What’s Wrong with the World

The men signed of the cross of Christ go gaily in the dark.

About

What’s Wrong with the World is dedicated to the defense of what remains of Christendom, the civilization made by the men of the Cross of Christ. Athwart two hostile Powers we stand: the Jihad and Liberalism...read more

Who? Whom?

Localists, agrarians, and other dissidents, critics all of the American politico-economic ethic of biggerbetterfastercheapermore, occasionally celebrate a rhetorical liturgy of execration, in order to damn Earl Butz, Secretary of Agriculture under Nixon and Ford, and advocate of the "get big or get out" philosophy of agriculture. Butz's philosophy was sufficiently loathsome to warrant the condemnation, though he was more a symptom and symbol of the system than its cause. The system, in all probability, may be traced, in its lineaments, to the early nineteenth century, when Hamiltonians throughout the nation won the debates over 'internal improvements', and public moneys were committed to the construction of highways and canals; the foreseen and desired results of these 'improvements' were an increase in commerce and the development of integrated regional - and in some cases, international - markets. Such markets developed, gradually wearing away many less expansive, less lucrative local markets. In time, the development of the railroad networks, another benefaction bestowed by the State, in both its national and state forms, upon the commercial (and speculative) classes, would accelerate this trend. Also contributing to the consolidation of American agriculture was the typical Great Barbecue era combination of usurious rates of interest on loans to farmers and unsupported, free pricing in commodities; this latter factor, in combination with the monetary constraints of the gold standard, as well as the vast increases in cultivated lands made possible by the opening of the West, resulted in great volatility in prices, amidst a general trend of decline. When the smaller, unluckier farmers couldn't earn enough to retire, or even roll over, usurious debts, there were always luckier, larger, more connected farmers waiting to expand.

It's easy to be mislead into thinking that the plight of the small farmer is something that burst into national awareness in the 1980s, but consciousness of this plight antedates even the first Roosevelt presidency, and was in fact more or less concurrent with the Gilded Age. Without going into the details, this concern was eventually translated into policies of price support and production management. It would be charming to think that these policies responded directly to the original concern, which they might have, had they been implemented in the 1880s or thereabouts; in reality, they arrived around the time that the balance had shifted decisively in favour of larger farms, and the mass-marketing of standardized commodities and packaged foodstuffs. Many small farms would continue in operation for another generation or two, but the die had been cast, and the policies ended up supporting the dominant agricultural interests, both because they had attained critical mass in the marketplace, and because they could command political leverage.

The consequences of this development are predictable, if perhaps unexpected by some: the profits of American agriculture are roughly equal to the subsidies provided through the Department of Agriculture.

Francis Cianfrocca explains:



Here’s a rough thumbnail: What’s the biggest grain crop in the US? It’s one of the varieties of wheat (red winter, if memory serves, but don’t quote me). Total market $30 bn/year. Another dozen or so grains (other wheats, corn, soya, sorghum), are smaller but still in the tens of billions. Let’s be conservative and say grains, cereals and things like sugar total less than $300 bn. (I left tobacco out of it.) Ranching and forest products (minus the paper industry) come to about the same size each.

Profitability in large US businesses tends to high single digits, especially in competitive spaces. What we’ve really just done is to add the auto and banking industries to the government-profited list. And they want to invent a green-tech industry from scratch, which will be government-profited from day one.

The Ag Dept budget is a bit more than $100 billion (discretionary and non-discretionary). Much of it is food stamps, but the part that is subsidies to farmers, ranchers and foresters (minus paper products) is pretty comparable to the total profitability of the industry.



The significance of this can, and should, be stated starkly: Big Agriculture, by which is meant the vast commercial conglomerates and all of their industrial operations, are essentially a vast corporatist-political enterprise, a rolling Five-Year Plan in which profits and engineered and insured at public expense. The inception of agricultural subsidies may have come when larger agricultural operations attained critical mass in the system, but the subsidies themselves have enabled those operations to become ever larger. (It must not be forgotten, moreover, than the very existence of interstate transportation, the public provision of roads, and the tax deductibility of transportation costs, provide additional layers of subsidy.) Industrial agriculture is not something that would have resulted from the operations of any free market, even laying aside the artifactuality of all markets, their social embeddedness - their existence in, and dependence upon, relations of custom, expectation, and power, most particularly when we cease to be conscious of this dependence - inasmuch as any global free market in agricultural goods would see the withering away of most American agriculture, undercut by foreign producers - as legions of developing-world farmers know.

It is far from clear that such an outcome should be desired, for a legion of reasons, and that leaves us with two options: either American agriculture should continue to be structured as an exercise in corporatist dirigisme, despite the facts that its profits owe largely or entirely to the political side of the relationship, and that the cost-benefit analysis goes negative when the externalities of this form of agriculture are reckoned, or American agriculture could be restructured along regional and local lines, via a combination of a removal of subsidies and the maintenance of existing trade protections. Cheap agricultural commodities are a case of the seen and the unseen in economics. We see the low, low prices. Unseen, or at least not understood in their full significance, are the taxes paid to sustain this system, and the profits of its operators. At this point, we're no longer arguing about the economic benefits of one system or another, as the costs probably come out in a wash; rather, we're debating the underlying values of respective agricultural systems - who pays, and how, and whom is benefited, and in what ways. A move towards localism would have the benefit of forcing more costs out into the open, and onto end users - among many other things.

Comments (159)

This is fascinating. I see a bunch of "Buy Fresh, Buy Local" stickers, but beyond that: Is there anyone on the political scene (to the right of Willie Nelson)advocating this?

Would I be right in assuming that when you talk about "a removal of subsidies" you aren't talking about removing the interstate roads? :-) Nor even changing tax law so that businesses who transport across state lines cannot deduct transportation costs in calculating net profit? You really just mean a removal of outright government subsidies, price supports, paying people not to sell oranges so the government can burn them and so forth?

By the way, I was in a mild way outraged to learn a few years ago that in my state dairy farmers aren't permitted to sell directly to consumers but _must_ sell to stores or parent companies for stores. I know that not all states have this rule. In Washington State, I had delicious, fresh milk delivered to my door early every other morning by a real, live milkman coming from the local dairy. It would seem to me that supporting localism should mean ditching such limitations on sales.

Good post, Jeff.

I would add a couple points. For one thing, orthodox economic theory would at least suggest that an industry so dependent on government subsidy is probably vulnerable to serious competition, especially at the regional level. But of course one of the features of our current predicament is that hostility to massive conglomerate corporations usually works out, through the mess of our politics, to mean bars and hindrances on the very innovators who might undermine the state-corporatist structure. Part of this derives from our country's peculiar misfortune to have deluded herself about the character of the Left-wing party long enough to give it the keys to the kingdom. So we the people say "we detest usury and all the huckster roulette of finance" and the Left-wing party in power takes that to be mandate for a raft of taxes, fees, responsibilities and bureaucratic and technocratic burdens, which will truss small business as surely as the bailouts strengthened the banks. The effect of cap and trade on small farming would not, I expect, be insignificant.

Also, it should not be imagined that American agriculture only became entangled with the legislative and executive apparatus of the state in the 19th century. For example, the earliest Americans, then still British subjects, evidenced a remarkable spirit of enterprise, including dodging privateers of the British monopolies, to bring their agricultural produce to market; and this earned them considerable wealth and success.

Such tales could be expanded at great length, and probably ought to be, in order to remind us who we are.

But in any case, we cannot lose sight of the fact that the spirit of human enterprise -- which is the only economic power that can rescue us now -- is often, humanly speaking, implicated with a host of vices suggested by words like adventurer, smuggler, blockade-runner, mercenary. Vanity Fair's recent report on the founder of Blackwater shows us a current example of an old American trade.

In a word, the profits do often accrue to the men of boldness, of mind, body and spirit, to the hotshot or half-mad genius who's willing to defy a challenge, be it the British monopolies or the apparent dead-end that has been reached in some field of endeavor. But his risks are great. He may fail; or he may be ruined by the state; he may fall into crime and perfidy and be killed or properly prosecuted. Etc.

The hell of this whole predicament is that an anti-business attitude in this country, however justified in many ways, will probably strengthen the hand of monopolists everywhere.

The hell of this whole predicament is that an anti-business attitude in this country, however justified in many ways, will probably strengthen the hand of monopolists everywhere.

Well-said, Paul. And it can't really be said too often.

I often wonder to what extent those concerned for localism would be willing simply to reduce regulation across the board, period. Suppose they could be convinced that this would be a greater help, even a much greater help, to the small businesses than to the large. Would they endorse it? Or would a residual feeling that _somehow_ the legal structure _must formally_ penalize the large business or it is unjust drive them to reject any such proposals on the grounds that they will, to whatever small extent, benefit the larger businesses inter alia?

If Cianfrocco said the sky was blue, I would go out and take a look. The guy exudes free market libertarian nonsense.

According to this site, wheat subsidies were about $2 billion per year. $1.3 billion is the most typical number. 99 and 00 were outliers, I would speculate due to loss assistance or something like that. This is just taking the sites numbers. There would be some debate over whether these subsidizes are for other goals such as environmental conservation.

Given the concentration of payments, I'm skeptical of the effects to the market. But same we accept all of that. There is no solid economic reason to believe that subsidizes are subsidizing profits. We aren't dealing with monopolies at the production level. If the subsidizes were taken away, we'd have every reason to believe that the demand price would increase or alternatively there would be a substitution to foreign wheat. The latter is probably want Cianfrocca hopes for, given his radical libertarianism.

Nor even changing tax law so that businesses who transport across state lines cannot deduct transportation costs in calculating net profit?

I;m arguing, among other things, that there should be no tax deduction for the long-distance transportation costs associated with industrial agriculture. Why should I, or anyone else, for that matter - the American people as a collectivity - subsidize the shipment of foodstuffs?

By the way, I was in a mild way outraged to learn a few years ago that in my state dairy farmers aren't permitted to sell directly to consumers but _must_ sell to stores or parent companies for stores.

This has been a controversy of late in Pennsylvania, though I'm not conversant with the nuances of the debate. I do know that it was once possible to purchase raw milk directly from producers, something I did for years, and that it is no longer possible to do this, at least not with any ease - and that the large dairy producers are behind the regulatory changes. Several small farms within a ten-mile radius were put out of business.

If the subsidizes were taken away, we'd have every reason to believe that the demand price would increase or alternatively there would be a substitution to foreign wheat.

I cannot speak for Cianfrocca; however, as I have indicated above, I would be adamantly opposed to any such substitutions.

Why should I, or anyone else, for that matter - the American people as a collectivity - subsidize the shipment of foodstuffs?

For the same reason that, and in the same sense that, you "subsidize" your local grocer's purchase of a computer for his payroll or the amount paid by your local producer of widgets to buy gas for the trucks that transport the widgets to the stores, even if the stores happen to be located within the same state or the same town. Business costs are usually able to be deducted from profit before the profit is taxed, because what the businessman pays in just carrying out his business is rightly not regarded as a true part of his profits. Net profit is gross profit minus the cost of doing business. It is no less a cost of doing business to transport one's product two hundred miles across a state line than to transport it two hundred miles that happen to be in-state or to transport it ten miles.

But I appreciate the clarification. I'll be careful not to sign on to your "cut the subsidies" plan if taxing people on money spent for what are *obviously* genuine business expenses is what you mean by "eliminating subsidies." And for a moment there I thought we had found common ground.

"The hell of this whole predicament is that an anti-business attitude in this country, however justified in many ways, will probably strengthen the hand of monopolists everywhere."

While this is true, it's worth noting that one can be "anti-corporatist," so to speak, without being "anti-business." You can be pro-business but in the [limited] sense that you do not believe that the constant growing-ever-larger of businesses and corporations is a good thing. Or to put it another way, that I refuse to shop at WalMart does not mean that I don't shop at my local nine-store supermarket chain.

One's thinking about such things is of course relative: how big is too big? This, I think, is one place where the idea of subsidiarity becomes helpful: buy as small and as local as your particular situation allows you to. It's a matter of asceticism as opposed to legalism. I don't want to outlaw WalMart or McDonalds, I just want to encourage people who can to shop or eat elsewhere.

Cool site Badger. I was able to find out that a couple of my neighbors got payments (wool and conservation). Anyway, the focus on wheat is strange as corn gets over 2.5 time the amount that wheat does and is, in large part, used for less socially useful purposes (fuel, sweeteners, feed).

What is local anyway and at what distance would legitimate business expenses start to be denied? In the Los Angeles area, dairies used to be located in the area then further away, then 90 miles away and now they are moving into the San Joaquin Valley. Local isn't an option for many people.

Most farm products are not subsidized anyway. Veggies and fruits are not for example.

A very interesting post, Maximos, and one that will be useful for me in attacking other libertarians who are less skeptical of big corporations than I am.

This just strikes me as another reason why we need conservatives to learn the difference between "free market" and "pro-business."

I;m arguing, among other things, that there should be no tax deduction for the long-distance transportation costs associated with industrial agriculture. Why should I, or anyone else, for that matter - the American people as a collectivity - subsidize the shipment of foodstuffs?

Can I assume from this that you have a principled opposition to tax deductions, or is this just a manifestation of your hostility toward big business? Not that the latter is necessarily a bad thing, but it would be hypocritical to prohibit a business from deducting its expenses from its income, but allow private citizens to deduct their expenses like paying for health care from their personal taxes.

There is no hypocrisy: I am generally opposed to according corporations the rights and privileges of persons.

There is no hypocrisy: I am generally opposed to according corporations the rights and privileges of persons.

That's a sort of slide away from your original point, which is that you said that tax deductions are subsidies. That is not true in that subsidies are, by definition, only moneys given to a person or company, not earnings that they are permitted to keep.

The hypocrisy here is that you are suggesting that it is wrong for a business to be able to exclude its non-profit income from taxation, but it is acceptable for an individual to do so. Either this act is itself tax evasion and a burden, or it is not. The social arrangement behind the act does not change the essential nature of the act, including whether or not it is a subsidy or a burden.

There can be local, relatively small corporations, too. Do they also not get to deduct their business expenses? Have to pay taxes on gross profits? If not, which business expenses do they get to deduct? No transportation expenses? Only transportation expenses within a hundred mile radius? But businesses, like individuals, have to pay taxes on profits? This just all sounds really arbitrary to me.

"I am generally opposed to according corporations the rights and privileges of persons."

Corporations are of the people, by the people, and for the people. Corporations are persons acting corporately (sometimes directly, sometimes through representatives of their own choosing), which is why corporations are often accorded the rights and privileges of personhood. There's no good reason to take the privileges of personhood away from persons simply because they act in concert for business purposes.

This just all sounds really arbitrary to me.

And that arbitrariness would bite many people in the butt if Maximos had his way. Let's say that BigAgri were replaced by hundreds of thousands of new small, family farms in the Midwest tomorrow. Their local markets are still far too small to support their productive capacity. It would be absolutely necessary for them to ship food hundreds of miles away to big cities and communities on the coast.

Even in states like mine, Virginia, farmers would find his proposal to be a problem because our "breadbasket," the Shenandoah Valley, is about 100-150 miles away from most of its nearest large markets. The distance between the Valley and Hampton Roads, the biggest area outside of metro DC, is probably closer to 200 miles. The markets within the Valley are simply not big enough to support the productive potential of the farmers and ranchers who live there.

It seems to me that allowing or not allowing long-distance transportation expenses as deductions from gross profits is a separable question from "should corporations be deemed legal persons." Really, quite separable. Suppose you had a business that wasn't a corporate entity (somehow, the legal situation had been changed) that happened to transport its product farther than Maximos thinks products should be transported. In his ideal world, it has to pay taxes on gross income to the extent of that transportation cost, even though it's a business cost? Or do we set up some cut-off and only force businesses defined as "large" to do this? Do we also not let them deduct what they pay their employees as a business cost if they have "too many" employees? I mean, it's just arbitrary, arbitrary, arbitrary. The "corporations shouldn't be legal persons" thing is just a change of subject.

What's so frustrating here is that Maximos started out in the main post saying something I could agree with concerning *ordinary, plain-old, government subsidies*. But what's coming up here is exactly what I feared: If it's a matter of treating businesses consistently, even if that would help small businesses as well as large, he's agin' it. The laws must be set up specially to disfavor larger businesses.

That's frustrating enough, but then to try to do it on the basis of talk about "subsidies" is even more frustrating, because if the business that transports shorter distances that Maximos approves of gets to not pay tax on its business expenses for transportation, this is a "subsidy" to that business as well. Or if a business Maximos approves of get to not pay taxes on its payroll, or on the cost it pays for its raw materials, or on _any_ ordinary business expense, that's a "subsidy," too. If simply not taxing business on gross profits is a subsidy, it's a subsidy no matter what business expense you let them deduct. Which is absurd.

Which means that letting them deduct _specifically_ _long-distance_ travel needs to be attacked, from the Maximos perspective, more honestly like this: "I think transporting stuff long distances is bad and wrong. So companies that do so should be punished by being forced to pay taxes on their long-distance transportation expenses as though they hadn't spent that money on what is _obviously a business expense_, in order to engineer their behavior and try to discourage long-distance transportation of goods." Thus the change in the tax structure can be supported, really, only if one agrees with Maximos about this specific way the government should use the tax code to punish long-distance transportation. Not because of anything to do with subsidies.

Lydia,

Suppose you had a business that wasn't a corporate entity (somehow, the legal situation had been changed) that happened to transport its product farther than Maximos thinks products should be transported.

This is already legally possible... it's called a sole proprietorship or partnership. Under Maximos' proposal, it would be legal for Mr. Big Fat Cat Private Citizen worth $500M to deduct his expenses from taxable income, but illegal for a LLC or S-Class corporation worth only $20M in market capitalization to deduct its expenses.

**Sole proprietorships and partnerships are not corporate entities; all owners of those organizations are 100% legally on the hook for the taxes and debts of their business. Greater risks, greater rewards, arguably, but a shift back to this model would make it much harder for businesses of any non-trivial size to operate because the entrepreneur would be at the mercy of all of his various employees behaving properly. If they fudge the numbers or something, the government would personally target the business owner, rather than his company.

Speaking for myself only, I am pretty much convinced that a useful reform in banking, specially, would be to push the investment banks back into private partnerships. With the benefit of hindsight, it looks very much like that transformation of these securities firms into public corporations, which gave risk-takers larger pools of capital with to gamble and strengthened their hand against the old-school broker-dealers, was an important step on that path to the usury crisis. There is, actually, one big securities firm (the name eludes me at the moment) that bucked the trend of going public, and they weathered the crisis better than any of the public investment banks.

Now, applying this idea to agriculture is a trickier business, I think.

Paul,

I think the issue there is that society needs to be careful about where liability is limited. The difference between a bank and a typical business there is that if investors are reasonably informed of a company's prospects, practices and products/services, it is legitimately "caveat investor." Banking, on the other hand, does that with the money of generally ignorant third parties; it's unlikely that most depositors had any idea or easy access to information which would suggest how their deposits were being used by the banksters.

Well, Mike, the problem is exacerbated by the number of non-bank institutions that became integral to world finance. How many AIG stockholders had any real idea of how exposed their capital to was to that infamous London office writing credit-default swaps on everything that moved? How many GE investors even today realize that company is really an enormous, aggressive investment bank attached to a staid industrial firm?

That's a sort of slide away from your original point, which is that you said that tax deductions are subsidies. That is not true in that subsidies are, by definition, only moneys given to a person or company, not earnings that they are permitted to keep.

Tax deductions are regarded as subsidies in virtually all discussions in political science and economics these days. My usage is far from idiosyncratic. Ergo, the home mortgage interest deduction is regarded as a home-ownership/buying subsidy; the deductibility of employer-based health insurance, and so forth.

The hypocrisy here is that you are suggesting that it is wrong for a business to be able to exclude its non-profit income from taxation, but it is acceptable for an individual to do so.

There is no hypocrisy, inasmuch as corporations and individuals are not the same sort of entities; there is no essential nature of the act in question the remains the same across this divide, because the agents, social contexts, and consequences or the respective acts differ.

There can be local, relatively small corporations, too. Do they also not get to deduct their business expenses? Have to pay taxes on gross profits? If not, which business expenses do they get to deduct? No transportation expenses? Only transportation expenses within a hundred mile radius? But businesses, like individuals, have to pay taxes on profits? This just all sounds really arbitrary to me.

These are all matters which should be subject to public deliberation, bearing in mind the increasing externalities of massive corporate conglomerates and their operations. Arbitrariness is only the judgment passed when someone either does not perceive, or does not accept, the social goods that a given configuration embodies and protects. From my perspective, it is arbitrary to apply the same principles to entities as diverse as individuals and corporations, including corporations of wildly varying sizes.

Corporations are persons acting corporately

And persons acting corporately are not the same sort of thing as persons acting individually, not least because they are treated differently under the liability and bankruptcy laws, and because no individual enjoys the presumption of indefinite existence which undergirds these differences.

That's frustrating enough, but then to try to do it on the basis of talk about "subsidies" is even more frustrating....

Subsidies of this nature are unavoidable in a complex, articulated political economy; hence, the relevant question is not, "shall we, or shall we not, subsidize", but, "who and whom, and towards what ends (ie. what social values shall we instantiate)?" Hence, the title of the post.

So companies that do so should be punished by being forced to pay taxes on their long-distance transportation expenses as though they hadn't spent that money on what is _obviously a business expense_, in order to engineer their behavior and try to discourage long-distance transportation of goods.

No, they would be taxed as though those expenses were no legitimate concern of public solicitude, as it is the essence of political society to make just such value judgments: this aspect of business will be treated one way, and this one another way.

Tax deductions are regarded as subsidies in virtually all discussions in political science and economics these days. My usage is far from idiosyncratic.

That doesn't make your usage correct. If scientists declared by fiat that "sex" can only mean vaginal intercourse, and that anything else is not "sexual" by virtue of not being related to the act of vaginal intercourse, I doubt you would accept that definition for the purpose of discussing morality.

Unless, of course, you are going to forfeit the vernacular for the jargon of "experts" and "elites."

No, they would be taxed as though those expenses were no legitimate concern of public solicitude,

See, this just sort of blows my mind. I imagine somebody setting up a business selling ice cream or clothing. He buys his cream or his inventory, he pays his workers, he pays rent for his building, and he buys gas for his ice cream trucks or delivery trucks. *Of course* he doesn't pay taxes on all of the money he spends on this, and it would *never in a million years* occur to me to say that this is because when Jones's clothing store buys inventory or rents its storefront, these particular expenses are matters of "public solicitude." Balderdash! If you teach violin lessons and you buy yourself a new violin, you gradually deduct (over a period of years) the cost of your equipment, and nobody thinks this is because your new violin is a matter of public solicitude!!! For crying out loud. It's because it's your _expense_, part of what you have to spend to _make_ your profits, so therefore, your _real profits are less_. Therefore, you shouldn't be taxed as though your profits are _more_.

The expenditure is *directly related* to the profit on which you are to be taxed. This is a normal way of calculating net profit rather than gross profit. You're just ignoring this.

It's almost like what you're saying is that there is some sort of natural government right to tax people every time money changes hands, and any backing off from this is a matter of a "subsidy." But that's silly. There is no more prima facie government right to tax you on the money you spent as a part of _making your profits_, as though that money were part of _net profits_ when it isn't than there is a prima facie government right to tax you on a reimbursement check you got from someone or other. Not all money that comes into some account is automatically taxable, and not all failure to tax money that happens to change hands is a subsidy.

For crying out loud. It's because it's your _expense_, part of what you have to spend to _make_ your profits, so therefore, your _real profits are less_.

And public authority, as exerted through representative institutions, can choose to allow some expense deductions and disallow others; there is no prima facie obligation to treat all expenses identically, regardless of the externalities of a given form or scale of business. That violin is not really analogous to the business expenses of agribusiness, for the very reason of those externalities, social conditions, etc. There is no prima facie right for a corporation to become as large as possible, and to operate on as large a scale as possible; as with taxation, these are matters of prudential reason.

Another example from my own experience: Some universities give their graduate assistants a check for X number of dollars but then require them, as a condition of getting that check, to enroll in Y number of hours of classes, where the school forgives the tuition for only Y-n number of hours. In other words, the student has to turn around and pay back to the school part of the money he "makes" for his GA-ship as part of the conditions of having the GA-ship. The government does not regard the money he pays in tuition as part of his income; it rightly taxes him only on the amount of his GA checks that he is not required to turn right back around and pay back into the university system as a condition for the possibility of getting the check in the first place. Nobody thinks that this is because his tuition is a "matter of public solicitude." Rather, it's regarded as a matter of merely calculating accurately the actual amount of his profit (income) from his GA activities.

To get back to the main point here:

According to the useful site provided by Badger, the last 12 years have seen $177 billion in agricultural subsidies. That's hardly chump change folks. So the question Maximos asks is this, Is the corporate-industrial model of agriculture even workable without government support?

There is no hypocrisy, inasmuch as corporations and individuals are not the same sort of entities; there is no essential nature of the act in question the remains the same across this divide, because the agents, social contexts, and consequences or the respective acts differ.

Rubbish. The basic act itself is identical here, it's merely the actor who is different. You would have us believe it is ok for a private citizen to exempt themselves from taxation on certain forms of income, but that a business, acting in a logically equivalent manner, is a burden when doing so, merely on the basis that one is legal fiction and another an individual.

Yes, because corporations, under the rubrics of that legal fiction, are in fact treated differently than individuals, despite their claims of the rights of the individual, and have externalities far beyond those of any individual, associated with both their modes of organization and the scale of their operations.

Paul, if the agricultural subsidies really mean subsidies in the "plain, old" sense, rather than just in the sense of letting them deduct normal expenses of doing business (and I assume it does mean a good deal more than that), then maybe not. And pull the plug and let it die, in that case.

And pull the plug and let it die, in that case.

What if that entails import substitution on a massive scale, with all of the entirely predictable consequences?

I thought you said it didn't entail that.

If my words could be taken to imply as much, then they were unclear. What I meant was that some forms of subsidy and protection will remain necessary in order to preserve an American agricultural system. We're just arguing over what sort of protections, and what sort of system.

Hello all,

First of all, I've been waiting for Maximos to post about agriculture, so I could post this link to a great article supporting "industrial farms":

http://www.american.com/archive/2009/july/the-omnivore2019s-delusion-against-the-agri-intellectuals/?searchterm=agriculture

It doesn't speak exactly to the points Maximos is making here, but it does provide some helpful context on what exactly happens on a decent sized farm that uses all sorts of modern equipment and depends on our interstate system of transport to be successful.

Secondly, I think it should be acknowledged that Maximos in this post is doing something much more than attacking large-scale industrial agriculture through subsidies (if that was all he was doing, he'd have Lydia, Professor Bauman, Mike T. and me all on board). He is essentially restating a long-running philosophical concern of his concerning modern capitalist economies -- basically he thinks they don't work well and wants to get them to work "better", where "better" is defined by Maximos as more conducive to proper human flourishing.

But here's the deal -- everyone who writes for or comments regularly at this blog is NOT some sort of Ayn Rand ideologue -- we all understand that human flourishing is about more than truck and barter and we reject the position of hard-core libertarians that there should be markets in everything.

So that leaves us with evaluating Maximos' specific claims as to their usefulness or their goal of achieving human flourishing. And here is where I think Lydia's (and Mike T.'s) specific counter-arguments are useful -- because usually when someone attacks our free-market system (i.e. the system we have in place that respects private property and uses government money to support public goods that help markets flourish) they either a) don't think through the implications of their regulations on the entire system or b) have a conception of human flourishing that can be attacked and debated on its mertis.

So with respect to (a), I think Lydia and Mike T. are already getting at the problems with Maximos' proposed reforms -- they will reduce everyone's overall economic well-being thanks to introducing needless complications and exceptions to our already needlessly and complicated tax code (and it should be noted, they will raise many issues of fairness and justice with respect to questions like – how is a $4 million corporation worse than a $200 million sole proprietorship?) Which ties into (b); because for Maximos the economy should not be about providing goods and services to people in the most efficient and effective manner -- it should be about how those goods and services are provided. This is not the post to debate this issue, but it is where the rubber hits the publicly financed interstate highway system road. I think an economic systems that helps people deliver goods and services cheaply and efficiently will be good for everyone because it will ultimately provide material abundance and meaningful work for those willing to seek it. Maximos says, no, through the process of creative destruction it will destroy the fabric of healthy communities and promote a materialistic culture, while leaving those on the left half of the IQ Bell Curve out of luck. So until we resolve these key issues, we’ll always the debate the merits or flaws of specific Maximos proposals until we’re blue in the face without getting to any resolution because Maximos will always bring the debate back to “Who?” and “Whom?”

Yes, because corporations, under the rubrics of that legal fiction, are in fact treated differently than individuals, despite their claims of the rights of the individual, and have externalities far beyond those of any individual, associated with both their modes of organization and the scale of their operations.

That doesn't explain why they should be subjected to a fundamentally different mode of taxation than any other form of business. Furthermore, your critique sloppily assumes that S-class corporation = megacorp. It is true that probably every single megacorp is a S-class corporation, but the reverse is hardly true. You still haven't addressed the issue which I posed which is that your model would benefit rich, landed private citizens while raping small S-class corporations and LLCs.

You still haven't addressed the issue which I posed which is that your model would benefit rich, landed private citizens while raping small S-class corporations and LLCs.

If wealthy, landed private citizens are distorting our political economy, and injuring the common good in some way, then some other means may be found of addressing that problem. If not, then not. But I'm not proposing a one-size-fits-all politically cure-all, merely one measure - intended to be among others - to redress the problem of megacorporations, their externalities, and the distortions they create in the political process.

Jeff, you're on to my purposes, in part. The difficulty for the maximal-efficiency program in political economy is that high wages correlate to high value-adding positions in the economy (setting aside the problem of rent-seeking), and high-value adding positions are precisely those that are subject to downward wage pressures owing to international labour arbitrage. What remain are relatively low-wage, low-value-added, low-security service positions.

Jeff,

Well said, and most of this could have been dropped if Maximos had responded to some of the specific issues in a way that addresses the issue of the other forms of organizing a business such as partnerships (full and limited) and limited liability companies. It is nonsensical to me that a small team of businessmen running a LLC should be bled dry by the IRS while a fat cat who owns $300M worth of arable, productive land in the Midwest and who runs a massive series of farms should be treated like a plain joe. In my opinion, the Marxist dictum "from each according to his ability, to each according to his needs" makes more sense than Maximos' approach of attacking businesses simply on their means of organization, not their size or income. Granted, Maximos could have been assuming that a corporation is a large, moneyed institution, but that is not a realistic assumption since there are so many incorporated entities which hardly fit his descriptions.

Maximos is right. The point is that long-distance transportation costs are subsidized by the federal government, and these subsidies favor larger corporations that rely on long-distance transportation more than those that do not, which tend to be smaller businesses. That favoritism is unfair to businesses that operate more locally; why should we favor businesses that operate over long distances over those that don't, especially since we now see that in some industries such subsidies account for almost all profit for some businesses? Favoring long-distance business is a decision that should not be made by the State, but by individuals and other communities.

Get rid of the subsidies. Prices may be higher, but will be offset overall by lower taxes, and if we're worried about the poor, give them tax deductions/benefits which will help them equivalently but not subsidize the formation of larger businesses over smaller ones.

If wealthy, landed private citizens are distorting our political economy, and injuring the common good in some way, then some other means may be found of addressing that problem. If not, then not. But I'm not proposing a one-size-fits-all politically cure-all, merely one measure - intended to be among others - to redress the problem of megacorporations, their externalities, and the distortions they create in the political process.

You're still evading the issue here. What is the difference between a $20M sole proprietorship and a $20M LLC? Why should there be one set of tax laws for a $4M s-class corporation that sells meat, but a rich rancher who makes 10x more than that corporation gets the benefit of another set of tax laws?

Why shouldn't tax laws be based on the income of a business, rather than its form of organization?

Albert,

The problem is that Maximos calls tax deductions subsidies. If it were simply a matter of cutting off the flow of federal cash to agricorps by repealing the bills which pay them actual tax dollars, there would be no controversy here.

I think in a way it would simplify matters if we could get the whole issue boiled down to "protective tariffs or no protective tariffs." In other words, suppose we got rid of *actual cash subsidies* and direct price supports (Uncle Sam will buy your milk at such-and-such a price if no one else will, so you can always hold out for Uncle Sam) and then saw what would happen. Would it really happen that food prices would skyrocket? I don't know. Would food prices only _not_ skyrocket because the America people would start doing more importing? If so, do they need to be forced not to do that?

I'm very slightly more sympathetic to protective tariffs than to other forms of government involvement in business, but it's an extremely minor, defeasible sympathy. If tariff protectionism combined with cutting real government subsidies (I hope by now it's clear what I mean by "real" subsidies) results in really high food costs here in America, what I'm going to say is, "Why are American farmers not able to compete against foreign farmers?" And see if there are still some sort of unnecessary regulations, etc., that are causing the problem. I have a lot of faith in American farmers. I really doubt that America is going to stop being the breadbasket of the world unless the government either pays it outright to be that breadbasket or else protects it by heavy tariffs against foreign agricultural competition.

<lurk-mode-off>

What is the difference between a [human being who owns a $20MM productive asset] and [an LLC which owns a $20MM productive asset]?

A $20M LLC never breathes, eats, sleeps, bleeds, marries, prays, raises children, or, and perhaps most importantly, dies of old age.

Heaven knows I understand disagreement over economic matters, and I'm not taking a substantive position on the points under dispute in the thread. But I don't understand incapacity to grasp that a corporation and a person are, quite radically and manifestly, extraordinarily different kinds of things. A human being and a dog have much, much more in common than a human being and a corporation.

</lurk-mode-off>

Zippy,

But I don't understand incapacity to grasp that a corporation and a person are, quite radically and manifestly, extraordinarily different kinds of things.

The point that Maximos was refusing to identify is why is it ok for a $20M sole proprietorship to do behavior X, but it is somehow different when a $20M LLC does behavior X. Given comparable wealth and influence, why treat them differently? His argument centers around the danger of scale of operations and externalities to society, but misses the point that corporations are often quite small, and that non-incorporated businesses may be substantially larger than he gives them credit.

Given comparable wealth and influence, why treat them differently?

It seems to me though that treating something which is radically and manifestly inhuman, lacking in any basic human or even animal characteristics (e.g. mortality, etc.), as if it were human, is what needs to be justified.

Given comparable mass, why treat a boulder and Alec Baldwin any differently? Though perhaps I undermine my point with the specific example.

In this particular case, though, the argument (Mike T is saying) seemed to turn on "mass" (for example), not on anything that could be boiled down to the differences in behavior or worth between persons and corporations. In other words, if the externalities are such-and-such, they would seem to be the same regardless of whether it was an LLC or an individual engaging in the behavior. Sort of like saying that it's okay to throw Alec Baldwin off the Empire State building but not a rock because a rock weighs more. Even if it were true that it's okay to throw Alec Baldwin off the tall building but not a rock, that doesn't seem like the right reason, since you might have a small rock that actually weighs less.

But as I said above, I think the whole LLC vs. individual issue is a separate one from my disagreement here with Maximos anyway.

Jeff Singer, Mr. Hurst, author of the piece you link to, is perfectly free to run his farm the way he sees fit. No one is attempting to legislate against his doing so, provided he obeys business, health, and environmental laws, etc. It is, however, problematic that the government greases the skids for big-agri in ways that make competition by smaller farmers difficult, if not impossible.

A book worth reading on these issues is "From the Farm to the Table" by Gary Holthaus. On occasion it gets quite technical, but there is lots of good info therein, some of it infuriating to this conservative.

It seems to me though that treating something which is radically and manifestly inhuman, lacking in any basic human or even animal characteristics (e.g. mortality, etc.), as if it were human, is what needs to be justified.

Then you seem to not be paying much attention since Maximos would impose different tax criteria on a whole class of social organization, irrespective of a particular instance's size, while leaving another form of social organization unscathed.

Given his concern for the political process, localism, corporate welfare, etc. it makes little sense to me to go off on a tangent about the particular form of social organization when the real object of his wrath is large, vested interests who make their living through subsidies and who hold tremendous power both in politics and the market. If a partnership were to achieve comparable results to ADM, it would most likely behave in the same ways that upset Maximos.

**despite the fact that partnerships are not corporations, but are individuals in business together.

I also would apply different laws to humans and non-humans, though I'd likely make different choices from Maximos'. It seems to me that that is precisely what is at issue, not an amount of money. For that matter I would treat (say) Planned Parenthood differently from how I would treat the Little Sisters of the Poor, for example, irrespective of whether their revenues were the same.

And as for my attention, such as it is, it is now going to go back to being occupied elsewhere.

My first comment here was a strong gesture in the direction of the limitations imposed by hard practical facts. To wit, it is idle to imagine, even for a moment, that the current arrangements of politics and society and administration will engender for us a saner and healthier political economy. Thus my worry about anti-business sentiment.

It is on this point of prudence that Maximos and I disagree. He doesn't care anymore about business sentiment. I think that his children will regret (say) the cap and trade boondoggle that his irritation with business allowed to pass.

But we strongly agree that certain sectors of the American political economy are in many ways quite mad, industrial agriculture being one of them. (Others: real estate, energy, above all banking.) It is, we also agree, high time to start thinking more clearly about this predicament, which is another way of saying that the revelations of the last 2 years have amounted to a serious discrediting of the model of capitalism practiced here and around the world. In industrial agriculture it looks for all the world like a very considerable portion of the sector is propped up by subsidy, by literal government handout. (The regional corruption here is clear too. Those billions from DC are falling mostly on some sparsely-populated places, man -- except maybe for those couple months when Iowa is inundated with journalists covering the First in the Nation caucuses.)

In short, industrial agriculture looks for all the world like the protection of a plutocracy not the operation of the market.

Now, maybe am I wrong about industrial agriculture. It is altogether possible. But (for instance) I am quite a bit surer that I am right that an analogous situation obtains vis-a-vis residential real estate development, banking, high finance, and indeed much of the world's capital markets.

Well, Paul, I think we could move the discussion forward on that basis, given that we all agree (I think) that the government is giving *plain, old, handouts* to the agricultural businesses. I gather this isn't in dispute. Now, if that's true, and if several of us are agreed that it should stop, what next? It seems to me that all the talk about "subsidizing transportation costs" could and should be set aside, since obviously we don't agree on whether, even, a subsidy is taking place in the relevant sense there. If we can agree that there are other, real, ordinary, plain-old subsidies, the next question is, what would happen if they stopped?

What is the difference between a $20M sole proprietorship and a $20M LLC?

The apportionment of liability in any cases in which it arises.

Why should there be one set of tax laws for a $4M s-class corporation that sells meat, but a rich rancher who makes 10x more than that corporation gets the benefit of another set of tax laws?

It's doubtful that any such rancher would be willing to remain unincorporated, precisely for reasons of liability, so I'm confident that he'd fall under the same set of laws as your hypothetical s-corp.

I have a lot of faith in American farmers. I really doubt that America is going to stop being the breadbasket of the world unless the government either pays it outright to be that breadbasket or else protects it by heavy tariffs against foreign agricultural competition.

Fifty years ago, had someone expressed an analogous faith in the ingenuity and innovation of American manufacturing, his confidence would have had a strong evidentiary basis in then-current circumstances, and yet, if expressed as a disconnected sentiment of, "Wow, we're really awesome, and we'll always win", changing politico-economic circumstances would have proven him a fool. For the reality has been made manifest, that only those nations which maintain some form of protectionism/mercantilism retain their manufacturing, and that a nation eschewing the latter, as with the US and the Detroit bailouts, must resort to outright subsidy and takeover in order to retain a few paltry factories. Absent some form of protectionism, the only way for American manufacturing, or American farming, to remain competitive in globalized markets would be to level down to the wage and lifestyle scales of the third/developing world.

No thanks. I'm not an egalitarian, least of all the covert sort who hides behind free market mythology and pretends not to notice the consequences for the middle class; neither am I a partisan of oligarchy, again, hiding behind market mythology and pretending not to notice the leveling down for the first-world masses and the emergence of oligarchy. If I wanted to live in a third world nation, I'd move. Obviously, I'm still here.

If a partnership were to achieve comparable results to ADM, it would most likely behave in the same ways that upset Maximos.

It is highly improbable that any partnership would ever achieve such market dominance, not least because the externalities, and thus, the potential liabilities, of industrial agriculture are so massive that few individuals or partnerships would be willing to face them unprotected by our legal fictions.

It is on this point of prudence that Maximos and I disagree. He doesn't care anymore about business sentiment.

I'm not insensitive to the political perils of the moment. I'm also sensitive to the fact that existing path-dependencies are neither just nor sustainable, and that risks simply will have to be taken if there is to be any possibility of averting the worst consequences.

Paul (and Lydia),

And let's not forget that with respect to agricultural subsidies, the argument often used by our farmers is that other countries are subsidizing their farmers even more, so how can we compete? And they have an excellent case, IMO, but to pursue this matter further would enrage the farm lobby in Western Europe (and our country) and you'd have more crazies like Bove shutting down French roads, etc. Of course, what any free trader can tell you is that the U.S. would still be better off letting the French, Germans, etc. subsidize their farmers while we buy their cheap products or buy from lower cost producers in Africa or Latin America all the while shifting our resources into new businesses that can thrive without subsidies and eventually make us all richer and more prosperous than the goofy Europeans. Our farmers might have to do something else for awhile, but a competitive economy guarantees no one their ideal job for life. But this is an argument for another day and proposing such a free-trade proposal will immediately be anathema to the Maximos' of the U.S.

Maximos says:

"Fifty years ago, had someone expressed an analogous faith in the ingenuity and innovation of American manufacturing, his confidence would have had a strong evidentiary basis in then-current circumstances, and yet, if expressed as a disconnected sentiment of, "Wow, we're really awesome, and we'll always win", changing politico-economic circumstances would have proven him a fool. For the reality has been made manifest, that only those nations which maintain some form of protectionism/mercantilism retain their manufacturing, and that a nation eschewing the latter, as with the US and the Detroit bailouts, must resort to outright subsidy and takeover in order to retain a few paltry factories."

But as I've pointed out to you before, our few "paltry factories" are producing more than they ever have in the past:

http://mjperry.blogspot.com/2009/04/manufacturing-more-output-with-fewer.html

(you can check out some other Professor Perry posts on this same topic -- the bottom line though is that technology causes more job losses than free trade -- this is a empirically claim that you would do well to investigate)

It should also be noted that in Maximos' fevered imagination of the inevitable "slouching toward Brazil" dystopia that he envision for the U.S., he continues to ignore the growth in welath in this country thanks to intellectual products like software and entertainment. Microsoft alone has created thousands of jobs and probably as much wealth as Henry Ford did in his day -- the difference of course is in the intellectual capabilities of those who got the jobs.

Well, Jeff, to merely suggest the outline of a response that I can imagine from Maximos: "shifting our resources," whatever its aggregate effect as measured statistically, might include such unstatistical tragedies at the impoverishment of the American Midwest. Maybe everyone from Iowa can just move to Chicago and trade options and futures on agricultural produce in Africa and Latin America.

Lydia -- I think we can all agree that the government is giving plain ol' handouts, corporate welfare, to the big agriculture interests. That said, I do tend to favor Maximos's broader suggestion that we recognize social policy in the tax code as well. There is a true sense in which taxation may be said, whether intended or not, to subsidize certain business at the expense of others.

Paul,

You can dismiss my 4:25 comment, but you ignore the 4:27 comment at your peril. The point I am making is two-fold:

1) as usual, when Maximos identifies some group he wants to help (the small farmer) he ignores how this help will impact other groups;

2) more importantly, if Maximos (and you) are really concerned about jobs then the true "enenmy" is not subsidies or free trade -- it is technology.

When you both start proposing some sort of national board that makes rulings on every technological improvement in the U.S. for its impact on jobs (and bans the use of tractors, for example, because having workers cut down the wheat would certainly employ a lot more folks), I'll start to take your economic proposal seriously. You'll also create a Brazilian America faster than any subsidy or free trade agreement ever did.

Jeff -- I had not seen your latter comment (4:37) when I posted, and I did not dismiss the earlier one (4:25). But you have neglected my now more than year-long argument: namely that the project to integrate global capital markets as conceived and presented by its promoters over the past several decades, has been dealt some heavy and lasting blows. The very phrase "free trade" is shaken, for it presupposes this integration, which was supposed to provide stability and freedom but instead gave us fragility and socialism.

There is a true sense in which taxation may be said, whether intended or not, to subsidize certain business at the expense of others.

Well, I have to say, Paul, that I don't think simply not taxing businesses that ship long distance on their _actual costs_ for shipping their products long-distance is "subsidizing" them "at the expense of" someone else. As far as I can see, it's a wash. The businesses that choose not to ship long-distance don't lose out on some "handout," because *they aren't spending the money to ship long-distance in the first place*. The businesses who do are both a) out the money and b) not being taxed on that money they are out. They make up their minds whether being out the money for doing the shipping is worth it in terms of the profits received. And that's it. This isn't subsidizing one business "at the expense of" another any more than letting anybody deduct any business expense is subsidizing his type of business at the expense of some other type of business. It's simply allowing _both types_ of businesses to deduct their _real business expenses_. Indeed, to tell the company that ships long-distance that it cannot deduct its expenses for doing so would _definitely_ be giving specially disfavored treatment to the business that ships long distance. As far as I'm concerned, letting both businesses deduct their actual expenses and pay taxes on net profit rather than gross profit is neutral.

So, whether or not we should "recognize social policy [in some new and different ways] in the tax code" or not, we should admit (which I'm sure Maximos would not admit on the rack) that this particular "recognition" would be a move to an ideologically freighted use of the tax code from one that is not, in this particular area, so freighted. As I said before, as far as I'm concerned, we don't let businesses deduct their operating expenses from their profits because those specific operating expenses are matters for "public solicitude," are the special darlings of the government, which the government wishes specially to "subsidize" at the "expense" of other people, but because such calculations enable us *accurately to describe* their actual profits and hence to tax those profits, which is the only justification for the tax in question in the first placew (namely, that the business is making a profit). If the business literally made no net profit, it would be unjust to tax it.

The issue of government intervention in agriculture is at least as old as Pharaoh, see Joseph managing the grain bins in Genesis if my memory is working. Throughout history, the cycle has been starvation, reallocation to production, overproduction leading to price collapse, people selling even the seed corn to cover their losses, and starvation again. Agriculture has historically responded poorly to supply and demand, at least poorly if you take starvation to be bad. That is why price floors have been implemented, so as to avoid the instance of people cashing out their seed corn. It is for this reason that every first world country has some form of price supports in agriculture.

Lydia -- rather than getting all tangled up in that specific dispute, let me just say that the way the prudential disagreement between me and Maximos works out is that I am still a hearty Reaganite on taxation, while he has grown more open to confiscatory schemes (correct me if I'm wrong there, Maximos).

So I would like to dramatically slash taxes, rather than spend with abandon -- as in our successive stimulus legislation. If the President and Congress want a "jobs program," let them cut taxes across the board, with heavy emphasis on small business. Would that put a new dent in the budget? Sure. But the world's appetite for US sovereign debt seems unsatiated so far. And we're much more likely to get the growth in private business that alone can begin to restore us to fiscal balance through an emancipation of private enterprise than through Keynesian spending.

Would that put a new dent in the budget?

And we could also cut government spending from where it presently is. I'm sure you'd agree with that idea, too.

more importantly, if Maximos (and you) are really concerned about jobs then the true "enenmy" is not subsidies or free trade -- it is technology.

Technology is an aspect of the problem, insofar as technology is typically conceived, somewhat inconsistently, as a mere instantiation of neutral technique, and its advancement as an intrinsic good. Perhaps the more pressing problem, however, is the intersection of technology and relations of power, in both politics and economics, and the detachment of the entire dynamic from any conception of the common good, or of human flourishing (apart from increases of sheer quantity, or aggregate efficiency).

The issue of government intervention in agriculture is at least as old as Pharaoh, see Joseph managing the grain bins in Genesis if my memory is working. Throughout history, the cycle has been starvation, reallocation to production, overproduction leading to price collapse, people selling even the seed corn to cover their losses, and starvation again. Agriculture has historically responded poorly to supply and demand, at least poorly if you take starvation to be bad. That is why price floors have been implemented, so as to avoid the instance of people cashing out their seed corn. It is for this reason that every first world country has some form of price supports in agriculture.

Precisely - which is why I propose to combine both necessary supports for agricultural production, and the communities that it ought to sustain, with the dis-incentivization of sprawling agricultural conglomerates, which have enormous externalities, have decimated many small communities and farms, and are, arguably, unsustainable in the medium-term and beyond. Land and labour may be, as Karl Polanyi argued, fictitious commodities, meaning that their disposition cannot be subjected solely to market mechanisms, owing to the social relations contingent upon them, but food is also one such fictitious commodity.

correct me if I'm wrong there, Maximos)

I would formulate my position thusly: any scheme of taxation will be more or less appropriate for a given mode of political economy, and the choice between them is seldom a moral issue, strictly speaking, but a matter of the prudential adaptation to circumstances. The high marginal rates applied to income and capital gains in the Eisenhower era, far from being impediments to economic growth (assuming that this is desirable in itself), were actually integral to the structure of political economy in that period. The New Industrial State (JK Galbraith) depended upon them, at some level, inasmuch as they discouraged various forms of exotic corporate looting, and encouraged wage growth in the middle classes, necessary to purchase the increasing output of the NES. When this system ran aground, for a variety of contingent, historical reasons, policy shifted, and now we're left to reckon with the inadequacies of the current political economy. The difference is that, when the NES had run its course, the system groped around, and found a new path forward, even though this latter was not without its problems - which we've been dealing with for over a year now - whereas presently, we cannot even admit that the system has structural problems. Instead, power moves heaven and earth to return to the status quo ante, while the usual apologists hymn their dithyrambs to the infamy.

Sheesh - acronyms in the above should be NIS.

We could indeed cut government spend, Lydia. An eminently sensible idea. However, to really affect the budget deficit we will have to go way beyond discretionary spending to cut either (a) retiree and health care entitlements, or (b) defense. With stimulus expenditures already gone, and the TARP coming back slowly but surely (with profits!), the primary sources of deficit come from institutional frameworks compassing legislative commitments that no politician would dare propose cutting, except on the extreme margins.

I have nothing to say about this topic, however, let an outsider be the first to point out that you let Zippy show up and didn't even say, "Hi!"

To his point, I say (with tongue in cheek): Oh, yeah?

A $20M LLC never breathes, eats, sleeps, bleeds, marries, prays, raises children, or, and perhaps most importantly, dies of old age.

A $20M LLC:
Bleeds red ink
Marries and forms partnerships with other like-minded entities
Preys on the poor
Raises subsidiaries as their children
Can certainly die of old age (anyone remember when Remington made typewriters?)
Eats up tax credits
Sleeps soundly under the protection of big government
Breathes murderous fury when one dares to challenge its legitimacy

Gotta love analogical thinking.

Maybe I'll go back to grading my finals.

The Chicken

We were all too stunned by his usual brilliance, Chicken. We forgot our manners.

I was astonished to see him, but I knew I'd scarcely have time to say "hi" before he disappeared again.

Paul, I'm not sure I entirely follow you. Aren't _most_ of our current spending commitments laid out by legislation, including retiree entitlements? And that's considered a major third rail. So any significant spending cutting would require a congressional backbone of iron, that's for sure. But I think it needs to be a priority.

I'm just saying that the entitlements (along with Defense) are the big budget items, and their projected expansion as the Boomers retire constitute the great bulk of the deficit problem in the future. We could clean up all the pork in the budget (again, worth doing in its own right) and still have a structural deficit for as far as the eye can see.

There is no hypocrisy: I am generally opposed to according corporations the rights and privileges of persons.

I would be willing to go along with cutting out certain kinds of treatment of corporations, but the notion of treating corporations as "persons" as being illegitimate only sounds really good until you learn what is really meant by treating them as "persons" under the law. In legalese, these persons are not accorded all of the rights than a certain subset of "persons" is accorded, namely those "persons" who are living and breathing and bleed when you cut them. In tax law, at least, these latter sort of persons are called "individuals", and the rules do not land identically on "persons" as on "individuals." Nor, I would imagine, does it do so in other areas of law, of which I am less familiar.

Tax deductions are regarded as subsidies in virtually all discussions in political science and economics these days.

True, when the speakers are being a little sloppy or overgeneralizing. But what we are talking about here is a carving out of a deduction treatment so that some sorts of businesses get the deduction for the exact same action that OTHER businesses DON'T get the deduction, transporting his goods in the course of business. Yes, then the deduction would naturally become a backwards subsidy,_in comparison_ of course, to the lucky few who get it. This skewing of the playing field is precisely the problem with playing social taxation games.

No, they would be taxed as though those expenses were no legitimate concern of public solicitude, as it is the essence of political society to make just such value judgments: this aspect of business will be treated one way, and this one another way.

To answer this properly would force the discussion into a detailed class on tax theory, but let me just say this: In so far as our hodge-podge of an income tax system stands of anything that can properly be called principles, one of them is that we tax income, and by "income" we don't mean every dollar that passes through someone's hands (gifts are not income, for example). The definition of income is open to debate, but from the very beginning of the tax, the law provided a mechanism for business _generically_ to not be taxed on its revenue to the extent its revenue was spent on things used to produce that revenue - i.e. the tax is meant to land on net income. The fact that we call this mechanism "deductions" hardly implies that they are subsidies in principle. However, when you implement a particular deduction that applies to only one subset of tax objects that has nothing to the distinction by which that subset is carved out, that clearly is a subsidy. There is a big difference between a deduction that is so broad and general that the entire tax code is built around it, and a narrowing or limiting of that deduction so that it ceases to apply to a certain subclass of taxpayers.

The point is that long-distance transportation costs are subsidized by the federal government,

The existence of roads favors ALL transporters, whether short or long distance. It makes no sense to single out long-distance transport when it is done with the same mechanism (motor vehicles) that short distance transport is done with.

I find it extraordinarily difficult to think of making roads as fundamentally a form of subsidizing business activity, since (a) making new roads of its very nature (other than in the wild frontier) requires exercise of eminent domain, and (b) has so many, many other uses than simply economic activity. You might just as well say it subsidizes visiting distant friends, or writing letters, or getting to church.

I suppose, under your theory, that police protection is also a form of business subsidy, since if we didn't have government do it, the businessman would have to hire guards, mercenaries, investigators, etc all on his own nickel. I don't quite think you are going to get a lot of agreement with that notion.

Maximos, I do agree with your complaint that the way we handle corporations causes problems. I don't think that you can argue, though, that this is because corporations are inherently de-humanizing. People are social, and that means they will act in concert, and that means they will form organizations. The abuses of corporate entities are not due to the very fact of that organizing principle, but of some bad choices for how we have chosen to legally treat most corporations under certain areas of the law. Can't those failures can be dealt with without disbanding the very notion of organized economic activity? But human nature being what it is, whatever we use to rein in the abuses will find clever people finding loopholes in it. (And trying to get government to help them in crafting advantages, of course).

which is why I propose to combine both necessary supports for agricultural production, and the communities that it ought to sustain, with the dis-incentivization of sprawling agricultural conglomerates, which have enormous externalities, have decimated many small communities and farms, and are, arguably, unsustainable in the medium-term and beyond.

That's quite interesting. So you are in favor of subsidies for agricultural production. And you are in favor of penalizing large organizations, even when they are agricultural ones. So let me ask you: let's assume your scenario, if someone who is NOT getting any direct government assistance happens across a new agri model for his farm that is highly successful, and (without forming a corporation, or anything other than simply hiring more people) he expands because he is good at getting food to people for a fair price, and this expansion is likewise successful so he expands again, you are in favor of all of a sudden of penalties for him? Why is that again? That sounds very suspiciously like the concept of left-liberal treatment of profitable business - penalties on account of success.

Paul,

I don't think I've been a vigorous commenter one way or another on your posts concerning our global financial system, because I'm still trying to figure out my own position on the issues. I will say that I think certain regulations seem emminently sensible (e.g. requiring more capital reserves, slowly making sure the government stops bailing out large investment firms and makes this policy explicit so a buyer beware culture takes over on the Street as opposed to a "don't worry, Uncle Sam will step in if we take on too much risk"). I also have probably commented before on how I think much of our current crisis has more to do with too much government, not too much capitalism (i.e. Fannie and Freddie, the creation of the market for MBS, encouraging loans to risky debtors, etc.) But my own sense is that your conclusion that the "...very phrase "free trade" is shaken, for it presupposes this integration, which was supposed to provide stability and freedom but instead gave us fragility and socialism" is incorrect, but I guess I'll have to engage you more vigorously in future posts to make my case.

Maximos,

I don't know your sources for your brief economic history of post WWII America, but the minute someone starts quoting J.K. Galbraith, I know I'm dealing with...how should I put this...someone who is steeped in a certain ideological perspective. Here is Buckley from his book review of "The Culture of Contentment":

It is fortunate for Professor Galbraith that he was born with singular gifts as a writer. It is a pity he hasn't used these skills in other ways than to try year after year to bail out his sinking ships. Granted, one can take satisfaction from his anti-historical exertions, and wholesome pleasure from his yeomanry as a sump-pumper. Indeed, his rhythm and grace recall the skills we remember having been developed by Ben-Hur, the model galley slave, whose only request of the quartermaster was that he be allowed every month to move to the other side of the boat, to ensure a parallel development in the musculature of his arms and legs. I for one hope that the next time a nation experimenting with socialism or Communism fails, which will happen the next time a nation experiments with socialism or Communism, Ken Galbraith will feel the need to explain what happened. It's great fun to read. It helps, of course, to suppress wistful thought about those who endured, or died trying, the passage toward collective living to which Professor Galbraith has beckoned us for over forty years, beguiling the subliterate world, here defined as those whose knowledge of what makes the world work is undeveloped, never mind that many of them have Ph.D.s.

Jeff -- government alone could not make a wave of ruin so huge. It took the ingenuity of man to drive us to this.

The MBS market was not, on my reading, anything close to a creation of government. It much more clearly an artifact of the free-flowing genius of private enterprisers. It along with the great Architecture of Usury was a thing of man's technical mastery, through technology, being applied to the world. Yes government contributed plenty -- mostly in the realm of moral hazard, of failing to allow failure. But this is one of the failings of democracy itself, that sometimes the majority cannot be made to see sense. And right now the majority of Americans still cannot see the plain sense that far more than government is implicated in this predicament. The judgment rings against deeper features of our age than mere governments.

True, when the speakers are being a little sloppy or overgeneralizing.
To answer this properly would force the discussion into a detailed class on tax theory

To be perfectly honest, and without any intention to cause offense, I consider all of this quite pedantic. Academic discourse, as I have already stated, typically treats many of these things as subsidies - economics is replete with such implied equivalencies - and I'm not terribly interested in pulling out the dictionary to correct them. Even were I to agree, I don't regard this as a consequential point. Sorry.

This skewing of the playing field is precisely the problem with playing social taxation games.

"Skewing of the playing field", "social taxation games", and general "social engineering" are intrinsic to any scheme of taxation, which by nature will favour and incentivize certain forms of economic activity, and disfavour others. For example, the spread between the rates of taxation applied to capital gains and income incentivizes speculation and short-term forms of investment, rather than investment in the painstaking construction of new enterprises - hence the lurid forms of usury implicated in the economic crisis. You cannot escape the questions, Who? Whom?

I don't think that you can argue, though, that this is because corporations are inherently de-humanizing. People are social, and that means they will act in concert, and that means they will form organizations.

Of course they will. From this is does not follow that these organizations must be of the limited-liability type, which permits the elaboration of corporate structures, the amassing of capital, and the production of externalities far in excess of what any principals would consent to be responsible for, or could effectively assert responsibility for - in essence, the form instantiates the separation of power, and its perquisites, from the responsibility for its exercise. This latter ends up diffused through society generally, whether in the form of cleanups, bailouts, social dislocations, and so forth. The form in question is perhaps the original mode of the privatization of profits/socialization of risks and costs.

The existence of roads favors ALL transporters, whether short or long distance. It makes no sense to single out long-distance transport when it is done with the same mechanism (motor vehicles) that short distance transport is done with.

As I stated above, arbitrariness is the judgment passed when someone either does not perceive, or does not accept, the social goods instantiated by a given discrimination. If the economic and social consequences are different, and evaluated negatively, then differential treatment is wholly legitimate.

I suppose, under your theory, that police protection is also a form of business subsidy

Perhaps, if police services were to benefit businesses in ways not available to other segments of society, if businesses received a uniquely vigilant degree of protection, this might be considered a sort of subsidy; police services, however, are supposed to be an element of the common good, as available to the common man as to the prosperous merchant. Whereas the interstate highways system clearly benefits some classes of society more than others, these differences being legitimate objects of debate.

So let me ask you: let's assume your scenario, if someone who is NOT getting any direct government assistance...

The scenario is underdetermined, as far as being a trigger for any sort of policy remedy I may, or may not, have in mind.

That sounds very suspiciously like the concept of left-liberal treatment of profitable business - penalties on account of success.

I neither worship success, nor regard the facilitation of success, so defined, as overriding objects of public policy. The fundamental fantasy of the "right to rise" is not without its adverse consequences, and, as these are legitimate considerations of public policy, the fantasy is not a trump for the common good.

I know I'm dealing with...how should I put this...someone who is steeped in a certain ideological perspective.

I'm not terribly interested in ad hominem argumentation, according to which someone's being wrong on one issue supposedly entails that his views on some other issue are immediately suspect. Should I disregard everything ever published in the Weekly Standard merely because that magazine supported, and continues to support, a foreign policy I consider ruinous, unjust, and often stupid? Surely not.

Paul,

I suggest you keep reading:

The subprime mortgage crisis started because banks and mortgage companies packaged risky loans and resold them on the secondary market, which was created by the legislation that created Fannie Mae and Freddie Mac. This legislation was supposed to help homeownership become more affordable.

That's just from my first Google search, from the website "About.com". Did shysters, I mean "private enterprisers", like Angelo Mozilo, take advantage of this market? They sure did, in the same way ACORN takes advantage of government programs created to "help homeownership become more affordable".

Maximos started this thread with historical theories such as this:

Such [regional and international] markets developed, gradually wearing away many less expansive, less lucrative local markets... Also contributing to the consolidation of American agriculture was the typical Great Barbecue era combination of usurious rates of interest on loans to farmers and unsupported, free pricing in commodities;

The first part is quite a bit more opaque than I, for one, would like. What does it mean to say "such market developed", other than to say that such processes became more successful than others? But what in the world does this have to do with "gradually wearing away less expansive, less lucrative markets"? Did the local people all of a sudden stop wearing clothes and eating food? The expansion of a market means including more people and areas in the market, not excluding locals from the market.

The second part is just as problematic: The ability to locate to and farm new land was pretty much available through 3/4 of the 1800's, with very little up front investment. And usually that up-front investment could not involve a loan, since the borrower typically was going way out in the frontier where collection would be unlikely. I suppose that later in the century this became more difficult, because land was no longer available for the taking. But I have no idea where the "usurious rates of interest" came in, and how. I thought that typical loan rates were low back then - are we talking about 20%, or 5%, or what? And if the land was not worth the loans (in terms of (a) profits from the farm, and then (b) earning interest for the lenders), then why did people buy new tracts of land with such borrowed money and why did lenders lend it? Are we talking about people who ALREADY had the land - why would they need loans to maintain a farm that was an already going concern?

And just what was so gravely evil about the "unsupported, free pricing in commodities"? How was that supposed to generate evil economic business models? Well, I understand the mechanism that Jeff Singer gave, that's pretty clear. But that mechanism points in the direction of cooperative efforts - either social ones enforced by law or private enterprise ones done by corporate joining are both moral options given that basic facts, so why is the private agri corporation bad and legally mandated social risk-spreading good? Only because, as Maximos claims, the large private corp model is unsustainable. Well, that thesis is only arguable, not provable, by the very nature of the case. And since the argument depends in principle on a great many contingent variables, you could never maintain with sufficient force that it is _impossible_ to reform the system into a sustainable one with only these limited adjustments, rather than your wholesale revamping of the entire concept of property and free economic action.

I do actually think that our current system is unsustainable over the long haul. But that's because I think the morals that are required for ANY system to be maintained have been draining out to the point of no return. Most of the particular abuses of the economic environment are just that - abuses, not fundamentally un-human forms of social arrangement. If we reformed the morals of the people, we COULD make a sustainable environment with some very important changes, but changes but short of a revolutionary eradication of property. And without reforming morals, no revolutionary change will work anyway.

Jeff, the men who invented the MBS were Laurence Fink at First Boston and Lew Ranieri at Salomon Brothers. Private entrepreneurs working on the frontier of financial science. This was twenty years before Countrywide was trading the distant and more complex cousins of that invention. The credit default swap was conceived deep in the bowels of a securities firm as well. CDO? The same. IO and PO strips. The NYC-to-Chicago futures and index arbitrage trade that sparked the 1987 crash. John Meriwether and LTCM, the geniuses of risk analysis. That government agencies purchased these bonds, and now and then supported these markets throughout their development, is a material fact; but it hardly means that the government was responsible for this market, this enormous creative engine. Private businessmen created it.

The scenario is underdetermined, as far as being a trigger for any sort of policy remedy I may, or may not, have in mind.

But you said you want to dis-incentivize large agri business. The scenario I gave is a guy who grows into a large agri business. That's all the determination your own claim made for dis-incentives.

As I stated above, arbitrariness is the judgment passed when someone either does not perceive, or does not accept, the social goods instantiated by a given discrimination.

I am pretty sure I don't grasp what you mean here. Are you saying that what appears as arbitrary only appears that way because I don't see that the claimed distinction is a valid distinction? That's probably true, but simply pointing it out does not establish that the distinction is actually valid, it simply underlines that there is a basis for disagreement.

I neither worship success, nor regard the facilitation of success, so defined, as overriding objects of public policy. The fundamental fantasy of the "right to rise" is not without its adverse consequences,

I don't worship success either, when it is generated at the cost of good morals. However, when we are evaluating a proposed system precisely on the grounds of whether it is "sustainable", one of the parts of the definition of sustainable must include "can it generate the material goods needed for healthy living for families", and this CANNOT happen without economic success for the family. That's primarily what I mean by success.

I really have no idea of what you mean by "the fundamental fantasy of 'the right to rise' ". I mean, really, what does that mean? Does it mean that you think that a person has no right to take the laws and society as they have been developed, figure out how to use that environment in order to generate new wealth to supply his family with the goods necessary for life, and has no right to expect (barring emergencies) that the government shall leave him in possession of a major portion of wealth he thus created? Is that expectation what you mean by "fantasy".

Jeff, it occurs to me that you may think that in my opinion the MBS is a wicked instrument. Let me disabuse of this. I do not accuse all of modern finance, root and branch. It's the damndedest thing to discover precisely the lineaments of the usury problem. My mind lacks the mathematical power to grasp all the subtleties.

My point remains, however, that we cannot lay this at the feet of government. It is deeper than that.

Tony, most of the settlement came with the railroads. The railroads were given huge grants of land - alternate sections extending many miles on each side of the tracks for each mile of track laid. The railroads aggressively marketed these lands.

Grain production has always been about growing in one place and getting the product to distant markets in one form or another. The Whiskey Rebellion was an early example of this problem.

Al, I will grant that much of the later development came after the railroads got significant. But the breadbasket states of Missouri, Kansas, Nebraska, and Iowa were settled before the RR really got significant. California and Nevada underwent their initial development without RR. The Oregon Trail was with oxen and horses pulling wagons, not RR. In fact, other than the later connecting up of the transcontinental RR's two sides, the RR generally was _not_ responsible for the first layer of development, but was involved in the second layer after the frontier was broken in.

Your point is well taken about the Whiskey Rebellion. The early history of this country is consists significantly of poor farmers moving to the frontier, applying their muscle and producing, over several years, a homestead, farm, and sufficient wealth to raise a family, with very limited government involvement of any sort.

The earliest RR in Kansas was 1853. The first settlement in Kansas was Fort Leavenworth in 1827. It became a territory in 1854, and a State in 1861. Its time in the Missouri Territory was temporary. (www.censusfinder.com/kansas.htm) Kansas's real development began after the railroad.

Lots of comments since I was here last. I found this a little amusing (if slightly grimly). Tony said,

That sounds very suspiciously like the concept of left-liberal treatment of profitable business - penalties on account of success.

To which Maximos replied,

I neither worship success, nor regard the facilitation of success, so defined, as overriding objects of public policy. The fundamental fantasy of the "right to rise" is not without its adverse consequences, and, as these are legitimate considerations of public policy, the fantasy is not a trump for the common good.

In other words, yup.

Paul,

We could indeed cut government spend, Lydia. An eminently sensible idea. However, to really affect the budget deficit we will have to go way beyond discretionary spending to cut either (a) retiree and health care entitlements, or (b) defense.

Or education.

The defense budget is only about 16% of federal spending. Option A is the only way you are going to seriously cut costs since about 70% of the federal budget goes to entitlements and debt interest.

On the other hand, there are a lot of things that could be done to make the military cheaper like reducing it down to something similar to Japan's Self-Defense Force if you are really that upset about it...

I neither worship success, nor regard the facilitation of success, so defined, as overriding objects of public policy. The fundamental fantasy of the "right to rise" is not without its adverse consequences, and, as these are legitimate considerations of public policy, the fantasy is not a trump for the common good.

There is also a fine line between your dismissive tone toward success and denying people the right to be productive which is effectively what the left seeks to do. Given the fact that our society is filled with so few people who have genuinely productive knowledge and skills, it doesn't surprise me that to see productivity given such short thrift.

Paul,

Thanks for the clarifications. You and I disagree about this sentence:

"That government agencies purchased these bonds, and now and then supported these markets throughout their development, is a material fact; but it hardly means that the government was responsible for this market, this enormous creative engine."

I would argue that it is precisely because government agencies purchased these bonds and supported the markets (including the bi-partisan effort to push homeownership to risky buyers) that the government created an environment of "too big to fail" and widespread moral hazard. There is no way the MBS market would have grown as fast and as big without Fannie and Freddie. A good history on our current troubles (that point to government causing more problems than solving them) is provided by the folks over at AEI:

http://www.aei.org/basicPages/20080924093822815

The first part is quite a bit more opaque than I, for one, would like.

Please, this is pedantic. It means that local markets, and production for local markets, gave way to production for integrated regional and national markets. Success, moreover, has many metrics, some not amenable to quantification. Increasing concentration in the agricultural sector was permitted to develop because it generated, and continues to generate, greater exchange-values; to criticize such "success" is to critique the valorization of this metric.

But I have no idea where the "usurious rates of interest" came in, and how. I thought that typical loan rates were low back then - are we talking about 20%, or 5%, or what?

Writing of the disastrous combination of the country-store system and the demand of financiers for cash crops, in his work, Age of Betrayal, Jack Beatty describes the consequences:


The furnishing merchant - whether Yankee, immigrant, or planter - attached a condition to his loans beneficial to him but destructive to the South. He got his lending money from Northern investors who gave it only to back cotton, the one Southern crop with an established if declining demand in world markets: The merchant-planter lent for cotton and for cotton only. "The merchant was only a bucket in an endless chain by which the agricultural well of a tributary region was drained of its flow", C. Vann Woodward writes. The merchant could dictate terms because no one else would extend credit to the farmer. once the farmer was in debt to one merchant "no competitor would sell the farmer so much as a side of fat back, except for cash, since the only acceptable security, his crop, had been forfeited." The lender enjoyed a local monopoly. He drove the farmer to plant cotton to his doorstep not only to pay for the loan but to keep the farmer from growing his own food, forcing him to borrow against his future crop to eat. Merchants "charged from 25 percent to grand larceny", according to a contemporary observer. For common items, "credit price" markups ranged from 20 to 40 percent in North Carolina to 50 to 75 percent in Alabama; for medicine the premium could run to 250 percent. To borrow $800 a Georgia farmer might pay $2800 in interest over five years. "When one of these mortgages has been recorded against the Southern farmer", a researcher found, "he has usually passed into a state of helpless peonage to the merchant who has become his creditor.... Every mouthful of food that he purchases, every implement that he requires on the farm, his mules, his cattle, the clothing for himself and family, the fertilizers for his land, must all be bought of the merchant who holds the crop lein, and in such amounts, as the latter is willing to allow."

Further along in the chapter from which this quote derives, Beatty discusses the difficulties attendant upon homesteading in the West: most homestead tracts would require a minimum of $500 to provision for farming, this at a time when such an amount was six-months wages in the industrial north, assuming continuous employment, which could not always be assumed. This compelled reliance on usurious lenders, and, in a roundabout way, facilitated both the concentration of landholdings and speculation.

And just what was so gravely evil about the "unsupported, free pricing in commodities"?

This has already been limned in multiple locations in this thread, and I've no intention of stuttering. If the value of your debts, already subjected to usurious compounding, are rising, and the value of your crops are falling, you're financially doomed.

Most of the particular abuses of the economic environment are just that - abuses, not fundamentally un-human forms of social arrangement.

Whether the moral deformation of our times has impacted our social structures is precisely what is at issue.

but changes but short of a revolutionary eradication of property.

No one has proposed such a course of ruination, and curtailing the privileges of limited liability corporations would not effect such a revolutionary alteration of property rights.

And without reforming morals, no revolutionary change will work anyway.

I never gainsaid this argument, but rather intended to build upon it.

The scenario I gave is a guy who grows into a large agri business.

No, your scenario is abstracted from all of the incidents and particularities that make actually-existing agri-business objectionable, and affords no insight into how massive conglomerates could arise, and function, in the absence of those objectionable incidents. It is, to reiterate, not the bare fact of 'someone's getting rich' that is objectionable, but the manner in which he does so, and the potential consequences thereof.

Are you saying that what appears as arbitrary only appears that way because I don't see that the claimed distinction is a valid distinction? That's probably true, but simply pointing it out does not establish that the distinction is actually valid, it simply underlines that there is a basis for disagreement.

If we cannot agree that the personal, familial, and communal goods of human flourishing that are adversely impacted by "creative destruction", whether in agriculture or elsewhere, are really goods worth defending, than this entire discussion will prove pointless, with one side protesting that all these hapless plutocrats wanted to do was "become successful". Boo hoo.

However, when we are evaluating a proposed system precisely on the grounds of whether it is "sustainable", one of the parts of the definition of sustainable must include "can it generate the material goods needed for healthy living for families", and this CANNOT happen without economic success for the family.

Me definition of success encompasses much more that mere material abundance, the material preconditions of a certain way of life, irrespective of the moral value of that way of life.

Does it mean that you think that a person has no right to take the laws and society as they have been developed, figure out how to use that environment in order to generate new wealth to supply his family with the goods necessary for life, and has no right to expect (barring emergencies) that the government shall leave him in possession of a major portion of wealth he thus created? Is that expectation what you mean by "fantasy".

The fundamental fantasy is that each man can become wealthy, if only he assiduously pursues whatever it is his believes, on the evidence, will garner him wealth; many Americans evidence a sort of psychological double life, living at once in the real world, as well as an alternate future reality, in which they are wealthy, and on the basis of which they both determine their conduct in the real world, and pass sentence upon the real world. Because they imagine that they might one day be wealthy, they desire policies and social practices that, at a minimum, will leave their fantasies unencumbered by countervailing obligations, and, at the maximum, will actively facilitate the realization of such fantasies. Even where an hypothetical brake upon corporate conduct, or the politicking of plutocrats, might demonstrably benefit the common good, and even many Americans personally, many Americans will oppose it, on the supposition that they will someday be wealthy, and subject to such 'invidious' limitations. The fantasy is not that one should retain possession of some significant portion of one's earnings, but that one is entitled to do so without regard to the social contexts and consequences of such striving, without regard for the common good - that society is somehow obligated to defend one in the performance of some wealth-making action(s), even where the particular actions and frameworks are injurious to numerous aspects of society and its diversity of goods. The public, however, are not obligated to defend, through their representatives, modes of accumulation deleterious to the common good. If this be leftist, than that term has been defined down into meaninglessness.

Jeff -- The difference is between a causal factor and a contributory factor. The mortgage-back security, over the course of its development, was an instrument of private enterprise. I agree that the market for these instruments was vastly expanded by government and quasi-government capital. But again, this is ancillary to their origin and innovation. I'll even agree that government "caused more problems than it solved." Where I think you are plainly off-base is in thinking that the government was responsible for "the creation of the market for MBS." Nonsense. Fink and Ranieri transformed the business of fixed-income investment banking with their innovations. This was a technological development undertaken and achieved by private businessmen. The vast architecture of shadow banking that it eventual became has been rightly called "the biggest U.S. export business of the 21st century."

I really doubt that you would be so quick to credit government for other business innovations. How would you react if someone claimed that because the government funded and built the Interstate Highway System, we should credit government with the invention of internal combustion? What other triumphs of human ingenuity could our socialists glibly appropriate is this way?

Further, the too big to fail doctrine -- moral hazard -- was not created by government alone either. It would be much more accurate to call moral hazard a conspiracy of government and private financiers, in a word, a plutocracy. The smart financiers began to see the systemic risk factor, and calculated that they could trade risk cheaper on the expectation that certain institutions would not be allowed to fail.

"There is also a fine line between your dismissive tone toward success and denying people the right to be productive which is effectively what the left seeks to do."

Mike, when the small farmer was told either implicitly or explicitly to "get big or get out," then government farm policy proceeded to compel this choice, how did the notion of "success" figure in? If a given farmer was happy and satisfied with his couple hundred acres, was he therefore not "successful" because he didn't aspire to own a couple thousand?

As Maximos said above, there's no fundamental right for any business to grow ever larger, neither should we assume that every business owner desires his business to grow in such a way. Goverment policy should not cause adverse effects on those business owners or farmers who decide that they don't wan't to become, or become part of, Cargill or ConAgra.

Gover[n]ment policy should not cause adverse effects on those business owners or farmers who decide that they don't wan't to become, or become part of, Cargill or ConAgra.

I'm very sympathetic to the idea that people who are content and are taking care of themselves should be left alone. I would take this very far. For example, if the Joneses have owned a pig farm in some location from generation to generation for a hundred years, and their neighbors sell their land to real estate developers, I think the Joneses should be left alone to continue to raise pigs, even if the people in the new houses in the development don't like the smell. When I see the poster that says, "Do something. Lead, follow, or get out of the way," my instinct is to say, "Go around me."

I was also horrified when I discovered the tendency to chivvy people in contemporary white collar jobs always to be changing their jobs, rather than letting them learn to do one thing that they enjoy well, and leaving them to do it.

So, okay. But the notion that government policy "causes adverse effects" just seems to me too vague to fall clearly under censure based on these principles. I'd have to be convinced that this causal effect just wasn't some highly contingent, highly roundabout thing. I'd also have to be convinced that the obvious benefits (and justice) of whatever the government was doing or not doing weren't outweighed by these less-than-obvious, roundabout, negative effects. A persistent type of disagreement between me and Maximos on a rather startling variety of issues concerns a tendency to blame people (and governments) for the exceedingly indirect effects of their actions or even their failure to act, and to blame them and use rhetoric that seems to imply that these actions or inactions are actual _persecutions_ of the people who are affected indirectly. If something is in an obvious and direct sense a good or even at least a legitimate, morally neutral, thing to do, I'm going to find it hard to place all this heavy blame upon the person who does it because it has (or even might have, or has if everybody does it, or whatever) these highly indirect effects.

Note that it isn't only with Maximos that I have those kinds of disagreements. Here's a connection that occurred to me, with some surprise, at the time: When I lauded international adoption, there were people in my long, long thread who implied that helping a particular child should not be done if, in the aggregate, a lot of such acts of helping might indirectly lead to making Americans more susceptible to multiculturalist rhetoric. To my mind, it's ridiculous to sacrifice obvious and immediate goods and benefits to real people, and even go so far as to blame positive acts of love, on the grounds that, way down the causal stream, there might be these other negatives.

I tend to suspect I'd say something similar about the government policies being blamed here for "caus[ing] adverse effects" for smaller farmers.

As Maximos said above, there's no fundamental right for any business to grow ever larger, neither should we assume that every business owner desires his business to grow in such a way.

That may sound like a high-minded thing to say, but the practical effect of saying that "there's no fundamental right for any business to grow larger" is that you have just laid down a philosophical principle that says "society may dictate all aspects of size and organization of a business." You have just said that the government can just arbitrarily declare "your small business shall employ no more than 10 people" or "you shall not earn more than $X.XX" because all of that is inherently folded up in the implication of saying that no peaceful business owner has a right to expand their business as long as their own means permit them.

A community might be able to make a strong case for prohibiting a business from entering its territory on the basis that it is abusive, engages in monopolistic practices aimed at destroying competition and/or tends to use unethical practices like buying off local officials to get sweet land deals, but that's a far cry from just declaring that there is simply no presumption that any businessman, no matter how he behaves, has a right to peacefully expand his business with his own means as far as they can take him.

The selectivity with which such judgments concerning attributions of responsibility are passed is a source of endless amusement to me. Notwithstanding the fact that most Western European nations provide mechanisms for universal health coverage, and do so without descending into the manifold practical and ethical failings of the British NHS, demonstrating by the fact of their existence that health reforms, and even universal coverage of some sort, are not the slippery slope to socialist sheol, we are informed that any such reforms in the US will lead, inexorably, to socialized medicine and many invidious practices.

Everyone employs "waaaayyyyy down the causal stream" arguments. We only differ as to where they are best employed.

demonstrating by the fact of their existence that health reforms, and even universal coverage of some sort, are not the slippery slope to socialist sheol, we are informed that any such reforms in the US will lead, inexorably, to socialized medicine and many invidious practices.

That's certainly true if you narrowly define socialism as a system where the government is the entire loop of the economic process which provides the service...

By that logic, Canada doesn't have Socialism either since it simply has a **single-payer** system.

Socialism is being defined down into meaninglessness. Now, the Swiss health system, which provides universal coverage through private, non-profit entities, offers subsidies to the poor and indigent, and affords those with means the opportunity to purchase additional coverage beyond the basic regimen, is socialist. Ooookaaaayyyyy.

Because the benefits promised are dubious, a great many of us would be harmed by the proposal, not simply in the long-term but probably in at least the medium-term if not sooner, because the proposal is unconstitutional, unjust, and foolish rather than being wonderful and beneficial. Because it's a classic case of the "I want Ivan's goat to die" phenomenon wherein liberals and sucking socialists of all stripes don't mind if everybody has a medium-poor system compared to the present one, a bunch of people are worse off than they were before, and the government has far too much power over life and death *instantaneously* so long as it's "fair" and everybody's "equal." Where do I begin? Puh-leese, Maximos. You aren't going to get me or anyone else who opposes your beloved socialized medicine to agree that it's some sort of great good in an immediate, obvious sense and bad only in some highly indirect and un-obvious sense and manner.

"A community might be able to make a strong case for prohibiting a business from entering its territory on the basis that it is abusive, engages in monopolistic practices aimed at destroying competition and/or tends to use unethical practices like buying off local officials to get sweet land deals..."

I'd tend to argue that beyond a certain size or measure of expansion, such abuses and practices are inevitable. I'm not saying, necessarily, that the government should limit the size of companies, but that it is highly doubtful that companies need to grow to these monstrous sizes. There is no necessity, other than the profit motive, for these corporate monstrosities, and at some point greed must overtake prudence; "choice," in this case choice to grow, becomes an idol. As Booth Tarkington puts it, we worship bigness. And bigness means $$$.

Christians especially should be wary of this mentality, as the Bible has few good things to say about "Robb Report" Christians, a species that we don't need more examples of.

And I've already surveyed the lying garbage Maximos has apparently believed according to which the "indigent and poor" are merely "helped" to health care and the rest of us can buy whatever we want beyond that. But on this issue (as on too many others), Maximos is far more ready to believe the leftists he evidently hangs around with on the Internet than the conservatives. I went into this particular myth on my personal blog but didn't bother with it here, because I knew it would do no good. I probably shouldn't even mention it now.

Rob,

I don't disagree with that, but it's inherently problematic to flatly state "a business has no right to grow" as that statement strips the business' owner of any claim to being treated unjustly if a bureaucrat bosses them around without regard for actual, bona fide common good issues. If you have no freedom of speech, you have no moral claim against a censor who capriciously strips of you of the right to publish **anything** because no right is infringed by any act of censorship under that regime. That is the equivalent magnitude and danger of saying "a business has no right to grow." You might as well say that business can only grow at the sufferance of the government.

Lydia,

Maximos also glosses over various serious issues with these systems. They have lower cancer survival rates than ours (better bankrupt than dead!) and the way they treat premature and unhealthy babies would tend to have Catholic pro-lifers regard them as one step removed from an abortion clinic. Furthermore, the majority of the world's medical innovation happens in the countries with the least socialism (surprise, surprise!) I don't have it on hand at the moment, but a year or two ago, Reason did an expose on this, pointing out that it is the United States which has contributed a very significant percentage of modern (last 40-50 years) medical innovations.

As should be obvious, if your system or company can benefit from someone else's R&D, your costs will be lower.

I don't think Maximos is actually recommending socialized medicine. I think he is gravely underestimating the calamity of socialized medicine, but that is very different that actively desiring it. What he's saying is that if he cannot deduce to unintended consequences of corporate capitalism, because they are way on down the causal chain, then why is it okay to deduce to the consequences of the bill that may or may not pass in the Senate soon? Why is it out-of-bounds to say that industrial agriculture is going to lead us to ruin, but legitimate to say that the compromise HCR bill is going to lead us to ruin?

My answer to these question is as follow: you may indeed legitimately adduce your forecasted consequences of capitalism, for I have seen with my own eyes the staggering failure of capitalism; but I still believe your anger is blinding you to the perils of the Left, the compromise HCR bill being among the foremost of them.

And I say, because the calamity of Obamacare is evident immediately and on its face, and because it is not, as I said above when discussing either setting up a business that grows large or (for example) adopting a child, a good thing or a neutral thing, but a bad thing.

And I disagree, Paul, at least from what I have seen. I think Maximos has made it clear again and again that he actively desires some form of socialized medicine. He believes it would be more just than what we have. Numerous comments on numerous threads support this conclusion.

My role in this discussion is to ask stupid questions so that those in the know can enlighten us poor simple cash-and-carry folk.

To that point, if a large business goes under, doesn't it tend to hurt society as a whole and certainly a larger number of individuals more than if a few among a whole bunch of small businesses of the same type go under or are small businesses that manufacture the same things subject to an invisible string of connections in their manufacturing process such that if one goes down, they all are either going down or they all suffer?

It would seem that the most flexibility in a society is maintained when there are a few large businesses and many small businesses, so that if the big ones go down, society can still survive from the small ones.

This was Issac Asimov's mistake in Foundation's Edge, where he wanted to form a unified galaxy based on a single linked mind power. If a psychic "virus" could get introduced into the single galactic mind, the whole galaxy would fall, but if there were a large group and many small groups, the small groups could, perhaps, successfully fight the infection from the outside. Statistically, the greatest ability of structure to be generated comes when there is partial ordering. I suspect the same to be the case in economics.

The Chicken

I've often talked about the virus principle, MC, in connection with forms of government and even human associations. (I also can't forbear mischievously pointing out that it is relevant to the existence of one Church as opposed to a variety of denominations, but perhaps we should pretend I didn't say that.)

But here's an interesting question: Is there not a danger that if we give the government the power to maintain a system in which businesses don't grow "too large" (whatever that may be), the government _itself_ will become the big monopoly which, if it promotes wrong things or bad values, can harm a much larger number of people than would be harmed if government power were more limited?

Actually, those vituperating against my "lying garbage" about socialized medicine have ignored the specificity of my example: I cited the Swiss example, which has the features indicated by my spare little sketch above, suggesting that, were such a proposal to be advanced in our own legislature, it would be met with the same sort of indignation, and the same "slippery slope to perdition" arguments with which the actual legislation has been met. (I pause to note that I hold no brief for this legislation, but only endorse isolated provisions in the competing bills.) And this is a legitimate inference, inasmuch as the opponents of the legislation, including those who have sparred with me in these pages, have indicated their opposition, not to the specific mechanisms of the legislation, but to the very notion of, say, eliminating pre-existing condition exclusions, and to any attempts to approach universal coverage (even after the fashion of Michael Liccione's framework) - have, in a phrase, opposed any reforms save those that would extend the calculating frigidity of the cash nexus ever deeper into our health care system. The barest suggestion that health care is in some sense a social good, I have been told for well nigh one two years, is the first momentous step on the path to health care hell. There are "logical, causal" chains, you see, and I'm lost in the throes of some profound moral turpitude for denying their existence.

On the other hand, actual, historical causal chains in American agriculture - for example, those between the rise of the largest agricultural firms and the decimation of small farming communities throughout the heartland - are dismissed as mythological figments of the leftist imagination, or waved away with a Panglossian flourish as mere accidents of a wholly benevolent Progress. In fine, anything whatsoever that Maximos proposes reforming would, if altered, lead us straightway to perdition, the unintended consequences (or were the intended by Maximos' great malevolence?!) leading inexorably, logically, like the unfolding of a complex argument in a tome of analytical philosophy, to socialism most foul; and those very same things are not linked, either logically, causally, or contingently, with any of the evils that motivated me to advocate their reform. In fact, those evils are really "evils", unalloyed goods, if only poor purblind Maximos would learn to see them aright. That right, folks! Only my politics have unintended consequences. Everyone else's politics, insofar as these oppose mine, only have 'aw, shucks, that might seem really bad for Mr. X, but he should acknowledge that this is all for the best in this best of all possible capitalist worlds' consequences.

The sheer tendentiousness of my adversaries in these debates is indicative of the profound intellectual putrefaction of conservatism in these times. Are you desirous that agricultural policy be reformed? Socialism! That the financial system be reformed? Socialism! That health care not be interwoven ever more firmly into the cash nexus? Quelle Horreur! Communism! Heaven shall burn if Maximos has his way! Why, the negative consequences are practically analytical truths. But the negative consequences of actually-existing policy regimes are either trifles, mythological in nature, or wholly accidental in relation to the policy in question. Capitalism has no unintended consequences of the sort that Maximos' policies would certainly engender.

Is there not a danger that if we give the government the power to maintain a system in which businesses don't grow "too large" (whatever that may be), the government _itself_ will become the big monopoly which, if it promotes wrong things or bad values, can harm a much larger number of people than would be harmed if government power were more limited?

I thought the whole purpose of the Constitution was to prevent this. Am I naive? Have we discovered yet another Godelian flaw in the Constitution?

On a related note, I, independently, discovered the Godelian flaw, years ago, and it has kept me from taking some jobs based on flaws in loyalty oaths that certain universities asked their employees to sign (the oaths were paradoxical in that they ignored the principle of self-amendment in the Constitution - the logician, Peter Suber, has also pointed out the self-referential problem in the Constitution). It is amazing how many people will avoid logical conclusions when they really want permission, instead. Being poor, I could not afford to explain meta-logical contradictions to judges. Most lawyers that I talked to agreed that it existed, but said it was not the intent of the oaths (so, why couldn't they write the oaths properly, to begin with?). Anyway, being poor, I had to let the matter drop.

Perhaps, Suber is interested in paradoxes of self-reference in part because he used to be a stand-up comic. I am one of only a few people in the world who studies the logic of humor (Suber does not) and humor is based on something which is a cousin to self-reference which does not, as yet, have a name in the literature (I HAVE to get publishing), although I call it a skewed paradox (this is the wrong place to get into it, however).


As for the Church thing, the guardianship of the Holy Spirit is the ultimate anti-viral agent. It may take some time to kick in, but it will kick in and before the patient dies or makes an essential mistake.

The Chicken

I thought the whole purpose of the Constitution was to prevent this. Am I naive?

Well, yes, but we just ignore the Constitution when we want to. Vide certain bills presently before Congress. Ask a Senator, "What is your constitutional authority for forcing everyone in the U.S. to purchase health insurance?" and you get only bluff and bluster. "We have plenty of authority!" Not answering the question.

So the Constitution is no guard, because the laws the people's representatives pass go beyond the authority it grants, and no one stops them.

against my "lying garbage" about socialized medicine

That I believe, from many of your comments here and elsewhere, you have bought. Not that you have promulgated knowingly. Sorry if you don't like that, but too bad. You are the one over and over again implying (and please, don't pretend you haven't) that what is now being proposed is indeed going to allow people to buy whatever they want and are able to buy over and above the great "social good" being benevolently extended to the poor and downtrodden, including those entitled to more chiropractor visits. Who could object to that? Occasionally I've tried to point out, even here, that it ain't so, but you haven't listened. ("How is this any different from [benign] auto insurance exchanges?" for example.)

If were I wrong about that specific aspect of the proposed reform, which is entirely possible, that would not affect my broader argument, which is not about the actually-existing reform proposals per se.

~~it's inherently problematic to flatly state "a business has no right to grow"~~

Which no one stated. What was stated was that there is no fundamental or prima facie right to a business's growing as big as it can, which isn't the same thing.

~~Is there not a danger that if we give the government the power to maintain a system in which businesses don't grow "too large" (whatever that may be), the government _itself_ will become the big monopoly which, if it promotes wrong things or bad values, can harm a much larger number of people than would be harmed if government power were more limited?~~

Of course. With Chesterton, Kirk, Wendell Berry and others, I am equally suspicious of big government and big business. But I am especially suspicious when the two collude. The monopoly we have to worry most about is not that of the robber barons or a socialist government, but a plutocratic amalgamation of the two.

Which no one stated. What was stated was that there is no fundamental or prima facie right to a business's growing as big as it can, which isn't the same thing.

There is no point in making a distinction between "growing as big as it can" and "a right to grow" if by the former you mean "grow as big as it can within the limits of its own resources, while behaving ethically and not acting against the common good." If you assume that "growing as big as it can" can encompass a sociopathic attitude toward society, laws, ethics, the common good, etc. then that is a different issue bordering on being a strawman.

Of course, who gets to decide what is too big? We now live in a society where to be a monopoly, one need not actually control the market, but merely be the dominant power among many viable competitors.

Instead of worrying about size, it is behavior that really matters.

Rob,

The fundamental fantasy of the "right to rise" is not without its adverse consequences, and, as these are legitimate considerations of public policy, the fantasy is not a trump for the common good.

You were mistaken when you said that Maximos has not argued for a right to grow one's business.

against the idea that there is such a right***

Mike, the "fundamental fantasy" is essentially pleonexic, a combination of desire for increasing material wealth and dogmatic certitude that its unlimited increase is beneficial for oneself and morally licit. Unlimited acquisition is unnatural, as philosophers have taught from antiquity.

Maximos posted a long quote about ruinous rates charged to farmers, of which a portion is

Merchants "charged from 25 percent to grand larceny", according to a contemporary observer. For common items, "credit price" markups ranged from 20 to 40 percent in North Carolina to 50 to 75 percent in Alabama; for medicine the premium could run to 250 percent. To borrow $800 a Georgia farmer might pay $2800 in interest over five years.

This is in direct contrast to an article I read today, not in the least supportive of monopolistic railroads and damaging developments, but which paints a very different picture:

Next, consider farmers’ claims about interest rates and mortgage debt. It is true that interest rates on the frontier were high, averaging two to three percentage points more than those in the Northeast. Naturally, frontier farmers complained bitterly about paying so much for credit. Lenders, however, may have been well justified in the rates they charged. The susceptibility of the frontier to drought and the financial insecurity of many settlers created above average lending risks for which creditors had to be compensated (Bogue, 1955). For instance, borrowers often defaulted, leaving land worth only a fraction of the loan as security. This story casts doubt on the exploitation hypothesis. Furthermore, when the claims of farmers were subjected to rigorous statistical testing, there was little evidence to substantiate the monopoly hypothesis (Eichengreen, 1984). Instead, consistent with the unique features of the frontier mortgage market, high rates of interest appear to have been compensation for the inherent risks of lending to frontier farmers.

But read the whole article, it is quite worthwhile, and very well documented. And it actually supports significant portions of Maximos's premises, though in a much more measured manner than he might prefer.

http://eh.net/encyclopedia/article/stewart.farmers

The sheer tendentiousness of my adversaries in these debates is indicative of the profound intellectual putrefaction of conservatism in these times. Are you desirous that agricultural policy be reformed? Socialism! That the financial system be reformed? Socialism!

Come on - that's pure silly bunk. I for one, and Lydia as well, have commented on how we think that certain current policies (such as agricultural policy) need reform. But there are many ways of reforming something, even if that something is rotten almost to the core. One way is to take away the freedom of ordinary people to choose how to creatively use the muscles, wits, energy, and good morals that God graces them with to generate wealth for the good of the human family, to take away that freedom so that the person doesn't "abuse" either his own self or others' resources. That way is the way of government control, and it leans in the direction of socialism even if it never gets to the ideal of full socialism as such.

Other ways exist to reform abuses than this. When we identify problems with your suggestions we are not doing it to maintain the status quo across the board.

Me definition of success encompasses much more that mere material abundance,

I agree, and said as much: I stated that such material abundance only constitutes ONE PART of success. If you are agreeing with my premise, then why are you disagreeing with the conclusion that follows?

No, your scenario is abstracted from all of the incidents and particularities that make actually-existing agri-business objectionable, and affords no insight into how massive conglomerates could arise, and function, in the absence of those objectionable incidents. It is, to reiterate, not the bare fact of 'someone's getting rich' that is objectionable, but the manner in which he does so, and the potential consequences thereof.

Right. Let's see: I abstract out of the large agri model the objectionable ways that some entities manage to get there, and instead I suppose as hypothesis that our farmer fellow gets there without such practices, just being a good farmer and a good manager. On the other hand, YOUR proposed reform lands on our model farmer equally harshly as on the agri back-stabber and bad customer who exploits left and right, because YOUR reform focuses on the simple result of being large, instead of explicitly on the evil ways of getting there. And then you back-and-fill by saying that _anyone_ who got large had to have done it by using the exploitive mechanisms built in to the current laws and practices. No, No, and thousand times No: it isn't exploitation simply to become a large businessman within the system you must operate.

No, No, and thousand times No: it isn't exploitation simply to become a large businessman within the system you must operate.

For the 890,764,129th time, this entire controversy, or sub-controversy, centers upon the question whether injustice, exploitation, or 'unintended consequences' of the deleterious sort are incidental to largeness, or intrinsic to it. I say the latter, you say the former. Largeness, I argue, has dislocating and destructive effects, regardless of the probity of those who direct large firms.

One way is to take away the freedom of ordinary people to choose how to creatively use the muscles, wits, energy, and good morals that God graces them with to generate wealth for the good of the human family, to take away that freedom so that the person doesn't "abuse" either his own self or others' resources.

What the deuce does this mean, aside from begging the question of what constitutes an "abuse" liable to public remedy? I've argued, across a number of posts, that this "freedom" does not encompass a right to establish institutions modeled on the vice of pleonexia, a right to utilize concentrated feedlot operations - which are sadistic, incubate disease, and cause massive pollution externalities to boot - or any number of other things that it would be tedious to list at 10:30 pm. In any event, I'm not much interested in hearing invocations of the "sweet mystery of life" in an economic context, coupled with a faith in progress, as solutions to our ills.

The essence of usury is to make a promise, or to require a promise, which the object of the lending cannot reasonably be expected to make good. Neither the farmers, in many instances, nor the lenders, in virtually all instances, were blameless; greater responsibility, however, rests with those who possessed greater wealth and power, as it always does.

Well, Maximos, neither you nor I appear to be coalition builders. Long ago in this thread you could have drilled down and focused on the point of our agreement--real subsidies to agriculture--but you appear not to think that very important. You might, too, have focused on the place where Jeff Singer says that farmers may have to learn to do something else for a while if subsidies are stopped. That's a pretty interesting admission from your perspective. How many farmers would have to do something else? To what extent would it mean that America would no longer be independent in her production of food? Does this have national defense implications? Those are questions that interest _me_ and provide a possible place for you to try to push on my admitted mildly greater sympathy for protective tariffs than for other forms of government involvement like confiscatory punishment of "big agri" or agricultural subsidy.

I guess it would depend on how high that made food prices rise and on how vulnerable America would be, which would in turn depend on _how many_ farmers had to do something else, and for _how long_. Those are the kinds of practical questions that come up after we say, "Okay, we're agreed that direct subsidies to American agriculture should stop. Then what?"

We could have gone that direction. Now, why didn't we? Never mind, let's not debate that.

Sorry, to clarify, how high tariffs made food prices rise and how vulnerable America would be through not producing enough food for herself _without_ tariffs.

For the 890,764,129th time, this entire controversy, or sub-controversy, centers upon the question whether injustice, exploitation, or 'unintended consequences' of the deleterious sort are incidental to largeness, or intrinsic to it. I say the latter, you say the former. Largeness, I argue, has dislocating and destructive effects, regardless of the probity of those who direct large firms.

I think that part of the problem is that you seem to be sandwiching those three evils, "injustice, exploitation, or 'unintended consequences' of the deleterious sort' " as if they are ALL present equally by the very nature of bigness, and (indeed, this is what I find MOST objectionable) that there really isn't any useful difference between those three sorts of evils in this discussion. But suppose we took your thesis and sliced it up a different way:

(1) Largeness intrinsically has injustice in it.

(2) Largeness intrinsically has exploitation in it.

(3) Largeness intrinsically has deleterious 'unintended consequences' in its train.

I would be quite ready to accept #3, and be quite ready to do some major changes to deal with that - all under the presumption that we first ask and delve into "what are the unintended consequences of THAT particular reform for Largeness, and is the overall effect better, or worse?"

But I have seen no actual arguments for #1 or #2. So far as I can tell, the form of the argument has been this: There are numerous disastrous consequences (intended or unintended matters not) for society in Largeness, therefore Largeness is not only a poor choice for organizing businesses, but it is unjust and exploitative.

I don't buy that argument. I DO buy that many large organizations are unjust and exploitative. I do buy the suggestion that some of the late-comers to the economic party are almost forced into copying the evils of those Large-guys who exploit, in order to compete. But please note the almost there, some businesses manage to grow even without copying the unjust and exploitative practices. And when they grow from small to medium and then keep on growing _with the same formula_, nothing about that formula constitutes an evil just because they happen to get Large (due in part to luck, skill, foresight, and happening to be in the right place at the right time). Even if I were to grant (for the sake of argument) that that continued growth into Large is likely to turn into deleterious unintended consequences for society, that would NOT make the growth at the cost of injustice and exploitation. And is it even theoretically possible to prove that the deleterious consequences that did come about with a plethora of explicitly unjust and exploitative practices would have come about anyway even if the business leaders had been models of restraint and morality?

I am reminded of an article I read some 10 years ago, which suggested that the notion of true democracy can only sustain itself in a small polis, typically about 5,000 free voters at most. There were various arguments, such things as you have to know personally, or at least have a friend who knows personally, the people you vote for, and so on. Of course, eventually you get these polities forming alliances and confederations (as did the Greeks). In any case, the reason I bring it up is that however you want to slice or dice it: If you limit the integral root organized entity to a small size (let's pick 50 members just for example), then you will perforce end up with these small entities forming associations and cooperatives in order to succeed - not because they want to continually increase size and market share and wealth, but because they need to manage risk, unforeseen change, pressure from without, and so on. Does it matter fundamentally whether we call this larger associative body a ""conglomerate" or a "cooperative", or is that just semantics? And, is the very act of associating into a larger body a step into the evils of injustice, exploitation, and deleterious consequences? What I am suggesting is that Large is actually an inevitable and necessary part of society's development into a harmonious complex. Many facets of Large (given fallen human nature) are unsatisfactory and must be dealt with - but then some facets of small are inherently undesirable as well (we have all heard of the gossip of small towns, for example). Nor does taking Large out of the hands of private choice and putting those same choices into the hands of "government" really do away with all of the evils of those unintended consequences - the mere movement of where the decisions are made neither prevents corruption to seep in nor makes those choices free of deleterious consequences (nor, for that matter, free of skewed manipulations that are exploitative).

See, normally conservatives are very keen on supporting both the root cells of society (the family) _and_ the many intermediary institutions that make society a well ordered community. Communism explicitly denounced the right to those intermediary institutions. Your thrust is in the direction of preventing some of those institutions not only on account of specific crimes or specific acts of injustice that they commit, but also on account of their very size itself. But an attack on Large simply due to its size alone (under the umbrella of it being "unjust" as such) looks a great deal like an attack on the intervening institutions that mediate between families and government.

I'd like to ask Max to identify the deleterious, unintended, effects of smallness.

Given man's fallenness and his propensity for iniquity, and considering that greed is a serious sin, it seems to me rather obvious that Christian conservatives should be wary of any large accumulation of wealth and/or power. Christ said that it is difficult for the rich to enter the Kingdom, and I'm fairly certain that he wasn't just shooting the breeze there. Yet American corporate capitalism, in making ever-increasing acquisition a virtue, flies directly in the face of this.

In the introduction to his 1915 novel The Turmoil Booth Tarkington lamented the rise of the worship of the new god "Bigness." Things haven't changed much in the ensuing 95 years, have they?

Maximos,

Mike, the "fundamental fantasy" is essentially pleonexic, a combination of desire for increasing material wealth and dogmatic certitude that its unlimited increase is beneficial for oneself and morally licit. Unlimited acquisition is unnatural, as philosophers have taught from antiquity.

Traditionally, market forces acted to tame that by imposing practical burdens on ambition and corporate growth. The problem I have with your arguments is that you don't seem to account for the fact that a body politic which does not have a concrete, limited and definite notion of the "common good" as a basis for intervention in the market will invariably lead to the current corporatist environment and regulatory capture problems. As Vox Day noted recently in a smackdown of Paul Krugman over the great depression, there were around 22k banks going into the great depression. Only about 10-15% of them collapsed during the first several years of the great depression. Today, we have less than 5k banks due to a combination of regulations that make it harder to operate a bank and antitrust failures.

Look at Wal-Mart. What most of its critics object to is not its size, as it could theoretically be a "gentle giant" in terms of its pratices. Instead, it relies on predatory pricing to destroy local competition and is notorious for acquiring land and benefits through dubious means via local governments. It is not the size of Wal-Mart or its presence in most communities that is poisonous, but the specific actions it takes. Those actions, not its size, are what causes so much harm to small communities. A wiser policy by the body politic would be to aggressively enforce antitrust measures against them whenever they appear to engage in anti-competitive ways than to simply attack them "because they're too big."

Nanotechnology: the bigness in smallness.

The Chicken

You know, part of this story can, I expect, be traced to the fact that the early Republic was so manpower-hungry. Hamilton certainly saw the importance of productivity to the prosperity of America. Those decades were teeming with brilliant men tinkering and working to improve efficiency through labor-saving artifacts. So this fact of a dearth of labor became part of the character of the Republic as she grew, but eventually, as it were, it became not longer a fact. We do not lack for manpower and haven't in generations. But we will again soon -- especially the manpower of youth.

So for me, part of what Americans are now obliged to think about is means of amelioration, for it is very likely that further dislocations are forthcoming. And yes, Bigness is part of the driver of these dislocations. We're facing a massive shift toward statism, mostly because the biggest capitalists of this country failed as fiduciaries of public trust and reason.

In a word, I feel strongly that all Americans are obliged to face the facts, and probably adjust their ideological notions of some things.

But (and here is where I part ways with Maximos) I do keep in mind one of the core instincts of conservatism: It can always get worse. So I am profoundly reluctant to lend any support to radical programs of reform borne more of outrage and indignation (much of it justified) than of the cool deliberate sense.

It took centuries for America to get to a predicament like this. There are many facets of it. There are ample opportunities to make it worse. These need to be avoided just as surely as reform is necessary.

Ours must remain the politics of repair.

Is the problem really bigness or greed? The two are mildly correlated, but not absolutely.

The Chicken

In the introduction to his 1915 novel The Turmoil Booth Tarkington lamented the rise of the worship of the new god "Bigness." Things haven't changed much in the ensuing 95 years, have they?

I read the comments in this thread, and if this is meant to be any sort of description of anything Tony, Mike T, me, or anybody else here has said, I think it's absurd. These commentators are measured and clear, and they make a lot of sensible points. I don't see anybody worshiping anything. Heck, Mike T advocates the use of antitrust laws against Wal-Mart!!! What's with some of you guys? It's necessary to execrate bigness qua bigness and to look to government for salvation from it in order not to be worshiping it?

No, Lydia, no specific applications were meant, other than the fact that we as a society still tend to view "growth" as something inherently good. Your individual mileage may vary.

Already gigantic, WalMart wants to be bigger. It is this drive that causes it to engage in dubious practices. Hence, the size issue and the practice issue are related.

You might, too, have focused on the place where Jeff Singer says that farmers may have to learn to do something else for a while if subsidies are stopped. That's a pretty interesting admission from your perspective.

That I did not focus on this constellation of issues, except in passing, is a function of a critical judgment, namely, that Mr. Singer is, in point of fact, correct that the abolition of agricultural subsidies and trade protections would result on import substitution on a significant scale, and that the consequences of this process would involve profound dislocations. Given the entirely predictable consequences of such a transition for a political economy which consigns increasing numbers of people to economic helotry, national security, demography (such a transition would essentially empty out vast swathes of the Midwest, further augmenting the reserve army of the un/underemployed), and energy usage (peak oil is coming, folks, and reliance on long-distance shipping under those circumstances will be dumber than dumbness itself), I should think such a proposal a non-starter. The pursuit of absolute economic efficiency is reductionist in the purest sense, a process which pares away every counterindication, every impediment, every other social and human good - every form of evidence against it.

Hence, my presupposition is that any American market in agricultural commodities will necessarily embody deviations from free-market purity; the outstanding questions, then, concern the nature of such deviations, and whom will be benefited by them.

I think that part of the problem is that you seem to be sandwiching those three evils, "injustice, exploitation, or 'unintended consequences' of the deleterious sort'...

Because, to one degree or another, that is simply what the agrarian/localist critique of economic aggregation does; if the localist contention is true that there are fundamental goods of human flourishing bound up with economic arrangements in which greater numbers of people exercise meaningful control, in which economic decisions are as much subject to subsidiarist considerations as political decisions ought to be, then it simply is unjust and exploitative for bigness to deprive people of such goods, as unjust and exploitative as it is when higher levels of government intervene wantonly in the affairs of lower levels.

I am reminded of an article I read some 10 years ago...

That analysis is all quite true, as far as it extends, and yet it does not touch the heart of the matter, which is that, in this process of expansion-for-preservation, there always occurs an inflection point, at which the pursuit of increasing scale and scope, to the end of preserving/expanding the goods of that way of life, instead eventuates is the subversion of those very goods, that very way of life. Athens playing at empire lost all of the vital goods of the Polis, as one can divine from readings of Plato and Aristotle. Rome lost the goods of the Republic as she became an empire, even if that empire was accidental, formed inadvertently as Rome sought to secure her frontiers from the barbarians. And so on and so forth. The dynamic of expansion-transformation-collapse is practically universal in the history of civilization, and America is hardly immune. We localists, agrarians, and distributists believe that America has probably long since passed that inflection point, and we strive to cultivate the perspective of, say, a Cicero, mourning what is lost, and hoping to recover at least a few spare scraps of it.

See, normally conservatives are very keen on supporting both the root cells of society (the family) _and_ the many intermediary institutions that make society a well ordered community. Communism explicitly denounced the right to those intermediary institutions.

Precisely. Large corporations all cross over a certain invisible, but very real line, beyond which they cease to function as mediating institutions, but rather become governing and ruling institutions, as one can observe is virtually all sectors of the capitalist world, from retail to banking. Power summons forth countervailing power, for no power should be untrammeled.

The problem I have with your arguments is that you don't seem to account for the fact that a body politic which does not have a concrete, limited and definite notion of the "common good" as a basis for intervention in the market will invariably lead to the current corporatist environment and regulatory capture problems.

But I do have a conception of the common good, which I maintain should govern the formulation and implementation of policy, namely, the flourishing of family units, nuclear and extended, and the prosperity of local communities, as opposed to vast, increasingly abstract, aggregates.

Look at Wal-Mart.

I'm an advocate of both/and as regards the means by which corporations like this could be controlled: both exploitative, monopsonistic praactices should be penalized, and mere bigness should be discouraged, for reasons already limned.

I'd like to ask Max to identify the deleterious, unintended, effects of smallness.

As an undergraduate, my first faculty adviser was a postmodernist (quite the fan of Derridean deconstruction), and required his honours students to produce papers analyzing their political and religious convictions as expressive of relations of domination and subjugation. The merits, or lack thereof, of this exercise are beside the point now, which is that I have no intention of engaging in any version of this exercise, when my opponents - many, though not all of them - refuse to concede that the 'unintended consequences' of largeness are, in fact, unintended in the deleterious sense. I refuse to participate in rigged games, in which I must come to the confessional, while my adversaries at once gloat over my alleged transgressions, and parade their own vices as virtues. No thanks. When it is conceded that largeness, in all its manifestations, has all-too real negative consequences, each of them a legitimate object of deliberative redress, then we'll talk.

Chicken -- I've got a post in the works on greed. Stayed tuned.

All,

First of all, since I won't have the time for this post today, can I just say in the spirit of brotherhood and charity that Maximos' comment at 5:43 PM, while not exactly fair to the folks here who have raised objections to Maximos' vision for American agriculture (and more broadly, the American economy), is threee paragraphs of beautifully executed rip-roaring jeremiad.

Secondly, anyone who compells me during an argument to go look up the word "pleonexic", has made me just a little bit smarter and for that I am grateful.

Finally, I think Maximos sums up the argument well when he says,

"For the 890,764,129th time, this entire controversy, or sub-controversy, centers upon the question whether injustice, exploitation, or 'unintended consequences' of the deleterious sort are incidental to largeness, or intrinsic to it."

Since I'm a guy who loves Wal-Mart, ADM is great, and is a big fan of Microsoft (just to name three large corporations doing what I would argue to be intrinsically good work) Maximos and I would have to have a long and drawn out argument about the meaning of "injustice, exploitation, or 'unintended consequences' of the deleterious sort" before we'll ever come to any agreement on ANYTHING having to do with political economy.

Jeff -- do you love that Wal-Mart has reconciled itself to socialized medicine (in part because it calculates that smaller competitors will be hurt more by it) and actively works now to foist this behemoth on us?

Do you like that Google has acquiesced in Chinese internet censorship?

Do you like that the big financiers are undoubtedly licking their lips at the thought of the structure of speculation and complicated arbitrage that will surely attend cap and trade?

I would ask you to at least consider that, alas, the instances of Capitalism we often see in our largest corporations, are very often the active enemies of free enterprise?

Do you like that the big financiers are undoubtedly licking their lips at the thought of the structure of speculation and complicated arbitrage that will surely attend cap and trade?

Speaking solely for myself, I shudder.

Just to put a finer point on this, in the context of Bigness:

No boutique securities firm in Birmingham or Colorado Springs will make any money on cap and trade. But the huge players, with access to unimaginably big pools of capital, will undoubtedly be able to exploit leverage, computing power, and fractional irrationalities, to book hundreds of millions of dollars in profit on the infinitesimal momentary increments of the cap and trade schemes. In 20 years, the financial press will be singing the praises of the wizards of the "carbon-default swaps" trade or whatever.

Meanwhile small businesses will be further hampered, resources misallocated, booms and busts exaggerated, etc.

But I do have a conception of the common good, which I maintain should govern the formulation and implementation of policy, namely, the flourishing of family units, nuclear and extended, and the prosperity of local communities, as opposed to vast, increasingly abstract, aggregates.

Good for you, that you have a conception of the common good, but you're not the one we're talking about. We're talking about the people in the body politic. I'm more interested in creating constitutional barriers which prevent them from doing things like creating new forms of social organization that are unaccountable to the public and new crimes on a whim. If the state constitutions mirrored the federal constitution in providing so little room to do anything adventurous that legislators can barely breath without bumping into constitutional barriers, the dread corporation might not even exist as a legal entity in the United States today.

Paul,

Have you ever seen the film "Jean de Florette"? The film is in my top films ever made list and relevant for this discussion, as it takes place in a small bucolic French farming community uncorrupted by capitalist "bigness". But the community is NOT uncorrupted by greed and jealousy and the plot involves one farming family trying to undermine another farming family (a newcomer). Whether large or small, human beings running a business or a community are corrupted by sin -- so I am much more interested in establishing rules that attempt to deal with this reality AND that attempt to create the groundwork for what I consider human flourishing (in the economic sphere this means folks are not actively constrained by the government or their neighbors in the pursuit of their economic goals, only constrained by their individual talents and abilities).

To answer your questions in order:

1) No, but I like the fact that in revolutionizing the retail industry they have provided good and services to millions that needed them -- now we just have to fight their misguided support for Obamacare;

2) No, but, again, I'm glad they have provided their services to millions -- but if don't like what Google is doing overseas we should make them stop through legislation;

3) No, but I'm not sure what that has to do with the goods and services provided by ADM, except for their arbitrage divisions.

Finally, the fact that when some corporations get big they then attempt to stifle competition is why we have laws against monopolies -- laws which I support wholeheartedly as monopolies can indeed be the enemy of free enterprise (although it is worth noting that this is not the case for every monopoly -- there has been good scholarly economic work done over the past couple of decades showing that under certain conditions, consumers won't be harmed by monopoly practices).

Already gigantic, WalMart wants to be bigger. It is this drive that causes it to engage in dubious practices. Hence, the size issue and the practice issue are related.

I see similar arguments from libertarians who try to be civil toward prosecutors and police who break rules on evidence and procedure to win quick convictions. They say "the system gives them bad incentives" and that's why they perjure themselves, rely on the testimony of scoundrels, cook up evidence, etc. In both cases it may be true that the environment breeds a certain tendency toward corruption in some people.

Quite frankly, I don't care. They know what's right and what's wrong. Punish them without consideration for their environment.

If the state constitutions mirrored the federal constitution in providing so little room to do anything adventurous that legislators can barely breath without bumping into constitutional barriers, the dread corporation might not even exist as a legal entity in the United States today.

IN this respect, the federal system itself provided the means of its own subversion, as individual states were free to establish their own regimes of incorporation, whereupon ensued a race to the bottom in corporate chartering and regulation. Eventually, this beget the Progressive movement, which sought, among other things, to mitigate the worst excesses of the corporate system.

I'm not insensitive to the concerns about unaccountable political power; I simply believe that more people should be concerned about unaccountable corporate power.

Jeff -- I do hope it is clear that I am not assigning to bigness all the evils of the world. My examples at 10:24 AM were provided to show some problems with bigness as such. They were provided as instances of corporate size and breadth issuing in practices inimical to free enterprise, and to suggest, as I said, that the instances of Capitalism we often see in our largest corporations, are very often the active enemies of free enterprise.

When I heard the phrase 'too big to fail', I realized some of the problems of bigness. One of these isn't that small operations (in business, gov't, or anything) are less susceptible to greed or corruption, but rather that small operations, when corrupted, are far less capable of doing great damage to the surroundings. The complement of this is the economies of scale approach; that big organizations are also capable of doing great good to the surroundings in a way that small ones aren't. I don't think there is an obvious answer here that can be reached; it depends on priorities.

It strikes me as odd that many conservatives can tell you the problems with big government right off the bat but can't even fathom the problems with big business. I speculate that this is due to a (materialist?) view that physical power is the only important kind in interpersonal relations, and since governments always have a monopoly on the use of force, that governments therefore are always the problem.

Max,

I'll try again:

Great wealth and size are attended by their own set of moral challenges, just as are smallness and the lack of resources. Everybody knows that. I want to know what you think the moral, political and economic challenges of smallness are (especially moral), and how you think we ought to overcome them, if at all, were we to adopt your view regarding the challenges of great size and wealth. The question has nothing at all to do with the tactics and worldview of your undergraduate deconstructionist professor.

"I'm not insensitive to the concerns about unaccountable political power; I simply believe that more people should be concerned about unaccountable corporate power."

Exactly. And as I stated above, I believe we should be especially concerned when the two collude.

I'll try again

In a discussion forum in which my hostile interlocutors seldom, if ever, concede the moral challenges attendant upon great size and wealth, but instead inveigh against criticisms of these things, asking a defender of smallness to engage in self-critique is precisely the sort of thing my deconstructionist professor required of his students. The foreseeable consequence will be that the voices critiquing smallness grow more numerous, while the voices critiquing largeness will fall silent. Reciprocity in intellectual exchange is good; but until I get some, I'm not going to be giving any.

Maximos (and Paul),

Concerning the "moral challenges attendant upon great size and wealth", as if on cue, how about this Goldberg column for a start:

http://article.nationalreview.com/?q=ODVhZDJjNDViMDczOGVkOTA4OGIwOTJjYzk5OTM3N2Q=

I sitll think corporations like GE are fantastic -- I would just want to make sure their interests and ability to lobby for a piece of legislation are made transparent. I might even restrict the amount of money they can spend on lobbying or politics in general, but such a reform would open up a whole different can of worms that is not appropriate for this combox.

Jeff Singer: yes - excellent column from Jonah Goldberg.

A couple favorite bits:

"...the story of big business in America is often as not the story of fat cats rigging the system. And the story of progressivism is the same tale. The New Deal codes were mostly written by big business to squeeze out smaller competitors. The progressives fought for these reforms on the grounds that it’s easier to steer a few giant oxen than a thousand cats..."

...with the easily predictable result that the "few giant oxen" ended up doing the steering while the "progressives" got steered.

The idea that this sort of thing can be cured by expanding the regulatory powers of government strikes me as just bizarre.

Rubbing in the same point:

"...health care is the most troubling example of the trend. Washington Post columnist Robert Samuelson notes that while everyone has been debating the government takeover of health care, what’s really transpired is health care’s takeover of government..."

Etc.

Just as every attempt by the government to expand its control over the financial industry inevitably results in the financial industry expanding its control over the government.

Of course, I'm not convinced that the abuses outlined by Goldberg can't occur with small businesses in small communities -- the stakes are just usually lower (e.g. if you hire my cousin Fred at the General Store, I'll make sure the town purchases all our tools from your store, etc.) I suppose those defending smallness could argue that such abuses are more easily detected in small, republican communities and therefore more easily corrected. I'm not so sure (where's the data says this 'sophister, economist, and calculator'?) but in any event, I think I can appreciate the dangers of big business while still championing their achievements if won on the competitive "battlefield" of the marketplace.

Matt Weber writes:

"It strikes me as odd that many conservatives can tell you the problems with big government right off the bat but can't even fathom the problems with big business. I speculate that this is due to a (materialist?) view that physical power is the only important kind in interpersonal relations, and since governments always have a monopoly on the use of force, that governments therefore are always the problem."

Matt: would you disagree that there is something especially morally problematic about gross physical coercion, with guns, fists &c?

And what conservative claims that "physical power is the only important kind in interpersonal relations?"

And what conservative (here at WWW, anyway) "can't even fathom the problem with big business" - starting with the tendency of big business to collude with & suborn the guys with the guns and the fists?

if the localist contention is true that there are fundamental goods of human flourishing bound up with economic arrangements in which greater numbers of people exercise meaningful control, in which economic decisions are as much subject to subsidiarist considerations as political decisions ought to be, then it simply is unjust and exploitative for bigness to deprive people of such goods, as unjust and exploitative as it is when higher levels of government intervene wantonly in the affairs of lower levels.

Maximos, what if the large company uses explicitly subsidiarist concepts in formulating policies and methods from the bottom up? Is it still the case that the Largeness obstructs the goods of subsidiarity? My point is that when a conservative thinks of subsidiarity in action in the political arena, he thinks of layers of government, each one allowing (and, indeed, fostering) the lower levels in taking care of their own proper sphere - WHILE THE HIGHER LAYERS REMAIN IN PLACE taking care of larger concerns. The fact that there are higher layers counts against subsidiarity not at all , since subsidiarity insists that the higher layers of government are there to take care of their proper sphere of decisions and actions.

There is nothing which restricts and prevents large business from operating under the same model of control and decision-making. The fact that there are upper levels of management does not contradict subsidiarity all by itself , not without further assumptions. True, many large businesses do not choose to operate in this fashion, there are many who operate in ways that are unsupportive of subsidiarity and its communal goods. This means we need to foster a different model of large business, not eradicate large business.

Large corporations all cross over a certain invisible, but very real line, beyond which they cease to function as mediating institutions, but rather become governing and ruling institutions,

But it is not in virtue of their largeness itself, or it would apply equally to governments. It is due to largeness AND bad ideas of how to proceed in dealing with individuals and communities (often due to greed, though greed is not the only sin typical of tycoons).

I have no intention of engaging in any version of this exercise, when my opponents - many, though not all of them - refuse to concede that the 'unintended consequences' of largeness are, in fact, unintended in the deleterious sense.

I, for one, did explicitly acknowledge your point on this.

Paul and Rob, I agree wholeheartedly that the collusion of big business with government control of the marketplace is execrable. This seems to me to ensure a compounding of evils rather than a mitigation of them.

Michael, excellent points, I thought.

Maximos, the reason I brought up the problems of smallness was not to get you defensive, nor to force attention away from big business evils. (I deplore many of the same specific evil practices found in big corporations that you do, and would like to see reforms undertaken to deal with them.) It was for a more precisely gauged point: The inherent, absolutely unavoidable difficulties of bigness (in which, I remaind, I do not include injustices as such) ought to be considered and weighed in the balance, AS SHOULD ALSO the inherent and absolutely unavoidable ills of smallness, producing a tension between the two that I would call an essential aspect of the human condition in this life.

If we are talking about reforms to deal with some of the inherent and absolutely unavoidable consequences of bigness, those reforms must be weighed in the balance with all of the pluses and minuses of the alternative forms. One of the alternative forms is to hand over ALL large scale decision making to government, with the attendant evils of that approach. Another is to forbid ALL large businesses, with the attendant ills of that approach as well. I would submit that we should be willing to live with the tension between the two, by crafting a legal and social environment that supports small business and ALSO supports large business insofar as they operate with subsidiarity and all other social virtues.

What are the inherent problems with smallness? Unless you equate lack of size with lack of resources, which Mr. Bauman seems to do above and which I believe is an invalid equation, I fail to see that smallness per se entails any major negative unintended consequences.

My point is that when a conservative thinks of subsidiarity in action in the political arena, he thinks of layers of government, each one allowing (and, indeed, fostering) the lower levels in taking care of their own proper sphere - WHILE THE HIGHER LAYERS REMAIN IN PLACE taking care of larger concerns.

Yes. Subsidiarity is not libertarianism, or anarchism, or the "night watchman" state. Any vital good which cannot be realized save by the action of the higher level of authority legitimates the action of that authority to realize that good. Defense is a prerogative, in the main, of the federal government. There is a potent case for permitting cross-state issuance of health insurance policies, provided that this does not eventuate in large national monopolies - after all, one of the reasons for allowing cross-state issuance is precisely the existence of state-level monopolies, which are oligopolistic, inefficient, and often fail, even so, to achieve adequate risk-pooling.

But defense and adequate, cost-effective risk-pooling in health insurance are vital goods, in a way that a large corporation, achieving certain economies of scale, and driving the cost of some good down, from 2.75 to 1.99, just isn't; not only are lower prices not good in the same sense as health and defense are good; not only are they simply less necessary; but the means by which they are attained often - under the conditions of globalization, always - result in the diminution of other, first-order goods, such as the integrity of local communities, the responsibility, control, and stakeholdership of a mom-and-pop operator (as opposed to the same folks being put out of business, and left with the option of working for substandard Wal-Mart wages, always with working hours falling just short of qualification for benefits), and the preference for durable, and opposed to disposable, goods.

Perhaps we can hypothesize a large corporation which incorporates principles of subsidiarity. I don't know what that would look like, because there is nothing like that, nothing at all, in the American experience. It would probably depend upon the nature of the industry, the organization of the various divisions, and the sourcing of any raw materials, sub-components, etc. Something like an auto manufacturing concern, which probably has to operate on the national scale, might qualify, if the respective divisions have substantial operational autonomy, the assembly workers have a stake in the company, and some management input, and component sourcing favours domestic sources. However, whether subsidiarity permits largeness in a given case is a function of the nature of the economic pursuit itself; what is necessary in the case of auto manufacturing is not necessary in the cases of widget manufacturing, or agriculture. We need large corporations like GM or Toyota in order to have cars. We don't need ADM in order to have food, or Wal-Mart in order to have consumer goods. In these latter cases, the largeness is not fundamentally related to the goods provided; it is not the necessary condition of their existing at all. Subsidiarity requires that any good be provided or maintained by the lowest level of authority/power/enterprise capable of realizing that good, and this condition is simply not fulfilled by the majority of the instances of largeness that exercise us so.

There is always a tension between various goods, and between various goods in any hierarchical ordering of goods, if only because people are confused as to the natures of different goods, and their relative degrees of priority; tensions also arise because people assign false valuations to certain goods. Largeness is necessary if and only if goods otherwise unattainable are provided thereby, and if and only if the realization of those goods does not imperil or diminish higher-order goods.

"what is necessary in the case of auto manufacturing is not necessary in the cases of widget manufacturing, or agriculture."

One of the problems which seems to be inherent in conservatism is the habit of viewing things through the wrong end of the telescope; the details (reality) of the past are lost. The article Tony referenced above is both problematic (no numbers to back up the analysis) and instructive. It points hot how risky smallholder farming can be. This article might be useful.

http://www.newyorker.com/reporting/2009/12/14/091214fa_fact_gawande?currentPage=all

Our price support system needs reform but we should factor in the likely effects of no USDA.

(BTW, Tony my point on the RR was the importance of transportation and world wide markets in any serious development. Oregon was part of a world wide trading network well before the Trail and California is a special case. Nevada is a hop and a skip from Sacramento. Nebraska and the Dakotas were relatively unsettled until the RR)

Rob,
Are you kidding?

Do you really think that small businesses and small communities -- precisely because they are small -- don't often lack the resources to do for their members what larger, richer communities and businesses can do for theirs? Rural towns and counties often simply cannot do for their children and schools, for example, what larger, wealthier, suburban communities can do for theirs. No doubt there are well off smaller "tribes," of various sorts, but small groups normally cannot do for their members what larger ones can, whether commercially, culturally, or even spiritually.

For example, I live in a county where there are only 45,000 people. The entire county has 21 churches, only one of which is Roman Catholic, none are Eastern orthodox. If you are part of one or the other of those traditions, you are at a distinct disadvantage, especially if you are constrained to drive 50 miles or more in the snow and ice in order to worship -- endangering yourself, your family, and your property. I prefer to attend the Evangelical Free Church of America, the nearest of which is 40 miles away, in another state. The same disadvantages attend to things like fire and police protection, ambulance services, and snow removal -- all of which are normally much better in larger, wealthier, suburban communities. In other words, if you live in a small rural community and your house catches fire you are more likely to suffer greater loss than if you lived in a larger city. If you have a heart attack, you are more likely to die.

Disadvantages often also attach to small businesses compared to large ones, and therefore to their respective customers.

This just is the proverbial tip of the iceberg.

Got it?

Maximos, your comments about a worthwhile auto company quite closely align with just what I have been thinking about the same industry for some time now.

There are some products where there needs to be a large scale, and autos appears to be one. (Mind, in 1910 nobody thought that you needed a national scale to have an auto company. We should at least be open to the possibility that national scale is unnecessary for autos as well. But I doubt that there can be any successful argument that airframe manufacturers should be small entities.)

Largeness is necessary if and only if goods otherwise unattainable are provided thereby, and if and only if the realization of those goods does not imperil or diminish higher-order goods.

Maximos, one of the critical questions here is, who gets to decide if either (a) the good in prospect really is "necessary", and (b) whether it imperils higher-order goods _sufficiently_ to prohibit the prospective enterprise. I think that it is obvious that such questions ought to be at least looked at at the government level, but it is also reasonable to argue that government should not get involved in prohibitions related to this until the evidence is quite clear. And that's often the rub.

Yes, Michael, I get it. But I haven't got it. Your presumption is that larger = wealthier, which ain't necessarily so. I agree that some things are better handled by larger than smaller entities, but that wasn't my point. What I'm saying is that a small business can be extremely successful and remain small. A small town can be wealthy and productive yet remain small. If either of these is true, then there is nothing inherently problematic with smallness per se.

Get it?

Rob,
You're turning the exception to the rule into the rule itself. I've already agreed that such exceptions sometimes occur. When they do, they are laudable and worthy of protection. Will you now agree that they are exceptions, and that lack of resources -- of many sorts (some of which are deadly) -- quite frequently attach to smallness?

Michael, what I said was that smallness per se isn't inherently a problem, that smallness doesn't necessarily mean lack of success or lack of resources. The examples you mentioned above don't change that. What I mentioned were not exceptions, but defeaters.

Rob G,

Huh?! Tell me how it is remotely possible that a young child born with a heart defect who would have died at the age of 2 without open heart surgery which is now made possible through the long process of industrialization, development of medical equipment and training, scientific research, etc., etc. would still be alive in a world of hypothetical small agrarian/small trading/small-scale manufacturing communities as envisioned by Maximos and the Crunchy Cons? Answer is the child wouldn't be alive.

Now, you and I'm quite sure Maximos would say something like -- yes, Jeff, your hypothetical could indeed be true but what have lost to get the modern medical wonders of today? We've lost our communal ties, our willingness to defend and honor traditions, our spiritual connection with the land and with each other, etc. And I would put them on a scale and say onward Christian soldiers to "biggerbetterfastercheapermore" and hope that we could figure out a way to live in a world with both globalization and global capital and a renewed sense of Christian identity and morals, perhaps tied up with a healthy national identity that respected borders, language and culture.

Jeff, my brother-in-law was born with such a heart defect, in the Soviet Union, no less, and that system moved heaven and earth to save his life - and did. In the abstract, therefore, one can certainly give thanks for the consequences of systems to which one remains opposed; for that Soviet system of medicine would not have existed at all, absent the coercive industrialization/progress policies of the Soviet Union, technology thefts, and some native developments (Russians are a pretty clever lot).

More specifically, the preference for smallness or largeness, locality or the cosmopolis, is contingent upon the nature of the thing in question. Medical research appears to require large university programs, independent foundations, government funding, and some for-profit enterprises. So be it. The point is that not everything requires these things.

Jeff, I've heard similar arguments from liberals about the Enlightenment and/or modernity. When conservatives question some aspects of either of those, they are given the "you-don't-want-us-to-have-antibiotics-or-modern-dentistry" dodge.

Your statement is a form of that dodge. If you've read Kirk, Weaver, Scruton, Berry, or the Southern Agrarians, you'd realize that none of them is either a Luddite or a nostalgiac reductionist. Ditto most crunchy cons and Front Porchers.

"I would put them on a scale and say onward Christian soldiers to 'biggerbetterfastercheapermore' and hope that we could figure out a way to live in a world with both globalization and global capital and a renewed sense of Christian identity and morals, perhaps tied up with a healthy national identity that respected borders, language and culture."

Good luck with that. Globalization and global capitalism are inimical to "Christian identity and morals." Along with McDonalds and WalMart, we're exporting multi-culti claptrap, sexual diversity and political correctness.


Actually, the child was not saved by the bigness of the medical profession, but by the fact that it could be scaled down to a local community that could effectively help the child. The bigness was split up into smaller groups. There may, sometimes, be a synergistic relationship between the large and the small, such that neither one can be completely ignored.

The Chicken

A'dan Z'ye tadilat, dekorasyon, mobilya anlamında evinizin tüm ihtiyaçlarını karşılıyoruz. Bunun için profosyonel ekibimiz, mimarlarımız ve atölyelerimizle hizmetinizdeyiz.

Post a comment


Bold Italic Underline Quote

Note: In order to limit duplicate comments, please submit a comment only once. A comment may take a few minutes to appear beneath the article.

Although this site does not actively hold comments for moderation, some comments are automatically held by the blog system. For best results, limit the number of links (including links in your signature line to your own website) to under 3 per comment as all comments with a large number of links will be automatically held. If your comment is held for any reason, please be patient and an author or administrator will approve it. Do not resubmit the same comment as subsequent submissions of the same comment will be held as well.