Combating Political Religion: How Small Government, Free Market Dogma Fails to Account for Observable Reality

There is growing sense that those interested in finding out what is true of the world are becoming a rarer and rarer breed. Everywhere we look, someone is trumpeting some blatant inanity. Vaccines cause autism. Adding flouride to water is a government conspiracy. Genetically modified organism are dangerous. Organic food is particularly nutritious. Christians are a persecuted minority. The 44th President was a foreign national and communist agent. The 9/11 Terror Attacks were an inside job. The world is only 6000 years old. Humans can’t influence the climate.

Nonsense is everywhere, but the impression that it is more prevalent than ever is mostly a matter of appearances. Humans are innately tuned to focus on the negative aspects of their environment. Good reasons for this abound, easily distilled in the recognition that it is far more consequential for us to spend our time thinking about the things that could be better than it is to spend it thinking about the things that are going just fine. On the landscapes of our ancestors, where decisions about what to pay attention to were a regular matter of life and death, it was vitally important to take note when things were about to turn sour – when herds of prey were about to migrate to a new territory, when seasonal changes were about to reduce the availability of edible fruits, when an unfriendly band of visitors turned up in your neighborhood.

So it is today. We perk up and pay extra attention when our political rivals take office or slow down and drive more carefully after passing an accident on the side of the road. The idea that we live in a world anomalously dominated by halfwits and conspiracy theorists isn’t due to the fact that halfwits and conspiracy theorists are more common than they once were. Rather, it is due to two related facts.  First, that we have access to the knowledge necessary to identify half-witted and conspiratorial thinking. Second, erroneous views about the world are obnoxious at best, dangerous at worst. Because of this, they tend to stand out. It’s unfortunate that only some of us use the knowledge constantly at our fingertips to build a more consistent, reliable understanding of the world. But the larger reality – that any of us have access to any of that information at all – is the real historical aberration.

Ignorance persists despite the proliferation of tools for its easy obliteration. As a consequence, individuals with any amount of expertise in a given subject are likely to take note of the fact that a lot of their peers have firm beliefs about the way things work that are flat-out wrong. The resilience of discernible falsehoods is an unremarkable product of historical inertia. In that, we should rejoice – not that they are still around, but that we now know how to spot them.

Unfortunately, there are situations in which the perpetuation of obviously false views about how the world works can achieve special gravity. This happens when the people who hold the levers of power embrace attitudes that are thoroughly divorced from reason and evidence. Historically, we can point to the woe and misery wrought by efforts to force the square peg of communist fantasy into the round hole of reality as illustrative examples. Men like Mao Zedong and Joseph Stalin held views about the way the world should work that had very little basis in fact. They achieved power and millions of humans suffered and died as a result.

Sadly, this is not a phenomenon that has been consigned to history books. In the United States, this kind of thing pervades government.  Powerful men and women who harbor ill-founded and objectively false ideas about how the world works are currently engaged in the cruel work of hammering Western society into a form that better fits their perverse vision. They are not communists, but like communists they celebrate a vision of society based far more in fantasy than in observable reality. In this, their categorical affinity with communists is striking:  that is, they are ideological fanatics.

Their fanaticism flows from two doctrinaire beliefs. First, that market liberalization results in the best kind of society possible. The fewer restrictions there are on the way people make money, the better off we will all be. This view can be reduced to a simple slogan: “markets produce the best possible distribution of wealth and resources.” Second, that government is the source of all evil. They believe that the only legitimate role for government is to militarily secure and protect an open field for profit generation. This perspective is captured by the old aphorism, “that government which governs least governs best.”

An immediate problem with both views is that they are meaningless tautologies. They don’t produce useful criteria for judging whether or not they are actually true. Instead, they frame things in such a way that any outcome that results from liberalizing markets or decreasing the size of government is granted a priori status as the best possible outcome that could have happened. For an ideologue, this is a useful definition. For anyone concerned with actually evaluating how accurate these prescriptions are and how effectively they produce worthwhile outcomes, these views are entirely useless.

There need to be external, independently verifiable criteria for deciding what does and does not count as effective governance or a desirable distribution of resources. Absent such benchmarks, slogans about the power of markets and the proper role of government are reduced to religious mantras. They don’t gain truth through repetition, but a lot of elected representatives have taken their steady repetition as a sign of truth.

Consider some concrete examples. Below are the mission statements of two influential think tanks.

The mission of The Heritage Foundation is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. 

The Brookings Institution is a nonprofit public policy organization based in Washington, DC. Our mission is to conduct in-depth research that leads to new ideas for solving problems facing society at the local, national and global level.

The first is immediately problematic. The Heritage Foundation is intellectually neutered by its interest in finding policy solutions that conform to a pre-established ideological litmus test. They have decided that the solutions to public policy problems involve free enterprise and limited government in advance of evaluating any evidence. The Brookings Institution, on the other hand, places initial emphasis on in-depth research as a tool for solving problems. Usefully, they do so without establishing ideological strictures on what the best solutions ought to look like.

Take any hypothetical problem and it becomes immediately obvious that The Heritage Foundation is going to have a harder time finding a good solution than The Brookings Institution. American students are scoring poorly in math and science. The burning of fossil fuels is having detrimental environmental consequences. Millions of American kids aren’t getting enough to eat. For The Heritage Foundation, the answer is always clear: less government, freer enterprise. If a branch of science worked this way, it would cease to be science. No congress of physicists is going to get together and outline a research program that says all good science must conform to Newtonian mechanics. But this is precisely what The Heritage Foundation has done with issues of public policy.

Yet the views of the Heritage Foundation carry enormous weight. They are endorsed by majorities in both houses of congress. The Speaker of the House, third in line for presidential succession, is a zealous devotee to the a priori assumptions of small government, free market fundamentalism. Conservative bill mills like the American Legislative Exchange Council produce legislature precisely tailored to reflect free market, small government dogma and Republican politicians – at every level of government – work to make that legislation the law of the land. Those willing to dissent do so at considerable risk. Skepticism is likely to be greeted with a well-funded primary challenge from an individual more willing to tow the party line. It is hardly shocking that there is an armada of well-heeled conservative ideologues willing to spend huge sums of money on the project of forcing Western society into the mold of libertarian utopia.

The Dubious Underpinnings of Conservative Economics

The ultimate tragedy in all of this is that the market religion of the modern GOP is provably false. Visions of conservative/libertarian utopia emerge from the logic of neoclassical economics. Starting in the 19th century, men like Leon Walras and Vilfredo Pareto took up the work of turning our understanding of human economic behavior into a respectable science. They turned up lot of powerful insights, but also set in motion a line of thinking that would eventually turn large segments of economics into nothing short of a mathematically sophisticated religion.

By the early 20th century, economics had come to invoke a number of simplifying assumptions in order to produce workable models. These assumptions included:

  1. The belief that economic agents are perfectly rational.
  2. The belief that economic agents work to maximize utility.
  3. The belief that economic agents are entirely self-interested.
  4. The belief that economic agents are infinitely knowledgeable.
  5. The belief that economic agents have consistent, well-ordered preferences.
  6. The belief that all contracts are complete.
  7. The belief that all economic agents are scrupulously honest.
  8. The belief that prices always accurately reflect the costs and benefits of a product.
  9. The belief that economies are closed equilibrium systems.

Deploying these premises, economists produced theories about how people ought to behave in idealized markets. They weren’t wrong. If all of the above assumptions were true, then the best governments could ever do to facilitate happiness and prosperity is get out the market’s way.

Problematic in all of this is that each and every one of those assumptions is false. Not just doubtful or misleading, but an objectively untrue statement about observable reality. Many economists were aware of this fact at the time and many are aware of it today. That’s why economists use fancy terms like “unpriced externality” – this is an implicit acknowledgement of the reality that assumptions four through eight are false.  But there’s no reason to stop there. Observational and experimental evidence also tells us that humans are not perfectly rational, that they aren’t good at maximizing utility, that they aren’t entirely self-interested, and that economic systems are neither closed nor precisely tuned to seek out any equilibrium states.

Yet for some reason, some people began to act as if the aforementioned beliefs were more than just useful assumptions. They didn’t just make it easier to model the exceedingly complex behavior of huge swarms of interacting humans. Rather, they were true reflections of how the world actually operates. If this were the case, the ideological fanatics working for The Heritage Foundation and populating every tier of U.S. Government would be onto something. Indeed, they would hardly deserve being labeled “ideological fanatics”. They would be right to think that all policy solutions ought to involve steps to limit government and deregulate markets.

Or would they?

Notions of market optimality – the belief that unfettered markets produce the best possible outcomes – do not withstand a lot of scrutiny and often fail in their own terms. Consider two examples: scientific research and pollution control.

Much of the technology we take for granted today would be impossible absent scientific breakthroughs from the first half of the twentieth century or latter half of the nineteenth. Some of these discoveries were funded by governments, others through private philanthropy. None of the foundational insights in theoretical and experimental physics that laid the groundwork for global GPS, cellular phones, communication satellites, or the worldwide web emerged from a desire to get rich. At the time, a physicist who displayed a thirst for profit was frequently greeted with scorn and ostracized by his or her community.

Governments across the Western world funded scientific research as an expression of human curiosity and a matter of national prestige. Curiosity-driven scientific research often yields enormous benefits, but the ways in which discoveries will shape futures landscapes are largely unforeseeable. Neils Bohr, Werner Heisenberg, Albert Einstein, Lise Meitner, Marie Curie, Robert Oppenheimer, Alan Turing and their peers didn’t envision a world where Apple and Samsung would make billions producing portable, wireless communication devices connected to a worldwide web, granting hundreds of millions of people perpetual access to virtually all human knowledge. Yet without their discoveries, that world would not exist.

Indeed, a rational, entirely self-interested, utility maximizing agent would never make an investment in a research program that might, in some way or another, decades down the line, turn a profit for someone else. A CEO who sought to divert funds to scientific efforts that might – forty, fifty, sixty, or seventy years in the future – prove foundational to some kind of profit generating enterprise would quickly be removed by shareholders and replaced by someone made business decisions more closely aligned with their interests – that is, making money.

The same logic bears out in the realm of pollution control. Some types of business are environmentally costly. The processes they use to manufacture products for commercial use also produce byproducts with harmful downstream consequences. According to the strict logic of neoclassical economics, businesses should only respond to the costs of pollution and mitigate the effects of harmful byproducts of production under a narrow range of circumstances.

If the costs of pollution are immediately obvious to customers, they can and will (under the assumption of rational choice) respond by sanctioning the company, who will in turn work to remedy the problem in order to placate their customer base. But any time the costs of pollution are not sufficiently large or localized to be immediately discernible to customers, the logic of the market demands that the business do nothing about it. In fact, being rational and self-interested, they should actually make efforts to conceal their harmful behavior anytime the costs of deception are lower than the costs of mitigation (one of the ways in which the founding premises of market optimality are inherently contradictory).

That means a factory that manufactures paper plates in Mississippi will have little incentive to clean up any harmful byproducts if most of those paper plates are sold in China. Likewise, pollutants that accrue gradually, such that their ill-effects are only exerted decades down the line, are invisible to corrective mechanisms internal to the market itself. Such is the case with anthropogenic climate change, where the costs of burning hydrocarbons aren’t necessarily felt until decades after the fact.

Suffice it to say, there are numerous conditions under which the reasoning behind the modern conservative ethos – the ruling dogma of billionaire oligarchs like Charles and David Koch and ambitious political zealots like Ted Cruz – crumbles under its own weight. This was widely known and commonly accepted in the first decades after World War 2. Economists and politicians alike recognized that market were only sensitive to a narrow range of inputs and entirely blind to many of the downstream costs that might accrue for any given method of production. Recognition that third-party intervention would sometimes be necessary to secure good outcomes was bipartisan. That’s why the EPA was founded under Richard Nixon and his signature graced the first iterations of the Clean Air and Water Acts.

The antipathy toward government now common on the political right emerged as part of a deliberate campaign undertaken by fanatical millionaires to peel back what they perceived as the creeping threat of socialism. They founded think-tanks like the Heritage Foundation and launched an intellectually caustic propaganda war against any and all barriers to the generation of wealth – in particular, their wealth. In this, they have been enormously successful, managing to shift their fringe views so far into the mainstream that they are openly espoused as true and irrefutable on the most widely viewed cable news network in the United States.

Now, congress is populated by zealots oblivious to the dubious intellectual underpinnings of their ruling philosophy. Their worldview is the direct progeny of a set of premises adopted for instrumental utility, otherwise entirely lacking in reality. Based on their behavior, it is safe to assume that they are true believers – they really think that eradicating every piece of government that doesn’t relate to national defense is the best thing to do for everyone. They are simply blind to the fact that their core beliefs are so flimsy that they often fail in their own terms and crumple when measured against external benchmarks of success.

But there is no reason why we should confine ourselves to discussing such a spurious worldview strictly in its own terms. Few of the founding premises of modern conservative socioeconomic philosophy happen to be true. Shifting the dogma of the modern conservative movement into natural light reveals an edifice held together by tape and glue.

Humans are frequently irrational. And markets are made of humans. Those inclined to root their understanding of human systems in verifiable reality are rarely surprised to learn that market behavior is riddled with error. Investors sometimes value a parent company at millions of dollars less than its subsidiary, clearly falsifying the neoclassical prediction that the price set by the market is always right. Football teams sometimes trade multiple later round draft picks for the chance to pick up a star up front and win fewer games as a result. People take out loans they can’t afford, buy items they don’t need on credit, and don’t save enough for retirement.

Let’s reconsider those nine premises I listed a few paragraphs back.

  1. The belief that economic agents are perfectly rational.
  2. The belief that economic agents work to maximize utility.
  3. The belief that economic agents are entirely self-interested.
  4. The belief that economic agents are infinitely knowledgeable.
  5. The belief that economic agents have consistent, well-ordered preferences.
  6. The belief that all contracts are complete.
  7. The belief that all economic agents are scrupulously honest.
  8. The belief that prices always accurately reflect the costs and benefits of a product.
  9. The belief that economies are closed equilibrium systems.

Recall that the smaller government, freer markets at any cost emerges from taking these premises as reliable, high fidelity distillations of observable reality. They are instrumental to substantiating the mindset of men like Charles Koch and Ted Cruz. And every single one of them is undeniably false.

This is not a secret. It is widely known and easily discoverable. This is why it is impossible to take people like Paul Ryan or Mitch McConnell or Ted Cruz seriously as thoughtful stewards of American wellbeing. These people are not principled statesmen. They are ideological fanatics. They subscribe to a worldview that has been repeatedly and consistently refuted by the very nature of reality. Insofar as their policy prescriptions have any merit, it is largely a result of coincidence. They have not, I suspect, invented a remarkable method for reasoning from false premises to sound conclusions.

And yet they persist in these beliefs. Their belligerent insistence on clinging to a misguided vision of how the world ought to be, independent of any and all evidence of how the world actually is, makes them incredibly dangerous men. Though they have yet to scratch lowest rung of the anguish unleashed by the likes of Mao and Stalin, the fact remains that their ideology lives in the same epistemological neighborhood as communism. It is a vision of what the world could be if a number of important facts about what the world is actually like were otherwise. Their efforts to force the world to conform to their ideological prescriptions will only result in conflict and pain. Powerful solutions to pressing social, economic, and ecological problems will escape them, willfully hidden behind a veil of dogma. Even if compelling policy initiatives that violate their worldview are brought to their attention, they will be prohibited from adopting them by a blind commitment to ideological purity. As the mission statement of the Heritage Foundation clearly states, only solutions that embrace limited government and free enterprise are on the table.


Combating Political Religion

The arc of recent history bends toward insight and discovery. Anti-vaxxers, conspiracy theorists, and religious fundamentalist receive a lot of well-deserved public derision. This sometimes makes it look as though society has become infected by an unprecedented strain of ignorance. But the larger reality is that people have easier and easier access to better and better information about the world in which they live. It’s easy to feel disheartened when a poll shows that 40% of U.S. adults think the world was made, as is, by some divine power within the last 10,000 years. Every available strain of evidence says this view is false, yet people persist in maintaining it. Taking a wider view brightens things a bit. Sure, it’s a bummer that a bunch of adults are so enamored of a childish fairytale that they deny the fundamental nature of reality. But a couple centuries ago, we didn’t even have access to the information that exposed those beliefs as farcical. The vast majority of people held views about the age of the earth and the nature of reality with absolutely no basis in reality.

This rosy outlook is tainted when people who cling to superstitious or ideologically clouded thinking achieve political power. It is easier today than at any other point in human history to find out when we hold false views about the way the world works. Yet a glaring majority of the elected officials in the U.S. Federal Government passionately subscribe to a view of human behavior and the role of government that is provably false. Not only do they hold these beliefs, they are using them to guide policy formation.

The GOP has held control of two out three branches of government for a little over two months. Already, they have taken steps to roll back vital environmental regulations and decrease funding for curiosity driven science. These, as mentioned, are two of the areas where their one-size-fits-all belief in smaller government, freer markets fails in its own terms. Unchecked, they stand to implement a campaign of ideological extremism unlike anything the nation has ever seen. That this is done in service of unchecked greed is largely incidental. The fact that very wealthy people stand to become even wealthier while the poor are left to wither as a result of the conservative agenda disguises the fact that that agenda is an expression of fervent religious devotion. I

Some scholars have made the mistake of using communism to point up the dangers of secularism. This ignores the fact that communism itself, as expressed in the regimes of Pol Pot, Mao, and Stalin, cannot be derived from secular thinking. Secular thinking is an expression of reason, guided by evidence. It gives us things like an expanding circle of human rights and cures for dangerous infectious diseases. Communism, like exaggerated notions of libertarian capitalism, falls apart when subjected to evidentiary checks. And libertarian capitalism, like communism, is a form of political religion. Both are utopian visions that exist in obstinate indifference to the hard nature of reality.

Huge swaths of political thinking run afoul of this single, crippling fallacy – the mistaken belief that there is one right answer. Sometimes governments grow too large and run inefficiently. Sometimes free markets generate undesirable outcomes. Neither point can be used for the wholesale dismissal of either.

This is precisely why we need external, universally recognizable criteria for recognizing success and failure. What do we want governments and markets to achieve? If we want markets to achieve an optimal allocation of resources, we need a definition for “optimal allocation of resources” that is external to the market itself. Moreover, we need to recognize that the motivations required to thrive in markets foist on people a certain level of myopia – markets are incapable of planning for the distant future or taking into account all the potential costs a given business strategy might incur. That’s why we need both government regulation and government investment in curiosity-driven science.

The goal of government should be to make it easier and easier for larger and larger portions of the population to thrive. In this, it should be a democratic instrument. The goal of economic systems should be similar. They should not exist to generate wealth as an end unto itself. Rather, their purpose is generating the wealth necessary to pursue the end of human thriving. From these simple premises, we can derive a number of hallmarks for identifying success and failure.

By accepting these aims and jettisoning the fallacious dogmas that drive intransigent anti-government sentiment and fuel blind market liberalization campaigns, it is possible to achieve ground ripe for bipartisan collaboration. History teaches us that liberalized markets tend to be correlated with prosperity and peace. Together with democratic governance, they seem to make people generally better off. It is clearly desirable for people to have as much leeway for free economic choice as possible. That is where the reasoning of the market fundamentalists stops, thereby failing to recognize that the more apt and justifiable expression is that people should have a much leeway for free economic choice as possible, given the larger, perpetually shifting aims of society.

It should be recognized, as a matter of incontrovertible fact, that markets sometimes generate undesirable outcomes. They produce entrenched inequality and unfairly discount the wellbeing of future generations in favor of current wealth. Nor do they include any discernible mechanism instituting ideals higher than “make money”. There is no room for curiosity and the quest for knowledge as ends unto themselves in a world ruled by smaller government, freer markets at any cost ideologues. In that world, a human animal invested in aspirations above and beyond the accumulation of wealth would be a creature bent on extinction. The utopia of the libertarian capitalist is just as bleak and gray as they utopia of the hard-line communist.

Thankfully, we don’t live in an either/or world. Continuing the historical embrace of reason that has been underway since the Enlightenment, we can build an understanding of economic systems and political order based on scientific evidence. Already it is clear that unfettered freedom of expression is unambiguously good and that economic liberty is often a powerful tool for making humans happier, healthier, and more prosperous. Eschewing one-size-fits all political religion can help us take these insights and put them to better use in a piecemeal engagement with the endless parade of political problems that are bound to emerge whenever humans live together in large numbers. Indeed, it is immediately obvious that government can play a vital role in encouraging markets to behave as if those nine assumptions about market optimality were true. For instance, they can make sure the prices of products reflect all of the unforeseen costs of production and ensure that consumers have access to all the information they need to make smart economic choices.

There may be other ways to solve these dilemmas. Discovering them will demand abandoning ideologically motivated, one-size-fits-all policy prescriptions. The point here is not to make the case that government is the solution to all of the world’s problems. Examples where precisely the opposite is true – where government interference in market behavior has produced undesirable outcomes – are plentiful. Sometimes the best solution will be market liberalization. Often, however, markets will generate unexpected and undesirable outcomes. It can never be a foregone conclusion that government is not the answer. Unless someone comes up with a better form of third-party enforcement than democratic governance, there will be many circumstances in which it is the best alternative we have.


An addendum in light of a comment.

One thought on “Combating Political Religion: How Small Government, Free Market Dogma Fails to Account for Observable Reality

  1. Pingback: An Odd Mix of Racism, Insight, and Inanity: A Curious Comment from a Reader | High Plains Skeptic

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