Wednesday, November 12, 2008

Well-Meaning Leftist of the Week

The fact that we can empathize with many of the ultimate goals of Leftist policies (there are, of course, prominent exceptions) while taking issue with the counter-productive secondary consequences of those policies is one of the recurrent themes of this blog. Thinking Conservatives don't love things like war and social inequity for their own sake, and pundits who gleefully give this impression are missing the point. Traditionally, though increasingly less so, it has been Conservatives who look for the unintended consequences of a given policy, taking the unpopular long view and opening themselves up to shallow and easy smears. For instance, the only right reason to fight a war is to render a future, more costly war impossible. The only right reason to allow a job to go overseas is to maintain a labor market unfettered by ridiculous employment-hampering regulations (cp. unemployment rates in France). We all agree that war and unemployment are sad facts, but the philosophic integrity of the Right depends on its opposition to sentimental, poorly-conceived policies that actually aggravate these problems in the long run.

With these thoughts in mind, and for your viewing pleasure, I introduce the "Well-Meaning Leftist of the Week" feature. Every week I will highlight a Leftist with a half-baked plan full of good intentions and unintended consequences. (Your suggestions for Leftists to feature, past or present, are welcome). We'll start off all historical-like.

This week: Thomas Jefferson
One of the most controversial battles the legislators of young America faced was how to pay off the IOU's and securities issued to Revolutionary armies as salary. The problem was that many patriotic, hard-fighting citizens had, despairing that they would ever be reimbursed, sold their securities to speculators--some for as little as 15 cents on the dollar. As public credit stabilized, due in part to the Federal Government's confidence-inspiring assumption of the States' debts, these securities and IOU's approached their former worth. As you can imagine, Jefferson and his party were vehemently against rewarding the weaselly speculators and in favor of tracking down the original holders (however that was to be done). Alexander Hamilton, on the other hand, recognized that, at this juncture in the Country's history, it was more important than ever to ensure confidence in the Government's ability to uphold the law. As Ron Chernow writes in his biography of Hamilton, "The knowledge that government could not interfere retroactively with a financial transaction was so to outweigh any short-term expediency." Hamilton recognized that it would be better for every citizen, great and small, if they could be sure the incentives put in place to encourage hard work, industry, and innovation would be honored. Jefferson, despite his usual understanding of the "paradox of liberty and law," ignored this fact, and so earns his place as the well-meaning Leftist of the week.


  1. An excellent book on this theme is Doug Bandow's "Beyond good intentions". It outlines the Biblical perspectives on various political issues and critiques both misguided good intentions,(like the American welfare state) as well as outright government corruption.

  2. Excellent topic - and nice touch starting out with a nice history lesson.

    IMO, the best way to determine the long term impact of a policy is to look at the incentives it creates vs the incentives created by the alternative(s). Let's look at the incentives created by Hamilton's policy vs Jefferson's.

    Hamilton - Paying the speculators certainly must have been hard to stomach and was likely very unpopular, however honoring the transaction does the following:

    1) Teaches current and future bond holders to inform themselves of the bonds current value
    2) Encourages more speculators to purchase bonds in circulation. This is a good thing - with more people willing to buy bonds from holders, the current value goes up. This makes it less likely that individuals would have to settle for 15% of full value.
    3) Long term, it encourages individuals to purchase government bonds since they know that they can be sold pretty easily if times get tough.

    Jefferson - Paying the original bond holders indeed penalizes people who may very well be shady, but here is what it does:
    1) Bond holders have no incentive to inform themselves of the current value of their holdings. They have the comfort of knowing that if they make poor decisions, they will be rewarded anyway.
    2) Bond holders would be stuck with bonds until they matured. If times got tough and an individual needed money, nobody would give them anything for worthless piece of paper. Purchasing a bond from someone else would have no upside at all.
    3) Long term, the Federal government would have a tough time issuing bonds since people know they would have no access to cash should they need it.

  3. One other thing:

    The original transaction was a trade of risk for security.

    The seller in this case got financial security at a time when there was none. The buyer accepted the risk of losing his money in exchange for the possibility of getting paid later.

    We've all had the experience of buy something and finding a better deal later or sold something only to find out its true value.

    Buyers Remorse teaches us to be smarter in our decision making. If there is no risk of loss, we will keep making foolish decisions.

  4. Great analysis. I would have included more of Hamilton's position, but I thought it was getting a little long as is. He makes a similar point to your 2nd under Jefferson. The veterans got money when they needed it (they were free to take advantage of that opportunity), and the speculators actually took a chance on the U.S. gov't. As you reiterate, our senses of justice revolt at the initial thought of Hamilton's policy, but, again, it's better for all in the relatively immediate future and in the long run. What's more sentimental than that?

  5. Great post Joe! Your wife turned me on to your blog, and I look forward to keeping up with it. I think the idea for a series on "well-meaning leftists" is spot on.

  6. Very nice Joe; that's why you’re the intellectual. Was that a correct use of the semi-colon?

  7. Yes, puffdaddy. A very well positioned semi-colon. :)

    And I agree. Very well written post, Joe. I especially appreciated John's added information too. (For those of us who are a little thick skulled, we need the breakdown for things to hit home).

  8. To be perfectly frank, I'm a sucker for colons, semi-colons and dashes, so I'm not sure I can speak with the sort of clinical detachment for which I usually strive. I like how they burden my prose with more complex and subtle relationships than are possible without them. The more the merrier.