Brexit, free trade, and the EU

06/25/2016 Jacques Delacroix Current Events Brexit, European Union, free trade, immigration, media studies, protectionism, United Kingdom

I posted this on Facebook twenty hours before the results were known:

The United Kingdom will not leave the EU. If it does, there will be concrete talks of a trade agreement between the UK and the Union within a week. Free trade is the best part of the EU anyway. It may be the only worthwhile part. At least, it undeniably works. The EU has a free trade agreement with Norway and with Switzerland already. I don’t see it denying the UK, not even out of collective pique.

My guess (guess) is that the UK will have done the EU a favor by pointing out that much of the European Union’s bureaucratic, abstract, nebulous project is simply overambitious. The UK taught the world democracy and soccer (football). It can teach its European neighbors pragmatism.

Obviously, I called the referendum wrong. The mistake I made was to guess that people who were going to vote for staying were more likely to lie to pollsters than partisans of Leave. That would have given an underestimate for the “stays.” I should not have called it. I am not inside British culture enough to make this kind of guess. I shouldn’t have. I won’t again.

I am perplexed by some of the comments I heard all day in the US media. Perhaps as a result of a bit of psychological projection, American commentators state that anti-immigration sentiment played the main part in the victory of the “leave.” This may be the case; I don’t know enough to pronounce but I need to make a technical point that the pundits don’t seem to be completely aware of. Leaving the European Union can only lessen the flow of European immigrants into the UK: Polish (plumbers), Romanian carpenters, and tens of thousands of French citizens, at least. Since about one million Brits leave abroad and almost all in the EU, I see an exchange agreement in the making. Don’t you?

Leaving the EU will do nothing or nearly nothing to reduce the intake of immigrants of color and of Muslims. Those landed in the UK and continue to land there as a consequence of past colonial relationships. I say this because I suspect (I suspect; I don’t know) that Brits are more exercised about large numbers of dark-skinned Muslims than they are about fewer dishwater-white Catholic Poles. Call me a cynic!

Second technical point. Many of the American commentators I heard today, including those predicting Armageddon as a result of the British referendum, seem to have vague ideas about what the European Union actually is. It’s actually fairly complicated but I don’t excuse them. If they want to comment, they should do their homework. Anyway, the EU is first and foremost a free trade area and and free investment area. In this capacity, it works very well. I mean by this that any step backward would impoverish all Europeans to some extent.

I don’t see how British industry and British commerce can really face the possibility of meeting with tariff walls and other discriminatory treatments in a market of 27 countries until now wide open to them.

The Brits have two years to finalize their exit. I think (but I have been wrong before; see above) that they will say to the EU: We are leaving except that… we want to be included in your free trade and free investment area, like Iceland and like Norway. As I mentioned above, I also think they will want some mutual arrangement about citizens of the EU living in the UK and citizens of the UK living in the EU. I think there are going to be many rounds of negotiations around the theme: “We are leaving but…” It’s also possible that the most fervent Leave-ers will ultimately be satisfied with having made a rude gesture toward Brussels, the capital of the European Union. I am repeating (in fear this time) my prediction that the British referendum will cause the EU to reform itself. In fact, think it already has.

See also “Protectionism; Free Trade….” It was written for the intelligent uninformed.

The Cruel, Conceited Follies of Trump’s Colonialist Foreign Policy

06/03/201606/04/2016 Zachary Woodman Current Events, Liberty American elections, Andrew Jackson, classical liberalism, colonialism, Donald Trump, economics, Election 2016, foreign policy, free trade, Hillary Clinton, imperialism, Iraq, ISIS, libertarianism, Libya, Ludwig von Mises, national interest, Politics, Presidential Election, Syria, Thomas Jefferson, Walter Block, Zach Beauchamp

I typically prefer to abstain from writing too extensively on electoral politics. For one, it’s not my area of expertise and I simply don’t enjoy it that much, but also I think the type of issues that come up in electoral politics are a sensationalist distraction from the meaningful policy debates that actually go on in the back rooms of congress and think tanks, as well as the deeper and more important philosophical, economic, and cultural issues that plague our political situation. Thus, I prefer to write in more detail about public policy or more theoretical economic and philosophical issues rather than the day-to-day drudgery of superficial political news. However, the recent discussion on foreign policy on the campaign trail surprisingly has the potential to become at least mildly substantive, so it is in my mind worth analyzing in greater depth. It should be noted that I am far from an expert in foreign policy, so apologies in advance for any errors and if this article as a whole is a farce.

The purpose of this article is to lay out and critically assess Donald Trump’s foreign policy. It is my contention that Trump does have some fairly consistent underlying instincts, if not principles, on foreign policy that may be inferred from his public comments on the issue. This may be characterized by a concerning belief that the ultimate end of foreign policy should be to aggressively promote America’s interests abroad, akin to a radical, new type of Jacksonian colonialism. If I am right about Trump’s underlying views on foreign policy, a Trump presidency would result in disaster. It would mean massive violations of humanitarian rights and would fail to meet the goals even Trump himself is seeking to attain.

Clinton on Trump’s Foreign Policy

Yesterday, Hillary Clinton delivered a major speech ostensibly criticizing Trump’s foreign policy. Unfortunately, most of her speech was more of an attack on the narrative of Trump’s campaign and Trump himself than his actual foreign policy. This is largely because she thinks Trump doesn’t really actually have a foreign policy; his positions, Clinton thinks, are incoherent, ignorant, or just not even positions at all. This is probably the most quoted passage of the speech:

Donald Trump’s ideas aren’t just different — they are dangerously incoherent.
They’re not even really ideas: just a series of bizarre rants, personal feuds, and outright lies. He’s not just unprepared, he’s temperamentally unfit to hold an office that requires knowledge, stability and immense responsibility. This is not someone who should ever have the nuclear codes — because it’s not hard to imagine Donald Trump leading us into a war just because somebody got under his very thin skin.

Clinton’s strongest case against Trump was that he is “temperamentally unfit to hold office.” She makes this case even more persuasively elsewhere in the speech:

Imagine Donald Trump sitting in the Situation Room, making life-or-death decisions on behalf of the United States. Imagine him deciding whether to send your children into battle. Imagine if he had not just his Twitter account at his disposal when he’s angry, but America’s entire arsenal.

Do we want him making those calls – someone thin-skinned and quick to anger, who lashes out at the smallest criticism?

…I’ll leave it to the psychiatrists to explain his affection for tyrants. I just wonder how anyone could be so wrong about who America’s real friends are. But it matters. Because if you don’t know exactly who you’re dealing with, men like Putin will eat your lunch.

I typically don’t find these types of arguments convincing. After all, it doesn’t matter so much the character of public officials as the institutional incentives they face. But in matters of foreign policy problems of temperament and character do matter because the social situation between foreign leaders in diplomacy can often make a huge difference. Bad manners can and have caused wars (eg., there’s an argument to be made that Jefferson’s bad manners towards British diplomat Anthony Merry helped lead to the War of 1812). These points are confirmed by the fact that world leaders are terrified by Trump and how the intelligence community is afraid he could spill security-sensitive confidential information. (Of course, Clinton also has a less-than-optimal track record on the matter of intelligence security).

What is Trump’s Foreign Policy?

However, Clinton is only partially correct in claiming that Trump’s ideas on foreign policy are “incoherent” or that he doesn’t really have a foreign policy at all. It is true that, as with every other issue save immigration and free trade, Trump switches his positions a lot. But underneath the prime facie incoherence is an overarching vision for a foreign policy that is both somewhat coherent and terrifying.

First, a common misconception needs to be clarified about Trump’s foreign policy views. The press commonly treats Trump as if he’s more of a dove on war and foreign intervention than Clinton, citing his recent criticisms of the Iraq War and Libya. This myth is particularly peddled in pro-Trump “libertarian” circles (with an emphasis on the scare quotes). It is widely accepted that Trump’s foreign policy are less interventionist than Clinton’s fairly hawkish views. However, this is decidedly not the case.

Zach Beauchamp has persuasively made the case that Trump is, in fact, more hawkish in some sense than Clinton. The most consistent point that Trump has made for years now is that America should be waging, in Beauchamp’s words, “colonial wars of conquest” for the purpose of taking resources from other countries. Beauchamp notes:

He first debuted this plan in an April 2011 television appearance, amid speculation that he might run for the GOP nomination. In the interview, Trump seemed to suggest the US should seize Iraqi oil fields and just operate them on its own.

“In the old days when you won a war, you won a war. You kept the country,” Trump said. “We go fight a war for 10 years, 12 years, lose thousands of people, spend $1.5 trillion, and then we hand the keys over to people that hate us on some council.” He has repeated this idea for years, saying during one 2013 Fox News appearance, “I’ve said it a thousand times.”

Trump sees this as just compensation for invading Iraq in the first place. “I say we should take it [Iraq’s oil] and pay ourselves back,” he said in one 2013 speech.

As Beauchamp says, “To be clear: Trump’s plan is to use American ground troops to forcibly seize the most valuable resource in two different sovereign countries. The word for that is colonialism.”

This type of colonialism is even more extreme than the colonialism of American imperialism of the early twentieth century, where colonial wars of conquest were typically justified in terms of America’s “manifest destiny” to spread democracy throughout the world that would eventually benefit the conquered, often coaxed in racial terms (as typified by Kipling’s famous poem), rather than explicitly justified by looting natural resources.

Many people alleging Trump’s dovishness point to his recent criticisms of US intervention in Iraq, Syria, and Libya. The idea that Trump is a dove on these issues, however, is largely a myth. The actual record shows that what Trump’s comments over the past decade or so on foreign policy are largely in line with what Beauchamp sees as his colonialism.

As Beauchamp points out, Trump actually supported intervention in Libya at the time and called for even more aggressive intervention than the Obama administration engaged in (which, as a reminder, included Hillary Clinton at that point):

In a March 2011 vlog post uncovered by BuzzFeed’s Andrew Kaczynski and Christopher Massie, Trump full-throatedly endorsed intervening in the country’s civil war — albeit on humanitarian grounds, not for its oil.

“Qaddafi in Libya is killing thousands of people, nobody knows how bad it is, and we’re sitting around,” Trump said. “We should go in, we should stop this guy, which would be very easy and very quick. We could do it surgically, stop him from doing it, and save these lives.” In a later interview, he went further, endorsing outright regime change: “if you don’t get rid of Gaddafi, it’s a major, major black eye for this country.”

Shortly after the US intervention in Libya began in March 2011, Trump criticized the Obama administration’s approach — for not being aggressive enough. Trump warned that the US was too concerned with supporting the rebels and not trying hard enough to — you guessed it — take the oil.

“I would take the oil — and stop this baby stuff,” Trump declared. “I’m only interested in Libya if we take the oil. If we don’t take the oil, I’m not interested.”

What to make, then, of Trump’s more recent comments where he says he “would have stayed out of Libya”? He’s either incoherent, as Clinton claims, or he’s lying. The first possibility has largely been explored and, though plausible, is uninteresting for present purpose. Therefore, I’ll focus here on the latter (and, in my mind, more likely) possibility. I would argue that Trump is engaging in what could be called, in Arthur Melzer’s understanding of Straussian terms, a sort of dishonest perversion of political esotericism. But unlike the political esotericism of early modern political philosophers who sought to make the world more tolerant, Trump seeks the exact opposite ends. He’s recently been hiding his colonialist views in anti-war rhetoric to attract votes from Americans fatigued with perpetual nation-building through the Bush and Obama administrations. In reality, one of the only sincere substantive positions he’s retained throughout the years is a colonialist desire to wage war for oil. He could not be much further from an anti-war candidate.

As for Iraq, Trump has repeated the claim that he opposed the Iraq war from the beginning many times. Just yesterday, in reaction to Clinton’s speech, he repeated this yet again. “Crooked Hillary said, ‘Oh, Donald Trump, his finger on the button,’,” he said. “I’m the one that didn’t want to go into Iraq, folks, and she’s the one that stupidly raised her hand to go into Iraq and destabilize the entire Middle East.”

In reality, Trump himself wanted to stupidly go into Iraq at the time. In a 2002 interview with Howard Stern he said he supported invading Iraq, adding “I wish the first time it was done correctly.” How did he think it should have been done? Though he wasn’t specific in that interview, his later comments suggest he thinks a “correct” invasion of Iraq would be more aggressive and, of course, focus on taking their oil. Despite being sharply critical of the war later in the Bush administration (though note how he critiques the way it was “handled,” not getting involved in the first place), he supported McCain’s position in favor of the Troop Surge when endorsing him in 2008, claiming, though he wanted to pull out as soon as possible, he wanted to pull out with a victory. Even his most recent comments “critical” of the war, when viewed in the context of his overall foreign policy motivations, aren’t really dovish at all. As he said in 2013, “When I heard that we were first going into Iraq, some very smart people told me, ‘Well, we’re actually going for the oil,’ and I said, ‘All right, I get that.’ [But] we didn’t take the oil!”

Recent comments by Trump against the Iraq War, I think, are well explained by his aforementioned dishonest political esotericism. The record shows Trump disagreed with Bush’s Iraq policy because the motivations were too humanitarian and weren’t aggressive enough prior to the surge. Indeed, Trump’s dishonest claim to dovishness on Iraq has been widely proven false in the press (and yes, each different word links to a different source saying the same thing).

Beauchamp points out that Trump’s views on Syria can’t be described as doveish, as he is largely in agreement with Hillary Clinton:

But the two of them support more or less the same military escalation in Syria. Both Clinton and Trump have proposed carving out “safe zones” in the country, which means clearing out a chunk of its territory and protecting it from aggressors.

Trump sees this as the answer to the Syrian refugee crisis — if you can keep the Syrians there, they won’t have to come over here (or to Europe). “What I like is build a safe zone, it’s here, build a big, beautiful safe zone and you have whatever it is so people can live, and they’ll be happier,” he said in a campaign appearance. “I mean, they’re gonna learn German, they’re gonna learn all these different languages. It’s ridiculous.”

Similarly, both candidates have emphasized the need to bomb ISIS in Iraq and Syria — with Trump famously summarizing his policy as “bomb the shit out of” ISIS. But the way in which Trump plans to wage war on ISIS is far more aggressive — and illegal — than anything Clinton proposed.

He goes on to show that Trump endorses killing the families of suspected terrorists and supports torture for detainees, both of which are illegal war crimes. The killing of suspected terrorists’ families, in particular, is far more extreme than anything Clinton’s proposed and a violation of international law.

Trump essentially views other countries in one of two ways, the way he seems to view people: either as enemies to be defeated economically (eg. China and Mexico) and militarily (eg. Lybia and Syria) or assets to be exploited for American interests via colonial conquest (eg. Iraq). Indeed, he combines the worse elements of neoconservative interventionism with the worst elements of isolationism that my fellow Notewriter Brandon Christensen points out. Like isolationists, he opposes international organizations like NATO and the UN, is generally skeptical of alliances, and fiercely opposes trade agreements; but he also supports costly, unnecessary, and unjust foreign wars and efforts to intervene in other countries’ affairs like neoconservatives. He manages to be both an isolationist, thinking the American government should only protect its own interests at the expense of the citizens of other people, and an interventionist, thinking the government should wage unjust wars to that end, at the same time.

Beauchamp notes how Trump’s foreign policy positions can best be described as Jacksonian:

But historically, there are lots of other forms of American hawkishness. Trump fits well with one of those — one that Bard College scholar Walter Russell Mead calls the “Jacksonian tradition,” after President Andrew Jackson.

Jacksonians, according to Mead, are basically focused on the interests and reputation of the United States. They are skeptical of humanitarian interventions and wars to topple dictators, because those are idealistic quests removed from the interests of everyday Americans. But when American interests are in question, or failing to fight will make America look weak, Jacksonians are more aggressive than anyone.

… Unlike neoconservatives or liberal interventionists, who have well-fleshed-out foreign policy doctrines, many Jacksonians think about war and peace more instinctively. “With them it is an instinct rather than an ideology — a culturally shaped set of beliefs and emotions rather than a set of ideas,” Mead writes. Sound familiar?

Of course, Trump is Jacksonian in more ways than just his foreign policy. His general populism and affection for strong-man leadership are very Jacksonian through and through. Indeed, Thomas Jefferson’s criticisms of Andrew Jackson himself could just as easily be leveled against Trump today (and echo Clinton’s words):

I feel much alarmed at the prospect of seeing General Jackson President. He is one of the most unfit men I know of for such a place. He has had very little respect for laws and constitutions, and is, in fact, an able military chief. His passions are terrible. When I was President of the Senate, he was Senator; and he could never speak on account of the rashness of his feelings. I have seen him attempt it repeatedly, and as often choke with rage. His passions are, no doubt, cooler now; he has been much tried since I knew him, but he is a dangerous man.

A Critique of Trump’s Foreign Policy

Besides the obvious criticism made very persuasively by Clinton that Trump is temperamentally unfit to engage in diplomacy, what is wrong with foreign policy? In a word: everything. But for the purposes of this post, I’ll confine my criticism to three points.

First, Trump’s style of Jacksonian foreign policy is largely responsible for most of the humanitarian atrocities committed by the American government. Second, Trump’s economic foreign policy is antithetical to the entire spirit of the liberal tradition; it undermines the dignity and freedom of the individual and instead treats the highest good as for the all-powerful nation-state (meaning mostly the politicians and their special interests) as the end of foreign policy, rather than peace and liberty. Finally, Trump’s foreign policy fails for the same reasons that socialism fails. If the goals of foreign policy are to represent “national interest,” then the policymaker must know what that “national interest” even is and we have little reason to think that is the case, akin to the knowledge problem in economic coordination.

On the first note, Beauchamp quotes Dr. Mead on how the Jacksonian tradition in America has resulted in some of the most atrocious abuses of human rights in American history:

In the last five months of World War II, American bombing raids claimed the lives of more than 900,000 Japanese civilians—not counting the casualties from the atomic strikes against Hiroshima and Nagasaki. This is more than twice the total number of combat deaths that the United States has suffered in all its foreign wars combined…

Since the Second World War, the United States has continued to employ devastating force against both civilian and military targets. Out of a pre-war population of 9.49 million, an estimated 1 million North Korean civilians are believed to have died as a result of U.S. actions during the 1950-53 conflict. During the same war, 33,870 American soldiers died in combat, meaning that U.S. forces killed approximately thirty North Korean civilians for every American soldier who died in action. The United States dropped almost three times as much explosive tonnage in the Vietnam War as was used in the Second World War, and something on the order of 365,000 Vietnamese civilians are believed to have been killed during the period of American involvement.

This is because the Jacksonian view dictates that we should use full force in war to advance our interests and the reasons for waging war are for selfish rather than humanitarian purposes. We have good reason to think human rights under Trump will be abused to an alarming degree, as his comments that we should “bomb the hell out of” Syria, kill the noncombatant families of suspected terrorists, and torture detainees indicate. Trump is literally calling for the US to commit inhumane war crimes in the campaign, it is daunting to think just how dark his foreign policy could get in practice.

As mentioned earlier, many “libertarians” such as Walter Block seem to be under the delusion that Trump’s foreign policy is somehow compatible with the liberal tradition’s aspirations of individual liberty and peace. As he wrote when he endorsed Trump and created the oxymoronically named group “Libertarians for Trump:”

When put in this way, it is clear that The Donald is the most congruent with our perspective. This is true, mainly because of foreign policy.

…We readily concede Mr. Donald Trump is no Ron Paul on foreign policy or anything else for that matter. However, compared to his Republican alternatives, the Donald stands head and shoulders above them. He has said, time and time again, things like “Look at what we did in Iraq. It’s a mess. Look at what we did in Libya. It’s a mess there too. And we’re going to repeat our mistakes in Syria? Not on my watch.” …Yes, future President Trump wants a strong military, but with only a few exceptions, fewer than the other Republican candidates, only to defend our country.

Ignoring the glaring factual inaccuracy that Trump’s criticisms of Iraq and Libya were that we weren’t fierce enough and the main reason why he wants war is not to defend our country but to loot oil, nothing could be further from the truth that Trump’s foreign policy views are anywhere near to congruent with libertarianism.

To reiterate: Trump’s foreign policy views are just a particularly nasty version of imperialism and colonialism. Mises dedicated two entire sections of his chapter on foreign policy in Liberalism: The Classical Tradition to critiquing colonialism and revealing just how contrary these views are to liberalism’s commitment to peace and liberty. In direct opposition to Trump’s assertions that we should go to war to gain another country’s wealth and resources and that we should expand military spending greatly, Mises argues:

Wealth cannot be won by the annexation of new provinces since the “revenue” deprived from a territory must be used to defray the necessary costs of its administration. For a liberal state, which entertains no aggressive plans, a strengthening of its military power is unimportant.

Mises’ comments on the colonial policy in his time are extremely pertinent considering Trump’s calls to wage ruthlessly violent wars and commit humanitarian crises. “No chapter of history is steeped further in blood than the history of colonialism,” Mises argued. “Blood was shed uselessly and senselessly. Flourishing lands were laid waste; whole peoples destroyed and exterminated. All this can in no way be extenuated or justified.”

Trump says the ends of foreign policy are to aggressively promote “our” national interests, Mises says “[t]he goal of the domestic policy of liberalism is the same as that of its foreign policy: peace.” Trump views the world as nations competing in a zero-sum game and there must be one winner that can only be brought about through military conquest and economic protectionism, Mises says liberalism “aims at the peaceful cooperation between nations as within each nation” and specifically attacks “chauvinistic nationalists” who “maintain that irreconcilable conflicts of interest exist among the various nations[.]” Trump is rabidly opposed to free trade and is horrifically xenophobic on immigration, the cornerstone of Mises’ foreign policy is free movement of capital and labor over borders. There is no “congruence” between Trump and any classically liberal view on foreign policy matters in any sense; to argue otherwise is to argue from a position of ignorance, delusion, or to abandon the very spirit of classical liberalism in the first place.

Mises wasn’t the only classical liberal critical of Trump-style colonialist foreign policy. The classical liberal editor of The Nation Edward Lawrence Godkin was also sharply critical of the imperial foreign policy of the progressives and populists in his time. In a 1900 article entitled “The Eclipse of Liberalism,” in which he lamented the decline of the liberal emphasis on limited government, Godkin wrote:

Nationalism in the sense of national greed has supplanted Liberalism. It is an old foe under a new name. By making the aggrandizement of a particular nation a higher end than the welfare of mankind, it has sophisticated the moral sense of Christendom. Aristotle justified slavery, because Barbarians were “naturally” inferior to Greeks, and we have gone back to his philosophy. We hear no more of natural rights, but of inferior races, whose part it is to submit to the government of those whom God has made their superiors. The old fallacy of divine right has once more asserted its ruinous power, and before it is again repudiated there must be international struggles on a terrific scale. At home all criticism on the foreign policy of our rulers is denounced as unpatriotic. They must not be changed, for the national policy must be continuous. Abroad, the rulers of every country must hasten to every scene of international plunder, that they may secure their share. To succeed in these predatory expeditions the restraints on parliamentary, even of party, government must be cast aside. [Emphasis mine]

Though Godkin’s broader arguments against the “inferior races” argument for imperialism may not apply to Trump himself per se, it certainly does apply to some of Trump’s dangerously backward white nationalist supporters (at least one of whom Trump has publicly appointed) who are helping to drive his rise.

It wasn’t just Godkin in the United States, an entire organization was formed to oppose these policies: The American Anti-Imperialist League, which formed specifically in opposition to the Spanish-American War and the annexation of the Philippians and Cuba. Though it was certainly a diverse collection of anti-imperialists with a wide variety of motives, many of them were classical liberals. Their platform emphasized the incompatibility of small government and imperial conquest:

We hold that the policy known as imperialism is hostile to liberty and tends toward militarism, an evil from which it has been our glory to be free. We regret that it has become necessary in the land of Washington and Lincoln to reaffirm that all men, of whatever race or color, are entitled to life, liberty and the pursuit of happiness. We maintain that governments derive their just powers from the consent of the governed. We insist that the subjugation of any people is “criminal aggression” and open disloyalty to the distinctive principles of our Government.

Trump’s incompatibility with classically liberal goals is not of unique interest to libertarians. In many ways, both neoconservatives and liberal interventionists aim for a similar end of peace among nations in foreign policy for which classical liberals aim (or at least, I hope they share such an aim). The three viewpoints just disagree on the best policy means to reach those ends. Trump decidedly does not take peace as the end of foreign policy. He takes the ruthless promotion of America’s economic interests to be the goal, often at the expense of peace and at the expense of the lives of innocent people.

Additionally, even if we take Trump’s nationalist ends as given, the policy means Trump prefers of violent military intervention likely will not be successful for similar reasons to why socialism fails. Christopher Coyne has argued convincingly that many foreign interventions in general fail for very similar reasons to why attempts at economic intervention fail, complications pertaining to the Hayekian knowledge problem. How can a government ill-equipped to solve the economic problems of domestic policy design and control the political institutions and culture of nations abroad? Coyne mainly has the interventionism of neoconservatives and liberals in mind, but many of his insights apply just as well to Trump’s Jacksonian vision for foreign policy.

The knowledge problem also applies on another level to Trump’s brand of interventionism. Trump assumes that he, in all his wisdom as president, can know what the “national interest” of the American people actually is, just like socialist central planners assume they know the underlying value scales or utility functions of consumers in society. We have little reason to assume this is the case.

Let’s take a more concrete example: Trump seems to think one example of intervention in the name of national interest is to take the resource of another country that our country needs, most commonly oil. However, how is he supposed to know which resources need to be pillaged for the national interest? There’s a fundamental calculation problem here. A government acting without a profit signal cannot know the answer to such a problem and lacks the incentive to properly answer it in the first place as the consequences failure falls upon the taxpayers, not the policy makers. Even if Trump and his advisors could figure out that the US needs a resource, like oil, and successfully loots it from another country, like Libya, there is always the possibility that this artificial influx of resources, this crony capitalist welfare for one resource at the expense of others, is crowding out potentially more efficient substitutes.

For an example, if the government through foreign policy expands the supply of oil, this may stifle entrepreneurial innovations for potentially more efficient resources in certain applications, such as natural gas, solar, wind, or nuclear in energy, for the same reasons artificially subsidizing these industries domestically stifle innovation. They artificially reduce the relative scarcity of the favored resource, reducing the incentive for entrepreneurs to find innovative means of using other resources or more efficient production methods. At the very least, Trump and his advisors would have little clue how to judge the opportunity cost of pillaging various resources and so would not know how much oil to steal from Libya. Even ignoring all those problems, it’s very probable that it would be cheaper and morally superior to simply peaceably trade with another country for oil (or any other resource) rather than waging a costly, violent, inhumane war in the first place.

Of course, I’m probably giving Trump way too much credit in that critique. Chances are, given Trump’s (nonexistent) economic literacy, he is just under the delusion that more resources always mean a better economy no matter what–opportunity costs, resource allocation, and entrepreneurial innovation be damned–and that government policy can be run just like a business.

Not only is it difficult for policy makers to know what the national interest is, as Christensen has argued it is unclear what “national interest” even means to begin with. He defines national interest as “an excuse for a policy or set of policies that should be taken in order to strengthen a state and its citizens (but not necessarily strengthen a state relative to other states…).” He further claims, “There’s no such thing as a national interest.” I’d take it even one step further: the rhetoric of “national interest,” it seems to me, is just an ideology (in the critical theory sense) for the foreign policy elite and their lobbyists to justify using coercive force to advance their arbitrary private interests rather than the (largely indeterminate) interests of the public or the country at large. Even if the “national interest” does have any meaning other than as a rhetorical ideology for the military industrial complex, the only way such a concept could become known is via the spontaneous process of the voluntary interchange of individuals, often time between citizens and non-citizens, and will likely never be known by a single individual mind. At the very least, there’s a public choice problem here: how is Trump realistically to differentiate his personal interests and those of his cronies from those of the general public? Given the fact that Trump likely has narcissistic personality disorder, I don’t have faith that he will.

The only positive potential to foreign policy under a Trump administration is the possibility that he will wisely not intervene in foreign affairs when no argument can be made that such an intervention would be in the national interest or give us oil. But given Trump’s record on the matter, and the arbitrary and elusive nature of the concept of “national interest,” I doubt that this will be a major factor in the way Trump actually implements foreign policy.

Trump vs. Clinton on Foreign Policy: Who is Preferable?

It is clear that underneath the prima facie inconsistencies in Trump’s comments on foreign policy, there is an underlying consistency that he thinks the goal of foreign policy is to quite aggressively promote US interests. This goal is impossible to reach as it represents a naïve understanding of the knowledge public leaders can possess, and generally represents a selfish, reckless, nationalist disregard for human dignity. The means he wants to undertake for this end are unnecessarily cruel and would likely constitute massive human rights violations. They contradict the high (and in my mind correct) aspirations of classical liberals of peace and individual liberty, and they’ll likely fail to accomplish their stated goals.

However, none of this necessarily means that Clinton’s foreign policy will be all that much better. Sure, Clinton’s motives are likely purer, but her record shows that the means she undertakes are uncannily similar to Trump and fail for similar reasons. She’s shown a similar lack of judiciousness in her handling of classified materials, just what the intelligence community fears of Trump. Her record shows her diplomatic skills yield mixed results at best, and she’s widely a progressive interventionist on foreign policy matters whose policies will subvert the liberal goals of peace and individual liberty. It is somewhat ironic that the Democrats have such great opportunity to go after Trump on foreign policy, but have chosen the absolute worst person in their party to make that case as their nominee (akin to Republicans and Romney on ObamaCare in 2012).

Comparing the two candidates point-by-point, therefore, is very difficult. Though there are many underlying consistencies to Trump’s comments on foreign policy and Clinton is still largely right that his stated positions have been somewhat incoherent. Unlike Trump, we have a record of Clinton actually implementing foreign policy and our only knowledge of the Donald’s policies only comes from occasionally off-the-cuff and contradictory remarks about others’ policies. Thus there is a degree of uncertainty as to what Trump’s foreign policies will actually look like and, though I think his comments reveal there is a high probability they will be atrocious, there is a small chance that they could be marginally better than Clinton’s (whose record shows she will implement almost certainly failed foreign policies). Trump’s very concerning comments on foreign policy alone do not make a slam-dunk case that Clinton is preferable on these matters.

Having said that, I’d still argue Clinton’s foreign policy is at least marginally preferable to Trump’s. With Trump we risk not only a fairly high probability of atrocious policies—quite possibly worse than Clinton’s—based off of his comments, we also risk the added problem of regime uncertainty in foreign policy. Also, some of the concrete policies Trump has called for—like torture and the murdering of families—are a cause for serious concern. Further, Clinton is likely to be far more diplomatic and will be less likely to offend other leaders and alienate the US from the world. Her point that Trump is “temperamentally unfit to lead” is very well taken, and was only confirmed by Trump’s response to her speech which in which he largely stuck to the non-substantive screaming of insults in his typical childish fashion. None of this at all means anybody should vote for either candidate as there is a lot more to voting than the issues of foreign policy. For what it’s worth (which is very little), I for one will most likely not be voting in the next election. If I were forced to, it would be for the Johnson/Weld ticket.

Free Trade and Labor Market Displacement

02/08/201602/08/2016 Vincent Geloso Current Events, Economics, Liberty China, David Autor, free trade, international trade, Noah Smith, protectionism, Right to Work Laws, trade deals

A few days ago, I saw Noah Smith’s piece on free trade and why opening up with China may have yielded some undesirable results. In essence, his argument is that labor market adjustments have been slow. It created a small storm in the economics blogosphere. I wanted to reply earlier. I did not and I regret that. However, better late than never. So here are my three key reactions to the piece written by Smith (see his blog here).

Slow labor market adjustments are not a cause of free trade: If anything, they are the results of a series of government intervention. Countries like Denmark, which may have large governments combined with fewer regulations on businesses, are very well able to adapt to free trade. The ability to start businesses is basically the ability to properly channel inputs towards more valued output. If you prevent an entrepreneur from doing just that while you open your borders to more efficient producers, it is quite obvious that free trade could be “less” beneficial. This point can be well seen in the role of states with “right to work (RTW) laws”. Although there is a debate as to whether or not RTW laws increase wages (James Sherk at Heritage says yes, the good people at the Employment Policy Institute say no and I say that both don’t get it, we should care about regionally adjusted real wage growth), it does seem that it helps industrial activity while boosting employment levels (see here too). Unions would hinder adjustments to changes in trade patterns. In fact, its worth pointing out that of the 11 states that had RTW laws before 1948 – in only three of those states did the income share of the top 10% exceed that on the whole United States (see the data here) in 2013. While the entire country has seen an increase in income inequality, the RTW states have seen the share of all income of the top 10% increase by only 26% (1947 to 2013) compared to 42% nationwide. This suggests that RTW laws are probably helping workers adjusts to changes caused by free trade (otherwise, there would be a state-level increase in inequality). This finding seems to conform to large section of the literature on the links between RTW and inequality (here and here). I am sure that if the Autor, Dorn and Hanson study (on which Noah Smith relies) was to be redone with attempts to control for right to work laws, the effect would be concentrated in non-RTW states. Thus, if the problem is labor laws, don’t blame free trade for the poor adjustments!
Nobody said that free trade was “costless” to adapt to. I do economic history. I see cases of industries being protected for decades. Protectionism not only raise prices, but it changes relative prices between different inputs. It incites the adoption of an artificially profitable production method. It is profitable to do so, but it is by no means the most efficient approach. It was made profitable only by the artifice of regulation and duties. Once you eliminate that artifice by removing the barriers, you still have “time to build” problem and a need to change production methods. That takes time. However, governments are very good at making sure this takes more time than needed (see point 1)
Trade agreements with China are not free trade agreements: this is the point I keep repeating (and the point that actually make Paul Krugman interesting), free trade agreements should normally fit on a napkin. If it takes 10,000 pages, it is free trade with 10,000 exceptions. Noah Smith should realize that he may be looking at a case of such “managed trade”.

That’s all folks!

BC’s weekend reads

02/07/201608/02/2017 Brandon Christensen Links Alexis de Tocqueville, European Union, Euvoluntary Exchange, free trade, Ilya Somin, Janosch Delcker, libertarianism, Matthew Gault, Overcoming Bias, PoliticoEU, rhetoric, Robin Hanson, Samuel Wilson, strategy, Verso Books, Volokh Conspiracy, War is Boring, Wolfgang Streeck

Go Broncos

Is the European Union Collapsing?

09/14/201509/15/2015 Edwin van de Haar Economics, Liberty, Philosophy, Politics Adam Smith, David Hume, Europe, European Union, F.A. Hayek, free trade, immigration, international relations, liberalism, property rights

Lately, the European Union (EU) stumbles from crisis to crisis. After a long hot spring dominated by the financial crisis in Greece, we now see the collapse of the system based on the Schengen Treaty, which secures the free movement of people within most countries of the EU. The upheaval is the result of the huge numbers of refugees entering the EU, mostly from Syria, Eritrea and Sudan. It is expected that Germany alone will offer asylum to approximately 1 million people this year. With no end of the refugee wave in sight more and more countries are either closing their borders, building fences, or reintroducing border patrols. The situation in Hungary seems worst, especially in the temporary refugee camps. This weekend we saw footage of guards throwing food into the hungry crowds, just like zoo keepers do when feeding the wild beasts. An absurd lack of civilization.

Both crises have at least two factors in common, namely issues of sovereignty and property rights. Sovereignty is claimed back by European politicians, who previously made arrangements at the European level, yet are now confronted by their electorates who want to end the infringements of their property rights. In the case of Greece it was about (mostly) Northern European leaders who were pressed by public opinion to stop paying for the support of what was seen as an almost bankrupt country. Certainly in Germany and The Netherlands it was seen that Greece made a mess of things which itself needed to sort out (this was the dominant perception, I underline that I do not say this is also the right presentation of all relevant facts). In the current refugee crisis public opinion also welcomes large numbers of people who –again as it is widely perceived- are seen a poor sods fleeing from a terrible war. Yet at the same time the people understand that the refugees, no matter how well educated some of them are, also need to receive all kinds of welfare arrangements and will go through an often hard process of integration into society. This against the background of more than a decade of heated debate about immigration and integration in most (Western) EU countries.

In both questions the politicians eventually tend to back out, by reclaiming national sovereignty. Not directly, as this would be embarrassing. So Greece got its third support package, and in the refugees crisis it is underlined that ‘temporary border patrols’ and even ‘border closings’ are still within the letter of the Schengen Treaty. There is also talk of centralizing the intake of refugees at the European level, instead of the current principle of ‘first country of entry is the country where asylum should be requested. This may well be a good idea given the fact that refugees will arrive (as the US experience also makes clear). Yet it is hard to predict how the negotiations will end, because there are large objections against the European Commission spreading refugees among the EU member states at its own peril.

The bigger picture however could well reveal that both events mark the end of the movement towards ‘ever closing union’, the old purpose mentioned in the Treaty Of Rome (1957), the most important founding treaty of European integration. That is significant, because if I am right in my assessment it means we are experiencing a real turning point. There are a number of contributing factors, most of which have been identified before, but that does not make them less significant, such as a lack of European identity among the European people, and the desire to accept only a minimum amount of European policy, due to the much stronger desire to make national decisions, which are easier to correct by the electorates. This, by the way, is fully in line with classical liberal thinkers such as Hayek, Hume or Smith.

Does this mean the EU is about to collapse? Hardly likely. The economic basis is still strong and while large the current problems can be paid for and sorted out eventually. Yet if integration stops here it will also mean that the EU will never get a serious common foreign policy or a common defense policy either, both of which have been tried –and failed- over the past decades. So the EU will then only be a ‘super free trade zone’, with a common trade policy, and strong legal apparatus also spreading out over many non-economic issues. This raises many more issues, but that goes beyond the purpose of this contribution. For one thing: these are once again exciting times in Europe!

Greece Needs a Radical Transformation

07/06/201507/08/2015 Fred Foldvary Current Events, Economics decentralization, drachma, economic development, Europe, Eurozone, free banking, free trade, Greece

Having rejected austerity with the “no” vote on the referendum, Greece now sits on the edge of an even worse recession and economic collapse, unless the lenders write off or postpone the debt payments even further. The problem is that the Greek politicians have not provided a program of major policy reforms.

Only with radical changes could Greece rise like a phoenix from its economic mess. These are the measures which could quickly make Greece the most prosperous economy on earth.

1. Amend the constitution to eliminate all restrictions on peaceful and honest enterprise and human action. There would be free trade, without tariffs and quotas, with all countries.

2. Leave the European Union.

3. Crank up the printing presses and give each Greek citizen 10,000 new-drachma in paper currency. The new-drachma would be payable for taxes at a one-to-one ratio to the euro. One new-drachma would also pay for first-class postage to European countries. No new-drachmas would be created after this distribution except to pay previously-existing governmental pensions. Banks would be free to issue private currency redeemable in new-drachma.

4. Immediately replace the income tax, the value-added tax, and all other taxes with a tax on land value and a pollution tax. Replace judicial environmental restrictions with the levies on pollution based on the measured damage. Enable citizens to sue polluting firms that are not paying a pollution tax based on the damage. Allow real estate owners to self-assess their land value with the condition that the state could buy their land at their assessment plus 25 percent, and lease it back to the owner of the building at current market rentals.

5. Decentralize all government programs and bureaucracies other than the military to the 13 provincial “regions.” The Greek constitution already prescribes that the administration of the country be decentralized. The land value tax would be collected by the regional governments, which would then pass on a portion to the national government.

6. Pay the foreign lenders with futures contracts payable in new-drachmas maturing in 2025.

Greek democracy was restored in 1974. The politicians sought votes by legislating a welfare state funded by borrowing. With radical reforms, national welfare programs can be phased out as employment increases and programs are shifted to the regional governments.

A prosperity tax shift would bring in massive investment and quickly eliminate unemployment and tax evasion. Billions of euros held in foreign banks would come back to Greece to finance investment and production.

Without radical reforms, Greece will be stuck in debt, austerity, and poverty. Radical reforms are the only way out.

Trade: Is Obama Right This Time?

06/16/201506/16/2015 Jacques Delacroix Politics Bret Stephens, comparative advantage, Democrats, factions, free trade, Paul Krugman, protectionism, trade deals

I was hoping to sit this one out. I mean the multiple discords about the new Pacific trade treaty proposed by President Obama. I feel I need to lend a hand because there are good reasons to be confused. Plus, I taught international business for twenty-five years. My voice just might be useful this time. Here is my brief but adequate road map to the problem. I am deliberately staying away from nouns and initials because they do more harm than good.

Pres. Obama has an early draft of an international trade agreement with a large number of Pacific countries. Such agreements eliminate or lower trade barriers. So, first, they make it easier for economic actors from one country to buy a and sell things to economic actors from another country. That’s because all trade barriers are hidden taxes on consumers. They all raise prices above where they should be. Get rid of them, have more real income.

Second, the lowering or the elimination of trade barriers ultimately result in something almost magical: Economic actors stop doing what they are doing badly and start focusing on what they do well. Most items become less expensive and of better quality. Everyone benefits from this. I mean everyone in the world.*

International trade agreements do cause some to lose their jobs. They create many more jobs than they cause to disappear, however. But the loss is certain: After all, as soon as central American bananas are allowed into Canada, Canadian banana growers must lose their jobs, by and large. Incidentally, there have not been Canadian banana growers, as far as I know but you see what I mean: Canadians ought to concentrate on producing lumber, or refrigerators, or iron ore, almost anything but bananas.

The current trade project presented by Obama contains a $500 million clause to retrain at public expense those Americans who might lose their job as a result of the new agreement. This is nothing new. Previous trade agreements contained similar arrangements.

President Obama wants what is known as “fast track authority.” That’s the privilege to have the Senate vote a simple “Yes” or “No” on the final draft of the agreement with those many other countries. This is pretty necessary because if each government of each signing country has to go home and gather amendments and often, amendments to amendments, in the end, no agreement sees the light of day. It’s a practical thing, not a sinister ploy.

On the one hand, practically all previous presidents who signed international trade agreements had fast track authority. On the other hand there is a sturdy reason to deny Mr Obama fast track authority: He is a proven, extremely bad negotiator. On the third hand, the negotiations of such agreements are almost completely done by technical personnel who know their business. And, how likely is Mr Obama actually to get involved?

As I write, elected Democrats are all against everything involved because the unions think that every international trade agreement makes them lose ground. I think their perception is correct. Republicans are torn between their understanding of the world (which is more or less like mine) and their wish to give the president a black eye.

This is a small digest of a complex and interesting issue. I deal with it at leisure and extensively in nine installments on this blog. Each had the words “protectionism” or “protectionist” in the title. Again, those are installments; you may want to look at them in order. No test!

* Paradoxically, one of the best, clearest scholarly explanations of this magic – called comparative advantage – is by Paul Krugman. It’s from the days when he was not yet crazy. Bret Stephens in the WSJ 6/16/15 jogged my memory on this strange fact. It’s worth looking up Krugman, for once.

Around the Web

12/13/2014 Brandon Christensen Links American Anthropological Association, Ana Inés Heras, anarchism, Art & Antiques, art history, Francis Fukuyama, free trade, India, John Gray, Jonathon Keats, Literary Review, Ritesh Kumar Singh and Prachi Priya, The Diplomat

Self-organization, Integration and Homeless People
Book Review: Destination Denmark
Pious Fraud: In a bombed-out church in wartime Germany, Lothar Malskat crossed the line that separates art restoration from forgery
Indian States Need a Free Trade Deal (I’ll be blogging about this in the future)

The Myth of Common Property

02/26/201402/26/2014 L. A. Repucci Liberty Anarcho-Capitalism, Anarcho-Syndicalism, anthropology, capitalism, collectivism, Common Property, communism, currency, economic theory, epistemology, free markets, free trade, Ius Naturale, Leftism, Marxism, natural law, Praxeology, Property, property law, Social Contract, socialism

An Observation by L.A. Repucci

It has been proposed that there exists a state in which property — whether defined in the physical sense such as objects, products, buildings, roads, etc, or financial instruments such as monetary instruments, corporate title, or deed to land ownership — may be owned or possessed in common; that is to say, that property may be possessed of multiple rightful claimants simultaneously. This suggestion, when examined rationally and exhaustively, is untenable from the perspective of any logical school of economic, social, and indeed physical school of thought, and balks at simple scrutiny.

In law, Property may be defined as the tangible product of enterprise and resources, or the gain of capital wealth which it may create. To ‘hold’ Property, a Party, or private, sentient entity, must have rightful claim to it and be capable of using it freely as they see fit, in keeping with natural law.

Natural resources, including land, are said to be owned either jurisdictionally by State, privately by party, or in common to the natural world. If property may be legally defined only as a product, then natural resources may be excluded from all laws pertaining to legal property. If property also may be further defined by the ability of it’s owner to use it as they see fit, in keeping with Ius Naturale, then any property claimed jurisdictionally by the State and said to be held in common amongst the citizenry must meet the article of usage to be legally owned. Consider Hardin’s tragedy of the commons as an argument for the conservation of private property over a state of nature, rather than an appeal to the economic law of scarcity or an appeal to the second law of thermodynamics ,

In Physics: Property may be defined as either an observable state of physical being. The universe of Einstein, Kepler, and Newton rests soundly on the tenet that physical bodies cannot occupy multiple physical locations simultaneously. The laws that govern the macro-physical world do not operate in the same way on the quantum level. At that comparatively tiny level, the rules of our known universe break down, and matter may exhibit the observed property of being at multiple locations simultaneously — bully and chalk 1 point for common property on the theoretically-quantum scale.

Currency: The attempt to simultaneously possess and use currency as defined above would result in praxeologic market-hilarity in the best case, and imprisonment or physical injury in the worst. Observe: Two friends in common possession of 1$ walk into a corner shop to buy a pack of chewing gum, which costs 1$. They each place a pack on the counter, and present the cashier with their single dollar bill. “It’s both of ours! We earned it in business together!” they beam as the cashier calls the cops and racks a shotgun under the register…

The two friends above may not use the paper currency simultaneously — while the concept of a dollar representing two, exclusively owned fifty-percent equity shares may be widely and innately understood — the single bill is represented in specie among the parties would still be 2 pairs of quarters. While they could pool their resources and ‘both’ purchase a single pack of gum, they would continue to own a 50% equity share in the pack — resulting in a division yet again of title equally between the dozen-or-so sticks of gum contained therein. This reduction and division of ownership can proceed ad quantum.

This simple reason is applicable within and demonstrated by current and universal economic realities, including all claims of joint title, common property law, jurisdictional issues, corporate law, and financial liability. A joint bank account is simply the sum of the parties’ individual interest in that account — claims to hold legal property in common are bunk.

The human condition is marked by the sovereignty, independence and isolation of one’s own thought. Praxeological thought-experiments like John Searle’s Chinese Room Argument and Alan Turing’s Test would not be possible to pose in a human reality that was other than a state of individual mental separation. As we are alone in our thoughts, our experience of reality can only be communicated to one another. It is therefore not possible to ever ‘share’ an experience with any other sentient being, because it is not possible to perceive reality as another person…even if the technology should develop such that multiple individuals can network and share the information within their minds, that information must still filter through another individual consciousness in order to be experienced simultaneously. The physical separation of two minds is reinforced by the rationally-necessary separation of distinct individuals. There may exist a potential hive-mind collectivist state, but it would require such a radical change to that which constitutes the human condition, that it would violate the tenets of what it is to be human.

In conclusion, logically, the most plausible circumstance in which property could exist in common would be on the quantum level within a hive-minded non-human collective, and the laws that govern men are and should be an accurate extension of the laws that govern nature — not through Social Darwinism, but rather anthropology. Humans, as an adaptation, work interdependently to thrive, which often includes the voluntary sharing and trading of resources and property…none of which are held in common.

Ad Quantum,

L.A. Repucci

What’s up with decentralization (“Administrative Unit Proliferation”) in Uganda these days?

02/14/201405/12/2015 Brandon Christensen Current Events administrative unit proliferation, colonialism, decentralization, devolution, free trade, Guy Grossman, Janet Lewis, liberalization, postcolonialism, property rights, Uganda

I just came across a fascinating new article on decentralization by two political scientists. Here is the abstract:

Numerous developing countries have substantially increased their number of sub-national administrative units in recent years. The literature on this phenomenon is, nonetheless, small and suffers from several theoretical and methodological shortcomings; in particular, a unit of analysis problem that causes past studies to mistakenly de-emphasize the importance of local actors. We posit that administrative unit proliferation occurs where and when there is a conﬂuence of interests between the national executive and local citizens and elites from areas that are politically, economically and ethnically marginalized. We argue further that although the proliferation of administrative units often accompanies or follows far-reaching decentralization reforms, it likely results in a recentralization of power; the proliferation of new local governments fragments existing units into smaller ones with lower relative intergovernmental bargaining power and administrative capacity. We ﬁnd support for these arguments using original data from Uganda.

The article is by Guy Grossman & Janet Lewis and it’s fascinating. Read the whole thing. I found one especially interesting argument that I’d like to mull over (the piece also produced a couple of off-topic questions in my mind). Grossman and Lewis argue that the process of decentralization first undertaken by rebels-turned-politicians has actually led to a recentralization of power in Uganda. From page 33:

Turning to political dependence, in recent years local government ofﬁcials are increasingly appointed by the center, rather then [sic] being elected. Most dramatically, a 2008 amendment to the Local Government Act stripped from the directly elected District Chairperson the power to appoint the Chief Administrative Ofﬁcer (CAO) and other senior level administrators. Instead the central government’s Public Service Commission was granted the power to appoint senior level administrators, who are assigned to districts by the Ministry of Local Government. The 2008 amendment has, in effect, put the entire technocratic arm of the district under the purview of the central government rather than the district’s elected political leadership.

So what is happening in Uganda (and, according to authors, elsewhere in the developing world) is that more and more administrative units (think counties or states in a US context) are being produced, but that this is actually making the executive branch stronger rather than weaker. Does this make sense? If not, you know where the comments section is.

I find this process of decentralization fascinating, largely because I think it is more conducive to freedom (in the broadest possible sense) and as a result produces more economic prosperity (see my pieces on secession within the US, EU). What I had not accounted for was the fact that decentralization could actually make it easier for a tyrant to control a swath of territory. So naturally I had to ask why this recentralization has come about.

The answer, I think, is on page 35 of the same article:

Since the late 1980s, key players in the international development community—such as the World Bank and USAID—have encouraged developing countries to implement far reaching decentralization reforms.

So foreign aid is probably the cause of loss of local power, but also the catalyst for such decentralization in the first place (by bribing post-colonial governments to decentralize; but what about ideology? From what I can tell, the rebels who set up Uganda’s new government were committed to decentralization in order to maintain peace between tribes and limit power of the center, rather than to get money from Western lending institutions).

Let me try again. Decentralization became all the buzz in development circles after the collapse of the Berlin Wall. Western lending institutions began paying governments when they decentralized. However, there may have been an indigenous drive for devolution that is overlooked here, and this drive may have been overpowered by the bribes given to governments by Western aid donors. This clash – between Western donors and indigenous attempts to assert sovereignty while integrating into the world economy – is what I think would be worth exploring further.

There is also the issue of economic prosperity. While decentralization may have led to a recentralization of power in the post-colonial world (I am not convinced that decentralization is to blame; I think foreign aid is largely responsible for the inability of developing states to fully decentralize), I am inclined to argue that decentralization has also led to a dramatic decline in poverty levels.

I mentioned the halving of global poverty a couple of days ago, and this decline, coupled with the increase in decentralization, suggests that the libertarian impulse to decentralize power structures does lead to wealthier, healthier societies. So with the dramatic increase of world prosperity in mind, I have to ask if the recentralization efforts of governments are given too much weight in the Grossman & Lewis paper.

I am sure that decentralization has not been perfect. I am sure that decentralization has left many people who supported it deeply unsatisfied. What I am less sure about is that supporting the status quo (that is to say, prohibiting decentralization by any means necessary) would have been a better option than the one post-colonial states have been pursuing for the last twenty years. It seems to me like the process of decentralization has been a good one, all things considered.

So, now that I have made it known that I think foreign aid is to blame for the (perceived) recentralization of power in Uganda, and now that I have made it known that I think decentralization has been more good than bad for people, what do I think needs to be done to address the problem of recentralization that Grossman & Lewis argue is occurring?

My quick, lazy answers are 1) create a Senate, and 2) keep liberalizing the economy.

There are other, supplemental prescriptions (such as ensuring property rights protections are strong; this is probably best handled by integrating indigenous property laws with generally agreed upon rules governing world trade; in this respect, African states that were a part of the British Empire generally do a great job, and the failures of these states can largely be attributed to protectionist policies after decolonization), but I think my lazy answers are more straightforward, and would get better results (at least in the context former British colonies). (h/t Joshua Keating)

Oxfam: Combined wealth of the 85 richest people is equal to that of the poorest 3.5 billion – half the world’s population

01/26/201407/06/2015 Rick Weber Economics costs, ethics, free trade, immigration

I’ll bet the 85 richest people in the world have been beneficiaries of a good deal of rent seeking, but I still think there’s a positive spin to stories like this.

Let’s say (for the sake of not working too hard to write this post) that when we adjust for theft and its dead weight costs, the net productive wealth of group A (the wealthy) is just 25% the total wealth, that’s a mean productive wealth of 10.3 million times the average member of group B. For a humanitarian, this means that their fight to improve the plight of the world’s poor, has the potential to pick up trillion dollar bills off the sidewalk. This isn’t just little embossed portraits of old dead white men, it’s genuine human flourishing! Of course this message would be more meaningful if the numbers were something like “combined wealth of the poorest 3.5 billion is equal to the combined wealth of the poorest X million residents of OECD countries.”

That made up percentage, if it’s even remotely accurate, is a similar call to arms for those of us opposing politically supported privilege. And it just so happens that the humanitarian and libertarian causes overlap nicely! There is institutionalized theft and there is poverty, and that’s bad news. But the problems have been recognized and solutions are being fought for.

Has Nobel Laureate Gary Becker been reading NOL?

01/11/201405/13/2015 Brandon Christensen Politics decentralization, democracy, devolution, farm subsidies, federation, free trade, Gary Becker, James Madison, public choice theory, secession

I would think so, especially after reading this:

The movement toward free trade agreements and globalization during the past 60 years has enormously reduced the economic advantages of having a larger domestic market to sell goods ands services. Small countries can sell their goods to other countries, both large and small, almost as easily as large countries can sell in their own domestic markets. For example, during the past 30 years the small country of Chile has had the fastest growing economy of Latin America, larger than Brazil and Mexico, the two largest nations of this region. This would not have been possible without the access of Chilean companies to markets in other countries, both in South America and elsewhere. As a result, Chile now exports around 40% of its GDP, compared to a ratio of exports to GDP in the United States of about 13%.

[…]

Small countries can do well with small domestic markets by taking advantage of a globalized economy by selling large fractions of its production to consumers and companies in other countries. That is why smaller countries usually export a considerably larger fraction of its production, and import a much bigger share of its consumption, than do larger countries. Size of country was much more important in the past when many countries had high tariffs, and transportation costs were much more important.

Political interest groups tend to be less able in smaller countries in distorting political decision in their favor. This is partly because smaller countries are more homogeneous, so it is harder for one group to exploit another group since the groups are similar. In addition, since smaller nations have less monopoly power in world markets, it is less efficent for them to subsidize domestic companies in order to give these companies an advantage over imports. The greater profits to domestic companies from these subsidies come at the expense of much larger declines in consumer well being.

The growth in the competitiveness of small countries on the global market is in good part responsible at a deeper level for the remarkable growth in the number of countries since 1950 from a little over 100 to almost 200 countries now. And the number of independent countries is still growing.

OMG! He has been reading us! How could he not be? Check out our thoughts on secession, decentralization, and devolution and tell me I’m wrong. Do it!

Heck, if we’re writing about the same stuff as a Nobel Laureate, and you’re reading us, what does that tell you about you? About us?

I’m curious. I also know Dr Becker doesn’t really read us. However, does the fact that we write about the same concepts and events as a Nobel Laureate have more to do with intelligence or ideological bias? Do prominent Left-wing scholars write about secession and globalization in the same way that we do?

From what I can tell, the answer to my second question is ‘no’ (the answer to my first is further below). Generally speaking, libertarians view more countries, more decentralization and more economic integration as a great thing, and we’ve got the data (increases in income, and longevity of life, and literacy rates, and…) to back it up. We’re the optimists.

Leftists and conservatives argue that all the good libertarian things happening in the world are bad, and they have some data to back it up (like Gross National Happiness). Leftists and conservatives are the pessimists.

Is this disagreement over globalization really a matter of intelligence? Of ideology? I think it’s probably a mixture of both, and also that intelligence levels affect ideological bias. You don’t hear many stupid people advocating for a more globalized world, much less for decentralized power structures and economic integration. It’s also hard to find smart people that will shun internationalism at the cultural or political level. The fact that many smart people, especially on the Left, shun economic internationalism is not so much troubling as it is amusing.

Watching intelligent people attempt to squirm out of answering questions about economic internationalism (“globalization”) can be quite the treat.

I think facts are squarely on the libertarian’s side, and that the main obstacle to attaining a more globalized, a more economically integrated, and a more politically decentralized world is rhetoric (and sheer numbers, of course). The benefits of globalization are usually seen by intelligent people very quickly (though not always thanks to clever rhetoric), but there are simply not that many intelligent people in the world (if there were, wouldn’t intelligence be rendered useless or morph into something else?).

I guess what I’m trying to say is that working towards a more libertarian world (thousands of political units with one world market) should be easy, so why isn’t it? I think the answer is ‘factions’. Farm subsidies in the West, for example, are unnecessary and can actually lead to hunger in poorer parts of the world. Getting rid of such subsidies would be a great benefit to mankind, but these subsidies persist. Why? Because of the political power of farm lobbies. If a politician representing a farm district in the West votes to eliminate subsidies, he’s gone in the next election. So unless the representatives of Western farmers somehow band together in defiance of their own interests and vote to eliminate farm subsidies, poor people will go hungry and Western citizens will pay too much for food.

Here is the real conundrum, though. If some factions gain political leverage over other factions, it does not necessarily follow that arbitrarily ending the hard-won privileges of the rent-capturing factions is the best option to take. In fact, it is often the worst option to take because of the dangers associated with arbitrary rule.

Think about it this way: Suppose a bunch of farmers in a democratic state band together and form a lobby for the purpose of protecting their interests. They gain influence (“capturing the rent”) and eventually become a nuisance to their countrymen but not a problem. Unfortunately, they are more than a nuisance to people in poor countries, but these poor people are unable to form a lobby that counters the lobbying efforts of the farmers.

The farm lobby in the rich country has followed all the rules. It has achieved its status as rent-capturer fairly, democratically and legally. What gives the government the right to suddenly change the rules on the farm lobby? Absolutely nothing. Furthermore, if the democratic government starts to ban lobbies it deems to be nuisances, it relinquishes its democratic moniker (and, more importantly, introduces arbitrary rule). Do you see the problem of ‘factions’?

Unfortunately, factions are built in to the policy-making process itself. One of the strengths of democracies is that they tend to give factions more of a voice than autocracies. In the United States, for example, Madison sought to combat the problem of factions by restricting the scope of the state to certain duties, and his system has done an excellent job (all things considered).

So I’ve got two questions I hope to be able to think about in the near term: 1) how can we make the Madisonian system better here in the United States, and 2) how can we “export” (for lack of a better term) Madisonian democracy abroad in a non-coercive manner?

Keynes on Free Trade

11/17/201304/06/2016 Brandon Christensen Economics, History, Politics decentralization, free trade, John Maynard Keynes, libertarianism, political economy, political thought, postwar public policy, technocrats, the Left

I found this great quote from John Maynard Keynes earlier today:

In a regime of Free Trade and free economic intercourse it would be of little consequence that iron lay on one side of a political frontier, and labor, coal, and blast furnaces on the other. But as it is, men have devised ways to impoverish themselves and one another; and prefer collective animosities to individual happiness.

I found this in a journal article (pdf) on political decentralization and economic integration. The quote is from 1920 (the article is a couple of years old).

John Maynard Keynes’s system is collapsing in front of our eyes. It is doing so slowly, but it is collapsing nonetheless. What is interesting to note is that Keynesians share much of their ideology with libertarians. We are all liberals of one stripe or another, but the Keynesians won the public policy battles of the post-war period.

I’m not entirely certain I know what these policy battles were all about. Again, it seems like there is very little that we disagree with the technocratic Left about ideologically. Yet since the Keynesian system is collapsing it seems like now would be a good idea to go over how they got to technocratic planning from what is essentially the same starting point as the libertarian one. I think we would do well to exercise a great deal of our thoughts to thinking about this divergence.

From the Comments: Populism, Big Banks and the Tyranny of Ambiguity

11/11/201305/11/2015 Brandon Christensen Comments, Current Events, Law, Politics central banking, civil liberty, comparative advantage, democracy, Elizabeth Warren, ethics, fascism, Fred Foldvary, free banking, free trade, market regulation, Megan McArdle, populism, public choice theory, rule of law, Warren Gibson

Andrew takes time to elaborate upon his support for Senator Elizabeth Warren, a Native American law professor from Harvard who often pines for the “little guy” in public forums. I loathe populism/fascism precisely because it is short on specifics and very, very long on generalities and emotional appeal. This ambiguity is precisely why fascist/populist movements lead societies down the road to cultural, economic and political stagnation. Andrew begins his defense of populism/fascism with this:

For example, I still have more trust in Warren than in almost anyone else in Congress to hold banks accountable to the rule of law.

Banks have been following the rule of law. This is the problem libertarians have been trying to point out for hundreds of years. See Dr Gibson on bank regulations and Dr Gibson again, along with Dr Foldvary, on alternatives. This is why you see so few bankers in jail. Libertarians point to institutional barriers that are put in place by legislators at the behest of a myriad of lobbying groups. Populists/fascists decry the results of the legislation and seek a faction to blame.

If you wanted to be thought of as an open-minded, fairly intelligent individual, which framework would you present to those who you wished to impress: the institutional one that libertarians identify as the culprit for the 2008 financial crisis or the ambiguous one that the populists wield?

And populism=fascism=nationalism is a daft oversimplification. I’ll grant that there’s often overlap between the three, but it’s far from total or inevitable overlap. Populists target their own countries’ elites all the time.

Sometimes oversimplification is a good thing, especially if it helps to clarify something (see, for example, Dr Delacroix’s work on free trade and the Law of Comparative Advantage). One of the hallmarks of fascism is its anti-elitism. Fascists tend to target elites in their own countries because they are a) easy and highly visible targets, b) usually employed in professions that require a great amount of technical know-how or traditional education and c) very open to foreign cultures and as such are often perceived as being connected to elites of foreign societies.

The anti-elitism of fascists/populists is something that libertarians don’t think about enough. Anti-elitism is by its very nature anti-individualistic, anti-education and anti-cooperative. You can tell it is all of these “antis” not because of the historical results that populism/fascism has bred, but because of its ambiguous arguments. Ambiguity, of course, is a populist’s greatest weapon. There is never any substance to be found in the arguments of the populist. No details. No clarity. Only easily identifiable problems (at best) or ad hominem attacks (at worst). Senator Warren is telling in this regard. She is known for her very public attacks on banks and the rich, but when pressed for details she never elaborates. And why should she? To do so would expose her public attacks to argument. It would create a spectacle out of the sacred. For example, Andrew writes:

Still, I’d rather have people like Warren establish a fuzzy and imperfect starting point for reform than let courtiers to the wealthy and affluent dictate policy because there’s no remotely viable counterpoint to their stances […] These doctrinaire free-market orthodoxies are where the libertarian movement loses me. There are just too many untrustworthy characters attached to that ship for me to jump on board.

Ambiguity is a better alternative than plainly stated and publicly published goals simply because there are “untrustworthy characters” associated with the latter? Why not seek plainly stated and publicly published alternatives rather than “fuzzy and imperfect starting points for reform”?

Andrew quotes a man in the street that happens to be made entirely of straw:

“Social Security has gone into the red, but instead of increasing the contribution ceiling and thoughtfully trimming benefits, let’s privatize the whole thing and encourage people to invest in my company’s private retirement accounts.”

Does the libertarian really argue that phasing out a government program implemented in the 1930s is good because it would force people to invest in his company’s private retirement accounts? I’ve never heard of such an example, but I may just be reading all the wrong stuff. Andrew could prove me wrong with a lead or two. There is more:

This ilk of concern trolls (think Megan McArdle: somewhat different emphasis, same general worldview) is one that I find thoroughly disgusting and untrustworthy and that I want absolutely no part in engaging in civil debate. Their positions are just too corrupt and outlandish to dignify with direct responses; I consider it better to marginalize them and instead engage adversaries who aren’t pushing the Overton Window to extremes that I consider bizarre and self-serving. They’re often operating from premises that a supermajority of Americans would find absurd or unconscionable, so I see no point to inviting shills and nutters into a debate […].

Megan McArdle is so “disgusting and untrustworthy” that her arguments are not even worth discussing? Her name is worth bringing up, of course, but her arguments are not? Ambiguity is the weapon of the majority’s tyranny, and our readers deserve better. They are not idiots (our readership is still too small!), and I think they deserve an explanation for why McArdle is not worthy of their time (aside from being a shill for the rich, of course).

I think populism/fascism is often attractive to dissatisfied and otherwise intelligent individuals largely because its ambiguous nature seems to provide people with answers to tough questions that they cannot (or will not) answer themselves. Elizabeth Warren’s own tough questions, on the Senate Banking Committee, revolve around pestering banks for supposedly (supposedly) laundering money to drug lords and terrorists:

“What does it take, how many billions of dollars do you have to launder from drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution?” Warren asked at a Banking Committee hearing on money laundering.

Notice how the populist/fascist simply takes the laws in place for granted (so long as they serve her desires)? The libertarian would ask not if the banks were doing something illegally, but why there are laws in place that prohibit individuals and organizations from making monetary transactions in the first place.

Senator Warren’s assumptions highlight well the difference between the ideologies of populism/fascism and libertarianism: One ideology thinks bludgeoning unpopular factions is perfectly acceptable. The other would defend an unpopular faction as if it were its own; indeed, as if its own freedom were tied up to the freedom of the faction under attack.

Why is India so poor? A macro approach

10/20/201305/12/2015 Brandon Christensen Liberty colonialism, decentralization, devolution, Europe, free trade, India, institutions, path dependency, public choice theory

India’s total area, in square kilometers, is ~~1,222,559~~ 3,166,414.

The total area of France, Germany, the UK, Ireland, the Netherlands, Belgium, Luxembourg, Denmark, Sweden, Iceland, Norway, Finland, Switzerland, Austria, Italy, the Czech Republic and Slovakia (or “the West”), in square kilometers, is ~~1,223,543~~ 3,106,585.

Think of this comparison in terms of regions: one region is India, the other is the West. Both regions are densely populated. Both regions have a number of languages and an even greater number of regional dialects. Yet one region is wealthy, and the other is poor.

One way to look at this phenomenon would be to glance at the macro institutional structures in place in these two regions. India is one country. The West is composed of 6 17 countries. That’s ~~six~~ seventeen centers of power, as opposed to one, within territorial spaces that are roughly equivalent in size.

If we think about these macro institutions and incorporate them into other institutional arguments that focus on the micro institutions, then India actually has a lot of hope. The West saw numerous wars before it finally came to the arrangements it now has (~~six~~ seventeen independent centers of power and a free trade zone binding them together), so India has a great blueprint for improving its macro institutions.

On the downside, of course, is the fact that many factions won’t really care if India becomes freer and more prosperous, so long as they get theirs. Along with the standard public choice explanation, the path dependency argument also suggests that India has a tough road ahead.

Sometimes being a libertarian sucks.

Update: Dr Gibson was kind enough to point out that I had initially calculated India’s size in square miles rather than square kilometers. I have taken that into account and updated it accordingly. Conceptually, my argument actually grows in strength with the corrected size.

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Free Trade and Labor Market Displacement

BC’s weekend reads

Is the European Union Collapsing?

Greece Needs a Radical Transformation

Trade: Is Obama Right This Time?

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Keynes on Free Trade

From the Comments: Populism, Big Banks and the Tyranny of Ambiguity

Why is India so poor? A macro approach

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