The Road to Serfdom, The Definitive Edition

 The Road to Serfdom, The Definitive Edition by F. A. Hayek

The Road to Serfdom is a key economic book that is concerned with the intervention of government within society. He is often remembered as a strong libertarian against any government intervention. In reality, he was in favor of appropriate government, but wanted it limited to appropriate levels in areas that the markets could not self-regulate.

Hayek had experience in Germany. The country had significant social programs and was one of the more socialist countries. The Soviet Union also sought saw Lenin and Stalin carry out the communist revolution from the top down. True collectivism only works on a small scale. On larger scales, it requires a leader to "enforce" it. Even German Nazism was "National Socialism". Forms of Fascism are a likely result of socialism. These governments typically endow a few to implement central planning. This substitutes the will of a few for the power of a complex markets. ("Elites" often subscribe to socialism with the hope that they will be able to implement their plans. However, if democracy is maintained, that means that the majority will end up getting the power to implement.)

The book itself is rather short. It had been extremely popular in its day with Reader's Digest versions. This edition includes a significant amount of background material by Bruce Caldwell.

Rise of the Warrior Cop: The Militarization of America’s Police Forces

Municipal Police are a relative modern innovation. While police did exist in ancient Rome, they fell out of favor in much of the world. They were not really established until decades after the founding of the United States. Prior to that, communities were mostly homogeneous and would carry out their own discipline. Police were needed only after the rise of larger, less homogeneous cities. Different approaches were used for police initially. Some cities made them very local patronage jobs. This had advantages in that they knew the community. However, it also was rife with corruption and discriminated against non-community members. The opposite extreme was a distant non-resident professionalized force. This eliminated the corruption and seemed to provide equal service. However, the police had little "skin in the game" and did not necessarily align with community needs.
An important point of police process is the "castle doctrine". A person's home is a castle and cannot be broached except under extreme circumstances. The third amendment to the constitution alludes to this. This concept was gradually broached as police powers expanded.
Slavery and reconstruction were both used to expand police powers. Ironically, laws used to capture fugitive slaves were later used to enforce rights of freed blacks in reconstruction. The rule of unintended consequences does seem to regularly play a roll in law enforcement.
The 1960s and the war on drugs saw a huge increase in police militarization. SWAT teams were created to help respond to extreme situations. On large police forces, there was often some justification for these teams to respond to some extreme situations. On smaller police forces, these teams were often forced to justify their uses. The police would use the SWAT team in places where it is not needed, simply because they had a team. No-knock search warrants also became favored by SWAT teams in drug raids. Even the "knock" warrant usually was followed quickly by break in, with the fear that drug evidence may be flushed down the toilet. SWAT team members often loved the thrill of the break in. Civil forfeiture laws further encouraged police to go after drugs in order to make money. The police were able to make money and have fun, but did little to help stop the drug trade. There was also collateral damage, with many cases of cops hitting the wrong house or killing innocent people.
The book does a great deal to support many of the "defund the police" arguments. However, there are many complexities that need to be explored. Especially with regards to drug police, there are federal laws that pre-empt some of the state laws. There are some cases where the militarized force is needed. (After all, it was an inability to properly respond to Austin sniper-shootings that helped lead to militarization.) It is a tough challenge.
The book is highly relevant to the current political debate. However, it also identifies some of the political challenges. The "party out of control" often tends to be the one against militarization of police. Thus, democrats seem to be the "saviors" today. However, Biden's name comes up repeatedly in this book as one of the key sponsors of legislation to increase the scope and militarization of police. If he becomes president will it just shift the police to the "left-wing enforces" and leave are country further divided?

The Great A&P and the Struggle for Small Business in America

I had heard of A&P as a small Northeast grocery chain that may have been more important before. However, I did not realize how significant they were. A&P was the Wal-Mart of the early early 20th century. It evolved from a "showmanship" tea company to a cut-throat grocery company. Under the Hartford brothers, A&P expanded from the Tea and sugar business into grocery sales. At the time, most grocery stores were small independent operations that provided deliveries and credit and sold mostly individual items chosen from bulk containers. The quality was often suspect and the touch of clerks was required along the way. A&P created a centralized system with store brands as well as name brands. The stores became more self-service and did away with credit and delivery. They used their scale to give everybody low prices. (They were even concerned about stores becoming too profitable, thereby reducing the benefit to consumers.) The company grew like crazy and expanded throughout the eastern United States. The stores started out super small (as was custom in the day) and gradually grey to be larger and further spaced. There were plenty of legal challenges (including anti-trust suits complaining that prices were too high.) The company was also very conservative, sticking to short term leases and little debt allowing them to be very nimble.
After World War II, the company floundered. The Hartford brothers died, leaving the company to loyal employees. The inbred leadership was very conservative, trying to keep the same path, even as society was changing. New, large supermarkets were going up in custom-built suburban areas. A&P stores were not maintained well, and were small by comparison to supermarkets. The prices were also less competitive as A&P lost its advantages. The Hartford foundation also was sucking money from the company through dividends. Eventually the company went public, leading to even greater scrutiny before its final demise.
"The Great A&P" is very positive in its view of the A&P's legacy. The company was truly innovative. However, it did start the ball rolling on many changes from which we are still recovering. (They sponsored the "chicken of tomorrow" contest that lead to bland meat optimized for production of calories rather than bird health or taste.) Their innovations led to the elimination of many "mom-and-pop" operations, only to have A&P itself fall in favor of more nimble operations. We have seen this repeated with book-stores and other retailers. We do get lower prices and more efficiencies, but we also lose out on some of the personal benefits and product quality. If only we could get the best of both worlds.

The Preadator State

James Galbraith is the economist son of famous economist John Kenneth Galbraith. In Predator State he provides a critique of the Bush administration's economics as well as many modern economic practices from both sides of the political spectrum. His criticisms are sound. However, his alternatives are not as powerful.

He identifies "lucky coincidences" that caused various economic theories to be proven. The oil shock of the 70s had an immediate cause in OPEC's quadrupling of oil prices. However, the price rise was forced due to the devaluation of the US dollar caused by the dropping of Breton Woods. Since commodities were priced in dollars, a less valuable dollar meant lower prices even as the dollar value per barrel remained the same. The weaker dollar was caused by the US no longer being the master exporter.

Following economic booms were caused in part by the fall of Russia and the rise of China. Russia had a surplus of cheap energy it wanted to export. China had great demand for raw materials as well as plenty of cheap good to export. Together, this lead to a global economic boom that would have happened regardless of interest rates or strict government policy.

He is critical of "balanced budgets". The US deficit is caused by the dollar's status as a reserve currency. Other's need dollars, so the US will need to have a deficit. (However, this argument has some flaws. Why are the deficits rising even as countries like China are using a "basket" approach to reserves. And what about the limit to the deficit. If debt payments grow to consume most of the budget, the easy solution would be to devalue currency. However, this would reduce the dollar's value as a reserve currency and upset the US as well as the world.)

Free markets receive the brunt of his criticism. Enron is a prime example of free markets gone amok without noticeable improvement. The health insurance system is also something that has resulted in great costs that would have not been needed with a fully public option. (He wrote this before Obamacare. I'd imagine he would absolutely hate the system that we have in place now.) School vouchers are also on his "naughty" list. He has some sound arguments, but seems to go a little too far. Competition does have its benefits in producing innovation and improvements that could not be made by government fiat. Government programs tend to be overly bureaucratic and slow. The lack of profit motive is often accompanied by a lack of urgency and a desire to "please everybody". A true balance is needed with competition where appropriate and universal "utility" where not. Regulations need to be created for the benefit of society not for the few regulated industries. "Crony Capitalism" that benefits oligarchs is not helpful for the general public.

The book had an interesting discussion of unemployment and equality. Countries like Denmark with low unemployment, low income equality and significant social welfare programs are held up as the vanguard. Unemployment is seen as function of income inequality. When incomes are more equal, unemployment will be lower. High CEO pay is a "rent seeking" activity that does little to benefits companies.

He provides some critique of economics in general and supply-side economics in particular. He desires a more centrally planned solution. However, in his "central planned" solutions he relies too much on the status quo. A cap and trade system is "bad". Instead the government should create elaborate programs to research improvements in automobiles to make them more fuel efficient. However, this dismisses better alternatives like flat carbon tax or a restructuring of our transportation system. In 100 years we terraformed the earth to facilitate people traveling in cages that weigh 10 times as much as they do. Creating a more efficient system for moving people and goods along with an improved allocation of space would do wonders to solve the climate problem. However, spending government capital in one area to improve vehicles, while in an other area to optimize land use for inefficient vehicles doesn't help. The approach needs to be unified. Alas, doing that in a complex government is difficult, especially as many have already adapted to old regulations and would love to sue to maintain them.