Might is Right

Abusing History?

China’s mix of historical and legal claims in the South China Sea are inconsistent, says Frank Ching. Beijing can’t have its cake and eat it.

By Frank Ching

US scholar Lucian Pye once famously said that China was not a country but ‘a civilization pretending to be a state.’ That may have been apt at one time, but today’s China has been transformed into a modern state that plays an active role in international forums.

However, China also tries to capitalize on its long history when pressing its case in international disputes. Nowhere is this more clear than in the current South China Sea territorial dispute, which pits China against several of its neighbours. Also embroiled in the various rows are the United States, India and, increasingly, Japan. It’s a potent mix.

In 1996, Beijing ratified the UN Convention on the Law of the Sea(UNCLOS) and publicly embraced the treaty’s provision that ‘China shall enjoy sovereign rights and jurisdiction over an exclusive economic zone of 200 nautical miles and the continental shelf’ – a hitherto unknown concept.

At the same time, however, it reaffirmed its claim over the islets, rocks and reefs in the South China Sea on historical grounds—grounds that aren’t recognized by the convention. That is to say, China claims all the rights granted under international law today and, in addition, claims rights that aren’t generally recognized because its civilization can be traced back several thousand years.

Historically, China was the dominant power in East Asia and considered lesser powers as its tributaries. By insisting now on territorial claims that reflect a historical relationship that vanished hundreds of years ago with the rise of the West, Beijing is, in a sense, attempting to revive and legitimize a situation where it was the unchallenged hegemon.

The ambiguity about what parts of international law China recognizes and which bits it doesn’t gives rise to the current dispute, which directly involves Vietnam, the Philippines, Malaysia and Brunei, and indirectly involves the interests of many other nations.

The claims made by Southeast Asian countries rest primarily on the provisions of the Law of the Sea. China, however, is taking the position that its sovereignty over the territories concerned precedes the enactment of the Law of the Sea, and so the law doesn’t apply. History trumps law.

In 2009, China submitted a map to the UN Commission on the Law of the Sea in support of its claims to ‘indisputable sovereignty over the islands of the South China Sea and the adjacent waters’ as well as ‘the seabed and subsoil thereof.’

The map featured a U-shaped dotted line that encompassed virtually the entire South China Sea and hugged the coasts of neighbouring countries including Vietnam, Malaysia and the Philippines. This was the first time China had submitted a map to the United Nations in support of its territorial claims, but there was no explanation given as to whether it claimed all the waters as well as the islands enclosed by the dotted line.

This was a radical departure from the position China took when it ratified the treaty. Back then, China said that it would hold consultations ‘with the states with coasts opposite or adjacent to China respectively on the basis of international law and in accordance with the principle of equitability.’

Significantly, especially for the United States, China’s position on UNCLOS has also shifted in another respect. In 1996, it took the position that foreign warships required its approval in order to pass through China’s territorial waters. Now, China says that foreign warships must obtain its approval before they can pass through its exclusive economic zone – a much wider area that isn’t part of its sovereign waters.

The United States disputes that position, maintaining that waters in a country’s EEZ are part of the high seas and that naval vessels are free to enter them and even conduct operations without any need for approval.

This difference in opinion between China and the United States (as well as most developed countries) has led to confrontations between the two countries, with US naval surveillance vessels carrying out information-gathering missions in China’s EEZ and being challenged by the Chinese.

China’s resort to history is a relatively new development in international law, although it isn’t completely unprecedented. For example, coastal states have been allowed to claim extended jurisdiction over waters, especially bays or islands, when those claims have been open and long-standing, exclusive, and widely accepted by other states.

In China’s case, however, its claims are evidently neither exclusive nor widely accepted by other states since they are being openly contested. Still, Chinese officials and scholars have attempted to buttress their arguments by appealing to historical records.

For example, Li Guoqiang, a research scholar with the Research Center for Chinese Borderland History and Geography of the Chinese Academy of Social Sciences wrote in July in the China Daily: ‘Historical evidence shows that Chinese people discovered the islands in the South China Sea during the Qin (221-206 BC) and Han (206 BC-AD 220) dynasties.’ China’s maritime boundary, he asserts, was established by the Qing dynasty (1644-1911).

‘In contrast,’ he wrote, ‘Vietnam, Malaysia and the Philippines hardly knew anything about the islands in the South China Sea before China’s Qing Dynasty.’

Vietnam, in pressing its case, has cited maps and geography attesting to its ‘historical sovereignty’ over the Paracel and Spratly islands going back to the 17^th century. This doesn’t match the antiquity of China’s claims, but, at the very least, it shows that Chinese claims have been contested for centuries, and that China didn’t enjoy exclusive and continuous jurisdiction over these islands.

And, if history is to be the criterion, which period of history should be decisive? After all, if the Qin or Han dynasty is to be taken as the benchmark, then China’s territory today would be much smaller, since at the time it had not yet acquired Tibet, Xinjiang or Manchuria, now known as the northeast.

One compromise that China has offered to its neighbours is to shelve the territorial disputes and engage in joint development of natural resources. This was proposed by President Hu Jintao as recently as August 31, when he met the Philippine President Benigno Aquino.

However, there are serious problems. Just what does China mean by this policy?

The Chinese Foreign Ministry website explains: ‘The concept of “setting aside dispute and pursuing joint development” has the following four elements:

‘1. The sovereignty of the territories concerned belongs to China.

‘2. When conditions are not ripe to bring about a thorough solution to territorial dispute, discussion on the issue of sovereignty may be postponed so that the dispute is set aside. To set aside dispute does not mean giving up sovereignty. It is just to leave the dispute aside for the time being.

‘3. The territories under dispute may be developed in a joint way.

‘4. The purpose of joint development is to enhance mutual understanding through cooperation and create conditions for the eventual resolution of territorial ownership.’

These four points make it clear that instead of shelving the territorial disputes, the idea of joint development is China’s way of imposing its claims of sovereignty over the other party. Chinese sovereignty is the stated desired outcome of any joint development. No wonder that no country has taken China up on its proposal.

Perhaps because of the conflict between historical claims and the UNCLOS, other Chinese scholars are now calling for a review of the Law of the Sea.

Li Jinming, a professor at the Center for Southeast Asia Studies at Xiamen University, says that there are ‘shortcomings’ in UNCLOS and, as a result, ‘China should consider its own situation before enforcing UNCLOS.’ That is to say, even though China has ratified the treaty, which has been in effect for 17 years, Beijing shouldn’t abide by its provisions unless the convention is somehow revised to support China’s territorial claims.

Beijing, it appears, wants to be made an exception in international law. It wants to have its cake and eat it. But law is law. What is the point of having international law when it is no longer international, and when it is no longer law?

Tools of the Trade

The Art and Science of Pseudology

by Thomas Szasz 

The common belief that the scientist’s job is to reveal the secrets of nature is erroneous. Nature has no secrets; only persons do. Secrecy implies agency, which is absent in nature. This is the main reason the so-called “behavioral sciences” are not merely unlike the physical sciences but are in many ways their opposites.

“Nature,” observed Thomas Carlyle (1795-1881), “admits no lie.” While nature neither lies nor tells the truth, persons habitually do both. As the famous French mathematician and philosopher Antoine Augustin Cournot (1801-1877) observed, “It is inconceivable that [in the science of politics] telling the truth can ever become more profitable than telling lies.” Indeed, deception and prevarication are indispensable tools for the politician and the psychiatrist—experts expected to explain, predict, and prevent unwanted human behaviors.

The integrity of the natural scientific enterprise depends on truth-seeking and truth-speaking by individuals engaged in activities we call “scientific,” and on the scientific community’s commitment to expose and reject erroneous explanations and false “facts.” In contrast, the stability of political organizations and of the ersatz religions we call “behavioral sciences” depends on the loyalty of its practitioners to established doctrines and institutions and the rejection of truth-telling as injurious to the welfare of the group that rests on its commitment to fundamental falsehoods. Not by accident, we call revelations of the “secrets” of nature “discoveries,” and revelations of the secrets of powerful individuals and institutions “exposés.”

Because nature is not an agent, many of its workings can be understood by observation, reasoning, experiment, measurement, and calculation. Deception and divination are powerless to advance our understanding of how the world works; indeed, they preempt, prevent, and substitute for such understanding.

Psychiatry is one of the most important institutions of modern American society. Understanding modern psychiatry—the historical forces and the complex economic, legal, political, and social principles and practices that support it—requires understanding the epistemology of imitation and the sociology of distinguishing “originals” from “counterfeits.” With respect to disease, the process consists of two parts: One part is separating persons who suffer from demonstrable bodily diseases from those who do not, but pretend or claim to; another part is separating physicians who believe it is desirable to distinguish between illness and health, sick persons and healthy, from physicians who reject this desideratum and insist that everyone who acts or claims to be sick has an illness and deserves to be treated. In an effort to clarify the difference between medicine and psychiatry—between real medicine and fake medicine—I proposed a satirical definition of psychiatry, slightly revised as follows:

The subject matter of psychiatry is neither minds nor mental diseases, but lies, beginning with the names of the participants in the transaction—the designation of one party as “patient,” even though he is not ill, and the other party as “therapist” even though he is not treating any illness. The lies continue with the deceptions that comprise the subject matter proper of the discipline—the psychiatric “diagnoses,” “prognoses,” and “treatments”—and end with the lies that, like shadows, follow ex-mental patients through the rest of their lives—the records of denigrations called “depression,” “schizophrenia,” or whatnot, and of imprisonments called “hospitalization.” If we wished to give psychiatry an honest name, we ought to call it “pseudology,” or the art and science of lies and lying.

The imitation of illness is memorably portrayed by Molière (1622–1673) in his famous comedy, The Imaginary Invalid (Le malade imaginaire). The main character is a healthy individual who wants to be treated as if he were sick by others, especially doctors. Since those days, we in the West have undergone an astonishing cultural-perceptual transformation of which we seem largely, perhaps wholly, unaware. Today medical healing is regarded as a form of applied science. At the same time, the medical profession defines imaginary illnesses as real illnesses, in effect abolishing the notion of pretended illness: Officially, malingering is now a disease “just as real” as melanoma.

The view that pretending to be mentally ill is itself a form of mental illness became psychiatric dogma during World War II. Kurt R. Eissler (1908-1999), then the quasi-official pope of the Freudian faith in America, declared: “It can be rightly claimed that malingering is always the sign of a disease often more severe than a neurotic disorder. . . . The diagnosis should never be made but by the psychiatrist.” Now, more than 50 years later, this medicalized concept of malingering is an integral part of the mindset of every well-trained, right-thinking Western psychiatrist. For example, Phillip J. Resnick, a leading American forensic psychiatrist, declares: “Detecting malingered mental illness is considered an advanced psychiatric skill, partly because you must understand thoroughly how genuine psychotic symptoms manifest.”

In World War I soldiers afraid of being killed in battle malingered; psychiatrists who wanted to protect them from being returned to the trenches diagnosed them as having a mental illness, then called “hysteria.” Today, almost a hundred years later, soldiers returning home and afraid of being without “health care coverage” diagnose themselves as having a mental illness, called “post-traumatic stress disorder (PTSD)”: Almost 50 percent of the troops returning from Iraq suffer from post-traumatic stress disorder (PTSD) and depression “because they want to make sure that they continue to get health care coverage once their deployments have ended.” (Syracuse Post-Standard, Nov. 25, 2007, E1).

Psychiatrists and the science writers they deceive—and who eagerly deceive themselves—love to dwell on how far psychiatrists have “progressed” from their past practices. They have indeed, if we consider creating ever more mental illnesses/psychiatric diagnoses “progress.” Today psychiatrists assert that the person who regards himself as a mental patient suffers from a bona fide illness and laud him for his insight into his “having a disease” and “need for treatment.”At the same time, they lament the person who “denies” his mental illness, his “lack of insight” into being ill, and his “negative attitudes toward treatment seeking.” For example, from the International Journal of Eating Disorders we learn: “Considering that males have negative attitudes toward treatment-seeking and are less likely than females to seek treatment, efforts should be made to increase awareness of eating disorder symptomatology in male adolescents.”

Counterfeit art is forgery. Counterfeit testimony is perjury. But counterfeit illness is still illness—mental illness, officially decreed “an illness like any other.” The consequences of this policy—economic, legal, medical, moral, personal, philosophical, political, and social—are momentous: counterfeit disability, counterfeit disease, counterfeit doctoring, counterfeit rehabilitation, and the bureaucracies, courts, industries, and professions studying, teaching, practicing, administering, adjudicating, and managing them make up a substantial part of the national economies of modern Western societies and of the professional lives of the individuals in them.

The architects of the West German economic “miracle"

Some Constructive Heresies of Wilhelm Röpke

by Joseph R. Stromberg 

Wilhelm Röpke was a pro-market liberal who helped found the Mont Pelerin Society in 1947 along with F. A. Hayek, Ludwig von Mises, and Leonard Read. But he has some significant differences with Anglo-American classical liberals that are worth exploring.

Born in Schwarmstedt in northern Germany in 1899, Röpke came from a family of Lutheran ministers and medical doctors. After his time in World War I he studied law and economics and embarked on a career as an academic economist. A firm opponent of National Socialism, Röpke was forced to “retire” in late 1933 and left Germany. He taught briefly in Turkey before settling permanently in Switzerland, whose tough and sturdy bourgeoisie he came to admire.

The intellectual historian Razeen Sally notes that Röpke produced around 900 publications. His books include Economics of the Free Society (1937, 1963),International Economic Disintegration (1942), The Solution of the German Problem (1946), Civitas Humana (1948), The Social Crisis of Our Time (1950), International Order and Economic Integration (1959), and A Humane Economy (1960; see The Freeman’s review here ^[1]). In Germany, the Röpke Stiftung (Institute) keeps alive his work and memory.

Röpke was closely identified with Germany’s “Neo-Liberals” (or “Ordo liberals”), who included Walter Eucken, Alexander Rüstow, Alfred Müller-Armack, and Ludwig Erhard. Writing in the aftermath of Weimar and National Socialism, these men wanted competition and free price movement ensured by a strong State (more on this shortly). Favoring a social-market economy, they served as architects of the West German economic “miracle.” While Anglo-American liberals claimed to be aggregating and balancing interests, German Neo-Liberals wanted an honest (and rather rational Hegelian) civil service to establish and preserve free competition. Seeing “planless” State intervention in aid of organized interests as the key problem, Neo-Liberals wished to block the influence of private “social power” over State policy and foster the common good.

For conservative economist William Campbell, Röpke was a Protestant thinker in the line of Erasmus and Grotius, despite his adoption of the Catholic principle of subsidiarity. His work displayed distributist and radical Jeffersonian themes along with a dislike of entrenched aristocracies, and he distrusted what Campbell called “scientistic approaches to the production process,” such as Taylorism.

Röpke’s work in technical economics bore considerable resemblance to that of the Austrian school. Believing strongly in the market mechanism and free price movement, Röpke was nevertheless quite critical of modern business practices, corporations, advertising, and more. As he wrote in 1958, “[A]ctually existing forms of market economy . . . are a far cry from the assumptions of theory.” Social conditions shape outcomes “beyond supply and demand.” In 1929-30 Röpke argued that once a depression is under way, modest “reflation” to stimulate new demand may be called for. This argument for compensatory credit expansion can hardly be rejected out of hand—despite a partial agreement with Keynes—and a number of Austrian economists have taken a similar position. (Certainly he later rejected Keynesian methods as a normal part of State fiscal policy.)

One of Röpke’s central concerns was restoration of the world market crippled by World War I. Economically the world before 1914 had been “virtually a unit.” Customs duties were “merely data,” and there were no “raw materials” problems. The “gold standard was a working fiction of a real ‘world money’” with London at its center. In its heyday this order had promoted social and international peace. Pre-war protectionism had, however, fostered domestic monopoly, but Röpke lost little sleep over the modest tariffs of a bygone age. Instead, it was heavy State involvement in national economies (national corporatism) during World War I and between the world wars that concerned him.

The old trading system had not been a self-sustaining natural order but had had an “extra-economic . . . framework of moral, political, legal and institutional conditions.” Röpke’s views on international trade—“liberalism from below” by agreement of independent nations—appear to conflict with the current American top-down globalization model, even if Röpke showed some affection for the Pax Britannica. Under reasonably free trade there would be no special problems of “raw materials” and “living space,” and business as such was not the source of imperialism. Instead, States were the key promoters of monopoly, and if monopoly led to empire, State policy remained the most important cause.

While opposed to national corporatism, Röpke was perhaps insufficiently critical of the post-1945 (and U.S.-led) multilateral corporatism (“embedded liberalism”) of GATT and the ITO. On the other hand, he criticized exported U.S. inflation from the late 1950s onward and generally frowned on the top-down economic management of the Common Market, ancestor of the European Union.

Reflecting in 1946 on the disastrous course of German history in his Solution of the German Problem, Röpke applied his historical and economic ideas to the renewal of German political and economic life. As he saw it, a proper federal equilibrium had never existed in Germany. In late-medieval and early modern times, communal (town-based) decentralization succumbed to powerful feudal magnates making the transition to absolutism and bureaucratic management (“state feudalism”). On the land in western Germany free peasants emerged; to the east in Prussia “feudal” magnates successfully suppressed the peasantry. This dualism of agrarian structure persisted into recent times. Prussia’s underdeveloped cities posed no counterweight to the East-Elbian landed aristocracy (Junkers), and the factory-like Prussian state made society rational, mechanical, and clock-bound—whence inhuman Kantian “ethics” and the Prussian “cult of the colossal.”

German unification had been less organic than that of Italy. The new central state (from 1871) dominated by Prussia adopted elements of economic liberalism and abandoned them as needed. Here was a top-down social revolution involving proletarianization, population increase, mass conscription, State education, and the rise of atomized mass society. Subsidized, cartelized, hierarchical, and centralized as it was, German capitalism was “the prototype of monopoly-and-proletariat capitalism . . . of rigidly organized industry” looking toward “organized socialism” (italics in original).

The ideal political revolution would have constrained Prussian domination, while the ideal “economic and social revolution” would have required “agrarian reform breaking up the great estates and putting peasant farms in their place,” and tariff abolition to undermine industrial cartels. Interestingly, important Social Democrats opposed agrarian reform as necessarily backward and unprogressive.

Now—in 1946—something positive could be done about German agrarian and industrial “feudalism” and their attendant evils. Ideally, a new German revolution—sponsored by the Allies—would dissolve Bismarck’s imperial edifice in favor of the Länder (states). Local administration had survived the collapse of the National Socialist state, and the Allies could revive the constituent German states by negotiating a separate peace with each one, effectively dissolving the Reich. The Allies, Röpke thought, should also enforce “complete free trade, external and internal, for all these German states” to assure German economic viability in spite of political decentralization, thereby preventing the persistent poverty envisioned in the punitive Morgenthau Plan. Allied-enforced free trade would undermine the old order of cartels. As to Germany’s new political structure, a working compromise between a Staatenbund (confederacy) and a Bundesstaat (federal state—in the unfortunate American sense) would be required.

Röpke’s treatment of the German case reflected a broad historical vision. He spied a “plutocratic taint” in early capitalism and wrote that historical (and actually existing) capitalism featured “monopolies, mammoth industries, stock corporations, holding companies, mass production, proletariat,” and was thus “very misshapen” indeed. (This line of analysis parallels that of Franz Oppenheimer, who was a direct influence on Albert Jay Nock, Rüstow, and Röpke.)

The “feudal-absolutist heritage” resulted in “immense accretions of capital and economic positions of power which endow capitalism with that plutocratic taint which clings to it”—giving it “a false start from the very beginning.” But “violent contrasts between rich and poor, between power and impotence, are rather due to extra-economic (‘sociological’) positions of power” such as “feudal land holding . . . profits from the slave trade . . . war and speculative profits . . . pirates’ and soldiers’ booty, monopoly, concessions granted in the age of absolutism, plantation dividends, and railroad subsidies.” Such things were the basis of later “development.” Some were now gone; some, like “feudal mining properties,” lingered as “strongholds of robber barons. . . .” Thence came the odium unjustly extended to all market activity. As for that emblematic nineteenth-century investment—railroads—they had been premature and inflationary.

Consistent with this approach, Röpke found mass society and proletarianization central to the twentieth-century crisis. And where had proletarians come from? His answer: Political power made them, even if their numbers (population) increased later. In both eastern Germany and England (especially in the seventeenth and eighteenth centuries) dispossession of peasants created a reservoir of cheap industrial labor. In Röpke’s opinion, Capitalism and the Historians (1954), a book on the Industrial Revolution edited by Hayek, swung “too far the other way,” but could not dispose of proletarians—whatever their caloric intake may have been—and the social “catastrophe” that came with them.

Such phenomena had feudal-absolutist causes in Europe—but why then did we see much the same results in the United States? Here Röpke refers to Oppenheimer’s “political means” to wealth. The State, whether feudal-absolutist or not, made possible interest-group politics, and American democracy had long allowed “vested interests to flourish unchecked.” Indeed, the interpenetration of interests and bureaucracies “has probably reached its highest degree in the United States”! For Röpke the underlying cause of the evil was “the division of labor, pushed to extremes, and interlocking everything in the most complicated manner”—an unnecessary result since division of labor could in fact be “more humane and natural, and less mechanical and proletarian.”

Röpke announced his “Third Way” revisionist liberalism as early as 1941 in the Swiss Journal of Economics and Statistics, calling for the restoration of competitive markets and distinguishing good economic intervention from bad. He contrasted the industrial division of labor—within a firm or factory—with the social division of labor in which markets coordinate “activities of independent units.” Real, functional independence was what distinguished market economies from socialism, while excessive division of labor led “increasingly to mechanization [and] monotonous uniformity.” The obvious antidote for Röpke was widespread ownership of productive assets: deproletarianization through small property. Where possible, the realm of self-provision outside the market should be expanded and competition enforced.

On Röpke’s rather institutionalist view, State and economy are not and cannot be entirely separated except for purposes of analysis. As noted, he—like other German Neo-Liberals—saw interest-group liberalism as false pluralism: “Unhealthy pluralism . . . is not defensive but offensive. It does not limit the power of the state but tries to use it for its own purposes and make it subservient to these purposes.” Here then is a kind of socially conscious liberal cameralism as opposed to corporate syndicalism.

The false or unhealthy market economy rested on “legal forms and institutions”—“stock companies, the corporation, patent law, bankruptcy,” trusts, and so on, supported by legislation. Indeed, “the growth of the corporation with its much discussed but unfortunately too seldom remedied abuses has led more and more to the assumption of risk by the community.” The State’s job was to defend competition and refrain from favoring monopoly.

Röpke favored free movement of prices rather than a command economy, but insisted on a suitable legal-social framework, in stark contrast to the kind of liberal who imagines that private property and free price movement themselves constitute a social order. To achieve such fit legal foundations, Röpke suggested the need to overhaul laws dealing with bankruptcy, corporations, patents, money and banking, and antitrust. He saw economic concentration as being in particular the product of company law and tax policy. The low birthrate of new firms (as of 1960) surely reflected “something fundamentally wrong with the capital market and the tax system.”

For Röpke the best counterweight to the State was “the minimum economic independence for the individual which in turn is based on a minimum amount of property, economic freedom and security of existence.” Only a market economy could produce favorable outcomes—but what kind of market economy? Real independence was “jeopardized by proletarianisation, by concentration of private economic power, by increasing organization and monopoly, by cartels and associations, by agglomerations of financial interests, by corporativism, by the private planning of vested interests, in short by ‘business collectivism’”—which resembled (at best) a kind of feudal-authoritarian decentralization. The market required mutual trust, long-run legal stability, an ethic, as well as “certain psychological-moral reserves.” The economy was not “an autonomous sphere of rational behavior,” and philosopher Max Scheler (an important influence on Pope John Paul II) had shown that “contractual cooperation of men . . . cannot work without genuine communities.”

Röpke insisted that free markets require a moral framework outside themselves in order to work optimally. The market is only defensible “as part of a wider general order encompassing ethics, law, the natural conditions of life and happiness, the state, politics, and power.”

Röpke could perhaps be seen as wanting precisely the combination of “free market and strong State” some writers associate with Margaret Thatcher and Ronald Reagan. But in that model (also called “neo-liberal”) the strong State pursues a two-pronged strategy of “starving” the welfare beast while feeding the military-industrial one—the latter being (beyond controversy) a great den of special interests. Empirically, then, it appears that the Thatcher-Reagan regimes involved the triumph of new political coalitions working—free-market rhetoric notwithstanding—wholly within the logic of interest-group liberalism. (Financial magicians might also be mentioned.)

In Röpke’s Neo-Liberalism the State is “strong” in an ethical and not just a structural sense and is therefore able to resist special-interest pressures, whatever their ideological coloration. It is of course nearly impossible for Americans to believe that a neutral and ethical civil service can exist (or ever has existed) anywhere. But as John Taylor of Caroline, Hans-Hermann Hoppe, and Röpke have suggested, republican forms of government are the special prey of well-organized, rent-seeking interests.

Liberal and Libertarian Constructs

But, alas, Röpke frequently mentioned “regulation” and even “planning.” Here acquired reflexes will inevitably kick in, with sundry classical liberals shouting “statism” in a crowded tea party. But does Röpke’s model really differ so much from certain liberal-to-libertarian constructs? Let us consider some of those. In the educational model associated with F. A. Hayek, dedicated scholars put in decades of work, eventually turning the tide of public opinion, whereupon the State relents and gives us free markets. This plan is as old as the Physiocrats’ idea of persuading an absolute monarch to impose their vision of free internal markets on all of France. A good idea, no doubt, but it was the State that would do the imposing.

Next comes the model in which a libertarian legal code solves all our problems. All we need do is have a revolution of some sort. In one variant a kind of Patriot King will rally the masses behind a right-wing populist agenda. This “libertarian” man on horseback will then dismantle the State and give up his own (State-like?) power when his State-smashing frenzy is over. The law code being in place, we are asked to believe that thenceforward individual contracts undertaken in a complete ethical vacuum will constitute society.

(This version does not have probable success written all over it.)

So here we arrive at some common paradoxes of libertarian policy-making. Everyone concerned wants a government of laws and not of men, but this unlikely outcome demands some automatic mechanism to replace the fallible men. Have we ever seen such a mechanism? In practice it seems, everyone wants the State, or some suitably stateless-looking substitute for the State, to impose his or her program. On balance, Röpke’s ideal of a genuinely neutral and ethical civil service with a limited agenda subordinated to the common good does not seem more utopian than the proposals just sketched.

Institutions and Culture

Röpke’s Third Way, with its revision of liberalism and its slight tilt toward distributism and agrarianism, has the virtue of foregrounding issues of economic sociology, institutions, and culture, which everyday classical liberalism and libertarianism contrive to ignore. His specific insights and themes—however radical-reactionary and Romantic they may seem—ought to be of interest to all who see a need to combine the insight that markets are very useful with “thicker” social theory able to take account of community, shared values, and nonmaterial interests. Front Porch communitarians, “civic republicans,” left libertarians, conservatives, and many others might do well to revisit Röpke from time to time.

Perhaps Röpke was mistaken in thinking that, absent his ideal ethical and neutral State, people surrounded by “thin” markets could not generate essential “thick” (intermediate) social-cultural relationships. If he was wrong, then arguably it is naturally generated thick libertarianism that would in fact be the true Third Way. Röpke’s own experience, however, convinced him that non-neutral States and capitalism (in a negative sense here), working in tandem, had done so much damage (as in Germany)—and for so long—that it would be idle to rely on society to reconstitute itself in the short run.

The Power of Ideas

Ideas versus Interests

by Isaac M. Morehouse 

One of my favorite quotes about the power of ideas comes from Ludwig von Mises in Human Action: 

“What determines the course of a nation’s economic policies is always the economic ideas held by public opinion. No government whether democratic or dictatorial can free itself from the sway of the generally accepted ideology.”

This is a rather extreme statement. Are governments really so tightly bound by the beliefs of the public? Anyone versed in Public Choice theory is likely to find Mises’s statement a bit much. After all, Public Choice demonstrates how incentive structures in the political system can lead to policies that are not in fact favored by the majority of citizens but are in the interest of a powerful few.

Public Choice analysis is incredibly useful to economists and laypeople alike. It has opened our eyes to the difficulty of government reaching its own stated ends because of incentive problems within the system of government itself. It has dispelled the myth that government ineptitude is simply the result of bad leaders. However, in all this emphasis on incentives and interests, Public Choice often overlooks or minimizes the role of ideas.

We cannot forget the power of ideas to overcome the bad incentives inherent in any system of government and to act as a roadblock to the seemingly inevitable expansion of State power.

Consider a rather silly example that illustrates the inability of Public Choice alone to explain the world of policies in which we live.

A billboard says, “Kicking chickens creates prosperity.”

This is part of a campaign sponsored by the Partnership for a Chicken-Free America. The group is made up of people who have an extreme dislike for chickens, and they are willing to put vast resources into reducing the well-being of such fowl. In fact, they advocate legislation to establish national Kick-A-Chick Day.

Most voters and members of the general public do not share this distaste for chickens. Then, again, most people are relatively indifferent when it comes to chicken happiness. With a few exceptions, it is not in an individual’s interest to spend resources on a counter-campaign or to hire lobbyists to oppose the Kick-A-Chick bill; the costs of doing so simply outweigh the benefits.

This is a classic case of concentrated benefits and dispersed costs. The anti-chicken people derive tremendous happiness from harming chickens, making their campaign a worthwhile expenditure. Yet the general public gains little from preventing chicken kicking, and the cost of opposing it is very high.

On the other hand, the public loves prosperity. If they believed that punting hens created wealth, there is little reason to suspect they would not support the policy. A public-awareness campaign would be just the ticket.

Armed with Public Choice theory we can see the sad but likely result. The chicken-free association will exert its influence and get its bill. The public will either support what they believe to be a prosperity-creating policy or ignore it altogether because the cost of fighting is too high. The interests align in such a way that we can expect the anti-bird forces to get their way.

Of course this story is absurd and such a law would never be introduced, let alone pass. What makes it so obviously impossible?

Ideas.

People know there is no causal connection between kicking a chicken and enjoying a higher standard of living. That knowledge makes the campaign laughable. Regardless of how the interests are aligned, if people are educated enough to know that chicken kicking does not equal prosperity, such an absurd policy will not be enacted.

Ideas and Public Opinion

This was an admittedly silly example. You could claim that the real reason such a stupid policy wouldn’t fly is not public opinion, but the fact that no real interest group would advocate for kicking chickens. But it is not hard to imagine other instances where a real interest would benefit from marketing a false cause-and-effect relationship, but where they simply cannot because the public knows enough not to buy it. Hotdog producers would gain if the consumption of one frankfurter per day were required by government. Why don’t they promote such a law? They could run ads saying, “If you eat a hotdog, a child will be cured of cancer.” It is not hard to see that, real or imagined, interest groups cannot get away with everything, even in the face of bad incentives.

Yesterday I saw a sign on the side of a bus that I found no less absurd than the chicken-kickers campaign. It read, “Converting buses creates jobs. What are we waiting for?” The ad was sponsored by a “clean air” association, no doubt consisting of members of the natural-gas industry and people for whom a reduction in fossil fuel use would bring some great personal pleasure.

Just like our chicken story, the incentives are aligned so that the benefits of bus-conversion mandates to the members of this small group exceed the cost of their advocacy efforts, while the benefits to individual citizens of stopping the mandates fall short of the cost of opposition. As far as incentives go, the situation seems pretty dire.

Unlike our chicken story, however, most people do not know there is no magical or “free” job creation when government mandates bus conversions. The resources used to convert the buses must be taken from somewhere, and it is as likely as not that there are many other jobs destroyed or never created in the first place when the resources are redirected. Furthermore, most people do not know that there is no causal connection between more jobs and more prosperity, or a higher standard of living. In fact, if a government mandate creates jobs, it is likely that it does so precisely because it is destroying wealth by moving it from more-productive to less-productive (and more labor intensive) uses.

This lack of knowledge is actually good news.

It means things are not as hopeless as pure Public Choice theory might suggest. Bad incentives can be overcome by good ideas. In our chicken story it was clear that interests alone were insufficient to enact policy. Knowledge of the policy’s incoherence trumped the incentive structure. With a grasp of basic economics, people may find the sign on the bus just as laughable as the idea of Kick-A-Chick Day.

Special interests can only appeal to things within the realm of accepted public opinion, which is shaped by public knowledge. We can affect public knowledge.

Special interests can do much to destroy liberty given the incentive structure in our political system. Indeed, with an ignorant populace there is little they cannot do. But even the most powerful interests ultimately answer to the ideas held by a majority of citizens. Policy follows the path blazed by belief.

In emphasizing the role of ideas in limiting the expansion of the State or the power of special interests I do not mean to say Public Choice is incorrect. It is a valuable toolkit that brings a dose of realism to our efforts at reforming the State. But it is most powerful when it recognizes and incorporates the power of ideas to change and shape interests, and to help people put aside their short-term interests and understand their long-term interests.

It was recognition of the power of ideas over interests that motivated Leonard Read to start the Foundation for Economic Education. It is because of the power of ideas that FEE has tirelessly educated individuals on economic principles for these many years. It is because of the power of ideas that we must continue our educational efforts, no matter how frustrating it may sometimes be.

When we succeed, all interventionist interest groups and their ploys will be shown to be just as ridiculous as the Partnership for a Chicken-Free America. No matter how powerful an interest, how strong its incentives, or how corrupt the system, government can ultimately only do what people permit it to; and people will only permit it to do what they believe it capable of doing. Through education we can demonstrate just how incapable government is. In the end, despite the very real power of interests, ideas win.

To paraphrase Victor Hugo, “More powerful than an army of special interest lobbyists, is an idea whose time has come.”

The Wise and Good Vs the common people

Moderation in All Things

by Donald J. Boudreaux 

Aristotle wisely advised moderation in all things. Gluttons and fanatics self-destruct by refusing to make the tradeoffs necessary to lead a good life. “Don’t tell me that I can’t drink and carouse every night and not succeed in my career!” insists the fool. “I can have it all.”

Well, he can’t. No one can.

That’s the thing about tradeoffs. They’re unavoidable. If you don’t make your own tradeoffs, they will be made for you by nature, by chance, or by other people. And it’s a sure bet that when you abdicate your ability to choose how your tradeoffs are made, the ways that nature, chance, or other people make them for you will displease you.

As I read it, Aristotle’s counsel of moderation is no puritanical call for an austere life unadorned by intense sentiments, pleasures, and passions. Rather, he counsels personal responsibility and rationality in pursuing your sentiments, pleasures, and passions. You simply cannot enjoy limitless amounts of all the possible joys available in life. If you grasp unthinkingly at every pleasurable opportunity that passes your way, you will not be making choices. You will be reacting mindlessly. And your mindless pursuit of immediate pleasures will deny you access to other opportunities. You will enjoy fewer pleasures and much less happiness over the long haul than you would have enjoyed had you acted rationally.

Make whatever choices you wish, constrained only by your respect for the rights of others to make whatever choices they wish. But make your choices. Make them rationally and wisely. Your choices may differ substantially from mine. But as long as you choose your own tradeoffs rationally—without abdicating that responsibility to others or to fate—your prospects for a fulfilling life are promising.

The Aristotelian counsel of moderation is, thus, a plea to weigh tradeoffs mindfully. It has an important implication for public policy, which is this: true moderation (and its resulting happiness) is necessarily an individual pursuit and accomplishment. It cannot be achieved by a third party, whether that third party is a democratic majority or a dictator. The reason is that, in each instance, striking the right tradeoff requires assessing the relative merits of many different options in light of each person’s unique circumstances, opportunities, and aspirations.

Because you cannot know my preferences, hopes, history, and opportunities, and because I cannot know yours, neither of us is well equipped to make sound decisions for the other. Were I to attempt, even with excellent intentions, to make your choices for you, the result would not be moderation for you. The result would be immoderation. My inability to know your aspirations and circumstances inevitably would cause me to foist on you too much of some things and to deny you too much of others. Your life would be imbalanced.

Indeed, to the extent that you as an individual are stripped of your right to choose, you are stripped of humanity. Whether you believe that your capacity for rational thought is God-given or the exclusive product of natural selection, the fact is that you possess this capacity. Your capacity to think and to choose is who you are. Exercising it is what makes you an individual. The very concept of individuality is empty absent each person’s right to make his own life’s choices.

Some readers might respond with an “Of course. Who denies that freedom to choose is necessary both for human happiness and for the flourishing of individuality?” To this response I say: While many people pay lip service to this fact, too few really believe it.

Consider, for example, the demonization over the past several years of tobacco companies. This demonization occurred only because it is widely believed that people are mindless fools who lack sufficient capacity to judge and choose wisely. If people so lack the capacity to choose wisely that the mere sight of a cigarette jutting from the chiseled chin of a cowboy impels them to smoke, then a solid case might be made that tobacco companies are predators seizing profit from a fundamental human weakness—namely, an inability to choose and act wisely.

But if most of us truly believe both that people are capable of making their own choices wisely and that people’s freedom to choose ought not be throttled, then efforts to demonize tobacco companies would fail. It is today’s presumption that smokers are helpless dupes—that people are mere reactors rather than actors—that is the source of the current hostility toward smoking and tobacco companies. And it follows almost inevitably from this despairing view of humans-as-foolish-reactors that ordinary men and women must be protected from themselves by the Wise and the Good—or, at least, by those who fancy themselves anointed because they’ve achieved political power.

Of course, it’s true that even the most prudent amongst us sometimes make poor choices. It’s also true that some of us persistently react childishly rather than choose wisely. But one of the beauties of a society governed by the impartial rules of private property rights rather than by government dictates is that the consequences—good and bad—that fall on each decision-maker correspond closely to the consequences that these decisions have on others. If I produce a $200 computer that has all of the features and reliability of a model that costs $2,000, I prosper. If, in contrast, I use resources to produce chocolate-covered pickles, I lose money. Likewise, if I use my energy and time to acquire productive skills and knowledge, I prosper. If, in contrast, I squander my energy and time pursuing nothing other than my own immediate gratifications, I personally pay the price.

But when politics replaces freedom and personal responsibility, people who make poor decisions—for example, domestic producers who don’t invest as wisely as foreign firms—are often shielded from the consequences of their poor choices. Political favors enable such people to persist in their own immoderation, but only by taxing and regulating the rest of us in ways that compel us to support their immoderate behavior. In the end, society winds up with immoderately large amounts of the undesirable behavior protected by government and too little of the desirable behaviors necessary for a prosperous, free, and civil society.

To have moderation in all things requires freedom from immoderate government.

The Concrete Age of Soviet Planning

Prisoners in Camp Kim

   Strange, secretive, and desperately poor, North Korea tests the limits of social control.

BY PETER HITCHENS

Here is the locked ward of the political asylum, the place where politics has actually become an official state religion, and power is worshipped, directly and literally, in the form of a colossal bronze idol to which the people come and bow with every sign of reverence. Nothing in the modern world compares with North Korea, though it gives us some clue about how life must have been under the pharaohs, in Imperial Japan before Hiroshima, or in the obliterated years—conveniently erased from memory by blushing fellow travelers—when Josef Stalin was revered as a human god.

Pyongyang is the most carefully planned and also the most mysterious city on the planet. You cannot, unless you escape from the warders who accompany foreigners everywhere in North Korea, walk inquisitively along its surprisingly green and spacious streets. If you did, you would rapidly be apprehended and returned, amid fierce reprimands, to your tour bus or to the special hotel on an island in the Taedong River, where outsiders are comfortably but irksomely confined when they are not on supervised expeditions. But you can glimpse the shady, fenced-off streets where the elite live, close to the Russian Embassy from which subsidies used to pour in Soviet days.

You can gaze on the gargantuan housing estates, made up of scores of apartment blocks, a great festival of concrete outdoing even Soviet Moscow in its gigantism. You may admire the Juche Tower, which symbolizes North Korea’s supposed self-reliance. The tower is a column three feet taller than the Washington Monument, weirdly topped by a great simulated red flame, like a much larger version of the World War I Memorial in Kansas City, but only when there is enough power to keep it aglow. That is not always. Voltage is a problem in Pyongyang. The streetlamps are never switched on, and there is a strange interval between sundown and total darkness, before the lights start to come on in the windows of all the apartments. There is also a wonderful quiet, since Pyongyang has hardly any motor traffic by day and even less at night. Human voices can be heard from astonishing distances, as if you were in a tranquil lakeside resort rather than in the center of a grandiose metropolis. The electric current in homes and offices seems suspiciously feeble and shuts down abruptly when the government thinks bedtime has arrived. The authorities also have views on when you ought to wake up. A siren rouses the sluggards at 7 each morning, though light sleepers will already have been alerted to the approach of the working day by ghostly plinking, plonking music drifting from loudspeakers at 5 and 6 o’clock. The sensation of living in an enormous institution, part boarding school, part concentration camp, is greatly enhanced by the sound of these mass alarms.

I wondered what they reminded me of until it came to me that they resembled the Muslim call to prayer, wavering and throbbing across Islamic cities for the pre-dawn prayers. For while visitors may see this place as a prison, many of its inmates show every sign of regarding it as a shrine to the human god whose image they all wear on their clothes and whose various names cannot be pronounced without reverence: the Great Leader, Gen. Kim Il Sung. It is Kim, not Marx or Lenin, who is honored everywhere. In fact, the Communist nature of the regime is hardly ever stated, except in the hammer, sickle, and writing brush of the Korean Workers’ Party symbol.

If you are very lucky and honored, you may penetrate the Kumsusan Memorial Palace. This was the home of the Great Leader when he was ordinarily alive, kept going in his later years by a special diet of extra-long dog penises. Today, it is his mausoleum, where he lives forever in the extraordinary fashion devised for him by whoever actually controls this country. This is no mere Lenin’s Tomb but a temple of awe, where devotees must have the dust blasted from their clothes and shoes before approaching the sacred body and bowing deeply.

I was not considered worthy to go there, but was allowed to lay flowers at, and bow to, the bronze image of Kim that gleams on a hill above the city—and used to gleam a great deal more before the gold leaf that once adorned it was stripped off. It is widely believed that the extravagant coating was removed in one night after the Chinese leader Deng Xiaoping remarked dryly that if North Korea could afford such a display, it surely did not really need the Chinese economic aid for which it was asking. As for the bow, I performed a perfunctory Episcopalian nod, inoffensive, polite, but far from effusive. One of the many advantages of an Anglican upbringing is that one has gestures for all occasions, including obeisance to the bronze images of unhinged tyrants—though I found myself strangely disturbed by and ashamed of this particular breach of the Commandments for some time afterward. As I laid the equally obligatory and hideous flowers, I silently assured myself that I was doing so in memory of Kim’s many victims. You may classify this as cowardice, and I will not necessarily disagree, but it seemed that I had accepted that I would have to kowtow to this cult the moment I decided to enter North Korea. What is more, I sensed that my guides and guards genuinely revered this thing and that it would be plain bad manners to refuse. 

Brooding over this morbid, idolatrous cityscape is a great pyramid, a thousand feet high. But this majestic structure is also a ruin, a grand project that was never finished and now never will be. Visitors are discouraged from asking about it. Guides prefer not to mention it, and more recent official publications do not contain pictures of it, though older ones do. It’s by far the tallest tower in Pyongyang, but its windows show no lamps by night, and it has no aircraft warning lights (a lower skyscraper does), so that if there ever were any air traffic over Pyongyang (there isn’t), it would pose a grave danger to night-flyers. It is, by coincidence, almost exactly the height and shape of the Ministry of Truth in George Orwell’s 1984, though its purpose was more innocent—it was to be a hotel, taller than any other in the region. But something mysterious went wrong with the construction, and so it slowly crumbles, mocking with its hundreds of glassless windows the tongue that commanded its construction and the mind that conceived it. Nothing short of a nuclear explosion could remove it, but it is hard to believe that a nation that cannot even finish a grand hotel can really construct a workable atom bomb, as it claims to have done.

The main feeling the visitor has in Pyongyang is one of pity at the pathos of the place—its hopeless, helpless overestimate of its own power and importance, the deluded ignorance of millions of people carefully protected from any inrush of truth about themselves, their country, and their rulers. Every radio and TV set has been carefully

A role model for Greece

As Argentina Seizes Newsprint, Press Freedom Suffers

What's the oldest trick in the dictator's handbook? Why, to seize the newsprint. Fresh from a big electoral win, Argentina's President Cristina Fernandez has pulled that hoary stunt, topping even Hugo Chavez.

By a vote of 41-26, Argentina's Senate passed a law to nationalize all newsprint, of course in "the national interest."

In Argentina, a nation that still avidly reads newspapers and magazines, that's a lot of power. It effectively hands the government a monopoly on newsprint — since only one newsprint plant, Papel Prensa, remains.

By coincidence, it's owned by La Nacion and Clarin, two media groups Fernandez has pursued for years.

The Newsprint Bill represents "progress toward a free press," the government oozed.

It "will improve the quality of information and the plurality of opinions in Argentina," added Vice President Amadou Boudou.

Baloney. It's a blow to free speech that opens the door not just to self-censorship, which is already rampant in Argentina, but to ever-more fascistic state manipulation of the country's communities, businesses and industries, and violations of personal and property rights.

It's part of a long slide for the increasingly socialist nation. In a report last May, the Inter-American Press Association denounced the "constant harassment and intimidation of independent and critical journalists" in an attempt to "create self-censorship or simply attack them to destroy their credibility."

There are precedents for this.

In 1973, Chile's Marxist President Salvador Allende — a Fernandez hero — tried to seize newsprint, too, triggering a popular rebellion that led to his downfall. But to Fernandez, and the U.S. left, Allende remains a saint. That's why Fernandez feels free to copy him.

Sadly, this is happening because no one stands up for democracy in a region that still claims to be democratic. The Organization of American States is a nonentity, and the U.S. under the Obama administration still considers Argentina a major non-NATO ally.

Fernandez, in power for just two weeks, uses her large electoral victory as justifying her action.

But in reality, Argentina's opposition has been decimated and a one-party state remains. With no one left to fight, Fernandez is going after the press — in a way Allende and Hugo Chavez could only dream of.