Procedure or Chaos?

If you will forgive a ponderous opening question, I have one: 

What is justice? 

I promise that I won’t get too solemn on you here on a Monday morning. 

One of the sharp bright dividing lines between populists—right and left—and conservatives and traditional liberals is that very question. It comes down to matters of procedure vs. matters of outcome, and how we weight those respectively. The economic case is the simplest to understand. The classical liberal-conservative view emphasizes procedure: If the rules have been followed, if nobody has been deprived unjustly of his property or his ability to work and earn and trade, if property rights and contract and the rule of law all are respected, then the distribution of wealth and income that resorts of this is just, or at least not positively unjust, even when the results are not precisely what we would like. The populist view often emphasizes the role of luck and happenstance in economic life—some people have natural talents, some are born to better-off parents, some people just have bad luck, some people are victimized by callous employers or other economic actors whose deeds may technically satisfy the formal rules of the system but are infused with an underlying malice or inhuman indifference. What matters from their point of view is the justice or injustice of the outcome—if Elon Musk is a wicked man (says the lefty populist), then he does not deserve to be so wealthy, especially when there are more deserving people who have less. Populists will point out that the system is far from perfect; the classical liberal-conservative view is that the justice of the system doesn’t depend on its being perfect, only on its being applied to everyone equally, and those rules of course are subject to revision, but only carefully. 

Populists feel aggrieved by the state of things—the state of their own lives or the state of the republic—and their grievances are central to their understanding of the world. About 89 percent of populism comes down to a conviction, however vaguely stated, that the wrong sort of people are on top, and that the more deserving people are being kept from rising. There’s a lot of “Rich Men North of Richmond” in that. When I ask my right-populist friends (and some who are not my friends) what it is they want to do or what they want the government to do, the answer is almost always some form of: “I want them to act like they care more about the kind of people I care about and give less weight to the priorities and preferences of the sort of people who go to fancy schools, get advanced degrees, run tech companies, swan around Davos, and that sort of thing.” There rarely is any very coherent sense of what would come out of that listening—of what the government might actually do differently—as though the act of listening more to x and less to y were a whole and complete political goal in and of itself. And I suppose it may be: As I have been arguing for a long time (and the argument is hardly original to me) in a society as wealthy and blessed as ours, there is a tendency to switch from fighting over scarce material resources to fighting over status, which is one of the few truly zero-sum games in town, being entirely relative. The idea is that if Mitt Romney had become president, then that would have been a collective victory for the private-equity guys and McKinsey types and the Harvard Business School graduates—and that the status elevation of that group is an issue entirely independent of anything that a President Romney would have wanted to do as a policy initiative. 

In the same way, a Trump victory is savored by Trumpists not because of any serious policy goals—their reliably dishonest protestations notwithstanding—but because a Trump victory is seen as elevating the status of the sort of people who wanted Trump to win. It doesn’t actually do that in any meaningful sense, of course, because, in this case, the status relationship is asymmetrical: There are a lot of prairie populists out there who care a great deal about what Silicon Valley tycoons think about people like them, but the truth is that the Silicon Valley tycoons don’t think much about the prairie populists at all, much less obsess over what those populists might think about the billionaire coastal tech lords. The people in Palo Alto for the most part couldn’t be bothered to take the time to condescend to the Trump voters in Vidor, Texas. 

The feeling among populists—and revolutionaries—is always that the status quo is unjust. And if the outcome is unjust, then the system that produced the outcome must be unjust, too. That is why you see so much contempt for norms, procedures, constitutional checks and balances, and things of that nature among populists. The Trump-aligned populists obviously are the more relevant ones just now, but the Bernie Sanders and Elizabeth Warren followers have just as much contempt for norms and the rule of law when it comes to things like property rights, investment income, corporate governance, etc., and government’s effect on these. 

Another way of saying this is that there is one vision of justice that is substantive and another that is procedural. Conservatives and traditional liberals more or less accept and defend the system and believe that it is just and legitimate even when it produces outcomes that are not to everyone’s liking; indeed, the limited (and most intelligent, I think) view of the welfare state is rooted in that kind of thinking: Property rights and free enterprise are good in and of themselves and produce good results in the form of a more prosperous and materially secure society. But even a good system will sometimes produce outcomes we don’t like, so we will impose very gently on those property rights from time to time and use the force of taxation not for public goods as classically understood but simply to finance private consumption by unlucky or unhappy people who seem to us to be getting a raw deal. The revolutionist and the populist are not satisfied with that: They want to upend the system, partly on pragmatic grounds (the belief that different results require a different system) and partly on grounds of moral offense. 

(Sometimes the offense is aesthetic; the people who hate Walmarts and corporate chain restaurants often sound like Ezra Pound offering fiery condemnation of people who put up billboards: “Some foetid spawn of the pit puts up a 30-foot wooden advertisement of synthetic citronade to defile man’s art in road-making and the natural pulchritude of the vegetation,” etc.) 

We end up talking past each other, and ignorance isn’t bliss. A lot of what goes on in the world of high finance is utterly opaque to people who don’t know that world and don’t speak its language: hedge funds, private equity, flux capacitors. And the fact that people in that world make so much money compared to a hardworking guy who is a shift lead in a factory seems like a scam to a lot of people. (I’ll hear from many who insist that it is.) The more you know about it, the less like a scam it seems, of course. How people actually create value is complicated and requires real knowledge to understand: A plumber is, seen from the most superficial point of view, simply a guy who turns some wrenches and connects pipes and fittings and things like that; but, of course, the value he creates isn’t from his ability to turn a wrench—it’s from knowing which kind of intervention is needed and when and why. A highly paid lawyer or investment manager who spends most of his days talking on the phone and having meetings doesn’t make all that bank because he’s really good at having meetings. 

But try explaining that the underlying system is just even when it produces outcomes that seem unjust, and you’ll get an appreciation for the challenges of ordinary democratic politics. 

The ascendency of Trump and Trumpism is worrisome for many reasons. Some of those are transient—Trump himself, bad as he is, low as his character is, ghastly as his ambitions are, is a temporary presence. He will do his damage and move on. But what he stands for is a crisis in legitimacy, or at least in perceived legitimacy. If the Trumpists do not give a fig about the rule of law, procedure, advice and consent, checks and balances, and all of the rest of it, it is because they believe these to be part of a broader, deeper, more nefarious scam. Some of them reject the system out of hand, as do such right-wing anti-liberals as Adrian Vermeule. Some of them will pledge allegiance to the underlying system in theory—the Constitution, in particular, is treated as sacred, including by many who have no idea what it actually says—even as they argue, and accept Trump’s argument, that all of our procedures and norms, including the Constitution itself, can be set aside when necessity demands.

 An even more common view is that things like the rule of law work only when the right people are manning the posts and are necessarily perverted and put to wicked ends when the other sort of person holds the power. This isn’t exactly new, of course: Modern American conservatism in its familiar form might be said to begin with William F. Buckley Jr.’s God and Man at Yale, an argument against “the superstitions of academic freedom.” Academic freedom, to the Trumpist mind, is good when it protects a friendly professor, and bad when it protects a leftist academic trafficking in destructive or offensive ideas. Like “common-good constitutionalism,” it amounts to a way of saying: “Justice is what happens when we get what we want.” 

One of the lessons that we keep insisting on forgetting—one that we’ll wish we had remembered sooner—is that mobs are fickle and panicky, that the demos is easily stampeded, and that substantive notions of justice can change, overnight, for no obvious reason. They do not develop on the pattern of philosophy but in the way of fashion, social justice à la mode. Insistence upon the legitimacy of procedure is hard-won wisdom that comes from bloody and ugly experience. If the only rule of the game is, “My people win,” then all politics is existential crisis all the time. 

One thing about Trump and Trumpism that it is important to understand is that the assault on procedures, norms, and the constitutional order isn’t some unfortunate price populists have to pay in order to finally get a look at that terrific health care plan Trump has been three weeks away from releasing for nearly a decade. The violence to institutions is the point. Populists believe that the system itself is unjust. In the short term, the point of breaking the rules is to get what you want by the fastest route; in the long term, the point of breaking the rules is that the rules are broken and stay broken. 

It is worth considering here that it is not only individuals and political factions that have revolutionist tendencies. Much of the instability in the world today results from the tension—and mutual misunderstanding—between the generally well-off developed nations that largely accept and support what we have come to call the “rules-based order,” while nations such as Russia, Iran, and China want to overturn that order and replace it with one they think will be more to their liking. The European Union is the most conservative bloc when it comes to the rules-based order, and China is the most significant of the revolutionists. The United States and India, both currently under the sway of right-wing populists, go back and forth, sometimes leaning into the conservative position and sometimes leaning into the more revolutionist position. Trump is, of course, the most significant of the American revolutionists, taking a very dim view of the North American trade association, World Trade Organization, NATO, etc., with a special disdain for “globalists,” who in the Trumpist understanding are more of a cultural enemy than an impediment to mere policy change in Washington. 

I sometimes think of the example of German Chancellor Otto von Bismarck, who brought into being the first truly modern welfare state even though he thought most of its means and ends were either undesirable or impractical. He calculated that he could deflate a potential socialist revolution by implementing a small part of the socialist agenda—just enough to placate the would-be revolutionaries. It didn’t really work—the socialist parties continued to thrive and by 1912 the Social Democratic Party held the largest bloc of seats in the Reichstag. Giving our contemporary populists a little bit of what they want—a tariff here, a little more government interference in corporate governance there—may simply whet their appetite rather than taking the edge off it. I think there are some lines worth defending: property rights, free trade, freedom of contract, an independent judiciary, freedom of the press. 

Words About Words

Judging by his social-media output—which is really the only raw copy we get from the guy—Donald Trump is a borderline illiterate. And that must present some challenges for the people who write his press releases and such for him—a professional or semiprofessional writer trying to write like someone who never has read a book is like a good actor trying to play a bad actor: It’s tricky. 

But, if this isn’t Trump, the writer nailed it:

Commissioner Carr is a warrior for Free Speech,  and has fought against the regulatory Lawfare that has stifled Americans’ Freedoms, and held back our Economy.

If you take those commas seriously, then Commissioner Carr—that‘s FCC Commissioner Brendan Carr, nominated to be chairman of the FCC by Trump—did three things: He was a warrior for free speech, he fought against regulatory lawfare (capital-L Lawfare, of course, Trump’s capitalization alternating between kind of German-ish and kind of random), and he held back our economy. (Capital E.) 

Compound sentences: How do they work? 

Basically, a compound sentence is a sentence made up of two (or more) parts that could have been independent sentences of their own. Those independent clauses are joined by a coordinating conjunction preceded by a comma, e.g.: “He got up in the morning, and he made a pot of coffee.” You could have written that “He got up in the morning and made a pot of coffee,” but there are times when you want the full independent second clause, e.g.: “I filled up the car at the gas station in Matador, because it was the last one until Lubbock.” 

The usual rule is to use a comma before the coordinating conjunction joining the two halves of a compound sentence. But if you don’t have two separate subjects, you don’t need it. And, often, it’s smoother to write the sentence that way, if it’s not too long: “He got up and left” is better than “He got up, and he left,” in most situations. 

Economics for English Majors

A professional investor once said to me: In the short term, markets are driven by fear and greed; in the long term, markets are driven by math. I think that probably gets it about right, and it brings to mind another maxim, one from John Maynard Keynes: “Markets can remain irrational longer than you can remain solvent.” In 1936, Keynes gave economics a very useful term: “animal spirits.” 

Which animals? Everybody has heard about bull markets and bear markets. Why bulls and bears? Sarah Isgur asked last week on a podcast, and the answer, as far as the Oxford English Dictionary can tell me, is: “Nobody knows.” “Bear” as financial con artist has a long history (you can read about them in Daniel Defoe’s The Political History of the Devil, 1726), its origins apparently in a proverb warning against selling a bearskin before you’ve caught the bear. How that got transferred (or whether it actually did get transferred) to those expecting a downturn in prices is unclear. The most likely explanation is that the bears were short-sellers, selling stocks they didn’t own in the expectation that prices would go down before time to make good. 

But the animal most relevant to the animal spirits is, of course, the human animal. And the human animal is not Homo economicus. His passions outweigh his powers of analysis regularly. 

From the Wall Street Journal:

Republicans are feeling a lot perkier about the economy now that Donald Trump is on his way to the White House. Democrats, less so. 

The index of consumer sentiment in Republican households climbed more than 15 points in November, according to data released Friday by the University of Michigan. In Democratic households, the same index fell by more than 10 points. This release is the first that includes surveys conducted after Election Day.

The Republican upswing helped push up the overall sentiment index. It rose to 71.8 from October’s 70.5.

But there’s an interesting wrinkle: 

Still, even with the big swings, sentiment remained higher among Democrats than Republicans. The index hit 81.3 for Democrats, and 69.1 for Republicans. 

While there has been a great deal of social sorting that goes partly along political lines, typically it is that case that an economy that is good for Republicans also is good for Democrats. Unless they’re running for office, of course, in which case the economy is either the worst since the Great Depression (if the other party is in power) or the best it has ever been (if your party is in power). 

Presidents do not typically actually have very much immediate effect on the economy. The U.S. economy is a big, complex beast, and the kinds of policy changes that presidents are able to enact unilaterally, or with the help of a temporary congressional majority, do not typically have urgent immediate effects. And yet we insist on judging presidents by our vague impressions about the state of the economy—impressions that often are, empirically speaking, wrong. 

But there’s no arguing with animal spirits. You may as well try to argue with an actual bull or bear. 

Furthermore … 

Talking too much in an interview podcast is not normally my vice, but, man, I really did it with poor Frank Bruni, who barely got a word in when I was hosting The Remnant. Sorry about that, Frank. I hope I can have him back and let him talk. 

And if he were talking, the former New York Times man in Rome certainly would have identified Julius Caesar as having been involved in the Gallic Wars, about which he wrote a famous book, rather than the Punic Wars, which is what I said, meaning the other ones. The Punic Wars concluded several decades before Caesar was born. The great Roman general of that campaign was Scipio, whose exploits won him the agnomen “Africanus.”

Talk a lot, and you’ll make mistakes. But the mistake is only the minor reason I wish I had talked a bit less. 

I suppose that writing so much about Trump has put Hannibal on my mind—yeah, that’ll be my excuse. 

What? Wrong Hannibal? Dang it. 

And Furtherermore

Do read Jessica Gavora on the “revenge of the Title IX dads.”

And Even More Furthermore

“What do we want?”

“To drain the swamp!”

“Who’s going to drain it?”

“Lobbyists and hedge-fund guys!”

Elsewhere . . . 

You can buy my most recent book, Big White Ghetto, here. 

You can buy my other books here. 

You can see my New York Post columns here. 

Please subscribe to The Dispatch if you haven’t. 

You can check out “How the World Works,” a series of interviews on work I’m doing for the Competitive Enterprise Institute, here. 

RIP Fred Smith

Fred L. Smith was one of the paradigmatic happy warriors. An economist and mathematician, he worked in business, in journalism, and in think tanks, founding the Competitive Enterprise Institute (where I am a writer in residence) in 1984. He worked in many specific areas—climate, regulatory reform, free-market environmentalism—but his great theme was the defense and celebration of capitalism. 

A dozen years ago, he wrote:

Joseph Schumpeter argued that the very success of capitalism would plant the seeds of its own destruction. Capitalism liberates the ‘creative destruction’ of entrepreneurial change. The resulting wealth frees most people from subsistence levels, creating a middle class. Most enjoy the better life but some become agents of change: the ‘doers’ – the entrepreneurs – and the ‘thinkers’ – the intellectuals. 

Entrepreneurs are the drivers of economic and technological growth. They are the heroes of our society – from Eli Whitney to Bill Gates – who thrive by making our lives easier and more productive. 

Intellectuals develop the societal narratives that seek to explain changes in society. Their storyline: change is disruptive. As witnessed during the Industrial Revolution, the vast changes that swept through Europe and America ignited resentments. Most intellectuals disparaged capitalism for its disruptive nature, neglecting to take note of the value added by its immense wealth-creating capacity. 

Capitalism, the intellectuals argued, may address man’s material needs, but fails to advance higher order needs – community, environmental protection, equality and justice. Economics Nobel Laureate Friedrich A. Hayek aptly described the fatal conceit as intellectuals’ belief that they can direct social change for the benefit of mankind (Hayek, 1988). These intellectual critics of capitalism argued that the gains were concentrated too heavily, that the benefits diffused too slowly, that not all benefited equally and capitalism must be modified to better address poverty, inequality, pollution, illiteracy, public health and other societal problems. 

Intellectuals craft the narratives, stories and metaphors framing and shaping what become the popular views of societal change. 

As the anti-capitalist narratives gain in popularity, the view of capitalism as an immoral means of creating wealth and knowledge becomes ever more entrenched. As those ideas influence public policy, freedom declines and statism rises. 

…

Yet rather than fight for economic freedom, many in the business community have responded to this growing threat by seeking to use government to their own advantage. The corrupting influence of political regulation on business has led to a system of crony capitalism in which vested economic interests protect their positions by undermining competition through the wielding of political power. To that end, they forge powerful alliances with other forces with a stake in the status quo – from the politicians on whose favour the crony capitalists depend to the fashionable-cause activist groups and establishment media whose approval the bien pensant so crave. 

Today, we see the end result in a statist status quo – known as ‘managed capitalism’, ‘capitalism with a human face’, the ‘third way’ and other nebulous monikers – in which established political and economic interests stand athwart the Schumpeterian process of creative destruction yelling ‘stop’ and have the force to back up their admonition.

Kent Lassman, the president of CEI, sent out an email announcing Smith’s death, and advised: “I encourage you to do at least one wild, unexpected, joyful thing to celebrate his legacy.” I second the recommendation. 

In Conclusion 

I’ll defend many aspects of good old-fashioned American corporate consumerism on both economic grounds and aesthetic grounds. I don’t want to hear about your cute little bed-and-breakfast—give me a Hyatt Regency anywhere there is one and nine times out of 10, I’ll prefer it on a dollar-to-dollar basis to whatever eccentric independent establishment with dumb art on the walls you can find. I like Whole Foods, Apple, and American Express. But I live in a small town surrounded by farms, and we go to the local farmers’ market on the weekends, and we secured a very nice-looking turkey for Thanksgiving from a local farmer who is connected to our church. I like that, and I get why other people like it. 

But do you know who goes to the farmers’ market to buy expensive eggs and local turkeys and such on Saturday mornings? Rich people, basically, though I define rich pretty broadly (and you should, too). Journalists and college professors and local business owners checking out the local farmers’ produce—it is great, it is lovely, it is all-American, but … it also makes me think a little of Marie Antoinette, who built a whole phony rural village so that she could play shepherdess when she tired of life at court. Country life has many attractions, and it has a heck of a lot more if you have a fair bit of disposable income and can be in New York or Washington or Austin in about two hours. 

I’ll let you know how that hometown turkey turns out.