Sunday, August 19, 2018

Ludwig Lachmann -"It need never have happened"

In 1967, at the impressionable age of 19, having decided, for reasons I can no longer remember, to study economics, I encountered Ludwig Lachmann. Lachmann was a Jewish émigré from Germany, having come to South Africa in 1950 to assume the position of chair of the department of economics and economic history at Wits (the University of the Witwatersrand). He came via London, after leaving Berlin with his wife in 1933, the year that Adolf Hitler came to power. Though attracted even then to the teachings of the Austrian School of Economics, this interest appears to have been greatly enhanced by many years of study with Friedrich Hayek at the LSE (London School of Economics). It was apparently during this time that his lifelong interest in capital theory was formed, though, at that time, it was mostly in connection with the energetic efforts of those many young scholars in the “Hayek circle” to understand the workings of the business cycle in order to come up with an explanation for the deepening crisis in which they found themselves in the 1930’s.

By the time he got to Wits the Great Depression was over and the protracted post-war period of economic growth was about to take off. In 1956 he published his most well-known book, Capital and its Structure, which cemented his reputation as an Austrian capital theorist and by the time I came to be in his class, in Economics II (as a second year undergraduate) he was devoting considerable attention to capital theory and growth theory in his lectures. It was through a lens shaped by this experience that I viewed him.

That year was the beginning of a lifetime association with Professor Lachmann, my most important economics teacher. Upon graduating my BA in 1968, I joined his honors seminar until I left for the Ph.D. program at the University of Chicago in 1972. (I returned briefly to South Africa 1976-1978, during which time I taught economics and resumed attending the honors seminar.) Little did I know that by the time I left Lachmann had completed and published his book The Legacy of Mac Weber. I was only dimly aware of who Weber was and oblivious as to why Lachmann might be interested in him. Looking back I realize how abysmally ignorant and conceptually immature I must have seemed, although less so than my peers. Lachmann must have struggled to find thinkers with whom he could truly converse. The opportunity to do so later, must have been very welcome, when he became a yearly visitor to New York University (and with some frequency to George Mason University), where he encountered Don Lavoie and other “mature” thinkers, some of whom would have been knowledgeable about the history of Germany and German social thought. I was aware of this from afar, when I returned to Austrian economics after Chicago, but my main interests lay elsewhere.

Now, in my 70th year, I find myself reading the third essay of his Legacy of Max Weber through a greatly expanded lens. It is an eerie experience. I hear him talking to me from beyond the grave, “Do you understand now what I was doing? Do you understand what I was trying to communicate, and why?”

In this connection I think of one particular episode from our early acquaintance. I was a junior lecturer at Wits, and a member of the Lachmann honors seminar, circa 1977 (Legacy had been published a few years earlier). I had a colleague that I introduced to the seminar, an Israeli living in South Africa. It so happened that he found himself one time alone with Lachmann in his office, perhaps arriving early for the seminar. Unlike me, who was extremely reticent in my demeanor toward my professors, he was very forthcoming and unrestrained in his curiosity, and, thus, asked a question I never would have. Knowing that Lachmann had left Germany in 1933, and knowing that he was Jewish, and strongly identified as Jewish, he asked him what he thought about the Holocaust! As I remember what my friend reported to me at the time, he replied that it was, indeed, a terrible tragedy, all the more so because it was something that “need not have happened”.

This has stuck with me over the years. I had no clue what he could have meant by this, what it implied to him, and even how anyone could say such a thing. Was he making excuses?

Now as I read his third essay on “Political Institutions”, and encounter a detour describing German history and the climate of opinion from German unification in 1871 until the rise of Hitler, I suddenly see what may be what he meant. My impression is strengthened by the fact that it is exactly what he was immersed around the time of the conversation in question.

My brief summary will not do justice to the subtleties of Lachmann’s account and is meant simply to indicate the nature of his preoccupations at the time he wrote this essay. He is referring to the fragility of the Weimar Republic. The unification in 1871 established the Great Compromise of the Rechstaat, the term by which it was known, which translates loosely as ‘the rule of law’. The power of the traditional Prussian agrarian elite, the Junkers, though diluted in the new institutional structure of the German Empire remained important. The Junker nobility was influential beyond its economic and political power across a wide range within the broader population. The new coalition of interests agreed, however, on the importance of institutional stability in the face of the rapid changes occurring as a result of industrialization. And this notion of institutional stability included the principle of freedom of contract and broadly laissez faire rules within a facilitating constitutional framework of “fundamental institutions”.

Industrialization brought with it a rapidly growing working class that did not seem to fit well within the new institutional order. From the 1880’s the Great Compromise was being challenged by the ascendancy of Marxist thinking, albeit subject to much revisionism, that saw history as an inevitable march toward the triumph of socialism. World War I shattered the institutional framework of the Great Compromise  and whatever influence the elite still had, and the coalition that constituted the Wiemar Republic formed in its wake, included a strong contingent of socialists ( for whom, as dedicated professionals, Lachmann interestingly expresses some admiration) who worked with the rest of the coalition to promote economic growth with the conviction that it was a necessary step along the path to socialism. And when in 1933 Hitler rose to power they viewed it in the same light, heralding an aspect of the impending collapse of capitalism. By this time, Lachmann suggests, quite simply the “fundamental institutions” of the Rechstaat had disappeared. There was no bedrock set of principles, or any strong political group who embraced them, to push back. Had these institutions and the principles they represented not been so eroded the Holocaust might never have happened (my interpretation).

To my knowledge, Lachmann never wrote about the Holocaust. But, I found his choice of words in this passage quite provocative.

“The mere fact that after the holocaust of Nazi rule and the Second World War the new German state was again erected on the same foundations as the Weimar Republic had been, because there were no others, seems to us to attest the inherent strength of the social forces underlying both.”

And he continues:

“Where, then, lay the weakness of the Weimar Republic? It so happens that the critical source of its weakness lay in … [that] its fundamental institutions rested on no firm basis. The compromise [between the parties of the coalition, notably by the socialists] was regarded by too many of the participants as a temporary rather than a permanent one, not as a Great Compromise [Rechstaat] but rather as a petit compromise”.

For Lachmann the Holocaust was a matter of personal experience. He was in a very real sense a ‘survivor’. I know nothing of the fate of his extended family, of friends and colleagues or of his personal feelings about those of his associates who rode the Nazi bandwagon, including his thesis supervisor Werner Sombart. I for one regret that he never addressed these matters publicly. After reading this essay I also wish he would have written a book on the history of modern Germany fleshing out the insights he presented so briefly in this essay. He refers the reader to the “brilliant” work of Joseph Schumpeter on this subject, but I can’t help feeling that Lachmann could have added much of value to that work, though, given my limited expertise, I make no judgment as to its standing relative to other different interpretations of that tumultuous history.

Sunday, July 8, 2018

My struggles with religious belief.

    One of topics I tend to obsess a bit about is the nature of religion and its role in society. My readers may react very differently depending on their presumptions. It is one of the those topics that is very difficult if not impossible to discuss with some people. I think I understand why this is. But I still have trouble emotionally interacting with these people. It is my problem not theirs I suppose. Let me try and explain.

    • It is astounding to me how resilient religious belief is. It almost seems as if we are hard wired to believe in some form of supernatural, and that while many of us are able to transcend this, many are not. 
    • In the modern secular world, many religious groups have adapted. Their belief systems are in various degrees adaptations of moral codes as filtered through the metaphors of scripture. They are not literal believers. If they have a belief in revelation it is a loose one - for example, that God reveals things in mysterious and often symbolic ways. And they are willing and able to disbelieve the factual claims of the scripture. With these people I have no, or very few, problems. 
    • For those who believe fundamentally - by which I mean, believe in the revealed word as recorded in the relevant (for them) scripture - for these people belief relates not only to morals, but also, crucially to facts. For example, there are factual claims about matters such as the age of the universe, the occurrence of events (including miracles), the development of language, etc. With these people I have great difficulty. 
    • There is no evidence that you could ever bring that would weigh with them against the claims of that scripture. Any such evidence, no matter how compelling, can be and is dismissed as mistaken or a puzzle sent by God. For example, the claim that the world is about 6,000 years old is reconciled by saying that appearances to the contrary were created by God. (Some respond by interpreting the claim liberally to be symbolic - so a 'year' could be much longer than a year. But many insist that the literal meaning of the words are the correct ones.)
    • This mindset is pretty scary. It is a mindset insulated from any prospect of refutation of core beliefs no matter how repugnant or incorrect factually they may appear to us.
    • This is why, while I recognize the many socially beneficial and aesthetically pleasing aspects of organized religion, I also fear its potential for incredible evil when it has the power to compel. This requires eternal vigilance. Theocracies once very common, still exist in many parts of the world and these are usually horrible places to live in.

    • As a Jew I also believe that, though Judaism, in many respects, avoids most of the worst cases that would operate in a world in which Jewish Law were the absolute authority, it is also true that in such a world there would be much to object to - especially regarding some of the more extreme varieties of interpretation of Jewish law. And I also think that, as oppressive as the dispersion was for Jews, the fact that Judaism became a rabbinic religion in a world of strangers, prevented some of the worst developments that might have occurred had it continued to be a temple religion based on the rule of the high priests. 

Tuesday, July 3, 2018

Feeling romantic and grateful

If I were Steve Horwitz I might write something like the following. But since I am not, and since it is much too soppy, I won't.
They are welcome to it; all that stuff
it’s never enough
All the parties and the clothes
for what purpose who knows?
Our own little heaven, just you and me
together, with our not so little family

The power of love.

Wednesday, June 13, 2018

Impressions on visiting South Africa - June 2018

South Africa today, almost three decades after the abolition of apartheid is a very confusing place. I suppose it could be somewhat simplistically described as a dual economy, a society caught in-between the first and the third worlds (as those terms are colloquially understood) with elements of both.

On the one hand there is a modern, industrialized technologically sophisticated economy, with beautiful highways, and vibrant businesses, large and small. The food is fantastic and cheap. And investment and expansion is all around, construction of residences and businesses everywhere. The urban populations are growing dramatically.

On the other hand there is the third world misery within this. Unemployment is rampant. Crime is very high. A large portion of the population is miserably poor. The wealthy live behind walls and barbed wire fences. There are chronic water shortages and electricity blackouts.

The government is typically third world - but with aspects of the rule of law remaining - for example in the judiciary and the electoral system. But people here tell me it is being eroded bit by bit. Corruption is rife, the police are useless, mobs and gangs are powerful and dangerous, especially in the townships and depressed areas. It is doubtful, that no matter how bad things get, the ruling ANC party will ever relinquish power. And the situation is ripe for the flowering of populist politics and economics.

The expenditure tax rate is high (15% VAT) and only 6% of the population of 50 million pay income tax. So the tax base is very small and is falling as the young among the wealthy and the educated leave in large numbers.  The country's human capital is being diminished by this. There is immigration that somewhat offsets this, from all over the world - people leaving bad situations coming to benefits from the manifest business and employment opportunities that do exist, but I don't know the resulting balance between these two trends.

So it is a really mixed bag, one whose future is really difficult to predict.

Monday, June 11, 2018

While visiting South Africa

Back in Joburg after a long six hour drive, some of it with traffic. A day of rest before tomorrow's early flight to Cape Town - till Sunday.
Our trip to the game park was indescribably wonderful. Non-locals might not appreciate the value of it. We saw an amazing variety of game up close in the African bush. Our guide was an elephant expert. We got close enough to a large male to touch his face - not that we did. Heart pounding. I am sure the kids have no idea how lucky they were. A female leopard with a kill in the tree. Lots of lion. All kinds of buck, some of them quite rare. Warthogs, zebras, wildebeest, wonderful birds, rhinos, giraffes, exotic squirrels, ... no cheetah (very rare) or wild dog (even more rare -only two packs in that area and they migrate out and in and were not there).
The park, Tintswalo (part of the greater Mayaleti reserve) is a concession dating from the end of Apartheid. During the Apartheid era it was an inferior blacks only game park. After Apartheid it was privatized (the ultimate fate is still in dispute) and is now a wonderful, luxurious, but not unreasonably priced, game resort. Great food (more than great), great accommodation (with a view of the waterhole to watch animals come down and drink). Dreamworld.

Tuesday, May 15, 2018

Impediments to effective interpersonal discussion/communication

Impediments to effective interpersonal discussion/communication. Not mutually exclusive.
  1. Lack of trust - the perception of bad motives by your discussion partner.
  2. Fear of being wrong - an ego commitment to a particular position that prevents the open consideration of alternatives. 
  3. Lack of clarity - a disjoint in the understanding of terms and concepts - sometimes the result of asymmetric prior education and conditioning.

Number 1 is devastating. 2. is formidable. 3. can be overcome with patience and determination.

Tuesday, May 1, 2018

Palestinian leader acknowledges the Holocaust in deeply anti-Semitic remarks.

I want to subject this incident to a bit of analysis. It is very interesting for a number of reasons.
1.     On the most superficial level his remarks are a window into what he and his collaborators in the PA and the PLO and related organizations really believe, or are prepared to say they believe in order to foster the basest resentment against Israel (=Israelis). The religious animus toward Jews runs deep in Islam and inevitably manifests in modern semi-secular pan-Arabism as well. It strikes a chord of resentment whenever desperate Arab politicians need to whip some up.
2.     Additionally, he wants to drive a wedge between Jews and the land of Israel by suggesting that Askenazim have no cultural ties to the land - one supposes in contrast to the Sephardim who have lived in the vicinity and in the Arab world forever. So, it is a an attempt to inject racism into the discussion - to make a distinction between Arab Jews and European (Caucasian) Jews. It is the European Jews who were persecuted and there are (good?) reasons for that.
If you are part of the common folk living in the middle east this could make sense to you. You see the social world primarily in tribal terms overlaid with race, religion and culture - us versus them. So identifying the Ashkenazim as alien Europeans may have some populist traction. (The attempt to deny any connection between Ashkenazi Jews and the land of Israel - a common feature of the Palestinian narrative, supported by the likes of UNESCO - is repeated in his remarks. Given the cultural components of 2,000 years of Jewish history the patent absurdity of this is obvious to people in the west, or familiar with that history. But it is totally lost on his intended audience, for whom it is just one more reason to hate.)
Ironically, there are internal contradictions in this narrative. It undermines the claim that the Ashenazi settlers (pre-1948) were instruments of European colonization. Were they both victims of the Europeans and their nefarious colonial allies? But this is a point for the western analysts and carries absolutely no weight in diluting the poison Abbas is hoping to brew. Populism is full of contradictory ideas.
3.     The remarks are interesting insofar as they seem to confirm the Holocaust. Absurdly this is used against the Jews in the sense that it can be explained by the resentment caused by their 'social functions' as greedy usurious bankers and financiers (talk about obnoxious stereotypes). So, it is not because of their religion that they were targeted, but because of their social function. Abbas apparently thinks, or wants other to think that he thinks, that this is a distinction with a moral difference. What an ingenious twist this is. The Holocaust is used as evidence of the obnoxiousness of the Jews who were responsible for colonizing Arab lands.
4.     Finally, what is left of the argument that it is possible to be anti-Zionist and pro-Palestinian without being anti-Jewish? Well, yes, of course it is, in theory. By which I mean, there is a logic that distinguishes criticism of the aims and actions of the Zionists (focusing on the effects it had on the local residents) that is not anti-Jewish in substance or intent. Close examination suggests, that while this is true, it is wrong, or contradictory. I say this because such arguments focus on the allegation that the pre-1948 Zionist settlers coercively displaced the rightful owners of their land where they settled, and this is simply just not true. There were instances of ambiguous ownership. But there was no concerted and coercive effort to displace the local Arab population, which in any case was sparsely settled and very small in numbers. In fact, large number of Arabs migrated into the area as a result of the Jewish settlements and the economic opportunities that they created. The East European Jewish settlers had no government behind them to carry out any kind of ethnic cleansing. In fact, it was the Arab Islamist/pan-Arab movements who had the support of the British, pandering for the sake of oil, who tried to keep out Jewish immigrants and drive settlers from the land. So, yes, it is possible to separate anti-Zionist from anti-Jewish, but one needs first to get the facts right, and then one needs to push the argument in universal terms and not apply double standards to the alleged Zionist colonists. The fact that, in practice, such arguments are both based on gross ignorance and employ double standards, invites the perception of bias of one sort or another.
But in the case of Abbas, there is no ambiguity. For him and his friends there is no difference between anti-Zionism and anti-Jewish. So much is clear from these recent remarks. One need only inquire of him whether Jews will be able to live in the Palestinian state that is the object of the two-state solution he claims to support.
In short, given the scrutiny they deserve, these remarks should put paid to any doubt about the chances of such a solution and where the obstacles to it really lie. That they will not be given such scrutiny in the western media or by the vocal leftist critics of Israel is clear. But some people may notice and begin to wonder.

Monday, April 9, 2018

Can economics be non-ideological (objective)? Yes and no.

Any economic investigation proceeds on the foundation of certain basic, often unstated, presumptions. And these presumptions are value-judgements; they could, with justification, be described as ideological. A couple of examples should make this clear.
Consider the question of whether the imposition of an enforced minimum wage above the free-market wage reduces employment or not (and the related policy prescription).
Should the proponent of the minimum wage be required to show that its imposition does not reduce employment in order to successfully defend its imposition, or should the antagonist of the imposition be required to show that it does in order to successfully oppose the policy. Two important things need to be noted about this question. 
  1. In order to proceed with the study of the effect of minimum wages it has to be answered. In order to complete the sentence "the study shows ...." one has to answer this question. One has to decide where to put the burden of proof. And 
  2. Answering it requires a value commitment, not a scientific one. Where to put the burden of proof requires a value-judgement, an 'ideological' commitment. Arguing for or against the placement of the burden of proof requires more than the 'scientific facts'. For example, in this case, I would argue that the burden of proof should be on the min-wage proponent to show, as a necessary condition (not automatically sufficient) that it does not reduce employment, and I would defend this claim by saying the the policy interferes in private transactions that *ought* to be given moral priority. Free to trade ought to be the default - ought to prevail in the absence of compelling evidence of an overriding good to be gained by interfering with it. Needless to say, those who see government as a superior judge of what is good than private individuals would argue differently. And, though evidence may influence these instrumental values, they are values nevertheless, prior to any investigation.

Once the values are agreed upon, the investigation should be as neutral and objective as possible. It should not be easy to refute the claim that min-wages reduce employment, ceteris paribus, but the evidence should be examined honestly and transparently. In that sense, yes, it can be neutral.
Another important example (there are a multitude), Consider the policy prescriptions of the climate activists. They proceed as though to oppose them effectively requires you to show that they are wrong in their climate predictions and cost estimates - hence the attempt to deligitamize opponents with the phrase 'climate deniers". I have argued that this is totally upside down. What they are proposing, even in the minimal versions, is interference in the private production decisions of millions of individuals across the planet - interference in the actions that affect the livelihood, sometimes survival, of millions. Surely, on moral grounds, they should have a high burden of proof to show that such interference is warranted by the dangers they posit. This relates not so much to their predictions as it does to the costs of what they predict and, even more, of the remedies they propose. Absent their meeting this burden they should not be taken seriously - or rather they should be taken to be as dangerous as the central planners of the 1930's - the market socialists. Again, this is not a completely scientific judgement, but, rather is based on a firm conviction in the value of and the robustness of the free market economy.
In dealing with economic discourse, especially disagreements, it may be necessary to deal first with the conflicting presumptions of the protagonists.

Friday, March 30, 2018

Freedom, slavery, xenophobia, paranoia, and Pesach

Around the holidays, I sometimes recycle old blogs and sometimes, if something occurs to me, I write new ones. This is a new one.

Our religious and cultural tradition gives us stories with timeless situations, predicaments that are endemic in the human condition. Though I do believe that economic development and rising standards of living has brought with it a decline in violence and general moral progress, certain aspects of human nature have not changed much. Problems faced by our ancient ancestors, and those who wrote stories about them, are very similar to those we face today, with subtle illuminating variations in context.

Joseph tells his brothers: come live in Egypt, there is ample food here because Egypt has vast storehouses that are full (thanks to his entrepreneurial vision). So the family relocates to Egypt the land of abundance. And, apparently the Egyptians (not to make a category mistake by conflating them with citizens of today’s Egypt) are ok with that – until after a few generations a Pharaoh arises who is paranoid. Cultural paranoia, xenophobia against the Jews now becomes dominant and they are enslaved. Pharaoh is afraid the Jews will multiply in numbers relative to the Egyptians and thus overwhelm them (physically, culturally?). And the rest is history.

Immigration, successful economic integration, multiplication – familiar themes. Few societies in history have been able to peacefully absorb a large influx of culturally different people. The two major exceptions of our time are the U.S. and Israel, which stand in stark contrast to much of Europe (for example France which faces tremendous internal cultural frictions). And today in America we are again being put to the test as our President and many of his supporters are troubled by paranoid xenophobic impulses.

The ultimate result of this is the loss of freedom in some way or another, and in the extreme could result in slavery and genocide.

Concerning which, what do the authors of the Hagadah mean when they bemoan slavery and extol freedom? Are they talking about the same notion of freedom that we are today? Yes and no. For one thing, slavery itself was not abolished with the exodus. Slavery is recognized as legitimate in the bible, and there are laws concerning the treatment of slaves by their owners. Similarly, from today’s perspective, women at that time could not be considered to be free.

Nevertheless, the Passover story has relevant things to say to us about freedom as we now understand it, particularly in relation to freedom for individuals regardless of ethnic, cultural characteristics.

Sunday, February 18, 2018

So you have a problem believing?

Let me see if I have this right.

God is the all-powerful, all-knowing, all-good creator and ruler of the universe. He knows everything, including what will happen in the future. He created us, gave us the capacity of reasoning and understanding, and we think we have the free-will to exercise those capacities – but since he has already determined and knows the future, this must be an illusion. He punishes us if we make the wrong choice that he knew we would make and likewise rewards us for good deeds. He requires that we pray to him at frequent intervals to praise him over and over again, and perform various kinds of rituals, like fasting, and wrapping ourselves in prayer garments. He requires us not to eat certain foods, and he prescribes how we should slaughter and prepare others. If none of this makes sense that is ok, God tells us it does not matter is we don’t understand, the main thing is to believe in spite of not understanding. Understand?

Wednesday, January 17, 2018

A tale of two grandfathers

Interacting with different kinds of people provides us with different learning experiences. Growing up I had two grandfathers, whom I did not know very well, because, being the child of two youngest children, my grandfathers were already quite old when I was born. Both of my grandmothers were already dead. So I knew my grandfathers somewhat remotely. Yet, I do believe that each of them was a strong influence on my life – in very different ways.

On my father’s side, my grandfather, whom we called Zaida, was the patriarch of the close family. I would see him every time the extended family got together in his little house where he lived with his two unmarried daughters. This was mostly on religious holidays and occasionally on Friday nights. I enjoyed the experience, getting together with my cousins, even though the food was pretty awful. And my grandfather was there at the head of the table, talking to the adults in Yiddish. Interactions with the kids were minimal but always pleasant and warm. For about a year before my bar mitzvah I would go on Saturday morning to shule with my Zaida. It was a little intimidating. He struggled to communicate with me. His English was good, that was not the problem. It was, rather, that he had no idea what to talk to me about, and I had no idea that he had no idea. It felt a bit awkward for both of us.

I would sit with him in the front row through the Saturday morning service (I loved the choir). The rabbi would always come over to greet him and therefore greet me as well. Supposedly this was all to help me get prepared for my big day. It made me realize how respected my grandfather was in his  community, what a quiet dignified and humble man he was. I will tell you more about him, but first let me tell you about my other grandfather.

My mother’s father, whom we used to call Oupa was known to me from infrequent meetings whose purpose I can’t remember. They were not regular gatherings, but were occasions when my grandfather was visiting and the family would get together. For a short period of a matter of months he lived in our house. In all of these encounters he was to me somebody with whom the adults dealt - most of the time he was sick - and it seemed to have very little to do with me. I cannot recall having a single conversation with him, and what I do remember of what he said was mostly complaining about his health and about the noise that the children (der kinde) were making.

To be sure, my two grandfathers presented me a stark contrast.

Though he was never rich my Zaida lived a full and productive life, and he gained the respect and admiration of all who knew him. He was a very religious man, but a man who believed it was important to interact with the world and to embrace progress. After a somewhat meandering emigration from Lithuania, he eventually settled in a small town in South Africa called Outshoorn. He and my Bobba eventually had eight children, the youngest being my father. Zaida was a peddler and during the first world war, when the South African economy was in a depression, he went bankrupt and moved to the big city of Johannesburg. Decades later he returned with one of his daughters to pay outstanding debts that remained from that period. He lived with his family in Johannesburg for the rest of his long life. He died in his ninety ninth year.

In the course of his emigration, first to America and then to South Africa, he taught himself to read and write English, not just to get by on the street or in the store, but sufficiently well to be able to read and quote from Shakespeare. In fact it became a favorite family story that he would quote from Shakespeare while teaching the Talmud seeing commonalities and connecitons between the two. Indeed, in Johannesburg he became a revered scholar in one of the largest synagogues in which he was known as the Cohen hagadol. For many years he taught Talmud in the shule. I remember that his class finished a particular section which became the occasion for a big celebration of his 93rd birthday. I have a cassette recording of that event.

From my Zaida I learned the value of education, the importance of dignity and respect and honesty, the importance of compassion and generosity, and the importance of treating everyone kindly and  giving them the benefit of the doubt. He taught this to my father as well and so I got a double dose. My Zaida was in many ways a role model worthy of emulation, but someone who set a high standard for anyone who would try.

My Oupa was another kettle of fish, as my mother might have said. He was also an immigrant from Lithuania, though later than my Zaida. But there the similarity ended. The sad truth is, he was apparently not a very likable man. I don’t know as many details about his life, but I think he suffered many disappointments, maybe in an unsuitable marriage (to a sophisticate lady from England), and in business, where his younger brother was very successful but also very selfish and probably stoked the resentment of my grandfather. In my eyes he was always angry, somewhat menacing. He was a chain smoker, his fingers were stained red from something in the cigarettes, and when he was not complaining he was coughing, sometimes violently. I’m sure he suffered, but his demeanor was not one that evoked any sympathy in me. I just remember disliking him very much, and when he died, smoking himself to death, I could not empathize much with my mother who was apparently quite upset.

My Oupa taught me a great deal. He taught me exactly what not to be as a grandfather, and although my grandchildren joke with me that I’m a grumpy grandpa, nobody is in any doubt about the extent of my love for them and how much I enjoy being with them, even though I may sometimes complain about the noise. I am very conscious of the picture that my Oupa presented to me, and very determined to never allow myself to sink that low no matter how bad I may feel. I’m not sure how my Oupa would feel to know that the lessons I learned from him are negative ones. Maybe he would be happy to know that some good came out of his negative example. And I certainly hope my Zaida would kvel to know how much I value his example – even if I did turn out to be a non-believer.

Two grandfathers, two very different stories, two very different significant experiences in my life.

The closing of the economist's mind

This is the abstract of a seminar announcement (in business economics) that appeared recently at my school. I don’t know the author or his/her work, and I omit his/her name here. All I will say is that he/she is on the faculty of a top five university. My intention is not to attack him/her, but, rather, to highlight the nature of what passes for state-of-the-art economics these days.
Read the abstract. Even if you can understand what it means, and I confess I cannot understand all of it, you will search in vain for any reference to the actions of real-world human beings. Of course they are there by implication, but there is no hypothesis containing the necessary actions that will lead to the posited aggregate outcomes that are the subject of this paper. And if humans are brought in at all in the paper it is in the form of a ‘representative’ actor, meaning not a real human, facing real uncertainty, having real expectations, etc. This typical approach violates what Austrian economists understand as methodological individualism, and think, whatever this is, it is not economics.
Notice also the buzzwords – the coined words, phrases and expressions that refer to a developing esoteric literature. Whatever the intention the effect is to narrow the scope of the discussion, the range of minds that can be joined in wrestling with ideas. It also reduces the amount of competition that the participants in the specialized group face.

Wednesday, December 6, 2017

Rediscovering Friedman’s Capitalism and Freedom

I first read the following paragraph as a nerdy college student sometime between 1966 and 1968.
“In a much quoted passage in his inaugural address, President Kennedy said, ‘Ask not what your country can do for you – ask what you can do for your country’. It is a striking sign of the temper of our times that the controversy about this passage centered on its origin and not on its content. Neither half of the statement expresses a relation between citizen and his government that worthy of the ideals of free men in a free society.”

This is the first paragraph of chapter 1 of Milton Friedman’s classic little book Capitalism and Freedom (C&F), first published by the University of Chicago Press in 1962, and since republished numerous times unaltered. The italics are mine.

I can still recall, after half a century, the shock that this paragraph produced in me as I read it. I could scarcely believe that Friedman had the temerity to so brazenly criticize that most admirable and dynamic of world leaders, the young, charismatic prince of the free world, the prophet of a new tolerant age, John Fitzgerald Kennedy. What could he possibly mean?

I had to read the book to find out. It was a uniquely transformative experience. I credit this book, more than any other work, with transforming my thinking about the meaning of freedom and the character of a free society. It was the beginning of my life’s journey as an economist dedicated to the mission of spreading the essential message that Friedman articulated in this work.

Fifty years later, in preparation for a new academic program to engage a select group of undergraduate business students, I am rereading Friedman's C&F. at the same time I am dipping into F. A. Hayek's The Road to Serfdom (RS) by way of comparison. Hayek’s work was first published in England in March of 1944 and in America by the University of Chicago Press in September of that same year. The two books are historically and philosophically connected.

Perhaps not surprisingly, rereading C&F, I see so many things now that I did not see as a young reader that add to my immense appreciation of the book - especially the introductory foundational chapters (this notwithstanding that I take issue with some of its claims – as Friedman himself would certainly appreciate). Clearly Friedman, by his own admission, was much influenced by Hayek (as evidenced by his forwards to the 1976 and 1994 editions of RS and his numerous references to it in C&F). Looking at the two books together one gets a sense of how the "climate of opinion" changed over the years. Both works help the reader to understand the nature of the classical western liberal tradition and the development of ideas marshalled against it. But for Friedman’s readers these ideas are different from those faced by Hayek’s readers. For example, the meaning of 'socialism' changed from one focused on central planning to one dealing with the role of government in redistributing income and micromanaging commerce by way of regulation. And reading C&F in 2017 I realize how, once again, the nature of the anti-capitalist arguments have changed to suit the contemporary intellectual anxieties and agendas. This makes the book a valuable source for discerning the history of ideas in relation to contemporary policies, over the broad sweep of Western civilization, in addition to whatever enduring value it retains as both a tract for evaluation of the policies of its time and today’s.

Indeed, it is amazing how relevant much of the book still reads. For example, it contains chapters dealing with, and anticipating much of the developments in, public education (Friedman being the originator of the idea), a volunteer army, privatization of social security (his idea), occupational licensing, inequality of income and wealth and more.

Something else I noticed was Friedman's careful choice of words. He speaks not so much of 'capitalism' as of 'competitive capitalism' - this distinguishing it from 'crony capitalism' – which should be referred to simply as 'cronyism' - but given its reliance on the alliance between big business and government, is naturally confused with capitalism.

Of course the two works are very different. Friedman's book is much more accessible to intelligent undergraduates than Hayek's (which was intentionally addressed to intellectuals). Friedman's book underscores his talent as perhaps the best communicator of the political-economic ideas of the classical liberal tradition of the last century. We may never know the full extent of his achievements in spreading the cause of liberty and helping to lift untold millions out of the grip of poverty and deprivation. He travelled the globe talking to important people wherever he went, uncompromisingly articulating his message. This book is but a glimpse of the force for change that he was to become. Certainly, Friedman could not be accused affecting a humble tone or a retiring demeanor, yet there is nothing in this book, or in his work on political-economy generally to suggest that he claimed any originality in this area. He was an economist not a political-philosopher, but he arguably did as much good in advancing an understanding of the latter than of the former. Reading the text carefully provides one a very useful springboard for the discussion of Hayek's deeper RS and of other important works. I plan to use it that way.

Sunday, October 8, 2017

The Banality of Evil and the Technology of Extermination.

My nephew has just visited Lithuania in search of ties to the various strands of his family – one strand being my wife’s parents’ family. This prompted me to contemplate (again) the fate of my own ancestors and the communities in which they lived.

Most of the Jews of South Africa came from Lithuania – as did three of my four grandparents. At one time there were 250,000 Jews there, much smaller than the 3 million in Poland, where reportedly ninety percent of the world’s rabbis lived and died in the holocaust; but it was a great center of Jewish learning and of Jewish commercial achievement, notwithstanding that many Jews lived impoverished lives in very small villages (like Varna from where my paternal grandparents came). Pretty much all of the Jews who were there in 1941 were murdered and there are very few left there today, maybe a few thousand.

What may not be widely known is that the Jews of Lithuania did not die in the gas chambers. The Nazis started systematically exterminating Jews (and other "undesirables") before the “final solution” of the gas chambers was put into effect. Instead, hundreds of thousands of east European Jews (not only in Lithuania) were lined up in the woods in front of their own graves that they were made to dig, and shot by groups of soldiers and local collaborators known as einsatzgruppen.

A couple of things strike me about this.

One is that for every one Nazi there were five local collaborators. The Lithuanians were particularly culpable in this – worse even than the Poles. Without their collaboration the project could not have been carried out.

Second, it is testimony to the effectiveness of old-fashioned (low-tech) technology in achieving a high death count – something that became quite evident later in the case of Ruanda. The Nazis moved from hands-on, face to face murder to gas chambers reportedly not for efficiency reasons, but because of the “emotional stress” that the firing squads caused the Nazi soldiers. [Ultimately the einsatzgruppen killed between 5 and 6 million people, of which about 1.3 million were Jews. The most famous atrocity occurred at Babi Yar.]

There is not much left of a once great Jewish civilization in Lithuania. In the 1950’s the Soviets destroyed most Jewish cemeteries to make room for development and those that remain in the small villages have been badly vandalized and defaced.

As far as I know there has been no Truth and Reconciliation Commission in Lithuania and reportedly anti-Semitic sentiment is still quite common. [But see also here.]

Sunday, August 6, 2017

Lewin-Landman Wedding

July 9, 2017 - Brooklyn NY.

On behalf of Shiralee and Geoffrey, and of the Landman and Lewin families, it is my great pleasure to welcome you all here this evening to celebrate the wedding of Shiralee Lewin and Geoffrey Landman.
I am very honored to have been asked by the bridal couple to say a few words to mark this occasion – words that will hopefully serve as a fitting memory for them and for all of us gathered here to celebrate with them.
At a time like this I am going to assume that I am permitted to engage in some personal remarks about Shiralee and Geoffrey and, also, to presume to offer just a few words of advice as they embark on the rest of their lives together.
I have known Shiralee for quite a long time. I don’t have to tell you about the special relationship that exists between fathers and their daughters, between fathers and their princesses. Beverley and are I are blessed with four wonderful children, four precious jewels, three of them princesses. Shiralee tonight you are the princess of the hour. So, ladies and gentlemen, please forgive my bias in the matter. Shiralee is and will always be my princess. 
Shiralee, we waited a long time for you to arrive in this world. You were born eight years after your sister. You occupy a special position in our family, strategically placed between your opinionated older siblings and the baby of the family. And from the day that she was born, it was obvious that Shiralee had special characteristics. She marched to the tune of her own drummer and often in a different direction from those around her. She saw the world through her own creative lens. Her name means loosely “sing to me” or alternatively “my song” and tonight indeed she sings her own special song.
Shiralee has an independent spirit, a curious mind and a desire to experience the world in all its diversity. She was the youngest of our children to go to sleep away camp in the Hill Country of Texas – at the tender age of 11. I know that these days the kids go away from home to camp at an even younger age. But we were not used to this. Beverley and I were devastated, terrified at the prospect of our little girl out there in the world, traveling alone on an airplane, and not knowing anyone at that camp. While the parents around us were rejoicing to be free of their charges for the summer, we were sad and apprehensive. But, as you might expect, she did fine. And a few years later, she became a counselor at that very same camp. This theme was repeated when she left Texas to go to Indiana University. And then, when she subsequently moved by herself to the grand metropolis of New York City, where she ultimately met her prince. She is nothing if not courageous.
Her creativity led Shiralee to study and work in fashion. This would not be so remarkable, were it not for the fact, that her parents—especially her father— are fashion-challenged. So it was destined that Shiralee would become the fashion policeman of the family. To this day, I receive, sometimes unsolicited, advice on my choice of wardrobe. I trust that Geoffrey has now been able to share in this benefit, though incompetence in this area prevents me from judging the matter. Seriously though, I am proud of Shiralee’s talents, talents to be cherished and nurtured as she goes through life. Creativity is a gift that flourishes best when shared with others – encouraging and helping others to express their originality in various ways, thereby creating meaningful connections and experiences. Be alert to the opportunity to creatively connect with others.
Another often overlooked skill is that Shiralee possesses is being extremely well organized, as the planning for this event testifies. She likes things to go according to plan, which is good, most of the time, except when they don’t. As one gets older one learns to live with unexpected outcomes. So, my advice is to take this valuable organizing ability that you have and use it, as you have done in the past, to your best advantage, but don’t let it overwhelm you. I have no doubt that she will use these strengths  to enhance her partnership with Geoffrey and to do more great things in the world.
Shiralee has an abiding love for her family, something we all cherish. Too many young people grow up and grow apart from their roots. Shiralee has always taken care to maintain these most precious bonds. Her nieces and nephews adore her and love spending time with her. Dare a father express the hope that one day in the not so distant future events may conspire to bring her and Geoffrey permanently closer to the mothership of Dallas, Texas.
But what of the Prince?
Of course, I have not known Geoffrey as long as I have known Shiralee. I have, however, spoken to those who have known him since childhood, and will rely on them (in part) in what I have to say. If it is remarkable that Shiralee was born into a family devoid of any fashion sense, it is perhaps even more remarkable that Geoffrey was born into a family without exceptional musical talent. Geoffrey’s father Phil reports that he has no particular talent in that regard, and while Sue and David do have some talent, it is not to the same extent as Geoff. From a very young age, Geoff showed an exceptional interest and talent in music, especially classical music, and this interest and insight has shaped his life.
Though the family moved around a bit, wherever they went Geoffrey took his dedication to music with him. And, as we all know, through dedication he has developed his passion into a formidable craft, a surpassing ability to play his chosen instrument, the classical Saxophone, as only a handful of people in the world are able to do – a talent that has taken him to many places in the world, including a notable appearance at Carnegie Hall.
Music touches the soul; it is a universal language – though spoken with different accents. A language is pretty useless if you speak only to yourself. At some level everyone appreciates music, so those who are privileged and sensitive enough to pick up its beauty, can use it to forge bonds with those around them. I know you will use this gift to do so.
Besides his music, Geoff enjoys fishing, which makes sense – it is after all a relaxing and contemplative pastime. And, of course, he has his bike. Evidently, if Geoffrey decides to do something, he will do it to perfection, certainly to the best of his ability. So, when he is not selling bikes, or ski equipment, or teaching or practicisin music, he is either walking the dogs or riding his bike, frequently in some race beyond the capacity of most mortals to endure. Biking is wonderful exercise and is something which can be done with others for most of your life, so you can take this too with you on your life’s journey.
Pursuing such a special vocation as your music no doubt entails sacrifices and hard work, and I am sure it can sometimes be lonely. Although what I do in my work is very different, I can relate to the experience of choosing something out of the ordinary as a career. Perhaps you get, as I do, raised eyebrows and expressions of incredulity. One is continually defying people’s expectations. But you are fortunate to have parents who recognized your talents and nurtured your passion allowing  you to follow your dreams however impractical they may have seemed to others. That is a priceless gift from them to you, one that enabled you to become the accomplished practitioner you are today. I know you cherish this and will carry that appreciation through your life. We don’t get to choose our parents – some of us just get lucky.
Geoffrey we welcome you and your family to our family and hope to celebrate many more happy events together.
Shiralee and Geoffrey when two people from different backgrounds—who set out along their own individual journey—find each other and decide to build a home and a life together, they bring with them all their talents, experiences, and special, unique zest for life. The union is more than the sum of its parts. I know that I am speaking for Beverley, Sue and Phil, and for everyone here today, when I say that we rejoice in your union, we love you and wish you many happy and productive years together. May your marriage be a blessing for you and for all who know you.
At times like this we remember loved-ones who could not be with us. I know that you both have fond memories of your grandparents during your formative years who have given you something of value to remember them by. If I were asked to give you one message to take with you from this day I would look to my late father, a gentle man and a gentleman, whom, as Shiralee knows I am fond of quoting. When dealing with people do not rush to judgement, always give them the benefit of the doubt, be sensitive to their beliefs and tolerant of their differences, treat them as you would like to be treated, show patience and moderation. That is how he lived his life and how I recommend you aspire to live yours.
The institution of marriage is as old as civilization itself. Though celebrated in different ways in different traditions, it is always based on an initial contract in which the future husband and wife pledge themselves to each other in the presence of witnesses.
In this spirit Geoffrey and Shiralee entered into the following agreement that I will now read:
On this 9th day of July, 2017, before family and friends, Shiralee Rebecca Lewin, daughter of Beverley and Peter Lewin, and Geofrey Loryn Landman, son of Sue and Phil Landman, entered into this marriage commitment.
Pledging  our love for each other, we comit to a life together based on mutual respect and understanding. As husband and wife we are a team, each complementing the other. We pledge to remain faithful and loyal and to support and sustain each other through life’s challenges, to always consider the feelings and views of the other in all that we may do. This we affirm in front of our friends and family on this special day.

 There is well known Hebrew blessing that I give to my children and grandchildren every Friday night that I am with them, and it is also often given on important occasions like this and I would like to read it to you as an expression of my wish for you to always be safe, happy and above all at peace in your lives together.
יְבָרֶכְךָ יהוה, וְיִשְׁמְרֶךָ
יָאֵר יהוה פָּנָיו אֵלֶיךָ, וִיחֻנֶּךָּ
יִשָּׂא יהוה פָּנָיו אֵלֶיךָ, וְיָשֵׂם לְךָ שָׁלוֹם
May God bless you and keep you safe
May God shine his light on you and be gracious to you
May God lift His face toward you and bestow upon you (the most precious of all blessings, the blessing of) peace.

Having fulfilled the laws of the land and affirmed their commitment to each other in the presence of those who love them, Geoffrey and Shiralee now invite you to join them for dinner.