among patenting firms. Consistent with our model, however, these increases did not occur." Other evidence supporting this model includes a distinctive pattern of cross-licensing and a positive relationship between rates of innovation and firm entry. [4]"
The most innovation occured during a "market free for all". You want more innovation but a move to more laissez faire markets "worries" you? Are you serious?
"Mark, sure, but the reality is that there will always be employees out there that will sign on to contracts that effectively do give employers completely free reign in terminating the agreement, out of either desperation, ignorance, or carelessness (Ive certainly never once bothered to read every last paragraph of an employment contract, have you?)."
Yes, they will always be there and will be a very small majority which does not justify having less economic efficiency across the whole economy.
You should read everything you sign. I do. You are vilifying employers and free labour markets when you are that reckless with your own liabilities? The same thing could have happened to the guy who refused to work seven days a week. He might have agreed to it. How is it unfair to then dimsiss him (if that's what happened)?
NPOV - can you provide the link to the article linked to in comments to Ken's last post? (I've had a quick look myself but it's a long thread.) This is the article suggesting that more people think of becoming entrepreneurs in the US, but a smaller proportion go ahead and do it.
You don't need to convince me on patents. A move to a more laissez-faire market only concerns me wrt areas where regulation and tax and redistribution do provide a substantial net benefit. FWIW, I've no doubt I would substantially benefit personally from it, if I was happy to wrap myself up in a cocoon and not concern myself with the reality of life for those less fortunate than myself.
Allowing employers free reign to write up whatever employment contracts they want sounds to me like a recipe for employees only being sure of a reasonable employment terms once they hire a lawyer to go through their contracts with a fine-tooth comb. As it is now, I can confidently apply for any job I see in advertised, and not concern myself with whether I'm likely to wind up with an employer who thinks nothing of firing on a whim.
Hey, why even mandate that a contract must be written up at all? I could do with an assistant - perhaps I'll find someone that's happy to sleep in the garage and I can pay in grocery vouchers. Government doesn't need to know anything about it.
Nick, it's http://www.aaronsw.com/weblog/prostartup
The Mieses articles on Denmark and Sweden are fair and balanced. And I'm a monkey's uncle.
The one on Sweden begins thus.
Sure - and Kevin Rudd is my auntie.
Thanks guys.
I gave up at that point. And yes it's true, there was a brief breezy mention that life for the downtrodden in Swedish cities might be better than in Newark - but hey, what of it when you can toss off pearls like those from Ludwig and Murray.
Ken
My answers are (a) yes, (b) let policy setting be democratic for there is no general rule.
I dont particularly see it as laissez fair v socialism. I was just using them as shorthand examples of two ways of life. The former is what you are talking about: the individualistic, entrepreneurial, competitive, independent-negotiate-your-own-life, negative freedom, equal opportunity, procedural justice, materially optimistic, socially pessimistic (human nature bad), role identity. The latter is egalitarian, collective, cooperative, brother's keeper, interdependent, positive freedom, equal outcome, distributive justice, materially pessimistic, socially optimistic (h.n. good), social identity.
My point is they are each logically (and psychologically) coherent. The necessary middle path is not. Policy settings are collective whereas the essence (the ideal-type) of the innovative individualist is a war-lord. So in effect you are asking how we arrange things so that the collective gets the benefits of individualist innovation. The settings must be slack enough not to stifle the go-getters but tight enough to prevent descent into a Hobbesian free-for-all (well, laissez faire Enron robber-baronism). This is the third way and it is ad hoc.
For example, work-place regulations. I see no general principle for deciding them. Each issue has to be decided on its merits, case by case. Patricks comment at #27 illustrates the point as does NPOVs at #30: reasonably free rein as does much else in the comments. People argue back and forth but how to DECIDE? The way it is, we have the government of the day deciding and it has a built-in bias toward one of the two ways of life (not to mention other incentives). If such matters were to be put to a vote the public, who have to wear the consequences, would make the decision.
Observa
I wonder if it is possible to construct an economic Magna Carta or mission statement that would achieve majority support and which actually said something eg would prevent the largesse to Toyota. Social blueprints are the sort of thing that imperial or fascist governments develop. I shouldnt think there are any underlying tenets except that every citizen should have an equal say in making any tenets.
I suspect Ken agrees with the first part of my comment at 27, since he wrote it ;)
"The settings must be slack enough not to stifle the go-getters but tight enough to prevent descent into a Hobbesian free-for-all (well, laissez faire Enron robber-baronism). This is the third way and it is ad hoc."
I agree. Pirsig effectively says the same thing starting with this passage:
"Thats the whole thing: to obtain static and Dynamic Quality simultaneously. If you dont have the static patterns of scientific knowledge to build upon youre back with the caveman. But if you dont have the freedom to change those patterns youre blocked from any further growth.
You can see that where political institutions have improved throughout the centuries the improvement can usually be traced to a static-Dynamic combination: a king or constitution to preserve the static, and a parliament or jury that can act as a Dynamic eraser; a mechanism whereby new Dynamic insight can wipe out old static patterns without destroying the government itself. ..."
BTW, to see comment 27, you can type:
javascript:document.getElementsByTagName("ol")[0].childNodes[27-1].scrollIntoView();
(Hmm, that automatically converted the double-quotes to non-standard ones, so you can't copy and paste it into the address bar as is).
Back from work, sad to have missed out so far on an interesting conversation. To answer Ken's #10 question, I accept Hayek's point about entrepreneurial unplanned activity generally surpassing planned economic activity, in much the same way that I accept Marx's point about capitalism's tremendously creative force in the bourgeois stage. I'd also add; "of course". They're only "self-evident" as they pertain to economic activity, and this is what I am arguing about Pirsig's soap-slippery Quality; I don't accept the corollary that raw prosperity makes for a better society in itself. Prosperity for societies, like money for individuals, permits many more freedoms, but in the end those freedoms are always won through social struggle, not industrial work. Capitalism has produced a more comfortable society for us, and I agree conrad, for me, but what we and I want out of society is entirely bound up by our modernist expectations. Personally, I love the benefits of industrial capitalism, especially (ahem) my Japanese single-cylinder motorcycle, but I don't pretend that my way of looking at the world is universally human. In the past people defined their social Quality differently than we do, that's the whole point of Pirsig's reinvention of Zen for modern times. It's anti-anti-modernism, and there's a place for it, but there's little about it self-evident.
This argument of Pirsig's is historically determinist in the extreme, and it's this kind of prose I object to.
To further clarify:
I do regard them as such. When it comes to building a liveable rather than simply a rich society, however, I look not to entrepreneurs but to organisers and activists, whose focus is upon building social capital and securing "Quality" through struggle.
There's plenty of capitalism, innovation and entrepreneurship in Africa, but with few exceptions the place is a basket case. The role of good governance and social factors are downplayed be libertarian types but are obviously very important to economic success. I think good government has a symbiotic relationship with the market economy rather than a predatory relationship. The experience of the Nordic Model countries demonstrates that a symbiotic relationship can exist even when the size of government is much larger than it is in the Anglosphere.
Yep it's a veritable silicon valley.
Name one libertarian who thinks bad governance is a better choice. Good governance/small government and the rule of law are far more important than what's in the ground in terms of assisting in raising living standards.
"Two strongly libertarian articles which are actaully very fair and balanced:"
Remind me again of the floods of immigrants fleeing those Scandinavian hell holes for the totally free markets of Somalia and Afghanistan.
One of the biggest immigrant rushes of all time is Mexicans and other Latin Americans crossing into the US. But not because they're escaping their stifling over-regulated homelands. Quite the contrary. They want to get away from anarchy and the arbitrary rule of force and go to the nearest country where there's a coherent and stable Government offering a large, well-developed, expanding and fairly rigorously enforced system of laws and support systems that give you at least a fighting shot at not just surviving but flourishing.
In the western world, most people seem to tend to vote for a Government that will do more for them whereas classically pure Misean/Friedmanite policies seem to need dictators to impose them from above a la Pinochet. And even then the Government still hung onto Chile's main source of foreign exchange, the copper mines.
Y'know, not everyone wants to be a gung ho entrepreneur with a shapeshifting career portfolio living off their wits and devil take the hindmost. There are an awful lot of people out there who want a stable life where they can earn an honest living from and contribute to a decent and prosperous community that allows them to enjoy their life and raise a family with some comfort and security. And that takes massive amounts of hard-won consensus with many tradeoffs along the way.
It's hard not to think of a hard core libertarian as the bloke who said "fuck all this new-fangled and totally boring communal sowing and reaping shit, I'm off to personally kill me a woolly mammoth" and was next seen outlining an enormous footprint with his skin and hanks of hair.
If you want the benefits of living in a thriving first world economy in a globalised world then you have to accept it comes with certain restrictions too. It's the old rights vs responsibilities dichotomy again.
On the other hand. I understand you can make a real killing these days in the Somalian mobile phone provider market.
"But, but us libertarians do believe in government. We just want a smaller one."
In that case, you're not a true libertarian. You've accepted the underlying principles of how we live these days and are now just haggling over the price.
"You can see that where political institutions have improved throughout the centuries the improvement can usually be traced to a static-Dynamic combination: a king or constitution to preserve the static, and a parliament or jury that can act as a Dynamic eraser; a mechanism whereby new Dynamic insight can wipe out old static patterns without destroying the government itself."
Your old dialectician you. But yeah, you can't have creative destruction without something to destruct. Which in turn needs to built on something solid that can handle and keep evolving under all that constant bloody hammering and sawing and drilling.
And getting back to the original post, Pirsig's a a great example himself of what he's talking about. A few decades or so of being a mentally troubled vet and strolling academic, getting baked on pot and motorbike fumes, running riffs on friends in the wee small hours and he comes up with a product that would have generated enough royalties to buy the sole BMW dealership in Zazenland.
Funnily enough there is high number of young swedes leaving the country primarily because of high taxes.
I dont really think Mexican immigrants to the US leave Mexico for those reasons. The higher wage rate attracts them. Its the same with North Koreans trying to escape into that most libertarian nation of all: China.
Actually Mexico was extremely over-regulated although not as much as it once was. Up until the 90s it was basically a closed economy for all intents and purposes.
Freidman was asked to give advice on an economic model, which Pinochet adopted to some degree. Prior to that Chile was basically statist like the rest of Sth. Am. You cant honestly confuse free market/social liberalism with any dictatorship. If you know of one I would be happy to know which.
Its true that not everyone wants to be self-employed. But there is nothing to suggest LDP policies(for instance) would side with business or the consumer.
Why exactly are the restrictions?
Somalia is basically a lawless state that has nothing to do with libertarian philosophy. A healthy functioning society cannot operate without an efficient rule of law
Thats not true. Most libertarians would be happy to see the size of government shrunk to a much smaller level. Policies ought to be tested thoroughly for net benefit outcomes etc. There are anarcho-libertarians of course, but they are another kettle of lobsters.
The global history of immigration since WW2 is overwhelming a flight from chaotic and totalitarian environments to places of strong stable government where collectively endorsed decisions about the rule of law are always placed over the dictates of the market.
Anyway Joe, my comment wasn't aimed at you. You're a parent who has run operations that provided others with a livelihood. It was aimed at certain commentators who have apparently have never taken serious responsibility for anything bigger than their own spoilt egos. "I'm not getting what I deserve! It must be the system holding me back!"
"Most libertarians would be happy to see the size of government shrunk to a much smaller level."
What reasonable person doesn't? But so many disagree on where and how it should be shrunken.
And some aspects of Government should be expanded and made global. How about a truly global regime for licensing and quality checking key aviation services personnel from mechanics to air traffic controllers?
It's too late anyway. The countries that will thrive and prosper in the 21st century have to accept it's gonna take more rather than less transnational regulation to make it work. However the upside should be that regulations, proscriptions and laws based on culturally-specific social-sexual mores will eventually wither away under the slow motion tsunami of Western first world economic and soft power.
And anyway, we in the West have never been so rich and powerful. We seem to have got the balance generally right between the public and private sectors. Why change a winning game now?
Mark Hill gave excellent examples recently such as eliminating regressive taxes. Duties in imported cars, removing the 17.5% tariff on clothes..How about imposing a carbon tax with income tax trade offs, ensuring the labor market is flexible and eliminating the minimum wage to help the not chronic unemployed find and get a taste for work.
H
There shouldnt be any laws directing any social mores in terms of how we arrange our private lives.
There are still plenty of things to do in terms of improving our well being. Theres no reason we shouldnt be experiencing growth rates of 5% with a fully flexible economy.
This borders on the disingenous. It isn't really about changing the winning game, it is about keeping winning. The fact is we are constantly re-drawing that the parameters of that 'balance', both because
- we can surely do better (as JC suggested), and whilst that might not mean much to Nabokov,KP, JC, me or even anyone else here it means a lot to those who are currently on the margin of that 'balance', and
- the underlying facts keep changing.
Which I believe is why Ken is particularly interested in subjects like this:
and this:
and this:
And further interested in why no lefties seem able to just say that they agree with his original propositions re flexibility and innovation, although NPOV appears to implicitly endorse them.
Why would you think I'm not able to "just say that [I] agree wih [Ken's] original propositions re flexibility and innovation"? Here: "Yes, Ken is absolutely right that our social, economic and political organisation should be flexible and capable of encouraging innovation".
However, even criminals can be innovative. And innovation on its own is no guarantee that a nation can remain cohesive and that prosperity can be shared by all.
BTW, I have to say Nabakov's pronouncement "We seem to have got the balance generally right between the public and private sectors. Why change a winning game now" is pure conservatism in the traditional sense. It's certainly not a view I would subscribe to - though I do believe that privatisation and nationalisation needs to be carefully justified on a case-by-case basis, not because of some general principle that, e.g., "private is always better".
Okay. However if this is a discussion about entrepreneurialism and innovation it seems odd that you raised the topic of civil liberties and political freedom whilst bagging libertarians for being obsessed with economic freedoms. If you don't want to discuss civil liberties and political freedom then don't raise the topic. And if economic freedom is a negative obsession then I suppose your strong focus on entrepreneurialism/innovation is merely a bad habit. ;-)
In any case the focal point of your opening article would seem to be the question:-
Which is much broader than entrepreneurialism and innovation. How we organise and how we innovate are not quite the same thing.
"How we organise and how we innovate are not quite the same thing."
There isn't very much we could usefully talk about in terms of "how we innovate" AFAIK. There are certainly academic writings about different sorts of entrepreneurs and their psychological and other characteristics. I suppose you could talk about those if you want. But my intended purpose for the thread was to explore what sorts of regulation and other policy settings might be most conducive to innovation and entrepreneurial activity. That way the innovators/enterpreneurs can get on with what they do best, untroubled by unnecessary or inappropriate regulations and policy settings. Perhaps it's too wide a topic for people to want to engage with if couched in those terms. But then others seem to think there's no point in discussing it without also discussing social policies!!
"And further interested in why no lefties seem able to just say that they agree with his original propositions re flexibility and innovation ..."
In fairness, I think Liam did that. He then added the rider that he looks to governments to foster social capital, a proposition which I personally think is fair enough. Of course, the big problem in all this is that exactly what that implies may have huge impacts on the sort of flexible governance regime on which innovation thrives, just as small government flexible regulatory regimes might have severely adverse impacts on fairness/social capital development. The devil is inevitably in the detail, so perhaps there is fairly limited value in exploring whether and to what extent people agree on the broad proposition in the abstract.
For example, I raised earlier the suggestion that unlawful termination laws should be wound back and replaced by stronger social welfare/retraining safety nets for displaced workers. However I don't think we could just make it completely open slather on dismissal, because I also strongly believe that freedom of association (trade union membership) is an important right. The LDP also believes that (or says it does). However, if all employers could dismiss employees for any reason at any time without restriction and for any reason whatever, then it would be all too easy for employers who wanted to exclude unionism to sack any worker who joined/was a member of a union. There was some evidence that such things started occurring during the WorkChoices era. A liberty in a theoretical/Hohfeldian sense can only exist if others are forbidden to interfere with it, and liberty of association would not exist if others are legally free to penalise those who exercise that liberty. I haven't really got my head around how one could deregulate/simplify dismissal laws in the interests of promoting a flexible labour market where entrepreneurs/innovators are able to respond rapidly to the changing demands of the market, while also effectively protecting rights to trade union membership/freedom of association.
"However Im not going to permit this thread to be derailed by yet another interminable discussion about libertarianism."
Fair enough. But that will happen when you smack people down for their idiotic statements, "like Afghanistan was a free market under the Taliban because they had poor Governance". It is stupid, ignorant and deceitful.
It is amazing some of you think that permament 12% unemployment and 13% hidden unemployment is better than here or in the US. Or that such conditions encourage entrepreneurialism. Generational poverty encourages entrepreneurialism?
Damn, why did we "need" the intervention?
BTW libertarians are the only political group that supports free enterprise, so how are we not going to come up when even "centrists" are so eager to fire cheap shots and tacticly support a real unemployment rate of 25%?
Mark, show me the slightest evidence that, for instance, Norway has anything like 12% unemployment.
If Sweden is suffering high unemployment, then that's a problem for Sweden, not for strong social democracies in general.
"It is amazing some of you think that permanent 12% unemployment and 13% hidden unemployment is better than here or in the US. Or that such conditions encourage entrepreneurialism."
In fact the latest figures I could find on a quick Google show that Denmark has an unemployment rate of just 3.4% while Finland has a rate of just over 7%. Switzerland has a rate of 6.7% and Norway just 2.4%. So where did this 12% figure come from?
As for hidden unemployment, this very useful paper by Uwe Becker suggests that hidden unemployment may be higher in some Scandinavian countries than the European average, but concludes overall that the Scandinavian picture is indeed a positive one from employment and other perspectives.((Becker sees signs of hidden unemployment in high rates of sickies among public servants. Some Scandinavian countries have large, grossly inefficient public sectors where public servants take sickies at a significantly higher rate than other parts of Europe let alone the US. Thus they hide their unemployment in bullshit "make work" public sector jobs. I would under no circumstances advocate that Australia should emulate that part of the Scandinavian recipe/s, nor that we should adopt Scandinavian tax rates approaching 50% of GDP. I cite them only as evidence that somewhat higher tax takes are not necessarily of themselves inimical to innovation or entrepreneurial activity. In part it depends how you spend the money. Spending it on education, skills training and fostering R & D, allied with strong mutual obligation policies to deter malingering seems to correlate well with business firendliness, as The Economist studies show. ~ KP))
Indeed, from a business/entrepreneurial activity perspective, it's not just my assertion (or NPOV's) that conditions in at least some Scandinavian countries strongly favour entrepreneurial activity. The Economist newspaper's annual ratings of business friendly countries rates Denmark and Finland as no. 1 and 2 respectively for business friendliness:
It sort of did get derailed. The argument never ends; the internet is full of it. Its proponents are tireless and no one ever persuades the other side. Why? Because each side sees the logic of its argument, and that logic is coherent with myriad (predictable) views and lifestyle choices so that a change of mind involves changing not just politics but everything from one's friends to one's clothes, and because there exists no logical middle ground that could be agreed upon. Our mindsets (attitudes, tastes, worldviews) are discrete. If it is haggling over price (#49 Nabakov), the opposing calculations are far apart. The argument is in principle not resolvable.
#56 Terje: "How we organise and how we innovate are not quite the same thing." Indeed. To organise is to figure out the third way balance between the libertarian and the left (laissez faire and socialist, free market and govt service - whatever) and there is no principled, general resolution of the two so each issue must be resolved on its merits - and by fiat.
#57 KP: "my intended purpose for the thread was to explore what sorts of regulation and other policy settings might be most conducive to innovation and entrepreneurial activity." There just is no "sort". Each issue must be resolved on its merits and I was suggesting that democracy is the best way to do that.
Mike
I doubt that your democracy point gets us very far. Few voters have the faintest idea about the detail or even broad outline of regulatory or broader policy regimes, except perhaps the very few aspects that directly impinge on them. Nor do just about any voters have the faintest idea what other policy and regulatory choices the bureaucrats had available to them and what their consequences might have been. Those are the sorts of issue I'm aiming to find a way to explore, though perhaps this isn't the ideal forum for such a discussion. Nevertheless, these are issues that mostly concern "policy wonks", they're not ones that exercise voters' minds or on which they make their democratic choices.
I think it's potentially useful to have a discussion among policy wonks (which describes most of the readers of Troppo as far as I can tell) about the sorts of policy settings that would be most conducive to innovation and entrepreneurial activity without undermining "social capital". Certainly The Economist newspaper appears to think it's possible to iddentify and measure such policy settngs, and in fact does so across 82 countries each year.
If you mean simple majority rule then I think that's wrong as majority rule can end up going for a ride down shit street. It's only because of the self imposed limitations in our political sphere exhibited by both major parties that we haven't ended up there. The system that would offer stronger protection is a constitutional republic.
yes business taxes are low in some scandi countries. However it's pretty deplorable to have business taxes at 25-30% while personal income taxes are approaching 60%+. That's basically a form of corporatism.
btw, I wonder if everyone remembers that Kim Il Carr is currently conducting an
inquisitionenquiry intoproducing according to the planinnovation, of which clubtroppo's Nick Gruen is an expert member?Anyone think Kim-Il will endorse TQM?
This debate gets fairly detailed. Norway has a lot going for it. In short, they rely on oil revenues which fund a lot of inefficient jobs and generous benefits which lower worker productivity and growth rates. They also have the third lowest real disposable income in Western Europe.
The slightest evidence? Well I was referring to Sweden. When the proponents of democratic socialism are as unambiguous, so will be the criticisms.
"If Sweden is suffering high unemployment, then thats a problem for Sweden, not for strong social democracies in general."
No. It is a general problem. Denmark is like Sweden. Norway is the exception but has a freer labour market.
Norway exports more oil and gas except for Russia and Saudi Arabia. This constitiutes almost half of their exports and over one fifth of their GDP. The Government has direct ownership of oil assets.
They have a relatively free labour market in the region - but Denmark is actually better. They are lucky to have that oil and gas. But are they? Adjusted for real disposable incomes, the Nordics are the poorest in Western Europe.
Although the hidden rate of unemployment is higher than in Australia and the US, with a virtually identeical "real" unemployment rate. However, the benefits are not as generous as Sweden or Denmark. The Netherlands too changed their beenfits scheme as mounting cost pressures rose in the 1990s.
These nations all do have a lower long term trend in growth rates. The rate of worker productivity growth in Norway is very low. Employment growth growth in the Government sector for 1970-1999 was 3.5% and the public sector was 0.5%.
There is also underemployment, which puts the country at risk of high unemployment through labour market hysteresis. This and the high rate of hidden unemployment may be self reinforcing.
In short, it is unsustainable.
What do you mean "adjusted for real disposable incomes"?
People have been arguing that the situation in the Nordic countries has been "unsustainble" for decades. I'd argue just as strongly that Australia's current economy is "unsustainable". Indeed, other than returning to hunter & gatherer existence, probably no single economical model is sustainable - what matters is that we can change it to adapt to changing circumstances.
I'd also point out that if the growth rate of western European nations is slower than, say, Australia or the U.S., at least some of this has to be down to slower population growth rates.
You're not allowing for productivity gains in your assertion. Economic growth doesn't have to equal population growth otherwise we wouldn't have witnessed higher living standards for all.
"What do you mean adjusted for real disposable incomes?"
When you take out total taxes and inflation, this is the purchasing power of your take home wages. Their taxes buy them...lower real disposable wages.
"People have been arguing that the situation in the Nordic countries has been unsustainble for decades."
It is. Like Ken said, many people are employed in BS make work programmes. They subsidise unproductive work with productive work on a very large scale.
Australia does not do this any more to the degree that the Nordics do.
The unsustainability is evidenced by emigration and capital flight, not genuine foreign direct investment from these countries.
"Id also point out that if the growth rate of western European nations is slower than, say, Australia or the U.S., at least some of this has to be down to slower population growth rates."
If you have slower population growth, your capital labour ratio should be easier to maintain or increase. As this ratio grows, you get economic growth as real wages grow. But yet they are struggling with this whilst Australia and the US take on large numbers of migrants (and in the US case illegals).
According to "The Economist" the Nordic countries have unemployment rates below the European Union average and are actively seeking skilled employees from elsewhere due to severe labour shortages:
"The Finns and their Nordic neighbours have reason to worry. Figures from Eurostat show that unemployment in all the Nordic countries is well below the European Union average. In Denmark the seasonally adjusted jobless rate of around 2% is the lowest since the early 1970s. In Norway unemployment is also just over 2% (see chart).
With economies throughout the region expected to slow soon, low unemployment is not necessarily a bad thing. On the other hand, employers across the Nordic region are complaining of labour shortages and fretting about wage inflation and reduced export competitiveness.
The Swedish response has been the most radical: a proposal that will virtually guarantee entry to any non-EU worker with a job offer from a Swedish employer. Residence and employment permits, initially valid for two years, can be extended for an extra two, with the possibility of permanent status afterwards. The labour minister, Tobias Billstrom, says foreign workers are needed to counter a greying population and shrinking labour force. We've had a one-track immigration policy. The only way to get into Sweden since the 1970s has been as an asylum seeker, he notes. Norway has also simplified the rules. Previously, foreign workers faced weeks of waiting to have their papers processed. Now they can start work as soon as they have lodged their properly filled out applications."
http://www.economist.com/displayStory.cfm?story_id=10960117
I agree with Ken about not taking the social democratic model as far as the Nordic countries, but nonetheless the success of these economies is extremely important because it shatters the myths put out by the small government/ free market crowd.
Mark, ok fine - but how many things do Norwegians not have to pay for because they are provided (or heavily subsidised by) the State?
You claim this is evidenced by "capital flight", but the various commentators have consistently rated such countries as good places to invest.
And what are the actual stats on emigration? I would certainly expect, for instance, Norway to have more of its young professionals leaving long-term than Australia, given it's right next door to several other nations, and with a EU passport, leaving is generally straightforward. But where are they leaving to? And how does Norway compare with other nations with similar geopolitical advantages, but without the supposed imposition of big government quasi-socialism?
Mel;
There is magic formula there.
raise personal tax rates to 65% lower corporate taxes to 25% adopt free trade measures and in most cases allow pretty liberal labor hire/fire laws.
You left out this part:
Maybe keeping 35% of your Krona gets to be a little disappointing for some :-)
Perceptions? Immigrants to Denmark often have to live in Sweden so as to marry their Danish lovers! That would indeed be perceived as hostile, I think.
Ken #62 I doubt that your democracy point gets us very far. Few voters have the faintest idea
King John was of the same opinion at Runnymede. Expertise is fine but these decisions are not made on that basis but on a political basis. When the professors of politics or economics go to vote they dont all vote the same as they should if expertise were the driving force. Expertise may define the choices, and make them sensible, but the decision is made on the basis of personal bias. Hence it should be made by those who are affected.
I dont know how The Economist identifies and measures such settings but knowing The Economists leaning, I would expect there are plenty of people who dispute they are measuring it right or measuring the right things.
JC #63 If you mean simple majority rule then I think thats wrong as majority rule can end up going for a ride down shit street.
What I mean is set out in #22. You would have minority rule and you would see yourself in that minority, would you not? There is no evidence majority rule makes bad decisions. Quite the contrary.
Since Runnymede democracy has expanded. The result has been good unprecedented in human history. The country that most makes its decisions depend on popular vote is the first or second most prosperous country on earth.
That is the historical evidence. Yet people still go on thinking that it is a bad thing if people make decisions affecting their own lives. For some theoretical explanation, The Wisdom of Crowds is pretty good.
http://www.amazon.com/Wisdom-Crowds-James-Surowiecki/dp/0385721706/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1214972870&sr=8-1
Yes Mel and you are conflating.
Yes Norway and Denmark have very low unemployment - but they also have freer labour markets than we do. But they also have equal or higher hidden unemployment. You then go onto praise Sweden, which their peak union offical bemaoned for having 25% real unemployment.
"I agree with Ken about not taking the social democratic model as far as the Nordic countries, but nonetheless the success of these economies is extremely important because it shatters the myths put out by the small government/ free market crowd."
No it doesn't. The Nordic success (low official unemployment rates, high levels of technology transfer) have been attributed to predictable factors, like high levels of openness and some free labour markets. The failures of high taxes and subsidising uneconomic work (sluggish growth, high hidden unemployment and pitiful real incomes) have been predicted and observed as well.
So much for your "myth busting".
"Mark, ok fine - but how many things do Norwegians not have to pay for because they are provided (or heavily subsidised by) the State?"
Their real disposable income is 3rd lowest in Western Europe. This refers to purchasing power. This means it includes a measure of what the State "pays" for. This is because the disposable figure implictly includes a measure of how much they have paid for cradle to grave services.
"You claim this is evidenced by capital flight, but the various commentators have consistently rated such countries as good places to invest."
Maybe they have. Capital flight is real so you can remove the scare quotes. People from offshore don't stop investing - JC notes the silent practice of corporatism. The natives have left and moved headquarters or entire firms offshore. This is not the same as opening up a new subsidiary overseas. The taxes are sending their own firms overseas, never to come back.
Hillbilly,
The source of your "facts" is Mises.org which is the libertarian equivalent of CPA.org. Please provide reliable information rather than propaganda.
You are wrong. I haven't actually quoted Mises. I said that Mises was fair and balanced in providing an opinion that the Nordics (Denmark especially) has a lower standard ofliving and growth rate in what people expect. That's it.
I've quoted several other sources for reference, some off memory, none of these other sources being Mises.org - except for asserting a lower living standard, which is obvious if you look at electricity consumption or real disposable incomes and backed up by other sources.
Now take it back, because what you said is fallacious smearing.
I think the winner take all approach in some nations in South American puts paid to that thesis.
I would also suggest you ask how gay people felt about sodomy laws up until 15 odd years ago.
Thx NPOV. Interesting link.
"I think the winner take all approach in some nations in South American puts paid to that thesis."
I don't actually know what you are talking about but anything that depends on examples in South America it is a desperate argument. There isn't a respectable democracy among the lot of them. It is certainly not what I am talking about.
There have been thousands of referendums. Thousands. Can you show me some which led up "shit street"? Can you even produce any that were bad in some way?
You are a libertarian yet you think only some people should make the rules. How do you square that?
Incorrect, we should minimise the amount of rules we have and apply the rule of law.
Surely this is just a transition problem. Once you liberate the labour markets you get closer to full employment and the ability of employers to be selective in terms of third party associations becomes severely reduced. In fact you tend to see reductions in social exclusion when minimum wages and the like are removed. In the USA the employment rate amoungst young black males was near equal to that of young white males (all be it on a different average wage) in the era before minimum wages. Much the same was true of Australian aboriginies prior to the equal wage rulings. Disliking somebody because of their race is different to disliking somebody because of their involvement with a trade union but the principle remains that a strong labour market reduces the actualisation of prejudice and mitigates the form of the prejudice (ie lower wages for social outcasts instead of isolation for social outcasts).
In a truely liberal labour market I think there might be an interesting academic question about how much more employers would be willing and/or capable of paying non-union employees versus unionised employees. However the idea that your pay might be based on something other than pure merit should not shock anybody. People are paid differently because of lots of things such as their capacity to fit in with a corporate culture, their ability to work late when needed, their loyalty to the organisation and lots of other extraneous factors. Union membership is hardly likely to be the most significant factor except perhaps in industries where unions have proven to be a major obstacle to productivity.
I think I understand your concern about discrimination against unionists in a free labour market however I think it is an over rated concern and a misplaced one.
Mike - you may like the LDP position on citizen initiated referendums:-
http://ldp.org.au/federal/policies/Democracy.html
Personally I think the 2% threshold is a little two high. And I think voting on the initatives should be held over until the next general election. However I'm personally a big fan of the idea. I also have a cause on facebook that interested individuals can join:-
http://apps.facebook.com/causes/43536?m=6f503&recruiter_id=6758475
Terje
I'd join like a shot but when I went to the site I realised I had been there before and it is not my bag. It's intrusive. It wants my date of birth and it wants me to join "Facebook". Nup.
I agree 2% is a little high. If it is too high it tends to restrict signature gathering to highly organised groups. The Dems had it as policy but the parliamentarians never really pushed it did they? They never do. Have you read the Williams and Chin article on CIR in Australia? It's depressing. From it I count about 35 times that a CIR bill has been introduced into an Australian parliament - by both the major parties - but there is always some double shuffle and it gets shelved.
George Williams and Geraldine Chin, 2000, "Failure of CIR in..." Australian Journal of Political Science, Vol. 35, No. 1, pp. 2748. I can email it if you wish.
Yea. Prohibition would be one that comes to mind.
Well it's usually the first port of call when i want an example of what's bad with statism and crony economics. I was hihlighing what's bad with majoritarian rule and why a constitutional republic with effective safeguards against kneejerkism is far better.
i wouldn't say that. Chile isn't that bad. Mexico has been okish for the past 10 years or so. Columbia is doing ok under the circumstances. Even Brazil under Lulu is improving.
Hillbilly says:
"Now take it back, because what you said is fallacious smearing."
Sorry Hillbilly but the only links you provide above are to marxist.org, oops I mean't mises.org.
Please furnish evidence rather than slogans and propaganda.
"Prohibition would be one that comes to mind."
You mean the amendment to the US constitution prohibiting alcohol. Yes, it was a bad result. But there was no referendum. The legislatures did that. You know? That minority you trust to do the right thing? (There has never been a national referendum in the US.)
There have been thousands of referendums though. You say it leads up shit street. You don't have a single supporting case do you? The US states have a couple of dozen referendums every election. Switzerland has had over 500 national ones in the last 160 years along with heaven knows how many thousands in its 26 Cantons. You'd think that somewhere there must be a bad result.
But this is all ratty. As a so-called libertarian you want only some people to be free. You want a minority to rule but instead of offering some reasoned, PRINCIPLED justification of this twist on liberty, you want to say that the reason liberty should be limited is that beyond a certain point it doesn't work - and then you can't produce any evidence of its alleged failure to work.
Ratty.
Mike,
I would agree that there is too much pessimism about democracy. My personal view is that the failings of democracy that we do observe generally have more to do with the poor menu that the voters can choose from, and in some instance the poor system of voting, than a reflexing inclination on the part of voters towards choosing bad policy and/or bad laws.
Having said that I don't agree with using CIRs to initiate legislation. Instead I prefer to see the people hold a power of veto over legislation via a repeal process driven by CIRs.
Switzerland is a pretty terrific example of democracy working well. It also seems to have retained the best aspects of federalism.
You asked me for an example of a referendum that didn't work and I offered Prohibition as a pretty close/decent example. i very much doubt all those legislatures simply went against public opinion at the time.
But why the straw man about referendums anyway? It's not what i was discussing.
My argument is that simple majority rule with strong constitutional safeguards offers a better deal in terms of protecting individual rights than simple majority rule. Is it fool proof? Of course it isn't but it's certainly better than not having these safeguards.
And why are you asserting I have a problem with referendums anyway? I don't and never suggested otherwise.
If we had constitutional safeguards we most likely wouldn't have issues with free speech such as the Victorian attempt a few years ago as a legislature wouldn't dare attempt infringement so readily.
You channeling my dead grandmas too, mike? You think that's what I was saying? How extraordinary.
Great lateral thinking here.
Let me ask you, you think the rights of minorities should be safeguarded or should the majority opinion always prevail even when those rights look like theyre going to be trampled
"Sorry Hillbilly but the only links you provide above are to marxist.org, oops I meant mises.org.
Please furnish evidence rather than slogans and propaganda."
Steve is conflating again, while I linked to Mises, I used other evidence - namely official evidence most of the time, all publicly available produced by national or international agencies. He can look it up if he is so inclined.
Steve is also an ignorant commentator, Mises' student Hayek won the Nobel prize in economics whereas Marx's student Lenin advocated murdering the landholders. His equation is an attempt to spawn more ignorance. Only a fringe dwelling lunatic would make such a comparison.
JC #89: My argument is that simple majority rule with strong constitutional safeguards offers a better deal in terms of protecting individual rights than simple majority rule.
No. Your argument was in response to me and it was that majority rule can end up going for a ride down shit street and you claimed that the two major parties had saved us (#63). After I prodded you several times it turns out you can offer no support for this claim.
As for strong constitutional safeguards, this libertarian mantra would, presumably, be engraved in stone by God? I mean: if a majority (Im not sure what the adjective simple contributes) decides on safeguards, great. If they dont, they dont. That is all. If you are genuine about everyone being free YOU dont get to dictate any alleged safeguards.
This thread began with Ken Parish asking about optimal forms of social organisation. I said everyone should have an equal say in deciding that. KP suggested that expertise counted but I disagreed. Expertise is valuable and counts for nearly everything if you want to know, say, the effect of a wage rise on inflation. You build a model, you see how it compares with reality, you refine it, and then you apply it to reality in a predictive way. Expertise counts for a lot if you want to know, say, the effect of student-teacher ratio. But it is not everything because values enter and you need to say whether the effect is on grades, or career success, or divorce rate, or life expectancy all of which are matters of expertise but might give grounds for divergent policy recommendations.
When you want to know the sort of policy settings which would simultaneously maximise wealth-producing innovation and the public welfare, expertise counts for even less. This was the topic, was it not? I asserted there is no sort. I pointed out that there are two logically coherent ways of thinking (eg laissez faire v socialism) but here we seek the middle road and this is no general coherent way this can be logically worked out (#22, #40). The middle road is a political decision made on a case by case basis. It will consist of rules enforced by the coercive state.
Since the answer CANNOT be worked out expertly, I suggested that there is one proper way to make those rules: democratically. Ideally, every citizen should have a precisely equal say in making the rules. I pointed out that this is not only proper but is the most effective in terms of prosperity and offered history as evidence. Overwhelming evidence.
Terje #88 I dont agree with using CIRs to initiate legislation. Instead I prefer to see the people hold a power of veto over legislation via a repeal process driven by CIRs.
I tend to this opinion, too, however it should be something for the majority to decide. About 10 years ago, the Swiss knocked back a proposal to initiate legislation nationally. However they do it in all the cantons and in many US states. It could be better set up, but it has not caused catastrophe.
JC #89 asks whether I think the rights of minorities should be safeguarded or should the majority opinion always prevail even when those rights look like theyre going to be trampled.
If the majority establish safeguards, they establish them. If they dont, they dont. The alternative is to have some minority dream them up. For ten thousand years the MINORITY has oppressed minorities, not safeguarded them. When the (simple!) majority get to actually decide, has it ever oppressed any minority? JC, who wants to believe in this tyranny of the majority, cannot come up with a single instance. I note the contradiction of the doctrinaire individualist expressing concern for a minority which is, by definition, a group. I suspect that what really worries the libertarian about the majority deciding is that the majority would not endorse the libertarian program. Now that is a justified worry.
The alternative to a simple majority is actually a super-majority. For example a majority of states as with our referendums and as with Swiss national referendums. It seems not a bad idea but is it important? It has saved the minority from oppression on five occasions out of 44 in Australia. When I checked Switzerland a few years ago it had rescued the minority on eleven occasions out of over 500. You would have to look at the instances to know what frightful fate would have befallen them but it doesnt look like a simple majority would be a ride down shit street.
The evidence is all one way: a (simple) majority control would improve the quality of laws and maximise prosperity.