Friday, July 5, 2013

A Ruling Class That Wants to be Free

I don't blame President Obama.  For over a century the educated ruling class has longed for the freedom to finally implement its program of pragmatic, expert-backed government programs to end poverty and every other social and economic ill.

Finally, with Obama's election and a filibuster-proof US Senate he and the ruling class had their chance for a decisive breakthrough.  They would end the chaos in the financial markets with a proper regulatory regime; they would end chaos in health care with a first step towards a properly thought out comprehensive plan for national health care.  And they would take decisive action to end carbon pollution with a comprehensive program to phase out fossil fuels in favor of renewables.

And yet.

Something is wrong.  The Federal Reserve is still printing money to keep interest rates low, four years after the bottom of the Crash of 2008.  The economy is not recovering at anything close to the usual pace.  The comprehensive health program is foundering as businesses in terror stop hiring.  And the green energy plan is running full tilt into an energy revolution that will make natural gas and oil abundant for centuries -- and worst of all, the climate is not heating up like the settled science predicted.

To me, it all sounds like the Nazi invasion of Russia.  After a year or so, it ran out of gas in the foothills of the Caucasus, a few hundred miles from the oil wells that Nazi Germany wanted.  And then the Russians at Stalingrad broke up the left flank of the huge Nazi salient. So, after various mistakes, the Nazis failed in their strategic thrust into Russia.

But we ask today: what were the Germans trying to do?  They were in the process of becoming the most advanced economy in the world.  They didn't need to own the natural resources or plunder them like the conquerors of old; they could buy whatever they needed with their valuable merchandise exports.  The Germans invaded Eastern Europe just at the point where it had become obvious that the age of invasion and plunder was over.  Wealth, we had found out in the 19th century, is not sitting on the ground or in a mine or an oil well.  It is between the ears of each citizen.

So here we have the educated ruling class in the United States that thinks that the only way to the future is for it to invade and plunder the entire social space and fill it with comprehensive and mandatory programs.  It is an invasion that is doomed to failure just like the Nazi invasion of Russia.

You can see the world changing even as the Obama offensive starts to falter.  There is Michael Barone, who talks about the end of Big Unit America.  There is Walter Russell Mead, who writes about the end of the Blue Social Model.  There is America 3.0, by James C. Bennett and Michael J. Lotus about the change from a society run by "powered machinery" to a "post-industrial, networked, decentralized society."  Then there is Kevin D. Williamson and The Future is Going to be Awesome about the inevitable failure of big one-size-fits-all pensions, healthcare, and education.  Finally, there is good old George Gilder, back with another bleeding-edge book.  This time it's about Knowledge and Power, how the information theory of Claude Shannon is really the basis of capitalism,  and how it's going to transform the economy.

If all these people are saying almost the same thing, then something is astir in the land, rather in the same way that supply-side economics was astir in the 1970s.  And oh so conveniently, our liberal friends are crashing and burning the economy in another Bourbonesque effort to prove that they have learned nothing and forgotten nothing.

What all the writers above are saying is that the essence of capitalism is that it is always surprising us.  To use Gilder's information theory approach, entrepreneurs are always creating new information out of the noise of the world.  But as the noise from government increases then it becomes more difficult for the information from the entrepreneurs to get heard.

I've been saying for a while now that you don't just come to the end of an era, the era of the educated ruling class, and hand it off to a new ruling class.  Usually the ruling class has to run out of money first, like in Egypt or in France under the ancien régime. On this view, the overreaching and the failures of the Obama administration are a necessary prelude to a genuine change in our society.  The ruling class has to be off-balance, demoralized and discredited before it will agree to surrender its power.

Our ruling class wants to be free -- to dominate us.  In George Gilder's view the ruling class needs to be chained and fettered.  It is the entrepreneurial class that should be as free as air -- to amaze us.

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