In a spectacular display of the very ignorance against which he issues his call to arms, Traub shows how thoroughly infected the establishment is with their group-think. God forbid the ‘fist shaking’ rabble would actually think for themselves and effect an “utter repudiation of the bankers and economists and Western heads of state who warned voters against the dangers of a split with the European Union.” If there was a miscalculation on the part of David Cameron, it was “how utterly he misjudged his own people[‘s ability to think for themselves].”
Rise up against the ignorant masses? Be careful what you wish for, Mr. Traub… Your intellectual nakedness just might end up on full, public display.
The Foundational Issue: The Most Significant Unit of Society
Traub shows himself ignorant of both British and American history when he concludes: “[M]aybe we have become so inclined to celebrate the authenticity of all personal conviction that it is now elitist to believe in reason, expertise, and the lessons of history.”
Philosophically, ‘Scottish Common Sense Realism’ provides a framework for understanding how someone’s thinking would begin with ‘personal conviction’. This framework lies at the heart of the thinking of authors like John Locke, on whom Thomas Jefferson depended heavily when writing the Declaration of Independence.
Locke’s philosophy of government and economics expresses this framework and stands in stark contrast to that of Thomas Hobbes. Between the two of them we can drive the difference down to a single question: What is the most significant unit of society? The answer for those who would follow Hobbes is the State. For those who would follow Locke it would be the individual.
Money and Monetary Policy: The Scaffolding of Society
At the heart of debates over economics, then, lies the matter of money. If you are inclined to build on Hobbes’ premises, money is a tool of the State for ordering the affairs of society. If you build on Locke’s foundation, money is a utility contrived first by individuals to facilitate commerce. If we revisit the debate between Keynesian and Austrian economics, these two presumptions about the nature of money animate each philosophy. Keynes presumed an essentially Progressive, statist understanding of human government. His prescriptions for monetary policy follow quite logically.
The problem with Keynesian economics at this point in history (which Traub at least recognizes to be singular) is he could not have foreseen either the computer or how it has changed banking on the one hand and supply-chain management on the other. Neither could he have entertained the deployment of massive amounts of capital to essentially speculative financial products – most of which would have been illegal in his time. These two things have conspired to elevate what Keynes called the “Zero Level Boundary” to a point above zero where money has been made so cheap that the actual creation of new wealth (by improving things) cannot compete with speculation and stock buy-backs for available capital. Or in other words: when the chips are free, who wouldn't gamble?