Ipse dixits, and other stories

Adam Gopnik, a regular contributor to the New Yorker, posted a defense of President Obama’s “You didn’t build that” speech and sentiment to that magazine’s blog. It was brought to my attention by a reader and correspondent who frequently provides grist for my mill. After reading it, I opined that it was rather shallow. Challenged to justify that sentiment, I offer the following:

Barack, Mitt, and Adam Smith — Posted by Adam Gopnik
 link to the post here

“From the meaning of what “is” is to the meaning of “that”—American political discourse can sometimes move in depressing monotony around its little circles. Where former President Clinton’s defense of his famous sentence on his deposition turned on the problem of the past tense, President Obama’s so-called “un-American” words depend on his using “that” as a kind of pronoun, with the question being the antecedent to which this “that” referred, if that, uh, makes any sense. Anyway, his precise words are worth reviewing:
‘Look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something—there are a whole bunch of hardworking people out there. If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.’

“What President Obama was saying was perfectly clear: the “that” in his statement refers to the bridges and roads and “this unbelievable American system.” He wasn’t, despite what one may have heard from Mitt Romney, saying that you didn’t build your own business. He was saying that your neighbors and ancestors helped. We drive on roads built for each by all.”

Well, it is hardly perfectly clear. Rules of grammatical construction at best make it clear that he was referring to “business” not anything else. The ‘nearest referent’ rule would dictate ‘that’ refers to business, which is the nearest and, in the absence of inflection of speech, the antecedent of ‘that’ as used here. I watched the video to see if the tone of voice or inflection would show otherwise. It doesn’t. Moreover, the sentiment expressed is consistent with the contemporary left-wing – ‘progressive’ if you must – agenda.

What is strange about this bizarre adventure in amplified untruth, apart from its simple mendacity, is that what the President was saying was not some late arriving, New Deal-style codicil to the theory of free markets; it’s what the theory of free markets is. It’s the premise at the very heart of all free-market theory as Adam Smith—the guy whose profile is on every libertarian tie—conceived it. As I had occasion to write in a long piece on Smith’s thought a year or so ago, the notion of Adam Smith as an apostle of laissez-faire who would have recoiled in horror, or even narrowed his eyes in suspicion, at the idea that a healthy state precedes and oversees a truly free market is not merely a caricature of his actual thought—it is in many ways the direct reverse of what he said and argued for length and with great lucidity.”

What’s really bizarre is this guy’s wordiness. Is he getting paid by the word, a la Charles Dickens? A more terse sentence might be “Not only is this a lie; it is not a recent, leftist idea, but is really what Adam Smith meant.” There: 20, rather than 67, words in a concise sentence that doesn’t have to be parsed. But, hey, left-wingers love euphemisms, and long, verbose sentences are the most euphemistic of all. As for lucidity, Smith’s work was exceptionally methodical, but many, many parts of it would be a great substitute for Ambien.

As for substance, Smith ever used the term “laissez-faire” and like many such appellations, one can put whatever spin they want on it to make their point. The meaning our leftists put on it is that akin to Russian (or Sicilian, for that matter) business practices, which are decidedly not capitalism – or any free-market species. Furthermore, to say that modern libertarian-leaning economic thinkers regard Adam Smith’s work as some kind of Holy Writ is far from the truth and patently ridiculous. Smith was the one of the first economists to describe the free-market, but his ideas have been built upon and refined over the years. F. A. Hayek and Milton Friedman are two of the more recent purveyors of the free-market.

“Smith’s work comes in two volumes, his ‘Theory of Moral Sentiments’ and his ‘Wealth of Nations.’ In both, his primary concern is not to free mankind from the hold of government but to free the market from the undue influence of a handful of hereditary plutocrats (nothing personal, Mitt) who seek to escape the rules of the market, control their own costs, and set their own prices, contributing only as much to the public weal as they feel like. It’s a radical, not a conservative doctrine (which is why Dr. Johnson distrusted him so much). Smith was for a government that intervened regularly and actively on behalf of consumers and against the natural tendency of ‘producers’—i.e., very wealthy people, whether aristocratic landowners or manufacturers or, perhaps, financial-leverage experts—to band together for their own benefit. The laissez-faire economy, truly ‘left alone,’ becomes a conspiracy of producers against consumers, of sellers against buyers, and makes the submissive state hostage to special interests. As Smith wrote, ‘The interest of the dealers’—i.e., manufactures and merchants—‘in any particular branch of trade or manufacture, is always in some respects different from, and even opposite to, that of the public.’”

Just mentioning his cheap shot in its proper characterization is comment enough. Aside from that, this paragraph is utter nonsense. For one thing the “hereditary plutocrats” (another term Smith never used) in the 18th Century were the landed aristocrats – the nobility – who had a legal status superior to all but the monarch. Their wealth was legally protected from divestment. More importantly; they were the government, that is, the state (although in France, Louis XIV made it clear that he was the state. Another thing, doesn’t this guy understand that the government in the 18th Century almost everywhere except in the former British North American colonies was the aristocracy. His out of context quote from the Wealth of Nations distorts the point Smith was making. The way that a “the laissez-faire economy, truly ‘left alone,’ becomes a conspiracy . . .” is when state power is a used to foster the special interests. The passage in which Smith’s quote was contained was an argument against ill-considered regulation of commerce. Smith recognized that those of a particular interest would have a better knowledge of that interest and would seek to regulate so as to restrict their competition. Nowadays, it’s called regulatory capture. Who squawked the loudest when the airlines were deregulated? The airlines (except for Southwest). Obamacare is capture of the government by the insurance industry – anyone surprised by that wasn’t paying attention.

“Smith, as I wrote, does not think that ‘government is the problem’; he thinks problems arise when the rich are able to make the government take their side. A healthy sovereign state is what serves the public against the producers. (He was all for high wages, by the way, on the now old-fashioned grounds that the actual wealth of a society can be discerned not by how much its top class has—you can find rich topsters in Ur or ancient Egypt—but by the dissemination of wealth to the many. ‘The high price of labor,’ he wrote, ‘is the essence of public opulence.’)”

More gibberish. I suppose a “healthy sovereign state” could exist if we could find Plato’s Philosopher King. The closest humans have ever come might have been George Washington, or possibly Lucius Quinctius Cincinnatus, but they both gave up their power before being corrupted by it. What is the “public”? The producers are essential to any society. Without the producers there are no consumers because there is nothing to consume. Consumers must be producers, too. Otherwise, except for the small number of outliers who are mentally or physically impaired, they are either looters or moochers. He is correct that Smith was in favor of high wages – commensurate with the value they purchase, that is. Henry Ford understood that 100 years ago, and so have many other entrepreneurs. The United States has been generally freer in economic terms than any other country, and it is exceptionally wealthy across the board. It is true that there are only a small number of fabulously wealthy – but no one starves in this country – a country where even poor people are fat. For all practical purposes, there is greater economic equality here than ever before.

It isn’t just that a free market can survive regulation; it’s that the free market is the product of regulation, regulation designed to protect the public from the kind of arrangement that, let’s say, allows people with undue influence on the government to have a lower tax rate than people who don’t. This makes Smith, as I wrote, a firm believer in public goods: his state has an obligation to build roads and schools, establish an army, build bridges and highways, and do all the other things necessary for a sane polity in which the market can function naturally. Everyone should pay for them, and the rich should always pay more than others. “The rich should contribute to the public expense not only in proportion to their revenue,” Smith writes, “but something more than in that proportion.” (He also thought, Mitt, that taxes should be paid with joy, as a contribution to the well-being of all.)

This “paid with joy” is rather ridiculous. Can you imagine looking forward to April 15 with the same anticipation as Christmas? I’m sure there are those who are totally indifferent to having to pay taxes because it is hardly a flea bite to them, and anyway, they have paid accountants to figure and pay without any bother. But joy? Come on. The “regulation” that facilitates a free market is the rule of law that prevents one taking another’s property by physical force and enforcing contracts freely made. Gangsters, whether they are termed “robber barons” or mafiosi, can only succeed where they can get a way with forcing a “your money or your life” deal, or employ theft by stealth or lying and cheating. That is what government is designed to protect.

“And this—that—all goes deeper than questions of efficiency, to questions of what we can only call the common emotional tone that lets prosperity happen. As Emma Rothschild writes in “Economic Sentiments,” her matchless 2001 study of Smith’s thought, it depends on what might be called niceness: Smith’s “faith … is in the mildness and thoughtfulness of most individual men and women. He is induced thereby to believe that they will usually not pursue their interests in grossly oppressive ways, and that they will usually wish to live in a society in which other people are not grossly oppressed or deprived.” Even if more money can be made by the producer by enclosing the land the peasant’s animals grazed on or by hiring child labor—or by looting someone’s pension funds—a decent concern for the opinions of mankind will stop the wise producer from doing these things, because he will know that they will break the bonds of common sympathy, the sense that we’re all in this together, on which the producer’s—or the equity manager’s—well-being ultimately depends.”

Haven’t read Ms. Rothschild’s work, so I cannot comment on it, except to say Gopnik’s gushing indicates it is probably of like mind. He citation of it is an exercise in confirmation bias. This appeal ad misericordiam with examples of the enclosure of the “land the peasant’s animals grazed on” and employment of “child labor” are also non sequiturs. As is the “looting of pension funds” attempt at updating. Enclosing land used by peasants to keep them from grazing animals might have been an act of feudal barons protected by the king’s henchmen, i.e., the government and for really practical reasons, probably did not often occur. Interestingly, we had a reverse situation in our history. Parts of the Western United States in the late 19th Century, saw e had range wars between cattlemen who opposed the fencing of land by farmers – “homesteaders” who had obtained the land by purchase from the federal government under the Homestead Act. The United States had in turn purchased the land from France, or obtained it by the treaty that ended the Mexican-American War. (These conflicts were the background of many western movies including the classics Shane and The Man Who Shot Liberty Valence.) The cattle interests sought to prevent enclosure of the farmers’ private property by fence-cutting and even worse violence. In a number of cases, the U.S. Army took the side of the cattle barons. These conflicts were mostly settled by admission of new states whose legal systems recognized and enforced private property rights, including the right to fence in your land. The prospect of child labor tugs at heartstrings as a result of the images of Dickensian sweat-shops. Certainly states should prohibit the employment of children in some industries and occupations. But what about family farms, or other family businesses? The family farm really has gone the way of the horse and buggy as an economically significant institution, but they still exist. Many family businesses, mostly those of immigrants, have created considerable wealth from the efforts of all family members. As for looting of pension funds, no one should have any problem of vigorous prosecution of thieves and swindlers, a basic function of government. Unfortunately, we are never going to be able to prevent such crimes before the fact by draconian and idiotic regulations any more than were are going to similarly stop street crime. The ingenuity and inventive capacity of humans will always find outliers who can trick the system and get away with it, at least for awhile. The “decent concern for the opinions of mankind” will indeed restrain producers most from doing wrong, but not because of common bonds, but because producers want to sell their products. Rational people will not buy shoddy and overpriced goods. The fact that a good number of persons do not always act rationally cannot be helped. I say “always” because most eventually get the picture.

“It’s always easy, Smith knew, to provoke a cycle of exploitation, rage, and revolution; that’s what most of history has been. What’s hard is to replace it with one of “mildness”—of public decency, progressive reform, and shared prosperity. You couldn’t have a free market unless you had all the institutions of trust in place that only a sovereign state can guarantee. (If you want to know what capitalism looks like without those institutions, think of words like “Russia,” “oligarchs,” and “kleptocracy.”) Everything we mean by a free market depends on a functioning, sympathetic state—a state rooted not in selfish individualism but in a social sympathy so broadly articulated and institutionalized that every man is confident that he can make an honest deal with his fellow man.”
Again, this guy must be paid by the word. Instead of his verbose final sentence of the above paragraph, how about “For a free market to exist, we must have a government that will restrain and punish lying, cheating, stealing in the marketplace, and itself be restrained from doing the same.”

I understand why left-wing ideology eschews individualism . I don’t understand why anyone, especially an American who is steeped in the Nation’s history (it’s probably too much to ask for in this days and age for most to know any history) would be so dismissive of the concept. Collectivism has brought us tribalism, racism, feudalism, socialism (National and otherwise), communism, and other odious isms. Individualism brought us the Renaissance and Enlightenment; Newton and Einstein; Bacon and Benjamin Franklin; and, yes, Adam Smith.

I recall the words (which I actually, in-person, heard) of liberal Democrat Senator, former Vice-president, and one-time Presidential hopeful Hubert Humphrey where he said that “The more the government can do for you; the more it can do to you.” Or, said another way, The government that can give you all you want, can take from you all you have.

There is no capitalism where oligarchs and kleptocrats reign. That is gangster government, the antithesis of capitalism. It is hardly free, and it is oppressive in the extreme. Mao Tse-tung was correct when he said that all political power, that is, government, comes from the barrel of a gun. In our system, there are many niceties between a transgression and the gun, but the gun is ultimately there. The Russian mafia simply dispenses with what they might term the intermediary nonsense. Actually, Vladimir Putin is more frequently using regulatory schemes as a subterfuge to oppose those who might threaten his power. Who would have thought that the EPA and OSHA could be role models for the Russians?

“So the view that the President was articulating the other day in the “that” speech wasn’t even a mild and “acceptable” form of social democratic reproach; it was the root foundational view of the free market as its greatest apostle imagined it. So don’t apologize, Mr. President, and don’t explain. Say it again! What you were articulating were the principles on which the free market, and with it this republic, is built. And that … is … that.”
Utter nonsense, and a blatant ipse dixit. Or, in English, “this is what Smith meant because I say it is what he meant” – sometimes these foreign phrases actually save words. I previously read the entire official White House transcript to be certain the “you didn’t build that” quote was not taken out of context. It wasn’t. And it wasn’t an articulation of free market principles. It is a consistent articulation of leftist ideology along with “spread the wealth” – hey, he warned us ahead of time. Reminds me of another politician. Oh, I can hear the howls already for that observation.

The free market has actually existed from prehistoric, primitive times, on some level, everyplace. It even existed in Soviet Russia, Mao’s China, and Castro’s Cuba, albeit only at the village or neighborhood level. If it were to have got beyond that, it would have been squelched, or at least taken over by the state – and ruined. A free market has always needed a mechanism to keep the murderers, looters, moochers, liars, cheaters, and thieves at bay. That is what the Enlightenment writers like Locke, Hobbes, and Jefferson articulated so well. Some organized societies have been better at that function than others. Because the ultimate arbiter of social and economic mores here on Earth is Mao’s gun, it. It must be used only in response to its first use, and must be in the hands of everybody.

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