Is Cass Sunstein a creationist?

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This is another case of evolution being misused. Social Darwinism has very little to do with biological - except to distort the agenda. There is a reason that biology is a hard science, while sociology, economics, etc… are social sciences.

According to Boudreaux, I’m an atheist hypocrite because I believe that I created my coffee this morning from beans and hot water.

What a stupid man Don Boudreaux must be. I wish he’d drop by the Thumb and treat himself to a good old fashioned horse whipping.

What does Boudreaux’s post have to do with atheism? What the hell are you talking about? What a stupid person YOU must be.

Don Boudreaux sez

But the bluest blue-state left-“liberal” atheist oughtn’t be too quick with the self-congratulatory praise of his or her own rational faculties. Most left-liberals are pure creationists when it comes to society and social order.

In yr face, asg.

Uh huh. Where does he say atheism is true or false in that post, or that atheists are hypocrites? Right. Thanks for playing. (He does say left-liberals are being inconsistent, but atheists? No.)

Boudreaux’s point is simply that, just as it is wrong to infer design from the apparent order in living things, it is wrong to infer that social order always comes from design as well. In both cases, the cause of the order is “spontaneous, undesigned, and undesignable evolution.”

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Wow, an Argument from Fortuitous Word Association. Sunstein is a “creationist” because he thinks governments “create” order.

I suppose people who propose a “flat” tax across the land are “flat-earthers” now, supporters of globalization are “young earthers” because they want to create a “new world” order, and Greenpeace are “omphalists” because they object to some of France’s use of “navel power”.

Still, I guess this is easier than actually addressing any of these actual positions with something like an actual argument.

This discussion misses the point so widely that I’m not sure it’s worthwhile, but I’ll try to clarify: Boudreaux’s point is that Darwin’s great accomplishment was in showing us that apparent design does not necessarily imply the existence of some central Designer. What Darwin saw in biology, Adam Smith and others have seen in economics: that apparent design arises from the interaction of parties, none of whom have any particular design as their goal. One need hardly be a libertarian to agree with Smith in this regard. Stephen Jay Gould, a self-proclaimed Marxist, makes this exact same point in chapter 9 of Eight Little Piggies (1993) for example. See further Robert Nozick, Anarcy, State And Utopia 20-21 (1974) (listing various “invisible hand” style theories from different disciplines). Sunstein’s error, Boudreaux argues, is in assuming that social order must be the product of some central Designer—that is, in his adoption of “skyhooks” to explain the existence of such social institutions as individual rights.

The proper rejoinder, for instance, to Wonder’s childish post is this: some “economic creationist” might indeed think that for me to get a cup of coffee in the morning requires some central Authority to organize the coffee-making apparatus, from planting the beans, to harvesting them, to drying them, to grinding them, to shipping them, to filtering them, and so forth. But of course, no such organizing Designer exists, or is possible. See Leonard Read, I Pencil. Instead, the coffee in my cup is the end product of thousands of unorganized, private actors, not coordinated by any central Authority.

Boudreaux’s impression of Sunstein is correct—Sunstein does indeed believe that individual rights are created out of nothing by a sovereign authority, and that they have no deeper foundation. His analogy, therefore, between Sunstein and the creationist who believes that life must be created out of nothing by a sovereign authority, with no deeper foundation, is accurate.

Ah, I get it.

Thanks for the clarification, Mr Sandefur.

Now, for the record, I’d just like to repost the incredibly dumb quote from Boudreaux’s article that led to my “childish” post:

But the bluest blue-state left-“liberal” atheist oughtn’t be too quick with the self-congratulatory praise of his or her own rational faculties. Most left-liberals are pure creationists when it comes to society and social order.

I submit that the second sentence is a strawman. How many “left liberals “ are pure creationists? I guess Sunnstein fits the bill. Does Gould qualify as a “left liberal”?

Right now the tally shows that out of two left liberals, one is a pure creationist when it comes to society and social order and the other is not. I’m a left liberal and I’m not. So now we’re’ down to 1 for 3. 33% is not “most”. At least, that is what this childish man has been taught.

Mr. Sandefur:

it could be argued that each and every of the thousands of private actors whose work was necessary to putting coffee in your cup did their work under the umbrella of govt institutions.

the columbian shipper who relied on the letter of credit from the US bank did so, because us courts have held LOCs to be enforceable and US banks are reliable institutions, due to federal govt oversight.

the american buyer was willing to buy the coffee from Columbia knowing that it would be coffee and not rodent excrement. trade agreements and federal ag agencies create that assurance.

the customers of the local coffee seller rely on health dept inspections for the comfort that the coffee is still coffee, not rat excrement.

rights may exist independent of govts (or not – frankly i find the debate largely pointless), but govts are the tool we use for enforcing them.

I suppose one could argue that we start (at least conceptually) with complete anarchy, with everyone acting out of the most immediate possible self-interest with no thought to even the most obvious short-term consequences. In this mental experiment, people quickly learn that the disadvantages outweight the advantages disproportionately, and adopt some degree of cooperation. Cooperation requires agreements, a quid pro quo, mutual backscratching.

After a while, by trial and error, people learn which values justify a cooperative approach and which ones do not. So they might decide cooperation is important for defense, for commerce, for possession of property and “stuff”. They agree to support one another in these ways. This support defines what the “individual rights” are, and the agreement to make it happen constitutes the source from which those rights flow.

From here, it’s not much of a streth to imagine the cooperative effort expanding and formalizing, taking advantage of the division of labor so that some govern, some enforce, and the rest produce. But this organizational maturation process doesn’t necessarily add any new rights, it only clarifies and codifies what was agreed to from the start.

But what could possibly be any “deeper authoritity” than the agreement of everyone with everyone else as to the social requirements of everyone? Individual rights emerge from the agreement among people to cooperate for their mutual advantage.

Boudreaux said:

But the bluest blue-state left-“liberal” atheist oughtn’t be too quick with the self-congratulatory praise of his or her own rational faculties. Most left-liberals are pure creationists when it comes to society and social order. For them, government is the creator of order – of high wages, of safe working conditions, of safe food and drink, of fair prices, of good education, of trustworthy physicians, accountants, and butchers, of peace, commerce, culture, and civility itself.

I can’t speak for such folk, and frankly, I suspect there are very few. For example, many of us live in “Red” states (oddly appropriate, some might argue, that Republicans have adopted Totalitarian Red as their color – oddly, and sadly). Many of us liberals are liberals because we follow Jesus, and we find the beatitudes require a degree of liberalism far beyond what the current administration will condone.

But I can speak for several millions of liberal Democrats (and probably more than a few Republicans who are still democrats swimming against the tide in their own party): Jefferson had it right when he wrote that “governments are established among men to secure those rights,” immediately after he had written that we are each “endowed” by our Creator with “certain unalienable rights” (Franklin having edited that phrase, putting “unalienable” in for “sacred,” to avoid exactly the sort of hubristic rectitude that leads to Moore-ism in Alabama).

Sunstein may be a boor, I don’t know. But to the extent Boudreaux eschews the Jeffersonian construction that protects Boudreaux, he’s certainly no better than Sunstein in defending freedom.

We know government doesn’t create rights. But we also know that all forms of totalitarianism fail, especially those that put property rights above the human rights of people who are deprived of property.

Is there something really wrong with what Sunstein argues, or is Boudreaux trying to mask his own distaste for American democracy with a really offensive and barely defensible attack on reason and science?

Creationism by the club is evil, and would be even if creationism was not inherently evil by its opposition to knowledge. Boudreaux doesn’t recognize that?

The point of this particular post by Timothy Sandefur has nothing to do with the creation evolution debate. It is purely an attempt to proselytise for his unsavoury political views; views that on the one occasion I debated with him he was unable to defend without strawman arguments, out of context quotation, and misrepresentation. The stated aims of the Panda’s Thumb are:

The patrons gather to discuss evolutionary theory, critique the claims of the antievolution movement, defend the integrity of both science and science education, and share good conversation.

As clearly his post has nothing to do with the other aims, I must presume he trying to “share good conversation.” And to convince myself of that, I now need only convince myself that he is a good conversationalist. That may take a while.

Tom Curtis

A nice bit of bait-and-switch here. And, I think, a poor choice for a Panda’s Thumb post.

I don’t say that because I believe, as Tom Curtis does, that Timothy Sandefur’s political views are ‘unsavoury’. (I’m not a libertarian, but I imagine my own views are good deal closer to those of Mr Sandefur than of Mr Curtis.)

Rather, Sunstein’s ‘creationism’ has SFA with that creationism the exposure of which is a major part of the Panda’s Thumb mission. Mr Sandefur isn’t particularly coy about his politics, but I had not previously noticed him using the Thumb explicitly as a forum for political discussion that does not touch upon, e.g., the teaching of science. Such discussion is at best irrelevant, at worst potentially damaging to the fight against creationist educationalists.

Mind you, I’m not saying Mr Sandefur is wrong. I’m not even saying his point isn’t interesting. As it happens, I find this sort of thing terribly interesting myself. I could read about natural law theory vs. positivism, in their many respective variants, all day long. But I’d hope to read about them on a different sort of website. PT is an appropriate place, I’d think, to criticise the Right when it espouses creationism or the Left when it espouses science-denying epistemic relativism. One might well wish to criticise the Right for (say) militaristic imperialism or the Left for (say) economic collectivism; but I don’t see that it furthers the aims of PT to do so here.

Sorry; ‘SFA to do with’, of course.

‘SFA’, in case you were wondering, is an abbreviation for a somewhat more pungent way of saying ‘nothing’.

I also thought it was a bad post for PT

I enjoyed the many comments on blue-state creationism. Here’s further explanation:

http://cafehayek.typepad.com/hayek/[…]bluesta.html

Probably, this post is dead now, but I wanted to point out that Mr. Wonder is performing a spectaclar job of “quote mining” when he takes that one quote of Dr. Boudreaux’s post.

Funny what happens when tables are turned.

(BTW, never commented here before and I just want to say great blog!)

What an amazingly low signal to noise level. I guess that when people say that Usenet is dead, they’re right … and talk.origins has been reborn as the comment section of pandasthumb.org.

The gist of Don’s argument is that Creationists are poopy-heads when they insist, against all evidence, that God created the heavens, the earth, and man. Everybody here agrees with that, right? Well, he’s also pointing out that left-liberals are being creationists (with a small c) when they insist against a similar quality of evidence that freedom and rights are created by governments. Yes, I can see how y’all might want to deny his point, being an unattractive truth.

Don’t be a Creationist, and don’t be a creationist! -russ

What an amazingly low signal to noise level. I guess that when people say that Usenet is dead, they’re right … and talk.origins has been reborn as the comment section of pandasthumb.org.

The gist of Don’s argument is that Creationists are poopy-heads when they insist, against all evidence, that God created the heavens, the earth, and man. Everybody here agrees with that, right? Well, he’s also pointing out that left-liberals are being creationists (with a small c) when they insist against a similar quality of evidence that freedom and rights are created by governments. Yes, I can see how y’all might want to deny his point, being an unattractive truth.

Don’t be a Creationist, and don’t be a creationist! -russ

I think the “Great White Wonder” must refer to snow blindness. This commenter is getting lost in the conversation. If you believe that the state is an essential actor in co-coordinating most activities, then you believe that order does not occur spontaneously. To use an example from my experience we can talk about money or the alphabet. Do you believe that some Sumerian or Egyptian king woke one morning with the insight to create a language or a commonly accepted medium of exchange? No, most anthropologists find that these develop out of necessity, over time. The convergence is driven by spontaneous forces or “the invisible hand.” Similarly there is too much current thought which credits the modern state with such omniscience, declaring that collective action is necessarily a government mandate. Those of us that spend time thinking about spontaneous order, like the poster above which referred this audience to “I, Pencil,” believe that lasting orders evolve without state coordination. Someone that believes there is no creator who miracled the world into existence, is inconsistent if they believe that their daily life is dependant on a benevolent government. These stateists must imagine bureaucrats pulling appropriate strings so that each morning the mocha latte price is similar to the price that you expected to pay for it. As always, the impulse to harangue a person is more compelling than exercising the gray matter.

Michael and Russ

How much is Boudreaux paying you to apologize for his beating of a dumbass strawman?

Really, you guys are pathetic. “Waahah, waawh, mommy, those guys at Pandas Thumb are making fun of Don’s important criticism of leftists!!!!”

How utterly and incredibly lame. Guys, isn’t it time to prepare your costume for the upcoming Robert Heinlein Fan Convention? Get a life.

Mr. Sandefur - I believe this bit of blogpimping for Don Boudreaux is off-topic and inappropriate for The Panda’s Thumb. Please don’t do it any more.

Regarding Michael Thomas’ comment on alphabet, does seem to be the case that development of new writing systems is strongly associated with centralised bureaucracies. If you’re looking for a fairly recent (and well documented) example you’ve only got to consider hangul, for example. [Always exceptions, thank goodness - eg. Sequoia’s script seems to be a singular instance of personal genius.] Same could be said of irrigation, highways .…

Leftists may appeal to a creationist-style argument IF they argue that rights come from the state.

But most of us don’t argue that.

If Sunstein does, then he may fit Boudreaux’s bill.

But I suspect it is a straw man argument.

And most of us who defend science do not hypocritically claim that rights come from the state. We’re Jeffersonians in that regard. We agree with Madison that such rights belong to the people – which is why religion can’t be taught in school: We did not delegate our rights to the state, and the state is limited to doing those things with regard to rights that we delegate to it.

Boudreaux’s claim against most leftists, and especially against those of us who oppose creationism in science classes, is just ass-backwards.

Mr. Boudreaux: since you apparently do not accept comments on your blog, I’ll post mine here.

The US Govt, largely through the DOD but through other agencies as well, finances a tremendous amount of original research. The internet is one notable success story; multiple billions (maybe even trillions by now) have been spent on failures.

Is the world better off? Tough call. Certainly some of the money not collected by the USG in taxes would have gone to research, but basic original research, one would expect, would be less likely to receive funding in the market than ideas that are closer to providing a return on investment. Certainly the private competition to the Human Genome Project presents a compelling counterexample.

My point, such as it is, is that blue-state stateists rely on the state as a convenient vehicle for achieving communal goals. Perhaps the state is necessary (i tend to think that it is); perhaps an organized anarchy could exist. You are welcome to join the Free State Project; i’d rather lobby my congressman.

I’m a lawyer, not a historian. but the book “Guns Germs and Steel”, among other sources, seems to provide pretty strong evidence that beyond a certain population density people LIKE a strong state; it provides a useful clearing house for passing information and resolving disputes.

Living in downtown Long Beach, California, I may have “property rights” independent of the state. but in a dense urban environment i think the argument is kind of pointless. The property rights I have COULD NOT EXIST without the state.

cheers

From Michael Thomas:

Someone that believes there is no creator who miracled the world into existence, is inconsistent if they believe that their daily life is dependant on a benevolent government. These stateists must imagine bureaucrats pulling appropriate strings so that each morning the mocha latte price is similar to the price that you expected to pay for it.

There exist in the United States some people who think that some state introduced order is a good thing. They think this because they think that for some forms of order, it cannot exist (or is very unlikely to exist) unless introduced by a central authority; or because they think that specific introductions of order by a central authority will improve upon the type of order that is generated by “the invisible hand”. The central authority does not have to be a “state”, but the people who think a central authority would be helpfull preffer it to be a state so that it can be controlled by democratic means.

Other people think they disagree about this. These people, like Michael Thomas does above, equate the position of thier opponents with the view that “all order must be introduced by the state”. There is no other way to conclude that “These stateists must imagine bureaucrats pulling appropriate strings so that each morning the mocha latte price is similar to the price that you expected to pay for it.” As “these statists” are left liberals in the United States, they are firmly committed to the desirability and actuallity of the “invisible hand” delivering most of the order they find in society. Thus Thomas’s comments are based on an obvious, and gross distortion. It is a tribute to the strength of his argument that he cannot make it without this level of mistatement.

Mr Boudreaux is guilty of (nearly) equal misrepresentation. He quotes a letter from the New York Times and summarises it:

In other words, without taxpayer-financed scientific research, we’ll enjoy neither national security nor economic well-being.

http://cafehayek.typepad.com/hayek/[…]bluesta.html

Really Mr Boudreaux? Did you ask the author if s/he would agree with that position? Does it not seem more likely that they thought fundamental scientific research was essential for Americas’continuing national security and economic well-being, what ever the source of funding for that research? That seems more likely to me, perhaps coupled with the belief that private funding of fundamental research was unlikely, or unlikely at sufficient levels.

Mr Boudreaux, it seems to me, has attributed to the letter writter the bizare position that an NSF funded to the same levels as currently by no-strings private donations would be not be beneficial for the US, but that equivalently funded by tax moneys it would be. Unless he interprets the view so bizzarely, he has no basis to accuse that author of “creationism”; but then he wouldn’t have a straw man to flog.

To Tom Curtis, have you ever seen the Wizard of Oz? You might like that movie, it plays on your beliefs a little.

I must protest. Mixing actual quotes from my writting with statements Tom Curtis makes up and just adds quotes around is dishonest.

I don’t see my thoughts on the matter as any type of misstatement (one is forced to ask a misstatement of what,?? since I have read explanations of social order that clearly state this and have am just reproducing them here).

Mr. Curtis I also disagree that all supporters of a state default to democracy, in fact don’t we resort rather to a republican form of government (how long did monarcy exist)? Still further the natural conclusion of your arguments is that we turn over all of our decision making to the state because they just know better. The Soviet Union tried this but failed because they did not allow prices to function in the market to transmit the essential information needed in a market economy. My advocacy above all else comes from devoted study to the mechanism of price and price theory. This intricacy cannot be achieved by a government bureaucrat, even if you are keen to dismiss it as a weak argument.

Order is achieved in numerous ways, for example, at some point when travel by car became more popular people were confronted with the problem of stopping at stop signs, if two people were there someone had to have the right of way, rather than wait for a bureaucrat they solved the problem spontaneously. Only later would they take the informal lesson that had emerged from experience and codify this into law. This is why when you look at the freedom index you see that systems of common law (codification from experience) results in higher measures of freedom than countries that depend on abstract models to design the contingencies of the world.

To bring this all back to the relevant topic at hand, some of us noticed an inconsistency with folks that defend Darwin’s theory because it supports their world view. These same people then, when confronted with similar logic in an economic format, act like someone is telling them they have a curfew. Because of these reasons, I cannot make sense out of your advocacy.

Also, I have noticed that people on this page like the word strawman, it helps them avoid responding to issues that were raised by their peers. It also sounds vaguely scientific, both bonuses if one is trying to impress himself.

Again Michael Thomas shows that he can misrepresent, but not argue. He says:

Still further the natural conclusion of your arguments is that we turn over all of our decision making to the state because they just know better.

It is unclear which part of my argument he finds this the natural conclusion of. He is immediately discussing my claim that:

The central authority does not have to be a “state”, but the people who think a central authority would be helpfull preffer it to be a state so that it can be controlled by democratic means.

In that case, I would love to learn by what fanciful argument he concludes that a prefference for democratic control of the central authority results inevitably in turning all authority over to the state. (For the record, I did not specify whether the democratic control should be by a democratic, republican or constitutional monarchic constitution.)

More sensibly, he is arguing that my entire argument leads to that conclusion. My entire argument, of course, suggested that:

[T]hey [and I] are firmly committed to the desirability and actuallity of the “invisible hand” delivering most of the order they find in society.

Again Thomas does not specify by what contorted logic he concludes that a prefference that most economic transactions be left to the control of Adam Smith’s invisible hand results in all decision making be handed over to the state.

In fact, Thomas has merely illustrated my point for me again. He is unable to argue against advocates of a mixed economy without falsely attributing to them a desire for absolute state control of all areas of life. He suggests that we are trying to evade the issues he raises, but the only issue he raises is, why can’t advocates of unrestricted capitalism confront the real beliefs of their opponents?

Thomas also suggests:

To bring this all back to the relevant topic at hand, some of us noticed an inconsistency with folks that defend Darwin’s theory because it supports their world view. These same people then, when confronted with similar logic in an economic format, act like someone is telling them they have a curfew.

People familiar with evolution knows that in the long term it can produce a kind of order, but an order subject to many ineficiencies and absurdities. This knowledge is immortalised in the name of this forum. In fact, those same people when arguing against creationists point out to these inefficiencies as proof that no intelligent being directly designed those organisms. Intelligent beings can do a better job than that. I fail to see, therefore, why believing that the economic invisible hand may also result in inefficiencies that can be improved by deliberate design is somehow inconsistent with this belief. You could just as well say that an absolute capitalist (or libertarian) he resorted to a doctor when sick was inconsistent because they believed in health that intelligent agency could improve on the hand they were dealt by blind forces.

The entire appeal of this liberal/creationist analogy is that, if treated suitably superficially, it might seem like a plausible analogy - and therefore it is a convenient substitute for actual argument.

I am fully aware of the suposed economic arguments for market efficiency. They prove nothing until it is asked, efficiency for what? An efficiency is always a ratio, and until it is asked and clearly explained what is the ratio between economic arguments are irrelevant as social arguments. If both cost and gain are measured in material terms, we might wonder what is the point of this idle shuffling of resources. If, more promisingly, it is measured as a ratio of utility costs, then we are interested. But then we clearly see that a free market does not maximise utility gain; rather it maximises the satisfaction of demand. And demand is desire times monetary resources. The desire of the starving, but penniless Ethiopian generates zero demand. The slightest whim of Bill Gates generates more demand than I will in a life time. Unless we are determined that the purpose of the economy is to serve the desires of the wealthy (hardly a self evident aim), there seems little to worry us in curtailing the demand of the wealthiest to satisfy pressing social needs. (There is far more to this, of course, than I can canvass here.)

Finally, champions of the free market like to position themselves as advocates of no government intervention in the market place. That is a lie. In general they advocate a large number of such interventions - most notably a government backed currency; a slight inflationary posture in the economy (to avoid any risk of deflation); the existence of corporations; and the existence of limited liability. Taking seriously the proof that any intervention in the market eliminates pareto optimality, we must ask who is made worse of by these interventions. It is not the wealthy. So we are left with two groups of positions on the economy in the West. Those who advocate a variety of government interventions to help the poor and the wealthy; and those who advocate only those interventions that aid the wealthy.

Mr. Curtis,

I find your tactics bizarre. I will not be baited by what you think you read.

One comment I have is in the last paragraph.

Finally, champions of the free market like to position themselves as advocates of no government intervention in the market place. That is a lie. In general they advocate a large number of such interventions - most notably a government backed currency; a slight inflationary posture in the economy (to avoid any risk of deflation); the existence of corporations; and the existence of limited liability.

Champions for the free market most certainly do not want a government backed currency. This is an extension of government beyond its necessary role. The alternative is a market driven system of private fractional-reserve banks. Since this would be lead by pricing signals which I have talked about before, the discipline this system forces into the market should be highly superior to the whims and the theories of government officials. I am still unsettled in my mind about the full impact of limited liability, but it seems that if the person selling the investment product is clear about their special status, the market would drive folks away from this if it was a bad deal for the consumer (the same holds true for fractional-reserve banking).

Also, you said …

The central authority does not have to be a “state”, but the people who think a central authority would be helpful prefer it to be a state so that it can be controlled by democratic means.

… Which leads to my conclusion that you preferred democracy, but the more important part is that you implied people are willing to give up control to a government body, hoping that this body will be a democracy. I merely pointed out that this is not always the case, despite good intentions professional politicians will bend the state to suit their needs (see history of western civilization). The fact that folks are so keen on the state despite this risk leads me then to believe that these same people would see merit in central planning. This, as stated before, leads to the elimination of price signals. I indicate the direction here, away from optimal, that has an ultimate conclusion. This is the natural result of a society forgetting the importance of a price system. Would I want to live in an absolute Anarchy? I would have to see one develop first to know if I would like it. Private Police force, Justice System, and defense, are just theories at this point, if you will show me an example of the existence of these absolutes, I will be glad to weigh in on that.

The words that you seek to place in my mouth create a conclusion that I will not claim. You are a moving target if you constantly say that whatever I advocate is too far to one side or the other. You brutally critique an argument in a direction. You “misrepresent” that my arguments are for absolute elimination of the government to suit your hyperbole. Since you claim some middle ground, and I do as well, we don’t differ that much in ground. This leads me to conclude that further exercise on this subject is vain.

I would comment on the rest of your statements, but frankly they are vague at best. This “logic” (using your word, though I do not agree with your definition) requirement that you impose on me, might be better spent directed inwardly rather than externally.

I don’t think that you have correctly characterized my advocacy, and I don’t think that you are advocating anything clear yourself.

Lastly:

Taking seriously the proof that any intervention in the market eliminates pareto optimality, we must ask who is made worse of by these interventions.

This statement is very interesting; I would encourage you to peruse this. My thoughts are that you can follow the money, the people that benefit by government intervention, if they had anything to do with lobbying for that intervention, are suspect.

Michael Thomas:

Champions for the free market most certainly do not want a government backed currency. This is an extension of government beyond its necessary role. The alternative is a market driven system of private fractional-reserve banks. Since this would be lead by pricing signals which I have talked about before, the discipline this system forces into the market should be highly superior to the whims and the theories of government officials.

A little reading of American history shows that the theory and the practice have turned out to be somewhat different. Reality has a tendency to muddy the waters. Early in US history, money was issued by private fractional-reserve banks just as you say. But these banks were themselves not particularly secure, nor particularly regulated. They had an annoying tendency to get robbed, to go broke, to steal depositors’ money and vanish overnight, to refuse to honor currency issued by other such banks, to print money without limit, etc. The natural result was that many people refused to use this local currency, and those who did were geographically limited to about a day’s ride from the issuing bank (because banks elsewhere wouldn’t honor it). Far from “forcing discipline onto the market” this had the effect of crippling both local and regional commerce.

The effort to replace bank-money with gold (which couldn’t be created at whim, and was honored everywhere) was handicapped by the fact there simply isn’t much gold around. Some areas simply had no money at all, and were reduced to straight barter, perhaps the least efficient market mechanism possible.

This example is a microcosm of why a State is useful, despite its many drawbacks. In areas of law and commerce (among others) the State provides the equivalent of a common language, an absolute requirement for a smoothly functional society – even though lies can be told in any language.

Flint,

I recognize your arguments. This was a common reading of the historical record referred to as “wildcat banking.” The actual record does not suggest as you say that this banking system failed. Without going into much detail I can refer you to Dr. Lawrence H. White, his homepage, he is considered an expert in this area.

I recognize your argument and can vouch for the prevalence of this interpretation, but must also say that with further research I am compelled to disagree with its conclusion.

To my mind the best argument for the state is the idea that private actors will not take independent action when faced with network problems. This theory suggests that the first-mover will not reap the full benefit until others imitate their actions. The only mitigation that I can offer for this concern is the idea of spontaneous order. Examples of alphabet, money, and others seem to suggest that network convergence is possible. Much like genes, prices adapt to assure the survival of the organism, in this case the organism that I am concerned with is society.

To speak directly to your assertion:

The natural result was that many people refused to use this local currency, and those who did were geographically limited to about a day’s ride from the issuing bank (because banks elsewhere wouldn’t honor it).

there were examples of private clearinghouses which offered redemption of bank notes from less recognized banks (See Suffolk Bank in Boston for more history on this). The government rather than make bank notes more creditable often had the opposite effect, many western states put such irresponsible requirements on their banks that they precipitated failure. The national banks too were initially backed by less than optimal standards. It was not until the government outlawed competition by private banks that they were able to get the type of control over the money supply that bureaucrats desired. Many authors will credit monetary policy at the “state” level (read federal) not only for the depression (government monetary officials kept money from naturally depreciating - See Richard Ebeling for more on this), but also the slow recovery during the 30’s could be blamed on failed Keynesian economics. These new macro models took the arguments of the good intentioned and moved the US away from the model that had made it so successful in the first place. Add the command economy during WWII and the distinctions between the US and The Soviet Union were becoming less obvious daily. This is where the Austrian economists came in and re-asserted the importance of the price mechanism.

Please contact me if you would like further debate or more resources for these arguments. My name is linked to my blog.

Michael Thomas:

I’m not trying to make an argument here, exactly. Only to reflect on the inevitable tradeoffs inherent in any social decision policies. In general, I regard the State as one of the aspects of large-scale social organization (large-scale meaning, more people than can be expected to all know one another by reputation). It’s nearly impossible to either assign to the state, or remove from the state, ANY responsibility, without some people experiencing benefits and others experiencing difficulties. This doesn’t mean there are no bargains in either course of action, only that there is no such thing as a “pure” bargain, a good wind that blows nobody ill.

You guys just don’t seem to get it. All ideas apart from Libertarian ones are just plain wrong! (Alarm bells ring - over the tannoy we hear “Feder alert - all censors to stations 1 through 50”)

Problem is that libertarianism, as commonly construed, is a fraud, since most right-libertarians are quite happy to see private parties capture Ricardian rents.

Quoting the introductory paragraph of the excellent essay Are you a Real Libertarian, or a ROYAL Libertarian?:

We call ourselves the “party of principle,” and we base property rights on the principle that everyone is entitled to the fruits of his labor. Land, however, is not the fruit of anyone’s labor, and our system of land tenure is based not on labor, but on decrees of privilege issued from the state, called titles. In fact, the term “real estate” is Middle English (originally French) for “royal state.” The “title” to land is the essence of the title of nobility, and the root of noble privilege.

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This page contains a single entry by Timothy Sandefur published on December 6, 2004 10:05 AM.

Guest Opportunity on Janet Parshall’s America was the previous entry in this blog.

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