History

New Issue of Econ Journal Watch: Does Economics Need an Infusion of Religious or Quasi-Religious Formulations?

Brandon Christensen Current Events, Economics, History, Links, Religion , , , , , , ,

The new issue of Econ Journal Watch is out and EJW has teamed up with the Acton Institute to feature ‘religion and economics’ as the topic for a symposium.

As some of you may know, my fellow Editor-in-Chief Fred Foldvary is an editor for the journal, and Warren is the math reader, so this project holds a special place here at NOL. I just wish they’d be a little less humble about their endeavors elsewhere and share this type of stuff themselves (this humility is a recurring problem in the libertarian quadrant of the blogopshere)!

At any rate, here is the lineup:

The Prologue to the symposium suggests that mainstream economics has unduly flattened economic issues down to certain modes of thought (such as ‘Max U’); it suggests that economics needs enrichment by formulations that have religious or quasi-religious overtones.

Robin Klay helps to set the stage with her exploration“Where Do Economists of Faith Hang Out? Their Journals and Associations, plus Luminaries Among Them.”

Seventeen response essays are contributed by authors representing a broad range of religious traditions and ideological outlooks:

Pavel Chalupníček:
From an Individual to a Person: What Economics Can Learn from Theology About Human Beings

Victor V. Claar:
Joyful Economics

Charles M. A. Clark:
Where There Is No Vision, Economists Will Perish

Ross B. Emmett:
Economics Is Not All of Life

Daniel K. Finn:
Philosophy, Not Theology, Is the Key for Economics: A Catholic Perspective

David George:
Moving from the Empirically Testable to the Merely Plausible: How Religion and Moral Philosophy Can Broaden Economics

Jayati Ghosh:
Notes of an Atheist on Economics and Religion

M. Kabir Hassan and William J. Hippler, III:
Entrepreneurship and Islam: An Overview

Mary Hirschfeld:
On the Relationship Between Finite and Infinite Goods, Or: How to Avoid Flattening

Abbas Mirakhor:
The Starry Heavens Above and the Moral Law Within: On the Flatness of Economics

Andrew P. Morriss:
On the Usefulness of a Flat Economics to the World of Faith

Edd Noell:
What Has Jerusalem to Do with Chicago (or Cambridge)? Why Economics Needs an Infusion of Religious Formulations

Eric B. Rasmusen:
Maximization Is Fine—But Based on What Assumptions?

Rupert Read and Nassim Nicholas Taleb:
Religion, Heuristics, and Intergenerational Risk Management

Russell Roberts:
Sympathy for Homo Religiosus

A. M. C. Waterman:
Can ‘Religion’ Enrich ‘Economics’?

Andrew M. Yuengert:
Sin, and the Economics of ‘Sin’

Not too shabby, eh? I’ll admit upfront I haven’t been able to read any of the articles yet, but once I find some work out here in Austin I’ll be able to patch together a schedule that’ll allow for a little leisure. You can always download the entire issue, too (pdf). Econ Journal Watch is an important project that is dedicated to exploring and criticizing the underlying assumptions of the discipline of economics, but it is done in a way that is classy, professional, and informative.

Another Liberty Canon: Montaigne

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

Michel de Montaigne (1533-1592) might be the least controversial of the list of thinkers who have inspired me on liberty, but are not part of the standard list of thinkers on liberty. He even appears in the extensive collection of the Online Library of Liberty. Nevertheless there is a need to develop more the nature of his thoughts on liberty, and related subjects, and not just leave his ideas in the hands of commentators who are not liberty oriented, who may be over optimistic about collectivist and state schemes to rectify various forms of dissatisfaction.

Amongst other things, Montaigne offers an ethic of individuality, which is not too tied to some very specific moral theory, and which is neither narrowly egotistical nor a demand for self-denial. He explores his own strengths and weaknesses with sometimes unsettling frankness to establish a form of individuality that is both affirmative and self-questioning.

Montaigne’s life work was his Essays, which are in large part concerned with a life lived through writing and through the reading of books, which inspire Montaigne’s own writing. This came fairly late in life though, after a career as a local judge, and a period of melancholy which may have been connected with the death of his friend Etienne de La Boétie, himself the author of a classic of liberty minded political thought, ‘Discourse on Voluntary Servitude’.

Montaigne spent much of  his time in a tower on the family estate, writing in a book lined study. He did not write a big continuous integrated book, rather he wrote a series of essays of very variable length, which became the large cumulative classic, Essays. The individual essays range in length from about a page to more than two hundred pages in the case of ‘Apology for Raymond Sebond’.

The title and themes of the essay just mentioned can be taken as an illustration of Montaigne’s way of writing. Sebond was minor Medieval philosopher, who seems to have been a follower of Thomas Aquinas, translated by Montaigne’s father, and accordingly the essay has an element of filial piety in its origin. However, the essay has little to say about Sebond’s philosophy as it ranges through the link with his father, the context of writing, numerous philosophical themes largely established in discussion of ancient thinkers, including animal nature, knowledge, doubt, and being.

Montaigne’s explorations in his essays, longer and shorter, are on his own account rambling and contradictory, though they are also written with great literary style and at a high level of reasoning with regard to the difficulties of arriving at consistent positions. Part of this is that his writing is about himself, what is going in his mind at the time of writing, and therefore what reflects his passing moods and ideas.

The result is not a mess of unconnected thoughts, but a simultaneous exploration of how the mind works and the workings of the world in which the mind exists. The emphasis on the self is a confirmation of the moral importance of the individual and Montaigne is one of the major contributors to the idea that every individual perspective and every inner world matters.

The importance of every unique consciousness is expressed in a revulsion at cruelty, in the use of state power, or in any other kind of context, which is both horror cruelty at others and despair at futile forms of self-sacrifice. Our regard for the world created by someone else exists together with our own determination to prudently preserve  our own world of experience.

There is self-criticism in Montaigne’s account since he had been a judge and was very aware that a perfectly just judgement was not always possible. The judge has duties to follow the letter of the law and the history of interpretations of that law, which do not always harmonise, so undermining the idea of perfect justice. Furthermore, both these requirements may often prevent a judge from acting according to inner conviction about the relevant facts of a case and the moral evaluation of them.

He was painfully aware that the poor tended to come off worse from such constraints. In general he took some pride in an understanding of the condition of the lower classes that his father had encouraged. Though he made no claims to great generosity towards the poor, he does provide an example of thought about how state acts, and other actions, change the lives of weakest and most marginal in unintended ways.

Montaigne does not have a clear suggestion to offer on how to avoid such problems. He does entertain some utopian scenarios in which humans live spontaneously,  according to perfect justice in small self-sufficient communities without a state, and without judges, or ‘expert professionals’  of any kind. Montaigne was sceptical about medicine as well as lawyers, and was an early critic of the idea of imposing ‘rational knowledge’ on communities.

We must also be aware that Montaigne offers a utopia here, and one in which property accumulation  and communication, commercial or otherwise, between communities does not exist. He did not think that would be desirable, so does not offer a consistent non-state vision or vision of pure custom replacing law and imposed expertise. He does offer a powerful sense of how these things can go wrong and the need to temper and contain them, in a way of thinking in which every individual counts, just as nature can create anything, and even the most ‘monstrous’ creations are to be valued as part of the abundant possibilities of nature. 

In some respects, Montaigne is an enigma, and not just because of the shifting point of view he offers. He is evasive on the difficult questions of the time: Was he a republican  or a monarchist? Was he a Christian? Was he a Catholic? He adopts the pose of a moderate monarchist and moderate Catholic Christian, but there are plenty of hints of doubts and leanings towards other perspectives.

I am inclined to think he was a religious sceptic, with strong materialist leanings, and a republican at heart, but there is no certainty about this. Though his prudence on these issues partly reflects the dangers appearing to oppose the state authority and state church of monarchist Catholic France , his capacity for such elaborate and complex prudence shows a capacity for tolerance, understanding, and inclusion, that is its own message.

Ultra-libéralisme – A French Tale

Jacques Delacroix Current Events, History, Liberty , , , , , , ,

I am in frequent correspondence with a French retired businessman in his sixties. He is a thoughtful man with minimum formal education but who reads two newspapers a day and watches French news on television several times a day. My informal judgment (as a retired teacher) is that he possesses intelligence well above average. His interest in political matters is through the roof. My French friend is also strictly monolingual. That is, he gets all his information in French.

My friend sent me recently the following email I had trouble understanding, at first. (My own careful translation. My first language is French. I have published in that language.)

“The European Financial Markets Authority (EFMA) has downgraded the three main international credit agencies that, themselves, upgrade or downgrade European and other countries. It’s a just reward*… and a good defense against these agencies which possess no legitimacy at all except from the fact of their existence; agencies that seek to estimate the worth of those countries (and, perhaps, to play the stock market [on the basis of their own assessment]). No an easy issue. Perhaps this is going to calm down the yo-yo effect financial speculators have on the stock exchange…..I even thought a few years ago of sending a personal note to those credit agencies.”
(Bolding mine)

Two salient points in this communication: First, the EFMA is a European Union “authority,” a government agency emanating from the individual EU countries’ national authorities. It’s a complete government body.

The second comment is related to the first, I believe. My friend states categorically that US-based credit agencies (Moody’s, S&P and Fitch Ratings ) have “no legitimacy” because they are not government agencies, precisely. This expresses a mental world whereas all legitimacy flows, can only flow, however indirectly, in however contorted a fashion, from the electoral process. He really thinks that the IFMA’s puerile tantrum is going to change the credit game decisively.

Within an American intellectual context, this sounds almost like the thinking of a madman. Yet, my friend is not mad. I have known him for dozens of year. He acts rationally in every aspect of his life. He is also decisively and loudly critical of French political life in general. The problem is simply that he is French, that he receives all his information from French sources, that his mind has been shaped by French economic thought (or un-thought).

His rage against the credit agencies is not based on a factual analysis of their performance either, which would certainly be a useful exercise after the 2008 world-wide financial crisis. His rage is based entirely on the violation of sovereignty by these non-legitimate bodies.

I often ask myself the rhetorical question, ” How much would I have to be paid to….?” In this case, I can’t come to a figure. I don’t know how I would begin to explain to my French friend the idea that credit agencies get most or all of their legitimacy the from the fact that they are precisely not government agencies. I could not tell him the obvious without being interrupted, I am sure: When economic actors begin doubting the credit ratings these agencies assign to organizations emitting bonds and to governments, they will swiftly collapse on their own. That is, this abstraction, the market grants them all of their legitimacy.**

The concept of markets, counter-intuitive in the best of times, has almost completely disappeared from the French consciousness. In 2012 I watched on French language television in horrified fascination the lively debates preceding the presidential election. That was after an ambitious New York District Attorney had disqualified the most likely winner who was both a qualified economist and a sex maniac. (I mean Strauss Khan, the then-current head of the International Monetary Fund and a very moderate nominal “Socialist.”)

French pre-election debates are both more lively and better staged than their US equivalents. In the first round of a two-round system, the candidates are grilled longer, more directly, more pitilessly than anything I have seen on American television. In this case, these animated and sometimes vicious discussions went on for weeks without the most serious economic questions obviously (to me) facing the country being addressed at all. I mean, of course, a large and fast-rising debt burden and the failure to grow the economy. The attendant permanent high unemployment often came up but I think that no candidate bothered to mention that strong economic growth melts unemployment .

There were ten candidates in the first rounds, including one each from: the New Anticapitalist Party and Workers’ Struggle (Wikipedia’s translation). There was not a single seat at the feast occupied by a conventional conservative party, a Tory party. There was no “liberal” chair at the dinner in the English sense of the word that would prevail in France if the term were used at all. (See below.). If the role of the market in both producing innovation and correcting wrong turns was ever mentioned during the whole campaign (first and second round,) it left no impression on anyone. There were plenty of arguments and proposals concerning taxes. They were all couched in terms of “fairness.” None was about the fundamental fact that taxes, even low taxes limit the virtuous work of the market and therefore shackle economic growth (which has practically ceased to exist in France).

The French candidates also kept their eyes averted from, or dismissed summarily the example of Germany next door which successfully reformed its welfare state in a more market direction ten years earlier.

It’s not that there are no “conservatives ” in France. So-called “cultural conservatives” abound. Large segments of the population become exercised about the right of homosexual couples to adopt and even about host womb fertilization. The puerile excesses of the post-1968 strange, make-believe revolution alone would ensure the existence of such conservatism if it did not have deep roots in the country (see below). Sex hounds like Strauss-Khan have always existed in France but 1968 gave them permission to act openly and more or less brazenly, thereby exciting the Catholic minority’s ire and disgust.

The absence of liberal economic thought in France is the result of a historical accident, a major one to be sure. At the end of World War II, the segments of French political society who had taken an active part in the resistance again the Nazi occupation took over. Soon, they constituted nearly the whole of the political class. The two main segments were the Communist Party and a shifting alliance of “Gaullist” parties, with the Socialist Party playing the role of permanent opposition until 1981. The Communists – nominally Marxist though few of their leaders had read any Marx – were obviously not believers either in the efficacy or in the morality of market mechanisms. The fairly large Socialist Party was kept in a permanent state of primitive vulgar Marxism by the necessity in which it found itself to compete with the Communists for its electorate.

The political right was occupied by Gaullists with serious ties to the progressive wing of the Catholic Church. General De Gaulle himself – a venerated figure and a mediocre politician – was thoroughly influenced by the social doctrine of the Church. To summarize it – but not abusively, I believe – the social doctrine views the state in the guise of absolute Ancien Regime kings. Good kings are both fair and powerful. They use the state apparatus unhesitatingly to distribute both justice and charity as needed.

In the post-World War II re-distribution of power, there was thus no room left for non-statist, or for “little- statist” organized opinion. The socialist victory of Mitterand in 1981, followed by a Socialist majority in parliament swept away any remaining free-market voices. It was not done through persecution in violation of democratic rule but largely through a natural swamping motion. Soon, the effect of this Socialist victory were seen in both the major mass media and, especially in French schools at all levels. All arguments about the economy heard were statist arguments: How much government action, where, for how long, whom and what to tax more, by how much, how can the government create more jobs? (The latter is taken literally: The government actually “creates ” jobs, within itself, inside the government bureaucracy.)

After thirty years, statist schooling has done the expectable: There is almost never any mention in public discourse or in private conversation of this simple idea:

Things that need to get done get done mostly well, mostly efficiently if government does not interfere.

This basic idea was never debated and beaten back; it was simply buried. It does not exist in the French consciousness. The fact that the French public is rather inferior in its ability to read other languages – notably English – helps maintain its insularity in this respect as it does in others. (Incidentally, the insularity runs so deep that the French political elite is incapable of seeing the success of the relatively liberal policies of the UK next door even as educated French youth flocks there by its tens of thousands in search of employment.)

If the French had any notion of the sentence above, they would use the word “liberal” in its English meaning. In fact, the word is practically never used in public discourse or in private discourse. When it is, it’s always accompanied by the qualifier “ultra.” The French live in a strange mental world where there are some “ultra-liberals” but no liberals. “Ultra liberal” is clearly an insulting term. It means “heartless, selfish and extremist.” No decent person is an ” ultra-liberal.” I don’t believe I know three French people who would not interrupt me in the middle of the sentence above in casual conversation. “But you are not an ultra-liberal,” they would break in with worry written all over their faces. If I retorted, “Yes, I am” not one of them would believe me.

Failing to possess conceptual language has concrete consequences. Two stand out.

In the absence of adequate terms, it is difficult to legislate regulations for normal economic activities. Many are swept under the rug. The result is that legitimate economic activities may no be performed above board, lobbying, for one. Les lobbys (in French) are illegitimate by definition. Much of what they do is borderline illegal because there is no relevant legislation or because the relevant legislation prevents them from doing their work. Since economic interests have to manifest themselves in connection with the state anyway, there follows a systematic criminalization of political life. With many of their ranking politicians pronounced criminals, ordinary French people have become deeply disaffected with normal politics. The recent (exaggerated) success of the rightist Front National in European elections is one manifestation of this distaste.

More seriously, it’s difficult to reform a polity if there is no word to designate the new direction it should take. (You need a North to navigate.) There is widespread informal agreement in France that the French welfare state is not sustainable: In 2013, half of French households received government cash for a mean of $600 plus/ month. Thus, in a country with a GDP per capita of $37,000 maximum (World Bank, for 2013), half the households receive $7,200 to $7500 annually in the form of government re-distribution (Le Figaro on-line 6/6/14) . In a society where the sentence above may not be used, or used intelligibly, it’s very difficult to state the obvious:

“We need to allow the market to spawn economic growth. We need to do it, if for no other reason, to continue to afford our munificent social (welfare) coverage.”

Instead, the political class disparages itself and destroys its own legitimacy in futile proposals and counter-proposals to cut this rather than that social program, to raise or lower such and such least favorite tax.

In my opinion, the French welfare state will not slowly grind to a halt or fall slowly apart. Rather, I think, it will come to a sudden full-stop, sink into bankruptcy because no one who counts in France is able to mouth the liberal alternative.

*This is a weak translation. The French phrase: “juste retour des choses” implies a morally valid return to some sort of previous equilibrium.

** None of this means that I think credit rating agencies perfect. I am sorry there are only three big ones of them. I regret that they exercise what I call the “tyranny of the written and of the counted.” I mean that their summary judgments tends – in the nature of things – to become substitutes for more sophisticated evaluations. They encourage laziness on the part of bond buyers, including me. Also, they have not lost enough credibility from their bad judgments on the eve of the 2008 crisis.

My book, I Used to Be French: an Immature Autobiography, is live in the Kindle Store.

Liberalism Unrelinquished: Some Tactical Thoughts

Warren Gibson Current Events, History, Liberty, Philosophy, Politics , , , , , , ,

Today is #LiberalismDay. My friend Dan Klein of George Mason University along with his colleague Kevin Frei have launched a project called “Liberalism Unrelinquished.” An impressive list of economists and others have signed their petition which declares that they “affirm the original arc of liberalism, and the intention not to relinquish the term liberal to the trends, semantic and institutional, toward the governmentalization of social affairs.”

Other bloggers will presumably rehearse the tale of how that storied term lost its original meaning, at least in the U.S., as it has been appropriated, since at least the 1930’s, by statists.  (Example: George Leef’s fine piece). I just offer a few thoughts on some tactics that may be appropriate to this battle.

  • We must stop using the word liberal to denote present-day statists. This should be easy since they themselves have largely abandoned the term in favor of “progressives.” (Note that modern progressives hate progress of the material sort more than anything. That’s an issue for another time.) I have nothing better than “progressives” to denote these folks except perhaps a qualified “so-called progressives.” I hope “governmentalists” doesn’t get started. That would be too big a mouthful.
  • Speaking of which, there must be a better term than “governmentalization,” another mouthful. Perhaps just “government takeover” which is more forceful and easier to say.
  • “Liberalism unrelinquished” doesn’t exactly roll off the tongue either. How about “liberalism restored?”
  • Our task will often be easier if we say “classical liberal” rather than just liberal.
  • The term libertarian has entered the mainstream of U.S. politics. We should take advantage of this progress. We can use phrases like “the libertarian position, or as I like to call it, the classical liberal position …”
  • We must understand the price we pay when we call ourselves or our positions “liberal” or “classical liberal.” The price consists in the time and energy required to make clear to our audience what we mean when we use the term. Whether the price is worth paying depends on circumstances.
  • In academic writing, speaking, or debating there is usually sufficient time to preface our arguments by explanations. Attention spans are long enough that the price paid for explaining why we say “liberal” will not be significant.
  • The last place to take this fight would be political campaigns or debates. Attention spans are minute, audiences are unsophisticated, and we will just confuse people by using the term in its classical meaning prematurely. We can, however, try to disavow the tired old “liberal-conservative” spectrum that is currently entrenched in the media. “I’m aTime permitting, we could say classical liberal, and that means I agree with conservatives on some issues and with progressives on others. All my positions are grounded in the notion of liberty.”
  • In letters to the editor where every word counts we can say “libertarian (or classical liberal)” or the other way around.

I congratulate Dan and Kevin on the response they’ve gotten so far and I hope the momentum continues.

Karl Marx versus Thomas Piketty

Brandon Christensen Economics, History, Philosophy , , , , , ,

Both [Marx and Piketty] protest economic disparities, but move in opposite directions. Piketty advances into the domain of salaries, income and wealth; he wants to temper these extremes and give us—to alter the slogan of the ill-fated Prague Spring of 1968—capitalism with a human face. Marx advances into the domain of commodities, work, and alienation; he wants to undo these relations and give us a transformed society.

This is from UCLA historian Russell Jacoby in the New Republic. The rest of the article is not that great, to be honest (I’ll bet you ten bucks that Jacoby – whom I never took during my time in Westwood – is an old man; I can safely assume this because of the praise he lavishes upon Karl Marx at the expense of Piketty and other economists), but I thought this excerpt was a good opportunity to enhance my argument that Murray Rothbard was a great Cold War scholar and a terrible role model for the world we live in today.

Rothbard’s argument – exemplified by this excerpt that Adam provided in the ‘comments’ threads a while back – devastated the Marxist notions of the world held in the 1960s and 1970s, but Rothbard’s argument simply does not grapple with Piketty’s. It’s a whole new ball game, and one that newer scholars who have built upon Rothbard’s foundations are now grappling with. It does us no good to continue parroting a line of reasoning that has long since outlived its usefulness.

The Discovery Doctrine of Land Ownership

Fred Foldvary Economics, History, Religion , , , , , ,

The legal basis for land ownership in the Americas is “Christian Discovery.” This land doctrine derives from the 15th century theology of the Catholic Church. The moral origin of the Vatican’s land doctrine is its old claim of the supremacy of Christianity over all other religions. The “Christian discovery” doctrine is not in the US Constitution, yet it has been adopted by the US government and upheld by the courts.

“Bully’s Justice” by George Zebrowsky, an eye-opening article on Christian Discovery, was published in the June/July 2014 issues of Free Inquiry. Under Christian Discovery, the first Christians to “discover” land previously unknown to the Christian chiefs of state, and held by non-Christians, have a legally legitimate claim to that land. The indigenous and current dwellers have no legal property rights.

A court case in 2005 showed that the Christian Discovery doctrine is still in force. The Onondaga Indian (native American) nation in the State of New York sought federal-court recognition to title of ancestral lands. Also in 2005 the Oneida and Cayuga Indian nations had their land claims dismissed by the US Supreme Court. The Onondaga claim was dismissed in 2010 based on the 2005 Supreme Court decision.

The Supreme Court stated that “Under the doctrine of discovery,” the ownership of “lands occupied by Indians when the colonists arrived became vested in the sovereign, first the discovering European nation and later the original states and the United States.”

There are three moral justifications of land ownership. First is natural moral law, the universal ethic that is inherent in human nature and is a moral imperative for humanity. Second is tradition. Third is force. Natural moral law invalidates both tradition and force as moral rationales.

The laws of the United States derive from English common law, the US Constitution, natural moral law, and the Vatican’s doctrine of land discovery. The US Constitution recognizes the supremacy of natural moral law in its Ninth Amendment, and it also recognizes common law. The US Constitution does not recognize the legality of tradition, force, or the Christian Discovery doctrine, yet the US Supreme Court continues to adhere to Christian Discovery.

As stated in “Bully’s Justice” (p. 28), this Doctrine of Discovery is “one of the rare principles of American law that came not from English common law or from the pen of some Enlightenment philosopher but rather from the Vatican.” The US Supreme Court recognized the doctrine in Johnson v. M’Intosh in 1823 under Chief Justice John Marshall.

The doctrine of Christian Discovery originated in 1455 when Pope Nicholas V issued the papal bull Romanus Pontifex. Without any Biblical justification, this declaration justified the conquest of African lands by the king of Portugal. Pope Alexander VI extended the doctrine to the Spanish conquests in the Americas. The doctrine of Christian Discovery authorized European Christian explorers and their monarchs the rationale to claim lands not occupied by Christians. The doctrine deprived the indigenous inhabitants of any legal land rights.

As ultimate legal owner of the land, the state can then lease land to private tenants, and it can sell or transfer land titles to private persons, but such titles are always secondary to the state as senior and supreme owner, as the state can tax land, control its use, and forcibly buy back title with eminent domain.

The current Pope has expressed concern with global inequalities, but he has not gone to the core cause of inequality and poverty: privileged land tenure and the denial of labor’s self-ownership rights. The Catholic Church would have to confront its old doctrine on the conquest of land, and this is cannot do, and therefore popes must confine their concern about poverty and inequality to laments and exhortations. Now come economists such as Thomas Piketty calling for massive redistribution to treat the effects of income inequality, but refusing to acknowledge the origins and remedies in land and labor.

The Christian Discovery doctrine is based on supremacism, the belief that one’s religion, culture, and traditions are superior to those of others, justifying the use of force to maintain this supremacy. Such supremacy has been adopted by several religions, but this violates the human equality that is the basis of natural moral law and that has been recognized in declarations of human rights. Such constitutional cognitive dissonance does not seem to bother legal authorities.

If we seriously apply natural moral law to the question of land ownership, we need to confront both the false justifications of Christian Doctrine of Discovery and also the aboriginal land claims. As stated by John Locke in his Second Treatise of Government, human moral equality implies that one may fully own land only so long as there is free land of that quality available to others. When such land is scarce and has a price, the analysis of Henry George kicks in, that one may have possession conditional on paying the land rent to the members of the relevant community in equal shares.

Therefore the native American Indians may not take full ownership of their former lands. The land rent belongs not to them but to all humanity, or at least to all Americans. Also, the rental value of land due to civic improvements is a return on the capital goods, not the natural spacial resource.

Justice requires the abolition of the supremacist Doctrine of Discovery and its replacement with natural moral law. Some compensation and restoration of rights of possession are due to the aboriginal inhabitants, but history cannot be erased, and the current residents, users, and title holders, having followed the current rules, also deserve some consideration.

Economists and Environmentalists: Divergent Values?

Brandon Christensen Books, History , , , ,

Following Simon, the author of The Bet suggests that the disagreement between environmentalists and economists may be due to a divergence in values. People in Ehrlich’s camp believe that values can exist outside human minds and claim priority over human values. Although Sabin does not go there, the practical implication is that people in Ehrlich’s camp feel justified in imposing their ideal society on those who don’t share their values, which they disguise under the mantle of science. Hence the environmentalists’ inclination to boss people around.

This is from Pierre Lemieux’s new review of The Bet, a book on an infamous bet between an economist and a biologist in 1980 (the economist won).

One could easily replace ‘economist’ with ‘libertarian’ and ‘environmentalist’ with anything and could find the same debate being played out. This observation of mine, if correct, prompts a number of questions (such as “why aren’t all economists libertarians?” or “why are libertarians so pugnacious?”), but so does the loser of the bet’s reaction to his loss (you’ll have to read the review to find out!).

The Bet is by Yale historian Paul Sabin. Here is the link to his book.

Hume and Humboldt

Federico Sosa Valle History, Liberty , , , , , , , , ,

Divergent dichotomies are not unusual to be found in Hayek’s writings. Besides the essay “Two Types of Mind”, we have his 1945 lecture “Individualism: True and False” on the difference between the British Enlightenment and the Continental Rationalism. Grounded in Edmund Burke’s Appeal from the New to the Old Whigs, Hayek traces the origin of true individualism to Bernard Mandeville, David Hume, Josiah Tucker, Adam Ferguson, Adam Smith and Edmund Burke himself. The XIX Century adds Lord Acton and Alexis de Tocqueville to the list. On the other hand, Hayek states that Jean Jacques Rousseau exemplifies the Rationalist individualism, which postulates isolated and self-contained individuals –whereas, for the former, the individual is determined by his existence in society. The “true variant” of individualism is the notion of “subject” of Hume’s philosophy: the outcome of repetitions, expectancies and habits. Finally, Hayek concludes his lecture with the censure to the German type of individualism, rooted in Wolfgang v. Goethe and Wilhelm v. Humboldt: the individualism expressed in the original development of the personality and defended in J. S. Mill’s On Liberty.

Notwithstanding in this 1945 lecture Hayek claims that this German individualism of self-development has nothing to do with what he regards as true individualism and it is “an obstacle to the smooth working of an individualistic system,” much later, in Law, Legislation, and Liberty, he will restate his opinion on Wilhelm v. Humboldt’s legacy.

This reconsideration of the value of liberty as the development of the unique and particular character of an individual will be acknowledge not only regarding legal theory but as well in his 1976 proposal of denationalization of currency. In his late writings, Hayek will endorse the development of the originality of character as an important trait for the competition to work as a discovery process.

The key to understand his shift onto this new type of individualism is closely related to Hayek’s involvement into the ideas of cultural evolution. The “true individualism” was important to state how a society can achieve certain order. The “Humboldt’s individualism” is needed to explain the dynamic of the evolution of that order. Hume’s notion of subject is related to the ideas of integration and convergence, to how an order may emerge. Humboldt’s ideal of self-development of the unique and original character of each individual implies differentiation and divergence. These two traits are the key to the adaptation to the changes in the environment that defines the notion of blind evolution. A social and political system that assures the development of differences has keen aptitudes to survive to the changes in its environment. At the level of the “true individualism”, individuals are made of institutions, repetitions and expectancies. But at the level “Humboldt´s individualism”, successful institutions are made of differences, divergent series of facts and adaptation.

(Originally published in http://www.fgmsosavalle.blogspot.com)

#LiberalismDay: Calling all classical liberals and libertarians

Brandon Christensen Current Events, History ,

The following is a message I got from Warren via email:

Hello again! You were recently gracious enough to endorse Liberalism Unrelinquished, a project I’ve been working on with Dan Klein.

I wonder if you’d be willing to help keep the ball rolling by participating in related initiative, #LiberalismDay. Liberalism Day is an internet event aimed at amplifying a simple message: the word “liberal” used to mean something different than it does today.

To participate, all you have to do is write a blog post, tweet, or anything else on or around June 16th that contains the hashtag #LiberalismDay. (The hashtag is what ties everything together in search engines.)

You can add as much or as little nuance as you’d like. You can link to a favorite article (e.g. Milton Friedman’s essay “Liberalism, Old Style”), make a meme, write a blog, or even just tweet about the event to your audience.

From my vantage outside of academic circles, I’d guess that maybe 1% of the population has ever learned that the word “liberal” ever meant something else. I believe if we can boost that fraction a bit, it could spread organically. Merely knowing that 19th century liberalism was more akin to modern libertarianism will help correct a lot of false narratives, e.g. that Lincoln Republicans were really modern Democrats, or that libertarian ideas are a modern invention.

Again, all you have to do to help is plug the event with the hashtag #LiberalismDay and make a comment or share a link on liberalism. Our friend Mike Munger has already chimed in on his blog, and Richard Epstein has offered to rep it on his twitter feed, too. 🙂

Feel free to let me know by email or by leaving a comment on LiberalismDay.com if you plan to participate and I will add a link to your blog or website!

Thanks!

Kevin

Aside from Dr Gibson, I know that Dr Delacroix, Adam, myself and Dr van de Haar are going to be participating in this project on this blog. Any other bloggers out there thinking of doing this? It sounds pretty cool, and if there was any way to wrestle the term ‘liberal’ away from the American Left I’d be more than willing to do it. This may make a small impact in doing just that.

A Renegade History of the United States: a brief response

Rick Weber Books, History , ,

A while ago I finished reading (by audiobook) A Renegade History of the United States. The overarching theme of this entertaining and interesting book often seems to be: “look at these fucking squares!”

And that’s important, because the author points out their illiberal, short sighted, and irrational views, the reactionary nature of those views. But the author turns it into yet another A vs. B situation; a linear spectrum. There’s the “renegades” and the “squares.” I’m absolutely on board with the idea that there are establishment squares to be derided. But just because The Man is stupid, doesn’t mean he’s got a monopoly on it.

The positive message is that “renegades” are exemplars of freedom, and especially the freedom to be wrong. If you aren’t free to make mistakes, you aren’t free. And the point of freedom (besides the fact that freedom is excellent) is that it allows a dispersed approach to figuring out the good life. I’m increasingly doubtful that The Hitchhikers’ Guide was anything but correct when it posited that Earth is a computer set in motion to determine the question that matches the answer to “Life, The Universe, and Everything” (the answer is 42, the question is something besides “What is 6×7?”). This history shows a number of instances that show how breaking from the status quo, actively doing what everyone else is convinced is wrong, contributes to the overall flourishing and success of later generations.

All told, I’m happy giving it 4 stars.

Slavery and the footnotes

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

I came across this old essay on slavery by economist Gordon Tullock (h/t Tyler Cowen) and what struck me (aside from an excellent presentation of the economics of slavery) was this footnote on the inevitable dissolution of Marxism (this paper was written in 1967):

It may be that the dissolution is not the first step toward the total elimination of this powerful religion, but merely a breaking away of the talmudic encrustation of the true scribes and pharisees of the Second and Third Internationals. Such a development is not uncommon in the history of other religions. My personal opinion is that the disintegration which we now see is more fundamental, however, and I doubt that Marxism will survive the century as a living faith.

In my own experience in the classrooms of powerful and plebeian universities alike, Marxism has indeed disintegrated into virtually nothing. Marxism has, rather, become a sort of an embarrassing older uncle that professors chuckle about in a manner that is more reminiscing than bitter. They all realize that Marxism led to very bad things, but they are unable to acknowledge that capitalism – Marxism’s Other – has brought about peace and prosperity for untold billions.

It would be wise for us, therefore, to continue to focus on this dead religion. Deep-seated beliefs are hard to let go of, even after these beliefs have been shown – theoretically and empirically – to lead to horrors of the worst kind. “Yes,” the embarrassed former adherents grudgingly admit, “communism has failed miserably, but socialism has not. It has not even been tried, and besides, it is capitalism that is responsible for the world’s ills today.”

This is not obstinance. This is deceit, plain and simple.

So how do we go about combating obvious deceit (rather than the sophisticated theories of 20th century Marxists)?

I think the answer is to just debunk their examples on a case by case basis, in as public as a forum as you can muster. Famines in east and central Africa, for example, have often been attributed to capitalism because of the policies of the World Bank and IMF. Libertarians ought to agree with most of this, and then simply point out that the World Bank and the IMF are central planning agencies designed, created, and supported by governments in the West. Once this fact -which is not quite as simple as it appears – is acknowledged, you can go from there and take a public choice route, an Austrian route, or even a populist libertarian route to explain why capitalism is not responsible for famines.

Wars, genocides, ethnic cleansing campaigns, etc., can all be explained (and eliminated) if libertarians focus on the role of the State in all of these ills rather than on the theoretical or empirical weaknesses of socialist explanations and proposals.

Piketty’s numbers on inequality don’t add up

Brandon Christensen Books, Current Events, History, Politics , , , , ,

The Financial Times, a center-Left British publication, has the story here.

Piketty, an economist at France’s most prestigious business school, recently wrote an almost 600-page treatise on the growth of economic inequality in the West. The book has earned him lots of fame and has been discussed ad nauseum for about a month now.

Here is what I have found most interesting up to this point on the debate about inequality: The factions and their strategies regarding data and how it is interpreted. I think Dr Delacroix’s approach to the way data is interpreted is best, namely that the study design itself should be analyzed first and foremost.

Regarding factions, remember when that graduate student from the heavily neo-Keynesian UMass-Amherst found discrepancies in the work of Kenneth Rogoff and Carmen Reinhart on austerity in the West? The Left attacked savagely. The Right came up with excuses that would have earned an ‘F’ on most undergraduate tests.

Now that the Left’s own preferred conclusions have been borne out by bad data, what do you think is going to happen? Who wants to bet that the roles of Left and Right will be reversed? When Rogoff’s and Reinhart’s mistakes went public, the graduate student was invited to speak on televised talk and radio shows around the world. His work was (justifiably) hailed in the national and international press, and also (much less justifiably) as an answer to the deplorable state of the discipline of economics. What do you think the odds will be that the researchers responsible for finding flaws in Piketty’s data will get the same reception?

My money is on the answer “not good.”

All of this discussion about austerity and inequality is great, of course. The fact that researchers are expanding their findings to include more than just the data within their own countries is perhaps the most satisfying development in regards to epistemological human progress. I will await further developments to lay down my own verdict on the matter of inequality in the West. With the mistake of Rogoff and Reinhart, I decided, after carefully reading the merits and weaknesses of both sides of the debate, that their mistake was small enough to overlook and that austerity generally leads to better economic outcomes in the near- and long-term and that public debt is a drag on economic growth.

Depending on how the Left responds to its critics, I will see if economic inequality is indeed growing in the West.

Neoliberalism: When French philosophy thinks about American economics

Brandon Christensen Economics, History, Philosophy , , , ,

From an economic perspective, the vision of man becomes very, very poor. Man is a being who responds to stimuli from the environment, and we can modify his behavior with a choice of stimuli. And what government is, what power is, is the use of different kinds of stimuli. The economic theory gives a set of tools, a “good manner” to use stimuli to obtain the right comportment. In this respect, the result of the theory, perhaps, is to produce a vision of man that is very impoverished.

This is French philosopher François Ewald taking a moment away from his task of explaining Foucault’s thoughts on Gary Becker’s work to elaborate his own thoughts on the discipline of economics. Read the whole thing (pdf). It’s a short paper on Michel Foucault’s thoughts about American liberalism (or neoliberalism) and particularly Gary Becker’s work.

The Problem with Modern Monetary Theory

Fred Foldvary Economics, History, Liberty , , , , ,

“Modern Monetary Theory,” a doctrine about fiat money, has captured the attention of some reformers and progressives. This doctrine – a set of propositions contrary to logic and evidence – purports to explain why the US and other economies are ailing, but is beset by contradictions with the historic facts and within the doctrine.

For example, The New Inquiry on 11 April 2014 featured an article by Rebecca Rojer on “The World According to Modern Monetary Theory.” The author regards it as a revelation of MMT that the “rules of money are not immutable laws of nature.” Since the science of economics explains the effects of incentives and decisions, evidently these money “rules” are the outcomes of private and governmental decisions, and since the effects are not immutable laws, people can arbitrarily create whatever outcomes they wish. That would indeed be wonderful, to just print money are thereby eliminate unemployment, depressions, and poverty, all without creating price inflation, because the rules of money creation are not immutable, so we can have whatever outcome we wish!

Science is based on logic and evidence rather than “revelations.” It is possible that there have been revelations, but these create religion rather than science, since if an experience or experiment cannot be duplicated, the revelations are not sufficient for scientific warrants. Various religions have had different revelations, and the members do not believe the revelations of the others.

The author provides an example of the MMT doctrine. Suppose there is an island that has minerals. The owner of the mines hires workers and pays them with fiat money, like the paper and bank-account money we have today, i.e. money created out of nothing. But the owner also imposes a tax on the wages of the miners. So evidently this mine owner is a government, and we are not dealing with private enterprise, but a coercive socialist state. The miners work enough to both pay the wage tax and be able to survive.

But a premise of this MMT island example is that prior to the mining, the people were able to hunt and farm without working too hard. So why would anyone work in the mines? The historical explanation is the “enclosures” movement, in which land that was held by small-scale farmers or by villages was forcibly taken by the aristocracy or by the state or by foreign invaders. This is not a money story, but a land-grab story. Another way to get forced labor, other than chattel slavery, is to require the payment of taxes in money, which forces subsistence farmers to work on plantations at least long enough to pay the taxes. That is more a tax story than a money story, since if the government insists on being paid in coconuts, and a farmer does not grow coconuts, he must work on the coconut plantation, get paid in coconuts, and then pay the tax. Therefore the forced labor is based on the government’s restrictions on alternative employment opportunities.

MMT is correct in stating that one way that the government gets people to accept its fiat money is what economists call the “fiscal theory of money,” that the government reinforces its money as a medium of exchange by requiring the use of that money for paying taxes. However, if the government currency is being hyper-inflated, taxpayers would keep their savings in, say, gold, or a stable foreign currency, and then convert it to the fiat money only when a tax payment is due. The fiscal effect only works if the government is not creating too much inflation.

Therefore MMT is incorrect as stating, as a “core building block,” that forcing people to pay taxes with fiat money “gives it its value.” That was not the case, for example, in Zimbabwe, which suffered hyperinflation. One “immutable” economic law of money is that the creation of money, beyond what is needed for transactions, results in price inflation, and the payment of taxes becomes tied to that inflation, via the nominal rise of prices and wages, rather than preventing inflation.

A related fallacy of MMT is that “sovereigns” in general create money by “spending it into existence.” That can indeed happen, as for example in the Zimbabwe hyperinflation, but in the US and most countries today, government spending comes from taxes and borrowing, not money creation. The central bank, such as the Federal Reserve, does not create money by spending it for goods, but rather by buying bonds and then increasing the banks’ reserves or funds to pay for the bonds.

Since the “core” proposition of MMT, that price inflation can be controlled by government’s taxing and spending, is incorrect, the whole superstructure of the MMT doctrine built on it collapses. Actually, MMT does accept the proposition that monetary inflation creates price inflation, but that true proposition contradicts the core MMT premise that tax-paying gives money its value.

A worse MMT fallacy is that the taxes paid to the government destroys money. MMT tells us that governments create money when they spend, and then the money disappears when taxes are paid. But a tax no more destroys money than the dollars used to buy bread. The seller of bread now has the money, and the government now has the dollars paid in taxes, and they then spend that money.

There have been various theories and doctrines on money and banking in the history of economic thought, and in my judgment, the explanations that best fit the facts are a combination of the monetarist and the Austrian schools of thought. The monetarist core is the equation MV=PT, which explains that the quantity of money (M) multiplied by its annual velocity or turnover (V) equals the price level (P) multiplied by the amount of transactions (T) measured in money. Thus high price inflation, a rise in P, is usually caused by monetary inflation, an on-going increase in M.

The Austrian school explains how excessive monetary inflation not only cause price inflation, but distorts relative prices, such as when house purchase prices rise faster than rentals. Austrian theory shows how governmental central planning fails because the knowledge to do so well is always lacking, and that applies to money as well. Hence the Austrians propose free-market money and banking, so that the market sets interest rates and the money supply.

Indeed the Fed failed to prevent the Great Depression of the 1930s and the Great Recession of 2008, and its policies generated high inflation during the 1970s and the cheap credit that has fueled land-value bubbles. MMT cannot do any better, because, as the Austrian theory explains, the optimal money supply is not only not known, but not knowable. The pure free market provides the optimal money supply just as it provides the optimal amount of bread and the optimal amount of shoes.

“The Economic Origins of Territorial States”

Brandon Christensen History , , , , , , , ,

That’s the title for a paper by Scott Abramson in the Department of Politics at Princeton. Among the gems in this excellent paper:

[…[ before the French Revolution, before the era of the mass conscript army, wealth could not only purchase the technologies of violence, but also the manpower required to prosecute major wars. That is, rather than being an age when large states dominated militarily, this was a period where the population and natural resource advantages of territorial states provided little benefit in the production of violence. Leaders of states could, for a negotiated price, hire a Hessian colonel or an Italian condotierro and retain their men for a campaign season just as they could use these resources to purchase the most advanced technologies of coercion like siege artillery or rearms. It was by virtue of their economic capacity city-states like Genoa and Florence or groups of independent towns like the Swabian league could raise armies that matched or even exceeded those of territorial states like France or England

and

[…] the relationship between geographic scale and survival probability is the opposite of what war-making theories predict. Over this span small states were more likely to survive than their larger counterparts. In other words, rather than being an age of the territorial state” the period between 1500 and 1800 was one in which small political communities not only persisted but remained the typical form of political organization.

Read the rest of the paper here. So small territorial units dominated much of Europe during the initial phase of modernity and industrialization. What I’m trying to piece together is a way to incorporate the ability of small states to provide for themselves while at the same time maintaining ties with multiple neighbors in a way that binds them economically and politically, but without the coercive apparatus of a central government.

I think Madison was thinking about the same thing when he drafted the federal republic of the US, but it seems to me there is a right way to do federal republics (US) and a wrong way (Latin America). Does this make sense?