Is Australia’s Carbon Tax Repeal Really Market Enhancing?

Some libertarians cheer whenever there is any tax repeal. However, we need to distinguish taxes in form versus taxes in substance. Taxes in substance have no relation to a benefit or penalty attached to the payment. Taxes in form, but not in substance, pay funds to the government, but are tied to some benefit or compensation for damages.

It is standard economic theory that the best way to prevent pollution, as with other negative The effects, is to make the polluter, hence also the buyer of its products, pay the social cost of the pollution. The economist Arthur Cecil Pigou provided a thorough explanation in his 1920 book The Economics of Welfare. A tax on pollution has since then been called “Pigovian.”

One of the most discussed Pigovian taxes has been on the use of carbon-based fuels such as coal, natural gas, and oil. A “carbon tax” can be on the fuel inputs or on the emission outputs. The most effective Pigovian levy is on the emissions, as that provides an incentive to reduce pollution such as by capturing the carbon before it gets spewed out. If the polluter does not compensate society for dumping on the commons, then in effect it gets subsidized, as it sells its output at less than the total social cost of production.

Many countries have been confronting pollution with inefficient policies such as regulations, credits for offsetting pollution with purchases of forest lands, and permits that can be traded. Australia enacted what was called a “carbon tax” with the Clean Energy Act of 2011, implemented in July 2012. But this was not a Pigovian tax. The Act created a “carbon price mechanism,” a cap-and-trade emissions trading scheme that at first set a price per ton of emissions. This mandated price had the effect of a ‘carbon tax’. But after 2015, the mechanism would have transitioned to a trading scheme.

However, in 2013 the newly elected prime minister sought a repeal of the “carbon tax” emissions trading scheme. In 2014, parliament passed the repeal.

The opponents of emissions taxes claim that this increases costs to business and households. This is narrowly true, but policy should consider the total costs to society. The pollution imposes a social cost on Australia and the rest of the world. This is not a cost paid in explicit money, but costs in the form of illness, a less productive environment, and possible effects on the climate.

The opponents of emission levies overlook that the absence of compensation for the pollution costs is in effect a subsidy to the polluters and their customers. A pollution charge is not a tax in substance, but rather the prevention of this subsidy, and compensation for dumping toxic materials on other people’s property.

The repeal did not provide a replacement, and this creates uncertainty for business about any future anti-pollution policy. This policy uncertainty reduces investment and growth.

The best way to implement a pollution tax is as a replacement of other taxes. Taxes in income, sales, and value added impose the excess burden of higher costs and less output and employment. If politicians are concerned with tax costs, why are they not repealing these taxes? When a pollution tax replaces such market-hampering taxes, the total costs paid by consumers does not increase, but rather shifts in favor of less- polluting products.

Actually, the revenue obtained from Australia’s brief carbon tax was used to compensate taxpayers and affected companies. But the most effective policy would have been to have an explicit tax on pollution instead of a trading scheme, and to lower other tax rates, along with a transitional compensation to those with net losses.

Some opponents claim that Pigovian charges would be good if applied globally, but in a single country, would put its industries at a disadvantage. But that would not happen with a “green tax shift,” the replacement of inefficient taxes with a “green tax” on pollution. A green tax shift would reduce the environmental cost of pollution while not increasing the total tax costs for the country’s economy.

Israel/Palestine: An Encyclopedia, Part One

This will be the first entry into what I shall call “Israel/Palestine: An Encyclopedia,” a list of terms that provoke constant bickering as to their meaning, purpose, et cetera. I hope in writing this that I am able to clear some up rather nebulous concepts. Nota bene: Although I hope to clarify these things, do understand that this is only my own, limited take, guaranteed to please few and anger many. If your interest is peaked, I suggest you continue researching this topic on your own and come to your own conclusions.

Israel vs. the Israeli government/military/judiciary/und so weiter: it is important to keep nomenclature sound to avoid disputes. In all of my writing about the conflict in Israel/Palestine, I cleave to the following rule: “Israel” refers to the geographical and national entity contained east of Suez, west of Jordan and Syria, and south of Lebanon, but not including the occupied West Bank region nor the Gaza Strip. It may also refer to the people that live in the land of Israel, viz. Israelis. The “Israeli government” refers to the current governing coalition that wields political power over the land of Israel. Why does this matter? When a man says “Israel” and begins to criticize it, he is immediately putting into the minds of his opponents the notion that he is personally attacking the integrity of the nation and its people. “Israel does X and it’s bad!” may be true in some sense, but it threatens charges of anti-Semitism which obscures the message our interlocutor is likely trying to convey. By saying “the Israeli government does X and it’s bad!” our interlocutor is on much firmer footing: he is criticizing a discrete body of people and their actions, rather than an entire nation of 7+ million people; he cannot be charged with anti-Semitism, because his attack is leveled at a certain political echelon as opposed to all of am Yisrael; he cannot be misconstrued as anti-Israel, and thus a deligitimizer and again an anti-Semite, because he is not attacking Israel itself but the policies of its leaders.

Note: one can still attack the Zionist premises that Israel was founded on and not be an anti-Semite, for Zionism is not equivalent with Jews as people or as a religion. However, criticizing Israel as a nation-state is treading far different ground, and one must be careful to maintain legitimacy in an argument.

Occupation: What is the occupation, and what is it about? The occupation is the military and settler presence in the West Bank, and the military blockade of the Gaza Strip. From Jewish Voice for Peace: “The rest of the West Bank has been under a military occupation ever since [1967]. This means that the Israeli army has complete control over these areas. Palestinians in these regions have no guarantee of civil rights. They have no government of their own other than what Israel will allow. Israel can impose total curfews on any part or all of the territory. This prevents people from traveling to work, to market or to see family members. It can prevent medical care from reaching people, and people from reaching hospitals.” (source)

What is it about? Some might say “security,” some might say “religion,” and while these factors certainly are very important in creating an idea of what the occupation is, the most pressing factor is certainly land. One may see this when certain supporters of the Israeli government line say that the West Bank can’t ever, really, be given up because that would leave Israel far too slim at the waist; Mother Israel needs that extra buffer zone so in the inevitable next invasion from the Jordanians, Israel will have more time to respond. Indeed, this is security playing the lie so that a blatant land grab might be legitimized.

Boycott, Divestment, and Sanctions (BDS): BDS stands for boycott, divestment, and sanctions, a rather self-explanatory acronym. The movement seeks to boycott Israeli companies, seek out foreign companies that invest in Israel and persuade them to divest, and international sanctions on the Israeli state. All of this is to peacefully persuade the Israeli government and society to disengage from the occupation of the West Bank and blockade of the Gaza Strip. What is controversial is exactly what these broad policy goals entail.

To offer an insight into what the anti-BDS movement believes BDS is, I will quote from Prime Minister Benjamin Netanyahu’s speech last year to AIPAC (source). In said speech, he said of the BDS movement that it should be “vigorously opposed… because [it is] bad for peace and because BDS is just plain wrong.” Netanyahu concludes this is so for the following reasons:

  • The BDS movement does not seek a two-state solution, because they “openly admit that they seek the dissolution of the only state for the Jewish people.”
  • BDS “sets back peace because it hardens Palestinian positions and it makes mutual compromise less likely.”
  • BDS is “morally wrong… it is about making Israel illegitimate.” Why? According to Mr. Netanyahu, only in Israel can Middle Eastern academics openly speak their minds, Christians openly practice their religion, journalists can write, gays can be gay, women can have equality. Not only that, it is an anti-Semitic movement: “today the singling out of the Jewish people has turned into the singling out of the Jewish state… the latest chapter in the long and dark history of anti-Semitism.”
  • Finally, BDS movements really should be targeting worse offenders, such as Syria or Iran, and not the “only democracy in the Middle East.”

I am unsure where Netanyahu gets the idea that the BDS movement is about the dissolution of Israel as a state. Perhaps he believes that justice for the Palestinian people constitutes the dissolution of Israel as a state? Perhaps he is referring to the right of return, or of the proposed return to 1967 borders? I have no idea, but the stated purpose of members of the BDS movement, and their actions, seem far more constrained in their scope. From the website for Jewish Voice for Peace: “we support divestment from and boycotts of companies that profit from Israel’s occupation of the West Bank, Gaza, and East Jerusalem. This includes companies operating in or from occupied Palestinian territory, exploiting Palestinian labor and scarce environmental resources, providing materials or labor for settlements, or producing military or other equipment or materials used to violate human rights or to profit from the Occupation” (source). Nowhere does this imply support for the dissolution of the Israeli state, but rather non-violent civil disobedience and non-violent divestment from companies that profit off of the occupation.

From the mission statement of the Free Gaza Movement: “We want to break the siege of Gaza. We want to raise international awareness about the prison-like closure of the Gaza Strip and pressure the international community to review its sanctions policy and end its support for continued Israeli occupation. We want to uphold Palestine’s right to welcome internationals as visitors, human rights observers, humanitarian aid workers, journalists, or otherwise. We have not and will not ask for Israel’s permission. It is our intent to overcome this brutal siege through civil resistance and non-violent direct action, and establish a permanent sea lane between Gaza and the rest of the world” (source). Again, non-violence and awareness (NB: I am unsure whether the widely-publicized violence, involving the injury of several and the death of one of the protestors, on one of the Gaza Flotilla boats, originated from the Israeli commandos or the activists themselves – perhaps it is moot, perhaps we will never know?)

If a large part of the West Bank occupation is due to economic reasons (I have read as much, at least), then making it economically unfeasible for settlements to exist there seems like a good strategy – this of course doesn’t take into account religious reasons.

The anti-Semitic one is pretty easy to refute: boycotts and divestment don’t target Jews but companies that profit from occupation. A recent divestment bill that passed at my alma mater, University of California Santa Cruz, had the following text for its resolution:

“Let it be resolved, that SUA [Student Union Assembly] should further examine UC assets for funds being invested in companies that directly profit from or support a) military support for, or weaponry to, support the Israeli occupation; b) the building or maintenance of the illegal Separation Wall or the demolition of Palestinian homes, farms, or orchards; or c) the building, maintenance, or economic development of Israeli settlements in the West Bank and East Jerusalem; … if it is found that UCSC or UC funds are being invested in any of the above-mentioned companies we call upon or University… to divest their holdings from these aforementioned companies.” (source)

As anti-Semitism is an attack on a person’s being (or perceived being, perhaps, if you take Sartre’s analysis in Anti-Semite and Jew to heart), while the above is an attack on illegal actions taken by the Israeli government, it seems hard to argue that the BDS movement is inherently against the Jewish people.

However, it becomes all too easy when a man like Netanyahu conflates the Israeli state with all of am Yisrael. Because of this, in his mind any attack on the legitimacy of the actions of the Israeli government, or the territorial incursions of the Israeli state, is ipso facto an attack on the Jewish people themselves. This is problematic for multiple reasons: one, it essentializes all Jews, regardless of their level of observance, their nationality, or their political positions, into de facto citizens of the state of Israel, so that any attack on Israel is also an attack on them; two, it marginalizes Israel’s substantial Arab, small Druze, and smaller minority populations, effectively telling them that the country they are citizens of and which they call home is not really theirs; three, it shows as barren Netanyahu’s claim that “that Israel, like all states, is not beyond criticism,” because by equating the Israeli state with the Jewish people, any criticism of Israel can be construed rightly or wrongly as anti-Semitic; fourth, it has the odd outcome that criticism of the Jewish people is also criticism of the Israeli state – does the anti-circumcision movement in Europe equate to being anti-Israel, because it has elements of anti-Semitism? Perhaps, but not necessarily; fifth, if BDS is about the dissolution of the Israeli state as Netanyahu suggests, then it is necessarily also about the dissolution of the Jewish people, which on its face makes his claim even more absurd. Regardless, the charge of being anti-Israel rings hollow anyway: no boycott or divestment bill I have seen wants anyone to divest or boycott Israel itself, only companies that profit off illegal Israeli activity. Netanyahu’s conflation is unjustified and duplicitous.

Finally, Netanyahu’s last objection is just a tu quoque fallacy – other nations, such as Iran and the Sudan, are targeted by sanctions. Israel is also not equivalent with other nations policy-wise: Israel receives more military aid than any other nation, and our “special relationship” with the Israeli state merits equally special scrutiny. Big ticket offenders like China are left alone for various geopolitical and economic reasons, so mentioning them is more of a red herring – we have to focus on what is feasible to solve.

Pinkwashing: a term coined by academics to denounce Israeli efforts, and the apologetics of their supporters, to point to purportedly positive and/or progressive policies held by the Israeli government, or attitudes held by the Israeli people, as merely a red herring distracting from their human rights abuses of Israeli Arabs and Palestinians. While it is true that Israeli actions in one area do not impinge on Israeli actions in another – the liberal policy towards the LGBT community in Israel, though arguably the most open in the Middle East, has little to do with the draconian policy on Palestinian movement of people, for example – it is precisely because of this that the charge of “pinkwashing” carries no weight. If it is true that certain Israelis and their supporters attempt to distract from a poor human rights record in one place by holding up their stellar human rights record in another, it is equally true that their detractors do the exact opposite: detract from their stellar human rights record in one place, by holding up their appalling human rights record in another. It is a red herring in any event, and each policy should be examined on its merits before we take an account of the whole Israeli political apparatus. We ought not to proceed from a negative assessment of the system and then judge its parts, but begin with its parts, and from there form an image of the whole.

To be clear, pinkwashing can refer to any sort of apologetics for Israel that follows these lines: “We have a great policy on X, don’t you agree? So why do you keep hammering us on policy Y?” Such an example can be found in the above-quoted speech Mr. Netanyahu gave to the American Israel Political Action Committee (AIPAC). I quote: “I visited an Israeli army field hospital in the Golan Heights. Now, that field hospital wasn’t set up for Israelis. It was set up for Syrians. Israelis treated nearly a thousand wounded Syrians — men, women and a lot of children. They come to our border fence bleeding and desperate. Often they’re near death. And on my visit I met two such Syrians, a shellshocked father and his badly wounded 5-year-old boy. A few days earlier the man’s wife and baby daughter were blown to bits by Iranian bombs dropped by Assad’s air force. Now the grieving father was holding his little boy in his arms, and Israeli doctors were struggling to save the boy’s life.”

It seems clear that such lines are expressly designed to deflect charges that Israel terror bombs civilians in Gaza – which it most certainly does. Be that as it may, charging this as pinkwashing ignores the fact that, even if it does have rather nefarious intentions, nonetheless it has a good result.

Expanding the Liberty Canon: Aristotle

Apparently  some people have enjoyed the posts on ‘Another Liberty Canon’, so I will keep going on that tack, but with a revision to the heading as I ‘ll be covering some thinkers already accepted into the liberty canon, or at least some of the various canons. I’ll continue to discuss what I think should be brought into the canon, and push the boundaries a bit on those already generally accepted into the canon. I’ll be giving coverage to major figures, with regard to their work as a whole, but at some point I’ll start doing some relatively detailed readings of individual classic works.

I’ll start at the beginning, more of less with Aristotle. I’m sure there are texts and thinkers within the Greek tradition, and certainly in the Near East, southern and eastern Asia, and so on worthy of attention, but for substantial books clearly devoted to the nature of politics, and which have a focus on some idea of liberty, Aristotle seems as a good a place as any to start.

There is maybe a case for starting with Aristotle’s teacher Plato, or even Plato’s teacher. I think Plato should be rescued from the persistent image, never popular with Plato scholars, of forerunner of twentieth century totalitarianism, because just to start off the counter-arguments, Plato’s arguments refer to a reinforcement, albeit radical and selective, of existing customs rather than the imposition of a new state imposed ideology, and certainly do to suggest that arbitrary state power should rise above law.

However,  on the liberty side, Plato’s teacher Socrates was the promoter in his own life style of a kind of individualist strength and critical spirit who fell foul of public hysteria. We know very little about Socrates apart from the ways Plato represents him, but the evidence suggests Socrates was more concerned with a kind of absolutism about correct customs, laws and philosophical claims, in his particular critical individualistic attitude than what we would now recognise as a critical individualistic attitude.

It looks like Socrates was an advocate of the laws and constitutions in Greek states, like Sparta that were less respectful of individuality, liberty and innovation than Athens. Though Aristotle does not look like the ideal advocate of liberty by our standards, he was critical of Plato (often referring to him though Socrates, though it looks like he is reacting to Plato’s texts rather than any acquaintance with Socratic views different to those mentioned by Plato) for subordinating the individual to the state and abandoning private property, presumably referring to the Republic which does seem to suggest that for Plato, ideally the ruling class of philosopher-guardians should not own property, and that the lower classes composed of all those who accumulate money through physical effort, a special craft,  or trade, should be completely guided by those guardians.

It is not clear that Plato ever meant the imaginary ideal state of the Republic to be implemented, but it is clear that it reflects the preference Plato had for what he sees as the changeless pious hierarchies and laws of the Greek states of Crete and Sparta, and the already ancient kingdom of Egypt, in which power goes to those who at least superficially have detached themselves from the world of material gain in some military, political, or religious devotion to some apparently higher common good.

Plato and (maybe) Socrates had some difficulties in accepting the benefits of the liberties and democracy associated with fifth and fourth century BCE Athens that fostered commercial life, great art, great literature, and great philosophy. I will discuss the explanation and promotion of the values of Athens in a future post on the most distinguished leader of democratic Athens, Pericles, so I will not say more about it here.

Aristotle (384-322 BCE) came from outside Athens, he was born in monarchist Macedon which lacked the republican institutions of participatory government in the city states of Greece. Aristotle’s family was linked with the monarchy which turned Macedon into the hegemon of Greece, destroying the autonomy of Athens and the other republics. Aristotle even spent time as the tutor of Alexander the Great, who turned the Madedonian-Greek monarchical state into an empire stretching to India and Libya.

Aristotle was however not the advocate of such empires, but had already studied with Plato in Athens, where he acquired a preference for the self-governing city state participatory model of politics . His links with the Macedonian state sometimes made it difficult to spend time in Athens where most resented the domination from the north, so he spend time in Anatolia (apparently marrying the daughter of a west Anatolian king), the Aegean islands and the island of Euboea off Athens, dying in the latter place.

Despite these difficulties, Aristotle was so much in favour of the values of republican Athens that he even endorsed the idea that foreigners, or those born of one foreign parent could not be citizens, in case of a dilution of the solidarity and friendship between citizens. This issue brings us onto the ways in which Aristotle does not appeal to the best modern ideas of liberty. He was attached to the idea of a self-enclosed citizen body, along with slavery, the secondary status of women, the inferior nature of non-Greeks, restrictions on commerce, and the inferiority of those who labour for a living or create new wealth.

Nevertheless, given the times he lived in, his attitudes were no worse than you would expect and often better. Despite his disdain for non-Greeks, he recognised that the north African city of Carthage had institutions of political freedom  worth examining. His teacher Plato was perhaps better on one issue, the education of women, which appeared to have no interest to Aristotle.

Still unlike Plato, he did not imagine a ‘perfect’ city state where everything he found distasteful had been abolished and did not dream of excluding free born males at least from the government of their own community. Aristotle disdained labourer as people close to slavery in their dependence on unskilled work to survive, but assumed that such people would be part of a citizens’ assembly in any state where there was freedom.

His ideal was the law following virtuous  king, and then a law following virtuous aristocracy (that is those who inherited wealth), but even where the government was dominated by king or aristocracy, he thought the people as a whole would play some part in the system, and that state power would still rest on the wishes of the majority.

All Greeks deserved to Iive with freedom, which for Aristotle meant a state  where laws (which he thought of as mainly customary reflecting the realities of ancient Greece) restrained rulers and rulers had the welfare of all free members of the community as the object of government. In this way rulers developed friendship with the ruled, an aspect of virtue, which for Aristotle is the same as the happy life, and justice.

Friendship is justice according to Aristotle in its more concrete aspects, and ideally would replace the more formal parts of justice. Nevertheless Aristotle did discuss justice in its more formal aspects with regard to recompense for harms and distribution of both political power and wealth.

Like just about every writer  in the   ancient world, Aristotle found the pursuit of unlimited wealth or just wealth beyond the minimum to sustain aristocratic status discomforting, and that applies to writers who were very rich. Given that widespread assumption Aristotle makes as much allowance for exchange and trade as is possible, and recognised the benefits of moving from a life of mere survival in pre-city societies to the material development possible in a larger community where trade was possible under common rules of justice.

As mentioned, Aristotle preferred aristocratic or monarchical government, but as also mentioned he assumed that any government of free individuals would include some form of broad citizen participation . We should therefore be careful about interpreting his criticisms of democracy, which have little to do with modern representative democracy, but are directed at states where he thought citizens assemblies had become so strong, and the very temporary opinions of the majority so powerful that rule of law had broken down. He still found this preferable to rule by one person or a group lacking in virtue, which he called tyranny and oligarchy.

He suggested that the most durable form of government for free people was a something he just called a ‘state’ (politea) so indicating its dominant normality, where the people between the rich and the poor dominated political office, and the democratic element was very strong though with some place for aristocratic influence. It’s a way of thinking about as close as possible to modern ideas of division or separation of powers in a representative political system, given the historical differences, most obviously the assumption of citizens’ assemblies in very small cities  as the central part of political participation rather than elections for national assemblies.

Relevant texts by Aristotle

There is no clear distinction between politics and ethics in Aristotle, so his major text in each area should be studied, that is the Politics and the Nicomachean Ethics. Other relevant texts include the Poetics (which discussed the role of kings in tragedy), the Constitution of Athens, the Eudemian Ethics, and the Rhetoric (the art of speaking was central to political life in the ancient world).  Aristotle of course wrote numerous other books on various aspects of philosophy and science.

Review of Claire Conner’s Wrapped in the Flag

I recently posted a review at Amazon of Claire Conner’s Wrapped in the Flag: A Personal History of America’s Radical Right. (The paperback edition changed the subtitle to What I Learned Growing Up in America’s Radical Right, How I Escaped, and Why My Story Matters Today.) The review begins below. It unfortunately is buried within a stack of over a hundred favorable reviews at Amazon. But anyone who wants to read the review there can go here. Then if you find it worthy, you can click the button that says the review is helpful and move it up in the queue:

I thoroughly enjoyed this book despite myself. The author, Claire Conner, entertainingly interweaves a personal story of her growing up with parents who were avid and prominent members of the John Birch Society with a history of the Birch Society itself. I am only four years younger than Conner, and my own story has many intriguing parallels to hers. My parents never joined “the Society,” as its members referred to it, but they (particularly my mother) became what could be called Birch Society “fellow travelers,” involved in right-wing politics after the election of 1960. Many of their friends were Society members. I therefore imbibed much of the same literature as Conner, listened to similar public lectures, and was taken to and participated in similar events. She and I both, for example, were peripherally involved in the 1964 Goldwater campaign.

Our similar backgrounds even influenced both Conner’s and my choices of college. In her case, she was required by her parents to attend the Catholic University of Dallas, at a time when Willmoore Kendall (who had previously been one of Bill Buckley’s mentors at Yale) was teaching there. I chose to attend the Presbyterian Grove City College, studying economics under Hans Sennholz (who wrote for the Society’s magazine, American Opinion, for a span of years) and history under Clarence Carson (a frequent contributor to the Foundation for Economic Education’s Freeman). Finally, she and I eventually grew up to reject the Society’s conspiratorial worldview.

But there the similarities end. I drifted from conservatism to libertarianism, whereas Conner became a leftwing, progressive activist. Her narrative is filled with many fascinating tidbits and anecdotes about Birch Society activities and luminaries. But unlike me, she had parents who were domineering and dogmatic to the point of being abusive. Thus, she is unable to separate fully her wrenching childhood from the ideas and opinions of those she generally identifies as right wing. While there is always a note of tenderness in her writing about her parents, their fanatical harshness becomes the template for her damning of not only all Birchers but also most conservatives and even libertarians.

This makes her utterly oblivious to the extent to which she is still trapped in a conspiratorial worldview, but one of the Left rather than of the Right. She has graduated from her parents’ belief that America was threatened by a giant left-wing conspiracy, in which every liberal was either a Communist or a Communist fellow-traveler to a belief that America is threatened by a giant radical-right conspiracy, stretching from the 1950s to the present. She lumps together with the Birch Society in this gigantic, ongoing, and diffuse conspiracy such disparate individuals and organizations as Bill Buckley and his conservative National Review; politicians such as Barry Goldwater, George Wallace, and Ronald Reagan; Ayn Rand and her Objectivist followers; the libertarian Cato Institute; the modern Tea Party; and white supremacists of the Klan.

To support this portrayal, Conner engages in the same kind of guilt by association that Birchers employed to charge, for instance, that Martin Luther King was a secret Soviet agent. Thus, the fact that Fred Koch, the father of Charles and David, was a founding Council member of the Birch Society (who ultimately left because of opposition to the Vietnam War) implicates every person and organization associated with him and his sons. Although she honestly reports that Buckley eventually denounced the Birch Society, this cuts no ice for her. She recognizes no significant difference between the racist, anti-Semitic Revilo Oliver (kicked out of the Birch Society for those very reasons), who became virulently anti-Christian, and Jerry Falwell’s Christian Moral Majority, which was unabashedly pro-Israel. Indeed, nearly anyone who thinks that government has become too intrusive and extensive is somehow involved, wittingly or unwittingly. Most disgraceful and bizarre of all, the book’s introduction slyly tries to insinuate that the radical right somehow contributed to the Kennedy assassination, yet while fully accepting that Lee Harvey Oswald was actually the assassin as well as a Communist.

An occasional, slight acknowledgment that her parents or others she wishes to expose were correct about a few things slips into Conner’s story. Thus, only in a footnote to her memories about her parents indoctrinating her in the 1960s about how “the ultimate fiend was Mao Zedong” (p. 43), worse than Hitler, does she concede, “My parents were right about Mao” (p. 225). Late in the book she admits “I never would have guessed, not in a hundred years, that the John Birch Society would be as critical of President Bush and the fiasco in Iraq as I was” (p. 212). But none of this can soften her blanket denunciation of everything her parents advocated or embraced. As stated above, there is much fascinating historical detail in this readable book. With a little more nuance, balance, and objectivity, it could have been far more compelling and credible. Conner’s account of how her parents mistreated her, in particular, is in many places heartbreaking. Which makes it all the more sad that her scarred upbringing has turned her political landscape into the exact mirror image of that of her parents.

California Times Six

I live in California. It’s a great state. Too great.

A proposition to split California into six states may be on the ballot in 2016. “Six Californias” has announced that it has collected sufficient signatures. Why six? California’s population of over 38 million is six times lager than the US state average. The ruling powers may find a way to block the proposal, as some opponents claim that the signature gathering was unlawful. If “Six Californias” does get on the 2016 ballot, in my judgment, this will be a rare chance for fundamental reforms.

Many Californians have said that the state is too big to govern effectively. But the governance problem is not size, but structure. After the property-tax limiting Proposition 13 was adopted in 1978, taxes and political power shifted from the counties and cities to the state government. California could be governed well if decentralized, but the concentration of fiscal power to the state has made the state among the highest taxed and worst regulated in the USA.

There have been many attempts to reform the lengthy California constitution, but they have all failed. Attempts to replace the Proposition 13 have gone nowhere. The best option is to start over. Creating new states would provide six fresh starts.

Critics of the six-state plan say that the wealth of the new Californias would be unequal. The Silicon Valley state would include the high-tech wealthy counties of San Francisco, San Mateo, and Santa Clara, among others. The promoter of this initiative, Timothy Drapers, happens to be a Silicon Valley entrepreneur.

But the current 50 US states are also unequal in wealth. The income inequality problem is a national and global problem. Income can become more equal without hurting production by collecting the land rent and distributing it equally among the population. Since the critics of Six Californias are not proposing or even discussing this most effective way to equalize income, their complaints should be dismissed as irrelevant, immaterial, and incompetent.

US states have been split in the past. Maine was split off from Massachusetts in 1820, and West Virginia was carved out of Virginia in 1863.

If the initiative passes, a board of commissioners would draw up a plan to divide the state’s assets and liabilities among the six new states. A good way to do this would be to divide the value of the assets by population, but to divide the liabilities (including both the official debt and the unfunded liabilities such as promised pensions) by the wealth of each state. That would go a ways to deal with the inequality problem.

California’s complex water rights could be simplified by eliminating subsidies, instead charging all users the market price of water. There could continue to be a unified water system with a water commission with representatives from the six state.

If this measure is approved by the voters and by Congress, each state will design a constitution. The new constitutions should be brief, like the US Constitution, in contrast to the lengthy current California constitution that contains many provisions best left to statute law.

The new constitutions should retain the declaration of rights in the current state constitution, including Article I, Section 24: “This declaration of rights may not be construed to impair or deny others retained by the people.” This wording, similar to the US 9th Amendment, recognizes the existence of natural and common-law rights. This text should be strengthened with something like this: “These rights of the people include the natural right to do anything which does not coercively invade the properties and bodies of others, notwithstanding any state interest or police power.”

These new constitutions will be an opportunity to replace California’s market-hampering tax system with economy-enhancing levies on pollution and land value. There should be a parallel initiative stating that if Six Californias passes, the states will collect all the land rent within their jurisdictions and distribute the rent to all six states based on their populations. A tax on land value is by itself market enhancing, better than neutral, because it promotes an efficient use of land, it reduces housing costs for lower-income folks, and eliminates real-estate bubbles. Combined with the elimination of taxes on wages, business profits, and goods, the prosperity tax shift would raise wages and make California the best place in the world for labor and business.

This is all a dream, but the past dreams of abolishing slavery, having equal rights for women, and eliminating forced segregation all came true. This proposition will at least provide a platform for discussing such fundamental reforms.
—————————————-
This article was first published at http://www.progress.org/views/editorials/california-times-six/

Delacroix’s new book is available in hard copy

As you all know, Dr Delacroix recently called it quits here at Notes On Liberty (he still blogs at Facts Matter), but I thought I’d give his new book a shout-out:

My book:

Jacques Delacroix: I Used to Be French: an Immature Autobiography

is available from me by email : jdelacroixliberty@gmail.com. Please, send me $17 so I can buy fishing bait. Please, add $1.50 for taxes and $4 to help support the US Post Office. Total: $22.50

This is cheap for much entertainment and a little bit of
enlightenment. The book contains many items of esoteric high-brow trivia you will be able to use to make yourself sound brilliant at cocktail parties (Marin County) and at barbecues (elsewhere).

The electronic version is also available in the Kindle Store at:

http://www.amazon.com/dp/B00JY0G3SA

On reading devices other than Kindle: August 2nd

The electronic version costs only $7. (Every time you buy one I can afford another cappuccino.)

Other unimportant news: My slim collection of stories and essays in French will be on Amazon (electronic only) soon. It’s entitled: Les Pumas de grande-banlieue.

You can also find his book on the sidebar of the blog here.

Secession and international alliances go together

It is important to scrutinize the intellectual strength of libertarian ideas about international relations. Here are a few – admittedly only partly systematic- thoughts about the relation between secession and international relations. Or more precise: some libertarians are positive about secession, yet at the same time negative about international alliances. How does that relate?

Pleas for secession can be found in the works of Von Mises, Rothbard, Hoppe and other luminaries of libertarian thought, broadly defined. In an informative chapter on the issue, Mises-biographer Jörg Guido Hüllsman (at mises.org) defined secession as the ‘one-sided disruption of (hegemonic) bonds with a larger organized whole to which the secessionists have been tied’. Recent examples are the bloody secessions of South Sudan or Eritrea. Yet the issue also remains topical in Western Europe, for example in Scotland. It is not my purpose to emphasize the practical failures and wars associated with secession. From a libertarian perspective the principal benefit of secession is that a group of sovereign individuals decide for themselves how and by whom they are governed, and in which type of regime this shall happen. So far, no problem.

Let’s assume a world where secessions take place freely, peacefully and more frequent than in the past twenty-five years, where the number of sovereign states just went up by approximately twenty recognized independent countries. The logical result will be the fragmentation of the world in numerous smaller states, or state-like entities, of different sizes, composed of different groups of people. Perhaps some of these states will comply to an anarcho-capitalist libertarian ideal, so with a strict respect for property rights and the use of military defense only for clear-cut violations of these rights by others. However, it is unlikely that all states will be characterized in this way. Consequently, there remain a lot of causes for international conflict and war. For example, as there are more borders, there are also potentially more border disputes, about natural resources, water, stretches of land, et cetera. Of course humans are not angels, and no libertarian ever claims they will be. It simply means none of the other causes of war are perpetually eradicated in a world of free secession either.

So how to defend oneself in such situation, particularly when your state is much smaller than one or more other states in the vicinity? In such a situation you are unable to defend yourself against the most viable threats. Even if you declare yourself a neutral state it is unlikely this will always be respected. After all, it takes at least two to tango in international politics. Of the many possibilities to defend your property rights and sovereignty, the negotiation of agreements with other countries, or joining an international alliance seems logical and potentially beneficial (of course depending on the precise terms). It would amount to a system of multiple balances of power around the globe, very much like for example former Cato Institute scholar Ted Galen Carpenter favored for the current world. Surely, this would not be ideal, and would not be able to eradicate war either. Yet it will prevent many wars and safeguard the liberties and property rights of the participants.

This differs significantly from the pleas by people who simultaneously favor secession while calling for a non-interventionist foreign policy without alliances, such as Rothbard, Ron Paul (see for example in a column), or many contributors on www.lewrockwell.com.

Admittedly, most of these anti-alliance commentaries are directed against particular parts of current US foreign policy. However, it is still fair to demand theoretical consistency. Either these writers overlook there might be an problem, or they choose to ignore it. Still it is important to acknowledge there is an issue here. It is too simple to reject international alliances while embracing secession at the same time.

Around the Web

  1. Paupers and Richlings: Piketty’s ‘Capital’ by Benjamin Kunkel (h/t Mark Brady)
  2. The neoconservatives have ramped up their attacks on Rand Paul. This means his foreign policy ideas are winning out, of course. Neoconservatives have also begun blaming libertarians rather than liberals for the failure of their Iraq war campaign
  3. Liberals and libertarians have been finding common ground in the US House of Representatives
  4. What does the BRICS bank mean? From Dan Drezner
  5. Want to solve the border crisis? Give free drugs to addicts. This is from Marc Joffe, and includes a very thoughtful analysis of charter cities and how they can help improve the institutional problems that would still plague Central America even if the drug war were to end
  6. Help! I’m a Marxist who defends capitalism

Riding Coach through Atlas Shrugged: Chapter 2 – Whistling In the People’s Key.

Part One

50th Anniversary edition pages 20-32

Chapter Summary – We are introduced to Dagny Taggart, brother of James, who reflects on neo-classical music, throws her family name around a bit, cuckolds her brother’s business, and smokes, also Kellogg turns down an offer he can’t refuse.

Dagny is one of the characters who I am somewhat familiar with due to cultural osmosis. Her strong willed antagonism, her intelligence and stubbornness, her anger, her misery, and her smoking. All things that I expected that were confirmed in her first chapter in Atlas Shrugged.

What I didn’t expect however was the amazing paragraphs about Richard Halley’s symphony.

“It was a symphony of triumph…”

the notes of the symphony

“spoke of rising and were the rising itself.

Emphasis mine. The way Dagny is enveloped by the symphony, it consumes her, and just for a moment she can do nothing but feel when she hasn’t in so long.

Then it is revealed that she is merely hearing it being whistled from across the train car by some blond brakeman. If one man whistling one part of that symphony can fill Dagny with such joy then what effect would a full orchestra have on her, on the people, on society?

That feeling is the very thing I hope to gain from this project. The sense of wonder that Dagny is overwhelmed with and a reminder that

“[T]his is why the wheels have to be kept going, and this is where they’re going.”

The brakeman is interesting as well. Rand’s description of him as a worker with no loose muscles was very telling to me. This blue-collar laborer is the one carrying the tune that is Dagny’s hope. This is in stark contrast to the train conductor for example who doesn’t seem to care about the problems he faces and simply hopes everything will work out.

He jerked his head up at the red light. “I don’t think the signal is going to change. I think it is busted.”

“Then what are you doing?”

“Waiting for it to change.”

I almost wonder if this theme of hard working but uneducated versus apathetic educated middle class will continue. I always felt that Rand was somewhat anti-laborer, that those who were not entrepreneurs were merely leaches on the productive members of society but I am beginning to think that impression may have been unfounded.

Speaking of entrepreneurs there were two major economic principles stated in this chapter. First was Dagny exemplifying the attributes of an entrepreneur when she makes the call to use Rearden Metal for the new railroad tracks. When James protests the use of the new metal she tells him that she is making the call using her own judgment, knowledge, and personal experience. She is willing to assume the risk for this venture based on a gut feeling and her own personal belief that it will work. It is important to notice that she doesn’t deflect responsibility or assume some other person or entity will absorb any losses if she is wrong.

The second economic point was in regards to monopolies. A great exchange takes place between Dagny and James that goes as follows:

“It isn’t fair,” said James Taggart.

“What isn’t?”

“That we always give all our business to Rearden. It seems to me we should give somebody else a chance, too. Rearden doesn’t need us; he’s plenty big enough. We ought to help the smaller fellows to develop. Otherwise, we’re just encouraging a monopoly.”

“Don’t talk tripe, Jim,”

“Why do we always have to get things from Rearden?”

“Because we always get them.”

“I don’t like Henry Rearden.”

“I do. But what does that matter, one way or the other? We need rails and he’s the only one who can give them to us.”

“The human element is very important. You have no sense of the human element at all.”

“We’re talking about saving a railroad, Jim.”

“Yes, of course, of course, but still, you haven’t any sense of the human element.”

“No. I haven’t.”

This exchange exemplifies the free market vs anti-property positions on monopolies but misses one crucial point. This anti-monopoly activity is driven solely by the free choice of the individual. Taggart is perfectly able to restrict his business from any source he chooses for any reason he chooses and this is the pure libertarian position on the matter.

Now, don’t get me wrong, he is making a poor entrepreneurial choice since Associated Steel has repeatedly failed to deliver on the contract and from a purely economic standpoint Dagny is correct. From a libertarian standpoint however, both are correct.

James is totally justified running his business into the ground for any reason he chooses and Dagny has every right to seek out new opportunities. Assuming of course she owns part of the company or has been granted the authority to act in the company’s name. The latter is the case here as far as I can tell.

I would also like to point out that other non-humanistic arguments against monopolies are almost universally false. Predatory pricing for example has essentially never happened successfully even in the case that made it illegal.

Now for the negatives.

Primarily I feel like James is a bit too obvious as a villain, he is almost too petulant and whiny. I just don’t buy that anyone would follow him and that the board of directors would have kicked him off years ago. I suppose Rand is pushing the whole feudalism thing. How many nations have fallen because of a weak King or Queen?

Also, I just don’t know how to feel about Dagny yet. The quirkiness is what bothers me the most. Sitting on the arm of the chair, her snarkyness and her general self-importance. I am not sure how much I am going to like her character yet but there is plenty of book to go so we shall see.

Finally I have to give the last story beat in this chapter credit. The final conversation Dagny has with Kellogg was an amazing piece of the mystery that literally gave me chills of anticipation. Where are these people going? Why are the best and brightest suddenly missing but still creating? And most importantly…

Who is John Galt?

Re: How to Achieve Peace in Gaza

As the latest Gaza War rages on, several members of our consortium have taken up their pens to figure out a solution for this endless debacle. This post is in reference to an earlier post by Dr. Foldvary, which may be found here, as well as some comments by Brandon.

What is to be done for Israel/Palestine? How will the warring neighbors – perhaps neighbors is too generous a word, as it implies equality – ever come to terms? Should we care anyway? As the Germans say, das ist nicht mein Bier! The third question has a rather self-evident answer: if you at all care about what the US government does with American taxpayer money, you should be concerned that the taxpayers contribute roughly $6 billion per year to the Israeli government. Whether this is given in currency or kind I am unsure, but the dominance of American military technology in Israel seems to point more to the latter.

For the first two questions, Brandon and Dr. Foldvary argue one way, and I another.

Brandon’s proposal is essentially as follows:

Once the two sides are brought together (but not really, and the ‘not really‘ is key) under a federal umbrella – one that is endlessly interested in preserving itself at the expense of member states (and therefore willing to provide better services than either Israel, the PA, the Great Powers, or the IGOs of Great Powers) – peace and understanding (and economic prosperity!) can ensue.

Honestly, I have nothing negative to say about this idea. Confederating the two areas into one state, Israel/Palestine (an ugly name as of now; perhaps we can return to Canaan?), is probably where things are heading regardless of the specific proposal. Israeli and Palestinian intransigence at the political level will, barring some revolutionary change in the collective consciousness of their respective populations, will likely smooth over the other pertinent issues until: wham! One state! When did that happen? Where I disagree is over the practical validity of Dr. Foldvary’s and Brandon’s proposals.

For what it’s worth, here is my response to the original article:

Your plan is far too rational to work, unfortunately. There will be no apologies, no reconciliation; at least in this generation. The Israelis have a colonial contempt for their subjects that will not see them scrape and bow, and the Palestinians will not compromise on their core demands. Past peace negotiations have failed partly because of Palestinian intransigence on the right of return and on just how much land will be incorporated into a future Palestinian state.

When the two sides begin to think rationally perhaps they will implement some of your plan. But, they do not think solely with reason. Magical and religious thinking, racism, historical trauma, and other such mental detritus dominate the mind in that region. Better to leave it alone.

And some further reading:

…you assume a government can exist that will protect individual rather than group rights, but the current political status quo shows this to be an impossibility. Right-wing groups like Shas, Jewish Home, and Yisrael Beiteinu are small but their influence is disproportionate, because they are necessary to form a coalition. The Arab parties are allowed to exist but have never been part of a government, and the pro-peace parties are similarly shafted. Has Kadima made a peep since Sharon had his stroke? Yesh Atid is supposedly the centrist party but has been in a coalition with Likud and other rightists since the last Knesset election. Thinking Israeli society will shift in any way, shape, or form to a position favoring individual rather than group advantage is a pipe dream.

Even if it were not, there is too much pushing in the opposite direction to effect any sort of mental shift in the collective Israeli consciousness. The existence of perpetual warfare in Israel/Palestine has created three parties roughly analogous on both sides: the extreme right who wants war, the extreme left who wants peace, and the vast majority of both populations, who want to survive.

The problem is, the survival instincts of the majority are much more easily manipulated by the hardliners on the right wing, who preach intransigence, racism, and further warfare. The doves on the left, a far smaller force than the hawks on the right, preach peace which falls on deaf ears with each additional attack. What is worrisome is that large swaths of Israeli society are becoming hardened to the realities of war and treat it almost like entertainment. Re: the Hamas Rocket Drinking Game (drink each time you hear a siren!) and the theatre on a hill in Sderot for watching the bombardment of Gaza (you can find pictures online).

The best case scenario is that both sides get sick of spilling each other’s blood and, for the sake of their groups, hash out a peace deal that will probably be unfair to the Palestinians, but just unpalatable enough that they wont cast it in the teeth of the Israelis. I have no idea what this will look like exactly, but imagine that the right of return will be denied or severely limited, Israel will retain the majority of settlements or visiting rights in certain places (religious sites in Hebron, say), and the Palestinians will lose East Jerusalem and have to station their capital elsewhere, such as Ramallah. I also imagine some form of ethnic cleansing, like population exchange, will take place.

That is my assumption, unless there are systemic changes in Israeli and Palestinian society. The vast majority of them are sick of fighting, but continue to yoke themselves to racist, violent nationalist movements. When they decide on a better course of action for making peace, then we will see something interesting; until then, zilch.

In responding to Brandon’s thoughts, I find nothing substantial to change in my thinking on this matter. Although a Confederated Canaan, one built on individual rather than group rights and respecting the human dignity of all the subjects therein, would be a splendid idea, we still have to get there in reality. My main contention is that this is probably impossible. There is too much holding everything back for a rational and fair final peace. What will likely happen, as I noted earlier, is a grudging peace between Israel and Palestine with the dominant party (Israel) coming out better off than the weaker (Palestine). Palestinians will probably lose control of East Jerusalem and have a heavy security blanket draped over them for decades, while as has been done in the past, religious rights will be respected for holy sites such as the Dome of the Rock or, for the Jews, the Cave of the Patriarchs in Hebron. Perhaps some sort of Palestinian-only corridor to sites in Israel, and an Israeli-only corridor for sites in the West Bank. More interior settlements like those in Hebron or in the middle of the West Bank will be dismantled or the settlers abandoned, while those closer to the Green Line will be incorporated into the new Israel. The only substantial difference I can imagine is that, unlike now, the Israeli military apparatus will have the full, not just the grudging, support of the new Palestinian state in implementing the peace.

Over time, people will acclimate to this semi-normalized situation – and maybe at that point, a truly reconciliatory peace can be achieved. But until then, I think a Confederated Canaan is not going to happen on equitable lines.

A California Crack-Up?

We can only hope.

There has been a small flurry of news articles covering the success of a political initiative by a Silicon Valley entrepreneur to split California into six states rather than one. If this sounds familiar, it’s because many Notewriters have been advocating for more decentralization – both in the US and abroad – since NOL was founded back in 2012. Because breaking up states within free trade zones is such a sophisticated idea, many mainstream pundits have been reluctant to read up on it. Instead, Left-wing reactionaries (and really, are there any other kind?) simply resort to slandering the entrepreneur responsible for the initiative (his name is Timothy Draper, by the way, and you can look up his wiki here), slandering libertarianism, and slandering rich people (Slate, predictably, covers all of the fallacious bases in one fell swoop).

Luckily, the internet now provides people with more than three television channels.

There are two things you need to know about secession within the US free trade zone. First, it is extremely hard to break up one state into many. There is a constitutional process for the whole idea (I don’t understand why the framers, and subsequent legal experts, can respect secession within free trade zones but cannot bother to apply their reasoning to secession in matters outside of a free trade zone’s jurisdiction; Texas, for example, provides us with a great case study of what happens when an administrative polity breaks away from a federal state only to join a rival federal state; Why should this concept not be applied to the West’s foreign policies today?).

In order for a potential administrative unit (“state”) to become an actual US state, it must first be approved by state legislatures. So, in California’s case, only the California legislature needs to approve of the secession. However, there are rules in the constitution allowing for states to join up with each other, or for one region between two US states (like the hippie area in northern California and southern Oregon) to apply for statehood as well. When two or more states are involved, the legislatures of each state must approve of the secession (or marriage). Are we all clear?

Second, after the state legislature(s) approve of the secession, the move must then be approved by the US Congress (both houses). Andrew Prokop, of the Left-wing site vox.com (lest I be accused of being too ideological), explains well what this means:

The biggest difficulty of all would be getting Congressional approval. Giving California 12 Senate seats would be an extremely tough sell. Though those seats wouldn’t necessarily be overwhelmingly Democratic [...] they would dilute the power of every existing senator.

Indeed. Now you can hopefully see why libertarians generally support decentralized governance (and let it be remembered that federalism – even a territorially-expansionist federalism – is likely to be the quickest, but still legally-soundest, way towards decentralized governance). As I wrote in a ‘comments’ thread last September (2013):

[...] the federal pie itself would not grow in the event of a few states splitting up.

Think of it this way: suppose the federal budget is $100 for the year. Currently, there are 100 Senators and 435 members of the House, so altogether there are 535 politicians dividing up the $100 pie.

Now suppose the number of states suddenly doubled. You now have 200 Senators and say 870 members of the House.

Numbers like this guarantee that each politician will have less power.

Additionally, you cannot grow the federal pie simply by creating new states out of thin air. If this were the case, then politicians and intellectuals who favor the government redistribution of wealth approach would have long ago advocated for more states. Advocates of redistribution recognize that more decentralization of power makes it harder to come to a consensus about policy options.

And the less government does, the better off everybody will be.

Now, with this being said, there is more than one type of pie. There are state pies and county pies and private sector pies, too. Secession would weaken the power of state-level politicians (Governor Brown could only inflict damage on northern Californians rather than all Californians, for example).

County pies may or may not grow, but in my estimation I do not think growth at the county level is all that important.

The one pie that would grow would be the private sector pie, largely due to the lack of consensus (or, in other words, the greater amount of special interests) at the federal level that decentralization brings about.

Speaking of ‘comments’ threads: One of the things I like most about blogs is the fact that many of the insights I receive about an idea or an event are found in the ‘comments’ threads rather than in an original post. The openness of the blogging platform provides not only an avenue for individuals to express their thoughts, no matter how primitive or vulgar, but also a way for people to expand their horizons and learn something new. This is one of the reasons I try to encourage readers, as well as my fellow Notewriters, to get more involved in the ‘comments’ threads, although y’all are understandably weary of trolls.

Another Liberty Canon: Foucault

Michel Foucault (1926-1984) was a French writer on various but related topics of power, knowledge, discourse, history of thought, ethics, politics, and so on. His name to some summons negative associations of French intellectual fashion, incomprehensibility, and refinements of Marxist anti-liberty positions.

However, his influence in various fields has become too lasting, and too much taken up by people who do not fit into the categories just mentioned, for such reactions to be considered adequate. Foucault himself resisted and mocked labels, which was a serious issue for him because in his work he tried to question the absolute authority of any one system of knowledge and the  authority of isolated great thinkers.

He said that once he had written something it was no longer what he thought, which is in part a playful attempt to resist labelling, but also a rather serious point deeply embedded in his thought, about the nature of subjectivity, how it is always more than what we say or more than the identity that power relations impose on us.

It seems to me that any ethics of subjectivity has pro-liberty implications, and despite the image some might have of Foucault as morally irresponsible or indifferent, he increasing developed the idea of  self-invented subjectivity, based on care of the self, the art of existence, and related terms.

The self-invention does not mean that Foucault thought we can arbitrarily will our self to be anything, it does mean that he thought we have possibilities to cultivate ourselves to live in a way that relates to, and challenges our existing strengths and goals.

Despite the image for some of intellectual fashion round Foucault, these ideas were partly developed through study of Ancient Greek and Roman ideas about ethics and style of living, which included interaction with scholars in the field.

Another theme he developed through his interests in antique knowledge and culture was that of ‘parrhesia’, Greek word that refers to free speaking, which in the context of ancient city states, particularly the Athenian democracy, had strong overtones of courage in truth telling before the city assembly, a prince of any other source of power.

The ethic of truth telling relates to Foucault’s own work on the language of knowledge and the history of science, as well his political ideas. He did not believe in absolute final systems of knowledge, autonomous of context, but he did believe that trying to find truths within whatever perspectives was an ethical enterprise connected with the kind of self cultivation he advocated.

Foucault’s own father had been a doctor and on at least one occasion Foucault suggested his own work was a continuation of the doctors work that evidently combines ethical and scientific aspects. It must also be said that Foucault was a great critic of the authority of experts, including doctors, so he might also be seen as struggling with the memory of his father.

The ambiguity and the personal involvement in ideas suggested there is very much at work throughout Foucault’s writing, in its tension and energy. It is part of his ‘difficulty’, which also comes from the philosophical and literary interests he had, which relate to the creative possibilities of linguistic disruption. We can see that in the most obvious way when he quotes literary texts of Borges, Beckett and so on.

The existential commitments in Foucault’s work is clear if we think about the book that made him famous History of Madness (also known as Madness and Civilisation ) and his personal experience of mental ill health and psychiatric treatment, particularly in his student years.

We can also think about his constant critique of power and his individual  willingness to physically confront power, as in the beatings he received from the police at demonstrations for rights in both France and in Tunisia (where he taught for a few years just after becoming a celebrity public intellectual in France).

Returning to the topic of experts and power, one of Foucault’s most pervasive ideas now is of ‘biopolitics’, that is the way that power expresses itself through prolongation of life.  As the state has moved from a basis in the power of death over criminals and other supposed enemies, to a promotion of population, public health and prolongation of life, it has demanded corresponding powers of intervention and control.

At the extreme this means the ‘racial hygiene’ ideas that German National Socialists used to justify the Holocaust, and in a more routine way means expanding state activity justified by public health goals. We can readily see the contemporary significance of Foucault ideas here in relation to ever expanding state and ‘expert’ attempts to limit smoking, drinking alcohol and supersized fizzy drinks, eating sugary and fatty foods , and so on.

The ideas about biopolitics builds on the discussion of modern power in maybe his most widely read book, Discipline and Punish, which deals with the way that the prison becomes the central means of punishment after the eighteenth century Enlightenment, and suggests the dangers of Enlightenment becoming a controlling form of rationalism.

The way the prison works, around observation, or surveillance, of prisoners to ensure adherence to prison routine was the model of modern power for Foucault including factories, schools, and armies, in a model of ‘disciplinarily’. Again Foucault’s intellectual interests correspond with life commitments, as he was a prominent campaigner for prisoner rights, under the inspiration of the man with whom he shared his life, the academic sociologist Daniel Defert.

Foucault’s analyses in Discipline and Punish, and related material, draw on the ‘classical sociology’ of Emile Durkheim and Max Weber with regard to norms and authority, as his views on the emergence of the modern state draw heavily on the ‘pre-sociology’ to be found in the historical and social work of the classical liberal thinkers Charles-Louis de Secondat, Baron of La Brède and Montesquieu and Alexis de Tocqueville.

There is some drawing on Marx, but one should be wary of those left socialist inclined advocates of Foucault who emphasise this strongly, since they don’t mention the other points of orientation so much. The same applies to remarks Foucault made about the importance of the twentieth century Marxist theory of the Frankfurt School, as those who emphasise such remarks ignore accompanying remarks about the importance of Max Weber and ‘Neoliberalism’ (i.e. classical liberal and libertarian thought since the Austrian Liberal school of Menger, Hayek, Mises etc).

Strange as it might seem, Foucault suggests we take Marx, Weber, the Frankfurt School, and Neoliberalism together as attempts to explore liberty and power. Maybe it shouldn’t seem so strange, however awful the consequences of Marxist ideas coming in power have been, that does not mean we should ignore Marx and Marxism, which starts by drawing heavily on classical liberalism and does have some noteworthy things to say about constraints on liberty in a capitalist society, even if offering bad solutions.

Certainly Foucault is not your man if you think a pro-liberty position means uncritical embrace of the links between private enterprise and state power, but since the liberty tradition has in a very significant way been concerned with criticism of rent seeking and crony capitalism, of the drives within capitalism to betray itself, then I don’t think we need to reject Foucault in this area. Indeed it is even a part of the liberty tradition to reject ‘capitalism’ as tied to the state and concentrations of power and argue for markets, property, and association rights liberated from state alliances with economic power.

This is the core of left-libertarianism, and even Foucault’s most Marxist leaning fans would find it hard to deny that left-libertarian is an appropriate label for Foucault. Clearly he was a natural maverick and critic of all power, including state socialist power. I suggest his life, his activism, and his writing, can be taken as an inspiration for all liberty inclined people. Even on the more conservative side, Foucault’s thoughts about self-cultivation are a version of virtue theory, of an emphasis on cultivating virtue, so Foucault has a lot to offer to all streams of liberty thought.

Those Foucault texts most relevant to political thought about liberty

Monographs 

History of Madness (also published as Madness and Civilisation)

Discipline and Punish

History of Sexuality (3 volumes: Will to Knowledge, The Uses of PleasureThe Care of the Self)

Collected lectures

(Foucault’s rather early death means that much of his work was in lectures that would have been later revised into published material. The task of bringing those lectures into print is still underway).

Fearless Speech

The Government of Self and Others

The Birth of Biopolitics 

Security, Territory, Population 

Hermeneutics of the Subject 

Society Must be Defended 

How the Rentenbank Stopped Inflation

After World War I, Germany had to pay reparations to the United Kingdom and France. Having sold off its gold, the German government had no specie with which to back its currency, the mark. Therefore Germany issued fiat money, not backed by anything. It was called the Papiermark, the paper mark.

With its economy in ruins, the German government printed more and more currency with which to pay its bills, and the German expansion of money became the world’s most famous example of hyperinflation.

The inflation induced alternative currencies in Germany. In 1922, the Roggenrentebank was established, issuing notes backed by rye grain. In 1923 several local governments issued small-denomination loan notes denominated in commodities such as rye, coal, and gold. The commodity front served as a price index relative to marks for the notes.

The inflation came to a halt with the replacement of the Papiermark with a new currency, the Rentenmark on October 15, 1923*. One Rentenmark could be exchanged for a trillion Papiermarks.

The Rentenmark was fronted by bonds indexed to amounts of gold. Since the US dollar was backed by gold then, the Rentenmark was thus also pegged to the US dollar at 4.2 RM to $1. To “back” a currency means to exchange it for a commodity at a fixed rate. It was not enough to merely index the units of the Rentenmark to gold. To become stabilized, the new currency needed to be fronted by a commodity that was actually used. That commodity was real estate.

The Deutschen Rentenbank, the central bank of Germany, established reserves that included industrial bonds as well as mortagages on Germany’s real estate. A currency is fronted when the issuer has collateral that it can deliver in exchange for indexed units of the money. Real estate rentals payable in Rentenmarks were fronts for the new German currency. “Rente,” derived from French, means income in German, such as a pension.

After having stabilized the money, the Rentenmark was replaced by the legal-tender Reichsmark in 1924 one-to-one, although Rentenmark notes continued to serve as money until 1948.

Previous attempts to front a currency with land value failed, because such frontage is insufficient. In France during the early 1700s, John Law’s bank issued money on the collateral of land in Louisiana, but that hypothetical land value did not constrain the over issue of the banks’ notes. Then during the French Revolution, the government issued “assignats” on the collateral of confiscated church land, but that too did not prevent the inflation of the money.

Land rent cannot “back” a currency, since there are no uniform units of land that can be exchanged for units of money. But land rent can be a “front” for money when taxes are payable in that currency, which helps give that money its value. But that alone does not prevent an excessive expansion of the money. To stabilize the currency, it also needs to be backed by or indexed to some commodity. And gold has been a common and suitable backing for paper and bank-account currency.

The German experience also shows that the gold backing does not require large amounts of gold. It is sufficient for stabilization that there is some credible limit to the expansion of the money. The Germans were lucky in 1923 in having monetary chiefs such as Hans Luther of the Finance Ministry, and Hjalmar Schacht, Commissioner for National Currency, who maintained the gold index by limiting the expansion of the new currency.

But as the experience of France, shows, it is risky to depend on the integrity of monetary chiefs. Permanent monetary stability requires a structure of money and banking that is self-correcting. That structure is best provided by free-market banking, in which the real money (outside money) is some commodity beyond the control of the banks, and the banks issue “inside money” or money substitutes backed by the real money. Competition and convertibility prevent inflation.

Any kind of tax can serve to help endow money with value, but a land-value tax offers the greatest frontage for currency, because in effect, LVT acts as a mortgage on land value, and the government can take over land when the tax is not paid. Unlike with taxes on income, nobody goes to prison for not paying a real estate tax, because the rent serves as a reliable collateral. Land rent can serve as collateral not just for real estate loans, but also for taxation, and for currencies. All countries can have “renten money” when they covert from market-hampering taxes on production to market-enhancing taxes on the economic surplus that is land rent.

* This was corrected from an earlier typo listing the year as 2013 instead of 1923.

Tabarrok on “Bernanke vs. Friedman”

Alex Tabarrok has a very flattering post at Marginal Revolution about my 2011 article,  “Ben Bernanke versus Milton Friedman: The Federal Reserve’s Emergence as the U.S. Economy’s Central Planner.” It seems that the President of the Richmond Fed has independently just made a similar argument.

Spontaneous thoughts on a humble creed

Follow

Get every new post delivered to your Inbox.

Join 2,124 other followers

%d bloggers like this: