Getting Barack Wrong: Lessons from the Chicago School

Pat Ryan

I'm really intrigued but not a bit surprised by the way the Obama approach to domestic policy is shaping up. We've all known for a long time that you can't carve stuff up into little bundles labeled, poverty, education, economic policy, medical care, and so on, even though most of us ignore the fact and specialize in our own little areas. They are all tied together and if you get one of 'em wrong, there's a good chance that you'll miss the boat on the rest too. That happens frequently among policy makers too, but onlyt a very few are abvle to stand back and evaluate alternatives dispassionately.

Now Obama was teaching at the University of Chicago, home of Milton Friedman and Leo Strauss, for years. The New York Times has a nice article out on his history there in today's paper. The gist of it was that he was a Purveyor of Complexity, which after seven years of George and his brain dead crew is something that I'm fairly starving for. He rarely showed his cards but preferred to challenge others on extant assumptions. Apparently he did come to some conclusions about how a healthy state might function and this looks to be a central one.   

There are two related ideas coming from different camps that will be merged in an Obama administration to address some problems that have arisen in various international and domestic economic policy dogmas since WWII.

The big one is something called behavioral economics  and the subset is even a bigger headscratcher, libertarian paternalism.  The main idea here is the same one we were taught in Sunday School. If God sends a swarm of bees into the room (to quote the song):

He does not compel you to go against your will, he just makes you willing to go.

So the article says:

If Obama isn't an old-school Keynesian, what is he? One answer is that he is a behavioralist --the term economists use to describe those who subscribe to the tenets of behavioral economics, an increasingly popular discipline that seeks to marry the insights of psychology to the rigor of economics....

Examples abound:

A few years back, Scott Lazenby, the prime minister of Sandy really wanted to fix the streets but the citizens refused to levy a local fuel tax on themselves, so he got the City Council to pass a monthly fee on all residents and businesses, and put the original idea back on the ballot for adoption. Of course it passed overwhelmingly, roads were repaired, and no one except yours truly called it blackmail.

In the linked articles above we this example of encouraging individuals to opt in to the desired result for the many:

........ people often fail to set aside money for retirement even when their employers offer generous 401(k) plans. If, on the other hand, you automatically enroll workers in 401(k)s but allow them to opt out, most stick with it.

So the general idea is, regardless of your preferred medical plan, you absolutely need a deductible of some kind that you can assess on all participants so that when Little Johnny has the sniffles or skins his elbow, the family will think twice about pulling say $25 out of their budget to take the little darling to the Emergency Room, thus saving the rest of us a few thousand dollars. On the other hand, we want to catch that tumor growing out of the side of Johnny's head early on, so no deductible at all for regular checkups at the GP and the Dentist's office.

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I think that there are huge swaths of the Progressive Wish List and the WasteFraudandAbuse list favored by the Hairclub acolytes that could be viewed through this lens. If we can then get the public sector crew onto a similar beahvioral accountability track as has been done already in some areas of Federal gummint, we can also address the Bang for the Buck issue.  Both groups will, of course, scream Bloody Murder at this, but we're gonna find that our aging but comfortable little daub and wattle nests are ill suited to the new game.

Open your head and Get ready to ride.

Comments

  • (Show?)

    Fascinating post Paddy. I read the NYT's article reviewing Obama's performance as a Law School Senior Lecturer with interest. It seems to me he employed a Socratic line of questioning in his classes, allowing the students to think, and to challenge their own thinking as they informed themselves. Imagine a Cabinet meeting where Obama asks provocative questions or weaves a scenario for them to address to smoke out unintendeded consequences before a recommendation becomes policy. Like the Kerns Goodwin book, "Team of Rivals" I expect Obama to seat a Cabinet that has very different view points.I expect better and more pragmatic decisions from the Obama presidency. What do you think Paddy?

  • murph (unverified)
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    Ryan,

    You forgot to mention that with Obama we also get Zbigniew Brzezinski, one of the bigger neocon followers of Leo Strauss. Just what is it that we are voting for in Obama?

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    Brzezinski is not a neo-con. He thinks they're blockheads.

    He's been yelling at Obama for the past several months about not getting "entangled" in Afghanistan like the Russians did, and he should know about that one.

    Anyhow, I disagree with him on Afghanistan this time around, and so does Obama, and so do the troops and combat anthropologists on the ground.

    (Love the concept of combat anthropologists).

    <hr/>

    Obama may be the first president to not have a definition of where "The Wogs" start. Churchill famously said they start at Dover, Lou Dobbs thinks they start at El Paso, The Indians think they start at the Pakistani border, Rich Lowry thinks they start in Berlin, and the Bushies think they start at the White House gate.

    Anyhow, this one's about domestic policy mostly. Kind of a different psychological difference in approaches.....

  • sock'd salmon (unverified)
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    This is also Obama advisor and Chicago law school mentor Cass Sunstein's "nudge" theory for implementing political/social/economic change. Consult his latest book (or not) for more details. Sunstein is considered a leading candidate for a supreme court appointment if O is elected president.

  • Fair and Balanced (unverified)
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    One way of summarizing the gist of "behavioral economics" is "it's all about incentives." Pat, you're right on about the deductible/copay requirement that disincentivizes marginal visits but encourages preventive care. We need to take a systemic look at the entire social support web and see what behaviors are being encouraged and what not. Are people on welfare being shown a "path of least resistance" toward getting an education and a job? Are low-income teenagers given attractive options to drugs and crime? Are poor people in "developing" countries given the skills and incentives to create sustainable economies based on their natural resource base?

    Both the Soviets and the American hegemonists and other authoritarians should have learned that you can't have a stable system based on control, where you impose your will on an otherwise unwilling populace. Sooner or later the levee will crack and you drown. Much better to provide a channel that "encourages" the water to irrigate the fields.

  • murph (unverified)
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    Pat,

    Curious, you read any of Brzezinski? I have. And while he does consider the neocons to be blockheads, notice what he does advocate. Power and action at any cost and the opposition be damned.

    And while we are at it, have you read Leo Strauss? I have. Mostly right out of Machiavelli and The Prince.

    Regardless of what political ideology you wish to endorse, the purpose of that ideology is power and control, liberals and democrats included. In this drive for power and control, any means are legitimate as long as the agenda is pushed forward. Witness the horrific boondoggle of the Clinton years in NAFTA AND CAFTA. This always entails the abridgment or bypassing of popular social agenda.

    And by the way, I notice when I do searches for the Democratic platform that nowhere do I find a continuation of the early years platform. Rather a continuous reaffirmation of high sounding ideology with no concrete basis or means of implementation. Same for the republicans, although it became obvious in the last 7 years that the republican platform was all air with no intention of substance.

    Manifest destiny and social Darwinism is alive and well. We haven't learned a thing in the last 250 years. It has always been about power and control and the high minded idealism be damned. The culture of greed has taken over instead of lurking in the smoky back rooms of the deal makers. Just what is it you expect to change with a different administration anyway?

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    There was an earthquake a few years back and in NW Pakistan, villagers were surprised and delighted to see American helicopters and trucks delivering medical supplies, potable water, and food to remote dwellings isolated by rockslides etcetera.

    A lot of good will was generated between aid providers and the very same guys that are currently shooting at our troops over there. As was pointed out upthread, these guys have beaten back and worn out invaders from the time of Alexander on......but doesn't anyone else see strategies here for peaceful interaction and bringing them into the world community so they can refocus on the important things in life like Big Macs and Gap Jeans?

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    I've read Strauss, the PNAC Manifesto, The Prince, Sun Tzu, and as much Brzezinski as I need to. So has Obama. I've also been pretty diligent about reading Obama himself, and I really like what I'm seeing so far, especially that he continues to confound the Box Builders on the Left and Right.

    It's at least possible that we might have a guy here who will be beholden to neither the Neo-Cons, the Paleo-Cons, the Passive Aggressors, or the Euroditherers. If that's the case, we could see foreign policy and world peace gains unlike anything since the end of WWII.

    I'm able to imagine a president who will make decisions based on what's best for the world without needing to fudge policy to accommodate The Carlyle Group, United Fruit, Coca-Cola, Halliburton, and so on. One precondition for such a guy would be that he be minimally beholden to these interests upon assuming office.

    This presidential candidate might tell you his intentions and some keyboard commando might write up the parts he finds especially fascinating and emblematic of the ballyhooed Change we keep hearing about.

    <hr/>

    Whereas really smart guys like Clinton or really indifferent guys like Bush seem to cede whole swaths of their agendas to key advisers, I've seem zero evidence that Obama is similarly myopic. Quite the contrary. He seems to pick little bits of useful stuff from a broad range of advisers and synthesize something that goes beyond previous established thought in a particular discipline.

    That's why I HOPE for positive CHANGE.

    Why do you think that he ain't the guy?

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    Murph,

    Aren't you cherry picking a bit here? Obama's foreign policy team also includes Susan Rice, Samantha Powers, and Tony Lake. Do you think any one of these can even be remotely characterized as a neo-con?

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    Brzezinski also opposed the initial aggression in Iraq and has consistently argued for getting out ASAP. In this respect his self-proclaimed "realism" allows him to be what he'd no doubt call "hard-headed" (meant in a good sense) about the speculations as to consequences for Iraqi civil conflict, as in "we can't afford to let that be our problem."

    The folks Paul cites are all "liberal interventionists." Brzezinski probably argues against them.

    Liberal interventionism might mean some good things in certain kinds of genocidal situations, but also can be a path to imperial adventurism. A great deal of the British and French conquest in late 19th and early 20th century Africa was made in the name of suppressing Muslim-run slave trades, and/or internal slavery producing plantation crops for export to Europe (palm oil for Palmolive and Pears Soaps, e.g.) that developed when slave exports to New World plantations were largely cut off. In point of fact, once the British and French were on the ground, their need for governance on the cheap led them to ally with local elites and to be very reluctant to intervene at all in local slavery & labor arrangements; even after formal abolition laws were passed, they were often not enforced.

    The point is that "liberal interventionism" will often end up working in similar ways in the present.

    Apparently Samantha Power married the "law and (behavioral) economics" maven Cass Sunstein on the Fourth of July this year.

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    On "behavioral economics," I think this term is pretty funny since mainstream marginal utility economics is nothing but an impoverished theory of human psychology and behavior anyway. What kind of economics isn't behavioral?

    NYTimes economics blogger ("Freakonomics" column) Steven D. Levitt disagrees that "behavioral economics" is about incentives. He writes:

    The main point of [Sunstein and Richard Thaler's behavioral economics advocacy book Nudge] is as follows: Since people don’t think very hard about the choices they make, it is a lot easier to trick them into doing what you want than to try to educate them or incentivize them to change their behavior. There are many ways to trick people, but one of the easiest is simply by giving thought to the way choices are arrayed to them, or what they [Sunstein and Thaler] call “choice architecture."

    N.B. -- trick rather than incentivize.

    Which seems to bring us back rather closer to the Straussian heritage of "the noble lie," Plato's Guardians (philosopher subset) performing shadow theater for the hoi polloi who are inherently unequipped to handle the light of Truth etc. In which light the seeming oxymoron of "libertarian paternalism" also takes on a rather Straussian cast -- if not simply a Platonic shadow in the cave itself, then perhaps one of the figures held up by the Guardians to cast the shadows.

  • murph (unverified)
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    Pat,

    Ok, we have both read some of the same stuff. Guess we have different perceptions on what it means.

    I give credit to Obama for being a constitutional scholar. At least he isn't the smuck and crew we have in the white house now whose main claim to authority is quoting the old testament.

    In my lifetime, I have heard and read the writing of various "important" political figures. Without many exceptions, what they say and write is very different from what they do when in power. However, as of today, I have not heard Obama address energy policy, the boondoggle involving the FDIC or the Fed deposit corp., nor any specific support for the working class, nor the looting of SS, or the boondoggle of Medicare, the signing statements from Bush, the Patriot act and the whole list of other ills our society is plagued with, a great deal being attributed to Bushy and crew.

    On a personal level, I have a very deep suspicion of the elite class. They do have an agenda different from the working class and Obama is a member of the elite. So, anything that he says that I might agree with is immediately open to suspicion. I guess I'm a steady cynic. Sorry bout that.

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    The prospect of Cass Sunstein as Obama's putative first choice for the Supreme Court does not make me at all happy, despite some of his domestic views (see below), because of his positions on the constitutional crisis created by Bush's illegal usurpations and exercise of power, under spurious interpretations of the commander-in-chief's prerogatives that in essence purport to place the president above the law and the constitution.

    Sunstein supports much if not all of this spurious doctrine. This is troubling in two respects. Whether on the court or not, Sunstein clearly has Barack Obama's ear. Comparison of his views on FISA with what Obama has said to justify reneging on his promise to support a filibuster of any telecom immunity bill strongly suggests that it was Sunstein who persuaded him to vote as he did.

    So, even if Sunstein were not appointed to the Supreme Court, how else might he influence Obama away from his promises to reverse himself or support Congressional reversal of Bush's illegal executive power grabs?

    If he were appointed to the Court, his views make it seem likely that he would join in with the conservative bloc in their perspectives on deference to the president as commander-in-chief and their exaltation of that military-imperial role. Rather than a help in resolving the constitutional crisis in favor of the actual constitution and restoration of the balance of powers, he appears likely to be a force to entrench Bush's erosion of democratic republican civil liberties and the apotheosis of the unconstitutional powers of executive securocrats.

    This is a pity, because his views on domestic rights seem to be quite good. He advocates for the (legislative) enactment of Franklin Roosevelt's proposed "Second Bill of Rights" (in his 1944 inaugural address): A job with a living wage, freedom from unfair competition and monopolies, homeownership, medical care, education, recreation.

    Much of this corresponds to what international human rights advocates call "third generation human rights," the first generation being the kind of republican civil liberties embodied in the Bill of Rights or the Declaration of the Rights of Man, and the second generation being those embodied in the Universal Declaration of Human Rights & places like the Geneva Conventions.

    But his views on presidential power, the constitution and the subordination of civil liberties to national security claims and secrecy make him anathema to me as a potential Supreme Court justice, or federal judge on any level actually.

    That in turn substantially weakens the main basis for my personal support for Barack Obama, which has been seeing a strong contrast between Obama and McCain in terms of their implications for the future of the courts. The prospect of a Sunstein appointment makes that contrast much murkier.

    Now I am concerned that Obama may prove to be as much the Democratic ratifier of the Bush commander-in-chief powers coup as Bill Clinton proved to be of Reaganite domestic policy presumptions and reasoning.

  • Tom Civiletti (unverified)
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    Pat Ryan wrote:

    I'm able to imagine a president who will make decisions based on what's best for the world without needing to fudge policy to accommodate The Carlyle Group, United Fruit, Coca-Cola, Halliburton, and so on.

    So, Pat, how long do you imagine such a president remaining alive? Just wondering.

  • Tom Civiletti (unverified)
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    Since free market ideology is based on well-informed self-interested decision making, behavioral economics might justifiably called "scammed market" theory.

  • (Show?)

    Scams and Straussian manipulation acknowledged and Levitt's right on the money of course, but when we're dealing with a huge swath of the electorate that absolutely refuses to inform themselves, what should we do?

    I know that for the past four decades, progressives have eschewed deception in favor of education. That, if anything, is the central focus of croups like ROP and the Bus Project. I salute them for their efforts and for the concrete results that they've gotten, but they're still only reaching a tiny fraction of the voters with the specific message of citizen involvement based on educated and informed choices.

    For the rest, there's either Toby Keith and Sean Hannity or Behavioural Economics.

    I'm sick of being the One Legged Man in the Ass Kicking Contest.

  • Harry Kershner (unverified)
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    Murph: I think you're a skeptic and not a cynic. Keep it up.

    Chris L: I like your "trick rather than incentivize" explanation of "behavioral economics". Having battled against the psychology behaviorists, the B.F. Skinner group that once dominated academic psych, I can say this about behaviorism: those who favor an elitist polyarchy will love it and its economic offshoots.

    Behaviorism is a system for establishing domination and control. It implies that there are two groups of human beings, E's and S's, experimenters (who control) and subjects (who are controlled). The S's are, ironically, objectified beings who are posited to be under the control of "reinforcement contingencies" which can be manipulated by the E's. How the E's are able to escape the domination of their own contingencies is a mystery that behaviorists avoid (I once heard Skinner say, "If my analysis fails to adhere to the standards of reason and rational thought, then so much the worse for rational thought.")

    (Anyone with a yen for philosophy of science who wants to read about the demolition of behaviorist theory: A Review of B. F. Skinner's Verbal Behavior.)

    One further point that I would make about "behavioral economics" as a "third way" middle ground between Keynes and Friedman: Keynesian economics is already the "middle". It's capitalism with a muzzle on it, not "far left" socialism. Obama once again represents the "center" between the far right and the right wing of the DP.

  • college essay (unverified)
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    interesting points of view

  • Ted (unverified)
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    I'm registered non-affiliated, because I don't see any party's platform that I mostly agree with, but I think Mr. Ryan's excellent post points to one of the stronger arguments on behalf of libertarianism. The objective libertarian doesn't argue that big government or its egalitarian goals are bad, but that the long term conditioning of people to be dependent on big government is what is destructive. When that power becomes institutionalized, the nation becomes at risk that it may be corrupted to serve interests that are inimical to democratic and constitutional principals. Therefore, decentralization of power and a regulatory environment that prevents anti-competitive market forces are essential.

    The interesting thing that many people don't know about the original Neocons like Leo Strauss and James Barnham is that they were all fervent Trotskyists back in the 1920s and 30s. The ultimate failure of the great Soviet experiment was the failure of condign power to provide motivation for production. Unfortunately, this terrible social experiment was initially supported and swooned over by the financial centers of Europe and America. It failed. Neoconservatism is equally a belief in elite rule and federalism, but instead of condign power, the masses are herded for production for the state with the lure of greener pastures to feed on. Propaganda and the proverbial "sheeps clothing" on behalf of the rulers are the tools to control the masses. The gains are consolidated into anti-competitive cartels whose absolute control of industry and finance ultimately lead to control of the state.

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    Ted has a very peculiar and mistaken view of history. "The financial centers of Europe and America" so "swooned" over the Soviet Union that they backed their governments in invading it, unsuccessfully, to side with the anti-Soviet Whites in the Russian Civil War that followed the revolution.

    Leo Strauss was never a Trotskyist. His intellectual interlocutors included the independent leftist Hannah Arendt and the Nazi-murdered Communist intellectual & literary critic Walter Benjamin, as well as the right-wing authoritarian Carl Schmitt and the philosopher Martin Heidegger, who was an actual member of the Nazi party, with whom Strauss studied, though Strauss left Germany with the rise of Nazism and was for a long time at the New School for Social Research, founded by refugees from Nazism. He just can't be labeled easily in those kinds of political terms.

    James Burnham was in the 1930s, broke with the main Trotskyist party, the Socialist Workers' Party, in 1940 over the Soviet invasion of Finland, then ceased to be a communist altogether and joined the OSS during World War II, being vigorously anti-communist from then on.

    A considerable thread of neo-cons were connected with a faction that broke with the SWP at the same time and formed the Workers' Party around Max Schactman, which eventually entered into the Socialist Party of Norman Thomas. Some, like Irving Kristol, left relatively soon thereafter. Jeanne Kirkpatrick apparently had a short youthful affiliation in the mid 1940s. Others stayed in until the SP split over Vietnam, when many who became neo-cons formed Social Democrats, USA.

    The Schactmanites formed part of what became known as "the third camp," rejecting both Washington and Moscow in international matters, and the orthodox Trotskyist position of critical support for the Soviet Union. They had an anti-Soviet position consistently and formed a key source for the Cold War AFL-CIO anti-communism, support for the Vietnam war etc., through people like Tom Kahn.

    Most of the Schactmanites also worked inside the Democratic Party. Many worked for Hubert Humphrey and then for Henry Jackson for President in 1972, where they linked up with others like Elliott Abrams, who never had been in any sense a Trotskyist.

    The Jackson campaign may be the single largest common denominator for the foreign policy neo-con first generation (much of the younger generation being their children), with migration of many to the Republicans beginning with sitting out the 1972 general or supporting Nixon over McGovern over Vietnam. The movement was accelerated as that grouping formed the core of "The Committee on the Present Danger" opposing Carter's foreign policy in the mid-late 1970s.

    In any case, none of those people were in any meaningful sense Trotskyists after the Workers' Party went into the Socialist Party (which was not only anti-Stalinist, but anti-communist entirely) in 1958.

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