Seymour's Bill is frightening the luvvies so much they can't read

DAVID SEYMOUR'S REMARKABLY TEPID Regulatory Standards Bill is getting frightened and bewildered luvvies to put down their lattes and type indignant emails to their MPs.

Fuel for many of this outraged commentariat (Anne Salmond was the first; Brian Easton is the latest) is provided by a book-length screed by one Quinn Slobodian called Hayek's Bastards, "The premise of Quinn Slobodian’s new book," says the bookplate, "is that authoritarian right-wing populism is a mutated version of classical liberal economics." A version labelled "neoliberalism" by its opponents.

A counter-intuitive thesis to be sure, So I checked on some actual classical liberals to see what they thought of the book. (Pointless asking Trump followers, since we know none of them can read. Or "neoliberals," none of whom actually exist.)

Phil Magness, an economic historian  who most recently convinced over 150 economists and scholars to sign a declaration opposing Trump's economically harmful, constitutionally dubious tariff policies, wonders aloud at the absurdity of the book's central thesis. Which is Slobodian's apparent conviction "that Trumpism traces its intellectual origins to the Austrian economists Friedrich Hayek and Ludwig von Mises." This would undoubtedly astonish all three. 

Slobodian's attempts to link the three suffers, Magness says wryly, "from a lack of clear evidence for the parentage. Undeterred, Slobodian supplies the links by making them up."

As they say, if you have to lie to make up your criticisms, it suggests you probably don't have any.

Slobodian of course relies on the fact that few if any of his credulous readers will bother to actually read Hayek or Mises. (Easton for one would benefit hugely from the experience.) But if you want a candid study of how to quote somebody to say the precise opposite of what they say — in this case Mises quoting others to denounce their racial prejudice is used to suggest their vile views are his own — then Magness's review is a good place to start. 

This is not even sleight of hand. It's a conjurer simply assuming his audience are too dumb to notice. "Deliberate deception" is how another commentator describes it. It's a consistent pattern. Here's Slobodian in 2015, for example, showing how to get Mises to support something he was writing to oppose:

Slobodian demonstrates his pattern of ripping quotes from their
context to give the opposite impression of an author's intention.

It's complete dishonesty: a "scurrilous  ... slipshod attempt to taint and tarnish the reputation of one of the leading economists of the 20th century, and one of the most consistent and outspoken defenders of the classical liberal ideal of political, social and economic liberty and the free society," says Misesian Richard Ebeling in his response to the deception.

We live at a time when one of the worst accusations that can be thrown at someone is the charge of “racist.” Have that word tied to your name and it not only results in moral condemnation, it potentially throws into discredit almost anything and everything that person has said or done. That makes it a serious matter when an individual never identified with such racist views or values has that accusation attached to them. ... The actual facts show this is a fundamentally baseless accusation that attempts to taint and tarnish the reputation of one of the leading economists of the 20th century ...

[O]ne of the most embarrassing observations that can made about an author’s work [is] being slipshod scholarship. Professor Slobodian has 93 footnotes in his article. Over 50 of them reference Mises’s writings or correspondence. Looking them up, I found many instances in which the page reference to a paraphrase of a passage or a quote in one of Mises’s works was not to be found where Professor Slobodian indicated it to be.

In some instances, this was not simply being off a page or two; the page referenced turned out to be in a portion of one of Mises’s works that had nothing to do with the theme or idea that Professor Slobodian was referring to....

In addition, there are instances in which Professor Slobodian asserts or implies views or states of mind held by Mises at some point in time. But the footnoted reference sometimes refers to some other scholar’s work that when looked up did not refer to or imply anything about Ludwig von Mises. For example, at one point (p. 4), Professor Slobodian says, “But for Mises, a war had shaken him the most. Japan’s defeat of Russia in 1905 brought about a non-white power into the elite white club of empires. The event resonated with the rhetoric of the ‘yellow peril’ widespread at the turn of the century, understood as both a racial demographic and commercial threat.” And he footnotes a[nother author's] work about Asian intellectuals in the period before the First World War.

Professor Slobodian then says, “Mises’s response was different but no less radical,” and then references how Mises [allegedly] saw the economic significance of increased global competition from Asia ... The juxtapositioning of these two ideas, one following the other, easily creates the impression that Mises, while having a “different” response, was part of the group worried about a “yellow peril.

There is nothing to suggest in Mises’s writings actually referenced that he held or expressed any such race-based fear in the wake of the Japanese victory over Russia. But the implication is easily left in the reader’s mind.

Slobodian is fundamentally dishonest.

Christopher Snowdon has more:

The first two chapters find Slobodian searching for hints of racial prejudice in the work of Hayek and Mises. For the former, the best he can manage is a reference to ‘the Christian West’ in a 1984 speech. For the latter, who may well have been Austria’s least racist man in the 1930s, it is an even greater challenge. 

Slobodian revives two articles he wrote about the lifelong supporter of open borders in 2019 that have been heavily criticised by Phillip W. Magness and Amelia Janaskie for ‘inverting Mises’s meaning in a light that erroneously casts him as sympathetic to racism or colonialism.’ 

One does not need to be an expert on Mises to see that Slobodian is guilty of selective quotation. One only needs to read the whole paragraph from which the quote is taken. For example, Mises is quoted as writing in 1944: ‘There are few white men who would not shudder at the picture of many millions of black or yellow people living in their own countries.’ Slobodian puts this in a context that implies that Mises shared this revulsion and cites it as evidence that Mises had ‘partially legitimised closed borders for nonwhite migrants as a near-permanent feature of the world order.’ But the very next sentence of Mises’ text reads: ‘The elaboration of a system making for harmonious coexistence and peaceful economic and political cooperation among the various races is a task to be accomplished by coming generations.’ It should be obvious that Mises was not endorsing the prejudices of the majority, but merely acknowledging the existence of such prejudices and hoping that they could be overcome.

And here's Slobodian's problem, and the reason he must so transparently mis-quote: "There is simply no through-line from Mises or Hayek to the alt-right." 

By referring to right-wing populists of the present day as Hayek’s illegitimate offspring (‘bastards’) Slobodian allows himself a certain amount of wriggle room, but if a student believes the exact opposite of the teacher, can he really be portrayed as a follower?

The fatal flaw in this book is that Slobodian has clearly started with his conclusion and worked backwards. An author who was interested in writing about the roots of the current wave of right-wing populism would start with the right-wing populists and study their words and deeds.

Which is what Misesian Jeffrey Tucker did many moons before Slobodian even thought about slithering into print — "the most important political book in recent memory" is what my own reviewer called it.

BUT THIS BRIEF GLIMPSE  into a fetid authorial swamp was not just to alert you to a shitty book from an author too incompetent to even formulate real arguments. It's to show you how bereft of clothing are the nakedly insubstantial objections to Seymour's bill, that so many rest their objections on a ad-hominem without even a home. As Richard Ebeling says so tellingly in a recent article, "“Progressives” Blame F. A. Hayek for Everything They Dislike."

That so many of these "progressive" objections to a fairly unobjectionable Bill rest unthinkingly on Slobodian's animus and deception — for a historian used to checking sources, Anne Salmond's was an example of one of the most dishhonest — suggests the same thing said of Slobodian's book could be said about the objections to the Bill: if you have to lie to make your arguments, then perhaps you don't really have any.

I only wish they were right that it is something they need to be scared about.

The Fairytale of Hegemonic Neoliberalism

One of the great untold stories of the 20th century political left is how they lost the debate on economic issues within the economics profession. So they moved over into the English department (and other humanities) instead, and resumed teaching discredited economics there. This might explain, explains Phil Magness in this guest post, why many of the humanities adopt an explicitly conspiracist epistemology when they talk about economics as a discipline — and why their graduates adopt an explicitly conspiracist approach to opposing political ideas. As examples, you can see the recent "scare" over the Atlas Network, and the long-running scare story about how the world is being taken over by something called "neoliberalism."

What is "neoliberalism"? As Magness explains, "neoliberalism" is essentially an intentionally imprecise stand-in term for free-market economics or for economic sciences in general; for conservatism, or for libertarians and anarchists; for authoritarianism and for militarism; for advocates of the practice of commodification, for centre-left or market-oriented progressivism; for globalism and for welfare-state social democracies, for being in favour of or against increased immigration; for celebrating rocketing house prices or promoting policies to make them fall; for favouring trade and globalisation or opposing the same; or for really any set of political beliefs that happen to be disliked by the person(s) using the term. In short, it's a fairy-tale used to describe any kind of "dragon" of which a certain type of person is against. But dragons don't exist....

The Fairytale of Hegemonic Neoliberalism

by Phil Magness

Nobel laureate economist Joseph Stiglitz recently made waves in academic circles with a book declaring the end of something called “neoliberalism” and outlining the contours of a suitable replacement.

“That question has come to define the current era,” Stiglitz explained. After describing the allegedly dying paradigm with a series of vague economic concepts that include tax cuts, deregulation, and global finance, he declared “the neoliberal experiment” a “spectacular failure.”

His prognostication received a celebratory response from political commentators, many of whom have similarly proclaimed the concept’s demise in anticipation of a more progressive replacement paradigm. Obituaries of this type are now a weekly feature of political and academic commentary. Stiglitz himself also previously announced the “death” of neoliberalism several times to similar fanfare in 2019, in 2016 — and in 2008 before that.

Curiously, among all the cries that the neoliberalism wolf is dead or dying, little attention has been given to a more fundamental question: Does that wolf even exist? And did it ever exist?

Origins

I’ve examined the origins of the term “neoliberalism” before, tracing it back to 1920s Germany, when it served as a favourite term of disparagement for laissez-faire economics used by Marxists and fascists alike. So clearly it has an earlier use. But pejorative terminology originating in discredited extremist ideologies from interwar Germany is a grossly deficient basis on which to establish that the maligned object is anything other than a caricature.

“Neoliberalism” has certainly become a favoured academic buzzword used since that time, although common notice of it in the scholarly literature dates no earlier than the mid-1980s, when attention was drawn to it by the French philosopher Michel Foucault. Even then the term did not achieve widespread academic use until the late 1990s [popularised here in EnZed by the likes of Jane Kelsey], and it has only supplanted another favourite bugbear of the activist world, “globalisation,” in the last decade or so — globalisation having having now become a scare-word for the other side of the political spectrum!

Still, this usage pattern remains exceedingly strange for an ideological paradigm that is commonly alleged to have dominated  economic policy right up to the present day. Conventional depictions of “neoliberalism” routinely assert that this paradigm captured the economic policy-making apparatus of the United States, and eventually the world, starting around 50 to 70 years ago. The dating alone necessarily entails that the alleged neoliberal takeover took place before the vast majority of the world even knew that neoliberalism existed, let alone what neoliberalism was. Which poses an obvious question ...

Where Have All the Neoliberals Gone?

When one probes this strange usage pattern a little further, it quickly becomes apparent that the term’s anachronistic deployment is only the beginning of its problems as a suitable descriptor. The term’s very definition is, to put it mildly, fluid and notoriously imprecise. As Jason Brennan and I note in our book Cracks in the Ivory Tower, neoliberalism is essentially an intentionally imprecise stand-in term for

free market economics, for economic sciences in general, for conservatism, for libertarians and anarchists, for authoritarianism and militarism, for advocates of the practice of commodification, for center-left or market-oriented progressivism, for globalism and welfare state social democracies, for being in favour of or against increased immigration, for favouring trade and globalisation or opposing the same, or for really any set of political beliefs that happen to be disliked by the person(s) using the term.

The “neoliberal” designation has been applied to an array of political and economic beliefs, including internally contradictory ones. In the political-candidate space, it purports to describe everything from Hillary Clinton to Donald Trump. To those who use it with regularity, the only recurring certainty is that neoliberalism is bad. Or to quote left-wing columnist George Monbiot, neoliberalism is “the ideology at the root of all our problems.”

Except there’s also another problem beyond the term’s fluid definition. When investigating the seemingly obvious question of who actually espouses neoliberalism, one quickly finds that almost nobody actually subscribes to this supposedly dominant paradigm. There are almost no actual people who call themselves “neoliberal” — who advocate, adopt, or seek to impose “neoliberalism” on the economy. Nor have there ever been.

Some readers might respond that the term was batted about between the 1938 Walter Lippmann Colloquium and the mid-’50s as a way to rebrand classical liberalism. This is nominally correct. But the adoption of this name was contested from the outset in 1938, and never really stuck on the free market or laissez-faire side of that internal debate, its supposed home in both the interwar German uses and in the academic discussion between 1990 and today.

At best, the self-described “neoliberals” of the midcentury drifted into an attempted melding of (1) international free market liberalism in matters of trade, regulation, and commerce with (2) a robust and fiscally solvent European-style welfare state. Not only does this latter half of this equation meet with approval on the progressive left, but it’s a much more difficult case to maintain that the modern American economy is a derivative of the eventual product of that midcentury discussion, the German Ordoliberal school.

There are also a handful of recent attempts by free market thinkers to re-appropriate the “neoliberalism” label for themselves. But this movement is entirely a response to the term becoming academically trendy in the past decade, not any intellectual continuum to a laissez-faire past. Commendable as the effort to change the word’s overwhelmingly pejorative use into a positive may be, its current adherents probably number in the hundreds. They both postdate the claimed “neoliberal” takeover and remain far removed from the instruments of power that it supposedly wields — and has wielded for over 50 years.

So practically speaking, the total number of people in the world today who would identify themselves with the allegedly dominant ideology of the last half-century is negligible. In fact, the number of academics on the left who devote their lives to decrying “neoliberalism’s” supposed stranglehold over the American and global economies exponentially exceeds the total number of self-described adherents of neoliberal ideology today or at any time in the past.

Taking Neoliberalism Seriously

Neoliberalism, we are constantly told, still runs the show, has run the show for over half a century, and is on the verge of being replaced by a progressive alternative on account of its “failures.” So what happens then if we take this cliché at face value? What happens if we try to actually identify where and how specific neoliberals came to control American economic policy after World War II?

The term’s modern use has exceptionally strong association with Ludwig von Mises — one of the economists who rebuffed the moniker at the aforementioned 1938 colloquium — and with Milton Friedman, who preferred to call himself a classical liberal. As much as we may value their respective economic contributions, neither Mises nor Friedman ever enjoyed anywhere close to the widespread control over economic policy that is often ascribed to them.

Both wrote in an age when Keynesianism was ascendant in economics, and particularly when Keynes’s American expositor Paul Samuelson enjoyed nearly complete saturation in economic education due to the popularity of his college textbook and associated political prescriptions.

Mises articulated a sweeping case against economic interventionism on both philosophical and practical grounds, including a recurring observation that central planning was both inherently susceptible to graft and impossible to implement without disastrous misallocation. Briefly stated, the entire premise of the central planner undercuts the signaling mechanism of prices, which in turn renders him incapable of allocating goods and services to functionally meet even basic consumer wants and needs. Yet Mises remained an outsider to the halls of political influence until his death in 1973, and only found wider vindication after the fall of the Soviet Union validated his longstanding critique of their economic model. [SEE: 'Mises Against the Neoliberals']

Friedman is a somewhat similar case in that his best-known policy work, Capitalism and Freedom (1962), was an outsider’s critique of the entire New Deal order and subsequent welfare state. His monetary theories did acquire some policy salience in the 1970s, but only after stagflation revealed systemic faults in the dominant Samuelsonian approach to central banking that had taken hold in the previous two decades.

While Friedman’s brand of monetarism is frequently credited in the “neoliberalism” literature for the aggressive interest rate “shock” policies of Paul Volcker at the Federal Reserve (1979-87) in a quest to tame inflation, this common account conveniently neglects that Friedman himself was harshly critical of the Fed throughout the same period that it was supposedly under his philosophical guidance. Near the end of the Volcker term, Friedman went so far as to denounce the Fed’s record as an erratic and politically manipulated succession of missteps that openly rejected a stable monetarist rule even while speaking in nominally monetarist rhetoric.

Note that even here one can still legitimately debate the extent to which a Friedmanite policy undergirded these events, but the record points to a messy implementation at best and one that forced him into confrontation with the blunderous obstacles of political execution. It did not, however, entail a “neoliberal” takeover of even monetary policy either before or since that moment, let alone the entire economic paradigm.

Neoliberalism and Political Influence

Far from signifying its validity, Mises and Friedman are actually illustrative of a central defect in the “neoliberalism” literature. Their prescriptive approaches to economic policy — typically calling for a deeply constrained or rule-based form of economic intervention in Friedman’s case, and broad adherence to economic non-intervention in Mises’s framing — have been eschewed for politically entrenched alternatives that favour proactive government intrusions into most economic matters.

Even more so, the main political instruments of economic policy making reveal a conspicuous absence of supposedly “neoliberal” figures throughout this period.

As my friend Peter Boettke recently remarked, there was never a Treasury Department operating under the guidance of James M. Buchanan; never a Friedman Fed; never a Hayekian Council of Economic Advisors.

Instead, the more common norm for political appointments to key economic positions is (1) traditional Keynesians, (2) liberal and conservative New Keynesians, and (3) technocratic empiricists of both the center-left and progressive variety. Instead of “neoliberals,” we find these roles populated in the more progressive moments by Samuelson, or Robert Solow, or James Tobin, or Walter Heller, or Arthur Okun, or Alan Krueger, or — yes — Joseph Stiglitz (chair of the CEA, 1995-97) himself. In more conservative moments such as the George W. Bush administration, key economic policy appointments have typically gone to New Keynesians such as Ben Bernanke and Gregory Mankiw.

One could extend this observation to international bodies that allegedly represent the “neoliberal” era as well.

Although some recent works have attempted to write Mises and Friedrich Hayek into the deep genealogy of the World Trade Organization, the World Bank, the IMF, and similar institutions, the evidence for such paths of influence resembles more of a “six degrees from Kevin Bacon” game than any meaningful shaping of policy.

Key “neoliberals,” at least of the Misesian free market non-interventionist type, are always noticeably missing from the formative political events of these institutions, such as the Bretton Woods conference of 1944 (attended by Keynes himself, along with an assortment of New Dealers) and the key rounds of the General Agreement on Trade and Tariffs (1948) that eventually produced the WTO in 1995. [SEE ALSO: 'Why Austrians are Not Neoliberals']

And when one looks to the modern political leadership of these allegedly “neoliberal” institutions, they do not find laissez-faire theorists or Friedmanites or Hayekians or Misesians. Instead, one is more likely to find their leadership roles populated by political and economic figures hailing from the left of centre and favouring varying degrees of interventionist technocracy. These institutions routinely attract career politicians such as Dominique Strauss-Kahn and Pascal Lamy, left-of-center New Keynesians such as Lawrence Summers, or — once again — progressives such as Joseph Stiglitz (World Bank chief economist, 1997-2000) himself.

Given these and other recurring patterns of political appointments that chafe with the notion of a politically dominant “neoliberalism” paradigm, it becomes entirely reasonable to question the utility of the entire “neoliberalism” literature. Far from fighting to supplant a prevailing ideology for our age, “neoliberalism’s” critics appear to be battling a phantasm of their own imagining.

And conveniently, that phantasm also serves as an intellectually unsophisticated and pejoratively deployed stand-in for any and all things the same people dislike about free market economics without having to actually engage free-market arguments.

* * * * * 

Phillip Magness is an economic historian specialising in the 19th century United States. He is the author of numerous works on the political and economic dimensions of slavery, the history of taxation, and the history of economic thought. 

Dr Magness spent over a decade teaching public policy, economics, and international trade at institutions including American University, George Mason University, and Berry College. His work has appeared in scholarly outlets including the Journal of Political Economy, the Economic Journal, Economic Inquiry, and the Journal of Business Ethics. In addition to his scholarship, Magness’s popular writings have appeared in numerous venues including the Wall Street Journal, the New York Times, Newsweek, Politico, Reason, National Review, and the Chronicle of Higher Education.

His post first appeared at the American Institute of Economic Research.

"...they lost the debate on economic issues within the economics profession. So they moved over into the English department and other humanities..."

"One of the great untold stories of the 20th century political left is how they lost the debate on economic issues within the economics profession. So they moved over into the English department (and other humanities) instead, and resumed teaching discredited economics there.
    "Note that this also explains why many of the humanities adopt an explicitly conspiracist epistemology when they talk about economics as a discipline. See also the neoliberalism studies' literature ... and similar.
    "Corollary: this also applies to the protectionists of the NatCon right ... They lost the economic debate on trade over a century ago ... "

~ Phil Magness

'Neoliberalism': What is it?

"Neoliberalism is essentially an intentionally imprecise stand-in term for free-market economics, for economic sciences in general, for conservatism, for libertarians and anarchists, for authoritarianism and militarism, for advocates of the practice of commodification, for centre-left or market-oriented progressivism, for globalism and welfare-state social democracies, for being in favour of or against increased immigration, [for celebrating rocketing house prices or promoting policies to make them fall], for favouring trade and globalisation or opposing the same, or for really any set of political beliefs that happen to be disliked by the person(s) using the term."

~ Phil Magness, from his article 'The Fairytale of Hegemonic Neoliberalism'

So what's wrong with globalisation, anti-globalists? [update 2]

I keep hearing from many so-called libertarians that they're against something called "globalisation." Which seems odd. So I checked a working definition of globalisation, from an organisation that's so ill-disposed towards libertarianism they refer to something called neoliberalism (one of those "academic lies about free-market economists") ...

Neoliberalism [says something called the 'Dictionary of Global Bioethics'] is the dominant ideology of globalisation. It is a conglomerate of ideas focused on promoting the free market such as competition, privatisation, deregulation, reduction of public expenditure, tax reform, and protection of property rights. According to such an ideology globalisation is basically liberalisation and will foster individual liberty and human well-being when global markets are free.

So it looks like globalism means, in order: 

• the free market, 
• privatisation, 
• deregulation, 
• reduction of public expenditure, 
• tax reform, 
• protection of property rights, 
• individual liberty, 
• human well-being and 
• global markets.

So what's not to like, anti-globalists?

UPDATE 1:

An example from the anti-globalist swamp, this one from the species Duplicitous Trumpus, speaking [sic] just this afternoon:

I want a future that protects American labor, not foreign labor. The future that puts American dreams over foreign profits. And a future that raises American wages, that strengthens American industry, that builds national rapport, and that defends his country's dignity, not squanders it all to build up foreign countries that hate us. And you know where they are. They're located all over the world. But they're mostly on the other side of the world. We [sic] don't want that.
    Under [the current administration] you have none of this. You have none of the things we want. Instead of economic nationalism, you have ultra left-wing globalism.

So now globalism is "ultra-left wing"?

Or do you really have to be an idiot to think that?

UPDATE 2:

In the comments below, Ross G draws a distinction between economic globalisation and political globalisation. (Thanks Ross.) They "are different beasts" he points out: "Being an owner of an exporting business, and the owner of IP in many markets, I am all for economic globalism. But not so keen on political globalisation though, i.e. the growing influence of the World Bank, IMF, WTO, WHO, etc."

This is true, except insofar as political globalisation is used to increase (or diminish) economic globalisation.

Let's think back a bit.

There was never a time when the world was more interlinked economically than at the very beginning of the twentieth century (right up until the world was rent asunder by war). 

One great story to tell is how that "liberal century" (the nineteenth century) created that economic interlinkage despite all the technological hurdles is one story. 

The other story, hardly told, is how it was re-created after the Second World War despite the widespread philosophical and academic opposition to it all (and how it's now being killed off today). That is: how we nonetheless ended up at the end of the twentieth century with at least as great a degree of economic globalisation as at the end of the nineteenth, despite the Gramscian capture of the bureaucratic and educational institutions (and the antediluvian nationalism -- both economic and political -- that's been destroying it since).

The main cause seems to be that the Gramscian "long march through the institutions" was opposed by a Hayekian one. They simply chose different institutions on which to focus.

And that's the crucial difference. While Gramsci's activists were capturing the teachers colleges, protest movements, and philosophy and sociology departments, Hayek's followers (many of them) were capturing the global institutions.

The key thing to grasp from that chart above is that the high in the Year 2000 was achieved when there was achieved almost a global consensus on free trade and global markets, on deregulation and self-regulating markets, on individual liberty and human rights,  tax reform and fiscal responsibility, etc. -- and also when anti-capitalist protests outside WTO meetings were at their height. The consensus was that these things were good. The strange thing is that it was mainly the protesters outside the meetings who understood how that consensus within had been achieved.

So one of the very strange things about this, is that the story of how that increasing post-war economic globalisation was achieved is mostly told by its enemies. And some of the least irrational accounts credit the ingenious advocacy by a group (including Hayek, Gottfried Habeler, Ludwig Von Mises and Wilhem Ropke) to use global political institutions like the WTO and the IMF to promote this cause. Their work began pre-war. From Quinn Slobodian' s book Globalists, for example, comes this tale:

Röpke himself pointed out in 1937 that macroeconomics encouraged the national frame of policy, including what he called “self-contained national income theory.”157 The nation-state was the assumed, if not the explicit, container for projects of planning and later the distribution of the welfare state’s social services and benefits. Geneva School neoliberals felt that this confidence was misplaced and drew a line around the nation when the frame of analysis should encompass the world....
    In a decade [the 1930s] when most solutions inspired by Keynes, Moscow, and Schacht were national, and [central] planning was in the air, Röpke and his collaborators in Paris, Geneva, and Eastern Europe thought at the scale of the globe.
    The neoliberals [sic] gave a name to the enemy in the 1930s and 1940s: “economic nationalism.” The term, which today is commonplace, refers to governments enacting policies that block or slow trade ...
    Against the enemy doctrine of economic nationalism, neoliberals posed what Michael Heilperin, in his contribution to the 1939 International Studies Conference, called “economic internationalism.” He defined this as “a policy intended to prevent political boundaries from exercising any disturbing effect on economic relations between areas on the two sides of the frontier.”7 Economic internationalism sought to make political borders mere lines on the map with no effect on the flow of goods and capital. By contrast, economic nationalism pursued the misguided goals of national self-sufficiency, autarky, “insulation,” and “autonomy”—the latter being categories that Heilperin put in quotation marks to express his skepticism. Neoliberals saw economic nationalism as a revolt against interdependence that could lead only to starvation or wars of expansion. Globalization could not be undone. To shield a national economy from the forces of world competition in any way was a sign of secession from the international community. Neoliberals saw the root of the problem in the tension between the twin Wilsonian principles of national self-determination and economic free trade.

That is, between the competing ideas of political nationalism and economic globalisation. The use of global political institutions was intended to counter that -- using their global framework to push economic liberalisation worldwide.

[T]he distinction between the political and economic realms was central. Nations could have formal sovereignty while still remaining deeply connected economically.... Atomistic national political equality, in other words, could coexist within what [Moritz] Bonn called the “invisible economic empire” of trade and exchange that was global. A political world of borders could coexist, and had coexisted ... within a borderless world economy....
    Accepting that political frontiers could not be eliminated, and that nationalism was a force that spoke to people in an ineradicable way, they sought what Bonn called the “sterilisation of frontiers.” “If frontiers were no longer obstacles to international economic intercourse,” he wrote, “they would lose part of their sinister significance.” The idea was to reconstitute the invisible economic empire of exchange and trade overlaid with a grid of externally bounded political units called nations.

Despite their many problems, global political institutions like the WTO, IMF World Bank were used to promote this cause. One method, imperfect as it was, was to promote the so-called Washington Consensus (ironic, since Washington DC itself could barely follow one of the ten-point "consensus"). Critics of the process [in their diatribe Neoliberalism: A Very Short Introduction] bewail the worldwide spread, half a century later, of the Hayekian "long march through the global institutions":

In some cases, domestic elites, educated in elite universities abroad, embraced neoliberalism enthusiastically. Others adopted it only grudgingly because they felt that they had no choice but to swallow the bitter pill of structural adjustment demands that inevitably accompanied much-needed IMF or World Bank loan offers. Although Chicago School economists like Friedman disliked the 1940s Keynesian regulatory framework under which the IMF and World Bank had originally been devised, their neoliberal ideological descendants in the 1990s managed to capture the upper echelons of power in these international economic institutions. With the support of the world’s sole remaining superpower, they eagerly exported the ‘Washington Consensus’ to the rest of the world.

Readers might remember that New Zealand itself was a beneficiary in the 1980s. And that a former New Zealand Prime Minister was to become head of the World Trade Organisation (WTO). And even that the consensus was so widespread, and so powerful, that even the former left-wing activist Phil Goff could be lauded at one time as one of the best advocates in global closed-door discussions for free trade!

The ‘Washington Consensus’ is often viewed as synonymous with ‘neoliberalism.’ Coined in the 1980s by the free-market economist John Williamson [whose work was mainly on the institutions necessary for economic progress and stability], the term refers to the ‘lowest common denominator of policy advice’ directed at mostly Latin American countries by the IMF, the World Bank, and other Washington-based international economic institutions and think tanks. In the 1990s, it became the global framework for ‘proper’ economic development. In exchange for much-needed loans and debt-restructuring schemes, governments in the global South were required to adhere to the Washington Consensus by following its ten-point programme: 

A guarantee of fiscal discipline, and a curb to budget deficit 

A reduction of public expenditure, particularly in the military and public administration 

Tax reform, aiming at the creation of a system with a broad base and with effective enforcement 

Financial liberalisation, with interest rates determined by the market 

Competitive exchange rates, to assist export-led growth 

Trade liberalisation, coupled with the abolition of import licensing and a reduction of tariffs 

Promotion of foreign direct investment 

Privatisation of state enterprises, leading to efficient management and improved performance 

Deregulation of the economy

Protection of property rights

Which rather brings us back to the point at the top of this (now over-long) post: that if this is globalism (global political institutions used to push back economic nationalism and primitivism), then what's not to like?

It's election season, so be careful of "trendy economics"

"With the rise of social media (especially Twitter), it has becomes easier to observe changes in the zeitgeist. Over the past few years, I’ve seen the following trends:

1. Claims that increases in the minimum wage do not have negative side effects.
2. Claims that we don’t have to worry about big budget deficits when the interest rate is low.
3. Claims that changes in the money supply don’t impact inflation.
4. Claims that 'neoliberalism' no longer works, and that we need an industrial policy. 

"In each case, trendy pundits rejected long established economic principles. And now the chickens are coming home to roost. [See post for the various chickens' flight paths.] ...
    "To summarise, stay away from trendy economic fads. The eternal verities never change:

1. Price controls are bad (whether on wages, prices rents or interest rates.)
2. Large budget deficits are bad, even if interest rates are low at the time. 
3. Persistent inflation is always and everywhere a monetary phenomenon.
4. Free market economies do better than statist economies. Emulate Denmark, not Argentina."

~ Scott Sumner, from his post 'Avoid trendy economics'

"...an effective international order of law is a necessary complement and the logical consummation of the liberal programme.”

“Since it has been argued so far that an essentially liberal economic regime is a necessary condition for the success of any interstate federation, it may be added, in conclusion, that the converse is no less true: the abrogation of national sovereignties and the creation of an effective international order of law is a necessary complement and the logical consummation of the liberal programme.”

~ Friedrich Hayek, from his essay 'Insterstate Federalism,' collected in Individualism and the Economic Order [hat tip Branden Christensen]

"'Neo-liberalism' is trotted out as some sort of satanic evil that needs no explanation for its wickedness. In fact, its meaning is simple. It refers to the new order of individual economic freedom that began in the 1980s after statism was finally dumped." #QotD

 "[The word] 'neo-liberalism' is trotted out as some sort of satanic evil that needs no explanation for its wickedness.
    "In fact, its meaning is simple. It refers to the new order of individual economic freedom that began in the 1980s after the disastrous statism was finally dumped and is better described as the [hampered] market economy. People making [more of] their own decisions rather than the left making them for them has produced an unprecedented global prosperity, but is enormously offensive to the we-know-best-what's-good-for-everyone mob. Enjoy their suffering. They deserve no less as they rail away in their bubble worlds to one another about the injustice of people enjoying life without their riding instructions."
        ~ Bob Jones, from his post 'Political Language Abuse'

Dear Stephen Franks: It was not ACT’s principles that killed the party, it was its people [updated]

Dear Stephen

You write at your blog about the ACT Party’s future, if it has one, about which your headline makes the promise to explain why no libertarian party rules (or thrives) anywhere.

Your headline is incorrect, and in relation to the ACT Party, irrelevant. But it seems to me that answering you helps explain what it is about ACT's approach that hasn't worked.

I will always respect you as being the only person in Parliament who argued against the Architects Institute maintaining their legal monopoly over a word. But as you yourself made clear on many occasions then and since, you yourself were not a libertarian, and neither, it’s clear were many other ACT MPs.

It’s not even clear that that party itself is libertarian — as David Seymour reminded me sharply a week before the election, instead it's something called “centre-right,” whatever that ill-defined term might mean.

You say, Stephen, that libertarians are "zealots [who] ignore and deplore what drives normal humans”; and that voters “will never trust a party, and people, who do not understand and reflect our collective impulses.” This, you imply, is to answer the promise of your headline.

Where to begin?

Perhaps, to start at the very beginning, you need to be reminded, Stephen, that the United States of America, one of the greatest nations on this earth, was founded on those very values you say are so ignored and abhorred. Yet, in the estimation of many of us, it was those very values that made America great, and their abandonment that has condemned it to the slow death we have all observed. If America is ever become great again, it will need to rediscover those values, and to embrace them.

So too, perhaps, with the ACT Party, which was founded on fine principles but which the party’s own people too often ignored.

Frankly, Mr Franks, it was not the ideas that disgraced the party’s people; it was the people who disgraced the ideas they purported to represent — a succession of both major and minor disgraces with which the honesty and integrity of everyone associated with the party are now tainted.

It was the party’s people who made the party toxic, not the principles they claimed to represent.

The abandonment of those principles began at the party’s very founding, the man who composed those fine words — that individuals are the rightful owners of their own lives and therefore have inherent freedoms and responsibilities; that the proper purpose of government is to protect such freedoms and not to assume such responsibilities — running from the party he helped form when he saw there was very little interest from party bearers in upholding them.

Today those words are nowhere to be found on the party website, replaced instead with heaping helpings of blancmange.

If the party’s own people frequently appear too embarrassed to uphold the principles they claim to follow, why indeed should the voting public take them seriously?

And just look at those who purported to uphold them.

Rodney Hide, allegedly a proponent of small government, dropped whatever principles he may have had when a Ministerial limousine beckoned, and promptly ran amok in Auckland — a city in which he can still no longer even show his face.

John Banks, presented to the party by Don Brash as a gift that just kept not giving, a man who never knew a principle even when he fell over one, was instead taken by the public to represent them, and as he fell so too did the party’s reputation.

It has never recovered.

A small party may may have survived one of these oafs. It could never survive them both. A short story is representative of many: One of the few announcements made by the party in recent years squarely based on its principles, Don Brash’s clarion call to legalise marijuana, was scuttled very public when Banks himself opposed it. The party quickly dropped the policy. It should have dropped the politician. The public, those who had already begun to embrace the policy, saw where things were going and dropped the party.

It was the people that let the principles down, not the principles themselves.

And it was not just the luminaries, and not just in recent years. The behaviour of the party’s minor figures over many years has also seemed to suggest that integrity is the very least of things to expect from this party’s people — or at least have allowed the media to present that notion this way.

Owen Jennings, for example, let his office be used for a madcap Get Rich Quick pyramid scam, after which he disappeared from public life.

Donna Aware-Huata distinguished herself before selection for nothing more than selling Maori stick games to government departments, and once near power for little more than putting her fingers into her charity’s till.

David Garrett: best known not as he might suppose for the three strikes legislation he introduced, but instead for acquiring a passport derived from a viewing of a dead baby’s grave. (“Can't say I blame David Garrett for creating a false identity,” responded one wag. "His real one is hardly something to be proud of.”)

And Deborah Coddington who, in her first year, made such a splash she was awarded accolades for being the most effective debutante in the Parliament, went —after achieving such wide public notice — off to Oxford for a year to pursue a programme of private study while still taking the taxpayer's dime. (And she was not the first ACT Party MP to so openly enjoy the parliamentary perks to which the party is supposed to be opposed, was she.)

These are only some of the minor constellation of party luminaries who have appeared in the public eye and given continual ammunition to the growing view that to be a classical liberal in these times must also to be a cocksmack. A succession of these ghastly people have made the party grate.

Even the founders - Quigley, Prebble and Douglas — are known in the public mind at least as turncoats. The whiff of Muldoonism never left Derek Quigley, nor the memory of how many years he purported to believe things to which his behaviour in government said otherwise. And Prebble and Douglas ... whatever you may think of the policies they carried out as Labour ministers, it’s fair to say that in their first round at least the public was entitled to wonder why they were never properly presented to them at election time. It seemed to suggest that to promote what its opponents call “neoliberalism” is somehow to necessitate duplicity in the policies’ promotion. (That the then-Labour MPs’ policy salesman himself, David Lange, resiled from the selling only seemed to reinforce this impression, particularly since neither Douglas nor Prebble themselves ever seemed to fully acquire this very necessary political skill.)

This miasma of betrayal also sadly infects Ruth Richardson who, in the estimation of many of us, did great things as Finance Minister — but did them without the previous imprimatur of having first presented them to public vote, the public instead feeling they had voted for something else and rebelling when they were offered ‘Ruthenasia’ (the public description) instead. (Her boss, Bolger, being far less gifted at selling the policies, and with even less interest in the principles represented, rarely even bothered to make a case.)

No, Stephen, it’s not the ideas the ACT party claims to hold to which the public appear implacably opposed*. It’s very possible the public don’t even know or understand what the party stands for at all. It was not even clear this election that all the party’s candidates did.

What the voting public do despise however is that the party seems associated not with principles and powerful persuasion but with duplicity and deception.

Is it any wonder the general public now associates the ideas with which the party sometimes dabbles, what their opponents call "neoliberal,” with these self-same toxins? With so powerful a toxicity that it drags down even the good principled people the party did and does still contain. No wonder Jamie and David could never build a real fire under the party.

Even the one principled thing at which the party did once achieve serious traction, its very public perk busting, was disgraced by Douglas and Hide themselves in loudly and proudly embracing the concept of sucking up expensive travel perks for themselves and their whanau for the period of their natural existence. “I’m entitled,” they both whined when found out.

What a disgraceful pair.

No wonder the voting public despises them.

They have, all of these entities, disgraced the ideas with which the voters associate the party. And very clearly, Stephen, it is that way around — there is no need for yet another party to reflect what you allege to be "most people’s need and respect for altruism, nationalism and other expressions of the social and collectivist part of our nature."

What there is a desperate need for however is a party of principle that can sell individualism to the public — sell those principles written for the party’s founding — and sell them untainted by these toxic monstrosities from the past.

It needs a top-to-toe transformation if it is to survive as a real force instead of as a limp and occasionally useful appendage to the Blue Team.

If it is ever to be able to slay dragons, it needs to kill the ghosts first.

It needs its own "Clause Four Moment."

* * * * *

* Indeed, the public in their ill-informed wooly way seem to the think the Blue Team which has already won three terms is some kind of soft representative of those free-marketish ideas. Strange, but true.

UPDATE: As part of his excellent post-election analysis, Liberty Scott writes:

ACT lost badly in part due to the Nats successfully scaring voters on the right to voting National, but also because David Seymour moved too far away from having a coherent position on issues.  He was seen as backing National, but whether it was too hard for him to get traction on multiple issues or he lacked ground support to campaign, the only policy that got a lot of publicity was in increasing teacher pay.  ACT once had a coherent less government, lower tax position that promoted more competition in public services, was tough on law and order and rejected identity politics.  Yet Seymour couldn't break through with such a message.  The brand is mixed, he made statements about abortion which would alienate some, but he tried hard.  ACT needs to work out who it is targeting and what message it is giving.   There is a gap on the right, one that will open up large when a certain Maori ex. National MP finally retires.  ACT can't fill much of that gap, but it sure can grab some of it...

And what now?

ACT needs to refocus

For those who think government does too much, who think individuals alone or with others should have more power and responsibility to find solutions to the problems of today, there is little to offer.   The best hope might be for ACT to be in Opposition, regardless.  To campaign more clearly on principles, which should be around private property rights, everyone being equal under the law (including the abolition of Maori-only political representation), opening up education to choice and diversity, tackling the culture of welfare dependency, opposing state subsidies for business, more taxation and more state ownership.  ACT should firmly come down on limiting the scope and powers   of local government, on ridding central government of wasteful politically-correct bureaucracies and taking on identity politics.   Yes it should support other parties when it comes to victimless crimes, but there should not be a unified view on abortion.  It should be tough on real crime, tough on parental responsibility, but also take on measures that governments have done that increase the cost of living.  This includes the constraining of housing supply, and immigration policies that mean new migrants utilise the capital of taxpayer funded infrastructure, without actually paying for it.

What Winston does as his possible swan song is of minor interest, what matters is there being a party that stands up for something different.  For now, only ACT can do that.

Quote of the Day: On the Ponzi scheme of contemporary economic theory

"Both the neoclassical synthesis and the neoliberal consensus ... condition economists to argue, without irony, in their roles as professors, private consultants, and high-ranking public employees, that they have special expertise in setting economic policy, but also that the most reasonable economic policy is no economic policy. Mainstream economists acknowledge their inability to predict the effects of economic policy in order to emphasise that when the economic policies they endorse have adverse economic consequences, nobody is to blame. But they still contend that in moments of economic crisis, only economists possess the special expertise to fix a failing economy. This is the Ponzi scheme of contemporary economics….

"One is tempted ... to wonder whether the 'Queen of the Social Sciences is a dry cellar, a cactus land, a paralysed force, a headpiece filled with straw. What part of the record of economics should persuade us economists aren’t altogether expendable? 'What are the roots that clutch, what branches grow, out of this stony rubbish?'"

~ Matt Seybold, from ‘The End of Economics’ in the LA Review of Books

[Hat tip Per Bylund, who adds his own very pertinent comment … ]
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