Notes for a Talk
By Arnold Kling
I am having trouble putting this together. It is supposed to be based on U and U, for an audience that I expect to lean neocon, and to go for about 20 minutes, followed by Q&A. I would rather provoke than pander. Below are my thoughts so far.1. In 1810, if you could have picked an elite group of 200 Americans and put them all in one room, you would have had a significant share of the world’s understanding in science, engineering, practical information, and commercial know-how in that room. Today, if you performed that exercise (and scaled it up for world population growth), you would have a much smaller share of the world’s knowledge in the room.
2. Yet political power has not dispersed in the same way. One could even argue that it has become more concentrated.
3. This knowledge-power discrepancy is behind three crises. First, the financial crisis. Second, a crisis of political legitimacy. Pending is a sovereign debt crisis.
4. The financial crisis has not been resolved. Yes, there is confidence that large financial institutions will not fail. But there is no confidence in the process of mortgage securitization.
5. In fact, each crisis could be described as a crisis of confidence. But a better term would be crisis of over-confidence.
6. Executives on Wall Street and regulators in Washington were overconfident in their ability to put marginal buyers into homes with little money down while diluting and managing the risk.
7. The political crisis of overconfidence is that leaders are more confident in themselves than in the people who elect them. Most Democratic politicians believe that TARP was necessary, the stimulus created jobs, and the health care bill represents an improvement. They think that those of us who do not believe that are confused and irrational. Republicans do not trust the people very much, either. They certainly do not trust them enough to speak the truth about the budget and the outlook for entitlements. The Ryan Roadmap is an exception. But that is not what the Republicans are campaigning on.
8. Dispersed knowledge implies we ought to have dispersed power. But how do we get from where we are today to a country with limited government?
9. Perhaps the next two elections will be a political death match, and our side will win. But I think it is unlikely that the Democratic Party will slink away in defeat. I think it is even more unlikely that the Republicans will enact a coherent agenda that moves us significantly in the direction of limited government.
10. One fantasy I have is for a Constitutional Convention. Not to amend the Constitution, but to ratify it. That is, we could have an open and honest debate over the principle of enumerated powers. If it stays in, and it gets ratified, then by golly this time we stick to it.
11. Another fantasy is an evolution toward competitive government. This can be achieved by a gradual trial-and-error process. We can try various experiments, see what works, and generally move in the direction of giving individuals more choice about how they receive government services.
12. One idea is unbundling. Separate the provision of schools from the provision of fire protection services from the provision of land use regulation.
13. Next, allow competition. Let different entities compete to provide schools, trash collection, and so on.
14. For the charitable and redistributive functions of government, allow taxpayers to make decisions. That is, treat taxes for these purposes as donations, and let taxpayers pick the programs to which they want to donate. They might be government programs or private charities. Let taxpayers make their own decisions, rather than giving power to legislators.
15. Try to shift from territorial jurisdiction to network jurisdiction. For example, I would prefer to eat in restaurants that do not allow smoking. Rather than have a particular jurisdiction ban smoking in restaurants, it would work better for me if there were a network of restaurants that banned smoking. That way, when I travel to a new jurisdiction, I do not have to inquire as to whether the jurisdiction bans smoking in restaurants. I just have to know where to find restaurants that belong to the no-smoking network. By the same token, someone who wants to smoke can find in any territory a restaurant belonging to a smoking-allowed network.
16. Network jurisdiction works for organized religions. Jews, Christians, Muslims, and atheists can live near each other, as long as we agree that any disputes among us will be resolved peacefully by unbiased courts. We should try to achieve that with political religions. Somebody who wants European style welfare systems should be able to live next to somebody who wants personal responsibility, without one group having to submit to the rule of the other.
Suggestions? Comments on substance and presentation both welcome.