The Gap between politics and economics

For all the recent talk about a unified nation there seem to be some undeniable rifts in opinion as of lately. First a brief comment on partisanship. As I already mentioned I’ve been watching the stimulus package committee meetings on CSPAN and they appear to be anything but bi-partisan or unified. Democrats and Republics seem at each others throats over where all this money is to be spent.
Economists also seem to be drawing lines in the sand. There are those who support the stimulus package (Brad Delong, etc) and those who don’t (everyone Brad Delong thinks is stupid).
Will Wilkinson has recently commented:

What arises in my mind is the strong suspicion that economic theory, as it is practiced and taught at the world’s leading institutions, is so far from consensus on certain fundamental questions that it is basically useless for adjudicating many profoundly important debates about economic policy.

I want to draw attention to the major rift between politics and economics if only to shift Wilkinsons accusation a bit. On the one hand we have economists – the specialists – those who supposedly know the most about the functioning or dysfunctional elements of the economy. They cannot agree whether the stimulus will be on net good or bad, enough or too much. Well that hasn’t stopped the political world from churning as it anyways would. While I agree the professional mainstream may be incapable of providing consensus on fundamental questions, I also think it is worth mentioning, crying, screaming – that the political process is in no way situated to accommodate discussion or insight on fundamental questions if they were so available. So what’s the incentive for consensus on fundamental issues to arise?

Stimulus committee

Last night I stopped the clicker on CSPAN for a while, it was one of the stimulus package committee meetings. Man these things are better drama then anything else that’s on TV!
There was some obvious tension across party lines. Democrats presented themselves as finally getting funding into desperately needy charities and welfare programs. Republicans seemed to be in the midst of changing strategies away from corporate tax cuts and towards infrastructure and public works programs. One of the main talking points was police salaries. Free markets were neither present nor spoken for. The new subtitle of the Obamanomics book is quite revealing. “How bottom-up economic prosperity will replace trickle down-economics.” Normally I like social orders characterized as bottom up, but I don’t think we mean the same thing. Neither party supports free markets and free trade, they are merely arguing where to spend – business or charity.

What will the future recession look like?

Steve Horwitz recently posted a news update – several students at the New School are sitting-in in a department building as a form of protest. Admittedly I don’t know the situation or what is underway, but the occurrence has me thinking about how political activism in the near future may be similar to political activism of the recent past.
With the civil rights flavor of our recent election still in my mouth, this incident makes me think of the influence such activism had on our political landscape since the 1950s. On the one hand, we look at our contemporary history and see a romantic narrative of protests, marches, and civil engagement but there is also a darker side of these same events – police brutality, rioting, etc. Such were the qualities of modern revolutionary activism that caused James Buchanan to deride the ideals of anarchism a few decades ago.
Such spurts of civil disobedience are often interpreted as irrational and or chaotic. I would beg to differ, civil disobedience, violent protests even rioting can be understood within a context of rational choice – which is to say that they are often the predictable outcome of certain institutional structures and the incentives that they create.
The naive college student so frustrated about the Vietnam War that he marches upon the University Dean’s office, violence erupts and police cart off several protesters to jail. Obviously the student knew his actions would not truly end the war, but he marched on anyways – Was he irrational? An urban neighborhood is so enraged by recent cases of racially charged police brutality that they riot and destroy their own houses and businesses – are they irrational? An inmate on death row is so filled with helplessness as to his future that he hangs himself in his cell, while other inmates cover their own cell walls with feces – Are they irrational? I would answer not necessarily in all three cases.
These cases are similar in so far as the actors are all attempting to achieve ends far beyond their own control at the same time they only have a narrow range of activities (means) at their disposal. Yes their behaviors seem irrational because they carry a high probability of personal cost and a low probability of personal benefit – BUT what is the alternative? The college student wants to do something. Something has to be done about police brutality. Inmates are desperate for control in a controlled environment. Given that these actors are compelled to do something, what will that something be? With only a few viable courses of action these actors do what they can, given their extremely limited means.
The reason why I felt compelled to write on this topic today is because of a sneaking suspicion that I have that our political climate in the near future is likely to look like something similar to the protesting days of the past. Such conditions of helplessness, frustration, and a lack of control are likely to be exaggerated in a world of expanding statism. The individual is marginally less influential upon his own welfare as more of the division of labor is turned over to state control. Several people have written that the Obama presidency, as are all presidencies, will be one of promises made and promises broken, thus leaving behind several groupings of people frustrated and helpless as to the real conditions of their economies, their liberties and their lives.