Arnold Kling  

Natural Allies or Natural Enemies?

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Misplaced Priorities... Determining Bank Solvency...

Clive Crook reviews Animal Spirits, by Akerlof and Shiller.


Likening the role of government to a parent's duty to create a happy home, the authors write: "The proper role of the parent is to set the limits so that the child does not overindulge her animal spirits." This is an unappealing analogy. I would sooner take up arms against a government that saw me as a child than vote for it.

That last sentence is a keeper. I have written a review essay for The Independent Review, in which I raise the same concern, although not as concisely or as eloquently.

In another eloquent passage, Jonah Goldberg writes,


Across a vast array of issues, liberals are moving away from markets and freedom at precisely the moment libertarians want to find common cause with them. I find that odd.

At dinner, I would rather discuss issues of philosophy and economics with liberals like Akerlof and Shiller than with non-libertarian conservatives. But the political arena is different. Think of it as a Thanksgiving meal. At the conservatives' table, I feel like an uninvited guest. At the liberals' table, I feel like the turkey.


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COMMENTS (14 to date)
fundamentalist writes:

Goldberg: "...liberals are moving away from markets and freedom at precisely the moment libertarians want to find common cause with them."

Socialists (liberals) don't like compromise. It's a sign of weakness. They want unconditional surrender. The fact that libertarians are willing to compromise with socialists tells the socialists that they have won. Libertarians are on the ropes. Why compromise? Go for the whole victory!

Floccina writes:

Across a vast array of issues, liberals are moving away from markets and freedom at precisely the moment libertarians want to find common cause with them. I find that odd.

To the victor goes the spoils. They seem to be saying we told you so.

I am a libertarian but it seems to me that it might be a flaw in libertarians that we do not want gov agencies like the FDIC to mimic private agencies as long as they exist. In the case of the FDIC perhaps they should have threatend to drop insurance on various banks in 2003-2007.

John Thacker writes:
At dinner, I would rather discuss issues of philosophy and economics with liberals like Akerlof and Shiller than with non-libertarian conservatives. But the political arena is different.

Of course, part of the problem with the formulation is that "liberals like Akerlof and Shiller" don't represent the entire liberal (or, if you like, Democratic Party) coalition. There are plenty of liberals (or perhaps they call themselves moderates) that would be just as unpleasant at the dinner table-- Sen. Sherrod Brown, for example, or the host of people to whom Obama's "McCain opposed 'Buy American,' he's disloyal to America" ad and stump speech was aimed.

Most of the intellectually minded conservative types tend to at least call themselves fairly libertarian conservatives, or something like that. Jonah Goldberg is included as such. Intellectually minded liberals don't generally make such a distinction, though I suppose in some cases "progressive" indicates such.

Blackadder writes:

The other night I saw a preview for a new movie called The International, which is about a bank that kills people, and thought about how lucky the producers of the film must feel that it happened to come out now, when (I conjecture) the public is primed for a film or two about evil bankers.

I have the same kind of thought reading about the Animal Spirits. Talk about lucking out on a publication schedule!

Zdeno writes:

It's not odd at all. The number of people who depend on the government for their paychecks and prestige, i.e. the public sector, the underclass, recent immigrants and single women is approaching critical mass. In previous elections, the democrats needed to moderate their positions to retain at least some support among taxpaying citizens - but that day is passed. Batten down the hatches.

taimyoboi writes:

Could you provide a further clarification as to what you would include in the set of "non-libertarian conservatives"?

Do you mean non-social conservatives? Limited-government conservatives? Something else?

The Student writes:

My question to Kling is whether he has read the book.
I'm guessing no.
On the other hand, I have, and I can claim it offers a much more convincing narrative than the few sentences that Libertarians have gerrypicked out of it.

Besides, it's a metaphor the makes a good point. The only interaction they advise the government to have in the economic sphere is to restrain both the manipulative and the dumb. And in no place do the author actually liken people to children. The point they're making is that most people lack the necessary information or disposition to make optimal choices, and in fact, most can be mislead by those intelligent enough and evil enough to do so. The role of government is to increase information flow, and protect people from being swindled.

To Black Adder: Shiller and Akerlof both predicted that a recession was coming, Shiler has become famous for doing so, and making a bet with Art Laffer about it. The book includes a great deal about the current recession, and examines how non-optimal behavior (motivated by animal spirits) led to bubbles and breakdowns in various sectors of the American economy.

Though in my opinion the best part is their explanation for, and observation of, money illusion, and how large an effect it has on society.

Dan Weber writes:

If you think Kling is writing reviews for books he hasn't read, you should probably contact The Independent Review directly with your concerns.

The Student writes:

There is no such article written by Prof. Kling at the website of the Independent Review.
I stand by my statement.

Brad Hutchings writes:

Jonah Goldberg is a bad example of a conservative. He is the one that got away from libertarians. Arguably, Obama won the Democratic primary and even the general election on what were effectively social issues: Iraq War, Gitmo, racial harmony, etc. The stimulus package is vastly unpopular. But the Republican answer is let's do half as much, and focus in on something that didn't have much effect last year.

There is far more promise in libertarians trying to appeal to younger Democrats like Heath Schuller than in trying to prop up the remaining, stodgy Republican edifice. Younger people universally know that Social Security and Medicare are unsustainable shams, and that unions benefit basically nobody under 40. Bling, big screens, and cool phones are a virtue, not a vice, to younger people, so they should be more receptive to good economics. And the only young people who self-identify as Republicans these days are insufferable bores.

johnleemk writes:

As a young college-going libertarian-leaner, I would definitely say I have more in common with liberals in spite of their sometimes annoying tendencies. The problem with both liberals and conservatives is that their bleating base is insufferably, for lack of a better word, ignorant. The difference is that there are still some reasonable liberal thinkers out there; it's really hard to say the same for conservatives, especially now that William F. Buckley is gone. His only successors are partisan hacks.

For me at least the future of libertarianism lies in a more liberal direction. I personally identify more with Will Wilkinson's "liberaltarianism" (though I am tempted to call it Cowenism since Tyler Cowen is often identified with it by many libertarians) than I do with the libertarianism which conservative thinkers like Jonah Goldberg claim to identify with.

A major problem I see with all this is motivation. Many modern libertarians and liberals, I suspect, are motivated by similar beliefs in equality of opportunity of sorts, and also a belief that through the right freedom-promoting policies, government can make things better. The difference comes in our definitions of freedom. When I look at modern conservatives, I don't see them motivated by freedom or societal welfare so much as they are motivated by their opposites. It's honestly hard to conceive of a conservative politician or thinker who seriously identifies benefiting society's least well-off as an important and primary goal of public policy; the writings of libertarian thinkers on the other hand often emphasize how libertarian policies can benefit the most disadvantaged of us. A conservative would scoff at Milton Friedman's idea of a negative income tax, or the idea of Pigovian taxes in general even.

I understand why many older libertarians identify more with conservatism, but looking at the modern conservative flagship, I just do not see much to relate with. Conservatives simply cannot credibly advocate freedom or Pareto improvements to welfare. The liberals aren't much better, but I at least share their concerns in a number of areas, despite my strong disagreements with them about how to resolve these problems.

Arnold Kling writes:

I only sent the review to the Independent a few days ago. Check back in six months to see if it is on their web site.

Walt French writes:
I would sooner take up arms against a government that saw me as a child than vote for it.
Better not read too much of the Founding Fathers' concerns about how to balance the knowledge of The Elite against the wishes of The Mob. You might have to personally secede from this longish Experiment in democracy, because it recognizes that its strength is a potential source of weakness.
jb writes:

@TheStudent - the problem (for me) is that there's nothing to ensure that the government isn't the one doing the evil misleading of the public.

And in many ways, misleading the public is viewed as the proper role of government. For example, Matt Yglesias, who I think of as bright, articulate and wise-for-his-years, specfically advocated lying to the public about the costs of building mass transit in order to get mass transit systems built. Indeed, it is something of a central tenet of his political philosophy that politicians lie regularly, about all sorts of things, and, when done by the right people, for the right reasons, that's perfectly ok.

There's no evil in his heart, as far as I can tell. He believes that progressive/liberal ends justify all sorts of deception and prevarication. And he is not alone. I don't think I'm slandering him - I think he's specifically stated on his blog about mass transit and other such posts that lying is justified.

But a government built on lies will only work as long as we are governed by angels. Corruptible men will find all sorts of ways to justify any policy they want as "good enough to mislead the people about it". And they do. Regularly. Constantly.

So while the role of government "in theory" is to increase information flows, in practice, it seems to pick and choose rather arbitrarily which information flows to support, and which to impede.

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