Did the Right Throw Hayek Under the Bus?

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Trump Maladministration

Friedrich Hayek was, of course, the author of the book The Road to Serfdom,  first published in 1944, which was enormously influential in the last half of the 20th century. Hayek’s basic arguments would become a cornerstone of movement conservatism and libertarianism.

For those who don’t remember: Hayek was certain that the ultimate evil that would destroy democracy and individual liberty is central planning of the economy. Free markets equal free people. The key to maintaining individual liberty is to support the free exercise of capitalism and markets. Conversely, it was self-evident to conservatives that capitalism and tyranny cannot co-exist, and that if (for example) Communist countries would become more capitalist, individual liberty for their citizens would follow closely behind.

These days, of course, a lot of serious thinkers are asking if capitalism and democracy can co-exist, but let’s put that aside for now.  Eric Levitz at New York magazine points out that Trump is assuming the role of Central Economic Planner, and the Right seems to not be objecting.

On Friday, President Trump formally endorsed a plan to keep struggling coal power plants open — by forcing energy-grid operators to purchase power from them at uncompetitive rates — for the sake of “national security.”

This proposal is bonkers for a variety of reasons. The notion that it is in America’s national-security interest to prop up the coal industry is patently absurd. Our nation’s power grid has plenty of alternative sources of reliable energy — and keeping coal plants in business exacerbates climate change, which is itself a major national-security threat (if you believe those tree huggers at the Pentagon, anyway). Further, the costs of subsidizing inefficient, dirty energy will fall partially on consumers in the form of higher electricity bills. Which is to say: The administration has found a way to combine the (supposed) short-term economic costs of environmental protection with the long-term ecological risks of laissez-faire.

Where is the principled outraged from conservative intelligensia? Oh, wait … is there a conservative intelligensia any more?

The libertarian crew at Reason magazine do object (mildly) to Trump’s tariffs, but they haven’t gotten around to the coal power plan yet. I checked at National Review — nope, although their site search engine isn’t working so I couldn’t look past the front page. I checked at the American Conservative, which does occasionally make sense and seems to be the last refuge of conservatives who haven’t utterly sold out. Nothing. Maybe they need more time.

You know that if Hillary Clinton or Barack Obama had proposed the coal power plan, Republicans would all be screaming about Communism at the top of their lungs and hauling out their dog-eared copies of Hayek to frantically point at relevant paragraphs. But with the Right, the evil of an act does not depend on what is done but who is doing it. Just as white evangelicals threw Jesus and the Gospels under the bus to support Trump, the American Right in general seems ready to turn a blind eye to a blatant violation of Hayek’s principles, for the sake of … what? Their tribe? Or are they all in on the take?

Back to Levitz:

But the craziest aspect of the Energy Department’s proposal isn’t that it puts the profits of coal magnates above the survival of the planet. That much, we have learned to expect. The wild thing about Trump’s plan is that it rests on an interpretation of executive authority that is incredibly dangerous to the conservative movement.

Generally speaking, the president is not supposed to be able to unilaterally direct subsidies at his favorite industries; that’s Congress’s job. But Trump’s attempt to pay back his coal-magnate donors would never survive on Capitol Hill — it is that rare energy policy that is opposed by wind power, solar energy, and oil companies, alike.

There is absolutely no justification for it, except that Trump wants to do it. Somewhere in his developmentally arrested brain he may dimly remember that he promised to save coal miner jobs, and maybe this is his plan to save them. Or else his company is poised to exploit the coal industry somehow. That’s all I can figure.

Thus, the administration has decided to simply deliver the handouts itself — by invoking the Defense Production Act, a Cold War–era law that empowers the president to “effectively nationalize private industry to ensure the U.S. has resources that could be needed amid a war or after a disaster.”

As Bloomberg notes, this authority was most famously exercised by Harry Truman, who used it to cap wages and impose price controls on the steel industry during the Korean War.

The steel thing happened in 1952, and conservatives at the time threw a fit about it.

If our current president can wield this power to prop up coal plants, it’s hard to see why a future one couldn’t use it to shut them down:

This takes us to Levitz’s argument, that a future president with socialist leanings (the article is illustrated with photos of Bernie Sanders) could use the same presidential authority to shut down fossil fuel industries altogether, because how will America defend itself if its major coastal cities are underwater?

Similarly, one could imagine the Warren-Sanders administration finding a progressive use for the expansive trade powers that Trump has claimed. Creatively abusing another Cold War–era law, Trump has assumed the right to unilaterally impose tariffs on any nation he chooses — so long as he offers a specious national-security justification for doing so. After the next Democratic president uses the Defense Production Act to rapidly reduce America’s carbon emissions, it could threaten massive tariffs on any (developed) foreign nation that refuses to aggressively pursue its own emission-reductions targets — thereby turning America’s coveted consumer market into force for climate justice.

Levitz says there are arguments that, under existing law, a president could override pharmaceutical patents to provide low-cost drugs to beneficiaries of federal programs. A president might also use executive power to turn post offices into public banks. And perhaps, if the next Democratic president is saddled with an obstructionist Republican Congress, that sort of thing could happen.

But if Trump’s plan for propping up the coal industry isn’t challenged by Republicans in Congress, I think we can officially declare that Hayek is dead. I can’t say I’m sorry, since his arguments were way too simplistic. Unregulated industrial capitalism in the 19th century created Communism, after all. And the young folks today are far more open to socialist ideas than their parents were. If there are still any Republicans who believe Hayek was right, let them speak now or forever hold their peace.

Update: Arghh — the SCOTUS ruled in favor of the homophobic wedding cake baker.

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19 Comments

19 Comments

  1. goatherd  •  Jun 4, 2018 @12:59 pm

    At the risk of showing my ignorance, I’ll try to explain something that I’ve been wondering about.

    Countries that have made attempts at a centrally planned economy have run into problems.  The worst that comes to mind was “Mao’s Famine,” which cost millions of lives.  One of the major causes, perhaps the major cause, was that local leaders entered into competition regarding their production of foodstuffs.  Each province was obligated to contribute a significant percentage of their product to the central government.  Provincial governors reported higher levels of production than actual in an attempt to remain in favor.   This increased the amount of what they owed to the central government.  So, where there was a shortfall, there was a double whammy effect.  ( I hope I’m not getting too technical.)

    So, one of the causes of this misery was simply, bad data.   If you combine bad data, no data and occasionally, some reliable data, the chance of matching production and use of resources to future demand is basically zero.   

     

    But, now, companies are able to gather much more reliable information about our patterns of consumption.   They know how to market to each of us as an individual, because through the magic of the internet, they know who we are.   That is they have a demographic identity for us, how old we are, our level of education, our interests, how much money we make, how much money we spend and what we generally spend it on.

    None of this has been centralized yet, but, it could be, and in the aggregate, the data could be adequate to produce an efficient planned economy.  

    Other technological developments such a 3-D printing, AI and advanced robotics would also reduce the consequences of error.

    As for Von Hayek, I’ve read some about him and some snippets of what he wrote.  One description of his philosophy indicated his belief that efforts to manipulate the performance of an economy or lift it out of a depression “always contained the seeds of their own destruction” and therefore, it would be better to weather the storm and let the market adapt and recover on its own.   To my layman’s ears this only makes sense if you conceive of a market economy as fairly static.  But, economies evolve, you might say that every stage of an economy, boom, bust and in between, contains the seeds of its own destruction because it is in a constant state of flux.   It also disregards the cost in human terms.  Let’s say the after the crash of 2008, every nation decided to let the market adapt and repair itself.   The depth of the crisis would very probably have been much deeper, and those of us lucky enough to have kept body and soul together, would still be enjoying toasted rats on a stick as part of our regular diet.  But the debate over whether the market is meant to serve man or man meant to serve the market would be over.

     

     

     

  2. Tom_b  •  Jun 4, 2018 @3:43 pm

    Maybe I’m naive, but I don’t think the coal plan will find the votes or survive the lawsuits. Nor is raising utility costs, in the same year you raised people’s taxes, likely to be a good issue to push in an election year.

  3. maha  •  Jun 4, 2018 @4:13 pm

    Tom_b — Trump is pushing forward on the power plan by himself, on presidential orders. This is not something he proposed to Congress; he’s assuming authority to do it himself. Will Ccongress stop him? I’m betting it won’t.

  4. doug  •  Jun 4, 2018 @3:45 pm

    I have problems with how the question is framed. Yes, the right threw Hayek under the bus. In Congress and in the rightie media outlets. BFD. File under, "Dog bites man." Pelosi is a greedy…person. (passing on the gender-based slur). Schumer proposed a law which makes the discussion of boycott of Israel illegal. (hasn't passed, yet) First Amendment ring a bell, Chuckie?

    Only in a handful or cases on the left and right can you find even the hint of principled action. Jesus H Christ, Trey Gowdy, of all people, is taking a principled stand against Trump after seeing the confidential stuff from DOJ. Where did liberal and conservative ethics go? Sold out, dude.

    Ninety-nine out of a hundred examples of slimy behavior on both sides in Congress can be traced to US greenbacks, in either campaign finance, insider trading or post-congressional 'jobs' as lobbyists or industry reps for ten times what they made in Congress. Far too many pundits are institutional mouthpieces for their party machine. (Dems, too)

    "There are a thousand hacking at the branches of evil to one who is striking at the root." – Henry David Thoreau

  5. Bernie  •  Jun 4, 2018 @4:05 pm

    You are so right, Goatherd, and a read of Timothy Geithner's book Stress Test contends that the countries that did not provided liquidity and bailouts did less well than the US did.  The book also chronicles advocates for the Libertarian/Conservative notion of let them fail, tried but did not prevail in those chaotic days.   I thought it interesting to note that Alan Greenspan recanted on his Libertarian Economics, and conceded that he was in error in his theoretical assumption that free markets were corrective and oversight and management were generally not needed.  

    Those days of intense management were in response to economic chaos and an international lock-up of world credit markets.  Current micro management from the White House on tariffs and coal company bail outs are interventionistic economic practices which are not a reaction to crisis and a radical shift in standard Libertarian/Conservative ideology.  This is amazing, as most followers  of "the tribe" led by our child emperor, never really knew the "let it fail ideology" existed, or today even admit that the 2007-8 economic  train wreak ever occurred.    Bush, Greenspan, and the hands off capitalism ideas causing that  international economic train wreck are all blame free according to the tribe.   (In case the denial defense by the use of revisionist history fails to work).

    Truly the present two party system is the Democrats and the Trump Party.  As Kasich said this weekend, the Republican party does not exist anymore.  As far as I see no one even presents Republican thinking on economic matters.  Get right on your nerves Larry Kudlow, tries to publicly contend the child emperor is pro free trade in his heart.  I am not privy to the MRI of the alleged heart old Larry must be hallucinating about.  Larry might just be using his x-ray vision or other super-powers. The only Kudlow super-power I can attest to is his power to really get right on my nerves.

  6. c u n d gulag  •  Jun 4, 2018 @5:08 pm

    If these so-called "Christians" don't read their precious Bible's, why would anyone believe they've ever read even a page of Hayek?

    Oh sure, they all carry dog-eared copies of both.

    But they buy those already dog-eared – along with other books adults should have read, at this very popular DC shop:

    "Ye Old Well-Used Important Book Shoppe – Books to Carry, or Have on Your Bookshelf, to Impress Other Frauds.

    Notes:  Dog-earing books extra.  Marking important passages is also extra."

    I wonder many GOP Rand boy-ho's ever even finished any one of her books?

    Probably none…

  7. Tom_B  •  Jun 4, 2018 @5:18 pm

    Maha,

    my reading, which may be wrong, is that he CONTEMPLATING a legally-hard-to-defend executive order:

    https://mobile.nytimes.com/2018/06/01/climate/trump-coal-nuclear-power.html

    I would imagine an immediate stay could be sought on the cost to consumers alone.

  8. maha  •  Jun 4, 2018 @11:32 pm

    Tom B, The issue is that he thinks he can do this by executive power alone.

  9. priscianus jr  •  Jun 4, 2018 @5:57 pm

    Trump never heard of Hayek. He doesn't know how to spell "Hayek." He's just supporting a pariah industry because they support him because he supports them. He takes his support where he finds it, and that's mainly from under rocks and behind the woodwork.

  10. Bernie  •  Jun 4, 2018 @7:24 pm

    Tom_B, thanks for the link. So Rick Perry pushed, at Trump's bidding, for power plants using coal and nuke that the power industry did not want or need.  Now that's a tricky selling job.  

  11. c u n d gulag  •  Jun 4, 2018 @7:26 pm

    The twit-filter HATES ME!

  12. freetofu  •  Jun 4, 2018 @7:32 pm

    goatherd: I think that the famine in The Great Leap Forward happened mainly because Mao was a brutal dictator who ruled by fear at ever level. So you lied to your superior for fear of being tortured or executed. And I seem to have read that Mao was aware of the famine and didn't care. I think this was his idea for jumpstarting industrialization, inspired by what the Soviets achieved early on. 

    My sense is that a lot of this sort of thing comes from the fact that violent revolutions tend to lead to military dictatorships, by whatever name.

  13. chris  •  Jun 4, 2018 @7:33 pm

    SCOTUS didn't really make a decision on the baker. They said some garbage about the baker not having something done right in Colorado courts or whatever. Essentially, they punted and didn't really resolve the case.

  14. Tom_b  •  Jun 4, 2018 @8:57 pm

    Chris: I also heard the bad SCOTUS decision maybe limited and influenced by Colorado’s procedures. That said, we have to hope the next bigot baker/photographer/limo driver loses on merits. Otherwise, it won’t be only LGBT people discriminated against; they’ll be saying their brand of Evangelicism disapproves of black marriages or interracial marriages. Back to the ugly 1950’s.

  15. goatherd  •  Jun 5, 2018 @7:27 am

    Freetofu:  Yes, I should have used stronger language in place of "remain in favor."   Most of my information comes from a BBC documentary and not a collection of scholarly works on the subject.  So, maybe I should have chosen another example.

    But, those who adhere to  the views of Von Mises and Von Hayek site this as a prime example of the destructive futility of planned economies.   I'm speculating that as the accuracy and volume of data increases, the divide between the "free market" and a planned economy is narrowing.  I might have done with a less dramatic example. 

  16. elkern  •  Jun 5, 2018 @10:07 am

    yeah, Hayek is just Ayn Rand for Grad Students, with a little more math and a little less sex.

    Recently found an interesting thread of the right-wing spider web on Naked Capitalism site, discussing career of economist (not President) James Buchannan:

    https://www.nakedcapitalism.com/2018/05/meet-economist-behind-one-percents-stealth-takeover-america.html

    Yes, the Rich want to believe that they are Rich because they are Good (shorter Rand/Hayek), but even moreso, they want to stay rich.  Buchannan helped develop the political program which the Koch Bros have used to take over the USA.  Power is more important than Theory.

     

  17. freetofu  •  Jun 5, 2018 @6:59 pm

    goatherd: Matt Bruenig has recently been doing a lot of good writing on this sort of thing e.g. showing that Nordic social democracies are a lot more socialist than is commonly acknowledged.

    See his twitter page and/or peoplespolicyproject.org

    Also I just read a great book called "Bad Samaritans" by Ha Joon-Chang, which shows that rich countries got where they are by state intervention like protectionism and support for "infant industries," and that by pushing free market ideology on poor countries they are "kicking away the ladder" by which they achieved their own success. Recommended.

  18. goatherd  •  Jun 6, 2018 @6:56 am

    Thanks for the suggestions, I'll check them out.   I've read some similar material but it goes a few years back.   The IMF and its demands on poor countries in crisis is a particularly good example of  "kicking away the ladder."

    Most of the libertarians that I have known, although there haven't been many, tended towards a certain frame of mind.  They considered themselves intelligent and logical, and in general, they were.  But, there was a simple minded quality to the way they perceived the world, it was almost Manichean; black and white, without much in the way of nuance.   In practical terms their reduction of the world bore little resemblance to the reality, that their logic bordered on argument from false premise.  

    On a different note, I have an old friend who is intelligent and empathetic.  Due to a severe traumatic injury early in her life she benefitted from a lot of from government programs.  To my surprise she was a big Trump supporter.   To top it off, her boyfriend of many years is Norwegian, and she recently traveled there.   It seems impossible that her experience in Norway wouldn't contrast significantly with, and impact her vision of Trump's America.  But, alas, she has dropped off Facebook, and I'll have to wait and see.  Our "deeply held" beliefs are adept at fending off reality.

  19. puddle  •  Jun 6, 2018 @10:47 pm

    I lived/taught in China from '79 to '82.   The general feeling then among Chinese was that the "Three Hard Years" came about because China had loans from Russia, and with growing bad feelings/break between the two, China was determined to pay off the Russian debt as swiftly as possible.  Combine that with new communes and some very bad weather. . . .   What food there was was funneled towards the children, leaving the adults in serious starvation mode.  Hours were cut back because no one had the energy to work a full shift, and many were still suffering from the aftermath.

    Interestingly, China had had since they started keeping records about 50BC, about one famine every other year.  Until the Communist Takeover (or Liberation, if you're Chinese).  The Commies have had one in 60 odd years.  Famine defined as a period when more than a million people die of starvation.

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