Between anarchy and minarchism: the redistributive state

While sometimes we think of ideologies in strict terms of left and right, more frequently we look at political schemes that incorporate a statism dimension. Big government is possible for both conservatives and progressives; so, maybe, is minarchy. If minarchy is possible, and achievable, it must attain popular support less it be thwarted by revolution or contrarian voting. From this, maybe it makes sense that a minarchism utilize fundamental values from each side, in order to be pragmatic and achieve democratic (and thereby stable) ends. Here there may even be room for an ultraminarchy.

In Anarchy, State and Utopia, Robert Nozick defended a minimal state slightly more restrained than traditional classical liberalism. This minimal state arises through natural market forces from statelessness, and serves to enforce contracts and produce monopolistic law. Nozick, although countering his fellow academic Rawls, was also responding to the natural law anarchists, who criticized coercive states for violating human rights — which, in many interpretations, boil down to rights of property.

However, before arriving at the minimal, night-watchman state, Nozick articulates an ultraminimal state, i.e. a private protection agency that claims exclusionary right over the use of force for a given geographical area. It has its voluntary clients; the extension of coverage to others makes the agency a “state” as it introduces taxation.

In ASU the state is an entity formed from an invisible hand to produce heavily libertarian functions of government like protecting rights. Because of this, the minarchist state was a refuge for archist libertarians to claim as their own, relatively consistent with centuries of Western liberal thought. Accordingly, in response, the anarchists question the viability of a lasting minimal state — cue David Friedman in Machinery of Freedom:

“It took about 150 years, starting with a Bill of Rights that reserved to the states and the people all powers not explicitly delegated to the federal government, to produce a Supreme Court willing to rule that growing corn to feed to your own hogs is instate commerce and can therefore be regulated by Congress.”

Government grows; modern government grows really, really fast. Minimalism hasn’t seemed to last. So the question is, what sorts of minimal governance could last?

The traditional ultraminimal and minimal state are concerned with, as stated, traditionally libertarian public functions such as police, the judiciary, and possibly roads and maybe even national defense. The problem with these utilities is that they feel wildly inadequate to the modern American used to entitlements, welfare, or a president. The privatization of nearly all federal departments is seen as wild enough for John Oliver to entertain millions of viewers, at the blight of Gary Johnson, and make hardcore libertarianism a losing electoral program. The contemporary world is too complicated, or our enemies are too powerful, or the market is too corrupt for the reinstitution of laissez-faire in the 21st century.

Nevertheless we want a smaller government, or no government, and losing to the tide isn’t a good death; we’d rather fight, and we’d rather win. A lasting minarchism satisfies the purposes of limited governance — liberty, protection, and preserving the benefits of the market — while sufficiently completing basic democratic demands, lest it erode into statism or collapse internally. (Keep in mind that anarchism, at least this week, is not a winning platform.)

Here’s what I think lies between anarchism and minarchism: the redistributive state. We can make a couple assumptions which are likely true: (1) every public service currently offered by the state could be provided (and, maybe, could be provided better) by the market and non-coercive communities instead, and (2) the entitlement theory of distributive justice offered by Nozick is correct, i.e. holdings are just if acquired by peaceful initial acquisition, voluntary exchange or gifting, or rectification of a previous unjust acquisition. Taking these assumptions, and leveraging the fact that the American populace will not currently settle for brutalist governance, the redistributive state (RS) seeks only to collect tax revenues and redistribute money progressively.

Instead of offering vouchers, EBT, or public options like housing, schools, security and roads, a RS would only tax its citizens and reallocate revenue based on some progressive variables like income, net worth or consumption. (These details are less important, for now.) The only administration is something like an IRS, Census Bureau and investigation unit suffused together, with over ninety percent of the current staff eliminated, with tax escapees adjudicated in private courts and sent to private prisons or some other form of punishment.

An RS violates rights based on a Lockean conception; it also does something which sounds pretty socialist to right-wing circles. For this reason, though minarchist, it may not be libertarian. However, the pragmatic element is also highly utilitarian, which may interest bleeding-hearts; and, being essentially one big welfare program, it may intrigue American leftists currently eyeing universal healthcare and socialized education. We would do well to keep in mind that Friedrich Hayek and Milton Friedman were not averse to basic income either — a redistributive state keeps a UBI and abandons the active functions of the state. I think it is obvious that, in a situation where we are already giving a person $X in the form of schools, transfer payments, utilities, roads, defense, firefighters, planning, retirement funds, mail service, etc. etc., instead we should just give that person $X to spend however they see fit. If anyone disagrees, they are probably too authoritarian to consider minarchism in any scenario.

The RS has many benefits over our contemporary goverment. In the first case, the reductionist perspective of right-wing anarchists — that the state is essentially a conquer-tax-and-redistribute machine — is validated, and a lot of the mysterious machinery and bootlicking, ivory-tower political philosophy is dissolved. (And mindless political science about the Rousseauian general will collapses.) And, for the Marxists, their critique of the state as a tool of the capitalist class expires, since the state now greatly serves labor more than capital. Some of the income of the upper classes is directly allocated to the lower classes. Also, the state ceases to be paternalistic — it no longer chooses what food is available through SNAP, or issues health and safety warnings; it just straight-up hands out the money without assuming value for consumers. It doesn’t determine what is taught in schools, or what color the roads are, or what country gets bombed on Tuesday.

Perhaps best of all the RS almost completely eliminates bureaucracy. With one small administrative branch which functions like a hyper-specialized agency, there is little room or need for massive proliferation. Likely, all seats will be elected positions along with some underlings, with the marginal tax brackets pre-established constitutionally. But, that can all be figured out later.

Now, there are some obvious flaws for an RS. First of all, the very wealthy have little incentive to stay in a redistributive state. Their money is seized without visible benefit for themselves, like roads or security. They have to buy those things on their own dime. The only solution to this I can think of is that, in a society with less state involvement, community ties will be closer — the rich will want to pay their “fair share.” This is the Hoppean trust in private charity, except that it’s now “forced private” charity. Also, taxes would be much, much lower than the current situation and hopefully tolerable. The taxes are also going directly to other citizens instead of politician’s wallets, oil tycoons and potassium chloride. Furthermore, they’re paying to live in — the government still has a coercive monopoly on land — the freest nation in the world. An RS is significantly freer than the other statist regimes, and less stressful. Government plays no role at all in everyday life.

One other flaw — maybe an inherent flaw of government brightly illuminated by a raw redistributive state — is what Murray Rothbard saw as an eternal tension between net tax-payers and net tax-consumers. To the extent that the RS administration is elected, and to the extent that politicians have platforms, a lot rests on whether or not taxes will be raised/redistribution will increase or not. The left will continually be concerned with income inequality, regardless of whether or not the poor can afford sustenance. The goalposts might keep climbing. Dialectically, the very wealthy will want to keep the maximum amount of their money, regardless of my arguments above. Raw societal tensions like these require a dynamic form of governance, with fluctuations in party dominance, but the RS is too minimalist to feature such parties or other contrivances. The only hope here, I guess, is that the tension will be less than in the current system. And very likely it will be. (Also, the market will correct much of the gratuitous wealth diparity.)

In conclusion, a redistributive state would be baldly organized around theft (in a libertarian interpretation) and using people as means rather than ends. To that extent it is hardly libertarian. It achieves Nozick’s end of minimal government but distorts the typical functions we correlate with small government. Still, it’s ultraminarchical, preserves innovation, balances right-wing virtues like liberty and industry and left-wing virtues like equality and positive freedom, and, for a radical populace not quite keen on revolution, politically viable. It serves welfarist functions demanded by 21st century citizens without the authoritarian, corporatist monster of the present. Also, no one starves. For all of this, even if a redistributive state is not perfection incarnate, it seems far better than the current system, and provides such a culturally-celibate political framework to possibly achieve acceptance in totally disparate societies from the United States. I don’t advocate a redistributive state quite yet, but I think it’s a useful, radical place to look for bipartisan solutions to a complicated and overwhelmingly statist world.

I’m pretty sure I’m the first one to suggest a state organized singularly around redistribution of citizen wealth, either because it’s too stupid or it’s too grossly unattractive, so I welcome all feedback. But, if voluntarist institutions are possible at all, this implies all the state is is a redistributor anyway. The idea of an RS just accepts this conclusion and makes it efficient. Keep in mind I haven’t elaborated on the many complications of UBI, which is an entire field to articulate more extensively. For now the only question is would it work.

Why protect speech?

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

Law on the market: a debate

I’ve been reading through a great debate of sorts, first encountered in a C4SS anthology. I’m sharing it here, as it’s not everyday that one encounters a semi-live issue getting hashed out by giants in the field.

It starts with Robert Nozick. (Precious little starts with Nozick — we have Randians, Hayekians, Rothbardians, but no Nozickians, and no Nozickian tradition. Although he energized libertarianism as a respectable political philosophy for academics, his narrow scope and silent response to critics seem to have killed his staying power.)

Nozick famously claimed in Anarchy, State and Utopia (1974) that “Individuals have rights, and there are things no person or group may do to them (without violating their rights).” A first reading of Anarchy in the context of institutionalized philosophy makes it seem like a defense of libertarianism from big government, socialistic ideology. But, when Nozick’s connection to the Austro-libertarian anarchists is uncovered, the first part of Anarchy looks much more like a defense of small government from the anarchists.

Nozick tries to deal with the problem of law and police on the marketplace. In Chapter 2 of Anarchy, State and Utopia, he envisions a market model of competing rights-enforcement agencies. Eventually, in the service of their customers, two or more protection agencies will clash. They will fight. This results in the destruction of one (to the immediate monopoly of the other) or the relocation of the customers of each (to the territorial monopoly of each in different jurisdictions). If they choose not to fight because of the high expense, even arbitration can’t prevent a legal monopoly: consolidating to the top through voluntary contracts, government emerges anyway above the agencies. Thus, concludes Nozick, a purely free-market society will evolve into a state through an invisible hand process.

Collected in Free Markets & Capitalism?, published by C4SS, Roderick Long makes an argument against Nozick’s conclusion on the basis of different models of a post-state society (“The Return of Leviathan: Can We Prevent It?” (2013)).

Long points to another argument, this one from Tyler Cowen, that there is no way to save anarchy from collusion leading to monopoly (“Law as a Public Good: The Economics of Anarchy” (1992)).

David Friedman responded to Cowen’s argument the year afterward (“Law as a Private Good: A Response to Tyler Cowen on the Economics of Anarchy“), and Cowen responded back (“Rejoinder to David Friedman on the Economics of Anarchy“). Bryan Caplan, in an unpublished manuscript, critiqued Cowen’s position as well (“Outline of a Critique of Tyler Cowen’s ‘Law as a Public Good’“).

This is a showdown between Nozick and Tyler Cowen on the one hand, and Roderick Long, David Friedman and Bryan Caplan on the other. The whole extended debate is fascinating, but I’m not sure it has a conclusion. Was Nozick correct about the natural emergence of a state? Maybe it will take a NOL writer to finish it off…

 

Deontology and consequentialism, again

Christopher Freiman, associate professor in philosophy at William and Mary and writer at Bleeding Heart Libertarians, identifies as both a libertarian and utilitarian. Since my first real introduction to libertarianism was Harvard theorist Robert Nozick, I originally envisioned the philosophy as a rights-based, and thereby in some sense deontological, political theory, with like-minded economists and political scientists arguing for its merits in terms of material conditions (its consequences). In university philosophy courses, “libertarianism” means self-ownership and property rights, often through Nozick’s analytic approach. Consequentialism looked more like a top-down approach on how to live, one that doesn’t necessarily suggest any political theory, or does so only ambiguously.

In living by a deontological ethics, considerations about the consequences of an action will almost inevitably come into play, especially when pressed with more extraordinary cases. (Brandon has pointed out their ostensible — I think it only that — compatibility.) The right of an individual to not be violently attacked, for example, seems trumped in the face of the alternative immediate destruction of every other human being. I don’t think this is a great method for deducing practical principles, however. Although considering extreme cases might be entertaining and enlightening as to the durability of a thesis, their pragmatic import is typically negligible.

However, in considering their philosophical compatibility, libertarianism and utilitarianism feel at odds, and not over extreme counterexamples. Let’s look at a few low-hanging fruits. Suppose the National Security Agency had advanced knowledge that someone was planning to attack a nightclub in Orlando a few weeks prior to June 12, 2016. Private security would have increased, several clubs would have shut down. Were the threat classified as serious enough, state government might debate the Constitutionality of entering peoples’ homes and forcefully taking firearms; they might do this and succeed. Any further firearm sales would also be prohibited. This is an awful lot of state power and intrusion. However, fifty lives are plausibly saved, including Omar Mateen, and the lives of their family and friends are not devastated. Using a hedonistic calculus, these efforts look justified. Now, ignoring the NSA’s incompetency, suppose that our security agencies predicted the hijackings several months before September 11, about sixteen years ago to this day. In a utilitarian model, would the choice to prevent any civilian boarding for so many days, in order to prevent tragedy, be the correct one? In essence, is the partial nuisance to a substantial number of people overridden by the imperative to save 2,996 lives? Certainly — through utilitarianism — yes: the government ought to intervene and shut down air travel. In fact, the state determined it had a compelling interest immediately after the attacks and did this very thing, balancing national security over civil liberties.

Utilitarianism and liberal positions also challenge each other aggressively on issues like gun rights. In theory, were it possible to completely remove firearms from the states, there would be a gain in utility for the lives saved that would otherwise be lost to gun violence accidental or otherwise. Many people suffering nuisance (e.g. loss of pleasure from visiting the shooting range and insecurity about home invasion) is less consequential than the saving of lives.

And what of abortion? I align with reproductive rights, like plenty but not nearly all libertarians. Is choice, here, compatible with utilitarianism? All the additional children, bringing their own default happiness (cf. David Benatar for a counterargument), might be a utility bomb large enough to warrant invasive pro-life measures under utilitarianism, regardless of first, second or third trimester.

There are surely historical arguments that protest awarding the consequentialist victory so easily to the side of authoritarianism. For example, a nation equipped with the administrative power to invade private citizens’ homes and families, or cancel intranational travel or immigration, is probably not the nation which, in the long run, leads to the most utility or happiness. Nationhood aside, if all firearms were removed from society, this too might not be that which leads to the greatest net utility: maybe home invasion becomes epidemic; maybe rural areas that capitalize on hunting fall into unforeseen economic concerns; maybe the sheer quantity of the nuisance outweighs the beneficial effect of confiscation. The consequences of most of these issues are empirical and fall to historical argument. However, at least to me, utilitarianism seems incompatible with a variety of rights-based libertarian commitments, and thus deontological considerations become essential.

Here is another challenge to utilitarianism in general, and particularly Bentham’s project of a utilitarian legal system: discovering utils, or quantifying how much utility is connected to any action, is difficult. (And, since it has been, in all instantations, attached to government policy — not cooperation among peoples — it suffers from planning concerns on an even more detrimental scale.) The calculation is even more challenging when considering “short” versus “long term” effects. In the cases of Patriot Act-style defense, gun control (were it possible), and abortion, large-scale government intervention is, prima facie, justified by utilitarianism; yet over time, it may become evident that these choices result in overall poorer consequences. How much time do we wait to decide if it was the utilitarian decision? — And in the episodes of history, did any of those scenarios play out long enough to give a definitive “long term” case study? Swapping classical for “rule ulitarianism” doesn’t remove this epistemic barrier. There isn’t a non-arbitrary rule that determines how many moments into the future one must wait before judging the utility-consequence of any action, for those actions where we cannot pinpoint the closed-system end of the casual chain. Another related concern is that utilitarian judgments take on society as a whole, with little room for specific circumstances and idiosyncracies. This is why it strikes me as viciously top-down.

Thus the two philosophies, one etho-political and one entirely ethical, appear to conflict on several important considerations. (Most of the principles of the Libertarian Party, to name one platform, are not utilitarian.) Lengthy historical arguments become necessary to challenge the compelling nature of particular hypotheticals. J. S. Mill, whose utilitarian work inspired much of the classical liberal tradition, was, at the end of the day, a consequentialist; however, his harm principle from On Liberty is definitively rights-based, and this principle is at the core of his libertarian import, along with his anti-paternalism as espoused by people like Freiman. Freiman acknowledges some of the criticisms of utilitarianism, being (I think) a Millian and a libertarian, including one of its most prominent objections from those concerned with individual liberty: the separateness of persons, as offered from critics like Rawls. His response to this problem is essentially the one that falls to historical argument: “While it is possible for utilitarianism to recommend organ harvesting, hospitals that expropriate organs would not contribute to a happy and peaceful society in the real world.” This empirical conjecture leaves the realm of philosophy for us.

The inconsistencies promulgated by Mill — from his political philosophy, namely in On Liberty (1859), and his ethical philosophy, namely in Utilitarianism (1863) — may be why both consequentialist and deontologist libertarians can find support in his writings. Combinations like these are no doubt why Brandon finds the two compatible.

I don’t find them compatible, though utilitarianism as it was understood before Rawls may be the worse of the two (although rhetorically more effective). The modern father of deontology, Immanuel Kant, rejected the consequentialist ethos in his call to “treat people as ends, not means.” Utilitarianism, as broadly understood, has every reason to produce an omnipotent authority figure that will approve any gamut of regulatory and coercive policies if it seems to benefit the greatest interest of the majority. The “seems to” part is the only part that matters, since plans have to be acted on the basis of best knowledge; and I would maintain that estimating utils is never certain, being an empirical question made especially blurry by historical confusion. Brandon gave the example of the Great Leap Forward as an instance where we see utmost disregard for human sanctity in the sake of majoritarian or nationalist or “best interest” considerations.

Yet Kant can be interpretated as no less controlling. Deontology, from deos “duty,” is the study of what is morally permissible or obligatory, and to this natural rights is just one possible derivative. He is taken to be a natural rights theorist, and there is a separateness of persons explicit in his ethics absent from Bentham and Mills’ greatest happiness principle. But although Kant’s metaphysics of morals has persons, and not majorities, his Protestant upbringing shines through in his conservative views on sexuality and otherwise non-political behavior.

In a comment on Freiman’s post, Matt Zwolinksi objects to his assertion that utilitarianism is opposed to the interference of government in private, consenting interactions between adults (for some of the reasons mentioned above, and I agree). Zwolinski says, on the other hand, that Kant was strongly anti-paternalist. I doubt this. Immanuel Kant wrote criticisms of casual sex — each party is self-interested, and not concerned about the innate dignity of the other — and, like other Enlightenment philosophers, advanced that true freedom is something other than acting how one wishes within the bounds of others’ rights (true freedom is, in fact, acting according to how Kant wants you to act). It’s not exactly clear if his traditionalist positions on personal morality follow from his categorical imperative, but his duty ethics in isolation prohibits many activities we would take to be personal freedoms regardless. Kant might have opposed forms of government paternalism, but his entire ethical philosophy is paternalistic by itself.

For example, what would a Kantian say about a proposal to legalize prostitution? When someone pays another for sexual favors, the former is definitely not considering the latter’s innate dignity. The person who sells their body is treated as means to an end and not an end in themselves. Presumably, since Kant thought the state has a role in regulating other behavior, he would be against this policy change. This is confusing, though, because in most trades people use each other as means and not ends. The sexual transaction is analogous enough to any sort of trade between persons, in which we consider each other in terms of our own immediate benefit and not inherent humanity. When I purchase a Gatorade from a gas station, I am using the cashier as the means to acquire a beverage. Kantian deontologists could, the same as the utilitarians, call to organize all the minutiae of personal life to coordinate with the ideals of one man from Königsberg.

Meanwhile, what does the classical utilitarian say about legalizing prostitution? We only have to weigh the utility gained and lost. First of all, it helps the customers, who no longer have to enter the seedy black market to buy a one-night stand. Next, it helps the workers, who in a regulated marketplace are treated better and are less likely to receive abuse from off-the-radar pimps. There would likely be a dip in human trafficking, which would raise the utility of would-be kidnapees. In addition, it creates new jobs for the poor. If you are in poverty, it automatically benefits you if a new way to create income is opened up and legally protected. Further, with legalization there would be less stigmatization, and so all involved parties benefit from the mitigated social ostracization too. The disutility is minor, and comes from the pimps (who lose much of their workforce), abusive tricks who get away with physical violence as long as prostitution is underground, and the slight increase in moral disgust from involved sexual prudes around the globe. So, it seems safe to award the legalization case to Bentham and Mill, and indeed decriminalizing prostitution is the right thing to do. (Although we see another fault. Since all humans are equal, their utility too is considered equally: the utility of “bad men” is worth as must as the utility of “good men,” there being no meta-util standard of good.)

In this situation, utilitarianism helps the libertarian cause of individual freedom and self-determination; in others, duty based ethics are a closer bet. Natural rights perspectives, from Cicero and Aquinas to Nozick and Rothbard, on average satisfy more of the conditions which we find essential to libertarian concerns, especially when the emphasis is on the individual. That said, Kant is a deontologist and not necessarily a freedom-lover. Neither utilitarianism nor Kantian deontology point obviously to libertarianism. The moral psychology research of Jonathan Haidt gives us reason to surmise that it’s mostly “left-libertarians” that think in terms of consequences, and “right-libertarians” that stick to natural rights or deontologic premises. I think, regardless of which theory is more correct, they both capture our ethical intuitions in different ways at different times — and this without even considering other popular theories, like Aristotle’s virtue ethics, Rawlsian justice as fairness, loyalty ethics or Gilligan’s ethics of care.*

I like a lot of Christopher Freiman’s writing on Rawls and basic income. However, I find utilitarianism has to submit to empirical inquiry a little too often to answer fundamental questions, and in its ambiguity often points to policy that disrespects the atomic individual in favor of a bloated government. I don’t think utilitarianism or deontology à la Kant are the bedrock of libertarian principles, but ultimately natural rights is the most non-incorrect position and groups together most cohesively the wide range of positions within libertarianism.

* Gilligan’s ethics of care is terrible.

What is Wrong with Income Inequality? Five Reasons to be Concerned

I sometimes part ways with many of my libertarian and classical liberal friends in that I do have some amount of tentative concern for income/wealth inequality (for the purposes of this article, the otherwise important economic distinction between the two is not particularly relevant since the two are strongly correlated with each other). Many libertarians argue that inequality ultimately doesn’t matter. There is good reason to think this drawing from the classic arguments of Nozick and Hayek about how free exchange in a market economy can often interrupt preferred distributions.

The argument goes like this: take whatever your preferred distribution of income is, be it purely egalitarian or some sort of Rawlsian distribution such that the distribution benefits only the worst off in society. Assume there is one individual in the economy who has some product or service everyone wants to buy (in Nozick’s example it was Wilt Chamberlain playing basketball), and let everyone pay a relatively small amount of income to that one individual. For example, assume you have a society with 10,000 people all who start off with an equal endowment of $5 and all of them decide to pay Wilt Chamberlain $1 to watch him play basketball. Very few people would object to those individual exchanges, yet at the end Wilt Chamberlain ends up with $10,005 dollars and everyone else has $4, and our preferred distribution of income has been grossly upset even though the individual actions that led to that distribution are not objectionable. In other words, allowing for free exchange precludes trying to construct an optimal result of that free exchange (a basic consequence of recognizing spontaneous order).

Further, these libertarians argue, it is more important to ensure that the poor are better off in absolute terms than to ensure they are better off relative to their wealthier peers. Therefore, if a given policy will increase the wealth of the wealthiest by 10% and the poorest by 5%, there is no reason to oppose this policy on the grounds that it increases inequality because the poor are still made richer. Therefore, it is claimed, we should focus on policies that improve economic growth and the incomes of the poor and be indifferent as to its impact on relative inequality, since those policies are strongly correlated with bettering the economic conditions of the poor. In fact, as Mises Argued in Liberalism and the Classical Tradition, a certain amount of inequality is necessary for markets to function: they create a market for luxury goods that can be experimented and developed into future mass-consumption goods everyone can consume. Not everyone could afford, for an example, an IPod when it first came out, however today MP3 players are cheap and plentiful because the very wealthy were able to demand it when it was very expensive.

I agree with my libertarians in thinking that this argument is largely correct, however I do not think it proves, as Hayek argued, that social justice (understood in this context as distributive justice) is a “mirage” or that we should be altogether unconcerned with wealth or income distributions. All this argument does is mean that there is no overall deontological theory for an ideal income distribution, but there still might be good consequentialist reasons to think that excessively unequal distributions can impact many of the things that classical liberals tell us to worry about, such as the earnings of the poor, more free political economic outcomes, or overall economic growth. Further, even on Nozick’s entitlement theory of justice, we might oppose income inequality if it arises through unjust means. Here are five reasons why libertarians and classical liberals should be concerned about income inequality (note that they are mostly empirical reasons, not claims about the nature of justice):

1) Income Inequality as a Result of Rent Seeking

Certain government policies result in uneven income distribution. For an example, a paper by Patrick MacLaughlin and Lauren Stanley at the Mercatus Center empirically analyze the regressive effects of regulatory policy. Specifically, Stanley and MacLaughlin find that high barriers to entry create barriers to entry which worsens income mobility. Poorer would-be entrepreneurs cannot enter the market if they must, for an example, pay thousands of dollars for a license, or spend a large amount of time getting costly education and certifications to please some regulatory bureaucracy. This was admitted even by the Obama Administration in a recent report advising reform of occupational licensing laws. As basic public choice theory teaches, regulators are subject to regulatory capture, in which established business interests lobby regulators to erect barriers to entry to harm would-be competitors. Insofar as inequality is a result of such rent-seeking, libertarians have an obvious reason to oppose it.

Many other policies can worsen inequality. When wealthy corporations receive artificial monopolies from policies such as excessive intellectual property laws, insulating them from competition or when they gain wealth at the expense of poorer taxpayers through improper subsidies. When the government uses violent policing tactics to unequally enforce drug laws against poorer communities, or when it uses civil asset forfeiture to take the property of the worst off. When the government uses eminent domain to take the property of disadvantaged individuals and communities in the name of public works projects, or when they implement minimum wage laws that displace low-skilled workers. Or, if the structure of welfare benefits discourages income mobility, which also worsens inequality. There are a myriad of bad government policies which benefit the rich and exploit the poor, some of which are a direct result of rent-seeking on behalf of the wealthy.

If the rich are getting richer, or if the poor are stopped from becoming wealthier, as a result of government coercion, even Nozick’s entitlement theory of justice calls for us to be skeptical of the resulting income distribution. As Matt Zwolinski argues, income distributions are not only a result of, pace Nozick, a result of the free exchanges of individuals, but they are also a result of the institutions in which those individuals exchange. Insofar as inequality is a result of unjust institutions, we have good reason to call that inequality unjust.

Of course, that principle is still very hard to empirically apply. It is hard to tell how much of an unequal distribution is a function of bad institutions and how much is a function of free exchange. However, this means we can provide very limited theories of distributive justice not as constructivist attempts to mold market outcomes to our moral desires, but as rough rules of thumb. If it is true that unequal distributions are a function of bad institutions, then unequal distributions should cause us to re-evaluate those institutions.

2) Income Inequality and Government Exploitation
Of course, many with more Marxist inclinations will argue that any amount of economic inequality will inherently result in class-based exploitation. There are very good, stand-by classical liberal (and neoclassical economic) reasons to reject this as Marxian class analysis as it depends on a highly flawed labor theory of value. However, that does not mean there is not some correlation between some notion of macro-level exploitation of the worst-off and high levels of inequality which libertarians have good reason to be concerned about, for reasons closely related to rent-seeking. Those with a high amount of economic power, particularly in western democracies, are very likely to also have a strong influence over the policies set by the government. There is reason to fear that this will create a class of wealthy people who, through political rent-seeking channels discuss earlier, will control state policies and institutions to protect their interests and wealth at the expense of the worst-off in society. Using state coercion to protect oneself at the expense of others is, under any understanding of the term, coercion. In this way, income inequality can beget rent-seeking and regressive policies which lead to more income inequality which leads to more rent-seeking, leading to a vicious political-economic cycle of exploitation and increasing inequality. In fact, even early radical classical liberal economists applied theories of class analysis to this type of problem.

3) Inequality’s Impacts on Economic Growth

There is a robust amount of empirical literature suggesting that excessive income inequality can harm economic growth. How? The Economist explains:

Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education. Inequality could also threaten public confidence in growth-boosting policies like free trade, says Dani Rodrik of the Institute for Advanced Study in Princeton.

Of course, this is of special concern to consequentialist classical liberals who claim we should worry mostly about the betterment of the poor in absolute terms, since economic growth is strongly correlated with bettering living standards. There is even some reason for these classical liberals, given their stated normative reasons, to (at least in the short-term given that we have unjust institutions) support some limited redistributive policies, but only those that are implemented well and don’t worsen inequality or growth (such as a Negative Income Tax), insofar as it boosts growth and helps limited the growth of rent-seeking culture described with reasons one and two.

4) Inequality and Political Stability

There is further some evidence that income inequality increases political instability. If the poor perceive that current distributions are unjust (however wrong they may or may not be), they might have social discontent. In moderate scenarios, (as the Alsenia paper I linked to argue) this can lead to reduced investment, which aggravates third problem discussed earlier. In some scenarios, this can lead to support for populist demagogues (such as Trump or Bernie Sanders) who will implement bad policies that not only might harm the poor but also limit individual liberty in other important ways. In the most extreme scenarios (however unlikely, but still plausible), it can lead to all-out violent revolutions and warfare. At any rate, libertarians and classical liberals concerned with ensuring tranquility and freedom should be concerned if inequality increases.

5) Inequality and Social Mobility

More meritocratic-leaning libertarians might say we should be concerned about equal opportunities rather than equal outcomes. There is some evidence that the two are greatly linked. In particular, the so-called “Great Gatsby Curve,” which shows a negative relationship between economic mobility and income inequality. In other words, unequal outcomes can undermine unequal opportunities. This can be because higher inequality means unequal access to certain services, eg. Education, that can enable social mobility, or that the poorer may have fewer connections to better-paying opportunities because of their socio-economic status. Of course, there is likely some reverse causality here; institutions that limit social mobility (such as those discussed in problem one and two) can be said to worsen income mobility intergenerationally, leading to higher inequality in the future. Though teasing out the direction of causality empirically can be challenging, there is reason for concern here if one is concerned about social mobility.

The main point I’m getting at is nothing new: one need not be a radical leftist social egalitarian who thinks equal economic outcomes are necessarily the only moral outcomes to be concerned on some level with inequality. How one responds to inequality is empirically dependent on the causes of the problems, and we have some good reasons to think that more limited government is a good solution to unequal outcomes.

This is not to say inequality poses no problem for libertarians’ ideal political order: if it is the case that markets inherently beget problematic levels of inequality, as for example Thomas Piketty claims, then we might need to re-evaluate how we integrate markets. However, there is good reason to be skeptical of such claims (Thomas Piketty’s in particular are suspect). Even if we grant that markets by themselves do lead to levels of inequality that cause problems 3-5, we must not commit the Nirvana fallacy. We need to compare government’s aptitude at managing income distribution, which for well-worn public choice reasons outlined in problems one and two as well as a mammoth epistemic problem inherent in figuring out how much inequality is likely to lead to those problems, and compare it to the extent to which markets do generate those problems. It is possible (very likely, even) that even if markets are not perfect in the sense of ensuring distribution that does not have problematic political economic outcomes, the state attempting to correct these outcomes would only make things worse.

But that is a complex empirical research project which obviously can’t be solved in this short blog post, suffice it to say now that though libertarians are right to be skeptical of overarching moralistic outrage about rising levels of inequality, there are other very good empirical reasons to be concerned.

Some afterthoughts on Rio Paralympics

Paralympics are over, and with them the cycle of Olympic Games in Rio de Janeiro. Once again the city was able to put up a good show, and thankfully all went well in the Cidade Maravilhosa. But not everything is alright in Rio: even more than the Olympics, the Paralympics were able to show the contradictions between the city where we live everyday and the city of the event: Rio is not welcoming for people with disabilities.

At least in Brazilian Portuguese, political correctness has done a mess with vocabulary concerning the kind of people who compete in Paralympics. We are not supposed to say they are disabled (don’t even think about saying they are crippled!). I think the correct vocabulary today is, as I used, “people with disabilities.” But even that is under political correct scrutiny, so it seems. All this discussion about words springs from cultural Marxism, postmodernism, relativism and the belief that there’s nothing objective beyond our vocabulary. But words can’t hide the reality: Rio is unequal. The way it treats the blind, the lame, and even the elderly or the young, is completely different from the way it treats people in middle-age and more able to walk. And all that despite strong legislation in this area.

One of the greatest debates in political philosophy in the 20th century happened between American philosophers John Rawls and Robert Nozick. Trying to build on classical liberal foundations (but moving to egalitarian liberalism), Rawls pointed out that “equality was supposed to be the moral benchmark for social and political institutions, and that any deviation from equality had to be specially justified.” Nozick answer was that liberty upsets patterns. Even if we have a starting point in society where we have a perfectly equal distribution of goods or assets, the moment that we allow people to be free to make their own choices (as liberalism prescribes) they are going to make choices we cannot possibly predict, and these choices are going to upset any kind of pattern we established in the first place. That happens because each one of us is unique in its own right: each one of us have a specific set of values, preferences and circumstances that upsets any would-be planner. So, if you want to respect human liberty to make choices, you have to give up on any plan for material equality.

Nozick’s answer to Rawls has a lot of Adam Smith in it. In The Theory of Moral Sentiments (1759) (preceding the more famous Wealth of Nations both in time and argument) Smith presented a character called “man of system.” This person sees society as an architect sees a blueprint for a construction. Smith says such person is “apt to be very wise in his own conceit; and is often so enamored with the supposed beauty of his ideal plan of government that he cannot suffer the smallest deviation from any part of it.” The problem is that humans have free will, the ability to make choices. And as such, they will upset any blueprint prepared for them. In other words, “individual people are not chess pieces you can move on a board with their dreams and desires ignored.” To the eyes of the would-be planner, “society must be at all times in the highest degree of disorder.”

So, material equality of outcomes (or at least of opportunities) is totally out of reach? Should we disregard it completely? Should the “invisible hand” prevail in spite of the weakest in our society? I don’t think so. Just the opposite! One of the very reasons I find classical liberalism morally appealing is the fact that no economic or political system ever conceived helps the weakest as it does. In other words, contrary to (what seems to me is) the popular belief, classical liberalism defends social justice more than any of its intellectuals alternatives. Answering John Rawls’s famous claim that “a just society will be one whose rules tend to work to the maximum advantage of the least well-off classes,” Friedrich Hayek pointed out exactly this. In The Constitution of Liberty, Hayek agreed with Rawls about the end at which social institutions should aim: the welfare of the least advantaged. He simply disagreed about the means Rawls thought would get us there.

Instead of thinking of us as chess pieces on a board, when can use the analogy of a soccer game (or football, or basketball – suit yourself). The outcome of the game is the result of the player’s individual abilities, but it is also the outcome of the rules. In other words, in a free society, where people are free to choose, the outcomes are not just the result of the innumerable decisions of countless individuals. They are also the result of the rules enforcing property rights, contracts, taxation, and so on. So, it’s important to think about the justice of these rules, as well as the outcomes they might have. The point is that we can embrace a theory of social justice, but that just tells us the end we are heading to, not the means to get there.

Contrary to egalitarians, progressivists and socialists claims, no theory “tends to work to the maximum advantage of the least well-off classes” as classical liberalism does. And that’s a great reason I support it. As I said in the beginning, Rio is very unequal, despite decades of egalitarian policies in the city and in Brazil as a whole. On the other hand, there’s plenty of evidence that classical liberal policies tend to help the very people others accuse it of ignoring. When it comes to doing social justice, it’s important to have not just the heart, but also the mind in the right place. And I believe classical liberal policies are this place.

References:
What’s Right about Social Justice?
Rawls and Nozick on Liberty & Equality
Adam Smith and the Follies of Central Planning
Fight of the Century