North Korea at the North Sea?

Yesterday, both Houses of Dutch Parliament jointly opened the parliamentary year, which is always held on the third Tuesday in September, and is known as “Budget Day.” Normally, there is not much pomp and glory in the Low Lands, but on “Little Princes Day” (as the day is literally called), we go all-out: the King and Queen are driven in a horse-pulled carriage to the Hall of Knights, the oldest part of the parliamentary buildings (built around 1250), surrounded by military troops in full ceremonial dress. The King reads his speech (actually written by and under full political responsibility of the Prime Minister and cabinet) from a huge throne, announcing the government’s plans for the next year. Male ministers in morning coats, ladies in dresses and hats, with the powerful elites also assembled.

king and queen
King Willem-Alexander and Queen Maxima entering the Hall of Knights (source)

After the reading, the Royal couple make their way back to one of their palaces in the centre of The Hague, returning once to greet the masses from the balcony.

Meanwhile, the Minister of Finance officially presents the 2018 budget to the Lower House. The separate budgets of all departments are laws, which will have to pass both Houses before 31 December. This process is normally preceded by a two day debate on “the general state of the country,” but this year it is skipped because there is only a caretaker government in office. It awaits the finalization of negotiations for a new government, which started right after the elections on 15 March. Still no government is formed, although it is widely expected that a four-party coalition will be presented within a few weeks, consisting of small Christian left wingers, centre Christian Democrats, and two social liberal parties, D66, and Prime Minister Mark Rutte’s VVD.

Although much improved since the low point of the Great Recession, around 2011-2012, the public finances are still shocking from a classical liberal perspective. The income of the national government is 285 billion Euro (around 338.5 billion USD), which is 43% of GDP.

It consists mainly of several mandatory insurance premiums for collective arrangements (112.2 billion Euro), income tax (55.4 billion; the highest bracket of 51.5% tax applies to all personal income over 68.507 Euro), and VAT (52.8 billion). The rest are mainly specific taxes, related to companies, the environment, excises, dividends, et cetera. In 2011, the public share of GDP was still 47%, while in the 1980s it reached peaks of around 60%. Not exactly anywhere near an ideal liberal situation, no matter what liberal persuasion you are. Personally, I would argue that 25% should be the max for a decent set of state tasks, but I am sure that makes me some weird Northern European commie in some American libertarian eyes!

The situation is even more dire if we see where that money is spent. Health care (80.4 billion euro) and social security (79 billion) are always in competition as the largest spending departments. So that is 56% of the budget already and both increase annually, no matter the economic circumstances. The third post is public education (35.4 billion), followed by funds for provinces and municipalities (24.4 billion), foreign affairs and foreign aid (12), police and judiciary (10.3), defense (8.4), and infrastructure and environment (also 8.4), with the other departments taking parts of the rest. Despite a very rare expected budgetary surplus of 7.8 billion in 2018, the national debt is still 53.7% of GDP. Perhaps not bad in international comparison, still not good for any liberal.

These numbers are only part of the story, because there are also numerous local taxes, and the number of liberty-inhibiting regulations, from European, national, provincial and local origin are staggering. There is not one really free market, and there are hardly parts of individual life not regulated or influenced by the state. A comparison with North Korea is of course still far-fetched, yet socialism is alive and kicking on the North Sea shores.

In my view it is evidence of the remarkable power of capitalism that The Netherlands is still one of the richest countries on earth, a global top 15 economy (GDP per capita), with only 17 million inhabitants. No matter how hard you curb it, the capitalist system still delivers amazing results. Of course, the opportunity costs of the Dutch regulatory state are very high. In terms of personal liberty there are not many better places on the planet. Yet in other fields it is a different story. Economic freedom is a mess, which means that the material aspects of personal freedom are seriously restricted. Yet the worst is the mentality. Sadly, most Dutch have traveled the whole Hayekian Road to Serfdom, making a shift to classical liberalism highly unlikely.

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Deontology and consequentialism, again

Christopher Freiman, associate professor in philosophy at William and Mary and writer at Bleeding Heart Libertarians, identifies as both a libertarian and utilitarian. Since my first real introduction to libertarianism was Harvard theorist Robert Nozick, I originally envisioned the philosophy as a rights-based, and thereby in some sense deontological, political theory, with like-minded economists and political scientists arguing for its merits in terms of material conditions (its consequences). In university philosophy courses, “libertarianism” means self-ownership and property rights, often through Nozick’s analytic approach. Consequentialism looked more like a top-down approach on how to live, one that doesn’t necessarily suggest any political theory, or does so only ambiguously.

In living by a deontological ethics, considerations about the consequences of an action will almost inevitably come into play, especially when pressed with more extraordinary cases. (Brandon has pointed out their ostensible — I think it only that — compatibility.) The right of an individual to not be violently attacked, for example, seems trumped in the face of the alternative immediate destruction of every other human being. I don’t think this is a great method for deducing practical principles, however. Although considering extreme cases might be entertaining and enlightening as to the durability of a thesis, their pragmatic import is typically negligible.

However, in considering their philosophical compatibility, libertarianism and utilitarianism feel at odds, and not over extreme counterexamples. Let’s look at a few low-hanging fruits. Suppose the National Security Agency had advanced knowledge that someone was planning to attack a nightclub in Orlando a few weeks prior to June 12, 2016. Private security would have increased, several clubs would have shut down. Were the threat classified as serious enough, state government might debate the Constitutionality of entering peoples’ homes and forcefully taking firearms; they might do this and succeed. Any further firearm sales would also be prohibited. This is an awful lot of state power and intrusion. However, fifty lives are plausibly saved, including Omar Mateen, and the lives of their family and friends are not devastated. Using a hedonistic calculus, these efforts look justified. Now, ignoring the NSA’s incompetency, suppose that our security agencies predicted the hijackings several months before September 11, about sixteen years ago to this day. In a utilitarian model, would the choice to prevent any civilian boarding for so many days, in order to prevent tragedy, be the correct one? In essence, is the partial nuisance to a substantial number of people overridden by the imperative to save 2,996 lives? Certainly — through utilitarianism — yes: the government ought to intervene and shut down air travel. In fact, the state determined it had a compelling interest immediately after the attacks and did this very thing, balancing national security over civil liberties.

Utilitarianism and liberal positions also challenge each other aggressively on issues like gun rights. In theory, were it possible to completely remove firearms from the states, there would be a gain in utility for the lives saved that would otherwise be lost to gun violence accidental or otherwise. Many people suffering nuisance (e.g. loss of pleasure from visiting the shooting range and insecurity about home invasion) is less consequential than the saving of lives.

And what of abortion? I align with reproductive rights, like plenty but not nearly all libertarians. Is choice, here, compatible with utilitarianism? All the additional children, bringing their own default happiness (cf. David Benatar for a counterargument), might be a utility bomb large enough to warrant invasive pro-life measures under utilitarianism, regardless of first, second or third trimester.

There are surely historical arguments that protest awarding the consequentialist victory so easily to the side of authoritarianism. For example, a nation equipped with the administrative power to invade private citizens’ homes and families, or cancel intranational travel or immigration, is probably not the nation which, in the long run, leads to the most utility or happiness. Nationhood aside, if all firearms were removed from society, this too might not be that which leads to the greatest net utility: maybe home invasion becomes epidemic; maybe rural areas that capitalize on hunting fall into unforeseen economic concerns; maybe the sheer quantity of the nuisance outweighs the beneficial effect of confiscation. The consequences of most of these issues are empirical and fall to historical argument. However, at least to me, utilitarianism seems incompatible with a variety of rights-based libertarian commitments, and thus deontological considerations become essential.

Here is another challenge to utilitarianism in general, and particularly Bentham’s project of a utilitarian legal system: discovering utils, or quantifying how much utility is connected to any action, is difficult. (And, since it has been, in all instantations, attached to government policy — not cooperation among peoples — it suffers from planning concerns on an even more detrimental scale.) The calculation is even more challenging when considering “short” versus “long term” effects. In the cases of Patriot Act-style defense, gun control (were it possible), and abortion, large-scale government intervention is, prima facie, justified by utilitarianism; yet over time, it may become evident that these choices result in overall poorer consequences. How much time do we wait to decide if it was the utilitarian decision? — And in the episodes of history, did any of those scenarios play out long enough to give a definitive “long term” case study? Swapping classical for “rule ulitarianism” doesn’t remove this epistemic barrier. There isn’t a non-arbitrary rule that determines how many moments into the future one must wait before judging the utility-consequence of any action, for those actions where we cannot pinpoint the closed-system end of the casual chain. Another related concern is that utilitarian judgments take on society as a whole, with little room for specific circumstances and idiosyncracies. This is why it strikes me as viciously top-down.

Thus the two philosophies, one etho-political and one entirely ethical, appear to conflict on several important considerations. (Most of the principles of the Libertarian Party, to name one platform, are not utilitarian.) Lengthy historical arguments become necessary to challenge the compelling nature of particular hypotheticals. J. S. Mill, whose utilitarian work inspired much of the classical liberal tradition, was, at the end of the day, a consequentialist; however, his harm principle from On Liberty is definitively rights-based, and this principle is at the core of his libertarian import, along with his anti-paternalism as espoused by people like Freiman. Freiman acknowledges some of the criticisms of utilitarianism, being (I think) a Millian and a libertarian, including one of its most prominent objections from those concerned with individual liberty: the separateness of persons, as offered from critics like Rawls. His response to this problem is essentially the one that falls to historical argument: “While it is possible for utilitarianism to recommend organ harvesting, hospitals that expropriate organs would not contribute to a happy and peaceful society in the real world.” This empirical conjecture leaves the realm of philosophy for us.

The inconsistencies promulgated by Mill — from his political philosophy, namely in On Liberty (1859), and his ethical philosophy, namely in Utilitarianism (1863) — may be why both consequentialist and deontologist libertarians can find support in his writings. Combinations like these are no doubt why Brandon finds the two compatible.

I don’t find them compatible, though utilitarianism as it was understood before Rawls may be the worse of the two (although rhetorically more effective). The modern father of deontology, Immanuel Kant, rejected the consequentialist ethos in his call to “treat people as ends, not means.” Utilitarianism, as broadly understood, has every reason to produce an omnipotent authority figure that will approve any gamut of regulatory and coercive policies if it seems to benefit the greatest interest of the majority. The “seems to” part is the only part that matters, since plans have to be acted on the basis of best knowledge; and I would maintain that estimating utils is never certain, being an empirical question made especially blurry by historical confusion. Brandon gave the example of the Great Leap Forward as an instance where we see utmost disregard for human sanctity in the sake of majoritarian or nationalist or “best interest” considerations.

Yet Kant can be interpretated as no less controlling. Deontology, from deos “duty,” is the study of what is morally permissible or obligatory, and to this natural rights is just one possible derivative. He is taken to be a natural rights theorist, and there is a separateness of persons explicit in his ethics absent from Bentham and Mills’ greatest happiness principle. But although Kant’s metaphysics of morals has persons, and not majorities, his Protestant upbringing shines through in his conservative views on sexuality and otherwise non-political behavior.

In a comment on Freiman’s post, Matt Zwolinksi objects to his assertion that utilitarianism is opposed to the interference of government in private, consenting interactions between adults (for some of the reasons mentioned above, and I agree). Zwolinski says, on the other hand, that Kant was strongly anti-paternalist. I doubt this. Immanuel Kant wrote criticisms of casual sex — each party is self-interested, and not concerned about the innate dignity of the other — and, like other Enlightenment philosophers, advanced that true freedom is something other than acting how one wishes within the bounds of others’ rights (true freedom is, in fact, acting according to how Kant wants you to act). It’s not exactly clear if his traditionalist positions on personal morality follow from his categorical imperative, but his duty ethics in isolation prohibits many activities we would take to be personal freedoms regardless. Kant might have opposed forms of government paternalism, but his entire ethical philosophy is paternalistic by itself.

For example, what would a Kantian say about a proposal to legalize prostitution? When someone pays another for sexual favors, the former is definitely not considering the latter’s innate dignity. The person who sells their body is treated as means to an end and not an end in themselves. Presumably, since Kant thought the state has a role in regulating other behavior, he would be against this policy change. This is confusing, though, because in most trades people use each other as means and not ends. The sexual transaction is analogous enough to any sort of trade between persons, in which we consider each other in terms of our own immediate benefit and not inherent humanity. When I purchase a Gatorade from a gas station, I am using the cashier as the means to acquire a beverage. Kantian deontologists could, the same as the utilitarians, call to organize all the minutiae of personal life to coordinate with the ideals of one man from Königsberg.

Meanwhile, what does the classical utilitarian say about legalizing prostitution? We only have to weigh the utility gained and lost. First of all, it helps the customers, who no longer have to enter the seedy black market to buy a one-night stand. Next, it helps the workers, who in a regulated marketplace are treated better and are less likely to receive abuse from off-the-radar pimps. There would likely be a dip in human trafficking, which would raise the utility of would-be kidnapees. In addition, it creates new jobs for the poor. If you are in poverty, it automatically benefits you if a new way to create income is opened up and legally protected. Further, with legalization there would be less stigmatization, and so all involved parties benefit from the mitigated social ostracization too. The disutility is minor, and comes from the pimps (who lose much of their workforce), abusive tricks who get away with physical violence as long as prostitution is underground, and the slight increase in moral disgust from involved sexual prudes around the globe. So, it seems safe to award the legalization case to Bentham and Mill, and indeed decriminalizing prostitution is the right thing to do. (Although we see another fault. Since all humans are equal, their utility too is considered equally: the utility of “bad men” is worth as must as the utility of “good men,” there being no meta-util standard of good.)

In this situation, utilitarianism helps the libertarian cause of individual freedom and self-determination; in others, duty based ethics are a closer bet. Natural rights perspectives, from Cicero and Aquinas to Nozick and Rothbard, on average satisfy more of the conditions which we find essential to libertarian concerns, especially when the emphasis is on the individual. That said, Kant is a deontologist and not necessarily a freedom-lover. Neither utilitarianism nor Kantian deontology point obviously to libertarianism. The moral psychology research of Jonathan Haidt gives us reason to surmise that it’s mostly “left-libertarians” that think in terms of consequences, and “right-libertarians” that stick to natural rights or deontologic premises. I think, regardless of which theory is more correct, they both capture our ethical intuitions in different ways at different times — and this without even considering other popular theories, like Aristotle’s virtue ethics, Rawlsian justice as fairness, loyalty ethics or Gilligan’s ethics of care.*

I like a lot of Christopher Freiman’s writing on Rawls and basic income. However, I find utilitarianism has to submit to empirical inquiry a little too often to answer fundamental questions, and in its ambiguity often points to policy that disrespects the atomic individual in favor of a bloated government. I don’t think utilitarianism or deontology à la Kant are the bedrock of libertarian principles, but ultimately natural rights is the most non-incorrect position and groups together most cohesively the wide range of positions within libertarianism.

* Gilligan’s ethics of care is terrible.

Minarchism, Anarchism, and Democracy: A Shared Challenge

Minarchism–basically as small a government as we can get away with–is probably the most economically efficient possible way to organize society. A night watchman state providing courts of last resort and just enough military to keep someone worse from taking over.

The trouble (argues my inner anarchist) is that if we’ve got a government–an organization allowed to force/forbid behaviors–we’re already on the slippery slope to abuse of powers through political trading. Without an entrenched culture that takes minarchism seriously it’s only a matter of time before a) the state grows out of control and you’re no longer in a minarchist Utopia, or b) a populace unwilling to do their part allows violent gangs to fill the power vacuum.

Having a government at all is a risky proposition from the perspective of someone worried about the abuse of that power. Better not to risk it at all.

Anarchism relies on the right culture in a similar way. This is clear to critics of anarchism (basically it’s just the minarchists who are willing to take anarchists seriously at all) and is the crux of an important argument against anarchism. Without the right culture, what’s to stop people from just creating some new government? Nothing at all.

In fact, we face the same problem in the military-industrial-nanny-state complex of our imperfect real world. For any government–or lack of government–to work, the ideological framework of the people living in that society has to line up properly. To the extent people are ignorant, distracted, short-sighted, biased, or mean-spirited, we get governance that reflects those flaws.

If we want to live in a better world, we can argue all day about what sort of government we do or don’t want. But ultimately we have to work on improving the culture, because the median voter is still in charge.

A Little More on “Price Gouging”

In my previous post on this subject I argued that the critics of “anti price-gouging laws” are mistakenly assuming that is possible to satisfy demand at the pre-natural disaster price. That is, sadly of course, fiction. It it not our reality anymore and we are better accepting the new situation than blindly deny it. As many economists are explaining these days, to not let prices increase after a natural disaster does more harm than letting prices increase. This can easily be seen in a demand and supply graph.

Prige gouging

Consider first just the lines in black. Those lines represent the pre natural disaster situation. What is considered “normal prices”. At price p0, a quantity q0 of a good is traded in the market (i.e. bottles of water.)

Now there is a shock. A hurricane hits this region and demand increases (shifts to the right). This is the demand line in color red. The red dotted line that extends to the right shows the size of the shortage (q2 – q1) at the “normal and fair” price.

Price gouging is an emotional loaded word, but it doesn’t have any specific economic meaning. How does “price gouging” show up in this graph? It is the increase in price from p0 to p1. This is the increase in price required to satisfy the higher demand and provide the extra number of goods (q1 – q0). No… supply is not horizontal.

What happens if price increases are banned? Then at the pre-crisis quantity (q0), consumers are willing to pay p2, a price even higher than price gouging. This means two things. First, a number of people in need will be unable to acquire the goods (the empty shelf problem). Second, that the actual total cost (to those who acquire the quantity q0) is p2, not p0. The difference between the price in the store and total cost falls into waiting in long lines, visiting a long number of stores, bribing producers (yes… with natural disaster price controls also lead to black markets), calling favors., etc. Any principles of microeconomic textbook has plenty of more examples under the price ceiling discussion.

There are three scenarios being discussed here.

  1. Quantity q0 at price p0
  2. Quantity q1 at price p1
  3. Quantity q0 at price p2

The natural disaster makes scenario 1 impossible. And it is not clear that scenario 3 is better for those in need than scenario 2. Less goods are provided at a higher total cost than in scenario 2.

One final remark. Note that in this analysis the natural disaster only affected demand. Of course, it is quite likely that supply would also be affected. The point, however, is to show that prices are not pushed up only by produces. As we can see in this case, it is consumers who are increasing the price and producers reacting to the new behavior of consumers.

A short note on ideological neutrality

William‘s excellent post on dishonesty reminded me of an equally excellent post by John McGinnis over at Liberty Law Blog on the ACLU and free speech. The post ended, though, with the following sentence:

It would be a tragedy for our nation if the ACLU’s decision begins to dissolve the strong social fabric supporting the ideologically neutral First Amendment.

Ach. There is nothing neutral about the First Amendment. It’s a law based on liberal ideology. The idea of free speech is based on liberal ideology. The other ideologies out there pay great lip service to free speech, but there’s no First Amendment in the post-colonial states of Africa and Asia. Free speech is trumped by an ambiguous form of censorship called “hate speech” in other OECD countries (Western Europe, Australia-New Zealand, Japan). There is no First Amendment in Russia or China or Venezuela.

Liberalism is the only ideology out there that actually encourages rival ideologies to attack it, not with provocative laws but with one specific law that allows all factions the same space for their platform. The First Amendment is not neutral at all; it is instead an aggressive flaunting of liberalism’s staying power and ability to deliver freedom.

When libertarians start thinking of their preferred values as “neutral” or “centrist” they begin to echo the Left, which has been dishonest with itself for the past 45-50 years. That’s a road I’d hate to the movement plod through.