Massachusetts to let cabs tax Uber: The seen, the unseen, and the minor nuisance

08/21/201608/21/2016 Rick Weber Current Events, Economics, Liberty, Politics cabs, competition, interventionism, Lyft, massachusetts, regulation, ride-sharing, tax, taxes, taxis, Uber

**There’s a simple alternative to regulation: liability. We don’t need to tell companies how to be safe if we make them legally responsible for negligence.**

It’s as though Mass’s government decided that back-to-school season calls for creating real-life rent seeking examples for my class. They’re going to start taxing ride-sharing customers $0.20 per ride with five cents of that going to the taxi industry.

“The law says the money will help taxi businesses to adopt ‘new technologies and advanced service, safety and operational capabilities’ and to support workforce development.”

New technologies like an app that gets more use out of otherwise idle cars? Or an app that makes it easy to hail a ride with little wait? Or an app that brings supply into harmony with demand when demand surges? Oh wait! We’ve already got that and it’s the thing that’s being taxed!

There are a few important economic lessons that Massachusetts’ electorate is evidently in need of. Let’s start with taxes.

Taxes don’t stick

“Riders and drivers will not see the fee because the law bars companies from charging them.” They won’t see the fee, but that doesn’t mean they won’t pay it. A business only exists by collecting money from customers and paying some portion of that to suppliers. The government cannot tax a business without taxing that business’s customers and suppliers.

Granted, part of the cost will be reflected in lower profits (although profits aren’t as big as people think) which means Uber’s shareholders will face part of the tax. But what does that mean? It means 1) a little less money in pensions, and 2) potential investment capital is moved from the people who gave us the best version of taxi travel to the people who gave us the worst version of it.

Money is fungible and I don’t know how to run a cab company

Safety, new technology, and workforce development all sound good, but taxi companies (at least those that deserve to stay in business) will already be doing these things. Safety is important because accidents are costly (especially if your fleet size is limited by regulation). New technology is being adopted by every other (competitive) industry without government support. Other companies invest in their employees.*

Supporting workforce development is part of a larger trend of people supporting specific fringe benefits without appreciating the tradeoff between monetary and non-monetary compensation. And all these ideas reflect a faulty logic: just because something is good, doesn’t mean we need to force people to do it.

Voters simply aren’t in the right position to know if some good thing is good enough relative to other options. If you go into the backrooms of any industry you aren’t already familiar with you will surely learn about techniques and tools you had no idea existed before. So why should we expect that cab companies need regulators to tell them what to do? Let them learn from their trade magazines.

But there’s good news. If we mandated that cab companies use this new revenue stream to pay for new tires, they wouldn’t simply waste the money by buying superfluous tires. They’d stop buying tires out of their own revenues and start buying them from Uber’s. Telling someone to pay from their left pocket simply leaves more money in their right pocket for everything else.**

Extra money in cab company coffers could allow them to invest in better service, happier employees, “and help so taxi owners could buy ‘flagship’ vehicles like a 1940s Checker or a Porsche.” But cab companies are already free to reinvest their profits if they think doing so would create value (i.e. greater future profits). The more likely outcome is that they will simply have more money than before.

Competition is not the problem, it’s protectionism

When we see problems in the world we need to look for their root causes if we want to actually make things better. More often we act like a doctor diagnosing cancer is the cause of the cancer. Don’t want cancer? Outlaw doctors!

Cab companies aren’t as successful as they previously expected and the apparent culprit is Uber. But they only exist because an inefficiency in the market created a profit opportunity. Cab companies are doing poorly because they don’t provide as much value per dollar. And that’s largely because of regulation that prevents competition. Much of it was put in place specifically to protect incumbents from competition.

A lot of these regulations sound nice enough, but they still created the market niche that Lyft and Uber filled. And they protected cab companies from competition right up until ride-sharing became feasible.

Regulation is not the answer

Let’s give cabbies the benefit of the doubt for a minute. Let’s assume that they aren’t really in it for the cash-grab and that they just want to help people get around safely and conveniently. Let’s even assume that NYC’s medallion system is about congestion rather than competition.

If that’s the case, then there are better ways to address the root causes of the problems cabbies tell us to worry about. We don’t need to address each of these problems individually if we can find a few key causes at the root of each of them.

never-half-ass-two-things-whole-ass-one-thing

Cabs have medallions but civilians don’t, so congestion will still be a problem in cities until congestion fees are implemented that balance the demand for road access with its limited supply. Safety is important, but mandating extra inspections for only some types of cars is a half-assed way of dealing with it.

There’s a simple alternative to regulation: liability. We don’t need to tell companies how to be safe if we make them legally responsible for negligence. This is an important lesson for how we think about regulation in all industries. The basic logic is also why economists vastly prefer pollution taxes to specific regulations; it’s usually better to name the outcome we want and create a cost for failure to meet it rather than mandate specific behaviors.

Perhaps this means we should modify the laws that require all drivers to be insured so that some drivers have higher minimum liability coverage. That would be far less invasive and do far more to alleviate the concerns Uber’s critics raise than mandating specific behaviors.

Concentrated benefits dispersed costs

Okay, so maybe this is too small an issue to be concerned with. If that’s not by intentional design, then it at least reflects an evolutionary logic. This policy is likely to survive because the people it taxes will face a cost so small it isn’t worth doing anything about. Yes, Uber and Lyft have incentive to lobby against it, but it’s so close to invisible that they’ll probably be able to pass it almost entirely on to drivers and passengers.

This is going to cost millions… with a tiny little m. At first I read it as a 5% tax and quickly realized that Uber rides are so cheap that I won’t even notice it. And 20 cents a ride is even less than 5%.

So why worry? Precedent. The problem with death by a thousand cuts isn’t any one cut.

*Of course we can argue about whether they do enough of that. There may be a tragedy of the commons if there’s asymmetric information between people looking to make human capital investments and businesses looking to gain access to specific human capital. Such a situation might create an opportunity for government to do some good by investing in public goods or subsidizing on-the-job training. But if that’s the case, it calls for very different programs (education reform, etc.) than taxing successful companies to subsidize their competition.

**Why is this good news? Because if cab companies did change their behavior it would imply they’re doing something where cost exceeds benefit. It would destroy value. Remember those stories of WWII rationing? Imagine that situation but with cab companies buying twice as many tires and just storing extras in the garage. It would clearly be a bad thing. Scarcity isn’t so urgent nowadays, but the basic logic remains the same.

At a Muslim Wedding

08/20/201608/23/2016 Jacques Delacroix Culture, Liberty Algeria, equality, ethnography, gender, Islam, Islamic culture

I was on that free diving and fishing trip through Algeria I have written about before. The French, who had seemingly deeply colonized the country, had been gone for a few years. They had left behind their language and many buildings in the big cities and in some other, fertile parts of Algeria. In remote areas though, it was almost as if they had never been there. I was in one of those areas with my then-future-ex-wife (“TFEW”) in our VW camping bus.

It was in the east, in Kabylia, in a small town squeezed between the mountains and the sea. There was a tiny harbor protected by a tiny breakwater that sheltered four or five boats. There was also a café a hundred yards away. A big rock with steep sides emerged within swimming distance of the harbor. The town was a spear fisherman’s dream as well as a vacationer’s dream. It was the kind of place that travel agencies use to arouse you on TV in the winter and never, never deliver.

When we arrived, in the middle of a hot afternoon, there was no human being in sight; even the café was empty. I was an instinctive believer in the adage that it’s easier to ask for forgiveness than for permission even before I heard it spoken. So, we parked at the harbor and had our cheese, bread, and figs lunch. I prepared instant coffee on the stove. I thought I was giving whatever authorities might exist in the town ample time to chase us off if they wished. Nobody came.

Toward evening, I walked to the café where four or five men were sitting and talking quietly. I said Hello in French and they replied in the same language. I could read the curiosity in their eyes but they were too polite to inquire. So, I ordered some tea and explained briefly what I was doing in Algeria. This interested them. Being a fisherman works everywhere as an introduction. Everyone knows what fishing is (unlike “touring,” for example). Every man either is a fisherman or wishes he were. Or has a brother-in-law who is a fisherman. One of the men volunteered that the café served wine. I ordered a glass for myself and offered to treat the men. Only one accepted.

My companion and I has a small dinner under the light of an oil lamp and went to sleep in the back of the bus. In the morning, I quickly located a bakery by smell. There was hot fresh bread. (Good bread is an undeniable gift of French colonialism.) After breakfast; I cinched on a light weight belt and grabbed my speargun; I put on my mask and snorkel and my flippers. I entered the clear water of the harbor and swam to the offshore rock. The sea was bountiful. There were groupers there that did not even know I was a predator and various edible fish that seemed to only have Arabic names. (If you don’t believe me, I have a picture.)

The location was so idyllic that we lingered on. In truth, we didn’t even have anyplace to go in a hurry anyway. We ate fresh fish at every meal, with fresh bread and tomatoes, plus some fruits. There were no authorities. Only the village kids came to visit. They were sweet and full of good questions. We gave them fish. I had become almost an old-timer at the café. One of the guys there told me his name was Pierre. He was the same guy who had accepted a glass of wine the first day; I should have known. I never got the story of why he had stayed behind after all the other French left. Maybe, there was a woman involved. Or, he had no relatives in France. Asking would have been pushy

One morning, early, two older children with solemn expressions came by with a message. There was going to be a wedding the next day and we were invited. We were both flattered and intrigued. The TFEW immediately went into a flurry of activity looking for a suitable present for the bride. It was no easy task because we were camping, with minimalist baggage. Eventually, she found a small silk kerchief that she thought might do because, frankly, the locals seemed so poor. She (and I too) was thinking in terms of what we knew about: American and French weddings, pretty much variations on the same basic model: The bride is the queen and she gets presents, the bride’s mother is the dictator, the groom is a little drunk, so are many of the guests, including children. There is dancing. Most unmarried women are a little or much turned on; single guys try their luck.

On the wedding day, we cleaned up as well as we could, birdbath manner. My companion even washed her hair in cold water. Fortunately, she was wearing it in a very short afro, almost a buzz cut. She put on a light cotton mumu that looked almost ironed. It was a decent, loose garment but with discreet curves in the right areas. I thought she looked more than presentable. I don’t know about myself. I had on clean jeans and my only shirt with a collar. The kids had been vague about time. Around noon, we walked up the steep street with the same children guiding us.

A whole other street, a flat one, had been blocked off and long tables, benches and chairs lined up on the sidewalks. It appeared that our being invited had not been such an extraordinary honor after all. We guessed the whole village was invited and it would have been unseemly to leave the tourists out. (But wait….) However, we saw only male human beings on the street, from boys in short pants to bent old geezers. A band played somewhere close-by but we couldn’t see it and there were no dancers in sight. The action took place behind bed sheets hung from a rope that stretched across the street. We were instructed with smiles to sit down. After a few minutes, young men came bearing enamel basins of food. They placed a piece of mutton next to us on the table oilcloth and a bowl of semolina (grits, more or less) with two spoons. Another boy set a recently rinsed glass full of limonade in front of each of us. We noticed that other guests were waiting for our seats.

We were going to hurry off the table but a tall, handsome man in a dark suit – the only suit in sight – came by. He was the groom and he had taken it to heart to greet us personally, which he did graciously, in perfect French. We were told later that he was a fighter pilot back from training in the Soviet Union who had returned to his native town just to get married. The man was elegant and he had a great deal of presence. He would not have been out of place in an upscale bar in Palo Alto, California where we lived most of the time. I told him that my wife had a small gift she would like to give to the bride in person. He said not to move, that he would send us someone quickly.

After a short time, an older man came to tell my companion to follow him. He took her a few feet away behind a low wall where I could still see her. There, he handed her over to two old crones. One of them had red dyed hair that would not have fooled a blind man ten feet away. The three women walked away through an unlit area but in the direction of a brightly lighted structure where I lost sight of them.

About ten minutes later, the TFEW came back by herself steaming. (I was a grown man; I felt the vibes; I knew the signs.) So, I asked, did you meet the bride and did you give her the present? She said she had and she had and the bride, sitting all made up and coiffed in a gilded armchair, surrounded by her handmaidens, seemed touched. But, she said, you won’t believe what happened before that. Just as we reached the bridal pavilion, one of the two old women held me by the shoulders while the other lunged for my crotch and tried for a grab.

What do you think? Would I make this up? Do I have the talent, the imagination?

Several things. First, yes, of course, this is intended to be a pop-sociological story. It’s a commentary on something. Your guess.

Second, it should be obvious that I liked everyone I met during that stay and in that episode, every single person. That’s more than I can say for the people with whom I cross paths daily in California, for example. And, don’t get me started on the French! (Many of whom are holes in the ice as my decorous granddaughter would say.) Now, I know why I liked them but it’s hard to tell why they were so likable. Everyone in the small town was courteous and generous if he had a chance to be, even if only by offering a glass of hot tea after my long stay underwater. Again, I can’t tell why they were so gracious. Perhaps small towns are like that. Perhaps people used to be generally like that when they live in places small enough to be real communities. I can’t really believe this though because I have read too many stories (beginning with Maupassant’s), seen too many movies, where small town people behave in a completely beastly manner.

In the absence of perfect sampling, I tend to put some faith in cultural redundancy: If blondes keep treating me shabbily, I begin suspecting that there is something wrong with blondes (or about blondes and me). So, I have been treated courteously by Muslims and by people who appeared to be Muslims whenever I spend time in Muslim surroundings, even thousands of miles apart. So, until proven otherwise, I think it’s their culture that makes them friendly. Yet, naturally, I find the crotch grabbing incident and what I take to be its many implications repulsive. I don’t think it would have happened anywhere in the formerly Christian West.

The gesture and its sexual implications have a historical association with Islam, I believe. (See how carefully I chose my words.) Yet, there is almost certainly nowhere in the Islamic Scripture that mandates, commands, or even condones such behavior. Contrary to many Muslim apologists I hear on TV and on radio, that’s not the end of the story, as far as I am concerned, however. You are responsible for the baggage your religion carries. So, there is absolutely nothing in the Christian Scriptures ordering that theological deviants be burned alive. And yet, it happened in Christian lands, over and over again. Historically, it’s a sort of Christian specialty although Christ would not have applauded the practice, I am pretty sure. If you are a Christian, it’s disingenuous to say that burning people alive has nothing to do with you. It’s as much part of your heritage as are the glorious Gothic cathedrals.

And, yes, you are right; I loaded the dice by entitling this story “A Muslim Wedding.” I could have called it equally well: “An Algerian Wedding,” or “A Kabyle Wedding” (for the area), or “An Amazigh Wedding” (after the local people’s ethnicity), even “A Village Wedding.” Was I wrong? You decide.

Freud and property rights

08/17/201609/15/2017 Bill Rein Liberty autonomy, identity, property rights, psychology, Sigmund Freud

In a recent, short discussion of property rights, I offered that property is an extension of the body, and therefore property rights can be naturally assumed as equal to our bodily rights. It was responded to highly critically. The body is intrinsically tied to our identity, as most recently stated with Sosa-Valle’s article; most people would agree to that. I feel similarly about personal property, even if proving this is somewhat more difficult.

The question of property comes up in an infinite number of discussions. If I own a Sharpie, acquiring it through legitimate transaction, I can legally prohibit another from using it. Isn’t this more of an intrusion on another’s freedom to explore the world than it is a utility of my freedom to protect this object? Why is this Sharpie mine such that I may disallow others its use? How is it within my freedom to prohibit it from others?

Where property rights actually come from, and what concerns, aside from economic or consequentialist, validate their protection, is a fundamental question. Here is a perspective from a Freudian dissection of ego relations, and historical-technological advance.

Technology is fundamentally an extension of human attributes. What is a record, but an upgrade of human auditory memory; what is a video, but an upgrade of human visual memory or imagination; “materializations of the power [man] possesses of recollection”? “With every tool man is perfecting his own organs, whether motor or sensory, or is removing the limits to their functioning. Motor power places gigantic forces at his disposal, which, like his muscles, he can employ in any direction,” and so on (Civilization and Its Discontents, p. 43).

It’s not remarkable to consider that material objects may take precedence over actual limbs, given technology is simply human advancement. When a woman loses her ability to walk, and is outfitted with a mobility scooter or likewise, the apparatus takes the place of natural walking endowments; prosthetic advancements, still infantile in Freud’s time, increasingly distort what are “legs” and what are not. We wouldn’t lessen the strength of the legal bodily autonomy just because her legs are composed of different material than the organic.

Our accessories, aside from restoring us from disable- to able-bodied, take us far beyond what the human was ever capable of accomplishing, creating “prosthetic Gods.” The modern cellphone contains the entire world of knowledge in its hardware and software. Many people feel more connected to their tablets than their hidden organs. (Or maybe, more accurately, people are more connected to the functionality of their tablets, than the automatic, reflexive actions of their organs. This is clear because tablets are replaceable but the overall attached feeling persists.) The ego, per a Freudian perspective, is extended to the external world, through some fulfillment of instinct that technology allows in an otherwise impossible situation (see instinct displacement, Instincts and Their Vicissitudes, p. 121, James Strachey translation). It becomes difficult to delineate what is attached to “me” and what is not, contrary to the simplistic, phenomenological dichotomy of body and world.

How is it anyway that our body is even connected to our psyche? For an extremely brief discussion, consider that our sense of self, as a straightforward consciousness, is not immediately crippled by, say, the removal of an appendage through a freak accident. The attachment that we feel, then, is cerebral and historical, and functional. These same conditions in and of themselves are equally possible for relating the sense of self to foreign, i.e. materially external, objects. Indeed, the “connection” we feel to our body is perfectly capable of being transferred onto other objects. See, for instance, Freud’s discussions in An Analysis of a Case of Hysteria (this point of transference could be argued to be the central pillar of the classical psychoanalytic perspective on childhood and ego-formation); David Chalmers’ arguments for the phone as a part of our mind via cognitive extension; and recent psychological studies of “joint action,” through dancing and the like.

Given these instances, I think it’s more sensible than not, at least providing one accepts even a little Freud, to perceive property rights as on the same ground as bodily autonomy.

Of course, Freud never argued for property rights from his analysis of technology as ego-engagement. His political views were mostly impersonal and disinterested. He left Vienna after his daughter was summoned by Gestapo in 1938, to live in London, but unfortunately left no direct commentary on totalitarianism, and most of his political views have to be derived.

On Robots and Personal Identity

08/16/201608/16/2016 Federico Sosa Valle Liberty artificial intelligence, F.A. Hayek, identity, individual liberty, Peter Geach, spontaneous order

When I came across this documentary on robots and their ability to carry on a conversation between each other, the well-known ideas on the spontaneous emergence of language inevitably crossed my mind. The resemblances to Hayek’s Sensory Order are obvious as well, notwithstanding his later remarks on negative feedback processes, which involve spontaneous orders that are borrowed, precisely, from cybernetics. But what grabbed my attention the most was the importance attached to the fact that the robots had a body. According to the documentary, the shape of the body of the robots allows them to develop certain patterns of classification for facts and behavior that would be different if their bodies were different as well. In this sense, “to have a body” is a requisite characteristic of the robots to make possible artificial intelligence; to evolve following a process of negative feedback.

That brought me back the works of Peter Geach on personal identity. He confronted John Locke’s notion of personal identity as mere memory and stated, instead, that the body was essential to the said concept. Memory and human body are, in order to develop an individual personality, inherent to each other.

This is relevant to our discussions about the definition of individual freedom. If the body is inherent to our personal identity, there are not much place left for Spinoza’s freedom of thought, or inner liberty, as the ultimate definition of individual liberty. Besides freedom of thought, we need freedom to move in order to be regarded as free individuals, and our sphere of individual autonomy should be extended to our body and its surroundings. Moreover, it would be impossible to exercise any freedom of thought and expression if such individual liberties are not protected.

NGDP 3% per year; NGO much less!

08/11/201608/11/2016 Vincent Geloso Economics, Liberty economic growth, NGDP, NGDP target, NGO, Scott Sumner

A few days ago, Scott Sumner blogged about the “new normal” of NGDP trend (3% a year) (here and here). Overall, I tend to agree with him that the aggregate nominal expenditures are now at a new and historically low trend growth rate. I think that he is way too optimistic!

As readers of this blog are aware, I am not convinced that NGDP is the proper proxy for nominal expenditures. I believe that Nominal Gross Output (NGO) is a better proxy as it captures more goods and services traded at the intermediate level (see blog posts here, here and here). The core of my argument is that NGO will capture many “time to build” problems that will not appear in GDP as well as capture intangible investments which are now classified otherwise (see literature on intangible investment as capital goods here). Thus, my claim that NGO captures more expenditures (especially between businesses). (Note: I am in the process with some colleagues of finalizing a paper on the superior case for NGO – more on this later.)

Are we at a new normal point where growth in nominal expenditures is slower than in the past? Yes! But according to Sumner and others, this is 3%. If we use NGO we are much lower! Again, using the FRED dataset, here is the evolution of NGO and NGDP since January 2005 (the start date of the NGO series in a quarterly form). The graph shows something odd starting in mid-2014 : NGO is growing much more slowly.

NGDPNGOaug2016geloso

To see this better, let’s plot the evolution of NGO as a percentage of NGDP in the graph below. If the ratio remains stable, then the trend is similar for both. As one can see, the recession saw a much more pronounced fall of NGO than NGDP with a failure to return to the initial levels. And since 2014, the ratio has started to fall again (indicating slower growth of NGO than NGDP).

NGDPoverNGOgeloso2016aug

So what is happening? Why is there such a difference? I am not one hundred percent sure about the causes of this difference. However, I am willing to contend that NGO is fitting better than NGDP with other indicators indicating a tepid recovery. If we look at the labor force participation rate in the US, it continues to fall in a nearly mechanical manner. Fewer and fewer workers are at work (or looking for work) in comparison to the population that could be working while investments are disappointing.

CivilianLaborForceParticipation

Maybe Scott Sumner is being overly optimistic. The new trend might simply be substantially lower than he believes.*

*Readers should note that I believe that monetary policy is, at present, too restrictive. However, I believe the culprit is not the Federal Reserve but financial regulations that restrict the circulation of “private money” (the other components of broad money found in divisia indices – see my blog post here).

A Note on Trump, Immigration, and Healthcare Reform

08/10/201608/11/2016 Zachary Woodman Current Events, Economics, Liberty, Politics Donald Trump, Election 2016, Entitlements, health care reform, health insurance, illegal immigration, immigration, ObamaCare, public policy, Welfare

Hopefully, the US election will start getting out of the he-said-she-said of assassination attempts and badmouthing parents of military personnel and start being about actual policy issues. Unfortunately, that isn’t going to happen at all, but in a minuscule and futile attempt to help get us there, I’m going to blog about some policy issues for a minute.

Trump’s campaign released a brief memo about his healthcare positions recently. For the most part the positions—though not quite detailed enough to really call a “plan”—are fairly decent. They contain most of the reforms free-market analysts have been proposing for decades such as opening insurance competition across states, allowing for Health Savings Accounts, and streamlining Medicaid funding. Notably missing was abolishing the employer mandate to reduce price fragmentation, as Milton Friedman proposed, although Trump proposes taking steps in that direction by introducing a tax deduction for individual insurance plans.

But what stuck out to me was that Trump, surprise, surprise, made xenophobia an element of his health care proposal by furthering the myth that immigrants are a further drain on our healthcare and welfare programs:

Providing healthcare to illegal immigrants costs us some $11 billion annually. If we were to simply enforce the current immigration laws and restrict the unbridled granting of visas to this country, we could relieve healthcare cost pressures on state and local governments.

Meanwhile in reality, undocumented immigrants actually contribute more to Medicare than they withdraw. It is unclear where Trump is getting his $11 billion figure, but he is ignoring the increased payroll taxes undocumented immigrants pay into these programs. A 2015 study found that, in fact, between 2000 and 2011 immigrants paid up to $3.8 billion more into Medicare than they took out. From the results of the study:

From 2000 to 2011, unauthorized immigrants contributed $2.2 to $3.8 billion more than they withdrew annually (a total surplus of $35.1 billion). Had unauthorized immigrants neither contributed to nor withdrawn from the Trust Fund during those 11 years, it would become insolvent in 2029—1 year earlier than currently predicted. If 10 % of unauthorized immigrants became authorized annually for the subsequent 7 years, Trust Fund surpluses contributed by unauthorized immigrants would total $45.7 billion.

Poor immigrant children, both legal and illegal, are also less likely to be enrolled in Medicaid or CHIP than citizens.

Thus Trump’s campaign is being factually dishonest by claiming that restricting immigration will help fund government healthcare systems, it will actually make Medicare go insolvent sooner. Which is especially concerning given that, until this memo, Trump has shown no interest in any meaningful entitlement reform.

This refrain—that immigrants are a fiscal drag on America’s welfare programs—has been among the most common refrains from Trump, and has even been popular among libertarians who are otherwise sympathetic towards immigration. But, as I’ve argued extensively in the past, it is completely false. Almost every major study shows that immigrants, at worst, pay as much into welfare programs as they get out of them.

Some thoughts on the Olympic Games and cosmopolitanism

08/09/2016 Bruno Gonçalves Rosi Current Events, Liberty Brazil, BRICS, cosmopolitanism, hegemony, international relations, multilateralism, Olympics 2016, spontaneous order

Right now my city, Rio de Janeiro, is hosting the Summer Olympic Games. It is in many ways a great moment, and it is especially good to see people from so many parts of the world together in relative harmony. In other words, a good example of cosmopolitanism. The cosmopolitanism in the city today reminds me of the attempts of multilateralism that marked Brazilian (and world) foreign policy in previous governments, but that now seem to fade away. The two terms, cosmopolitanism and multilateralism, are not exactly synonyms, but are closely related: multilateral policies should work in bringing peoples together in a more cosmopolitan world. Concerning that, I think of a multilateralism that does not work in bringing people together through cosmopolitanism, and one that can work in that way.

When the Cold War was over, multiple theories were presented to explain what would happen to a world without the tension between two superpowers. Some suggested that the US would reign as a lone superpower; others that it would embrace some form of benign hegemony, in a New World Order. Others still believed that US power was in decline, and that the World would see more multilateralism in the 21st century. This last view was especially dear in Brazil, but as the 21st century progresses, it does not seem to hold as much water anymore.

One great example of multilateralism substituting American hegemony was the integration of Western Europe, but that does not seem to be the case anymore. It is true that beginning shortly after WWII European countries experienced growing levels of regional integration, culminating with the European Union and the Euro in the 1990s. But even then, economists warned politicians and the general public that such a level of integration was not possible, at least not without a central government in Europe. Successive economic crises, Brexit, and the harsh questioning of immigration policies show today that economists were right back then.

Another example of multilateralism celebrated in the 1990s was the growing importance of the UN. Successive humanitarian missions and interventions in several countries suggested that that UN could now surpass the dawn that marked the relationship between USA and USSR in the previous period. Optimism went so far as to discuss themes such as the ‘obligation to intervene’, substituting previous understandings of state sovereignty. But as the years go by, cases like Haiti, Rwanda, Sudan, and many others show that the optimism was at best too high.

Finally and more recently, Brazil and other underdeveloped and developing countries focused greatly on South-South Cooperation, trying to substitute the more standard paradigm of North-South Foreign Aid. This materialized in initiatives such as UNASUR and BRICS. Although presented as a new development, that was actually very reminiscent of The Non-Aligned Movement, The Group of 77, and other initiatives from the 1960s and 1970s. Now, as Brazil, Venezuela, Ecuador, Bolivia, Turkey, China, Russia, and several other countries face growing levels of economic and political hardship, attempts to “overcome American hegemony” seem but preposterous.

New forms in multilateralism in Europe, the Global South, and even the World (in the UN) did not work because they are not really democratic, as they claim to be. Behind a rhetoric of democracy, empowerment of the poor, and so on, they are just new forms of mercantilism: political elites trying to control the economy, not just at the national level, but the international one as well. The point was never to actually bring people together, but to maintain the status quo by avoiding real competition.

The multilateralism that can bring about cosmopolitanism, and that somewhat shows in the Summer Olympic Games in Rio, is one characterized by spontaneous order. People do come together: that is the natural ways of things. The desire to trade spontaneously brings different peoples closer to one another, and as they are closer they realize how much they have in common, and also what can be learnt from the differences. It is not always a peaceful dealing, but the more people are educated to tolerate the differences and to benefit from them, the more cosmopolitan they become.

A top down approach to cosmopolitanism is just a deformed clone of the real thing. Even if some results appear, they always seem to fall somewhere in the uncanny valley, and anyway, the results do not last very long. A bottom up cosmopolitanism is the real thing, and if only elites let it be, it can grow stronger, bring more wealth, and even a little more peace to the world.

Voting For Potty-Mouth Trump

08/08/2016 Jacques Delacroix Current Events, Liberty, Politics American culture, American elections, American politics, Donald Trump, voting

I think Donald Trump has the attention span of a two year-old and the potty mouth of a six year-old reared by an indulgent grandmother who is also hard of hearing. I also think he is deeply ignorant on a very important issue (international trade) and I disagree forcefully with him on another (illegal immigration from the south). Finally, I believe there is little chance that a President Trump’s foreign policy would reverse the Obama precipitous decline of the US on the world stage, which I think is dangerous for Americans.

Not a pretty picture overall. So, it takes serious concerns for a dedicated, generally well-informed rationalist like me to vote for him. Here are the reasons why I will.

First, Trump has already told us whom he would appoint for the Supreme Court which sets the life conditions of American society for a generation or more. All his potential appointees are fine by me. It’s not difficult to guess that no Clinton appointee would be acceptable, not one, zero. Any of them would facilitate the creeping abrogation of the US Constitution we witnessed under Obama.

Second, I am certain – because it’s difficult to imagine otherwise – that a President Trump would try to stop and reverse most the climate change cult nonsense and relegate it to the level of a private religion where it belongs. His administration would allow an energy revolution sufficient in itself to rekindle economic growth. I see no prospect of normal economic growth under a Hillary Clinton presidency. (I mean 3% per year and over.) She has said herself that she would continue Pres. Obama’s paralytic policies.

Third, through the example of his sheer verbal brutality, Trump would lift some the yoke of political correctness. This is not a superficial or a light reform. I believe that political correctness actually paralyzes Americans’ criticality on nearly all issues. (Examples on request.)

My last reason is Democratic candidate Clinton of course, even if I leave aside every single one of the leftist policies she is likely to try to implement. Mrs Bill Clinton is still bought and paid for. The fact that I don’t know exactly by whom or by what only makes it worse. (Someone who would not braggingly share her $250,000 a shot speeches with the public is unthinkable to me.) On that account alone, if I had to choose between H. Clinton and Al Capone for president, it would be a toss-up. We know what interests Al was serving, after all.

There is worse: Her lies about her lies, her lies that have zero chance of being believed have become a proof that she is delusional, at least part of the time. By contrast, Trump ‘s untruths are like those of a little boy who can’t help himself from opening his mouth before he talks.

Presidential elections are not only about the presidency, of course. They give the winner’s party a confirmation of the validity of the principles it proclaims and of the policies it embodies. This is obviously true for well defined policies such as Obamacare. It’s true, more subtly, about cultural policies both explicit and implicit. Seven and half years of Obama administration have established firmly – with Big Media complicity – the language of envy and the spirit of beggardliness in American political discourse. Public speech is now built around platitudes, clichés, half-truths, and big lies repeated so frequently that they have become truth, Goebbels-style. The new liberal language is disgusting but completely predictable and thus boring. It’s also a form of child abuse. (Individuals who were 10 during Pres. Obama’s first campaign are now 19. They have never known public sanity.) As for Demo principles, there aren’t any. I count my blessings!

Donald Trump on his part, is his own buffoon. He is only an epiphenomenon. His objectionable traits are not part of a cultural movement. He is not contagious. There is zero chance the Republican Party, or the conservative movement are going to adopt his crudeness. Neither could if they tried.

I am angry about this cultural deterioration because I believe that in the long run what people do, what they accomplish collectively, is strongly constrained by culture. The contemporary American left-liberal culture shackles the imagination, and by doing so destroys many possible futures. Again, the Obama/Clinton conceptual swamp is vastly more of a lasting threat to America than the childish vulgarity and the ignorance Trump displays so frequently.

Being on the side of Trump often puts me in embarrassing company, I admit. But being on Clinton’s side would place me knowingly in vicious company. It would also range me squarely on the side of an intellectual class that has spent decades consolidating its collective blindness and its collective deafness about the reality of the world. It’s a class I know well because much of it lives in universities. There is no doubt that Trump as president is a big gamble. But Clinton is no gamble at all; her evilness is predictable.

Sometimes, to be a man of conscience, you have to gamble. That’s what I plan to do, on my behalf and on your behalf.*

* Public persons often contribute unwittingly to me finding my bearings: If Harry Reid, the corrupt real estate and proud deliberate liar loudly condemns Trump, there has to be something right about supporting Trump.

Invitation to Steemit – a blockchain based social media platform

08/07/201612/18/2016 Chhay Lin Lim Liberty blockchain, cryptocurrency, decentralization, social media, Steemit

As some might already suspect from some of my previous posts, I am a cryptocurrency enthusiast. As of now, there is another crypto-project founded by two libertarian anarchists that I find extremely interesting and that I would like to share with you.

In this post, I’d like to introduce this project called Steemit, a new social media platform where content creators (bloggers) can earn money with every ‘upvote’ (comparable to ‘likes’ on Facebook) they receive from the community. I am not encouraging my fellow note writers to quit posting articles on Notes on Liberty, but I would recommend them to share their articles both here and on the Steemit platform.

So what is Steemit?

“Collectively, user-generated content has created billions of dollars worth of value for the shareholders of social media companies, such as Reddit, Facebook, and Twitter. Steem supports social media and online communities by returning much of its value to the people who provide contributions by rewarding them with virtual currency.”

Steemit is most similar to Reddit, but with the important difference that you can monetize your blog. You can take a look at my first two ‘hits’ on Steemit for proof that you can monetize your blogging skills:

Steemit was founded half a year ago by entrepreneurs Ned Scott and Daniel Larimer. Daniel Larimer has been a familiar face in the cryptocurrency scene as the founder of Bitshares, which currently ranks as the 19^th largest cryptocurrency in market cap on www.marketcap.com. Steem itself, the currency that drives steemit, has risen in prominence among other cryptocurrencies. According to www.marketcap.com, Steem is now the 4^th largest behind Bitcoin, Ethereum and Ripple.

The concept behind Steemit is very simple, and you don’t need in-depth knowledge of the workings of cryptocurrencies to start writing (and curating posts) and earning some money. If you have a facebook account or a reddit account, you can sign up at www.steemit.com. At first sign up, you will receive $10 worth of Steem Power – I will later get to Steem Power to explain what it is. Once you sign up you can immediately start submitting posts or comments on other people’s submissions. You can earn money through both ways.

The website is still in beta, and you may argue that it is not as user friendly as Reddit or other social media networks, but the pace in which applications have been rolled out on the platform in the one month that I have been using it is impressive!

A chat functionality with private messaging, a functionality to follow other writers, and weekly insights in your earnings have for example all been added in the past four weeks.

This, however, is just the beginning. The founders of Steemit have far larger plans than just creating a blockchain based social network. The social network is the means to attract enough users of its currency (Steem and Steem Dollars) that a full-fledged market place based on these currencies can emerge. The first step is to increase the user base, but next steps are to create a market place in which people can trade goods with Steem and Steem Dollars and where Steem will grow in such prominence that it will compete with already existing fiat currencies like the USD, Euro, GBP, Yen, and RMB. We are still far off from this actually happening, but it’s great to see these kinds of experiments with the free market.

Is Steemit a scam?
I have read about people who have called it a scam, but the funny thing is that you don’t need to put any monetary investments in the platform to submit an article and earn some money. Normally in scams, you are encouraged to give away your money for little or nothing in return. With Steemit, all you need is to create content that the community values and in return you will receive some money.

Steem, Steem Power and Steem Dollars
Lastly, I’d like to say some words about the three tokens you can hold when using Steemit: liquid Steem, Steem Power and Steem Dollars (SBD).

Liquid Steem, or simply Steem by name, is immediately convertible to bitcoin and fiat currencies as USD. People who would like to speculate on the price of Steem can hold it to sell at a higher price.

You can also convert your Steem into Steem Power. Steem Power gives you, if I am not mistaken, interest of approximately 0.7% in Steem Power per day. Holding Steem Power is like holding a stake in the long-term development of Steemit as you can only convert 1% per week of your Steem Power in Steem and exchange it for bitcoins and fiat currencies.

Steem Dollars are tokens pegged to the USD at an exchange rate of around 1 : 1. People who don’t like the volatility of cryptocurrencies can hold Steem Dollars.

For more information about Steemit, you can read the Steem White Paper or watch this excellent interview of its founders:

I hope that I have triggered your curiosity about Steemit, and I hope that you will take this invitation to post your content not only on Notes on Liberty, but also on www.steemit.com. Please don’t forget to follow me once you are on Steemit. You can find me at www.steemit.com/@chhaylin.

What sort of “Meritocracy” would a libertarian endorse, if he had to?

08/01/201608/01/2016 Federico Sosa Valle Liberty, Philosophy authoritarianism, F.A. Hayek, institutions, legal theory, libertarianism, meritocracy, modernity, Niccolò Machiavelli, republicanism, spontaneous order, virtue

The first attempt to answer this question should say: “none.” Notwithstanding that this is the correct approach, we can’t help but feel uneasy about it. Libertarians have had to deal with this uncomfortable truth for so long. In respect to my own personal experience, I remember where I was when I read, for the first time, “Equality, Value, and Merit,” the title of Chapter 6 in Friedrich A Hayek’s The Constitution of Liberty. I was attending a weekly reading group about that book, and we were gathered in a cafê in Buenos Aires. The number of attendees was enough to find every kind of reader you could expect (and not expect) to meet in such a group:

There was the one who had already studied and condensed each chapter and then was re-reading and re-assessing the whole book; the one who did his “homework” without any effort;
the one who the embarrassment of failing to accomplish the reading requirements for the meeting overcame the pleasure of any type of procrastination (i.e. me, mostly because I was one of the promoters);
and the one who gave to the group the enthusiasm to last for six months in a row and finish the whole book. The latter, in this case, was a truly “natural Libertarian,” the one who had the pure Libertarian position for each subject by not showing an excessive regard for what Hayek was actually saying.

I remember that I arrived to the “Equality, Value, and Merit” meeting with a feeling of uncertainty. Hayek argued that there is no merit to acknowledging in a market process, none of any sort, a just compensation for the value of one’s apportation – a value whose magnitude depends on the relative scarcity of the marginal product. The reader who always accomplished his reading duties without any effort shared my sentiment of awe. Almost the whole meeting was conducted by our companion who was reading the book for a second – or perhaps third – time. In effect, Hayek left no place to meritocracy, since it is impossible to decide democratically among any scale of merit (remember Kenneth Arrow’s theorem on the impossibility of democracy, cited later on the third volume of Law, Legislation and Liberty), so retributions based on value enable the system to adapt spontaneously to the changes in the environment with more efficiency. The explanation was a bit of an unpopular one, but accurate. Not without reluctance, almost all of us accepted it. All of us but one: our true spontaneous Libertarian. She would under no condition surrender her convictions on the merit of the retributions that the market process assesses spontaneously to each one in accordance to the marginal value of their activity. While we acknowledged no merit to the results of the market process, she was prone to endorsing a moral value to the blinded results of the allocation of goods adjusted to the changes in their relative scarcities.

Many years after our debate took place, I am now starting to acknowledge that there might be a particle of truth in the statements of our natural Libertarian and, what is most outstanding, that these statements could be deducted from other chapters of the same book (The Constitution of Liberty), particularly the one which concerns on the definition of liberty (“Liberty and Liberties”). I said a particle of truth, not the whole truth, but at least that particle which is needed to start an intellectual quest.

In The Constitution of Liberty, written in 1960, Hayek made a quick outline of the different notions of liberty that were popular at that moment in time. Positive liberty, negative liberty, inner liberty, individual liberty, freedom from, freedom to, and freedom of were some of the categories mentioned. He made it clear that an in-depth discussion of each notion was not his main aim, but instead that was trying to make a quick account of them in order to give a conceptual frame to the one of his choice: a variant of the individual negative liberty defined as “the absence of arbitrary coercion.”

Slavery is the subjection to the will of another person, without boundaries of any kind. A slave could be subject to a good master who allows him to keep a normal life, but he could lose all of his freedom on a whim of his master at any time. On the other hand, the boundaries to the freedom of a free man are imposed by abstract and general laws and by contracts and the judicial decisions based on those contracts. The ordinary experience of a man enables him to discover principles and patterns of what would be regarded by others as just conduct, and to form in such way expectatives on how a given conflict could be solved. This concept of individual liberty as an absence of arbitrary coercion stated by Hayek in 1960 finds a strong resemblance today in the notion of liberty as an “absence of domination” by contemporary republican authors such as Quentin Skinner, Philip Pettit and, here in Argentina, Andrés Rosler.

The outcome of such a system is that every individual is enabled with a set of possible actions to be taken at his sole will, which we call an “individual sphere of autonomy.” In principle, these spheres are delimited by general and abstract laws and any controversy on the limits between two of them will be solved by an impartial court whose decision will be based on principles expressed by these norms. These judicial decisions would be in accordance to the patterns of just conduct that everyone had previously formed by ordinary experience, so they will prove correct the expectatives of most people and then will be regarded as non-arbitrary.

Of course, we could find that some judicial decisions would be taken by equity or that some administrative decisions would be based on expediency. But such a system could stand some exceptions, most of them aimed to solve an unexpected situation. Some of these new “precedents” are compatible with the principles which inform the existing laws and then their formulation will be a sort of “discovery” of new norms that until that moment were “implicit” in such a normative system. A criterion to distinguish the discovery of new norms from a decision based on expediency might be that the universalisation of the former brings about stability to the system; it makes the law work as a negative feedback system while the universalisation of the latter would only cause an increasing process of disorder.

Friedrich Hayek developed his theory of law – savagely summarised in the previous paragraphs – in Law, Legislation and Liberty and it provides us with an accurate modelization of how it would work a legal system that could not be experienced as “arbitrary” by the individual. In Hayek’s legal model, the fulfillment of the law would imply the respect of individual freedom as the absence of arbitrary coercion, since all boundaries to one’s will are previously known or reasonably expected and, then, our individual plans are conceived and accomplished regarding such limits.

After such a long digression we may come back to our initial enquiry: if a Libertarian had to “do meritocracy,” what sort of meritocracy would it be? The usual answer is, as we noted above, “none.” But I suspect that the wrong statements of some intuitive Libertarians carry within them a kernel of truth: the assignment of functions and subsequent retributions are expected not to be arbitrary, because even the changing value of the marginal products implies (1) some sort of predictability, (2) an impersonal process, and (3) a learning feedback system that fosters increasingly correct pattern predictions.

If we state that liberty is one, be it political, economic or social, we cannot use a definition of liberty in the political realm and another notion of it in the economic one. The “none answer” implies just plain individual negative liberty (absence of coercion) in political economy issues, while our definition of individual liberty is “absence of arbitrary coercion,” and this should be applied to the definition of economic liberty as well.

Therefore, I dare to state that a non-arbitrary distribution of functions and its subsequent remunerations should be a central problem to economic liberty, if we define it as “absence of arbitrary coercion.” Since our spheres of individual autonomy are delimited by a system of norms of just conduct, general and abstract, which distinguish arbitrary from just coercion, the economic liberty is expected to be found in such a framework.

Usually, the legal framework of a free market is regarded to be a neutral one: general and abstract rules, whose source could be the legislation sanctioned by an assembly of deputies of the people and notable citizens or the customs acknowledged as mandatory by the judiciary courts. In any case, general and abstract rules that are not conceived by a single will but have the impartiality of a plurality of legislators or juries. In this sense, “absence of arbitrary coercion” is identified with “absence of coercion by discretionary powers of the state.” Nevertheless, we consider that this is not enough: we should be conceptually endowed to do an evaluative judgement about the outcome of such economic system. We need to determine if the result of a neutral legal framework produces a non-arbitrary distribution of functions and retributions.

A neutral legal framework works like a peaceful, predictable, and secure Lockean Civil Society – i.e. the opposite of a Lockean Civil Society. Since we accept that legal norms express rules of just conduct whose obedience brings about a rightful delimitation of each individual sphere of autonomy, the remaining normative conflicts will be related to moral and social norms. But these normative conflicts will not occur among competitive orders, such as legal order against moral order or against social order, since we acknowledge the preeminence of the rule of law over any other source of obligations. Modernity relegates moral and social norms to the inner of each individual sphere of autonomy or, at most, to conflicts among different individuals which will never escalate and balloon into physical violence. That means that morals and social customs will not bring about an alternative order to society, but that they will enable the individual with an order to rule the inner aspects of his personality and a limited scope of his interactions with other individuals. These sets of moral and social rules will not integrate the formal institutions – to use the categories coined by Douglass North – but will be embodied in “packs of precepts of life” that we usually name “virtues” (a term cherished by the republicans mentioned above and by libertarian authors such as Deirdre McCloskey.)

These “virtues” are expected to contribute to the fulfilment of most individual plans in a system of inner stability. What we regard as good and wrong are a set of received values accrued after generations of trial and error processes. “Being honest,” for example, might be considered as a pack of precepts of life which successfully spread all over the members of the society structured by a neutral legal framework. The unit of evolution is neither the society nor even the individuals, but the “virtues” that are spread among the individuals that compounds that society.

At this stage, we must admit that what we regard as “neutral” is just an analytical category that means a set of fixed elements that work as a framework for other elements which change their respective relative positions. This framework is what Hayek named “order” (we can find in his Sensory Order the most accurate definitions of this concept: more than one). These notions allow us to do a clear distinction between the concepts of “evolution” and “change.” Change occurs among the relative positions of different elements given a stable framework – a Hayekian “order” – while “evolution” – in our terms – is related to a modification in the framework where the ordinary events occur. In the words of Douglass North, “evolution” is an incremental change in opposition to a disruptive change – or revolution. Notwithstanding this use of the terminology at hand, only Hayekian orders “evolve,” while their elements (or events) simply “change” their relative positions.

Nevertheless, to use an Arthur Schopenhauer image, events are the eyes of the blind machine which is the spontaneous order. Given a certain abstract order, the population with some types of virtues extended among the individuals will prevail over other ones. For example, Max Weber, in his Protestant Ethic, showed how the habits of frugality, self-confidence, hard work, and so on, were once considered by most people as eccentric but eventually took over whole communities and changed the meaning of good and evil in a process that ended up in an “iron cage of liberty”: the dissolution of the transcendent values that had previously given a religious sense to those habits into a neutral framework of standard moral duties immanent to the social system.

Another classical book that illustrate a process of “natural selection” of virtues might be The Prince by Nicoló Machiavelli: from the very beginning, the author warns us that a different set of virtues would be needed to be develop in a Republic and that he treated that matter in another book, The Discourses on the First Decades of Titus Livius. The Prince, instead, is focused on determining which virtues is a Prince to be enabled with in order to survive in a realm where no one has the sense to be bound by any moral or legal obligation, i.e.: in a set of non-cooperative games. The whole book can be read as a succession of mental experiments about which virtue could make the Prince survive over his competitors. In Richard Dawkins terms, the ones which are competing are the virtues, and the politicians who struggle with each other are the “vehicles” of those virtues. A very well-known example shows how the population of the ones who seek to be feared at the risk of being hated will displace the population of the ones who seek to be loved at the risk of being scorned. To put this another way: in the “ethical pool” the trait “seek to be feared” will outshine the trait “seek to be loved.” Finally, at the last paragraph of the book, the very virtue of the Prince rules supreme among the other ones: the initiative.

Besides the fact that The Prince – as Quentin Skinner pointed out – should be regarded as a satire (but see Barry here and here for a contrary account) , the emergence of the virtue of the initiative as the inner quality of a political leader of a non-republican system scraps any moral sense of the term “virtue.” Virtues are a compound of personality traits that conditions the agent’s decisions from the inner. But certain virtues depend on the legal framework to spread over the “ethical pool.” As we have said, the virtues that will prevail in an authoritarian regime will be different from those which flourish in a republic. The “republican virtues” described by Machiavelli in his Discourse on the Decades can only proliferate among people within a given set of procedural rules. A similar distinction was made later by David Hume: “natural virtues,” such as empathy, can emerge at any given circumstances, as they are embodied in human nature, but artificial virtues such as “justice” will depend upon a determinate legal framework.

Virtues will erode or shore up a formal institutional framework by incremental change (D. North), yet this will occur only as a response to the change in the environment (virtues as the eyes of the blind machine of the spontaneous order). For example, Gutenberg’s press discovery allowed the evangelical movement to gain force since anyone could then start to count with a Bible. Within the Evangelical movement took place a Puritan one, which at its turn changed the sense of morality in the people for whom it took place. This resulted, for example, in the anti-slavery political movement in certain states of the US or cities of the UK such as Bristol, even at a price of high economic cost.

Nevertheless, while spontaneous changes in virtues lead to incremental political and legal change, a disruptive change of the latter could bring about a dramatic shift in uses and customs of the people involved. This need not to be a violent revolution, since democratic institutions are enabled to issue the required laws to make a significant change for the good – or for the bad – in the said virtues to spread among the society. Sound money is a condition for the virtue of frugality to appear, for example. On the other hand, the Adam Ferguson’s book When Money Dies shows how the people change their main traits due to the phenomenon of hyperinflation.

Since virtues are – in the definition stated here – a mere pack of ethical traits that condition the individuals who are their vehicles from the inner, allowing them to survive and pass their virtues to the next generation of individuals, on what basis should we endorse some virtues over other ones? Our theory cannot provide us with a normative answer by itself, since it leads us to the conclusion that what we regard as good and evil comes from a process of blind evolution. As we have said, a learned libertarian would not endorse a meritocracy of any kind.

However, the complex order compounded by the legal framework and the moral and social virtues extended in society might be “neutral” for each individual involved in such society, but the legal framework will not be neutral to the moral and social virtues that are spread in that society. Different types of frameworks will deliver different sets of virtues to be spread. An authoritarian regime will deliver the set or virtues described by Machiavelli in The Prince, while a republic will spread the virtues of The Discourse on the Decades of Titus Livius. Moreover, the difference between the former and the latter is found in the proportion of decisions taken on the basis of expediency and the ones taken on the basis of principles. The whole message of Hayek’s Road to Serfdom might be exemplified in the transition from a system of public decisions based on principles (i.e.: a republic), to a system of public decisions based on expediency. Each system will deliver a different set of “virtues.”

Thus, we are now in a better position to answer the question “what sort of meritocracy would a libertarian would endorse, if he had to?” A natural libertarian will expect that the distribution of functions and retributions will correlate with the virtues most expected to be found in a legal and political system in which most decisions are taken on the basis of general and abstract principles. Such a system of norms and values will be experienced by the individual as “non arbitrary” and then the ideal of negative individual liberty as “absence of arbitrary coercion” will be achieved, not only in the political realm, but also in the economic and social ones.

In a “Keynesian turn,” we could point out that a system whose decisions are taken purely on the basis of principles is an “especial case” and that we usually find mostly the opposite. In most constitutional systems the “macroeconomic policy” is not a matter subject to the courts and we have to acknowledge that the spreading of some virtues over other ones are more conditioned by monetary or tariff policies than by a neutral legal framework. Nevertheless, this reality is not a reason to disregard the value of the virtues that would arise should those policies be neutral (i.e. not being policies at all, but legal norms). Moreover, these objections just pointed out are good reasons to claim for a republican system of liberties as a fairer system.

To summarize: natural libertarians are not so wrong when they aim to achieve a special kind of meritocracy – the one in which the functions and retributions would correlate with the virtues spread in a society where liberty as absence of arbitrary coercion is respected. In such a system, most political decisions will be taken on the basis of general and abstract principles. After all, the dissatisfaction manifested by a natural libertarian when most of the wealth of a society goes to the rent seekers is rooted in a well founded claim for a “free and virtuous society.”

Why Brexit is bad for Liberty

07/19/201607/19/2016 Barry Stocker Current Events, Liberty, Politics Brexit, Europe, European Union, libertarianism, liberty, public policy, United Kingdom

I have been debating classical liberalism and the European Union with Edwin van de Haar. For the moment at least, I think the debate should end or we will risk repetition of previously made points. I would like to thank Edwin for a constructive debate and to invited readers to read through it themselves. Now is the time to move onto a more concrete discussions of the UK referendum vote to leave the European Union.

The UK referendum vote to leave the European Union is not producing the consequences its most eloquent supporters and ideologues had predicted. It is of course very early to have a complete view of the consequences of Brexit, but a large part of Brexit journalistic, campaigning and intellectual elite have argued for leaving the EU on the grounds it would enable a mıore free market UK, one less burdened by regulations ‘imposed’ from Brussels.

A disproportionate part of this elite claims to be libertarian or conservative libertarian, operating in party politics via the Conservative Party and the UK Independence Party and operating in libertarian to conservative campaigning groups. Employees of the most important classical liberal and libertarian policy institutions, the Institute of Economic Affairs and the Adam Smith Institute were divided on this issue. However, some part of the Brexit elites were High Tory, that is traditionalist conservative.

The insistence on sovereignty and national institutions outweighs a commitment to free markets and individual rights. Immigration in particular comes off badly here. The High Tory narrative dominates the Brexit narrative in practice. Some Brexit enthusiasts welcome the supposed opportunity to boost defence spending (though this has nothing do with the European Union which places no limits whatsoever on national defence spending) and believe Brexit will allow restoring the UK’s Great Power status. This is already very high by general European standards and given the inherent limits of the UK’s resources compared with the USA, Russia and China, it’s hard to see how great power status could be attained and why the UK should try. It is clearly not compatible with retrenchment of the state.

David Cameron announced his resignation as Conservative Party leader and Prime Minister straight after the referendum result. His replacement Theresa May began her term of office with a speech suggesting greater state involvement in the economy and society. As Home Secretary she has a particularly illiberal record in civil liberties, immigration and drugs. She has announced support for changes in company law to force firms to accept employee representatives onto boards and restriction on takeover laws.

These measures have led the ‘Red Tory’, Philip Blond, to announce compatibility with his views and enthusiasm for her leadership. Blond runs the policy institute, ResPublica (http://www.respublica.org.uk). He was a colleague of mine in graduate programs at the University of Warwick in the late eighties, though I have not been in touch with him since. He moved from a period of research and university teaching in theology (he was studying European philosophy since the early nineteenth century when I knew him) into the policy world.

The contemporary theologian who influenced him most is John Milbank, an adherent of a version of the Christian tradition which tends to advocate community above individual, or at least would seem to do so if its social philosophy is turned into state enforced actions. There is a strong element of Medieval nostalgia for an organic society in Blond’s social and political thought. He is arguing for less not more free markets and individualism. Now there is no reason to think that Blond’s ideas will have a major influence on May, but if he feels so comfortable with her then that is reason to think there will be strong streak of communalist conservatism in the post-referendum government and even a hint of Christian socialism.

May’s approach has also been compared to that of Joseph Chamberlain, a nineteenth century advocate of interventionist local government and then of a protectionist, state-welfare orientated British Empire; he was as well considered by some to be the strongest advocate of Empire ideology in his time.

Even the Brexit supporters who have the strongest free market small government history have come out in favour of interventionist and corporatist polices. Allister Heath, a senior member of the Daily Telegraph staff, who has a reputation as a free market advocate published advice to Theresa May which is anything but free market, full of corporatism and buying off people who might be relative losers in the post-Brexit UK.

Previous free market advocates, who found it easy to be advocates when the EU served as a scapegoat for any and every overextension of state activity in the UK (whether or not in reality it originated with the EU), have become less clear in their commitment given that some EU support for open markets, such as bans on subsidies to keep bankrupt companies afloat, are no longer available. With some institutional supports for free markets removed, the Brexit liberty advocates find themselves in a world of paying off voters who voted for ‘leave’ because they don’t like ‘neoliberalism’ and blame any difficult consequences of technological invention and market innovation on Brussels Bureaucrats along with immigration from EU countries.

One key theme of the more ostensibly libertarian parts of the ‘leave’ campaign was to argue that they did not want to reduce immigration, but globalise it by replacing automatic rights of EU citizens to live in the UK with an Australian points system, which allows people to enter from anywhere in the world who has sufficient points with regard to educational level, scarce skills, money to invest and so on. However, it is clear that many ‘leave’ voters just want a reduction in immigration and May has distanced herself from a ‘points’ system in favour of absolute reduction.

The ‘leave’ vote won based on the anti-immigration, anti-globalist and anti-‘neoliberal’ instincts of a significant section of the ‘leave’ vote. It is not the whole of the ‘leave’ vote, but ‘leave’ could not have won without it. The evidence so far is that whatever the intentions of the libertarian to conservative element of ‘leave’ thinking that the government is now driven by the wish to follow that aspect of public opinion. The UK is headed towards communalist corporatism, or even protectionist/mercantilist, security-state Great Power nationalist versions of conservatism. Clearly there is much work for liberty advocates to do in the UK counteracting this disaster.

Art, Photography, and Homophobia

07/17/201607/18/2016 Warren Gibson Books, Current Events, Liberty, Religion free association, Lester Maddox, Michelle Kamhi, property rights, Walter Block

Sometimes the theater of the absurd, current events that is, just gets to be too much and I have to comment. This time the issue is whether photography is an art form, a case arising from a professional photographer’s refusal to cover a lesbian wedding. If photography is art, goes the argument, it’s a form of speech protected by the Constitution and that protection overrides any laws prohibiting discrimination on account of sexual orientation.

This nonsense arises from the notion that some forms of voluntary transactions should enjoy legal protection and others shouldn’t. Transactions that are deemed to be exercises of religion or freedom of speech are protected while it’s OK to suppress others even when they are mutually voluntary. The courts view artistic works forms of speech, and are protected. This protection covers not just engaging in protected activities but also refraining from engaging in them. Thus if photography is art, then refraining from photographing a lesbian wedding is an exercise of free speech, protected by the first amendment.

That’s all well and good as far as it goes, but it leaves courts with the job of drawing lines delimiting religious activity or free speech activity. Example: during Prohibition, Catholics were allowed to use wine as part of their Communion sacrament. But Native Americans who want to use peyote as part of their religious ceremonies have consistently run afoul of the law. What’s the difference? Obviously, Catholics are more numerous and politically powerful than Native Americans. Since there is no objective way of delimiting either religion or art (as presently understood), court decisions about these matters are necessarily political.

Delimiting artistic expression may be even more problematic than with religion. Given that any and all kinds of garbage can be found in “Modern Art” museums, it would seem that almost any activity, spraying graffiti for example, could be construed as artistic expression.

The solution is to recognize the right of free association and its concomitant freedom of dissociation, whether in personal or business affairs. (Though not a part of the First Amendment, these rights might be found in the Ninth Amendment.) There are two qualifications. First, any transaction that infringes on the rights of third parties is illegitimate. As Ayn Rand put it, “any alleged ‘right’ of one man, which necessitates the violation of the rights of another, is not and cannot be a right.” Second, politicians and bureaucrats must not be allowed to discriminate since they are supposed to represent the entire population. Those qualifications aside, any business person must be free to turn away gays, blacks, Jews, or anybody else, with or without explanation. But woe unto anyone who tries such exclusions in today’s world. They would pay a stiff price in lost business and boycotts. Unless they found a niche market among KKK bigots, such business people would very likely lose most of their customers, including, I hasten to add, this writer.

Some time ago I posted a piece on these pages defending the right of Lester Maddox, a truly obnoxious character, to exclude blacks from his chicken restaurant, which he did in the 1960s in defiance of the Civil Rights Act. Those were different times, and he garnered enough support to get elected Governor of Georgia. That would not happen these days.

Though I got a lot of pushback, I stand by the argument that obnoxious characters like Lester Maddox constitute a vanguard that helps defend the rights of us “normal” folks. If their outrageous but non-aggressive actions are protected, our moderate actions are safe. Nobody has made this case better than Walter Block in his book “Defending the Undefendable.” He trots out and defends one seedy character after another—pimps, prostitutes, you name it—whose actions, while distasteful to almost everyone, violate no one’s rights.

Returning to the photographer in question, it should make no difference whether her refusal is informed by religion or by hatred of gays. She should be free to turn away customers for good reasons, bad reasons, or no reason.

Incidentally, my friend Michelle Kamhi recently convinced me that photography is not art. I highly recommend her book Who Says That’s Art?, devoted primarily to demolishing modern and post-modern “art” which she calls “anti-art.” I think she’s spot on, but whether you agree or not, you will have to admire the courage and tight reasoning in her book.

The Nice Massacre

07/15/2016 Jacques Delacroix Current Events, Liberty civil liberty, France, Islamism, terrorism

Following the massacre in Nice yesterday, I am hearing comments on radio that, together, would have one believe that it could not happen here, that it’s somehow the fault of the French themselves. I think that’s a dangerous dream.

Americans have to get past the Irma la Douce fantasy about France that many still shelter in their hearts. The French do not wile away their days at sidewalk cafes terraces brimming with insouciance. (That means a “devil-may care” attitude.) France is an industrial society pretty much like the US though without most of the inventiveness. Its economic policies for the past twenty years have been stinky. The causes of the French stagnation would sound familiar to any Bernie Sanders supporter. The current government of the Socialist Party differs from the Obama administration in matters of degree only. The same la-la-la Land dream occupies the minds of most of the French Left as of most American liberals. If anything, the French tend to be more realistic because they have had more experience of its failures.

It’s not the case that France has had an open borders policy as I have heard say on conservative radio today. Nevertheless, for historical reasons, France probably has many more Muslims proportionately than the US has. “Probably” because no one knows who is really a Muslim; no one really knows who is really a Catholic. The only thing that’s more or less known is the number of Muslims names. There are many. Most are French citizens by birth.

The current French Minister of Labor has a Muslim name. People with Muslim names are present throughout all levels of French society. They are in banking, in entertainment. The most popular French citizens probably have Muslims names; they are in sports. By and large, such people are well integrated within a mostly religiously indifferent French society. That is, as well as can be done within an economically stagnant society with a permanent unemployment rate of 10%, 20% for the young. How much discrimination there is against people with Muslim names is anyone’s guess. The fact is that immigrants with Muslim names keep trying hard to move to France. Not many try to move to Egypt or even to Saudi Arabia, for example, where the fate of immigrants may be even worse.

This large population with Muslim names is seen from the US as providing a bottomless pool of jihadist recruits. That’s true but it should also be an asset in combating violent jihadism. Thousands of French police personnel have Muslim names. (The police officer murdered outside Charlie Hebdo was one such.) Hundreds if not thousands of police and other security personnel are fluent in diverse dialects of Arabic. This is more, of course, than can be said of their American counterparts.

The French intelligence services have earned the respect of their allies. The country was not caught sleeping after the Bataclan slaughter. It had been under a state of emergency lightly suspending some personal rights. The state of emergency was slated to be removed in the coming days. Perhaps, someone did not want it to stop although it’s hard to believe given how light it was.

As I write on July 15th, there has been no claim by any Islamist organization. The only thing known is that the driver of the truck, the murder weapon, was a person of Tunisian origin who was probably a French citizen. That’s not enough to prove a link to Islamist terrorist organizations. The man was known to the police as a petty criminal (a familiar story). Note that a petty criminal is one who is not very successful, one at the bottom of the criminal pecking order. He was also undergoing a difficult divorce. I speculate that jihadist organizations provide people of Muslim origin undergoing personal difficulties a high-sounding excuse for venting their anger on the innocent many.

If there was indeed an involvement of ISIS or Al Qaida, no reason for the attack on civilians need to be found. They hate Westerners, irrespective of what Westerners actually do. The fact that France has been publicly involved in fighting Islamist terrorism in two theaters – in Iraq next to the US and in Mali may have made it a priority target for jihadists.

With this group assassination the lack of scruples of violent jihadists is confirmed again. Given the number of victims, the circumstance and the location of the crime, there is a 100% certainty that some of the victims have Muslim names. (By the way, the best video of the event was supplied by an Egyptian tourist.) I wonder if this is going to prompt Muslim organizations everywhere, including in the US, to do more than passively deplore the crime. I wonder if this is going to lead to request for energetic surveillance measures involving the breeding marshes of violent jhadists, which are not Lutheran seminaries or Buddhist monasteries. I ask because, under Obama, in this country, we are paralyzed by political correctness as if avoiding bruising the feelings of some was well worth a few hundred blown up civilians here and there.

Classical Liberalism and the Nation State

07/13/2016 Edwin van de Haar History, Liberty, Philosophy F.A. Hayek, imperialism, international relations, liberalism, libertarianism, Ludwig von Mises, nationalism, political thought

Barry’s response to my earlier post is another interesting read, yet it is also rather broad brush historical. I think he is erroneous if he claims that ‘it did not occur to classical liberals, on the whole, to question the state system as they knew it’. In fact the founding fathers of classical liberalism, David Hume and Adam Smith, were very much aware of other, often cosmopolitan ideals of world order. Yet they argued that the nation was attached to individual emotion, which could not be the case for entities beyond the nation state. This was also the position of later classical liberals such as Von Mises and Hayek, as I show in Classical Liberalism and International Relations Theory (Palgrave, 2009). Let me elaborate a little, also in the wider context of international political theory.

Liberalism is the political expression of individualism, yet cooperation of individuals in groups is valued positively. For classical liberals the nation, or the country, is the largest group in society which is the object of human passion, both positive in the sense of national pride and negative in the sense of shame and humiliation. Hume noted that there are few men entirely indifferent to their country, and both he and Adam Smith underlined that humans sympathise more with people to whom they are close than with strangers or foreigners. Feelings for the nation are strong, natural motivational forces for individuals.[i]

This also applies in the age of modern states and nationalism. Despite the atrocities committed in the name of national glory throughout the twentieth century, Mises and Hayek never predicted nor called for the end of the nation state. Mises thought that language was the essence of nationality, and with the fragmentation of the polyglot Austro-Hungarian Empire in mind he argued that multi-language countries were doomed to failure. His solution was an increase in possibilities for individual self-determination and group secession, but not in the expectation that this would lead to a world without sovereign states.[ii] Hayek saw the nation as a prime source of human bonding and individual loyalty, but recognised the negative aspects of nationalism. He valued the nation, but nationalism was a poison,[iii] not least because he saw a strong relation between nationalism and imperialism. After all, it is a small step from thinking good about one’s country to trying to rule and civilise allegedly inferior others. Often, although certainly not in all cases, the nation as a group is politically organised as a sovereign state. In the classical liberal view, states are the most important actors in international relations.

To maximise individual freedom the state should only have a limited number of tasks. The state is an important protector of natural rights, but history has shown that it is also the biggest abuser of these rights. The principle of the rule of law intends to protect the negative liberty of individuals. Classical liberals think the state can best be bound by a combination of constitutions; separation of the legislative, executive and judicial powers; and the limitation of positive law.

In international affairs this means that states should be cautious about concluding and ratifying treaties and other forms of positive law. These are often binding commitments that are very hard to change or to get rid of, with a large possible negative impact on individual freedom. Some international agreements may be useful to smooth the working of the international society of states, or to settle practical matters. But the dangers of overregulation are just as real in world politics as they are in national politics. Besides some specific cross-border issues, the classical liberal rule of thumb is that there is no need for international state action if there is no domestic state task.

Consequently, attempts to build a better world by establishing international organisations and regimes are rejected. Mises and Hayek were strong critics of the League of Nations and its successor the United Nations, and Hayek was a fierce critic of the International Labour Organization. Their main concern was that these and other organisations were taking up tasks they should not perform, just like overactive states in national circumstances. Social constructivism is bad, no matter at what level it is performed.[iv]

In Degrees of Freedom (Transaction, 2015) I have tried to illuiminate the differences between the different forms of liberalism (and conservatism, also see my earlier post on the differences between them entitled “Let’s clear up the liberal mess”), including their views in international relations. In summary it looks like this:

Liberalism, Conservatism and International Relations

	Classical liberalism	Social liberalism	Libertarianism	Conserva tism.
Nation as limit of individual sympathy	Yes	No	No	Yes
State as prime actor in world politics	Yes	No	No	Yes
International governmental institutions/regimes	No	Yes	No	No
Can war be eliminated	No	Yes	Yes	No
Does trade foster peace?	No	Yes	Yes	No

Source: Edwin van de Haar, Degrees of Freedom. Liberal Political Philosophy and Ideology (Transaction Publishers, 2015).

That also explain partly why Barrry can rightly argue that the ideas of Kant, Mill and to a lesser extent Montesquieu differ from those of Hume, Smith, Mises and Hayek: they are not classical liberals but social liberals.

Notes:

[i] Hume, Treatise,79, 317; Adam Smith, The Theory of Moral Sentiments (Indianapolis: Liberty Fund, 1982), 299; also Edwin van de Haar, ‘David Hume and International Political Theory: A Reappraisal,’ Review of International Studies, 34:2 (April 2008), 225–242.

[ii] Ludwig von Mises, Nation, State, and Economy. Contributions to the Politics and History of Our Time (New York and London: Institute for Humane Studies & New York University Press, 1983), 39–40, 82.

[iii] Friedrich Hayek, Studies in Philosophy, Politics and Economics (New York: Simon and Schuster, 1967), 143.

[iv] Mises, Nation, State and Economy, 90–91; Ludwig von Mises, Omnipotent Government. The Rise of the Total State and Total War (Grove City: Libertarian Pres, 1985), 292–294; Friedrich Hayek, The Road to Serfdom (London: Routledge, 1997), 176.

Classical Liberalism, Cosmopolitanism and Nationalism

07/11/2016 Edwin van de Haar Current Events, Liberty, Philosophy, Politics Barry Stocker, cosmopolitanism, ethics, European Union, F.A. Hayek, France, free trade, international relations, libertarianism, nationalism, political thought

In another thought-provoking post on Facebook (does the guy ever write mediocre stuff, I wonder?) Barry raised the question of the relation between classical liberalism, nationalism and cosmopolitanism. He wrote the following:

“On the capture of classical liberal/libertarianism by anti-cosmopolitans. This is very influential at the heart of the ‘leave’ ‘elite’ in the UK, and can only be destructive of classical liberalism/libertarianism. The immediate political consequence of Leave is the elevation of Theresa May to Tory leadership/Prime Minister’s office on a much more ‘Red Tory’, communitarian, corporatist foundation than existed under Cameron. ’To the extent to which the current wave of populism maps into a conflict over national versus transnational identity (Dan Drezner is unconvinced), the problem is not an excess of cosmopolitanism but rather its absence, especially on the conservative, free-market right.”

He seems to take a positive relation between classical liberalism and cosmopolitanism as the default position. Of course Barry did not provide definitions in a FB post, but here I take cosmopolitanism to mean “the idea that all human beings, regardless of their political affiliations, belong to a common moral community. Cosmopolitans often believe that all individuals have the same basic moral status, and tend to downplay the importance or desirability of national political institutions. [They are] opposed to nationalism” (source: Matt Zwolinski (editor), Arguing About Political Philosophy, Routledge, 2009).

I argue that Barry overlooks that classical liberalism combines a cosmopolitan side, with a strong defense of national political institutions (e.g. the state). The cosmopolitan side is perhaps easiest to see, if one takes the idea of free trade as the guiding principle. Free trade is by nature morally neutral for the individuals involved, and has numerous positive economic effects; it fosters cultural exchange as well as innovation and knowledge sharing. In that sense classical liberalism is indeed related to cosmopolitanism.

Yet this stops where the national state comes into play. Classical liberals never predicted any positive political effects of trade (see my earlier notes on this topic) and, just as importantly, they actually favor a strong state, with a limited number of tasks. At the same time, from Hume and Smith onwards to Mises and Hayek, they strongly dislike the idea of transnational political institutions, because these lack any substantial emotional basis which nations do posses. Also, these large political institutions easily become a threat to individual liberty, even more so than national states with too many tasks. So, there is no really no relations between political cosmopolitanism and classical liberalism at all.

There is also no relation between nationalism and classical liberalism. A preference for the national state does not lead to nationalism, which is the vicious and poisonous belief in the superiority of one’s country, often accompanied with a dislike of allegedly inferior neighboring countries or peoples or groups. This is collectivism turned even worse, which is a double ‘no’ from a classical liberal perspective. This said, if patriotism is defined as national pride, then classical liberalism and patriotism can and will go together. There is a fine line between the two sometimes, but patriotism is not violent and dividing, but a binding force between individuals sharing a national state.

The last point is on the European Union. Hayek and Mises have been on record with strong support for a European Federation, primarily as a remedy to war-torn and nationalism-infected Europe. In these circumstances the default position of an international order as a society of states no longer functioned, so there was a need to seek an alternative. Needless to say their federation had little resemblance with the current super state we know as the European Union, which has become a classical liberal nightmare in terms of liberty and property rights violations it commits on a daily basis.

The current EU has some classical liberal traits (the imperfect common market is the single most important one), which is of tremendous use to all European individuals. It is, however, way too cosmopolitan in the bad political way. A likely consequence of Brexit is that this will become even worse, now that the French and their allies will get more room for their collectivist fallacies.

Notes On Liberty

Spontaneous thoughts on a humble creed

Liberty

At a Muslim Wedding

Freud and property rights

On Robots and Personal Identity

NGDP 3% per year; NGO much less!

A Note on Trump, Immigration, and Healthcare Reform

Some thoughts on the Olympic Games and cosmopolitanism

Voting For Potty-Mouth Trump

What sort of “Meritocracy” would a libertarian endorse, if he had to?

Why Brexit is bad for Liberty

Art, Photography, and Homophobia

The Nice Massacre

Classical Liberalism and the Nation State

Classical Liberalism, Cosmopolitanism and Nationalism

There’s a simple alternative to regulation: liability. We don’t need to tell companies how to be safe if we make them legally responsible for negligence.

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**There’s a simple alternative to regulation: liability. We don’t need to tell companies how to be safe if we make them legally responsible for negligence.**