Their Theories — Our Money
by Michael S. Rozeff
by Michael S. Rozeff
Whose theories are their theories? In this case, Robert J. Shiller and George Akerlof, two economists, but Shiller in particular. Whose money? Mine and yours — ours.
Shiller published an article in the Wall Street Journal on Tuesday, January 27, 2009: "Animal Spirits Depend on Trust." His conclusion is the standard statist, authoritarian, and Keynesian solution to the recession:
"In due course our animal spirits will once again turn positive, but we would rather that happen this year or the next rather than five or 10 years from now. There is only one way to speed this process: greatly expand governmental support of credit markets and pass a much larger fiscal stimulus plan than is now proposed."
I have no problem with his proposing his theory of animal spirits. As a scientist, I will entertain all sorts of hypotheses and give them my due consideration and evaluation. I have a very large problem with that theory being imposed on me.
When one religious sect attempts to impose its beliefs on another, we rightly condemn such behavior. We believe in religious freedom. Let each sect worship in its own way. Let each leave the other alone and not interfere with them. Let there be peaceful relations. These are the prevalent and right beliefs we put into practice.
But when one sect of economists attempts to impose its beliefs on us, we do not condemn it. We applaud it as democracy. We applaud it as the making of public policy through free speech and public debate. In this, we do not believe in political freedom. We do not believe that each political preference be expressed in its own way. We do not believe in leaving each other alone. Instead we believe in interfering with each other. Many of us run to Washington and attempt to impose our beliefs on others.
Shiller's theory is that the boom-bust cycle is largely driven by animal spirits. There is a resemblance of this theory to Robert Prechter's socionomics which hearkens back to Vilfredo Pareto's theories. There may or may not be something to these ideas. They are worth thinking about. They do not satisfy me, although some aspects are worth pursuing, but I don't intend to evaluate them here because the larger issue is more important, which is that we are living in a system in which such theories can be legally put into practice and applied to all of us, including those of us who do not want the theory applied to us.
Here we have an untried and untested theory being proposed by an economist of some note and notoriety. There is no evidence that his theory is correct. There is much evidence inconsistent with it. There are many things that such a theory does not explain. There are many viable competing theories. In the scientific world, research into these ideas will go on for many decades to come. We scientists will think about and research these ideas in peace. We will not be imposing them on anyone. It is certainly impetuous and premature for Shiller to declare that such a theory be put into practice. It is downright preposterous, but I fully grant him the right to display any and all of these personal characteristics. In the scientific arena, they would not matter.
What is highly bothersome is that we accept the idea that such proposals may be enacted into legislation that will become the law of the land and apply to all of us. This is why newspapers publish such opinions. Newspapers are not scientific journals. They are part of a public discourse that ends up in legislation.
But I ask: why are we having this discourse at all? Why should we accept it as normal? Why should many or most of us think of this as a good thing? We accept a system that denies us political freedom, and we do so in the name of freedom!
We could do worse, I concede. We could have a Bush or an Obama unilaterally tell us what to do and order our lives in detail. Some debate is better than no debate. However, we could do a lot better. Many of us have closed our minds to doing a lot better. We have cast off the idea of peaceful political relations with one another. Having settled the matter through a Constitution and a civil war, we have accepted the idea that we must all occupy the same political boat.
We allow ourselves peaceful (or at least more peaceful) relations in many other areas of our lives. We grant each other the freedom to worship as we choose, to travel where we choose, to dress, speak, eat, and think as we choose, to educate ourselves as we choose, to invest as we choose, and to doctor ourselves as we choose — with a proviso, which is that, having accepted a system that denies us political freedom, we are making serious inroads into many of these other once-free areas of choice.
Why do we have religious freedom? Mankind learned through trial and error that religious warfare was a destructive waste. We learned that religious toleration pays off. Wendy McElroy has a nice article on why we have religious freedom here. Voltaire played an important role. France almost self-destructed with its religious wars, but commerce and the stock exchange in England encouraged people with different religious beliefs to tolerate one another.
We should have learned by now that political freedom also pays off, and that the lack of political freedom does not pay off. We have learned that lesson but only in part. We recognize that totalitarian regimes destroy lives, but we tolerate elements of totalitarianism all the time in our own political systems; and we constantly propose and put into practice more and more of such totalitarian notions. We do not seem to realize that having a single, central, powerful national government that can enact a very wide variety of laws to be imposed on all within its reach, is totalitarian in its essence.
One must clearly realize that we do not possess political freedom. Not enough of us recognize this basic fact. If we had political freedom, we would tolerate a variety of political entities on the soil of America. We would not have a Mother Church encompassing all of us that we call the U.S.A. We would have a multitude of communities and associations that people might build that would interweave in ways beyond central planning, just as a variety of ethnic food restaurants grows up in many cities. We would not be having a public conversation about the Shiller plan to increase our animal spirits via government action. Many of us would be ignoring Shiller altogether and acting on our own theories. Some of us would be wondering how it is that Shiller and his government compatriots escape the animal spirits that they attribute to the rest of us. What makes them the immune and superior beings who will push and pull our animal spirits for our own good?
Nor is there political freedom around the globe. Every citizen of every nation is held hostage to one Mother Church of that nation, and there are always ongoing efforts to bring the entire world under the rule of a single supra-national governing entity. This makes nationalists very uncomfortable. These nationalists should be as uncomfortable with their own monopoly governments as they are with a world government. Both deny political freedom.
We have been taught to think and believe that we have political freedom, because that was the dream of the framers of our Constitution or because that political system was the kernel of the American political genius. However, the historical development of a more and more powerful and centralized national government belies all such ideas as does the American civil war.
We Americans have congratulated ourselves continually since 1775 over our enlightened political arrangements. We have held them out to the world as ideals. We stopped dead in our tracks. We stopped progressing politically. We thought we had reached the pinnacle of political wisdom and could go no further. If we did not rise to the challenge of creating greater political liberty, we would retrogress and become like any Old World repressive system. We set the course away from the pole of greater liberty and toward the pole of central control. Deep in our hearts, we feared real liberty. The Constitution was a compromise and it compromised liberty. We needed to see it as the flawed document that it was. We needed to maintain a push toward greater and greater liberty, come what may. We needed to recognize that this would take hard work, open minds, tolerance, boldness, and courage. As great as America was, as enduring and hard-working and courageous were those who built the country, they failed. We human beings usually fail. We have to accept that so as to be prepared to do better. It is no disgrace to fail in some respects even as one succeeds marvelously in others. Americans have succeeded greatly, and we have failed greatly. It is no disgrace to recognize where we have failed and now try to do better. It is a virtue. It is a great challenge. Liberty is a great challenge. Political freedom remains an unfinished work before us and before all the peoples of this world. It is our greatest challenge. Rockets to other planets are fine. Unraveling genes is fine. Understanding the brain is fine. But what has happened to the challenge of political liberty? Why have we relegated it worldwide to a dark corner in a dark closet in an abandoned home? Why have we boarded up the windows? Why are we afraid to peer inside?
January 30, 2009
Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York.
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