David R. Henderson  

Paul Gregory on Communism

How Does Narrative Emerge?... Ways in Which the U.S. has Bec...

Although I haven't found time to listen to more than about 20 of Russ Roberts's Econtalk podcasts, one of his latest, his interview with our Hoover colleague Paul Gregory, is one of the best I've heard. Here are some of the highlights.

Gregory points out the clear connection between violence and non-market allocation. Of course, his focus is on Stalin's ruthless, and successful, policy to expropriate the peasants' crops. Successful in the limited sense that they got some of the peasants' crops and let the peasants starve. He also points out (at about the 18:20 point) something I hadn't known and Gregory hadn't known: that Stalin completely understood that when you set prices too low, you get people being unwilling to sell. That's why he used force.

At about the 17:30 point, he notes Bukharin's epiphany: markets in agriculture work and if you let them work, you'll have harmony with the peasants. This realization, and Bukharin's revulsion at seeing young children starve to death, caused other Bolsheviks to realize that he was "soft."

At about the 23:15 point, he states that being willing to be totally ruthless was a huge advantage in the fight for power. Both he and Russ then referred to Hayek's insights in the chapter of The Road to Serfdom titled "Why the Worst Get on Top." In a ruthless fight for power, soft-hearted people can't win. The specific section of that chapter that most fits is the part at the end, which I'll quote:

Yet while there is little that is likely to induce men who are good by our standards to aspire to leading positions in the totalitarian machine, and much to deter them, there will be special opportunities for the ruthless and the unscrupulous. There will be jobs to be done about the badness of which taken by themselves nobody has any doubt, but which have to be done in the service of some higher end, and which have to be executed with the same expertness and efficiency as any others. And as there will be need for actions which are bad in themselves, and which all those still influenced by traditional morals will be reluctant to perform, the readiness to do bad things becomes a path to promotion and power. The positions in a totalitarian society in which it is necessary to practice cruelty and intimidation, deliberate deception and spying, are numerous. Neither the Gestapo nor the administration of a concentration camp, neither the Ministry of Propaganda nor the S.A. or S.S. (or their Italian or Russian counterparts), are suitable places for the exercise of humanitarian feelings. Yet it is through positions like these that the road to the highest positions in the totalitarian state leads. It is only too true when a distinguished American economist [Frank Knight] concludes from a similar brief enumeration of the duties of the authorities of a collectivist state that "they would have to do these things whether they wanted to or not: and the probability of the people in power being individuals who would dislike the possession and exercise of power is on a level with the probability that an extremely tender-hearted person would get the job of whipping-master in a slave plantation."

At about the 24:20 point, Russ and Paul talk about Stalin's idea of the best day under Communism being a day when he gets revenge.

The story of the destruction of families, especially Bukharin's family, under Communism is tragic and moving. It reminds me of my wife's reaction after we saw the movie "Goodbye, Lenin." She commented, "What it shows is that one of the worst results of Communism is the destruction of families."

In about the last two minutes, Russ tells a moving story about his run-in with a U.S. cop who was in the wrong but had the power to decide who was in the wrong--guess what he decided--and points out how rough it would be to live in a society with armed people with may more power over you than the cops here have.

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COMMENTS (7 to date)
Anonymous writes:

There is a lesson here for anyone willing to think about your last paragraph...

People shouldn't fear their government...

Patrick writes:

The trouble with this is that a lefty could have written nearly the same thing about sociopaths rising to the top of corporations. Libertarians think of government as a conspiracy to promote antisocial monsters into positions of power where they can do the most damage. Socialists think of free markets as conspiracies to promote antisocial monsters into positions of power where they can do the most damage.

Indeed, the monsters are there.

The common delusion of left and right is that abuses of power can be made to disappear by modifying the rules by which power is apportioned. But power-hungry people go to where the power is. Sociopaths are overrepresented in the top echelons of government (totalitarian or not), business, the military, the police, the clergy, everywhere. Conscience is nature's way of sacrificing the interests of the individual to promote the well-being of the group. We have evolved toward an equilibrium where one to four percent of people lack a functioning conscience. (Callousness is the most strongly inherited of all personality traits.) Naturally, people unencumbered by feelings of guilt and shame when they hurt others have a distinct advantage in the scramble to the top of many, if not all institutions. Nature never makes perfect the enemy of good enough. Evolution is full of disgusting arms races. This is one of them.

James writes:


No one believes abuses of power can be made to disappear. But I'm very sure that different arrangements can affect the impact of such abuses.

E.g. I think the policies of the Obama administration and the policies of Bank of America are lousy. How hard is it for me to avoid being affected by the former? How hard is it for me to avoid being affected by the latter?

Get it now?

Patrick writes:

James, I could introduce you to at least a dozen people I know personally who believe just that. You know better, but you are not quite everybody.

Yes, different arrangements can substantially affect the impact of such abuses. I think we can agree authoritarian countries are terrible places to live, but I'm talking about left versus right, not authoritarian versus libertarian.

Where are you safer from abuse by sociopaths, the United States or Sweden? I don't think the answer is obvious, yet the competing economic principles of left and right are both sold, in part, on their ability to protect people from abuses of power. The free-market advocate says he'll protect you from petty bureaucrats who think they know your interests better than you do, or may simply ruin you for the sake of some dark political objective; and the socialist says he'll protect you from amoral business executives who will poison your drinking water if they think complying with the law is more expensive than settling the lawsuit you or your heirs will file.

I still think the US is the better place to live, but I don't think Henderson's argument holds water. If the Soviet Union had gulags because it was a socialist state, then Sweden would have some, too. Authoritarian government is what enabled Stalin to commit his own Holocaust.

It's easier to escape nuisance policies by BoA than the federal government, but they are nuisances. And there are cases where moving to freer markets will increase nuisance policies by business. If you live in California and your credit card info is stolen by hackers, you will be notified by your CC company. If you live in Texas, you won't. Because they don't have to.

Jaap writes:

I don't think you can be too satisfied with America then. This country has taken away the liberty of many men, most famous in still open Guantanamo Bay. Power-abuse was rife when people were sent there, and rife when people were living there. The scale was not on a 'Gulag' level, but the methods were similar. Reading Solzhenitsyn teaches me this.

David R. Henderson writes:

Amen, brother. I thought it was also telling that so many of the neocons, who were sooooo against torture when done by the Soviet Union and were so supporting of Vladimir Bukovsky, didn't change their views at all when he came out against torture by the U.S. government.

Thomas Sewell writes:
If you live in California and your credit card info is stolen by hackers, you will be notified by your CC company. If you live in Texas, you won't. Because they don't have to.
Don't forget to tell the story of what is unseen in your example.

What percent of people are financially negatively affected by not being notified in Texas vs. what they would have saved if the State forced notifications? Now compare that to how much every single credit card user in CA is affected by higher fees and costs for owning a credit card as a result of the regulations.

Also, is there a legal rule that prevents a credit card company customer in Texas from including in their agreement with the company that they are to be notified of eventsbased on specified criteria? If not, why do you think people aren't demanding such changes to their CC contract and why aren't there CC companies putting them in and making it a selling point to choose their card?

I strongly suspect that the answer to your complaint isn't that the market has failed, it's that the government regulation in CA forces people to do something other than they'd choose to do on their own and that it doesn't take into acocunt WHY they wouldn't choose that option.

Without even understanding why the market equilibrium in CC contracts exists, it's completely irresponsible to arbitrarily decide to change it based on some feel-good theory about how credit card companies "should" behave based on only the very limited information available to a bureacrat or legislator.

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