American Gridlock
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American Gridlock

Why the Right and Left Are Both Wrong - Commonsense 101 Solutions to the Economic Crises

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eBook - ePub

American Gridlock

Why the Right and Left Are Both Wrong - Commonsense 101 Solutions to the Economic Crises

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About This Book

A sensible solution to getting our economy back on track

Pessimism is ubiquitous throughout the Western World as the pressing issues of massive debt, high unemployment, and anemic economic growth divide the populace into warring political camps. Right-and Left-wing ideologues talk past each other, with neither side admitting the other has any good ideas. In American Gridlock, leading economist and political theorist H. Woody Brock bridges the Left/Right divide, illuminating a clear path out of our economic quagmire.

Arguing from first principles and with rigorous logic, Brock demonstrates that the choice before us is not between free market capitalism and a government-driven economy. Rather, the solution to our problems will require enactment of constructive policies that allow "true" capitalism to flourish even as they incorporate social policies that help those who truly need it.

Brock demonstrates how deductive logic (as opposed to ideologically driven data analysis) can transform the way we think about these problems and lead us to new and different solutions that cross the ideological divide. Drawing on new theories such as game theory and the economics of uncertainty that are based upon deductive logic, Brock reveals fresh ideas for tackling issues central to the 2012 U.S, Presidential election and to the nation's long-run future:

  • Demonstrating that the concept of a government "deficit" is highly problematic since it blinds us to the distinction between a good deficit and a bad deficit – where a deficit is good if it results from borrowing dedicated to productive investment rather than to unproductive spending.
  • Deriving the need for a U.S. Marshall Plan dedicated to very high levels of profitable infrastructure spending as the solution to today's Lost Decade of high unemployment.
  • Drawing upon a logical extension of the Law of Supply and Demand to demonstrate how the health-care spending crisis can be completely resolved by letting supply increase at a faster rate than demand.
  • Utilizing the theory of bargaining inaugurated by the "Beautiful Mind" mathematician John F. Nash, Jr., to help us avoid being repeatedly duped in our negotiations with China.
  • Making use of a completely new theory of market risk recently developed at Stanford University to demonstrate why dramatically limiting leverage is the key reform to preventing future Perfect Storms, whereas hoping to banish "greed" amounts to whistling Dixie.
  • Deducting from first principles a solution to the contentious issue of fair shares of the economic pie, a solution that integrates the two fundamental norms of "to each according to his contribution" and "to each according to his need."

Profound, timely and important, American Gridlock cuts through the stale biases of the Right and Left, advances new ways of thinking, and provides creative solutions to the problems that threaten American society.

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Information

Publisher
Wiley
Year
2011
ISBN
9781118234624
Chapter 1
Dialogue of the Deaf
What to Do About It
Where is the wisdom we have lost in knowledge?
Where is the knowledge we have lost in information?
—T. S. Eliot
Two decades ago, during ski season, I had the pleasure of spending a weekend in the Alpine chalet of Bill and Pat Buckley near Gstaad, Switzerland. For those of you who don’t remember, the late William F. Buckley Jr. was the dean of American conservative politics, having founded the National Review and having hosted the conservative talk show Firing Line for three decades. At lunch we were joined by his close friend Ambassador John Kenneth Galbraith, the celebrated Harvard economics professor who was as liberal as Bill was conservative. Despite their sharply contrasting views on many topics, the two carried on a civilized discourse in which each put forth and defended his views intelligently and rationally. Even better, they ended up achieving a modicum of consensus in their views via the dialectic of step-by-step reasoning. Of course, such behavior was once expected, and the lack of it was seen as “bad manners.” Those days are long gone.
What a contrast their dialogue offers to today’s deafening Dialogue of the Deaf between Left and Right. This can take the form of shouting matches on cable news talk shows, or stale cross fire between liberal op-ed writers at the New York Times and conservatives at the Wall Street Journal, or debates in the U.S. Congress—even in the Senate, which was once known for its bipartisan courtesies. Today’s Dialogue of the Deaf treats us citizens to an endless repetition of predictable views by commentators and politicians—views that rarely if ever change. The predictable partisanship of most pundits suggests that they are completely unaware of an arresting new scientific discovery:
PQ is inverse to IQ
Where PQ refers to a person’s Predictability Quotient, and IQ refers to his or her “effective” Intelligence Quotient.
That’s right: The more the reader can predict the conclusion of a column by reading its first two sentences, the lower the effective IQ of the columnist. The reason why is simple: The columnist stopped wanting to learn long ago, even if he is reputedly brilliant and possessed a high IQ at age six. A new Nobel Prize in Remedial Logic should be awarded to those researchers who unearthed this important new relationship.
Almost everyone in the establishment media is now assumed to be either on the Left or on the Right, in varying degrees, and their views are highly predictable. The fact that Left and Right are categories that have ceased to be meaningful does not seem to bother anyone. The possibility that a compelling middle ground might exist seems to have evanesced into thin air. And once you are tagged as on the Left, then you must remain on the Left, and vice versa. Even entire think tanks are now regularly tagged “Left of center” or “Right of center.” When I made this point to the head of a very prestigious research institute, he explained to me that the identity bestowed by such labeling was “very good for the funding of contract research.” To be sure, there are a number of commentators who do not fall into these categories. Nonetheless, the tenor of the times is the crossfire between Fox News and MSNBC. The result is that we are all losers.
The Price Paid: Policy Gridlock
Perhaps the most serious price we are paying for this polarization is policy gridlock on issues ranging from global warming to national energy policy, to our stance toward Islamic radicalism, and to entitlements reform—health-care reform in particular. Everyone on both sides of the aisle concedes that there is gridlock and that little, if anything, is being done about our most pressing problems. But there is widespread misunderstanding about the true cost of policy gridlock. This cost can take two very different forms.
First, it can mean that nothing is done about a problem when arriving at a consensus is impossible. Social Security reform to date offers an example of this form of gridlock. The can is forever kicked down the alley and nothing is done to improve matters. The problem with procrastination is that the longer-term cost of remedial action skyrockets.
Second, gridlock can be broken and legislation passed even when there is no consensus, provided that a veto-proof majority exists. This is exactly what happened when the Democratic majority in the House, under Nancy Pelosi’s whip, rammed ObamaCare through Congress in the spring of 2010. The most significant piece of legislation in a generation passed with no Republican support whatsoever. Gridlock was broken, but watch what you wish for. Highly partisan majority rule victories of this kind can and usually do backfire. This will certainly happen in the case of the health-care reform bill, an all-important piece of legislation that was a bad one, as will be proven in Chapter 3.
To anticipate, the ObamaCare reforms are almost exclusively focused on “more demand,” with little thought to “more supply.” Indeed, several of the new bill’s provisions will cause shrinkage of supply as doctors choose to exit a system mandated to pay them less each year for standard procedures. The point is that, while the reform bill did break policy gridlock, it did so in a very biased manner that will cause access to health care to be much more restricted than intended, and cost growth to be far higher than is necessary. My own question is: How did the level of thinking about this crucially important issue degenerate to such a point that a demand-centric set of policies could ever have been considered in the first place—by either party? My Labrador retriever knows this is the wrong way to reduce total expenditure. So did the Australians when they expanded health-care coverage in the early 1970s under Prime Minister Gough Whitlam.
How different it was when policy differences in Washington were ironed out in camera, and indeed in civilized discourse between such journalists of yore such as James “Scotty” Reston and Walter Lippmann. Their writings conveyed the impression that they themselves were often as confused by policy dilemmas as their readers were, and that they were attempting to discover answers for themselves as well as for their readers. Such commentators showed little interest in ridiculing the views of those who disagreed with them, as Rush Limbaugh on the Right and Paul Krugman on the Left regularly do today. Readers learned from and alongside these wiser men.
As a result, our own personal views about complex issues were forged over time via an ongoing learning process, a dialectic of the sort endorsed by Plato. And these views often changed over time. All of this went hand in hand with the reality that, while there were indeed sharp policy differences between political parties, there was little policy gridlock in today’s sense. Compromises were regularly ironed out. I cannot recall either the Democratic or the Republican Party ever being described as “the Party of No,” much less being proud of such a label, as many Republicans are today.
What Went Wrong: Origins of the Dialogue of the Deaf
At least five developments over the past half-century have contributed to today’s Dialogue of the Deaf. These range from the culture wars of the 1960s and 1970s, to the triumph of inductive logic, to significant changes in lifestyle, and to the advent of extensive Congressional gerrymandering. It will be helpful to review the role played by each.
The Culture Wars
To a certain extent, the “culture wars” of the late 1960s and 1970s hastened the end of civilized discussion as the gulf between the Left and Right grew, and as the attacks of the one on the other grew ever more vitriolic. Much of what happened reflected the way in which political debate expanded to include very personal concerns such as the obligation to serve in a much-hated war (Vietnam); or the probity of having an abortion; or the true purpose of public education; or the rectitude of child discipline; or the validity of “deference” to any authority, whether Einstein or God; or the quest for sexual liberation; or the relativism of all forms of “morality”; or the deconstruction of reason, rectitude, and scientific truth. Given this turmoil, who could have been surprised by the infamous Time magazine cover in April 1966: “Is God Dead?” The absolutism of arguments in these culture wars forced many bystanders to choose sides in a binary manner, and the politics of the late 1960s and 1970s became nasty indeed. Civilized debate in this environment became almost impossible.
Decline of the Classics and of the Dialectical Method
One particular casualty of the culture wars was interest in the classics—a field of study that was already waning by 1965. After all, the authors of the great books were dead white males, so how could they be expected to lead us toward any concept of the truth? The greatest of the dead white males was arguably Plato, and the Socratic Dialogues that he promulgated set forth the process required for truth seekers to bridge their differences and arrive at the terra firma of common ground. The timeless graphic image of this particular pursuit of truth is the cave of ignorance central to Plato’s Republic. The voyage of life was a lifelong learning process guided by deductive reasoning that gradually led us from the flickering shadows of ignorance in the interior of the cave toward the daylight of truth on the outside. To Plato, learning is a lifelong struggle in which sound bites play no role.
Indeed, the dialectical method found in Plato’s Dialogues, such as the Crito, requires the participants to progress via primitive rules of deductive logic from Proposition A to B, then from B to C, and ultimately to the common ground of the conclusion Z. By contrast, in today’s Dialogue of the Deaf, one side keeps repeating “It’s F, idiot,” whereas the other retorts “No, it’s H, idiot.” Note that there is no Proposition G linking F and H. Moreover, the origins of propositions F and H are never clear, much less questioned. As for the idealized terminus Z, well, it is neither sought nor reached. After all, when each side starts off knowing the truth, who needs the hassle of reasoning? This is as true on cable news as it is in Congress or at the dinner table at home. Patience, along with a belief in logic, is required for the dialectic to work, and both traits are largely absent from dialogue today.
Studying the dialectical process in classical Greek as a young person fundamental altered how I would pursue truth-seeking throughout my own life, and how I expected others to reason in attempting to convert me to their views. It was a process that required a measure of mutual respect, humility, patience, and most important, opinion modification. A commitment to reasoned debate used to be instilled at school by the teaching of the classics, ancient Greek and Latin in particular, and by instruction in those lost arts of rhetoric and debating. But most students today are not exposed to these disciplines. What they have lost is not simply the ability to reason and debate more clearly but also, and equally important, the awareness of the fun of doing so.
The Triumph of Inductive Logic
If the painstaking process of deductive logic enshrined in Plato’s Dialogues has fallen into disuse, the reverse is true of the other form of logic: induction. When using the term inductive logic I mean the use of real-world data to arrive at a conclusion, a public policy, or whatever. Yet policy analysis today often refers to a partisan process in which those on each side of an argument cherry-pick facts to support their own case. The invention of the Internet with its voluminous and easy-to-access data has facilitated this process. This is of course a bastardization of the inductive process, which traditionally was presumed to be objective in the sense made clear by the symmetry conditions taught in any course in statistics. But when participants in a debate have never been taught to recognize and distrust the illogic of bastardized induction, inductive arguments can be very persuasive. The person with more dramatic factoids almost always wins.
Additionally, adducing supporting facts and examples is much less time-consuming than deducing truth from persuasive premises, the process of starting at A and ending at Z. No room for sound bites or tweets here! The difference between deduction and induction in a public policy context will be discussed at greater length in the next chapter, partly because this distinction is central to the argument in this book, and also because it is rarely discussed. For the moment, it suffices to acknowledge the triumph of induction in amplifying the Dialogue of the Deaf. It is a form of logic ideal for politicians and commentators who know that their audience is very impatient, and wants answers now. It is the ideal form of logic for a sound-bite era. This relates to my next point.
Lifestyle Changes and New Technologies
If the culture wars played a pivotal role in the advent of the Dialogue of the Deaf, so did technological change and associated changes in lifestyles. With the invention of TV and then the Internet, life sped up. Audiences exploded in size. Talk-show hosts and columnists became celebrities. And incomes exploded with audience size and with celebrity. Given ever-declining faculties of valid reasoning along with increased impatience with laborious truth-seeking, commentators and politicians now “brand” themselves by adopting increasingly polarized identities. Indeed, it was economically rational to do so. Would Rush Limbaugh be as rich as he presumably is had he adopted a Socratic approach to political discourse? Moreover, once branded, how better to preserve one’s brand and augment one’s income than to become ever more expert in trashing the opposition, a pastime that spectators seem to love? “Gotcha” has become the game of our times.
Congressional Gerrymandering
During the past 30 years, states have been involved in a significant effort to gerrymander a large number of congressional seats. Doing so makes them “safe seats” controlled by one party. By extension, congressmen end up being pulled to the Left if they are Democrats, and pulled to the Right if they are Republicans. This is because they are much more vulnerable to influences from the extreme flank of their own party than to the rhetoric of the opposite party. This development in turn has widened the gulf between Left and Right and thereby amplified the Dialogue of the Deaf.
Alas, the Media Was the Message
As these developments unfolded, Marshall McLuhan’s perceptive prophecy was fulfilled: The media did indeed become the message. What he missed is that truth-seeking proper would become the victim of a media-centric world, and that political gridlock would emerge with all of its attendant carnage. In a world of “Gotcha” and of black-and-white truths, who has time for those fine shades of gray in which truth actually resides?
An End to the Dialogue of the Deaf and an Exit from Gridlock
There are two main problems to be solved if this nation is to get back on track. First, win-win policy solutions must be identified for the five real-world problems addressed in Chapters 2 through 6. Second, the Dialogue of the Deaf must come to an end, policy gridlock with it, and these solutions must be implemented. A central premise of this book is that one and the same approach can be utilized to resolve both of these problems. More specifically, by utilizing somewhat advanced forms of reasoning that have been developed during recent decades and that are not widely appreciated (e.g., game theory, the economics of uncertainty, the theory of endogenous risk, incentive structure logic, and axiomatic ethics), we can arrive at compelling bipartisan policy solutions to today’s problems and mute the Dialogue of the Deaf at the same time.
The Surprise
How can it be ...

Table of contents

  1. Cover
  2. Contents
  3. Title
  4. Copyright
  5. Preface
  6. Chapter 1: Dialogue of the Deaf
  7. Chapter 2: Must There Be a Lost Decade?
  8. Chapter 3: Resolving the Entitlements Spending Crisis
  9. Chapter 4: Preventing Perfect Financial Storms
  10. Chapter 5: Bargaining Theory 101
  11. Chapter 6: Beyond Democratic Capitalism
  12. Conclusion
  13. Appendix A
  14. Appendix B
  15. Index