September, 2009

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Why Public Policies Fail

Tuesday, September 29th, 2009

I’ll try to answer your second question, Diana, but first we need to make it defensible; it’s simply untrue that “public policies cannot ever seem to achieve what they proclaim as their goal and instead seem to create the opposite effect or worse.” If that were true, we would live in a marvelous world. By creating policies designed to put more criminals on the street, to retard industry, or to cause war, I would solve the world’s problems.

In fact, even Bastiat would say we go too far if we claim that all public policies are doomed to fail. Bastiat believes that public policy is necessary to temper humankind’s self-interest:

Now since man is naturally inclined to avoid pain — and since labor is pain in itself — it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it. When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.

This, then, is Bastiat’s purpose of public policy: to make plunder more painful than labor. It is from this point that we can understand why public policies fail and how to make them succeed.

As Bastiat notes, humans will act for their perceived self-interest (not even “religion or morality can stop it”). This is the fact from which successful public policy begins. Unsuccessful public policy begins with the assumption that it is the strongest force in society.

If we are to build a successful public policy, then, we must realize that the ground1 of our system is greater than the law. It is true that the state has police power, and this leads many to think that the state is capable of great control; however, police power is itself dependent on a system of officers and incentives. Police power will fail if it goes against the ground (e.g., in the corrupt Brazilian police force). Why do the laws of Rio de Janeiro often fail? Because legislators think that they can control the system despite the ground. They pass a law with no thought as to what motivates the police force, and the law goes unenforced. This is failed public policy.

Successful public policy plans for self-interest and systemic forces. Our constitution works well partly because it was planned under the assumption that self-interest would drive the government. As James Madison said: “In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.” The obligation of which Madison speaks is the difference between successful and unsuccessful public policy. Successful public policy recognizes that it is simply words on a page; it must rely on the ground of the system to manipulate the system, and it must rely on the ground to manipulate the ground.

-Ben Siler

1. By “ground of the system,” I mean the material and ideal causes that give rise to human social and economic systems. For example, a materialist who describes the rise of democracy out of the means of production or an idealist who describes the rise of democracy out of the idea that all men are equal are both talking about the grounds of the system democracy.

Destruction of Choice

Tuesday, September 29th, 2009

The movie “A Day Without a Mexican” in connection with Bastiat truly opened my eyes to the “unseen.” In the movie “A Day Without a Mexican” the Arab talk show host cited a statistic that was particularly revealing. He says that roughly 3 billion dollars are spent on providing Mexican immigrants with welfare, while these immigrants produce over 90 billion in revenues. I don’t know if this is accurate, but it is a good example of Bastiat’s concept of the seen and unseen consequences of immigration: most tend to focus on how these immigrants “take and take,” but do not recognize the unseen profits they are creating.

This also reminded me of a part in the Selected Essays of Bastiat. On page 31, Bastiat is defending the effects of machines on industry. The complaint that he states people make is similar to the complaint that we hear in regard to immigration and foreign jobs in general. People constantly complain about India “stealing” our tech jobs, but this is simply the complaint of a group of lazy people! Bastiat states that “its actual effect is not to make jobs scarce, but to free men’s labor for other jobs.” Here is where we make the jump to public policy generally. In hearing that “our” people are losing their jobs to the “unjust” practices and wages of third world countries, legislators could react with a law that all call centers that want to serve the American people must hire only American citizens. Simultaneously, another legislator is concerned that America needs more “Green Jobs.” Therefore, he pushes laws through that mandate companies to create green jobs, or explore green technology. What have they accomplished? Their goals? Perhaps, but what happens when times change again? And what happens to the family in India that would have prospered from that call center job, or to the engineering student that was going to make a break through in “green” technology?

The lesson we learn is this, all the goals that the legislators were working for would have been accomplished without their meddling. In addition, the peoples’ free will, OR ability to CHOOSE would not have been robbed from them by one who obviously considers him or herself more intelligent then the people. Public policy fails when it destroys peoples’ rights that they never agreed to surrender to the government.

Just Fix It!

Tuesday, September 29th, 2009

Since reading Selected Essays on Political Economy, I cannot concentrate on anything without asking myself, “What is not seen in this situation?”. Although many of us (as well as legislators, politicians, voters, and the public in general) believe that we critically analyze situations before making a judgment, I think we often allow our personal biases to influence our perception of situations. It is natural that our backgrounds and beliefs influence our opinions about situations, but this can often result in individuals’ not being able to actually look at a situation objectively. I think biases play a large part in peoples’ opinions about immigration. This situation is different from many political situations in the sense that it is actually one where many people can see both sides of the “fence”, so to speak.

 As both the book and movie emphasized, there are many unseen consequences of not only immigration policy, but all policies. I believe the reason many public policies have unintended consequences is because we ignore “what is not seen”, specifically what is not seen for the future. Legislators and politicians are concerned with retaining their jobs and the result is often policies that address current problems without ever actually solving the problem and/or addressing the consequences of the current policy for the future. I am not going to start finger pointing and saying so and so does not keep their promises, because the fact is most, if not all, politicians make promises that they do not keep, even if they intend to (besides Randy, I am sure he keeps his promises). This is because in order to become elected and keep their office position, politicians must appeal to the people and most people are not reasonable enough to examine what a certain policy would entail. Many individuals simply want to hear that a particular situation will be taken care of, thus they believe promises that many people know are simply impossible or will take many years to fulfill. I am not one to place all the blame on the politician. I believe that if the people took the time to understand America’s system they may realize what polices can realistically be enacted or changed. The result of this entire situation is that in order to please the people, politicians run these public policies through that are focused only on the current issue (what can be done to calm the people down for a couple of years), rather than what is best in the long run.

Although the movie makes many of the unseen consequences of the immigration issue blatantly obvious, it does get the point across. There are also a slew of other “unseen” or “ignored” consequences that could come from any action or inaction on immigration policy, thus I am not sure it is possible to design a perfect solution to this policy “problem”.

Passivity

Tuesday, September 29th, 2009

I found it interesting Bastiat includes an inspection of democracy. He states that prospective legislators have an unlimited faith in mankind, making grandiose statements about the will of the general populous and their “native wisdom,” this is the seen. Bastiat then moves on to the “unseen.” “But once the legislator is elected and freed from his campaign promises, oh, then his language changes!” and the legislator miraculously transforms himself into an omnipotent being and “mankind has nothing to do but to let things be done to it; the hour of despotism has arrived.”

This sequence of events is seen all too routinely in the campaign, election, and actions of our own elected legislature, and further, in our executor. In one of the most publicized and monumental elections of this age, presidential candidate Barack Obama made many significant promises, including removing soldiers from Iraq, closing the Guantanamo Bay Detention Center, and ending wiretaps, just to name a few. These are the “seen.” Let us now venture into the “unseen.” After a bit of research, it seems as if the majority of the election winning promises made by the current President during his campaign are now either shunted to the sidelines or stalled.  Some, although not many, have been outright broken. It is incredible to me how Bastiat’s interpretation has proven true! It seems almost as if it is a self fulfilling prophecy that after the election the populous becomes passive and chooses not to scrutinize the behavior of their officials. The promises were seen, but the outcome of those promises are not seen, whether broken, fulfilled, or forgotten.

After making this analysis, I am still unsure where to place the blame. At the outset one might think, the elected should know that one must keep their promises, but unfortunately that may be giving them too much credit. The only place left to look is to those that elected them. Is it the elected that believe that mankind is passive, or is it electors that allows themselves to lapse into passivity?

-EM

The Good Economist

Tuesday, September 29th, 2009

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”(1)

I believe that the great majority of political discord in this country is caused principally by the tendency of political theorists to base their arguments on limited/selected effects (usually short-term) of the proposed legislation, and to dismiss (or often deny) the other (long-term) effects.

Why this happens is simple politics: a politician has a 2 to 6 year term, at which point he (or she) is up for re-election.  They want to be able to claim credit for the effectiveness of any legislation they enact, so they will almost inevitably value the short-term effects over the long-term effects (those are for another generation to worry about), and we get benefits at someone else’s expense.  Hence, the average politician “pursues small present good that will be followed by a great evil to come”.(1)

There was once a time when politicians had the unfortunate dichotomy of welfare and taxes: social programs are very popular, but they cost money – revenue is needed to pay for the programs, but high taxes are very unpopular…they had difficult decisions to make, but times have changed.  Bastiat gave the solution,  “after having drained the present, the state will devour the future.” (128)

What better way to have your cake and eat it too?  We get all the programs, none of the cost (someone will have to work to pay off the trillions in debt, but that’s someone elses problem) and the politician can show how benevolent and caring he or she is.  (We won’t mention that this method is technically taxation without representation, and is fundamentally against the constitution…)

Immigration policy is just one of many examples where this occurs – it’s popular to be a protectionist, but tighter legal immigration policies inevitably lead to a rise in illegal immigration, higher enforcement costs, more crime (because the illegals can’t technically be employed)…the full list of effects is way too long to go through, but it’s just another case where political rhetoric and “false philanthropy” wins out over facts and common sense (which turns out to be not that common, after all).

Just a couple random observations:

Of the books we have read so far, none have consumed as much of my highlighter ink as this one.  I can scarcely go a page without coming across a quote that merits a yellow strike-through.

The producers of “A Day Without a Mexican” must be ecstatic – I think the 20 copies of the movie that were purchased for Koch Scholars effectively doubled its total distribution.

Challenge question for Bastiat’s selected essays

Saturday, September 26th, 2009

“In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.”
– (F. Bastiat, Selected Essays on Political Economy, P. 1)

These first two sentences of Bastiat’s selected essays volume seem to set the tone not only the first essay, but for the rest of the book. Law intended to protect property turn into law that expropriate; legislation intended to create fraternity turns into legal plunder; the “champion of protectionism” posing as “destroyer of communism” disseminates “the theory and practice of communism” (p. 194); public education, intended to create unity among the population, creates “frightful moral disorder” (p. 292).

Applying this insight to the movie “A day without a Mexican” what are the seen and the unseen consequences of immigration policy? More generally, why is it, that public policies cannot ever seem to achieve what they proclaim as their goal and instead seem to create the opposite effect or worse?

Darwinian Conservatism

Thursday, September 24th, 2009

Last night’s discussion reminded me of a fascinating book by Larry Arnhart, Darwinian Conservatism. Larry is professor of puolitical philosophy, american government and biopolitical theory at Northern Illinois University. The google books link for the book is here. He also has a blog–Darwinian Conservatism. Here is a post from last week that addresses some of our conversations to this point in the semester:

“A major objection to my notion of Darwinian natural right is that Aristotelian natural right assumes an essentialist understanding of species that has been refuted by Darwinian evolutionary science.

My idea of natural right assumes that human beings exist as a distinct species or kind of animal with characteristic traits, which include natural desires that incline human beings to certain natural ends. I can then argue that whatever fulfills those ends of the human species constitutes the natural human good.”

Nature: A Motivator and Model

Wednesday, September 23rd, 2009

As I read Tropical Nature, my mind continually went back to the events leading up to the French Revolution (thanks to the French Revolution class I am currently taking). There was an Old Regime in disorder. It fostered resentment, cruelty, and immobility. As the Enlightenment swept across Europe, so to did the idea of Empiricism: the ability to rationally observe the order of the world and glean truth from it. This thought, however, was at odds with the current illogical system. Consequently, a movement arose that called for the Old Regime to either be reformed or eliminated. This eventually led to the French Revolution.

 

Ever since I read Leviathan by Thomas Hobbes, I have always disagreed that a social system led by the state of nature leads to a life that is “solitary, poor, nasty, brutish, and short.” I think the example of the French Revolution shows that people yearn to have the order and the beauty that they see in nature reflected in their social system. The key, however, is interpretation. Some (like Rousseau) may idealize a world in which people do not touch the natural at all, whereas, others may believe that people should take the structures of nature and use it to their advantage while keeping in harmony with the natural cycle of things. I tend to be of the second opinion. Overall, I think that the book Tropical Nature has shown me that it is best to let nature go its own way, while we as humans model ourselves after it and respectfully assert our role in it.

Welcome to the Jungle

Wednesday, September 23rd, 2009

Since the natural world runs independently of human interaction it is easy to view it as a simple repetition of reactions. However, this book is yet another reminder that the natural world is just as complicated as a humanly constructed one. Even the roots in the ground are described like a Roman battle ground with thin shoots filtering into a web from the proud pillar like trees. I believe this book was showing the similarities between nature and our free market. It is no wonder the cliché phrase “it’s a jungle out there” has been used so often when referring to the business world.

    We claim to be stepping out of the harsh uncivilized world, and that humans can set themselves apart from other creatures because of “rational thought”. But the free market uses the same drive and ‘winner takes all’ spirit that nature does. Humans are driven to get what they can even at the expense of those around them.

     However, according to this book, nature is not all harsh. Organisms, predator or prey are giving, exchanging and in a sense helping each other. It is this natural order that keeps the harmony of the wild going. I am not a business woman, and I don’t enjoy seeing the harshness of ‘a big dog takes all’ theory, but the idea that all decisions benefit the whole is a relieving thought.

A Wishful Fantasy

Wednesday, September 23rd, 2009

In Tropical Nature, the authors compare our own existence to that of the Matapalo, and makes an insightful argument. The Matapalo, which is guilty of killing other trees in the rain forest through a process of strangulation, also fosters an exquisite diversity of life after maturing. What does this say about life and its diversity, when it benefits so greatly on the demise of another organism? Can we learn anything about our own condition?

Although its life history is more blatantly aggressive than that of other trees, its end result is no different from the effect any competitor has on another. The tendency for life to saturate available resources makes almost every living thing a killer of sorts. When we look at the sad manifestations of our own Mathusian predicament, many of us decry competition and aggression, seeking refuge in ideas like ‘natural harmony’… But this is a wishful fantasy. There is more tangible sense of hopefulness in seeing the matapalos of the world and marveling a the manifold ways in which the living take life from death.

This passage reveals and interesting idea which may challenge preconceptions. Is the “harmony” that we so desire, a state which rejects competition and aggression, really just an illusion?

Secondly, is it possible that we have a completely distorted view of the harmony which nature exhibits? Perhaps our idea that a life in adherence to this harmony is “nasty, brutish, and short,” requires a reevaluation.

Tropical Nature describes a number of complex relationships between species which incorporate both self-interest and cooperation. And undoubtedly, it is difficult not to draw parallels to our own state of affairs as humans.

Chapter six of Tropical Nature appropriately bears the title, “Listen to the Flowers.” Throughout this chapter, the reproductive habits of flowering plants are discussed. We learn that most flowers in the rain forest are reluctant to rely on the winds for pollination, as this can prove to be both inefficient and limiting to the plant’s diversity. Instead, most flowering plants depend on the enticement and attraction of “mobile animals,” and through such mechanisms, compel these pollinators to deal specifically with plants of the same species.

What results is a fascinating state of natural capitalism, which combines self-interest and cooperation to ensure survival and produce a diversity of life. Flowers in the rain forest develop ways to appeal to a variety of organisms: colorful flowers attract birds, and red and orange flowers find particular success among butterflies, some flowers develop “roosts” to facilitate the access of bats and other mammalian pollinators, many flowers discover ways to invite certain organisms to the table, while preventing others, and most interestingly, some flowers actually mimic the mating habits of their pollinators as to ensure success.

The product of such a harmony is a highly diverse and specialized ecosystem, which benefits generally from the self-interest of its residents. Whereas life devoid of cooperation may indeed be “nasty, brutish, and short,” a life which relies upon the harmony of nature, where self-interest inevitably creates cooperation, is one of richness and diversity.

Why, therefore, do we scowl at the existence of competition and aggression in our own society, when nature has proven that such qualities not only ensure survival, but enhance the quality thereof? For a state opposite to that of natural harmony is nothing more than a ‘wishful fantasy.’

– Marc