Good Government Fails Better

By Robert H.

Arnold Kling, channeling Megan McArdle, says that large firms need to fail gracefully:

A large, established firm needs to fail gracefully. Be able to kill the project without killing the company. You might think of Coca-Cola’s recovery from New Coke, but the real graceful failures are the ones we never even hear about. A large firm that fails ungracefully is denying that it is in trouble (Megan uses the example of Dan Rather and Mary Mapes of CBS News, who put out a story based on a forged document and just refused to back down from the story.)

But that government sucks at this:

Government cannot do any of these things well. Think of Obamacare... Graceful failure? No, it is a big, ugly failure.

Maybe I'm missing something, but it seems like Kling wants large firms to fail gracefully because it insulates the successful part of the company from the dumb new venture, allowing the company to continue.  They have to "kill the project without killing the company."  If that's the standard, our government seems to be really, really good at failing well.   After all, if it's a survival game then America has reached a ripe old age.  The number of two century old private firms is not large.  America's killed a lot of bad ideas (and millions of their proponents!) without killing "the company."

More broadly, Kling acknowledges that different firms need to fail in different ways (for example, he thinks startups need to fail quickly so everyone can move on to new ideas), but rather then figure out how government needs to fail, he insists on judging it by the standard of corporations.  He doesn't explore how government's *should* fail, he just says government isn't good at failing the way good firms do.  I think that's a mistake.  Here's how I would complete kling's list:

An individual needs to fail with a fallback position. 

A small startup firm needs to fail quickly.

A large, established firm needs to fail gracefully. 

A government needs to fail non-catastrophically.  Bad governance can ruin economies, enslave millions, and, these days, kill billions.  Catastrophic failure of a government program must be avoided at all cost.  As a good rule of thumb, any failure members of the next generation only know about if they are particularly literate or into history is a good failure (barring significant propaganda). 

There is a great deal of ruin in a nation, and governments can do much that is merely bad.  The goal is to keep the bad to a minimum.  A small program with minimal effects can drag on, failing for decades, and that will, in the big scheme of things, not have a damned thing to do with whether a government is relatively successful or relatively terrible.  Good government often wallows in mere failure, what it avoids is catastrophic failure.

P.S. There's another blog post to be had unpacking Kling's assumption that Obamacare will "fail."

Fascist Libertarians

by Robert H.

I continue to be worried by the trend of libertarians dismissing the idea that democracy might be, you know, good.  From Arnold Kling:

Lindberg also notices the hard-line stance of today’s left. This may be the key quote of the essay:

The notion of an invincibly center-right electorate was anathema to the emerging Left 3.0. A key moment in its reconciliation with the Democratic Party was the latter’s abandonment of policies designed with a center-right electorate in mind. For the foreseeable future, the party would lay claim to the center not on the basis of adopting positions to appease moderates and independents, but on the basis of winning more than 50 percent of the vote on election day for candidates congenial to Left 3.0 and garnering majority public support for positions congenial to Left 3.0.

I see this hard-line stance evident in the progressive’s resistance to any suggestion for reducing government spending. You cannot suggest cuts in the short run, because that would mean austerity. You cannot suggest trimming entitlement promises, because Social Security is sacred and control over health care spending is a job for technocrats.

The radical hardliners!  Claiming they should get to enact policies just because they win elections and have policies most people support!  What is this, some sort of representative democracy?

To be fair, this is really common in the "explain why the people who won the last election have novel strategies, an unstoppable political coalition, and will dominate politics forever" genre of writing.  "Unlike in the past, the people who won the last election have hit on the crazy idea of seeking majority support for their policies and candidates, then pushing those policies through while conceding as little as possible to the other side!"  Back under Bush, liberals were all complaining about how divisive Carl Rove's "50 percent plus 1" strategy was.  That was basically the same thing, "These mean old republicans are just trying to win elections and then pass the policies they like.  If they really cared about America they would make huge concessions to our policy positions for the sake of national unity."  Maybe!  Or, you know, we could let the majority rule so long as it respects human rights and our governmental institutions.

I'll let pass Kling's claim that Social Security is sacred to the new left, unfortunately made at the same time the President is calling for chained CPI as a policy concession democrats are willing to make for Republicans.

And my usual caveat: Arnold Kling is the person with whom I most disagree while still enjoying his writing, so I critically comment on his posts a lot.  I'm not trying to stir up some weird internet grudge or something.  Indeed, you can generally assume that if I *don't* write about one of his posts, I basically agreed with it.

Working for the Mandarin

By Robert H.

Oh boy, more misuse of historical analogy:

But I think that we are looking at something even deeper than that: the Mandarinization of America.  The Chinese imperial bureaucracy was immensely powerful. Entrance was theoretically open to anyone, from any walk of society—as long as they could pass a very tough examination. The number of passes was tightly restricted to keep the bureaucracy at optimal size.  Passing the tests and becoming a “scholar official” was a ticket to a very good, very secure life. And there is something to like about a system like this ... especially if you happen to be good at exams. Of course, once you gave the imperial bureaucracy a lot of power, and made entrance into said bureaucracy conditional on passing a tough exam, what you have is ... a country run by people who think that being good at exams is the most important thing on earth. Sound familiar?The people who pass these sorts of admissions tests are very clever. But they're also, as time goes on, increasingly narrow. The way to pass a series of highly competitive exams is to focus every fiber of your being on learning what the authorities want, and giving it to them. To the extent that the "Tiger Mom" phenomenon is actually real, it's arguably the cultural legacy of the Mandarin system.

To the state the obvious, there is a big difference between the ancient Chinese system, where the government selects elites by examination, and the American system, where the government and free market actors select elites by examination.  Most journalists are employeed by for profit organizations.  If all those organizations are hiring driven, smart grads from top universities, maybe those people make good employees.

Two caveats:

1.  Yes, via occupational licensing the government often requires that people have certain educational requirements, and that probably leads to over investment in education.  Maybe less than you would think, though: even in states that offer the traditional "go get on the job training" route to becoming a lawyer (California, for example), top law jobs are still staffed by top graduates from top schools.

2.  The basic point of that article is right, it *is* a real concern that low income children have difficulty cultivating the habits and resources needed to excel at these institutions.  But the solution is to subsidize and help them, not rail against institutions that seem to be providing an important market service.    Investing in future generations based on which children rich people love is a market failure, hiring Harvard grads is not.  Articles like this, which pretend that elite education is a scam foisted on America to create a ruling class, are stupid.

P.S.  Hat tip to Arnold Kling for the links.
P.P.S. Note that the second article exists firmly in the "we are obviously right, but we keep losing elections, therefor democracy is flawed" school of libertarian discourse.  It rails against one man one vote and, at the same time claims, our system is too oligarchic.  Awesome!  Fascist libertarians for the win!

The Worst Pun

Arnold Kling (man, how many posts have I written commenting on something he's said?  I have no defense other than that he is thought-provoking and smart, while having views that differ from mine just enough to fuel posting) has a post on the riddle of social security.  Why do we subsidize retirements?

If it's a riddle, it's a very old one.  Bismark invented the welfare state in the 1880's, and the third major law he passed, in 1889, was The Old Age and Disability Bill.  Enter social security insurance on the world stage.  The fact that old age is linked with disability in that legislation tells the whole tale: in this crazy modern world in which we live in, for some people retirement is what happens when you decide to stop working and play golf.    But for most people in history (and now?) old age isn't dominated by leisure so much as it is dominated by having a crappy body.  In 1880's Germany, being an old person is basically the same thing as being a disabled person -- you physically can't work for a decent wage.  So Otto says,

„[...] the actual complaint of the worker is the insecurity of his existence; he is unsure if he will always have work, he is unsure if he will always be healthy and he can predict that he will reach old age and be unable to work. If he falls into poverty, and be that only through prolonged illness, he will find himself totally helpless being on his own, and society currently does not accept any responsibility towards him beyond the usual provisions for the poor, even if he has been working all the time ever so diligently and faithfully. The ordinary provisions for the poor, however, leaves a lot to be desired [...].“

Auto Van Biz-Mart

For a lot of Americans, there is still some truth in the idea that old age leaves people less able to support themselves and is a form of disability (IE, if they had a very physically active line of work or if they are low skill and mostly sell their manual labor).  But in a white collar world with age discrimination laws that is increasingly not true (or at least, the wage hit old people take is more marginal), and I think you are increasingly seeing a new justification for SSI.  There is an element of hope to it.  Lots of people have to work shit jobs they hate their entire life.  Subsidizing retirement is a way to give those people meaningful hope -- there's gold at the end of the crap rainbow! -- which both makes the working people happy in its own right (lives with hope are better!) and probably gets people to buy into society more (remember, Bismark didn't implement the welfare state because he believed in it, he implemented the welfare state to keep social order in a world increasingly dominated by class struggle).  I think this is what people talk about when they talk about lives deserving "dignified retirements" -- everyone deserves a little hope at the end.

But those two things have different policy implications.  If we feel bad for old people because "old" is a form of disability and the elderly can't work, we feel bad for all old people.  But if we want to give working people an element of happiness and dignity to look forward to at the end of their lives, we can means test SSI.  Rich people can buy their own dignified retirement just fine, thank you. I suspect that, as the justification for the program increasingly moves from the first to the second thing, the system will start to look (and be) more explicitly redistributive.

Debaters of the Lost Minarchs

Arnold Kling has capped off a great conversation with Michael Humer and Bryan Caplan about why non-libertarians reject libertarianism (you can follow links back through Kling's various posts). Kling ultimately comes to the conclusion that the moral case for libertarianism isn't appealing to lots of people and the consequentialist case should be emphasized. As someone who has rejected the moral case for libertarianism but been persuaded to support a lot of libertarian policies on consequentialist grounds, that sounds about right to me.

But that still leaves the question, why *do* people reject the moral case for libertarianism, rooted in freedom and the harm principle? I've been thinking about why I reject it, and this is what I've come up with:

1. It doesn't accord with my every-day reality. In our society, only bad people live according to the harm principle (IE, the ability to use force to defend yourself and your property is heavily limited.  You can't use force to retrieve stolen property or property owed to you, can't use lethal force to protect property, can't use force to protect yourself from a non-imminent but very real threat, etc.  The state can do all these things).  It seems weird to take behavior that is illegal and immoral in the context of our society and then say everyone has a natural right to do it.

2. It's not simple. Take a basic statement of the harm principle, "the only purpose for which power can be
rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others." That is, on its face, not a libertarian statement. Taking money from person A and giving it to starving person B arguably prevents harm from happening to B.  

To get to libertarianism, you have to start with a more complex harm principle, something like, "the only justifiable use of force is to protect people and their property from the force of others."  But now we have to come up with an argument for how materials in nature can morally be converted to property, what other ways I can morally acquire property, the extent of my property rights, define "uses of force" (IE, is a harmless trespass on your property really a use of force?  Is conversion by fraud?  Many thieves do not use coercion or the threat of coercion, they are just sneaky), explain how we can enforce contracts (are contracts really just a subset of property rights?), etc.  Nozick got this: it is hard to prove that people should adopt a minarchy from first principles.  He was constantly being forced to make subtle distinctions, to paper over whole genres of argument, to say "we need to think harder about this," etc.  I'll keep re-reading Nozick and keep reading others, but the moral argument for libertarianism is complex, has to answer lots of questions, and, to my mind, has not done so satisfactorily in a number of instances.  I suppose I'll keep blogging about what all those are in future posts.

3.  Libertarians seem to miss a lot of basic moral impulses.  People like fair shakes, like equality of opportunity,  dislike gross inequality in results, abhor human suffering, and are willing to tolerate, praise, and even force redistribution as a result.  There are a lot of contradictory impulses that animate our intuitive moral senses, and "enforce the harm principle" is only one of them. Robin Hood isn't a hero because he fights taxes, he's a hero because he fights unjust taxes and because he redistributes wealth. 

4. Once you get away from talking about the harm principle and start talking about maximizing freedom and minimizing coercion, it's not clear to me from first principles that libertarian states do that.  On the one hand, "freedom" and "coercion" have dimensions beyond "freedom from state coercion." On the other, it's not clear to me that a minarchy would actually coerce people less than a state with more powers.

5. Libertarians don't seem to pay much attention to culture and how government interacts with culture.  I once said on this blog that when a big man with a club meets a little man with a prosperous farm in the state of nature, a conservative worries the barbaric big man will kill and loot the little man, the liberal worries the brutish big man will enslave and rule over the little man, and the libertarian thinks they'll work out a contract by which the little man pays the big man for defense.  In point of fact we don't know what would happen, because it would depend entirely on the cultures, dispositions, and circumstances of the two dudes.  Same tribe?  Different tribes?  Warring tribes?  No tribes?  Ingrained cultural norms about hospitality?  Etc.  Libertarians seem to me to have a one-size-fits-all solution, when it seems to me that a minarchy (and certainly anarcho-syndicalism) could only work under a limited, some-what fantastical and a-historical set of cultural norms.  To a large extent this is a consequentialist critique, but it bleeds over into a philosophical one -- the philosophical libertarian argument would be stronger if it addressed a variety of societies full of a variety of people, rather than limiting itself (mostly) to state-of-nature societies full of pretty rational people.  

6. While we are on the subject, it is not obvious to me that state of nature analysis beats veil of ignorance analysis, or why either is better than using the real world as a starting point.

7. To be clear, I don't think anyone has made a first-principles case for why the state should have lots of power either.  Again, to me it comes down to consequentialism. 

8. My consequentialist analysis heavily tinges all this.  I think a minarchy, much less anarcho-syndicalism, would suck.