Neoliberalism vs. Socialism

Scott Sumner is frustrated.

The is no plausible argument that Hong Kong’s success is in any way a success story for statism, and there is no plausible argument that Greece’s failure has anything to do with neoliberalism. To suggest otherwise is to engage in The Big Lie. So what does this mean?

Read the whole thing.

Let me try, in a somewhat charitable way, to express what I believe is the mindset of the left.

1. Start with the assumption that there is a science of government. I need to credit Jeffrey Friedman with influencing me to articulate this assumption. Note that everyone uses the term “social science,” even though Jeffrey and I would argue vehemently that economics, sociology, et al, are not sciences.

2. If there is a science of government, then there is no reason to tolerate market failure. Since market failure is widespread, government intervention should be widespread.

3. If there is a science of government, then government failure is avoidable. Government failure only results from leaders not heeding the scientists.

4. If there is a science of government, and people on the right believe in markets, then they must believe that markets are perfect. They are clearly wrong about this.

According to this scheme, the key to intellectually overcoming the left is to get people to concede that there is no science of government. And in particular, it means taking economics down a peg. That is what Jeffrey is trying to do with his next book, and it is what I try to do in the book that will be out later this month.

37 thoughts on “Neoliberalism vs. Socialism

  1. When I suggested to Scott that I thought Singapore was an example of a fairly libertarian country I got rebuked. Didn’t I know it was a statist hellhole? Now Hong Kong, a similar country, is a vibrant example of libertarian success apparently.

    I mean, Singapore (and Hong Kong) have massive government regulation of their healthcare system (which is also universal healthcare, ugh!). I thought the fact that managed to create universal healthcare of such a quality people from all over South Asia went there for care and did it on 3% of GDP was astonishing, but I didn’t realize I had tripped over libertarian ideology.

    You could say similar things about a lot of their economy, government is involved in many ways we would consider heavy handed statism over here in the USA. However, it tends to work out well though. And in the areas that government wouldn’t do well, they know enough to leave it alone. Hence the overall low level of taxes and lack of regulation in many sectors. It’s almost like there is a science to government, or at least an art, and they are getting it right over there.

    But hey, they are just boring Asians that practically worship pragmatism and evidence based decision making instead of some flaky ideology that is so rigid it can’t point to a single country in the world that represents it. Also, they don’t have OPEN BORDERS, and LKY was a RACIST! Clearly unacceptable.

    I didn’t realize that if the government is involved in any way, it must be a clusterfuck, QED. No other critical thought need apply. Libertarianism.

    • Doesn’t Singapore have one of the highest open border policies in the world and several times higher than the US? They have very open borders unlike most other far East Asian nations.

      Secondly, isn’t the libertarian great concern of the weight of government debt going to hit Japan before any other developed nation with falling and aging populations?

      • Singapore has a two tier immigration system. One for high IQ professionals and one for “fruit pickers” and other low human capital immigrants. The former is loose and tries to attract the best. The latter is tightly controlled and regulated.

        The opening of this video best sums up LKYs view:
        https://www.youtube.com/watch?v=e8rPofi-AUw

        LKY is also worried about Japan, but notes that while Singapore is small enough to steal away high IQ people from around the world to keep it going, Japan is much larger. There may not be enough high IQ people to make a difference in Japan. And accepting low IQ immigrants will hurt rather then help the situation. It’s a tough conundrum, they need to increase the fertility rate, but it may be impossible to increase the fertility rate in such an urbanized and crowded Asian country as Japan. Nobody has has figured out how.

        • Looking back in the last 37 years, I find the Japanese story and potential fall more interesting than the fall of the Soviet Empire. I remember the days of Japan Inc. with massive growth leading into the the great lost decades. (The greatest statement I ever heard from 1993 \ Econo Professors was Japan was going to struggle with low wage labor supply with such a low birth.)

          In reading Arnold Kling, I reading more on PSST but in the long run the ever changing PSST economy is also making workers less willing or able to have children. (Tyler Cowen noted India might be below replacement fertility level…India!) However, with less population, robust economic growth is impossible.

  2. “Social Sciences” is certainly a problematic term and “Political Science” is a term filled with irony.

    Even so, it is a false dichotomy to regard the “Social Sciences” as simply either scientific or unscientific. We should think of scientificness (to coin an awkward term) as existing on a spectrum. Even the hard sciences often fall short of scientific ideals.

    The Social Sciences aspire to become relatively more scientific and that’s a good thing. The things that Economics can teach us about the effects of supply and demand on price are reasonably scientific. They make very reliable predictions.

    Macroeconomic predictions are much harder and much less scientific. This should not surprise anyone. Chemists can make very reliable predictions. Biologists make much less reliable predictions about whole organisms because there is so much more complexity.

    • Edward O. Wilson’s book _Consilience_ is worth reading (or re-reading) on this topic.

      I’m sure others have written on it, too. But there are some pages in Consilience (1998?) that bear careful pondering.

  3. I like the part about “taking economics down a peg.” Nathan Glazer and most of the original neo-cons and friends (James Q. Wilson, Daniel Patrick Moynihan, Edward Banfield) had that same approach.

    I recently finished reading Godfrey Hodgson’s biography of Daniel Patrick Moynihan (Title: _The gentleman from New York_). The book discusses the idea, fashionable in the 1960s, that

    1. First social problems are identified

    2. Next, the social science expert investigates the problem, makes a diagnosis and produces a policy

    3. Finally, the policy is implemented and the problem goes away (or is greatly ameliorated).

    obviously it didn’t quite work that way. But if it could work out that way, social scientists would be our temple priests.

    • “obviously it didn’t quite work that way. But if it could work out that way, social scientists would be our temple priests.”

      Universities and professors fill social roles not unlike temples and priests, regardless of whether or not their theories are true or their policy recommendations solve real problems.

  4. “There is a science of government” sounded very Straussian to me, so I looked up Jeffrey Friedman and sure enough, he works in the Straussian UofTexas polisci dept.

  5. Based on my experience, the mindset of most of those on the left isn’t nearly so intellectual. It is more along the lines of:

    – Poor people need food, housing, medical care, etc. Government can give them these things. Therefore government should give them these things.

    – Higher rent would be a hardship for many people. Government can stop landlords from raising rents. Therefore government should control rents.

    – Student debt is a problem. If higher education were free, the problem of student debt would go away. Therefore government should pay for higher education.

    – Many people are shot with guns. If there were no guns no one would be shot. Therefore the government should prohibit the possession of guns.

    – A lot of people would be better off if they made at least $15 an hour. Therefore government should require employers to pay at least $15 per hour.

    People might agree that there is no “science of government” but still support all of the above. There is no question that government could do all of these things. The problem with the leftist mindset is that it refuses to acknowledge unpleasant trade-offs.

  6. I see the argument, but don’t quite see how it applies to Summer’s point about Greece. From the science-of-government position, Greece would be a failure of #3 (Greek government not properly heeding scientists), not of #2 (Greek government being misled by neo-liberalism into making the ‘mistake’ of non-intervention). So even from the science-of-government position, the idea that Greece was brought low by neo-liberalism would still be a ‘big lie’, no?

  7. If you really want to know what leftists think about social problems and their solution, you could actually gather some data. This is an empirical project. First, select a reasonably representative sample of willing leftists. (I’m willing, but I don’t whether I represent more than my idiosyncratic self.) Second, employ an appropriate methodology to distill their underlying conceptual structure. Third, put the results before reviewers and readers that include leftists and get feedback.

    As to what methodology is appropriate, I’d suggest “structure-laying”, since this is a hermeneutic problem. If you go lower-tech with survey methods, be sure to include lots of sensitivity about wording etc.

    This is assuming you want to know whether there’s empirical support for your hypothesis. You’re no doubt aware of the literature on conservatism and authoritarianism, which has a much simpler hypothesis but does, to its credit, use empirical methods. I’d warmly welcome critical empirically-based research on the left — we need it.

  8. Maybe, a different way of looking from the neoliberal left, is the economic and political systems are not mutually exclusive. The decisions made in one sphere has consequences in the other sphere.

    Look at the success of Donald Trump nomination run in 2016. Basic Trump nationalism policies is not new and looks a lot Pat Buchanan or Ross Perot’s runs in 1992 or 1996. (But with a great attack Twitter feed!) The biggest voices against immigration and free trade were not the left but the social conservatives that felt the economic elite were using the political elite to keep working class wages down and long term weakening religious institutions. (Even moderate Ross Douthat has argued these points.) There is a significant portion of the Republican that would still vote for Buchanan in 2016.
    Notice the huge Republican negative reaction to the Merkel’s policy to Middle East refugees, in which they blame the diminished role of religion in Europe leading to low birth rates and allowing too many immigrants to the EU.

    Also, can we get off the Venezuela media blame game? We have a small nation in the South America greatly failing while the US media that is in the middle a major Presidential election. Brazil is failing as well and I remember several times when they were the great new economy to business leaders 10 years ago.

    • “Social conservatives”

      My kingdom for someone who uses this term in a manner that indicates they have any d*mn idea what it means.

      • Social Conservatives – A religious voter that places more value on social issue (family, church, abortion, etc) then on economic or foreign issue. They would like their state (not necessarily Federal Government) to have more control on their population behavior which will improve society. They completely distrust HRC neoliberalism but have some mistrust for the economic elite as well. (Which has grown since the Housing crash and TARP.)

  9. Most Dems certainly have faith in Big Gov’t solutions to specific problems, whether they would phrase it as a science of gov’t or not.

    The success of Sweden/ Scandinavian “models” allows plausibility of the latest big gov’t scheme.

    On #4, most Dems don’t need “science of gov’t”, merely: problem, good-intentioned gov’t solution, Reps who claim this gov’t solution won’t work don’t want to solve the problem, Reps are evil.

    The emotional drive is actually moral superiority, and a desire to believe that Reps who disagree with them are evil (even for the atheists).

  10. Well Sumner certainly can’t make that argument. He’s very much of the belief that there is a “science of government” in the sense you mean your term.

  11. Moldbug termed the ideological belief in scientific government – and thus rule by professional experts enlightened in, or guided by, the latest ‘science’ – ‘Mandarinism’.

    Once one recognizes it as a valid conceptual category that maps well to a real world phenomena and a set of pervasive systems of beliefs and attitudes, then one can recognize it as a common source of many contemporary frustrations.

    • I think I just got it. They don’t care about science, except that it is another way to disenfranchise the opposition.

      • That’s not quite right. They believe reality has a liberal bias, and they are in the reality-based community. By definition, there is no daylight between progressive beliefs, potentially omnicompetent rational government, and ‘good science’. Anything else is this ‘bad science’, at best.

        • Why refer to the Left’s biases as “liberal”? Their interest in liberty, it seems, does not go beyond “liberty” in the choice of sex partners and bathrooms.

          • The term was unrectified a long time ago. People have been trying to re-rectify it for a century. No dice. You go to war with the corrupted lexicon you have.

          • The Europeans don’t use “liberal” as a synonym for “leftist,” and I don’t see why we have to continue doing so, just because the word has been misused in this way for so long.

  12. “According to this scheme, the key to intellectually overcoming the left is to get people to concede that there is no science of government.”

    If you’re trying to persuade the average contemporary virtue-signaling, college-educated, professional, metropolitan American of this — good luck. I don’t think you’re going to get very far.

    • Just repackage it as failing fast, accountability, responsive, customer focused, data aware, participatory, horizontal, open source government.

  13. Am I to assume the right, libertarian right anyway, believes

    1. Markets have no need of governments.

    2. Governments aren’t markets and suffer from government failures.

    3. Government can only can only make things worse, so

    4. Markets are the best of all possible worlds under all circumstances and all flaws.

    I doubt many conservatives would agree.

  14. I think the starter is wrong. I would say that leftists see collective will as a legitimate phenomenon, and government its best possible expression or embodiment. Markets don’t embody a collective will because they appear chaotic, rapacious, ignoble. Government is collective and noble, and therefore inherently superior to markets. Because collective will is real, overt intent matters, and it matters more than the emergent process of a market under basic legal constraints. I think going down the road of science is too generous for understanding the ideological mind.

    To me this explains not just the leftist belief in government, but leftist hostility to evaluating the real outcomes of policies (because the results might defy intent) [the right is against this too, usually]. It explains the preference for hiring armies of bureaucrats to “do something” rather than just flipping a computer switch that sends checks to the poor, and so on.

    • Leftists “see collective will as a legitimate phenomenon, and government as its best possible expression” – except when they the collective will turns in a direction they don’t like. In other words, the “will” to which Leftists give their allegiance is their own, which they seek, with increasing success, to impose on the rest of society through their control of key institutions.

    • I think this hits the nail on the head. #2 (“If there is a science of government, then there is no reason to tolerate market failure. …”) makes sense only with an additional assumption that there is some “we” who can do this tolerating and not-tolerating.

      Nearly everyone will, at times, repeat Rousseau’s mistake of beleiving in some “General Will”. Those on the right have counterbalancing mental habits, whereas modern lefists talk like thoroughgoing Rousseaueans.

      Even the ones who intellectually know the General Will is incoherent, reinvent unconciously and are constantly saying things like “we should do X because it is obviously rational”.

      • A better summary of my original comment would be “Markets embody appetite, government embodies intent. Which side are you on?” If you’re concerned with labeling certain outcomes as “just”, it is intuitively difficult to imagine that emerging from spontaneous interaction, rather than from intent.

    • Excellent Comment.

      I don’t necessarily think it’s a binary left/right divide over believe in popular will/markets, which some might claim as a strawman against your argument– e.g. “well, but, here is X example of the Right leveraging democracy to cram their favored policity”– but the ideological loci of the 2 sides are far enough apart for this difference in mindset to still explain a lot of behavior we observe.

  15. I don’t think that “science of government” is the right way to describe progressives’ framework. A “scientific” approach to government would likely produce objective, non-discretionary, precisely-stated, unambiguous principles and rules, and progressives seem to favor *discretionary* policy making by experts (that purportedly understand the “science of government”). For example, conservatives such as John Taylor, John Cochrane, and Scott Sumner favor rules-based monetary policy, while I have not heard many progressives argue against discretionary monetary policy. Although we associate Big Government with lots of rules, the regulatory state that progressives create actually empowers regulatory agencies with broad discretion to make, implement, and change rules. Progressive legal theory revolves around a Living Constitution, i.e., one in which judges’ discretion is unconstrained by plain text as it was understood by the people that wrote the text. It’s not even clear that progressives are skeptical of markets per se so much as they dislike the non-discretionary market rule — let people do whatever they want so long as it’s voluntary — which leaves little room for discretionary tinkering. This description is not deliberately uncharitable; even progressive Ezra Klein describes conservatives as thinking in terms of principles and ideology while progressives think in terms of advancing various groups’ interests [http://www.vox.com/2014/9/15/6131919/democrats-and-republicans-really-are-different]. In short, progressives advance Rule of Man rather than (inherently non-discretionary) Rule of Law.

    If economics were knocked down a peg, I don’t believe the Left’s response would be to become more humble in the application of government science. Instead, they would argue that discretion should be shifted away from economists to other social scientists. Rule of Man thinking calls for changing the Man in charge, not principles. One might view behavioral economics and policy “nudges” as a case study. When evidence emerged that purportedly contradicted classical economic theories, progressives’ faith in social science did not falter. Instead, they merely empowered behavioral economists and psychologists with discretion to construct “nudges”, i.e., changed the Man from classical economists to someone else.

    Overcoming the Left requires getting the Left to think about Republican-dominated government whenever discussing the proper powers of government, to get them to attach a higher probability to the outcome that the Man will be someone they really dislike.

  16. Many good comments have been generated from this post.

    I agree with many above that there isn’t a “science of government”–that can express some General Will.

    But isn’t there a science of administration, or a science of political rule? This would including knowledge of budgeting and financial controls. It’s just that those things don’t automatically result in good policies.

    I think part of the squishy, vague, nebulous, fuzzy thinking on “using government to improve things” arises from this confusion.

    Governments know how to tax citizens/subjects and spend the money on programs or policies, including but not limited to transfer payments. The problem is in the political economy of unintended consequences, mission creep, ratchets in public spending, adverse incentives, “regulatory capture,” narrow interests that are well-organized, rent-seeking behavior, etc.

    We do have knowledge about how to do certain things with government–it’s just that it’s very difficult to do good things rather than bad things. It’s not technically difficult to create budgets or build roads or maintain a standing army with professional officers. It’s just politically near-impossible to avoid traps, creep, rent seeking, etc.

    Laissez faire and small government is often intellectually defendable on a historical basis simply because so many well intentioned efforts don’t produce their intended results.

    The above paragraph is different from saying there is no “science of government.”

    Perhaps this is a semantic distinction, but it’s deeper. Perhaps we have Knowledge but not Science?

    Also, a lot of our Knowledge is not “how to do what we want.” A lot of our Knowledge is “We said we were trying to do X, and instead what we ended up with was Y.”

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