NATO, Kendrick Lamar, and the answer to free riding

Edwin’s post giving one cheer to NATO brings up the old rift between European and American libertarians on foreign policy and military alliances. As usual, it’s excellent and thought-provoking. Here’s what he got out of me:

International relations splits the classical liberal/libertarian movement for a few reasons. First, consensus-building on both sides of the pond is different, and this contributes strongly to the divide over foreign policy. American libertarians lean isolationist because it aligns closer to the American left and libertarians are desperate to have some sort of common ground with American leftists. In Europe, leftists are much less liberal than American leftists (they’re socialists and communists, whereas in the States leftists are more like Millian liberals), and therefore European libertarians try to find different common ground with leftist factions. Exporting the Revolution just doesn’t do it for Europe’s libertarians.

Edwin (and Barry) have done a good job convincing me that trans-Atlantic military ties are worth the effort. But we’re still stuck at a point where the US pays too much and the Europeans do too little. Trans-Atlantic ties are deep militarily, culturally, and economically. Tariff rates between the United States and Western Europe are miniscule, and the massive military exercise put on by NATO’s heavyweights highlights well the intricate defense connections between both sides of the pond. Night clubs in Paris, London, Warsaw, and Los Angeles all play the same Kendrick Lamar songs, too.

Politically, though, the Western world is not connected enough. Sure, there are plenty of international organizations that bureaucrats on both sides of the pond are able to work in, but bureaucracy is only one aspect of getting more politically intertwined with each other (and it’s a damn poor method, too).

In 1966 economists Mancur Olson and Richard Zeckhauser wrote an article for the RAND Corporation showing that there were two ways to make NATO a more equitable military alliance: 1) greater unification or 2) sharing costs on a percentage basis. The article, titled “An Economic Theory of Alliances,” has been influential. Yet almost all of the focus since it was published over 50 years ago has been on door number 2, sharing costs on a percentage basis. Thus, you have Obama and Trump bemoaning the inability of Europe’s NATO members to meet their percentage threshold that had been agreed upon with a handshake at some sort of bureaucratic summit. You have Bush II and Clinton gently reminding Europe’s NATO members of the need to contribute more to defense spending. You have Nixon and Carter prodding Europe’s NATO members to meet an agreed-upon 3-4 percent threshold. For half a century policymakers on both sides of the Atlantic have tried to make NATO more equitable by sharing costs on a percentage basis, and it has never panned out. Ever. Sure, there have been some exceptions in some years, but that’s not okay.

What has largely been lost in the Olson & Zeckhauser article is the “greater unification” approach, probably because this is the much tougher path to take towards equitable relations. The two economists spell out what they mean by “greater unification”: replacing the alliance with a union, or federation. I’m all for this option. It would make things much more equitable and, if the Europeans simply joined the American federation, it would give hundreds of millions of people more individual freedom thanks to the compound republic the Americans have built. Edwin, along with most other European libertarians/classical liberals, acknowledges that Europe is free-riding, but are Europe’s liberals willing to cede some aspects of their country’s sovereignty in order to make the alliance more equitable? Are they ready to vote alongside Americans for an executive? Are they ready to send Senators and Representatives to Washington? Or are they just pandering to their American libertarian friends, and telling them what they want to hear so they’ll shut the hell up about being ripped off?

One Cheer for NATO

The largest military NATO exercise since the end of the Cold War will start shortly in Norway. About 50.000 troops and 10.000 vehicles from all 29 NATO countries plus Sweden and Finland will commence ‘Trident Juncture 2018’ on October 25.

Before the actual exercise starts, there are already logistical tests. As the news release of NATO explains:

Over the next few days, 70 Foxhound, Husky and Landover vehicles will make the 2,000km journey from the Hook of Holland harbour through northern Europe to Norway. The UK convoy’s move through the Netherlands, Germany, Denmark and Sweden will test how efficiently soldiers and equipment can move between European countries. It will also test customs, border regulations and infrastructure’s ability to cope with rapid and heavy troop movements.

“Military mobility is vital, especially to reinforce in a crisis. That’s exactly why we exercise it,” said NATO spokesperson Oana Lungescu. “Over the past few years, NATO has made real progress in improving our ability to deploy troops quickly across Europe. We are overcoming legal hurdles and cutting red tape, including by working closely with the European Union. Looking ahead, we aim to further reduce border-crossing times (clearances within five days by the end of 2019), identify alternative supply routes, and exercise even more to practice military mobility.”

The exercise itself has an article 5 or collective defense scenario, training NATO’s crisis response ability. It will last about two weeks. “NATO is a defensive Alliance. We’re not looking for a fight, but we are committed to defense and deterrence. That’s what this exercise is all about: training to defend, and providing a deterrent effect, ready to respond to any threat from any direction at any time,” commanding officer Admiral Foggo underlined.

I think this exercise, with all NATO members, on this scale, in these uncertain times, deserves one cheer. It shows that the Alliance is still able and willing to get together, to show it is the most powerful military alliance on earth, and that it realizes it needs a lot of training to remain so.

There are still two cheers lacking. The second cheer is lacking because the partnership is still unbalanced. Despite increases in the defense budgets in some of the European NATO members (The Netherlands included), the main burden (also in relative numbers) still falls on the Americans. That is simply wrong. And it is also dangerous, because in current times, for example also with cyber warfare becoming ever more important, any shortage of budget is putting (future) lives at risk. The third cheer is lacking because anti-NATO rhetoric (on both sides of the Atlantic) will sow the seeds of doubt about the use and future of NATO. That is also simply wrong and dangerous. Whether it is Russia, or other powers, the West cannot afford to leave any current or future authoritarian ruler in any doubt about the military ties across the Atlantic, all the way to the Russian border. It is in the best interest of all NATO members, the US included.

Is Free-Riding for Union Negotiations a Myth?

As the US Supreme Court is considering the case of Janus v. AFSCME on mandatory deductions for the purposes of union negotiations, I think it is time to truly question the argument underlying mandatory deductions: free-riding. Normally, the argument is that union members fight hard to get advantageous conditions. After taking the risks associated with striking and expending resources to this end, non-members could simply get the job and the benefits associated with prior negotiations and not contribute to the “public good” of negotiation. This is an often-used argument.  I come from Quebec in Canada where closed shop unionism (i.e. you are forced to join the union to get the job) still exists and mandatory dues are more stringently enforced than in the United States. There, one of the most repeated defense of the closed shop system and of the mandatory dues is the free-riding argument. As such, the free-riding argument is an often-used communication line.

That is, in essence, the free-riding argument. While it appears axiomatically true, I do not believe that it is actually a relevant problem. However, before I proceed, let me state that I have a prior in favor of consent and I only sign off on “forcing” people when the case is clear and clean-cut (I am what you could call a radical “contractarian”).

So, is free-riding a problem? The answer is in the negative (in my opinion) as the free-riding argument entails that unionism provides a public good. One of the main feature of a public good is an inability to exclude non-payers.  Think about the often-used example of lighthouses in public economics: the lighthouse provides a light that everyone can see and yet the owner of the lighthouse would have a very hard time to collect dues (although Ronald Coase in 1974 and Rosolino Candela and myself more recently have emitted doubts about the example).  However, why would a union be unable to exclude? After all, it is very easy to contractually “pre-exclude” non-payers. A non-member could obtain only 50% or 75% or 80% of the benefits negotiated of the union. Only upon joining would he be able to acquire the full benefits of the union.

As such, “excludability” is feasible. In fact, there are precedents that could serve as a framework for using this exclusion mechanism. Consider the example of “orphan clauses” which were very popular in my neck of the wood in the 1990s and early 2000s. Basically, these clauses “create differences in treatment, based solely on the hiring date, in some of the employment conditions of workers who perform the same tasks“. These existed for police forces, firefighters and other public sector workers.  Now, this was a political tool for placating older union members while controlling public spending. As such, it is not an example of exclusion for negotiation purposes. Nevertheless, such contracts could switch the “date of employment” for the “union status” in determining differences in treatment.

Another mechanism for exclusion is social ostracism. This may seem callous, but social ostracism is actually well rooted in evolutionary psychology. It also works really well in contexts of continuous dealings (see also this example by Avner Greif which has been the object of debates with Sheilagh Ogilvie and Jessica Goldberg)  Workplace relations between workers are continuous relations and shirkers can be ostracized easily.  The best example is the “water dispenser gossip” where co-workers will spread rumors about other workers and their behavior. All that is needed is an individual marginally inclined towards the union (who could even get special treatment from the union for being the ostracism-producer) who will generate the ostracism. As such, the free-riding argument has a solution in that second channel.

In fact, ostracism and contractual exclusion can be combined as they are in no way mutually exclusive. These two channels are the reason why I do not adhere to the “free-riding” argument as valid justification of compulsory payment for financing unions.

Which countries are of US interest?

I was reading my news stream when I noted a blog post from the Cato Institute discussing the silliness of adding Montenegro to NATO. I don’t disagree per se. I certainly don’t see the value of adding Montenegro to NATO, if the purpose of NATO is to protect the US. Nor do I disagree with the general US-libertarian belief that the US has over extended itself in terms of military alliances.

I do wonder though what countries US-libertarians should desire to maintain a military alliance with. A North American military alliance, ranging from Canada to Panama and including the Caribbean, makes sense to me. The Atlantic and Pacific Oceans are our greatest defenses, but I welcome military cooperation from our geographical neighbors.

Beyond there though it gets tricky. Western Europe is certainly rich enough to protect itself. The main reason I am hesitant to leave NATO altogether is the nuclear question. France and the UK are the only European powers with nuclear weapons, but several others are part of NATO’s nuclear sharing program. Should the US leave NATO would these countries seek nuclear weapons for themselves? Would the UK/France provide substitute weapons? Ending military ties with Europe would likely be the easiest option in terms of cutting down on allies.

Japan and South Korea are likewise rich countries, but here too the nuclear question arises. Japan has a cultural aversion to nuclear weapons that I do not see it overcoming in the foreseeable future. South Korea may be willing to use nuclear weapons, but its strained historical relationship with Japan leaves me concerned about the future possibility of a Korean-Japanese alliance to counterweight China PRC. I believe that Japan should be encouraged to modify its constitution to allow its military greater freedom in action and to consider acquiring nuclear weapons of its own. Other nations in the region, such as the Philippines, are outmatched in conventional weaponry or, in the case of Australia, too far away geographically to be of much use in restraining China PRC’s influence in east Asia.

I am hopeful that within my lifetime China PRC will transition to a liberal democracy, but till then I am skeptical about allowing it free reign in east Asia. For the foreseeable future it is hard for me to consider an east Asia without a significant role for the US. Nor would I be particularly against offering South Korea and/or Japan statehood in a United States of the Pacific.

Thoughts? I admit that international politics is not my area of expertise and I more than welcome other’s thoughts on the matter. I also admit that I am not viewing these issues from a pure libertarian perspective but with a splash of nationalism.

As readers may know our own Brandon is playing around with creating a NOL foreign policy quiz similar to the Nolan libertarian quiz.

From the Comments: The Contribution of American Allies to Pax Americana

Dr Stocker answers my concerns about free-riding and rent seeking with this gem:

Good points Brandon. On the rent seeking, I think you are broadly correct, but I would offer two qualifications. European nations/the EU often foot a lot of the bill/take on associated civilian tasks where America has taken military action, so that the US is not subsidising the defence and security needs of Europe quite as much as it might seem. So for example, in the Yugoslav breakup led to US military operations and a comparatively passive role for Europe, but a lot of the afterwork was taken on by Europe and there is no point in military intervention without work on building civil society to create long term security and stability. Going back a bit further to the first Gulf War/expulsion of Saddam from Kuwait, Germany and Japan did pay a lot towards the cost in return for not participating. Despite [this] they got a lot of abuse in the US Congress from politicians who don’t appear to understand that their non-intervention in the Gulf owed a lot to constitutions and attitudes which the US encouraged/imposed during post-World War II occupation. Recently, though European govts have been cautious in what they say in public about the Ukraine crisis and containing Putin, there is a growth in military spending and co-operation done in fairly quiet ways largely with the aim of deterring Putin from adventurism in the Baltic states. Just one example, Germany has recently taken 100 Leopard II tanks out of retirement and work is underway for the Leopard III. Moving to the Pacific, Japan is enhancing its military and weakening constitutional restrictions on the deployment of the military (imposed by the US in the post-war Constitution) in reaction to Chinese assertiveness.

While I think it is broadly correct that the US has been paying for a military burden which should be born by Europe and Japan, the situation is not as extreme as it often assumed in the US and as far as I can see is moving in a more balanced direction. In general while it is true that the US has a very impressive military machine with some impressive technology and officers, I think some Americans are a bit over confident about this. A lot of Americans, at least amongst those who take an interest in military kit, appear very convinced that the Abrams 2 is the best tank anywhere, I would suggest that in military capacity, for cost, the Leopard II is probably better (it certainly does much better in export markets) and even in absolute terms ignoring cost, the French Leclerc (which is extremely expensive) has a good claim to be the best tank around, and the Korean K2 is another strong but very expensive candidate. The Abrams is expensive, heavy, difficult to transport and difficult to keep in sufficient fuel, though it can certainly do a very good job. A lot of Americans appear to be incapable of thinking of France as anything other than a surrender monkey joke in military terms, which is really very far from the reality, as can be seen by the very strong role that France is now taking in northwest Africa against violent Islamist fundamentalists. The US military may well be able to have the same military capacity for lower cost if it moves away from the Abrams II model of a tank that is expensive to run and transport as well as build.

So broadly a correct point Brandon, but I think the situation is a bit better than is often understood in America and is moving in the right direction as Japan and Europe are getting used to the idea of taking responsibility for dealing with new threats from China, Putinist Russia and the hydra of Islamist fundamentalists.

A very good point, and an even better angle with which to view the world.

My only quibble is that the right direction American allies are moving can easily be changed without a more fundamental shift in institutional arrangements between us. Some sort of federal or confederal arrangement would go a long way toward addressing this issue, and would further deepen the economic and cultural ties between constitutional democracies.

Or am I just looking for problems where there are none, in order for my arguments to gain ground?

Measles Vaccine? Not Me!

That’s because the vaccine didn’t exist when I was a kid. I got the disease instead, leaving me with natural immunity. I think my chums all got it too and it amounted to a few days of discomfort, no big deal. But there must have been some who got it and suffered serious consequences, even death. News just didn’t get around in those days (ca. 1950) like it does today.

It’s terrific that a vaccine now exists, but like all vaccines it entails perverse incentives. When nearly everyone is vaccinated, there is little incentive for an individual parent to get it for his child because the disease can’t spread through a vaccinated population, and at least some incentive not to get it: cost, bother, and a remote chance of ill effects. And if enough parents skip the vaccine, the percentage of vaccinated children may fall low enough to permit the disease to propagate as, in fact, it has begun to do lately in some areas.

The solution for public schools is simple: require vaccination for all entering school children. As long as we have public schools, there have to be rules and this would be a quite sensible rule. For private schools the situation is trickier. Should the government require private schools to require vaccination? I think not. Most parents would have sense enough to keep their kids away from such schools. A no-measles policy would be a selling point for private schools.

From the Comments: Military Alliances and the Free Rider Problem

Dr van de Haar’s excellent post on secession and alliances prompted the following from yours truly:

I think you highlight well the difference in opinion, on foreign policy, between libertarians/classical liberals in Europe and the United States. Alliances are sometimes a good option, and it pains me to see American libertarians dogmatically reject alliances in a spirit of reaction.

At the same time, European libertarians have yet to acknowledge a problem as old as Thucydides’ writings on the Delian League: that of free-riding. As NATO stands today, the European partners in the alliance (save for the UK and some newer, Eastern members) have been taking the US taxpayer for a ride.

This is a small injustice in the grand scheme of things, but it is an injustice nonetheless. The problem of alliances and free-riding extends far beyond NATO, of course. This is why I argue that alliances should be eschewed in favor of federations. I got this this idea from the likes of Ludwig von Mises, Adam Smith, and FA Hayek. The logic behind opting for federation over alliance runs something like this: if two or more countries can pledge mutual military aid to each other, but cannot abide forging closer economic and political ties, then the likelihood of each member of the alliance adhering to an agreed-upon charter is going to be very low.

Federation gets around this problem. Isolationism and empire do not.

Be sure to check out the back-and-forth between Edwin and General Magoon, too.