Thursday, October 28, 2010

Disaster is not left to chance

New Jovian Thunderbolt muses on Keynesian economics as a cargo cult, which got me thinking about the incompetence of our "elites".  That incompetence is both practically and theoretically demonstrable, and the elites are ignorant to this sad fact.

First, let's deal with the practical aspect.  The Elites claim the privilege of social and economic planning, due to their education and intelligence.  So let's think about planning: imagine that you're the very first city planner.  This is thousands of years ago, before anyone had thought of it before.  You think up a Cartesian grid layout for your city, with numbered streets going north-south, and lettered avenues going east-west.  Now anybody can find any location, with just an address.  This is a huge win.

OK, imagine that you're the second city planner.  The grid pattern has already been created.  What do you do?  Maybe diagonal grand avenues like in Paris or Washington DC, but this isn't as helpful as the grid pattern.  Now imagine that you're the 426th city planner.  What can you do that compares with what's come before?

The big gains are always at the beginning.  Always. Keynes' heyday was the 1930s and 1940s.  It was a LOT easier to find productive infrastructure projects back then that made a visible difference:
  • The TVA and other hydro-electric and water management  projects (like the Hoover and Grand Coolee dams)
  • Rural electrification
  • The Interstate Highway system
You could probably go pure libertarian and say that the gubmint shouldn't have done any of these, but at least at the end of these "shovel ready" projects we had some great hydro power, super highway, and electric lighting infrastructure.  As Mythbusters would say about 1930s Keynesianism, "plausible".

Fast forward to now (or to 1972 and Nixon's "we're all keynsians now").  Name me a project that would match Hoover and Grand Coolee, that the EPA and enviro whackos would let start.  Diminishing returns, anyone?

And so you get the Big Dig - a $2 Billion tunnel project that ends up costing $14 Billion and kills people.  But Nobel Laureate Paul Krugman says the stimulus was too small.

And thus we're at the Q.E.D. point on the practical demonstration of the Elite's incompetence.  Ah, they say, the necessity of elite planning is justified by theory.  Look at the Enlightenment philosophers, they say.  Rousseau spoke eloquently of the need for the elite.

As did Marx, Lenin, Trotsky, Nietzsche, Mussolini, and Hitler.  How'd that work out?  But none of these were original thinkers, in our city-planner sense.  All spring from the intellectual tree that has Plato at its root.  Plato was the first to state that society should be ruled by Philosopher-Kings (that seductive flattery to academics everywhere).  He laid out the structure of this in The Republic, which survived from antiquity due to its great influence.

This theoretical justification used by the elites, though, was demonstrably wrong.  Bertrand Russell wrote of this in his A History of Western Philosophy (Allen and Unwin, 1946, p. 114):
To understand Plato, and indeed many later philosophers, it is necessary to know something of Sparta.  Sparta had a double effect on Greek thought: through the reality, and through the myth.  Each is important.  The reality enabled the Spartans to defeat Athens in war; the myth influenced Plato's political theory, and that of countless writers.
Plato based the governmental structures of The Republic on the system of Sparta.  This was a brutal, rigid system, perhaps more easily recognized in a time when National Socialism had just been defeated in a terrible war, and a new Cold War was breaking out with International Socialism.  But Sparta was already collapsing when Plato wrote, and he was ignorant of or ignored the work of contemporaries that saw the Spartan system more clearly.  Plato was wrong.  Russell again (p. 118-119)
Apart from war, the reality of Sparta was never quite the same as the theory.  Herodotus, who lived in its great period, remarks, surprisingly, that no Spartan could resist a bribe.  This was in spite of the fact that contempt for riches and love of the simple life was one of the main things inculcated in Spartan education. ... We ar told that the Spartans were inflexibly patriotic, yet the king Pausanias, the victor of Platea, ended as a traitor in the pay of Xerxes.

[Aristotle] goes on to accuse the Spartans of avarice, which he attributes to the unequal distribution of property.
Let's see, a grand theoretical foundation of centralized, elite rule, justified by equality and fairness, but based on a romanticized system that fell apart during Plato's own lifetime.  That's the theoretical basis for the elite's claim to power.

The punch line, of course, is that those in the elite are almost certainly ignorant of all this.  Somehow, after all that time consuming and expensive education, this fact (which was well known to intellectuals fifty years ago) was left out.

But couldn't, argue the Elites, Plato's system work?  If you got the Right Sort of People to do it?

Because and Elite must find a use for itself, worthy of its own elevated sense of worth.  The answer is necessary, but brutal:

Couldn't the circle be squared?  Not by you.

Couldn't lead be transmuted into gold?  Not by you.

Couldn't a Progressive Utopia be implemented if you got the Right Sort of People to run it?  Not by you.

Their ignorance of both the practical and theoretical emptiness behind their theory is the really damning thing.  That ignorance is self imposed: seduced by the flattering thought that they are the very image of Philosopher Kings, they simply don't look at some (critically important) things that might dim the luster of that beautiful vision.

If it's true - as I believe - that the first responsibility of a true intellectual is to challenge your own first premise beliefs, then they fail miserably.  Some intellectual "elite".  Megan Mcardle says it differently, but it's the same thing:
Elites are often missing crucial knowledge, and unaware of it.  In some ways, that effect is more pronounced than it used to be, with more and more of the elites drawn from a narrow class of extremely well-educated people from a handful of metropolitan areas, few of whom have ever, say, been responsible for a profit and loss statement, or tried to bring a gas station into compliance with local and federal EPA regulations.  In a world where your primary output is words, it is easy to imagine a smoothly operating process based on really smart rule-making.
And so, back to Keynes.  There's a use for planning, but the early gains are always the greatest.  We've passed that point, and are now seeing the wasteful, destructive effects overwhelm any benefit.  As with the trillion dollar "stimulus" that didn't stimulate, our planners choose not to see that they are living proof of the old saying: Enough layers of management ensure that disaster is not left to chance.

6 comments:

Boat Guy said...

We've LONG SINCE passed the point of utility of the Keynesian theory - if indeed, it ever really existed.
The self-proclaimed "elites" are merely half "educated" dilettantes gambling with OUR money

Toaster 802 said...

I had this story up from Pajama media, but linked to your good Xtra large sizing of the topic in a awesome way. Nice post!

Cargo cult 08!

DirtCrashr said...

Cargo Cult! 426th planner build giant bamboo airplane in honor of the God-King Keynes!

New Jovian Thunderbolt said...

Yay! I got BorePatch to devote some intellectual cycles. Good, good.

New Jovian Thunderbolt said...

Think that Keynesians KNOW they lack a big project, like TVA or the Interstate System, and they cast around looking for one. What they come up is something like an underground carbon sequestering scheme. Unlimited amounts of money can be spent on that. It has the added benefit of having Keynesian "bury money in the ground in jars" thought exercise. The problem is, after you spend a trillion on that, what do you have? Nothing positive. They can only point to "the Urf didn't warm up, yay!" And we know already the dubiousness of that.

But that's all they have.

DirtCrashr said...

There's people (WWF) branching out on that bury jars of money thing, but they are thinking REALLY BIG and call it 'ecosystem services' in view of a cost-analysis to "identify the financial value of natural resources" - and they want to:

Regulating Pollination
Regulating Biological Control
Habitats for Species
Habitats for Genetic Diversity
Cultural Service: Recreation
Cultural Service: Tourism
Cultural Service: Aesthetic appreciation
Cultural Service: Spiritual Experience
Provisioning Food
Provisioning Raw Materials
Provisioning Fresh Water
Provisioning Medicinal Resources
Regulating Local Climate
Regulating Carbon Sequestration
Regulating Extreme Events
Regulating Waste Water Treatment
Regulating Soil Erosion and Fertility

It's almost like they believe in terraforming, but right here.