Author: Brandon Christensen

From the Comments: Federalism, Small States and Central Banks

Brandon Christensen History, Politics , , , , , , , , ,

Rick Searle asks the following question after reading my argument with George Ayittey on secession in Africa:

Brandon, how do you respond to the geopolitical and macro-economic arguments in favor of strong federalism rather than small-state nationalism? The experience of Central Europe after the First World War seems to offer a telling example of what happens when you break-up multi-national states along ethnic lines. The collapse of the Austro-Hungarian Empire created a power vacuum which Hitler and Stalin were only too glad to fill. All of the thriving national states you have named exist under the implied or real security guarantee of the US.

Secondly, whatever the attraction of economic integration without political integration seems to be coming apart at the seams with the example of the European Union as we speak.

Breaking up Africa’s multi-ethnic states- unless they were replaced with a robust form of federalism- would, thus, seem to condemn that continent to perpetual interference by the big powers, and economic weakness.

Rick,

Thanks for chiming in. Your question and comments are very good ones.

how do you respond to the geopolitical and macro-economic arguments in favor of strong federalism rather than small-state nationalism?

As far as strong federalism goes, it is actually my preferred system of governance for the withering away of the state. Unfortunately, strong federal republics are few and far between in history. There are very hard to maintain and even harder to govern effectively. The best way to achieve a strong federal state is to start small and work your way up to a confederation, and if all sides want more political integration, then it would be wise to start putting together a federal state.

As far as small-state nationalism goes, I don’t want that. At all. What I am in favor of is smaller states without the nationalism. Remember, of all the small states I’ve listed most are fairly multi-ethnic. Denmark isn’t (I blame the crappy weather), but is still very open to immigration and international firms, while South Korea is currently trying to push an immigration reform bill through its parliament. Small states are good, nationalism is bad. More on this just below, but first:

The experience of Central Europe after the First World War seems to offer a telling example of what happens when you break-up multi-national states along ethnic lines. The collapse of the Austro-Hungarian Empire created a power vacuum which Hitler and Stalin were only too glad to fill.

Ah, great example Rick. Just to be clear: I don’t want to go around breaking states up. That would be both pompous and disastrous. Playing god is something only Leftists do! All I am saying is this: if a region within a state wants to secede from another state, then the international community should recognize this secession. There are a couple of caveats, of course. Doing this in China or Russia’s backyard would be a bad idea, but in the post-colonial world I think this is something that we should be looking at as a policy option to stunt the violence and poverty in these areas.

Recognizing the legitimacy of the secession would have three effects that would stop the violence for a time: 1) it would require that the new states prove their worth in the international community in the form of not persecuting minorities in their new state, 2) it would deter the state that just lost the region to secession from attacking another sovereign state for fear of reprisals and 3) the recognition of independence would inevitably lead to talks by both sides. Perhaps they could figure out a way to re-federate a few years on down the line, or perhaps they could come to some sort of agreement on trade. Whatever they do, they would at least be talking instead of fighting.

Failure to build an international consensus to recognize the independence of regions seeking independence will lead to more of the wars we have seen in much of the post-colonial world, as well as in the Caucasus and the Balkans.

Back to the nationalism you brought up earlier. A lot of states that try to secede are actually very multi-ethnic. Azawad, in Mali, for example, is a good example of a multi-ethnic region trying to break free from Bamako’s inept rule. With the advent of the market economy throughout the world (see my reply to NEO above), nationalism will continue to decline in prominence, and the areas of the world where nationalism is prevalent will be the hottest ones on the planet. States that thrive on nationalism are going to have to struggle to assert their authority over their people, and where there is nationalist promotion in government, there we will see most of the violence. I am thinking of China, Russia, Israel, Palestine, North Korea, and India-Pakistan.

In other cases, secession has taken place within a state that is largely homogenous ethnically. Somaliland, a democratic, relatively prosperous, but unrecognized state in the north of Somalia is a case in point. They want out of Somalia until all the violence and competition for the center of power dies down. They are open to re-federating, but in the meantime…

All of the thriving national states you have named exist under the implied or real security guarantee of the US.

Yes, but isn’t this in itself a form of confederation, or loose federalism? I’m all for more integration between the US and other societies, by the way. If we could get these states to integrate further economically, and could make our political borders largely irrelevant within the confederation: then security costs would largely be paid for. My co-blogger Jacques Delacroix has actually written one of the most stimulating papers on the subject of integration between states: “If Mexicans and Americans Could Cross the Border Freely.” I highly recommend it. Remember, one of the pillars of individualism is internationalism. Hayek, among others, lamented that we had lost this fight to the Marxists in the 19th and 20th centuries.

Secondly, whatever the attraction of economic integration without political integration seems to be coming apart at the seams with the example of the European Union as we speak.

Ah, but the problems of the EU don’t stem from economic integration, they stem from more political integration. The European Central Bank – a political creation if I’ve ever seen one – and proposed measures for a European parliament with more delegated powers is what has caused the strife in the Eurozone, not the ability of Greeks to work and vote in France, and vice versa.

Breaking up Africa’s multi-ethnic states- unless they were replaced with a robust form of federalism- would, thus, seem to condemn that continent to perpetual interference by the big powers, and economic weakness.

Agreed! But again, I don’t want to go around breaking up states. One big hole I see in my support for secession theory so far is the question of what if: what if the new state’s neighbors don’t play ball economically? Won’t that new state be isolated? Co-blogger Fred Foldvary actually wrote an article on this subject using Turkey’s rejection from the EU as an example: “Let Turkey Join NAFTA.” Another highly recommended piece!

Whew. Thanks again for contributing to the conversation, Rick, and don’t be bashful in throwing more fastballs my way. It helps me learn and clarify my thoughts!

Around the Web

Brandon Christensen Current Events, Links , , , , ,
  1. John Locke, President Bush and the Jesus Pushers
  2. (More) on the legality of the latest ObamaCare fix
  3. Israel is wigging out; One of the fairest assessments of Israeli foreign policy I’ve seen since my own musings!
  4. Has Barack Obama told the biggest (dumbest) lie ever?
  5. Are real rates of return negative? Is the “natural” real rate of return negative?

Keynes on Free Trade

Brandon Christensen Economics, History, Politics , , , , , , , ,

I found this great quote from John Maynard Keynes earlier today:

In a regime of Free Trade and free economic intercourse it would be of little consequence that iron lay on one side of a political frontier, and labor, coal, and blast furnaces on the other. But as it is, men have devised ways to impoverish themselves and one another; and prefer collective animosities to individual happiness.

I found this in a journal article (pdf) on political decentralization and economic integration. The quote is from 1920 (the article is a couple of years old).

John Maynard Keynes’s system is collapsing in front of our eyes. It is doing so slowly, but it is collapsing nonetheless. What is interesting to note is that Keynesians share much of their ideology with libertarians. We are all liberals of one stripe or another, but the Keynesians won the public policy battles of the post-war period.

I’m not entirely certain I know what these policy battles were all about. Again, it seems like there is very little that we disagree with the technocratic Left about ideologically. Yet since the Keynesian system is collapsing it seems like now would be a good idea to go over how they got to technocratic planning from what is essentially the same starting point as the libertarian one. I think we would do well to exercise a great deal of our thoughts to thinking about this divergence.

A Warm Welcome

Brandon Christensen Current Events

Hello dear readers (all three of you). I’ve been a bit behind in my introductions, and I apologize for that, so without further adieu I’d like to introduce Dr Claudio Shikida and Edmund Cotter to the team.

Dr Shikida received his PhD in economics from the Federal University of Rio Grande do Sul and now teaches economics at IBMEC-Minas Gerais. He has taught and performed research at numerous universities around the world, including UCLA. He also blogs at De gustibus non est disputandum.

You can find Dr Shikida’s first post here. We are honored to have him join with us in experimenting with a multilingual blog. Libertarianism is an international creed, and I think that exposing more people to more languages and more worldviews (worldviews based around the freedom of the individual, I might add) will help contribute in some small way to a better world.

Ed has a B.A. in Communications from George Mason University. He believes in the creation of a broad coalition of the Liberty Movement with greens, progressives, and technocrats. He supports the off-the-grid and sustainability movement as he believes it is the most tactical way to support libertarian causes. He is a small-scale produce farmer. The issues he considers most important are the Federal Reserve and the foreign policy in the Middle East. He is currently working on a book and several screenplays for the libertarian cause.

George Mason is, of course, is known for its free market bias among universities. I found Edmund plying his trade on the Young American for Liberty blog and thought he’d be a great addition to the team here. You can find his thoughts here.

From the Comments: Is US Economic Stagnation A Myth?

Brandon Christensen Current Events, Politics , , , ,

The short answer is “yes.”

In the ‘comments’ section of Dr Delacroix’s recent article on the myth of American economic stagnation, Dr Amburgey, who works at the University of Toronto’s business school, dropped three arguments at my feet. I gave him three responses and he chose to address Issue #2 first. I will await his responses to Issues #1 and #3 respectively, but I want to make sure that we are all on the same page before we get to Issues #1 and #3.

At the heart of this discussion lies Dr Delacroix’s observation:

So, the implication here is that when it comes to the unequal distribution or real economic growth you have to do two things:

A You have to slow down and make sure you understand what’s being said; it’s not always easy. Examples below.

B You have to decide whether the inequality being described is a moral problem for you or, otherwise a political issue. (I, for one, would not lose sleep over the increased poverty of the stock exchange players in my fictitious example above. As for the lady typists, I am sorry but I can’t be held responsible for people who live under a rock on purpose.)

With this in mind I think it is important to point out that because what we are discussing brings out a lot of passion, it is easy for people to look at some numbers and believe them just on principle. For example, Dr Amburgey writes:

The numbers I use come from [here]. Median household income for 1975-2012 in constant (2012) dollars. There is a picture on the wikipedia entry I gave above [found here – bc] that charts GDP per capita and median household income. Go look at it. It’s pretty much flat for median household income. In other words pretty stagnant. Numbers wise in 1975 its $45788. In 2012 it’s $51017 (less than it was in 1989 by the way). Plug the numbers into my handy dandy econometrics software and regress median household income on year and the average annual change is $232.32 per year.

I suppose ‘stagnant’ is in the eye of the beholder but I’d say that’s 38 years of economic stagnation for the American economy as a whole.

Can you see why Dr Amburgey’s statement above is untrue? I can spot two big errors in his logic (feel free to correct me or add your own in the ‘comments’ section):

  1. Median household income has, on paper, indeed stagnated. Yet this says nothing about economic decline or stagnation in the US because median household income cannot tell us what such income has been able to buy in the past 40 years. That is to say, the measurement used by Dr Amburgey, and the ensuing numbers they produced, tells us nothing about the purchasing power of the American consumer.
  2. This second error is huge in my mind. Dr Amburgey and others are plainly stating that the American economy has been economically stagnate for 40 years. This is a good example of looking superficially at some numbers and then kowtowing to proper social norms. After all, Dr Amburgey’s handy-dandy econometrics software was around in 1973, right?

None of what I am arguing denies that the US economy sucks today. I am not blaming this on the Obama administration (though it has certainly kicked us while down). Nor am I denying that there are real structural issues that need to be addressed. What I am arguing, and what I think Dr Delacroix is arguing, is that the numbers and the issues used by Leftist factions to push their beliefs through the political process are based on faulty assumptions and even faultier logic.

I am still waiting for Issues #1 and #3 to be addressed. Dr Amburgey actually has access as an author on this blog, so maybe Christmas will come early for me this year and I’ll be able to read one of his posts here at NOL.

Around the Web

Brandon Christensen Current Events, Links , , , , , , , ,
  1. College football metrics: machines say the Pac-12 is the strongest football conference, humans erroneously believe the SEC is stronger
  2. Ken White on the cultural implications of the War on Drugs
  3. Orin Kerr on the case that sparked Ken White’s analysis I linked to above
  4. Ali Ezzatyar, a lawyer at UC Berkeley’s Program on Entrepreneurship and Development in the Middle East, makes The Case for Kurdistan
  5. A Barton Hinkle, echoing Dr Delacroix’s recent work, advises us to ‘cheer up’ because things are getting better (thanks to capitalism)

From the Comments: Populism, Big Banks and the Tyranny of Ambiguity

Brandon Christensen Comments, Current Events, Law, Politics , , , , , , , , , , , , , , ,

Andrew takes time to elaborate upon his support for Senator Elizabeth Warren, a Native American law professor from Harvard who often pines for the “little guy” in public forums. I loathe populism/fascism precisely because it is short on specifics and very, very long on generalities and emotional appeal. This ambiguity is precisely why fascist/populist movements lead societies down the road to cultural, economic and political stagnation. Andrew begins his defense of populism/fascism with this:

For example, I still have more trust in Warren than in almost anyone else in Congress to hold banks accountable to the rule of law.

Banks have been following the rule of law. This is the problem libertarians have been trying to point out for hundreds of years. See Dr Gibson on bank regulations and Dr Gibson again, along with Dr Foldvary, on alternatives. This is why you see so few bankers in jail. Libertarians point to institutional barriers that are put in place by legislators at the behest of a myriad of lobbying groups. Populists/fascists decry the results of the legislation and seek a faction to blame.

If you wanted to be thought of as an open-minded, fairly intelligent individual, which framework would you present to those who you wished to impress: the institutional one that libertarians identify as the culprit for the 2008 financial crisis or the ambiguous one that the populists wield?

And populism=fascism=nationalism is a daft oversimplification. I’ll grant that there’s often overlap between the three, but it’s far from total or inevitable overlap. Populists target their own countries’ elites all the time.

Sometimes oversimplification is a good thing, especially if it helps to clarify something (see, for example, Dr Delacroix’s work on free trade and the Law of Comparative Advantage). One of the hallmarks of fascism is its anti-elitism. Fascists tend to target elites in their own countries because they are a) easy and highly visible targets, b) usually employed in professions that require a great amount of technical know-how or traditional education and c) very open to foreign cultures and as such are often perceived as being connected to elites of foreign societies.

The anti-elitism of fascists/populists is something that libertarians don’t think about enough. Anti-elitism is by its very nature anti-individualistic, anti-education and anti-cooperative. You can tell it is all of these “antis” not because of the historical results that populism/fascism has bred, but because of its ambiguous arguments. Ambiguity, of course, is a populist’s greatest weapon. There is never any substance to be found in the arguments of the populist. No details. No clarity. Only easily identifiable problems (at best) or ad hominem attacks (at worst). Senator Warren is telling in this regard. She is known for her very public attacks on banks and the rich, but when pressed for details she never elaborates. And why should she? To do so would expose her public attacks to argument. It would create a spectacle out of the sacred. For example, Andrew writes:

Still, I’d rather have people like Warren establish a fuzzy and imperfect starting point for reform than let courtiers to the wealthy and affluent dictate policy because there’s no remotely viable counterpoint to their stances […] These doctrinaire free-market orthodoxies are where the libertarian movement loses me. There are just too many untrustworthy characters attached to that ship for me to jump on board.

Ambiguity is a better alternative than plainly stated and publicly published goals simply because there are “untrustworthy characters” associated with the latter? Why not seek plainly stated and publicly published alternatives rather than “fuzzy and imperfect starting points for reform”?

Andrew quotes a man in the street that happens to be made entirely of straw:

“Social Security has gone into the red, but instead of increasing the contribution ceiling and thoughtfully trimming benefits, let’s privatize the whole thing and encourage people to invest in my company’s private retirement accounts.”

Does the libertarian really argue that phasing out a government program implemented in the 1930s is good because it would force people to invest in his company’s private retirement accounts? I’ve never heard of such an example, but I may just be reading all the wrong stuff. Andrew could prove me wrong with a lead or two. There is more:

This ilk of concern trolls (think Megan McArdle: somewhat different emphasis, same general worldview) is one that I find thoroughly disgusting and untrustworthy and that I want absolutely no part in engaging in civil debate. Their positions are just too corrupt and outlandish to dignify with direct responses; I consider it better to marginalize them and instead engage adversaries who aren’t pushing the Overton Window to extremes that I consider bizarre and self-serving. They’re often operating from premises that a supermajority of Americans would find absurd or unconscionable, so I see no point to inviting shills and nutters into a debate […].

Megan McArdle is so “disgusting and untrustworthy” that her arguments are not even worth discussing? Her name is worth bringing up, of course, but her arguments are not? Ambiguity is the weapon of the majority’s tyranny, and our readers deserve better. They are not idiots (our readership is still too small!), and I think they deserve an explanation for why McArdle is not worthy of their time (aside from being a shill for the rich, of course).

I think populism/fascism is often attractive to dissatisfied and otherwise intelligent individuals largely because its ambiguous nature seems to provide people with answers to tough questions that they cannot (or will not) answer themselves. Elizabeth Warren’s own tough questions, on the Senate Banking Committee, revolve around pestering banks for supposedly (supposedly) laundering money to drug lords and terrorists:

“What does it take, how many billions of dollars do you have to launder from drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution?” Warren asked at a Banking Committee hearing on money laundering.

Notice how the populist/fascist simply takes the laws in place for granted (so long as they serve her desires)? The libertarian would ask not if the banks were doing something illegally, but why there are laws in place that prohibit individuals and organizations from making monetary transactions in the first place.

Senator Warren’s assumptions highlight well the difference between the ideologies of populism/fascism and libertarianism: One ideology thinks bludgeoning unpopular factions is perfectly acceptable. The other would defend an unpopular faction as if it were its own; indeed, as if its own freedom were tied up to the freedom of the faction under attack.

What was the world’s reaction to Kristallnacht?

Brandon Christensen History , , , , , , , , ,

Der Spiegel has a fascinating article on the reaction of European diplomats to Kristallnacht. Among the gems:

The diplomats almost unanimously condemned the murders and acts of violence and destructions […] Many diplomatic missions were already in contact with victims because men from the SS and the SA, Nazi Party officials and members of the Hitler Youth were also harassing foreign Jews who lived in Germany […] Although there was some looting, many diplomats, like Finnish representative Aarne Wuorimaa, reported on “withering criticism” from members of the public. According to Wuorimaa, “As a German, I am ashamed” was a “remark that was heard very frequently.” However, the reports generally do not delve into whether the critics fundamentally rejected the disenfranchisement of the Jews in general or just the Nazis’ brutal methods.

Again, read the whole article. It’s absolutely fascinating. One thing the article just barely touches on, but highlights well (if you know what to look for) is what foreign governments didn’t do. Der Spiegel, a center-Left publication, highlights the lack of sanctions and other diplomatic posturing, but this is, in true center-Left fashion, complete garbage. If you read the article closely you can see what the world should have done. Indeed, you can see what the world should have been doing all along. It is a testament to not only libertarianism’s moral clarity but also the creed’s humility. Observe:

Most of all, however, the borders of almost all countries remained largely closed for the roughly 400,000 Jewish Germans.

This is an important fact. Der Spiegel implicitly recognizes it, too, but the article fails to elaborate any further upon it, as if the benefits of open borders and their ability to ward off tyranny speaks for itself. The lack of open borders, of course, coincides nicely with the policies of Franklin D Roosevelt and his fellow fascists. Closing off the borders to immigration and arbitrary numbers of goods and services is a cookie cutter example of authoritarianism.

This brings me to my Tuesday morning rant: I can’t stand the fact that libertarians are proud of their ignorance in regards to what they read. I can’t count the number of times a libertarian has disparaged a center-Left outfit (to name one example) because he doesn’t agree with it. Libertarians should be reading everything and looking for the libertarianism inherent in it. When the libertarianism is found, point it out. If it cannot be found, point out the inherent authoritarianism in it (Dr Gibson always provides excellent examples in this regard). But do not avoid reading it simply because you do not agree with it. Ignorance, after all, is no strength.

Around the Web

Brandon Christensen Current Events, Links , , , , , , , , , , , , , , ,
  1. When governments go after witches
  2. Borders, Ethnicity and Trade [pdf]
  3. A Lonely Passion. Libertarians in China
  4. Halloween in Germany: read this with globalization and its critics in mind
  5. Should Japan take the lead in mediating US-Iranian talks? Props to Obama, by the way
  6. Another excellent Free Speech blurb from Ken White
  7. Culture in a Cage

A Warm Welcome, and other assorted editorial duties

Brandon Christensen Current Events, Liberty, Politics , , , , , ,

Hello all. I’m proud to announce and introduce Jesper Ahlin to the blogging team here at NOL:

Jesper Ahlin received his B.A. in philosophy from Linköping University and is now a graduate student in philosophy at Uppsala University. He has conducted Stureakademin, a study program run by the classical liberal think tank Timbro, and is the local coordinator for European Students For Liberty in Sweden. As a right-libertarianish thinker he enjoys reading Mises and Rothbard as well as Hayek and Nozick. He also likes ice hockey, music and traveling.

Jesper’s debut post can be found here. He’s currently hanging out in Washington and New York City, but do look for more of his posts in the near future. I, for one, am very excited to be blogging alongside Jesper.

In other news around the blog, Andrew is shocked – SHOCKED! – to find Senator Elizabeth Warren in the company of other rich, white (class-wise, of course) liberals. What would a “sincere and credible populist” be doing rubbing elbows with rich, white (class-wise, of course) Leftists? After all, Senator Warren, a Native American, was a law professor at Harvard. Think of all the glass ceilings she shattered. Do read the whole thing. As always, it’s very well-written.

‘Populism’ is just a quaint term for ‘fascism’ and ‘fascism’ is just a fancy term for ‘nationalism’. All three terms are useful if you want a society to be culturally, economically and politically stagnant. What, for example, is the criteria for being an ‘American worker’ (one segment of society that Senator Warren holds especially close to her heart)?

The guy who works twelve hours a day at a hospital, four days a week?

The guy who works twenty hours a week at a deli slicing pastrami?

And what, for example, characterizes an ‘American worker’ from, say, a ‘German worker’?

Nobody in Warren’s populist camp ever really defines what it means to be an ‘American worker.’ Policy matters, and policies targeting certain segments of society – whether for good or for ill – will only guarantee stagnation, especially if the certain segment of society is only vaguely defined. Not everybody can drive a BMW to work and, more importantly, not everybody wants to.

Elsewhere, Hank and NEO and Edmund argue about political power. It seems to me that they are simply arguing about how this power should be shared, rather than how it should be shorn. This is a dangerous precedent, in my opinion. Read Edmund’s whole piece, and the exchange that follows.

Personally, I don’t care which party is in office, as long as laws that are anathema to libertarianism can be repealed. Conservatives are often an embarrassment to themselves and to their countrymen. They rarely travel, are often less educated than their Leftist peers and usually possess a deep belief in the power of magic and sorcery to solve the social and personal problems that they inevitably come to face in life.

For all this, at least they aren’t Leftists.

Thanks for reading and, more importantly, for sharing your thoughts in the ‘comments’ section. Together, through arguing, we are doing the fine-stitching of democracy.

What do Mexicans read for intellectual nourishment?

Brandon Christensen Philosophy , , , , ,

I asked an old friend of mine (I think he’s a professional economist these days, but I deactivated my FB and haven’t been able to keep up with anyone) to help me find some Mexican media outlets to troll for knowledge and information. I also wanted to know how influential Mexico’s press is outside of Mexico (especially in regards to her smaller neighbors in Central America but also to Spain). He gave me the following heads up:

I’d recommend searching for articles in Nexos and Letras Libres magazines, which are something like the The Atlantic.

Mexico is very insular and there is almost no influence from media outside or from here to other places. However, I believe El País from Spain usually does a good job reporting about Mexico.

My friend and I actually met at a summer seminar put on by the Institute for Humane Studies back in 2009. It’s the same seminar that I met Rick at as well. If you are young and want to be a competent defender of liberty then I would highly suggest checking out the IHS’s programs.

American Foreign Policy: Predictions, Assumptions and Falsehoods

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

On November 1st 2011 I got into an argument with Dr Delacroix about US foreign policy. During that time, if you’ll recall, a debate on the merits and demerits of bombing Libya was raging across the blogosphere and in the halls of power. Here is what I wrote in the heat of the moment two years ago today:

Time will tell, of course, which one of our predictions comes true. In two years time, Tunisia, which did not get any help from the West, will be a functioning democracy with a ruling coalition of moderate Islamists in power.

The Egyptian military will be promising the public that elections are just around the corner, and Libya will be in worse shape than it is today. Two years from today, Dr. J, you will be issuing an apology to me and making a donation to the charity of my choice.

Since you are very good at avoiding the facts on the ground in the name of democratic progress, I think we should establish a measurement rubric by which to measure the progress of Libya. How about GDP (PPP) per capita as measured by the IMF?

Not too shabby, eh? In case you haven’t been staying up to date on current events in the Middle East, Tunisia is a functioning democracy with a ruling coalition of moderate Islamists in power. It is not Switzerland or Iceland, but it is doing much better than the two states who were on the receiving end of US “help” during the Arab Spring.

Egypt, for example, is currently being run by the (US-funded) military, and the military is promising Egyptians that elections are just around the corner.

In Libya, GDP (PPP) per capita for 2013 started off the year at $11,936 (in international dollars). In 2011, prior to the uprisings and subsequent US bombing campaign, Libya’s GDP (PPP) per capita clocked in at $14,913 (you’d have to look at 2010 to see where Libya started off). That’s a nearly $3,000 drop in purchasing power parity. Here is the relevant IMF data (it starts off in 2010 and you can go from there).

Perfectly predicting the current mess in the Middle East has less to do with my genius than it does with applying a general libertarian framework to the situation. For example, I know that government is very bad at doing nearly everything. Government is a name we have given to an organization that has a monopoly on force. This monopoly on force is usually consented to because it is expected that it will provide an honest court system and a way to interact with other polities (“diplomacy”). When this monopoly on force is applied to anything other than these two functions, peace and prosperity give way to war and impoverishment. The trajectory that war and impoverishment take in a society depends on any number of variables, but the general libertarian framework I just outlined never fails to impress.

Now, my perfect prediction was made in the heat of the moment during an argument. If my argument was right, what did the other side of the debate have to say? Is it at all possible that Dr Delacroix had an argument that somewhat conformed to reality as well? Decide for yourself, and remember, this was written near the end of 2011:

There are several benefits to the Libyan/NATO victory for this country […] First, rogues and political murderers everywhere are given a chance to suppose that if you kill Americans, we will get you afterwards, even if it takes twenty years […] Two, Arabs and oppressed people everywhere are figuring that we mean it when we say we like democracy for everyone […] Three, this Obama international victory will cost him dearly in the next election. A fraction – I don’t know how large – of the people who voted for him the first time around oppose all American military interventions.

I don’t know about you, but it looks as if Dr Delacroix got Libya, the rest of the Arab world and American domestic politics horribly wrong, and on every level possible. If I am being disingenuous or unfair to Dr Delacroix’s argument, please point out to me where I go wrong in the ‘comments’ section.

Let’s take a second to reflect on something here. I was factually correct in my assessment of what would happen in the Middle East if the US intervened militarily. Dr Delacroix was factually incorrect. I think the drastic difference in outcomes occurred because our assumptions about how the Middle East works are informed by different history books. This is odd because we agree on nearly everything else.

Were I proved to be wrong, and shown how devastating the effects of my assumptions on societies could be,  I know I would do some deep questioning about my prior assumptions of how the world works.

There are four assumptions Dr Delacroix makes, in recent blog posts, that I believe are unfounded. When these unfounded assumptions have gained traction policy-wise, the consequences have been devastating. When these unfounded assumptions have been defeated in open debate, the consequences have been minute. By pointing out these assumptions, and ruthlessly criticizing them, I hope to provide a framework for those who read this blog to use when thinking about foreign affairs.

  • False Assumption #1: “Bullies will try to pull off worse and worse brutalities until they become intimidated. The unopposed brutalities of one bully encourage others to go further. Some who had the potential but never acted on it will be encouraged by the impunity of others to become bullies themselves.”

Comparing leaders of authoritarian states to schoolyard bullies is a bad way to go about understanding international relations. I think this is done on purpose, of course, in order to obfuscate the reality of a given situation. Dictators in authoritarian states often enjoy broad coalitions of support from the populaces over which they rule. In Iraq, for example, Saddam Hussein enjoyed support from Sunni Muslims, Christians, secularists, socialists, trade unions, domestic corporations, women’s rights groups and the poor. Dictators often enjoy broad support from their populaces because of the fact that they bully, to use Dr Delacroix’s term, the bullies (see False Assumption #2 for more on this).

Here is another example: Bashar al-Assad has broad support in Syria because he protects religious and ethnic minorities from the passions of the vulgar mob. Dictators rarely care about the actions of dictators in other countries, unless it serves their own domestic purposes, and slaughtering people randomly is something I have never heard of a dictatorship doing. A dictator’s attacks are calculated, quite coldly I admit, so as to bolster support from the factions they are allied with. Dr Delacroix would like nothing more than to have the Middle East actually be a place where dictators take comfort in the actions of other dictators. Were this to be true, his argument would be right. His predictions would come to pass. Alas.

  • False Assumption #2: “By the way, as little as four years ago and even less, Western liberals and misguided libertarians were still blaming the American military for Iraqi on Iraqi violence. The US military is gone; the violence is rather worse.”

Attempting to sweep the violence and high death count associated with the US invasion of Iraq under the rug does nothing to inspire confidence in Dr Delacroix’s framework. The Iraqi-on-Iraqi violence occurred after the US military illegally removed the bully’s bully from his position of power. Prior to the US military’s illegal invasion, the Iraqi-on-Iraqi violence Dr Delacroix points to was kept in check by Saddam Hussein’s heavy-handed tactics. When Hussein gassed Kurds, for example, he did not do so simply because the Kurds “revolted” against his rule. He did so because the Kurds had been murdering Arabs and engaging in terrorist activities that targeted Iraqi infrastructure. The intrastate warfare in Iraq was quite negligible until the United States decided to break its own laws and illegally invade and occupy Iraq.

Of course, you can always choose to believe Dr Delacroix’s theory of events, but I think the results of our predictive power speak for themselves (on the inevitability of intrastate warfare in post-colonial states, see the discussions about “post-colonialism,” “secession” and “decentralization” here at NOL).

  • False Assumption #3: “In World War Two, we could have stopped the genocide of the Jews or slowed it to a crawl. We did not because there was a strong but vague reluctance to ‘get involved.’”

In 1939 France and the United Kingdom had worldwide empires. The Soviet Union was 25 years old. So were the small, independent states of Turkey, Hungary and Austria. Germany, despite its defeat in World War 1, was an industrial power. The was no such thing as cruise missiles. There was no such thing as jet airplanes. There was no such thing as satellites. Or the internet. The Jews that were slaughtered in Europe lived in places that could not be reached by the American military of 1939. Indeed, they lived in places in Europe that could not be reached by the American military of 1945. The Eastern Front in World War 2 was many things, but certainly I think you can see why it wasn’t a “reluctance to get involved” on the part of the American people that is partly responsible for the Holocaust. To assume that the American military could have marched into Eastern Europe during World War 2 and stopped, or even slowed, the Holocaust is delusional.

  • False Assumption #4: “Today, I am ashamed to be an American because of our passivity with respect to the slaughter of Syrian seekers for freedom.”

Since the end of World War 2, when the US assumed its place as the world’s most prominent polity, Washington has continually opted to support the socialists (Ba’athists, Nasserists, Ghaddafi, etc.) over the Islamists in the Arab world (liberal Arabs simply, and unfortunately, emigrate to the West). The most obvious reason for this support is that the socialists do not send their agents to fly planes filled with people into commercial buildings filled with people. Pretending that the US is putting its head in the sand is disingenuous. Washington is well-aware of the consequences of letting Assad fight it out with the Islamists. We have made our decision after weighing the costs and benefits of every option available. We did this through open debate. Socialists make better enemies (and allies) than Islamists.

Now, these are just some small examples of jingoism and delusions of grandeur I have picked out. There are many more examples, especially in the national press, but Dr Delacroix’s are much, much better reasoned than any of those. If you are reading the op-eds in the national press rather than Dr Delacroix you are going to be woefully misinformed about the nature of the world. Your brain will be slightly more malnourished than it otherwise would be (this is one of the reasons why I like blogging with him). His arguments are informed by a lifetime of prestigious scholarship; they are informed by somebody who has the benefit of understanding two distinct cultures in an intimate way.

And look how incredibly wrong he has been proven to be. Assumptions matter. So, too, does truth and falsehood.

Around the Web

Brandon Christensen Current Events, Links , , , , , , , , , , ,
  1. A university in Malaysia has awarded an economics doctorate to North Korea’s communist dictator
  2. Ian Bremmer asks, in the pages of the National Interest, if China is in the middle of a big bubble
  3. The Diffusion of Responsibility: a short piece on government employees, the rest of us, and some implications of the drug war
  4. How laissez-faire made Sweden rich by Johan Norberg
  5. Why do banks keep going bankrupt? Kirby Cundiff answers this question in the pages of the Freeman
  6. Mud People and Super Farmers: Creatively adapting to the lack of land rights in Africa

“Could we build a bridge between Austrian Economics and New Institutional Economics? – A Pre-History of Soft Budget Constraint”

Brandon Christensen Economics , , , ,

This is the title of a paper by Claudio Shikida. Here’s the abstract:

The concept of soft budget constraint is recent in economic analysis. It has become increasingly important in economic theory, for its role as a system of incentives. However, soft budget constraint plays also an important role in the history of economic thought, where it can be traced back until Mises’s writings on economic calculation and property rights, both derived from the debate of the economic calculation in socialist regimes. In this sense, soft budget constraint can be viewed as a bridge between Austrian Economics and New Institutional Economics. Since Mises, like other Austrian economists, is virtually ignored in Brazilian courses of Economic Thought, this article intends to show his importance as a forerunner of the concept of soft budget constraint, and will try to link these two theoretical views of economic systems.

You can read the whole thing here. Any thoughts?

From the Comments: The four broad pillars of the market-based economy

Brandon Christensen Comments , , , , , , , , , , , ,

NEO’s response to my musings on decentralization in Africa is worth highlighting:

It strikes me , Brandon, that one of the impediments here, there may be others, I’m no expert, is that the nascent US was composed mostly of literate folks with a (at least somewhat) common outlook that specified above all honesty and a “government of laws, not men”. I would also state that this is a good bit of our problem now.

This is a great observation. An anthropologist by the name of Maya Mikdashi recently wrote an article on the effects of market-based reforms in the Middle East. She essentially argued that the market-based reforms assume that only a certain type of individual can successfully participate in the market economy (stay with me here): the rational, autonomous, freedom-seeking, and legally-protected-as-an-individual type. Over the past two decades, as more states have moved towards a market-based economy, we have seen the institutional and cultural rewards being reaped from this process. Instead of people who have known only poverty and want, the market-based economy has pushed individuals to seek to become more rational, autonomous, freedom-seeking, and legally protected as an individual.

Now, stay with me. The market-based economy, capitalism, has four broad institutional pillars that it needs to thrive: private property, individualism, the rule of law, and an internationalist spirit. From these pillars come the fountains of progress that the West has come to enjoy over the past 300 years. While I doubt she realizes it, Mikdashi is simply echoing the writings of the great classical liberal theorists of the past three centuries: institutions matter, and they matter a lot. A big point both Dr. Ayittey and myself have been trying to make is that the institutions necessary for progress and capitalism are already in place in the post-colonial world; when I was in Ghana doing research one of the things I always asked farmers is where they got their property titles and they answered “the chief.” I asked them why they didn’t go through more official routes to obtain their property titles (i.e. through the state), and I’m sure you can finish the Ghanaian farmer’s answer for him.

The fact that most, if not all, citizens of the new republic desired the rule of law is one that cannot be stressed enough, and it is definitely one of the reasons why we have grown so prosperous, and answers why we are in trouble today. However: Africans don’t desire the rule of law?