Socialism is Wired Into our Genes, so How do Free-Marketeers Ever Get Elected?

Socialism is Wired Into our Genes, so How do Free-Marketeers Ever Get Elected? By Daniel Hannan in the UK.

For the first time in three decades, we have a government focused on prosperity. No more cheap money. No more ghost-growth. Britain will concentrate on real-world wealth, removing barriers to enterprise so that we can all see rises in our living standards — especially people who depend on their salaries and so have missed out on the asset bubble of the past decade.

Why then have so many of the intended beneficiaries taken against it? …

The answer lies in our neural wiring. Liz Truss’s budget, however reasonable its contents, triggers three deep-rooted cognitive biases. First, change-aversion. Secondly, a reluctance to see how other people’s enrichment might be to our own advantage. Thirdly, a difficulty in accepting the notion of the lesser evil. …

So how, you might ask, do free-marketeers ever get elected? If our hunter-gatherer intuitions incline us against freedom, if they predispose us to see others’ success as coming at our expense, if they lead us to prefer control to spontaneous order, how is it that we have had more Conservative than Labour governments?

The answer is that, although we distrust the methods of capitalism, we generally like its results. Parties of the centre-Right tend, overall, to have a better record when it comes to prosperity. We might, when asked in isolation, say we want higher spending, more social protection and the rest — but we can’t help noticing that every Labour government in history has put unemployment up. …

Once the lockdowns were decreed, we were in a world of lesser evils. You cannot put an economy into an induced coma without lasting damage. You cannot keep printing money without a reckoning, and we printed more money in 2020 than in the whole of the previous decade. The reckoning is happening now, and not just in Britain. On every continent, inflation and bond yields are rising, even as governments dig yet deeper to fund energy packages.

Truss could have tried to keep the party going a little longer. She could have accepted the corporate consensus, favoured redistribution over growth and sought to keep interest rates down. She would doubtless have had a better reception from the BBC, the IMF, the FT, The Economist and Mark Carney. But all the problems that have been piling up since the lockdown — indeed, since quantitative easing began in March 2009 — would have grown heavier. The reckoning, when it came, would have been vastly more painful.

Grasping this truth requires us to acknowledge the existence of trade-offs, of lesser evils. Yes, a rise in mortgage costs will be difficult for many; but keeping interest rates at historic lows for even longer would be worse. Yes, a fall in house prices will be disagreeable for homeowners. But keeping the bubble inflated for longer would be worse. Yes, spending cuts will be painful; but postponing the cuts will only make them more savage.

None of this will be popular. Do you remember, from school, those charts that placed people from far Left to far Right on the x-axis and from authoritarian to libertarian on the y-axis? Well, voters do not fall evenly into the four quarters. According to the British Election Study, only 2 per cent of voters are in the “libertarian Right” quarter — the group that is best disposed, in principle, to tax cuts, deregulation and small government. A budget offering these things was always going to be controversial when Britain’s political centre of gravity is a kind of patriotic socialism.

In a land with a gradually declining average IQ, the ability to see that the free market is generally better slips and the support for socialist stagnation grows. The miracle of the last two centuries is receding.

Related: The prices of government services (or those subsidized by government) rise much faster than those offered by the private sector, because they are monopoly suppliers with less incentive to be efficient: