Hayek’s Progressive Hubris

There is a crippling hubris in Friedrich Hayek’s political project. It was explained well by John Gray:

Keynes’s own experience told against Hayek’s theories. As one of the 20th century’s most successful speculative investors, playing the markets on behalf of his college from a phone at his bedside before he got up for the day, he understood—in a way that the inveterately professorial Hayek did not—the ineradicable uncertainty of economic life. As a member of the British delegation at the Paris Peace Conference in 1919, Keynes had been horrified at the punitive conditions imposed by the Allies, which he forecast would destroy the German economy and lead to an upheaval that would “submerge civilisation itself”. Keynes had an acute sense of the risks posed to social stability by misguided economic policies. In contrast, Hayek consistently ignored these hazards.

Hayek’s blind spot with regard to politics was clear in the early 1980s when the first Thatcher government, in an attempt to reduce inflation and bring the public finances closer to a balanced budget, was raising interest rates and cutting public spending. As he had done during the 1930s, Hayek attacked these policies as not being severe enough. It would be better, he told me in a conversation we had around this time, if Thatcher imposed a more drastic contraction on the economy so that the wage-setting power of the trade unions could be broken. He appeared unfazed by unemployment, which was already higher (more than three million people) than at any time since the 1930s, and would rise much further if his recommendations were accepted.


Though he witnessed at first hand the collapse of liberal civilisation in interwar Europe, Hayek had little sense of the fragility of freedom. He observed how the Habsburg regime was destroyed, first by war and economic ruin and then by nationalism, but his response was to look for what he called in his book Individualism and Economic Order (1949) “a permanent legal framework”, which could serve as a guarantor of liberty in the economy and society. Here Hayek disregarded the principal lesson of the interwar years, which is that a liberal regime cannot be secured by legal diktat.

Geopolitical conflict and war, economic upheavals and new social movements have repeatedly damaged or destroyed liberal regimes. No ideal constitution can overcome the permanent threats to liberal values.

Yet throughout his writings Hayek invoked the mirage of a legal order in which vital freedoms are protected by being insulated from the political process. Something like this protection was provided by the Austro-Hungarian empire during the reign of the emperor Franz Joseph, and it is almost as if Hayek were trying to reconstitute the Habsburg realm in a new form that would last for ever.

The same objection should be made against what Gray called “anti-political liberalism,” which is “the ruling illusion of the current generation of progressive thinkers.” Gray made this argument (and convinced me) in his book Two Faces of Liberalism. If you want to know why the tag line for this blog is “liberal, but not progressive,” read his book.

The Upside of Political Machines

Polarization may not be what stymies American politics today. According to Jonathan Rauch, fragmentation is the real problem, and better political machines are the solution. That was the conclusion Rauch drew in his insightful and tightly argued book Political Realism: How Hacks, Machines, Big Money, and Back-Room Deals Can Strengthen American Democracy.

Many will balk at the title alone and read no further, but Rauch’s argument is more subtle than it may seem at first. Rauch recently defended his call for stronger machines in a recent episode of The Chess Clock Debates, which describes itself as podcast “for people who love good debates on divisive issues by serious people but think moderators just get in the way.” The exchange is a good introduction for anyone skeptical of Rauch’s position.

Transactional politics are a necessity, and machines are where transactions happen. In order for governments to govern, Rauch said, “political machines or something like them need to exist, and they need to work.” He elaborated:

By “govern” I mean reliably and reasonably reach accommodations on the problems and conflicts which demand resolution from day to day.

By “political machines,” I mean informal (as opposed to legally constituted) and mutually accountable hierarchies, networks, and relationships that allow politicians to organize their environment by reaching accommodations, honoring accommodations, rewarding and protecting supporters, punishing and marginalizing defectors, and exerting coordinated influence through multiple formal channels.

By “or something like them” I mean to indicate that the famed big-city party machines of yesteryear are merely one kind of machine and that other, less sharply defined political organizations or networks can do the work of machines: for example, the “regular order” system in Congress, with its hierarchy of committees and seniority rules. Until the 1990s, the U.S. House of Representatives had a pronounced machine-like aspect, with minority Republicans claiming a piece of the appropriations action in exchange for cooperation with majority Democrats (an arrangement gleefully demolished by Newt Gingrich). Even coalitions which are independent of formal political parties and structures, groupings like the Tea Party or the Koch brothers’ network, can have some machine-like aspects, as we’ll see.

My emphasis on “machines or something like them” is unconventional, to be sure. Most realists focus their analyses on parties. And well they should: parties are important, and machines have usually been partisan (and parties, when strong and effective, have been machine-like). But reciprocally accountable political hierarchies are not necessarily partisan, as we know from the House in its relatively bipartisan days; and parties are not necessarily machine like, as we know from watching the Republican majority’s travails in Congress today. Translating the axes of analysis from parties to machines has the advantage of putting function ahead of form: it begins by asking not what an organization or system is but what it does, which is a useful place to start. It also avoids some common confusions that can arise in a party-centered analysis: for example, between strong party machines and strong party identification or ideology. It’s often said that parties are stronger than ever because votes on Capitol Hill are so consistently partisan.

But that can be (and usually is) because the majority party is allowing votes only when its factions agree, whereas machines facilitate decision making when fellow partisans don’t agree. Ideological solidarity is a brittle glue, and reliance on it for intraparty cohesion is a sign of a weak party machine, not a strong one.

Finally, by “need to exist and need to work,” I mean that they need to establish incentive structures which enable political leaders to lead and which encourage political followers to follow—thereby assisting with what [James Q.] Wilson called the assembling of power in government.

I do not agree with Rauch on every particular, but he is on to something. The potential benefits of ever-greater transparency have been wildly oversold and the costs blithely denied. Many efforts to broaden participation, in the name of democracy, have increased the veto power of activist minorities who are not accountable to voters. I am not sanguine about the role of big money, but crippling the ability of political parties to operate as political parties is no boon for democracy either.

Political Realism is not a doctrinaire book. Rauch does not have a baroque list that runs for a dozens pages on What Must Be Done. Instead, the book is a lucid reminder that even “good governance” reforms can have perverse and unintended consequences. Trying to take the politics out of politics is a fool’s errand. It does more to undermine than advance effective governance.

Red Flags for Mass Murder

Dylann Roof was not silent about his homicidal intentions. Before massacring nine people who welcomed him into their church, Roof shared with several acquaintances his violent commitment to racial cleansing:

At first Mr. Meek said he did not take Mr. Roof seriously. But he became worried enough that several weeks ago he took away and hid Mr. Roof’s .45-caliber handgun, which Mr. Roof had bought with money given to him by his parents for his 21st birthday. But at the urging of his girlfriend, Mr. Meek returned the weapon because he was on probation and did not want to get into trouble.

Now Mr. Meek and his girlfriend, Lindsey Fry, both of whom are white, say they feel guilt about the shooting. “I feel we could have done something and prevented this whole thing,” Ms. Fry said.

Asked why Mr. Roof picked that particular church, Mr. Meek replied, “Because it was a black church.”

Another friend, Dalton Tyler, said that Mr. Roof had begun talking about wanting “to start a civil war.” But like Mr. Meek, he did not always take Mr. Roof seriously.

Mr. Tyler said on another occasion, the two were driving to a strip club by the zoo when Mr. Roof saw a black woman, used a racist word and said, “I’ll shoot your ass.”

“I was just like, ‘You’re stupid,'” Mr. Tyler said. “He was a racist; but I don’t judge people.”

The last statement is reprehensible. To completely abstain from judging others would be morally deranged and intellectually dishonest.

Most of us have heard the public service announcement “If you see something, say something.” But short of someone brandishing a weapon, it is not entirely clear what to watch for. Joe Navarro is a former FBI agent who worked for years on counterintelligence and behavioral analysis. Navarro has argued that several traits are common to most mass murderers.

Political fanatics who resort to mass murder tend to view themselves as part of a vanguard, with a special authority to act without having to answer to anyone else. They speak in hateful terms, but what they express is an all-pervasive fear. They imagine the world as a conspiracy, where they are persecuted by some malignant and mysterious force. In their minds, they are engaged in a relentless battle against some existential threat. This fear and loathing, Navarro said, “can give purpose to an otherwise unfulfilled life.” It can also be taken as a license to kill.

A common practice for such fanatics is the collection of wounds. According to Navarro:

These are individuals who collect social or historical slights, procedural wrongs, injustices real or imagined, mistakes, faux pas, on and on for a purpose. That purpose is to validate their hatred and paranoia and justify just how correct they are. And they don’t just collect wounds they nurture them so they don’t die out. They take them out, dust them off, tell and retell them, think about them, and garnish them, so that they become almost mythically powerful through repetitive admiration (story telling, ideation, writing, rituals, etc.). Thus, wound collection is essential, it provides the justification for acting out.

Most of these whinging fanatics do little more than bellyache. Distinguishing the few audacious enough to act from the sedentary blowhards is no easy task. However, Navarro said there are some crucial indicators: when they seek out the means to kill, and when they engage in magical thinking about righteous violence. Though before they act, they are likely to withdraw, first psychologically and then physically:

By self-isolating the individual assures that he is not listening to outside factors (extrinsic) that would derail his [or her] thinking or ideation. Coupled with physical isolation, the individual insures no outside distractions, and they can focus on their ideology, collected wounds, and the magical solution to solve the issue. In physical isolation, they can further focus their hatred, refine their magical solution, plan how to execute their action, come to terms with their decision and how the violence will be carried out.

Early clues are not difficult to find, though they are easy to dismiss. We leak what we desire, Navarro said, “but we broadcast what we hate.” After a terrorist attack, there is often concern about possible failures of intelligence or law enforcement agencies. More disturbing to me are the failures of community and civil society.

How Not to Reform Finance

The potential for financial crises can only be mitigated, never eradicated. Few institutions are more vital in resolving a crisis than the lender of last resort. I thought progressive reformers understood this necessity, but I may have been wrong.

Senators Elizabeth Warren and David Vitter have introduced The Bailout Prevention Act of 2015. The bill would restrict access to emergency lending by the Federal Reserve and pressure the central bank to lend at steeper rates in a crisis. According to former Fed Chairman Ben Bernanke, it would undermine the Federal Reserve’s role as lender of last resort. Bernanke’s argument is compelling:

Imagine a financial institution that is facing a run but has good assets usable as collateral for a central bank loan. If all goes well, it will borrow, replacing the funding lost to the run; when the panic subsides, it can repay. However, if the financial institution believes that its borrowing from the central bank will become publicly known, it will be concerned about the inferences that its private-sector counterparties will draw. It may worry, for example, that its providers of funding will conclude that the firm is in danger of failing, and, consequently, that they will pull their funding even more quickly. Then borrowing from the central bank will be self-defeating, and firms facing runs will do all they can to avoid it. This is the stigma problem, and it affects everyone, not just the potential borrower. If financial institutions and other market participants are unwilling to borrow from the central bank, then the central bank will be unable to put into the system the liquidity necessary to stop the panic. Instead of borrowing, financial firms will hoard cash, cut back credit, refuse to make markets, and dump assets for what they can get, forcing down asset prices and putting financial pressure on other firms. The whole economy will feel the effects, not just the financial sector.

The stigma problem is very real, with many historical illustrations. When the BBC announced in 2007 that the British lender Northern Rock had received a loan from the Bank of England, for example, a severe run on the lender began almost immediately. Ultimately, the government had to take the firm over.

The Warren-Vitter legislation would create an insuperable stigma problem. (It has other drawbacks as well, but my focus here is on stigma.) First, the requirement that solvency analyses be released immediately (or quickly) would publicly identify any potential borrowers. No borrower would allow itself to be so identified, for fear of the inferences that might be drawn about its financial health. Second, the five percentage point penalty rate requirement would remove any doubt that those borrowing from the central bank had no access to other sources of funding, further worsening the stigma problem. (A penalty rate was not a problem in [Walter] Bagehot’s era, because, unlike today, all lending by the central bank was strictly confidential.) Moreover, because borrowers would know that the program could be terminated in thirty days if Congress didn’t approve, the benefit of borrowing from the central bank would be limited. Because borrowers would not willingly participate, broad-based lending programs (which Dodd-Frank intended to preserve) would not work, and we would have lost a critical weapon against financial panics.

The approach of Senators Warren and Vitter, Bernanke said, is “roughly equivalent to shutting down the fire department to encourage fire safety.” It would be far better to improve the fire code, which has already changed since 2008:

The Fed intervened in the cases of Bear and AIG with great reluctance, doing so only because no legal mechanism existed to safely wind down a systemic firm on the brink of failure. A key element of the Dodd-Frank financial reform bill, passed in 2010, was to provide just such a mechanism—the so-called orderly liquidation authority, which gives the Federal Deposit Insurance Corporation and the Fed the necessary powers to put a failing firm into receivership without creating financial chaos. (By the way, a great deal of progress has been made in implementing this authority and preparing for the possible failure of a systemic firm; see these recent remarks by FDIC chairman Martin Gruenberg.) With the creation of the liquidation authority, the ability of the Fed to make loans to individual troubled firms like Bear and AIG was no longer needed and, appropriately, was eliminated.

If the liquidation authority is not yet adequate, reformers should demand its enhancement. But undermining the Fed’s role as lender of last resort is completely backasswards. It leaves me baffled as to what lessons were learned from the financial crisis by progressives like Senator Warren.

There are reasons to doubt the stability of the financial system, as Martin Wolf has argued. But when reformers get the diagnosis wrong, they are far more likely to screw up the remedy.

Blasphemy Is the New Bigotry

If a Muslim woman is spat on because she wears a niqab, that is bigotry. If a Muslim man is denied an apartment because of his faith, that is bigotry. If a mosque is firebombed by a Christian nativist, that is bigotry. Blasphemy, however, is not.

The term “Islamophobia” conflates blasphemy with bigotry. This is no accident. In origin and purpose, this pejorative has always been illiberal. Pascal Bruckner explained:

To avoid incurring any blame, in the 1970s fundamentalism invented the term “Islamophobia,” which was supposed to parallel xenophobia: the semantic buckler was first used against the American feminist Kate Millet, who was said to be guilty of calling upon Iranian women to take off their chadors, and then in the 1990s against the Anglo-Indian writer Salman Rushdie when he published The Satanic Verses. This was a clever invention because it amounts to making Islam a subject that one cannot touch without being accused of racism.

The use of this “semantic buckler” is not confined to the Islamist movement. Garry Trudeau is no Islamist, but he has joined the campaign against those who dissent from political Islam. In the acceptance speech for his Polk Award, Trudeau said:

Traditionally, satire has comforted the afflicted while afflicting the comfortable. Satire punches up, against authority of all kinds, the little guy against the powerful. Great French satirists like Moliére and Daumier always punched up, holding up the self-satisfied and hypocritical to ridicule. Ridiculing the non-privileged is almost never funny—it’s just mean.

By punching downward, by attacking a powerless, disenfranchised minority with crude, vulgar drawings closer to graffiti than cartoons, Charlie [Hebdo] wandered into the realm of hate speech, which in France is only illegal if it directly incites violence. Well, voilá—the 7 million copies that were published following the killings did exactly that, triggering violent protests across the Muslim world, including one in Niger, in which ten people died.

Powerless is not an adjective I would apply to men with Kalashnikovs. But unlike Trudeau, who was punching the dead, I view Islamists as political actors.

Buried within Trudeau’s argument is a peculiar assumption about Islamist agency. David Frum teased it out:

Had the gunmen been “privileged,” then presumably the cartoons would have been commendable satire. The cartoonists would then have been martyrs to free speech. But since the gunmen were “non-privileged,” the responsibility for their actions shifts to the people they targeted, robbing them of agency. It’s almost as if he thinks of underdogs as literal dogs. If a dog bites a person who touches its dinner, we don’t blame the dog. The dog can’t help itself. The person should have known better.

An aggrieved dog also has no politics, which is convenient for Trudeau. It’s violence cannot induce cognitive dissonance. It presents no conflict between multiculturalism and liberal values.

UPDATE (April 30, 2015): Power, as Nick Cohen said, “is not fixed but fluid. It depends on where you stand.”

The unemployed terrorist with the gun is more powerful than the Parisian cartoonist cowering underneath his desk. The marginal cleric may well face racism and hatred—as my most liberal British Muslim friends do—but when he sits in a Sharia court imposing misogynist rules on Muslim women in the West, he is no longer a victim or potential victim but a man to be feared.

Fever Dreams of the Apocalypse

The allure of prophetic and messianic religion is not something many American pundits comprehend. Conservative Rod Dreher is a rare exception. Dreher views the Islamic State’s barbarism as something familiar and comprehensible, if you consider their “fever dream of the Islamic apocalypse.” In a post over at The American Conservative, he explained the intoxicating power of apocalyptic visions:

I was reading last night from a passage in the Russian philosopher Nikolai Berdyaev (1874-1948), who writes about the messianic urge within societies. Excerpts:

It is not only upon interpretation of the meaning of history, but also upon the formation of the very category of the historical, that messianism has its bearing. History is created by the expectation that in the future there will be a great manifestation, and that this manifestation will be a disclosure of Meaning in the life of the nations. It is the expectation of the appearance of the Messiah or of the messianic kingdom. The movement of history is also a movement towards that messianic appearance which will bring with it liberation from slavery and suffering, which will inaugurate for man a state of happiness. Messianic consciousness is born in suffering. When suffering does not crush man it is changed into a terrible power. The dynamic messianic myth is turned towards the future. It is in this respect a contrast to pagan myths, which were turned not towards the future but to the past It was characteristic of the Greeks to be concerned with the contemplation of the cosmos and its cyclic movement. This postulates that the world is eternal and has neither beginning nor end, a world, above all, in space and not a world in time. No philosophy of history is to be found either in Plato or in Aristotle. It is in ancient Israel that the philosophy of history begins, in the revelation of God in history, which found expression in the consciousness of the prophets, and in the Book of Daniel.

But it is within Christianity, Berdyaev says, that a philosophy of history first became possible because it “introduced disquietude about the future, a messianic and eschatological disquietude.” He means that Christianity accepted and extended Jewish messianic hopes, foretelling an End of History, culminating in the Second Coming of the Messiah. In this way, history has meaning. It’s not simply random or cyclical events; it is going somewhere. We can only understand the meaning of history if we have a vision for where it is going, he says. This is not something scientific; this is something “prophetic.”

Islam, which arose in the Middle East seven centuries after Christianity, is messianic in that it also sees history ending with an apocalypse. And Berdyaev observes that Hegel was also driven by a messianism, though of the post-Christian sort. So was Marx. And so are the Western democrats of today, who may or may not believe in God, but who do believe in liberal democracy as the End of History. The messianic impulse is part of what it means to be modern (as opposed to ancient). This is something that contemporary Westerners do not seem to understand. At all.

Berdyaev says that formal religion domesticates and stifles the messianic consciousness among the people. “The priest has more and more crowded out the prophet,” he writes. “Ritualism is dominant. But ritualism does not confer any understanding whatever of the meaning of history.”

What he’s saying is that people have a deep craving for the belief that what they’re going through means something. That their suffering is not in vain. That events are going somewhere, however random they may seem on the surface. This is an essentially religious impulse, but it was shared by orthodox Marxists as well as religious believers. This is at the heart of the meaning of Beckett’s Waiting for Godot. We cannot let go of our sense that existence has meaning, and that the meaning will be revealed if we wait patiently and expectantly. More Berdyaev:

The messianic consciousness and expectation creates history, proclaims a meaning for it and holds it together, and yet at the same time, so to speak, breaks down history and seeks to overleap it. This contradiction has to be accepted as a part of experience. In the same way as the first Coming of the Messiah was prepared among the Hebrew people, so now among all mankind the way must be prepared for the Second Coming; and it is in this that history has its justification. The goal is no less than the attainment of the creative fullness of life and the realization of the Spirit not only in human life but also in the life of the cosmos.

It is nothing less than re-union with God, and the advent of Utopia. The end of all suffering, and the fulfillment of time. If you cannot understand why this vision has immense power, especially for the wretched of the earth, you are not looking hard enough. If you cannot understand why this vision has immense power for the bored, clapped-out, shopped-till-they’ve-dropped bourgeois children of the West, you are not looking hard enough.

The most compelling book I ever read on eschatological fanatics was Norman Cohn’s The Pursuit of the Millennium: Revolutionary Millenarians and Mystical Anarchists of the Middle Ages. The book is a sweeping account of the radical religions that thrived during the upheavals of late medieval Europe. It taught me that the expressions of this monomania are manifold and prone to moral derangement.

Paradox of Tolerance

Burning a cross on someone else’s front lawn is not something many liberals would defend as civil disobedience. No matter how sincere a Klansman may be in his beliefs, they are no license to terrorize others.

We are often intolerant of intolerance—with good cause. Tolerance without limits would self-destruct. As Karl Popper explained:

The so-called paradox of freedom is the argument that freedom in the sense of absence of any constraining control must lead to very great restraint, since it makes the bully free to enslave the meek. The idea is, in a slightly different form, and with very different tendency, clearly expressed in Plato.

Less well known is the paradox of tolerance: Unlimited tolerance must lead to the disappearance of tolerance. If we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend a tolerant society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them.

Reasonable liberals will debate what the limits are and how they should be imposed. However, there can be no question whether any limits should be imposed at all. Anyone who claims otherwise cannot be trusted to defend an open society.