Sunday, September 26, 2010

Peter Lewin's thought for the day - remembering history

The reason why we (collectively) don't learn from history is that we don't live long enough to remember it.

Those alive today who are old enough to have actually experienced, as thinking adults, the Carter, Reagan,Thatcher administrations and the ascendancy of the ideas of Friederich Hayek and Milton Friedman - leading to the widespread discrediting of Keynesian economics - are in the ineffective minority. The knowledge that counts for economic policy is very much based on actual experience (you had to live through it); it is tacit in nature, very difficult to transmit to someone who did not share the experience. Written history is a pale substitute for the real thing, and it frequently distorts.

So, every generation seems doomed to find out for itself what it should not do by doing it again - just like every child in the process of growing up.

Tuesday, September 14, 2010

Some quotes from the NYRB

Paging through my latest copy of the NYRB I came across these two quotes.

The first is from an article by Tony Judt - maybe one of his last before his recent death on August 6. Judt was a widely read and very popular historian and commentator who first came to my attention because of his writings on Israel. Though he lived for a time in Israel he became openly hostile to the whole idea of a Jewish state and was one of the first of the now legion leftist intellectuals calling for the dismantling of the Jewish state in favor of a single Israel-Palestine. Of course he must have realized what this would imply for the Jewish minority who lived in such a state - if any remained.

Interestingly, his position on America and the world was equally provocative. He was clearly an uncompromising opponent of anything that smacks of Capitalism. What strikes me about this quote, and I realize it is only one quote, is its sheer incoherence and the abysmal ignorance it reveals. Clearly Judt was never burdened with the education of even the most basic of economic principles. He does not know how markets work (clearly does not want to know) deriving satisfaction from unselfconsciously and arrogantly spewing these meaningless ideological phrases to the tumultuous applause of his sycophantic audience.

Judt is now gone. He was notable, but he was not unique. His kind abound. They are revered as intellectuals, as insightful interpreters of current trends and events. But, in truth, many of them are very, very ignorant.

Today, we can still hear sputtering echoes of the attempt to reignite the cold war around a crusade against “Islamo-fascism.” But the true mental captivity of our time lies elsewhere. Our contemporary faith in “the market” rigorously tracks its radical nineteenth-century doppelgänger—the unquestioning belief in necessity, progress, and History. Just as the hapless British Labour chancellor in 1929–1931, Philip Snowden, threw up his hands in the face of the Depression and declared that there was no point opposing the ineluctable laws of capitalism, so Europe’s leaders today scuttle into budgetary austerity to appease “the markets.”

But “the market”—like “dialectical materialism”—is just an abstraction: at once ultra-rational (its argument trumps all) and the acme of unreason (it is not open to question). It has its true believers—mediocre thinkers by contrast with the founding fathers, but influential withal; its fellow travelers—who may privately doubt the claims of the dogma but see no alternative to preaching it; and its victims, many of whom in the US especially have dutifully swallowed their pill and proudly proclaim the virtues of a doctrine whose benefits they will never see.

Above all, the thrall in which an ideology holds a people is best measured by their collective inability to imagine alternatives. We know perfectly well that untrammeled faith in unregulated markets kills: the rigid application of what was until recently the “Washington consensus” in vulnerable developing countries—with its emphasis on tight fiscal policy, privatization, low tariffs, and deregulation—has destroyed millions of livelihoods. Meanwhile, the stringent “commercial terms” on which vital pharmaceuticals are made available has drastically reduced life expectancy in many places. But in Margaret Thatcher’s deathless phrase, “there is no alternative.”

The second quote illustrates this as well. It is from an article by Arnold Relman commenting on an analysis of Obamacare by John Weinberg. My temptation is to just say, "what an idiot" and move on; but this stuff is taken seriously by apparently intelligent people. Like his suggestion that when we start treating health care as a right rather than as a business, like other countries do, we will be able to control costs. Yes, and the world is flat.

Wennberg’s painstaking documentation of overuse as a cause of excessive costs greatly helps our understanding of the US health care problem because it shows that costs could be controlled by eliminating unnecessary care, without rationing medically appropriate services. The clear implication of his work is that we could afford good care for all if we made our medical system more efficient and less wasteful.

What he does not emphasize is that to produce such change will require elimination of the economic forces that have made medical care a commodity in trade instead of a social service, and have transformed our health care system into a profit-seeking industry. Until we join other advanced countries in treating medical care as a right and not a business, we will have to wait for control of health costs.