This week’s FREE Insights is by Harry Teasley of Tampa, Florida. Harry is a Georgia Tech graduate and former president of Coca Cola Foods, among other top positions at the Coca Cola Company. More importantly here, Harry is a businessman with an excellent understanding of political economy, especially public choice economics.

Teasley’s “Thinking About Public Policy” is a timeless talk given to college students years ago. It is prescient and reads as though written in response to today’s “Climategate” pathologies. Teasley integrates quotes ranging from Toms Jefferson and Paine to vons Hayek and Mises, to provide “a useful set of frames -of-reference for thinking about government, politics and politicians.”

If you are interested in understanding the forces driving current arguments over health care, climate, entitlements, actuarial deficits, and other opportunities for political plunder, you’ll find this FREE Insights helpful indeed. Given the increasing domination of political allocations, you’ll find Teasley’s section titled “Guiding Principles of Politicians, Bureaucrats and Bureaucracies” an analytic analogue of a GPS of politics.

Harry ends with this: “The great classicist, C.S. Lewis, argued that one of the objectives, of education, was to teach the next generation how to recognize the propagandists when they come. Traditionally, that has been one of the roles of the liberal arts institution.” I have hopes this educational purpose will return to campuses when the constraints of political correctness become too costly to endure.

Thinking about Public Policy in the Context of Libertarian Thought

By Harry Teasley

Thanks so much for those gracious remarks. It is always a personal pleasure to meet with a group of college students, who find libertarian thought attractive, logical, consistent, valid, and congenial with their personal worldviews.

So, I am delighted with your invitation to address your organization this evening. As a presenter, I prefer the Socratic dialog to lectures, thus I will attempt to limit my formal comments, so that you can ask questions and we can attempt to tease out some conclusions about current political issues and approaches to public policy.

Since I assume that most of you are familiar with many of the central tenets of the libertarian construct, I will try not to carry too many coals to Newcastle. Never-the-less, I wish to set the stage for my later remarks by summarizing a few of the key concepts of libertarianism, as compiled by David Boaz of Cato, interspersed, here and there, with a few other pithy quotes, which explicate the concepts. And I also am aware that, for a few of you, this discussion may be your first exposure to the framework of libertarian thought.

My objective is to establish a frame-of-reference that might inform our discussion at the end of my remarks.

On the Concepts that Inform Libertarian Thought:

Individualism - “Individuals are seen as the basic unit of social analysis, as only individuals make choices and each is responsible for his or her decisions.”

Individual rights – “Individuals are moral agents, who have the natural right to be secure in their life, liberty and property.” Rights and responsibilities are opposite sides of the same coin.

Spontaneous order – “A great degree of order in society is necessary for individuals to survive and flourish. It's easy to assume that order must be imposed by a central authority, the way we impose order on a stamp collection or a football team. (Most people reason this way.) The great insight of libertarian social analysis is that order in society arises spontaneously, out of the actions of thousands or millions of individuals who coordinate their actions with those of others in order to achieve their purposes.” Markets, money, language, customs and law are but a few examples

The rule of law – “Libertarianism proposes a society of liberty under law, in which individuals are free to pursue their own lives so long as they respect the equal rights of others.

The rule of law means that individuals are governed by generally applicable and spontaneously developed legal rules, not by arbitrary commands; and that those rules should protect the freedom of individuals to pursue happiness in their own ways, not aim at any particular result or outcome.”

The rule of law is a tricky concept, as Thomas Jefferson explains:

“Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add “within the limits of the law.’ because law is often but the tyrant’s will, and always so when it violates the rights of individuals.”

Limited Government –

I would also like to quote Thomas Jefferson’s POV on the role of government:

“A wise and frugal government which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement …… This is the sum of good government.”

A quote from Ludwig von Mises goes to the underbelly of government action:

“Government interventions always breed economic dislocations that necessitate more government interventions.”

Maybe we can talk later about the appropriate role of government or constraints to central power.

Free Markets - I quote Lady Thatcher on this concept

“Before I read a line from the great liberal economists, I knew from my father’s accounts that the free market was like a vast sensitive nervous system, responding to events and signals all over the world to meet the ever changing needs of peoples in different countries from different classes, of different religions, with a kind of benign indifference to their status.

Governments acted on a much smaller store of conscious information and, by contrast, were themselves blind forces blundering about in the dark, and obstructing the operations of markets rather than improving them.”

The virtue of Production – “Thomas Paine, for instance, wrote, “There are two distinct classes of men in the nation, those who pay taxes, and those who receive and live upon the taxes.” Similarly, Jefferson wrote in 1824, "We have more machinery of government than is necessary, too many parasites living on the labor of the industrious." Modern libertarians defend the right of productive people to keep what they earn, against a new class of politicians and bureaucrats who would seize their earnings to transfer them to non-producers.”

The Natural Harmony of Interests – The great Austrian economist and Nobel Laureate Friedrich Hayek had a wonderful observation on this point and I quote:

“The possibility of men living together in peace and to their mutual advantage without having to agree on common concrete aims, and bound only by abstract rules of conduct, was perhaps the greatest discovery mankind ever made.

Peace – Randolph Bourne said: “War is the health of the state.” and so it is. Governments always get bigger and more powerful in times of war.

Ludwig von Mises made the following insightful observation on the concept of peace:

“Whoever wishes peace among peoples must fight statism.”

Another way to summarize the libertarian construct is to understand that it is a system of thought, beliefs and political philosophy that is informed and animated by the virtue of voluntary agreement expressed through contracts in an environment characterized by choices, cooperation and competition. This philosophical view is in stark contrast to a political system based on coercion and confiscation enforced with command and control rules, mandates and sanctions.

The economist John Maynard Keynes famously said.

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.

Indeed, the world is ruled by little else….. The power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas…. Sooner or later, it is ideas, not vested interests, which are dangerous for good or evil.”

While I disagree with the principle tenets of Keynes’ ideas on political economy, I do agree with this astute observation.

Like eighteenth century Adam Smith, one of the first great voices that articulated many fundamental economic and free-market concepts and, a century later, Karl Marx, who provided much of the intellectual framework that helped give rise to and informed the totalitarian statism of the twentieth century, Keynes, in the twentieth century, was also extremely influential. His “General Theory” was exactly the kind of theory, which appealed to those who wanted to aggregate power in a central government that would make plans as to how you should live your economic and moral lives.

Along with the mid-nineteenth century German leader, Bismarck, Keynes had immense impact on the kind of political institutions we experience and live with today.

Finally, at the end of the twentieth century and the beginning of the twenty-first, the ideas of the free-market Austrian economists, Ludwig von Mises, and Friedrich Hayek along with the public-choice economists like Jim Buchanan and Gordon Tullock finally began to take root and flower. Classical liberals or libertarians are delighted that many of our treasured beliefs and insights are finally finding some currency in the real world, if not the political and academic worlds.

Libertarians are fond of quoting the title of one of Richard Weaver’s books, which makes the same point as Keynes.

“Ideas matter and have consequences.” - And they do

Tonight I would like to talk about ideas. My objective is to posit, what I believe might be a useful set of frames-of-reference for thinking about government, politics and politicians.

In my preceding remarks, I have used the term statism. What is statism and what does it mean?

I would now like to pass out and discuss a paper titled, Two views of the World, in which I have attempted to compare market liberalism with statism.

TWO VIEWS OF THE WORLD

The Market-Liberal View

FREEDOM–LIBERTY

OPPORTUNITY

THE INDIVIDUAL

PRIVATE PROPERTY

FREE MARKETS

LIMITED GOVERNMENT

VOLUNTARY COOPERATION

CHOICE AND COMPETITION

INDIVIDUAL RESPONSIBILITY

OPPORTUNITY COSTS & TRADE-OFFS

SELF-ORGANIZATION AND SPONTANEOUS ORDER

COMMON LAW

DISPERSED KNOWLEDGE

DYNAMISM

REAL DIFFERENCES – TRUE DIVERSITY

FRAMEWORKS & SELF ADJUSTING PROCESSES

EQUALITY OF OPPORTUNITY

RULE OF LAW

The Statist View

ORDER

SECURITY

THE COLLECTIVE

THE COMMONS

GOVERNMENT INTERVENTION

CENTRAL PLANNING

COERCION AND MANDATES

PROSCRIPTIONS

PATERNALISM - ENTITLEMENTS

COSTS DON’T MATTER

COMMAND AND CONTROL

STATUTORY AND REGULATORY LAW

CENTRALIZED REPORTING

STASIS

SAMENESS - ONE SIZE FITS ALL

PROCEDURES, SOLUTIONS, AND OUTCOMES

EQUALITY OF RESULT

PROTECTED CLASSES

SOURCE: Harry Teasley

There is a huge difference in how public and most private proposals are debated and made.

In the private world of the corporation or that of the personal investor or decision-maker, it is the responsibility and obligation of promoters of change to prepare the rationale for the project or change that they propose. The proponents for change are expected to make responsible and reasonable estimates or projections of the probable impacts that the proposal or change will have.

Promoters of radical change or investment have the obligation of clearly stating the reasons for, objectives of, and a projection or forecast of how things will be better if their proposal goes forward, so that others are in a position to review, critique or vet the reality of the proposal. Included in feasibility studies are: forecasts of volume, estimates of profit, capital requirements, cash flow analyses, statements of risk and uncertainty and discounted returns to capital.

It is not the responsibility of reviewers to create, out of whole cloth, the vision, the implied objectives or a projection of the future.

In short, in the ideal world, one expects a process where the proponent of a proposal, recommendation, investment opportunity, or project:

is painfully honest

defines reality and encourages people to be honest no matter how discouraging the news may be

searches for the reality of a situation and strips away emotional bias

looks at the full dimensions of a proposal and defines the activities that will be impacted by or can impact a proposed change

convinces himself beyond doubt of the correctness of his point of view before trying to convince others.

develops logical and defined basis for enthusiasm and is selective with the power of persuasion

While this process does not always occur in private institutions, the potential for it to occur is far greater than in public institutions.

While the same approach should be applied in the debate about public decisions, more often than not, promoters of change pursue a political process of generating support for an idea, concept or proposal without making explicit the facts or costs nor doing the tough analysis of probable outcomes. Like ideas, facts matter and influence outcomes.

Public Choice Theory: Public Choice theory is useful in understanding how public decisions are made.

"Choice is the act of selecting from alternatives. "Public" refers to people. But "people" do not choose. Choices or decisions are always made by an individual. Those choices may be "private" or "public". A person makes private choices as he goes about his ordinary business of living. He makes "public choices" when he selects among alternatives for others as well as for himself. Such choices become the objects of inquiry in Public Choice.

While traditional economic theory has been narrowly interpreted to include only the private choices of individuals in the market process, traditional political science has rarely analyzed individual choice behavior. Public Choice is the intersection of these two disciplines; the institutions are those of political science and the method is that of economic theory.

Public Choice scholars are perhaps best characterized by their emphasis on comparative institutional analysis, and, in particular, by their concentration on the necessary relationship between economic and political institutions. While many orthodox social scientists have inferred that governmental regulation should be substituted for free market process whenever imperfections are present in the latter, Public Choice students are unwilling to take such a non-logical leap. They are realists who do not view the government as necessarily performing less poorly than the market. Public Choice analysts share a lack of enthusiasm for, but not an unwillingness to turn to government for the solution to innumerable problems. The realization is that markets are imperfect, but that alternative institutions (i.e., government) may also have defects.” Source: George Mason University

On concentrated benefits and distributed costs: Public decisions are often characterized by situations where benefits are highly concentrated on a few, while the costs are widely dispersed to the many. In these situations those who benefit can spend a great deal of time and money to push a proposal through the system, while it is basically irrational for any single person to invest the necessary time and money to study or contest a proposition.

Those who benefit can afford to retain the services of lobbyists, PR firms, advertising agencies, attorneys, and consultants and make substantial contributions to the coffers of politicians. They also can spend years in the effort. And importantly, they only have to win once, while those contesting the proposition have to win all the battles and wars.

When the benefits are highly concentrated, the promoters are also often parsimonious with the truth. They are not in the business of seeking truth; rather, their objective is to force through, by any means possible, a decision, which benefits them personally rather than the community as a whole.

Under the situation described above, it is rational for the individual citizen to be uninformed and irrational to be well informed. The cost of going along may be relatively low, while the cost to protest can be high.

Politicians and bureaucrats know the drill and are good at gaming the system.

Guiding Principles of Politicians, Bureaucrats and Bureaucracies:

1. Save the problem: the problem is the basis of power, perks, privileges, budget and security.

2. Use every crisis or contingency to increase power and control.

3. If there are not enough natural crises, create crises where none exist.

4. Control the flow and release of information.

5. Maximize PR exposure; use the press by giving them something to write about. Create a cover story.

It’s for the children

It’s for the environment

It’s for the old people

It’s for the homeless

It’s for national defense

It’s for homeland security

Always say that one’s point of view is in the public or national interest.

6. Create support groups by distributing concentrated benefits and/or entitlements to special interests, while distributing the costs broadly to citizens-at-large or, better yet, to one’s political opponents.

Examples of Democratic party support groups follow:

The welfare industry and establishment:

Social workers

Consultants

Governments

Entitlement recipients at all levels

The Educational Establishment:

Public School Teachers and Teacher’s unions

The Academic Community: “Has become Island of Repression in a sea of Freedom”

Unions of all stripes

Government employees

Philosophical collectivists;

Leftists

Communitarians

Socialists

Social Democrats

The Plaintiffs Bar

The Hollywood community

The large Media

Minorities, especially African-Americans

Central planners

Environmentalists

Large social service organizations, like the United Way

NOTE: A similar group could be presented for the Republican party.

7. Demonize the truth tellers that have the temerity to say, “The emperor has no clothes”

8. Accuse the truth teller of one’s own defects, deficiencies, crimes or misadventures.

9. Deny, delay, obfuscate, spin and lie.

10. Incrementalize decision-making and divide potential opposition to prevent an opposition group from coming together.

11. Force eleventh hour decisions. Threaten the loss of options. Limit the opposition’s opportunity to review and critique.

12. Wage constant war; it is not a game

Source: H. Teasley

The implications of the foregoing are obvious. It is difficult to fight City Hall, but it can be done. In almost all successful efforts to contest a bad proposal, often a single individual steps forward and makes a decision to concentrate the costs on himself, by spending his time and money to fight the issue, while distributing the benefits broadly to the community at large,

On support groups: If there is a leader, then grass-root support groups can be invaluable in any effort to thwart bad policy and vested-interest proposals. Support groups can assist in communicating the issue broadly, and to their specific contacts. The Internet provides a powerful new tool for grass roots organizations, as does mobile communications.

Essential to any grass-roots effort is the creation of a clear and concise critique or argument that can serve as the intellectual platform for the résistance.

If any of you find market liberal concepts congenial to your own philosophy, then how might that understanding inform and animate one’s political life?

I’ll put forward a possible answer to that question.

In everything that you do:

Uphold the classical-liberal approach to seeking truth via rational discourse, free inquiry, and the scientific method; facts and logic matter.

Support the rule of law, private property, and limited government.

Promote voluntarism and individual responsibility in social and economic interactions, relying on choice and competition to achieve the best outcomes.

Seek to demonstrate the power of private institutions.

Seek to preserve and extend those aspects of an open society that protect prosperity and act as a check on encroachments on liberty.

Among these are free trade and private property, immigration, labor and capital mobility, voluntary contract and voluntary association, scientific inquiry, and technological innovation.

Seek to foster an understanding of and an appreciation for the limits of conscious planning in complex social systems.

Seek to foster policies and attitudes which link individual actions to personal outcomes.

Seek to promote the use of economic reasoning to understand a world of scarcity and trade-offs.

Seek to reverse the public perception that government intervention is the appropriate or efficient solution to most social problems.”

I would like to close with the following thought:

For the remainder of your professional careers and personal lives, you will be exposed to and accosted by the propagandists. They may come in the robes of the academy, or under the rubric of ” public servant” or “the honorable”, or in the coiffed media garb of the talking head, but they will come.

The great classicist, C. S. Lewis, argued that one of the objectives, of education, was to teach the next generation how to recognize the propagandists when they come. Traditionally, that has been one of the roles of the liberal arts institution.