Crisis, Hero, Zero - And Journalism

The lead editorial in Mint today, titled "A crisis of legitimacy," is a historic document, for this is the first time a mainstream business daily has opined that Chacha Manmohan S Gandhi has flopped. The first para says:

A grave crisis of legitimacy afflicts the United Progressive Alliance (UPA) government. This is due, in very large part, to the absence of leadership in government and in the political system. There are no signs of this abating anytime soon.

And the edit concludes thus:

... the prime minister’s first and last line of defence has been his personal honesty and integrity. No one disputes that. But after five-and-a-half years at the helm of India, that shining banner has frayed into a tattered standard. The question is not about him or his honesty but what his ministers do; what do his partymen do; the inability of his government to carry out key, nay the very basic, tasks of governance. In this and much else, Manmohan Singh, in spite of his lofty credentials and even higher expectations, has been found wanting. In calmer moments, he will do well to reflect on what needs to be done to stem the rot that not only threatens his government but also the present and future of the country.

This crisis of legitimacy has many dimensions - political, economic, and legal. In politics, it is about certain legitimising concepts - like "democracy" and "socialism." In economics, it is about markets - as against "welfare" and PSUs. And in law, it is about Property - and legislation.

At another level, the crisis is about "organisations" - like the "political party," the bureaucracy, the armed forces, the State Police and the State judiciary.

What is most heartening is that some editors are realising that a crisis is underway. There are no simple and easy solutions to such a crisis - no "magic bullet" - but it might be comforting to note that this crisis is near universal: it afflicts the USSA and the EU too, where the very same legitimising concepts in politics, economics as well as law are also battling it out. So it is a long haul that lies ahead. More and more journalists must uphold Truth, Liberty, Property and Sound Money.

In order to inspire such journalists, I would like to introduce them today to the works of a great hero of 20th century economic journalism - Henry Hazlitt (1894-1993). His Economics in One Lesson (inspired by Bastiat, another great journalist) is a must-read, as is his The Foundations of Morality. Hazlitt became an economist under the personal influence of Ludwig von Mises - and it not unsurprising that he wrote quite a few critiques of Keynesianism that need to be resurrected and popularised today. He also wrote against "welfare" - and how Third World poverty cannot be cured by "foreign aid." For 20 years, his column in Newsweek upheld laissez faire capitalism and the gold standard; and railed against the machinations of central bankers, the IMF and the World Bank. Murray Rothbard honoured him on his 80th birthday with this tribute, in which he points out why Hazlitt remained ignored - and what follows is the first of five points:

In the first place, he lacks both a PhD and an academic post – those twin passports to intellectual and academic respectability. For a scholar to discuss or footnote a book by Hazlitt – no matter how important or scholarly – would be to lose caste and brownie points in the status-anxious world of academe.

Note that the Big Flop we started off discussing, our Chacha, has a PhD and has held academic positions - and that he has many friends in academia worldwide. It is precisely for this reason that I say we need many more self-taught journalists like Hazlitt - not only to take on academia, but also to enlighten the reading public.

To reinforce the fact that the university academics of our time are very much "part of the problem," let us turn the discussion away from the great hero Hazlitt to the Great Zero - Milton Friedman of the Chicago School, who won the Nobel prize in 1976. To most people, Friedman is considered a "free market economist" - but the fact remains that he was always a "court libertarian," one who helped the State in many ways, and who is also responsible personally for the "positivism" that characterises the methodology of mainstream Economics.

For example, it was Friedman who came up with the idea of a "withholding tax" (what we in India call "tax deducted at source"). It was also Friedman who conceived of "school vouchers" - a statist idea that does not question the role of State in education, and a vast budget for the same. Friedman and his Chicagoites are all believers in fiat paper money, in "stabilisation," in the notion that Economics can be divided into "micro" and "macro" - and that the State has a role to play in the "macro" domain. Friedman championed welfare as an "automatic right" - in the form of a "negative income tax." None of these ideas are even remotely "libertarian."

Murray Rothbard, whose tribute to Henry Hazlitt I have cited above, also penned a powerful critique of Milton Friedman and his Chicago School. This valuable document is available here. Rothbard concludes thus:

The libertarian movement has coasted far too long on the intellectually lazy path of failing to make distinctions, or failing to discriminate, of failing to make a rigorous search to distinguish truth from error in the views of those who claim to be its members or allies. It is almost as if any passing joker who mumbles a few words about "freedom" is automatically clasped to our bosom as a member of the one, big, libertarian family. As our movement grows in influence, we can no longer afford the luxury of this intellectual sloth. It is high time to identify Milton Friedman for what he really is. It is high time to call a spade a spade, and a statist a statist.

The great "crisis of legitimacy" that is currently underway is in many ways a crisis for academia - that is, "mainstream economics." And this includes the Chicago School. The only challengers to these views are the Austrians - and Hazlitt was very much an Austrian. Hazlitt taught himself - and wrote. That is what more and more economic journalists need to do.