Why stagnant ideology poisons the well of new ideas

hannanmegafoneIn this strongly worded essay, The Slog argues that Dan Hannan’s insight on some matters cannot hide his naivety on the big econo-fiscal issues of our time. Without question the most glaring example of that blind spot is his unswerving support for the obviously busted flush of Friedmanite economics. Milton Friedman was a genius, but he was wrong because he was narrow. That his ideas have been perverted by contemporary manipulators is no excuse for continuing to idolise the founder of Chicago economics. Ultimately, Friedman was an inflexible ideologue: it is in the very nature of any resultant ideology that it cannot withstand change, and fails to develop new ideas outside its self-imposed box.

I have long admired Rod Liddle, a bloke who like me has thought hard about his liberal values in middle age, and then become a sort of curmudgeon for all seasons. Equally, I think the eternally irritating Dan Hannan does have genuine insights about important stuff. The problem is that both of them can be such complete prats at times. So when Dan wrote a very interesting (and accurate) piece in the Telegraph last week about the link between euroscepticism and leaving political office, I wasn’t surprised when Rod gave it the thumbs-up in the Spectator. But this one Liddle observation (OK, only a teensy-weensy Liddle observation for some people, but not me) got right up my nose:

‘Dan puts this down to what Milton Friedman called ‘the tyranny of the status-quo’, and of course it is true about many more things than simply our membership of the European Union.’

No, really? This only served to remind me of the prattish side of both blokes – for two reasons. First, because I’m sick to the back teeth of fans quoting Friedman’s alleged sagesse when he is, let’s face it here people, the single biggest reason why Berlin has been able, over the last three years, to get away with quite the most destructive economic attack on southern Europe in history. And second, because the ‘once they’ve left power’ thing in a broader sense isn’t an insight at all: it’s an insult to the intelligence of all those who can spot a cliché from a mile off.

Enormous power brings with it the need to keep quiet about thousands of nasty things – it’s one of the dozens of things wrong with it – up to and including one’s real personal views….if one has any at all. Thus every President leaving the White House, every MP kicked upstairs to be a Peer – and every Minister who gets fired – is that person ready, willing and unable to resist the chance to finally speak that which passes for their mind. The best evidence for this being a tedious truism is that Rod Liddle felt it de rigueur to add the words ‘of course’ to his flaccid observation.

The rigidly observed status quo harms the small and vulnerable. It rarely tyrannises the powerful.

‘The tyranny of the status quo’ only has any validity as an observation when somebody in power is prepared to lose that power by breaking out from the herd reaction. If Friedman called the status quo a tyranny, I’d imagine he was talking about how difficult it was to get policymaking minds to accept his madder assertions during the 1960s.  But once he became an economics Deity, Milt benefited hugely from the new status quo. The problem with most Friedman idolatry is that it has itself become one of the silliest and most tyrannical personality cults in history.

Committed Friedmanite fanatics tell us – when the inflexible tyranny aspect is put to them –  “Ah well you see, that’s not really what Friedman meant”. Er….can someone tell me what difference there is between that excuse and the classic Hard Left nonsense about what Marx “really meant”? Or the fluffy libero-socialist view of what Keynes was saying between the lines?

The fact is that there is but one true tyrannical status quo in what passes for economic thought in 2013, and that is the neocon doctrine almost entirely derived from Milton Friedman –  a theorist who is gradually being proved wrong about pretty much everything he posited.

It is Friedmanism that insists markets must decide, that bourses are the most ‘natural’ ways to raise money, that any company’s sole responsibility is to its shareholders….and a dozen other potty dimensions of his anorexic ideology. The core elements of Milt’s catechism – so readily adopted by the greedy buggers – try to divorce the making of unethical and ill-directed money completely from the socio-cultural milieu that provided the context for it to do so in the first place. That is like a child in denial about the vital necessity of parents in order to exist. Markets should not always decide, because markets are only collections of people, and people – especially many of the clowns working on bourses – do dumb things, panic a lot, and snort coke. Companies do not owe loyalty only to the shareholders, because the shareholders are far too often remote, asleep, and motivated by different needs to those of the company, its management, and employees.

Again, one puts this to the goggle-eyed Miltonians, and they smile patronisingly while saying “Yes, but what’s happening today is not Friedmanism – it’s a perversion of it”. In which case, Friedman was an idiot with no grasp at all of human moral frailty. I will offer you one simple but massively significant example of why this perpetual get-out clause for the Nuttall Miltoes is bunk.

Friedman was a very, very smart bloke, but he was a little sketchy about what the point of governments might be, and the social anthropology of how citizens interreact with them. He theorised that there exists a “natural” rate of unemployment, arguing that governments can increase employment above this rate (by artificial stimulation of demand) only at the risk of causing inflation to accelerate. First point: note the way that Friedman conveniently sets to one side the first duty of every Sovereign State: the safety and welfare of its good citizens. There is no thought here about why employment is below par….or why the unemployed should be blamed or suffer. The underlying assumption is that’s the lever you pull, because it ‘works’. From this socially flawed idea came the idiotic phrase “jobless recovery” so beloved of the MSM during 2010.

Second point: what SuperMilt and his disciples never did – and still aren’t doing – is ponder what the underlying causes of that employment might be in the first place. Friedmanite Chicago economics do not allow for qualitative, organic change in the nature of capitalism: like Keynesians before then, and Marxists before JMK, they adopt the Talcott Parsons structural functionalist approach to society….rather than the more dynamic change-orientated human behavioural model developed by Ralf Dahrendorf. This paragraph you’re reading at the moment explains in one why Sovereign policies are getting nowhere right now: they’re about graphs, economics and history…..not the huge socio-technological changes forcing us to face the future.

So for all the Dans and Rods and Georges and Bens and Marios out there – and the Milibands, Balls, Stiglitzels, and Obamas – let me explain something: we have structural unemployment that won’t go away in the West for four crucial reasons:

1. The model of lowest-cost, volume production is wrong for us, and has been for years: we cannot compete with Asia using it, nor should we even try. As currently constituted, the approach moves jobs to the East and doesn’t replace them. That, my friends, is the real tyranny of a status quo in which short-term bottom-line accountancy is deemed better than longer-term preparation for change. The ROI obsession of Friedmanism demands can-kicking in general, and low estimation of human suffering.

2. The Miltonian model of taxation and reward ensures that, far from wealth ‘trickling down’, it gushes up: the anthropology insists it should, because we are appetitive hunter-gatherers. That growing disparity of wealth – and the pauperisation of the middle 30% so clearly seen everywhere from Athens via London to Cleveland – reduces mass consumption, drives down demand, and directly creates job losses which – again  – are only rarely replaced. It is the single biggest reason why Western economies are not responding to stimulation.

3. The ideologues in economics cannot deal with the huge factors changing the game globally in business over the last thirty years: Chinese abandonment of Maoism in favour of mercantilist growth; the fall of the Soviet Union and its eventual replacement by a wild west baronial economy based on the geopolitical use of energy and corrupt creation of property/financial assets; the breakthrough in communications – driving production success in Asia, and unbeatable uses of commercial and financial espionage by Chinese and Russian technologists; the giant leaps in computer science, causing corporate investment crime to rise, and small investor involvement to fall, among the world’s main bourse centres; and last but not least, the creation by frontal-lobe compelled investment bankers of a belief in derivatives, bet insurance and criminal manipulation being perfectly safe and economically functional – despite their growth to between fifteen and thirty times the size of the physical world gdp.

4. A crazily lax policy on migration into already hard-pressed welfare systems by soi-disant ‘liberals’ over the last two decades – policies that can just as easily be interpreted as an attempt to almost literally breed a new electoral franchise for left-of-centre political groupings.

Pause here now for the Miltstones to clamour that “Friedman would never have approved of the misbehaviour by investment bankers”. Perhaps not: but could he not see that deregulating sociopaths results in disastrous over-confidence? Did he understand that little about neuroscience? Could he not project beyond his academic economics department and see that this would produce Sovereign costs, higher taxes, poorer welfare services and thus ever-lower consumption alongside dangerous social instability?

And much as Dan Hannan – along with the other New Conservative fanatics like Gove, Delingpole, Johnson, Hunt and Fallon – can’t accept is that there’s a very short but not very sweet answer to that question: “No”. Milt didn’t get that because he was a narrow academic who spent his later years spouting aphorisms with all the productivity (but none of the wit) of Mark Twain. The only way Dan can defend his economic hero is to tweet Friedman’s fortune-cookie superficiality endlessly; and when he runs out of these, drivel on about Adam Smith and Burke who, let’s get real, didn’t know what a dark liquidity pool was, so why on Earth should anyone be interested in their feelings about tyranny and international wealth?

Hold hard again a few seconds as the Miltongs storm back in with “Friedman wanted to abolish the Fed Reserve, and would’ve seen Bernanke as a traitorous criminal”. Sorry fellas, but the exact same answer applies: had Friedman never studied politics? He was Ronald Reagan’s economics advisor for years (his advice fed the American debt/deficit disaster like no other) so did he never meet any politicians? Did he never spot that the only thing they care about beyond money and strange pussy is votes? Why in God’s name did he imagine Greenspan just let the machine run on out of control – because he was a Democrat or something?

QE, money printing at the ECB, and lunatic Sovereign borrowing were the absolutely inevitable outcomes from Miltonian deregulation. Put hardsell bankers and power-mad financial bureaucrats together with megalomanic politicians trying to buy votes: what do you get? A car-wash flunkie in Oporto could tell you “A marathon of can-kicking disaster like we have at the moment”. But poor little Milt and his idolators couldn’t see that truck coming down the road.

Let me tell you why Friedman was, at the end of the day, just another ideologue with one idea, and a mind closed to either (a) its flaws or (b) alternative ideas. Because he was a glorified quant in a higher-education talking shop. Milt the sort of nerd I called a Graphucker: an econometric generating bullshit-theory academic obsessed with his own narrow circle, but devoid of awareness about the need for a multivariate grasp of disciplines when dealing with contemporary societies. He didn’t get corruption, or the idea that deregulation merely gives the nod to the Murdochs, Blacks, Hunts and Blairs of this world to slither from under the stone, and take their place in polite society without fear of retribution. He blasted the regulatory twerps that were, again, inevitably spawned by the deregulated Greens, Diamonds and Madoffs. Today, Dan Hannan suggests that the regulators are the problem, not the crooks. At times, the denial beggars belief.

Milt and the Friedmanites see themselves as the economic supergroup for the 21st century, but they remind me more of duffle-coated 1950s students playing trad jazz. The thing that ties Ban the Bomb marchers and the neocons* together is a risible level of naivety about human nature. Just as many of the women at Greenham thought the Soviet military machine had no designs on the West, so now the Chicago School has failed utterly to grasp the Hobbesian nature of uncultured – dare I say decultured – Man.

Why do these people think white collar techno-crime has gone through the stratosphere…because all middle-class professionals are nice? How do they feel about prime-time ambulance chaser ads from lawyers on the telly? What’s their position on doctors pocketing salary increases while dropping weekend working? Do they clock any of this going on? What’s their answer, if not regulation?

The answer, dear reader, is revitalisation of cultural ethics. Now that’s a toughie. Without religion – or some other higher-order guidance equipment – how do you do it? I don’t know – although I think about it a lot. But I will tell you one thing: not only do Friedman, Keynes, Marx, the Fabians, Thatcher, Josephs, Hunt and Hannan have nothing to offer on this one either: they’ve refused to recognise that it’s the issue in the first place. So week in, week out, those of this ilk who are still with us defend indefensible psychos on the grounds of them being the product of their narrow ideology….and thus by definition, correct. Aaaaarrrrrrrrg.

For over half a century or more now – pretty much since the reformist Labour ideas of Richard Crosland were being formulated in The Future of Socialism – and the Kennedy Democrats began to think about the New Frontier – the application of eclectic philosophy to the development of Western civilisation has been both tramline and superficial. Even worse, among both liberals and conservatives, the windscreen view has been abandoned almost entirely in favour of the rear-view mirror. Most of our societies are woefully split to the point of Mexican standoff or mutual mudslinging: our politics are as stagnant as our economics which are in turn as amber-trapped as our social theories. Listening to Harriet Harman on the subject of gender and children, one is struck by how little she must have read about behaviour therapy and neuro-wiring since 1970. Listening to Dan Hannan, one is equally astounded at the feeble grasp of social anthropology. Listening to Ed Balls on fiscal management, it is as if the revolution in mass employment had never taken place.

So poor was the creativity applied to macro-commentary by 2002, New Labour ‘strategists’ – the ultimate oxymoron – were beginning to talk bollocks about ‘the end of political change’ and ‘the victory of tactics’. Even more dreadful than such pondlife assertion was the complete lack of any media-based guru dismissing these apparatchiks as loons with zero-consequences thought-patterns. Unable to apply any insight to why the New Labour or Bush GOP gesture-spin machine was the last thing anyone needed, the Democrats turned to the beef-free sandwich Barack Obama, Britain’s Tories to the Blair-worshipping David Cameron.

Maybe it was a victory for tactics, but if so it was Pyrrhic. These empty suits (and their EC equivalents in Brussels-am-Berlin) are delivering us with suitably blind conviction unto the greatest econo-fiscal disaster in history. And the education system that once snared every dictatorial attempt to grasp yet more political power has melted down into a candle-stub of conformist learning and sponsored depoliticisation. The West faces a dire future armed only with a quite staggering suspension of snake-oil and tainted well-water for fuel: directionless tacticians recruiting dated ideologues in order to rationalise policies none of those ancients would’ve recognised. No wonder the global gearbox has seized up.

Ideology will always become – unless it evolves like a living organism adapting to environmental change – the ultimate enemy of ideas. It will be the destroyer of genuine creativity, the executioner of the visionary, the censor of the empirical, and the father of dictatorship. My message to Dan Hannan – and Joe Stiglitz, Ed Balls, George Osborne and Wolfgang Schäuble – is this: forget the past giants, they have nothing to offer us in this crisis. Grow some fresh brain tissue and some balls. Open your mind to revised interpretations. Have some new ideas. Because the refusal to do so, while it may garner praise from peers or get you votes, can only doom all of us to a new dark age.

Last night at The Slog: Why Dave Whelan is my hero, and Rupert Murdoch isn’t