Monday, April 5, 2010

Government or not? A review of Intellectuals and Society by Thomas Sowell

This recently published book (2010) makes a very thorough case against government action of most any kind, with the exception of war. I spent over an hour looking through Sowell's latest book at Borders. The blurb inside the jacket caught my attention because it mentioned how intellectuals influence our democratic process by shaping the thinking of the electorate, rather than directly persuading elected officials. I saw this as a significant insight into how our system works. I extend the theory to any media person with a large audience, the impact of their ideas is greatly amplified. Rush Limbaugh could be an example. A good communicator with a big audience has diproportionately expanded political speech, similar to the expansion of speech rights for corporations under the new Supreme Court ruling. I would argue that the media figure actually has greater power than the corporation. Remember the clashes between GOP chairman Michael Steele and Rush Limbaugh over which of them speaks for the Republican Party?

We have all understood how big business and lobbyists are dominating our political debate and many of us see this as very bad for our nation. But I haven't heard much discussion about the great influence of the very small minority of opinion shapers. So I was disappointed to see that Sowell turned from what could have been a full analysis of this phenomenon and instead chose to pursue a one-sided attack on government. That said, he makes some very good points that should give pause to anyone attempting to govern. There is no question that history is full of examples of unintended consequences, government actions that backfire and make the situation worse, and "public intellectuals" being proven totally wrong by unfolding events. Sowell lists these out with relish. It is a truth that we cannot generally see weaknesses in our own beliefs. People with different convictions are only too happy to point these out, and we can learn from them. Sowell is not immune to this, he sees none of the failings of his own hands-off dogma. I will point these out and show that his overall conclusions are incorrect even though much of what he says is true.

One of the main arguments of "Intellectuals and Society" is that there is far more intelligence distributed among the many actors in the market than can be contained in a small group of experts. This makes sense in a certain way, and is really just a restatement of the Adam Smith's invisible hand. Yet we have an example right before us in recent history where the invisible hand guided market players to make extremely risky loans against no collateral. I have heard Wall Street experts describe how in this climate even prudent managers were basically forced to participate because if they didn't they would be outperformed in the short term by those who did, due to the bubble economics at play. In fact, any bet against the bubble would be impossible to collect, since if you were right then the counterparty to the bet was bankrupt. So experts may frequently be wrong, but the market can also be "wrong", or at least lead us somewhere we don't want to go.

When experts attempt to tinker with complex systems they can easily cause big problems, sometimes bigger than the problem they're trying to solve. Sowell uses this to argue against intervening in the system. Taken to the extreme, this means essentially no government. But what is government other than a very greatly expanded version of a group of people combining forces for greater efficiency? If a neighborhood gets together and decides to take care of their own garbage service to save money, this takes some organization, a group decision, and a willingness to abide by that decision. We accept leadership and top-down decisions in the corporate structure (and all of us who have worked in this environment know how disconnected from day-to-day reality these can sometimes be). Yet corporations can have great success being guided by an elite at the top. Believe me, I'm very much in favor of keeping things simple and keeping an organization lean and small. But does that mean that you should forgo any consolidation of forces to protect individual freedom? This is the trade-off. If you never want someone to tell you what to do, then you are reduced to a lone-wolf status, with no benefit from others resources or know-how. I am arguing that good government may sometimes tell you what to do, but you are getting a great benefit from its efficiencies and combined resources. (I know the idea of efficiencies and government in the same sentence seems ridiculous, but bear in mind that we have a huge country here and so obviously there is a fair degree of waste in this process when you consider the many levels of government involved).

I would grant that our government is too big and too centralized, so we can easily find problems with it. I would be happier with a much more local level of organization. However, this is what we've got, I don't think that means that it is useless. I don't think it means that we would be better off with nothing.

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