We are suffering under the ignorance of our national heritage

There was an excellent discussion about the concept of wealth redistribution at the Federalist Society on November 12, which was broadcast on C-SPAN. I really liked listening to Richard Epstein, a law professor at the University of Chicago. He put forward the perspective of Natural Law, which was the philosophy used by the Founding Fathers in writing the Declaration of Independence and the Constitution. What I particularly enjoyed was that he put forward the idea that the principles of working systems are pretty timeless. They may need slight modification from time to time, but the basic principles will most often remain the same. The principles of Natural Law are also timeless, because they address issues of human nature.

I also enjoyed the fact that he pointed out the ignorance of Jed Rubenfeld of Yale Law School, and that of Andrew Stern, who is the head of SEIU, when it comes to understanding how systems work. I appreciated the fact that Rubenfeld and Stern were there, because they were exemplars of the perspectives that dominate today, and I think such ignorance needs to be exposed and challenged.

Prof. Rubenfeld took a relativistic stance on all of the subjects discussed, and seemed to have trouble answering a question about the concept of rights.

Profs. Epstein and Rubenfeld spoke about wealth redistribution, but mostly from a legal standpoint. Mr. Stern argued from the standpoint of economic distribution, and he spoke from the perspective of what I’d call “an educated worker”. He said that unions were supposed to take wages out of competition so that workers could compete based on productivity and quality. That’s news to me. Everything I’ve heard about what actually happens with unions is that they stifle creativity (thereby reducing productivity), and reduce incentives for striving for quality since they tend to demand the imposition of wage scales, and restrictions on workforce flexibility (for example, making it difficult to reassign people based on abilities, or lay off bad workers). To me, the only positive impact that labor unions had historically was in incentivizing government and industry to improve workplace safety so that serious injuries and deaths were reduced.

Steve Forbes was also at this panel, and he made the constructive argument (I thought) that if you look at every significant downturn in the 20th century it was caused by the policy actions of some government entity. This is no less true of this last downturn.

What disappointed me about Stern’s arguments (and this was not unexpected) is that he ignored Forbes’s and Epstein’s arguments, I think because he couldn’t understand them. The old maxim has never failed me: If someone doesn’t understand something, they don’t think it’s important. All he understood was the historical narrative from a worker’s point of view. It’s just a guess, but I think he dismissed them because he thought of them as privileged, unaffected by the ups and downs of the economy.

I got turned off by Rubenfeld’s and Stern’s arguments, because neither of them could understand what Epstein was talking about, apparently, but they acted like he was the “impractical” one, stuck in his ivory tower. What Epstein kept pointing out was that their approaches just screw up people’s lives. They don’t solve anything. He laid out a consistent pattern through history, that the economy does badly when political progressives obtain power. Whereas Rubenfeld and Stern said, “We tried it your way (in the 1920s) and it didn’t work,” never questioning why the Great Depression happened. Stern dismissed any role by the Federal Reserve (historically it did have a role, and it’s admitted it). They blamed it all on laissez-faire economics.

Capitalism gets turned into a “whipping boy” when the economy goes into a downturn, and this reveals our collective ignorance about how systems work. We like capitalism when the economy is doing well. We hate it, and blame it, when the economy tanks. I know from my own experience that an understanding of economics is most advantageous when the economy is doing badly. It’s a good antidote to the feeling that nothing’s working, because in fact it is. There’s just a lot more friction in trying to get work or obtain credit. It also gives one an understanding that we should be cautious about tampering with our economic system. I mean that in the most generic sense. I’m not saying that our society’s economic regulatory structure should never be altered. I am saying that we should be careful about what regulations are imposed on it.

This panel discussion was an excellent presentation of contrasts in philosophy and conceptual understanding.