Friday, September 10, 2010

Jonah Goldberg is Still Dumb

Recently Goldberg argued that
No one in the world knows how to make the newspaper you are holding (and, if you're reading this on your phone, computer, iPad or Kindle, no one knows how to make those things either).
He was, as he admitted, referencing I, Pencil, which argues that no one individual is in possession of the information, skills, and abilities to make a pencil. As he admits, this is probably not true
I suppose it's possible for someone to master all of the knowledge and expertise to make a pencil all by themselves, but why would they?
But he nonetheless insists that
The lessons one can draw from this fact are humbling. For starters, any healthy civilization, never mind any healthy economy, involves unfathomably vast amounts of harmonious cooperation.
In other words, libertarianism rests on the fundamental insight that free markets, because they are examples of voluntary cooperation, are better off without state intervention. Or, as he puts it,
More relevant, the modern market economy is the greatest communal enterprise ever undertaken. Friedrich Hayek did the heavy lifting on this point half a century ago in his essay "The Use of Knowledge in Society." The efficient pricing of markets allows millions of independent actors to decide for themselves how to allocate resources. According to Hayek, no central planner or bureaucrat could ever have enough knowledge to consistently and successfully guide all of those economic actions in a more efficient manner.
He claims that the
latest proof of Hayek's insight can be found not only in the economic winter that goes by "recovery summer," but in the crown jewel of the stimulus known as "cash for clunkers," which subsidized car purchases that would have happened anyway. That's a major reason the auto industry just had its worst August in 27 years. Meanwhile, lower-income buyers are seeing used-car prices soar thanks to the artificial scarcity created by destroying perfectly good "clunkers."
As John Cole points out, while arguing with a different wrong-headed fellow, this position misrepresents the purpose of CC; consequently it is judging success or failure by standards that don't apply.

Goldberg fails to mention that the state does things all the time necessary for the smooth running of society, i.e., the Interstate, and identifies and solves specific problems, how to build a really powerful bomb and, ultimately, harness the power of the bomb for the creation of energy -- neither of which is necessarily a good thing, by finding and financing the work of individuals with the requisite knowledge, skills, and abilities to solve the problem. Could some private enterprise have landed on the moon?  Maybe.  But the fact is they didn't and the state did.  Could some private entity have created DARPA, which led to the intertubes? Maybe but they didn't.  And so on.

Goldberg's position also errs in insisting that free market success doesn't stifle innovation.  Consider these vignettes from James Scott via:

It seems to me that large-scale exchange and trade in any commodities at all require a certain level of standardization. Cronon’s book Nature’s metropolis, which is a kind of ecological history of Chicago, has a chapter on the futures market for grain. There exists a tremendous natural variety in the kind of corn, soya and wheat that were grown, but they all have to be sorted into two or three grades in the great granaries, and to be shipped abroad in huge cargo ships–the impetus to standardize in the granaries found its way back to the landscape and diversity of the surroundings of Chicago, reducing the entire region to monocropping.
It’s the same principle at work as I describe in Seeing like a State with regards to the Normalbaum in German scientific forestry. Agricultural commodities become standardized as they move and bulk in international trade. If you build a McDonalds or Kentucky Fried Chicken franchise, they tell you architecturally exactly how to construct it, you have to buy the equipment that is standardized, it all has to be placed in the same relationship to the other things in the floor plan, so it’s all worked out in detail, and it is worked out in such detail to produce a standardized burger or standardized fried chicken. And because it is standardized, the person who comes from the corporate headquarters can come with a kind of checklist in which every place is more or less the same, and they can check on cleanliness, quality, productivity and conformity to the corporate standard. This is the kind of control over distance that is required for industrial purposes. In the end, what is the assembly line? It is an effort to standardize the unit of labor power. The processes are not so different for grain production, burgers, or cars—as are the effects on diversity. Contract farming is then an instance to adapt agriculture to post-Fordist conditions with a higher emphasis on demand.
The demand by free markets for standardization means that consumers lose out on better products and eat crappy food because of the advantages of economies of scale and the top down wisdom of corporate head quarters insisting that this is how it ought to be done.

Goldberg concludes with the rousing stem-winder of an dea that a
market economy is cooperative, and more successfully so than any alternative system ever conceived of, never mind put into practice. 
 Manchester's development into Cottonopolis is especially instructive.  Were the producers of cotton, southern American Slaves and the colonized in India, voluntarily producing cotton?  Did the Indians who consumed much of the cotton do so voluntarily.  Well, no they didn't. Did slavery and colonialism end because of free markets?  Well no they didn't. In today's market economy the demand for profit maximization means that consumers eat tainted eggs or some other equally abhorrent whatnotery.

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