Economic growth slowed to a near standstill in the past quarter and does not seem likely to budge much this quarter, either. Real investment is receding, with nonresidential fixed investment down 2.1 percent and equipment purchases down 5.5 percent. What that means is that nobody is building new factories or upgrading the machinery in others. Residential investment is down 5.7 percent, exports down 7.6 percent, imports down 1.4 percent. The growth is in government: State and local government spending is up 1.3 percent, total federal spending up 0.7 percent, military spending up 2.4 percent, nondefense spending up 5.9 percent. That means that while we’re not investing in new oil refineries or microchip factories, we are investing in federally subsidized cowboy poetry festivals, maintaining unused federal buildings, and making bonus payments to VA doctors receiving reprimands for practicing without valid licenses or flat-out refusing to see patients.
The case of two VA doctors is instructive. Both received reprimands for unprofessional performance, and both received “performance” bonuses for achieving goals completely unrelated to the care of patients, such as being present at a certain percentage of departmental meetings, publishing an article, or “improving survey metrics.” When waste and abuse are pointed out, or when the IRS abuses its powers and harasses political enemies, or when the NSA has overstepped its boundaries, the usual response from Congress, the administration, or the bureaucracies is: “We didn’t know!” If they had known, they say, they should have done something. But they didn’t know.
“We didn’t know” isn’t a very good excuse. But it usually is true.
Each of us knows approximately nothing. Even the very smart ones among us know basically zilch about almost all of the important aspects of anything and everything. We may have some specialized knowledge about our particular field of expertise, if we have one, but it is almost always the case that the deeper the expertise the narrower the specialization, because the really interesting questions turn out to resist generality and demand specificity. And it is always the case that the world outside our field of expertise is larger than the world inside it. E.g.:
Sheldon: I’m a physicist. I have a working knowledge of the entire universe and everything it contains.
Penny: Who’s Radiohead?
Sheldon: . . .
Penny: . . . ?
Sheldon: I have a working knowledge of the important things.
Recently, I was asked a question about Hindu nationalism, and whether I believed that there was an authentic theological basis for it. I’ve read the Bhagavad Gita and the Upanishads, lived for a time in the country that sometimes calls itself “Hindustan,” and have even encountered a couple of prominent Hindu nationalists. Even so, my knowledge of Hindu theology and its relationship to Hindu nationalism is superficial, to the extent that it exists at all, and my experience with Hindu literature and culture has produced at most a Socratic notion of the scope of my ignorance. I’d guess that I know more about the subject than nine out of ten Americans, but that is less significant than it sounds; if you have never read the works of Guy du Maupassant but you are familiar with the plot of “Boule de Suif,” then you are well ahead of the game compared with most 21st-century Americans you’ll meet. But the list of things about which you know nothing will remain effectively infinite.
In politics (and in political journalism), the raw material is words about words, an intellectual exercise in what J. Frank Dobie described as “nothing but a transference of bones from one graveyard to another,” generally operating at a great remove from anything concrete. And it is easy for those of us with some rhetorical fluency to mistake in ourselves, and to cause others to mistake in us, levels of knowledge that are relatively high but absolutely trivial for genuine understanding. (If you’re really good at presenting trivial understanding as authoritative, a position at Vox awaits you.) If the business of creating agricultural policy is unmoored from the business of raising crops or tending cattle, and it inevitably is, then it will end up being words about words and little more, and the regulations and transfers associated with it will have largely unpredictable effects.
The same is true for national economic policy.
“The economy” is an abstraction, a way of talking about billions and billions of discrete activities and transactions that are too complex and fast-moving to be aggregated into something that politicians can shape through policy. It’s something like that famous mess of mousetraps and ping-pong balls used to illustrate atomic fission in those old educational films, except that the reaction never ends. Economics is a way of trying to describe the economy, which is a very different thing from trying to manage the economy. If there were some set of policies that could be enacted in Washington that would provide everything that politicians and the rest of us would like to see in our economy — strong and steady growth, low unemployment, low and stable inflation, etc. — then they probably would have been enacted by now, regardless of which party or president holds power. There’s not much political upside to economic stagnation for anybody in power. You can assemble a basket of economic factors with great subtlety and complexity — top tax rates, government spending as a share of GDP, monetary policy, you name it — and you will not find much consistent correlation with positive economic outcomes over long stretches of U.S. history: We’ve had good economies with higher tax rates and with lower tax rates, with higher levels of spending and with lower levels of spending, with looser money and with tighter money. Spend enough time looking at the charts and you may conclude that those little islands of economic bliss that have from time to time emerged from the stream of history were not much more than happy accidents. That’s true at the global level, too: Within certain broad limits defined mainly by property rights and honest courts, countries with highly dissimilar economic policies — Singapore vs. Sweden, the United States vs. Germany — will have fairly similar outcomes, with periods of stability and growth punctuated by recession and the occasional crisis.
But still the politicians — and, worse, such intellectual enablers as Paul Krugman — treat the economy as though it were a piece of machinery that only they know how to operate: Do x and enjoy y result. When things go off the rails, it’s “We didn’t know!” But when it’s election time, it’s: “We know! (So give us power!)” The federal government very generally does not know what it is doing or what it should be doing — it does not know what its own agents are up to most of the time, much less how those agents should go about interacting with firms and citizens engaged in all manner of activity about which said agents know approximately nothing. The generalization is triumphant, the details forgotten: “We know what to do about veterans’ health care, but we have no idea what our veterans’ doctors are up to,” or “We know exactly what to do about health care, but we didn’t even read the law we passed to empower us to do it, and so we don’t really know if we’ve legally empowered ourselves to do exactly the things that we know — because we know — are what needs doing.” Etc. The wisdom of Solomon as executed by the Three Stooges.
What we have here is a mapmakers’ dilemma. If you wanted to make a map of Houston that was entirely accurate and complete, the map would have to be the size of Houston — which, at 600 square miles, would be difficult to fold. To make a map manageable, you have to leave some things out, to simplify, to oversimplify, to reduce, to condense. Sometimes, making a map more useful means misrepresenting the actual territory, as in the case of the distorted Mercator projection. The mistake our policymakers always stumble into is mistaking the map for the territory, as though rearranging the bits of policy also rearranged the atoms of reality in a fashion that is if not precisely parallel then predictable. You could spend ten years locked in a barn in Muleshoe, Texas, poring over maps of Paris, but if you show up on the rue de la Paix one fine morning looking for work as a Parisian bus driver, your perfect, comprehensive knowledge of the map is not going to get you the job, especially if you don’t speak French, know the routes, or know how to drive a bus. You have a great deal of knowledge, but it is the wrong knowledge. You know the map, not the streets. There’s a reason that even in an age of ubiquitous GPS, people in Southern California engage in those wonderfully self-parodic conversations about which streets to take to get to which destination — the shortest route is not necessarily the fastest. Reality is not on the map. The problem confronting politicians who would manage the economy is not only the quantity and complexity of the relevant information but the question of where that information is to be found. The useful stuff is contextual, specific, local, and often temporary.
People engaged in making public policy should meditate for ten minutes every workday morning on the words of Paul Valéry: “Everything simple is false. Everything complex is unusable.”
The Right means to radically remake American government at all levels, and we’ve got a few roadmaps of our own, and our analyses also gyrate queasily between the false and the unusable, occasionally balancing for a moment on the pivot. But while the radicals and the libertarians and the “Rome wasn’t burned in a day” crowd (of which I count myself a member) are preparing to storm the battlements of etatism and drown the IRS in the Potomac like an unloved kitten, spare a moment for that other kind of conservatism, the boring, limiting, “Delta Tau Chi has a long tradition of existence” conservatism that reminds us that our big ideas, too, are likely to have some unintended consequences, and that we will not like all of them. Radical reform is necessary, but so are stability, continuity, and predictability.
Our big ideas should be tempered with an understanding of our ignorance and the limitations that ignorance puts on our ability to shape the world in a predictable way through politics. The best and only way that modern societies have come up with for aligning the broad thinking of public policy with the specific facts of economic life — to use the map to understand the territory — is to create simple, general, stable rules at the macro level while individuals and firms operating at the micro level go about the messy and improvisational business of commerce, with any luck producing the robust economic growth that has been eluding us. Entrepreneurs and companies can accommodate many different kinds of public policies if they have the time to adapt to them and the expectation that doing so will be worth the investment — that things will not simply career unpredictably beyond their ability to compensate.
As a practical matter, that means that while there would be some value in reducing the tax burden, there would also be some value in having a tax regime that is stable and predictable. If the choice were between a top rate of 33 percent that had to be renegotiated in two years and a top rate of 35 percent that we could expect to endure politically for some time, the stability would probably be worth the two points. All of our reforms should be when possible oriented toward simplicity and generality: straightforward rules that apply to everybody in the same way, with fewer favors, subsidies, carve-outs, exemptions, and industry-specific tax credits, with less economic protection and attempted steering. This might suggest, for instance, that a flat tax on income is the policy to pursue, even though it is almost certainly not the most economically efficient model of taxation or (it will occur to many in Washington) the one that offers the greatest opportunity for political leverage. We should let taxes be taxes rather than try to make them into social or industrial policy. We should let the roads be the roads, not economic-stimulus programs.
Our aim should be a government that does relatively few things but does them relatively well. And the less the federal government does, the easier it is to keep an eye on it. “We didn’t know!” happens when conservatives are in power, too.
— Kevin D. Williamson is roving correspondent for National Review.