The Long View

The Day Before Hierarchy

Am I wrong in thinking that all these items are about the same thing?

Daniel Henninger at The Wall Street Journal discerns The Revolt of the Masses in which "Electorates are casting a global no-confidence vote in their leaderships":

When the political world arrives at the point where even the Japanese rise up to toss a party from office after almost 54 years in power, it's time to see something's happening here, Mr. Jones... The same weekend the Japanese unloaded the Liberal Democratic Party, German voters withdrew Chancellor Angela Merkel's ruling majorities in the state legislatures of Thuringia and Saarland.

In the U.S., political handicappers are predicting heavy Democratic losses in the House next November.... Some search for an ideological trend toward the left or right in these votes, but the only evident trend is to strike out at whichever blob is currently in power. Even as Americans turned over their country to liberal Democrats, opinion polls showed that the British people were turning toward the Conservatives for relief from listless Labour.

What accounts for the global electorate's growing disgust with the political overclass? Try this: No matter the ideological cast of these governments, they all hold in common one policy: the inexorable upward march of national indebtedness. It has arrived at the edge of the cliff.

Readers of this space will know that few people are so debt-phobic as I. Nonetheless, I am inclined to dismiss the mention of debt as an expression of the need to find an explanation that the WSJ opinion-editors had heard of (the other possibility would be high capital-gains tax rates). In any case, at the risk of citing a Usual Suspect, let us consider the views of Simon Johnson, a professor of entrepreneurship at M.I.T.’s Sloan School of Management [and] former chief economist at the International Monetary Fund.

Unfortunately, 200 years of experience with real-world finance reveal that it also has at least three serious pathologies...features that can go seriously wrong and derail an economy.

First, the financial sector often acquires or aspires to political power.... Second, the financial sector can obtain disproportionate power over industry.... Third, finance can also go crazy, running up speculative frenzies.... Which kind of financial sector pathologies do we face today?

Unfortunately: all of the above. And, not just in nature but also in size, we face a financial sector much more potentially debilitating than anything stared down by Jackson, Teddy Roosevelt or Franklin Roosevelt....Just a few years ago, finance accounted for an astonishing, and unprecedented for the United States, 40 percent of all corporate profits, and even today the sector generates around 7 percent of what we measure as G.D.P... the amount of risk-taking that this sector can pursue remains mind-boggling, and its ability to "put" the cost of big failed bets onto the government is undiminished... the headline numbers for the economy beginning to improve, the impetus for any real reform of this sector — within the United States or internationally — starts to fade. The likely future is: more of the same, at least until we find a Jackson or a Roosevelt....

Note the implicit invocation in that item of the cycles of American history. Note most of all, however, Saran Ruden's observation at First Things that Free Is Not God:

Chris Anderson, editor in chief of Wired Magazine, [celebrates] the marketing concept of "Free" [in his book of that name]. [Free], in essence about profit-making through giveaways, does not worry about the livelihood of people like me [who write creative content for a living]. Ideally, in his thinking, basic content will be the thing provided for free, while the delivery modes and add-ons alone, computer hardware, broadband subscriptions, advertising, and so on, bring in the actual revenue.... Set out by Anderson in various examples (such as a "free" cell phone with an expensive long-term contract, or a medical-records database given free to doctors but making money through sale of the collected records to third parties), this is a large set of duck blinds built over the actual cost (and also the inherent value) of goods, and has a future no more dynamic than that of sub-prime mortgages...the digital economy has simply not yet hit its own wall of limited resources and unlimited greed on both the producers’ and the consumers’ side.... The loss of freedom at the hands of those who claim to be giving me more is where my most important concerns lie: those of a religious believer.... In psychological terms study after study is cited to show how the methodology built upon Free is intended to restrict the will and attention more and more to the mere act of choosing... Deployers of Free aim for the impression that great value lies in the mere ability to make choices, and only fleeting value in the choices’ content.... The last will serve the first, but because these are their decisions, the last can be trained to believe that they are first, that a benevolent force has exalted them.... they can be trained in contempt for anything that could be considered [elitist] spiritual hierarchy that is, permanent content, otherwise known as meaning...

Libertarianism shares with Marxism the fallacy that history is fundamentally entropic, that it can destroy hierarchical structures but not create them. Certainly history favors interaction, but that is another matter entirely.