I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man. -- Thomas Jefferson

Tuesday, November 6, 2012

Election-Day Prediction: Romney With A Substantial Win (I Think)

A Romney win: 53 to 47 in the popular vote; 295 to 243 in the Electoral College.

I give Romney the obvious states plus Colorado, Ohio, New Hampshire, Iowa, and Wisconsin.

I’m a reluctant Romney supporter: I favored Ron Paul in the primaries, and I am doubtful that Romney and Ryan understand the magnitude of the task they face – an unsound monetary system, a “dependency society” that cannot possibly survive long-term, an over-extended system of global military and geopolitical commitments, a culture vehemently opposed to serious learning, a chattering class committed to fads ranging from “Waiting for Superman” to catastrophic climate change (yes, as a physicist, I know that the globe has warmed, but it is an open scientific question as to how large future warming will be), etc.

I’m not sure the Governor and the Congressman have the courage and insight to turn this around, much less the political skill to bring the country with them.

I do wish Romney the best, if he wins, just as I sincerely wished Obama the best when he won.

So, if I am not a fierce Romney partisan, why do I think he will dramatically outperform the polls?

Four reasons:

Turnout and the polls: the most important reason.  I’ve followed the debates from Fox to MSNBC, and, as a guy who loves the number-crunching game (I had a great time in 2000 running the numerical extrapolations in my head and seeing that the networks were clearly wrong both when they called the election for Gore and when they called it for Bush – this really is my idea of fun!), I think that the skeptics have the better case:  I.e., the polls seem to be substantially over-weighting Democrats.

Enthusiasm.  Both the polls and the anecdotal reportage from journalists, along with my own personal observations, show a lot more enthusiasm for the GOP.  It’s hugely different from ’08: I only talked to one acquaintance in ’08 who was enthusiastic for McCain.

Late deciders.  When an incumbent has trouble getting to fifty percent in the polls, common sense and historical experience suggest that late deciders (who are these people?) are not likely to discover that they really do like the incumbent after being unable to decide for four years.

The Bradley effect.  For some reason, a small number of voters seem to like to tell pollsters that they are going to vote for a black guy and then do the opposite (the “effect” is named for what happened to the black Democratic candidate for governor out here in California, Tom Bradley, back in the ’80s).  This seems bizarre to me, but it does seem to happen.

The last two effects are no doubt pretty small this year – there are, after all, few late deciders.  And, enthusiasm can be grossly misleading: after all, McGovern had lots of enthusiasm and “Tricky Dick” Nixon had very little – I remember it well.

So, in the end, it is the issue of turn-out models, as assumed in the polls, versus who really turns out tomorrow.

And, while those who are skeptical of the polls seem, to me, to have the stronger statistical arguments, no one really knows.

A lot of people will turn out to be really wrong, including, perhaps, me.

(However, if I am right, I wonder if the New York Times will fire Nate Silver and hire me!)

I predict the GOP will pick up three seats in the Senate, which will tie the upper house, with the new Vice-President holding the tie-breaking vote.  I.e., I think Romney will have short coattails.

And, I think the GOP will lose five seats in the House – the blowout election in 2010 blew in some weak winners, a few of whom are likely to lose tomorrow.

After we find out whose predictions are right and whose are wrong, we will face the real problems:  Bernanke has printed a huge amount of money that should ignite a firestorm of inflation when the recovery really starts moving.  A robust recovery will help the deficit situation a bit, but there are structural problems that are pushing the federal government towards bankruptcy – and, unfortunately, the entire world monetary, financial, and economic systems are closely tied to the securities (i.e., debt) issued by the United States government.

And, underlying it all, the culture: a century of frivolity, irresponsibility, and unbelievable mendacity not just in the popular culture but especially among the intellectuals – the “serious” media, the universities, the “social scientists,” etc.

If Romney wins, he has not only my best wishes but also my condolences.  He may have taken on an impossible task.

I hope he will prove me wrong.

Monday, October 11, 2010

Will the Election Matter? (And Some Predictions)

Robert Samuelson, the economic columnist for Newsweek, has a current column, “The Age of Austerity,” that argues:

We have entered the Age of Austerity. It's already arrived in Europe and is destined for the United States. Governments throughout Europe are cutting social spending and raising taxes -- or contemplating doing so. The welfare state and the bond market have collided, and the welfare state is in retreat. Even rich countries find the costs too high…

Clearly, most European nations waited too long to overhaul their welfare states. (The same is true of the United States.) The added costs of the global recession have now forced them to do the politically unthinkable: chop social spending and raise taxes in trying economic times. They have little choice, but it may be a mission impossible.

Last week, a friend, who is a Tea Party supporter, and I were talking about the election, and I suggested, “The real problem is how to repeal the New Deal.” Samuelson is a mainstream journalist and certainly not a “Tea Partier,” and he put the matter less bluntly than I. But I think his message is essentially the same.

A few weeks ago, I saw Paul Ryan, a rising star in the conservative wing of the GOP, on Charlie Rose’s show. Ryan explained very clearly the conception of the Founders that rights were innate to human beings, not privileges granted by government, and explained that the current idea of “entitlement rights” was not what the Founders had in mind. The Founders supported natural rights, essentially the right to be left alone to develop one’s abilities as one chose.

Then, Ryan went on to claim that the main mission of the GOP was to protect Social Security and Medicare!

The irony is of course that Social Security and Medicare are the primary examples of the “entitlement rights” Ryan had just so articulately criticized.

The problem really is how to repeal the New Deal, but I do not think the GOP has the guts even to attempt that task.

Don’t get me wrong: the Obama Administration needs to be sent a message, and only a tidal wave of defeats for the Democrats can send that message. Yes, it is time for a change.

But, no matter how big the tsunami of November 2, I doubt it will solve the basic problem: the onerously expensive, unsustainable, and unconstitutional welfare-warfare state that goes back to FDR. It is going to be a very long road to move forward to the ideas of Thomas Jefferson.

Now, for predictions: even though I am generally not an optimist when it comes to the outcome of the democratic process, I do love elections – I should’ve been a pollster.

I predict that the Republicans will pick up nine seats in the Senate. I’m assuming they will win the “Republican-leaning” toss-ups: Illinois, Nevada, Colorado, and West Virginia. I doubt the GOP can take Connecticut, even though Linda McMahon is a much more credible candidate than Blumenthal (who repeatedly lied about serving in Vietnam). And, I do not think Fiornia can take out Barbara Boxer out here in California, as happy as I would be to see Ms. Boxer enjoy her long-delayed retirement.

The real question mark is Washington: if Dino Rossi can beat Patty Murray, that should be enough for the GOP to take the Senate. And, the most recent polls show Rossi taking the lead.

It might happen.

I predict the GOP will pick up forty-five seats in the House of Representatives, enough to take control with six seats to spare.

And, one thing I am absolutely certain of: there will be some surprises on election day.

Incidentally, I find the Real Clear Politics site to be the best single place to follow the horse race and political commentary: RCP does a great job of summarizing the polls, and their links to pundits and commentators are more evenly divided among leftists, conservatives, and libertarians than the old, now dying, “mainstream” media.

For one single pundit who is the first in class in predicting elections, I recommend Charlie Cook

After the votes are counted, the pundits will tell us how this election is of earth-shaking importance. In fact, it will not turn things around: it has taken eighty years to dig ourselves into the hole FDR, and politicians of both parties, created for us, and it will take decades to dig ourselves out.

But perhaps this election can be a small beginning. So, get out and vote, and, if you have friends who are utterly clueless about the problems the country faces, encourage them to relax and stay home and ignore the election. Some people are not a plus to the democratic process.

Thursday, April 22, 2010

Homeschooling Economics:
Economics as the Key to a Civilized Society

Economics is the study of how human beings satisfy their needs and desires by mutually beneficial exchanges and interactions and thereby create a prosperous and civilized society.

The ignorance or rejection of the principles of economics leads to the boom-and-bust cycle, ongoing inflation, and, at the most extreme, the Soviet Gulag, the mass murders of the Maoist “Cultural Revolution,” and the “killing fields” in Cambodia under the Khmer Rouge.

Studying economics may, peripherally, help one pursue a career in business or manage one’s own finances. But the primary reason for studying economics is to understand how to create and maintain a free, civilized, and affluent society.

The study of economics is therefore a crucial part of a classical, humane education.

Following is a discussion of what I consider the twelve over-arching, core principles of economics, followed by a detailed discussion of how to integrate the principles of economics into one's education. These core economic principles emphasize not the technical details of supply-and-demand or the operation of the money supply but rather the broader concepts that make sense of all those finer details. Those finer details cannot be ignored, but they only make sense within this broader context.

(I came close to switching to economics after completing my Ph.D. in physics: I actually had an offer to do a post-doctoral fellowship in economics. My interest in economics goes back nearly as long as my interest in physics.)


The Twelve Core Principles of Economics

The economy is individual people working together to solve human problems

Crack open an economics textbook or listen to the news and you will get the idea that economics is about abstract concepts such as consumer demand, the business climate, the unemployment rate, etc. It is all too easy to get caught up in such abstractions and forget that economics is about nothing more than individual human beings working together with each other to solve human needs and wants.

Used properly, the graphs in an economics text (e.g., supply-and-demand graphs) can help explain the interactions of all the individuals that make up an economy. But, if those graphs and abstractions hide the reality of individual people solving problems, working out how to get a job done, figuring out where to get the tools or supplies that they need, etc., then the analyses supplied by the textbooks are simply obfuscating the true reality of economic behavior.

Anyone who has worked for any length of time in a successful private business and who has paid attention to the overall operation knows that real economic life involves juggling schedules, figuring out what customers want and what suppliers can deliver, working out new procedures to carry out tasks more efficiently, looking for improved tools to get the job done better, faster, or cheaper, etc.

That is economics.

Any approach to economics that tries to make the student forget all this is an attempt to obscure reality.

The result can be catastrophic.

A concrete example is the recent attempts to end the current “Great Recession” by injecting money into the economy, by bailing out unsuccessful businesses, by increasing consumer demand, or by making it easier for businesses to borrow money.

The recession began because workers and businesses were engaged in unproductive activities, notably in the area of real estate. The federal government, via the Federal Reserve System, Freddie Mac, Ginnie Mae, etc. encouraged and subsidized an unsustainable bubble in the real-estate field.

Reality popped that bubble.

The only road to a sustainable recovery involves individual workers, investors, and businesses working out for themselves all the messy details of how to move away from unproductive activities and into more productive lines of activity.

There is no short-cut here: stimulating demand, encouraging investment, etc. cannot solve the problem. There are millions of separate detailed problems that have to be solved, a separate problem for each individual worker, for each failing business, etc. No central authority can do this. No one else can vicariously solve your detailed personal problems, just as no one else can lose weight for you or get into good physical condition on your behalf.

You have to do it yourself.

When we understand that the economy consists of many millions of people working out complicated, detailed problems, and that interfering with their doing so only worsens the economic situation, we understand the key reality of economics.

Economics is about millions of human beings applying their own intelligence and problem-solving ability to solve human problems and satisfy human wants. Impede their ability to do so and you wreck the economy.

Private property = accountability

There is an old saying that we do not own our possessions but that our possessions own us.

That, in a sense, is the point of private property: people can be expected to take full responsibility for their decisions only when they themselves bear the consequences of those decisions. When you own something, you take care of it because it is yours, because you yourself will have to deal with your failure to be responsible.

People protect, defend, maintain, and care for their own property.

That which is “owned” by everyone is in fact owned by no one.

This leads to the “tragedy of the commons”: we have, for example, a problem with air pollution because no one owns the air. Add a bit of pollution to the air and you do not feel that you have diminished the economic value of something that belongs to you.

Indeed, “Coase’s theorem,” the result which won Ronald Coase the 1974 Nobel Prize in economics, maintains that all economic “externalities” are due to improperly defined or inadequately enforced property rights.

The connection between having personal authority over one’s personal property and taking responsibility for that property is, at a simple level, obvious to almost everyone. But many people have trouble seeing that the same point applies at a larger level. The reason that Walmart is much better managed than the Post Office or the Department of Motor Vehicles is that there are people who own Walmart and who will suffer economic losses if Walmart is run badly. Unfortunately, we all supposedly “own” the Post Office and the DMV, so no one really owns them: no one feels that he must see that the Post Office or DMV runs well in order to protect his own personal property.

Prices as signals

If private property makes accountability possible, it is the price system of a market economy that sends the signals and provides the information that makes it possible to carry out that accountability wisely.

If a worker can make twice as much money being a carpenter as he can being a plumber, that difference in wage rates sends him the message that the economy currently needs carpenters more than it needs plumbers. If a manufacturer could make twice the profit selling electric cars as he could selling internal-combustion cars, then the price system would be sending him the message that consumers prefer electric cars over conventional cars (his profit of course depends on the price he can sell the cars for versus the price he must pay for labor and for raw materials – prices are the key to making estimates of profitability).

If you prevent prices from moving freely by setting price controls, minimum or maximum wage rates, etc. then you destroy the communication system of the economy: you are, metaphorically speaking, cutting the phone wires, shutting down the network, that transmits the information that allows the economy to operate.

Capitalists keep workers from starving

The stereotype of the greedy capitalist goes back centuries. Yet, in a free market, workers are perfectly free to build the factory, create the tools, gather the raw materials for themselves, without any capitalists, and thereby avoid “exploitation” by “greedy” capitalists.

So, why don’t they?

Because it takes time, often many years, between the beginning of a project and the final point where one can sell the products resulting from that project. It takes a long time to erect factories, to design and build machines, to extract and transport raw materials.

And, in the interim, the workers need to eat.

The capitalist buys time for the workers. He enables them to do productive work in the present, work that will not pay off for quite a while, and yet, thanks to the capitalist, the workers can be paid now instead of waiting until the factory finally starts selling products.

If the workers think that this is unfair, they can always go it alone, and somehow figure out how to eat until the factory is finally in operation. Or, they can stay in other activities where there is no significant delay in time between the initial work and the final sale.

Most workers prefer the income security and the higher wages made possible by the capitalist.

Capitalists allow workers to reap the fruits of more productive, long-term methods of production while still enjoying an income before their labor yields its final results.

As a result, workers under modern capitalism enjoy a standard of living exceeding that of kings and emperors in millennia long past.

The interest rate is the price of time

It is often worth a great deal to have money now instead of having money later. Sometimes, one needs money immediately for a personal emergency; sometimes one can reasonably expect to have more money in the future, and it is useful to borrow money today and pay it off in the future (e.g., when buying a house).

Most importantly, in an industrial economy, the building of factories, machines, etc. takes a good deal of time, but that investment in time can ultimately pay off handsomely in increased productivity.

The interest rate is the price of time: it sends messages throughout the economy of the availability and cost of doing something now versus later.

If the government or the central monetary authority attempts to interfere with interest rates, it is distorting one of the most crucial forms of communication in the economy.

Trying to set interest rates is a form of price control, and it distorts and damages the economy as any price controls do. But, in an industrial economy, where production processes throughout the economy are based on lengthy, time-consuming projects, distorting interest rates is especially destructive.

In an industrial economy, “bubbles” are typically due to the monetary authority attempting to set interest rates. Attempts to control interest rates ends in depressions when those bubbles inevitably pop.

Government control over the monetary and financial system, largely via “central banking” (the “Federal Reserve System” in the United States), induces bubbles and the resulting depressions by interfering with the natural rate of interest.

Economic advance comes not from labor but from those who make labor more efficient and productive

The “labor theory of value” maintained that the economic value of a good or service is measured by the labor that went into producing that good or service.

If that were true, economic progress would be impossible.

Long ago, Benjamin Franklin pointed out a simple point of economic arithmetic. Suppose that everyone in an economy labors for forty hours a week. Then, on average, each person can enjoy the fruits of forty hours of human labor, no more.

A few wealthy people may employ a retinue of servants and assistants. But, it is mathematically impossible, for simple arithmetic reasons, for everyone to employ a full-time butler, a full-time cook, etc. The numbers cannot add up (i.e., there would have to be more butlers and cooks than there are people!).

The only way to improve the living standards of the average human being is for everyone to work much harder for much longer hours (which is hardly an obvious improvement in human welfare!) or to figure out how to make each hour of human labor more productive.

We know only three ways to do this: give workers more and better tools (machines, trucks, computers, etc.), have workers employ newer and better technology, organize workers in a manner so that their efforts and activities are better coordinated to produce more productive results.

In practice, all three of these approaches generally involve pursuing more long-term, more roundabout processes of production: i.e., they require more capital.

That is why “capitalism” is indeed an appropriate designation for a modern industrial economy that brings affluence to the mass of the people: only capitalism can physically alleviate widespread human suffering and poverty.

Optimal methods of economic organization are worked out by the market

It is easy enough to see that the wonders of personal computers, cell phones, etc. are the product of the innovative capabilities of a free-market economy – i.e., of millions of human beings freely trying out new ideas, freely deciding what jobs to offer to prospective employees, freely deciding what products to buy, etc.

But it seems harder for many people to understand that the same applies to modes of economic organization. Shouldn’t we “protect” the corner variety store from Walmart or the corner burger stand from McDonald’s?

It was not that long ago when many people wanted to protect tiny, antiquated steel mills from technologically modern, large-scale mills, or tiny inefficient oil refineries from modern efficient refineries.

The huge increase in worker productivity since the Industrial Revolution may well owe more to changes in business organization – everything from marketing and finance to the actual physical operation of factories – than to improvements in technology.

The key point to understand is that there is no surefire analytical method for predicting what new organizational methods will end up working. How many people realized that eBay or amazon.com were the wave of the future? And how many people gambled and lost on “dot coms” that sounded promising but failed?

There is sometimes talk about “running government like a business.” The problem is that there is not a single, distinct way in which to “run a business.” A free economy consists of thousands or millions of people trying out a plethora of different ways to run a business and finding out what works.

And, it therefore may turn out that a college dropout comes up with a better way of running a business than was ever envisioned by hordes of MBAs.

The “Red Queen Principle”: the market erases “sure thing” opportunities

In Lewis Carroll’s Alice's Adventures Through the Looking Glass, the Red Queen declared, “It takes all the running you can do, to keep in the same place.”

Everyone would like to believe that he has stumbled upon a “sure thing,” a gravy train guaranteed to keep money rolling in forever, without requiring ongoing effort and innovation.

There can be no such “sure thing” in a free-market economy.

“Just invest in blue chips.” If that really is an ideal investing strategy, sooner or later other investors will pick up on it. They will bid the price of blue chips up to a point where they are so pricey that they are no longer great investments.

“Real estate can only go up.” It is perhaps mean-spirited to bring up that particular fallacy after the recent bubble has popped. But, wait a few years, and we will hear it again. The fallacy of course is that if real estate really is a great investment, the price of real estate will be bid up to the point where it no longer is a great investment, maybe to the point where it has become a disastrous investment.

This principle goes beyond avoiding investment bubbles.

Whenever you think you see some area of the economy where the market seems to be operating inefficiently, ask yourself why someone has not moved in to make some profit off of that inefficiency. If you are right, someone either has moved in, or soon will be moving in, to offer goods or services to eliminate the inefficiency: if you are sure of the inefficiency, and in a position to take a risk, move into the area yourself.

You think some industry or profession is making “exorbitant” profits? Move into that industry or profession, or watch others move in, and see the increased competition eat away those exorbitant profits.

It is “exorbitant” profits and unrealized opportunities that drive a market economy: they drive people to take advantage of those profits and opportunities in a way that creates new businesses, new jobs, and new products. In very short order, the “exorbitant” profits and unrealized opportunities have vanished, to be replaced by a higher standard of living for everyone.

There is one exception: if the government can restrain or prohibit new entrants into an industry or profession, exorbitant, truly exploitative incomes and profits can indeed be sustained indefinitely at the cost of consumers. This need not consist simply of laws prohibiting competition; it can also consist of onerous governmental regulations that can be more easily monitored and complied with by large existing firms than by new, small start-ups.

Whether intentionally or not, government regulations tend to favor large, established, bureaucratic corporations over small, innovative start-ups: the large corporations can hire lobbyists to protect their interests and gain special privileges; they can afford large legal departments; they can absorb the costs of complying with regulations. A start-up company cannot.

Indeed, economists have recognized for decades that regulatory agencies created to restrain business tend to get “captured” by the established firms in the industry they are supposed to regulate (see, e.g., the 1970 classic The Crisis of the Regulatory Commissions edited by MIT economist Paul MacAvoy): the Carter Administration abolished the Civil Aeronautics Board for precisely this reason.

The need to run rapidly in order to stay in the same place can be unappealing to the incompetent, the lazy, and those who are already affluent and powerful. They may therefore appeal to the government to try to preserve the status quo.

The result is the stifling of economic growth. The “Red Queen Principle” is the engine of economic progress and the only means to better the material condition of humankind.

“Market failure” = utopian speculation or government intervention

Economic textbooks, media pundits, and politicians go on at great length about areas in which the market has “failed.”

Keeping in mind that the economy is nothing but individual human beings, a “failure” of the market in fact means a failure of human beings to work together to solve their problems.

What could cause such a failure?

Well… the market has indeed “failed” to create an elixir of immortality or turn base metals into gold or invent a means to travel faster than light or…

But, all of those “failures” are simply due to the fact that humans do not know (yet) how to do those things.

More commonly, market “failure” means simply that someone wants other people to pay for his own desires or pet projects and they choose not to do so.

The market has “failed” to provide for everyone free childcare, or free health care, or free sirloin steaks or…

Yes, the free market allows people to decide for themselves what charities to contribute to, and most people are reluctant to contribute to charities to provide free childcare, health care, and sirloin steaks to others who are unwilling to provide those things for themselves.

Aren’t there cases where people really could provide, and want to provide, some good or service, but for some reason cannot do so through the market?

Yes, when government regulation makes that impossible. Someone, for example, wants to do yard work for you at a mutually agreeable wage, but for you to pay him that wage would violate minimum-wage laws, ignore regulations requiring you to pay half of his Social Security payments, etc. Government regulations prevent a mutually beneficial exchange from occurring.

“Market failures” are due either to inadequately defined and enforced property rights (vide “Coase’s theorem”) or to government intervention in the economy.

I know of no exceptions.

If you think you are wiser than the market, prove it

Again and again, we hear that the market has its place, but that it needs to be properly guided, controlled, or restrained by some wiser, over-riding authority.

For example, we were told for many years that the market was failing to offer enough loans to low-income, minority borrowers. Government regulators pressured lenders to relax their standards for such borrowers. Many of those borrowers, of course, ended up defaulting when the real-estate bubble popped: it turned out that the market’s standards had been wiser than the well-intentioned regulators’ judgment.

If minority borrowers had really been under-served, there would have been a wonderful profit opportunity here: the regulators who truly believed this could have quit their government jobs, opened new lending institutions focused solely on worthy minorities, and made a bundle financially while also serving the cause of social justice.

You believe women or minorities are underpaid in the workplace? Start a business that only hires women and minorities and outshine your competitors by getting good workers cheap.

This is not hypothetical: Malcolm Forbes, Sr. claimed to do just that by hiring largely female employees, whom he thought were undervalued in the market.

It apparently worked.

But it will not work forever – as the “Red Queen principle” reminds us, others will soon notice your success, and everyone will soon be following the wiser and more profitable (and socially more just) approach to business.

You’re wiser than the market? The market is just other people – maybe you are smarter than they are. Put your money, time, and energy where your mouth is and prove it. If you’re right, you will make a bundle, and everyone will end up better off.

If you are not willing to do that, well… talk is cheap. An economy progresses on action, not talk.

“Economic harm” = fraud, theft, or just whining

We often hear that foreign competition “harms” American workers, that Walmart “harms” smaller, older retailers, etc.

What such “harm” usually means is that the group being “harmed” had a good thing going by overcharging consumers and wanted to preserve their exploitative position: they wanted to be granted immunity from the “Red Queen principle.”

The freedom offered by a free market is the freedom to buy or sell what you want to whomever you want, to employ whomever you wish, to work for whomever you wish, provided that the person on the other end of the deal finds that the deal works for him.

If you want to hire a worker at a lower wage than he can get elsewhere, if you want an employer to pay you more than he can pay for other workers, if you want consumers to shop at your store when another store offers lower prices or more variety, none of that is guaranteed to you by a free market.

A market economy is millions of human beings figuring out the best way they can solve their own and other people’s problems. If you think they are “harming” you by passing you by, because someone else makes them a better offer, you had best understand how the “Red Queen principle” works in a market economy.

The free market advances human well-being and eliminates human suffering by allowing people to constantly invent new and better ways of solving each other’s problems and meeting each other’s needs. If you refuse to participate in that constant round of change and innovation, you will not participate fully in the benefits.

Yes, in that sense, you will be “harmed”: you will not reap the benefits of a process in which you yourself decline to participate.

Of course, in any human society, there can be real physical, not merely metaphorical, harm: theft, fraud, murder, rape, etc. That is the province of the criminal law, not the economy in general. Arguably, the primary source of theft and fraud in most contemporary human societies is the government itself: the monetary cost of ordinary crime is trivial in comparison to the cost of taxes, and the fraudulent promises of government certainly exceed the fraud most of us encounter in our everyday economic lives.

A free-market economy economizes on love

Lewis Carroll wrote:
“’Tis love, ’tis love,” said the Duchess, “that makes the world go round.” “Somebody said,” whispered Alice, “that it's done by everybody minding their own business.” “Ah well,” replied the Duchess, “it means much the same thing.”
Several decades ago, the British economist D. H. Robertson published a brilliant paper that opened with this quote; his essay was entitled “What Does the Economist Economize?”

Robertson concluded that the ultimate resource that is economized in a free-market economy is “love.”

That may sound paradoxical in light of the widespread belief that the market not only allows but demands untrammeled greed.

However, as I have tried to emphasize, “the market” is nothing but millions of people trying to solve each other’s problems and satisfy each other’s needs in a mutually beneficial fashion.

The genius of the market is that both sides expect to benefit in a market exchange: we receive benefits from our fellow participants in the market even if they have no love for us personally but are merely pursuing their own self-interest, “minding their own business,” in Alice’s words..

This does not in any manner preclude participants in a market economy from acting out of altruistic motives. Indeed, I myself have again and again engaged in economic transactions where the other person seemed genuinely proud and pleased to be of help – everything from the craftsman who built our fireplace mantle to friends who run a local Greek restaurant. Conversely, I can only recall one occasion where a government employee, a civil “servant,” truly went out of his way to be helpful beyond what his job required (strangely enough, he was a supervisor at the Department of Motor Vehicles).

The difference is that a government employee who provides service beyond what is required is not serving his economic interest, but someone who does so in the market economy helps himself by helping others (I recommend the Greek restaurant to friends).

While a market economy does not require altruistic behavior, it does cause people to serve the interests of others simply by pursuing their own self-interest.

A market economy thereby allows people to focus their limited altruistic impulses on efforts that are not adequately served by the larger, money-based economy: charitable and cultural activities, physical and moral defense of the society at large and of civilized values, and, above all else, their own friends, family, and children.

The human capacity for altruism is not unlimited. We cannot spend every breathing, waking minute thinking about how to save the world. A free market allows us to tend to our own needs by also serving others, and, in our time away from the job, we can exercise our purely altruistic impulses as we judge best.

Socialism works in exactly the opposite way: citizens of a socialist society are exhorted to constantly put the needs of the larger society above their own needs in all of their everyday activities.

The effort is morally exhausting: socialism means life as an ongoing emergency, a constant need to sacrifice oneself, just to create a viable society.

Human beings cannot do this: the demands on human altruism made by socialism exceed the supply of altruistic impulses that are available to us as human beings.

The result is bizarre monstrosities such as the Maoist “Cultural Revolution,” Stalinist “Stakhanovism,” or the “killing fields” under the Khmer Rouge, which physically consumed human lives.

A market economy is millions of human beings working to solve each other’s problems. It works so brilliantly because, as I have emphasized above, the free market decentralizes accountability via the institution of private property, disseminates information via the price system, and encourages innovation and the alleviation of human suffering via the “Red Queen principle.”

But above all else, a free economy allows a flourishing of human altruism by allowing altruism to be used where it is truly needed and allowing more mundane, “selfish” motives to operate when they are sufficient.

It is still fashionable to ridicule “Victorian values.” But those “bourgeois” values, the values of laissez-faire capitalism, saw an outpouring of charity (vide Andrew Carnegie, and many others), a diminution in poverty, and the well-known emphasis on family life, all hitherto unparalleled in human history.

“Bourgeois” capitalist values make a peaceful, civilized, humane, affluent society possible.

The twentieth century consisted largely of a rejection of those values – the Gulag, the Holocaust, the Cambodian “killing fields” were all quite insane from the perspective of bourgeois capitalism and were all motivated by an intense rejection of bourgeois values.

Economics is the study of how a market economy is possible, how and why it works, and why the alternatives to a market economy produce human suffering, poverty, incivility, and death.

In short, economics is about how human beings can acquire their daily bread and still live in a civilized society. And that is why the study of economics is necessary to a liberal and humane education: we need to understand that the ultimate object of economics is, as Robertson wrote, “to economize on love” so that we may live good and fulfilling lives as human beings in a humane society.


These twelve principles are, of course, by no means the entirety of the discipline of economics. There are other basic principles – the “sunk-cost” fallacy, the importance of “thinking at the margin,” the law of comparative advantage, basic supply-and-demand analysis, cost as being foregone alternative opportunities, the effects of varying incentive structures, etc.

And, there is the application of all of this to specific areas and problems:
  • applying supply-and-demand theory to money to see how inflation of the money supply causes prices to rise

  • showing why international trade helps consumers and why protectionism reduces economic welfare

  • explaining how consumer demand directs resources to different uses and creates the overall structure of the economy

  • discussing how the banking system functions (and malfunctions)

  • demonstrating how capital markets allocate resources across different firms and industries in the economy

  • understanding why socialism always fails

  • exploring how government causes recessions and depressions

  • discovering the different forms of contractual and institutional relationships that people have created for different economic settings

  • exhibiting how governmental controls, regulations, and interventions impede the operation of the economy and distribute special privileges to the members of the government and their supporters
and much more.

One of the features of the discipline of economics that is strange to those of us trained in the natural science is the division of economics into a number of competing “schools”: Keynesians, Chicagoites, Marxists, neo-Ricardians, Austrians, etc.

Nonetheless, this is the reality in economics. Several of these “schools” have as their primary purpose justifying the predatory role of the state and obfuscating the damage that an interventionist government inflicts on the economy.

Several of these “schools” also have a somewhat strange fixation on a rather bizarre use of mathematics: my own mentor in physics, Richard Feynman, labeled this “cargo-cult science.” On certain Pacific islands after the Second World War, “cargo cults” arose in which the natives would construct imitation airfields hoping that these would magically bring back the American airplanes and all the goodies the Americans had brought with them.

In the same way, Feynman argued, some people in the “social sciences” imitated the mathematical form of physics, although there was no real substance behind this form. I was told by one of Feynman’s colleagues in the economics department that Feynman was particularly disdainful of Paul Samuelson’s famous Foundations of Economic Analysis, often considered the seminal book in this move to mathematize economics.

Much of this mathematization of economics is simply navel-gazing, but some is positively harmful. For example, one can find in many economics texts quite rigorous mathematical proofs that if we possessed God-like knowledge of the economy then we could arrange it in a better way than the market. That is of course quite true – if we possessed God-like powers, we could do many things better than mere human beings can do.

(Essentially, these mathematical proofs assume knowledge of certain complicated mathematical functions, often represented in the textbooks by graphs of supply curves, demand curves, production-possibility curves, etc. The problem is that these functions are not actually known to any human being: indeed, economic activity can be thought of as people’s inventing or discovering the small portions of those curves that are relevant to their own economic activities. To assume that these curves are known and can be used in formal mathematical calculations is therefore like assuming that dinner is ready when one has not yet done any cooking. The curves assumed by the textbook are not inputs to economic analysis; rather, those curves (or portions of them) are the output of economic activity in the market – i.e., the result of the very difficult and complicated problem-solving activities and decisions of millions of hard-working people. To take those curves, or the mathematical functions they represent, as “given” is to make, as the philosophers say, a “category error.”)

Alas, we lack the God-like powers required to grasp all the information needed to replicate the results of a market economy. The whole point of a market economy is that the market allows real human beings, lacking God-like powers, to use their own knowledge and intelligence to solve a myriad of difficult, concrete problems in a decentralized yet cooperative manner. To assume that we have God-like knowledge of the economy is to basically assume away the economy itself.

Unfortunately, these rigorous but irrelevant mathematical proofs are commonly used to justify governmental controls over the economy, ignoring the fact that the government is made up of people notably lacking in God-like knowledge or wisdom!

Of course, the proponents of mathematizing economics could prove us critics wrong quite simply: they could make verifiable, testable predictions of future developments in the economy.

They have tried. Repeatedly. And failed. Spectacularly.

There have been numerous attempts to escape this cul de sac in mathematical economics for more than half a century: input-output analysis, game theory, rational-expectations theory, behavioral economics, Arrow-Debreu theory, evolutionary economics, etc.

I will not try to deny that there has been and continues to be some interesting work in some of these areas. But none of it has lived up to the standards of natural science and none of it, I think, has significantly invalidated the basic principles of economics I outlined above.

Furthermore, even some brilliant economists, notably Milton Friedman, have argued that economics can and should take a “positivist” approach, similar to that taken by the natural sciences, in which one forms broad theories, deduces hypotheses from those theories, and then tests the theories by rigorously testing the deduced hypotheses against actual empirical data.

An interesting idea – except anyone familiar with economics knows that almost none of the major economic theories and principles have actually been developed and tested in that way.

There are several reasons why this sort of “scientific” approach to economics has in fact proved to be a will o’ the wisp.

I have already alluded to one of these reasons – physics and astronomy have relied on detailed and successful mathematical models. Such empirically-successful mathematical models just do not exist in economics. The subject matter of economics is human desires, human innovation, human problem-solving, etc.: it is doubtful that such matters can ever be quantified and subjected to empirically-meaningful mathematical analysis in the manner in which we can measure and analyze mass, forces, etc. in physics.

At any rate, attempts to do so have simply not resulted in broad mathematical models that make detailed empirical predictions that have been rigorously tested by observation and proven to be correct.

Furthermore, as the sociologist Randall Collins pointed out in his 2005 paper, “Why the Social Sciences Won't Become High-Consensus, Rapid-Discovery Science,” one key to the rapid progress of the natural sciences has been constant innovations in research equipment used for observations and measurements, resulting in the accumulation of new sorts of observational data and the discovery of hitherto unsuspected natural phenomena.

Astronomers build increasingly powerful telescopes, physicists create higher energy accelerators to make new subatomic particles, biologists supplement light microscopes with electron microscopes – all of this means that natural scientists are constantly able to uncover new clues revealing the secrets of nature.

It is hard to see how anything like this can ever occur in economics or the other social sciences: we already have far more data about human beings than we have about subatomic particles, for we ourselves have an “inside view” of human beings.

And, indeed, in the last half century, there have been monumental advances in the natural sciences – the discovery of quarks in physics, the recognition of plate tectonics in geology, the cracking of the genetic code in biology, the discovery of quasars, pulsars, etc. in astronomy – that have revolutionized the natural sciences and that will remain important parts of those sciences as long as they exist.

I doubt that anyone can point to similar “discoveries” in economics (or the other social sciences) in the last half century – i.e., discoveries that have revolutionized our understanding of social reality, that are universally accepted within the discipline, and that are certain to remain central to the discipline throughout its future history.

There has been a huge amount of “research” published in the social sciences in the last half century, but it is hard to claim that any of that research truly, radically, and permanently changed our understanding of reality in the way that new discoveries in the natural sciences have done.

“Research” in the social sciences tends not to be cumulative: to put it bluntly, it tends to consist of academic fads, in fashion for a decade or two, and then largely forgotten and ignored as new fads become fashionable.

In all of these respects, I think that the present-day school of economics that best preserves the fundamental insights of economics, without succumbing to the ever-changing fads of the moment, is the so-called “Austrian school,” which began in Austria in the nineteenth century but which now exists largely in the United States. Among the most prominent figures in the Austrian school have been Ludwig von Mises, Murray Rothbard, and the Nobel laureate F. A. Hayek.

The Austrians have been particularly strong in exploring how the economy uses the problem-solving abilities of millions of human beings to bring about economic progress, explaining how government policies can wreck that progress (e.g., by producing the “boom-bust” cycle by interfering with the monetary and financial system), and showing why socialism does not work because it cannot utilize the human capacity to solve problems, coordinate actions, and create new ideas.

Much of what I have presented here I myself learned from reading the Austrian economists; some of this I learned from my own experiences in industry and from talking with my father about his experiences in manufacturing (thanks, Dad).

However, there are certainly other schools of economics that have also shed important light on economic reality – e.g., the “public-choice” school, notably Gordon Tullock. And, the concepts of “information costs,” “transaction costs,” and “bounded rationality” associated with economists such as the Nobelists Oliver Williamson, Ronald Coase, and Herbert Simon, are also, I think, crucial to understanding economic reality.

On the other hand, some “schools” of economics have been wholly negative in their impact: I do not know of any positive result from the revered J. M. Keynes (and, yes, I have read and studied carefully, in its entirety, The General Theory of Employment, Interest, and Money). The same can be said of Karl Marx.

How, then, does this connect to homeschooling?

Some of the basic principles of economics that I have outlined above can be and must be integrated into history and social studies very early in grade school. As soon as a child is old enough to understand that construction workers build buildings, he can understand that someone has to pay them so that they can eat while they are building a factory, before the factory is completed and ready to churn out clothes, toys, etc.: that is the essence of the idea of “capital” and “capitalism.”

The idea that ownership equals responsibility is also a concept that can be and should be taught in early grade school: even young kids understand that it is our job to mow our own grass, gas up our own cars, etc., but that we have no reason to mow other people’s grass, gas up their cars, etc. A yard that is owned by no one is likely to go ummown. This is why private property is necessary.

Even kids early in grade-school can understand that some countries once tried to run things so that “everyone” – i.e., no one – owned all the stores, farms, factories, etc. in the country, and that this worked horribly, just as a yard owned by no one is likely to be horribly overgrown with grass.

The failure of socialism, and the tens of millions who died in the name of making socialism work, is the central historical fact of the twentieth century. Any attempt to discuss twentieth-century history that ignores this fact and fails to explain the economic principles that the socialists themselves insisted on ignoring, is almost criminally negligent.

But, of course, it is not enough simply to integrate economics into discussions of history, politics, etc. Students also need to explicitly and seriously study economics as early as feasible.

The only books that I know that seriously try to do this at a grade-school level are Richard J. Maybury’s “Uncle Eric” books – e.g., Whatever Happened to Penny Candy. I happened to be going through that book with my grade-school kids when the financial collapse occurred in late 2008: it was very illuminating to watch the nightly news and then read a section in the book with the children that presented the economic principles that explained what we had just seen on the news.

Maybury’s perspective is similar to mine: i.e., he sees economics as an intellectual tool that enables one to understand what makes a humane and decent civilization possible.

Let me emphasize that one can find books that talk about some basic concepts of economics without engaging the broader perspective I am discussing. Such books are counter-productive, indeed inimical, to acquiring a broad education: this is true not only of many economics textbooks at the high-school and college level but also of many of the “gee whiz” pop economics books published in recent years. (Some of those pop-economics books try to apply economics, in very dicey ways, to issues of love, sex, etc. That no doubt helps to sell the books, but it is missing the central point: economics is about the large-scale structure of cooperation that makes an affluent, civilized, and humane society possible via the free market, not about topics better suited to Oprah.)

David Gordon’s An Introduction to Economic Reasoning introduces much of the basic apparatus of economics (e.g., supply and demand curves, the idea of marginal utility) in a brief, readable format (upper-grade school to middle-school reading level) that also stresses the broader framework of economics.

Henry Hazlitt’s classic Economics in One Lesson is at a somewhat higher reading level but avoids any technical apparatus to focus on the central point of thinking about the actual actions of participants in the economy in a number of detailed, illustrative discussions.

Murray Rothbard’s The Mystery of Banking and What Has Government Done to Our Money present the basic theory of money and banking in a readable form that emphasizes the broader context: the deleterious effects of government intervention in the monetary and financial system.

At a middle-school / early-high-school level, I like Alchian and Allen’s Exchange and Production and University Economics, both out-of-print but available at any decent university library.

The basic goal of a high-school economics course should be to read and understand Rothbard’s Man, Economy, and State, which unifies economic and political analysis in a careful, detailed, readable text (make sure to get the recent edition that includes “Power and Market” – the original, abbreviated edition is inadequate).

For seventy years, the reigning conventional wisdom in economics has been the Keynesian synthesis. Keynes was simply wrong: he did not understand the fact (known as the “real-balance effect” or “Pigou effect”) that a declining price level increases the effective quantity of money (since the same money goes further at lower prices) and that an increased demand for money can therefore be satisfied by a decline in the price level. Failing to grasp this, Keynes convinced himself that an increased demand for money would result in people “hoarding” money and shutting down the economic system: he did not see that an increased demand for money would simply result in lower prices (i.e., cheaper goods). Focused on a mistaken explanation, Keynes failed to understand that depressions are created by government meddling in the monetary and financial systems leading to “bubbles,” and that the recovery process is impeded by governments' trying to prop up failed businesses and dying sectors of the economy.

While Keynes’ errors were simple, the massive treatise in which he presented these errors, The General Theory of Employment, Interest, and Money, comes close to being unreadable.

However, I myself, as a high-school student, did manage to make it through the entire book with the help of Hazlitt’s The Failure of the New Economics and the collection of essays Hazlitt edited, Critics of Keynesian Economics.

To really understand modern economics, this truly is necessary. Although Keynes was obviously, embarrassingly, wrong, Keynesian views are so embedded in the news media and in introductory university texts, that anyone who does not carefully work through the Keynesian morass cannot see how radically misguided modern economic policy really is.

If a student masters all of this, where then should she turn, later in high school and as she moves on into college?

Most of us are interested in economics largely because of its intersection with politics. None of the books I have mentioned above ignore that connection (how could they?). But there are books that focus on this connection, more from the political side, by Gordon Tullock, Rothbard, H.-H. Hoppe, and others that are well worth reading. I’ll go into some of those in another post that focuses on political science.

The history of economic thought is also important in understanding economics, partly because economic fallacies never seem to die but merely metamorphose into new forms: an interesting discussion of the history of economics is Rothbard’s two-volume An Austrian Perspective on the History of Economic Thought. Economic history is interconnected with the history of economic thought, because what people believe about economics helps determine the economic policies they actually pursue: Rothbard’s America’s Great Depression and The Panic of 1819 illustrate that interconnection.

It is important to understand that a lot of popular economic history is written by authors who lack an adequate understanding of economics themselves, who do not grasp the core principles of economics I have laid out above, and who therefore reduce economic history to a soap-operaish tale of good-guy governments or labor unions versus evil, “greedy” capitalists. Rothbard does not deny that there are indeed “bad guys” in economic history – government officials who pursued policies based on misguided or malevolent economic theories, businessmen who used their connections in government to line their own pockets and wipe out competitors, thereby exploiting consumers, economists who obtained cushy positions for themselves by providing justification for predatory governmental actions, etc. But he does insist that these judgments must be based on sound economic understanding, not on uninformed emotional musings.

Finally, isn’t all this just too much, way, way too much?

Well… I started studying economics as a sophomore in a traditional high school, and I did work through most of the above in high school, while I was also teaching myself a good deal of advanced physics and math.

What I have outlined here is really doable: as I said above, I myself made it through Keynes and the Hazlitt books (as well as Mises’ massive Human Action) as a high-school student in a traditional school: I had less freedom, and less time to spend on serious study, than homeschoolers do.

But, the main point is that homeschoolers do not need to start that late. Start with Maybury in fourth or fifth grade, then move on to Gordon’s introductory text and Rothbard’s books on money and banking.

Tackle Alchian and Allen in middle school, and, yes, by high school it should be feasible to at least handle Man, Economy, and State, Keynes, and the two books by Hazlitt that are critical of Keynesian theory.

Yes, this is a serious course of study, but economics is about serious things – inflation, depression, unemployment, and, ultimately, war and peace, freedom and slavery, and life and death.

How can human beings, through mutually beneficial interactions, create a free, prosperous, and humane society? That is what economics is about.

It is a subject worth mastering.


Most of the books I have mentioned are available through the Mises Institute, the premiere site for economics on the Web. Alchian and Allen’s books and, of course, Keynes' can be found in any decent university library. Thanks to my kids for helping to proof-read this essay, to several friends and relatives for countless discussions on these subjects, and to Ludwig von Mises, Murray Rothbard, and all those others who helped me understand the critical importance of economic knowledge to sustaining a prosperous, humane, and free society.

Thursday, March 18, 2010

The World We Have Lost

All of us homeschoolers have rejected, to some degree, the modern, bureaucratized society in which we live, simply by the fact that we have chosen the alternate path of homeschooling.

But, I think, most of us still do not realize how unthinkingly we are caught up in the values and attitudes of the modern world and how radically, and often disastrously, that world differs from the world of our forebears.

My great-grandmother was born in 1883: she passed away when I was a senior in college, so I knew her well throughout my childhood. It is very revealing to compare the world she grew up in to the society and culture we ourselves, our parents, and our own children inhabit.

Child-rearing and education

The most obvious difference, especially in the context of homeschooling, is in the area of child-rearing and education.

My great-grandmother only finished fourth grade. Yet, unlike many high-school graduates today, she had acquired basic skills in reading, writing, and arithmetic.

There was no “teen-age” rebelliousness, no “teen-age” youth culture, in her generation simply because there were no ‘teenagers.”

There were of course young people whose ages lay between thirteen and nineteen, but there was not a general expectation and acceptance of young people’s having a unique “culture” that took an adversarial stand against the adult world, intentionally creating music, dress styles, etc. calculated to annoy or outrage adults.

“Teenagerhood” – both the word and the idea – was an invention of the first half of the twentieth century, largely a result of the “consolidated” high school created in the first half of the twentieth century. Partly because of a desire to keep adolescents out of the workforce so that they would not compete with working fathers during the Depression, partly out of the “progressive” belief that more schooling was better for everyone, American adolescents were forced to spend twelve years in the school system.

As Grace Palladino explains in the first chapter of her comprehensive Teenagers: An American History:
The Great Depression had finally pushed teenage youth out of the workplace and into the classroom.... a shift that helped to create the idea of a separate teenage generation. When a teenage majority spent the better part of their day in high school, they learned to look to one another and not to adults for advice, information, and approval.... they revolutionized the very concept of growing up. This remarkable transformation had as much to do with the high school experience as with raging hormones or adolescent insecurity...
(It is interesting to recall that Golding's dystopian novel, Lord of the Flies, involved a group of schoolboys left on their own.)

Since many of the kids forced into the new comprehensive high schools lacked either the desire or the ability to engage in serious academic work, the curriculum was dramatically “dumbed down” (for a non-polemical, scholarly study of this “dumbing down,” see Kliebard’s The Struggle for the American Curriculum: 1893 – 1958), forcing kids to pursue pointless make-work until they could “graduate” from high school.

Is there any surprise that this has created anger, rebelliousness, and a youth culture based on contempt and resentment towards the adult world?

In the nineteenth century, there was a real purpose to the lives of most adolescent kids: they were working, on the farm, in the home, or at outside jobs, doing things (or learning to do things) that actually needed doing.

That is not true of most “teenagers” today.

Thomas Hine, in the final chapter of his The Rise and Fall of the American Teenager, a broad-ranging study of youth through American history, concludes:
By looking at history as we have done, we see that the teenager that emerged in the mid-twentieth century was but one of many ways in which American young people have responded to the circumstances of their times... If we are going to persist in our notion that all young people should spend their teems simply waiting for adulthood, we have to find ways of making this teenage experience more satisfying and effective.

Alternatively, we can decide that the idea of the teenager is one that has outlived its usefulness, then move on to other possibilities
Hine does not deny that serious, rigorous, challenging academic work makes sense for those children willing to pursue it and able to benefit from it. But does it make sense to warehouse kids who are unable to or unwilling to pursue serious academic work in “schools” that serve only to artificially prolong adolescents' period of irresponsibility and dependency?

Our forebears were not convinced that Lord of the Flies was inevitable adolescent behavior.

Culture and the attitude towards learning

American (and British) culture in the eighteenth and nineteenth centuries was imbued with the ideal of intellectual self-improvement: to recognize that, one need only read Franklin or Emerson or recall Lincoln’s eagerness to acquire learning however he could. To be truly well-educated before the twentieth century was at least to know Latin (and, ideally, ancient Greek), and also a modern language (French or German).

There is a story that Lincoln, as a lawyer riding circuit, took a copy of Euclid’s Elements with him so that he could sharpen his reasoning powers.

How many American adults today seriously try to learn an intellectually difficult subject – a new area of mathematics, a new foreign language – unless they are required to do so for their job?

In fact, the idea of actually doing proofs – the axiomatic method of axioms / theorems / proofs – that has dominated serious mathematics since the time of the Greeks – has been largely eliminated from American high schools in recent decades (see this lament published in the LA Times, written by then-chair of the math department at Caltech, the most selective science university in the country).

We live today in a society that despises learning.

  • How many living sports stars or entertainers can the average American name off the top of her head?
  • How many living scientists, mathematicians, or medical researchers can the average American name off the top of her head?
  • How many American teen-agers can identify who Babe Ruth was vs. who Jonas Salk was?
We have more leisure today, more access to tools of learning such as books, libraries and the Internet than ever before in history, and, yet, there is active contempt, bordering on hatred, for the idea of learning simply for the sake of learning.

No doubt part of this is due to memories of the “twelve-year sentence” that most Americans were forced to endure in the public schools.

But there is also a positive respect for delinquency and irresponsibility: the “trend-setters” of our popular culture are often the dregs of our society. It is not just the kids who are enraptured by “gangsta rap” or whatever the latest symbol of youth rebellion happens to be, but also adults who hold up failed human beings as objects of emulation or even veneration, whether “celebrities” such as Michael Jackson or fictional characters such as Holden Caulfield.

This is not the historical norm. Our forebears did not model themselves on petty thugs, juvenile delinquents, and people who clearly lacked the ability to live a normal life.

Rather than publicly honoring real, substantive achievement based on serious intellectual effort, we accept as our public “role models” the products of our “cult of entertainment”: professional sports is, of course, a prime example of modern entertainment. Again, this is not the historical norm: sports heroes and popular entertainers were not national icons throughout most of the eighteenth and nineteenth centuries.

One result of our modern obsession is such an exaltation of style and personality over character and substantive achievement that even the Presidency is filled not on the basis of actual ability but rather on how well the candidate can theatrically play the role of being President on television (“he looks Presidential,” as we say).

During the recent 2010 Winter Olympics, General Electric ran a funny commercial in which physicians ran into a stadium and were cheered by a crowd of thousands. What makes the ad funny – and poignantly sad – is that we all know that the cure for cancer, the replacement for fossil fuels, etc. will be found by some studiously nerdy drudges who will never be cheered by tens of thousands in a stadium in the way football players and baseball players are normally cheered.

On the contrary, we all know the insulting terms and jokes aimed at those who strive to develop their intelligence. To spend hours and hours every day training for athletic competitions makes one a hero, but to put similar effort into developing one’s intellectual abilities makes one a “nerd, “a “geek,” etc.

Have Americans acquired so much hatred for serious learning, due to their experiences in the public schools, that they cannot admire those who develop the intellectual skills needed to move the world forward?

There is far more to learn than there has ever been in human history, yet, paradoxically, most of our children are learning less than educated people learned a century ago.

During the course of the twentieth century, more was discovered about the nature of the natural world via science and about the possible structures of space and number in mathematics than was discovered in all of human history prior to the twentieth century. Even in learning about the human past, archaeologists and historians have dramatically expanded our knowledge during the last hundred years.

And, yet, those who pursue serious intellectual effort, especially as adolescents, are now denigrated in much the way that drunkards or tramps were despised when my great-grandmother was a child.

The loss of middle-class independence

The old middle-class ideal was self-sufficiency and independence: a self-respecting person would not let himself be on the government dole and would plan for his and his family’s long-term personal and financial needs.

That is no longer true: most Americans believe they are “entitled” to Social Security, Medicare, public schooling for their kids, etc. – all at taxpayers’ expense. A large number of Americans believe they are “entitled” to government-provided daycare, to government-provided medical insurance, etc.

Government policies have systematically engineered this culture of dependency: during the last ninety-seven years, since the government founded the Federal Reserve System, the inflation of the currency by the “Fed” has destroyed more than ninety-five percent of the value of the dollar, according to the government’s own statisticians.

Combined with a plethora of new taxes never paid by Americans before the twentieth century, notably FICA (“Social Security”), and the passage of the Sixteenth Amendment (legitimizing the federal “income” tax), this has made it much more difficult for families to become financially independent by saving the money they have earned, and has therefore encouraged dependence on the state.

Even what is now considered a “modest” rate of inflation of, say, three percent per year, will eat away half of one's savings in less than a quarter century. And any rise in interest rates that partially offsets the price inflation will be taxed as “income,” making it even more difficult to keep up with the inflation created by the ongoing expansion of the money supply by the government.

These financial depredations against the American people have also encouraged both spouses to join the workforce. This “liberating” of mothers (how odd that women being forced to enter the workforce to make ends meet is considered “liberation”!) has meant that the functions traditionally provided at home by a parent are increasingly expected to be filled by government.

This loss of middle-class independence is of central importance to all the changes I am discussing. Specifically, when middle-class families no longer have the financial wherewithal to allow one parent to stay home with the kids, it is inevitable that responsibility for the kids is handed over to “experts,” to the schools, and to a barbaric “youth culture.”

More broadly, citizens who feel that it is neither necessary nor even possible to take personal responsibility for their own retirement, for possible periods of unemployment, for health care, etc. are taught the lesson that they are not responsible and competent adults in general. It is no wonder that such adults doubt their ability to tend to their children's education and child-rearing and instead abdicate those responsibilities to irresponsible “experts.”

Bureaucractization and the rule of experts

We have entrusted “experts” with everything from education to the criminal-justice system to the proper approach to child-rearing to regulating the nation's financial system.

Those “experts” insisted on “whole-language” reading instruction instead of phonics, on “rehabilitating” violent criminals instead of punishing them, on a “permissive” approach to child-rearing, and on economically insane policies for the nation's financial system.

None of that has worked.

We all know this, and, yet, we continue to entrust such “experts” with enormous power in education, the criminal-justice system, the “helping” professions, and even business management.

Numerous jobs that, fifty or a hundred years ago, did not require a college (or even high-school) diploma now require applicants to be college graduates. Sadly, there is evidence that college graduates today are only about as literate as the average high-school graduate of a half century ago. In 2002, the Zogby polling organization, at the behest of the National Association of Scholars, carried out a study to test the general academic knowledge of Americans today compared to a half century ago by repeating questions used in a series of polls taken at mid-century. The result was:
The overall average of correct responses for the entire general knowledge survey was 53.5% for today’s college seniors, 54.5% of the 1955 high school graduates, and 73.3% for the 1955 college graduates.
In short, although college is demanded for more students today, it seems to be accomplishing no more for most of those students than high school accomplished half a century ago: we are insisting on educational credentials that are in fact meaningless. Our “experts” are not experts; our “educated” college graduates are not in fact educated.

We have a society based on credentials that guarantee knowledge and expertise, but those credentials are in fact fraudulent (see sociologist Randall Collins' classic work The Credential Society.)

The issue of turning over large fractions of our lives to bureaucracies goes beyond the enormous economic waste and the everyday frustrations of dealing with bureaucracies. Millions of reasonably intelligent Americans spend decades of their lives acquiring a meaningless “education” to get themselves “jobs” that are utterly pointless, often positively destructive: for example, simply pushing paper to comply with (or, worse, create) meaningless, often economically destructive, regulations. Anyone who doubts this should look, for instance, at the huge salaries paid to those who wrecked “Fannie Mae.”

The rule of experts, the dominance of bureaucracy, a society of paper-pushers engaged in meaningless, pointless jobs – this is not the America that once existed. It is not a society that produces free and independent human beings that live meaningful, purposeful lives.

Regimentation, militarism, and the dominance of the “group”

The twentieth century was the century of “total war”: hundreds of millions of human beings died horrifying deaths as the result of the numerous wars and “civil terrors” pursued by the world’s governments during the last century.

War means militarization, and the results of that militarization has spilled over into society at large.

The traditional middle-class virtues – prudence, caution, independent thinking, planning for the long-term future – are not the military virtues.

A military high command does not want its “cannon fodder” to consist of thoughtful, cautious, calculating individualists.

Combat soldiers, whose life might end tomorrow on the battlefield, tend to have short “time horizons”: “Eat, drink, and be merry, for, tomorrow we die.” There is truth in the stereotype of the hard-drinking soldier or sailor; it makes sense that soldiers are known for short-term sexual liaisons formed without concern for long-term consequences.

Furthermore, a military runs on “esprit de corps,” which, pragmatically speaking, boils down to “submerge yourself in the group.” “Individualism” is not a military virtue.

The majority of Americans of course have never served in the military, but the never-ending wars in which the U.S. government has chosen to involve the United States for more than a century have resulted in a widespread acceptance of the military mindset, even among those (perhaps especially among those) who consider themselves not to be militarists.

This is evident not only in the contempt for cautious, prudent, middle-class behavior, but, above all, in the fervent belief in the need for “group activities” and “socialization” for children to teach them to “fit in” with the group.

To put this “groupism” in a historical context, recall that Thomas Jefferson never played on a Little League team; Abe Lincoln was never a Cub Scout.

Indeed, as Robert H. MacDonald explains in detail in his Sons of the Empire: The Frontier and the Boy Scout Movement – 1890-1918, Lord Baden-Powell created the Scouting movement in imitation of his own wartime experience as an actual military Scout. Scouting employs military rituals such as uniforms, bugle calls, salutes, etc. because one of its major purposes was to accustom young boys to military attitudes so that they would be prepared to “do their duty” as soldiers to advance the imperial cause when they became adults.

Progressives who stress the need for “group activities” and “socialization” may not consciously think of their goals as being militaristic. But, the military is in fact the very model of a bureaucratic, regimented institution. To raise children to think of themselves not as independent individuals but as members of a group is to encourage in them a militaristic mindset.

Of course, there are some worthwhile activities that can only be achieved by being part of a group: one cannot perform a symphony, play a basketball game, or dance the Nutcracker without being part of a team. I am not suggesting that it is wrong to be part of a team when that makes sense to achieve a common goal. But all of human history shows that it is not necessary to be immersed in formal group activities throughout one’s childhood in order to become a happy and productive adult.

The radical change from the traditions of our forefathers is not that we encourage our kids to do some activities that may involve them in groups. Rather the change is the belief that doing things in a group is good in and of itself, conveying to our children the belief that submerging one's individuality in the consciousness of group membership is proper and desirable.

That is the heart of militarism.

Can Homeschoolers Repeal the Twentieth Century?

Haven’t I grossly oversimplified?

Sure – I am talking about very broad social and cultural changes spanning a century. To blame the insistence on “group socialization” solely on the need to get everyone to share the proper group attitudes in our never-ending wars against never-ending enemies (first the Kaiser, then Hitler / Tojo, then Stalin / Khrushchev / Brezhnev / Mao, promptly followed by Qaddafi / Saddam / bin Laden, etc.) is of course over-simplifying.

After all, “group socialization” was also a key part of the “progressive” agenda, which in turn was one of the main sources for the cult of “experts.”

These cultural changes are indeed intertwined in many, very complicated ways.

But these changes are nonetheless very real: most Americans have come to accept regimentation, bureaucratization, control of their lives by “experts,” dependence on government, a collapse in education, a collapse of the currency, a punitive tax system, and a strange new approach to child-rearing that would have stunned and outraged most Americans when my great-grandmother was born in 1883, much less the American Founders.

My central point really is the inter-linking and reinforcement among these different changes. The contempt for serious learning produces “citizens” who are willing to be controlled by bureaucrats and by self-proclaimed “experts” and who are willing to accept the multiple lies of our “Commander-in-Chief,” whoever he may be. The emphasis on “fitting in” with the group discourages people from becoming self-reliant, independent individuals who can think for themselves. The collapse of parental responsibility for raising their own kids means that those kids are turned over to the tender mercies of the self-proclaimed “experts.”

Let me emphasize that I have said nothing about the explosion in crime, or illegitimacy, or broken homes in the last one hundred years. The social changes I have discussed have occurred even among normal, stable middle-class American families: most of what I have described is not even viewed any longer as “social pathology.”

What I have described is now taken for granted as “normal” American life. And yet it differs radically from the life and culture into which my great grandmother was born.

This transcends the hackneyed liberal vs. conservative political divisions. Liberals may be the ones insisting on “group learning” in the schools, but it is conservatives who focus on the Pledge of Allegiance to insure that we are all part of one “indivisible” nation (officially “under God,” ignoring the fact that God might have His own opinion on the matter!).

If there is any single source for these changes, it is probably the “progressive” movement of the late nineteenth and early twentieth century. We tend to forget that progressivism was a bipartisan movement (Teddy Roosevelt, a Republican, was the first “progressive” President) and that it was the two “progressive” Presidents, Wilson and Roosevelt, who initiated the policy of never-ending wars to fight never-ending enemies.

Why should all this matter for homeschoolers?

First, because if we think that our homeschooling is a response simply to the failure of the schools, we are missing the broader picture. The collapse of education in the U.S. is just a small part of a much broader web of social change.

Second, if we do not understand those changes, we risk replicating much of the worst aspects of present-day society in our own homeschooling: e.g., a belief in the need to be “socialized” in order fit in with the group, or to swear our “allegiance” to the government, or to trust in “experts,” or to take “celebrities” and contemporary “entertainment” seriously.

Finally, the changes I have sketched out are the history of the United States during the last century. Understanding these changes matters far more than understanding the historical influence of John F. Kennedy, or Ronald Reagan, or Bill Clinton, or Newt Gingrich.

Indeed, one of the most important things to understand about Gingrich and Reagan is that they accepted and perpetuated this disaster in American society just as much as Clinton or Kennedy.

Why should our kids bother to learn this history?

Primarily because learning is, despite the contrary spirit of our time, a good thing in and of itself; but also because our kids cannot understand where we are unless they understand where we have come from.

Those who do not understand the past are prisoners of the past.

Can we repeal the twentieth century and simply turn the clock back to 1883 when my great-grandmother was born?

No, of course not, and no one really wishes to do that – no one wishes to give up antibiotics or airplanes or weather satellites. The point is not to “turn back the clock”; the point, rather, is to recognize that the changes that have happened during the last century in American society were not inevitable: they were the result of human choices.

We can consciously judge those changes and actively make decisions as to what our own values should be. We can welcome antibiotics and yet reject “gangsta rap.” We can fly on airplanes but also reject the present-day contempt for serious learning.

One of the first step towards helping our kids to avoid the mindset in which most Americans are trapped, so that our children can make serious, conscious choices for themselves, is to help our kids to understand that the contemporary American mindset is, in so many ways, a historical aberration, that most of our ancestors did not think this way, and that our kids can themselves choose to reject the attitudes and values that now pervade our society.

But to reject those attitudes and values, we must identify them and understand their source.

We must look back at the “world we have lost,” and help our kids to do so, in order to understand the values that were once taken for granted by most Americans and to understand how those values were so catastrophically lost.

Monday, February 1, 2010

Homeschooling Political Philosophy:
Natural Rights – “We Hold These Truths to Be Self-Evident…”

This blog is about homeschooling, not politics, but, of course, learning about political systems, political thought, etc. is a necessary and important part of a serious education.

For that reason, I want to mention a fellow homeschooler’s essays on the natural-rights principles that are the basis of the Declaration of Independence and that were central to the founding of the American republic (see her section titled “The Proper Role of Government, My commentary as I study his article”: the essays are written from an LDS perspective) and also to expand further on her comments.

There is a tendency nowadays to view “natural rights” as simply a fuzzy rhetorical flourish used by the Founders to justify their breaking away from Britain.

The Founders, specifically Jefferson, did not see it that way: they thought they were actually describing some important, central, objective facts about human life and the nature of government.

I think they were right.

I despise fuzzy thinking, and I certainly would not put it past even the Founders (who were, after all, politicians) to engage in political propaganda.

But, the principles of natural rights did not in fact simply advance the interests of the Founders: for example, as Jefferson himself recognized, slavery stands condemned as a horrendous crime from a natural-rights perspective. Jefferson and the other slaveholders among the Founders were faced with that uncomfortable fact when they advocated natural rights.

There is also a tendency nowadays to view “natural rights” as simply an old-fashioned religious concept, inappropriate to our modern secular age.

Again, the Founders disagreed.

Of course, anyone who believes in God will believe that everything from natural rights to quarks and neutron stars are, ultimately, due to God.

But, the Founders came from a wide variety of religious perspectives, ranging from evangelical Christians to deists or agnostics: they did not find that their religious differences impeded their common understanding of the concept of natural rights.

The idea of natural rights is not specific to any particular religious tradition.

The natural-rights perspective is in fact based on a careful, systematic analysis of the nature of human action that combines abstract logic with a keen awareness of the realities of human history.

Most of us homeschoolers are rightly reluctant to get into the typical Republican vs. Democrat, liberal vs. conservative “flame wars.”

But, in various conversations with other homeschoolers, I am seeing an increasing interest in the broader philosophical issue of natural rights. Aside from the essay I linked to above, a homeschooling friend recently recommended to me Bastiat's classic The Law, and I think there is also a growing interest among homeschoolers in understanding the underpinnings of the Founders' thinking.

That interest among homeschoolers is, I think, not only understandable, but vital. I’ll go into this in more detail in future posts, but I’ll mention here some basic sources from which one can learn about the concept of natural rights..

One of the best-known sites on the Web that consistently advocates natural rights is LewRockwell.com. The Mises Institute is the best site both for serious, scholarly work from a natural-rights perspective, as well as for popular introductions, commentary on current events, etc.

The novelist and philosopher Ayn Rand wrote two essays that succinctly summarized the classical natural-rights perspective: “The Nature of Government” and “Man’s Rights.” (I do not entirely agree with Rand’s political perspective, and I disagree strongly with some of her current followers, but these essays do very clearly present the classical limited-government version of the natural-rights perspective.)

My own views on natural rights come largely from an economics perspective (I considered majoring in economics, and actually had an offer to do a post-doc in econ after I got my Ph.D. in physics). The single greatest influence on me was the late economist Murray Rothbard – see, e.g., his books Egalitarianism as a Revolt Against Nature and Other Essays, The Ethics of Liberty, and For a New Liberty.

Thoreau’s Essay on Civil Disobedience is generally remembered for its anti-militarism and its emphasis on the importance of individual conscience, but it is in fact a passionate, humane, and readable defense of the natural-rights philosophy, which emphasizes the danger that any government poses to individual rights. Thoreau’s opening declaration could well serve as the motto for defenders of natural rights:
I HEARTILY ACCEPT the motto, — "That government is best which governs least"; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, — "That government is best which governs not at all"; and when men are prepared for it, that will be the kind of government which they will have.
John Locke’s Second Treatise of Civil Government is the classical formulation of the idea of natural rights (although the basic concept of natural rights originated among the radical Protestants of the English Civil War such as Roger Williams, John Lilburne, and the heroic Anne Hutchinson, and the idea has roots in the Middle Ages and ultimately in Classical civilization).

Locke is difficult reading for those of us educated in the twentieth or twenty-first centuries, but anyone seriously interested in natural rights or the founding of the United States ultimately has to read it.

Most of the sources I have linked to above are available online, though I would recommend getting hard copies of Locke's Second Treatise and Rothbard's The Ethics of Liberty.

Isn't this an awful lot to read?

Well, yes. But spread out over the course of the middle-school and high-school years, it really is not that burdensome.

After all, learning math, from arithmetic through calculus, requires a lot of reading, too. And, any reasonable study of English and American literature requires thousands, perhaps tens of thousands, of pages of reading.

Isn't it possible to read just one or two of the essays or books I have linked to above?

Well... yeah, just as it is possible to read one play by Shakespeare and one book by Dickens and declare that you have finished English literature.

But, you're fooling yourself.

Any serious education involves the study of history and of human nature. The idea of natural rights is central to the history of our own country, and, the Founders believed, central to understanding both history in the broader sense and the nature of human beings.

The Founders were, I think, correct.

If the idea of natural rights is central, as the Founders thought it was, to understanding human nature, history, economics, and politics, then it merits serious and sustained study. It is not a topic that one should try to briefly “slip in” to one's schooling, as one might “slip in” origami or basket-weaving if you and your child happen to have some spare time (nothing wrong with either origami or basket-weaving – but neither are essential parts of a serious education).

In all honesty, I think a firm understanding of natural rights does require reading, at the very least, all of the essays and books I have listed above.

Locke and Thoreau are, of course, the most demanding of these, but they are also key historical documents that any educated person must read: unfortunately, they are not likely to be required reading nowadays even at good universities, so it is important to include them in your homeschooling. Rand's essays are quite brief, and Rothbard's books are quite readable.

Am I then suggesting that kids should learn about the idea of natural rights only in middle school or high school?

No. The Founders expected ordinary people to grasp the references to natural rights in the Declaration of Independence. The basic concept is not difficult: natural rights are those rights human beings possess automatically by nature, granted neither by other human beings nor by any rulers or any government.

To give a concrete example, humans can, after birth, normally breathe on their own. Normally, breathing is therefore a natural right. On the other hand, humans are not automatically provided by nature with free health care: therefore, free health care is not a natural right.

The distinction is straightforward and obvious: even a child in early grade school can grasp it.

Why this distinction matters, what it implies about the nature of politics, economics, history, etc. – all of that cannot be fully grasped by a first-grader, of course. But we tell first-graders that the earth moves around the sun, even though they cannot yet grasp Kepler's laws of planetary motion. A similar point applies to teaching the idea of natural rights.

Further along, as a student learns history, economics, etc., the idea of natural rights should be deepened and used to illuminate those other subjects.

In short, reading Locke, Thoreau, etc. when the student is older should be not the first introduction to the idea of natural rights, but rather an opportunity to see how the idea was created and fully developed historically.

Of course, the concept of natural rights, and its centrality in the thought of the American Founders, has pretty much disappeared from American education, so that even highly educated adults in contemporary America do not generally understand natural rights as well as the average farmer in the era of the American founding.

So, as is so often the case for us homeschoolers, educating our kids necessarily starts with educating ourselves – i.e., if you have not read the sources I listed above, you have a bit of reading to do before you can help your child understand the principles that lie at the foundation of our country.

Is it worth the trouble? Yes – if you want your kids to have a solid grounding in history, economics, and the founding principles of our country.