Monthly Archives: October 2015

Capitalism and Freedom Part Four – Friedman

Friedman, Capitalism and Freedom

Friedman, Capitalism and Freedom

Part three of this blast from the past looked at The Role of Government In a Free Society. In that chapter, Friedman argues that small government is conducive to individual freedoms. The more the government looks after people–even with seemingly benign programs such as retirement pension plans–the less freedom a people have. Remember that the Canada Pension Plan (CPP) isn’t free (except perhaps for the first generation of recipients). The contributions come out of your and your employer’s pockets. If there was no CPP, you would have been able to spend your money as you saw fit.

Incidentally, the last company I worked for had a defined benefit plan. They gave the employees the option to opt out of the plan; employees who opted out would have the deduction for the pension plan removed from their paycheques. That is to say, they would receive a larger paycheque. I opted out and invested the money in investments of my own free choosing. Expanding CPP (that is all the talk these days) is fine. But why not make it so people can also opt out of it? That way, those without investment knowledge would be covered and those wishing to manage their own retirement portfolios would be able to do so.

While a fan of small government, Friedman believes that government does some things better than the private sector. First, government is a rule maker and umpire. Second, government coins and regulates the value of money. With this, we turn to chapter three: The Control of Money.

Friedman on The Control of Money

Our task in this and the following chapter is to steer a course between two views, neither of which is acceptable though both have their attractions. The Scylla is the belief that a purely automatic gold standard is both feasible and desirable and would resolve all the problems of fostering economic co-operation among individuals and nations in a stable environment. The Charybdis is the belief that the need to adapt to unforeseen circumstances requires the assignment of wide discretionary powers to a group of technicians, gathered together in an ‘independent’ central bank, or in some bureaucratic body. Neither has proved a satisfactory solution in the past; and neither is likely to in the future.

The gold standard is undesirable because the amount of money in a society would be dependent on the ability of that society to extract, refine, and produce gold. Friedman doesn’t mention this, but this brings to mind ancient Athens. Why was Athens able to attain hitherto undreamt levels in literature, art, science, and philosophy? Was it because of their democracy? Maybe. But it was more likely because they had unlimited money in the form of the silver mines of Laurium: 20,000 slaves toiled there daily in the 5th century. So, a gold or a silver standard can positively or negatively affect a state, depending on its mineral wealth.

The central bank is undesirable because, in attempting to resolve crises, it often makes the problem worse. Friedman blames the Federal Reserve System for exacerbating the Great Depression.

I find these shoulda woulda arguments on the Great Depression only half convincing. Arguing that ‘this made things worse’ or ‘this made things better’ is at best a thought experiment. To do a controlled experiment in economics, you’d need to set up an alternate-earth to see the actual effects of differences in policy. The failure of shoulda woulda arguments is that they are not tested against their unintended consequences. I much prefer economists to make projections into the future based on their models and hypotheses. While it would be hard to determine whether their forecasts are right because they were right (they can nail the prediction and still be dead wrong), at least they have to face up to the unintended consequences of their policies. This seems more honest than the ‘I told you so’.

Friedman On the Dispersal of Power

A liberal is fundamentally fearful of concentrated power. His objective is to preserve the maximum degree of freedom for each individual separately that is compatible with one man’s freedom not interfering with other men’s freedom. He believes that this objective requires power to be dispersed.

While Friedman is talking about the dangers of concentrating the power of regulating money in the government, the need to disperse power got me thinking about the amalgamation of municipalities.

Victoria, or Greater Victoria, is composed of many separate municipalities: Saanich, Esquimalt, Langford, Sooke, and so on. There has been talk for many years about amalgamating the municipalities. There would be significant cost savings to streamlining everything: fire, police, garbage, landscaping, and so on, especially for the smaller municipalities such as View Royal, which has a population under 10,000. There would also be benefits to businesses. Building inspectors from each of the municipalities all follow the BC Building Code, but they interpret the clauses differently. Amalgamating the municipalities would mean a construction company would know what to expect no matter where the construction site was located.

I’m a fan of amalgamating the municipalities. So much waste in having little dukedoms spread over the place, duplicating services. I guess here I disagree with Friedman: I favour efficiency over freedom.

Friedman On Inflation

In the present state of our knowledge, it seems to me desirable to state the rule in terms of the behaviour of the stock of money. My choice at the moment would be a legislated rule instruction the monetary authority to achieve a specified rate of growth in the stock of money. For this purpose, I would define the stock of money as including currency outside commercial banks plus all deposits of commercial banks. I would specify that the Reserve System shall see to it that the total stock of money so defined rises month by month, and indeed, so far as possible, day by day, at an annual rat of X per cent, where X is some number between 3 and 5. The precise definition of money adopted, or the precise rate of growth chosen, makes far less difference than the definite choice of  particular definition and a particular rate of growth.

By ‘growth in the stock of money’ I take it that Friedman means ‘inflation’. How times have changed since he wrote those words in the early 1960s! Today the bogeyman is deflation and we are lucky to achieve a 2% rate of inflation. From 1984-2015, core inflation has averaged 2.22% As of October 2015, core inflation is at 2.1% and dropping. No wonder the 1960s were a decade of change: at 5% growth, every 20 years, the society is 100% changed (5% * 20 years = 100% change). People speak of ‘change’ today. But at 2% growth and under, how much change can you have? Countries like India and China, which are growing at >7%: now there’s possibility for change (and revolution if you’re not careful).

In the quote on inflation, I take it that Friedman wants the mandate of the Federal Reserve to be limited to maintaining inflation rather than full employment. Today, the Federal Reserve (and also the Bank of Canada) has a dual mandate: target inflation and full employment. I’m not sure about this, but the argument seems to be that if monetary conditions are stable, let private enterprise figure the employment part out. That sounds reasonable to me.

The thing I don’t quite get is why a 3-5% rate of inflation was targeted in the 1960s and why a 2% rate of inflation is desirable today. Why do we need inflation at all? Is inflation and growth the same thing?–i.e. if the GDP rises 3%, does inflation also rise 3%? I don’t think so. Is inflation built into the system to prevent people from hoarding money (because it eats away at non-invested savings)? Or?

Until next time, I’m Edwin Wong and, believe it or not, Doing Melpomene’s Work, like economics, is a study of how people behave in a dog eat dog world where resources are limited.

 

Capitalism and Freedom Part Three – Friedman

Part two of this blast from the past looked at The Relation Between Economic Freedom and Political Freedom. There seems to have been some consensus in the 50s that economic and political freedom were separate items: Friedman argues that they are one and the same. In part three, we turn to chapter two: The Role of Government In a Free Society.

Friedman On Government as Rule Maker and Umpire

Nothing new here. These are the legislative and judicial branches of government. Government defines society. Government provides a level playing field for free enterprise. By maintaining personal freedoms (freedom to relocate to a different county or state, freedom to change careers, freedom to shop around, etc.,), free enterprise can function. But there is the thorny problem that to preserve one person’s freedom is to take away another person’s freedom. To demonstrate the point, Friedman has a memorable quote from a Supreme Court Justice: ‘My freedom to move my fist must be limited by the proximity of your chin’.

Friedman On the Necessity of Government

The need for government in these respects [i.e. to modify, mediate, and enforce rules] arises because absolute freedom is impossible. However attractive anarchy may be as a philosophy, it is not feasible in a world of imperfect men.

So anarchy would be feasible in heaven? It was surprising to see this admission by Friedman. He is full of surprises.

Private Monopoly, Public Monopoly, or Public Regulation?

Here’s a question that’s still hot today. Friedman talks about monopolies or regulation regarding the issues of his day: phones, railways, and letter delivery. Technical (phones) or infrastructure (railways) or competitive (letter delivery) factors in the decades leading up to the 1960 had made it so that telecommunications, railways, and the postal service had single providers. The question was whether they should be in the hands of a private monopoly, a public monopoly, and how they should be regulated. Today the question applies to things like BC Ferries, medical marijuana, the internet, the pharmaceutical industry, and so on. The industries are different but the question still relevant.

Here’s what Friedman says:

When technical conditions make a monopoly the natural outcome of competitive market forces, there are only three alternatives that seem available: private monopoly, public monopoly, or public regulation. All three are bad so we must choose among evils. Henry Simons, observing public regulation of monopoly in the United States, found the results so distasteful that he concluded public monopoly would be a lesser evil. Walter Eucken, a noted German liberal, observing public monopoly in German railroads, found the results so distasteful that he concluded public regulation would be  lesser evil. Having learned from both, I reluctantly conclude that, if tolerable, private monopoly may be the least of evils.

Interestingly, since the 1960s, telecommunications, railways, and letters delivery are no longer monopolies. Still publicly regulated though. All three industries seem to be in good shape, at least from the viewpoint of the consumer. Maybe public regulation is the least of evils?

Friedman’s Predictions On the Future

The historical reason why we have a post office monopoly is because the Pony Express did such a good job of carrying the mail across the continent that, when the government introduced transcontinental service, it couldn’t compete effectively and lost money. The result was a law making it illegal for anybody else to carry the mail. That is why the Adams Express Company is an investment trust today instead of an operating company. I conjecture that if entry into the mail-carrying business were open to all, there would be a large number of firms entering it and this archaic industry would become revolutionized in short order.

DHL, Loomis, UPS, Fedex: it’s happened. And the industry has been revolutionized. Parcels from China or Great Britain arrive on the doorstep (Victoria, BC), in some cases, in less than a week. Crazy. In fact, the competition has become so efficient that Canada Post pays the likes of UPS and Fedex to move their mail around: it’s only on the last leg where the postie comes to the door that Canada Post ‘delivers’.

Top 14 Things the Government Does To Irk Friedman

1 Parity price support programs for agriculture [still around today, i.e. dairy industry]

2 Tariffs on imports or restrictions on exports, such as oil import quotas, sugar quotas [less today with NAFTA and other free trade deals]

3 Government control of output, such as through the farm program, or through prorationing of oil as is done by the Texas Railroad Commission [the Texas Railroad Commission was the OPEC before OPEC (setting prices on oil) and the farm program gave money to farmers for not growing crops: seems to be less government control of output today than in the 1960s, though I am not sure on this one]

4 Rent control [still around and on the rise in the form of low income housing]

5 Legal minimum wage rates [here to stay and more and more of a contentious issue, i.e. ‘minimum living wages’]

6 Detailed regulation of industries, such as regulation of transportation or banking [on the rise after the Great Recession. If the banks have a problem, fix it with regulation!]

7 Control of radio and television by FCC [no problem, we have internet these days]

8 Present social security programs, especially old age and retirement programs [these programs are getting bigger and bigger, pretty soon CPP will be bigger than the Canadian economy!–then what?]

9 Licensure provisions in various cities [Uber vs taxi licences]

10 So-called ‘public housing’ [You know this one doubly irks Friedman because he uses ‘so-called’ and surrounds ‘public housing’ with quotations as well!]

11 Conscription in peacetime [Friedman won over some unexpected allies with this one back in the day]

12 National parks [Friedman is referring to BIG places like Grand Canyon and Yellowstone]

13 Legal prohibition to carry mail for profit [No longer!]

14 Publicly owned and operated toll roads [Trend is toward P3 projects that are a mix of private and public funds with a private operator leasing out assets for 100 years. In fact, a Canadian company, Brookfield Asset Management, is a world leader in maintaining and managing infrastructure (roads, bridges, etc.,) the world over]

Until next time, I’m Edwin Wong, and, while Doing Melpomene’s Work isn’t a monopoly, it seems like I’m the only one doing it!

Here: A Captive Odyssey (William Head Prison Theatre)

A play performed in an actual prison by inmates? Who could pass up a chance like this? Not me and FG, who drove the 40 minute drive down the windy road to William Head Institution, a minimum security jail overlooking the Strait of Juan de Fuca. Performing since 1981, this year, and for the last three years, they’ve been writing their own plays. Here: A Captive Odyssey is the product of an intensive 6 month writing/production effort by the William Head on Stage Theatre Society (WHoS). As they said after the show in the Q&A: ‘every day a new script’. Warning: spoilers dead ahead!

Here: A Captive Odyssey Synopsis

HERE: A Captive Odyssey is a tale that is spun from archival research and oral stories of William Head, with inspiration from the book Quarantined by Peter Johnson.  Two inmate friends are finishing their final years of their sentences at William Head and find themselves on a time-travel odyssey back into the history of William Head, complete with shipwrecks and sea monsters. Through drama, movement, shadow puppetry and live music, audiences will experience a haunting time-travel vortex that whirls through centuries of both First Nations and settler occupation.  Before it was a prison, William Head was home to First Nations fishing grounds, a Scottish pioneer’s sheep farm, small pox quarantine centre, hospitals, dormitories, fumigation rooms and schoolrooms.  This land has many intriguing and surprising tales.

Admission

You can’t bring anything in with you. Wallets, cell phones, gum packages, and purses all have to be left in the car. Each couple is allowed one set of keys (to get back in the car). All that you can bring in is your ID. The jail itself is right along the water. Picturesque. At the parking lot is a tower overlooking the water, a double set of chain link fences, and a guard station. They check your ID and you sign in with the name and time. The security guard give male visitors an invisible stamp that shows up under a special light. It’s an all male facility.

From there, two six man vans shuttle visitors to the gym, which is a minute or two down the road. The drivers are excited to host the event and are happy to tell stories about the prison. The last escape they had was a couple of years ago when a prisoner floated away in a coffin. Too bad the drive wasn’t long enough to learn more. A coffin? What, you would paddle with a stake? Very industrious. But I guess jail brings out industriousness in people, especially after many years.

Crowd

Full house, all age ranges. Estimated capacity of the gym for the audience is 160. Lots of young folks in the 20s. Different than the regular grey haired crowd at the Belfry and McPherson. Tickets are a bargain $20. Large cast and crew. Roughly 22 acting roles and 3 support roles (lighting and music).

Economics

Assiduous readers will recall that the economics of live theatre has been one of my preoccupations. Here runs 12 times. Let’s say they fill up each time (if they had more shows I’m sure they’d sell out as well, quite a bit of good buzz in the air). So that’s 12 * 160 * $20 = $38,400 in revenue. Now, divide this up by the 22 acting roles, the 3 support roles, and the other writers, directors, and so on. Let’s say the number is 30. $38,400 / 30 = $1280 each person. That’s $1280 for 6 months of part time work. Let’s say they put in an average of 20 hours per week for 6 months. That’s a total of 520 hours (26 * 20). In the end, it works out to a renumeration of $2.46 per hour. I think this is part of the reason why so many theatre shows outside the jail are one man shows. $2.46 an hour is not enough to get out of bed for most folks.

But here’s the question of the day: are the prisoner-actors compensated or do they receive monetary consideration for their efforts? Presumably, they will get out one day and when that day comes, they’ll need some cash to keep them afloat while they look for a job, get a place, and integrate back into society. You’d probably need, say, $3000 to get a place, put down deposit, pay for a couple months rent, get some clothes, food, etc., Can they save up for this in jail employed at various tasks? To me, it’s a fascinating question.

Here The Play

It wasn’t till the end that the play came together for me. With plays I’m either really sharp or really obtuse. Genres that I know well, I’m pretty sharp. Take horror. If a guy goes down to check out something in the cellar, you already know before he goes down what’s going to happen. He ends up in trash compactor (or something like that). But if I’m not familiar with the genre, I’m thick as mud. With this play, I wasn’t sure what to expect. Actually, that’s not true. From the blurb, I had expected a documentary style play, more a history lesson than a drama. I was wrong. It was both.

There’s two main characters. They’re both in jail. One of them has his act together and a plan: do good works and get out of jail sooner. The other one is a slacker. They are fishing buddies.

Well, it turns out that the slacker hooks a magical sea monster that sends him time travelling from 1700s William Head to the present. The other fellow spends the play looking for his friend.

As the slacker travels through time, he witnesses the horrors of slave labour, court room injustices, and sees the effects of smallpox. When he gets back to the present, he understands that life is short: a life without a plan is an unlived life. He resolves to work hard to get out of jail. His friend, meanwhile, has also made positive strides: he reconnects with his estranged sister.

Reception

Fantastic play. The audience loved it. Lots of talent. Raw talent, as most of the inmates did not have theatrical experience. But it wasn’t the talent that made the play. I think what made the play was that everyone took a big chance putting it together. The audience recognized this and showered the players and the producers with applause. The risks they took in putting this on stage were real. And so was there enthusiasm. The difference is like the difference watching NBA basketball and college basketball. Of course the talent in NBA basketball is better. But boy do they play out their hearts in college. The prison production is like watching college basketball.

Perhaps my favourite part of the play was the Q&A session at the end. The audience got to ask questions to the players. Questions like: ‘How does being in the play help with rehabilitation?’ or ‘Do you plan on pursuing theatre on the outside?’. A lot of honest responses on how hard it was for them to open up to the process of theatre and work together. Some funny responses as well: one guy said that he volunteered because he thought ‘it would be cool to play a prison guard’.

What struck me the most is how likeable many of the actors were. They didn’t seem like they belonged in jail. They just seemed like regular dudes. Which they probably are. So this was eye opening. And the best thing was how genuinely happy they seemed to be to be able to put on Here: A Captive Odyssey for the packed house. Kudos. A real play by real people. Something real at stake: some kind of redemption, perhaps? I’m sure there were some tears in the eyes of both the spectators and the players by the end of the night.

Until next time, I’m Edwin Wong, and I’m Doing Melpomene’s Work.

Capitalism and Freedom Part Two – Friedman

In part one of this hard hitting series, I reviewed the 1982 Preface, the 2002 Preface, the original 1962 Preface, and the Introduction to Milton Friedman’s Capitalism and Freedom. It’s been 53 years since the book came out. It started out from a position of obscurity before taking the world by storm in the 80s. How does it fare today? This second instalment looks at Chapter 1: The Relation Between Economic Freedom and Political Freedom.

Friedman, The Relation Between Economic Freedom and Political Freedom

In chapter one, Friedman outlines what he is for and what he is against. Here is what he is for: competitive capitalism, laissez faire, economic freedom, political freedom, Jeremy Bentham, Benthamite liberalism and the Philosophical Radicals, the descendants of the Philosophical Radicals (Dicey, Mises, Hayek, Simons), liberals (in the 18th century meaning of ‘liberal’ meaning supporting the freedom of the individual and free trade), division of labour, and decentralized and/or small governments.

Here is what he is against: democratic socialism, totalitarian socialism, nationally mandated retirement plans (think Canada Pension Plan), fair trade laws, communism, Fabian socialism, Labour party, the BBC, centralized authority, rich magnates backing radical movements within capitalist societies (Field, Blaine, Lamont, and Engels).

How Could Anyone Not Like the BBC?

If you’re going to be against the BBC, you’d better be going against it on good authority. Friedman cites Churchill’s experience with the BBC leading up to WWII:

From 1988 to the outbreak of World War II, Churchill was not permitted to talk over the British radio, which was, of course, a government monopoly administered by the British Broadcasting Corporation. Here was a leading cities of his country, a Member of Parliament, a former cabinet minister, a man who was desperately trying by every device possible to persuade his countrymen to take steps to ward off the menace of Hitler’s Germany. He was not permitted to talk over the radio to the British people because his position was too “controversial”.

The larger point is that dissent is difficult in socialist and communist societies because of government interference. To be able to express dissent is a function of free societies. Government censorship and regulation of Google or Facebook in Communist China today would be analogous to Churchill’s experience with the BBC. To express dissent is not possible without danger to friends, family, job security, and perhaps life and limb. Look what happens to Putin’s enemies: 15 billion could not save liberal Yukos CEO Mikhail Khodorkovsky from being sent to jail on trumped up charges.

But what about dissent in democratic capitalist societies? Friedman turns to McCarthyism. During the McCarthy era, communist sympathizers or alleged communist and socialist sympathizers were routinely blacklisted by the government. Now, if you are blacklisted in a country where the government controls the job market, you are hooped. But in a country such as the USA where a large private and free market exists, you can dissent and be blacklisted and still be gainfully employed. Friedman uses 1950s Hollywood as an example. 15% of Hollywood movies in the 50s were written by blacklisted writers working under pseudonyms. Because you can dissent and still be gainfully employed, you remain free. Dissenting on an empty stomach in the middle of Siberia is a hard thing.

Strange Bedfellows

Now, Friedman doesn’t talk about this, but it strikes me as something odd and interesting enough to mention. Hollywood is a product of a free society. You don’t find Hollywood in East Germany or Russia. Hong Kong (capitalist) cinema is much more advanced than mainland China (communist) cinema. But take note of the values Hollywood promotes: private enterprise (i.e. corporations) are evil, the free market is evil, bigger government is better. Examples: Elysium, Divergence, and The Wolf of Wall Street. If someone into the free market becomes the hero, it is only by accident. Think of Oliver Stone’s Gordon Gekko. Stone was making a movie about what an ass Gekko was. It was only by some kind of accident that Gekko became a folk hero. It was sort of like John Milton writing Paradise Lost: Satan got all the cool lines and God got all the lame lines. Even though Milton was a devout Puritan, Satan emerged as the Byronic hero.

Now what happens if someone approaches Hollywood to do a movie where industrialists are the heroes, corporations do good, and government invades people’s civil liberties? Well, it just gets turned down. Atlas Shrugged was privately financed.

But here’s the point: isn’t it strange that anti-capitalist socialism loving Hollywood is made possible by a capitalist democracy?

Economic and Political Freedom

Most of the effort in the first chapter is directed at the following argument: economic freedom equals political freedom and vice versa. It seems pretty clear today, but I guess this wasn’t always the case. From Friedman’s arguments, it seems that back in the 50s and 60s, the prevailing argument was that economic freedom and political freedom were entirely different things.

Friedman argues that exchange controls in Great Britain after WWII (ostensibly a limit on economic freedom) made it impossible for her citizens to vacation in the United States (a political freedom). So limiting one limits the other. Conversely, compulsory old age programs administered by the government (ostensibly a limit on political freedom) results in an additional clawback on each paycheque (a harm to economic freedom).

As an aside, when I worked for Bayside Mechanical, there was a DB pension plan administered by Local 324, the Plumber & Pipefitter’s Union. I deregistered from the plan and took a higher salary instead. The freedom to be able to choose my own investments and my own destiny meant more than the convenience of having a third party make my investments for me. That the trustees of the carpenter’s union a few years ago had squandered their pension funds on speculative real estate investments made that choice a no brainer. With freedom comes responsibility to do the right thing. In fact, true freedom is only free in the sense that it is free to do the right thing.

Until next time, I’m Edwin Wong and I’m thankful for the freedom to be Doing Melpomene’s Work.

Capitalism and Freedom Part One – Friedman

I love the Chicago School. Paying Melpomene’s Price will be set to Chicago Manual of Style guidelines. That means footnotes. No MLA or APA style parentheses or endnotes, which are all the rage today. Damn the trend. Footnotes are beautiful: no need to flip to the back of the book (and lose the page); no parentheses sitting in the text like stumbling blocks for eyes to trip over.

My investments are modelled after the efficient market hypothesis, a financial theory fathered by Eugene Fama at the University of Chicago. The efficient market hypothesis states that the price at which an asset or a stock trades in the open market is its price. Stocks are neither undervalued nor overvalued: all the information out there is reflected in the price of the stock. Isn’t that the most beautiful idea?

Finally, believe it or not, the risk theatre is inspired by Chicago School economics theories: Frank Knight’s Risk, Uncertainty and Profit and James Buchanan’s Cost and Choice. The gist of what they say is that there is an opportunity cost to choice. That’s not far from what happens in tragedy: make a choice and pay the price. The Chicago School appeals to my sensibilities: there is no free lunch. Life is nasty, brutal, and short. It’s dog eat dog. This is no Disneyland we’re in.

At Disneyland, the oppressed mice run free (Tom and Jerry, Mickey Mouse), society is egalitarian (Cinderella), and the natural order of the world punishes evil (Evil Queen in Snow White, Captain Hook). But notice: to keep the magic inside Disneyland, it is necessary to build a big gate around it complete with toll booth. It’s a fantasy world. To work its magic, it must sequester itself from the real world. Some people say Keynes is the opposite of the Chicago School. I say Disneyland is the opposite of the Chicago School, not Keynes. But in my imagination, Keynes is somewhere inside the gated world, cavorting with Snow White and the Seven Dwarfs.

Now Chicago is about as far away as you can get from Los Angeles in the States. I would laugh out loud if someone were to try to build a Disneyland in Chicago: it just wouldn’t work. Even compare their sports teams. In the 80s, the LA Lakers–the ‘Showtime’ Lakers–dominated basketball by fast breaking their way to effortless championships. They were even led by a guy called Magic who would dazzle opponents with impossible sleights of hand. In the 90s, the Chicago Bulls dominated basketball by grinding it out with the Bad Boys from the Detroit Pistons (remember Bill Laimbeer?). They were led by His Airness, Michael Jordan. Hierarchy, organization, and sacrifice: this is what gets things done in Chicagoland. Showtime was replaced by sacrifice (remember Jordan getting snubbed by teammates during the 1985 All Star game?). Dues had to be paid. The Windy City is a very different place than Disneyland: they represent competing worldviews. People who believe in an unlimited supply subscribe to the Mickey Mouse worldview. People who see many people competing for limited resources subscribe to the Chicago School.

But enough about Disneyland. Frank Knight’s most famous student was Milton Friedman. This post is the beginning of a series devoted to Friedman’s most influential work: Capitalism and Freedom. This first post covers the 2002 preface, the 1982 preface, and the original 1962 introduction.

Before beginning, here’s an interesting twist of fate. When applying to grad schools back in the spring of 2003, the University of Chicago was one of the places which rejected my application. The rejection letter was beautiful. There were many students competing for limited enrolments. I lost to a better student. I’m fine with that: it reflects the natural order of the world.

Friedman: Capitalism and Freedom Back Blurb

How can we benefit from the promise of government while avoiding the threat it poses to individual freedom? In this classic book, Milton Friedman provides the definitive statement of his immensely influential economic philosophy–one in which competitive capitalism serves as both a device for achieving economic freedom and a necessary condition for political freedom. The result is an accessible text that has sold well over half a million copies in English, has been translated into eighteen languages, and shows every sign of becoming more influential as time goes on.

Friedman Author Blurb

Milton Friedman (1912-2006) was a senior research fellow at the Hoover Institution, Stanford University, and the Paul Snowden Distinguished Service Professor Emeritus of Economics at the University of Chicago. In 1976 he was awarded the Nobel Prize in economics. He has written a number of books, including two with his wife, Rose D. Friedman–the bestselling Free to Choose and Two Lucky People: Memoirs, the latter published by the University of Chicago Press.

Friedman 2002 Preface

Forty years after Capitalism and Freedom came out, Friedman added a three page ‘2002 Preface’. He takes the government spending as a proportion of national income (GDP) as a barometer of freedom. His thesis is that the more government spends, the more it takes away people’s freedom (by spending, government makes choices for the people). In 1956, government spending was 26% of GDP (non-defence = 12%, defence = 14%). In 1982, government spending rose to 39% of GDP (non-defence = 31%, defence = 8%). In 2000, government spending dropped to 36% of GDP (non-defence = 30%, defence = 6%). This is all for the US, of course.

It would be interesting to see how much government spends today. According to the IMF’s website, in 2014, government spending (in the US) accounted for 40% of the GDP (non-defence = 35%, defence = 5%). Government spending in Canada in 2014 was not far off: 41% of GDP (non-defence 40%, defence = 1%).

The trend in the last 50 years has been for government spending to go up. The effect would have been even more pronounced had military budgets remained constant. As it is, military budgets have fallen in both Canada and the US from 14% to 5% (US) and from 8% to less than 1% (Canada).

As a proportion of GDP, the welfare state has grown in the last 50 years. In the US, from 1956 – 2014, it has almost tripled (excluding military, from 12% to 35%).

It should be interesting to see what happens in the US and Canada. The welfare state accounts for 39% (US) and 40% (Canada) of national income already. People want more. But what will happen to people’s freedoms when the welfare state keeps going up?

Friedman 1982 Preface

In 1982 Capitalism and Freedom had been out 20 years and Friedman takes a look back. He notes when the book first came out, nobody reviewed it at all. With some satisfaction, he goes on to say it’s sold 400,000 copies, getting recognition, and also influenced Alex P. Keaton from the TV show Family Ties. No, he actually did not say the last part. But he did say that he finds himself vindicated by problems in Russian and China. In the 80s it was becoming clearer that Russian and China were going into the gutter. Remember, in the 60s and the 70s, it was not so clear cut who would prevail: US or Russia, West Germany or East Germany, South Korea or North Korea, and so on.

The tide was changing: the Fabian socialism of Great Britain (which also exercised a hold on the American intelligentsia) was also on the way out. The 80s were the decade of free trade, laissez-faire economics, capitalism, and freedom. After 20 years of obscurity and ridicule, Friedman’s time had come: he had powerful champions in Reagan and Thatcher.

Friedman Original (1962) Preface

Some interesting notes about his influences. Friedrich Hayek and Frank Knight of course. Friedman also mentions he has drawn from some previously published material in various books and journals promoting ‘individuality’. Yes, of course, it had never really occurred to me, but capitalism and freedom must be the symptoms of an intense awareness of individuality, of being different than others, of having different end goals. It has as its antithesis the collective where everyone is working not for oneself, but for everyone else.

If Friedman’s ideas are to be attached, it must be here: his unrelenting pursuit of individuality at the cost of the collective. To pursue individuality to the extreme leads nowhere: no man is an island. It’s interesting to note that in the 60s and onwards, music shifted from communal, traditional, and folk forms to rock and pop, which are distillations of the individual. Individual genius (Hendrix) or individual suffering (‘King of Pain’ by the Police). Individualism is good, but taken too far becomes egocentricity. Take Sting singing: ‘There’s a flag-pole rag and the wind won’t stop: that’s my soul up there’. Cry me a river.

Friedman Original (1962) Introduction

Friedman defines his standpoint and objectives:

As it developed in the late eighteenth and early nineteenth centuries, the intellectual movement that went under the name of liberalism emphasized freedom as the ultimate goal and the individual as the ultimate entity in the society. It supported laissez faire at home as a means of reducing the role of the state in economic affairs and thereby enlarging the role of the individual; it supported free trade abroad as a means of linking the nations of the world together peacefully and democratically. In political matters, it supported the development of representative government and of parliamentary institutions, reduction in the arbitrary power of the state, and protection of the civil freedoms of individuals.

Flash forward to 2015. How does it look for Friedman? Is the individual still the ultimate entity? Yes, it appears so. As the middle class emerges in Asia and Africa, the individual will become even more pronounced. Is freedom still the ultimate goal? Sometimes. Sometimes when a democracy is installed the people vote democratically for a party that limits individual freedom (e.g. people vote for fundamentalist regimes). What happens there?–the people have used their freedom to take away their freedom. Has free trade been successful? Yes and no. It has made the world a more competitive. Competition has led to innovation which has kept costs low (look at agriculture and computers, for instance). But, free trade has created supranational bodies such as WTO and NAFTA which limit the freedom of the individual. Look at Greece. I don’t think they’re a sovereign nation anymore. Does the reduction in the arbitrary power of the state lead to increased protection of civil freedoms? The jury’s still out on this one. In the 1960s, populations were more homogenous. It’s more of a melting pot now with different classes of people wanting different things. Look at Vancouver. They call in Hongcouver. In Richmond, Asians now outnumber white Christians. There’s been a lot of non-European immigration in Canada since the 60s. The state seems to be assuming greater powers now in order to protect civil freedoms. There’s a election coming up in Canada in the next few days. Hot topics include whether or not federal employees should be allowed to wear a niquab and whether citizenship can be revoked for terror suspects. On a municipal level, the big question in Vancouver and Richmond is whether Asian businesses with Asian signage are legally obliged to post in English as well. The very definition of civil freedom is changing.

Until next time, I’m Edwin Wong and it’s thanks to the Chicago School that the inspiration came to Do Melpomene’s Work.

 

Rewriting Chapter One

Here’s some thoughts on the art of rewriting. And a quick update. Update first. About three-quarters of the way through rewriting chapter one. Chapter one introduces the building blocks of the risk theatre: the hero’s temptation, the hero’s wager, and the hero’s cast (of the die). It’s all a gambling metaphor. Simple, you say: the hero rolls the dice and loses. End of tragedy. Well, it is that simple and it isn’t that simple. In my mind it’s that simple. But once I start to put in into words, it becomes quite complicated. So much so that I’m now a week behind my self-imposed schedule. The goal was one chapter on the first of each month.

Why’s it complicated? Well, sometimes things just don’t work out when you put them into words. Or, when you put thoughts into words, unforeseen problems come up. The latest one is the gambling metaphor of looking at each dramatic act as a gambling act. You’ll recall that my idea of tragedy is built up from a gambling metaphor: the hero’s temptation, the hero’s wager, and the hero’s cast. Once I started committing the idea onto paper, it occurred to me that something was very wrong with the hero’s wager.

In the actual game of gambling, the gambler antes up for a chance to win the pot. If the gambler wins, he keeps his ante and the pot. So, if the gambler antes up $5 and wins the $10 pot, he finishes with $15. Well, in the risk theatre, the hero loses or sacrifices what he antes up. So, if Macbeth stakes the milk of human kindness to win the crown, when he gets the crown, he loses the milk of human kindness. Similarly, when Antigone stakes her civic obligations to fulfil her religious obligations, she forsakes her civic obligations when she fulfils her religious obligations. If the gambling metaphor were spot on, if Macbeth or Antigone were to win the round, they should be able to keep both the milk of human kindness and the crown (in the case of Macbeth) or fulfil both her civic and religious obligations (in the case of Antigone).

So this has been holding me up on chapter one. The surprising thing is that I’ve been thinking about this idea for years now (and have even written the first draft). The problem of the incongruence between the gambling metaphor and the dramatic action has never occurred to me. It is only through thinking about everything carefully in the rewrite of chapter one that the problem cropped up. Rewriting is very useful: since the writer has already got the skeleton of the idea down, brainpower can be devoted to working the ideas through. Writing the first draft was really a test to see whether there was enough in the risk theatre (or myself) to write a book. The ideas were only half-baked at that stage, as the point of the first draft was really only some kind of a proof of concept. Rewriting is where the real thinking takes place. In fact, thinking and writing are allied concepts: thinking (the hard thinking) only takes place through the process of writing things into words. The mind always thinks that its ideas work. Writing is what proves that they actually work.

So what did I do? Nothing. After recovering from the shock, it didn’t seem that bad. Metaphors are metaphors. If they worked perfectly, they wouldn’t be metaphors. They would be the real thing. What counts is that the metaphor allows you to see something in a productive way. The gambling metaphor achieves this in tragedy by highlighting the element of risk. The gambling metaphor also captures the obsession, abandon, and loss that heroes experience as they go for the gold. And, on top of this all, tragedians frequently insert gambling metaphors into the mouths of their heroes. So, the gambling metaphor is double justified: first, it highlights the element of risk in theatre. And second, dramatists use the gambling metaphor themselves.

Getting back now to the theme of rewriting. What does rewriting do? It forces the writer to think the idea through. Ideas always work out in the writer’s mind. Rewriting is to the writer what experimentation or the scientific method is to the scientist: it’s a way of proving an idea works. It subjects the idea to the rigours of logic and rhetoric. By writing, the writer is forced to demonstrate that it works. The more rewrites the better. But, mind you, there comes a time just to move on as well.

Until next time, I’m Edwin Wong and I’m re-Doing Melpomene’s Work.

Style: Towards Clarity and Grace – Williams

15 years. That’s how long it’s taken to read Style: Towards Clarity and Grace by Williams and Colomb. Professor LB recommended it back in 2000. I picked up a copy at the University of Victoria bookstore (the sticker is still on the back). I read a few chapters. Then it went onto a sunny spot on the bookshelf. You can tell because the parts of the cover that were exposed have been bleached white by the sun. The cover was originally an attractive bright yellow colour.

Williams 'Style' Cover Illustration

Williams ‘Style’ Cover Illustration

Style Back Blurb

This acclaimed book is a master teacher’s tested program for turning clumsy prose into clear, powerful, effective writing. A logical, expert, easy-to-use plan for achieving excellence in expression, Style offers neither simplistic rules nor endless lists of dos and don’ts. Rather, Joseph Williams and Gregory Colomb explain how to be concise, how to be focused, how to be organized.

Filled with realistic examples of good, bad, and better writing, and step-by-step strategies for crafting a sentence or organizing a paragraphs, Style does much more than teach mechanics: it helps anyone who must write clearly and persuasively transform even the roughest of drafts into a polished work of clarity, coherence, impact, and personality

Style Author Blurb

Joseph M. Williams and Gregory C. Colomb are sought-after communications consultants. Williams is Professor Emeritus in the University of Chicago’s Department of English Language and Literature and author of Origins of the English Language. Colomb is professor of English language and literature at the University of Virginia.

I never knew: Williams is Professor Emeritus with a capital ‘P’ whereas Colomb is only a small ‘p’ professor! That could be because ‘Professor Emeritus’ is a title whereas ‘professor’ is the name of an occupation like ‘plumber’. But poor Colomb: not only is he a small ‘p’ professor, he teaches English language and literature with small a small ‘l’ at Virginia whereas Williams is part of Chicago’s Department of English Language and Literature with a big ‘L’! Colomb seems to get short shrift, no? And besides co-authoring two chapters in Style, has Colomb published anything? He certainly doesn’t seem to have written an Origins of the English Language like how Williams has done!

Why It Took Fifteen Years to Read Style

Unlike Strunk and White’s Elements of Style (which is short) or Stephen King’s On Writing (which is fun to read), William’s Style is neither short (208 pages) nor fun to read. Will it make writers write better? Perhaps some. Will it make writers better readers. Yes. The numerous examples give a x-ray view into how other writers write well or poorly. The problem is that it’s hard to evaluate your own writing with the same set of eyes you’d evaluate others’ writings. Perhaps the reason why it’s taken me so long to read Style is because while it it undoubtedly helpful, it makes writing less enjoyable for me.

Part of the problem is that Style presupposes that the writer is already at quite an advanced level. For writers not already there, it’s a headache to take in all the tips. Mind you, they’re good tips. For example, avoid nominalizations (nouns derived from verbs):

The police conducted an inquiry into the matter.

Just use the verb by itself:

The police investigated the matter.

But nominalization is good for effect at the end of a passage:

…until in God’s good time, the New World, with all its power and might, steps forth to the rescue and the liberation of the old (Churchill).

Williams’ Style reminds me of economics articles on Bloomberg or Marketwatch. Do you ever read the business section and notice how the articles are laid out? Well, it goes something like this. Let’s say they’re talking about interest rates (but it could be anything: employment numbers, GDP growth, bond yields, etc.,). The article will start off saying they’ll raise/lower interest rates. Then it will quote two specialists who will give their rationale. As they explain their thinking, then they will say their projection is based on x, y, and z. Then they have the hedge or the ‘get out’ clause: if x, y, and z are different than what the consensus is, then things will turn out opposite to their projection. To me, what they’re actually saying is that they have no idea of what’s going to happen. If they’re right, then they’re clever. If they’re wrong, well, they weren’t really wrong; it was just that variables x, y, and z did not play nice.

Well, Style is sort of like that. Williams will point out certain rules. He shows why his rules work with a bunch of examples. Then he takes a really famous and beautiful passage (a so-called purple passage) and rewrites it according to his rules. Invariably, his rules damage the beauty of the purple passage, making it seem pedestrian. So it’s like he tells you how he thinks you ought to write, but cautions you against writing like that. Sort of like the self-defeating economics articles in Bloomberg and Marketwatch.

But there is a certain honesty to that approach: rules are made to be broken. What I find is that after reading Style, I focus very carefully on how the words and sentences and paragraphs are put together. Did I use nominalizations? Did I put the new information towards the end? Did I get to the point quickly enough? How many subjects are there in the paragraph–is it too many? But to think about all this stuff…is hard. But perhaps that’s what a good style guide should do: push the writer to think more. The jury’s still out on this one.

Until next time, I’m Edwin Wong and I’m finding that to do Melpomene’s work with clarity and grace is easier said than done.