What’s the difference between open borders and Open Borders?

There are two meanings here. I’ll define them below:

  • There are open borders, where borders are open and anyone can move between them
  • There are Open Borders, where borders to rich states are open to people from poor states, but the borders to poor states are closed to immigration

Open borders are fairer than closed borders. If people can move from poor states to rich ones, that’s good. But what about people who want to move from rich states to poor ones? Open Borders addresses the first issue but not the second one. Libertarians are enamored with the second type of open borders these days, for a couple of reasons. The main reason, and the only one I’m going to name here, is that most of us are pragmatic and therefore support any kind of liberalization in labor markets we can get. If we can get our respective polities to open up their borders to poor migrants, so be it. Let’s do this in any way we can.

But what we are advocating for is not open borders. It’s labor market liberalization. I understand the need for sloganeering these days. I get it. Y’all are thinking on the margin. I’m all for Open Borders.

How, though, do we get actual open borders?

How can senior citizens from the US have the freedom to choose retirement in not only Florida or Oregon, but Tamaulipas or Veracruz, too?

How can middle class Californians have the freedom to choose between not only Texas or Colorado for relocation, but Chihuahua or Neuvo Leon?

My answer is, of course, federation, but I also realize my argument is politically unfeasible for the time being (even though it’s an old argument). Any other ideas, or is Open Borders the best we can do for now?

BC’s weekend reads

  1. The raccoon scrotum monster
  2. The unrecognized
  3. The Gandhi statue causing a fuss in Ghana
  4. The battle for Burundi
  5. The end of interventionism
  6. The Socratic classroom for an activist age

A libertarian case for Hillary Clinton

I have abstained from commenting on the American presidential race between Donald Trump and Hillary Clinton (sorry Rick) for so long because I just wasn’t very interested in it. I’m still not that interested in it, but the topic has come up quite a bit lately here at NOL so I thought I’d throw in my two cents.

First, though, I thought I’d use up a couple of paragraphs to explain why I don’t really follow American presidential elections, even though most intelligent people, in most parts of the world, do. American presidents simply don’t have a lot of power in domestic American politics. Congress controls the purse strings, makes the laws, and, in the case of the House of Representatives at least, is closer to the People than is the President. The Supreme Court is in charge of deciding which laws are good and which are not, and in some cases even has the power to create laws where Congress or the People simply aren’t getting the job done (Proposition 8 in California comes to mind). To me, that makes the executive branch the most boring branch of government.

The one area in American politics where the head of the executive branch does have a lot of leeway, foreign policy, is one area where I’m not particularly worried about either candidate. I’m not worried because both, despite holding views of the world I strongly disagree with, are not advocating anything radical or unpredictable. I’d rather have a presidential candidate advocate the same old garbage of getting in Russia’s face and keeping troops in South Korea because that way I know they’re ignorant and, more importantly, I know they know they’re ignorant on such matters because they defer to the Washington Consensus.

Libertarians don’t like statists and we don’t like statist policies. Some of us don’t even think voting is worth the effort (or even a good idea). I think there is a case to be made, though, for Libertarians and libertarians to get out and vote this fall for Hillary Clinton over Donald Trump. My case rests on 3 hugely important facts (at least to libertarians and Libertarians).

Fact #1: Thanks to the recent wikileaks revelations, we know for sure that Hillary Clinton is in favor of free trade. This is THE most important reason to vote for Hillary Clinton in the fall. Imagine if the United States, led by Trump’s isolationism, were to begin breaking its trade agreements with the rest of the world. Yikes. Free trade has lifted hundreds of millions of people out of poverty over the last 30 years, but because the majority of beneficiaries to trade liberalization have happened to not be American citizens, demagoguery ensues. I understand that Clinton has expressed skepticism in US free trade agreements on the campaign trail, but when you’re in a party that is vying for potential voters who feel they have been hurt by free trade, you’ve gotta do what you’ve gotta do.

Regardless of what Clinton says to the masses, her record on free trade while holding political offices is impressive (a ‘No’ vote on CAFTA notwithstanding). Free trade, or trade liberalization, is one of the fundamental tenets of libertarianism. Individual liberty cannot be realized or even partly realized without markets that are free from the constraints of governments and the factions that manipulate them. Donald Trump, like Bernie Sanders, wants to reverse decades of trade liberalization and the benefits that such a policy has bestowed upon humanity.

(Digression: Libertarians and libertarians are so adamant about free trade not only because it loosens the grip of the state over peoples’ lives, but also because it makes everybody – not just fellow countrymen – better off. When libertarians and Libertarians hear protectionist sentiments from the political class, you will often see or hear us point out that the Great Depression of the 1930s was hastened not only because of central banking policies but also because of the isolationist tariffs that Congress threw up as a response to the economic downturn caused by the new central bank’s policies. Free trade is a BFD.)

Fact #2: Hillary Clinton is much more individualist than Donald Trump. Women’s rights is an individualist issue, and always has been, even though Clinton has made a mockery of the historical movement by playing the “gender card” and defending (and pledging to expand) subsidies in the name of women’s rights. Trump wants to “make America great again,” but Hillary just wants your vote, any way she can get it. If that ain’t individualist, I don’t know what is.

Hillary Clinton is not a racist, either. She marched against The State’s oppression of black Americans in the South and against The State’s discrimination against black Americans in the rest of the country throughout the 1960s. (For what it’s worth, I don’t think The Donald is a racist. Businessmen rarely are, for reasons that should be obvious to any fair-minded person, but his rhetoric on race is absolutely toxic, and he knows it. His deplorable actions bring to mind a certain F-word I won’t mention here.)

Trump may or not be a racist – I’ll give him the benefit of the doubt – but I don’t know for sure. Clinton is definitely not a racist.

Fact #3: Hillary Clinton is a lawyer and she knows how our government is supposed to work (even if she doesn’t like it). One could make the case that Trump knows how our federal system of government works, too, given his braggadocio about buying off politicians, but his is a vulgar understanding of what is, after all, a magnificent example of compromise and diplomacy over our more primal urges. Lawyers make better politicians than businessmen. As Alexis de Tocqueville remarked way back in his 1831 ethnography of the United States:

“the authority [Americans] have entrusted to members of the legal profession, and the influence which these individuals exercise in the Government, is the most powerful existing security against the excesses of democracy […] When the American people is intoxicated by passion, or carried away by the impetuosity of its ideas, it is checked and stopped by the almost invisible influence of its legal counsellors, who secretly oppose their aristocratic propensities to its democratic instincts, their superstitious attachment to what is antique to its love of novelty, their narrow views to its immense designs, and their habitual procrastination to its ardent impatience.”

Lawyers, Tocqueville observed, make up a sort of informal aristocracy in America because their training in the field of law requires them to have a deep respect for precedent and “a taste and a reverence for what is old.” Businessmen are not used to the clumsy, inefficient coalition-building necessary for good governance. That’s why businessman George W Bush was such a failure and attorney Bill Clinton was such a success. Any good libertarian needs to acknowledge the benefits that come from specialization and the division of labor. Any really good libertarian, the kind that has actually read a little bit of FA Hayek’s work, knows that change in the political and institutional arena needs to be done slowly, and preferably through the legal system (no matter how imperfect it may be).

I know all about the bad stuff that Hillary has supported and voted for in the past (especially on foreign policy, and even more especially on foreign policy in Africa). I get it. I really do. But Donald Trump represents a very nasty strain of thought that has swept into power of the country’s Right-leaning political party. His nationalism is antithetical to libertarianism in a way that Clinton’s typical corruption and condescension is not: libertarianism has a long history in this country of dealing with Clinton-esque figures. The American polity was forged by consensus and thus has recourse, perhaps more so than any other presidential system, to constrain exactly this type of persona. This persona is egotistical and out for personal glory and prestige, but libertarians, progressives, conservatives, and others here in the United States have institutions and networks that were created specifically for presidencies run by people like Clinton.

We’re small in number, too small to have a significant impact if we all voted for Clinton, but we have an outsized impact in the realm of ideas and policy. Get behind Clinton in any way that you can, because more of the same ain’t all that bad.

BC’s weekend reads

  1. Smuggling Nikita Khrushchev’s memoirs out of the USSR
  2. Are memes disrupting American politics? So asks a Leftist
  3. The 4th Amendment, policing, and pedagogy
  4. At least the end of the War on Drugs is nigh
  5. A new (old) strategy for a polycentric world (but why not federation?)
  6. A simple map of Brazil and its states

Taxes, Free-riding, and Federation

Check out Adam Smith complaining about the rent-seeking that the UK’s North American colonies were practicing back in 1776:

The expence of the ordinary peace establishment of the colonies amounted, before the commencement of the present disturbances, to the pay of twenty regiments of foot; to the expence of the artillery, stores, and extraordinary provisions with which it was necessary to supply them; and to the expence of a very considerable naval force which was constantly kept up, in order to guard, from the smuggling vessels of other nations, the immense coast of North America, and that of our West Indian islands. The whole expence of this peace establishment was a charge upon the revenue of Great Britain, and was, at the same time, the smallest part of what the dominion of the colonies has cost the mother country. If we would know the amount of the whole, we must add to the annual expence of this peace establishment the interest of the sums which, in consequence of her considering her colonies as provinces subject to her dominion, Great Britain has upon different occasions laid out upon their defence. We must add to it, in particular, the whole expence of the late war, and a great part of that of the war which preceded it. The late war was altogether a colony quarrel, and the whole expence of it, in whatever part of the world it may have been laid out, whether in Germany or the East Indies, ought justly to be stated to the account of the colonies. It amounted to more than ninety millions sterling, including not only the new debt which was contracted, but the two shillings in the pound additional land tax, and the sums which were every year borrowed from the sinking fund.

This comes from Book 4, the third (and last) part (“Part Third”) of Chapter 7 in Smith’s famous book The Wealth of Nations (TWON). (Here is a great link to the whole chapter, courtesy of the Library of Economics and Liberty. I read the Bantam Classics version for my Honors seminar on Liberty in Western Political Thought, led by Andrew Sabl, who is currently a Visiting Professor at Yale, though I don’t have it with me so I can’t cite, let alone remember, the page numbers.)

Let me throw a little bit of historical context for this excerpt at you. Smith wrote TWON before the onset of the first Anglo-American war (TWON was published in 1776, which means it did not influence the American colonists in any way, shape, or form; think about the way information spread back in those days), and the war was largely the result of a quarrel between the UK and its North American colonies over taxation. The taxation, though, was needed in order to pay for a war (the Seven Years’ War) that the colonies had initially lobbied the British government to fight for them. The British colonies in North America had much more leeway than their French, Spanish, Portuguese, and Dutch counterparts, and a number of these colonies wanted to expand westward, into the Ohio Valley, where the French state had made claims that were recognized under international treaties.

To make a long story short: Several colonial factions picked a fight with the French and their Native American allies, and this little schoolyard brawl turned into a global war (with fighting in North America, India, Africa, South America, and East Asia) that saw the United Kingdom become the world’s preeminent imperial power and France lose almost all of its North American colonial possessions.* When the war was over, the British parliament wanted to tax the colonies to pay for their fair share of the war, and the colonists said “No taxation without representation!” Smith summed up the situation as thus:

In order to put Great Britain upon a footing of equality with her own colonies […] it seems necessary, upon the scheme of taxing them by parliamentary requisition, that parliament should have some means of rendering its requisitions immediately effectual, in case the colony assemblies should attempt to evade or reject them […] The parliament of Great Britain insists upon taxing the colonies; and they refuse to be taxed by a Parliament in which they are not represented.

This is quite the conundrum, and Smith put forth a proposal that I found quite novel when I first read it as an undergraduate. But before I get to his proposal, I want to make sure that everyone understands the situation here. The UK fought an expensive war at the behest of its colonies, and the colonies, once the war was over, refused to pay for it. Sound familiar? It should. Today the United States finds itself in this situation often (just replace the word “colonies” with “allies”).

Smith proposed the following deal instead of war or civil oppression (such as economic sanctions):

If to each colony […] Great Britain should allow such a number of representatives as suited the proportion of what is contributed to the public revenue of the empire, in consequence of its being subjected to the same taxes, and in compensation admitted to the same freedom of trade with its fellow-subjects at home. [Were British America] to send fifty or sixty new representatives to parliament, […] there is not the least probability that the British constitution would be hurt by the union of Great Britain with her colonies. That constitution, on the contrary, would be completed by it, and seems to be imperfect without it. The assembly which deliberates and decides concerning the affairs of every part of the empire, in order to be properly informed, ought certainly to have representatives from every part of it. That this union, however, could be easily effectuated, or that difficulties and great difficulties might not occur in the execution, I do not pretend. I have yet heard of none, however, which appear insurmountable. The principal perhaps arise, not from the nature of things, but from the prejudices and opinions of the people both on this and on the other side of the Atlantic. […]

Why didn’t the UK just federate with its North American colonies? Smith cited British fears of an unbalanced political constitution that the North American colonies might bring to such a union, and North American fears of being completely dominated by a faraway parliament were they to join such a federation. He countered both fears well, but check out what he predicted would happen if such a federation were to actually take place:

The distance of America from the seat of government […] would not be of very long continuance. Such has hitherto been the rapid progress of that country in wealth, population, and improvement, that in the course of little more than a century, perhaps, the produce of American [taxation] might exceed that of British taxation. The seat of the empire would then naturally remove itself to that part of the empire which contributed most to the general defence and support of the whole.

Interesting, right? Smith argued that the American colonies would become so rich and so populous that the capital of his proposed British federation would “naturally” move from London to somewhere in North America.

Smith was wrong in a general way, but correct in an even more general way. Let me explain.

Smith was wrong because the United States – once separated from the United Kingdom – evolved into the wealthiest, most innovative society the world has ever known. The reason for this is the aristocratic upper house of a legislative institution (“Senate”) that the 13 states had to create in order for all of them to join a federation. If Smith had had his way, the world would have never known the American Senate, and I doubt very much that the 13 colonies would have grown to become as innovative and wealthy as they are today without this vital institution of governance.

Smith was also wrong to make his argument for such a federation to be based on tax revenue rather than principled representation (though see Warren’s infamous post arguing for just such a proposal). The tax revenue argument might be more economically efficient, but it would not give polities seeking federal bonds the guarantee of some sort of equality (two representatives in the aristocratic chamber of the legislative assembly) that they would need to join such a federation. On these two points Smith’s argument was wrong, but what did he and other republicans and federalists get right?

To answer that I think it’s best to ask another question: What would happen if the UK and the US were to federate today?

The UK would be the poorest state in the union (as measured by GDP PPP per capita), if it were admitted as one state.

The stark difference in living standards doesn’t stop there, though. Suppose the SNP finally gets its way and Scotland leaves the UK. Even if England (intl$ 32,669), Wales (intl$ 25,947), and Northern Ireland (intl$ 27,573) were admitted into the US as three separate states, they would all be at the bottom of the living standards barrel. Were Scotland to go along with the other polities in the UK and federate with the US as a separate state, she would rank second-to-last (intl$ 33,791), just in front of Mississippi but behind Idaho. The rankings would look like this:

49. Idaho

50. Scotland

51. Mississippi

52. England

53. Northern Ireland

54. Wales

Smith’s argument suddenly looks a whole lot better, right? At least if you think living standards as they are measured by economists are a good way to gauge the overall health and wealth of a given society.

A federation is basically a huge, actual free trade zone (both capital and labor can move freely) coupled with a binding military pact and some institutions that allow factions to openly argue and contest for spoils that end up in a state’s treasury, but that’s not what the US has with any of its military allies or trading partners. What I find interesting is that the objections to federation between the UK and its North American colonies that Smith listed are essentially the same ones that crop up when such a federation is proposed between the US and its various allies and partners. The difference between now and then, though, is the Senate. Sending representatives based purely on population or tax revenue would most likely contribute to an unbalanced political constitution, but having two guaranteed representatives in a political body that’s heavily aristocratic and lightly democratic would surely guarantee an equality that all sides could eventually agree upon.

There is also an interesting cultural development to think about as well. The states in Western Europe and East Asia sans China have helped to develop a political culture that is more closely aligned with the one found in the US, Canada, and Australia/New Zealand, one where citizenship trumps ethnic identity. Identity based on citizenship is not as strong as the one found in the Anglo-Saxon world, and ethnic differences do pop up from time to time (largely due to linguistic differences), but the states of Western Europe and East Asia have taken many steps in the right direction to help eradicate the parochial tribalism that has long plagued European and Asian societies and replace it with citizenship. Take a look at the political constituencies of the following three countries:

Germany’s 2013 federal elections (source)
South Korea’s 2016 legislative election (source)
Italy’s 2013 legislative election (source)

They are largely based on a Left-Right divide rather than the ethnic ones we find in less economically-developed, less politically-integrated, post-colonial states. This Left-Right divide would fit in perfectly with the Madisonian constitution, as administrative units (i.e. Northern Ireland, Gangwon, Bavaria, or Trentino instead of the UK, South Korea, Germany, or Italy) could be added in a manner so as not to upset the balance between Left and Right currently found in the US. Political coalitions would wax and wane with time, of course, but if we want a world where the East Asians and Western Europeans pay their fair share, and where they are protected from Moscow and Beijing, then federation is as moderately radical as you can get.

Just ask Adam Smith.

New issue of Econ Journal Watch is out!

For those of you who don’t already know, Warren is the math reader for EJW and one of NOL‘s co-founders, Fred Foldvary, is an editor for the journal, so this is very much a family affair. Here are some of the articles that caught my eye:

You get what you measure: Daniel Schwekendiek explains how South Korea followed a proven template of incentivizing exports to boost Web of Science publications and raise the rankings of its academic institutions.

Now entering a Republican-free zone: Mitchell Langbert, Anthony J. Quain, and Daniel Klein report on the voter registration of faculty at 40 leading U.S. universities in Economics, History, Journalism, Law, and Psychology.

Whither science in gender sociology? Charlotta Stern investigates whether gender sociologists blinker themselves from scientific findings about sex differences.

How to Do Well by Doing Good! In this 1984 essay, Gordon Tullock counsels young economists that doing well and doing good go together.

You can download and read the whole thing here (pdf).

BC’s weekend reads

  1. Racism in Brazil, and American academic imperialism
  2. A quick lesson on race and class in Brazil
  3. Unlike Their Parents, Black Millennials Aren’t A Lock For Clinton
  4. The Rise of the Libertarian Technocrats
  5. Property versus Democracy
  6. Our Friendly Visitors