Year: 2014

What’s up with Oil and the Saudis?

Warren Gibson Current Events, Economics , , , , , , ,

In case you haven’t noticed, the price of oil has dropped dramatically and has not rebounded as yet. As I write, the price of the most common form of crude oil is under $54 per barrel, about half of what it was in mid-2014. What’s going on?

Several factors contributed to the fall. One was increased U.S. production, much of it shale oil. Also, U.S. consumption has not been rising apace with GDP in part because of higher fuel efficiency. Demand in Europe and Japan is muted due to low growth or recession.

Those things did not happen suddenly, however, so the drop would appear to be overdone. Large producers, who have a lot of pricing power, would normally cut production in this circumstance. (Pricing power means a change in their production has a noticeable effect on the world price.) The Saudis have considerable pricing power and their production decisions are controlled by their government. Why have they not cut production? I believe they are engaging in predatory pricing.

Predatory pricing is illegal in the U.S. and elsewhere, under anti-trust law. Predatory pricing occurs when a supplier cuts his prices for the purpose of bankrupting a competitor, or at least driving the competitor out of the market. The predator is willing to suffer losses or reduced profits temporarily, while holding the prices low. Once the competitor is gone, the predator’s pricing power will have increased enough that he can raise prices a lot and make up for losses suffered during the period of predation. Predatory pricing is definitely possible in free markets but is very risky for several reasons: (1) the predator can’t be sure how long it will take to ruin his competitor, (2) he can’t be sure how long he can maintain low prices without sustaining ruinous losses or perhaps face a shareholder rebellion, (3) it’s possible the competitor, or someone who has bought his assets in bankruptcy, will come back to life and start competing as before. For these reasons (and others, such as the difficulty facing regulators who are supposed to distinguish predatory motives from “innocent” business strategy), I believe there is no reason to outlaw predatory pricing.

The situation is a little different in the international oil market because the Saudis and many other major players are government controlled. They are not constrained (much) by the market forces outlined above. They are not accountable to shareholders and are only vaguely responsible to the population of Saudi Arabia. They have substantial latitude to pursue political motives even if their profits suffer.  And anti-trust law does not operate across national borders.

What might the Saudis want to accomplish politically? They hate Russia and Iran, both of which rely heavily on oil exports. They don’t hate the U.S., at least not openly, but they surely wouldn’t mind sticking it to U.S. and Canadian shale oil producers. Those producers are largely market-driven and thus have limited ability to withstand predatory pricing. The Saudis could indeed drive smaller firms out of the market, and also less profitable operations of larger firms.

That might not be such a bad thing. There has been a huge land rush into shale oil and fracking. In any such boom, whether in energy, mining, or computers, many small firms fall by the wayside. If the Saudis ruin some marginal firms or projects, that’s not such a bad thing.

We little guys are sitting pretty. We’re paying a lot less for gasoline. If we hold shares of the major oil firms we’re probably OK, as their share prices have held up and their dividends look solid. The same is true of the pipeline operators. Only if we hold shares of marginal energy firms or oilfield service companies are we in any trouble.

So – go for it, Saudis! Stick it to the evil governments of Russia and Iran and help us clean out some of our marginal energy operations.

2014 in Review

Brandon Christensen Current Events, Liberty, Links , , , , ,

2014 was a good year for NOL. I hope it was just as good for you and yours.

I particularly enjoyed Dr Stocker’s ‘Liberty Canon’ series and cannot wait to see what he comes up with for 2015. I could not decide if I liked “…Tacitus on Barbarian Liberty” or “…Icelandic Sagas of the Middle Ages” more, so they are tied for first place. DONE! I also enjoyed his posts on Michel Foucault and Francesco Guicciardini.

Also enjoyable was Dr Delacroix’s book I Used to Be French: an Immature Autobiography. I hope to have a review out shortly.

My most enjoyable moments here at NOL were simply reading what others wrote, both as posts and in the ‘comments’ threads. We’ve got a unique composition here at NOL and it provides for some thought-provoking, entertaining reads (if I do say so myself!). Call me a loser if you like, but I get very excited when my phone tells me I have an email and I check my email and there is a post at NOL just waiting for me to read. I only hope that everybody will have enough time to blog waaaaay more often in 2015.

Speaking of ‘comments’ threads and blogging, I am also glad I came across the Policy of Truth group blog, run by philosopher Irfan Khawaja. I actually came across the PoT consortium because I was looking for someone to add a little oomph to NOL and I thought Khawaja had what it took (my method for hunting down potential bloggers and pestering them into becoming Notewriters will remain a family secret, but there is both a science and an art to it). Alas, when I began my search I found PoT and found it to be alive and well (you can tell the health of a blog by its ‘comments’ threads). True story bro.

Thanks to all our Guest Notewriters as well. Be sure to check out their projects and give ’em some NOL hell when you get the chance. Hank’s new consortium, The Libertarian Liquidationist, is especially coming along nicely.

Around the Web

Brandon Christensen Links , , , , , , , , , , ,
  1. Athens on the Midway: Defending Leo Strauss
  2. Should Earth Shut the Hell Up?
  3. Space of Mediation: Why do international labor recruiters in China charge so much, and why are they difficult to regulate?
  4. The strange normality of life in the middle of Syria’s war

Christmas went well. I’ve got four books I have to read before the three books I ordered from amazon.com (thanks to a gift card) arrive.

What is a Governmental Intervention?

Fred Foldvary Liberty ,

A governmental “intervention” is a law or action which changes what people would otherwise voluntarily do. Interventions are market-hampering, as the use of force by government reduces the well-being of the people who are coerced. In contrast, laws which protect property rights are market-enhancing, as they increase the well-being of people; such laws are not interventions.

The word “intervene” derives from the Latin words “inter,” between, and “venire” to come. To “intervene” means to come between two or more things, to interfere in order to change the outcome. If a US company seeks to export goods to Cuba, and the government prohibits this trade, the government comes between the parties that sought to trade, changing the outcome to not trading.

To analyze intervention, we first need to understand its absence, liberty. In a purely free society, the law prohibits only acts which coercively harm others. A harm is an invasion into a person’s proper domain: his body and his property obtained by voluntary means. Theft, murder, kidnaping, and trespass are invasions. In contrast, an offense is an act that a person deems displeasing only because of his beliefs and values.

When people are offended by images, speech, or the observation of actions they don’t like, these offenses are not prohibited in a free society. If one is not allowed to make a speech whenever any person does not like it, then there is no freedom of speech. Morally, a victim is a person who has been coercively harmed. Acts which may offend but not harm people are victimless crimes.

Laws prohibiting offenses, such as gambling, prostitution, drugs, nudity, and words regarded as obscene, are interventions. In a society that has complete liberty, people are free from interventions. The law prohibits acts which coercively harm others, but not acts which are merely offensive.

Government officials enact interventions because of political pressure by special interests, but also because some people, perhaps a majority, believe that society is better off with the intervention. For example, illegal drugs may be physically harmful to health. But we need to see the broader effects of the intervention. Prohibitions create an underground market, and then the government responds with more interventions, invasions of the privacy of financial accounts, intrusions into homes, the confiscation of property, and an increase in the prison population. But aside from these effects, the policy of intervention erodes liberty and rights to property and privacy.

Governments also interfere in the belief that the intervention makes markets more competitive. In the USA, anti-trust action is intervention by government into firms that dominate a market, such as IBM did in computer hardware, or Microsoft with computer operating systems. Governments require licenses to practice law, medicine, and hair styling. The provision of public goods such as security and streets is done with taxes that intervene into earnings and spending.

Such interventions have as an alleged justification, the prevention of “market failure.” The economics textbooks claim that markets fail when there are externalities, uncompensated effects such as pollution, which justify the intervention of regulations. But a pure free market would not have negative external effects, as these would constitute trespass, an unwanted invasion into others’ property. Government can play a market-enhancing role by enforcing property rights, such as enabling a lawsuit against a polluter, or making polluters pay periodically for on-going damage. Such compensations would not be interventions. Thus a law requiring a smog test for a car is an intervention, but a payment by a polluter for causing damage is not an intervention, as the latter helps to establish a voluntary market.

Advancing technology, such as the Internet, has made information more widely available, often at no charge, and so whatever justification there was for interventions such as licensing laws has become obsolete. Technological progress also erodes the rationale for the intervention of anti-trust action, as companies need to continuously innovate as new companies reduce the dominance of existing firms.

Interventions are often bad substitutes for sound economic policies. For example, the economic solution for traffic congestion is tolls just high enough to let the traffic flow smoothly. But instead, governments typically impose restrictions such as high-occupancy lanes, an intervention that prohibits cars from entering an underused lane. Today, it is possible to have electronic charging along streets and highways that enable the tolls to be paid as the car moves along.

Interventions include subsidies that reduce the prices of products below the cost of production. The taxes that pay for the subsidies have a social cost greater than any gain to consumers. Taxes on events, other than negative externalities, intervene into these events. Events include earning wages and profits, buying goods, and adding value by production. But truly voluntary user fees are not interventions, and a levy on ground rent or land value is not an intervention, since it does not depend on any event, and the fee prevents what would otherwise be the implicit subsidy of the rent generated by government’s provision of public goods.

Governmental interventions destroy liberty and damage economies. People want interventions partly because of their misunderstanding of ethics and economics, and partly because our constitutions have structured government in a way that gives special interests political clout. But as interventions cause the plundering of the earth, and cause poverty and war, it is all the more necessary for people to understand the meaning and consequences of intervention.

A Quiz on Public Finance

Fred Foldvary Economics , ,

How well do you understand public finance? Below is a quiz. Answer whether the statements are true or false, and briefly explain why. If you think that the statement is only sometimes true, or true under particular conditions, say “maybe” and explain. My answers follow the quiz, but first write down your own answers.

1. After a high tax on land value is in place, it will impose a burden on landowners and reduce the productivity and efficiency of the economy.
2. The most efficient way to pay for a city bus service is to make the bus riders pay for the full cost.
3. The best way to decide whether a club should have a party is by a yes-no vote, with the majority of those voting deciding the outcome.
4. No decentralized pricing system can optimally provide collective consumption.
5. Subsidies that reduce the price of goods below the cost of production typically have net benefits to society.
6. The best policy for government budgets is always to avoid deficits, hence to finance all spending from current revenues such as taxes and fees.
7. The best way to handle pollution is with restrictive regulations, as these are less costly than pollution taxes or permits.
8. The least worst tax for the USA would be a flat-rate income tax with no deductions or credits.
9. The least worst tax for the USA would be a national sales tax that replaces the income tax.
10. A pure free market generally fails to provide adequate public goods and to efficiently and equitably handle externalities such as congestion and pollution.

Answers

1. False. A tax on land value reduces the price of land and replaces what would have been paid in mortgage interest. A land-value tax pushes land to its most productive use, increasing productivity and efficiency.

2. False. The best way to pay for mass transit is to charge riders only when the service would otherwise be too crowded, and just enough to prevent congestion. The rest of the cost is best paid for from the increase in the land rent generated by the transit.

3. False. The best way to decide on a club party is the method called “demand revelation.” Each member records the most he would pay for the party. The amounts are added up. If the total is greater than the cost, have the party. To keep the members honest, if any member changed the outcome, relative to stating one’s cost, that person has to compensate the group an amount equal to the net loss of everyone else (their stated values minus their costs). This method is better because it measures how much the members want the party, not just whether they want it.

4. False. Collective consumption paid for by land rent can be decentralized, because the rent reflects the demand to be located there, and the land will not flee, hide, or shrink when its rent is tapped to pay for collective goods.

5. False. The social cost of taxes that pay for subsidies is greater than the gain to consumers.

6. False. Government borrowing can be a good policy if the funds are spent for investments that are more productive than if the funds were spent in private investments. Otherwise, the budget should not have a deficit.

7. False. A charge or tax on pollution, based on its damage, is more effective than regulations and permits, and the funds can replace taxes that harm the economy.

8. False. A land-value tax is better for the economy than a flat-rate income tax.

9. False. A land-value tax is better for the economy than a national sales tax.

10. Some textbooks say this is true, but the better answer is, False. Private communities such as homeowners’ associations and shopping centers can and do provide public goods from the site rentals. In a pure market, pollution is trespass that requires compensation. Private transit can have congestion charges. A pure free market would have contractual governance that could adequately provide public goods and prevent pollution and congestion.

Could the social sciences benefit from being synthesized?

Michelangelo Landgrave Liberty , , , ,

This past month a paper Marion Fourcade, Etienne Ollion, and Yann Algan by on the ‘Superiority of Economists‘ has made the rounds around the webs. Our own Brandon has made note of it before. I have given the paper some thought and cannot help but wonder if the social sciences could not benefit from being synthesized into a unified discipline.

Some background: I have been studying economics for a little under half a decade now. By all means I’m a new-born chicken, but I have been around long enough to have grown a distaste for certain elements of the dismal science. In particular I am disturbed by the insular nature of economists; relatively few seem interested in dropping by the History or Political Science departments next door to see what they’re working on. I cannot help but feel this insular nature will be economic’s undoing.

It should be no surprise that I hope to enter CalTech’s Social Science program for my PhD studies. The university is famed for its interdisciplinary nature and its social science program is no different. Its students are steeped in a core composed of microeconomics, statistics, and the other social sciences. For a while the New School in New York City offered a similar program.

I am sure there would be those who would object to synthesizing the social sciences into a unified discipline. Sociology and Economics might be more easily combined (as they were by folks such as Gary Becker) than Economics and Anthropology.

I am eager to hear other’s thoughts on this. Is the gap between the social sciences too large for them to be unified? Is unification even desirable? Should we content ourselves with an annual holiday dinner where we make fun of our common enemy?

The Most Embarrassing Factions of the US-Cuba detente

Brandon Christensen Current Events , , , , , , , , ,

I can only list, in order of magnitude, three: 1) Republican hawks, 2) condescending Leftists, and 3) anti-Americans abroad.

In some ways none of this is surprising. All three of these factions hate each other, mostly because they are the least libertarian factions in the world (familiarity breeds contempt, it is often said).

Republican hawks are first on my list because they are the most dangerous. This is a deeply reactionary faction that does not care one iota about the national interest. It is a vulgar mob that has no need for nuance or depth. One of the state of Florida’s Senators, Marco Rubio, exemplifies this isolationist faction. This is demagoguery at its finest. It also goes a long way toward explaining why I will never, ever be a Republican, despite the honest efforts of courageous statesmen like Ron and Rand Paul.

Condescending Leftists are second because of their reactions to the beginnings of the end of a vicious, self-defeating embargo: Decrying the fact that Starbucks and McDonald’s will soon be forcing poor, naive Cubans into becoming customers with actual choices in an actual marketplace. According to the worldview of these Leftists: the lives of Cubans have been better than those of Westerners because of its simplicity (this simplicity was brought about, of course, by the heavy-handed tactics of the Castro dictatorship, but somehow this always fails to make the final cut of the condescending Leftist’s narrative). Capitalism will put an end to the simple lives of the Cuban people, and this is a bad thing for both the world and the Cubans themselves.

Embarrassing and disgusting.

The last faction on my list, anti-Americans abroad, have taken the Obama administration’s decision to reach out to Cuba as an excuse to lie to domestic factions everywhere. They have seized upon the fact that the US sometimes pursues bad policies, and have turned it into a soapbox preaching session for all of the gullible schoolboys and girls in the world who instinctively hate the world’s liberal hegemon. What is lost (or, more likely, ignored) in these preachers’ message is the fact that the US is changing its bad policy. The same cannot be said for the tired tropes wielded by aging anti-Americans in the name of some variant of socialist (whether national or international) revolution.

Some notes in the margins:

  • Cuba will not become free or (or) democratic overnight.
  • It will not become wealthy overnight, either. In fact, there is bound to be a whole lot of cronyism in the near future, as Castro’s butchers and henchmen gobble up much of the wealth that will inevitably flood Cuba’s markets. Remittances will likely increase as well, which means that the cronysim of Castro’s henchmen will be offset by the influx of cash from the US. This, in turn, means that the Castro dictatorship is likely to be around for a lot longer than anticipated.

Peggy Noonan’s piece in the Wall Street Journal is well-worth reading. Observe:

A closing note: I always thought, life often being unfair, that Fidel Castro would die the death of a happy monster, old, in bed, a cigar jutting out from the pillows, a brandy on the bedside table. My dream the past few years was that this tranquil end would be disturbed by this scene: American tourists jumping up and down outside his window, snapping pictures on their smartphones. American tourists flooding the island, befriending his people, doing business with them, showing in their attitude and through a million conversations which system is, actually, preferable. Castro sees them through the window. He grits his teeth so hard the cigar snaps off. Money and sentiment defeat his life’s work. He leaves the world knowing that in history’s great game, he lost.

Open the doors, let America flood the zone and snap those pictures. “Fidel! Look this way!” Snap. Flash. Gone.

Happy Holidays

Brandon Christensen Books , , , , , , ,

Merry Christmas, Happy Hanukkah, and Happy Kwanzaa.

I’ve just been chillin’ with family the past week or so. My brother got home from Paris recently and my sisters arrive in town, from Utah, sometime this weekend.

I’ve been browsing through the Bismark section of Kissinger’s Diplomacy, as well as the Bismark sections of Ozment’s A Mighty Fortress and Tipton’s A History of Modern Germany Since 1815. I’m trying to get a feel not so much for the man himself but for how he created a federal state out of many and called it Germany. I would welcome recommendations on this topic.

I’ve also been reading the Mistborn series by Brandon Sanderson. There is not enough gratuitous sex and violence for me to recommend the series (in fact there has been no sex at all in the series so far, and I’m about halfway through the second book), but the story line has hooked me enough that I’ll read through the entire trilogy. I think I’m done with fantasy though. I mentioned that I read the A Song of Ice and Fire series and really liked it, but apparently that series is considered an anomaly of sorts within the fantasy genre. A damn shame.

Why Republican Libertarianism? III

Barry Stocker History, Liberty , , , , , , , , , , , , ,

(This text was written for the European Students for Liberty Regional Conference in Istanbul at Boğaziçi University. I did not deliver the paper, but used it to gather thoughts which I then presented in an improvised speech. As it was quite a long text, I am breaking it up for the purposes of blog presentation)

There is a gap between ancient Athens and classical liberalism, and covering that gap will explain more about the development from antique republics to modern liberty. The trio of major antique republican thinkers mentioned above, Aristotle, Polybius, and Cicero, sets up the tradition. They establish the idea of the best state – polity/politea in Greek, republic/res publica in Latin – as one of hearing political power between groups in the context of shared citizenship and decision making.

For Aristotle, that is the sharing of power between oligarchs (the rich, in practice those wealthy through commerce), aristocrats (the virtuous, in practice the educated land owning classes) and the poor majority. Polybius was a later Greek thinker who admired the Roman republic and Cicero was a Roman aristocrat-philosopher from the last years before the republic gave way to the one-man emperor rule system.

Both use arguments from Aristotle but tend to refer to Sparta rather than Athens as the ideal republic, which indicates the difficulties for antique thought in accepting a commercial and free thinking republic as model. Polybius and Cicero both admire the Roman system because they see it as based on law and on sharing power between the people (citizens’ assembly), the aristocracy (senate), and a monarchical function shared between two year-long co-rulers (consuls).

Their arguments also rest on the idea of the state as military camp. It is interesting to note that Pettit the egalitarian liberal prefers this Roman model to Athens and that Arendt prefers the Athenian model. This suggests that Arendt has something to say to classical liberals and libertarians, though she is rarely taken up within that group, and that egalitarian liberalism is rather caught up in strong state ideas, the state strong enough to force redistribution of economic goods rather than impose extreme military spirit on its citizens, but a strong intervening state.

All three of the ancient republican thinkers had difficulty with the idea of a commercially orientated republic and has some idea of virtue in restraining wealth, though Cicero in particular was staggeringly rich suggesting that ancient republican thought had some difficulty in accommodating commercial spirit, more so than some ancient republics in practice.

There is one major step left in ancient republican thinking which is the account the senator-historian Tacitus, of the early Roman Emperor period, gives of liberty in the simple tribal republics of ancient Germans and Britons. He sees them as based on independence of spirit and a willingness to die for that independence, in a way largely lacking amongst the Romans of that time.

The admiration for such ‘barbarian’ liberty also gives some insight into the difficulty of combining commercial spirit with republicanism in ancient thinking. Wealth is seen as something tied to benefits from the state, state patronage, so reduces independence of the state whether the local state or a foreign invading state.

Republicanism takes the next great step forward when some way of thinking of wealth as existing at least partly independently of state patronage appears. This is what happens in northern Italy from about the thirteenth century. To some degree this Italian republicanism has older roots in the maritime republic of Venice, but the trading wealth is still very tied up with aristocratic status and a rigid aristocratic hold on politics.

It is Florence, which serves as a thirteenth, fourteenth, and fifteenth century Athens, where Italian culture, commercial wealth, and republican thinking all thrive. The cultural greatness goes back to the poet Dante and the republicanism to his tutor Bruno Latini. The really great moment in Florentine republicanism comes in the fifteenth and early sixteenth centuries, though, with Francesco Guicciardini, but mostly with Niccoló Machiavelli.

Commentary on Machiavelli is heavily burdened by the image of Evil Machiavel or at least of Machiavelli the cynical advocate of power politics in The Prince. This is just a completely false image of a man whose ideal was the revival of the Roman republic, not the rule of absolute and absolutely immoral princes.

The supposed wickedness and cynicism of The Prince related to comments on how kings seize and maintain power, in which as far as Machiavelli advocates rather than analyses, he advocates minor acts of political violence. The age of Machiavelli is the age of the Catholic Inquisition torturing heretics and passing them to the state to be burned at the stake, the mass persecution and expulsion of Iberian Jews and Muslims, wars of religion and conquest, which involved systematic and mass destruction of property, torture, rape, and murder.

Those who chose to condemn the ‘wickedness’ of Machiavelli at the time were often those engaged in such activities. Machiavelli’s advice to princes does no more than advocate at the most extreme, very limited amounts of violence to institute and maintain rule, certainly very limited by the standards of the time.

Questions about R

Brandon Christensen Liberty , ,

And lots of ’em.

I just downloaded the R package from the CRAN in Seattle. I haven’t opened it yet. I don’t even know what CRAN is. I’ve been gathering some data on the GDP (PPP) per capita of regions in the world and I want to tinker with them, but I also want to get familiar with a stats program.

Any help with the fundamentals of what I’m dealing with would be great. Thanks!

UPDATE 12/18/2014: Michelangelo has steered me away from R and into the loving arms of gretl:

I prefer gretl to R because the former has a menu-based interface. R, Stata, etc. on the other hand require you to now how to ‘code’. There are menus in the latter, but I don’t find them user friendly. The coding is hardly hard, but I think it confuses people who are just starting out and it isn’t really worth coding if you’re doing it for fun.

Six Months A Slave (The Drugs Don’t Work, They Just Make You Worse)

Brandon Christensen Current Events, Links , , ,

Check out Irfan’s story over at Policy of Truth about six months of addiction to some kind of sleeping pill (I’m a mushrooms and weed man myself, so I know little about pills):

I lay there awhile, let the vertigo wash over me a bit, then popped another 12.5 mg CR Ambien, settling soon enough into another four refreshing hours of non-REM sleep. By 2 am, I was wide awake, reading Jorge Luis Borges (on insomnia), and waiting for the sun to come back up so that I could start yet another vertiginous and sleep deprived day teaching ethics, critical thinking, and aesthetics to students who seemed not to notice that anything was amiss. (Conveniently, I had managed to collapse after class had ended. None of my students saw the collapse happen; I lay on the ground an hour before I was discovered by the instructor who needed to use the classroom after me.)

Read the whole thing. It’s very entertaining.

PS: My title is a reference to a song by The Verve. Don’t ask.

Around the Web

Brandon Christensen Links , , , , , , , , , , , ,
  1. Self-organization, Integration and Homeless People
  2. Book Review: Destination Denmark
  3. Pious Fraud: In a bombed-out church in wartime Germany, Lothar Malskat crossed the line that separates art restoration from forgery
  4. Indian States Need a Free Trade Deal (I’ll be blogging about this in the future)

Net neutrality? Mail neutrality?

Warren Gibson Economics , , , , , ,

“Net neutrality,” you surely know, is the notion that all internet traffic ought to be treated equally. All it takes is that one little word, “equal,” to send hoards of left-wing morons to the barricades. For those who care to think through the issue, I offer the following.

If net neutrality is a good idea, so is “mail neutrality.” The Post Office should treat all mail equally. No more Priority Mail, not even First Class Mail. Just mail.  No more commuter express lanes on the freeways.  No priority for anybody, anywhere.

Data sent over the internet, or any local network for that matter, is divided into packets which have header information indicating the destination of the packet followed by a block of bytes that is the digital form of the data, whether text, audio, or video; web traffic, email, or ftp. As far as I know there is no provision in the ethernet protocol for priority information, but that isn’t necessary to prioritize packets.

Why should they be prioritized? Because different kinds of traffic have different natural degrees of urgency. email messages are not terribly urgent, but packets of video are, because if the those packets don’t keep coming at a steady pace, the result is irritating pauses and that little spinning circular thingy. If consumers of video want good service, they should pay for it. If email users who are in no hurry are willing to wait a bit and pay less, that’s good too. Markets generally tend to segment in this fashion. Starbucks doesn’t practice coffee neutrality. They offer fancy drinks to those willing to pay for them and plain coffee for those of us who just want the caffeine.

What rules should be set for internet providers? None, except common law prohibition and prosecution of theft and fraud. Let the service providers set their own policies for use of their private property.  In the interests of their bottom line, they will seek out practices that best serve their customers.  The crucial requirement is that politicians and bureaucrats be kept away.

Hayek on Human Rights Day

Rick Weber Current Events , , , , ,

It turns out it’s Human Rights Day today! I came across a call on Twitter: “Don’t fight for your rights. Fight for equal rights.” This reminded me of an argument from Hayek: “If we knew how freedom would be used, the case for it would largely disappear…. the importance of our being free to do a particular thing has nothing to do with the question of whether we or the majority are ever likely to make use of that particular possibility… The freedom that will be used by only one man in a million may be more important to society and more beneficial to the majority than any freedom that we all use.”

This thought entered my brain when I was in a Constitution of Liberty reading group back in San Jose and has been percolating ever since. It has profound implications for how we think of freedom as a concept, and especially for how we should think about the sorts of liberties we want to support. I think the second part is obvious: even if I don’t need the freedom to own a business (for example), I’m far better off in a world where immigrants are allowed to start businesses like eBay. The same is true for more controversial liberties… we simply don’t know who ought to have the rights necessary to transform the world, and we don’t know what those rights are. So we should be prepared to err on the side of giving “too many” people “too many” liberties.

The first part (the implications for how we think of freedom as a concept) is a bit trickier. Hayek is arguing that the rights we all have aren’t terribly important. That is, it’s the marginal rights that matter. We all have the right to life. It’s important, but it’s not going anywhere anyways. If we want to improve the future, we need to keep an eye to things within our control; we could revoke the right to life (you know what I mean… that other thing is a whole different can of worms and you should write your own blog post about it…), but that’s not even on the table. What we need to be concerned with is those rights that we could conceivably lose because they don’t seem that important.

For example: women should be allowed to sign contracts, own property, and start businesses. We all know that to be the case based on our sense of fairness. But Hayek bolsters that argument: we should want that set of rights to be held by as many people as possible regardless of sex and possibly even regardless of species (District 9 and Planet of the Apes are two movies that would be very different if we attached rights to sentience rather than humanity). We don’t want rights to only go to people we care about, we want them to go to people who can use those rights to make the world better.

Why Republican Libertarianism? II

Barry Stocker History, Liberty , , , , , , , , , ,

(This text was written for the European Students for Liberty Regional Conference in Istanbul at Boğaziçi University. I did not deliver the paper, but used it to gather thoughts which I then presented in an improvised speech. As it was quite a long text, I am breaking it up for the purposes of blog presentation)

We can confirm Arendt’s sense that ancient Athenian democracy was not concerned with collective confiscation of private economic goods, by looking at the most famous political speech of ancient Greece. That is the funeral oration delivered by Pericles in the midst of the Peloponnesian War between democratic Athens and oligarchic-militaristic Sparta. Pericles states that in Athens there is no shame in poverty, only in not struggling with poverty (clearly referring to an individual struggle), and that poverty is no barrier to a place in political life. Pericles also refers to the greater tolerance of the different characteristics of other citizens in Athens compared with Sparta, and that bravery of the Athenian soldiers he mourns, so though the Athenian society does not put the military life as much at the centre as Sparta, it can show just as much courage in war.

As we can see, republicanism is the most historically situated form of political theory, aiming for continue a way of thinking about political community that goes back to Aristotle in fourth century BCE Athens. It was the tradition that runs through Aristotle, Polybius and Cicero in antiquity which informed the understanding of liberty in the classical liberals, in Locke, Hume, Smith, Montesquieu, Tocqueville, Constant, de Stael, J.S. Mill, and so on.

Their understanding also included the idea that there were differences between ancient and modern societies, particularly the greater emphasis on commerce in modern societies, which modified the understanding of liberty so that the liberty pursed by the moderns would be and should be different from the liberty pursued by the ancients, as summarised by Benjamin Constant in his speech ‘The Liberty of the Ancients Compared with that of the Moderns’ (1816).

However, Constant did not argue for a complete opposition between the two. He noted the commercial life of ancient Athens and its greater cultural openness than many ancient states. So that though Athens still shared in the tendency of ancient states to  impose conformity to officially defined religion and manners, it was less extreme than many. The republic of Carthage, defeated by Rome in the Punic Wars of the third and second centuries BCE, has also been mentioned by some as an ancient republic in which sea trade was at the centre of life, and since ships were the best means of trade in antiquity, that meant it was one of the commercial republics of antiquity. Montesquieu in particular noted that Carthage shared republican political forms with Rome, in which a citizen assembly governed the city in co-operation with an oligarchic-aristocratic council (the Senate in the case of Rome), but had a different attitude to trade and commercial life.

So though the classical liberals emphasised the differences between ancient and modern liberty, they did not simply reject ancient liberty, and did not reject the republican tradition. They found the centrality of war to ancient life, the relatively static political economy and commercial life, and the attempts of the state to enforce virtue to be different from what they hoped for from modern liberty.  The classical liberals also saw liberty growing in ancient republics and thought there was some link between the conditions of liberty and a public culture of shared concerns between citizens.

The laws and institutions necessary to liberty require some support from a feeling of citizenship and joint political enterprise. The need to replicate the solidarity of ancient societies based on preparedness for war is one of the reasons that Smith gives for advocating some public role in promoting education, though with a preference for most education to be provided by private institutions rather than the state.

It is useful to look at the views of the apparent greatest classical liberal defender of monarchy, Montesquieu, to see the importance of the ancient republican tradition for modern liberalism. Montesquieu suggests that a monarchy of the kind that existed in France in the eighteenth century is good for commerce and liberty where it rests on institutions that have some independence of the monarchy such as law courts and a land owning aristocracy.

However, the legal tradition he though guaranteed such liberty in France, is something he traced back to the German invaders of ancient Gaul during the collapse of the Roman Empire in the west. They brought the customary laws of tribes in the German forests which where essentially republics as kings existed to lead in war and relied on popular support. Montesquieu is a bit more ambiguous than this in his description of the ancient Germans, as he is generally an ambiguous thinker with regard to his views on monarchies and republics, and which are the best for liberty.

He recognised both a law governed ‘moderate’ forms of government opposed to despotism. He recognises the commercial capacities of the Athenian and Carthaginian republics. For his own time, he recognises England as a disguised republic (in the eighteenth century, Great Britain was essentially an oligarchic-aristocratic republic with a very constrained monarchy) which has a leading role in the era with regard to liberty and commerce. Montesquieu’s main criticisms of England relate to missing some aspects of a culture or honour and aristocratic courtesy, rather than any criticism of substance.