By Kevin D. Williamson
Tuesday, December 31, 2013
Anno Domini 2013 was an excellent opportunity to learn
the lesson that we failed to learn in 1857, 1933, 1971, and 2008: Uncertainty
is the destroyer. Economic growth remains unsteady, with a consensus among
experts that the economy is slowing down as the year closes — Bloomberg
calculates the average of economic-growth forecasts at a tepid 1.8 percent. Key
figures remained negative in 2013, from the labor-force participation rate
(down 2.7 percentage points since Barack Obama took office) to the
employment-to-population ratio (down 2 percentage points during the same
period). The most important of those economic indicators, at least so far as
future growth is concerned, is net domestic private investment, which remains
far away from returning to pre-crash levels.
Weak private investment means weak growth and bleak
long-term employment prospects. There is no way to finesse away that fact. The
question is: Why are we still in this position, all these years after the end
of the recession?
There is some debate on the right about whether President
Obama is a fundamentally well-intentioned incompetent or a more Machiavellian
figure so power-hungry that he is willing to kneecap key sectors of the U.S.
economy in order to advance his political agenda. My own view is that the
distinguishing feature of Obama’s ideology is the utter inability of the
president and his partisans to distinguish between the national interest and
their own political interests. (That is one problem with electing a messiah
rather than a chief administrator.) If you believe that your guy is a uniquely
gifted, once-in-a-lifetime transformational figure with a mandate to save the
country, and that he is opposed by uniquely wicked servants of Mammon and
partisans of unreason, then it follows that your political interests are
identical to the national interest, and consequently you have such grey
eminences as Bill Clinton, who has managed to secure for himself a career as an
elder statesman without ever having been a statesman, insisting that
Republicans are “begging for America to fail” — because they oppose large parts
of the president’s health-care program, which the president now opposes, too,
having set aside measures that are too unworkable or punitive to act on until
some more politically opportune time.
Market orders are complex and organic; political orders
are relatively crude and artificial. Obamacare, to take the year’s most
dramatic example, is an attempt to impose a simpleton order on a much more
sophisticated order, like trying to make microchips with cookie cutters. Such
attempts generally end badly, succeeding only in bringing chaos out of order.
Friedrich Hayek described the process in The Road to Serfdom: The plan never
pans out the way it was expected to, and the planners are obliged by political
necessity to take ever more arbitrary and authoritarian steps in order to give
the appearance of success to an enterprise that cannot in fact achieve its
goals. Even in a democratic society — perhaps especially in such a society —
the effects are corrosive, undermining the rule of law, liberal institutions,
and the mutual trust that enables meaningful social cooperation. Therefore the
question of incompetence vs. malice is not entirely a question of A or B.
This is complicated by the fact that politics is about
more than policy, to the extent that politics is about policy at all. Politics
is emotional and tribal. There is, for example, nothing inherent in the
socialist model that necessitates its being paired with anti-Semitism, but in
practice it generally has been, in both its major German and Russian
expressions. There is really nothing in Deng Xiaoping’s dream of “socialism
with Chinese characteristics” that requires such butchery as Beijing has
executed — against Tibetans, Uighurs, Falun Gong, Christians, democrats,
mothers, etc. — but it is difficult to imagine the Chinese national-socialist
project without it. There is, likewise, nothing in the substance of Obamaite
policy thinking on health care that necessitates an all-out assault on Catholic
institutions, but those attacks are of fundamental importance to the political
project of which those health-care policies are a part. For the Left, politics
is heroic — and every hero must have an antagonist. In 2013, those nominated to
wear the black hats were Catholics, the wrong kind of business executives,
insurance companies, one half of Congress, more than half of the nation’s
governors, the Koch brothers and their allies (real and imagined), gun owners
and enthusiasts, and people who cling to what was the president’s own view
regarding gay marriage until 600 days ago.
We find ourselves, then, in a kind of crossfire: The
battle between competence and incompetence rages on one front, while another
war — one in which the participants understand themselves to be in an
epoch-defining contest between good and evil — is fought perpendicularly.
Whichever side you find yourself on, know this: No sane
person builds a widget factory in the middle of a battlefield.
Robert Higgs, economic historian and author of the
indispensable Crisis and Leviathan, describes a condition he calls “regime
uncertainty,” under which the possibility of significant changes in the status
of property rights makes investment decisions difficult or impossible. This is
partly related to uncertainty regarding policy issues such as taxes and
regulations, but it is a wider phenomenon, one that is partly cultural. Higgs
writes: “Regime uncertainty pertains to more than the government’s laws,
regulations, and administrative decisions. For one thing, as the saying goes,
‘personnel is policy.’ Two administrations may administer or enforce identical
statutes and regulations quite differently. A business-hostile administration
such as Franklin D. Roosevelt’s or Barack Obama’s will provoke more
apprehension among investors than a business-friendlier administration such as
Dwight D. Eisenhower’s or Ronald Reagan’s, even if the underlying ‘rules of the
game’ are identical on paper. Similar differences between judiciaries create uncertainties
about how the courts will rule on contested laws and government actions.”
The Obama administration has achieved a special
distinction here: Investors are faced with considerable uncertainty vis-à-vis
how it might interpret rules as compared with the Bush or Clinton
administrations — and also about how it might interpret rules as compared with
the Obama administration the day before yesterday. Now you see a mandate, now
you don’t. And as bad as it is in 2013, the seething hostility of Elizabeth
Warren is ascendant on the left, a fact that offers very little encouragement
to entrepreneurs and investors considering illiquid, long-term positions —
things like factories, stores, and buildings, as opposed to easily liquidated
investments in financial instruments. Many on the left complain about the
“financialization” of the U.S. economy, while unwittingly helping to encourage
that very phenomenon. Given a choice between dividing up his investments
between a couple of hedge funds and financial firms or locking it up for ten
years in an assembly line in Indiana, a sane man will consider the question of
uncertainty and predictability. And under current conditions, the assembly line
is a risky bet.
Perhaps 2014 will be the year in which we learn the value
of predictability. Who can say?
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