Tuesday, September 4, 2012

Somebody is misunderstanding what laissez faire means...

...and it's either me or these guys.

So this morning, I picked up a copy of the newly released second edition of The Moral Imagination by Gertrude Himmelfarb. The second edition of this book includes new chapters on Adam Smith, Lord Acton, and Alfred Marshall. I just want to take a moment, dear reader, to assure you that just because I have this book, that does not necessarily prove that I am cooler than you. Although it is pretty suggestive.

Anyway, something I read in his opening chapter on Adam Smith made me do a double take. Consider this statement.
His opposition to mercantilism is generally read as a criticism of government regulation and a defense of laissez faire. It is that, and much more, for his objection to mercantilism is not only that it inhibits a progressive economy by interfering with the natural process of the market; it is also unjustly biased against workers.
Now, wait just a minute. Why is thinking mercantilism is bad for workers taken to be separate from a defense of lassiez faire? Why isn't it part of a defense of laissez faire?

This reminded me of an even more egregious statement from an otherwise great book, Banker to the Poor by Muhammad Yunus. He is not an ignorant man - he's a PhD economist and a winner of the Nobel Peace Prize for his work in micro-credit and micro-loans. Toward the end of the book, Yunus describes the fundamental philosophy behind the Grameen bank. While Himmerfarb's statement is perplexing, this one is a straight up robot killer.
Grameen does not believe in lassiez faire. Grameen believes in social intervention without government getting involved in running businesses or in providing services.
Wait...what? Isn't the idea that we should pursue our goals without government being involved in running businesses or providing services pretty much exactly what lassiez faire means?

Yunus says this as part of a strange bit of reasoning. On the previous page he says "Grameen supports less government - even advocating the least government feasible - is committed to the free market, and promotes entrepreneurial institutions." He lists the goals that the Grameen Bank thinks are important, which include "eliminating poverty; providing education, health care, and employment opportunities to the poor; achieving gender equality through the empowerment of women; ensuring the well being of the elderly. Grameen dreams of a poverty free, welfare free world." He then informs us "All these features place Grameen on the political left."

No, no, no, no, no, no, no, no. That's not even sort of true, Dr. Yunus. Having those goals does not of necessity place one on the political left. One can be a leftist and have those goals, certainly. But one can also be on the right and have those goals. (Does anyone believe that people right of center want, or are indifferent to, poverty and welfare?) Centrists, too, can share some or all of those goals. The argument is about how to achieve these goals, not whether they are desirable.

But back to the main point...either I am grossly misunderstanding what laissez faire means, or these guys are misusing the term. I wonder which?

1 comment:

  1. I think you're essentially right on the first, and definitely right on the second. In the first case, I only reserve saying you're completely right, because I'm defining you in opposition to the original author. Since I don't he he knows what the hell he means, and you've only pointed out what is really just a piece of sloppy writing, there is no "there, there". Since he has no point, there's no counter point for you to be right about. Inasmuch as you're pointing out that there's no reason for him to sloppily phrase things in such a way, I agree with your editorial instinct.

    Regarding Yunus, full disclosure here; I think he's a Fraud. A self-made Willy Wonka wannabee. More concerned with perceptions and goals than realism. He makes a standard mistake, the conflation of Public Choice questions and policy debates with "intentions". I think it remains to be seen, in the long run, how Yunus will have measured in terms of actual good done. He seems to have zero knowledge, or at least assigns no meaning to the words he uses in the text you cite.

    He clearly is Signaling that he's a "good guy". White hat.