On Tue, Mar 11, 2008 at 3:12 AM, David B. Shemano <[EMAIL PROTECTED]> wrote:
> I still think you are evading the PC critique -- if we are going to have a > democracy, what rules should be instituted to minimize the problems inherent > in > democracy, problems which you are apparently willing to accept as real? > Saying > democracy, as a whole, is better than plutocracy, as a whole, does > not mean you > can avoid discussing details of that democracy. > > >> One way of summarizing this point is to say that John Locke, James > >> Buchanan, and the like see (god given?) property rights as trumping > >> citizen's rights. I would agree with Jean-Jacques Rousseau that it > >> should go the other way, with citizenship rights trumping property > >> rights (or allowing them, depending on the democratic will). Of > >> course, I disagree with Rousseau on a lot of other things. > > Personally, I do not make natural law arguments. I view property rights as > instrumental to more fundamental core beliefs (freedom, happiness, > prosperity). What, exactly, are the problems of democracy you're talking about? There seems to me to be nothing new to your critique except that it has had to be articulated in a cultural environment of the post-war consensus. What you mean by "freedom, happiness, prosperity" is objectively clear in this regard: it isn't the property of homeowners, but the property of capital owners that you see as fundamental here. In this case, none of the problems were really created by the recent deregulation of the finance industry. What we are really seeing, in your opinion, is the final results of the post-war institutions that expanded the class of people able to own their own "property." That is where the rot can be found: the housing bubble isn't because of more recent changes to how this operates, but in something that happened fifty years ago and, "If we make the collective decision, through our government, to require bankers to make loans to people who are going to default at higher rates, that is fine, but let's be clear in understanding the consequences." So, just to recap, property is instrumental to more fundamental core beliefs such as "freedom, happiness, prosperity," but the way we should understand how this property works is very specific. The connection between these values is sometimes hard for the average person to see, and easily obfuscated by demagogic politicians. Saying that it should be possible for everyone to own their own home--to have some "property" of their own--would *seem* to guarantee "freedom, happiness, prosperity" for more people, i.e. it would be apparently more "democratic." But this has an inherent problem: it violates the iron laws of the capitalist market--which exists as a natural phenomenon and can accurately depict something called "creditworthiness" to those who are capable enough to read its signals. This, again, is a very specialized ability and virtually impossible for the average person to undertake; but be assured, while value itself may be subjective, creditworthiness is objective--so much so that it was not and cannot be seen as ever having been corrupted even by the structural policy of racial segregation and its legacy: the latter possibility could be considered as a thought experiment, but since, in general, we start with the understanding that the market (in this case for credit) is objectively perceivable; that the owners of the specific property in question (in this case money, capital, whatever you want to call it) and the bankers they entrust to manage it would only *normally* part with that property when the objective signs of creditworthiness can be read; and that they would *only,* as rational, self-interested calculating individuals, base their decision on these objective signs of creditworthiness, we can, from the outset, disregard the possibility that legalized, structural, institutional racism would have played any role in the availability of credit to minorities. Instead, we should look at the more objective fact that minorities just happen to be, in general, less credit worthy (for whatever reason) and thus were part of a group of people who--for whatever reason (probably laziness or criminality)--normally would fall below that line and thus, "the discrimination was evident the bankers were doing what they were supposed to be doing -- making creditworthy loans." On the face of it, this may be completely true--the facts may be "irrefutable" and we therefore may be able to "start with certain core beliefs, which seem self-evident" (i.e. that racism doesn't exist; that the owners of capital have a special, objective understanding of the conditions under which they should part with their capital) and "then look for theoretical arguments why [those] beliefs are correct." One doesn't have to do much other than find the statistics on the creditworthiness of blacks and whites before and after bankers were required "to make loans to people who are going to default at higher rates" to prove the self evident fact that minorities were, empirically, less credit worthy as a group (one could say "class" but that would be a slippery slope). Why they were less creditworthy, what role structural, institutional racism played, and so on is bracketed as a sort of uninteresting question left to historians and people with an axe to grind: they aren't asking the *right* questions nor are they looking at the evidence that is clearly in front of their face: "there was absolutely no difference in the default rates between white and black borrowers." That the number of black borrowers was dwarfed by the number of white borrowers or that the percentage of black borrowers among the entire black population was small is of far less importance to the overall argument of capital's superior power of judgment. As is the question of how many blacks *might* have been "credit worthy" at the time but were still denied loans. That is, as it were, all water under the bridge, only to be dredged up by demagogues. The main point to take away here is not really about race--again, entertaining this at all was just an appeal to a special interest of the interlocutors--it is about property "as instrumental to more fundamental core beliefs (freedom, happiness, prosperity)." And, to return to this point, the way we should understand the current crisis is that, again, through the democratic process, we instituted, sixty years ago, a set of policies that, though they might *appear* to have expanded the realm of freedom for more people (based, at the time, on something like Karl Polanyi's argument that, as a society, we could "afford to be free"), in actuality we undermined it. Keep in mind, also, that the more specific point is that we should not see the more recent *undemocratic* (i.e not based on appeals to democracy, except as an externality) reforms of banking laws--so-called "deregulation"--as the cause of the housing bubble. Despite the vigilance with which interested parties pursued those reforms, the depth of the changes made, and the hyperbolic discourse around them, they are merely epiphenomenal. The real issue is that, "when you subsidize something, strange things eventually happen." But by this we don't mean to consider subsidizing of single home ownership alongside other kinds of subsidies such as those of the auto industry, commercial, chemical agriculture, and military contracts (mostly to states in the "sun-belt" states with freedom-enhancing "right to work" laws): we don't mean to discuss this in terms of the sprawling, unsustainable lifestyle that was the bread and butter of post-war capitalism (right up to today): we could, again, entertain that argument, but it would need to be kept within the reasonable, but very narrow, confines of critiquing the corrupting influence of the welfare state rather than industrial capitalism itself. It should also be obvious that we also don't mean the effective subsidy given to the banking industry by reversing the regulating mechanisms of the past. What we really mean to point out is the specific way that this subsidy in particular undermined "property" as a concept. By this, we may not mean "Natural Law" in its specific articulation, but, if we're being honest, the impulse is the same. After all, when Locke spoke of "natural law" in property, he justified it in terms of labor (Richard Epstein's contentions to the contrary aside). And, like property today, labor then meant something very specific: it meant the labor (and hence the property) of a certain group of people. It wasn't *all* labor that was important (just as it isn't *all* property that guarantees those fundamental core beliefs). That kind of talk is really what got us into this mess, right? That is one of the key "problems inherent in democracy." If labor in general justified the ownership of property, that might ruin the very system that was just then making property profitable, namely the employment of "free" laborers by tenet farmers who rented from large landowners. Therefore it was not labor in general, but the "improving" labor of the landlord and tenet--the labor focused on profitable exploitation of all the resources at hand, of seeing the objective circumstances of profitablity. These circumstances, it so happens, led to a calculation of profitability that included the people who actually worked on the land as an input of production--again, the structural existence of which is mostly only interesting to historians, and mostly just radical Marxist ones. Natural law, therefore, determined that it was natural for the people who owned the property to continue owning the property. The violation of the natural law would thereafter be any attempt to undermine the ownership of this group because they, after all, are responsible for all the improvement (aka profit) that, while it is objectively good for them, is also good for everyone because it produces more (again, leaving aside the question of distribution, etc.). And *only* these owners are capable of determining just what those conditions of profitability are, again, through the objective process of the market. The "natural law" which gave these people ownership of the property, like the "fundamental core belief" in property today, is guided by the understanding that a line must be drawn: only a certain kind of property is productive of freedom. And what we should understand is quite simply stated in Von Mises' book _Liberalism_: "in a capitalist society, the deployment of the means of production is always in the hands of those best fitted for it." (p. 67) Likewise, those who have that property are the best judges of how to undertake its profitable employment. The bursting housing bubble we see now is not, as it would seem, the result of the more recent deregulation which gave virtually free reign to those capital owners to do as they would with it. That would undermine "certain core beliefs, which seem self-evident." No, if we are going to target one moment where we went awry, it would have to be when those capital owners--in this case mortgage lenders--were forced "to make loans to people who are going to default at higher rates." Though this was done, ostensibly, through a democratic process, to make more people able to own property, we should learn a very important lesson from it: democracy has a dangerous undercurrent and, as Hayek says in _The Road to Serfdom_, "If democracy resolves on a task which necessarily involves the use of power which cannot be guided by fixed rules, it must become arbitrary power" (79). "Arbitrary power" is, for Hayek, the opposite of "the Rule of Law." For Hayek, under the "Rule of law," "Government confines itself to fixing rules determining the conditions under which the available resources may be used, leaving individuals [such as bankers] to the decision for what ends they are to be used. [Arbitrary government] directs the use of the means of production to particular ends" (81). In this case, the particular ends were to expand the number of citizens who could own homes, but it also created a distortion in the "natural" (but not "natural law" mind you) functioning of the market for credit, aka the ability for the owners of property (i.e. capital, credit, money) to part with their property on their own terms. Though this created an enormous boom in the economy, has helped catapult the growth of US consumer capitalism on a world scale, and was largely the product of a cooperation between government and capital at the time (and though, again, there has been a more recent dismantling of most of these institutions at the ground level, making private capital much more powerful than the government subsidies alongside a general destruction of the ground on which both were based: the promise of perpetual employment), it is the real root of our problem today. This is not to say that it is a "natural law" per se, but if we value those post-war promises of "Freedom, happiness, prosperity," those fascist canards of the Roosevelt era, then we would do well to not repeat the dangerous proscriptions it made on the owners of capital (e.g. bankers), nor, in general, on the "freedom, happiness, [or] prosperity" of the people who are in the best position to understand how to bring these things about--even if it might *seem* to provide a short term benefit in the interest of so-called democracy (hence Hayek's insistence on the "amorality" of Keynes' "in the long run we're all dead.") This is not to say that there shouldn't be democracy, just that, as George W. Bush said in another context, "there ought to be limits to freedom." Or, in the words of David B. Shemano, "if we are going to have a democracy, what rules should be instituted to minimize the problems inherent in democracy?" It's just a simple question: why can't people on this list just answer it? Oh well, if you are ever interested in a serious attempt to do so, with no *explicit* (unlike the unrepentant Leftists on this list, with their class oriented) agenda and no *explicit* attempt to outline it in terms of Natural Law, Public Choice, aka GMUonomics, is the way to go. s _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
