The Great Myth of the Free Market

In 1776, in “An Inquiry into the Nature and Causes of the Wealth of Nations”, Adam Smith developed a new theory of economics, which we now call the theory of the free market. He wrote that a man should be “free to pursue his own interest his own way.... By directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain, and he is in this ... led by an invisible hand to promote an end which was no part of his intention.” That useful end was economic progress for the whole nation.

Smith was an economic genius who realized that the restrictions placed on their economies by 18^th-century European monarchies stifled productivity and the creation of wealth. If people were allowed to seize opportunities that they perceived, to assess risk and seek reward, the larger economy would grow more rapidly than if rulers dictated how commerce should proceed.

The moral superiority of free choice over monarchical fiat was indispensable to Smith’s argument. As a partner to the demand for more political freedom, the promotion of the free market was inherently democratic.

Since then, no economic system has equaled capitalism in creating wealth, for nations and individuals. The “free market” is such a sweet phrase that it has become a magic incantation, a panacea for every economic problem. The free market as an idea appears to have attained religious status. Proponents of an unfettered market invoke their version of God’s will in favor of their political position against any government regulation, for example, laws protecting the environment. The lineup of conservative presidential candidates has nothing good to say about any economic regulation.

The people who raise the unregulated market to a religious commandment support political advocacy with mythical stories, beginning with Adam Smith. Smith did not have absolute faith in the “invisible hand”. He openly preached that governments must play a significant role in the economy.

Governments should provide roads and bridges and other public works which individuals or private enterprises are not likely to build. He praised regulation of the labor market, but only when it supported workers. “When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.... Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate.” Smith distrusted the motives of employers, who sought, he believed, to keep wages as low as possible, “always and everywhere”.

He not only supported taxation, but favored a progressive tax system. “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.... It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.”

By obscuring these uncomfortable elements of Adam Smith’s theory, free market absolutists offer another myth: regulation has only costs, not benefits. Every regulation increases rather than decreases the costs of doing business, otherwise businesses would undertake these measures themselves. But modern life is dependent on the greater benefits of regulation: food products free of disease, rivers with live fish, air healthy to breathe. Regulations took the lead out of gasoline and paint. Regulations keep harmful drugs, like thalidomide, off the market.

Regulations put seat belts and air bags into cars, saving countless lives, a good example of their value. Every state but one legislates that adult drivers must wear seat belts. That state, New Hampshire, has the lowest usage of seat belts in the country. Live free and die.

Car manufacturers were successful in delaying the deployment of the air bag, costing thousands of lives. In 1983, the Supreme Court ruled 9 to 0 in favor of government-mandated air bags, writing: “For nearly a decade, the automobile industry waged the regulatory equivalent of war against the airbag and lost — the inflatable restraint was proved sufficiently effective.”

The writers of our Constitution, 13 years after Smith published “The Wealth of Nations”, enshrined the mutual necessity of freedom and regulation into Section 8, “The Congress shall have Power ... To regulate Commerce with foreign Nations, and among the several States”.

We can joke about the conservative effort to deregulate our economy. “How many conservatives does it take to screw in a light bulb?” Answer: “None. If the government would just leave it alone, it would screw itself in.”

But saving lives is no joke.

Steve Hochstadt

Jacksonville IL

Published in the Jacksonville Journal-C ourier, October 27, 2015

A Speaker Who Speaks for a Few

The inability of Republicans in the House to agree on a Speaker has halted the business of governing the country. The media loves the uncertainty, the rumors, the up-and-down candidacies as political theater. The deep politics is more disturbing.

The Speaker holds great power in the House. The Speaker presides over debate, deciding who may speak and controlling the flow of discussion. The Speaker rules on all points of order, selects most of the members of the Rules Committee, and appoints members of select committees and conference committees. The Speaker determines which committee will consider new bills.

In 1792, the Second Congress wrote rules about presidential elections and specified that the Senate President pro tempore would become President in the absence of the elected President and Vice President, with the Speaker of the House next in line. This line of succession was changed in 1886, when cabinet members replaced Congressional leaders. After Franklin Roosevelt died in office, a new Presidential Succession Act was passed in 1947, which restored the Congressional leaders as next in line, but switched their places, putting the Speaker next after the Vice President.

Congress believed that the Speaker in such a national emergency could rise above the politics of his district, of his region, of his party, and lead the whole nation. Speakers have been men, and one woman, Nancy Pelosi, who developed leadership during Congressional careers, faced national issues, and worked with Presidents of both parties.

Now the so-called House Freedom Caucus, representing the people who made his job so impossible that Speaker John Boehner announced that he was quitting Congress, who were uncertain that Kevin McCarthy of California was conservative enough, are demanding a Speaker for themselves. The Freedom Caucus includes about 40 Republicans, enough to prevent any Republican they vote against from winning the Speakership.

Who are these few dozen House Republicans? They are nearly all men, who sit on the far right in Congress. They include most of the most conservative Republicans; their center is far to the right of Republicans in the House. Their founding members had belonged to the Republican Study Committee, which since 1973 has operated within the House as a “conservative watchdog” on the right side of the Party. It now has 170 members, about 2/3 of the whole Republican caucus. That was too big a tent for the Freedom Caucus, who did not want to work with Republicans more moderate than themselves. In January, they announced their split from the Republican Study Committee in the midst of a House debate about funding the Department of Homeland Security. The Freedom Caucus threatened to shut down Homeland Security funding if their demands were not met.

Despite their defeat in that contest, now they are after a bigger goal, the Speakership itself. They prepared a questionnaire for possible Speaker candidates. “Would you ensure that the House-passed appropriations bills do not contain funding for Planned Parenthood, unconstitutional amnesty, the Iran deal and ObamaCare?” was one question. The Freedom Caucus insists on “full repeal of Obamacare” and impeachment of the IRS Commissioner.

They insured that McCarthy could not win the vote by endorsing Daniel Webster of Florida on Oct. 7, who has been in Congress only 4 years. His reelection is threatened, because a court says his district has been gerrymandered to produce a safe Republican district and must be redrawn.

What do other Republicans say about these rebels of the right? During the DHS funding fight, Rep. Peter King, a Republican from New York called them “this self-righteous delusional wing of the party, which leads us over the cliff.” Republican Charlie Dent from Pennsylvania repeated the term “self-delusion”. Trey Gowdy from South Carolina, rated in the middle of the Republican Party, said, “I think the House is bordering on ungovernable right now.”

California Rep. Tom McClintock, a Republican whom Heritage Action gives a 90 percent conservative rating, much higher than the average Congressional Republican, recently quit the Freedom Caucus. He characterized their politics as “a willingness, indeed, an eagerness, to strip the House Republican majority of its ability to set the House agenda.”

The so-called Freedom Caucus represents the Republican voters who have put three people with no government experience among them at the top of the polls. They don’t like government, period. With a fervor unmatched in recent American history, they hate everything that our government has done since Barack Obama was elected. They hate anyone who plays any role in governing, even a conservative one.

Should we allow one of them so near the White House?

Steve Hochstadt

Jacksonville IL

Published in the Jacksonville Journal-Courier, October 20, 2015

It Can Take A Long Time

My dogs spotted a squirrel the other day and couldn’t help lunging forward, even though they knew they were leashed. That made me think about men who treat women the way dogs treat squirrels.

Some men want to physically engage every woman they see who fits their image of sexy. They interrupt everything, get too close, use their hands, and won’t take “no” for an answer. When it doesn’t work, they try it again with another woman. Over and over again they manhandle women, because they think about them as the dog thinks of the squirrel, as lesser but attractive beings who must be chased.

There used to be lots of guys like that. When I grew up in the 1960s, they attracted everyone’s attention. Other guys watched them in awe and wonder at their boldness. At a time of much less free love, no matter what their success rate, they gained a reputation as very good at what they did. Their form of masculinity was taken for granted as an acceptable variant, not for every man, but worthy of respect and sometimes envy.

Other men, observers of this uninvited and unwelcome pursuit, were torn between two conflicting masculine imperatives: the ancient code of chivalry obligating men to protect women in danger, and a very modern respect for tough, aggressive, egotistical and physically dominant forms of serial conquest. The hunters may not have been universally admired by other men, but they were not recognized as the creeps we now see.

Before the 1960s, there were a few voices decrying the connection between female inequality and male sexual violence. As early as 1641, the Body of Liberties of the Massachusetts Bay colony included a prohibition against wife-beating: “Everie marryed woeman shall be free from bodilie correction or stripes by her husband.” But as late as 1970, male predators could still assume that few would try to stop them.

We still see men like that, but their days of unashamed hunting are gone. They are much more careful in their use of their hands, and perhaps more sophisticated in employing wealth, status, connections and unscrupulousness as persuasive arguments. But two things have really changed. The social approval of men which had surrounded them has turned sour. And the willingness of women to tolerate the boors is disappearing.

The species of predatory men is in decline, here and across the globe, because they were defeated culturally and politically. As our attitudes about men and women moved toward equality, laws were passed which attacked the hunting rights of men. The first significant national legislation to reduce violence against women was passed in 1994, the Violence Against Women Act. That law attracted bipartisan support, but the next year conservative Congressmen tried to cut its funding.

Neanderthal Man is not yet extinct. Their species keeps getting infusions of new life, mostly by the fundamentalist wings of the West’s major religions. Conservative politicians give a nod toward traditional male superiority every time they lionize openly misogynist commentators, like Rush Limbaugh.

Men will continue hunting women for the foreseeable future. Changing cultural assumptions developed over millennia is a slow and frustrating business. The ideological argument that women should be equal to men may have won the public debate, but human habits go much deeper than rational discourse. Those who demand gender equality occupy the moral high ground, but below, in the bushes, the struggle goes on. Conservatives still fight rearguard actions against equality in pay, in child care, and in politics itself. One third of Democrats in Congress are women, but only one tenth of Republican legislators.

None of the momentous social-cultural-political shifts of my lifetime are over. Each step toward equality faces obstacles which have been built over centuries. The more that ancient texts are revered, the harder it is to find a path to equality. But the progress during my lifetime has been breath-taking.

Steve Hochstadt

Jacksonville IL

Published in the Jacksonville Journal-Courier, October 13, 2015