autonomy

On Persons, Individuals, and Humans

Federico Sosa Valle History, Law , , , , ,

It is only from a notion of the human, common to all men, that the concept of person can be dissolved into the idea of individual.

The relevance of the concept of person lies in its ability to describe functional relationships with its environment: sui juris or alieni juris, noble, patrician, commoner, serf or lord, father, minor, capable, incapable, etc. In pre-modern times, according to each function, a normative system exclusive to caste, position or estate, known as “privilege”, corresponded.

Rather, Modernity dissolves fixed personal relationships into an undifferentiated diagram of spheres of individual autonomy. Each human being ceases to be a person attached to a certain fixed function in the social fabric and, by the mere fact of being human, is the holder of his sphere of individual autonomy, equal to that of any other human being.

The legal system ceases to govern particular relationships between people to become a structure empty of intentions and purposes, which only determines procedures and delimits equal and predictable fields of interaction and clear methods for the resolution of disputes among the holders of the different spheres of individual autonomy.

The principle ceases to be that of difference to become that of equality. The difference becomes the exception, to be justified on a functional basis that results in a public benefit.

However, in the non-political sphere, that of civil society, the difference does not disappear, but is expressed in each of the individual exceptionalities, within each respective sphere of individual autonomy, while it is accidental and irrelevant to the legal-political system.

There are certain special situations framed within specific legal regimes, such as minority and intra-family relations, which enshrine assistance obligations, usufruct rights and a system of representation and guardianship.

Consequently, the role of the public sphere within civil society is defined by the procedure to be followed to settle the conflicts that could arise from the collision of the different spheres of individual autonomy.

From the moment in which each human being is an autonomous individual, the legitimate exercise of power in relation to the population does not consist in giving specific orders to subjects but in administering a set of procedures whose specific purpose is to serve as a means for different individuals settle their disputes peacefully.

Of course, in Modernity and in liberal democracies relations of command and political obedience subsist, but within the governmental structures themselves, which in turn incorporated procedural rules that limit discretion in the exercise of power and establish functions and hierarchies that define competencies and delimit individual responsibilities.

However, both modern government structures and the legal consecration of a social structure composed of equal individuals in dignity and respect are not the result of an invention but the consequence of a historical evolution whose becoming does not cease and whose hindrances persist in the field of the aforementioned civil society.

That the differences between people are exclusively functional and that such functions report a benefit to all the individuals involved, in such a way that none of them is used exclusively as a means, but is seen as an end in itself, is an imperative for the public sphere, but only a programmatic aspiration in the field of civil society.

In turn, that each person deserves equal consideration and respect is a discovery in the true sense of the word. Quentin Skinner in “The Foundations of Modern Political Thought” recounts the role played in the Late Middle Ages by the discussion that every person was endowed with an immortal soul, deserving of salvation, for the subsequent conceptualization that every human being is worthy also of legal protection regarding their fundamental interests, such as their life, their personal freedom, or their possessions.

Regarding the natural law doctrine of human rights, which states that human beings enjoy a certain set of guarantees and rights against the state and against other people, it is usually dismissed as metaphysical.

However, such statement can be understood more clearly if it is related to its historical evolution: the different freedoms already existed but assigned to different people according to their caste or status, who had an immediate and specific interest in their protection.

To cite an example, in the Partidas of Alfonso X of Castille, we find every detail of social life regulated: some had the right to bear arms but not to work, since they had to be available to the king in his court to eventually go to war; others had the right to exercise a certain trade or profession, excluding those who did not belong to their corporation, but they were not free to change their activity, neither in terms of their subject matter nor their geography. In the pre-modern world, the holders of freedoms had a specific interest in defending them, but their ownership depended on circumstances that, in the vast majority of cases, were out of their control and, in others, obsolete in terms of their functionality.

Given that this legal-political system had very little plasticity to adapt to changes in the surrounding circumstances, it was generally inefficient, stagnant, and unstable and, therefore, conflicts manifested themselves in recurrent revolts.

Modernity consisted in the universalization of liberties. This means that freedoms – or immunities against power – that already existed and whose entitlement was limited to reasons of belonging to certain castes or estates, to the exclusion in many cases of one another, began to be extended to all human beings by the mere fact of being such.

That is to say, there is nothing metaphysical in the natural law doctrine of human rights. It actually consists of the universalization of rights that already existed and were recognized.

The novelty that this brought is that each human being ceased to be considered as a person in relation to his family, his social status or his caste, to be considered as an autonomous individual and equal in rights to any other, holder of rights that he was actively interested in exercising as well as others whose content he hardly had any news or specific interest.

In turn, men exchanged differentiated rights that protected certain personal interests in exchange for new abstract freedoms, the same for each of the remaining individuals. As a result, each person gained potential spheres of action and saw specific regions of power restricted.

The nobleman gained a freedom to work and trade that he may or may not have an interest in exercising, but he lost the power he had over his serfs or was displaced by commoner bureaucrats in government functions. The shoemaker gained the freedom to emigrate to other cities or to change his trade to that of a blacksmith, in which he may or may not be interested, but he also received competition in his own town from other new shoemakers who emigrated from other latitudes, who effectively exercised such rights.

Such transformations and their discontents can be verified in the conservative authors of the beginnings of the Contemporary age, as is the case of Charles Dickens, among others.

That is why the universalization of fundamental rights -for the English tradition- or natural rights -for the American conception- constitutes both a discovery of intellectual research on historical evolution and a political program.

Whether such an extension is desirable and to what extent it should be continued or reversed largely defines political positioning from right to left. For this reason, historical evolution is not a legitimizing device in itself, but a process of discovery of various forms of social and political organization that is subject to a critical evaluation regarding which institutions and practices to incorporate, preserve, resist or modify.

Do we have the right to be wrong?

Eliana Santanatoglia Current Events, Philosophy , , , , ,

The pandemic, and the consequent decisions taken by our and other governments, have confronted us with the question of the extent of our autonomy. Although we are aware of the exceptional nature of the situation, the matter about the right that assists each individual to make decisions about their own life returns more strongly.

In this sense, we can wonder: How do we make decisions? Are we rational beings? Are thus our decision-making processes rational or we tend to act based on emotions, instincts, or heuristics? Even if we think in terms of choices rather than of actions, do we have enough evidence to think that we rationally choose between options? And if so, can we find the optimal solutions for our problems? Can we evaluate the optimality of our decisions?

The rationality of our actions and our decision-making processes have been widely discussed, not only in the field of economics but also in the legal, political, and sociological realms. Some authors have proposed that our decisions are not based on perfect information or precise though-processes, as Friedrich Hayek, who enlightened us about dispersed knowledge in society or Herbert Simon , who showed us how limited rationality works in real decision-making situations.

More recently, various theories such as behavioral economics and several experiments conducted by scholars from different disciplines, such as those conducted by Carl Sunstein, have showed that individuals act influenced by cognitive limitations and emotional biases. For example, some of these studies have shown how, influenced by these biases, we fail in our perception of the risk, miscalculating the odds we have of suffering certain diseases or how our choices are influenced by the way the relevant information is presented (framing). Thus, it has long been revealed that human actions and choices are not the result of a perfectly rational thought-process, and such discoveries were very useful in predicting certain patterns of behavior.

Personally, I have always found these theories fascinating, showing us that our mind does not work as the precise instrument that other visions have proposed. These “limitations” of our rationality and cognitive capacity have always led me to conclude that we must assume a humble position regarding what we can and cannot do in terms of public policies or the “construction” of social and political reality. Even this humility should be applied to scientific knowledge that manifests itself in constant change and revision. What is worrying is that, recently, this type of analysis has made a jump from the descriptive realm to the normative one, obtaining prescriptive conclusions from these experiments.

On the other hand, nowadays it is common to find that, from different perspectives and schools, subjective rights of all kinds are multiplied. It seems that individuals enjoy -at least theoretically- not only all the rights constitutionally recognized, the rights established by international human rights treatises and all the tacit or unwritten rights but also the collective rights (adding several generations). It is discussed from the right to elect and to be elected (i.e., lowering the age of vote) to the right to enjoy a healthy environment. In addition, from diverse political agendas, it is proposed the widening of all rights enjoyed by people, groups and even animals. We could discuss at length about these rights and obligations involving third parties – not only to respect them but also, in many cases, to take responsibility for the effective enjoyment of them.

But it would seem that, among all these rights that we enjoy or intend to enjoy, the right to be wrong does not appear. Everything is permitted (again, in theory) while individuals live according to the standards or goals to accepted by the community and the State at a given time. From different perspectives we are constantly offered advice and suggestions to achieve the ideal that is presented almost as indisputable: a long, healthy, and calm life (not without some ingredient of novelty or adventure). Not only from the philosophical and theological views -that indicate that human life seems to have happiness, virtue, personal flourishing, or any other transcendent purpose as its goal- but also from more scientific perspectives that provide us with details about what our limitations are in making the right decisions about how to lead a full life. They all seem to agree in proposing a “perfectionist” ideal of human life.

However, when combined these two tendencies of thought -that is, on the one hand, the perfectionist ideal of human life and, secondly, a clear vision about human limitations for making good decisions or planning courses of action, it appears this idea that it is necessary to “underpin”, help or direct the decisions of individuals with the intention to help them that they achieve such ideal ends.

Just to illustrate this point outside the case of the pandemic, we note that all political views coincide in “guiding” citizens when it comes to eating and healthy habits. In this regard, if directing citizens consumption is concerned, much of the political range (conservatism, social democracy, and even the left) seem to agree in wanting to provide healthy standards that everyone should enjoy. This is reflected in a variety of decisions made by governments from one “ideal individual” – which range from prohibiting table salt in restaurants, forcing stores to not sell alcohol at a certain time of the night (and not only limiting the sale to adults as might be expected), forcing food producers or distributors to include a lot of information about its components in packaging, etc. The question does not end here: smoking tobacco, for example, has been almost completely banned everywhere (and not only in closed public spaces but also in open spaces and even in many buildings or premises for exclusive private use).

Faced with this reality, we ask ourselves the question: Do we have the right or not to decide about our lives (our body, our health, etc.)? Can adults without serious cognitive problems -beyond those biases named above that we all “suffered”- with their legitimate autonomy, freedom, and responsibility and, if you like, access to public information about the possible consequences of their actions, choose to assume risks? Do them have the right to put salt to their food, although there are numerous studies that show a correlation between salt intake and high blood pressure? Don’t all those who choose to paraglide or drive a car on a high-speed avenue also take risks? Why are some elections forbidden or more “observed” than others?

So, from this perspective that combines perfectionism and observation of the cognitive limitations of individuals: Does this lead us directly to conclude that our decisions should be replaced or at least “influenced” or “improved” – as suggested by the nudge theory – by the decision of a public official or an expert scientist? Do we let a nutritionist tell us the ideal diet based on recent generic scientific studies? Do we allow an official or civil servant to indicate what activity / sport / food / drink / medical treatment / insurance should we carry out / practice / consume / submit to / hire considering the general statistics of the population for my age / sex / social condition? Would we allow this civil servant to “suggest” us the way of interacting with other individuals or habits to adopt?

To answer this question, it could help us to bring here the conceptual distinction proposed by Dr. Martín Diego Farrell in his essay on “Nino, democracy and utilitarianism”. There Farrell proposes two alternatives to justify democracy: The first one holds that all adults, free of physical or mental impairments, are the best judges of their interests and, in its turn, the second one points out that the same adults would be the best judges of their own preferences.

Farrell argues that the former is indefensible by the number of counterexamples we can find in which an adult seems not to know his best objective interest (perhaps knowable by an expert without his intervention) and, at the same time, other examples that show adults opting freely against their own interest. Instead, he openly defends the second argument: adults are the best experts and judges of their own (subjective) preferences. Although we will discuss in the next few paragraphs the assertion about the possibility that expert may have the objective knowledge of another person´s best interest, we will concede the point for now and agree with Farrell that each adult is the best judge of their own preferences.

This is how we could now answer the questions we posed before. I think that most of us would intuitively reject the proposal of experts/officials telling us what food to eat, what sports to practice, what form of social relationships to prefer and so. Of course, with the exceptions of exceptional situations of crisis in which we consciously seek help from experts in each subject, so that they can provide us with, in this case, personalized advice, considering our specific circumstances, beliefs and wishes. On the other hand, the pandemic has left us a clear image of the fallible, provisional, and changing nature of scientific knowledge.

I believe that the perfectionist and scientistic vision of individual life is based on a conception that responds and falls into the following errors:

a) Confusing correlation with causality: Studies on the influence of certain habit or the consumption of certain food or drink on individuals´ health show correlations and no causal links. That is, it cannot be reliably proven that this or that habit produces such a consequence but only that, given two variables, the values ​​of one vary systematically with the homonymous values ​​of the other. This coincidence may respond to an external cause to both (which produces or “causes ” both variables) or by multiple causes that are difficult to unravel at this level. This is obvious to any scientist or expert in each area, but it is forgotten when it is discussed in the public sphere, where not practicing sports “causes” obesity, salt “causes” high pressure and not wearing a face mask seems to “causes” the contagion of the coronavirus.

b) Studies always work with populations, that is, with a sample or group of individuals of a certain sex, age, physical characteristics, etc. that could have a probability of, for example, suffering certain disease. Let´s say- for the purpose of illustration- that certain group of individuals -men over 65 years have a 60% chance of having a heart attack. But this “class” or group probability does not tell us anything about each particular individual being part or not of that 60%. What if a public policy of restricting salt is being imposed on a man with low blood pressure and a very low probability of having a heart attack? Can’t this individual make the decision to consume more salt than recommended by public bodies or professional chambers at his own risk? Let´s remember all the atrocious examples that were experienced during the pandemic about relatives who have not been able to accompany terminally ill patients, penalties even of jail for people who circulated at prohibited hours and contradictory recommendations that prevented individuals from being able, with the public information available, to decide about their possibilities to work, circulate, see their relatives, etc. under threat of sanction.

c) Scientific studies and their practical conclusions are constantly changing. We have lived through this intensely in the last 20months or more of the pandemic, where what at first seemed irrefutable, months later seems shocking. Just as an example, the practically absolute prohibition -in countries as Argentina- for children to walk in the streets the first three months of quarantine. These major shifts in scientific criteria in one area can be observed (perhaps without the speed we see during the pandemic) in many other realms. Continuing with the nutritional example, we can say that the paradigms in this area seem to change drastically and quickly. Only in the last 20 or 30 years has it gone from suggesting that alcohol was bad to recommending a glass of wine a day to prevent heart disease; to try to eliminate meat in all its forms to currently attempt to eliminate all carbohydrates and sugars and to consume only proteins and fats and many more.

But, beyond all these characteristics of scientific knowledge that inform “perfectionist” public policies, we can also raise an even more fundamental point: Even if we could know, reliably and with certainty, -what science would never guarantee- how a certain habit can affect our health or what would happen if we do not met with the ideal, don´t we have any right to choose how to live our lives? When did we renounce to that right in favor of the experts of a group of professional councils or of the civil servants of a Ministry of Health? Should we forbid the individual who wants to dedicate his life to climbing the Himalayas to carry out such an endeavor because of the high risks of his life plan? And the one who practices hang gliding? Don’t these individuals know their own preferences better than anyone else?

And here are some more points added from a higher level of observation:

a) Levels of Abstraction: Why might we think that individuals choosing between options are “biased” and when individuals working as government agents in offices creating “nudges” are not biased as other individuals in their daily life? Individuals who work in the civil service or have some degree of professional or scientific specialty, don´t they suffer from the same biases and limitations described in the studies above mentioned, typical of every human being? For example, don´t they choose between theoretical or experimental options for those results presented in a more pleasant way (problem of the architecture of the election) or that confirmed more strongly their hypotheses (confirmation fallacy)?

b) Scientific theories are fallible. Also, some of the results of these experiments may turn out to be incorrect or incomplete in the future. Do we have the right to influence individual decisions based on studies that are, like any scientific theory or experiment, fallible and provisional? After all, isn’t it more worthy for the individual to pay the costs of his bad decision rather than paying the costs of a government agent’s bad decision?

c) Finally, a more philosophical point: How does chance or destiny influence on our daily decisions? Is there a case where the options are presented in a “neutral distribution” way? Let us suppose the case of an individual’s decision regarding the acquisition of medical or retirement insurances (issues that have also been very relevant during the pandemic). The individual must choose between “default options”. The options could be presented to consumers randomly or in a way decided by offerors – but without any central agent deciding-. In the latter case, the options are established by the offerors because they are trying to influence commercially on consumers´ choice and, therefore, it could be said that there is no neutral distribution even though it is not a “nudge” of the public sphere. But, on the other hand, there is a suggestion made by government agents, then the ” nudge ” is intervening in the market, albeit subtly. That is to say that private influence is being replaced by governmental influence, bringing an artificial “architecture” of the choice that did not exist before and, therefore, eliminating randomness. Here we are again facing “levels of abstraction” problem: Don´t “experts” -who propose the ” nudge”- have the same limitations as individuals that interact?

Recapitulating, during this long process we lived the last year and a half since pandemic, quarantine and all the -health, economic, political -measures taken by governments, the question about the scope of our autonomy reemerged. Standing on a platform where philosophical perfectionism and a misunderstood scientism are combined, it has gone from trying to discover patterns of behavior to prescribing ideal results and to opening the door to all kinds of measures, which establish from our right to move freely, if we can work, if we can trade, etc. And what has been more unusual, without explicit limits on the duration of such measures. I think this responds to a trend of thought that had started much earlier. But shouldn’t we take back the reins of our lives as adults? Don’t we know our interests better -or, at least, our preferences- by ourselves? If others believe they know our interests better than us, shouldn´t each of us, considering our preferences, be the best judges of how much risk we want to take? We could think that governments and expert organizations can, in good faith, publish all the information and studies produced and, likewise, could suggest, recommend, and even collaborate to follow the suggestions; but not to compel, prohibit and sanction those who are “wrong” at their own risk.

Of course, this implies taking responsibility for our actions and not demanding or claiming the governments to decide for us or to be accountable for our mistakes. If we decide to climb the Himalayas, we will have to train for many years, buy the appropriate equipment, take out the appropriate insurance, face possible injuries and if something goes wrong, even face death. Ultimately, in each election our desires, our beliefs, our projects, and our philosophical perspectives – that provides- meaning to our lives- come into play. So, we cannot ask the government or the experts to prohibit something from us (because it is risky) or, what is worse, to prohibit it from all citizens, so as not to face the dangers or costs of our eventual mistakes.

We find ourselves – by our decision – facing the paradox that we, given our limitations, cannot make personal and everyday decisions about our work, food or habits, but we can choose legitimately officials, experts or governmental agents that are going to lead us on such tasks. I propose, instead, to reassume our adulthood and start exercising our right to bring the life plan whose consequences we can assume. This, instead of taking it as natural that others decide for us in exchange of unloading on them the responsibility of our own life. Only then we will be able to claim, legitimately, the right to take our own decisions at the risk of being wrong.

Hong Kong protests: justified but futile in the end

Edwin van de Haar Current Events , , , , , , ,

The world is closely watching the developments in Hong Kong. Brave youngsters are testing the limits and patience of the Hong Kong authorities, first protesting against the extradition law, enabling Hong Kong citizens to be sent to China in case of serious allegations, and now with much broader demands for several kinds of liberties. Anybody with who cares for personal and political freedom can only watch in great sympathy, knowing that this is a modern day version of a number of small Davids against the towering power of the Chinese autocratic Goliath, with the Hong Kong authorities as its stumbling middle man.

I happened to be in Hong Kong for a few days, just for touristic purposes, in the first half of the past week. Arriving from mainland China on Monday, we encountered the protests a number of times. The protests caused major traffic jams, making it impossible to leave the train station in the regular way. Yet a small detour on the metro sufficed to reach our hotel. Later that night, we tried to reach one of the night markets, which turned out to be impossible: not only had the traders already packed their stuff, because a prominent protest location was just around the corner, students had also blocked the road and made sure our taxi returned nicely to where it came from.

protest 3

In the hotel we could watch live footage from confrontations between the police and the protesters, with the latter throwing stones and rocks against a police station just a few hundred meters from our hotel in Kowloon City. At times, it seemed there were as many journalists as there were protesters, which is of course an encouraging sign from the perspective of press freedom. The next day we went to Hong Kong University, but only the Student Union was in full protest mode, there were no visible signs of other unrest at the campus.

There were lots of protests at night though, as the coverage in the main Hong Kong quality paper South China Morning Post made clear.

One of the main questions this week was whether the Chinese army or police force would interfere. The local Chinese army commander hinted at it, while about 12,000 policemen gathered in nearby Shenzhen, just across the border in the mainland. The Hong Kong authorities, notably executive leader Carrie Lam and several police commanders, emphasized they were perfectly capable of handling this situation themselves. Given the developments in the past months one can question this, but the hesitation of Beijing to interfere is comprehendible. They do not want unrest, in the wake of the 70th anniversary of the People’s Republic later this year, while they know that direct action will make it impossible to get realigned with Taiwan in the foreseeable future, which has been a main goal of any Chinese leader since Mao, current leader Xi Jinping in particular.

Lam hinted at a press conference that the protests only foster the quick termination of the ‘one country two systems’ situation, agreed as part of the handover Treaty with the British in the nineteen eighties. One of the important elements is that Hong Kong keeps its own liberal laws and regulations for the first 50 years after the transfer of sovereignty in 1997.

Earlier protests died down, without much change achieved, mainly because the protesters did not succeed in broadening their movement to the wider public in Hong Kong. Although there was a supporting demonstration of public servants last Friday, this may happen again. On Wednesday, small traders already complained about the income they lose due to all the protests. And there are the mysterious groups of men in white t-shirts who beat up the protesters.

However, in the midterm, the protests will be futile. In the end this is an internal Chinese issue. Sure enough, there will be international protests, and depending on the outcome of the current crisis, perhaps also economic sanctions against China, if it just ends the protests by police or army action. These international protests are mainly symbolic though. Economic sanctions are the instruments of the impotent, not the powerful. Never have they worked to change a regime, or to make live very miserable for the leaders of a country. They do hit the population, but his and her concerns are easily overlooked in the international arena. The sad but undeniable truth is that no foreigner is going to die for Hong Kong. The great powers will treat this an internal Chinese affair. The USA already said so. No foreign power will intervene in China if the terms of the Sino-British Treaty are tampered with. At present, it is far more likely that Hong Kong will lose its special status, perhaps also earlier than the 50 years agreed, than that China will change into the liberal direction. The world may protest, but in the end the Chinese will have their way.

Three Lessons on Institutions and Incentives (Part 5): “Spontaneous” institutions

Federico Sosa Valle Economics, Law , , , , , , , , , , ,

When Friedrich A. Hayek referred to the coordination problems among rational agents as a consequence of the dispersion of information in the economic system -and that made him worthy of the Nobel Prize in Economics- he did not refer to an information problem that could be solved with better statistical tools. This is also a problem of the economics of information and what Hayek himself called “limit relative to knowledge,” since the frontiers of science could be continuously extended, generating more and more information. The limit that Hayek qualified as absolute for knowledge came from the increasing degrees of abstraction and complexity characteristic of any “extended society.” This to the point of calling such phenomena spontaneous orders, or abstract or extended. Such orders allowed the prediction of the general configuration of the system, but they made impossible the concrete prediction regarding the relative position of each particular element of the system. If one looks for an example of such an institutional arrangement, Hayek himself would point as such to the legal systems that structured the mercantile communities, not because they lacked legislation or a state that monopolized its enactment, but because it provided the members of such a mercantile community of a dispute resolution system whose complexity acted as a guarantee of impartiality.

There is much talk of the virtues of institutions as guarantors of predictability, or legal security, or political stability and clear rules of the game. All of them are positive qualities that express the favorable consequences of a negative quality -negative not in the sense of pernicious, but of absence of a particular characteristic- that can be defined as “absence of arbitrariness.” In general, the concept of freedom is related to that of “free will,” which is very desirable for those who exercise it, but it could become a hell for those who suffer the free will of a third party. The institutions are, as it was pointed out, abstract limitations to the social human action that are structuring of the political, economic, and social interaction; in other words, they limit the arbitrariness of the decisions of own and third parties.

In a certain sense, institutions limit individual freedom, whether we define it in a positive way -as the faculty to exercise its own free will in a legitimate way- or negative -like the absence of coercion to exercise one’s free will. However, for the definition of freedom as absence of domination or absence of arbitrary coercion (similar to that coined by Quentin Skinner), institutions cease to be limiting of individual freedom to be functioning as the abstract devices that make it possible.

An institution is made up of a set of rules that not only limits the action of the rational agent and the action of a third party, but also limits, fundamentally, the actions of the political authority. The said procedural due process, for example, belong to the category of institutions that limit governmental action: no one can be punished except by a judgment based on a law prior to the fact of the process and dictated by its natural judges. The due process is not exhausted in this formulation, but this already constitutes in itself a strong restriction to the power of the government over the citizens. These limits make foreseeable the actions of the government that can interfere in the free will of the individuals and, therefore, define their spheres of autonomy.

Of course, although an institution by itself provides stability and predictability to the system and this generates dividends in terms of the coordination of expectations and individual plans, not all institutions are equally efficient if the mentioned predictability is taken as an evaluation parameter. A system of multiple castes, for example, depends on numerous but ambiguous indicators for the identification of each individual, necessary for the purpose of determining what rights and obligations that person owns. In contrast, a modern system, at the other end of the arch, which equates, with the exception of certain political rights, citizens with inhabitants, and agrees equal rights and obligations for anyone who proves distinctive features of humanity, drastically reduces the “transaction costs” of a system of social control structured around abstract institutions.

The summum of arbitrariness can be identified in despotic systems, in which the free will of the ruler or the group of rulers finds no abstract limit in the law -only concrete limits of other more powerful ones. In these systems, the rules are mere orders to the subjects that have a changing and unpredictable content. In any case, if there are positive laws, we are not facing the rule of law, but government through law. When a case of such extreme arbitrariness is exercised from one man to another, we call it slavery or, in the best of cases, servitude.

At the other pole of the arch we have, as has been pointed out, the modern system, which recognizes in each individual the inalienable right to exercise his free will within a sphere of autonomy that is equal for all. Thus, in a system of isonomy, knowing the limits of the sphere of autonomy itself, the limits of the spheres of autonomy of the third parties are known and, consequently, each individual can form expectations regarding a range of expected behavior of his fellows. They will have a high degree of certainty, as will their respective plans.

In the middle of the two poles of these two ideal types of legal-political systems we have the range of possible and specifically given societies, in which freedom as absence of arbitrary coercion (in the meanings given by both Skinner and Hayek) verify to a greater or lesser extent. What Daron Acemoglu & James Robinson do in this regard, is to open two axes of institutional analysis: the political and the economic, and in turn introduce the distinction between extractive and inclusive institutions. Extractive institutions would be halfway between despotism and isonomy: there are limiting rules of free will, but they are not equal for all, fundamentally restricting the right to access certain prerogatives: limitations on access to food, of political decisions or legal monopolies, to cite examples.

It is worth remembering that the birth of individual rights took place, primitively, as prerogatives that the powerful took from the despot. Such is the case of the Magna Carta of 1215. That is why it is said that rights do not pre-exist the individual but that they are conquered. These prerogatives that were pulling the sovereigns one by one and that is why there is no talk of “liberty” in the singular, but of “liberties”: of trade, of industry, of speech, of transit, etc. These prerogatives or liberties were initially torn from the ruler by militarily or financially powerful men and then extended to the rest of the inhabitants, to the point of recognizing their ownership every human being. Correlatively, by virtue of this process of institutionalization, in which each new prerogative was taken from the ruler, this implied a new limit to governmental power, so that the political system was evolving from tyranny to a constitutional system.

Following the course of this evolution, Acemoglu & Robinson work with the ideal substitute types of “failed state” and “modern state,” the complementary ideal types of “political institutions” and “economic institutions” and again with ideal substitute types of “extractive institutions” and “inclusive institutions.” Political democracy, with a plurality of voices and the extension of political rights, as to elect and be elected to public office, means the realization of inclusive political institutions. An economy that enjoys of sound money, a balanced public budget, openness to international trade, free access to markets, absence of legal monopolies and regulation of natural monopolies is the example of what inclusive economic institutions mean. For all this, we need a degree of political centralization crystallized in the modern state, which enforces the law, whose prescriptions must establish a public sphere whose administration the rulers must be accountable of.

Obviously, the analytical instruments of Acemoglu & Robinson are useful both in political and economic liberalism and, although they do not make a total use of almost three centuries of doctrinal and philosophical elaborations, their classification system is susceptible of being deepened by the incorporation of such concepts. For example, on the end of Why Nations Fail, the authors are at the crossroads of answering the question that serves as the title for the work. For this, they allude to the fact that certain critical situations cause a country to take one or another path: the development of inclusive political and economic institutions or the fate of stagnation, but that there is no such thing as a general law of history that determines that one or the other path will be taken forcibly at some specific historical moment.

This is how the authors invoke, timidly and tangentially, the current of cultural evolutionism, according to which the social customs and habits are evolving following the changes in environmental conditions, but without having a predetermined course, following an evolutionary drift. In the same way, they could have explained the institutionalization that the emerging state implies a modern state through the names and procedural principles that are previously in the uses and customs that make up private law. This is how Max Weber explained it and such studies can be used to delve into the historical analyzes formulated by Acemoglu & Robinson when answering why countries fail.

Notwithstanding this, these economists do establish certain patterns of institutional evolution that are apt to be applied when designing public policies or, plain and simple, a government program. In this sense, they allude to cases such as those of Argentina in the late nineteenth and early twentieth centuries, which had a resounding success at the moment of formal institutionalization through the enactment of a written constitution and the establishment of a central government of a federal nature. As explained by Acemoglu & Robinson, Argentina incorporated inclusive economic institutions, while it was slower to leave behind extractive political institutions. Initially, Argentina was strongly benefited by the “catch up” regarding the degree of progress of its economic partners, mainly England.

However, following these evolutionary patterns, sooner or later a crucial point is reached in which, in order for the economy to continue to progress, higher levels of competition must be developed that make it necessary to tolerate the impact of the so-called “creative destruction.” When the political system is extractive, it is much easier to resist innovation in the economic sphere when it threatens their economic rents. Arriving at that stage, there are the conditions given for the economic and political progress of a country to be reverted to extractive economic institutions.

That is to say, with inclusive institutions, both politically and economically, it becomes more difficult to find shortcuts to the sectors threatened by the creative destruction of all innovation that progress brings, in order to neutralize it. Once the regulatory, interventionist and protectionist apparatus that characterizes the extractive economic institutions is assembled, the contest moves to the political level: whoever has the springs of political power will distribute the benefits of the economic system. If we add to this a polarized society, it is not difficult to explain why the alternation of popular governments emerged from popular democracies and military civic coups. Specifically, in the case of Argentina, Acemoglu & Robinson add the factor of justice: for a country to be involved in such a spiral of institutional involution, it was necessary for justice to lose its independence from political power.

[Editor’s note: Here is Part 4; here is the entire, Longform Essay.]

Defending Political Liberty in an Administered World

Barry Stocker Law, Liberty, Philosophy, Politics , , , , , , , , ,

This is a very rough work in progress continuing on from my recent post on ‘Law, Judgement, Republicanism’.

The problems with a free and open political and judicial culture were diagnosed by Max Weber in his discussion of bureaucracy, which itself draws directly and indirectly on various accounts of the problems of bureaucratisation and administration of the social world (which itself began in the 18th century, at least in terms of explicit discussion  of bureaucracy). Wilhelm von Humboldt’s comments on bureaucracy in Limits of State Action is, as far as I can see, the first clear instance. Before that, the closest precedents are, I believe, in comments on the rigidity of Roman law in Montesquieu, which may have been at least in part against the laws and legal institutions of France in his own time.

Bureaucratisation and an administered world can themselves be seen as resting on the necessity of an integrated, hierarchical, rigid, and institutionalised legal system of a ‘Roman’ model, which is true even when thinking of ‘common law’ jurisdiction in England and its off-shoots (England, not Britain, because Scotland has its own more Roman system, and differences between English and Scottish legal institutions survived political union). This process, described in various ways by Weber, Schmitt and Foucault, Austrian school liberals and Frankfurt School Marxists, also rested on the simultaneous formation of commercial society and national economy described by Arendt. Arendt’s account is particularly enriched by comparison with Foucault on the emergence of the art of government. 

The consequences of these legal, administrative, governmental, and economic processes  is that the political sphere is deprived of content as a means for addressing the community as a community of judging, reflective individuals. Politics becomes competition for control of administration and the distribution of economic benefits that come with with this control. The political world is influenced by a drive to the kind of homogenisation favoured by the world of administration and positive law, which turns into struggles about identity and ‘political correctness’. That is, the struggle to define the dominant identity, with claims to a pluralist position still governed by the wish to establish the dominating identity as more tolerant (which can happen in a ‘progressive’ manner), as in a community seen as a community of communities or a ‘conservative’ manner, where there are distinct communities tied to nations or possibly non-interacting historical communities within nations. 

Arendt suggests a perspective aristocratic contest in politics taken from Greek antiquity, particularly Athens, as the antidote to the above. Foucault also has a perspective taken from Greek antiquity, of care of the self, which can also be understood as aesthetic techne, in which our capacity for self-affection is developed in self-creation and recreation, though not as a purely aesthetic play. Machiavelli was in some respects the advocate of the modern integrated state, of sovereignty concentrated in an individual who integrates society through the power of his political skill and creation of a dominating rhetoric or symbolism. In Machiavelli, though, we can also see much that comes from Ancient republicanism filtered through the republicanism of the late medieval city states of northern Italy.

There is not just the remnants of ancient republicanism but its transformation in a world where the state is increasingly invested in territorial control, distinct from the personalised nature of the state as understood before (either in the person of the monarch or the persons making up a republic). The ‘cynicism’ of Machiavelli has its starting point in Aristotle’s Rhetoric, where reason is applied to speech in public places, particularly the courts of law and the political assembly. Though Aristotle distinguishes between the rhetoric of courts and assemblies, he does show a commitment to the idea that they belong to a common world of persuasive speech. Rhetoric appeals to the less deductive parts of human judgement, even the parts of human judgement which come from immediate emotional reactions, but never just that.

The prince who is human and animal, moral and self interested, is also the strong lion and the cunning fox, within his animal self. There is a sense of the total possibility: symbolism and self invention of individuals engaged in the political world. The judicial connection with politics and the social world for whom law is in some sense dead, an accumulated wisdom from the ancients now codified and open to commentary, but not part of political life except in the administrative and governmental roles that Machiavelli himself had for a while on the basis of his legal training, mingled with humanistic (Latinate and literary) education.

Even so, we can see some ideas lingering in Machiavelli of the importance of law in political life, so that it is the ‘parlements’, partly independent and locally representative law courts, of France which gives its monarchy some of the liberty of a republic. In The Prince it is the case that the energy of the people defending its state and its liberties, where they have some history, outweighs the power of the princely ruler, so that classical Polybian republicanism of the Discourses is never completely absent from The Prince.

Most significantly, Machiavelli leaves a legacy which can be seen behind the 20th century attempts to find an alternative to an administered social world. There is the charismatic leader in Weber, the agonistic aspects of politics in Arendt, and the ethics of self-creation and transformation of the self in Foucault. The charismatic leader in Weber should not be understood as a dictator or a person above politics, but as the way in which legally and formally constrained politics can still engage with the social world and the free judgements of individuals. The agonistic politics in Arendt is not just nostalgia for Athens, but an account of what it is to have individual goals and public awareness in a political community. Ethics in Foucault is not just self-creation out of nothing or a non-political playfulness, it is about how we can have free judgement in politics and law. The glory the prince seeks in Machiavelli, and by the citizens of a republic, is a way of seeing that politics combines autonomy and prestige as driving forces in a historically located and contingent political community. Machiavelli anticipates the ways that Arendt understands political freedom to be related to a Homeric culture of seeking fame in public life.

Law, Judgement, Republicanism

Barry Stocker Liberty, Philosophy , , , , , , , , , ,

Draft material for a joint conference paper/Work in Progress on a long term project

This paper comes out of a long term project to work on ideas of liberty in relation to republicanism in political thought, along with issues of law and sovereignty. The paper in question here comes out of collaborative work on questions of law, judgement, and republicanism in relation to Turkey’s history and its current politics. Though this comes from collaborative work, I take sole responsibility for this iteration of draft material towards a joint conference paper, drafted with the needs of a blog with a broad audience in mind.

The starting point is in Immanuel Kant with regard to his view of law and judgement. His jurisprudence, mostly to be found in the first part of the Metaphysics of Morals on ‘The Doctrine of Right’, is that of law based on morality, so is an alternative to legal positivism. The argument here is not to take his explicit jurisprudence as the foundation of legal philosophy. There is another way of looking at Kant’s jurisprudence which will be discussed soon. 

What is particularly valuable at this point is that Kant suggests an alternative to legal positivism and the Utilitarian ethics with which is has affinities, particularly in Jeremy Bentham. Legal positivism refers to a position in which laws are commands understood only as commands, with regard to some broader principles of justice. It is historically rooted in the idea of the political sovereign as the author of laws. Historically such a way of thinking about law was embedded in what is known to us as natural law, that is, ideas of universal rules of justice. This began with a very sacralised view of law as coming from the cosmos and divine, in which the sovereign is part of the divinely ordained laws. Over time this conception develops more into the idea of law as an autonomous institution resting on sovereign will. Positivism develops from such an idea of legal sovereignty, leaving no impediment to the sovereign will.

Kant’s understanding of morality leaves law rooted in ideas of rationality, universality, human community, autonomy, and individual ends which are central to Kant’s moral philosophy. The critique of legal positivism is necessary to understanding law in relation to politics and citizenship in ways which don’t leave a sovereign will with unlimited power over law. Kant’s view of judgement suggests a way of taking Kant’s morality and jurisprudence out of the idealist abstraction he tends towards. His philosophy of judgement can be found in the Critique of Judgement Power, divided into parts on aesthetic judgments of beauty and teleological judgments of nature.

The important aspect here is the aesthetic judgement, given political significance through the interpretation of Hannah Arendt. From Arendt we can take an understanding of Kant’s attempts at a moral basis for law, something that takes political judgement as an autonomous, though related, area. On this basis it can be said that the judgement necessary for there to be legal process, bringing particular cases under a universal rule, according to a non-deterministic subjective activity, on the model of Kant’s aesthetic judgement is at the root of politics.

Politics is a process of public judgement about particular cases in relation to the moral principles at the basis of politics. The making of laws is at the centre of the political process and the application of law in court should also have a public aspect. We can see a model of a kind in antiquity with regard to the minor citizen assembly, selected by lottery, serving as a jury in the law courts of ancient Athens. It is Roman law that tends to impose a state oriented view of law, in which the will of the sovereign is applied in a very absolutist way, so that in the end the Emperor is highest law maker and highest judge of the laws.

As Michel Foucault argues, and Montesquieu before him, the German tribes which took over Roman lands had more communal and less rigidly defined forms of court judgement, and were more concerned with negotiating social peace than applying laws rigidly to cases. Foucault showed how law always has some political significance with regard to the ways in which sovereignty works and power is felt. That is the law and the work of the courts is a demonstration of sovereignty, while punishment is concerned with the ways that sovereignty is embedded in power, and how that power is exercised on the body to form a kind of model subjugation to sovereignty. The Foucauldian perspective should not be one in which everything to do with the laws, the courts, and methods of punishment is an expression of politics narrowly understood.

The point is to understand sovereignty as whole, including the inseparability of institutions of justice from the political state. The accountability of the state and the accountability of justice must be taken together. Both should work in the context of public accessibility and public discussion. The ways in which laws, courts, and judges can be accountable to ideas of autonomy must be declared and debate. Courts should be understood as ways of addressing social harms and finding reconciliation rather than as the imposition of state-centric declarations of law.

Why protect speech?

Ethan Blevins Law, Liberty , , , , , , , , ,

The U.S. Supreme Court has extended more protection for speech than other major courts that adjudicate rights, such as the European Court of Human of Rights. Nonetheless, the Supreme Court is frequently wrong about why speech deserves constitutional protection. That error has undermined the First Amendment that the Court purports to protect. Continue reading →

The TSA Wins

Michelangelo Landgrave Liberty , , , , ,

Since 2012 I have been a semi-frequent flyer making about five cross continental round trip flights a year, plus several shorter flights within the Pacific coast. Between now and then I would make it a point to ‘opt out’ of the standard TSA procedure and receive the pat down. I did it for a variety of reasons. For one, don’t like being exposed to radiation and don’t trust the government on the issue.

More than that though, I wanted to resist and encourage my fellow citizens to resist, however small, the security theater the government has us go through in exchange for our freedom to travel. I would not encourage people to resist the police or any armed agent of the state, but by opting out I was taking a stand against government and hoped others would join me.

In five plus years, no one did. The only people I ever had join me in the opt out process was ‘randomly selected’ individals, often Muslims or mis-identified Sikhs. I never saw someone else voluntarily opt out. In retrospect, I suspect noone else saw my actions as a form of protest.

When I took a flight earlier today I went through the standard procedure.* My will to resist, at least in this form, has gone away. In the coming year the TSA rules will become stricter as real ID is finally implemented. I like to think this will lead to popular opposition, but I wouldn’t wager on it. As a nation we’ve given up on asserting our freedom to travel with minimal intrusion.

When I arrived at my final destination I found the below containers blocking me from the entrance. To leave the airport I had to get checked one last time. They don’t seem to be scanners, but when you enter them you are held up for ten or so seconds before being let free. Are they just trying to see what we will put up with before unveiling the next wave of security theater antics?

Thoughts? Have a story about your flying experience(s) to share? Post in the comments below.

___

*Funnily enough I ended up being “randomly” choosen to have my luggage physically inspected anyway.

The Behavioural Economics of the “Liberty & Responsibility” couple.

Federico Sosa Valle Economics, Liberty , , , ,

The marketing of Liberty is enclosed with the formula “Liberty + Responsibility.” It is some sort of “you have the right to do what you please, BUT you have to be responsible for your choices.” That is correct: the costs and profits enable rationality to our decisions. The lack of the former brings about the tragedy of the commons outcome. In a world where everyone is accountable for his choices, the ideal of liberty as absence of arbitrary coercion will be delivered by the resulting structure of rational individual decisions limiting our will.

The couple of Liberty and Responsibility is right BUT unattractive. First of all, the formula is not actually “Liberty + Responsibility,” but “Liberty as Absence of Coercion – What Responsibility Takes Away.” The latter is still right: Responsibility transforms negative liberty as “absence of coercion” into “absence of arbitrary coercion.” The problem remains a matter of marketing of ideas.

David Hume is a strong candidate for the title of “First Behavioural Economist,” since he had stated that it is more unpleasant for a man to have the unfulfilled promise of a good than not having neither the good nor the promise of it. The latter might be a desire, while the former is experienced as a dispossession. The couple “Liberty – Responsibility” dishes out the same kind of deception.

It is like someone who tells to you: “do what you want, enjoy 150% of Liberty”; and suddenly, he warns you: “but wait! You know there’s no such thing as a free lunch, if you are 150% free, someone will be 50% your slave. Give that illegitimate 50% of freedom back!” And he will be -again- right: being responsible makes everybody 100% free. Right – albeit disappointing.

Perhaps we should restate the formula the other way around: “Being 100% responsible for your choices gives you the right to claim 100% of your freedom.” Only a few will be interested in being more than 100% responsible for anything. But if it happens that someone is expected to deal alone with his own needs, at least he will be entitled to claim the right to his full autonomy.

The formula of “Responsibility + Liberty” is associated with the evolutionist notion of liberties, which means rights to be conquered, one by one. Being responsible and then free means that Liberty is not an unearned income to be neutrally taxed. It is not a “state of nature” to give in exchange for civilization, but a project to grow, a goal, a raison d’etre.

Putting first Responsibility and then Liberty determines a curious outcome: you are consciously free to choose the amount of freedom you are really willing to enjoy. Markets and hierarchies are, then, not antagonistic terms, but structures of cooperation freely consented. Moreover, what we trade are not goods, not even rights on goods, but parcels of our sphere of autonomy.

Freud and property rights

Bill Rein Liberty , , , ,

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.

The problems of ‘Exit’ and ‘Autonomy’ in (mostly American) libertarian thought

Brandon Christensen Politics , , , ,

Over at EconLog, Italian political theorist Alberto Mingardi has a great post up on defining national socialism. Here is the money shot:

So, the nationalists are going to be more socialist, because they want to vindicate the power of the nation state in taking control of the national economy, and the socialists are going to be more nationalist, because strengthening regulation and advancing redistribution is all the more difficult in supranational arrangements, where a cooperative understanding is seldom reached.

My own mind was drawn to this insight, though:

I fear there is a symmetric problem for libertarians. If we take Applebaum’s points seriously, as we should, we are put in a very awkward position: which is defending the status quo, made of relatively free international trade plus relatively weak supranational institutions, as the least bad of all possible worlds. And yet libertarians are highly critical of the status quo and won’t feel well in the company of the current global elites.

This is largely correct. Libertarians are right, I think, to be critical of the status quo (even though it is the least bad of all possible worlds, and has been for the last three decades), but they veer off in the wrong direction when they start emphasizing exit and autonomy over entrance and interconnectedness.

This is not just a complaint about rhetoric, either. When libertarians constantly focus on exit and autonomy, a tendency begins to develop where these two concepts become harder and harder to critique and develop into more coherent ideas about liberty and freedom. Just look at all the support for Brexit by libertarians, or the support still given to the Confederate States of America (!). These libertarians have become so obsessed with exit and autonomy that they end up failing to even entertain the notion that you can’t have exit without entrance, or autonomy without interconnectedness.

Are small autonomous political units economically viable?

Chhay Lin Lim Liberty, Politics , , , , , ,

Macau Skyline

I am at the moment enjoying my end-of-year-holidays in Macau, a micro-state next to Hong Kong and like Hong Kong also a Special Administrative Region (SAR) of China. Being a SAR basically means that Macau is allowed political and economic autonomy, but still belongs to the People’s Republic of China. This construction is also known as the “One Country, Two Systems” constitutional principle. Being here makes me realize once again the unique position of micro-states. Although I understand that GDP per capita is no measure of everyone’s personal income, I would still like to stress that Macau has the second highest GDP per capita income in the world in 2014 according to the World Bank and that the CIA has placed Macau at spot number 3. Macau has furthermore the 2nd highest life expectancy rate (CIA, 2012). Some other interesting facts about Macau:

  • 0% VAT;
  • max. personal income tax rate of professional practices is 12% and only for incomes above MOP424,000 (~ 53,000USD);
  • currently 30% of this professional tax is waived;
  • tax free income threshold stands at MOP144,000 (~ 18,000USD);
  • Macanese residence in possession of an ID-card receive a yearly refund of 60% of the professional tax paid, subject to a cap of MOP12,000 (~ 1,500USD);
  • Macau is also known as a gambling/entertainment hub of Asia with the gambling/entertainment industry making up around 50% of the economy.

It is sometimes claimed that small autonomous political units are economically unviable, but Macau – like Hong Kong, Singapore, Monaco, Liechtenstein, Luxemburg and more – disprove this claim. Two reasons that are often given for the unviability of small autonomous political units are (a) economies of scale is difficult to realize in small states, and (b) they are vulnerable to trade shocks because their size prevents the states from wide diversification in economic activities. If these reasons would hold, then we would certainly find that micro-states are generally poorer than larger states. However, Easterly and Kraay (1999) have empirically found that micro-states[1] are 40-50% richer than other states when controlled for location by continent, controlled whether they are oil producers, and controlled whether they are members of OECD. In addition, Easterly and Kraay have found that life expectancies in these states are about four years higher and that the under-five infant mortality is lower by 22 per thousand. This suggests that micro-states do not suffer from developmental disadvantages.

Micro-states have been particularly more successful, because without abundant access to land and labour they are pressured to specialize their national economies[2] and to engage in international trade. International trade is particularly important in order to acquire goods that cannot be produced nationally. This pressure to trade encourages peaceful inter-state cooperation. Moreover, due to its small size, public policies are easier to follow which tends to result in greater political transparency. It hence increases the incentives of citizens to become politically involved. The rule over a small territory makes public policy targets also more efficient, and as a result fewer taxes are required. Nevertheless, one could still argue that micro-states in Easterly and Kraay’s research are large enough to be economically viable, but that especially those states that consist of maybe as few as 100 members would suffer from developmental disadvantages. This however, is a question of what the smallest possible size is for an economically well-functioning state. It is an interesting question that I unfortunately cannot answer. I will nonetheless leave a note from Plato on the subject to emphasize the importance of the division of labour in any well-functioning state. In Plato’s Republic, Socrates asserts that the state arises from the division of labour through which goods are efficiently supplied so that its citizens’ needs are fulfilled. The smallest notion of the state, as Socrates then asserts, exists of at least four persons who can produce the greatest human necessities: a farmer, builder, weaver, and shoemaker. I do not share the opinion that these specific four occupations are necessities for a small state, but I think you get the gist: for a (minimal) state to function well, you need at least division of labour.

Reference
Easterly, W., & Kraay, A., (1999). Small States, Small Problems? The World Bank.

Footnotes
[1] Micro-states are defined by Easterly & Kraay as states with populations of 1 million or less. Some examples of the 33 investigated states are Belize, Cyprus, Gabon, Iceland, Luxemburg and Suriname.
[2] Specialization increases productivity, and hence competitiveness.