Category Archives: Political Thought

Optimism and Despair in a World of Injustice

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The infamous development economist William Easterly recently tweeted that writing about spontaneous order without citing Friedrich Hayek is now “mainstream cool,” while writing about spontaneous order and citing Hayek makes one an ideological extremist. This biting critique of intellectual discourse, a mere 140 characters long, does more than just expose the drastic ideological shortcomings of the modern Left. It highlights the endlessly interesting obstinate ignorance that collectivists of all stripes have historically displayed toward the basic theoretical and moral insights advanced by libertarians.

In a recent Freeman essay by anthropologist Mike Reid, a pattern similar to the one noticed by Easterly emerges in the actions of central planners aiming to preserve the cultural heritage of a number of ethnic groups that have been deprived of their property rights by the very governments now looking to preserve their cultures for them. Reid takes examples from India and Canada and finds that the logic of preserving a specific culture does not hold up to scrutiny.

On the policies of the government of India, Reid writes: Continue reading →

Ham-Fisted Coercion and Incompetence versus the Invisible Hand of Self-Interest

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A Tale of Two Hands

I came across Gary Galles’ recent article in The Freeman about Leonard Read’s analogy of government coercion as a clenched fist, “The Clenched Fist and the General Welfare.” I see a symmetry between this analogy and Adam Smith’s about self-interest unintentionally channeled into market organization, one that is so familiar to free market proponents and detractors alike that it is a common metaphor: the invisible hand.

Government coercion and market organization. Two very important concepts for any libertarian to master. Which one better provides for the general welfare? Smith and Read would contend the latter. The reasons for this are contained in the analogies. As Read and Galles point out, not much good can come from a clenched fist. Only violence and incompetence. It can punch. It can pound. That’s about it. What better description of government? Likewise, as Smith notes, the usefulness of markets is that they do better than government many of the noble things government tries to do, thereby rendering it redundant, if not unnecessary, in those areas. The all-too obvious fist of government regulations and mandates is no match for a more efficient, less obvious hand: self-interest. Continue reading →

Markets Strengthen Moral Values

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[Cross-posted at the Progress Report]

Pure markets enhance people’s moral values. In a pure market economy, all activity is voluntary for everyone, and involuntary acts, those which coercively harm others, are outside the market as an invasion of rights. A pure market includes the governance that enforces natural moral law, thereby promoting acts that are good or neutral, while minimizing evil acts.

Critics of markets have claimed that when people search for the cheapest goods, this reduces moral concerns. But in a pure market, the products offered are produced by moral means, i.e. by a process that does not involve coercive harm. Therefore searching for the lowest-cost goods is not evil. Only when goods are produced by immoral means, such as with slave labor, is the product morally bad, but that could not occur within a pure market.

Unfortunately, some economists who conduct research on human behavior leap to incorrect conclusions because while they have been trained in experimental techniques and mathematics, their graduate-school training did not include market ethics. For example, Prof. Dr. Armin Falk at the University of Bonn and Prof. Dr. Nora Szech at the University of Bamberg conducted experiments in which persons were offered a choice between receiving ten euros versus letting a laboratory mouse get killed. If a subject decided to save a mouse, the experimenters bought the animal (“Morals and Markets”), allowing it to live a decent life. Continue reading →

See the Cat: The Heart of Economics in One Story

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A man was walking down a shopping street and came to a store window where there was a big drawing full of lines and squiggles. A sign by the drawing asked, “Can you see the picture?”

All the man could see was a chaos of lines going every which way. He stared at it and tried to make out some kind of design, but it was all a jumble. Then he saw that some of the lines formed ears, and whiskers, and a tail. Suddenly he realized that there was a cat in the picture. Once he saw the cat, it was unmistakable. When he looked away and then looked back at the drawing, the cat was quite evident now.

The man then realized that the economy is like the cat. It seems to be a jumble of workers, consumers, enterprises, taxes, regulations, imports and exports, profits and losses – a chaos of all kinds of activities. Here are fine houses and shops full of goods, but yonder is poverty and slums. It doesn’t make any sense unless we understand the basic principles of economics. Once we have this understanding, the economy becomes clear – we see the cat instead of a jumble. We then know the cause of poverty and its remedy. But since most folks don’t see the cat, social policy just treats the symptoms without applying the remedies that would eliminate the problem.

What is this economics cat? It starts with the three factors or resource inputs of production: land, labor, and capital goods. Land includes all natural resources and opportunities. Labor is all human exertion in the production of wealth. Capital goods are tools (such as machines and buildings) used to produce wealth. The owners of land get rent, workers get wages, and the owners of capital goods get a capital return.

Picture an unpopulated island where we’re going to produce one good, corn, and there are eleven grades of land. Continue reading →

Around the Web

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  1. A Brief History of IRS Political Targeting.
  2. Listen to the fascists sing.
  3. Philosopher Kevin Vallier’s response to a hatchet job on FA Hayek in a stale (and apparently desperate) Left-wing publishing outlet.
  4. Political scientist Samuel Goldman’s response to the same hatchet job.
  5. The aforementioned hatchet job (in The Nation).
  6. Monkey Gone to Heaven.

Another Fascinating reddit Thread

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This time one of my pieces has been the subject of debate.

What fascinates me most is simply how often people get their facts totally, utterly and completely wrong. If everybody were operating under the same set of facts, I think there would be much more room for libertarian policies to be implemented. Unfortunately, I think the enemies of freedom know this, so they spew lies that lead to assumptions like those being debunked in the linked-to thread above…

The Triumph of Liberalism Over Socialism

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The Economist has a great piece on France’s current socialist government and the scandal of wealth that has recently erupted there. From the report:

Now the Socialist president’s new disclosure rules reveal that seven of his ministers, including his prime minister, Jean-Marc Ayrault, are millionaires.

The French are discreet about money and flinch at ostentatious displays of wealth. So the new rules have prompted much discomfort, with ministers given only a week to declare their wealth. On April 15th Laurent Fabius, the foreign minister, who comes from a family of art dealers, duly declared over €6m ($7.9m) of assets, including a flat in Paris worth €2.7m and two country houses. Michèle Delaunay, minister for the elderly, reported €5.2m of assets, including two properties in Bordeaux and two houses in different south-west resorts. Michel Sapin, the labour minister, declared three country houses, some large tracts of farmland and a flat in Paris, for a total of over €2m. Even Mr Ayrault, a former schoolteacher, is a millionaire, with two properties to his name.

Other details raised eyebrows. Cécile Duflot, the Green housing minister who makes much of taking public transport, owns two cars, neither of them electric. Mr Fabius, despite his millions, has a €30,000 overdraft. Arnaud Montebourg, the left-wing industry minister, owns three properties and a Charles Eames armchair worth €4,300. French Socialist ministers turn out to be keen property investors; almost none holds shares.

Mr Hollande hastily devised the new rules after his former budget minister, Jérôme Cahuzac, had confessed to lying about a secret foreign bank account. Until now, only the president had to publish his wealth. Mr Hollande’s 2012 declaration included two flats in Cannes and a villa nearby, valued in all at nearly €1.2m, just under the threshold at which France’s annual wealth tax kicks in.

Now the president wants to extend the disclosure rules to all of France’s deputies. This will be tough. Even Claude Bartolone, the Socialist parliamentary speaker, denounced the exercise as “voyeurism” and expressed fears of the advent of “paparazzi democracy”. And Jean-Luc Mélenchon, a fiery hard-left European deputy not bound by the rules, mocked them by revealing on his blog his height and weight, and stating that he owned no paintings, cars, yachts or horses—and did not dye his hair.

Be sure to check out the graphic, too. The reality of the world today is that socialism is truly dead and done. Something else – equally reactionary – will arise in its place to challenge the liberal order’s peace and prosperity, but for the next few decades the world will know nothing but relative calm as it enjoys the benefits brought about by individualism and world trade.

When a new collectivism arrives to challenge liberalism, you can be sure that it will look very much like the collectivisms of old. Do you know what collectivism looks like?

Welcome to the New Bohemia

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[Editor's note: I first came across this article while living in Santa Cruz. It was in one of those trashy "arts and events" weeklys that you find littering every city in America. I have tried to locate the author of the piece but he appears to have written it under a pseudonym, and the weekly is now defunct. So, I figured I'd reprint the whole damn thing here. You can find an archived copy here]

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We are the modern equivalent of the ancient city-states of Athens and Sparta. California has the ideas of Athens and the power of Sparta. —Gov. Arnold Schwarzenegger

California is like an artificial limb the rest of the country doesn’t really need. You can quote me on that. —Saul Bellow

Perhaps Schwarzenegger and Bellow divined what’s now painfully clear to everyone: Arnie’s California is Humpty-Dumpty, the Hindenburg and some kind of sociopolitical Holocaust all rolled up into one overstuffed exploding burrito. It’s an ungovernable, near criminally impotent and outdated mess. Remedying California’s woes requires draconian cutbacks to essential services and infrastructure. Anyway, that’s what we are told, grand allusions to Athens and Sparta notwithstanding. Others insist the fix lies with the Feds, that the U.S. Treasury need to bail California out at the begrudging consent of Congress. But another still largely muted scenario is slowly gaining traction. Continue reading →

Economic Rationality

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[Cross-posted at the Foldvarium]

The concept of rational action is a frontier of economic theory. The new field of behavioral economics combines economics and psychology to analyze actions that seem to be irrational. For example, people value health and long life, yet they smoke and eat unhealthy food. A related field, behavioral finance, examines psychological and emotional traits that prevent people from making wise investments. Perverse psychological biases include anchoring to past prices and facts, the bias of weighing recent events too highly relative to the more distant past, being overly confident in one’s abilities, and following the herd to a cliff.

Neoclassical economics often assumes that people are purely self-interested and always seek financial gain, and that therefore altruism is irrational, whereas as Adam Smith and Henry George wrote, human beings have two motivations: self interest and sympathy for others. Since people get satisfaction from serving others, it is incorrect to label altruism or actions based on subjective views of justice as “irrational.”

The Austrian school of economic thought has a different perspective on rationality. The Austrian economist Ludwig von Mises envisioned human action as inherently rational. A person has unlimited desires and scarce resources. Human beings economize, seeking maximum benefits for a given cost, or minimizing costs for a given benefit. At any moment in time, a person ranks his goals, ranging from most to least important. He chooses the resources to achieve the most important goal at some moment, then the second most, and so on, until his gains from trade have become exhausted. This is the inherent rationality of human action. Continue reading →