Cities in capitalism are more beautiful

The other day I wrote about some of the reasons why I love capitalism. One of them is that cities in capitalism are more beautiful. I am convinced of this when I think about some cities I am more familiar with, including their geography and history.

Most foreigners I know have difficulty to answering correctly, when asked, “What is Brazil’s national capital?”. Most people answer Rio de Janeiro, but it is actually Brasilia. Many people say that beauty is in the eyes of the beholder, but I am very inclined to say that this is not so. I am still not 100% sure about this, but I believe that there is something objective about beauty. Maybe it is not something so strict, like a point. Maybe it is something broader, like an area. But still, I am inclined to say that there is something objective about it. At least for me, Brasilia is one of the ugliest cities conceivable. I am really glad to say that. Its architecture was designed by Oscar Niemeyer and Lucio Costa. Growing up in Brazil, questioning that Niemeyer was a genius is almost anathema, almost like saying that Maradona was better than Pelé or that Ayrton Senna was not the best Formula One pilot ever. Because of that, I was always happy to say that Niemeyer’s buildings are among the ugliest things on the surface of this planet. It was like shouting that the king is naked.

Brasilia is very beautiful from the sky. Its shape resembles an airplane or a cross. But that is the problem: the city is beautiful from heaven, but not for the people walking in it. It was made for God to see from up there. But, as Niemeyer was a convinced atheist, I am not sure who is watching his creation. My guess is that Niemeyer thought that he was a god. A very mean god, who didn’t care about people having to spend lots of time in cars driving long distances.

Niemeyer was also related, with Lucio Costa, to Barra da Tijuca, a neighborhood in Rio de Janeiro where I spent lots of time growing up. Lucio Costa, as far as I’m concerned, was not a communist. I believe he was closely connected to the Brazilian version of positivism. Because positivism and communism are basically the same, it doesn’t make much of a difference. Barra da Tijuca is very similar to Brasilia: very beautiful if looked at from the sky, but very unpleasant for the pedestrian. Very long distances to walk. Cars are mandatory.

The most pleasant neighborhoods in Rio de Janeiro are the result of spontaneous order. As Hayek noticed, spontaneous order is one of the central features of capitalism. People usually contrasted between planned economies (such as the USSR) and unplanned economies (such as the US in some moment of its history). But Hayek observed that all economies are planned. Some are centrally planned. Others are planned by several individuals who are not following a specific central plan.

I am convinced that cities that follow no plan, or a very simple plan, are more beautiful than cities that follow a very specific central plan. New York, as far as I know, followed a simple plan, a grid. But other than that, there was a lot of freedom in the use of the space for much of its history. It’s a city that I just love. I am more comfortable talking about Rio de Janeiro. It is a city that was at its best before modern architecture, positivism, socialism, Developmentalism, and other isms. It was better when Brazil had a little more classical liberalism.

RIP John Perry Barlow – On the right to free information

Sadly, John Perry Barlow, the founder of the Electronic Frontier Foundation has died today. He was – to me – a huge inspiration for the internet anarchy and the cyberlibertarian movement I support.

His vision of the internet was to create “a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth.”

As a tribute to Barlow, I would like to provide a summary of his speech on The Right To Know at TEDx Marin.

  1. The first time Barlow got online, he thought the internet would create the collective organism of mind.
  2. He believed that one day everyone on the planet would be endowed with the right to say whatever they want to say within their hearts, and nobody would be in the position to shut them up. In addition, everybody would have the right to not listen to what was said or written on the internet.
  3. The internet was going to be the great challenger of dogmatism.
  4. Having founded the Electronic Frontier Foundation in July 1990, he spent many years thinking about the intersection between Cyberspace and the physical world.
  5. All the existing power relations in the physical are being renegotiated in Cyberspace.
  6. We are now at the point where the physical world is starting to become terrified of Cyberspace. This is obviously shown by how governments deal with Wikileaks and the Arab awakening.
  7. Cyberspace has provided the bloggers, and journalists of Wikileaks and the Arab awakening with the opportunity to question the political structure. They knew that their real power was the ability to speak, and to be heard.
  8. They also understood that they had the right to know.
  9. If we play our cards right, the internet will make it possible for everybody on the internet to satisfy his curiosity to the fullest extent that is presently known by our species. Everyone interested, can know what is presently known.
  10. Nothing like this has had ever happened before.
  11. To achieve that, we have to realize that we cannot own free speech.
  12. Copyright is the wrong model for monetizing the expression of the mind. Thought is not a thing, … it is an action. The more a thought is heard and understood, the more powerful it becomes. It’s not like physical goods.
  13. Because of the old model of thinking of expression as a thing that must be regulated towards scarcity, there are many things going on right now that are militating against Freedom of expression.
  14. Comcast, yesterday, stopped all of our access to PirateBay. PirateBay is a notorious copyright infringement site, but is also an important cause with different members from European parliaments.
  15. The other thing is that the Freedom of expression necessarily includes tolerance to the other person’s right to speak up his mind. No matter how abominable his ideas may be.
  16. The answer to hate speech is love speech, and the answer of the speech you can’t stand is the speech of your own heart. Go out there and stop those who will try to own Freedom of expression.
  17. Take a look at the Electronic Frontier Foundation.

2018 Hayek Essay Contest

The 2018 General Meeting of the Mont Pelerin Society will take place from September 30 – October 6, 2018 at ExpoMeloneras and Lopesan Hotels in Meloneras, Gran Canaria, Canary Islands. As with past general meetings, the Mont Pelerin Society is currently soliciting submissions for Friedrich A. Hayek Fellowships. The fellowships will be awarded through the Hayek Essay Contest.

The Hayek Essay Contest is open to all individuals 36 years old or younger. Entrants should write a 5,000 word (maximum) essay that addresses the quotation(s) and question(s) detailed on the contest announcement (available at the above link). The deadline for submissions is May 31, 2018. The winners will be announced on July 31, 2018. Essays must be submitted in English only. Electronic submissions should be sent in PDF format to this email address (mps.youngscholars@ttu.edu). Authors of winning essays must present their papers at the General Meeting to receive their award. The essays will be judged by an international panel of three members of the Society.

Please feel free to share this announcement with any individuals who may have an interest in submitting an essay for consideration of a fellowship award. All questions may be directed to the MPS Young Scholars Program Committee by email at mps.youngscholars@ttu.edu or phone at +1.806.742.7138.

MPS Young Scholars Program Committee

Digging Deeper into Populism

TL;DR summary: The one thing most populist governments studied had in common was a declining protection for property rights. Focus there next time.

Nicolás Cachanosky explained that populism in five Latin American countries had led to a rapid deterioration in their economic freedom, intimating that this also led to a relative drop in living standards compared to other South American countries. Given that the two primary economic strategies of populism are control and spend (Dornbusch and Edwards 1991 quoting Carbonetto et al. 1987), it would be shocking if a populist government did not reduce economic freedom. That’s the idea! However, there is more we could learn about how populism reduces economic freedom by doing a little more to identify exactly what it was that populist governments did. First, I think it’s useful to go a little further back, to compare how trends were looking before* populism (say by 1991) to how those trends changed with the election of a populist government. Second, I’m going to take a more careful look at how and why economic freedom decreased.

It is funny to me that when Cachanosky’s response to his first commenter is to ask for a definition and a measure before being willing to debate a correction; that suggests he really ought to have been more careful to define populism in his post. In fairness, that’s a tall order*: much of the literature on populism has been trying to define it and there is still no consensus as far as I can tell. Are we focusing primarily on increasing statism, whether it is called populism or progressivism or socialism or cronyism? Or is there something special about the populist brand of statism that we should be looking out for? To the extent populism is a “power to the people” movement, Libertarianism itself could try to appropriate the populist brand and claim they are taking power back from the government for the people! I don’t think this is what Cachanosky has in mind. :). I tend to think that he is focused mostly on statism and for the purposes of his post, it doesn’t matter whether it’s populism or socialism that caused it, so please assume when I say “populism” hereafter, I mean increased state control over the economy.

Even given that, populism/statism exists on a continuum. There is a marked difference between a determined populist government that nationalizes wide swathes of an economy rapidly in order to redistribute riches to the common people and someone in an unnamed developed country who uses populist rhetoric to get elected and keep his base happy only to turn around once in office and enact largely pro-business deregulations and strengthen conservative social mores.

Because of this, it’s important to make distinctions between the 5 countries in question (Argentina, Bolivia, Brazil, Ecuador, and Venezuela). To demonstrate that, let me focus on Argentina and Brazil. Mueller and Mueller (2012) contrast Brazil and Argentina’s responses to the global food price crisis in 2006-08, during this populist period in both countries. There have been very few checks and balances on executive power in Argentina, allowing the Kirchners to enact “opportunistic price controls and intrusive export bans, generating significant discontent and investment disincentives” (pg 3). In Brazil, the checks on the presidency to prevent a repeat of the late 80s/early 90s inflation led to “the surprising conversion of President Lula once in office in 2003, reneging the leftish policy agenda his party had defended for years in the opposition, only to continue the fiscally disciplined macroeconomic policies of his predecessor” (pg 5). These kinds of difference are very important to understand what happens and when and why.This table shows how Heritage’s Economic Freedom in the World survey ranked the five countries Cachanosky singles out as populist in 1995 when the survey started, the year when they elected a populist government, and 2015; I then add five other South American countries for comparison. 10 represents high economic freedom and 1 very low freedom. The astute reader will notice that I am using the raw scores rather than country rankings as Cachanosky does because I suspect it matters more for economic growth what happens within my country rather than thinking economic growth will collapse because a handful of other countries on other continents become more free while I stay put where I am: I will look worse by comparison, but not be worse.

Heritage Overall
1991 start 2015
Argentina (2003) 6.8 5.6 4.4
Bolivia (2006) 5.8 5.8 4.7
Brazil (2002) 5.1 6.2 5.6
Ecuador (2007) 5.7 5.5 4.9
Venezuela (1999) 6 5.6 3.4
Heritage overall
1995 2005 2015
Chile 7.1 7.8 7.9
Colombia 6.5 6 7.2
Paraguay 6.6 6.1 6.8
Peru 5.7 5.3 6.1
Uruguay 6.3 6.7 6.9

To delve into the Argentina/Brazil comparison again, the survey shows Argentina scoring markedly higher than Brazil in 1995. This situation had already reversed itself by 2003 and the start of populism. Since then Argentina has continued to fall rapidly while Brazil has turned reversed its progress. Delving deeper into those numbers, Argentina has become markedly less free in terms of almost every category Heritage measures (respect for property rights in 2001-2003, government integrity 2006-2008, tax burden, government spending since 2011, business freedom in 2002, and monetary, investment, and financial freedom in 2003), while Brazil’s primary sin was an increase in spending in 2006 and an increase in taxes to pay for it. That’s it. This shows a real deterioration in Argentinian freedom before populism, a trend only continued and exacerbated by the Kirchners, while Brazil has shown both improvement and decline, with a much different, constrained form of policy making. Argentinian populism and Brazilian are far from the same phenomenon.

In Bolivia and Ecuador, property rights fell in 2001 and investment freedom by 2005 before populism in either country and both slid down steadily after electing a populist government; both countries have improved in government integrity, taxes got worse in Ecuador in 2008 with spending increasing massively in 2010, and financial freedom worsened after populism started. Venezuela saw the largest decrease in respect for property rights right after electing Chavez and again in 2008. In contrast to other countries, Chavez initially reduced government spending and kept taxes roughly constant, with spending not increasing again until after 2008. Business and financial freedom declined steadily, investment freedom plummeted in 2004, and monetary freedom only declined in 2014.

We see then five rather different patterns, even though most of them saw the same sort of decline of 1.2-1.4 points. The key feature in all but Brazil is the decrease in respect for property rights shortly after the election of a populist government. Spending also tends to be higher in these five countries, though all happened during the global food price crisis and the US/EU financial crisis when spending also increased by many non-populist countries as well. Otherwise, there is very little in common among the five countries, with some embracing freer trade and others fleeing it, some cracking down on monetary and financial freedoms with others largely ignoring them. Our five ‘control’ countries saw an improvement in economic freedom from 2005-201, particularly in Colombia.  Colombia and Peru reduced their respect for property rights in 2002, but later repented; Paraguay has not held property rights in even modest esteem since 1998.

All of this suggests the place to look in future research is to the importance of declining respect for property rights among populist governments as a driver of economic freedom and economic growth.

And that brings us to the second of Cachanosky’s points – that this drop in economic freedom in those five countries led to shrinking economies compared to other economies in the region. First off, to be clear, all five of these populist economies experienced rapid economic growth during the time period in question, and this economic growth was much higher than the economic growth enjoyed in the decade before populism started. This would lead pro-populists to conclude that populism was actually quite good. Cachanosky admits that even though Argentina fell farther in the economic freedom rankings than its peers, its GDP/capita actually increased. He excuses this as being “largely explained as recovery after the 2001 crisis and by consuming capital stock, not as an expansion of potential output.” Unfortunately for his story, Argentina’s GDP/capita in terms of real USDollars not only surpassed its pre-crisis level (around $12300 in 1998), but rose to $17500 – a 42% increase during its populist period. (All numbers from www.gapminder.org are PPP$ inflation-adjusted.) In every single case he cites, GDP/capita rose while the headcount poverty rate fell dramatically.

However, compare their growth to the five control countries, and compare the time period before and after in each case:

GDP/cap (PPP$) Growth poverty (% below $3/day)
1991 start 2015 91-start start-15 1991 start 2014
Argentina (2003) 9330 10300 17500 10.40 69.90 3.9 19.1 4.3
Bolivia (2006) 3850 4370 6150 13.51 40.73 30.4 32.4 12.7
Brazil (2002) 10300 11600 15400 12.62 32.76 35.8 24.5 7.56
Ecuador (2007) 7690 7810 10800 1.56 38.28 36.5 32.9 10.2
Venezuela (1999) 16100 14200 15800 -11.80 11.27 N/A N/A N/A
GDP/cap (PPP$) Growth poverty (% below $3/day)
1991 2003 2015 91-start start-15 1991 2003 2014
Chile 9750 15500 22500 58.97 45.16 N/A N/A N/A
Colombia 7780 8680 12400 11.57 42.86 22.7 26.6 13.2
Paraguay 6040 5870 8040 -2.81 36.97 7.9 19.4 7
Peru 5290 6880 11500 30.06 67.15 33.9 27.2 9
Uruguay 10100 11500 19900 13.86 73.04 2.1 5.2 1.3

The 2003-2015 period was good across the board in South America, with most growing at least 30% more from 2003ish-2015 compared to 1991-2003. Similarly, poverty rates fell markedly from 2003-2014 in every country for which I have Gapminder data. So the claim is not that populism resulted in negative economic growth. The issue is that the average growth in the non-populist countries was around 1% per year higher than in the populist countries. Thus, to the populist-supporter who points to the high growth of Argentina et al as proof that populism works, the response is that growth was even higher in their non-populist neighbors and poverty is lower in them as well.

Now the unfortunate thing for drawing a clear causal interpretation from these correlations is that economic growth was also higher in the non-populist countries in the before period as well, perhaps due in part to having higher economic freedom to begin with. Growth in the freedom-preserving countries was slightly more than 1% per year higher, and that is driven predominantly by Chile. If Chile had had a more average 11-13% growth during that time period, we would be able to show more conclusively that the economic growth gap increased after populism. So, really, the claim that populism caused a lower economic growth in those countries doesn’t hold up very well – economic growth was lower in those countries before populism as well. It may well be that economic growth would have been higher in Argentina, Bolivia, Ecuador, and Venezuela had they maintained or improved their respect for property rights, but the raw data doesn’t tell us that without significantly more controls and doing some proper regressions.


* – One of the problems of this exercise is that to get “before” populism, you need to go back a hundred years or so. Ah well.

Catalonia: a philosophical case for Secession

Yesterday, the Catalan government has overwelmingly voted for independence from Spain and to establish an independent republic. 70 were in favour, 10 were against, and 2 votes were blank. Unfortunately, it was rejected by the central governments of Spain and many other countries. Nonetheless, the Catalan case may inspire the other independence movements in Europe.

In this post I’d like to provide a philosophical case for the ethical right of secession based on a libertarian perspective of self-ownership. My argument is exclusively theoretical, although a discussion on how secession could be achieved practically would be interesting as well. I may save that for a post in the future.

Below, you can find a map of other places in Europe with strong secessionist movements:

Structure of my argument

My argument is deductive and runs as follows:

  1. People have the right of self-ownership in accordance with the non-aggression principle, and based on the natural rights philosophy put forward by the political philosopher Murray Rothbard;
  2. If people have the right of self-ownership, they also have the right of voluntary association, voluntary formation of communities, and the right to choose their own leaders;
  3. Sometimes the state that the individual belongs to, violates the rights of the individual to the extent that the individual does not feel associated with it anymore;
  4. Under such circumstances the individual may perceive the state as an unacceptable aggressor, and he is justified to revolt by separating himself from the state. He can form communal associations to secede as a new political unit;
  5. There is no limit to secession. Provinces have the right to secede from a state, a district from the province, a town from the district, a neighbourhood from the town, a household from the neighbourhood, and an individual from the household.

The right of self-ownership and property rights

In For a New Liberty (1973), Murray Rothbard deduces natural law from the essential nature of human beings. He writes that it is in man’s nature to use his mind in order to select values, ends and the means to attain these ends so that he can “act purposively to maintain himself and advance his life”. He furthermore contends that it is absolutely “antihuman” to interfere violently with a man’s “learning and choices” as “it violates the natural law of man’s needs”. Therefore, man’s nature should be protected through his right of self-ownership. This right asserts that man has the absolute right to “own” his body and “to control that body free of coercive interferences”. This right includes the practice of such essential activities as thinking, learning, valuing, and choosing ends and means without any coercion, since such activities are necessary for the enhancement of man’s life.

From this natural right follows the right to do anything with one’s body, including the right to form free associations and communities, and the right not to be violated in one’s self-ownership. Thus, one has the right to associate oneself with the leader of one’s choice, but not the right to impose a leader unto someone else. Likewise, people should be free to join and to leave communities voluntarily.

In addition to the right of free association, people also have property rights. Rothbardian property rights are directly derived from self-ownership rights, and are based on the Lockean homesteading theory. It states that since man owns his person, he owns his labour, and therefore he also owns the fruits thereof. John Locke (1689) has put homesteading theory in the following way:

… every man has a property in his own person. … The labour of his body and the work of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state of nature hath provided and left it in, he hath mixed his labour with it, and joined it to something that is his own, and thereby makes it his property.

Given that man has the right of self-ownership, and that he must employ natural objects for his survival, then the sculptor has the right to own the product he has made through the mixing of his labour. In other words, by producing something with one’s energy through the utilization of unowned nature, one has, as Rothbard calls it, “placed the stamp of his person upon the raw material”. One therefore rightfully owns the product. Any violation of self-ownership and property rights should hence be regarded as an act of aggression.

The state

The state is nonetheless a social institution that has historically interfered most often with people’s self-ownership and property rights. Max Weber has recognized it as an institution with a territorial monopoly of compulsion in his essay ‘Politics as a Vocation’ (1919). Hoppe, in Democracy – the God that failed (2001), asserts that every government will use this monopoly to exploit its citizens in order to increase its wealth and income.

“Hence every government should be expected to have an inherent tendency toward growth”. (Hoppe)

State exploitation happens in the form of expropriation, taxation, and regulation of private property owners. A state at best respects the rights of individual sovereignty and private property, but because its functioning is dependent on the expropriation of its citizens’ wealth there is a natural conflict between the state and its citizens. According to Franz Oppenheimer (1908), the state can impossibly finance itself without its productive citizens. It can only take that what has already been produced, and therefore it can only exist as a result of the “economic means”. However, this confiscation often involves state violence and aggression as nearly no one is willing to give up on his property voluntarily.

Under such circumstances, it is understandable that conflicts may arise between citizens and the state; sometimes resulting in citizens’ feelings of dissociation from their governments.

Secession

Frédérik Bastiat maintains in The Law (1850) that if everyone has the right to “his person, his liberty, and his property”, then

“a number of men have the right to combine together to extend, to organize a common force to provide regularly for this defense.”

Following Bastiat’s reasoning, I believe that citizens who feel dissociated can then revolt and opt for secession as a form of self-defense against state aggression on their self-ownership and property. Any state that does not recognize its citizens’ rights of secession does not sufficiently recognize the sovereignty of its people. Secession is a powerful means of political action to show the people’s discontent with their leaders. If secession would be impermissible, then the people who want to disassociate themselves from the state have the following three options:
(1) continue living under the oppressive state rule;
or (2) revolt against the state;
or (3) emigrate to another state.

By doing (1), the people continue living under perpetual state aggression, and their sovereignty is continually violated.

If the people choose option (2), then there will be severe and costly consequences which can involve war and destruction of private property. In addition, there are also no guarantees that the revolt against the state will be successful. For these two reasons, this option seems to most secessionists to be the least preferable of the three.

The people can alternatively choose (3) and emigrate to another state. This alternative is often used as an argument against secession under the presumption that those who are unhappy within one particular state, should simply emigrate. However, the cost of emigration can be so significantly high that it is unfeasible. One has for example the costs of finding information on the procedure of emigration, becoming accepted by the other state, finding a new workplace etc… The state can also exert barriers of emigration through tedious bureaucratic processes and passport controls, which makes emigration even more unattractive.

Who are morally justified to secede?

Following man’s right of free association, the answer should be: anyone, as long as it happens on a voluntary basis. Even though most secessionist movements are built on a common ethnicity or common cultural heritage, such precepts are not necessary to justify secession. Moreover, secessionists should not be prescribed any form of social organization as they should be free to choose their own form of government. This means that a multitude of social organizations are possible, including those that are currently non-existent. By being epistemologically modest of what governmental form is best, communities are allowed to experiment and find their own form of government. This will eventually add to our understanding of human social organizations.

Lastly, it is important to note that if secession is ethical, ultimately based on the principle of self-ownership, then it follows that the individual has the right to secede as well.

This right cannot be exclusively granted to groups, because only individuals can have ownership of their own bodies. Self-ownership cannot be shared, just like the mind cannot be shared. The mind is an attribute, inherent only to individuals, and collectives only derive their rights from the rights of their individual members. Therefore the right of self-ownership must necessarily imply the right to practice unlimited secession.

As Rothbard would assert, provinces should have the right to secede from a state, a district from the province, a town from the district, a neighbourhood from the town, a household from the neighbourhood, and an individual from the household. This logical consequence is anarchism.

Conclusion

In setting forward a natural rights defense of self-ownership, I have concluded that individuals have the right to free association and property rights. Unfortunately, states sometimes violate these rights to the extent that its people do not want to be associated with their state anymore. Under such circumstances they retain the right to secede. Secession should however not only be limited to communities. Single individuals also bear the right to secede, since only individuals can possess self-ownership, and since groups can only derive their rights from its individual members.

Cycling in Amsterdam

I just got back from a week in London and a week in Amsterdam. Probably the most striking thing I encountered was the wonderful dutch cycling culture. Any transit system involves some implicit negotiation between motorists, pedestrians, and others. On Long Island the motorists won. In Amsterdam, cyclists won.

I’m on a bit of a Dutch cycling high, despite only spending about 2 hours on 2 wheels while in Amsterdam. The dutch take their bicycles seriously and they shape their environment to that end. The Airbnb I stayed at had frontage on a bicycle road but no direct access to a motorway. I’m not 100% on this, but I think the Netherlands’ liability laws make the faster vehicle strictly liable for accidents which serves as an implicit subsidy for bikes.

100_4514
A typical Dutch cycle path

Here are some things I like about this culture:

  • The engineering. I really like the way they do bike locks… nearly every bike has a built in lock that disables the rear wheel. Most of these locks also have a chain to lock the bike to a fence, but that chain locks with the same key for the rear wheel.
  • It encourages enough density to get people interacting with each other, but still expands your plausible travel distance. They’ve got a nice balance between closeness and congestion.
  • It’s easier on the environment (excluding the costs of building bikes and bike roads).
  • Light physical exercise feels great.
  • The infrastructure involved in managing bike traffic is pretty minimal. Speeds are slow enough that human judgement works well outside of the busiest areas.

Why should libertarians care? Well, most of them probably have better things to focus on. But those of us living in or near dense cities, this is an example of a way of life that fits nicely with our broader goal of a peaceful, prosperous, liberal order. If Manhattan tried to be more like Amsterdam it could be a huge boon (I think… based on my preferences and zero scientific analysis) to human flourishing.