Arnold Kling  

Notes for a Talk

Employment: A New Trough... How Cool!...

I am having trouble putting this together. It is supposed to be based on U and U, for an audience that I expect to lean neocon, and to go for about 20 minutes, followed by Q&A. I would rather provoke than pander. Below are my thoughts so far.

1. In 1810, if you could have picked an elite group of 200 Americans and put them all in one room, you would have had a significant share of the world's understanding in science, engineering, practical information, and commercial know-how in that room. Today, if you performed that exercise (and scaled it up for world population growth), you would have a much smaller share of the world's knowledge in the room.

2. Yet political power has not dispersed in the same way. One could even argue that it has become more concentrated.

3. This knowledge-power discrepancy is behind three crises. First, the financial crisis. Second, a crisis of political legitimacy. Pending is a sovereign debt crisis.

4. The financial crisis has not been resolved. Yes, there is confidence that large financial institutions will not fail. But there is no confidence in the process of mortgage securitization.

5. In fact, each crisis could be described as a crisis of confidence. But a better term would be crisis of over-confidence.

6. Executives on Wall Street and regulators in Washington were overconfident in their ability to put marginal buyers into homes with little money down while diluting and managing the risk.

7. The political crisis of overconfidence is that leaders are more confident in themselves than in the people who elect them. Most Democratic politicians believe that TARP was necessary, the stimulus created jobs, and the health care bill represents an improvement. They think that those of us who do not believe that are confused and irrational. Republicans do not trust the people very much, either. They certainly do not trust them enough to speak the truth about the budget and the outlook for entitlements. The Ryan Roadmap is an exception. But that is not what the Republicans are campaigning on.

8. Dispersed knowledge implies we ought to have dispersed power. But how do we get from where we are today to a country with limited government?

9. Perhaps the next two elections will be a political death match, and our side will win. But I think it is unlikely that the Democratic Party will slink away in defeat. I think it is even more unlikely that the Republicans will enact a coherent agenda that moves us significantly in the direction of limited government.

10. One fantasy I have is for a Constitutional Convention. Not to amend the Constitution, but to ratify it. That is, we could have an open and honest debate over the principle of enumerated powers. If it stays in, and it gets ratified, then by golly this time we stick to it.

11. Another fantasy is an evolution toward competitive government. This can be achieved by a gradual trial-and-error process. We can try various experiments, see what works, and generally move in the direction of giving individuals more choice about how they receive government services.

12. One idea is unbundling. Separate the provision of schools from the provision of fire protection services from the provision of land use regulation.

13. Next, allow competition. Let different entities compete to provide schools, trash collection, and so on.

14. For the charitable and redistributive functions of government, allow taxpayers to make decisions. That is, treat taxes for these purposes as donations, and let taxpayers pick the programs to which they want to donate. They might be government programs or private charities. Let taxpayers make their own decisions, rather than giving power to legislators.

15. Try to shift from territorial jurisdiction to network jurisdiction. For example, I would prefer to eat in restaurants that do not allow smoking. Rather than have a particular jurisdiction ban smoking in restaurants, it would work better for me if there were a network of restaurants that banned smoking. That way, when I travel to a new jurisdiction, I do not have to inquire as to whether the jurisdiction bans smoking in restaurants. I just have to know where to find restaurants that belong to the no-smoking network. By the same token, someone who wants to smoke can find in any territory a restaurant belonging to a smoking-allowed network.

16. Network jurisdiction works for organized religions. Jews, Christians, Muslims, and atheists can live near each other, as long as we agree that any disputes among us will be resolved peacefully by unbiased courts. We should try to achieve that with political religions. Somebody who wants European style welfare systems should be able to live next to somebody who wants personal responsibility, without one group having to submit to the rule of the other.

Suggestions? Comments on substance and presentation both welcome.

Comments and Sharing

CATEGORIES: Political Economy

COMMENTS (16 to date)
AaronT writes:

Good points, but re:16, I'm not sure how feasible this is. Your audience may argue that someone who wants European style welfare will necessarily demand his personal responsibility neighbor sumbit to his rule. Redistribution is inherently coercive, so how can these neighbors co-exist while both getting what they want? I would imaging this would come up in Q&A.

Philo writes:

You might mention the extent to which some of your ideas, in particular, for competition in the provision of what have been government-provided services, have become more feasible (and are likely to become even more feasible in the future) because of advances in information technology. For example, thanks to the internet it would now be much easier than formerly to find smoking or no-smoking restaurants. And electronic data-management would make it easier to keep track of who belonged to what network. Compare: toll roads are much more convenient now than they used to be, with electronic "open-road tolling."

But the combination of inertia with widespread overconfidence in government regulation probably condemns your ideas to the status of fantasies.

Rebecca Burlingame writes:

Would rather provoke than pander? Hmm. Or at the very least, wake some of them up a bit. You could leave them with an image of what could happen if no economic/political action is taken in the years ahead. Something along the lines of "Remember the bumper sticker Lead, Follow or Get out of the way? Well, we've expected too many people to get out of the way (instead of participating) and where do we really think they're going? How many barbarians who descended upon the Roman empire actually were told to get out of the way before they came back?"

Maniel writes:

You have some provocative ideas.
Here's my view. Local and state governments in the USA are where the services are provided. These governments have been captured by public unions (which must be immoral, if not illegal, since they use public money to influence or support politicians who then support the unions) which have managed to influence legislation guaranteeing unsustainable (taxpayer-financed) health and retirement benefits.
The federal government, which provides almost no services of value, has become an income-transfer machine par-excellence. The money flows from the young to the old (SS, medicare, etc), from the self-employed to the cadres (government health-insurance subsidies), from renters to home owners, etc, etc.
Spending at all levels of government must be scaled back or the the big one, the debt bubble, will burst. As you say, at the federal level, the constitution can be a useful guide to cutting spending. Quibbling over the deficit and taxes is a delaying tactic. Milton Friedman should be required reading for the president and every congressman and senator.

MattW writes:

Re #8:
I think "implies" is a fairly weak link between dispersed knowledge and dispersed power. I'd like to see it stronger, and I think you made it stronger in the book (so maybe you're planning on expanding this point already). This is one of the most interesting ideas I've been acquainted with in the last year or so, and I think it's one of the most important as well.

Rebecca Burlingame writes:

About #1: The number of good non-fiction books in the personal libraries of most communities far outweighs what libraries can carry in the present. What does that say about the untapped potential at all levels of society?

JP98 writes:

First, it seems to me that you already have an interesting and thought-provoking talk based on your outline.

Second (since you asked for ideas), I would suggest considering the importance of morals (or culture, if you want a less-charged term). Whether we get a smaller & more dispersed government depends largely on how we see ourselves. What will make us say, "Thus far and no farther?" We might be seeing an answer to that now, in the widespread anger toward Washington and incumbents. (Peggy Noonan had a nice column today that touches on this area.)

BZ writes:

#10 - Why in the world would a written constitution limit government THIS time? It hasn't so far! My libertarian friends and I got booed out of a Republican meeting for it, but here you go: Repeal the 17th amendment, institute a state veto on federal law, and repeal federal grants to local law enforcement. Not a magic bullet, but a reasonable start.

Peter St. Onge writes:

I read recently about a Colombian town that gave up on collecting taxes and asked for donations instead (I believe this might frequently occur in warzones e.g. Iraq). They got something around 10% of their previous budget. Now, 10% is a drop, but our govt could surely operate on 10% of current budget.

Point is, donations-only taxation appears more feasible than many might think.

LT Phillips writes:

I would like to read more about the potential role of experimentation in the provision of public services and other potential constitutional/legislative reforms (e.g., sunset laws, opportunities to opt out of proposed public services/regulations, a more robust federalism, widely disseminated hard metrics about the effectiveness of public programs). Social scientists know very little about what will and will not work in the real world, much less what implementation will cost. We need to move away from the "one size fits all" approach to government -- all levels of government.

R. Richard Schweitzer writes:

By Constitution:

Reduce the House of Representatives to 290.
Increase the terms to 3 years.

Change the Senate terms to 8 years for the first term and 6 years for the second and 4 for any additional terms.

Limit the budget for all operations of Congress (House & Senate), including reserve provisions for any future benefits, to a maximum percentage of the average of the preceding 3 years of revenues net of debt service expense on indebtedness incurred (whether or not paid) in those years.

Simon M writes:

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Frank writes:

Item 8 seems to be a non-sequitur. The straightforward conclusion to draw from the dispersal of knowledge or increased ignorance of consequences is not that we should pursue a particular policy, but that we should have less confidence in our ability to predict the consequences of any policy. But you are not arguing for skepticism or intellectual modesty. Instead your claim is that dispersal of knowledge means that less government will have better consequences than more government.

Perhaps the thinking is this. Dispersal of knowledge makes it harder for any central planner to predict consequences, and therefore to construct plans than will have good consequences as intended. It does not make it harder for the market to produce good consequences. (At least we assume this until someone provides an argument to the contrary, for instance that it is now harder for consumers to make informed decisions, e.g. about medical procedures.) Nor does it make it harder to set up a legal structure that will allow the market to work well under these new circumstances. So the case for regulation as against the market is now, to some indefinite degree, weaker than it used to be.

If there is more than this behind the first sentence of 8, it might be worth spelling it out a little.

My reaction seems to be nearly the opposite of another commenter's, but perhaps we agree on a point that could use elaboration.

fundamentalist writes:

You might need a new definition of the Constitution:

"The constitution is neither a document nor the collection of words in a document. Instead, the constitution is the dominant ideology within us an ideology that determines what we permit each other to do, as well as what we permit government to do. No words on parchment, regardless of the pedigree of that parchment or of the men and women who composed those words, will ever override the prevailing belief system of the people who form a polity."

That's Don Boudreaux at

Durham writes:

Your stated "knowledge-power discrepancy" merely ratifies & fuels progressive-socialist (..and neocon) ideology.

Their consistent view is that of a strong central-planning group of "experts" {government power} directing society to progress.

If the 'experts' now lack sufficient knowledge to correctly proceed (due to knowledge dispersal) -- then that knowledge must be aggressively un-dispersed (consolidated by the experts)... via modern data-technology & vast government compulsory data collection/reporting/intelligence/surveillance mechanisms in all aspects of domestic & international society.

They just need to heavily intensify their current efforts --so that the government experts can access that 'knowledge' which you admit is already out there somewhere.

Thus, progressive-socialists look thru the other end of the telescope, seeing the 'problem' and 'solution' as opposite to yours. They will immediately draw the wrong conclusion from your "knowledge-power discrepancy".

You need better argumentation.

Brett writes:

Undoubtedly, this nation is headed for economic and social turmoil unless multiple major issues are identified and corrected in the near future. Selfish politicians are repeatedly voted in despite their misuse of power and position. This nation was created as one in which the citizens make demands and decisions, and the government strived to fulfill them. Currently I feel we are progressing to a nation where the government makes all of the decisions and then forces the citizens to conform. Many of the foundations of our nation and our economy are not only ignored, but completely rejected.

The problems our country face are not necessarily an easy fix, however plausible solutions are available. The first step in restoring our economy, and ultimately our nation, is to not only replace some current politicians, but to restore the attitudes, beliefs, and morals of the government as a whole to those that founded this nation. We the citizens must elect officials who will place the benefit of this country, and its people, before their own. Until the political system and those who comprise it are renovated, the economy cannot truly be fixed.

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