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Economic Rights are Positive, Political Rights are Negative

Simon Wren-Lewis has a great post up which relates to a point I’ve wanted to make for a long time…  It’s not really a new point, per se, (I heard similar points being made with respect to “right-to-work” laws and there is this from Brad DeLong in a similar issue), but… well… Simon just has a great thought experiment:

Employees are already beset by red tape if they try to improve their working conditions. Now the UK government wants to increase the regulatory burden on them further, by proposing that employee organisations need a majority of all their members to vote for strike action before a strike becomes legal, even though those voting against strike action can still free ride on their colleagues by going to work during any strike and benefiting from any improvement in conditions obtained. Shouldn’t we instead be going back to a free market where employees are able to collectively withhold their labour as they wish?
I doubt if you have ever read a paragraph that applies language in this way. Yet why should laws that apply to employers be regarded as a regulatory burden, but laws that apply to employees are not?
Here’s how I’d make the same point more generally:  Economic rights are always positive rights–rights provided by the government to expand citizen’s choice set–while political rights are always negative rights–that is, freedom from interference.
The fundamental unit of an economy–the economy’s “atom”, if you will–is the Transaction.  I do something for you, then you do something for me.  That’s what makes an economic system economic.
But a transaction cannot be defined for an individual.  Transactions always involve two (at least!).   That’s key.  There’s you, there’s me and we’re trying to trade something.  So what does this have to do with economic rights?
Consider freedom of contract.  There’s you, there’s me and we’re trying to come to agreement.  Obviously, we can come to agreement without government interference.  If we do, though, what happens when both of us are caught off guard by how events actually play out?  Well, we renegotiate.  But the possibility that we will renegotiate itself makes certain contracts/agreements undesirable, because each of us knows that we may be at a disadvantage if we have to renegotiate (this is called the hold-up problem).
Doesn’t sound like a big deal?  Consider the example of the humble spot transaction.   There’s no government, so suppose I have a horse you need to get around on (since there are no roads anymore) and you have a fistful of gold (since there’s no currency without government to provide it).  I’d like to trade my horse for your gold.  We meet, I get off my horse, you hand me your gold… now, what’s to stop me from jumping back on my horse and riding away?  Now I have both horse and gold.
Stealing the horse is a “spot-renegotiation” because it happened while the transaction was proceeding.   It just so happens that at one point during the transaction, I had all the bargaining power because I was physically in possession of both goods.   If we can’t manage to trade horse for gold simultaneously, this will always happen to one of us or the other, so we probably won’t even bother trying.   Really, this is a point you should already be familiar with from movies or TV when the good guys need to trade something with the bad:   doesn’t something always go wrong?
On the other hand, if there’s a government, guys with guns come to my home, take the horse back and lock me in jail.  That makes it easier for us to come to come to an agreement in the first place so we can trade that horse for gold.  The government provides the ability to make contracts  which will be upheld by our counter-parties because the government will actively use force to make sure everyone lives up to their agreements.  It’s what I called the “visible hand” of the market in previous posts.
This need not be a particularly anti-libertarian view.  After all,  this is the reason that libertarian philosophers like Nozick argue for minarchy rather than anarchy.  The government needs to exist to provide economic rights (at a minimum), because economic rights are always positive rights–they only exist when the government provides them.   Whenever people transact, there must always be someone to say to them, “live up to your agreement!”   And that someone is “the government” whether they want the designation or not.
The libertarian mistake is thinking that economic rights flow from a principle of non-interference.  Government is a necessary, if silent, collaborator in every transaction because government is what makes everyone play by the rules.  Non-interference is a property of negative rights and only negative rights are political rights.
Political rights govern our interactions with government itself.   “Free speech” doesn’t mean I can say what I  want without consequence.   I can get fired for trashing my company in front of clients, and rightly so.  Free speech only means that the government has no standing to punish me for my views about government.   Political rights are the activities with which government can’t interfere.
Libertarians are trying to have it both ways.  They want economic rights (ownership, contract) to be supreme over political rights (suffrage, speech, religion), but they also want non-interference to be supreme over positive rights.   Positive rights over negative rights over positive rights.
Nozick’s Wilt Chamberlain thought experiment tries to get around this problem by simply ignoring issues of ownership (an economic right) in his theory of distributive justice.  It’s not that he’s wrong precisely, but instead it’s weird to say “a distribution is fair if it resulted from non-interference”… right after assuming that all ownership rights are sorted out and agreed upon by all parties.    Agreeing on and sorting out those property rights is exactly the reason government exists.   It’s almost like saying “assume government isn’t needed, ergo non-interference by government is best”.  Well, duh.   It’s easy to miss this, because Nozick concentrates on Chamberlain’s human capital–which no one objects to his owning–and ignores everything else.
So, libertarians, this is your challenge.   Choose which is more important to you, economic rights above political rights, or non-interference/negative rights above positive rights.  Those positions are in direct conflict.
I’ve ranted on long enough.  So let me leave it at that.
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A model for efficient regulations

July 5, 2012 2 comments

[Edit:  I changed the title of this post since I never explained the old title–BSE]

[Edit II:  see also the excellent post by Noah Smith on this topic.]

There’s been a fascinating back-and-forth on the nature of public and private coercion and labor markets.

To start things off Chris Bertram, Corey Robin and Alex Gourevitch (BRG) argue that libertarians ought to care as much about private modes of coercion as they do about public modes.   Specifically, they should care about coercion in the workplace.   If you truly believe in a philosophy of maximizing freedom why would you accept a situation in which workers are forced to endure a thousand indignities  which they did not specifically contract for?

Critical to their point is that exit (i.e. quitting) from a bad job situation is not sufficient to ensure worker freedom–exit is expensive (lost wages), uncertain (the next job may be as bad, if it comes along at all) and bosses may use a “boiling frog” strategy in which individual humiliations are added one at a time and none of them are so horrendous to induce workers to up and quit.   I might add that homo economicus might leave in such a situation, homo sapien would not.

Tyler CowenAlex Tabarrok and Adam Ozimek (CTO) respond by asking (to paraphrase) what would workers be willing to sell their freedoms for?   A very strange opinion, in my view, for libertarian freedom lovers, but Adam adds the distinction between ‘static’ and ‘dynamic’ freedom.   I think his argument is entirely missing the point, but that’s me.

In defense of BRG, Miles Kimball makes a good argument that worker protections can certainly be justified, morally and economically (he uses the example of ‘worker’ protections in the military).    My favorite response, though, comes from John Holbo; which I’ll discuss in a moment.

Surprisingly, Matt Yglesias enters the fray (here and here)  on the side of the libertarians.   He argues that as long as there is full employment in the labor market, then exit is a credible threat and so having no labor market regulations will be efficient.   To quote Matt:

…But you have to make the argument that tighter regulation of permissable work rules will in fact benefit the intended beneficiaries in a world where labor market regulation isn’t going to suddenly increase employers’ benevolence…

Challenge accepted.   My response will mostly be geared toward Yglesias, and I will have a model!   I love ya Matt, but I gotta bring some economics beatdown…

That’s a lot of reading, but interesting.   Before I get to my model, let me first make a couple of points.

 This is a problem for Libertarians, not Liberals
Via Holbo, Hayek argues that someone who contracts out their freedom is not more free, but less so;
The danger of confusion here is that this use tends to obscure the fact that a person may vote or contract himself into slavery and thus consent to give up freedom in the original sense. It would be difficult to maintain that a man who voluntarily but irrevocably had sold his services for a long period of years to a military organization such as the Foreign Legion remained free thereafter in our sense; or that a Jesuit who lives up to the ideals of the founder of his order and regards himself “as a corpse which has neither intelligence nor will” could be so described. Perhaps the fact that we have seen millions voting themselves into complete dependence on a tyrant has made our generation understand that to choose one’s government is not necessarily to secure freedom. Moreover, it would seem that discussing the value of freedom would be pointless if any regime of which people approved was, by definition, a regime of freedom.
Think about the context that Hayek has in mind:  he’s arguing against the social democrats who define permissible government behavior as anything supported by the majority of the people.   Hayek is saying that if the people elect a tyrant, they are still slaves whether or not there was an election.
Holbo (as well as BRG) are simply pointing out that this same principle applies as well to private as to social contracts.   Liberals, who do not view contracting as a sacred right but a practical and useful tool, are quite comfortable with the idea that contracting may reduce freedom.   For liberals like me, the Bill of Rights exists precisely because we recognize the possibility that the social contract may be a source of un-freedom.    It is a set of principles that can never be renegotiated.
Libertarianism and un-freedom
The point is that libertarianism is a philosophy of un-freedom one way or another.   To quote Holbo
…libertarians are unconcerned with maximizing freedom…Different ways of regulating the workplace will plausibly increase freedom-as-non-coercion relative to the levels that a libertarian regime will produce, and libertarians are not willing to go for it. They are unwilling in principle. From which it follows that libertarians are not concerned to maximize freedom.   They are maximizing contract rights and property rights. They don’t see they are not, hereby, maximizing freedom because they make the mistake Hayek diagnoses…: contracting away your freedom is not tantamount to keeping it.
 …Libertarianism does not take freedom as an end but as a means. Hayek is a utilitarian…
To quote Hayek,
If there were omniscient men, if we could know not only all that affects the attainment of our present wishes but also our future wants and desires, there would be little case for liberty.
So why all the liberty talk from libertarians?   Hayek points directly to the informational issue (which will play a role in my model), Holbo adds some thoughts:
…because the thing that actually belongs on the pedestal can’t be directly aimed at… In part we don’t even know what it is: the true standard of overall welfare for humanity…Maximizing freedom is the best proxy for maximizing welfare for humanity…So how do you maximize freedom? Here rubber meets road. You don’t maximize it by ensuring property and contract rights the way Hayek and other libertarians want. As BRG say, this will sometimes result in less freedom
Now as Yglesias says, this could all be a red herring.   True, he says, but so what?    Show that labor market regulations increase freedom (at full employment).   As Matt says
…in almost all political contexts, including this one, both the concept of freedom and the concept of property rights are red herrings. A political movement genuinely focused on freeing people from the coercive authority of the state would spend a ton of time tackling the everyday tyranny of traffic signals, lane striping, jaywalking laws, and the dozens of other similar regulations that impinge upon the day-to-day lives of hundreds of millions of law-abiding American citizens. By the same token, a movement obsessively focused on property rights would be outraged by the fact that every automobile driver and factory owner in America is causing fine particulate emissions to traspass on people’s backyards all across this fine land.
Fair enough, so let’s deal with the practical issue.   After all, both Holbo (speaking for the libertarians) and Yglesias have reduced the problem to a practical one.   Libertarians have this theoretical problem that contracts and property rights won’t maximize what they say they want, but what about the alternatives?   Could labor regulations make sense?
Libertarianism is the philosophy of the powerful
Before I get to that, one more Holbo quote–because he already deals with this objection–and then I’ll discuss my model:
Libertarianism isn’t a philosophy that blows different directions in the shifting winds of the labor market – coming out against unions when they get bloated and corrupt and exclusive but turning against management and capital when they are, as they certainly may be, objectively greater threats to freedom than any actually existing labor union. Actually existing libertarianism is the philosophy of treating as axiomatic that maximizing contract/property rights is tantamount to maximizing freedom…
…Hayek fails to see that he is not actually interested in maximizing freedom because, actually, he thinks that some people’s freedom is a lot more valuable than other people’s freedom. Liberals always want to ensure the maximum freedom consistent with enjoyment of that freedom by all. Hayek is definitely not on board…:“To grant no more freedom than all can exercise would be to misconceive its function completely. The freedom that will be used by only one man in a million may be more important to society and more beneficial to the majority than any freedom that we all use.”  Ideally, we would find that one man and even make all others his slaves, if that is what it took to let him exercise his freedom to the fullest… But obviously the point would not be that the man might have some preposterously bottomless capacity to be free. Rather, Hayek is saying that a world with much less freedom – a world in which this one-man-in-a-million is even a tyrant, perhaps – is better than a world full of freedom.
 In my own words, Hayek (and all libertarians) believe in the right of the powerful–presumably Galt-like supermen–to take away yours [rights].   As Holbo says of Hayek’s philosophy, “We can pick out a class of people who are likely to be better users of freedom. This is no part of Hayek’s official philosophy, but the reason he sees coercion on one side (workers) not the other (employers)”
An example of labor market regulations increasing freedom and welfare
 I’m going to use the example of workplace safety.   Workers value “safety” in their workplace, but of course they differ on exactly how much wages they would trade to be certain they will not be injured on the job.   Working in “un-safe” conditions does not guarantee injury any more than “safe” workplaces guarantee non-injury.   This means that safety is valued to the extent that it has an insurance value.
Workplaces chose their level of safety which all workers will share.   Presumably, this safety is expensive to supply but there is an opportunity for smart entrepreneurs to offer optimal trade-offs to potential employees on the “safety” vs. “wages” choice.   In particular, the “true” wage is the sum of worker’s willingness to pay for their safety (i.e. the insurance value of that safety which I’ll refer to as the “safety wage”) and the actual (i.e. money) wage.   In a full information equilibrium, workers will self-select into jobs whose safety matches their own preferences and the system is efficient.
So what’s the problem?   How exactly do workers know before they accept their jobs and start working what the insurance value of the job will be?   For example, they don’t see missing fingers until they start working the assembly line.   Signals require realizations.   The safety wage is unobservable at the time of contracting.
What all this means is that there is an informational asymmetry at the heart of the labor market–potential workers don’t know if their potential workplace is the sort of place where fingers are lost until they see it for themselves, but bosses certainly know what they’ve spent on safety.   Thus, firms cannot attract workers by offering higher safety wages and so the industry wide money wages must equalize.   Given this, bosses offering higher safety wages (which are costly for firms) will either lose employees or be forced to raise prices–which would drive away customers from their product.   So bosses offering higher safety wages will either drop out of the market, or they will cut back on safety.
In equilibrium all workplaces are unsafe–workers don’t have the option of finding better working conditions since the market has driven a race to the bottom in terms of safety.
The same model, of course, applies to boss ‘jerkiness’.   Boss’s jerkness is not observed by workers until they are on the job and ‘non-jerkness’ is clearly costly.   Bosses are not just being capricious when they are jerks, as Cowen himself points out
I had a job in the produce department of a grocery store.  They made me wear a tie.  They did not let me curse.  Even if there was no work at the moment, I could not appear to be obviously slacking for fear of setting a bad example.  They had the right to search me, including for illegal drugs
 Failing to search would be costly–presumably–in terms of more stoned cashiers.    Presumably there are some, unlike Cowen, who do not like being felt-up for drugs.

I can order a Large, an Extra Large and a Grande, but not a Small

Adam Ozimek has issued a challenge to paternalists everywhere. If paternalists support Bloomberg’s attempt to ban too large sodas, where does the slippery slope of intervention end?

OK, I’ll bite. Now I don’t consider myself to be a paternalist (although I’m sure that Adam would see me as such), and to be frank, I find the entire “paternalism” debate to be dumb and completely self-serving for libertarians.  Now, on to the argument (in list form)!

First, let me say that as far as specific policy is concerned, I’m ambivalent at best over the proposed ban.   I would prefer a system of graduated taxes on large sugary drinks… say, proportional to the square of the total sugar content and paid by the firm so that the tax is incorporated into the posted price the costumer sees.

  1. Adam makes a lot of the slippery slope of government intervention, but what about the slippery slope of the market without intervention?   What do I mean?   Well, read the title of the post.   Seriously, many if not all places I go these days don’t even offer a “small” size anymore.  Why?   Doesn’t this all make the large a small?   Well, yes… and no.    I think what we are seeing is the interaction of two different effects.  First, (likely for evolutionary reasons) humans have a bias for larger portion sizes–often larger than maximizing ex-post satisfaction would imply (i.e. you feel over-full).   Should government intervene to prevent that?   Maybe yes, maybe no.   It depends whether there is a compelling public policy issue involved (in this case there is).   The other effect is price discrimination.   Firms can extract a small amount of extra surplus from larger portion sizes.   Should government intervene to prevent that? Yes.  Not always, but often it should.   The two effects interact in a nasty way, large portions lead to higher demand (because we keep wanting to over-stuff ourselves) which leads to more price discrimination and larger portions; that interaction strengthens the case for intervention.
  2. Is there a compelling social rationale?   Yes, there is.   You may be tempted, like Adam, to believe that obesity is a personal choice and nothing more.   That’s not true, though.   The point has been made many times by those with more expertise than I, but it can’t be reiterated enough: if you are obese, you increase healthcare costs to the rest of us.   Now, when you buy a car, you also increase the (car-buying) costs for the rest of us, but when you buy a car, you are buying a car–you are PAYING the cost that you are inflicting on the rest of society.   When you get fat, to be frank, you are NOT paying the full social cost of that choice.   This is not quite a classic externality–the problem is that society would (likely) not bear the policy choice of charging the obese more for healthcare.   In an abstract sense, it would be more efficient to just charge these people for the harm they cause, but that’s not the world we live in.   As a second best solution, then, society just… encourages… thinness.   That’s not an ideal solution, but we’re in the realm of the second best.
  3. OK, so what about that slippery slope of intervention?   Hogwash.   This is why you sound like an idiot (which Adam is not) when you make slippery slope arguments.   Why?   There are several reasons.   I’ll return to this but the short of it is that (I can’t reiterate this enough) slippery slope arguments, as a class, are fallacious.   I also think they’re telf-serving for libertarian-types as well, since any “intervention” can be labeled as a “slippery slope” and therefore “bad” on only the shoddiest of reasoning.   So, we should not intervene, right?   Well, no, but I’ll get to that.   Even when a “slippery slope” isn’t just sloppy analysis, there is never, ever a logical reason to abandon an intervention for the sole reason that there is a “slippery slope”.   As I say, I’ll return to this, for now I’m just making an assertion.
  4. Where to stop with the interventions?   How much is too much?   That’s easy.   You stop intervening when the political system says to stop.   That’s what the political system is there for, so use it.   Not every problem can be solved in the market.

So, that’s my basic response.   Bloomberg’s is not the best response (I’m guessing) but I’m willing to see how it goes if no one tries something more promising (like using some kind of Pigouvian tax).   And I think there’s nothing inherently wrong about at least trying to address obesity with public policy.

I would add that I find Adam’s position at least as “paternalistic” as mine.   After all, when he advocates for “free markets” (whatever that means exactly… but it’s amazing how often “free” means “what is best for rich people”) he’s implicitly saying that he knows what is best for the rest of us.   What I really want, for example, is to buy food that I know is safe–and that may not be possible if we deregulate the food industry.   My buying of unsafe food does not mean ipso facto that I prefer unsafe food if I do not have an alternative.

I would argue, instead, that “paternalism” is just another word for policy advocacy.   I am an advocate.   Adam is an advocate.   So we are both “paternalists”, though neither of us would us that word to describe ourselves.   We advocate for different things, which each of us believe is in the best interests of the rest of the nation.    That’s the way its supposed to work.   By calling people (who he doesn’t agree with) names (i.e. “paternalistic”), he is debasing the conversation–attempting a kind of preemptive ad hominem.

At any rate, I promised I would detail why the slippery slope is always a dumb argument.   First, a point of terminology; when discussing the “slippery slope” I logically separate the problem into the “slope” (i.e. the proposed policy change) and the “slip” (the asserted tendency for the proposed change to propagate itself).   Logically speaking, you need both the slip and the slope to make a “slippery slope”, although in practice most people ignore the later.

  1. Gradualism:   Even if the “slippery slope” analysis of a policy  is sound, we should never use this fact, in and of itself, as a reason to reject that policy.  Nearly all good policy is developed through a process of gradual improvement.   You tweak existing institutions, you do not create institutions whole from out of the aether.  To reject policy because that policy admits to reform would eliminate this option.   Instead, all policy changes would need to be revolutionary and more important, those changes would need to be right–there is no prospect of feedback.   This is an impossible bar to cross; for libertarians, that’s the point.
  2. Democracy:  Suppose a policy is implemented and once it is, it becomes generally accepted by the public.   The public wishes for more improvements.   This, incidently, summarizes the example that Adam cites.   I say, “the policy admits reform”, Adam says “slippery slope!”   Here’s the thing.   The slip in this slope is the fact that people like the policy and want more.   Adam says that the existence of this slip is reason to avoid the slope; doesn’t anybody else notice the anti-democratic implications of that?   If Adam concedes the slip, then he is conceding that the policy will be popular–policies propagate through the political, i.e. democratic, process not through asexual reproduction.
  3. Experimentation:   Not enough of a reason to make policy changes on its own, but combined with points (1) and (2) its reasonable, I think, to imagine that policy improvements are possible and something is learned from each reform.   If we are gradual enough about continued reforms there is no reason to think that the costs (i.e. reforms that don’t quite work) would be greater than the potential benefits and because we learn something from each reform it is reasonable to think that society should on average be willing to attempt reforms which it expects on average to fail (what we learn has option value).    What Adam calls a slippery slope, I call exploring the policy parameter space–and you can never be sure about the peaks and valleys of that parameter space until you explore them.
  4. Induction:   So far, I’ve argued practical issues.   Now, I want to argue pure logic.   The basic structure of a slippery slope (properly used) is this:   A->B->B’->B”->…->C through an induction-like process where each step is shown to be inevitable.  As used in the real world, however, the invocation of a slippery slope has the structure A->B and so C (which is presumably bad).   This is pure non-sequitur.   The sequence of events between B and C, in short, is missing. You mister slippery-slope need to spell out not only the slope (B and C) but the slip (why the sequence leading to C must continue all the way to C).   The slope may be wrong (A leads to outcome D, not C) and the slip may terminate long before C.

I’m sick of hearing about slippery slopes.  Please stop, or at least do your due diligence and show your work through its logical steps.

Taxes=Slavery?

May 1, 2012 4 comments

I mean to spend some more time posting my own thinking in this space, so far I’ve been hesitant to post any research related posts; I have some ideas in the pipeline, but I just haven’t gotten around to it. I’m always more comfortable responding to arguments rather than starting discussions.

At any rate, that old libertarian/objectivist standby that taxes are a form of theft or slavery is back on this internets, this time Karl Smith is linking to a post from Bryan Caplan. Quoting from the Smith post, here’s the argument in a nutshell:

Suppose there are ten people on a desert island. One, named Able Abel, is extremely able. With a hard day’s work, Able can produce enough to feed all ten people on the island. Eight islanders are marginally able. With a hard day’s work, each can produce enough to feed one person. The last person, Hapless Harry, is extremely unable. Harry can’t produce any food at all.
Questions:

1. Do the bottom nine have a right to tax Abel’s surplus to support Harry?

2. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to support Harry?

3. Do the bottom nine have a right to tax Abel’s surplus to raise everyone‘s standard of living above subsistence?

4. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to raise everyone‘s standard of living above subsistence?

How would most people answer these questions? It’s hard to say. It’s easy to feel sorry for the bottom nine. But #1 and #3 arguably turn Abel into a slave. And #2 and #4 clearly turn Abel into a slave. I suspect that plenty of non-libertarians would share these libertarian moral intuitions. At minimum, many would be conflicted.

And the response I left:

The problem here is that we know full well the solution to this parable in the real world and we ought not to think that hard to understand. No, almost nobody not already infected with libertarian/objectivist thinking would have any problems forcing Abel to help Harry. Nobody. I’ll go further and say that half the problem is a framing device which by now anyone who considers themselves honest thinkers should have built some resistence to. Calling the least able person “hapless” involves (a priori) a moral injunction against him.

What do I mean? Well, what if Harry is “hapless” because he is injured or maimed or, say, autistic? What would people decide then? Obviously, society would shun any who have the resources to help but refuse to do so. Abel would be a pariah. Either Abel would have to “buy off” the others to stay in their company, or he would have to support Harry himself. This is how real people behave.

You can call this slavery if you want, but its a really strange notion when you come to it (as Karl suggests, this is why slavery is difficult from a metaethical perspective, but I want to duck philosophical arguments as much as I can). The issue here is that Abel has the “right” to be lazy and feed only himself, but the group also has the “right” to define the “price” of admission into the in-group. This price is what we would refer to as a “tax” and if Abel wants to be part of society he’d better pay it. As the Greeks understood, we are all “slaves” to the law (a point that DeLong has brought up on numerous occasions).

More broadly, this is a very common framing I hear from Libertarian types and yet its deeply flawed. You can talk all you want about “voluntary exchange”, but ultimately Abel wants to be part of a group but has no “property right” over the group any more than anyone else. So, what Abel wants is to exchange his extra resources for a position in the group and the group wants the resources to feed its unable members. This is a mutually beneficial exchange, but Libertarians want the rest of us to see it as somehow salacious; rather it is Abel who wishes to free-ride.

Incidently, here’s a link to DeLong’s “Freedom is Slavery” point which he attributes to the Greeks.

There is no escaping labels

April 13, 2012 Leave a comment

Adam Ozimek had a great post this morning responding to Caplan and Wilkinson about the benefits or dangers of labels. Here’s the response I left after Adam’s post:

… I think all this talk about labels being beneficial or dangerous tends to miss the obivous point that labels are both beneficial and dangerous. This need not be an either/or proposition.

When I was young, I listened to Rush Limbaugh, called myself a staunch conservative and defended the Republican party from most attacks. In my mind, this was not because I so cherished the label as much as it was the fact that I listened to these people and their arguments seemed to make sense to me. When I slowly began to realize the weakness of their arguments I went searching for new labels, because what was I supposed to believe unless someone told me?

The real issue here is that a coherent worldview is not something that you can really build up from scratch from your own experiences, that’s not enough. An ideology like libertarianism took the lifetimes of many thinkers to flesh out; I couldn’t match that if I tried. Shortcuts are sometimes necessary.

It is also clear that having adopted shortcuts that that will introduce bias; not every problem has an ideal solution and this is an example of that. If you want to understand how that works, just read some Tversky and Kahnman papers… taking shortcuts which introduce bias is a universal problem in human decision making.

As for me, I spent my youth and early adulthood traveling the ideological spectrum from conservative to libertarian to self-concious centrist and finally to liberal/social democratic. In not one of those steps did I change a core belief, but each step I saw the world differently and I reacted differently to events.

I’m sure it helps to try and see the world as your opponents do, but that’s not a solution. There is no solution, except to do the best we can.

I’m not entirely sure if this puts me closer to Caplan (a rare event) or Wilkinson (much more common), but I do have to say that I see a lot of my own journey in what Wil has gone through. You just don’t realize all the subtle pressure to conform to your tribe until you’re on the outside looking in (not to mention the not-so-subtle influence of who you choose to listen to). But then, someone-who-listens to Wil-Wilkinson-more-than-Bryan-Caplan is itself a label.

I think politics, as Wil suggests, really is different, but only in the degree of tribalism and groupthink. I’m inclined to be convinced by Tversky and Kahnman because I’m a person who has been convinced in the past, but that doesn’t mean that they are or were right. Tthey may be those things anyway, but my inclination to believe them comes from my own bias, not from them. This is a form of tribalism… I’m a behavioral economist, and not a neoclassical one. For example I have a couple posts up on a common mistake I think most behaviorally inclined make in dismissing utility theory (a mistake going back to Tversky and Kahnman, incidently)… but I used to agree with them.

A truly rigorously-thought-out idea is a rare and valuable thing. I say keep the labels, but be aware that it messes up your thinking.

Steal-cage death-match: Kochtopus Vs. Cato Edition

March 19, 2012 Leave a comment

I’ve been meaning to write about the Koch brothers take-over attempt of the Cato Institute since I first heard about the story (from Brad DeLong–here is a good summary). I once considered myself to be a libertarian (long long ago, in a galaxy far far away) so I feel as if I should have something to say. Sadly, I don’t really think I do. Nothing terribly interesting at any rate.

Still, its going to bug me until I vent a little bit, so here goes.

My feeling is that the modern libertarian movement (as it actually exists) in the US is a terrible force of evil, not just here but in the world as a whole (I’ll refrain from citing examples for now, but I may come back to the topic in the future). This is a tragedy, and not just because libertarians are a powerful political force. In fact, I would go so far as to say that an idealized libertarian movement would form the best of all possible opposition parties to the progressives… that sounds like I mean the whole political culture ought to be significantly rightward of its current center of gravity, but that is not what I mean, so let me explain.

As I see it, politics is an N-person bargaining problem (where N is some very large number), but the N-person bargaining problem doesn’t have a single (known) solution. Still, we can say something about the fairest possible outcome of the N-person problem–for example if everyone earns his or her shapley value this would be a notion of the “fairest” bargaining outcome. Suppose also that the overall solution of this bargaining problem only admits solutions with two main parties. You might then ask which two parties best balance long run growth and equity of its citizens. My contention is that “close enough” to this shapley value solution to the bargaining problem, the two parties which best optimize growth subject to equity concerns are the progressives and libertarians.

The idea is that in order to maximize growth, a society needs to be constantly changing and evolving. To me, this suggests the need for an agenda-setting party and a skeptic party to keep the agenda-setters honest.

If there is one thing that unites progressives it is the idea that collectively we can solve societies problems–although we are indifferent, generally, as to how and disagree mightily as to what. This means that progressives are a great agenda-setting party (at least, we are at our best). As a bonus, it is probably best that the agenda-setters are the party most interested in equity, since the market will generally produce inequities all on its lonesome, which provides a steady stream of “change” that needs doing.

Libertarians, meanwhile, are dedicated to (what I usually think of as a somewhat strange notion of) liberty. There is a bit of paranoia in their single-minded focus on less government and a frustrating lack of awareness of the liberty-destroying abilities of powerful individuals. Yet, overall, I see libertarians getting more things right than wrong. They would be bad agenda-setters because of their rather awful blind spots, but their careful reasoning and market-oriented thinking make them excellent skeptics (even in command-and-control economies, markets tend to pop up on their own).

This is all pretty weak praise (for one thing implementing a shapley-value solution is probably impossible with a voting mechanism, I think actual voting mechanisms will get you something in the Core, so my intuition here is in a practical sense useless). Still, I think it’s fair to say that, at their best, libertarians make our political discourse healthier. I would not make the same claim for conservatives, broadly.

Whatever its practical faults, Cato comes the closest of all the major political organizations on the right to that elusive ideal of what libertarian thought ought to look like. To the extent that its ideas do filter back into the rest of the republican party and change the bilateral debate with the democrats, we are all better off for it. But precisely because kind of libertarianism does not advance the goals of conservatism or the republican party will move Cato further from what they should be. Then again, this is a very communitarian argument, which no self-respecting libertarian should buy into (read that DeLong post to see how well that fact has kept the libertarians from making precisely this case).

On the merits, though, the Kochs win the SCDM: the Koch’s membership shares are their own property and the attempt by Ed Crane to prevent them from reaching majority control amounts to theft of this property. I have no problem with this, because I understand that ownership and markets are not enough to guarantee optimal outcomes, but I can practically hear the cognitive dissonance as millions of libertarian’s brains change gears as one and take the communitarian side against property and markets. Score this one for the Kochs, but I think we all lose.