Rob Schofield (I actually mention his name out of respect for him and in the spirit of open inquiry) has penned a delightful little piece on the relationship between the sub-prime mortgage fallout and global warming. The connective tissue, by Schofield’s lights, is the need for the expansive regulatory state:
In effect, those who would promote and benefit from the continued short-term expansion of a carbon-fueled economy are the equivalent (albeit in many cases unwitting) of the rapacious mortgage brokers who helped propel the home foreclosure crisis. Both groups perceive themselves to be in accord with some set of immutable natural laws in which the pursuit of individual wealth is the highest form of human behavior. Each is oblivious to the broader effects of their own action for the rest of society.
This narrative, of course, is not new. I’m actually surprised that Schofield didn’t blame the subprime mortgage issue on global warming itself. Most zealots of the Big Green Church are as eager to blame global warming, as old world zealots blame the Devil. But no, Schofield simply thinks that individual market actors need to be reined in — kept from their excesses under government jackboots. Or, if you like, government nannies who must keep people from making risky judgements (as if the market hasn’t punished the both parties – mortgagers and mortgagees – enough in the case of the sub-prime fiasco). Nevermind that mortgage companies are changing their own rules as they see fit to contain risk.
Schofield’s answer is simply to remove risk from life by fiat. He overlooks all the people who are currently benefiting from those subprime loans; people who have been financially responsible and would not have otherwise qualified under his utopian regime. But nevermind them. He and a handful of bureaucrats are prepared to make your household financial decisions for you — to take away your ability to attempt to live beyond your means and a mortgage company’s risky decision to allow you to. The current market punishment for such excesses is not enough. Excess must be proscribed by law.
But what about Schofield’s general celebration of the regulatory state? Does it protect "freedom and prosperity"? Is it possible for an elite to adjust the rheostats of the market to make it work toward some ideal envisioned by Schofield? I’d argue no. Schofield is suffering under the planner’s illusion. You might say Schofield believes in Intelligent Design. Allow me to quote myself at length:
Consider quotes like this from the New York Times’ Paul Krugman: “What’s interesting about [the Bush Administration] is that there’s no sign that anybody’s actually thinking about ‘well, how do we run this economy?’”
The very idea of “running” an economy is predicated upon the notion that economies can be run and fine-tuned, much like a machine. But what Krugman and folks like Galbraith fail to understand is that the economy isn’t a machine at all, but an ecosystem. And ecosystems aren’t designed, they evolve.
Recall the last time you were in a room with both liberals and conservatives. If the liberal heard the conservative start to talk about Intelligent Design, you might have seen him shake his head rather smugly. Why? Because he will have read his Kaufmann, his Dawkins, and of course, his Darwin. He’ll let the creationist say his piece, and then he’ll reply along these lines:
As long as the basic regularities of nature are in place, Darwinism and complexity theory predict that the myriad forms of life and details of the world will emerge from the simplest substructures — i.e. atoms, amino acids, DNA and so on. The world doesn’t need a designer. The complexity of the world is a spontaneously generated order. The laws of nature yield emergent complexity through autocatalytic processes.
But does our smug Darwinist extend this self-same rationale beyond life’s origins?
People on the political left, while characterizing conservatives as being flat-earthers, do believe in a form of Intelligent Design. For like their conservative counterparts who believe that nothing as complex as nature could possibly have emerged without being designed, Beltway bureaucrats and DNC Keynesians believe nothing as complex as an economy can exist without being shaped in their image.
What both fail to realize is that neither needs a planner. Markets (individual actors in cooperation) do a better job of self-regulation than any government official can do from on high. Ecosystems (complex flora and fauna interacting in complex ways) regulate themselves better than the most determined ecologist ever could.
In fact, the intersession of bureaucrats in the economy almost always make things worse — as harmful unintended consequences follow from their actions. Because unlike the Intelligent Designer favored by Creationists, bureaucrats are neither omniscient, nor omnipotent.
The final irony in Schofield’s post is that he misses this parallel between the subprime issue and global warming. (Computer models can’t map complex systems — climate or economic.) All of this reflects the conceit of the central planner in thinking he can fully understand and adjust a complex systems to his whim. But he cannot. And that is why people like Schofield, despite all their good intentions, are paving the road to serfdom… And if people are truly being harmed by virtue of some commercial activity, there is a way to adjudicate without central planning. -Max Borders