Funding the Whore of Babylon

Some people are not going to like me for this one, but… well, what else is new?

There was an article in the online edition of the Globe and Mail that caught my eye. It hit home for many reasons, some of them personal. Apparently, many schoolteachers are lying about their faith in order to get coveted teaching positions in the Catholic school board.

It strikes a personal chord with me because I was for a very short while employed by the Ontario English Catholic Teachers’ Association (OECTA), the union which represents the province’s Catholic schoolteachers. I didn’t have to pass any religious tests there, but it was kind of a “don’t ask, don’t tell” environment. I still feel dirty remembering my time there.

Incidentally, I worked in OECTA’s government relations department, so I gained some valuable insight into how lobbying works. The Catholic school lobby in Ontario is well-funded and has the ears of literally every sitting Ontario MPP, regardless of party. Here’s an anecdote: one of these political parties (alright, it was the NDP) was having a contest to choose a new party leader. One of the candidates made the mistake of musing aloud about revisiting the issue of separate school funding. Perhaps he thought it would make a great wedge issue for his campaign. In any case, he brought down upon himself the full wrath of the Catholic lobby, including the organization for which I worked. The poor fellow quickly backtracked, and the idea has never again been uttered aloud in the province’s halls of power.

Leaving my personal experiences aside, there is so much wrong with this state of affairs, that I don’t know where to begin deconstructing it. First, a little background: if you happen not to be from Ontario, this province is unusual in Canada in having a publicly-funded Catholic school system, a fact that will probably cause you to scratch your head in wonderment and disbelief, and rightly so. There is some complicated legal history behind this arrangement, but I cannot think of any still-relevant facts that could morally justify it.

The Catholic lobby, the Catholic teachers’ union, and the gutless politicians in their pockets repeat endlessly that separate school funding (a euphemism, since no other religious or cultural group is allowed a taste of this particular plum) is “constitutionally protected”. However, there are at least three replies to this canard. First, the province itself does not have a written constitution such as the separate US states have, at least not in the sense of a written legal instrument that cannot effectively be repealed by regular procedural means. So if there’s a constitutional guarantee, it is not a provincially-based one.

Second, according to my non-specialist reading of s.93 of the Constitution Act (also known as the British North America Act) of 1867, the right of Catholic schools to exist is granted, but it says nothing about the public funding of those schools. The latter is simply not in the text. I suppose some clever judges have read it into the Act, but they could not have read it from the Act.

Third, other provinces have scrapped their separate school funding systems, examples being Quebec, Newfoundland, and Manitoba. Interestingly, Manitoba did it unilaterally, without jumping through the hoops of constitutional amendment. They simply went ahead, and Parliament failed to challenge it ― as is its prerogative. The legal background to separate school funding is too convoluted to present here in any detail. However, for a good overview, I encourage interested readers to peruse the website run by the group “Education Equality in Ontario”. Incidentally, this was one of several information sources run by concerned citizens that I was tasked with monitoring during my time at OECTA. Sadly, the site seems to have become moribund.

Simply stated, it is high time we weaned the Catholic Church from the public teat. If they wish to have their own education system, let them fund it from the heaps of treasure they’ve mercilessly piled up from the sweat, blood, and bones of generations of labouring poor.

(As an aside, given the persistent stream of ugly little revelations in the news, we might like to think twice before letting the Catholic Church anywhere near children. Kind of like shutting up the fox in the henhouse, no?)

However, there is more wrong with this story than just the public funding issue, which to me is enraging enough. It also begs the following question: why are our teaching colleges (also publicly-subsidized) producing so many more teachers than the education system can consume? This certainly does not seem like an efficient expenditure of funds. It was gratifying at least to read in the article that the province is planning to eliminate about a thousand places in teaching colleges. My mind boggles at that number: Ontario is turning out a thousand surplus teachers each year!

There is, however, a simple explanation for so many people wishing to attend teaching colleges: many people want to be teachers, and with good reason. Getting a full time teaching position has become a winning lottery ticket. The positions are few, but if you get one, you’re set for life. The salaries are absurd, the pensions and benefits are generous, and the fact is, the job is really not that difficult if you happen to have the knack for it (which too many working teachers do not). Sure, I personally know teachers who have tried to convince me that the work they do is much harder and more important than anyone else’s work, but I remain unconvinced. Sure, teachers are necessary (so are garbage collectors) and teaching has its quantum of stress, but what job doesn’t? One thing most jobs don’t have is a quarter of every year off, paid. I believe there are two prominent causes for this over-remuneration of teachers.

First, they are over-professionalized. There was a time when anyone with half a brain and a vocational calling could teach. Now it seems that the brain part is optional while much more is required in terms of education. Brains and education do not always – or even usually – go together. Is more professionalization a good thing here? Well, to use the Scriptural expression, “Ye shall know it by its fruits.” Despite the increased time and money it now takes to produce a “qualified” teacher, the resulting quality of education of their students continues to be dismal, to put it mildly. I know, because as a university instructor, I had to deal with the end results of the primary and secondary education systems, and it wasn’t pretty. It seems to me that, educationally-speaking, less is more here.

Second, along with over-professionalization, there is the problem of over-unionization. We constantly hear the refrain that there are too many students per teacher, that class sizes are too large. And yet at the same time, we have too many qualified teachers without positions. If there was some way we could hold the line on wages, or reduce them, I’m sure that many of those unemployed teachers would be more than happy to take one of the positions that could be created as a result. Doubtless, there are many who actually do see teaching as a calling and are not just in it for the money. As a matter of fact, reducing wages might even improve the overall quality of the profession, by weeding out those who are just in it for the money. Of course, the teachers’ unions will not have any talk of reducing wages.

One question remains unanswered: If both the Catholic and the regular public systems are funded from the same public source, why is it that the former is hiring while the latter is not? Well, first of all, the article does not necessarily say this is the case. But it does seem to be implied. If it is, I suspect this is because the Catholic system effectively has an additional source of funding that the public system does not (i.e. the Church). Anecdotally, I’ve known several parents who are not Catholic but who have enrolled their children in Catholic schools because of the perception that the quality of education is better. I admit I don’t know if or why this is the case. I don’t have children, and I have no first-hand experience of Catholic schools. I do know that as a teenager, if you wanted to be on the swimming team, you had to go to the local Catholic high school and use their pool. Our public high school didn’t have such frills, although we did have three times the number of students.

It is a strange irony, is it not? A situation is developing in which Catholic schools (styled "separate" schools in our political jargon) are increasingly staffed by teachers pretending to be Catholic, who are teaching students pretending to be Catholic.

There are too few teaching positions to go around. This is caused by the combination of over-professionalization and over-unionization. This, together with an archaic and unjust funding system has resulted in a sad state of affairs in which people are forced to lie about their religious faith (reminiscent of the bad old days of the Test Acts) in order to gain employment in their chosen field ― and to send their children to decent schools.

Please do not accuse me of being anti-teacher. I’m not. I blame the system and its perverse incentives more than I blame teachers. Thus, I’d like to end this post by dedicating it to those very good teachers I’ve had, the ones who have really made a difference in my life. I would especially like to thank Mr. Csoli, my fifth grade teacher, Miss McBride, my high school Latin teacher, and Mr. Dearing, my high school Economics teacher.

Dulce et decorum est?

Many Canadians have strong feelings about Canada’s involvement in the current military adventure in Afghanistan. Some support it. Some believe that we never should have entered the war in the first place. Others agree with the original aims but believe it’s now time to depart, either because we have largely accomplished what we’d set out to do, or because we can no longer plausibly accomplish what we’d set out to do, or else because it’s time for other nations to take on some of our burden.

I confess that until very recently I was sitting firmly on the fence with regard to the war in Afghanistan. I am no lover of the Taliban. I’m not being jingoistic when I say that I would happily see the savages wiped off the face of the earth if there were a quick and costless way of doing so. It’s not war nationalism that makes me say this. It is the fact that they throw acid in the faces of little girls and rape and murder women for daring to want an education or have a personality. Savagery is about the only way to describe the Taliban modus operandi.

On the other hand, knowing a little about the history of the place, one can confidently assume that the prognosis for prospective invaders is not good. And, high moral aims notwithstanding, invaders is precisely what we are.

My attitudinal default position on war in general is scepticism. I think such scepticism is entirely justified. This does not mean that I was against the idea of military involvement in Afghanistan from the beginning, but I was suspicious about the lack of public debate over our entry, as well as about the utter lack of frank discussion on what we could expect it to cost in terms of blood and treasure. Still, in comparison with the US invasion of Iraq that was in the works at the time, the Afghanistan venture seemed to have a relatively firm moral basis. If, as it is often speculated, Canada entered Afghanistan as a way for us to avoid entering Iraq, then many thought it was a shrewd move on the part of our then-Prime Minister Jean Chretien.

Much time has now passed. Too much time. Almost a decade, in fact. I am now ready to come down off the fence and declare myself to be against the war. I believe we must pull out of Afghanistan immediately. I say this not because of the death toll in terms of military and civilian lives, although that is certainly an important consideration, nor because I do not believe in the putative moral aims underlying it.

CANADA MUST LEAVE AFGHANISTAN BECAUSE THE WAR IS BEGINNING TO INFLICT DEEP AND LASTING INJURY ON OUR CULTURE AND ON OUR DEMOCRATIC INSTITUTIONS.

Canada has been militarily involved in Afghanistan almost as long as it was involved in World Wars I and II combined. Both of those wars changed the nature of our country in many ways, and few of these changes were, in my opinion, for the better. For example, the First World War brought us the introduction of the income tax, which was supposed to be a temporary measure but which will now be with us forever. And besides atomic weapons, the Second World War also brought with it a level of centralized control over Canada’s economy and society that we have never managed to shake off. As Nietzsche once wrote, “when doing battle with monsters, one must look to it that one does not himself become a monster”. In order to fight totalitarianism, we found it necessary to take on some of the characteristics of totalitarianism. We granted our government unprecedented powers to mobilize and control the productive forces of an entire society in order to defeat a formidable enemy. We won, but at great social cost, and many measures stayed in place when the circumstances which necessitated them had passed.

I have begun to see disturbing changes in the political culture of this nation as a result of our long involvement in Afghanistan. We now have a government that refuses to answer legitimate questions from Her Majesty’s Loyal Opposition on the grounds of “national security”. Many of these questions have to do with allegations that our military may have been complicit in the torture of prisoners, in direct violation of all international conventions governing the conduct of war. If true, these are activities that would themselves constitute a national security threat: if our enemies expect to be tortured by us or our allies, can our captured troops expect any better treatment at their hands?

Government is becoming too much the “silent passing of affairs through the hands of a few” which Adam Ferguson (1723-1816) decried as the political order of slaves, not of free men. Not only is the government not open or forthcoming with the most basic requests for information, but they are quick to accuse those who criticize or ask too many questions of not being sufficiently “behind the troops” and of giving aid and comfort to the Taliban. (This, while official government policies towards women would probably draw applause from the Taliban. But that’s another story.)

Every time the current minority government is threatened with a vote of non-confidence, we are told that, because we are at war, this is no time for an election. Does this mean that, because the war has been dragging on for some nine years, democratic elections ought not to have been held during that time? If we were to adhere to that logic, then the current government would never have been elected in the first place. A government that only expects to stay in power through fear-mongering has, I’m afraid, very little democratic legitimacy left.

(But, then again, at least in terms of popular vote, every Canadian government is a minority one and, as such, has little democratic legitimacy. That too is another story.)

The Speaker of our House of Commons recently had to issue an opinion to the effect that the government is answerable to Parliament and must hand over Afghanistan-related documents that it had been trying to keep secret. What has become of our democracy when our government has to be reminded that the ancient body comprising the elected representatives of the people is sovereign, and where a speech that merely re-affirms three hundred years of established constitutional practice can be reported on as if it were some new-fangled political innovation? Of course, how can we expect the government to respect our Parliamentary traditions when the very documents it was trying to withhold seem to indicate that it has as little understanding of the equally ancient and venerable concept of habeas corpus?

The war mentality has even entered the conduct of politics itself. Where once a political leader would speak of defeating an opponent at the polls, our current Prime Minister is on record as aiming at the “destruction” of the Opposition. This is the same Prime Minister who issued little handbooks to his Ministers with handy tips on how to disrupt committees and stall the machinery of government when things threaten not to go their way. This is politics turned into a sort of low-grade civil war, which is, as Lucan described it, “war less than civil”. The Opposition is described in language which to the ears of the unschooled mob is designed to make them sound like a pack of conspiratorial traitors: they want to make our country safe for foreign terrorists; their criticisms are subversive and give aid and comfort to Canada’s enemies while putting the lives of our brave troops in danger; they support effeminate and unwarlike types such as homosexuals, women, liberals, tree-huggers, and champagne-sipping city elites.

The war is not solely responsible for the current ills of our system of government. We can also blame the first-past-the-post electoral system, as well as the increasing consolidation of power in the Prime Minister’s Office that has been going one for quite some time now. But our current Prime Minister happens to be a man who is dangerous precisely because his intellect is inversely proportional to his moral integrity, and for him the war is a convenient shield to hide behind while he beavers away with his ongoing project to disassemble Canada’s institutions and new-model them in a way more congenial to his autocratic nature.

The war is not only destroying our political institutions. It has also begun to infect our everyday culture and language. Where once we were proud of our nation’s “peacekeeping” tradition, now we speak proudly of our “fighting men and women”. A stretch of highway near where I live has been unofficially renamed “The Highway of Heroes” because it forms part of the route along which dead soldiers are brought back from Afghanistan. One of our national newspapers, The Globe and Mail (or, as it is called in some quarters because of its warmongering, The Globe and Male), can carry a callous story about the exploits of one of our snipers and the number of his kills in a way which made me wonder if I was reading the Sports section. The story reeked of the worst kind of insensate martial masculinity. This is not the Canada I know, and it is not the Canada I used to be proud of.

To my mind, perhaps the most egregious symptom of this cultural degeneracy ― and I am well aware of how cynical this must sound ― is the maudlin public sentiment vomited forth by the media and its audience. This mushy and over-sweetened pablum comes in two pre-digested forms; one is to be swallowed by right-leaning citizenry, while the other is intended for the consumption of hand-wringing lefties. Frankly, I have trouble keeping either form down.

First, there is the “paying tribute to our fallen heroes” drivel that fills the news every day. Yes, our soldiers are brave to go to distant lands and fight our wars for us. But if we really cared that much about them, we at home would take better care of the institutions they’re supposedly fighting to protect and export. That care must include free and open questioning of why we’ve sent them over there to do our dirty work in the first place. It would also involve open debate about aims, costs, and whether or not we’re leaving our brave soldiers open to charges of war crimes (the detainee torture allegations) and consequent enemy reprisals. Such frank debate would be a better demonstration of our respect for our troops than easy crocodile tears and mindless flag-waving along the “Highway of Heroes”. The latter sort of thing is for Americans. It must stop. It’s yucky and un-Canadian. We’re made of sterner stuff. Neque quisquam omnium lubidini simul et usui paruit ― “no one has ever served at the same time his passions and his best interests” (Sallust, Bellum Catilinae, 51.2).

Second, there is the high-minded claptrap about all the good works we’re doing for the oppressed people of Afghanistan. Aren’t we kind and wonderful? Yes, Afghanistan is terribly poor, and yes, its women are generally treated with unspeakable inhumanity. But if we were able to conduct an honest poll of the Canadian people, with a device that could scan each person’s secret heart of hearts, I am willing to bet that we would not find very many who really gave the smallest fig about Afghanistan or its people. To be clear, I am not saying that people don’t care in some vague, ill-defined, and costless way. But I am saying that there are few who really believe Afghanistan is a worthwhile ground upon which to shed the blood of oneself or one’s children. I would also bet that those who have spouses, siblings, or parents fighting over there would be glad to have them home tomorrow, even if it means that Afghanistan will likely sink back into the shapeless anarchy that is its historical default position. Most people, when they think of Afghanistan at all, probably think of it in the way that Tacitus thought of the lands of the German tribes: informem terris, asperam caelo, tristem cultu aspectuque, nisi si patria sit (“with its wild terrain and harsh skies it is pleasant neither to live in nor look upon unless it be one’s fatherland”).

Such maudlin gushing, whether for the troops or for the people of Afghanistan, is really just the small change of politics, easily given away and quickly spent. Meanwhile, we don’t hear about the real money. Here’s a challenge: Without having to Google it, can you tell me roughly, even to the nearest billion dollars, how much the war in Afghanistan has cost so far? Or what it costs each day? If you cannot, don’t feel too bad. This seems to me a simple and pertinent question, and yet it is rarely answered in the mainstream media.

(The answer? It depends on who you ask. The government tends to low-ball the cost of the war, while other credible sources put it significantly higher. For example, according to the government, as of March 2008 ― already over two years ago ― the war had cost $5 billion. An Ottawa Citizen article of September 18, 2008 put the then-total at $22 billion. The Department of Defense itself estimates the cost of the Afghanistan mission for fiscal year 2010-11 to be $1.468 billion. A safe bet is that the war is costing about $100 million a month.)

I know that I’ve made a similar point before, but I wonder if the sentiments of all the flag-wavers and tear-jerkers would turn on a dime if they were presented with the bill for their share of the costs so far. Let’s put it this way: Would you be willing to make a one-time-only donation of $645 to a charity providing Afghan relief? Well, if the war has cost $22 billion, then effectively you already have.

Again, it’s not the monetary cost I object to. Nor is it the cost in human lives per se, as lamentable as that is. Sometimes war may be necessary, and it is never cheap. What I object to is the damage the war is doing to the fabric of our nation. It is a loss I’m sure we’ll end up regretting more than the $645 it has cost each of us.

Lord Acton's Folly

I could have simply appended this to my previous post, as item number five on the list of shortcomings of the Austrian School. I’ve had occasion before (“Are Private Vices Really Public Benefits?” Thursday, November 19, 2009) to chastise Friedrich Hayek for his poor judgment of intellectual character. His veneration of Bernard Mandeville was incongruous, to say the least. However, his judgment plumbs new depths in holding up for our admiration the character and writings of Lord Acton (1834-1902).

Acton was a Whig historian, sometime Professor of Modern History at Cambridge, and often cited by those on the right as a prophet of liberty. There is much to admire in Acton’s work: clearness of expression, richness of literary style, and warmth of tone. Having granted this much, there is, unfortunately, a topic upon which he wrote extensively, but about which his opinions were no less ignorant than they were culpably disingenuous. I refer to his views concerning the US Civil War.

Acton, though an Englishman, was an unabashed partisan of the Southern cause. Being himself an aristocrat, his sympathies were perhaps predictably genteel. To his mind, the Southerners were beleaguered ladies and gentlemen of culture and breeding, protecting their noble and refined way of life against the dark forces of Northern tyranny, soulless bureaucracy, and dehumanizing industry.

In my opinion, this characterization is misleading at best. For every wealthy antebellum Southerner of taste and breeding, there were probably a hundred hillbillies and rednecks with whom Acton would have felt little class sympathy.

Be that as it may, my main objection to Acton revolves around his views on race and slavery. Consider the following passage:

If my present theme were the institution of slavery in general, I should endeavour to show that it has been a mighty instrument not for evil only, but for good in the providential order of the world. Almighty God, in His mysterious ways, has poured down blessings even through servitude itself, by awakening the spirit of sacrifice on the one hand, and the spirit of charity on the other. (p. 273)

How uplifting! Slavery gives the opportunity, to slave and slaveholder alike, to exercise their nobler faculties. Both parties are the better for their relationship. I'm convinced. Let's re-institute slavery now! Oh... but wait. Who will be slave and who will be master? I imagine there wouldn't be very many volunteers lining up to assume the former role. As for myself, I'd rather exercise the spirit of charity (as master) than the spirit of sacrifice (as slave).

How does this square with Acton’s advocacy of the cause of liberty, as emphasized elsewhere in his writings? Well, first, we must rid ourselves of our modern notion that democracy is something desirable. For Acton (as for many earlier writers), the word “democracy” is pregnant with negative connotations. The same goes for the word “equality”, which is why he can hold an opinion like the following without being in the least affected by the bite of conscience: “Slavery is opposed to Democracy; first, because it establishes inequality among men, and secondly, because it accustoms men to rule other men who cannot govern themselves” (p. 304).

Slaves are such by their very natures. And in any case, democracy would only allow the better sort to pick up the worst qualities of their inferiors. Mixing of races degrades the naturally superior. The only way to protect against this is either to have a republic that is racially and culturally homogenous, or else to institute slavery:

Democracy inevitably takes the tone of the lower portions of society, and, if there are great diversities, degrades the higher. Slavery is the only protection that has ever been known against this tendency, and it is so far true that slavery is essential to democracy…. This is a good argument too, in the interest of all parties, against the emancipation of the blacks. (p. 260)

I don’t know how to begin to refute such rubbish, or whether it’s even worth the trouble. This is the man Hayek would want me to take for a defender of freedom? I’ll pass, thanks.

Besides his defense of the institution of slavery, Acton also backed the Southern claim that their secession had a firm moral and political basis in the doctrine of States’ rights, which says that the federal government had no business interfering in the affairs of the separate states, except in those areas specified in the Constitution. Since the Constitution enshrined the right of Southerners to own slaves, to abridge this right was an act of tyranny on the part of the federal government.

Interestingly, hardly a word is mentioned of such legislation as the Fugitive Slave Act. Before this, abolitionism in the North was a fringe movement. But when Southern agitators enlisted the services of the federal government in catching slaves and enforcing slaveholders’ property rights within the borders of the Northern states, many were driven into the arms of the abolitionists. To my mind, this was an even more egregious violation of States’ rights and provided the North with an even firmer and more just basis for secession. But Acton doesn’t concern himself with such details, as they don't tally with his ignorant preconceptions.

References

ACTON, Lord. Essays in the History of Liberty (Selected Writings, Vol. I). Indianapolis: Liberty Fund, 1985.

Some Shortcomings of Austrian Economists

As promised, this post is devoted to what I perceive to be some of the shortcomings of the Austrian School’s analysis of economic phenomena.

1. They Don’t take Market Failure Seriously Enough

Austrians like von Mises and Hayek (pictured) hate – hate – labour unions, and for the most part I’m in complete agreement with them. Labour unions work by coercion. They coerce employers, but what’s more reprehensible, they coerce other labourers, union members and non-members alike. They prevent those workers who would be willing to work for a lower wage from making a living, however meager that living may be, thereby contributing to higher unemployment. They prefer to keep their own wages artificially high, even if it means other workers must starve. The truly terrible thing is, all this is done in the name of “protecting working people”. And insofar as government permits coercive and antisocial union activity to continue, they are in dereliction of their duty to uphold the rule of law.

On the other hand, I do not believe that the blame for unemployment can be laid entirely at the feet of union thuggery and government incompetence. I believe that market failures, perhaps the most important example of which is unemployment, are real phenomena that cannot always be conveniently explained away.

As I’ve noted before in this blog (“A Tiger by the Tail,” March 8, 2009), when discussing workers and unemployment, the paradigm example Austrians seem to have in mind is the low-skilled wage worker. Such workers have transferable skills because they effectively have no skills. Thus, if they are let go during a recession, they can find another position at a similar rate of pay relatively quickly once the economy picks up again (an exception to this being auto workers whose inflated wages were the product of union extortion). Though the unskilled are more likely to lose a job, they are also likely to spend less time between jobs.

In a knowledge economy, which is dependent on more highly skilled labour, workers cannot so easily shift around from job to job. For one thing, there is a sunk-cost effect: it takes time and money to acquire skills, and the more highly skilled you are, the more time and money you’ve likely spent acquiring those skills, which means that the loss of opportunity to exercise those skills is that much more costly. And then there’s the fact that highly-skilled positions are precisely the ones most likely to change over time. They tend to require continuous upgrading of skills and knowledge, and are more subject to economic obsolescence. Not plying one’s trade for too long a time due to unemployment can effectively make one unemployable in such a field ― either the field itself disappears, or the worker is no longer qualified to work in it.

I have an armchair theory (one which I’ll leave to professional economists to demonstrate empirically). The more an economy depends on highly skilled labour, the more downwardly rigid its unemployment rate becomes and the less responsive that rate becomes to upturns in the business cycle. In a downturn, many lose jobs, but in the upturn that follows, many of these same people will not find new work, or will only find it at a lower skill and pay level and after much time spent re-training. My theory makes the following testable prediction: as an economy develops upward along a skills gradient, it will take longer and longer for employment to rebound after each recession ― if it rebounds at all. The long-term result of this will be a growing army of educated, highly-skilled unemployed. I leave it to you to imagine the negative social and political implications.

(Interestingly, in his The Road to Serfdom (1944), Hayek pegged unemployment among the skilled and educated middle class as a main contributing factor in the rise of Nazism in Germany. However, he characteristically – and rather spuriously – blamed such unemployment on meddling with the economy by government and unions.)

For advocates of the free market like me, this is a rather pessimistic and Marxian spectre. But burying our heads in the sand won’t do capitalism any favours. In short, while Keynesians may be accused of taking unemployment too seriously, Austrians can be accused of not taking it seriously enough.

2. They Don’t Take Morality Seriously Enough

Austrians are not alone among economists in their desire for economics to be a value-free science, along the lines of physics or chemistry. Theirs is not to tell us what we ought to do, but merely to describe the economic consequences of our choices. But policy must be made, and many economists make their livings by advising those who make policy.

However, policy (or at least good policy) must be made with a view to the values of people, and many of these values are not reducible to economic calculation. Many of our values cost us money, and in most cases, these are costs we are collectively willing to bear, much as, at the level of the household, one might deem the purchase of a large screen television a worthwhile cost. Strictly speaking, buying a television is not efficient economic behaviour. After all, if you could only exercise some restraint, that money could be invested at a rate of return that would eventually allow you to buy a television and, say, a new stereo. The point is, we don’t expect to make a profit from the television; we merely wish to make our lives more fulfilling somehow, and we cannot do this by perpetually foregoing consumption. Sooner or later, money must be spent.

With respect to morality, we could, if we wish, put this in the crassest economic terms. We might say that moral values are items of consumption. But as an item of consumption, values have certain important characteristics that televisions lack. They are goods that are (i) in near-universal demand, (ii) can be extremely expensive, and (iii) the demand for them is extremely inelastic. This inelasticity is shown by the fact that so many people are willing, under the right circumstances , to die for such values, which, in economic terms, seems to indicate that there is no other good that they would accept in exchange for them.

(The other unique and rather queer characteristic of fundamental values as an item of consumption is that (iv) not only do we desire to consume them, but we demand that everyone else consume them too. This is why it is not seen as problematic, except among philosophers, sociopaths, and more muddle-headed liberals, that the state has the general right – nay, duty – to enforce fundamental values on all citizens. Collectively, we go through an incredible amount of trouble to ensure that this strange economic good is provided to everyone, at vast public expense, whether they want it or not. It’s a rather strange form of welfare state. But consideration of this takes us too far from our topic.)

Many of our fundamental values are for most of us effectively outside the realm of economic calculation. The demand for them is – or is nearly – absolutely inelastic. If economists were to tell us that it no longer makes economic sense to enforce laws prohibiting murder (which, for all I know, might very well be the case), would we scrap those laws? I doubt it, because sometimes morality trumps economic calculation. The values underlying those laws are so important to us that money is no object when considering their utility. This is where the whole “law and economics movement”, which draws much of its inspiration from the Austrians, goes off the rails.

Turning to the Austrians themselves, their treatments of morality are mostly either dismissive, or at the opposite extreme, reactionary. An example of the former is von Mises, who, when he discusses morality at all, describes it as an atavism, something which comes from a primitive stage in human development and which now mostly interferes with economic prosperity and the efficient working of the market order.

At the other extreme there is Hayek, who, especially in his later writings, claims that our morality is the result of a sort of process of natural selection at the level of rules and institutions. The rules of morality, he says, were not consciously designed, but our subordination to them has allowed us to flourish. Therefore, we toy with them at our peril. Thus, where von Mises doesn’t take morality seriously enough, Hayek can be accused of taking it too seriously, listing dangerously in the direction of a mindless conservatism that sits in great tension with his overall libertarianism. What to me is worse, he seems to perpetuate the hoary old fallacy that Plato decisively refuted 2400 years ago, namely that there is some necessary connection between religion and morality. There simply isn’t.

At the same time, Hayek betrays a breathtaking ignorance of the historical development of morality, a development which seems to give the lie to his moral conservatism. At various points in history morality has changed drastically and rapidly, and often as the result of reasoned deliberation. And many of these changes were indisputably for the better. It’s doubtful whether Hayek’s precious capitalism would ever have arisen if it weren’t for precisely such revolutions in moral values.

3. They Don’t Take Inequality Seriously Enough

I am in agreement with the Austrians that in our imperfect post-Edenic world, all things considered, the market order is the best social order yet developed. Given this assumption, we must be prepared to live with the fact that a certain level of economic inequality is inevitable. Indeed, the Austrians claimed that the lot of the worst-off in society would be even worse under a strictly egalitarian system like socialism. (And of course, because we’d all be equal in such a society, we’d all be among the worst-off.)

However, there can be no doubt that too great a degree of inequality cannot be good. Hayek admitted that there should be some kind of a guaranteed minimum income to keep body and soul together for those unable to work. Allowing people to be seen starving in the streets would ultimately be bad PR for capitalism. Of course, he intended this income to be very minimal, and he envisioned that in a proper market order there would be very few indeed who would require it.

In part this attitude stems from the Austrians’ seeming inability to take market failure seriously, which we’ve already noted. But beyond that, and beyond the poor optics of allowing people to starve in the streets, there are at least a couple of other reasons why we should not allow the gap between rich and poor to yawn too widely.

First, great inequality eats society away from the bottom up. It breeds envy among the worse-off, and although envy should never be made the sole basis for redistributive schemes, nevertheless, human nature being what it is, envy is a predictable consequence of great inequality, one which policymakers (and the rich themselves) ignore at their peril. It’s no new observation that people who feel they have no economic stake in society will have less respect for the property and persons of those who do. History shows that they are too apt to fall into the embraces of demagogues who offer to enrich them at the expense of those who are better off.

Second, great inequality eats society away from the top down. Money often begets money, and the rich, as the saying goes, tend to get richer. This is not necessarily the fault of the rich. After all, they don’t behave any differently than would the rest of us if we were in their shoes. And let us not forget that many of the poor hope for nothing less than to become rich themselves. Nor is it right to say that the rich get rich at the expense of the poor, and in those cases where they do, it’s rarely intentional. But as wealth has a tendency to concentrate, and as there is a close relationship between wealth and power, power too will have a tendency to concentrate. The effects of this syllogism on a free society are many and they collectively point to the decay of democratic institutions. The result is corruption, rent-seeking, cronyism, unionism, and other termite-like behaviour. These latter are examples of activities where participants do indeed enrich themselves at the expense of others.

Allowed to progress beyond a certain point, great concentration of wealth is inimical to the political order of a free people. Under such conditions, both the poor and the rich will undermine the basis of their own security and prosperity in the blind service of their short term interests.

4. They Don’t Take Environmental Issues Seriously Enough

The Austrians have almost nothing worthwhile to say about environmental degradation and resource depletion. They had little inkling that a day would come when the oil that subsidizes the economic system they venerated would begin to run dry. All of their economic theorizing was predicated on the assumption that there would always be a limitless supply of cheap energy to underwrite the constant growth their system requires. We may disagree over the exact timeline, but no sane person can doubt that oil is a finite resource whose supply dwindles while its demand increases. The only question is exactly how much oil lies unexploited. I’m a pessimist in this regard, but even an optimist must plan for the evil day when it’s gone.

Of course the Austrians are always ready to counter that, so long as liberty is maintained, the free play of minds and markets will find solutions to things like resource depletion, either in the form of substitutes or in means of exploiting those supplies that it is not currently economically viable to extract. However, this claim does not constitute a solution to the problem. It is merely the chanting of an article of faith, no different in form than appeals to the providential hand of the Almighty. The history of the world is littered with civilizations that failed to come up with answers to such challenges. Humanity’s track record does not warrant so much faith.

Whenever Austrians deign to discuss depletion of natural resources, their basic solution is free markets and well-defined property rights. People, they claim, will be better stewards of resources if they own them, and they are implacably opposed to the idea of common ownership of anything. Unfortunately, I have seen little empirical evidence that they are correct. This is not to say that the track record of government management of resources is any better. Although I do not have the space to explore the issue in any detail, I find the Austrian attitude to environmental issues cavalier and their “solutions” facile.

Part of the problem lies in their refusal to recognize the possibility of market failure (see above). For them, freely operating markets are self-regulating and always converge on optimal outcomes. If clear-cut forests, collapsed fisheries, and poisoned lakes are optimal outcomes, then maybe they’re right.

Austrians are on safer ground when they discuss overpopulation, as both Hayek and von Mises have done. For them the population explosion is a temporary historical blip, caused, somewhat ironically, by the very prosperity which capitalism brings. It is the result of more babies surviving infancy, and more people living longer lives. Old reproductive habits have lagged behind new material realities. It no longer makes so much sense to have more children, in the hopes that at least one or two will survive long enough to look after their parents in their old age. Eventually people will adapt to their newfound prosperity. Early statistical indications are that world population growth is beginning to level off. Of course, it will take some time for this to be reflected in total population figures, but given current trends, at some point population will level off and perhaps decline. Whether this will happen in time to avert environmental (and civilizational) catastrophe is an open question.

Also an open question is the degree to which free societies can find solutions to the problems posed by environmental degradation without sacrificing that very freedom. For example, will successful (and meaningful) reductions in carbon emissions require the assumption of central coordination – or outright control – of economic activity by governments? It’s too bad that the Austrian School, prophets of liberty that they were, systematically failed to take seriously what will turn out to be liberty’s biggest challenge.