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The Mitch Daniels Desert Island Book Set

July 8, 2010

Five Books interview with Indiana governor Mitch Daniels is ricocheting around the libertarian blog roll. Daniels, a potential Republican POTUS nominee, has set some liberty-loving hearts a flutter by signaling his cred with The Road to Serfdom, Free to Choose, Charles Murray’s What It Means to Be a Libertarian, Virginia Postrel’s The Future and Its Enemies and Mancur Olson’s The Rise and Decline of Nations. (On top of that, the interview was conducted by Jonathan Rauch, author of Government’s End, an astute application of Olson’s theories to late 20th century U.S. politics.)

The fluency Daniels has with many of the ideas discussed in these books is unusual for a politician, and that should be approved of, but for me, his knowledge of Olson’s thesis stands out. What’s even more interesting is seeing him struggle with its implications:

Daniels: Olson has got a little bit of a pessimistic view. He makes it sound almost inevitable that free societies will become encrusted with these interest groups that form. It’s not sufficiently in anybody’s interest to oppose them, and because the cost they impose or diffuse over everybody, you need some sort of calamity to wipe them away if you really want growth to happen, if you really want the upward mobility of less fortunate individuals, which I think should be our highest priority.

Rauch: Olson’s thesis is that the gradual accumulation of perks carved out for special interests gradually saps the dynamism of economies and societies, leading to their decline if you don’t work very, very hard and constantly to try and counter those effects…

Daniels: Yes, and when I went to the shelf and pulled the book down – it had been years since I had – it reminded me how dense the thing is. It’s a very scholarly work but it leads one to ask – since we’d rather not have a war or an earthquake or an epidemic that wipes out these structures – what allows the green shoots of economic growth and mobility to happen again, what can be done to if not eliminate, at least minimise, the stultifying effects?…It was some of the books on this list that helped me to see that the real reactionary movements in a country like ours are what we call the left. These really are the forces of status quo: they may travel under different banners or masquerade as something else but these are the folks who are more often than not trying to freeze in place arrangements that worked well for the ‘ins’. So Olson shows you how that happens, Postrel shows you how this happens, Hayek shows you how this happens.

Almost inevitable! Indeed. The distasteful nut is that as a governor and even as a president, there’s not much a player like Daniels can do to scrape off the encrusted dead weight of special interest barnacles. But don’t hate the incapacity of the player, hate the stultifying game. If Olson sets the trap, thinking meta is the way out.

Innovation and dynamism atrophy only for a single closed economy. Impregnable barriers to entry are the bulwarks of the vested degenerate. But if we were to have a set of open and fragmented competing economies and polities–a system of competing systems–then the resulting diversity, pluralism and independence will prevent the establishment from clogging the line of progress. We’ve called this political creative destruction “Bloodless Instability“, but the idea is as old as David Hume:

That nothing is more favourable to the rise of politeness and learning, than a number of neighbouring and independent states, connected together by commerce and policy. The emulation, which naturally arises among those neighbouring states, is an obvious source of improvement: But what I would chiefly insist on is the stop, which such limited territories give both to power and to authority…

But the divisions into small states are favourable to learning, by stopping the progress of authority as well as that of power. Reputation is often as great a fascination upon men as sovereignty, and is equally destructive to the freedom of thought and examination. But where a number of neighbouring states have a great intercourse of arts and commerce, their mutual jealousy keeps them from receiving too lightly the law from each other, in matters of taste and of reasoning, and makes them examine every work of art with the greatest care and accuracy. The contagion of popular opinion spreads not so easily from one place to another. It readily receives a check in some state or other, where it concurs not with the prevailing prejudices. And nothing but nature and reason, or, at least, what bears them a strong resemblance, can force its way through all obstacles, and unite the most rival nations into an esteem and admiration of it.

At the Long Now Foundation, Paul Romer asked, “What if there were no new countries?” Olson’s answer is long-term economic and political stagnation. To rise from this muck, we need an entrepreneurial system in governance. We need the number of nation-states to increase over the next few decades.  Peaceful secession, seasteading, Free Cities, Charter Cities, and other approaches to the entrepreneurial creation of new sovereignties…I would be shocked, and I mean impressed, if a POTUS candidate advocated for these. If Daniels embraces it, even a skeptic like me might pull a lever.

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