David Brooks Provokes
By Arnold Kling
The free-market revolution didn’t create the pluralistic decentralized economy. It created a centralized financial monoculture, which requires a gigantic government to audit its activities.
Yesterday, during my talk at Campbell University, I also used the term monoculture to describe our financial elite. However, I included the New York Fed, Treasury, and Ben Bernanke in this monoculture. They all talk to one another, vet one another, and agree on way too much. What you can take away from books like The Greatest Trade Ever and The Big Short (the latter I have not read) is just how different were the personalities of those who connected the dots in the financial system from the personalities of those in the monoculture. I guarantee you that the hedge fund managers who bet against subprime mortgage securities would have been even less likely to be trusted by Tim Geithner or Henry Paulson than by bank CEO’s.
I describe elite finance, including both regulators and big bankers, as like an exclusive country club. The club members cannot conceive of anyone outside of the club as having any valuable knowledge or important function . They are sure that saving their club is the same thing as saving the U.S. economy.
The rest of Brooks’ essay is even more provoking. He praises British writer Philip Blond, who favors “radical transformative conservativism.” Gag. Blond’s solution for overly concentrated power is this:
reduce the power of senior government officials and widen the discretion of front-line civil servants, the people actually working in neighborhoods. He would decentralize power, giving more budget authority to the smallest units of government. He would funnel more services through charities. He would increase investments in infrastructure, so that more places could be vibrant economic hubs. He would rebuild the “village college” so that universities would be more intertwined with the towns around them.
I wish Brooks would read my other book, which offers a more libertarian perspective on the problem of dispersed knowledge and concentrated power. Or maybe he should just read Snow Crash, to which I made some references during my talk that were appreciated by at least a few people in the audience.
Brooks really likes the elite. He is disturbed by people who resent the elite. I also like the elite (that is, I would enjoy sitting down to dinner with a Larry Summers or a Barack Obama). But I am disturbed by what the elite believes.
For Brooks, the elite is relatively sane and the Tea Partiers are beserk. I think it’s the reverse. Again, read my book. I believe that the essential point to understand about where we are today is that John Kenneth Galbraith’s New Industrial State gets something exactly right and something else spectacularly wrong.
What Galbraith gets right is that large organizations must use bureaucratic planning. Hence, giving more power to “front-line civil servants” would be a disaster. They would be even less accountable than high-level planners for the success or failure of their work. Entrepreneurs need to be in their own businesses, with their own well-being on the line. You don’t want to encourage entrepreneurial behavior among people who are writing checks using other people’s money.
What Galbraith got wrong was his view that the economy had no use for entrepreneurs at all, and that it would forever be dominated by the likes of Union Carbide, U.S. Steel, International Nickel, and Johns-Manville (members of the Dow Jones Industrial Average in 1959, and now either deceased, merged out of existence, or relatively insignificant today). Galbraith wrote when the industrial economy was at its peak, or shortly afterward. The information economy works quite differently.
In this information age, the Progressives may be as threatened with irrelevancy as the industrial labor unions that they romanticize about. I think even most progressives recognize that it would be crazy to put a central control point or regulator in charge of all Internet content. Well, the economy as a whole shares the same complexity and dynamism as the Internet–indeed, the economy is in some sense merging with the Internet. So a highly-regulated economy is just not where trends are suggesting we should go.
At a point in history where the trend has been toward the diffusion of information, already the concentration of political power is creating anomalies, crashes, and mismanagement. Yet for now, the elite responds to this historical trend favoring diffusion of power by trying to grab more and more power for monopoly government in general and for Washington in particular.
David Brooks represents the elitist view, which is that the threat to social order comes from the libertarian streak in American society. Instead, the elites these days should be quoting Pogo: “we have met the enemy and he is us.”