Friday, June 11, 2010

Liberals and economics

Another of my rare political comments. I did want to comment on this survey which found that self-identified liberals did poorly when asked to answer questions on economics.

It seems to me that this result should not surprise us. I say this partly because there were similar but small scale studies in the past that produced similar results. Mostly, though, I say it because of what I believe to be true of modern liberalism.

I think there are two things that, for better or worse (and you can decide for yourself), characterize post 1960s liberalism.

First, it is pessimistic about the future. This, as many before me have pointed out, is what differentiates it from the liberalism of the 1950s and early 1960s. Liberals worry about what might go wrong with the environment, with the economy, with human rights. Today's liberal worries all the time about preventing bad things from happening and has very little sense of transforming the country or the world into something better.

Even when liberals talk about a seemingly Utopian idea such as world-government they praise its ability to limit the power of nations or, like Robert Wright, argue for world government because they believe the United States will shortly be no longer able to play a dominant role.

Now, when you think about economics this way, growth is never the go-to solution. A modern liberal is always thinking about limits to growth.  They think that things can't keep getting bigger, better, faster stronger economically. So they think in terms of conservation and fairness.

Second, and more directly related to the economics issue, liberalism is primarily a moral position. Not moral in the sense that it tries to impose moral principles on individuals but moral in sense that it holds that relations between people ought to be governed by principles such as fairness and equity. Again, only nine million people have said this before me.

But I think this second step explains the poor performance on the economics quiz/poll. Liberals aren't all that interested in economics per se. They have a moral position first and only pay attention to the extent that economics seems to confirm their ideas about fairness and equity.

So, for example, when liberals consider an issue like mandatory licensing of professions, they first consider the fairness issue. They worry about people being mislead by charlatans posing as professionals and decide that mandatory licensing is a good thing. When someone comes along and asks them is this might also increase the cost to consumers they are lost. That's not even on their radar. But licensing does seem to improve fairness generally so it probably feels like it shouldn't increase costs in ways that will ultimately hurt consumers so they go with their gut and get it wrong.

Something similar is happening in my neighbourhood right now. There are people who are worried about infill houses being built and one of their concerns is that these houses are too expensive. Their solution? To convince the city to apply all sorts of new regulations. Of course, these regulations will make it more expensive to build houses and drive the costs up even more.

And this should not surprise us. Anytime you make it more difficult to do something, you make it more expensive. But again, we all get things like this wrong. It is all that easier to get it wrong if our real concern is elsewhere.

This was nicely drawn out by a journalist who interviewed the Archbishop of Canterbury at the Trinity Institute this last year. I can't remember her name but she  hit him with a very astute observation. She said, social critics from the church have always focused on solely issues of distribution of wealth whereas economists have been equally interested in production of wealth. She then reminded him that the economists track record of predicting that growth would do more to help alleviate poverty had been overwhelmingly correct and the church's proposed distribution-based solutions had been failures.

Rowan Williams response was telling. He didn't evade the question so much as he acted like it didn't matter. What matters now, he said, is distribution of wealth. Actual economic issues aren't on his radar.

You might say he thinks about economics the same way I do about cars. I don't understand one tenth of the engineering that goes into modern cars. I might be able to grasp a lot of it if I tried but I don't try. I'm immensely interested in cars though. I care about reliability, safety, comfort and a thousand other things. But I only care about the results I want. I have no interest in how the engineers make them happen so long as they do.

Whether liberalism can continue to think of economics the same way I treat engineering is not for me to decide. It hasn't worked that badly for them in the past and they may continue to do well with this approach in future. It's up to the voters to decide.

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