2008 Year in Review: Dave Barry's Perspective

Dave Barry wraps up the main events of 2008. He covers some of the subjects that I commented on here but his version is hilarious. (Hat tip once again to Stephen Hicks.)

Corporatism: The Wave of the Present

David Boaz of the Cato Institute penned an article titled “Bush and Obama Opt for Corporatism Over Freewheeling Capitalist Economy” for the Investor’s Business Daily December 17 edition. It starts with the following.

Is Barack Obama a socialist? Not really. Is George W. Bush a free marketer? Not hardly. In fact, right now they both seem to be pursuing policies that are neither socialist nor laissez-faire but rather corporatist.

The Bush administration has spent close to a trillion dollars to keep the managers of big companies in the driver's seat. Instead of a free-market policy of letting the market determine winners and losers, the administration says Bear Stearns, AIG, Citigroup and other big Wall Street firms are "too big to fail." They can take dramatic risks and the taxpayers will cover them.

…

Corporatism was seen as an alternative to both the egalitarianism of the French Revolution and the laissez-faire economics of Adam Smith, with the state working closely with the different elements of society, especially labor and business.

As the Nobel laureate Edmund Phelps wrote: "The fundamental corporatist idea was to retain the private income, private wealth and private ownership of firms that (were) so central to capitalism (and found in avant-garde examples of market socialism too) but to remove the brain of capitalism — to curtail and to modify the mechanism of experiments and discoveries undertaken by unorganized entrepreneurs and financiers on which capitalism relied. . . . Corporatism sought to interpose the interests of the whole society in a range of decisions affecting the directions taken in the business sector."

We've always had some elements of the corporate state in America — subsidies, tariffs, monopoly privileges, regulatory cartels — but we've prospered because of the freewheeling entrepreneurship and creative destruction that characterizes most of our economy.

I think the most interesting part of this excerpt is Phelps’ comment about corporatism wanting to “remove the brain of capitalism.” By this Phelps means that capitalism is able to provide the endless flow of goods and services because entrepreneurs, managers and employees apply their creative forces to answer the challenges of competing against other enterprises for the customer’s business. Corporatists believe that the wisdom of government bureaucrats can replace these undirected creative, messy forces while still providing the same results.

I’d describe the corporatist’s position somewhat differently than Boaz. The corporatist wants to replace the many minds working independently with one mind, theirs. To modify Adam Smith’s “invisible hand” description of the free market, the corporatist wants to replace the independently operating invisible minds of the free market with the one visible mind of the bureaucrat who omnisciently pulls the levers of the economy.

Phelps (who won a Nobel Prize in 2006) shows in his writings that the record of corporatism fails to supports the claims of its proponents. (See the Wikipedia entry and his own web site.)

A second part of the Phelps quote stands out: “Corporatism sought to interpose the interests of the whole society in a range of decisions affecting the directions taken in the business sector.” Therefore, corporatists believe not only that bureaucrats can steer the economy better than the undirected free market but also they have the moral imperative and the right to steer the economy to better serve our “true” interests.

I agree with Boaz that corporatism is neither socialism (in which “the people” own the means of production) nor capitalism but a hybrid in which they want to harvest the benefits of the free market while giving it a lobotomy. They want to reap the effect while severing the cause.

Did Deregulation Get Us Into This Mess?

I've said in earlier posts before the Presidential election that Obama and his fellow Democrats repeated the mantra that our economic crisis resulted from the deregulatory policies of the Bush administration. In saying this the Democrats were trying to convince people that a return to regulation was needed to "fix" things. Jeff Jacoby, columnist for the Boston Globe, paints a different picture in his "The great Bush ‘deregulation’ myth" that apeared in the Jewish World Review. (Thanks to Stephen Hicks for this link. See the December 19 entry.)

Global Warming Revisited

I have not written on this subject for a while. The Presidential election preoccupied almost everyone, including me. Now the we have a new administration which claims to be more aligned with Al Gore's position on global warming which could lead to policies that directly affect us it seems an appropriate time to bring this issue back to the forefront. Here is a link to a minority report issued by the U.S. Senate Committee on Environment and Public Works. The subtitle on the web page says: More Than 650 International Scientists Dissent Over Man-Made Global Warming Claims.

Here are excerpts from the web page explaining the background of this report.

Over 650 dissenting scientists from around the globe challenged man-made global warming claims made by the United Nations Intergovernemntal Panel on Climate Change (IPCC) and former Vice President Al Gore. ... The over 650 dissenting scientists are more than 12 times the number of UN scientists (52) who authored the media-hyped IPCC 2007 Summary for Policymakers.

The chorus of skeptical scientific voices grow louder in 2008 as a steady stream of peer-reviewed studies, analyses, real world data and inconvenient developments challenged the UN and former Vice President Al Gore's claims that the "science is settled" and there is a "consensus." On a range of issues, 2008 proved to be challenging for the promoters of man-made climate fears. Promoters of anthropogenic warming fears endured the following: Global temperatures failing to warm; Peer-reviewed studies predicting a continued lack of warming; a failed attempt to revive the discredited “Hockey Stick”; inconvenient developments and studies regarding CO2; the Sun; Clouds; Antarctica; the Arctic; Greenland; Mount Kilimanjaro; Hurricanes; Extreme Storms; Floods; Ocean Acidification; Polar Bears; lack of atmosphieric dust; the failure of oceans to warm and rise as predicted.

In addition, the following developments further secured 2008 as the year the “consensus” collapsed. Russian scientists “rejected the very idea that carbon dioxide may be responsible for global warming”. An American Physical Society editor conceded that a “considerable presence” of scientific skeptics exist. An International team of scientists countered the UN IPCC, declaring: “Nature, Not Human Activity, Rules the Climate”. India Issued a report challenging global warming fears. International Scientists demanded the UN IPCC “be called to account and cease its deceptive practices,” and a canvass of more than 51,000 Canadian scientists revealed 68% disagree that global warming science is “settled.”

This new report issued by the Senate Environment and Public Works Committee's office of the GOP Ranking Member is the latest evidence of the growing groundswell of scientific opposition challenging significant aspects of the claims of the UN IPCC and Al Gore. Scientific meetings are now being dominated by a growing number of skeptical scientists. The prestigious International Geological Congress, dubbed the geologists' equivalent of the Olympic Games, was held in Norway in August 2008 and prominently featured the voices of scientists skeptical of man-made global warming fears.

...

Skeptical scientists are gaining recogniction despite what many say is a bias against them in parts of the scientific community and are facing significant funding disadvantages. Dr. William M. Briggs, a climate statistician who serves on the American Meteorological Society's Probability and Statistics Committee, explained that his colleagues described “absolute horror stories of what happened to them when they tried getting papers published that explored non-‘consensus’ views.” Briggs, in a March 4, 2008, report, described the behavior as “really outrageous and unethical behavior on the parts of some editors. I was shocked.”

Making Sense of the Current Crisis

Greg Ransom has a nice compendium of articles at PrestoPundit that explain the current financial crisis primarily from the Austrian economics point of view. (This is the school of thought that includes Ludwig von Mises and Friedrich Hayek.)

He also has a long post on "Who Is Barack Obama" that I also recommend.