Have I changed my mind?

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A reader asked,

In light of everything that has happened in the last few years, have you changed your mind on anything.

In the context, this was a question about politics. I think that in general I have become more pessimistic about American political culture.

I think that I would have preferred that the elite stay “on top” as long as they acquired a higher regard for markets and lower regard for technocratic policies. What has been transpired is closer to the opposite. There was a seemingly successful revolt against the elite (although the elite is fighting back pretty hard), and meanwhile the elite has doubled down on its contempt for markets and its faith in technocracy.

I am disturbed about the news from college campuses. A view that capitalism is better than socialism, which I think belongs in the mainstream, seems to be on the fringe. Meanwhile, the intense, deranged focus on race and gender, which I think belongs on the fringe, seems to be mainstream.

The media environment is awful. Outrage is what sells. Moderation has fallen by the wayside.

It seems increasingly clear that no matter who wins elections, my preferences for economic policy get thrown under the bus. The Overton Window on health policy has moved to where health insurance is a government responsibility. The Overton Window on deficit spending and unfunded liabilities has moved to where there is no political price to be paid for running up either current debts or future obligations. The Overton Window on financial policy has moved to where nobody minds that the Fed and other agencies are allocating credit, primarily toward government bonds and housing finance. The Overton Window on the Administrative State has moved to where it is easier to mount a Constitutional challenge against an order to remove regulations than against regulatory agency over-reach.

Outside of the realm of politics, things are not nearly so bleak. Many American businesses and industries are better than ever, and they keep improving. Scientists and engineers come up with promising ideas. Reading Technology Review is a wonderful antidote to reading, say Regulation Magazine. The latter is the most depressing thing I do all month.

14 thoughts on “Have I changed my mind?”

  1. It would make your blog a lot easier to read if you would include links with background information to terms that you use repeatedly like “Overton Window”.

  4. I think that I would have preferred that the elite stay “on top” as long as they acquired a higher regard for markets and lower regard for technocratic policies.

    From a Clinton neoliberal POV, I believe the big question why capitalism failed to deliver stagnant wages the last 15 years? I remember capitalism raging in 1998 in the US, it was a lot easier to convince the population of pro-market reforms. Now, it appears that the PSST economy has effected 50+% of the US population, so the population gets disillusioned with capitalism. It seems like the Economic Elite say Arnold Kling, Jamie Dimon, Koch Brothers, Cook and Jeff Immelt need to answer that question. If the size of PSST workers goes too large, then workers stop believing in capitalism. This is why in 1932 people listened to Keynes and not Hayek who was claiming prices were stabilizing in 1931. Oddly enough in 2017, I do believe we are going to continue to see rising wages but mostly because labor supply is not growing. (Today I believe we follow the 1950s economy with reasonable growth but a lot the producer surplus going to workers.)

    One reason why Trump did so much better than European nationalism candidates is because he mixed both Populist Nationalism with Capitalist Deal-Making. Le Pen was at sea on economic issues compared to Macron. Note, I bet if Trump had not fired Comey better, he would be basking in praise with his $100+B arm sales to Saudia Arabia.

    Secondly, I think the big issue for the developed is not the modern politics or capitalism/socialism axis, is the reality that is average young citizens are putting off marriage and kids. (And note the most couples are ones that don’t get married until 32 and having kids at 35.) European nations have low birth rates and nothing compared to East Asian nations. Think about how Japan had ~2.0M babies in 1955 where the baby born dropped to 1.1M. Immigration is a short term solution but given the 2016 election it creates political splits. The Ross Douthat issues are getting larger but the global economy is making them worse.

    And think what economic variable has large effects on AS-AD curves. Population Size.

  5. Kling is dead wrong on health insurance.

    If a woman without insurance has has a baby with a serious birth defect, or a homeless bum gets hit by a bus or suffers a non-fatal heart attack… everyone across the spectrum supports some basic level of government safety net service. This isn’t new, this isn’t a shift of the Overton Window, it’s what has been the overwhelming mainstream view of pretty much everyone, including free market proponents.

    In the past Kling endorsed John H Cochrane’s (aka Grumpy Economist) view on health insurance. Cochrane is clear that he supports some minimal safety net. A government safety net is by definition a type of “insurance”. And it applies to everyone, so it is literally “universal”, at least to US resident citizens.

    The ideal policy which Cochrane advocates is you have a universal insurance safety net for the bottom 15% or so of society and you move the rest of the nation to a flexible decentralized free market system. Eliminate regulations so that vendors compete on transparent prices. Eliminate regulation that ties health insurance to employment. Replace cross subsidy mechanisms to provide safety net with less disruptive direct tax+spend payment.

    Cochrane has a good recent post on this: http://johnhcochrane.blogspot.it/2017/05/wild-health-care-proposal.html

      • Except that hasn’t happened. In fact, in many states you can’t buy insurance coverage that will cover abortions. The statists are not letting people buy the insurance they want.

  6. Would that Arnold Kling, or someone of his capacity for rumination, set out some kinds of outlines for the characteristics by which the “elite” (so readily referred to) may be identified in OUR particular form of current social order.

    Is there a true “elite” in the historic social sciences sense?

    Or; do we have something else; some predominant determiners devoid of senses of obligations that at least marginally exceed their senses of entitlements, privileges and immunities?

  7. Progress on all fronts then. It is somewhat misleading to talk about markets when what you mean is laissez faire though. I would like to see less regulation and more markets in the form a carbon tax.

    • Most of us would make that trade (we invented it). So I ask why is it not being offered?

    • If you see more movement in the form of a carbon tax, I can guarantee you that it will not be implemented along with less regulation.

  9. Hey Arnold,

    Thanks for responding. Sorry for the delay life is busy.

    In terms of context I meant anything you’ve changed your mind about, not just “politics”.

    There are two things I noticed about your list.

    1) I doesn’t seem you’ve changed your mind about anything, just gotten more pessimistic about who you can back to get what you want.

    2) It’s all economics. Nothing about culture or society. I’m not just talking government policy here, even private opinions on matters.

    When I think about my own libertarian opinions ten years ago its the social/cultural ones that have changed the most. A few of them have government policy implications, but most are just about what I think is good/bad. Some of this is because I’ve become convinced that some things I thought were harmless choices turn out to be bad for the chooser and those around them. Some because I’ve realized that there is always some “winner” in the cultural sphere that imposes its views on others so you have to play the game.

    On the second point, besides general pessimism, have you figured out what you want to do about “if you desire the ends, you must desire the means.” The question I always ask is, “what’s the most realistic way to make the country my children and grandchildren grow up in better for them.” While some libertarian ideas and sentiments fit into that question, many don’t.

  10. So things are getting better as the country moves to the left

    Sounds good to me

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