Monday, April 20, 2009

Libertarians: Time to Change the Secret Password?

Maybe I'm missing something important here, but it seems to me this statement from Will Wilkinson is grounds for banishment from the libertarian treehouse:

I think we have recently punctured some dangerous misconception about the real value of certain kinds of “financial innovation,” and so we should reconsider how much those who have become wealthy in these fields have actually enhanced general welfare. I think a lot of execs basically failed to do their primary job: to manage their firms’ assets responsibly on behalf of the owners of those assets: the shareholders and creditors. This makes them justifiable targets of outrage. We’ve learned a lot of lessons. I think we’ve been given reason to think much harder about the principal-agent problem — the mismatch of incentives between owners and managers — at the heart of corporate organization. I think we’ve learned just how “socially responsible” maximizing long-term value really is, and how anything that distracts from focus on long-term value creation (whether it be myopic bonus systems or irrelevant-to-the-business “corporate social responsibility” initiatives) is a potentially hazardous nuisance. The Smithian congruence between self-interest and the general welfare is not a natural fact of the world, but is mediated by social norms and the structure of institutions. We need to make sure the desire for wealth takes the right shape, and that the institutions within which people pursue wealth tend to actually work to convert “low” aspirations into real social benefits.
Granted, Wilkinson takes a characteristically glibertarian swipe at the state of "corporate organization" to incant outrage at the real world's ever-disappointing tendency to produce situations not countenanced in the works of Robert Nozick, Milton Friedman, and Ayn Rand, but that aside, this business of "lessons learned" -- and oh, such non-libertarian-sounding lessons! -- is surely grounds for exclusion.

That I think he's mostly right in this statement surely counts against him in the counsels of the treehouse. Mostly, as in: I simply don't share the libertarian fancy under which human beings lack the ability to forecast outcomes. We can accurately forecast the short-, middle-, and long-term consequences of our actions and choices, and do so regularly: we do so in business, politics, education, religion, among family groups, and in virtually every situation that might be called social.

As to the specific area of concern here, surely not everything that labels itself "socially responsible" in business will pan out as expected, or as well as expected; and it's easy enough to cite instances where positively bad outcomes arise where good outcomes were expected, but this know-nothing pose is contrary to the most commonplace experience of humankind.

All that aside, the treehouse required a new password at "lessons learned," let alone at "[w]e need to make sure the desire for wealth takes the right shape."

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