An understanding of my political and economic beliefs may help the reader better understand the subjects I choose to write about and the conclusions I reach. Central to these beliefs is that false economics has enabled and created many of the political problems that now plague this country.
My political and economic philosophy rests on maximum freedom. This philosophy is based on theory and empirics. It is a utilitarian conclusion in that it provides better outcomes (higher standards of living, longer life expectancies, etc.) than the alternatives.
I believe that maximum freedom also wins on ethical and moral grounds. All of society benefits, not just targeted segments. Free men and free markets enable individuals to test whatever limits they were endowed with. Bill Gates, before his charitable endeavors, did more for mankind than any government ever did.
Assisting those with limitations is not inconsistent with this philosophy so long as coercion is not used as a pretense for compassion. No society is truly compassionate where force is used to take from some to give to others. That is not the role of government. It is the role of responsible and moral citizens.
A utilitarian approach is apolitical. If something works, it is good regardless of its pedigree. If not, find something better.
My father was highly educated and was a Democrat. He never influenced my political beliefs. I was naive, if not outright ignorant, of politics until after undergraduate school. Then I became aware of politics. I understood its importance in the scheme of things, however thought that politicians were parasites, pretending to be compassionate, while they drained the substance from society into their own careers and pockets.
I respected neither party. Other than on a few issues, they are one and the same. Even on these issues, the differences are marginal rather than substantive. The differences are more marketing strategy than meaningful philosophical disagreements. That is why it doesn’t matter who holds power. The end result is always bad except when it is worse. Here are a few similarities between the supposed competing parties:
- Both political parties grow government.
- Both engage in unnecessary military adventures.
- Both exploit citizens to feather their own nests.
- Both pander to voters rather than adhere to principles.
- Both routinely ignore the Constitution.
- Both raise taxes and spend monies in excess of taxes.
- Both expand programs that have little chance of succeeding.
- Both support programs that produce results opposite of what was intended.
- Both refuse to cut any program, regardless of the harm it does.
I learned Keynesianism and Monetarism in college and grad school. I know the “Chicago” school well, having taken courses from Milton Friedman, George Stigler, Ronald Coase and Gene Fama, all now Nobel laureates. Despite this exposure, I consider my approach to economics and society “Austrian,” in the tradition of Ludwig von Mises and Friederich Hayek. Chicago and Austrian free market conclusions generally coincide, although the methodological routes to reach such conclusions are very different.
The “Chicago” school is “Monetarist.” It emphasizes the effects of money on economic events. Keynesian economics emphasizes aggregate demand and ways to stimulate or dampen it. Both are aggregate approaches. That is, both focus on aggregates rather than the actual decision-making entities in an economy — individuals.
Keynesian economics never made any sense, even in my undergraduate courses. Microeconomics possessed a logic that attracted me to the subject. When I studied these two sub-sets of modern economics, they were literally separate bodies of knowledge. There was no link between the two fields. The logic of microeconomics was set aside when one entered a macroeconomics course.
Keynesians and Monetarists have tried various syntheses between the two fields since my initial experiences. These attempts have never been successful, at least in my opinion.
Human beings, not aggregates, make decisions. Economics is about human beings. It is not some physics model or production equipment where aggregate outputs can be manipulated by altering aggregate inputs. Economics is the study of human behavior and the factors influencing it.
Pretending that the summation of millions of humans can be treated as a single variable has created confusion and harm to economies around the world.
The Chicago and Keynesian schools are aggregate-based approaches to macroeconomics. Chicago at least had the redeeming feature of a great tradition in microeconomics. The Austrian school recognizes economics as a social science where the individual is key to understanding economic outcomes. Individuals are the proper atoms or building blocks of economics. They must be understood in order to understand the economy.
Pretending these blocks can be combined in some fashion to produces a simplistic model of the overall economy is scientism at its worst and most dangerous. It is the false science necessary for central planners and dictators. Aggregation is proper for summary and historical purposes. Aggregation that assumes behavioral or causal relationships is buncombe of the worst kind.
Economics is a behavioral science and must be focused on decision-makers. These are individuals, not groups. Doing otherwise simplifies things in an unrealistic and erroneous manner. Occam’s razor favors simple explanations, but it only favors simple and correct explanations.
Political and Economic Outcomes
Macroeconomics now dominates economics. It has importance and credibility solely as a result of the State. Most economists derive their income directly or indirectly from government. If government insists that it can control and improve the economy, disagreement with such a position will result in lower incomes.
Economists are no more moral than any other profession. They understand incentives and quid pro quo arrangements better than most. If feeding one’s family can be improved by supporting State myths, a moral dilemma occurs. Am I more loyal to truth or my family? Given what has happened to the profession, “prostitute” may not be too strong an appellation for many economists. The co-opting of this profession has made many apologists for The State and is responsible for many of our current problems.
There are no economic problems. There are only political problems. Economics is self-equilibrating, if not meddled with. Every political intervention is an attempt to thwart individual intentions and corrective adjustment. Political intervention does not help although it may hide (temporarily). Every political intervention makes the economic issue worse. Small targeted problems turn into large targeted problems.
If the political class continues to try to suppress the corrective mechanism, eventually the system seizes up and even collapses. That is what has been occurring over the last several decades.