by Mario Rizzo
There is an interesting interview with Ed Feulner, the outgoing president of the Heritage Foundation, in the weekend (Dec. 8-9) Wall Street Journal. The interview got me thinking about the progress made in the pro-economic-liberty cause, not only over the years of Heritage, but since, say, 1960. I choose this year deliberately because it was the year I became aware, as an almost-teenager, of the interconnection between politics (Nixon-Kennedy) and the economy (inflation and unemployment). I soon afterwards read Henry Hazlitt’s Economics in One Lesson.
What has changed since 1960 with regard to economic liberty? From an intellectual perspective, so many more people are aware of Ludwig von Mises, Friedrich Hayek and non-Keynesian economic thought. Milton Friedman spread his ideas about market-oriented economic policy. Thanks originally to James Buchanan and Gordon Tullock, we know again about public choice and rent seeking. (Somehow intellectuals had forgotten the lessons taught by James Madison and others.) Most economists are, at long last, convinced that Mises and Hayek were broadly correct about socialist calculation.
And yet government is more involved in more aspects of the economy, by far, than in 1960.
Oh yes, I am aware of the argument (cited by Feulner) that the “pie” has grown larger so although the state’s take is greater we have more absolutely left over. First, the appropriate measure is not taxation – but spending. (As Friedman taught us.) Second, but even by the pie measure federal spending is now about 25% of GDP and total government spending is about 40% of GDP. This is far higher than in 1960. Third, there are also many more interventions – regulations – beyond taxation. Fourth, I do not count my freedom in terms of my command over material goods.
What should we conclude from this? There is a wedge between what economists understand about the world and what policymakers do. Furthermore, when we ask whether “ideas matter” we are not being precise. Ideas about what? Policymakers do not have a prima facie incentive to pursue the “general interest.” Policymakers do respond to ideas – ideas about what will benefit their particular constituencies. The general interest has few representatives.
To make a long story short: I believe that intellectuals (including economists) need to be more ideological, not less. They ought to convince the general public to think in terms of big issues and big decisions. The idea of evaluating each issue on its own merits is profoundly unscientific as Herbert Spencer taught. Slippery slope mechanisms are all around us. When people begin to think of specific, narrow policies they cannot help but think in terms of their own particular interests.
It is not enough to win the battle for ideas among intellectuals. We must win in a way that makes a practical difference. Showing the limitations of case-by-case analysis of policy is important. The special interests do not care about the damage done to the general welfare. We must instruct the public that policies that benefit their own particular interests do and will generate policies that hurt them. There truly is no free lunch.