Transaction costs, exit, and democracy

“What is important to note, however, is that transaction costs associated with relocation matter. The relative success of protectionist and subsidyseeking groups in post-war Britain, Australia, and New Zealand was facilitated by the high costs associated with exercising the exit option. Both Britain and New Zealand are unitary and centralized nation states. Although Australia is a federation, there are only six states, each of which has less fiscal and regulatory autonomy than American states or Canadian provinces.

Polycentric democracy works most effectively when exit-related transaction costs are low and when the number of viable options is large. The closest approximations of a genuine polycentric democracy are the 50 American states and the 26 Swiss cantons.”

Read the rest (pdf). (Yes, I know this was part of last night’s “nightcap,” too.)

Why the US is behind in FinTech, in two charts

The US is frankly terrible at innovation in banking. When Kenya (and its neighbors) has faster adoption of mobile banking–as they have since at least 2012–it is time to reconsider our approach.

Here is the problem: we made new ideas in banking de facto illegal. Especially since the 2008 financial crisis, regulatory bodies (especially the CFPB) has piled on a huge amount of potential liability that scares away any new entrant. Don’t believe me? Let’s look at the data:

bank creation

Notice anything about new bank creation in the US after 2008?

A possible explanation, in a “helpful resource” provided to banking regulators and lawyers for banks:

regulatory complexity

This shows: 8 federal agencies reporting to the FSOC, plus another independent regulatory body for fintech (OFAC/FinCEN). Also, the “helpful” chart notes state regulations just as an addendum in a circle…probably because it would take 50 more, possibly complex and contradictory charts.

So, my fellow citizens, don’t innovate in banking. No one else is, but they are probably right.

Pourquoi Kamala Harris?

La nomination de Kamal Harris comme candidate du Parti Democrate (“D” majuscule) à la vice-presidence avec Joe Biden a donne lieu à beaucoup de sornettes dans les media francais, et francophones, comme on pouvait s’y attendre. Bien sur tout ceci importe car il y a de bonnes chance que Kamala se retrouve présidente, peut-être même très vite.

Etant donnés l’âge de Biden et son état de sénilité, il n’est pas impossible qu’elle devienne tôt Président des EU par remplacement constitutionel. Ceci, à moins que ceux-la mêmes qui ont choisi Kamala comme V.P. à rideaux tirés changent de cheval et inventent aussi un stratagème constitutionel pour mettre en oeuvre le remplacement du vieux Biden. Il y a même certains (dont je ne suis pas) qui parient que Biden ne sera jamais le candidat Democrate venu le temps des élections, qu’il sera remplacé par Kamala avant les élections.

D’abord, des clarifications sur l’ascendance familiale de Kamlal Harris qui ne sont pas superflues vu que le Parti Democrate est enfoncé jusqu’au cou dans la politique communautariste. Elle est la fille de deux immigrants. Sa mère était une Indienne de haute caste du sud de l’Inde. Son père vient de la Jamaique. Selon lui-même, il descend à la fois d’esclaves et de propriétaires d’esclaves. (Il s’agit d’une situation commune, aux EU, comme dans les Antilles anglaises. On saurait qu’elle est commune aussi dans les Antille françaises si on se donnait la peine de chercher un peu.)

Les EU sont un des ces pays possèdant une bourgeoisie issue directement de l’immigration. (J’en fait moi-même partie, sur un plan assez mineur, à vrai dire.) On n’est pas obligé d’entrer dans la société américaine par le bas. Aujourd’hui même, des milliers de citoyens de l’Inde arrivent nantis de bons diplômes. Ils acquièrent un enseignement supplémentaire sur place. Ceux qui s’arrangent pour rester se retrouvent quelquefois millionaires en dix ans. Il se marient le plus souvent entre eux, ce qui accélère encore l’ascenceur économique de leur mobilité sociale. En tous cas, le père de Kamala était professeur d’économie a Stanford et sa mère, chercheuse à l’université de Californie/ Berkeley, possèdait aussi un doctorat. La petite Kamala n’a donc pas été élevéee dans le dénuement. Grandissant dans la très éclairée région immédiate de San Francisco , dans les années 70/80, elle n’a surement pas beaucoup d’expérience personelle du racisme non plus .

Le fait qu’elle se présente comme un candidate Noire pose problème à beaucoup de francophones. C’est que la classification raciale aux EU est avant tout une question sociologique plutot que génétique. Depuis longtemps, elle dépent en partie des choix identitaires que font les personnes elles-mêmes. Personne ne châtie ceux qui se presentent comme blancs même s’ils ont 50% de sang africain sub-saharien. De même, il faudrait un état de fraude charactérisée pour que des porte-paroles Noirs dénoncent la négritude de n’importe qui possèdant un grand-père ou un arrière-grand-père Noir, ou même un seul arrière-arrière-grand-père. Il vaut quand meme mieux, cependant, posséder des traits visibles d’origine africaine sub-saharienne, sur la tête ou les lèvres, si la teinte de peau fait défaut.

Le père de Kamala, né à la Jamaique, possède sans aucun doute des ancêtres Africains . Et il semble que très tôt, Kamala ait fait le choix de devenir membre de l’élite politique Noire de la région de San Francisco. Elle aura delibérément opté pour l’afroamericanité. Elle a donc fait ses premières études universitaires à Howard University à des milliers de kilomètres de chez elle. Howard est difficile a expliquer. C’est une université fondée et financée directement par le gouvernement fédéral apres la Guerre Civile pour donner un débouché universitaire spécifiquement aux Noirs, dont les esclaves affranchis de l’époque. Incidemment, cette origine ne signifie nullement que Howard pratique la ségrégation raciale. Les blancs y sont facilement admis; ils l’ont toujours été.

En faisant ce choix, Kamal a expressément endossé une identité publique d’Africaine-Americaine et elle s’est plongée dans une culture ethnique qu’elle connaissait peut-être mal, ou même, pas du tout. Plus tard, Kamala a fait son droit a l’Universite de Californie/Berkeley, une école bien estimée régionalement, et aussi connue sur le plan national, et surtout, surtout, la pépinière presque’obligatoire du personnel politique de la Californie-Nord (qui comporte entre autres, San Francisco, et Silicone Valley). Comme on le sait, la grande majorité des politiciens américains possède une formation juridique.

Apres avoir echoué une première fois a l’examen qui ouvre l’inscription au Barreau, elle a réussi et elle est immédiatement entrée en politique, de manière tout ce qu’il ya de plus conventionnelle. Elle s’est arrangée pour être recrutée comme assistant-procureur de base; puis elle a été élue procureur en chef dans la circonscription de San Francisco en 2004.

Les mauvaises langues prétendent que le fait qu’elle ait été la maîtresse de Willie Brown, de 37 ans son ainé, n’aura pas nuit à sa capacité d’obtenir le support des notables Démocrates de la région. Willie Brown est l’ancien président de l’assemblée legislative de l’Etat de Californie et aussi, ancien maire de San Francisco. C’est un politicien professionel habile, un Démocrate un peut filou (mais pas trop), bien aimé de tous dans ces deux rôles (y compris de moi-même qui l’ai rencontré une fois). Mr Brown est Noir. A propos, à mon avis, les mauvaises langues ont bien raison.

Kamala est devenue procureur général du grand état de Californie en 2014 dans une élection peu disputée puisque le Parti Républicain, (mon propre parti) y est moribond depuis plusieurs années. Ce nouveau poste lui a procuré instantanément et automatiquement une notoriété qui lui manquait au niveau de l’ensemble de l’état de Californie (pop. 39 millions). En 2016, elle était élue la seconde des deux Senateurs de Californie au parlement fédéral donc, l’une de cent Senateurs nationaux. Elle avait triomphé contre un fauteuil vide car, aussi incroyable que cela paraisse, aucun Républicain ne s’était présenté contre elle! Après trois ans et demi au Senat, Kamal ne s’est illustrée par…rien. Elle y a bien fait son petit boulot au jour-le-jour mais n’est à l’origine, meme partielle, d’aucune législation importante.

Dans ses plusieurs carrières de procureur, Kamela Harris avait plus brillé par ses discours, et par ses vannes, et par ses initiative politiques que par ses chiffres de rendement conventionnels. Dans ses divers postes de procureur, elle a produit un faible taux de condamnations, l’aune de performance normale de ce métier. Elle a pourtan la réputation de s’attaquer a des proies faciles. Ainsi, par exemple, elle a mis a l’ombre des centaines de personnes coupables d’avoir …fumé de la cannabis (pas traffiqué de la cannabis). Ceci, à une époque où tout le monde savait très bien que la Californie était sur le point de légaliser cette pratique fort commune. Et puis, en fin de compte, qui donc est assez vulnérable pour se faire prendre et se retrouver sans défense devant ce chef d’accusation mineur, légalement valide mais pratiquement et moralement bidon? Les jeunes Noirs de sexe masculin, bien sur. Kamal a été entendue plaisantant sur la possibilité de jetter en prison les parents d’enfants récidivistes d’école buissonière. (Je ne sais pas si elle l’a fait.) Kamala Harris a aussi plusieurs fois demontré en public sa mechanceté hors du commun. Elle l’a fait, en particulier, à l’égard de Joe Biden à l’occasion de la primaire présidentielle Démocrate auquelle elle avait brièvement participé (et dont elle s’était retirée rapidement faute d’avoir suscité assez d’enthousiasme).

Q’apporte donc Kamala à la campaigne de Biden? Le plus important est ce qu’elle n’apporte pas. Elle n’apporte surtout pas le vote Noir, acquis depuis longtemps à Biden. D’ailleurs, les électeurs Noirs qui apprécient Kamala sont relativement peu nombreux selon un sondage récent. Elle n’apporte pas non plus le grand état de Californie (ou je vis), perdu d’avance par Trump et par les Républicains en général. On peut donc se demander: pourquoi Kamala?

Kamala Harris est-elle une femme d’extrême-gauche?

Cela dépend.

Kamala Harris est-elle un femme de gauche?

Cela dépend.

Kamal Harris est-elle une centriste?

Cela dépend.

Possède t’elle du talent pour la collecte de fonds?

Oui, oui, absolument.

Kamal Harris est une femme vigoureuse, d’apparence agréeable, toujours bien attifée, coiffée et maquillée (important pour l’électorat féminin), une femme qui s’exprime bien sur tout, et aussi sur rien, un femme politiquement correcte (doublement correcte) sur le plan ethnique, enfin, a peu près, (comme Barak Obama, d’ailleurs). En même temps, c’est une femme capable de mordre férocement

Kamala est un vase à la fois très présentable et vide qu’on remplira du contenu idoine le moment venu, un bon choix sur le plan de la flexibilité, idéologique et autre. Elle sera bien utile a ses capi quoiqu’il arrive dans les mois qui viennent à un Parti Démocrate aujourd’hui en pleine dérive. En effet, personne ne sait trop comment se recomposera le coctèle de son électorat centriste traditionnel (y compris, le gros de l’électorat Noir), de sa forte minorité Sanderista, style- ancien PSU , et de sa frange d’émeutiers enragés dont personne ne connait vraiment ni le nombre ni l’influence, même approximativement.

The Non-Partisan Movement We Need: Anti-Authoritarianism

Political/ideological debates have a lot of moving parts, and there are a lot of timely issues to address. Given the marginal impact of anything we do in this sphere (e.g. voting, sharing a blog post on Twitter, or being a solitary voter in a vast sea of the entire 6200 people in this country), it’s only natural that we have to economize on information and argument and that results. We can’t help but deplete the intellectual commons.

What are some low cost ways to improve the quality?

  1. Value Intellectual humility.
  2. Devalue the sort of behavior that makes things worse.

It bears repeating: value intellectual humility. It’s not easy. I’m as drawn the confident claims as you are. I’ve got a lot of smart people in my bubble and when they boldly declare something, I tend to believe them. But the “I honestly don’t know” posts deserve more attention and are less likely to get it. Let’s adjust in that direction. I’ll try to write more about things I don’t know about in the future (although I don’t know what that’s going to look like).

It’s a statistical impossibility that, of all of the people burned at the stake for heresy or witchcraft or whatever, nobody deserved some punishment received in an unfair process. Don’t get me wrong, witch hunts are a bad thing in general, but we can’t discount them as entirely (maybe just 99.9%) unjustified. But cancel culture is, like good old fashioned witch hunts is doing a lot of harm to the intellectual commons. I’m they catch more bad guys than 17th century Puritans, but lets not leave cancellations up to Twitter mobs. Particularly when it comes to cancelling ideas.

Bad ideas don’t need to be cancelled. They need to be crushed under good ideas.

Far be it from me to peddle unreplicated psychological research (confirmation bias alert!), but I tend to believe that there’s something to the claim that the extreme poles of the ideological landscape exhibit some unsettling traits: narrow-mindedness, authoritarianism, and apparently Machiavellianism, narcissism, and psychopathy.

“Narcissistic psychopath” is not a label I’d like to see bandied about because it’s just too close to ad hominum. But “authoritarian” is a term I’d like to see more widely used as a pejorative, regardless of the position taken by would be authoritarians.

Let’s quit with the shouting, cancelling, flag waving, and blindly taking reactionary positions. Invite debate, and invite holding people accountable. But letting Twitter be the last word is as absurd as letting Helen Lovejoy-esque moral scolding decide how things should be.

But then again, maybe I’m wrong.

Real Decision Rights Theory and Political Coalitions

Libertarians understand these two big ideas:

  1. A system of individual rights can allow widespread cooperation and human flourishing.
  2. The world is full of emergent orders, like markets, with aggregate outcomes that are more than the sum of their parts.

But commitment to the first idea often blinds us to the full implications of the second.

Complex adaptive systems involve an infinity of illegible signals involving cooperation and competition in networks so complex that it would be impossible to replicate their success in any conceivable top-down system. The market is a discovery procedure. But the “it” that is the market is a collective thing. It’s a jointly produced phenomenon and it’s impossible to split it up without fundamentally changing it.

Likewise, a system of rights (including the rights underlying a functioning market) is a jointly produced common good.

Why does it mean anything to say that I own my laptop? Because when push comes to shove (if I’m willing to shove hard enough), other members of my community are willing to act in ways (formal and informal) that enforce my property right. (Interesting aside: If I reported my laptop stolen to the local police, they wouldn’t do anything about it. Perhaps this reflects the median voter’s level of regard for other people’s property rights…)

Ownership is not as simple as “I own this piece of property, period.” Instead, to own something is to have some bundle of rights to make particular decisions. I can decide what to plant in my garden, but I can’t decide to build a nuclear reactor in my front yard. I don’t need to go through some elaborate chain of natural rights reasoning to argue that your negative right to avoid externalities supersedes my positive right to do a thing. Doing so might be a useful exercise to see how (in)consistent our ruleset is. But the real system is much simpler (and much more ad hoc). Rights are as rights are enforced.

What am I driving at here? First, that we should be dealing with property decision rights as they are more than we deal with them as they ought to be. Second, individual rights require collective support. This puts constraints on how we move towards our Utopias.

Debating/convincing our intellectual opponents is necessary, but it’s really just a negotiation tactic. Discounting idiotic opponents is reasonable in the intellectual sphere, but we can’t just overlook the fact that those opponents are part of the environment we’re trying to shape. We don’t necessarily have to throw them a bone, but when we don’t make some group part of our coalition, we have to expect someone else will.

Our normative theories will convince us that group A can’t make group B’s lives worse for the sake of A’s ego. But if A perceives the subjective value of that ego boost to be high enough, and if A has the relevant rights, then B had better look out.

Improving the world isn’t simply a matter of making the right arguments well. We have to be entrepreneurial, and keep an eye out for how others might do the same. Political entrepreneurship means looking for the under-priced voters which is exactly what Trump did in 2016. He found a group A full of low-status voters who had been discounted by the political establishment. And because their rights to shape the collective outcome went unexercised so long, it was that much more disruptive when they were finally brought to the table. Likewise, BLM protests reveal that there is a group B that is ready to throw their weight around.

That leaves a big pile of questions. What is the cost of pride? How can we ensure people have enough dignity that they won’t want to destroy what a functioning (if imperfect) society? How do we account for potential political energy (particularly when we remember that voting is only a tiny part of political participation)?

I don’t know the answers, but I know this: we can’t escape getting our hands dirty and engaging in some political exchange. I don’t like it, but I’m not the only one deciding.

“Political decentralization and policy experimentation”

Since 1932, when Justice Louis Brandeis remarked that in a federal system states can serve as “laboratories” of democracy, political decentralization has been thought to stimulate policy experimentation. We reexamine the political economy behind this belief, using a simple model of voting in centralized and decentralized democracies. We find the electoral logic suggests the opposite conclusion: centralization usually leads to “too much” policy experimentation, compared to the social optimum, while decentralization leads to “too little”. Three effects of centralization—an “informational externality”, a “risk-seeking” effect, and a “riskconserving” effect—account for the different outcomes.

By Hongbin Cai & Daniel Treisman. Here’s the whole thing (pdf). This is probably more right than wrong, but you gotta wonder: what’s “the social optimum”?

Post-pandemic trends in post-Brexit British foreign policy: Asia or the Atlantic?

Introduction

In January 2020, the UK had given a go-ahead to Chinese telecom giant Huawei to participate in its 5G network – with restrictions and conditions. The Trump administration conveyed its displeasure to the Boris Johnson administration. Not just the US President, but senior officials of the US administration are supposed to have said that this decision would impact economic and security relations between the UK and the US.

In the aftermath of the Covid-19 pandemic, ties between the UK and China have steadily deteriorated. As a result of increasing strains with Beijing, and the imposition of strong US sanctions against Huawei, London began to rethink its approach towards Huawei’s role in its 5G network.

First, it was decided that Huawei’s participation would be reduced to zero by 2023. In May, Britain had also proposed a multilateral grouping of 10 countries, D10 (G7+ India, South Korea and Australia), which could work collectively for reducing dependence upon Chinese technologies.

UK-China ties after the imposition of the National Security Law in Hong Kong

London further hardened its stance vis-à-vis China after the imposition of the National Security Law in Hong Kong, which, according to the UK, is a violation of the ‘one country two systems’ arrangement safeguarded by the ‘Basic law’ of Hong Kong and the Sino-British joint declaration signed in 1985. According to the Boris Johnson administration, the National Security Law will impinge upon not just the autonomy of Hong Kong but freedoms and rights of the residents of the former British colony, guaranteed by the 1985 declaration (these rights were to remain in place for a period of fifty years from 1997 – the year in which British left Hong Kong and handed over sovereignty to China).

Decision regarding Huawei

On July 14, 2020, on the recommendation of National Cyber Security Centre (NCSC), the Boris Johnson administration decided that Huawei will be removed from the 5G network by 2027. It was also decided that the purchase of 5G kits from Huawei will not be allowed after the end of December 2020.

China reacted strongly to the UK’s recent announcement, while it was welcomed by US President Donald Trump. China stated that the UK’s decision will exacerbate tensions, while the US President stated that the Johnson administration took this decision as a result of pressure from Washington. A top official in Boris Johnson’s administration stated that this decision was not driven by US pressure. Said the British Foreign Secretary Dominic Raab:

But I think that decision was made not because the US said it was a good decision but because the leadership in the UK concluded the right thing to do was to make that decision for the people of the UK.

Interestingly, some media reports suggest that British officials have stated that the recent ban on Huawei was imposed with a view to placate Trump, and the UK could revise its decision, if the mercurial US President is voted out in November 2020.

UK-Japan relations

Britain has already begun to look for alternatives to Huawei for developing its 5G network. On July 16, 2020, just two days after the decision was taken to remove the Chinese telecom giant altogether by 2027, British officials are supposed to have met with their Japanese counterparts and sought assistance for developing Britain’s 5G network. Two companies which were discussed as possible alternatives to Huawei were NEC Corp and Fujitsu Limited.

It would be pertinent to point out that in recent months Britain has been aiming to strengthen trade ties with Japan, and is also looking to secure a Free Trade Agreement (FTA) with Japan. Both countries have also been at the forefront of pitching for diversifying global supply chains.

Conclusion

While it remains to be seen whether Britain and Japan can work together for developing the former’s 5G network, the London-Tokyo relationship has witnessed an upswing in the aftermath of Covid-19. Both countries have already begun to take steps for reducing economic reliance on China. It would be interesting to see if Britain sticks to its announcement of removing Huawei from its 5G network by 2027, in case Donald Trump loses in 2020. While Britain is seeking to strengthen ties with countries wary of China’s increasing economic dominance, the former would not likely to be perceived as a mere appendage of Washington.

“The Long-Run Effects of the Scramble for Africa”

We explore the consequences of ethnic partitioning, a neglected aspect of the Scramble for Africa, and uncover the following. First, apart from the land mass and water bodies, split and non-split groups are similar across several dimensions. Second, the incidence, severity, and duration of political violence are all higher for partitioned homelands which also experience frequent military interventions from neighboring countries. Third, split groups are often entangled in a vicious circle of government-led discrimination and ethnic wars. Fourth, respondents from survey data identifying with split ethnicities are economically disadvantaged. The evidence highlights the detrimental repercussions of the colonial border design.

This is from Stelios Michalopoulos and Elias Papaioannou, in the American Economic Review.

Is there a way of out this quagmire for Africa? The status quo, with its multilateral institutions, doesn’t seem to be working (perhaps because multilateral institutions have been grafted on to the old imperial structures), and colonialism-slash-imperialism started this problem to begin with.

What about a more radically moderate approach? What if the US (or even the EU) opened up its federation to applicants from Africa?

Throwing the Bums out is Insufficient

It’s election season (those quite weeks between October and November three years later) which means a resurgence in political economy superstitions! A particular tempting one is the Throw the Bums Out Theory of Governance.

The theory goes like this: things are awful, awful people are in positions of power, therefore we need to get rid of those awful people.

As instincts go, it’s not the worst. But it’s Twitter level thinking. Yeah, it’s worth celebrating the regression to the mean that will be the end of Trump’s presidency. I’m looking forward to the “regular” amounts of corruption and embarrassment. But those “regular” amounts are still problematic. The lesser of two evils still sucks. The mean we’re regressing to is the real problem.

In other words: the political outcomes we get reflect the underlying political reality (give or take). As Mencken said: we get what we want good and hard. Political outcomes involve (mostly bad) luck, but Trump wasn’t some utterly random accident. He happened because enough American voters wanted that (more than the next best alternative, anyways).

Throwing the bums out is cathartic, but there’s no shortage of bums to replace them.

The problem is not the bums, it’s the system as a whole. Trump was able to screw things up so badly because we’ve set up ground rules that a) gave him the ability, and b) required more competence than he was ready or able to apply. But elections don’t choose the qualified candidates, they choose the popular candidates. And if one thing is obvious in 2020, it’s that we can’t count on magically educating our political opponents into having the enlightened views necessary for us to make sure the best candidates are always the most popular.

In the long-run, the task is to make incompetent morons less important–something I hope everyone can agree is a worthwhile goal (#neverHillary, #neverTrump). The current system means ideological tribes have to be constantly warring with each other to make sure presidential power doesn’t get into the wrong hands. Can we please agree that this is a terrible system?

We can lower the stakes. We can push power back to the state and local level (and give people an incentive to actually pay attention to local issues!). Let’s take a break from partisan entertainment–as fun as Project Lincoln is, let’s face it, they’re not convincing anyone–and get to the hard task of being a self-governing society. Let’s ask how we could set things up so we don’t have to worry about the next Clinton or Trump.

Until we change the system, we’re going to keep seeing more of the same. Let’s shift the conversation away from “that candidate’s terrible, how can we defeat them?” and towards “this setup attracts terrible candidates, how can we fix that?”!

New ‘summer eating allowance’ hard to stomach for low earning taxpayers

Rishi Sunak on the economy and lessons learnt from the Covid-19 ...

[This is a guest post by Dr Wesley Key, Senior Lecturer in Social Policy at the University of Lincoln.]

The announcement on 8th July 2020 by Chancellor Rishi Sunak that the government will refund 50% of the cost of meals out during Mondays-Wednesdays in August 2020, at an estimated cost to the taxpayer of £500m, will, for many reasons, be hard to stomach for low paid working age taxpayers who cannot afford to eat out themselves. For such people, paying the rent, heating their homes and feeding their children will often leave little or nothing left over for dining out.

This new ‘summer eating allowance’ is likely to disproportionately benefit affluent older people with high levels of disposable income, whose custom typically helps to sustain many eating outlets during the mid-day/afternoon periods of the working week. The very same affluent older people who have qualified, with no means test, for free prescriptions aged 60-plus, for a free TV licence if a household member is aged 75-plus (up to August 2020), for a Winter Fuel Payment if a household member has reached state pension age, and for free local bus travel if they have reached women’s state pension age, regardless of their gender. The very same older people to benefit from the seven-fold rise in UK private pension income during 1977-2016.

Low paid and benefit dependent parents may also wonder why Chancellor Sunak is splashing out such a large sum of taxpayers’ cash, given that it took the efforts of Manchester United footballer Marcus Rashford to change government policy on 16th June 2020 to ensure that children eligible for Free School Meals continued to receive the relevant food vouchers during the elongated summer vacation period. This ‘COVID Summer Food Fund‘ was eventually set up at an estimated cost of £120m, less than a quarter of the cost of Sunak’s ‘Eat out to help out’ scheme, a.k.a. the ‘summer eating allowance.’

In the longer term, when the reality of tax rises and/or spending cuts to pay for the COIVD-19 bailout begins to bite, the government needs to focus on intergenerational fairness and ensure that well off pensioners pay their share of the nation’s debt. It is time that a government made non-poor over-60s purchase their medication via a Prescription Prepayment Certificate (PPC), which in 2020-21 costs younger adults £29.65 for 3 months or £105.90 for 12 months, sums well within the reach of people in receipt of private and state pension payments. It is also time to make employees aged 65-plus pay a tax of the same rate as the employee National Insurance Contributions paid by younger workers, in order for older workers to fully contribute to the funding of the public services that they use more extensively than their younger colleagues. Such moves to cut the benefits received by, and increase the tax taken from, healthy, active people in their 60s and 70s would help to increase the funding of the social care services that are largely used by people aged 80-plus who are no longer able to undertake paid work and are entitled to face lower user charges for the social care that they require to ensure a degree of dignity and independence in old age.

Hazony’s nation-state versus Christensen’s federation

Yoram Hazony’s 2018 book praising the nation-state has garnered so much attention that I thought it wasn’t worth reading. Arnold Kling changed my mind. I’ve been reading through it, and I don’t think there’s much in the book that I can originally criticize.

The one thing I’ll say that others have not is that Hazony’s book is not the best defense of the status quo and the Westphalian state system out there. It’s certainly the most popular, but definitely not the best. The best defense of the status quo still goes to fellow Notewriter Edwin’s 2011 article in the Independent Review: “Hayekian Spontaneous Order and the International Balance of Power.”

Hazony’s book is a defense of Israel more than it is a defense of the abstract nation-state. Hazony’s best argument (“Israel”) has already been identified numerous times elsewhere. It goes like this: the Holocaust happened because the Jews in mid-20th century Europe had nowhere to go in a world defined by nationalism. Two competing arguments arose from this realization. The Israelis took one route (“nation-state”), and the Europeans took another (“confederation”). Many Jews believe that the Israelis are correct and the Europeans are wrong.

My logic follows from this fact as thus: the EU has plenty of problems but nothing on the scale of the Gaza Strip or the constant threat of annihilation by hostile neighbors (and rival nation-states).

The European Union and Israel are thus case studies for two different arguments, much like North and South Korea or East and West Germany. The EU has been bad, so bad in fact that the British have voted to leave, but not so bad that there has been any genocide or mass violence or, indeed, interstate wars within its jurisdiction. Israel has been good, so good in fact that it now has one of the highest standards of living in the world, but not so good that it avoided creating something as awful as the Gaza Strip or making enemies out of every single one of its neighbors.

To me this is a no-brainer. The Europeans were correct and the Israelis are wrong. To me, Israelis (Jewish and Arab) would be much better off living under the jurisdiction of the United States or even the European Union rather than Israel’s. They’d all be safer, too.

How I understand left and right today

One of the things that I discussed in my Ph.D. dissertation some five or six years ago was the concept of left and right in politics. In the context of my dissertation, the discussion had to do with the fact that 19th century Brazil had primarily two political parties, the Liberal and the Conservative. I was trying to find ways to make sense of these two parties. My advisor said that the Liberals were the left, and the Conservatives the right. I came to the opposite conclusion, but mainly because we were using different criteria to define what is left and what is right.

At least in my experience, people call left something that is closer or more sympathetic to socialism. Right is something that is opposite or aggressive towards socialism. This explains why most people believe that nazism and fascism are far-right movements: they are perceived as archenemies of socialists. Liberals (in the American sense) are also considered left-wing, although true liberals would not go so far as to embrace full socialism. Conservatives and Libertarians are in the right because they are more opposite to socialism. The left is also identified with revolution, for wanting to radically change things, while the right is perceived to be conservative (with a small c) or even reactionary.

Even when I was in high school, learning these things for the first time, I found them to be somewhat confusing. Really, what is the difference between Hitler and Stalin? How can it be that one is on the far-right and the other on the far-left if I perceive them to be so similar? In my 15 or 16 years old mind, a possible explanation was that left and right are not in a straight line, but in something that resembles a horseshoe, with the extremes very close to each other. I thought about that sitting in my high school History class before I read it anywhere, and it served me well for many years. All I had to do, I thought, was avoid the extremes, for they end up being equally totalitarian. For many years I thought of myself as a social democrat, in favor of a substantial welfare state and some level of economic intervention by the state, but only when market forces were unable to do their job right.

Since I truly started learning about classic liberal, conservatives and libertarians, my horseshoe theory started to make less sense. I think that the traditional way to think about left and right already makes less sense because we have to bend the line like this for it to work somehow. But also, I think that this model has a problem because we use socialism as a reference: we classify things and people as left or right depending on how they relate to people and things like Marx, Stalin, Lenin, and the USSR! Intuitively I think that there is something wrong with that. And that’s when I started to think that we should classify things as left and right according to how they relate to individuals.

Today I think of left and right according to how much freedom we are willing to give to individuals. In my mind, far-right means maximum freedom. Far-left means minimum. That’s it. Of course: Rousseau will say that people are not really free until they are free according to his definition of freedom. In a Rousseauian state you might believe that you are in chains, but you’re actually free and your process of reeducation is still ongoing. Granted, Christians think something in similar lines: you’re not truly free until you serve God. However, I think that this is mistaking freedom and flourishing. You can have whatever understanding of what human flourishing (or happiness) really means, but the point is that if you want people to be free, you can’t force it on them.

And so, that is it: when I think about left, I think about forcing on people your concept of human flourishing. When I think about right, I think about letting people free to figure this out by themselves. I don’t think it’s a perfect system. After all, am I not forcing upon people the concept that they have to find their flourishing ideal by themselves? But I avoid thinking about that. Of course, this model might make some conversations harder, because I’m thinking about Hitler and nazism as far-left movements, while a lot of people (maybe the majority) learned to think about them as far-right. But on a personal level, it has helped me to think about politics. On my part, I believe that a society where people are in general free to choose (Milton Friedman) is a better society. Generally.

 

What I learned in the Master’s

In my master’s degree, I studied international relations. As far as I can judge, the program was very good. Excellent even. It was a very good two years, in which I was challenged like never before. The master’s degree was very difficult for me. I was very curious about international affairs, but I knew almost nothing about international relations theory. The professors assumed that students were at least familiar with the content. I was not. So, I went through the experience of learning to cook and learning to be a culinary critic at the same time. I had to chase a lot. But it was good. The master’s taught me like no previous experience to study on my own.

Looking back, I understand that the program was strongly influenced by a light form of postmodernism. That was very difficult for me. There was a strong rejection of more traditional theories of international relations, such as realism and liberalism. It was all very new to me, but I knew that being a classic realist was not an option well regarded by the professors. I ended up finding a kind of lifeboat in constructivism. I didn’t want to be ashamed of being a realist, but my intuition told me that there was something wrong with postmodernism. It was only after the master’s degree, teaching the theory of international relations and studying several other things, that I understood that postmodernism is really crazy, something deeply twisted.

Constructivism is largely weird also. The most sensible thing I read in international relations was John Mearsheimer’s offensive realism. Stephen Walt is an author who also made sense to me in my post-master’s life. In short, I admire my master’s program for its academic excellence, but I find the theories espoused by several of the professors completely flawed.

It was very difficult for me to write my dissertation. I did not have a clear theoretical basis, just the instinct that I did not want to follow a postmodern line and the certainty that a more traditional theory would not be well accepted. I wrote the dissertation without having a very solid theoretical basis. But my research, modesty aside, was still very well done. I researched the arrival of the first Protestant missionaries to Brazil in the 19th century.

It was a topic of personal interest. I was a recently converted Protestant, and I wanted to know more about my history. As they say in Brazil, I joined hunger with the desire to eat. My question, which I was not able to ask so clearly at the time, was whether the presence of missionaries in Brazil, the majority coming from the USA, had affected Brazil-United States relations in any way. Even today, I find it very difficult to analyze causality in such cases, as someone would do in the hard sciences, but I believe that with the information I gathered I can defend that yes, American Protestant missionaries affected Brazil-US relations in many ways. Brazil and the USA were predominantly disinterested in each other in the early 19th century.

In the late 19th and early 20th centuries, this situation changed dramatically, especially on the part of Brazil. The USA started to play a central role in Brazilian foreign policy. It does not seem to me to be the case that the missionaries caused this change, but I believe that their presence in Brazil cooperated, along with other factors, to make this happen. Would Brazil change its foreign policy at the end of the 19th century in one way or another? This is a type of question that, honestly, I’m not interested in answering. But I believe it is clear that the missionaries helped the two countries to become a little more aware of each other.

I faced some opposition from colleagues for choosing this topic. One of the things I heard was that, being a Protestant, I would not have the necessary distance to do a good research. I also heard that missionaries would be little more than tourists, and that they would, therefore, have no chance of affecting relations between the two countries. These were harsh criticisms, which still make me sad when I remember them. I see in these criticisms a certain prejudice against evangelicals that is still present in Brazil, inside and outside academia. Ironically, I did not find the same thing on the part of the professors. On the contrary! Every one of them was always very supportive of my research, and in fact, they found the topic interesting and pertinent.

I would very much like to be able to return to the topic of my research with the head I have today, but I don’t have time for that. To some extent, I would also like to go back to those classes knowing the things I know today. But I also believe that I would not have that much patience. I have a better notion of what I consider epistemologically valid or not. I suppose the master’s degree would be more difficult to take today. Anyway, the master’s degree gave me my first job as a professor: I started teaching international relations when I hadn’t even defended the dissertation, and I did it for eight years. It was a very good eight years. Although I am away from this area, I still like what I learned, and I feel benefited by the time I studied and taught international relations.

What I learned at the doctorate

The 19th century Brazilian political system was dominated by two parties: Conservatives and Liberals. Although these parties were formally established only in the late 1830s or early 1840s, part of my thesis involves understanding that these parties existed, albeit in an embryonic form, since independence in 1822.

What I noticed is that since independence, conservatives have had a more realistic view of international relations. For them, securing the territory (and the government’s dominance over it) was crucial. Liberals had a more, well, liberal view of international relations. Although they did not deny the traditional formulation of the state (territory, population, government, recognition by other nations), they were more optimistic about the possibility of cooperation with other countries.

The view of conservatives and liberals about international relations matched their ideas about domestic politics very well: conservatives advocated a more centralized and stronger government, with greater control over the territory. One of their great fears was the possibility of Brazil’s fragmentation into several small countries, as happened with Spanish America. Their defense of the monarchy was linked to this: a monarch with greater powers would guarantee the maintenance of the territory. Liberals advocated a more decentralized government, with greater freedom for individuals, and also greater freedom for provinces, which would not be controlled so directly by the central government. The fear of fragmentation of the territory was lesser, and some liberals understood that if individual provinces decided to leave the union, well, that was their right.

These views on international and domestic politics also matched the way liberals and conservatives viewed the United States. Early in the country’s history, conservatives tended to see the United States as a young, unimportant republic. The proclamation of the Monroe Doctrine changed this attitude a little, but it remained a fact that conservatives preferred to direct Brazilian foreign policy towards Europe. Liberals, for their part, saw an example to be followed in the USA, with their conscious departure from the European way of doing politics, especially their federalism. Throughout the 19th century, as the United States grew in power, these attitudes changed, but not by betraying the basic understanding that the two parties had about international relations: conservatives feared possible US imperialism, especially in relation to the Amazon. Liberals were less jealous about the national territory, and in any case, they did not see the United States as a threat.

The great irony I found in my thesis is that in the late 19th and early 20th centuries, liberal and conservative ideas about the United States converged. The monarchy was overthrown and the republic proclaimed in Brazil in 1889. The liberal and conservative parties were formally extinct. Part of my thesis involves saying, however, that despite this formal extinction, liberal and conservative attitudes continued to exist in both domestic and international politics. In domestic politics, Republicans represented, at least in part, a radicalization of liberal ideas. Foreign policy was initially marked by this radicalization, but that soon changed. After a very troubled 1890s, the Baron of Rio Branco took the reins of Brazilian foreign policy in 1902.
Rio Branco was a frankly conservative individual. Early in life he chose not to get involved in domestic politics, partly because he did not want to be in the shadow of his father, Viscount of Rio Branco. He followed the diplomatic career. However, as I have already explained, the views of conservatives in domestic politics found a clear counterpart in foreign policy, marked above all by the defense of the territory. And this was the foreign policy of the Baron of Rio Branco.

The thing is that Rio Branco chose a liberal, Joaquim Nabuco, to be Brazil’s ambassador to Washington. Both Rio Branco and Nabuco understood that Brazilian foreign policy should focus on the USA, but for different reasons. On the international stage of the 1900s, Rio Branco believed that an alliance with the USA, albeit informal, was the best way to guarantee Brazil’s security against European imperialism. Nabuco did not ignore this aspect of international relations, but he also believed in a higher ideal: that the approach to the USA could represent a counterpoint to the bellicose European international relations, leading to the progress of civilization. So the irony was this: both Rio Branco, the conservative, and Nabuco, the liberal, wanted to get closer to the USA, but for very different reasons.

Studying to write my thesis was a very pleasant process. I liked the characters I met, I liked the stories and I liked the theme I chose. During the doctorate I was intellectually more mature, and I managed to have a high degree of independence in the way I conducted my research. In other words, I did not allow myself to be led by theoretical perspectives with which I did not agree. And I also think that what I learned has real practical implications. I am glad that it was not my responsibility to decide on Brazilian foreign policy in the 19th century, but I understand that conservatives were often being fearful. I know that they were often being hypocrites. Of course, hindsight is always beneficial, but I believe that liberals were generally right.

There is a catch to this story: Brazil was the last country in the West to abolish slavery, in 1888. Until then, an unimaginable number of slaves crossed the Atlantic to work mainly on coffee and sugar cane fields. This is a dimension of the history of Brazil to which I regrettably gave little importance at the time I was writing. Today I see things differently: the country of slavery yesterday, not for nothing, is the country of socialism today. And I think it’s important to think about how such a strong dependence on slavery probably affected the way domestic and international politics were made.

 

Advice to Libertarian IR Theorists

LGF: This short article was published in the now extinct ThinkIR website on 11 October 2012. I decided not to make any corrections to the original text.

How can you be a Libertarian and theorise IR at the same time? We may tackle this question from a normative or descriptive point of view, but I don’t think you could separate one from another.

On the normative side, let’s face it: most political scientists believe in big government and some who claim that don’t, believe in it anyway. The Libertarian IR theorist will be less than sanguine about the status of normative assumptions in IR, to say the least.

On the descriptive side, IR was born statecentric and remains a statecentric discipline. Adding “new actors” will not do if we keep presupposing they don’t have their own character and are merely “parts” of a “whole” – Leviathan, of course. Starting from the descriptive side, therefore, is also a bit of a problem for the Libertarian IR theorist.

How to begin? I suggest an agenda that does a bit of both and, for the time being, doesn’t get “quite there” yet. There’s preliminary work to be done. More importantly, there’s a lot of “real world” nonsense to be stopped or prevented, and this is equally pressing.

On the one hand, the Libertarian IR theorist has to dispel the normative and descriptive Leviathanic myths bought and reinforced by the discipline of IR since its incipience. For all its attractiveness, though, myth-bursting doesn’t necessarily precede “real world” engagement. “All these theories yet the bodies keep piling up”. That kind of thing.

Back to the question: how to begin? Do a bit of normative, a bit of descriptive and a bit of engagement. One day, Libertarian IR theorists will get there. Meanwhile, merely shifting the conversation with this threefold strategy will open doors – even gates.

Fellow Libertarian IR theorist, there are essentially two ways of doing normative, descriptive and engaging thinking. The first is the way of dialogue. The second is the way of antithesis. Out of these two, a whole new school of thought may emerge. New to IR, that is.

When in dialogue, speak the language of the conversation. Understand it first. Master the key IR theories and arguments in every branch. Security studies, foreign policy analysis, world history, IR theory, IOs and, of course, international political economy.

A good starting point would be deconstructing this unhelpful term, “Liberalism”, which can mean “Wilsonian imperialism” as much as “Kantian federalism”. In the hands of current pundits, it often means “bomb anyone outside the West who refuses to bow to our big government institutions and policies”.

From clarification of the many uses of the term and how anti-liberal the most frequently employed meanings are, proceed to an analysis of possible dialogue with Classical Liberalism. The powerful tradition of Hume and Hayek, of Mises and the Manchester School.

Don’t stop at economics or political philosophy. Do the hard cases. What (if anything) would they say, for example, against realists? IR “liberals”? Constructivists? And, of course, Marxists.

Here the point is to “mine” for “international thought” (even in the Wightian fashion) bearing in mind the “family resemblance” between the rich tradition of Classical Liberalism and the Libertarian approach.

But go a bit further. Is there anything we can learn from realists or constructivists? Feminists, poststructuralists, postcolonialists and, why not, Marxists? If there is, please mine it as early as possible and preserve whatever spark of truth we may find in the established approaches in our discipline.

You may, of course, be even sneakier, wear the camouflage and employ the vocabulary of the mainstream. Why not talk “securitisation” but add to it a Libertarian twist? Why not, for example, challenge both “securitising moves” and “desecuritisation” on the same grounds that either way there’s a statist assumption that public policy is the “appropriate” sphere of security?

Wearing camouflage, depending on the situation, can be a good way of getting heard. If you manage to get attention and smuggle a bit of Libertarian principles behind the mask of the mainstream, well, congratulations: you’ve just shifted the conversation.

This is the way of dialogue. Let’s look now at the way of antithesis. It is a worthwhile endeavour, but we run the risk of sectarianism. Antithesis is important to draw the line, but potentially damaging if employed to police thought within the movement.

Care more about drawing the line between Libertarian and Liberal than Randian and Rothbardian. If you achieve considerable dialogue with realism, constructivism and liberalism – or with critical theory, feminism, whatever – antithesis will be important to teach us where to stop.

Is Libertarian IR critical? Yes, but for exactly the opposite reason that Marxists would consider themselves critical theorists. Is Libertarian IR liberal? In a sense, but this has to be defined by contrast.

Notice I haven’t shown anything of the substance of a potential Libertarian IR theory. I don’t mean to say little about such an important subject for mere “industrial secrecy”. The truth is that it’s hard to know the final result.

Don’t Libertarians often refer to “spontaneous order“? So, then: it’s hard to predict, let alone know what a Libertarian IR theory will look like in detail, before obtaining space for it in the discipline.

The ground-clearing exercise of dialogue and antithesis helps open up space for Libertarian IR, but it operates as a constraining and enabling mechanism. When we try to be understood by both statists and state-centrists, when we speak their language, we’ll see that we’re adding originality to the formulation.

It’s not a matter of transposing Hoppe or Spooner, Nozick or Murphy into IR. It’s not a matter of merely developing a “world politics” argument out of the initial approaches. It is, rather, a presentation to the IR audience.

After gaining space, Libertarianism will be speaking to IR, and not anymore to those who listened to it in a past age. Libertarian IR will be similar, but not quite the same.

In dialogue with the IR establishment, or even critical theories, it will be similar to them, but will also smuggle a bit more of liberty into the conversation. In antithesis, it will of course draw a line. In transposition from the initial context to our own discipline, it will be original.

Remember intellectual exercise isn’t enough. Even now, as you read, Leviathan plots against human life, liberty and property. We need scholars, entrepreneurs of theorising, as much as we need second-hand trade in ideas.

Be visible. Be active. Be in the conversation out there. The conversation goes beyond the microcosmos of the university campus. If asked about policy, talk policy. Go to the media. Blog. Talk to people. Influence by example.

Do normative argument, do descriptive theory and by all means make it engage with the general public. Do journalism, punditry, policy advice. Pursue the way of dialogue or the path of antithesis.

Shift the conversation. Give it a new direction.