Inherited wealth and size of government

In the debate over inequality, I have long argued that governments are much better at creating inequality than at reducing them (see my paper here with Steve Horwitz). Through rent-seeking and regulatory capture, interest groups manage to redistribute wealth in the “wrong” direction. There are a great many cases of large fortunes amassed thanks to government favors (think of the Bombardier family in Canada or Carlos Slim in Mexico).

Yet, as many scholars have pointed out, large fortunes can be rapidly consumed by squabbling heirs and poor investments (see this paper here notably). Thus, the fortunes gathered by parents who earned government favors can melt away over time. Nonetheless, governments do protect the fortunes of the heirs if they continue in business. For example, the heirs of the Bombardier family in Canada continued their ancestor’s work and remained relatively well-off. This is in part because governments continue to rescue that firm from its misfortunes. In a way, government may act to limit the erosion of fortunes. We can phrase this differently by asking whether or not the size of government is correlated with the share of wealth from the “ultra-rich” that is gained through inheritance.

Using a working paper from the Peterson Institute for International Economics titled The Origins of the Superrich: The Billionaire Characteristics Database authored by Caroline Freund and Sarah Oliver and the Economic Freedom Index of the World produced by the Fraser Institute (released this week), we can check for the existence of this correlation. The paper by Freund and Oliver documents the share of the total wealth of billionaires that was earned through inheritance.

Unsurprisingly (for me), the lower the index for the size of government, the greater the share of wealth earned through inheritance. Using all OECD and European countries, we can very well see that the size of government is negatively correlated with the share of wealth from inheritance. untitled

Maybe, just maybe, those who believe that the solution to rising inequality is more government redistribution should be willing to reconsider their proposed cure. This is, I believe, an additional cause for skepticism regarding remedies.

Some afterthoughts on Rio Paralympics

Paralympics are over, and with them the cycle of Olympic Games in Rio de Janeiro. Once again the city was able to put up a good show, and thankfully all went well in the Cidade Maravilhosa. But not everything is alright in Rio: even more than the Olympics, the Paralympics were able to show the contradictions between the city where we live everyday and the city of the event: Rio is not welcoming for people with disabilities.

At least in Brazilian Portuguese, political correctness has done a mess with vocabulary concerning the kind of people who compete in Paralympics. We are not supposed to say they are disabled (don’t even think about saying they are crippled!). I think the correct vocabulary today is, as I used, “people with disabilities.” But even that is under political correct scrutiny, so it seems. All this discussion about words springs from cultural Marxism, postmodernism, relativism and the belief that there’s nothing objective beyond our vocabulary. But words can’t hide the reality: Rio is unequal. The way it treats the blind, the lame, and even the elderly or the young, is completely different from the way it treats people in middle-age and more able to walk. And all that despite strong legislation in this area.

One of the greatest debates in political philosophy in the 20th century happened between American philosophers John Rawls and Robert Nozick. Trying to build on classical liberal foundations (but moving to egalitarian liberalism), Rawls pointed out that “equality was supposed to be the moral benchmark for social and political institutions, and that any deviation from equality had to be specially justified.” Nozick answer was that liberty upsets patterns. Even if we have a starting point in society where we have a perfectly equal distribution of goods or assets, the moment that we allow people to be free to make their own choices (as liberalism prescribes) they are going to make choices we cannot possibly predict, and these choices are going to upset any kind of pattern we established in the first place. That happens because each one of us is unique in its own right: each one of us have a specific set of values, preferences and circumstances that upsets any would-be planner. So, if you want to respect human liberty to make choices, you have to give up on any plan for material equality.

Nozick’s answer to Rawls has a lot of Adam Smith in it. In The Theory of Moral Sentiments (1759) (preceding the more famous Wealth of Nations both in time and argument) Smith presented a character called “man of system.” This person sees society as an architect sees a blueprint for a construction. Smith says such person is “apt to be very wise in his own conceit; and is often so enamored with the supposed beauty of his ideal plan of government that he cannot suffer the smallest deviation from any part of it.” The problem is that humans have free will, the ability to make choices. And as such, they will upset any blueprint prepared for them. In other words, “individual people are not chess pieces you can move on a board with their dreams and desires ignored.” To the eyes of the would-be planner, “society must be at all times in the highest degree of disorder.”

So, material equality of outcomes (or at least of opportunities) is totally out of reach? Should we disregard it completely? Should the “invisible hand” prevail in spite of the weakest in our society? I don’t think so. Just the opposite! One of the very reasons I find classical liberalism morally appealing is the fact that no economic or political system ever conceived helps the weakest as it does. In other words, contrary to (what seems to me is) the popular belief, classical liberalism defends social justice more than any of its intellectuals alternatives. Answering John Rawls’s famous claim that “a just society will be one whose rules tend to work to the maximum advantage of the least well-off classes,” Friedrich Hayek pointed out exactly this. In The Constitution of Liberty, Hayek agreed with Rawls about the end at which social institutions should aim: the welfare of the least advantaged. He simply disagreed about the means Rawls thought would get us there.

Instead of thinking of us as chess pieces on a board, when can use the analogy of a soccer game (or football, or basketball – suit yourself). The outcome of the game is the result of the player’s individual abilities, but it is also the outcome of the rules. In other words, in a free society, where people are free to choose, the outcomes are not just the result of the innumerable decisions of countless individuals. They are also the result of the rules enforcing property rights, contracts, taxation, and so on. So, it’s important to think about the justice of these rules, as well as the outcomes they might have. The point is that we can embrace a theory of social justice, but that just tells us the end we are heading to, not the means to get there.

Contrary to egalitarians, progressivists and socialists claims, no theory “tends to work to the maximum advantage of the least well-off classes” as classical liberalism does. And that’s a great reason I support it. As I said in the beginning, Rio is very unequal, despite decades of egalitarian policies in the city and in Brazil as a whole. On the other hand, there’s plenty of evidence that classical liberal policies tend to help the very people others accuse it of ignoring. When it comes to doing social justice, it’s important to have not just the heart, but also the mind in the right place. And I believe classical liberal policies are this place.

References:
What’s Right about Social Justice?
Rawls and Nozick on Liberty & Equality
Adam Smith and the Follies of Central Planning
Fight of the Century

Trump for president?

I will vote for Gary Johnson knowing full well my vote doesn’t matter, since Hillary has a lock on California. But between Trump and Clinton, whom to root for? Trump is an empty suit with a filthy mouth. Clinton is pure evil, hell-bent on extinguishing what remains of our freedom and prosperity. Fascist dictatorship is her goal, draped in red-white-and-blue bunting. Will someone please write an update of the Sinclair Lewis novel, “It Can’t Happen Here”?

Forced to choose, I’d have to go with Trump. His election would be a much needed kick in the teeth to the Eastern establishment. We would have to hope he would listen to cool-headed advisors once in office. Or maybe get bored and resign.

But as I write, I remind myself that there is precious little any president can do, even Gary Johnson, to alter major trends that have so much momentum. You can recite the list as well as I can: government debt and unfunded liabilities, nuclear proliferation, race and class divisions, climate change hysteria to name a few.

To hell with them all. I’m going outside to enjoy the sunshine while I can.

Liberals and Conservatives should stop talking about guns

I’ve come across some great journalism on guns and gun control recently. Here’s the key points:

  • Most gun deaths are suicides. Many of these suicides would have happened were a gun not available, but many of them wouldn’t have.
  • Most gun homicides mostly affect young black men.
  • More guns does not equal less crime.
  • Gun accidents affect very few people.
  • Cost-benefit analysis would likely suggest improving safety other places would save more lives, given limited budgets. (e.g. changing attitudes on vaccinations)

A basic theme seems to be that government can do little on the margin to reduce gun deaths. Crime rates are uncorrelated with number of guns, or regulations in place. Upright citizens do not turn into Rambo when they see dastardly criminals mug little old ladies. Guns are actually sort of boring in practice.

It’s possible that the government could affect gun deaths with a comprehensive gun control policy backed by public opinion (the Australian option). But it would likely cost so much that you’d lose the budget and/or political capital to enact other reforms that would be less controversial and save more lives.

MrPB-prince-Cordova-one-of-amendments.png
We don’t torture people in America, Todd. That’s called one of the amendments.

What about the second amendment? The real argument for the second amendment is that having armed Americans around is pretty practical in general, but also important to prevent tyranny. In practice, guns aren’t half as practical, in terms of personal or national defense as back then. The capability of America’s military is so extraordinary that American’s don’t stand a chance of fighting a corrupt American government.

Let’s acknowledge that the Bill of Rights, though surely important, is ultimately a piece of paper that is neither sacrosanct nor a practical guarantee of anything in particular. The founders were brilliant, but fallible. The constitution is frequently ignored by governments, and citizens often do little to discipline such governments. Second amendment advocacy is mostly a symbolic gesture that probably comes at the expense of using political capital to protect the fourth amendment (the one that should protect you when the government decides to take your guns, cold dead fingers or no).

Conclusion

There are weak arguments to made in favor of gun control and weak arguments to be made in favor of protecting the second amendment. But mostly this whole debate seems like a distraction from more important issues. Symbolically valuable? Sure, but at what cost? The cost is the political will to make a bigger difference somewhere else. There are more valuable freedoms to protect, better interventions to pursue, and more lives to be saved.

O que é capitalismo?

O Brasil é capitalista? O capitalismo é culpado por vários problemas que observamos no Brasil? E outros países? A China é hoje um país de economia capitalista, ainda que com política socialista (ou comunista)? O capitalismo prejudica os mais pobres enquanto beneficia os mais ricos? Estas são algumas questões com as quais me esbarro regularmente. Algumas pessoas mais sofisticadas observam que não há apenas um capitalismo, mas vários: o capitalismo brasileiro é diferente do sueco, que é diferente do japonês, que é diferente do norte-americano, e assim por diante. Vejo alguma pertinência nesta observação, mas penso que ela ainda deixa de lado a questão mais básica e fundamental: o que é capitalismo?

Suponho que sem recorrer a qualquer fonte podemos concluir que capitalismo é algo relacionado a capital. Segundo o Palgrave Macmillan Dictionary of Political Thought, de Roger Scruton, “o capitalismo é um arranjo econômico, definido pela existência predominante de capital e trabalho assalariado”. De acordo com esta definição, no capitalismo alguns ganham salários e outros ganham lucros. Capital por sua vez é definido como “os meios de produção produzidos, ou seja, commodities que foram produzidas e que por sua vez podem ser empregadas na produção de outras commodities”. Em outras palavras: capital são recursos que são empregados na produção de mais recursos. Capitalismo é um sistema econômico (e não predominantemente político ou social ou cultural) que gira em torna da alocação destes recursos.

Partindo de uma forma de pensar semelhante, Milton Friedman observou que todos os países são capitalistas. Os EUA são capitalistas. A China é capitalista. A URSS é capitalista (Friedman estava fazendo esta observação ainda no período da Guerra Fria). Não há país (ou sociedade) onde não haja capital e onde não ocorram decisões sobre como alocar o capital. Há bastante tempo Max Weber fez uma observação semelhante, afirmando que alguma forma de capitalismo esteve presente em todas as civilizações, com a diferença que mais recentemente o Ocidente produziu um capitalismo moderno, com características peculiares. Mas voltando para Friedman: todos os países são capitalistas. A questão é: quem controla o capital?

A pergunta de Friedman lembra uma observação de Friedrich Hayek: durante o período da Guerra Fria era comum afirmar que a economia da URSS era planejada, enquanto que a economia dos EUA não era. Mas esta afirmação está errada: ambas economias eram planejadas. A da URSS por um pequeno grupo de pessoas em Moscou; a dos EUA por milhões de indivíduos espalhados pelo país. O ponto de Hayek é que uma economia necessariamente envolverá decisões sobre como alocar capital (ou recursos). A questão é: quem tomará estas decisões? Um grupo de governantes num comitê centralizado, em nome de toda a população? Ou a própria população, numa esfera mais modesta, dentro de suas próprias vidas?

Adam Smith é popularmente considerado o pai do capitalismo (e também da Economia como disciplina acadêmica, além do liberalismo econômico. Adam Smith teve muitos filhos). Curiosamente, Smith não usou o nome capitalismo em seus escritos (este nome seria cunhado mais tarde por marxistas – o próprio Marx também não usou este nome, ao menos não regularmente), mas falava sobre sociedade de mercado. A observação de Smith era que em tempos recentes mais pessoas estavam se tornando mercadores. Em tempos antigos (sobretudo na Antiguidade Clássica de Grécia e Roma) as relações econômicas eram dominadas por donos de terras e escravos. Havia mercadores (ou comerciantes), mas estes ocupavam um espaço menor na sociedade (e também eram vistos com desconfiança por não produzirem nada – apenas trocarem o que outros produziram). Na Inglaterra do final do século 18 mais pessoas eram comerciantes, isto é, trocavam alguma coisa, ainda que “alguma coisa” fosse sua força de trabalho em troca de salários. Neste sentido, Smith não inventou o capitalismo moderno: apenas observou e descreveu seu nascimento – além de suas vantagens diante de outros arranjos econômicos.

Partindo de Adam Smith e chegando a Friedman e Hayek, podemos observar quatro elementos fundamentais do capitalismo moderno (ou do liberalismo econômico, ou as sociedade de mercado, ou do livre mercado): escolha pessoal; trocas voluntárias; liberdade para competir em mercados; direito de propriedade privada. A escolha pessoal se refere às decisões individuais que se toma a respeito dos recursos individuais (devo sair para trabalhar hoje? Ou devo ficar em casa?). Trocas voluntárias se refere ao fato de que posso livremente trocar meus recursos com outra pessoa que queira fazer o mesmo (havendo uma coincidência de vontades). Liberdade para competir significa que posso oferecer meus serviços (ou produtos, ou talentos) e aguardar que haja interessados. Propriedade privada se opõe a propriedade coletiva ou comunal, geralmente sob controle do estado.

Uma forma mais direta de sistematizar a teoria de Smith (e neste ponto de Friedman e Hayek) é dizer que no livre mercado a propriedade é privada (e não coletiva ou comunal) e o trabalho e assalariado (e não escravo). Mais simples ainda, o livre mercado opera pela máxima de “não faça aos outros o que você não gostaria que fizessem com você”, ou “não mexa com quem está quieto”. No livre mercado os indivíduos são livres para fazer trocas voluntariamente com outros indivíduos – que queiram voluntariamente fazer estas trocas, havendo coincidência de vontades.

Há muitos economistas que consideram que a sociedade de mercado é mais um tipo ideal do que uma realidade. Alguns países estão mais próximos desta ideal do que outros, e neste sentido é válida a observação de que há variedades de capitalismo. O capitalismo praticado no Brasil (ou na China) não é (nunca foi e nunca chegou perto de ser) o capitalismo liberal descrito ou almejado por Smith, Friedman e Hayek. O capitalismo praticado nos EUA está mais próximo disso, embora esteja num franco afastamento deste ideal há várias décadas.

Saber o que é capitalismo é um primeiro passo para sabermos se este é um modelo que desejamos ou não. Pretendo nos próximos posts continuar este assunto. Por ora, digo apenas que quando falo a respeito de capitalismo estou pensando na sociedade de mercado descrita ou almejada pela tradição liberal. Caso o que temos no Brasil seja capitalismo, certamente não é este capitalismo que defendo.

Pornography, virtual reality and censorship [II]: puritanism and videogames

[Continuing from my last post, noting that feminists have not behaved monolithically toward pornography, and statistics have not provided any justifiable inference from violent pornography to violent crime.]

Most feminists would align, however, in a condemnation of violent pornography, even if they do not attempt to use legal coercion to restrict it. It has been particularly controversial when material becomes first-person, or even playable. And thus pornography, and violent pornography, often makes an intersection with the videogame industry. To name one infamous example, RapeLay, a role-playing game from a company in Yokohama, Japan, allows the player to assault a defenseless mother and her two children. Some critics argued that the videogame breached the Convention on the Elimination of All Forms of Discrimination Against Women, agreed to by the United Nations.

New York City Council speaker Christine Quinn called RapeLay a “rape simulator.” Commenting on the game and other controversies, an IGN journalist added: “For many, videogames are nothing but simulators. They are literal replications, and, as such, should be cause for the same kind of alarm the real life equivalents would inspire.” Is this the same motive for consumers though – that of, essentially, practice? On the piratebay download link for RapeLay, a top commenter “slask777” writes: “I highly approve of this for two reasons, [sic] the first is that it’s a slap in the face of every prude and alarmist idiot out there and second, it’s a healthy outlet for the rape fantasy, which is more common than most people believe.”

I suspect that much of the appreciation for videogames is due to their simplicity, to be eventually supplemented by mild and mostly innocent addiction. Then – not to put too much faith in slask777’s psychological credentials – I suspect as well that violent videogames serve a “channeling” function, allowing some instinctual energies to exert themselves in a harmless environment and release some psychological tension. Perhaps the “rape fantasy” is not shared by the majority of the populace, but judging by the comments on the torrent site, the audience for this game cannot be confined to stereotypical images of basement N.E.E.Ts. (Studies of the occupations of internet trolls confirm as well the difficulty of pinning down an image for anonymous internet users). There was even an informative, civil discussion of reproductive anatomy on page one of the torrent site. Following this theory of channeling, we might find similar uses for virtual realities: nonreal locations to perform socially unacceptable acts. Locations for people with genuine sexual or sadistic pathologies, to release their desires and blow off steam without harming other people. The entire premise is empathetic.

Of course, throughout history, any activity which has the possibly of harmlessly releasing what could be described as primordial man, the “reptilian” side, the repressed id, or whatnot, has faced violent opposition from culture, religion, criminal law and various romantic-familial-social apparatuses. Here, we can already expect that, fitting into the category of “recreational and individuational,” virtual reality technologies will face a cultural blowback. RapeLay is an extreme example of both violence and sexuality in videogames: the high-profile protest it received could be expected. (Pornography has even been to the Supreme Court a few times (1957, ’64, ’89). In a separate case, Justice Alito, commenting on RapeLay, wrote that it “appears that there is no antisocial theme too base for some in the videogame industry to exploit.”) This moral outrage, however, is not simply content-based, but medium-based, and flows directly from the extant condescension and distrust toward videogames and pornography.

The simple fact that disparate ideological camps agree on, and compatible groups disagree on, the effects and what to do about pornography and videogames could be seen as demonstrative of the issue’s complexity; in fact, this implies that the nature of opinion on this is fundamental and dogmatic. The opinion provides the starting point for selectively filtering research. There are two logical theories concerning these violent media: the desensitization argument, and the cathartic/channeling argument. Puritans and rebels enter the debate with their argumentative powers already assigned, and the evidence becomes less important.

Before evidence that might contradict either primitive position on pornography interferes, many people have already formed their condescension and distrust. The desensitization theory is particularly attractive due on the most publicly-understood thesis of cognitive-behavioral psychology: mental conditioning. Thus when violence or abusive language is used as a male advance in adult videos and games, and women are depicted as acquiescing rather than fighting back, boys must internalize this as reality. Of course, media itself has no interest in depicting legitimate representations of reality; it is inherently irreal, and it would be naïve to expect pornography directors to operate differently. This irreality I think is poorly understood, and thus the “replicator” argument as adopted by the IGN reporter becomes the most common sentiment for people that find pornography affronting to their morals and are also disinterested in research or empirical data. Glenn Beck, commenting on the release of Grand Theft Auto IV, said “there is no distinction between reality and a game anymore.”* He went on to say that promiscuity is at an all-time high, especially with high school students, when the number of sexual partners for young people is at a generational low. The seemingly a priori nature of a negative pornographic effect allows woefully out-of-touch rhetoric to dominate the conversation, appealing also to the emotional repulsion we may experience when considering violent porn. It encourages a simplifying effect to the debate as well. Again, were it simply true that nations with heavy pornography traffic face more frequent sexual violence (as a result of psychological conditioning, etc.), we would expect countries like Japan to be facing an epidemic – especially given the infamous content of Japanese porn (spread across online pornography, role-playing games and manga). Yet, among industrialized nations, Japan has a relatively low rape frequency. The rape ratio of a nation cannot be guessed simply from the size or content of its pornography industry.

Across the board, the verdict is simply still out, as most criminologists, sociologists and psychologists agree. There are innumerable religious and secular institutions committed to proving the evils of pornography, but contrasting them are studies that demonstrate that, alongside the arrival of internet porn, (1) sexual irresponsibility has declined, (2) teen sex has declined (with millennials having less sex than any other group), (3) divorce has declined, and – contrary to all the hysteria, contrary to all the hubbub – (4) violent crime and particularly rape has declined. Even with these statistics, and of course compelling arguments might be made against any and all research projects (one such counterargument is here), violent efforts are made to enforce legal restrictions – that is something that will probably persist indefinitely.

I first became interested in debating pornography with the explosion of “Porn Kills Love” merchandise that became popular half a decade ago. The evidence has never aligned itself with either side; if anything, to this day it points very positively toward a full acquittal. Yet, young and old alike champion the causticity of pornography toward “society,” the family, women, children, and love itself (even as marriage therapists unanimously recommend pornography for marriage problems). Religion has an intrinsic interest in prohibiting pleasurable Earthly activities, but the ostensible puritanism of these opposing opinions is not present in any religiously-identifiable way for a great number of the hooplaers. So an atheistic condemnation of pornography goes unexplained. One might suppose that, lacking the ability to get pleasure (out of disbelief) from a figure-headed faith (which sparks some of the indignation behind New Atheism), people move to destroy others’ opportunities for pleasure out of egalitarianism, and this amounts to similar levels of spiritual zeal. Traces of sexist paternalism are to be found as well, e.g. “it’s immoral to watch a woman sell her body for money,” and through these slogans Willis’ accusation of moral authoritarianism becomes evident. Thus the attitudes which have always striven to tighten the lid on freedom and individual spirituality – puritanism, paternalism, misogyny, envy, etc. – align magnificently with opposing pornography, soft-core or otherwise.

*I try to avoid discussion of GamerGate or anti-GG, but it is almost impossible when discussing videogames and lunatics. Recently, commenting on Deus Ex‘ options for gameplay, which allow the player to make decisions for themselves, Jonathan McIntosh described all games as expressing political statements, and that the option should not even be given to the player to make moral decisions about murder, etc. It’s immoral that there is a choice to kill, was his conclusion. He’s right about all games expressing political statements. But he’s a fucking idiot for his latter statement.

[In my next post I’ll conclude with an investigation into the importance of virtual reality technology and the effect it will have on society.]