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.

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.]

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.

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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 9^th 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.

Musings on population dynamics

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The real threat to our environment

While I’m not very fond of the term, it occurs to me, that the concept of “social capital” can be usefully used when discussing the economics of the environment. 

One frequently sees phrases like “harm the environment,” “good for the planet,” etc. especially now after the US rejection of the Paris accords. These utterances betray a fundamental misunderstanding about the nature of productive resources, what we often call capital-goods. In a brilliant, but underappreciated article, Hayek considers the question of “The Maintenance of Capital” (1936). He asks the common-sense question, what does it mean to maintain capital intact? How should an entrepreneur act in order to conserve his capital? He points out that the objective is not to maintain capital in any physical sense. It is not a *physical quantity* of any capital item whose maintenance is the objective of the exercise. Rather it is the *value* of his capital that he wants to keep intact. This means arranging his productive resources in such a way that they remain capable of yielding the same (desired) value of revenue in the future – behaving in such a way as to ensure that the current level of revenue is sustainable. To do this he will probably have to devote a part of his current revenue to the purpose of making good any decrease in the *value* of the combination of production resources that has occurred in order to produce that revenue. This is known commonly as depreciation. Anything put aside in excess of this is intended to produce an increase in revenue available in the future and can be thought of as saving or investment.

Note that maintaining capital in this sense may have little to do with the physical deterioration of productive resources. Mostly, in our modern world, it has to do with economic obsolescence – the decrease in the value of a production-good because of a change in technology that makes it less valuable than some new, better substitute.

The same distinctions between depreciation and investment and physical deterioration and obsolescence apply when considering the environment. Physical quantities of various types of environmental resources should not be the ultimate objective in preserving the environment. When we speak of conserving resources we should not think ultimately in terms of the physical quantities of those resources – like oil, or coal. Rather, it is the capacity of resources in general to produce outcomes that make our lives better, that is rightly thought of as the objective of the conservation exercise. The value of any resource in the environment or in a business results from and only from its usefulness in producing valuable goods and services for human beings.

Understood in that way, there is absolutely no danger right now in the industrialized countries of the world of permanently “damaging the environment.” The capacity of our environment to yield valuable goods and services that improve the lives of human beings has never been greater for now and for the foreseeable future. The resources that exist on the planet, the material items, may be marginally less in one form or another over time as we use them, but, in value terms, because of our technological abilities to productively use them, they have never been in greater abundance.

On the other hand, government policies that discourage private saving at the expense of public spending *do* inhibit our capacity to sustain our standard of living, our capacity to produce valuable goods and services from our productive resources, because to productively use those resources, entrepreneurs need financial capital that if diverted by government spending will not be available to them and they will not be able to profitably organize and combine those resources to produce what we humans need and want to sustain our lives. That is the real threat to our “environment”.

Income versus consumption inequality

When you think of inequality in terms of consumption it is more accurate and meaningful than thinking of it in terms of income or wealth. 

Haircut for a new semester

As my barber told me yesterday (barbers are a little known but highly reliable source of wisdom), the founding fathers were remarkable men, far from perfect to be sure, of course, but impressive in their knowledge and perception. And they left us with an incredible legacy, in the Declaration of independence, the Constitution, the Federalist Papers, ... - not only as political documents, but as triggers to activate our thinking and our education, and, crucially, the education of all the generations of our children - education about the fundamental principles of liberty and the proper role of government. For the founders' generation and those immediately following, these were the key issues of the day.

Sadly this component of our general and formal education has been diminished, dumbed down, marginalized as irrelevant to current concerns. The common folk of today, intelligent and otherwise, are strangers to the contemplation of the dangers of big intrusive government, and complacent about its perpetual expansion.

This then is what defines my professional mission - to stimulate a willingness among the unaware to question what seems to be normal, to awaken that spirit of independence and curiosity that led our founders to the conviction that individual autonomy is precious but fragile - that, indeed, the price of liberty is eternal vigilance. There is never a shortage of those who would promise the earth in exchange for individual rights - they are not the problem. The real problem is the lack of understanding about the cost of delivering those promises and the determination to resist them.

This I have to remember when, at the start of each semester, I am confronted by a pathetically small number of my students who even recognize the phrase "life, liberty and the pursuit of happiness" never mind know where it comes from - college students, and graduate students! One of the reasons we repeat the mistakes of history is that we don't know the history.

One person, student, friend, associate, ... at a time.

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100 years later

Travel back in time to 1917 to talk to a starry-eyed Bolshevik in the immediate aftermath of the Russian Revolution. Tell him that you are sorry to have to tell him that the brave new world he imagines communism will usher in, is an illusion - a horrible illusion; that in the next six decades 100 million people will die as a result of the excesses and failures of communism, 20 million in the Soviet Union alone; that the next Soviet leader will ally with a German dictator who will exterminate over 10 million (6 million of whom are Jews); that there will be a massive world war in which millions more combatants and innocents will die; tell him this, and he will tell you you are mad, delirious and dangerous.

Jonathan Sacks selling the belief in God

On my Facebook recently I linked to this important and inspiring address to the parliament of the EU by Jonathan Sacks – former chief rabbi of the UK, now a prominent, highly respected international commentator. I agree with pretty much every word of that address. It exposes the lie of those who claim to be anti-Zionist but not anti-Semitic – the polite hypocrisy of Europe’s leftist intellectuals. I very much admire Sacks’s intelligence, courage and communication skills. But this blog is about something else – a criticism that I have of another aspect of his work, a mild criticism, but one I feel compelled to register.

Johnathan Sacks was educated as a philosopher in the world’s most prestigious universities. He obtained his Ph.D. at Cambridge studying under the eminent philosopher Bernard Williams. He also studied philosophy at Oxford and Kings College, London. One may certainly expect that he have a deep understanding of the logical rigors of philosophical discourse. This is part of the reason I found a recent book of his so disturbing. I refer to his The Great Partnership: God, Science and the Search for Meaning, published in 2011, and widely admired. I think the book is deeply flawed.

Originally I intended to critically review the book, examining its contents in detail in the review. But, I now think that this is unnecessary and, in any case, might strike the wrong tone. The problem with the book, and with related work and pronouncements by Sacks, can be summed up by clarifying and exposing just one basic logical flaw, and that is the purpose of this blog.

As I interpret him, Sacks’s position (in this book and in many other places) can be summed up in two separate propositions. The propositions are not actually related, but he makes it seem as if they are.

1. There is no contradiction between religion and science– hence no contradiction between religion and modernity.
2. We need religion to keep modern societies from imploding.

Both might be valid propositions, and I believe they are if, but only if, the second is interpreted in a very different way from the way that Sacks intends it.However, he then proceeds, mostly implicitly, to a third proposition

      3. Therefore we should embrace religion – we should embrace its beliefs and its rituals.

Number 3 is already clear from the Introduction in his book, where he attacks the “new atheists’. “It makes sense to believe in God” (11). And chapter 14 (entitled "Why God?"), to which this refers, is an extended argument for believing in God.

My point in this blog is simply that proposition number 3 is nonsense. Or, more accurately, it is arguing in a nonsensical circle. So now I explain.

Consider proposition 1. Indeed, there is no contradiction between science and religion, as long as religion is understood to be about one’s values, about what one believes is right and wrong, good and bad. A religious person believes that these values come from that entity we call God. It is one of a set of deontological belief systems, systems that are grounded in fundamental beliefs taken to be revealed to us somehow and that are not open to question – they are treated as self-evidently true, whether we feel able to explain them in terms of some other values or not. They are the values we appeal to when considering what ought to be done, or how we ought to act in any given situation. But, and this is important, being fundamental, we believe them because we believe them, not because we can justify them in terms of some other value we believe. If we believe they are God’s words that is enough for us.

Science has essentially nothing to do with this, unless we are talking about the facts of revelation and affirming or disputing these facts. It is clear that beliefs about revelation by the faithful are pretty much insulated from critical scientific examination. There are foolproof methods for reconciling these beliefs with any scientific finding. God could have put the fossils there to make us think they were millions of years old being one example. So, these matters aside, science is about how the world works, about what the consequences of any action will be. Religion is about what we ought to do. Science is about how things are. Religion is about how they ought to be. These are entirely separate matters. They operate in different realms. As David Hume pointed out a long time ago, you cannot get an ‘ought’ from an ‘is’. Ought statements are normative statements. Is statements are positive statements. To know what to do, we need both. We need the empirical discoveries of science to inform us about the consequences of our actions and we need some way of deciding which consequences are good, bad or ugly; that is, we need some way of evaluating consequences.

In that sense, Sacks may be right, religion and science are partners. But, being right, he is not original. As a philosopher he certainly knows that Hume made this abundantly clear. And Sacks’s treatment is definitely inferior and more obscure than Hume’s. But that is not the real problem. The real problem is that he proceeds to confuse matters more with propositions number 2 and 3.

Proposition 2 is a positive statement. That is, it is a statement about how the world works, not about how it should work. It is an assertion about reality. What is this assertion? Sacks sees Europe and many other parts of the world caught in moral decline. He sees the miraculous European civilization, the result of centuries of painful social evolution, as slowly decaying, the reemergence of anti-Semitism being a prominent, but only one, manifestation of this. And he diagnoses this as the result of a “loss of religion”. Religious belief provides secure moral boundaries, a framework for moral action that guards against excess and profligacy. It is well known that modern Europeans are often openly hostile to religion, to its practice and to its influence in any form. They revere the anti-religious secular state. Sacks sees this as the key problem.

As I intimated above, I think, in one sense, he is right. I think he is right in thinking that belief in the secular state is the problem. This belief is responsible for the erection of the European welfare-state with punitive taxes, ubiquitous regulation, and high levels of dependence on state-sponsored services. It has, as Sacks notes, encouraged the erosion of individual accountability and responsibility for the consequences of individual actions. It has blunted incentives for innovation and entrepreneurship.

Where one might differ with Sacks of course is in diagnosing why this has happened. Certainly it is a kind of idolatry – a belief in the supernatural powers of the state government fueled by the good intentions of powerful individuals, and a loss of belief in spontaneous (external) supra-individual processes. It is a fatal conceit to think that powerful individuals can achieve a social utopia. And, certainly, a belief in God as usually understood, might have prevented this conceit (though, judging by liberation theology, it might not have). But, more fundamentally surely, the problem is a loss of belief in the sanctity of individual property rights under a universal rule of law. If you want to call that belief a “religion” then we can agree with proposition 2. We certainly need renewed faith in the values of classical liberalism (and these include the separation of religion and state, the right of individuals to practice their religions peacefully) if we are to arrest the economic and social decline of European civilization. He seems to come close to this when he realizes that Christianity is a force for freedom, but only when it is not an instrument of a powerful state (witness the Inquisition and the Crusades).

It is proposition 3, as I suggested, that is the real problem. This is a normative statement, but a complex one. It is a recommendation, a prescription for “action”. But, it is complicated by the fact that it is predicated on a prior positive statement. It is what we call an “if … then” statement – to wit – if proposition 2 is true, then proposition 3 follows. So, if it is true that a loss of “religion” is what  explains the European decay, says Sacks, then to reverse this we need to reintroduce religion – reestablish religious beliefs and the enervating discipline that comes with them.

There are multiple problems with this. The least is the meaning of “religion” as already explained. We can leave that aside – although clearly Sacks would probably not agree that secular classical liberal convictions are the necessary and sufficient elements we seek.

More important is the structure of this proposition. It is a call to believe, because belief is good. You see the problem? How do we know belief in God is good? What is the standard by which we judge here? If we know what is good because of what God tells us, then we are saying nothing more than we ought to believe in God because God says so, which makes no sense. It assumes you already believe in God.

But that is not what Sacks means. He means we should believe in God because then we are more likely to get the kind of society we want. In other words he is justifying this belief on consequentialist grounds. He is saying belief in God is good because it brings good consequences (will prevent the moral decay of society). But hang on, how do we know what “moral decay” is? Don’t we already need to believe in God for that so that we can consult his revealed word to determine that? You can’t have it both ways. You can’t claim that belief in God is the basis of all other moral beliefs and argue that we ought to belief in God because it is more likely to give us what we already believe is desirable.

Let me put it another way. I am an agnostic on matters of cosmology. There are things that appear to me to be beyond our knowledge and comprehension. But I do not believe in revelation – there is nothing in any revelation story that is even remotely persuasive to me. Certainly I do believe in certain values as self-evidently true. I do believe in the values of classical liberalism, in the autonomy of all individuals, and equality before the law, etc. This belief is a combination of simple intuition (deontological) and consequential (it brings the kind of society I prefer – which also has an empirical (positive) component to it). Sacks is saying to me, if you want to stem the moral decay of Europe then believe in God and support others embracing that belief. How ridiculous is this? How does one suddenly decide to believe something that one doesn’t believe? Of course, one can pretend to believe and act as if one believes, perform the rituals, etc. Is this what he wants? What exactly does he mean by “Why God?”?

Belief is not the direct result of a choice, of an action. One cannot choose at any moment to consciously believe what one does not believe. One can choose to keep an open mind, to resolve to examine rival claims and assertions no matter how unlikely they may seem. But, surely one should do this anyway, as a result of belief in productive scholarly discourse.

In the final analysis Sacks’s arguments on this are sadly, and surely unforgivably, given his impeccable qualifications, incoherent.

The Primacy of the Primal

Jonathan Haidt: "Because of flagrant "concept creep," however, almost anyone who is politically right of center can be labeled a racist or a fascist, and the promiscuous use of such labels is now part of the standard operating procedure. The call to shut down MacDonald’s talk asserted, without evidence, that her agenda is "racist, anti-Black, capitalist, imperialist, [and] fascist." As with accusations of witchcraft in earlier centuries, once such labels are attached to someone, few will dare to challenge their accuracy, lest they be accused of the same crimes.....

The human mind evolved for violent intergroup conflict. It comes easily to us, and it can be so emotionally rewarding that we have invented many ways of engaging in it ritually, such as in team sports. But the tribal mind is incompatible with scholarship, open-minded thinking, toleration of dissent, and the search for truth. When tribal sentiments are activated within an academic community, some members start to believe that their noble collective ends justify almost any means, including the demonization of inconvenient research and researchers, false accusations, character assassination, and sometimes even violence. Anyone not with the movement is against it, and its enemies — students, faculty members, administrators — are often intimidated into acquiescence. This is how professors and students are increasingly describing their campus climate, at least at elite four-year residential colleges."

http://www.chronicle.com/article/Intimidation-Is-the-New-Normal/239890

Today’s liberalism is an anachronism - from Shelby Steele

Some quotes from the Shelby Steele article linked below that I really liked. My italics

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"America became stigmatized in the ’60s as racist, sexist and militaristic, it wanted moral authority above all else. Subsequently the American left reconstituted itself as the keeper of America’s moral legitimacy. …From that followed today’s markers of white guilt—political correctness, identity politics, environmental orthodoxy, the diversity cult and so on.

This was the circumstance in which innocence of America’s bigotries and dissociation from the American past became a currency of hardcore political power. Barack Obama and Hillary Clinton, good liberals both, pursued power by offering their candidacies as opportunities for Americans to document their innocence of the nation’s past. …

For this man liberalism was a moral vaccine that immunized him against stigmatization. For Mr. Obama it was raw political power in the real world, enough to lift him—unknown and untested—into the presidency. But for Mrs. Clinton, liberalism was not enough. The white guilt that lifted Mr. Obama did not carry her into office—even though her opponent was soundly stigmatized as an iconic racist and sexist.
…

Today’s liberalism is an anachronism. It has no understanding, really, of what poverty is and how it has to be overcome. It has no grip whatever on what American exceptionalism is ... Instead it remains defined by an America of 1965—an America newly opening itself to its sins, an America of genuine goodwill, yet lacking in self-knowledge.

...

This liberalism evolved within a society shamed by its past. But that shame has weakened now.
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This liberalism came into being not as an ideology but as an identity. It offered Americans moral esteem against the specter of American shame. …

Let’s stipulate that, given our history, this liberalism is understandable. But American liberalism never acknowledged that it was *about white esteem rather than minority accomplishment*. … Liberalism is exhausted because it has become a corruption."

https://www.wsj.com/articles/the-exhaustion-of-american-liberalism-1488751826 

More musings on the passing of time

I have entered my 70th year. I cannot even remember ever anticipating getting this old. I remember thinking about 60, yes, but 70, that was so far away. Inside I am still 30.

The way my life has unfolded bears a tenuous resemblance to the way I imagined it unfolding. I wanted to be an economist, to teach and write, and I have achieved that in a way I could never have imagined, gaining some real-world business experience along the way. And if things had continued the way they are now, I would have been more than happy. Who would have thought that this year will be my busiest for quite a while - conferences, seminars, book project, an exciting institutional project, and more articles to add to the uptick in recent years (thanks to my young colleague Nicolas Cachanosky for a lot of this).

Add to this many family blessings and I conclude that I am the richest man alive.

Musings on the mysteries of mortality

Musings on the mysteries of mortality.

- It is a short ride really

- Upon entering the house of a close friend who has recently died at a young age - your age. You know he is gone, but the unconscious mind still uncontrollably “expects” see him sitting where you last spoke – his eyes, his expression, the timber of this voice, his special sense of humor, all as they ever were – it cannot accept the notion that all that he was has now somehow suddenly stopped – he has not left the room – he is gone forever. Sadness and frustration overwhelm you.

- 50 year high school reunion. You show up expecting to see your classmates and all you find there are old men and women.

An early stocktaking

The two issues I identified in my early evaluation of the prospects for the Trump administration also seem to be the most polarizing. I refer to immigration and trade. Educational reform runs a close third. I discuss them in reverse order.

I believe education is the one with most potential for rapid and large benefits. The federal government plays only a minor role in public education, but, if owing to the change in philosophy at the top, one or two states adopt a state-wide voucher program, the dam protecting the public school monopoly will burst (this is Milton Friedman’s metaphor). In very short order, a flurry of entrepreneurial activity will enter the K-12 education industry and parental energy will be mobilized in the interests of their kids. Within a few years a variety of better options for American school-children will be routine. I expect vigorous opposition at every turn, highlighting everything that even smells vaguely like a mistake, suggesting that the less than perfect condemns the better, as if it could be any worse for kids in the inner city than it is now. But the benefits will be huge and not only for the children via better education and earning opportunities, but also for their families and for the whole country, to put America back into the community of nations with high levels of proficiency across the board. Dare one hope?

On the matter of trade, it seems to me unambiguous. Restricting trade that is peaceful is uniformly a very bad idea. Trade is the engine of growth. We should never restrict trade to make something at home that we can import at five times less the cost - as with Mexico. One would think that any successful businessman would know that. How much of this is posturing for political purposes and how much trade and international investment in the U.S. and by U.S. companies abroad will actually be affected, remains to be seen. Again fingers crossed.

So to the matter of immigration. This is by far the most difficult issue and the one I feel most confused and sometimes isolated about. Movement of people across borders is, of course, related to movement of goods and services, and investments, across borders. In general this is an unambiguously good thing – a win-win situation – though of course those whose wages are protected by the absence of low-wage immigrant workers could be hurt. I believe, in the case of Mexican immigration, the number of losers and the extent of the losses are very small, because Mexican labor is complementary to, not competitive with, workers already here. More than thirteen million illegal workers do jobs that the rest of us are very happy to have them do. I cannot see that illegal immigration of this kind hurts anyone. It saddens me greatly to read in the Dallas Morning News this morning of the rounding up of hundreds of undocumented people for deportation. Who gains from this deportation? It diminishes us all. (And this is not new with Trump. Obama was a big deporter of illegals.) 

Whatever violence is associated with this immigration is most likely connected to the drug trade. It is not an immigration problem, it is a drug-enforcement problem. The best way to deal with that is to decriminalize the drug-trade. The drug-war cannot be won. Time to abandon it. And immigration on our southern border is simply not a problem, it is an opportunity, an opportunity to turn an apartheid situation into a integrated labor market with extensive immigration reform. The last thing we need is a wall.

But there is a difference between movement of things and movement of people across borders. People bring attitudes and intentions with them, they can get sick, they can die, they are animate. It cannot be denied that not all immigrants are alike in this regard. As I see it, there are two problem sub-cases connected to immigration, dependency and danger.

Dependency  - it cannot be denied that when people attempt to cross borders out of extreme need, desperation, into a welfare state where those with resources are forced to share those resources with the immigrants a serious moral dilemma exists. This is a really problematic second-best situation. It is fundamentally a problem of the welfare-system itself. But, given the existence of automatic mechanisms to force some to pay for the needs of others, a large influx of needy people could spell economic ruin. And, even if such mechanisms are altered to deny immigrants welfare assistance, the potential exists that the large numbers of immigrants may arrive anyway and constitute a humanitarian crisis beyond the capacity or willingness of private individuals to deal with – as we saw in Greece, Hungary, and other places recently as a result of the Syrian refugee crisis. Who can blame a population for collectively trying to respond to this by setting up some sort of barriers? The origin of the tragedy lies not with them but with the chaos in Syria. There are no simple answers in this kind of situation.

Danger – by the same token it cannot be denied that there are people in the world who are committed to the destruction of everything we hold dear. It cannot be denied that these people are dangerous. So the risks associated with allowing such people to immigrate may be real and one cannot fault an attempt to assess and deal with this risk. My condemnation and alarm at the recent travel ban imposed by Trump is not that this danger does not exist, but that, at the present moment, in America, it actually is not very great, and that danger will not likely be decreased by the kind of shot-gun approach of an across the board ban that affects all Muslims (including students and green-card holders and refugees) from those selected states. True they are states that sponsor terrorism, and for that reason greater scrutiny is already applied to people coming from there, directly or, more likely, indirectly. The harm done to innocent people by this ban is simply not justified.

Perhaps one of the most appealing aspects of candidate Trump was his refusal to be politically correct. I imagine many people voted for him because they were just fed up with the patronizing, whining refusal of the Progressives, personified most visibly by Barak Obama, the refusal to confront simple realities for fear of offending people; specifically to confront the issue of radical Islam, calling it by name, and examining its connection to Islam more generally. No one was served by this condescendingly evasive attitude, and, in fact, it probably played a large part in the election of Donald Trump. So when thinking about Muslim immigration, one should, for example, confront the reality that now exists in France, with its lawless Muslim ghettos openly radical and hostile to the very nation that took them in. Surely it is legitimate to ask, what did they do wrong, and what are the chances that we could suffer the same fate? What makes us different enough to believe that it will end better here?

I actually do think we are different and that it would end better here. I look at the large Muslim population we have already and how integrated they are into American life, not poor, isolated and hostile, especially the next generation. But the conversation is certainly worth having. If I am right, what explains the difference?

And the conversation is worth having undeniably because of the very nature of Islam itself. There are problems there. If we don’t talk about them the dangers of Islamophobia are greater. I think many Muslims understand this. Many non-Muslims need to be reassured.

As a world-view – according to its law-codes – Islam strikes most Americans (and “westerners”) as terribly problematic. Despite deflections by its apologists, it is full of violent, misogynistic, deeply anti-individualistic ideas and commands, and overt anti-Semitism. And the radical version of this accentuates those very elements that we find repugnant and ignores those we find reassuring. The very problematic nature of Islam as a set of doctrines needs to be counterpoised to the reality that Muslims in America do not seem to abide by them – though polls show that, worldwide, most Muslims affirm them. In North America, the vast majority of Muslims, in spite of the severe law codes of their religion, are peaceful and, in varying degrees, open to assimilating western ideas. The everyday lives of moderate Muslims when they work and play and pray, do not make the news. There is very little intellectual activity of a theological nature grappling with the severity of fundamental Islam and how a modern Muslim might live with them without denouncing Islam. The most common response appears to be to ignore those strictures that are not perceived to fit with a modern life, but not to talk much about it and perhaps take offense when asked about it. By contrast, Jews and Christians have no problem distancing themselves from the excesses of their fundamentals (Jews) or their history (Christians). Islam has not come to terms with the modern world in the same way. Islam in the west appears to be just beginning to deal with that.

Donald Trump is right about one thing. The real-world terrorism that emanates mostly from the middle-east and from Pakistan, is inspired by Islamic teachings. When people naively say “Islam is a religion of peace” they are ignoring serious internal contradictions within the fabric of Islam - at the very least that it is a religion explicitly dedicated to world domination by violence if necessary. What they mean to say is that Muslims are by and large, like the rest of us, peaceful people. I am sure that is true. And when Islam is able to make its peace with the world, when it is just another lifestyle choice, a tradition among many, then the world will be a better and more tolerant place. Those Muslims living in the west can and are helping to bring this about in an environment of free and open discussion.  Perhaps that will be a coincidental benefit of the age of Donald Trump. 

Facts relevant to the East Jerusalem Situation.

Ok, so the story linked below is getting a lot of play. I am not an expert, but some basic things should be known and are never reported.

The change referred to involves the issuing of permits to build homes and apartments on land near Jerusalem. Jerusalem is a fast growing metroplex. There is a shortage of housing for people who want to live there. Right now Jerusalem in under Israeli sovereignty. The political backdrop is that the vision of the Palestinian leadership, the Palestinian Authority, which is the current incarnation of the Palestinian Liberation Organization (PLO) sees Jerusalem as part of any interim or final settlement with Israel (like a two-state solution). Israel and most Jews dispute this vigorously. If this Palestinian demand is a precondition for a settlement then the whole thing is a non-starter. So to say that Netanyahu's action in allowing the issuing of housing permits kills the two-state solution is not accurate. It is equally the unrealistic Palestinian demand that kills it.

What are the relative merits on each side of this issue of Jerusalem? If one wants to play the ethnicity game then it should be known that Jerusalem was a Jewish city long before it was a Muslim city and that it is doubtful whether Muslims ever had a majority in the city before the 1949 war (when the Jewish and many Christian inhabitants fled). The Jewish quarter was taken over by Muslims.

“The Jordanian commander is reported to have told his superiors: "For the first time in 1,000 years not a single Jew remains in the Jewish Quarter. Not a single building remains intact. This makes the Jews' return here impossible." The Hurva Synagogue, originally built in 1701, was blown up by the Jordanian Arab Legion. During the nineteen years of Jordanian rule, a third of the Jewish Quarter's buildings were demolished. According to a complaint Israel made to the United Nations, all but one of the thirty-five Jewish houses of worship in the Old City were destroyed. The synagogues were razed or pillaged and stripped and their interiors used as hen-houses or stables.” (https://en.wikipedia.org/wiki/Jewish_Quarter_(Jerusalem).

So the notion that Jerusalem is an historically Muslim city is without basis in fact. It is more accurately historically an ethnically mixed city – which is what it is now under Israeli sovereignty. The two biggest ethnic groups are Jews and Arabs (there is an increasing number of Christians living there, but they are a small minority). Jewish and Arab neighborhoods are intricately intertwined and there is no way in any future settlement that they can be unraveled without considerable upheaval. The Arabs living in east Jerusalem work in Israel and have a standard of living a magnitude above those living in the West Bank in an economy segregated from the Israeli economy by the policies of the PA and the reaction to those policies by the Israeli government. So it is extremely doubtful that Jerusalem Arabs would want to live under the PA in any future settlement.

Having said this, there is ample ground for a critical assessment of Israeli housing policy. In general, the Israeli government’s position on land ownership is problematic. Too much of it is owned by the government (I would prefer it all to be private, but this is the age of nation-states). However, for government owned land, access to lease is officially open to all residents, Jewish or Arab (or anyone) and the same is true of privately owned land (http://www.meforum.org/370/can-arabs-buy-land-in-israel). It is probably true, that, in practice, Arabs are discriminated against when it comes to leasing government land.

So, a legitimate cause of concern about the newly available housing permits in Jerusalem is whether or not these permits will be politically granted in the service of the agenda of the religious and nationalist vision of the right-wing political parties. Those concerned for the well-being of the Palestinians should focus of the details of urban development in Jerusalem. Will Arabs have equal access to lease and buy land pursuant to the issue of these new permits? A very valid concern. An open market militates in favor of good relations among the residents.

In terms of the bigger picture, the robust development of Jerusalem, fast becoming Israel’s second largest high-tech sector, is an opportunity for entire West Bank should a way be found to peacefully integrate it into the Israeli economy. A one-economy solution is compatible with a variety of political arrangements.

Israel approves hundreds of settlement homes in East Jerusalem

It is difficult to change one's mind regarding long-held beliefs.

Milton Friedman was a genius in discussing social policy. He always seemed to have just the right words to communicate to and disarm the critics of his argument, or his proposals. An economy of expression and a master of clarity.

From reading him I came to believe in free markets. But I remember it was not a pleasant experience - not at first. When he opposed federal aid to victims of flooding located in flood planes, I just "knew" that he could not be right, but reading his logic, I could not figure out where he was wrong. And so it was with many similar issues. I felt anger and resentment at him. So damn sure of himself with his ice-cold logic.

I am no Milton Friedman, but I frequently encounter this reaction when I use the same logic against free-market critics. I am sure many of my like-minded friends do as well. Instead of rational counter arguments I encounter hostility - an impugning of my motives, a labeling of my position, a refusal to engage with the logic. Given how I felt back then I understand this reaction; it is understandable, but it is not excusable - not if it is stubbornly maintained. I came to change my mind, once I got past my ego, and became an admirer of Friedman. Perhaps I am asking too much when I am expecting others to do the same.

[I am not referring to those who have a coherent counterargument, based, necessarily on a different worldview. I am referring to those who have no logical counter argument, but just refuse to accept the implications of that.]

So how do you feel about President Trump?

Many Americans, myself included, will not be sorry to see the end of Barack Obama as president. The victory of Donald Trump, arguably, owes much to Obama’s many arrogant failures, including prominently the Affordable Care Act (ACA), known unaffectionately as Obamacare. To say the least, Trump is an unlikely candidate for president, and an even more unlikely winner. So, how should we feel about America’s next president, what should we expect?

Clearly there are grounds for some optimism. Trump has promised, and appears to be actively preparing for, a major reform of the ACA; for a significant change of course on environmental and climate policy to remove stupid, debilitating regulations on manufacturing and energy production; a change in education policy to allow for parental choice so kids can escape from the failed public school system; a change in labor policy (where Obama had acted arbitrarily and illegally to support labor unions); and most importantly, a reform and reduction in corporate and other taxes. These and some other proposed initiatives are promising. Some of the people he has nominated for his administration appear committed to following through on these. Let us hope they do.

Also significant for readers of this blog, is the fact that Trump promises a 180 degree turn on Obama’s barely disguised adversarial relationship with Israel. Trump seems to understand the hypocrisy of most of the world vis a vis Israel as evidenced through the actions and deliberations of the United Nations.  And on this, I believe he joins the majority of the American people. Going forward the BDS movement and the UN will not find it as easy to pursue their anti-Israel/anti-Semitic agendas as it was under Obama.

But, there are also grounds for concern. Trump is nothing if not unpredictable. It is hard to know what he really believes or on what he will follow through. Some of his nominees seem to have opinions at odds with his, and with other nominees. So will we have an administration that lacks coherence? This would not be good for the American economy, where the biggest problem for private investment has been uncertainty about government policy.

In addition, Trump articulated some specific policy agendas that strike me as very problematic. He promised to rebuild America’s infrastructure in a way that echoes old-style Keynesian demand-side stimulation policies – policies that have been tried and have failed in every generation since Keynesian economics was born in the 1960’s. One of his closest advisors describes himself as an ‘economic nationalist,’ which is very troubling. And this relates to trade policy, the most troubling of all his proposed policies. From what he says, Trump seems not to understand the most basic of all economic truths, the truth that trade is a win-win proposition, both parties to a voluntary trade gain from it. When he talks about trade with China and about reneging on America’s recent Atlantic free trade agreement and NAFTA, he implies that somehow America is losing from free trade. He emphasizes the losses that some Americans suffer by being unable to compete with foreign competitors and ignores the huge gains to others – producers, workers and consumers – that result from trade. He promises to impose trade barriers that protect local workers. This is known as Protectionism, a policy, like Keynesianism, that has been tried many times and failed, but just refuses to die. Protectionism has the potential to destroy economic dynamism and growth completely. Also, his stated position on immigration is very troubling to me.

How much is talk and how much will translate into significant policy remains to be seen. Trump cannot act alone. He will need the Congress to legislate and fund. I am hoping for the best and fearing the worst.