Waiting for Turgot: Tales of Political Economy

Edward H. Clarke

[July 2000 / Part 3 of 3]

Chapter 2

2.0 Ideology and Utopia

"What strikes the eye in all contemporary scientific utopias is their rejection of the ideal political order as the principal subject of inquiry". (Manuel and Manuel, 1979).

The conservative ideology is at the heart of such a rejection in that the task of a "rational social art" certainly should not be the creation of "the State". I argue, however, for understanding the State and asking (along the lines of De Jasay, 1985 (The State) -- "what would you do if you were "the State"? I also point to a way out of the dilemmas posed by De Jasey, all growing out of the "problem of majority rule", which leads him to portray modern Sate capitalism as subject to growing "redistributive addiction" and "churning", moving inexorably towards "a plantation State". How could incentive-compatible institutions combat this inexorable tendency?

In a treatment of problems of ideology and utopia (see Mannheim, 1936), in the world political economy, I try to focus the more widespread attention of scientists and the general world public on the need for a rehabilitation of political economy along incentive compatible lines. The work speaks to a political economy of mobility (and change) as well as of hope. This work does not cure the world's ills, but focuses attention on what can be done by way of information and incentive (recognizing also the limits of bounded rationality) to make the process of living together on this planet a more harmonious one.

The best of utopian thought has often shown an optimistic hope or faith in both science and humanity as well as the ability of people to discover the truth. Even if people were to discover the truth, why are incentives to tell the truth of any particular meaning? I began this work almost 20 years ago when the American economics profession discovered the demand revealing process. Professors Tideman and Tullock (1976) elaborated on demand revealing as one of the truth telling mechanisms, the family of which became known over the years as the modern theory of incentive compatibility.(2)

More importantly, this book is part of collective endeavors during the end of this century (millennium) to reconstruct and rehabilitate a political economy for the next century and millennium. The work anticipates a politics of hope and of change. I am aware of work by at least one prominent economist to publish several volumes of such work, beginning this year (1995). I may be a minor figure in this important work and the style that I use is certainly not a traditional one in political economy. To many, this work my read like a travelogue, say Graham Greene's Travels With My Aunt, with not even the entertainment value of real world fiction, in my reluctance to name people other than long dead economists or 18th century enlightenment philosophers.

The work is reflective of the need in moral philosophy to put one's ideas in a historical context as instanced by the work of postmoderns and postpositivists such as MacIntyre, (1981), Ricouer (1984), Dirreda (1976) and others. The historical context here is the stuff of comedy and tragedy, and any entertainment value is muted by the analytical requirements of the dismal science. There is often little entertainment value or moral insight in discussion of topics like economic rent (i. e. the rent to land natural resources and collective goods provision) and public expenditure theories, except to the extent that the stylized facts presented by the author in contrasting a rather idealized system with what exists in the present world of taxation and public expenditure will interest a large body of people in the social sciences and the citizenry at large.

This might be viewed as a self serving attempt to popularize an idea that has created a great deal of excitement in the social sciences and about which much has been written. It is called the modern theory of incentive compatibility. Every student whether in economics or in policy studies at some schools learns something about incentive compatibility and often it is the "Clarke tax", because this formulation is relatively simple to present and for students to understand. After teaching it, the subject is then often dismissed because of "difficulties" associated with its practical application.

In earlier attempts to popularize and disseminate the idea, it was claimed as a "revolution" in economics and politics (Tullock, 1975), quoted in Clarke, 1980. The years since have been somewhat disappointing although they help sustain my life in journey through a large segment of the world political order, where polities were themselves undergoing what amounted to a revolution, symbolized by the end of the Cold War. Although I had not always fully appreciated how this had all come about, I began to better understand and appreciate these events in reading the 1993 Memoirs of George Shultz (1993), a former Secretary of State who had played a key role in engineering the transformation, or presiding over the execution of it. See also Shultz address (Richard Ely lecture) of January 1995 to the AEA. Or one could read others which might simply note that the political order to which we had become accustomed to was simply sowing the seeds of its own destruction, with personalities playing a very minor role.

In any case, and as I noted in the last chapter, this work seriously began in early 1995 as I attended the annual Allied Social Science meetings (mainly of economists) in Washington, hearing former Secretary Shultz deliver the annual Richard Ely lecture. Two decades before I had worked assiduously to have some of my own ideas on the political ordering of U. S. economic policymaking entered into a very similar Richard Ely lecture being drafted for the same meeting by Herbert Stein, then Chairman of the White House Council of Economic Advisers.

During the course of several days in early 1995, I encountered acquaintances, some with whom I had only corresponded, as I moved through the halls of this meeting of thousands of economists, whose ideas played critical roles in the shaping of the current political order and those to come. One individual, whose work (Thompson, 1965) had stimulated or provoked my truth-telling discovery because it provoked me along with the "water economics cost allocation" question I was studying to spend endless hours studying his (the first known to me) solution or the manifestations of what I was trying to discover.

In the conversation he told me of a prospective 3 volume work (the first to be published this year in 1995) to Reconstruct Political Economy. It provoked me into at least two months of writing this essay (chapter 2) as well as beginning an introduction to the somewhat more modest work, entitled The Practice of Social Art.

If Professor Thompson's book creates a sensation, then I would be a modest fellow traveler. As a political bureaucrat, engineering the end of my long tenure in the U. S. Government, I am still too much a follower of Mayor Daly's ward healer's dictum/motto that I remember from the revolutionary days of 1968: "Don't rush to the front of the parade".

But the economist's remark about a work that I had not read (only a short revelation in a paper he gave me on a Pascalian rationalization) of health and safety regulation with a suggestion that he had done a Hegelian reconstruction struck me as what I thought would have been produced in great quantities since 1968. Perhaps it is there, like much good Utopian thought, and I have not become aware of it. Perhaps the work lurks near the surface. If so, this essay and other collective work may help to reveal and uncover it.

As part of what I believe to be the need for collective endeavors during the end of this century (millennium) to reconstruct a political economy (polity) for the next, the economist's work is the only manifestation I know of (like the discovery of mechanisms to motivate truth-telling), As was the case in that example, there had been others (William Vickrey, 1961) and these works helped to engineer a flowering of such mechanisms, which is largely the subject of this work.

As is the case with the truth telling mechanisms, mine and that of the reconstructionist economists's work may be minor scenes in these flowerings in that the mechanisms that will be used to achieve "economic harmonization" may seem quite divorced from the mechanisms used to order "power" relations in the existing social order, and the transitional mechanisms from one order to the other may have many qualities that appear different from those I discuss in this book, and many examples are provided in Chapters 3 and 4 (See also Varian, 1994). Perhaps this work (and that of other reconstructionists) will do as much as can be expected to link the mechanisms explored here to the existing "power" relations, but it will be unsatisfying to many even as an exercise in Utopian thought. Worse, it may seem like the idle musings of "system builders" and planners rather than those who might employ their energies on the architecture of freedom. (One is reminded of controversies in 19th century France between Bastiat and the system builders like Saint Simon and even Proudhon.

One even has to question the utility at the beginning, to even try to make this linkage, in order to try to overcome a writer's own resistances, much less those of the world's polities. Perhaps what finally helps this writer overcome them was another work from California (an essay on the Corruption of Economics) largely about the temples in which I and many of my colleagues had worked, and which led me to seriously pursue the Practice as a means of fostering a more modest rehabilitation of the political economy.

In the last chapter, I focused on an example of the political unconscious that must be dealt with from the standpoint of the "anticipatory consciousness" in the development of an idea. I spoke to Professor Thompson "Pascallian" rationalization of health care provision and health and safety regulation in the United States. Professor Thompson would direct the flow of some important "societal rent" (damages in tort law suits) to the State rather than plaintiffs and trial lawyers. In foreshadowing and explaining the political economy of demand revealing as set forth in this book, let me turn to debates among economists themselves about the development of America in modern times as summarized in Mason Gaffney's "corruption of economics".

2.1 Gaffney's "The Corruption of Economics"

This is about the relation of my idea to the work of a 19th Century social philosopher in America -- Henry George, and the efforts of Mason Gaffney whose work as a "water resources" economist I came to know in my early work trying to design a regime for water quality governance institutions.

First, with respect to Henry George. Over the years, I have been led to believe that the idea I had discovered could play an important role in relation to the idea that George had borrowed from the French Physiocrats. Both the "impot unique" and the "single tax" played enormously important roles in shaping political thought in the two previous centuries, under the influence of men like Turgot and Henry George. I wanted to similarly popularize my own idea even though it could meet much the same fate as the "single tax".

This brings me to societal resistances as well as to Richard Ely and my matrix, if you will, some 100 years later. I put myself in the position of someone like Professor Gaffney carrying out an institutional assessment 100 years from now. If he were writing about land policy, mobility policy, entitlements policy, international resource allocation or everything put together, what would I have him say. It is usual, following the usual standards of the profession to let the dead economists off somewhat more easily than has Gaffney in this portrayals. To the extent that Gaffney is right, and I believe him at least from what I have been able to learn, to be largely right, then there is a large amount of deconstruction to be carried out by American economists. This would be a healthy activity and it would help to at least alleviate the kind of damage that is being done to newly developing countries (such as South Africa) that are portrayed at the conclusion of the corruption. Different messages would be carried to Russia, to Haiti and elsewhere. Revolutions might be ignited, sooner rather than later, but they could be accepted with a spirit of hope as did men like Turgot who was encouraging our own during his Prime Ministership in 1775 shortly before his downfall.

In the book that might be written by Professor Gaffney in 2095, I care very much what is said even if I'm a very minor figure. If one reads about a minor but key figure such as Alvin Johnson on p. 72. If one is to understand Johnson, it is important to understand his matrix. On can then understand the historical context in which Johnson was led to write a critical Atlantic Monthly piece called "The Case Against the Single Tax" in that prestigious journal during 1914.

What profoundly disturbed me about Gaffney's work was the result of past deconstruction which is a lot of what the profession of economics needs, Gaffney's work notwithstanding. It struck very hard at me because as a student, I had started as an accountant. I was paid to leave Princeton University and to go through New York by a large unnamed accountancy firm to learn accountancy at the University of Chicago. Along the way, I learned much about "the corruption of accounting". When I began to learn the "economics of accounting" at Chicago, I read and had to absorb all the classics (J. B. Clark, Alvin Johnson and others) on rent. He and many of the other classics. I learned the work of Frank Fetter and his disciples at the Chicago Business School. I used this training to discover (as explained in my 1980 book) demand revelation. It finally won me at doctorate, even though the process engendered a lot of pain. I do not intend to betray the institutions which bred me but some apologies are due by the apologists for American institutions.

It is a perfectly understandable act for the owners of property to defend very hard the entitlements to their property and that of the universities such as Stanford, Chicago and Columbia. This is more respectable that the use of gangs to punish strikers and other more onerous behaviors in the late 1900s. The landowners and the railroads used universities and this is a fairly high minded form of corruption. Gaffney's complaint is almost Proudhonian, reading like "What is Property? -- Property is Theft". It is journalism Froncophone style rarely practiced in the respectable fields of economics. Nevertheless, it helps to add a perspective to other views on the "economic foundations of government" that legitimize the award of property rights to those who will presumably use, or efficiently reallocate them to others, who will use them efficiently.

I feel pained and uncomfortable siding with it, except that I anticipate entering the fray under the guise of mobility policy and in communicating my concerns and having them understand me, I need to tell them what I understand mobility policy to be.

I conclude by referring to Ely and his matrix. As explained by Gaffney, he did everything (much of it organized as a powerful stratagem against Georgism). He took the Land question and as only lawyers can do "defined all the issues". He organized much of the government (agriculture, public utility regulation and much else) in terms of his issues and others followed and collaborated with him. He started the prestigious JOURNAL OF LAND (AND PUBLIC UTILITY) ECONOMICS, a journal I read avidly for years looking for insights. I sometimes got quietly exorcized when someone like Tideman prepared an article on how implementation of land taxation would work in modern times and it would be quietly trashed by the editors (cite the case). But in general, I did not understand. I did not know the history or the matrices of the characters involved.

Gaffney's story reads like Macbeth when one realizes the nature of Ely's "vaulting ambition" (see Book III and the discussion of Wills' "Witches and Jesuits in Shakepeare's Macbeth) and it can lead to results than are even worse than regicide, especially if you measure happiness in terms of a Turgovian view of human progress. On some fronts 100 years of "progress" was lost because we did not really understand or comprehend institutional reality.

Comprehending institutional reality is what my work now is all about. When I put it in Dirredaian terms, we of course can't fully comprehend but we can take the next best steps toward comprehension and keep ourselves on what appear to be the right trajectories. In 1994 and 1995 I found my self talking often with a friend, a political scientist, about what I have come to call mobility policy. It appears a little different from the concerns above with the land question. The reader may at first suspect opportunism of the Ely variety -- a clever stratagem to define an issue in ways that will relieve the world's largest industry (transportation, including travel and tourism) of its fair share of taxes and that it is a simple front for a powerful World Travel and Tourism Organization located in Brussels. One might think of me about to leave the government and join the rent-seekers, who I complain about so loudly in Star Wars. (See Book III).

But it will become apparent I think that this is not the case. I'm certainly an entrepreneur like Ely though not as talented and energetic in doing everything and knowing everybody. I care about the verdict of history. I don't want to make a lot of money and then lose it (1929 like) as we reach the next trough of the Kondratiav cycle early in the next century. And most of all, believing in Karma, I don't want bad biographies or things said about me, if my work comes to become more than a textbook footnote. I obviously suffer from a certain amount of ambition, am a social reformer, and care about the verdicts of history on the schools of thought I find myself representing. Before I try to found a school of thought I need some time for quiet preparation which I seek in my next chosen place of endeavor.

This may be a place like Jill Conroy (a former president of Smith College) found in England before she came to the United States. It wasn't like what she had imagined in her fantasies, but it set the stage for what was to come, and was an important break with the past. George too found a lot of receptivity for his ideas in England. In the area of inquiry that I seek to explore while in England, there is probably only one decent journal (Journal of Transport Economics and Policy) that publishes the kind of work that helps make good advances in the area of policy I am talking about. Returning from England, I could help engineer a competing journal of sorts, after a few years of experimenting with a friend on what we call now the Mobility Policy Review. These tasks, which are also part of the matrix underlying my proposal, are set forth in Part II of this work.

The material following has been largely relegated to Book III. The material basically elaborates on what has been said in terms of the choices facing me in trying now to construct this calling I have defined for myself. It is more in the vein of what I could say to people who unaccustomed to my kind of deconstruction could receive without perceiving me as some form of lunatic.

Those who continue to look at the world in terms of its architecture can often be viewed as such. Turgot who I talk about in much that follows observed his own reservations about his own patterns of thought. "If a man could foresee with certainty all the events that depend upon chance and if he directed his conduct in the light of this knowledge, he would pass for a lunatic because men would not understand his motives." Manuel on "Turgot on the Future of the Mind", quoting from a MS in the Turgot archives in the Chateau de Lantheil.

Turgot once also spoke to Condorcet of truth: "to know the truth in order to make the social order conform to it, that is the sole source of public happiness. It is therefore useful, even necessary, to extend the limits of knowledge."

The body of "Waiting for Turgot" has been relegated as mentioned above to Book III (a personal memoir, presently for family and friends) which underpins a philosophy and political economy of hope.

The remainder of Book I (chapters 3 - 7) draws on material I have generated in fragmentary form over the last decade on implementation of the demand revealing process -- articles such as the "demand revealing governance of communities", and the "demand revealing governance of enterprise". Part II elaborates on an area of implementation that I have developed the most fully and is concerned with a political economy of mobility, mainly involving the allocation of resources to transportation improvements and the governance of institutions that affect air travel, domestically and internationally. Taken together, Books I and II describe an approach to the practice of social art, centered on the design of incentive-compatible institutions.

I am mainly concerned, of course, not as much with design, as with implementation. Part III is then concerned largely with "heresthetics" or political entrepreneurship, guided by a kind of spiritual philosophy that I call "the philosophy of hope" (Bloch, 1986). The book, tentatively called "A Political Economy of Hope" is basically about the act of introducing new dimensions to policy discourse which can be perceived as radical changes to existing policy discussions where "the entrepreneur pushing for a true innovation stands a high chance of failure" (Schneider, Teske, and Mintrom, 1995). The political economy of hope is thus an attempt to improve the chances of success as opposed to failure.

Part III is then about my private thoughts concerning political entrepreneurship or "heresthetics" and a philosophy of hope. In large part it drives the composition of Books I and II.

2.2 Political Entrepreneurship: The Case of Airport Slots

I spoke of truth and extending the limits of knowledge. From a postmodern perspective, this is not a simple unilinear progression. Today we look rather skeptically at how truth speaks to power and how ideologies shape social change. (See notes for Part III).

A book can often be read by simply looking at its cover. Book I (this book) is covered in red. It is a "red dawning" combining both warm red enthusiasm and cold rational analysis -- white, like the color of a snowcapped volcano.

Book II is white (colorless) -- posed usually in opposition to the warm red revolutionary fervor. Some twenty or thirty years from the "red dawning" of demand revelation, my wife believed that my life revolved around "airport slots".

Indeed, "airport slots" had become a metaphor at the Front of "anticipatory consciousness". In a sense, it had become a personal (and institutional) struggle in the advancement of an idea.

I explain this in terms of a debate over the practice of "herestetics" between Professor Riker and Sened and myself (with two coauthors).

Notes: The development of this chapter compares the heresthetics of Riker and Sened in "A Political Theory of the Origins of Property Rights: Airport Slots" and an alternative view by Brough, Clarke and Tideman (BCT, 1995) in "Airport Congestion and Noise: Interplay of Allocation and Distribution".

Riker's book (1986) The Art of Political Manipulation provides an even better illustration of what is at stake in the debate portrayed here. The debate carried forth in Book III also gets into political stability and the nature of disequilibrium, including punctuated equilibrium (Baumgartner and Jones, 1993).

In this context, I describe a case study of airline deregulation in the United States (which I helped father in 1974) and the persistent, ever changing "anticipatory consciousness" that drove my conceptions of supply-side policies to make the newly "contrived competition" (See Vietor, 1995) work effectively. The effectiveness of the contrived competition (for airlines) centered on the problem of airport slots.

Underlying the problem is the basic issue of who should receive the societal rent from airport slots -- the airlines or society (communities).

2.2.1. Riker and Sened's Political Theory of the Origin of Property Rights: Airport Slots.

Riker and Sened present an interesting and accurate story of the creation of the grandfathered market in slots. For about 16 years (1969-85), four of our most congested airports (LaGuardia, Kennedy, O'Hare and Washington-National) have operated under a high-density rule (HDR) that limited the number of landings and take-offs allowed. Each airport operated under a "scheduling committee" which semi-annually adjusted slot allocations. "This allocation procedure was the first step towards private property." The scheduling committees, operating under CAB's antitrust immunity, "worked well for allocations under cartel members but the system collapsed when applied to allocations under competitors, including new entrants". Before deregulation (1978), indeed after the controller's strike (1981), the committees usually agreed, but gradually after deregulation. the equilibrium allocation approached the worst outcome, where default (failure to agree) was often the best option.

At this point, the government had several options: (grandfathering and permitting the free exchange of slots or "buy-sell", auctions, lotteries, "open-skies' or quenes, or FAA assignment. The government, during the PATCO strike, experimented with buy-sell (beginning in mid-1982). However, the FAA still wanted to retain its politically valuable activity of allocating slots, so it suspended the activity (at the end of 1982) until the end of 1985. But during this interregnum, default options (and deadlock) among the scheduling committeees emerged and carriers learned that when FAA then allocated the status quo (1983), deadlock was costless. Deadlock continued until a committee led by Charles Plott and OIRA was convened to discover mechanisms to break deadlock. While OMB/OIRA and the Executive Office strongly preferred auctions, the only means to prevent further deadlock between the government and the carriers (the latter fearing that as many as 4200 slots might cost upwards of $1 billion or more than 10 percent of industry capitalization) appeared to be the buy-sell option (with grandfathering).

Riker and Sened expand on the external and internal policy considerations influencing OIRA and the FAA, leading towards their surprising and "counterintuitive" conclusion about "the pervasive role of government officials in creating rights". In this case, "the dominance of government is clear because the configuration of rights granted satisfied the grantor's interest (that is, the OMB's interest after it defeated the FAA) rather more than the holder's, most of whom were content to keep their rents and avoid FAA's possibly arbitrary allocation".

Riker and Sened's methodologically positive investigation also yields positive conclusions in terms of probable efficiency results. "Unlike money transfers (subsidies, entitlements) and the deadweight losses of pork barrel and regulatory cartels, property rights increase efficiency by encouraging owners to use assets more productively. Efficiency makes for prosperity which redounds to politicians' credit. Hence we expect ambitious and clever politicians to give bureaucrats career incentives to create rights. President Reagan did this with OIRA and the new rulers of formerly Marxist lands are now creating rights on a grand scale".

A somewhat contrary view is expressed in Brough, Clarke and Tideman (BCT, 1995). We take the view that a history of use of common property does not create an exclusive right to privileged access when the opportunity to use such property becomes scarce. At the same time, it is reasonable to permit commitments of slots to carriers for some span of time -- for example, in exchange for the carriers investment in developing schedules. Accordingly, there could be a transition, at a rate that was appropriate in view of prior commitments, from entitlements based on past usage to social collection of the scarcity value of slots.

It is not my purpose to weigh or throughly evaluate the philosophies and ideological positions at work here concerning the allocation of airport slots. It is best, however, to consider solutions(s) that are made possible when we can think of ways of separating the allocation from distributional concerns, much as I try to do in the "budget experiment" in the previous chapter. The point, which is driven home by a thorough reading of Riker and Sened is that the distributional struggles (within the government, and between the grantors and duty bearers) are enormous and the winning heresthetician or political entrepreneur is driven to "inferior" solutions from the standpoint of what I consider to be the relevant criteria.

Also, this experience reflects the first significant effort to introduce incentive-compatible mechanisms into a significant resource allocational problem (Grether, Issaac and Plott) and also FAA (1980) and ways of carrying out the idea in a way that is sensitive to distributional considerations (effects on carriers) is elaborated in more detail in Brough, Clarke and Tideman.

2.3 Concretizing Utopia: Airport Slots

While auctioning (or collecting the annual rental value of) slots continues to be a perennially futile exercise in heresthetics, it continues to be routinely advanced as a revenue raising element in the annual deficit reduction package (CBO, 1995) and is estimated to raise approximately $500 million annually at the four airports. (Note that this remains much lower than the potential value of slots if carriers take account of the probabilities of future appropriation of what still remains a quasi-property right). Applied to the largest 50 airports (with the four high density airports accounting for about 16% of enplanements) would yield about $3 billion annually.

The average taxpayer/consumer would normally look at such an initiative as another "tax" (making only a minor inroad into the deficit problem and likely to go into "project" pork barrels of the FAA and airport authorities. Further, such an approach was susceptible to the same coalitions that usually oppose peak-load pricing or airport congestion fees under the control of airport authorities.

Alternatively, "heresthetical" winning coalitions can be imagined. For example, the $3 billion could be looked at as a way of reducing the existing 10% ticket tax which would also contribute to potentially significant reductions in airport congestion. The $3 billion can, in fact, be viewed as the difference between existing air carrier landing fees (about $1.5 billion annual) supplemented by about $1 billion annual in passenger facility charges. This difference (of $3 billion) would essentially raise landing/departure fees to market clearing levels. perhaps adjusted by airport authorities to more precisely account for residual congestion costs in hours where there is still a "bunching" of flights.

Let us now look at the political dynamics of an extension of the "budget" experiment described in the last chapter, where we also include decisions on the level of taxation. Suppose that $3 billion in annual slot rentals were equally distributed among regions and even communities (recognizing that a different distribution relating say to the origin of ticket taxes could be easily justified).

In effect, this adds a large portion of the FAA budget (i. e. facilities and equipment) to the $20 billion transportation block grant described in the last chapter. In the beginning, the regions would then be able to collectively determine how much of the budget (if any) would be used to offset the 10% ticket tax as well as determine the allocations to FAA "facilities and equipment" as well as airport modernization and improvement. As for the portion of the existing budget used for deficit reduction, there would be a sufficient incentive for regions/communities that choose to save rather than spend entitlements to cover the desired level of deficit reduction in a way that also allocates funds to the most beneficial uses. That is, communities that spend less than the entitlement level save and contribute to deficit reduction while higher spending communities invest in projects with relatively high rates of return.

Perhaps it would take a decade to introduce and integrate the extension into the budget experiment envisioned in the previous chapter. Some carriers depreciate their investments in slots over a seven-year period which might be the appropriate period for continuing the existing stop-gap" solution of grandfathered rights while moving towards a system that amounts to a "second price" auction of slots.

Meanwhile, the system would be introduced as part of a system of allocating newly available slots, including presently available commuter and even international slots at the four airports where the buy-sell rule is currently operational.

NOTE TO THE READER: The following is an extension of chapter 2 which amounts to an essay (mostly prepared in January-February, 1995) which led me toward the writing of the Practice. Much (or most) will eventually be relegated to Part III or expurgated to the archives. However, it might communicate what is going into a "political economy of change" and a "political economy of hope" and helps to explain the ethical/philosophical underpinnings of Chapters 3 through 6.

Notes for Part III (from "Waiting for Turgot"), some of which will be incorporated into A Political Economy of Hope (Part III).

In June, 1995, I envisioned three short parts of my book as an exercise in postmodern political economy. I will have taken an idea (demand revealing) and concretized the idea (Book II on a political economy of mobility, relating largely to institutions that influence air travel, including worldwide travel and tourism) as well as embodied it into a philosophy of hope that is more in the realm of art and poetry than a deep philosophical discourse.

The following reflects a discourse (largely with myself) on how all this came together during early 1995 in an original essay, called "Waiting for Turgot" (a great French "budget director" or Comptroller-General of France shortly before the Revolution). Turgot's earlier Sorboniques (1750) to me set the society and the world on a path which reflected the best of the "progressivist" traditions in the Practice of the Social Art.

At the beginning of Chapter 2 in "conversations with Condorcet", I spoke of "extending the limits of knowledge". Since Turgot (and Condorcet's) time, societies (and individuals within them) have looked somewhat skeptically at the "progressivist view of history. The unilinear progression of truth and extending the limits of knowledge must confront the issue of how truth speaks to power, if you will. As I extended this work (the limits of knowledge, if you will), I went through a personal kind of deconstruction, a kind of "rewriting or scripting of self". Book III, basically written for family and friends, describes what this process has been about. If the ideas and practices I advocate in Books I and II begin to have influence in the near future, I leave to my daughters as to whether this book (or parts thereof) should be published (perhaps on December 26, 2000). Otherwise, I ask them to archive the philosophy of hope in the hopes it will have relevance in a more distant time, perhaps December 26, 2100 (one hundred years later). This decision has a lot to do with the coming shape of politics and social art during the next millennium. (It is also a defensive measure against the Farmer Generals who may rise up and I do not want to provide ammunition they can use against me).

The notes began in early 1995 as a deliberation on personal choices about how I could best develop Part I (The Practice of Social Art) and Part II (A Political Economy of Mobility). I call it (notes to myself) "Notes for Birmingham: Why England?"

Notes for Birmingham: Why England?

This starts out as a sort of confessional, Augustine style. Not being a Catholic, I started out in 1994 trying a reconstruction of self and most recently in deciding on a course. A year of reading in all the social sciences, and in modern " deconstruction" (also a psychological one), I decided that I would seek to be a visiting scholar at an English University, Birmingham. It had been suggested to me by a professor friend as perhaps a good place to go to write what I call a "concrete utopia" which is the foundation of The Practice of Social Art and A Political Economy of Mobility.

I wanted the work in England on the political economy of mobility to be the heart of my next book along with a part that addressed the land question, a much more difficult thing to write. This would not be so difficult if I decided to make the rest of the contemplated book a treatment of resource allocational question from the usual American perspective, or at least the dominant neoclassical perspective which I call NCE. But I had decided that the rest of my life was going to be devoted to speaking and writing "the truth" as best I knew it. The problem was how to do so in a manner that spoke truth to power and led to "success" not "failure".

I had been the day before at the local "political economy" bookstore on H st. (adjoining the World Bank) and a little book about the "Corruption of Economics" flew into my hands. I suppose it revealed what I already knew basically but about which I had a lot of denial because I am a reconciler like Henry George and a person trained in the NCE tradition which according to the author of the portion I read organized a 'fantastical' plot against George near the end of the last century.

My work on mobility policy was basically going to be something that took "georgian political economy" as I viewed it perhaps 100 years later and reconcile it with the NCE upsetting only a few applecarts along the way. Perhaps the domestic airlines would be a little difficult but I had already beat them in ways that greatly advanced their own good (at least in my view) during the mid - 1970's and felt that I could also engineer something comparable of the supply side 20 years later. They would end up paying for the landing rights they used at congested airports and perhaps also for some of the noise externalities created by airplanes. Although I had always denigrated the "noise" problem, I had spent a year on P St. near Georgetown University under one of the main flight paths entering and leaving Washington's National Airport. In many other ways, I also became involved in the "ecology" of Washington, D. C. and in many ways the book is a reflection of Mercier-like thinking of the Washington (like his Paris) that might exist some 500 years hence in "L'An 2440".

But what if I succeeded in doing something like this? Would it help to sustain the larger goals? Or would I just be a footnote in public policy (I have not even been given that for airline and trucking deregulation, and have tried to take the credit only in little speeches that I gave standing in for more important figures during the last significant "political revolutionary" year (1981)). It was a year when even my immediate superior was afraid to leave Washington and another figure (his boss) who was to become another important figure asked me to stand in and I delivered a rather vitriolic history on "regulatory star wars" which is part (along with this) of my autobiographical sketches.

I wanted my daughters years later to know why it was that their father had not won a Nobel Prize even though he clearly thought he might or could have deserved one.

The authors of "A Quiet Revolution in Welfare Economics" (Albert and Hahnel) apparently agreed when they noted in 1990:

"We do not intend this as a criticism of Groves et. al. we see no reason why societies heavily endowed with graduates of higher education should not enjoy the luxury of intellectual labor that includes a role for those with a special talent for formal abstract theorizing. We merely point out that there was no rush of economists with a more political 'bent' to promote the theorists of incentive-compatibility for Nobel consideration!" (Albert and Hahnel, p417 footnote 4).

I once thought that perhaps we could do a better job of "promoting ourselves. However, given the "political" bent of American economics one could also understand that the course that I am taking here in my "scripting of self" will not win me a Nobel prize, even if deserving. It might gain a Pulitzer Prize, if that becomes what I am seeking. My thesis chairman (George Stigler, a Nobel Laureate) in the Fall of 1977 to learn what I needed to do to complete my dissertation advised me what I should do and said perhaps jokingly, "you'll probably win a Nob.. (eh) a Pulitzer prize".

Years later, when I was reading about "Sociobiology" or rather the autobiography of its author (Wilson, 1994) entitled Naturalist, I began to feel comfortable about the "naturalistic" course I was setting and targeted on a kind of inquiry that may fit into the line of inquiry that was being encouraged at the University I was thinking about applying to which is what my work in the "new institutional economics" and public choice/public finance had been all about.

But I was talking about a striking new direction in public finance -- abandoning the entire NCE determined American tax system for one constructed among neo georgian lines. Unless pursued carefully, this is a possible recipe for rejection and failure.

In thinking about sending this epistle to some of my correspondents to at least get a reality or p. c. or "political noncorrectness" check on my direction, I realized that the setting I was seeking was the only way that I would really have any good chance of succeeding.

What Is Success?

My formal writings and addresses started with a valedictory address at Thomas Jefferson High School in Richmond, Va. in 1958. The speech often called by my friends and family a the best ever given for that school, perhaps because my life was measured like the son of a Richmond school superintendent who work like me in the field of applied public choice also appeared to be a success, even though the Prime Minister I call him (a former Secretary of the Treasury, for whom I worked as a special assistant, in some difficult days, often wondered why the other person constantly went down rather than up in the bureaucracy. Social criticism, of course, is simply not an easy occupation and certainly doesn't breed success in the American political bureaucracy. I'm sure the Prime Minister knew the answer to his own question.

The Prime Minister is of course appointed by the President and the Prime Minister to whom I refer -- a Turgovian kind of man, and a model to which I refer later (not knowing if he shared any of my own admiration for A. Turgot) was for a fleeting moment in the late summer of 1974 one of the three leading candidates to be the first appointed President in American history. President Ford was appointed instead and I became an adept of sorts in the small counter bureaucracy that I had imagined when I made contributions to the Prime Minister's "Reflections on Political Economy" in December 1993. This is the annual Richard Ely Lecture named after a man I will talk about later in this introduction. Twenty one years later the Prime Minister appeared at the same lecture again, delivering much the same in the way of reflections but a much more targeted "bottom line" on the integration of trade questions, the IMF and the World Bank. The Prime Minister had become an even more important Minister of sorts during the Reagan years, and one of I perhaps most admired of all those on the political landscape. I include his memoir (thank you note) along with President Nixon's last Christmas card on my office wall.

In subsequent years, after the carriage of NCE-- Chicago style into the deregulation of transport (airlines and trucking), and writing a first book on the central idea (the pivotal or Clarke tax mechanism) which is the central theme also of this book. However, the idea is tied to my own reflections about what it would take to make civil servants behave more like Hegelian civil servants in the idealistic Hegelian traditions (where they also eschew worship of "the State"). For this reason, this book (Book III) is also about the civil service and was originally intended as a separate book that had been tentatively titled "Civil Servants, Civil Societies". I had been (I felt) the founder of a counter bureaucracy at the top of the U. S. Federal Government", designed to control regulation using modern cost-benefit analysis, which is the principle tool of NCE.

In 1981, I anticipated a lot of what was to come in terms of the sharp criticism of NCE practice in two speeches that I performed as a stand in. My speeches of which I recall only four (the valedictory, the speeches of 1981 and another during the 1980's for my father in Richmond for the retired teachers along with my history teacher who had agreed that myself, and the other individual who had worked for the Prime Minister, were successful. These speeches might strike the reader as disturbing and funny, which they were intended to be at the time. I thought I was right and that I was speaking the truth, taking a chance not to be caught (because if they had been used to publically embarrass the institution where I worked, I would have been finished). I show these speeches to few people today although they foreshadow much of which is to come.

Summarize here the basic message in:

"Regulatory Star Wars: OMB, EPA and Democracy" which also had the subtitle "How will the President Dispose of EPA's Garbage Truck Noise Rule. In my life I was to be plagued by noise rules (see later) and in this introduction to my book (future work) I am plagued by a counterpart which seems to be another metaphor of government overregulation -- the rule or policy of the Federal Highway Administration to require metric conversion of highway signs. Like the garbage truck noise rule, metrification of highway signs became a metaphor which stimulated and energized this work, hopefully in a more constructive and balanced direction.

Clearly, at that time (1981) I was tired of being the garbageman and felt that there was more to life than the other heroes and heroines of the institution I had created than disposing of silly rules like the noise rule or (in the presnt context) of finding solutions to the metrification dilemma. But as I will argue, this is an important part of life that can set the stage for higher forms of progress, which I elaborate upon in what follows.

The second speech is also funny except that it was given not to students but to a more respectful professional audience of academic intellectuals, and businessmen. It was about regulatory reform and where it would be going in the new Republican Administration. I was playing the unaccustomed role of political bureaucrat foretelling the future.

Insert here some comment on "Wealth Redistribution in the Large and Small" as comment on Harrison and Portney's "Regulatory Reform in the Large and Small". (February 1981). As I look back on these speeches some 15 years later, I find that growth and change has led to a much different view of the world and how I should go about presenting my ideas to the world. This is the heart of chapter 5 and obviously the last chapter in the short -run to be written.

Here, at this point in time, I find myself 14 (or seven Congressional elections later) in much the same, if not a radically different, kind of discourse. What I was foretelling in early 1981 was a moratorium on regulation. This was followed 11 years later with another moratorium and the House of Representatives had just passed a third moratorium. Given all the other changes I saw myself with a very good chance of inserting the pivotal mechanism in a garb that I had pushed rather far during the two years following the two speeches but which had floundered during the period of my worldwide travels from 1983 to 1988. I had ended up in a revolution in Haiti, during June through December 1987, also in the massacre of Haitian voters in November 1987 playing the role of the American economist stationed in Haiti for what everyone believed was a renaissance of NCE economics in solving problems in that country. I saw on television the other night Minister Delatour, the Chicago trained Finance Minister who I was supposed to be aiding.

It was during that period that I started on this, my second book, that was laid aside in the succeeding years as I came back to the "oversight" of regulation. I didn't have many books and the ones I had (Henry George, Edward Belamy's Looking Backward and Utopian Thought in the Western World got me going on what would eventually I hope (Esperanto -- one who hopes) be called Esquisse after the last work of the Marquis de Condorcet.

I an only in the Act of trying to become a philosopher of History. I do this mainly because I'm trying to fit this work into a philosophy of history that is concerned with Progress and Justice. Probably the greatest work along such lines is Condorcet's Esquisse. I have tried to express this in the research prospectus in the section on What is Mobility Policy? This traces the work back to Turgot's sketches in the Sorboniques of 1750. Of all the great men whose philosophy I espouse, Turgot is at the forefront because I feel so much like him and would wish to be like him as an apostle of change. I am enigmatic for many reasons like him. He began the kind of progressivism I foresee for the next century and millennium.

If my youngest daughter prepares a sketch of the kind I told her about in discussing my work and a sketch to include in my work (even if posthumous, it would be like the one described on Turgot (in Manuels' Utopian Thought, which she saw me reading while she was studying painting in her visit of February, 1995. Turgot above all had my most valued attitude, one of (stoic) equanimity. Upon his dismissal after the Edicts of 1776: "If he was outraged by the betrayal of the King, there is no report of his indignation. The slightly skeptical smile continued to hover above his lips; it is preserved in Ducreaux's pastel in the Chateau de Lantheil." The papers of this man have also reveled no secret. If I have them then they are locked (Mark Twain like in a vault to be opened on December 26, 2100 if at that day someone with the permission of my grandchildren wanted to look backward over a history of the last 117 years as did the character in my favorite Utopian novel, "Looking Backward" For Bellamy the period was December 1887 to the year 2000 when I expect Esquisse (renamed the Practice) will be published as one of the many millennial works of that year.

In looking back on what is success, there was a lot of Christian sentiment (Victorian sentiment with the likes of Matthew Arnold and I remember best the lines that carried me through many years. I wanted to plant, trees, write a book and have sons. The pursuit of equality in the last hundred years had made me quite happy having daughters, and I envision progression in a family like one of my favorite 20th century novelists (who helped me find Goethe). The novel was the first by Mann, Buddenbrooks, which showed the progress in a family from materialism (commercial life) to politics and to art. I have daughters who I see as inclined to both of the latter. For my oldest daughter, much of this work is really dedicated because I am seeking to define politics and the "practice of social art". The central theme is a "mobility policy" for the next century in which she can participate and be involved. I am taking the world's largest industry and showing how it can be a test bed for everything else. As I have been taught by some of my past mentors I start with the frontier of growth which is mobility policy and link this to the frontier of deterioration, much as did Henry George in the last century, in his Progress and Poverty.

Even before a former wife told me about a new bestseller in the international politics section (not just the new age section) of the bookstore adjoining the White House (it is called Spiritual Politics), I knew about karma, a practice which is practiced by those colleagues in the house where I live. It is live and let live, or what goes around, comes around, or shit on the road and smell flies upon your return. The Corruption Of Economics, about which I began this essay is not karma as I practice it. But it is written by a first class economist and is most disturbing, even if I take it with an enigmatic Turgot-like half smile. How could NCE be corrupted; it was like reading a short book passed around by the LaRouche crowd almost a decade ago with a picture of Milton Friedman, entitled "Milton Friedman is a Fascist" which goes on to attack the University of Chicago as some Austrian-Hapsburg plot now being run out of the annual meetings of the Mont Perlian Society where I was invited by Dr. To once but begged out of because of the expense of traveling by air from Morocco to Northern Italy. (as shown later I am entering into a project to cut these expenses).

But the corruption strikes at more than just a belief I once had that George had missed some important fundamental elements of political economy. Students learn certain truths, with certainty and faith that the professors or masters have presented accurately the truths about subjects which would be much too difficult to figure out on one's own. My own, sometimes celebrated attempt to challenge one of the truths got me into a lot of difficulty, until it was learned later that I had the truth about motivating truth telling behavior. In the case of the Corruption, I Was shocked by the enormity of the misapplication of the truth and how it can be bent ever so subtlety to carry out a strategm against an idea that is wining too many adherents.

What I do in the way of discourse in now dealing with this shock is an important element in my proposal to Birmingham in which I take the basic ideas elaborated in Book I and suggest how they may be further developed in the context of international aviation relations (thus addressing the "infamous" U. S. vs. Heathrow problem). But for reasons elaborated here, perhaps I'm not ready to do this. Nevertheless, it sets a direction for work that if it doesn't succeed initially, it may succeed in years to come. I may have a Winnacott Paper in the meantime (the product of several months at Birmingham). Airline and transportation deregulation took from 1957 when first proposed to 1980 to reach full fruition.

There are notes like these that are very similar that have been collected under "memoirs" (1992 in particular as well as early 1993) when I was trying to jump start this work and to sustain myself in a through inquiry and portrayal of using the pivotal mechanism to solve the airport problem the "airport problem" is the central metaphor of this work. Along with the picture of Turgot, I want a little sketch which accompanies a working paper on the airport problem, a little professorial man with a good number of pens in his pocket, tie askew and looking somewhat disheveled, with a sign entitled "Free the Airports".

A little more on the spirit of all this, which my colleague rejected as just not appropriate for jump starting a Mobility Policy Institute or a Mobility Policy Review. My once former wife in a letter from Seattle in November had encouraged me to read "Spiritual Politics" (and a few other associated readings) and the note follows as part of an introduction to what I see myself doing. As much as anything else, it tries to communicate what one would do to change politics, if one did not find refuge in a scholarly community, but fearing there one would also find the Corruption of Economics. This is followed by a section on "Choices" in a letter to Birmingham.

As mentioned earlier, this book was conceived in the midst of the last Haitian uprising of November, 1987. As the American A. I. D. economist stationed in Port-au-Prince, I contemplated my life's work and the future (not being exactly certain I had one, given the circumstances (footnote).

Seven years later, in late 1994, I was told that it had been rumored (through my father's "housekeeper" that I was dying of a dread disease (perhaps a rumor that I had contracted AIDs in A. I. D. because I had lived in Haiti and although quite untrue, I asked what I would have done if it were true). I conceived of this piece of reconstruction after a short conversation with an eminent economist (my evaluation of him) who told me he was about to publish Volume I of his "Reconstruction of Political Economy", a Hegalian reconstruction if you will. I decided then I wanted to keep at work on my own, if somewhat more limited reconstruction or rehabilitation.

Nevertheless, in spite of my more modest approach, I decided that I too wanted to help reconstruct political economy and that an idea I had invented, known as the "pivotal" mechanism, or "Clarke tax" (sometimes the butt of economists' jokes) had a key role to play in my version of the reconstruction.

It was at a time, shortly after the Congressional elections of November, 1994, that the United States seemed to be going through a political reconstruction (or deconstruction if you will) and a colleague and I began to put together a small two person Institute and Review, called the Mobility Policy Institute and the Mobility Policy Review. Although, for reasons elaborated later, the Institute and the Review, will not necessarily ever really exist in actuality, they provide a useful metaphor for the kind of science and social art that is espoused in this work.

By way of example, the following is what I conceived the Institute to be doing:

"Objectives:

The Institute is a self-funded society of friends who take active, outer steps in the world that reflect our understanding of the inner causes of events. Begun in late 1994, we have worked on 15 steps (suggested by Corinne McLaughlin and Gordon Davidson in their 1994 book Spiritual Politics) to lend a new direction to politics. We and they use a whole systems or "holistic" approach that brings together all constituents in building new solutions together. Our work reflects the efforts of practical people trying to define practical solutions to practical problems, each following an inner light. We appeal to Transformational Leaders to help us all better define and shed that light.

We work from common material and share and disseminate our ideas. During the last year we have been working from Osborne and Gaebler's Reinventing Government using, as a fulcrum, policy issues affecting transportation (including worldwide travel and tourism).

Our central focus is institutional design, applying principles of mechanism design. Mechanism design permits the parties in a social (collective) interaction to better take account of each other's preferences in shaping collective decisions. In our first working paper, we have taken a potentially lively topic relating to the Clinton's Administration efforts at Federalism and reinventing government (REGO II) as a focus for this effort. We look in particular at the challenges presented in a new law that calls for innovation in balancing national and localized interests in our Federalism.


Part 2