Middlebury College demonstration against Charles Murray, illustrating the strained relations between the American Left and the American Right
Screenshot of Fox News Channel report

In my last post,  Concerning Ethics, Economics, and Social Reality, I responded to some disagreements of a progressive named Cai to neoliberal ideology. In this essay, I will try to reply to his remaining reactions to neoliberalism, which are directed toward the growing animosity and hostility between adherents of the two ideologies.

Before I get going, let me make my by now obligatory remark that neoliberalism is often mistaken as conservatism in the United States. The term “conservative” as applied to most Americans so-labeled is a misnomer, just as the label “liberal” is a misnomer for progressives.

Cai’s Remaining Issues With Neoliberalism

Both my last post and this essay are responses to a comment left by Cai on the post Will Automation Require Progressive Unemployment Solutions?. The remaining portion of Cai’s comment that I have yet to answer concerns the growing ideological and occasionally physical conflicts between progressives and neoliberals.

If you want to reduce authoritarianism in university faculty, you must credit them with sincerity and intelligence, and help them do the same for you, or they will seek ever more drastic measures and positions to gain an upper hand in a battle of words. Which is what you are trying to do on this website, is it not? Why not address the elephant in the room: that risk management trumps the search for truth. The risk of authoritarianism, I must protest, in light of history and the incandescence of our present moment, is not an affliction limited to leftists, and it cannot be mitigated but by finding compromise and middle ground between the belligerents. Writing articles that dismiss progressivism on the grounds that it is economically imprudent or authoritarian are only adding fuel to the fire. The fact is that authoritarianism must be addressed, not merely described. I implore you to find common ground with the progressives. I implore you to consider the possibility that governmental intrusion in the economy need not end in disaster. If you cannot yet do this, I will continue to argue that you make fundamental errors in achieving certainty in order to enjoy the simplicity that certainty allows.

For example, you never convinced me that you were not conflating economic freedom with lack of governmental intrusion. You argue against government intrusion by virtue of the fact that economic freedom is correlated with greater growth. You fail to explain how it is that the many of the most progressive, leftist-slanted incarnations of capitalism appear near the top of the list of economic freedom. You may prevaricate by arguing that we don’t have a high degree of economic freedom, but the implication is that no one in the world does. Thus you raise the stakes even more, and increase the risks that are entailed in the possibility of your ideas’ failure. I will stick with the devil I know, i.e. what actually exists in the world, rather than risk revolutionary violence on the chance that the payoff will be worth risking the millions of lives at stake.

This comment is a challenge directed to how our many national problems are addressed, as well as to how we can possibly live with each other in the midst of our profound disagreements. Some time ago, I wrote an essay, Compromise Between the Right and the Left,  questioning how we could deal with the latter problem. Unfortunately, I could find no middle ground for compromise; our beliefs and views of reality are just too far apart. Before I comment on that sad state of affairs, let me remark on the first issue Cai raises: the management of risk.

Understanding and the Management of Risk

Cai offers the following challenge: “Why not address the elephant in the room: that risk management trumps the search for truth.” This statement appears to me to confuse how one goes about managing risk. How can one manage risk without ascertaining what the credible threats are? That means you have to seek truth at least far enough to find which threats are credible. If the only way to find compromise is to acquiesce in government programs you know with absolute certainty will only make our problems a lot worse, then our problems are insoluble indeed. The arguments I present are a lot more than a battle of words, but — I hope — a participation in a battle of thoughts to illuminate what possibilities Reality presents for desperately needed solutions.

To follow paths I know for a certainty will only increase public discontent and impoverish us all, or to acquiesce to others and follow those paths in the vain hope they will temporarily postpone a socialist revolution, would be the height of stupidity.  Not only that, but to put my fellow citizens in an even more dangerous situation would be completely immoral for the ethical reasons I gave in my last essay.

Cai states “As when we argued about global warming, you miss the forest for the trees. I say again, so what if the danger is overblown by the UN public relations literature. It matters more that there is a danger that needs to weighed against other priorities.” However, from my side of the controversy, what I see as the credible dangers are very different from what Cai sees. Cai sees some possibility that man-caused global warming (Anthropogenic Global Warming or AGW) is a credible threat, and we should have some programs for lessening human emissions of CO₂ as an insurance policy. What I see is that physical theory, observations, and even a very major experiment at CERN say that natural causes can explain all of the observed global warming. Not only that, but the variance of those natural causes can explain why there are periodic pauses in warming or even periods of slight cooling. AGW has absolutely no explanation for these pauses. Given these facts, AGW ceases to be a credible threat and it  certainly does not justify the many hundreds of billions of dollars required to significantly reduce human CO₂ emissions. One report released by the International Energy Agency in 2014 claimed that switching from fossil fuels to low-carbon sources of energy would cost the world $44 trillion between 2014 and 2050, or a cost of $1.2 trillion per year, the equivalent of 6.8% of the U.S. GDP. That is a lot of economic assets to waste on a problem that is not even credible! To assess how accurate my assessment of AGW’s credibility is, you can read a summary of the arguments in Solar Wind, Cosmic Rays and Clouds: The Determinants of Global Warming.

In the case of social welfare and the dangers of social instability, the solutions Cai and his fellow progressives advocate would, I am convinced, make those problems much, much worse. However, in order to progress further in this discussion, I suspect I will need to clear up some matters on the meaning of the index of economic freedom, calculated annually by the Heritage Foundation and the Wall Street Journal for every country on Earth, and some matters of nomenclature on what we mean by the terms progressivism and neoliberalism.

Confusion Over Economic Freedom

There is no greater threat  against a successful conversation than confusion on what words and phrases actually mean.  As an example from this discussion, Cai’s comments show, I suspect, that he and I believe in very different definitions for “economic freedom”. Concerning economic freedom, Cai writes

I implore you to consider the possibility that governmental intrusion in the economy need not end in disaster. If you cannot yet do this, I will continue to argue that you make fundamental errors in achieving certainty in order to enjoy the simplicity that certainty allows.

For example, you never convinced me that you were not conflating economic freedom with lack of governmental intrusion. You argue against government intrusion by virtue of the fact that economic freedom is correlated with greater growth. You fail to explain how it is that the many of the most progressive, leftist-slanted incarnations of capitalism appear near the top of the list of economic freedom. You may prevaricate by arguing that we don’t have a high degree of economic freedom, but the implication is that no one in the world does.

When Cai says I have never convinced him I am not “conflating economic freedom with lack of governmental intrusion”, my response is “I should hope Not, for that is precisely what constitutes economic freedom under almost all situations.” What the index of economic freedom measures is precisely that. The index is an arithmetic average of a number of factors, originally ten and now expanded to 12, in four separate categories, each factor measuring how much government lacks control over that aspect of the economy. If the government has total control over the aspect of the economy represented by a factor, that factor of economic freedom computes to zero; If the government has absolutely no control over that part of the economy, that factor has a value of 100. As a simple arithmetic average of the factors, the overall index of economic freedom also varies from zero to 100, zero for absolutely no economic freedom (total government control) and 100 for complete economic freedom (Absolutely no government control). The four categories and their constituent factors that make up the index are listed below.

• Rule of Law
  • Property Rights
  • Judicial Effectiveness
  • Government Integrity
    
    
• Government Size
  • Government Spending
  • Tax Burden
  • Fiscal Health
    
    
• Regulatory Efficiency
  • Business Freedom
  • Labor Freedom
  • Monetary Freedom
    
    
• Open Markets
  
  • Trade Freedom
  • Investment Freedom
  • Financial Freedom

To see precisely how each of the constituent factors is calculated, please consult the Heritage Foundation’s Methodology page. There is a very small bias for some government economic involvement in the Rule of Law category, put there by the recognition that government is needed to enforce contracts, and otherwise to act as a kind of traffic cop. Other than that, the larger the government’s role in an aspect of the economy represented by a factor, the smaller the factor’s score is. Therefore the economic freedom represented by a country’s index of economic freedom is precisely as freedom was conceived in the Age of Enlightenment by John Locke, Adam Smith, the Baron de Montesquieu, Thomas Jefferson, and James Madison: It is freedom from government.

That being the case, any country that has a larger index of economic freedom than the United States has, by definition of the index, less government intrusion into the workings of its economy than does the United States. I do not lie, Cai, when I say the United States does not have the greatest economic freedom in the world, and that our economic freedom has been falling in recent years. Just last year, our economic freedom rank fell from 11th in 2016 to 17th in 2017. Currently, the countries with greater economic freedom (and by definition less government intrusion into the economy) are by rank with first being most economically free:

1. Hong Kong
2. Singapore
3. New Zealand
4. Switzerland
5. Australia
6. Estonia
7. Canada
8. United Arab Emirates (How humiliating!)
9. Ireland
10. Chile
11. Taiwan
12. United Kingdom
13. Georgia (Again, how humiliating!)
14. Luxembourg
15. The Netherlands
16. Lithuania
17. The United States

With some of these countries, progressives might point to some aspect such as national health care that would be considered more progressive than the United States, but by virtue of having a higher index of economic freedom, they must make up for that by being even more free-market elsewhere. Cai says to me, “You may prevaricate by arguing that we don’t have a high degree of economic freedom, but the implication is that no one in the world does.” For the life of me, I do not understand the last clause of this sentence, since it is quite clear that at least 16 nations have a higher degree of economic freedom than the United States. Nor, I must confess, can I see anywhere where I have prevaricated.

The interpretation of the index of economic freedom as being a measure of how much of a free-market a country has, or alternatively of how little the government interferes with the country’s economy, makes it a powerful tool to compare the results of having different degrees of government economic intrusion.  To emphasize this, I will show two plots I used in my last essay. First is the scatter plot of the GINI index of countries versus their index of economic freedom.

Allow me to remind you, a GINI index of zero indicates a country’s GDP is completely equally distributed among its citizens, while a GINI index of 100 shows that only one person gets the entire GDP as income, and nobody else gets anything. What this plot with its negatively sloped trend line demonstrates is that as a country’s economic freedom increases, it will have a more equitable distribution of the GDP. As I have noted in my last post, this is the exact opposite result from what progressives expect.

What the next plot shows is that not only does distribution become more equitable, but per capita GDP increases exponentially as the index of economic freedom becomes larger than 60.

It would appear that all this data from the World Bank and the Heritage Foundation is telling us we are living in a neoliberal world, not the world as imagined by progressives. Other data implying better economic outcomes with neoliberal policies than progressive ones are shown in my last post.

More To Come!

Alas,  I thought I could finish addressing Cai’s comments in this post, but there is a lot of material to cover when a progressive and a neoliberal butt heads. In my next post I will finish up by addressing the problem of an overwhelmingly progressive faculty in American Colleges and Universities giving extremely bad advice to the nation, as well as from which direction we should fear the rise of authoritarianism.

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