Michael Shermer Scrambles the Axes

You can listen to his talk at Cato.

In some respects, he sounds conservative. He seems to me to take a civilization vs. barbarism view of recent controversies regarding police, in that he believes that in a civilized society citizens must not threaten police. He insists that moral significance attaches to people as individuals, not as members of oppressed classes.

However, he breaks with conservatives in that he views religion as barbaric. He insists instead on science and reason. And in general, I think he would be happier earning the approval of progressives than earning that of conservatives. His main theme, that human beings are making moral progress (he speaks of a moral Flynn Effect), is one that sits more easily with progressives than with conservatives.

To the extent that he is libertarian, he sounds more like Rand than like Rothbard. He believes that the institution of the state is needed to keep individuals from using violence to solve disputes.

On economic issues, he offered thumbs-up for free trade and economic growth. But he said nothing about what I see as the most fundamental issue in economic philosophy today: how much can the emergent order of a little-regulated economy be improved by technocratic management? Clearly there are those who think that the answer is very much, while there are those of us who disagree. I suspect that Shermer is not on the libertarian side of this issue.

Robin Hanson, Manorialist

Robin Hanson writes,

I’d predict that if there were many for-profit cities most people would be okay with them, as they’d be reluctant to move to worse-run non-profit cities.

This reminds me of Spencer Heath, whose descendant wrote,

Spencer Heath once reasoned that if a new town were developed under unified ownership and its land parceled among the occupants by means of long-term land leasing rather than subdivided in fee, we would have an entrepreneurial community in principle very much like a hotel carried out-of-doors and writ large. In light of both the size and the complexity of many contemporary hotels, Heath’s suggestion that hotels might be viewed as prototypes of cities of the future is far more credible today than when he wrote sixty years ago. The MGM Grand in Las Vegas promotes itself as a self-contained city, and it does approach a truly generalized community. It includes shopping malls, professional offices, convention facilities, restaurants and cafes, chapels, theaters and art galleries, medical services, a security force, a monorail station, and the list goes on. It is significantly larger — counting room guests, service staff and visitors — than was the city of Boston at the time the United States gained its independence from England.

He terms this manorialism. What Hanson proposes is a way of getting from here to there–of having cities sell their land and the right to enact rules to a private buyer.

Hanson writes as if the current owners of a city are those who currently own its property. That does not take into account the teachers’ union, which acts as if it owns the county where I live. Given the political power that the union exercises, it could hold hostage any sale of the sort that Hanson contemplates.

Pete Boettke on Ideology and Economics

He writes,

Market fundamentalism is far from the mainstream of economic thought. The mainstream folks consider their work non-ideological and merely technical because they all share the same tacit presuppositions of political economy. It would be healthy if they looked through a different window, and spent some time reading those Nobel economists I mentioned above, or the Nobel worthy economists I mentioned as well.

Read the whole thing. I had a hard time choosing an excerpt. It also could use more fleshing out, in my view.

What Boettke is wrestling with is an asymmetry between mainstream economics and those of us with a free market bent.

Here is how I would describe the asymmetry. I think that the free-market types understand the main arguments of mainstream economists, but I think that mainstream economists only seem to deal with a straw-man version of free-market economics. Keep in mind, however, the Law of Asymmetric Insight: when two people disagree, each one tends to think that he understands his opponent better than the opponent understands himself.

I think that we on the free-market side understand behavioral economics. We understand asymmetric information. We understand market failure. Thus, we differ from the straw-man version of us that mainstream economists dismiss.

On the other hand, mainstream economists appear to me not to appreciate the two most important arguments that we have. One is the socialist calculation argument. My sense is that mainstream economists either do not believe that the socialist calculation problem is real, or they believe that it only applies to socialist dictatorships. In fact, any government program to spend, tax, or regulate will encounter the socialist calculation problem. That is, government planners face a fundamental information problem themselves. Knowledge is dispersed. What planners do not know is important, and indeed it can be more important than what they claim to know about market failure.

The second argument is the public choice argument. This is often over-simplified as “government officials act based on self-interest.” The deeper issue, which Boettke mentions in his post, is that markets and government should be looked at in parallel as institutions. The market process has certain strengths and weaknesses. Government has other strengths and weaknesses. The mainstream approach simply assumes away all weaknesses of the political process. Once an economist identifies a market failure and a policy to treat it, the next step if to play fantasy despot and recommend the policy.

Finally, I have to say that this is not mere abstract philosophy. The socialist calculation problem is real. It affects financial regulators, who in the period leading up to the financial crisis used crude “risk buckets” to alter the incentives of banks. That approach was woefully information-poor, and it created huge incentives for banks to do exactly what they did with risky mortgages. See Not What They Had in Mind. The socialist calculation problem affects every agency of the government, from the FCC to the FDA to the panel of experts who is supposed to determine which medical procedures to allow.

The institutional weaknesses of government are real. Read Peter Schuck’s book. You can get the flavor of it from his talk and my comments.

Jonathan Haidt, the n-word, and capitalism

He writes,

there are two basic master narratives about capitalism that have been circulating in the West since the time of Adam Smith. One story is that capitalism (and business more generally) is exploitation, so we need a strong government to keep the greed and amorality of capitalists in check. The other story is that capitalism is liberation. People were mostly serfs and peasants until capitalism came along and freed people to keep the fruits of their own labor, so we need to keep government’s role to a minimum, given how prone it is to capture, corruption, and inefficiency.

Pointer from Tyler Cowen. Remember, the word “narrative” has been declared “out” for 2015 by the Washington Post arbiters of taste.

Still, I think that Haidt is onto something. In terms of the three-axis model, the exploitation story fits the oppressor-oppressed axis favored by progressives, and the liberation model fits the freedom-coercion axis favored by libertarians.

This leaves out the conservative axis of civilization-barbarism, and I think that conservativism is somewhat ambivalent on the issue of markets. Conservatives praise markets for rewarding the virtues of effort, patience, self-reliance. But conservatives dislike markets for undermining cultural traditions, putting the vulgar on par with the sublime, and lacking moral direction. Consider Charles Murray in Coming Apart (which I am re-reading):

For Benjamin Franklin, this meant that “only a virtuous people are capable of freedom. As nations become more corrupt and vicious, they have more need of masters.”

It is a short leap for some conservatives to believe that markets unguided by conservative leadership take a nation on a path that makes it “more corrupt and more vicious.”

A Nice Rant

Kevin Williamson writes,

the Left’s fundamental intellectual defect — at least in the critique of those liberals who are now obliged to call ourselves “conservatives” — is that it seeks to establish something very much like the arbitrary princely powers that Smith and Hayek warned against, and that Washington fought against. The Left believes that this power can be made benevolent not by the strengthening of democracy — that is not precisely right — but rather by making ever-greater portions of society subject to arbitrary princely powers when those powers enjoy the endorsement of a plebiscite, as though handing over Augustus’s powers to the tribune of the plebs would constrain the imperial tendency.

I try to resist posts of the form “Hurray for my team, boo for their team.” But I am making an exception for Williamson’s piece.

The Two Languages of Libertarians

Daniel Klein classifies libertarians into challengers and bargainers. (He has a third category, “royalty,” to describe Milton Friedman and Adam Smith, who managed to achieve very high status.) Klein uses as an example of a topic the minimum wage. A challenger is someone who will say that the minimum wage should be abolished, while a bargainer is someone who sill say that the minimum wage should not be raised. Pointer from Tyler Cowen, who Klein pegs as a bargainer (I would agree).

Some comments:

1. I would describe challengers and bargainers in terms of language. Challengers use the language of certainty. “This is what I think, and people who disagree are just wrong.” Bargainers use the language of doubt or compromise. “Here is where my opponents and I agree, and here is where I think they are mistaken.”

2. I am mostly a bargainer. However, when I write posts using challenger language, I get a lot more praise and mention among libertarians. In fact, I have tried to keep myself from being influenced by such reinforcement.

3. You might be able to adapt these linguistic differences to other parts of the political spectrum. For example, I imagine that Paul Krugman evolved into the writer he is because he could not resist the positive reinforcement he received for expressing anger and certainty.

4. I think that Klein’s disctinction explains why I prefer having my own blog. I think it is fair to describe Bryan Caplan as more of a challenger, and when we were both at EconLog our styles clashed.*

5. Klein is never clear on whether the he is drawing an intellectual distinction between bargaining and challenging or whether he is making sociological observations. In fact, most of the talk strikes me as observations about differences between challengers and bargainers in terms of their personalities and social circumstances. For example, he says that the challengers tend to draw cult-like followings. On the other hand, he does say that an individual can make a choice about which stance to adopt, and it may even be possible to adopt different stances in different circumstances. That makes it sound more like an intellectual distinction. Bargainer that I am, I am trying to split the difference between making an intellectual distinction and making a sociological distinction, so that I want to emphasize linguistic differences.

6. I think that one difference, which can be viewed as intellectual but is probably grounded in personality, is that of certainty vs. doubt. The libertarians who Klein classifies as challengers strike me as highly certain. The bargainers have doubts. For example, challengers are quite certain that the world would be a better place with open borders, if drug laws were abolished, and so on. As a bargainer, I think that this is likely to be the case, but I am not so all-fired certain. Since challengers do not give much thought to being wrong, the fact that they are in a minority on an issue never bothers them. When I am in the minority, I question my own position–although I try to question my own position in any event.

7. In terms of what Jeffrey Friedman calls “the libertarian straddle,” challengers rely more on the philosophical a priori case for liberty. Think of Rothbard and the non-aggression principle. Bargainers rely more on the empirical economic case for liberty, which is that societies with more economic liberty tend to be more prosperous.

*This is all hindsight, in that I left EconLog primarily to pursue an ed-tech start-up. That did not go well, although I did learn a lot about how software had changed in the 15 years since I had been out of it.

The Supreme Court and the Text of the Law

According to a legal theory I am about to sketch, the Supreme Court would let stand the subsidies that are being paid to people through the Federal health care exchange, in spite of the language in the law that says only state exchanges are entitled to pass on subsidies. Instead, the Supreme Court would say that from a common-law perspective, the subsidies on the Federal exchange are what people have come to expect.

By a “common-law” perspective, I mean that the Supreme Court should pay little attention to written law or to the Constitution. Gasp!

In my amateurish libertarian legal theory, law should not come from legislation, or from Constitutions. It should represent the common understanding of what is legal. When a dispute arises, the role of the court is to resolve the dispute. The court exists not to interpret legislation or Constitutions. The court exists to resolve disputes peacefully.

If the court is unpredictable and arbitrary, then people will err on the side of bringing too many disputes to the court (or else they will ignore the court altogether, and it will not serve its purpose). Instead, a good court will resolve disputes fairly and predictably. Using precedent and clear principles makes for predictable decisions. With predictable decisions, people will not bring disputes unnecessarily to the court. When you can predict the outcome, there is no need to go to court.

In this world, law is embedded in precedent. There is no need for legislation. Hence, no need to interpret legislation. There can be legislators and legislation, but legislation is only binding if the court chooses to enforce it. If the court decides that legislation is contrary to common law, then the court can choose not to enforce the legislation.

What restrains the court in this world? If people stop agreeing to use the court to resolve disputes, then that limits its power.

By the way, this is a half-baked or quarter-baked theory of law. Comments welcome.

A Conflict of Rhetoric

Lawrence Mitchell writes,

A very significant component of success – one that may even be more determinative than hard work – is luck. This is true, even if the advantaged have worked hard to maximize the benefits of that luck. By luck, I mostly mean circumstances of birth and natural talents and abilities (which might well include the propensity to work hard).

Why do the disadvantaged tolerate this situation? The American myth of self-reliance. No matter the vagaries of fortune, we consistently find that Americans at all levels believe in some variant of the Horatio Alger myth – the classic American rags to riches success story – despite strong empirical evidence that belies it.

Pointer from Mark Thoma.

On the other hand, James Otteson writes,

Human beings are capable of being worthy to be free. Human beings become noble, and, I would even suggest, beautiful, by the vigorous use of their faculties and they become dignified when their lives are their own…

This conception of moral agency allows one to be one’s own person, and to stand, or fall, on one’s own individual initiative, without having to beg for personal favors, without having to grovel at the knees of a king or flatter a lord or satisfy the pleasure of the Regulatory Czar. It grants people the freedom to go where their own abilities and initiative–not someone else’s mercy or condescension–can take them. Yet with that freedom comes responsibility for one’s actions. If you succeed, then you reap the benefits–and no one begrudges you your success because it means you have done well both for yourself and for others. If you fail, however, then you may pay the cost and (one hopes) learn from the experience.

…Contrary to widespread opinion, failure is not something that public policy should attempt to eliminate…failure, and experiencing the consequences attendant on having made decisions that led to failure, is an indispensible [sic] part of moral agency.

Those quotes are from Otteson’s recent book, The End of Socialism.

My sense is that these two authors talk past one another. Otteson’s rhetoric emphasizes personal decisions as the determinant of individual success. For Mitchell, it is the opposite–even a “propensity to work hard” is a matter of luck.

I find myself unwilling to accept either extreme. I am inclined to think that Otteson makes the scope of individual moral agency seem too large, and Mitchell makes that scope seem too small. However, I have yet to finish Otteson’s book or to start Mitchell’s.

Coincidentally, Charles Murray writes,

deeper personal qualities account for what we call political polarization, but that one specific dimension—our respective attitudes toward personal responsibility—accounts for a huge proportion of the polarization all by itself.

Read the whole piece.

James Otteson on Socialism

In a Russ Roberts podcast, Otteson says,

So, who is making the relevant economic decisions? Is it a third party, a person, group, agency who is making it on behalf of others? That’s what I’m calling the impulse toward centralism. Or, is it principally individuals or communities, localized communities, themselves? That’s what I’m calling decentralized decision making. And that is a spectrum.

This ties in to what I call the FOOL theor, meaning Fear of Others’ Liberty. Chances are, few people want to cede their own decision-making to a third party. But many of us think that others’ decisions are bad for them or for society as a whole, and we want a third party to make those decisions instead.

Incidentally, I have started reading Otteson’s book.

The Greater FOOL Theory

Peter Wood writes,

The passivity of this cohort when faced with a hard core challenge by those intent on replacing liberal education with illiberal social control is, in that sense, a troubling mystery. One way to resolve it is to conclude that the “libertarian moment” in higher education is mostly an illusion. Is it possible that the small “l” libertarians are themselves not really libertarian at all? Could they be simply the crowd that follows where the progressives lead?

Read the whole essay to get the context.

One of my still-gestating essays concerns what I call FOOL, the Fear of Others’ Liberty. My theory is that the desire for government, or more generally for “illiberal social control,” comes from the tendency of people to fear what others will do with their liberty. You are willing to see liberty stifled, especially when you think it will be others’ liberty that will be stifled much more than your own. I am inclined to think that FOOL explains a lot.