Posts Tagged progressive

Food for Thought #9: Ahistorical Fiction

“Already we have far too much of this insipidity — masses of people … letting slip whatever native culture they had, … substituting for it only the most rudimentary American culture of the cheap newspaper, the “movies,” popular song, the ubiquitous automobile.” –Randolph Bourne in The Atlantic, 1916

This blog has touched on the end of the Gilded Age and rise of the Progressive Era before, albeit tangentially. As we begin to tackle how best to fuse liberalism and libertarianism here in the 21st century, it is worthwhile to revisit it, and to that end I’ll be drawing on Louis Menand’s excellent history of the period, The Metaphysical Club.

Menand chronicles how the rise of industrial capitalism radically intensified the disorienting aspects of modern life borne of relentless change and innovation. Politically, this turmoil manifested in the rise of progressivism as it sought to provide a necessary counter-weight to the opressively concentrated wealth of laissez-faire economics. Culturally — as illustrated by the quote above — it manifested as concerns about the corrosive effects of the new mass-produced consumer culture.  And philosophically it manifested in the creed of pragmatism, as developed most famously in the writings of William James and John Dewey.

Cut to Ayn Rand, writing from the 1950s, valorizing the Gilded Age laissez-faire society and condemning the rise of progressive politics as the death knell of actual progress. Like the thinkers of the time, Rand expresses concerns about vapid consumer culture — even though industrial capitalism is what made mass pop culture viable — while on the philosophical level, Rand’s Objectivism is a radical departure from the approach taken by that era’s great American minds.

What was their thinking? The school of pragmatism evolved as a response to intense mid-19th century debates about metaphysics, provoked by the rise of Darwinism and the attendant rise of material determinism.

Pragmatism took its name from the idea that as a philosophy it should be more than an intellectually satisfying  theory, it should be a practical system of thought useful for people in authoring their lives. To that end, it adopted a stance of metaphysical agnosticism. For example, pragmatists assumed free will exists, not as a claim about the metaphysical truth but for the simple reason that people experience situations involving decision-making all the time, so any philosophy that discards free will is void of practical application. 

Ayn Rand also believes in free will  (to put it mildly), but she asserts this as a given metaphysical truth, just like her claims about the moral nature of money are metaphysical claims not supported by logic.

"You know nothing of my work."

In fact her broadest and most problematic metaphysical claim is her ontology of logic, which we have already exposed as faulty here. The truth is that Aristotle’s First Law of Thought, that “A is A,” isn’t making a claim to metaphysical truth per se, which is how Rand wields it; it is claiming that for anybody to meaningfully communicate thoughts with anybody else, they must first agree on the meaning of the terms and symbols they employ in their language. It is a metaphysically modest claim grounded in pragmatic utility — the laws of thought are  not irrefutable truths about the nature of reality (that would make them the laws of reality), they are the rules regarding form that a human must follow to successfully convey content.

The man who founded the pragmatist ethos, Charles Pierce, said of logic’s role in human affairs, 

[Reasoning] inexorably requires that our interests … must not stop at our own fate, but must embrace the whole community. He who would not sacrifice his own soul to save the whole world is, as it seems to me, illogical in all his inferences collectively. Logic is rooted in the social principle.

Pierce’s premise here is that the collected observations and inferences of any one individual are inevitably insufficient for a comprehensive or verifiably accurate account of reality. A body of objective knowledge can only be built and sustained by a society dedicated to that common pursuit within and between generations.

Here we see that pragmatism, unlike Objectivism, is concerned with both liberty in the form of aiding man in the exercise of free will, and with the legitimacy of society as a whole. At the time pragmatism became ascendant, laissez-faire capitalism had reached a turning point. The economic right to freedom of contract had begun to violate the contract of freedom — the social contract.

Historical evidence of the dictatorial power of private parties to govern the lives of the masses during the Gilded Age includes JP Morgan’s centralized economic management as handled through the corporatization & conglomeration of formerly entrepreneurial and individualistic industry. But another key example is the Pullman strike, the national crisis that launched Eugene Debs to fame and first brought serious momentum to the labor and socialism movements in America.

In 1894, Illinois was the lynchpin of the nation’s railroad system, and the workers at the Pullman Palace Car Company all lived in the company town of Pullman. Facing a drop in revenues during a recession, Pullman cut their wages. But he didn’t lower their rent or the cost of goods in Pullman, all of which he obviously controlled. So it was very clear to the laborers that they were getting screwed, bearing the costs of the macroeconomy while those with enough power to better influence that economy simply preserved its benefits for themselves.

As with Morgan, the Pullman dynamic is ironically akin to the excess authority and impossible demands of Rand’s government planners. Not only that, but the strike was eventually broken by the government acting on the side of management, because the disruption of rail service itself threatened the macroeconomy. All of which is starkly opposed to Rand’s fictional government — not to mention her fictional 19th century.

Clearly the huddled masses couldn’t directly engage in fair negotiation with their corporate overlords. If they wanted real opportunities to exercise economic liberty, they would have to work through democratic institutions to petition for a renewal of the social contract.

The moral here is that while Rand’s view of anarcho-capitalism (as expressed by Rearden in 2:4) prizes economic liberty as an inviolate moral ideal, such fidelity produces blind spots — in this case that a social order emerging from the bottom up through privately-negotiated contracts can still produce despotic, top-down governing bodies as a practical reality. In the words of Homer Simpson, “Sure it works in theory, Marge. Communism works in theory.”

Another pragmatist quote, this time by the more well-known American philosopher John Dewey:

The bigger the unit you deal with, the hollower, the more brutal, the more mendacious is the life displayed. So I am against all big organizations as such, … and in favor of the eternal forces of truth … underdogs always, till history comes, after they are long dead, and puts them on the top.

One could find support for Rand’s fears of dystopian statism in this quote about bigness, but one could also read into it a progressive’s suspicions towards dystopian capitalism. After all, both of these anxieties are rooted in the dangers of excessively concentrated power, and they both feel the need to support Davids over Goliaths in response. The schism is over what institutional arrangements best to mitigate this problem. 

First result in a Google Image search for "American Culture"

Pragmatism, of course, prefers whichever arrangement produces real experiential liberty for the most people. Since pragmatism is so, well, pragmatic, it is better suited to deal with the muddy compromises of reality than the theoretically pure forms of either libertarian capitalism or socialist democracy. As we see in the quote up top, in an era of eugenics and scientific racism, the Dewey-taught Randolph Bourne argues for a multi-cultural America with each race and ethnic group sustaining age-old traditions as a bulwark against spiritually empty consumerism. This is not dissimilar to the Deist founding fathers encouraging a religious populace for the sake of social cohesion. As always, the argument is a practical and metaphysically humble one. 

But this adaptability to circumstances leaves pragmatism open to charges of moral relativism, which is not entirely an accident. The thinkers who developed pragmatism came of age during the Civil War and its aftermath, and the lesson they took was that moral absolutism led to immense human suffering. Yet after the meaningless slaughter of World War I, this philosophy fell out of favor to make way for ideologies more proactive about asserting moral values once again. Nonetheless, I believe the pragmatists’ metaphysical agnosticism — which is to say their epistemic skepticism — was immensely valuable. Certainly the dogmatic ideologies that took hold in the 20s and 30s only contributed to greater atrocities, atrocities by design even, in World War II.

So as much as Rand idolizes the period out of which pragmatism grew, she has discarded the lessons learned by those who lived through it. This is self-evident in her fables about Nat Taggart, in which she portrays the era with willful inaccuracy. And to end this quote-heavy essay on a famous one by George Santayana, those who do not learn from history are doomed to repeat it.


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Applied Randology #3: Taxation and Misrepresentation

So before we leave Part One behind, let’s add tax reform to the issues of health care, renewable energy, and the impact of lobbyists on our laws that we’ve touched on during this section of the book.

After all, Dagny spends Chapter Ten unraveling the mystery of how GM (or 20th Century Motors, as its known in the Randverse) went bankrupt, and what she discovers is that new management introduced a socialist pay scheme that basically acts as a morality play about income taxes. And here’s how:

If the Motor Company were a government, then what it did was allow tax rates to be set by simple majority rules democracy. If the hardest workers logged overtime or asked for a raise, the extra money was taxed at over 100% — for every dollar they earned, they had to pay more than a dollar back to management. Their paychecks shrunk the more they worked. The company then took the tax money they collected and gave it to the poorest workers as bonuses, so that the poorest effectively paid negative taxes.

See! What's so hard to understand about this?

The biggest difference between this and the U.S. tax system is not the over-the-top extremity of the rates. It’s that the Randian nightmare scenario is easier to understand than the real tax code.

The real tax code is a giant convoluted mess with an endless list of credits, deductions, and subsidies, some permanent and some scheduled to be for a limited time only. Most people are probably aware of marginal rates — your first $15,000 is taxed at 10%, the next $10,000 is taxed at 15%, etc. But those numbers don’t end up being the actual percentage of your income you pay.

In fact, that percentage can vary a lot within and between those tax brackets. Instead of your effective tax rate starting at zero if you’re poor and moving up in an arc the richer you get, the system ends up working more like a game of chutes and ladders. Thanks to all the intricacies of the tax code, if you move two spaces forward at the pre-tax level, you might find yourself moving three spaces backwards at the after-tax level. Like if you got a raise worth $500 but that put you above the limit for a $1000 tax credit, your taxes rise by more dollars than you get from the raise. The money from the raise was effectively taxed at >100%, just like it was for Rand’s hardest workers.

On the other hand, you might find that after deductions and whatnot your effective tax rate goes down and you’ve moved an extra space forward at the after-tax level. For example, if you move from the 25% bracket to the 35% bracket, every dollar you deduct saves you 35 cents in taxes, whereas the same deduction before only saved you 25 cents on the dollar. With enough deductions, your rate actually goes down when you cross into a new bracket. But the richer you get within your bracket, the more your taxes rise back up.

And if you are extremely poor, your tax credits could easily exceed your taxes owed, such that your effective tax rate is negative, and just like Rand’s poorest workers, for every dollar you make, you get money from the government. According to the Tax Policy Center, in 2010 the government effectively gave the poorest 2% of Americans an average of nearly 40 cents per dollar on their earned income.

Bartlett is one of those moderate Republicans from the '80s who is far too reasonable for today's GOP.

Obviously, these examples are a major oversimplification, and if you want more specific details I recommend reading Bruce Bartlett’s book The Benefit and the Burden. But the key point here is that unlike Rand’s nightmare scenario, in our real-life tax board game the chutes aren’t all at the top, and the ladders aren’t all at the bottom. They’re scattered unpredictably all over the place.

It’s also worth noting that this dynamic is what conservatives are talking about when they say welfare makes people not want to work. For a lot of people at the low end of the board, moving from a negative rate to a positive rate means their newly improved pre-tax income ends up being lower after-tax because of the credits they lose when they stop being so poor. They essentially get a small ladder at the start of the game, but it puts them on a space where they’d need to roll a five or a six to avoid landing on a chute and sliding backwards — any raise would have to be unrealistically large to bring the effective tax on any new money below 100%.

The error in the conservative argument is that it only calls this dynamic economically oppressive when it applies to people in the middle class or higher. According to conservative rhetoric, the poor person facing four chute spaces in a row is just a lazy moocher for taking that first tiny ladder.

If we want to reform our tax system, we could either get rid of the chutes and ladders altogether (the flat-tax conservative solution), or we could arrange them in a more recognizable pattern (the progressive-rate liberal solution). The fiscally responsible compromise would be to get rid of the ladders (close tax loopholes) and keep a few of the chutes (maintain multiple tax brackets instead of moving to a completely flat rate). But getting rid of the ladder loopholes basically means a tax hike for everybody, so no politician in their right mind would ever vote for it outside of an acute crisis.

A completely flat tax would cut rates for the rich and raise rates for the poor.

The only actual tax changes that can make it through the normal political process are the opposite of the fiscally responsible compromise. Getting rid of the chutes is okay, because that’s cutting taxes. Adding ladders is okay, and you can even call that cutting taxes if you design the ladder as a tax credit or a deduction instead of straight spending. But just like what I described above when you try to get rid of all the ladders, even getting rid of one ladder de facto raises taxes on some class of people or other. And the more money would be freed up to reduce the deficit by removing the ladder, the more people are facing that de facto tax hike. So it’s a political no go.

If this dynamic sounds familiar, that’s because it is. It’s another step on that slippery slope towards fiscal crisis that we discussed in Hayek Anxiety and which conservatives always warn about.

But also like in Hayek Anxiety, even though politicians from both parties face these perverse incentives, today’s Republican party takes the perversity to a whole new level by campaigning on the problem (those aforementioned warnings) and governing in a way that makes it worse.

We are through the looking glass here, people.

In fact in the case of tax reform, there is one specific lobbyist who wields dictatorial power over any reform proposal that crosses his desk, which is eerily similar to the villainous Wesley Mouch of the Randverse, the lobbyist-cum-bureaucrat to whom Congress grants dictatorial power over the economy.

This real-life Wesley Mouch is Grover Norquist (that’s him in the picture). He’s the leader of the Americans for Tax Reform interest group. Norquist has successfully taken over the conservative party on this issue by getting nearly all GOP congresspersons to sign a pledge to never raise taxes. The goal is to keep tax revenue low so that if congress wants to balance the budget it has to do it by cutting spending.

But that goal is different from simplifying the code, a.k.a. removing  chutes and ladders from the board. And history has proved that in practice it doesn’t work — even as tax revenues drop, spending just keeps going up. Not only that, new spending is often misleadingly designed as a new tax deduction or credit, a new loophole, that can technically be called a tax cut.

Norquist is fine with adding more of these loopholes because it lowers tax revenue. But these loopholes increase inefficiency in the economy and make the deficit worse — the exact same effects that Wesley Mouch’s socialist policies cause in Atlas Shrugged and which real-life conservatives blame liberal policies for creating. For all Norquist’s success in monopolizing power over tax reform, he has completely failed to reform taxes in an economically responsible way.

If this trend is not reversed, it will eventually cause an economic crisis worse than 2008 and similar to the one that was hinted at when the GOP threatened to limit the debt ceiling last summer. But politically speaking, it is in nobody’s individual interest to address the problem until the crisis happens, because whenever somebody does the right thing on this issue they lose their next election.

BOTTOM LINE: If the line goes higher than the top of the chart, America is truly fucked, like Greece. And literally the only way to bring the line down enough is to raise taxes and/or close loopholes.

So where does that leave us heading into Part Two? Rand’s vision of dystopian socialism does have analogues in the real America, vis a vis bizarre tax rates and potential economic collapse. But the injustice doesn’t fall so neatly along class lines, and the collapse is being brought on by today’s conservatives as much as by liberals, since the conservatives should be the libertarian, fiscally responsible party, but they have abandoned the policies and kept the rhetoric in ways that make the problems far worse.

As referenced earlier this week, Part Two is titled Either/Or, but the options Rand offers are a false choice. You can see this problem of illogic in our politics as well. The object of Applied Randology during the Either/Or chapters will be to reintroduce middle ground where Rand works hard to exclude it. If we succeed, we should be able to tie together all of the issues we’ve talked about so far into a crude vision of a progressive libertarianism that is not, in fact, a contradiction.

See you next week…

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Food for Thought #2: Political (and Actual) Climate Change

Okay we are now three chapters deep in Atlas Shrugged and the plot skeleton has finally developed real meat on its bones, specifically in the bar scene with Jim Taggart and the other villains of the piece. On the surface it’s pretty dry stuff, flat even, but it’s meaty because this is where Rand starts making points that are, at least from today’s perspective, both conservative and liberal.

Right off the bat she illustrates what she learned in Russia about how leftist socioeconomic policy can ruin the competitiveness of the market. The Tea Party approves. But the context of this lesson, strictly speaking, is a cabal of established businessmen who instigate the government’s malfeasance by warping the law to their own desire. Occupy Wall Street approves too! The Randverse, it turns out, is not as partisan as conventional wisdom would have you believe. In fact, despite Rand’s heroic feats of oversimplification, her world is riddled with dilemmas. I’ve embellished the text in two places to accent this:

The bigger and more dramatic of the two updates is the nature of the energy crisis in the book (or, “in the book”). Ayn puts the phrase ‘natural exhaustion of the mines’ in the mouth of the evil Orren Boyle, while the valorous Ellis Wyatt has struck new oil through sheer force of will. So Rand sees the problem as a withering of human ambition and not a genuine environmental limitation or the cause of catastrophic climatic side effects. Granted, she was writing in 1957 and you can’t predict everything about the next half-century.

Up means good, right?

But if the energy crisis (“in the book”) is legitimate, the villains while still villainous are at least reacting to real threats, just poorly, and our two main protagonists, Dagny and Hank, are effectively the champions of 21st century progressive projects like high-speed rail and sustainable development. All this reorients the way Atlas maps onto our real-life politics in ways that are far more interesting than going by the author’s, you know, actual intentions, and as such this new paradigm will become increasingly important as we progress.

The second update I make is the substitution of the word ‘lobbyist’ for Rand’s phrase ‘men in Washington.’  Again, by Rand’s account, the catalyst for state interference here is a syndicate of elite market players who work with influence-peddlers like Wesley Mouch to protect themselves from market forces. The vast majority of Americans today recognize that as a real problem and see lobbyists as the poster boys for it.

Generally speaking, conservatives blame government bloat for our troubles, because bureaucracy is inefficient and creates opportunities for rent-seeking (political science for ‘bribes’). Unfettered business is the natural corollary to their desire to shrink the state. Liberals blame the concentration of power in the corporate class for our troubles, since this class can fetter business to its own ends through lobbying, as a sort of covert class war. The truth is that the distinction is akin to arguing over whether a coin is all heads or all tails.

But the reality of how we ended up this way is more complex than the Randverse can contain. To explain that reality in three paragraphs I’m going to draw heavily from Lawrence Lessig’s new book Republic Lost, which you should buy here for more info. Here it goes:

Over the last three decades, the cost of running a campaign has skyrocketed into a financial arms race. Candidates need either a personal fortune or corporate backing just to compete. The average member of Congress now spends 40-70% of her time raising money, and the more competitive her district is (that is to say, the more a vote actually counts), the more money she’ll need (so the money counts first). She also no doubt won office by championing a couple of high-profile issues that she genuinely cares about, but now she has hundreds of votes to make on a wide variety of issues about which she knows very little. With no time to study obscure technical matters, she needs help to know how to vote and why. That’s where the lobbyists come in.

They aren’t buying results per se. They’re providing congressmen who don’t have enough hours in the day with vital background on all sorts of wonky topics. Is the research in their reports slanted towards the interests they represent? Certainly. But that’s obvious and they naturally work with the congressmen who are already friendly to their interests due to a vague sense of shared values (just like how voters pick their congressmen!). In short, they provide what political scientists call a “legislative subsidy.” If, for example, you agree with this post so far but didn’t have the details to back up your opinion before, I’m providing you with an “argumentative subsidy.” That’s the value lobbyists ostensibly bring to the table, but in the case of governing it creates a vicious circle.

Not that representative.

The laws of the land end up de facto written by various lobbies in various uncoordinated bits and pieces, resulting in ever more technocratic votes that leave Congressmen relying ever more on lobbyists’ help. The tangle of statutes produced gets so convoluted that you need, say, a phalanx of lawyers to understand it. That creates a bias towards big companies, which creates barriers to entry for start-up businesses, stifling competition. In the end the established businesses have done right by their investors but wrong by the market as a whole. The congressmen have done right by their constituents, voting their values on the issues that defined their campaigns and sending pork projects back home to boost the local economy, but they’ve done wrong by the country and our Constitutional institutions as a whole. Everybody hates Congress but likes their Congressman.

Maybe you noticed what this perverse dynamic doesn’t require: explicit pay-offs or quid pro quos. The ways in which lobbyists introduce politicians to major donors definitely skirts that line, but everybody networks, right? Individually, everybody’s doing what you would do too. Considering the social structure of their day-to-day lives and the personal cost/benefit dynamic, everyone’s behavior is in their rational self-interest, and pretty normal. Even if no one is corrupt, everyone’s actions in the aggregate produce a corrupt society. How can that be? Everyone is satisfying their rational self-interest just like Rand wanted, with the end result being the societal decay that she feared. All the powerbrokers are getting what they need but not what they’ve earned, while the true innovators who could address real, impending, potentially apocalyptic issues like energy scarcity and climate change are tarred as controversial figures whose goals are obstructed by a dysfunctional civic culture. Hey wait, that’s the plot of the book!

So in Rand’s favor she gets the broad strokes of today’s problems right, but her personal life philosophy actually enables those problems. Rational self-interest, it turns out, will not suffice as an ethical standard of behavior unless the impact of the individual on his culture is part of what defines that rationality. Anything too selfish is corrosive to the climate, political or otherwise, and exposes ‘self-interest’ as having been defined too narrowly.

Yes, in the recaps I joke that Ayn has a thing for fascism when describing her heroes. But fascism is often described as collusion between big business and big government, and that’s exactly the state of affairs we live in she depicts as villainous. Likewise, if you read Benito Mussolini’s definition of fascism, certain phrases about human values and the failures of egalitarian democracy seem straight out of Rand, even as the statist politics he promotes are the total opposite of her libertarian vision.

Dagny would be so disappointed.

By the same token I think updating Atlas to include modern lobbying and the climate & energy crises is actually true to the spirit of Rand’s work despite her political legacy because of the cognitive dissonance it provokes. Keep in mind that many of those who fund the most powerful lobbies and shower money on politicians preach Rand’s philosophy even as it condemns their behavior (Koch Brothers, I’m looking at you) — a self-contradiction in the very style of James Taggart.

And that makes Atlas Shrugged a self-fulfilling prophecy about a philosophy of self-fulfillment whose adherents are self-contradicting in direct contradiction of their self-styled philosophy causing the philosophy’s prophecy to become self-fulfilling.  Holy Meta!

Next week I’ll be following the Monday Chapter 4 recap with more Food for Thought on Wednesday. If you’re intrigued, please subscribe by e-mail or RSS at the bottom of the page, and if you like, get caught up on the reading.

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