DavidWarrenOnline
NEWSPAPER COLUMNS

COMMENTARY
February 14, 2009
Economics of madness
There is no good reason to listen to economists just now. This is no fault of the economists themselves, some of whom I have found to be very sensible fellows. (I wasted several years of my life in economic journalism, learning just how sensible.) But the discipline of economics, which is partly a science, and partly an art, and partly pure bluster like other human enterprises, is founded and can only be founded on the notion that human beings behave rationally (on the analogy of lab rats).

Sometimes they do, as David Brooks, a token "conservative" columnist in the New York Times, was arguing on Thursday, using biological jargon from our contemporary phrenologists, or "cognitive scientists" as they call themselves.

When the human animal is placed in a game with fairly predictable rewards and punishments, only the stupidest consistently reach for the punishments. But when the rules of the game are suddenly changed, or rather, withdrawn and replaced by chaos, decision-making is transferred to that region of the brain our phrenologists call the "amygdala." It is where they think emotions originate. We have what is politely called "non-linear" thinking.

I might disagree with Mr. Brooks about how the chaos is being created. He seems to think the Obama administration and the U.S. Congress are acting on economic models and analyses that are rational in themselves, but cannot anticipate human behaviour. I think they are acting in a state of growing panic, in which they cite whichever "expert" spoke to them last, to justify lining the pockets of their cronies with whatever money they can find. But the result, on either view, is the same.

I admit mine is the less charitable interpretation, but I invite my reader to examine the 1,071-page final shopping list of the Democrats' "stimulus bill," should they ever condescend to publish it. We know what it contains only by rumour. So that I cannot, at present, comment on the basis of any hard information on, for instance, provisions to establish and fund the office of a "National Coordinator of Health Information Technology," which Democrats stuffed in an earlier draft, on the advice of the since-discredited Tom Daschle.

Posing as an innocent make-work project that will improve the flow of information to doctors on the latest medical findings, the new bureaucracy will in fact be endowed with huge and perpetually increasing powers to enforce standardization, by penalizing doctors who deviate for whatever reason -- often a very good one -- from electronically-delivered protocols. In other words, it is a device for imposing socialized medicine across America by the back door -- in the knowledge that Americans will not accept it through the front door.

There are innumerable other provisions, barely glimpsed, which give the flavour of Big Brother deciding what is good for little citizen -- all the while sucking cash from his pockets (or alternatively from government printing presses) to the sort of institutions that provide wealth and jobs for the "progressive," control-freak types who are the Democrats' primary constituency, including the "private" vested interests best placed to feed at the new troughs.

It is to the credit of the Canadian constitutional system that we have a much clearer notion of all the ridiculous things in Prime Minister Stephen Harper's more modest "stimulus bomb." We tend to table things in our own House of Commons in plainer public view. But in the main, it is the same story: panic spending, most of which goes inevitably to "friends," though some of it to buy off, and thus shut up, the most effective opposition whiners.

What I am describing is merely the massive, systemic corruption that is endemic to any Nanny State. In the grand scheme of history, we may well discover that absolute monarchy is more consistent with fiscal rectitude and individual freedom. In the meantime, we must accommodate ourselves to absolute politicians, and the bureaucracies they create to regulate the details in our private lives.

What I fear is worse than corruption, however. Into the transient pain of a market correction -- supply exceeding demand; wherein the impoverished but rational citizen can take advantage of falling prices -- we have the utterly unpredictable effect of governments vomiting utterly unprecedented volumes of cash, in an utterly arbitrary manner. This creates circumstances in which the citizen simply cannot behave rationally, and in which he will almost certainly be punished if he saves (given the inevitable inflation), and punished if he spends (money he desperately needs to husband).

David Warren