William Anderson is a raving lunatic. As a fellow of the Ludwig von Mises Institute he is certifiable. Those guys believe in pure unadulterated laissez faire. It was the (famous) debate between Oskar Lange (lang - uh), a famous socialist and LSE economist (and later Vice President of Communist Poland) and von Mises that led to Lange proposing that a statue of von Mises be placed in the foyer of the Central Planning Bureau for his identification of the optimum production rule, i.e. that marginal cost be set equal to price in every market. Because Lange proved that no free market system could ever satisfy this rule (and only a planned economy could impose the rule), and others (Meade, Lipsey, Lancaster etc) proved there was in general no second best solution (i.e. if there was a single departure from the optimum in any market, it could not be assumed that attaining MC=p in every other market would be second best to the complete MC=p solution). Thus in the context of world trade, free trade cannot be justified if it is lacking in any single market. This debate and its sequellae pretty much destroyed well-trained economists' interest in political economy. Since no objective function that was unobjectionable could be established, political economy simple dissolves into ideological chaos. The economists' role in prescribing rules for conduct of the economy resolves into his ability to forecast the consequences of application of a set of rules to a given economy in a particular stage of development. The forecasts cannot be made on ideological grounds, but should be made, if possible, on the basis of experimental work and modelling.
Pitiful little Anderson wants to kick California out of the Union. He does not consider that this, under the Constitution, is impossible, and, therefore, merely wastes time. Telling California to secede is like teaching a pig calculus. It doesn't work, and it annoys the pig.
California's screwing up its energy market is an amazing example of what happens when amateurs and politicians meddle in situations they do not understand. IMO, this was a good problem for professional economists to analyze. The politicians need to prescribe what they want to happen as a matter of policy. If the public (through elections) approves of these objectives, the problem should be turned over to one or more groups of professional economists who are instructed to come up with a proposed solution which they agree will accomplish to desired objectives efficiently (which means at minimum social cost). The government then adopts the plan or modifies it, in which case the consultant's "guarantee" is abrogated. The legislature will then have to come up with a guarantee.
Sooner or later we will have to do something of this sort, refer problems to experts, and try to balance different biases. Economists of different stripes have no trouble cooperating in recommending policy. All professional economists believe the test of a theory is its predictive capacity. All of them agree on the methodology of forecasting, although, of course, they differ in the emphasis and support of particular micro-methods. Thus the OMB, CBO, CEA, BEA, Fed and other official economic forecasters cooperate and debate easily, usually without rancor, and ideology. People like Anderson, however, don't qualify as professional economists, because they view it as impossible that the real world might not obey their ideology.
I have just been reviewing the politics of the pre-Civil War period in the U.S. The joke that S.C. was too small for a nation and too big for a lunatic asylum is usually credited to Petigru, the only outspoken unionist in South Carolina. He had a clear understanding of the consequences of secession and civil war. He is the only person I can find who did. One of my own great-grandfathers was a member of the planter aristocracy of South Carolina and owned hundreds of slaves. He owned thousands of acres. And he owed money on everything. I know nothing of his own politics (although his wartime letters still exist and are circulating slowly among his descendants) but I believe he was typical of his class. The slave-cotton bubble was a bubble, and like all bubbles and Ponzi schemes, it had to continually expand in order not to burst. The slavocracy (as Rowan called it) had to increase the value of slaves (which constituted most of their wealth) by expanding into new lands which had not already been exhausted by cotton culture. The closing the border to slavery was what they most feared. The Dred Scott decision had decisively extended slavery into the territories, and declared that even citizens of the territories could not exclude it. The terrorist abolitionists (such as John Brown) had to act illegally, because legally, slavery was entrenched and legally protected. One of the great puzzles of history is why it was that the Fire-Eating Southerners did not recognize that they had won the legal battle and had legalized slavery everywhere in the U.S. In the late '50's runaway slaves and long-free men of color were being reenslaved throughout the North under the Fugitive Slave Act of 1850. Everywhere it was in the interest of
slaveowners to enforce the law. Few know that in the search for a compromise in 1860 to prevent secession, a 13th Amendment was adopted by Congress and even approved by some states which guaranteed that slavery was permanent and that the Constitution could not be amended in the future to limit or restrict slavery.
Why the South destroyed itself and its slave future is a great unexplained mystery. I cannot help but believe that the victory of Abraham Lincoln over Stephen Douglas (who emerges as the only national politician would could have reconciled the South and North had the South given him a chance.) Douglas, although an Illinoian, was a slaveowner (he owned a plantation in Mississippi) but believed that the (white) people of the territories should be permitted to accept or ban slavery ("squatter sovereignty"). Had southerners been reasonable and less fanatic, they would have recognized that Lincoln would undermine slavery, and punish secession and the only way of stopping Lincoln was to join with moderate, anti-abolition Northerners and to elect Douglas. IMO, the election of Douglas would have been the death knell of human liberty, first in America, and then everywhere else (where it was not doing very well on its own). Slavery would have been permanently imposed on America. The only way to overthrow it would be rebellion, and the small number of abolitionists were simply not up to it. Lincoln therefore emerges as the key world-historical figure of the 19th century, and deserves his near deification as the founder of human liberty. |
