The Theory and Practice of Oligarchical Collectivism Book Club, Part 6

And now it’s time to finish our critical read of TPOC.  Please leave your thoughts and questions in the comments and I’ll do an omnibus reply later this week.

In Oceania at the present day, Science, in the old sense, has almost ceased to exist… In all the useful arts the world is either standing still or going backwards. The fields are cultivated with horse-ploughs while books are written by machinery. But in matters of vital importance — meaning, in effect, war and police espionage — the empirical approach is still encouraged, or at least tolerated.

This “compartmentalization” is readily visible in today’s world as well.  Think about all of the brilliant scientists who just repeat popular platitudes when they talk about public policy.  Or the major political parties’ eager use of statistics to plan their electoral strategies, but not to guide their policy platforms.

The two aims of the Party are to conquer the whole surface of the earth and to extinguish once and for all the possibility of independent thought. There are therefore two great problems which the Party is concerned to solve. One is how to discover, against his will, what another human being is thinking, and the other is how to kill several hundred million people in a few seconds without giving warning beforehand…

Why would these be the Party’s two aims?  Power-hunger, of course.  If this is such a relatable motive, how come almost no one talks about it?  Social Desirability Bias, of course.

What is more remarkable is that all three powers already possess, in the atomic bomb, a weapon far more powerful than any that their present researches are likely to discover. Although the Party, according to its habit, claims the invention for itself, atomic bombs first appeared as early as the nineteen-forties, and were first used on a large scale about ten years later… The effect was to convince the ruling groups of all countries that a few more atomic bombs would mean the end of organized society, and hence of their own power. Thereafter, although no formal agreement was ever made or hinted at, no more bombs were dropped.

This is probably the least plausible feature of Orwell’s scenario.  The leaders of the totalitarian superpowers were fanatical and reckless enough to engage in nuclear war, but pragmatic and calculating enough to simultaneously realize that they’re a “few bombs” away from destruction?  During wartime, the first high-ranking leader to suggest de-escalation would probably be denounced as a traitor.  And even if his peers listened patiently, the obvious objection is: “If we sue for a cease-fire now, the other side will think we’re weak and impose highly unfavorable terms.  And even if they agree, they’ll probably double-cross us very soon.”  Yes, you can appeal to doublethink.  But the bottom line is that “Back down once you’re a few bombs away from the end of organized society” simply isn’t a focal point.

Moreover, no fighting ever occurs except in the disputed areas round the Equator and the Pole: no invasion of enemy territory is ever undertaken. This explains the fact that in some places the frontiers between the superstates are arbitrary. Eurasia, for example, could easily conquer the British Isles, which are geographically part of Europe, or on the other hand it would be possible for Oceania to push its frontiers to the Rhine or even to the Vistula. But this would violate the principle, followed on all sides though never formulated, of cultural integrity.  If Oceania were to conquer the areas that used once to be known as France and Germany, it would be necessary either to exterminate the inhabitants, a task of great physical difficulty, or to assimilate a population of about a hundred million people…

In Orwell’s scenario, all of the super-states are extremely multicultural already.  Oceania includes all of the Americas; Eurasia stretches from Portugal to Siberia.  Since none of them are supposed to have notable ethnic or regional tensions, these countries are supernaturally great at culturally assimilating disparate populations.

War prisoners apart, the average citizen of Oceania never sets eyes on a citizen of either Eurasia or Eastasia, and he is forbidden the knowledge of foreign languages. If he were allowed contact with foreigners he would discover that they are creatures similar to himself and that most of what he has been told about them is lies. The sealed world in which he lives would be broken, and the fear, hatred, and self-righteousness on which his morale depends might evaporate.

These echoes Stalin’s policy of arresting anyone with foreign contacts.  But the better story is not that contact with foreigners would seriously endanger the totalitarian system, but that the leadership is paranoid.

Under this lies a fact never mentioned aloud, but tacitly understood and acted upon: namely, that the conditions of life in all three super-states are very much the same. In Oceania the prevailing philosophy is called Ingsoc, in Eurasia it is called Neo-Bolshevism, and in Eastasia it is called by a Chinese name usually translated as Death-Worship, but perhaps better rendered as Obliteration of the Self. The citizen of Oceania is not allowed to know anything of the tenets of the other two philosophies, but he is taught to execrate them as barbarous outrages upon morality and common sense. Actually the three philosophies are barely distinguishable, and the social systems which they support are not distinguishable at all.

This is clearly inspired by the strong family resemblance between Nazism and Stalinism.  To insiders – the Nazis and Stalinists themselves – the minor details are obviously a matter of life and deaths.  But they’re deluded.  It takes an outsider to see the ideological landscape as it really is.  Atheists know (I repeat, know) that Catholics and Protestants fighting during the Wars of Religion were ideological siblings.  And confirmed enemies of totalitarianism know (I repeat, know) that the Nazis and Stalinists were ideological siblings.  Or dare I say, moral approximates.

Everywhere there is the same pyramidal structure, the same worship of semi-divine leader, the same economy existing by and for continuous warfare. It follows that the three super-states not only cannot conquer one another, but would gain no advantage by doing so. On the contrary, so long as they remain in conflict they prop one another up, like three sheaves of corn… Here it is necessary to repeat what has been said earlier, that by becoming continuous war has fundamentally changed its character.

Again, we need not and should not accept the silly story that totalitarian regimes preserve their power by keeping their subjects “stupefied by poverty.”  Instead, we should accept the sensible and parsimonious story that totalitarian regimes preserve their power by filling their subjects heads full of fear of vicious external enemies.

In past ages, a war, almost by definition, was something that sooner or later came to an end, usually in unmistakable victory or defeat… War was a sure safeguard of sanity, and so far as the ruling classes were concerned it was probably the most important of all safeguards. While wars could be won or lost, no ruling class could be completely irresponsible.

But when war becomes literally continuous, it also ceases to be dangerous. When war is continuous there is no such thing as military necessity. Technical progress can cease and the most palpable facts can be denied or disregarded…

The rulers of such a state are absolute, as the Pharaohs or the Caesars could not be. They are obliged to prevent their followers from starving to death in numbers large enough to be inconvenient, and they are obliged to remain at the same low level of military technique as their rivals; but once that minimum is achieved, they can twist reality into whatever shape they choose.

Overstated, but still insightful.  In particular, one of the top laws of modern geopolitics is that no one invades a nuclear power.  No matter how backward North Korea becomes relative to the rest of the world, their nukes allow the Kims to stonewall world opinion about their domestic policies.  Given these incentives, we should be amazed that nuclear proliferation hasn’t gone much further already.

The war, therefore, if we judge it by the standards of previous wars, is merely an imposture. It is like the battles between certain ruminant animals whose horns are set at such an angle that they are incapable of hurting one another. But though it is unreal it is not meaningless. It eats up the surplus of consumable goods, and it helps to preserve the special mental atmosphere that a hierarchical society needs.

Yes, but to repeat, the essence of the “special mental atmosphere” is fanatical group cohesion, not “stupefication via poverty.”


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The Mysterious Microchip Shortage

When the press reports on a microchip shortage, as it has done regularly since the beginning of the year, the economist does not believe it on faith. How can there be a shortage if market prices can freely adjust? A shortage is not simply a high price, for how useful would be a special word meaning exactly the same as “high price”? For the economist, a shortage is a situation where it is impossible to get something at any price, that is, by bidding up the current price. To cite just one textbook, see Arman A. Alchian and William R. Allen, Universal Economics, edited by Jerry L. Jordan (Liberty Fund, 2018), chapter 10. Since microchip prices are not, for all we know, capped by some domestic government under penalty of fine or jail, we need to find out what is happening.

At least, we need to ask the right questions. Let me suggest a few and propose some answers.

Of course, a temporary shortage in a segment of the market is not impossible, although it stretches and fuddles the meaning of “shortage” a bit. Perhaps I can say that there is a shortage of croissants at my preferred bakery every day at a certain time. But if I offered one million dollars (with a $100,000 deposit) for a croissant, the bakery would rapidly turn around or, if necessary, somebody would jump in a plane and bring me a croissant within at most 12 hours. Similarly, if your local grocery store is out of baguettes, you are facing a localized and temporary shortage of sorts—but only until the grocery supply truck returns.

In the same way, the so-called chip shortage is not across the whole market. Computer manufacturers, smartphone makers, and others apparently have no problem getting them, although they may have to pay more as they renew their supply contracts. And, of course, it takes more time to manufacture a microchip (typically a few weeks or months after an order) than to cook a croissant or deliver a baguette—the time dimension of shortages.

Another factor to factor in is that up to 50% of the chips car manufacturers need are non-generic, that is, they are not standardized commodities. The spot market for chips is limited but that does not prevent prices from rationing demand, if only in indirect ways through special fees for quicker delivery, for example.

What happened recently in the chip market appears to be that the car manufacturers’ demand suddenly increased last Fall as the economy recovered. This pushed up the price of chips and their components, including the ubiquitous wafers. Just over the past three months, chip prices have increased by an estimated 20%.

For one million dollars per chip instead of a few cents or a few dollars, a car manufacturer or a car part supplier could certainly find a chip maker who would be willing to pause its new contracts (usually signed months before delivery) and start producing for the new buyer as soon as they could. At such a high price some car companies would presumably be willing to sell part of whatever stock they have or to sell their own chip supply contracts with close delivery dates.

Of course, car manufacturers aren’t willing to bid up chip prices to $1 million. They obviously calculate that, at current prices, another batch of chips would increase their marginal cost of car production by more than their marginal revenues from car sales. This is why many car manufacturers in the world have announced production cuts and are waiting for lower prices or later deliveries. Some car manufacturers reallocate chips from their less profitable cars to their more profitable ones. For a student of economics, this is a reminder that possibilities of substitution in production exist—in this case, of an input between two products.

Why didn’t car manufacturers order their chips or chip-containing parts several months before the recovery and stock them? Because they did not need them during the slump in car demand caused by the pandemic. Stocks are expensive—they use space, cost interest, and require management—especially in uncertain conditions when they might not be needed. When the demand for cars picked up last Fall, manufacturers all started placing new orders. In the meantime, manufacturers of computers and other consumer electronics had increased their own demand for chips as consumer demand for their products had grown due to lockdowns and remote work and education. The variety of the chip supply had changed (with some retooling) to meet the changed demand. (Car manufacturing typically uses about 10% of chip production.)

Car manufacturers probably realize now that it was an error not to stock chips or chip-containing parts while waiting for the recovery of car demand. Risto Puhakka, president of VLSIresearch, an industry analysis firm in Silicon Valley, says that it was a big “car industry failure.” On a free market, of course, localized errors happen—all the time. But profit-seeking firms have an incentive to correct them for the future. Automobile manufacturers will no doubt become more attentive to their chip procurement.

To summarize how this reported shortage looks from an economic perspective: If we say that there is a current shortage in the microchip market, we must immediately add that it is a localized and temporary “shortage.” It is localized in that it is limited to certain products—for which users typically do not want to pay higher prices, which does not make it a shortage at all. It is temporary because the production cycle does some time during which supply is fixed.


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The Theory and Practice of Oligarchical Collectivism Book Club Commentary, Part 5

We continue our discussion of Orwell’s “War Is Peace.”


I don’t think that Orwell did believe the Soviet system could last for a long time. In fact, I’ve always suspected that the last third of 1984 was more tongue-in-cheek than people believe; Orwell was in fact poking fun at people in his time who believed that such a society could be perpetuate itself. My reason for believing this is this essay where he reviews James Burnham’s “The Managerial Revolution”:

Here is a quote from that essay:

“It is too early to say in just what way the Russian régime will destroy itself. If I had to make a prophecy, I should say that a continuation of the Russian policies of the last fifteen years – and internal and external policy, of course, are merely two facets of the same thing – can only lead to a war conducted with atomic bombs, which will make Hitler’s invasion look like a tea-party. But at any rate, the Russian régime will either democratize itself, or it will perish. The huge, invincible, everlasting slave empire of which Burnham appears to dream will not be established, or, if established, will not endure, because slavery is no longer a stable basis for human society.”

A fascinating essay; I’d never read it until now.  I still have trouble believing that any part of 1984 is “tongue-in-cheek,” but this is the strongest evidence I’ve seen in favor of this reading.

David Henderson:

Ever since the end of the nineteenth century, the problem of what to do with the surplus of consumption goods has been latent in industrial society.

Your comment is excellent. I also wonder, though, whether he had the idea of satiation: once we have so many consumer goods, we won’t want more.

Maybe, but I doubt it.  Orwell gets the idea that the common man aspires to the standard of living of the middle classes, who in turn aspire to the standard of living of the upper classes.  Both sets of aspiration leave ample room for expanding consumption.  Orwell’s in the older socialist tradition of thinking that capitalism creates artificial scarcity, not the later view that capitalism creates artificial wants.

From the moment when the machine first made its appearance it was clear to all thinking people that the need for human drudgery, and therefore to a great extent for human inequality, had disappeared.

You commented correctly that we need inequality in order to have incentives. But there’s more to say. We are getting rid of human drudgery in the first world. Jobs at pretty much every level are much easier now. That’s distinct from inequality.

If I were young, I think I’d prefer physical labor on a team of friends to teleworking in isolation.  But point well-taken.

Also, while you emphasize the role of incentives, it’s important to note that no one “decides” that there’s inequality. It’s the natural result of a market process in which people become various degrees of good at what they do. No one decided that Jeff Bezos should be the wealthiest man in the world. Instead, billions of voluntary transactions led to that result.

Yes, but we can still talk about how much inequality the government decides to allow.


Imagine if we could revive Orwell and bring him into modern times. Let him see how those officially classified as “poor” in America or Britain have blown far past the threshold he describes, and in fact possess luxuries far beyond anything the wealthiest people in his day had available to them. Show him how even the poorest Americans have supercomputers in their pockets that can instantly connect to a wealth of easily accessible and freely available information in platforms like Wikipedia and Khan Academy. And after he’s taken all that in, let him browse Twitter and and listen to talk radio and attend some political rallies, and ask him if he still thinks it’s material poverty that keeps people stupefied.

Brilliant.  If only we could actually revive Orwell for this fine experiment!  My guess is that he would switch to blaming the media for stupefying people, though the role of prolefeed in Oceania makes that an awkward move.

And at the same time the consciousness of being at war, and therefore in danger, makes the handing-over of all power to a small caste seem the natural, unavoidable condition of survival.

Orwell is right by highlighting that this doesn’t depend on actually being in a state of war. It only requires a “consciousness of being at war” –  you need only make people feel like the social issue de jour is akin to a state of war. Think of the War on Drugs, or the War on Poverty – the rhetoric of both was designed to try to create a “consciousness of being at war” as justification for the “handing-over of all power to a small caste.” And interestingly, Orwell held no illusions that the socialism he advocated wouldn’t entail the same thing.

Again, an excellent point.

Jason Ford:

“But it was also clear that an all-round increase in wealth threatened the destruction — indeed, in some sense was the destruction — of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motor-car or even an aeroplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction.”

Perhaps Orwell was on to a grain of truth. One hundred years ago, a town might only have a few college graduates. If old novels are to be believed, their status conferred a certain amount of respect. Today, how much deference does the average skilled laborer have for someone with a college degree and no other significant achievements? In my observation, very little.

I’d say that the average skilled laborer respects the material dominance of college graduates, but not their rhetorical dominance.  He wants his kids to go to college.  He wants them to marry other college grads.  He wants his grandkids to go to college.  But he doesn’t want to defer to the political and social opinions of college graduates.

Was this greatly different in the past?  I really doubt it.  Perhaps the masses had more deference for religious elites in the 19th-century than they have for intellectual elites today.  Even there, however, the surviving evidence seems thin.  Prior to the rise of public opinion research, who really knows what the masses thought and felt?

I doubt it would be possible to establish a hierarchy in America that those on the bottom rungs of the hierarchy would take very seriously. If the Constitutional Convention happened today, for example, would most people be inclined to support a document written by a small group of the most educated Americans? It seems very unlikely. In short, Orwell might have been on to something.

There was great deference for elites for a few years after 9/11 – a classic “rally round the flag” effect.  The Constitutional Convention fits the same mold.

Mark Z:

One issue with Orwell’s take on war as a means of perpetually maintaining social cohesion is that people tend to get war fatigue after a while, and I think the example of the Iraq War is an example of this. The original enthusiasm had mostly dissipated after a few years and opposition was a big factor in the 2008 election. Both Russia and Germany faced increasing domestic dissidence as WW1 dragged on and this partly motivated their governments to seek peace. War seems an effective way to encourage social cohesion for a few years, but not indefinitely. I think eventually the war would become a domestic burden to the party rather than an asset.

An excellent point, very consistent with the work of Scott Althaus.  On reflection, the power-maximizing strategy is probably to go through cycles of suspicion and hysteria: “You never know when the enemy will pounce” seasoned with an occasional “The enemy is pouncing!”  Classic Stalinism.


Except for the first few years after 9/11, I don’t think that one can make a very strong case that war, or even threats to “national security”, is used as an effective way to amass much power nowadays. Although we have deployed troops in the Middle East for 20 years, the War on Terror just doesn’t garner much mindshare anymore, and hasn’t for quite some time.

I agree that the War on Terror no longer generates much social cohesion.  But during the 90s, military spending as a share of GDP did plummet (see graph below), and the War on Terror managed to reverse that trend for about a decade.  Now we’re still a little higher than 20 years ago, but imagine how low military spending would have been without 9/11.  So I’d still say that war remains helpful for amassing and retaining power.

In 2020, the obvious pretense for “handing-over of all power to a small caste” is the War on Covid. Prior, and after, some desperately wanted, and will want, the War on Climate Change to fill that role, although thus far their efforts have been largely ineffective. Instead, the War on Systemic Racism and Sexism has been, and post-Covid is on track to continue to be, the all-consuming War that justifies everything…

Agreed.  As KevinDC says above, our metaphorical wars often serve the same function as the literal wars of Oceania, though the intensity is plainly far less.



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Great Moment in Public Service Number 12,933

I live in Monterey County, where the Monterey County Health Officer, Dr. Edward Moreno, has had a lot of control over our daily lives since last March. Many of us were hoping that at least he would do his job and get Monterey County its pro rata share of the Covid-19 vaccines allocated to California.

No such luck.

Here’s what a local weekly publication, the Carmel Pine Cone, reported in an email on February 13:

On Thursday the Wall Street Journal, citing data from Feb. 9, reported that Alabama had the worst vaccination rate in the nation, with just 10,013 doses administered per 100,000 residents. But on the same date, Monterey County said only about 8,000 doses had been administered here per 100,000 county residents. Nationwide county-by-county vaccination data doesn’t seem to be publicly available, but if Monterey County is that far behind Alabama, the county’s vaccination rate has to be one of the worst in the country.

Many of us suspect that Dr. Moreno has not been aggressive in pushing our county’s case and getting more vaccines.

And in a front-page news story in the February 12 Pine Cone, we might have found out why. Here’s a paragraph from a story about the grilling that Monterey County supervisor Mary Adams got in a recent town hall:

As for Moreno, who is often under fire for his poor communication skills, failure to crack down on the county’s hot spots and dysfunctional vaccine rollout, she [Supervisor Mary Adams] said, “I hear so many people say Dr. Moreno is not the greatest communicator. Dr. Moreno is the most shy person I have ever met, and this is agony for him to have to speak publicly. He also is very conscious of giving precise and correct answers.”

The reporter, Mary Schley, adds:

Unmentioned during the call was the fact that Moreno’s job description requires him to be able to “prepare clear and concise written and oral reports,” and “speak effectively before large groups.”




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Will Joe Biden Be a Dictator?

This might look like a ridiculous question to ask about a soft-looking near-octogenarian who signals his virtue by repeating the inclusiveness mantra. But not so much if you define “dictator” as a political ruler who imposes on the whole population some shared preferences of the minority who brought him or keeps him in power. A more inclusive definition would replace “minority” by “majority short of unanimity.”

Biden was elected by 51% of the American voters. If, to be inclusive indeed, we include the third of the electorate (that is, of Americans eligible to vote) who did not vote, Mr. Biden’s support shrinks to 34% (51% × 66%). Now, consider that many who voted for him probably did so only or mainly because they thought that his adversary, Donald Trump, was even worse—not an unrealistic hypothesis. If Biden imposes the preferences of 17% of the electorate to 83%, or even of 34% on 66%, he will be a dictator. (Note that my definition of the term is not very different from the one in Kenneth Arrow’s famous Impossibility Theorem.)

An interesting article that bears on this topic is John G. Grove’s “Numerical Democracy or Constitutional Reality,” Law & Liberty (our sister website), November 12, 2020. Grove argues that the United States is a limited, compound republic, not a numerical democracy, and that the whole check and balance structure is meant to prevent a numerical majority from bulldozing the preferences of the rest. In this perspective, each side has a right to have its preferences incorporated in the winner’s legislation and an adverse electoral result is not, for the losers, a catastrophe to be corrected at any cost.

By the very nature of government, however, it is not easy to prevent winner-win-all results: a law is enforced against everybody, especially against individuals who did not agree with it. It seems that, on the basis of an individualist philosophy, only a near-universal consensus could justify radical change.

One disturbing implication is the following. Grove’s idea is a two-edged sword. When we start from several decades of a collectivist legislative and regulatory drift that has trammeled the minority of individuals who want to be largely left alone, even a new numerical majority may not and could not rapidly change course. Ronald Reagan, with his many good ideas (and a number of bad ones) did not bring much change and perhaps no lasting change. But for the same reason, thank God, Trump was not able to do more damage than he did.

James Buchanan, the Nobel economist, understood the conundrum: How can one reverse dictatorship without being a dictator himself? The solution, Buchanan argues with Geoffrey Brennan in their book The Reason of Rules: Constitutional Political Economy (Liberty Fund, 2000[1985]), is a “constitutional revolution.” That is, we—“we” classical liberals and libertarians—need to promote radical change to which our fellow citizens can unanimously consent, at least in theory. This pedagogical and abstract task is not an easy one.


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The Theory and Practice of Oligarchical Collectivism Book Club, Part 5

Today our Book Club continues with Chapter 3, “War Is Peace.” Please leave your thoughts and questions in the comments and I’ll do an omnibus reply later this week.

All of the disputed territories contain valuable minerals, and some of them yield important vegetable products such as rubber which in colder climates it is necessary to synthesize by comparatively expensive methods. But above all they contain a bottomless reserve of cheap labour. Whichever power controls equatorial Africa, or the countries of the Middle East, or Southern India, or the Indonesian Archipelago, disposes also of the bodies of scores or hundreds of millions of ill-paid and hard-working coolies.

Ill-paid and hard-working, but with little human or physical capital.

Moreover, the labour of the exploited peoples round the Equator is not really necessary to the world’s economy. They add nothing to the wealth of the world, since whatever they produce is used for purposes of war, and the object of waging a war is always to be in a better position in which to wage another war. By their labour the slave populations allow the tempo of continuous warfare to be speeded up. But if they did not exist, the structure of world society, and the process by which it maintains itself, would not be essentially different.

A thoughtful concession, though even the “tempo” claim is debatable.  Counting transportation costs, do these desperate workers even produce more than they cost to manage?

The primary aim of modern warfare (in accordance with the principles of doublethink, this aim is simultaneously recognized and not recognized by the directing brains of the Inner Party) is to use up the products of the machine without raising the general standard of living. Ever since the end of the nineteenth century, the problem of what to do with the surplus of consumption goods has been latent in industrial society.

Orwell seems unaware of the textbook answer.  What is to be done with surplus consumption goods?  Cut their prices until people buy all you create!  What if you can’t make a profit at these reduced prices?  Then cut input costs or produce something in greater demand.  What if even that doesn’t work?  Then print more money.

In the early twentieth century, the vision of a future society unbelievably rich, leisured, orderly, and efficient — a glittering antiseptic world of glass and steel and snow-white concrete — was part of the consciousness of nearly every literate person. Science and technology were developing at a prodigious speed, and it seemed natural to assume that they would go on developing. This failed to happen…

This is a good time to take a break from being depressed by Orwell’s dystopia and acknowledge that in the real world, this “vision of a future society” is our present.  Or at least it was back in 2019.

From the moment when the machine first made its appearance it was clear to all thinking people that the need for human drudgery, and therefore to a great extent for human inequality, had disappeared.

Hardly.  The case for economic inequality in the machine age remains as strong as ever.  We need incentives for work, skill acquisition, and innovation.  And incentives aside, the repression required to greatly reduce such inequality is terrifying.  See “Harrison Bergeron” or the Khmer Rouge.

If the machine were used deliberately for that end, hunger, overwork, dirt, illiteracy, and disease could be eliminated within a few generations. And in fact, without being used for any such purpose, but by a sort of automatic process — by producing wealth which it was sometimes impossible not to distribute — the machine did raise the living standards of the average human being very greatly over a period of about fifty years at the end of the nineteenth and the beginning of the twentieth centuries.

A shocking concession for a socialist like Orwell.  And note that the “automatic process” to which he refers practically has to be the free-market mechanism, which “distributes wealth” by driving down the prices of abundant products.  Walmart is only the latest incarnation.

But it was also clear that an all-round increase in wealth threatened the destruction — indeed, in some sense was the destruction — of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motor-car or even an aeroplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction.

Orwell seems oblivious to the “rat race.”  Once everyone has enough to eat, having enough to eat confers no distinction.  But what you eat still does.  We can’t show off by eating big bags of rice, but we can show off by eating in fancy restaurants.  Distinctions have ye always.

It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste.

It is also possible to imagine a society in which the necessities of life are evenly distributed, but luxuries are not.  Nowadays, that’s basically every rich country.

But in practice such a society could not long remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance.

Silly.  The mere possession of ample luxuries rarely leads anyone to “think for themselves.”  Humans don’t need poverty to “stupefy” them, because apathy and superficiality are deeply rooted in human nature.  And if humans thought for themselves competently, they would realize that the “privileged minority” serves the vital functions of (a) providing skilled labor and (b) innovating.

Nor was it a satisfactory solution to keep the masses in poverty by restricting the output of goods… The problem was how to keep the wheels of industry turning without increasing the real wealth of the world. Goods must be produced, but they must not be distributed. And in practice the only way of achieving this was by continuous warfare.

The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent.

This ridiculous story brings a much more plausible one into focus.  Namely: War serves the function of maintaining fanatical social cohesion.  Stalin really did keep the Soviet people in constant fear of foreign invasion.  And his motive was clear: Paranoid fear of outsiders rationalizes domestic oppression.  “No one wants this suffering, least of all Comrade Stalin.  Sadly, our foreign enemies have forced these drastic measures upon us.  And anyone who questions these measures is an obvious lackey of our enemies.”

It is deliberate policy to keep even the favoured groups somewhere near the brink of hardship, because a general state of scarcity increases the importance of small privileges and thus magnifies the distinction between one group and another. By the standards of the early twentieth century, even a member of the Inner Party lives an austere, laborious kind of life. Nevertheless, the few luxuries that he does enjoy his large, well-appointed flat, the better texture of his clothes, the better quality of his food and drink and tobacco, his two or three servants, his private motor-car or helicopter — set him in a different world from a member of the Outer Party, and the members of the Outer Party have a similar advantage in comparison with the submerged masses whom we call ‘the proles’. The social atmosphere is that of a besieged city, where the possession of a lump of horseflesh makes the difference between wealth and poverty.

If even the elite lives poorly, what’s the motive behind all the cruelty?  Power-hunger, power-hunger, and more power-hunger.

And at the same time the consciousness of being at war, and therefore in danger, makes the handing-over of all power to a small caste seem the natural, unavoidable condition of survival.

Quite sensible.  There’s no need to appeal to silly stories about personal comfort somehow leading to critical thought.

War, it will be seen, accomplishes the necessary destruction, but accomplishes it in a psychologically acceptable way… What is concerned here is not the morale of masses, whose attitude is unimportant so long as they are kept steadily at work, but the morale of the Party itself. Even the humblest Party member is expected to be competent, industrious, and even intelligent within narrow limits, but it is also necessary that he should be a credulous and ignorant fanatic whose prevailing moods are fear, hatred, adulation, and orgiastic triumph. In other words it is necessary that he should have the mentality appropriate to a state of war.

Quite right.  Notice, moreover, that this mechanism can easily function without a diabolical mastermind at the helm.  Just say: Power-hungry leaders naturally tend to make enemies with other power-hungry leaders.  And once conflict erupts, power-hungry leaders don’t have to be geniuses to realize that conflict helps reinforce their power by promoting fanatical social cohesion.

It does not matter whether the war is actually happening, and, since no decisive victory is possible, it does not matter whether the war is going well or badly. All that is needed is that a state of war should exist.

In the twentieth year of the War on Terror, this sounds strangely familiar.  When you’re in the business of amassing power, numeracy is very bad for business.


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The seen and the unseen

Here is someone arguing against loosening regulations to allow more home building, unless supported by the neighborhood in question:

I would only support upzoning in order to create affordable housing if the zoning changes were supported by the community that they would affect. Currently, our land use process provides inadequate opportunity for substantive community input. I oppose upzoning our City’s historic districts. We can address our city’s affordable housing needs without changing the character of our City’s neighborhoods.

Here’s another example:

Did you know that an advisory panel in San José has recommended the elimination of single-family home zoning on neighborhood streets away from major boulevards and transit? This betrayal of the families in those neighborhoods contravenes the Envision San José 2040 General Plan that was adopted after much civic input. This so-called “Opportunity Housing” concept also contravenes common sense. . . .

[It] is a recipe for neighborhood strife around parking, noise, and privacy. It also goes against the city’s pledge to protect the character of often-historic blocks not on major boulevards or adjacent to transit. Such a move would nuke the neighborhoods that give San José charm, character, and breathing room.

The first statement was made by Maya Wiley, a progressive running for mayor of New York.  The second comes from the Santa Clara California Republican Party.

We are frequently told that America is polarized between liberals and conservatives, and there is clearly some truth in that claim.  But perhaps we are missing an even bigger polarization, between those who focus on the seen and those who focus on the unseen.  (BTW, the title of this post comes from Frederic Bastiat’s brilliant essay on opportunity cost.)

Proponents of NIMBYism on both the left and the right are opposed by those who focus on the unseen effects of zoning restrictions, that is, all the anonymous people who will never be able to live in areas with lots of great jobs because the local residents refuse to allow new construction.

There are many proponents of protectionism in both political parties.  They focus on the easily seen impact of imported goods, which is a loss of jobs in import competing industries.  They are opposed by people on both sides of the ideological spectrum who  focus on the unseen effects of protectionism, such as a loss of jobs in export industries.

A few years ago, a bipartisan group of Congressmen successfully repealed the “Cadillac tax” on health insurance, which aimed to gradually phase out the heavy subsidy that the federal government currently provides to health expenditures made through company insurance plans.  They focused on the easily seen consequences on worker paychecks and health care jobs.  They were opposed by people on both sides of the ideological spectrum, who worried that the subsidy to health insurance causes costs to explode, thus reducing real wages for future generations.

People on both sides of the ideological spectrum often favor fiscal stimulus.  Other people on both sides of the ideological spectrum worry about its unseen effects, such as crowding out.

People on both sides of the political spectrum worry that immigration will reduce wages.  Others on both sides of the political spectrum think about future generations of people who are not now but will become American, and who will be better off because they were allowed to immigrate to America in the 2020s.

People on both sides of the political spectrum favor government deposit insurance to protect savers when a bank fails.  Other people (including FDR) worried about the less visible moral hazard thereby created, the tendency of insured banks to make riskier loans than uninsured banks.

People on both sides of the political spectrum have advocated that universities fire people who make offensive statements about Israel, or about minority groups.  Others worry about the chilling effects of moving away from a tradition of free speech.

Yes, in America we have the Democrats and the Republicans.  But perhaps at a deeper level the actual split is between the party of the seen and the party of the unseen.


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Ezra Klein on California Housing Restrictions

In much of San Francisco, you can’t walk 20 feet without seeing a multicolored sign declaring that Black lives matter, kindness is everything and no human being is illegal. Those signs sit in yards zoned for single families, in communities that organize against efforts to add the new homes that would bring those values closer to reality. Poorer families — disproportionately nonwhite and immigrant — are pushed into long commutes, overcrowded housing and homelessness. Those inequalities have turned deadly during the pandemic.

This is from Ezra Klein, “California Is Making Liberals Squirm,” New York Times, February 11, 2021.

I like large parts of this Klein article, which is unusual for me. One thing I’m seeing is that there seems to be an alliance among libertarians, liberals like Ezra, and a few others to reduce government restrictions on housing. Last month I finished a review of Conor Dougherty’s excellent book Golden Gates: Fighting for Housing in America. It will come out next month in the Spring edition of Regulation. Dougherty delves nicely into some of the somewhat hopeful signs for housing in America.

I don’t endorse everything Klein says in the op/ed, especially on the Central Valley’s middle-speed rail, euphemistically called high-speed rail. But there’s a lot of good stuff in the piece.

By the way, in Pacific Grove, where I live, you can walk 20 feet without seeing the sign he sees, but it’s hard to walk 200 feet without seeing such a sign.

HT2 Glenn Reynolds.



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Vaccine Adventures

Following up on information that Covid-19 vaccines were available there, I walked into the small Maine pharmacy. I saw nobody inside, not even at the cash register. I continued to the back of the store: nobody manned the two counters of the pharmacist’s hideout. I stood in front of one. After just a few minutes, an employee appeared on the other side.

“Could I see the pharmacist?” I asked.

The pharmacist came.

“I have been told that you have Covid vaccines,” I said.

“We have a waiting list,” she replied.

I asked to be put on it but she would not, or could not, tell me when they were likely to phone me for an appointment. I recognized something like the Canadian health system, under which I lived for decades.

“Is it a matter of days, weeks, months, or years,” I asked.

“Days. At least.”

That looked good, except for the “at least.” In some of the on-line and mortar-and-brick places, there is not even a queue you can get at the back of.

At this stage, the actual vaccines don’t seem to be the problem. In the United States, the manufacturers have delivered twice as many vaccines as have been administered. According to the Wall Street Journal (Jared S. Hopkins and Arian Camp-Flores, “Demand for Covid-19 Vaccines Overwhelms State Health Providers,” February 8, 2021),

[a]lthough state officials often cite limited vaccine supply, manufacturers are producing largely on schedule. Pfizer Inc. and Moderna Inc. since December have supplied about 60 million doses, nearly one-third of the 200 million the companies together must deliver by the end of March.

State governments are supposed to distribute the vaccines that the federal government, after literally monopolizing the market, makes available to them. The length of the queues varies from place to place, perhaps depending partly on the success of whatever entrepreneurship can creep into what is basically a socialized distribution system. One Missouri hospital has a waiting list of 100,000 names and no vaccine left. Queues are not an efficient way to ration demand.

In the former Soviet Union, the government always had an excuse for shortages. The real problem was different: no private property, no market prices to signal scarcities, and no free entrepreneurship to respond to the signals.

In America, once the federal government has purchased them, the Covid vaccines are priced at zero, which implies that government allocation is required. At a zero price, demand is much larger than the quantity that bureaucrats can supply. The fee governments pay providers (hospitals, pharmacies, and such) for administering the vaccines may not be higher than the latter’s cost. For example, Medicare pays about $40 for administering the two doses of the currently available vaccines. In a flash of economic realism, Joe Biden has expressed some concern that this fee may not be sufficient.

It is no consolation that all governments in the “free” world have adopted similar policies. No “American exceptionalism” here.

For Soviet agricultural production, the weather was often the excuse. For Covid vaccines, we are told that “the supply chain” and logistics are the problem. The Wall Street Journal‘s Jennifer Smith reported (“Mass Vaccination Sites Will Mean Scaling Up Logistics Coordination,” January 30, 2021):

Other local health departments might need information technology help to cope with overwhelmed appointment systems, or assistance with planning and sourcing the labor, supplies and procedures needed to administer hundreds of shots a day. “People underestimate that this is a massive logistics operation,” Dr. Wen said. “That type of expertise is often missing in state and local public health.”

But except for governments—that is, political and bureaucratic processes—that should not be an unsurmountable logistics problem. Private businesses without central coordination produce and deliver the food, in innumerable configurations, for the daily meals of 320 million Americans. Recall the Russian official who, shortly after the collapse of the Soviet Union, asked British economist Paul Seabright, “Who is in charge of the supply of bread to the population of London?”

In 2020, Amazon shipped 4.5 billion packages to American consumers—more than 12 million per day. The UPS hub in Louisville, Kentucky has a five-million-square-foot facility for sorting and treating more than 400,000 packages or documents per day. The hub sees 387 inbound or outbound flights daily from the company’s fleet of nearly 600 aircraft. What is more impressive is to think of the millions of individuals around the country and around the world who work in long and diverse supply chains to provide the equipment and inputs necessary for UPS’s operations. We are reminded of Leonard Read 1958 essay I, Pencil, which explains how the manufacture of a simple pencil requires the voluntary cooperation of a multitude of individuals producing, without a mastermind, the zinc, the copper, the graphite, and the equipment to make pencils out of that, and all the equipment for producing that equipment, and so on.

Although working under no central direction, these innumerable people who contribute to the production of pencils or UPS’s equipment and supplies are coordinated by markets (supply and demand) and the prices that signal what is needed where.

Compare this to the federal government’s “centralized system to order, distribute, and track COVID-19 vaccines” in which “all vaccines will be ordered through the CDC” (see the description by Anthony Fauci’s shop: COVID-19 Vaccine Questions and Answers, accessed February 10, 2021), the price for the final consumer is zero, and providers are paid fees determined by bureaucrats. No wonder the distribution runs into problems. The contrary would be surprising.

Note that the vaccine could still be free for the final customer if the federal government had simply subsidized consumers for their vaccine purchases (with vouchers, for example) and had let markets, entrepreneurship, competition, and prices distribute the stuff. And it wouldn’t take ages, luck, and some humility to put one’s hands on the thing—or one’s arm under the syringe.

The consumer who wants a vaccine gets a small taste of what French philosopher Raymond Ruyer, in his 1969 book Éloge de la société de consommation (In Praise of the Consumer Society), described as the difference between a market economy, where the consumer is sovereign, and a planned economy, where the producer runs the show (under government’s control):

In a market economy, demand gives orders and supply is supplicant . . . In a planned economy, supply give orders and demand is supplicant.

« Dans l’économie de marché, la demande est impérieuse, et l’offre suppliante (the supply is supplying). Dans l’économie planifiée, l’offre est impérieuse, et la demande suppliante. »


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The Theory and Practice of Oligarchical Collectivism Book Club Commentary, Part 4

We’ve now moved on to “War Is Peace.”  Here are my thoughts on your latest comments.


I know you were speaking to the specific Huxley quote, but on the whole I wouldn’t dismiss “Brave New World” so quickly.  Americans have willingly ceded a great deal of their freedom to the government in recent decades…

I agree that Americans ceded a great deal of freedom to the government over the last century.  I don’t see that there’s been a net loss of freedom in American policy from 1980 or 1990 to the present.

and most people under 30 today seem fairly content to live in a numbed state of consciousness through social media, pornography, calorie-dense foods, video games and recreational drugs.  This is compatible with freedom in the “do what you will in the moment” sense of the word, but I don’t think it bodes well for the future of more essential freedoms to the elevation of human character.

Anti-intellectual apathy is the norm in all human societies.  Perhaps things are marginally worse than normal for under-30s nowadays, but I haven’t seen any compelling evidence of this.  What is a non-question-begging measure?

Freedom of thought, speech, association, and religion all seem to be under grave threat so long as the public endures in a state of numbed stupor occasionally punctuated by reactive frustration and outrage.

“Grave threat” seems like hyperbole.  Marginal threat?  Perhaps, though again it’s not clear that things were ever noticeably better.

Henri Hein:

China in the first few decades after the Socialist take-over fits your bill pretty closely. It is the 4th largest country in the world, with population centers such as Chongqing, Wuhan and Beijing isolated by distance and geography. It was surrounded by other failed socialist experiments, or other dysfunctional countries: Soviet Union, North Korea, Afghanistan, Nepal, Laos, Vietnam. Only India was a somewhat functioning country, but you had to cross the largest mountain range in the world to get there, and would probably be shot at if you made it that far. Hong Kong was close, but it had a tiny border and was closely guarded. The rulers told the populace they were living in a Socialist paradise, and the people wanted to believe them. Yet despite this almost perfect setup for Mao, millions of Chinese found their way to Thailand, Malaysia, Singapore, Hong Kong, North America, Indonesia and the Philippines. Millions and millions.

Do you have any source for these numbers?  Nothing readily googles, and they seem far too high.  In any case, “millions and millions of emigrants” out of hundreds of millions spread over a quarter-century of starvation and tyranny hardly sounds like a serious check on tyranny, does it?

Joe Denver:

This seems a bit strange for Orwell. Perhaps I’m misunderstanding him, but even as a socialist, it seems strange to strongly advocate against tyrannical Stalinism, yet also have so much faith that it works.

Compare this with liberals (libertarians), who, if anything, are far too quick to predict the downfall of authoritarian institutions. Likely because they have no faith that these institutions work.

Orwell thought that the Soviet system “worked” in the sense of maintaining an iron grip on power.  And he had excellent reasons to think so; he saw Stalin hold power under extraordinarily dire conditions, mostly of his own making.  Orwell’s mistake was thinking that the Soviet system would be good at perpetuating itself after the fanatical revolutionary generation died off.


While TPOC-Orwell is certainly prescient and insightful in some ways here, you give him too much credit as a strategist and war planer…

A two-bloc world is more seems more stable here. Why didn’t 1984-Orwell go for it? One foe should be enough now.

Hard to say.  Perhaps given his experience with British colonialism, Orwell was skeptical that two European powers could permanently maintain control over Asia.  Dramatically, of course, he wanted to have three powers so he could ridicule the Molotov-Ribbentrop Pact via the famous scene where Oceania switches enemies in the middle of Hate Week.

However, the point is moot, since, second, there are nukes in 1984. An even bigger arms race seems inevitable, and sooner or later one bloc will gain the upper hand (or is feared by the others to do so). Result in that world is the same: All-out war.

Aren’t nukes precisely what makes Orwell’s stalemate plausible?  Nuclear weapons are the standard explanation for why the Cold War stayed cold for the major powers, no?

Brian Kennedy:

I don’t think two bloc worlds are more stable, and I *sorta* think that the International Relations/Historian Academics (I am neither) think so as well.  Rome/Carthage, the Central Powers/Allies, Axis/Allies, etc.   In a two power dynamic, everything is zero sum, so if you have the advantage, press it.  Which makes a war to determine everything inevitable.

“Inevitable” is way too strong.  But it’s believable that two-bloc worlds are more likely to lead to total war than three-bloc worlds.

In a three bloc dynamic, it is not so simple.  Yes, two powers could gang up and totally defeat the third power, but then you are in the two bloc dynamic, do you want to enter that if you are the weaker of the two victories powers?  No. So you switch sides.

Plausible for most of history.  It wouldn’t have made much sense for the British to team up with the Soviets against the Americans after World War II, though.

If the Cuban Missile crises had triggered WW-III, later historians would have said it was just the event that triggered the inevitable war, just as they now say that the assassination of Archduke Ferdinand triggered WW-I.   Europe had gone through multiple crises pre WW-I, which eventually triggered a war.

Hindsight bias is mighty, yes.

So too the Cold War, though after the Cuban Missile Crises, those crises tended more towards Kabuki Theatre.  Because nukes, I would posit.


Donald Fagan:

“If you’re still not convinced, noticed how easily the European powers surrendered their entire empires after World War II.  Since they never really “needed” their colonies, they swiftly let them go with minimal domestic side effects when imperial fervor waned.”

I think you’re way off here. The European colonial powers were exhausted financially after the war and no longer had the juice to maintain empire in the new world of the superpowers.

This is a fine explanation for why the Netherlands gave up the Dutch East Indies; they lost control during World War II and lacked the resources to reestablish control in time.  But “financial exhaustion” really doesn’t explain the British or French collapse.  With the possible exception of British India, their mighty economies largely recovered before the independence movements gained the upper hand.  And again, if the colonies were actually profitable for the colonial powers, letting them go would have made their long-run financial outlook worse, not better.

How do you explain attempted British intervention in the Suez in 1957, and the diplomatic (as well as national) humiliation their failed efforts earned them?

I’d call it a last gasp of nationalistic pride.  The loss was humiliating, but not impoverishing.

David Henderson:

Here’s one of my favorite quotes from the late Jonathan Kwitny’s book Endless Enemies:

The excuse for intervention [by the U.S. government], of course, is the notion that if we don’t fight, Moscow will win by default. Yet as one travels the globe, from Indochina to Cuba to Angola, one finds that the Third World countries where the Soviets are alleged to have the strongest influence are precisely those countries where we have fought. Meanwhile, in countries that weren’t militarily threatened by the United States, where Soviet influence has had a chance to flunk on its own merits, it has. In Egypt, in Ghana, in Algeria, in Somalia, in Nigeria, in Indonesia—except in occupied countries along the Soviets’ own border, the Russians have been kicked out.

I’m tempted to agree, but it’s complicated.  Maybe the U.S. was more likely to fight in arenas where the Soviets were more determined to win a lasting victory.  The Soviets were “kicked out” of the countries where they were dabbling all along.  Until 1989, what explicit Marxist-Leninist dictatorship ever lost rule of a country after securely gaining it?  The closest example is Cambodia under the Khmer Rouge, where one Marxist-Leninist dictatorship lost power to another.

Henri Hein:

For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves;

War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent.

Continuing my efforts from previous posts, this time I am just going to list some geniuses that were produced by poor parents:

Michael Faraday
Srinivas Ramanujan
Alfred Nobel
Marshall Mathers
Alexander Hamilton
Abraham Lincoln

You’re getting a little ahead in the reading, but you make a useful point.  I’m going to focus on the fact that riches fail to intellectualize most people, but it’s also worth pointing out that poverty often fails to “stupefy.”


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