TGIF: Limited Government's Bait and Switch

In a fundamental respect, libertarian minarchism (minimal, or limited, government) and market anarchism (or anarcho-capitalism) have something important in common: neither can guarantee individual rights.

But there's a big difference: unlike market anarchism, minarchism appears to offer a guarantee, which allegedly makes it preferable to market anarchism. Actually, it's a false guarantee, a bait-and-switch. So it's not preferable to market anarchism, at least on those grounds.

However, what market anarchism can do is show how everyday incentives will tend to protect liberty (and already do now). Minarchism can't credibly say the same thing because constitutionally limited representative democracy is riddled with well-known perverse political incentives. That makes market anarchism the better bet.

It's instructive to watch the recent Soho Forum debate on the proposition "Anarcho-capitalism would definitely be a complete disaster for humanity." Yaron Brook, chairman of the Ayn Rand Institute, took the affirmative, and Bryan Caplan, libertarian professor of economics at George Mason University, took the negative. I think Caplan demolished Brook's case, which isn't exclusive to Ayn Rand Objectivists. This was a debate between two people starting from similar premises in favor of individual freedom, rational self-interest, and competition.

While what follows may not convince anyone to advocate market anarchism, it should eliminate a big argument against it.

Most limited-government advocates think that only a monopoly government can produce the objective law and fair and peaceful adjudication/enforcement that human beings need to flourish. The problem, as indicated, is that minarchism is all talk. It can't deliver.

Remember the old joke in which a tourist asks a grumpy local how to get somewhere? The local responds, "You can't get there from here." That's the problem. Brook's theory of constitutionally limited government promises to get us to a place we cannot go because it doesn't exist. Why not? As Dr. Seuss might say, because it's people all the way down. Limited-government advocates ignore this obvious fact.

Contrary to its fans, limited government is conceptually impossible. It, not anarchism, is a "floating abstraction." If this standard argument for limited government disappears, what's left?

Any advocate of liberty who knows even a little U.S. political history should see the problem for minarchism. In freedom-loving quarters, the American constitutional system wins kudos  -- the obvious serious contradictions such as slavery excepted. But what about the government's horrendous expansion since 1789? Isn't that a hint that something did not quite work?

Some Americans began complaining about the bigness of the national government at the turn of the 19th century! And let's not forget that the first constitution, the Articles of Confederation, denied the national quasi-government the power to tax and regulate trade. Within a few years, that changed. Wasn't that a bad omen?

Anarcho-libertarian abolitionist and businessman Lysander Spooner's 1870 "The Constitution of No Authority" concluded, "But whether the Constitution really be one thing, or another, this much is certain -- that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case it is unfit to exist.”

The Constitution has not guaranteed freedom. Brook himself called today's U.S. government a "gang." So what could have been different, minarchists? A nation full of perfect Objectivists? Good luck with that.

The Soho Forum debate, which I highly recommend, could have been over early when Caplan identified the impossible guarantee. Brook responded that his ideal government would "strive" to make that guarantee. Caplan pointed out that a striven-for guarantee is not a guarantee.

Undeterred, Brook resorted to the catechism "A proper government is the means by which we place retaliatory use of force under objective control and objectively defined laws ... for the purpose of protecting rights."

Caplan called this mere "tautological." You can define the term proper government as an objective and reliable rights-protector. But in the real world, how do you get there from anywhere? It sounds Platonic. It's more like a version of the ontological argument.

Brook also said that the banishment of force from society "doesn't just happen. That's not something you negotiate. That is just something that is." (My emphasis.)

"Just is"? What does that mean? How does it materialize -- immaculate conception? And how would it be maintained? Is the state an infallible Objectivist Mr. Spock? Or Gort, the robot in The Day the Earth Stood Still? (The original movie costarred Patricia Neal, who ironically also played heroine Dominique Francon in the film version of Rand's The Fountainhead.)

Remember, it's people all the way down -- from inception of the government to maintenance. People are fallible. They disagree. They change their minds. They ask for free stuff from politicians. Some will even be corrupt and dishonest when they run for office. And, as Public Choice shows, the ones in government are prone to bias in favor of their careers. No one can reasonably hope to keep a government limited, nonaggressive, and efficient -- a square circle indeed. Is a New Man required? (See my take on someone who long grappled with this question, Anthony de Jasy.)

Pro-market economist Harold Demsetz warned against the "Nirvana fallacy": positing an unachievable "ideal" as an alternative to anything that can be achieved. That's what we have here in limited government. If it isn't on the actual menu, we must determine the best actual alternative.

Caplan repeatedly challenged Brook with this basic objection, but Brook bobbed and weaved. (See the exchange starting here.) He seems not to have read anything but Rand's 1960s essay on the need for government, predicting routine widespread violence under market anarchism. But she was answered many times. Brook casually dismissed the voluminous market-anarchist historical, economic, and ethical scholarship as a mere intellectual exercise.

It was good to hear that Book supports free immigration. Among its many virtues, it would be a potential escape from tyranny. But why shouldn't people be free to "migrate" from one rights-protecting institution to another without changing location? Brook says a location (undefined) must have one law. But Western Europe doesn't have one law. Yet he agreed with Caplan that, unlike in previous eras, a war between, say, France and Germany or Norway and Sweden is unthinkable and will very likely remain so.

Caplan noted that what keeps the big governments in those countries from fighting (which would be made possible by taxation and conscription) is people's general expectation of peaceful dispute resolution. That would apply even more to accountable, reputable, and competitive businesses selling security to free customers.

War isn't impossible in Western Europe and elsewhere, just unlikely in our more pacific era. (See Steven Pinker's The Better Angels of Our Nature: Why Violence Has Declined.) Yes, Russia and Ukraine are at war. But how many of the almost 200 countries in our anarchist world without a super-government would rather fight costly wars even for the winner than settle disputes diplomatically? (For an analogy, think of what two auto insurance companies routinely do when each has a client in a conflict. The companies already have contracts to deal with each other peacefully. They couldn't afford a Randian war of all against all.)

Well, why does market anarchism, unlike minarchism, inspire reasonable confidence about the chances of protecting liberty? That's a topic for another day, but suffice it to say that, as Caplan argues, rational self-interest, free competition, the need for a good reputation, and today's general expectation of peaceful conflict resolution provide our best chance. This doesn't mean pushing the "anarchist button," which doesn't exist anyway. It means showing people that major alternatives to the state already exist, including arbitration and private security firms.

It is said that freedom isn't free. Protection of freedom certainly isn't free. But we need not be forced to pay monopoly prices for inferior services and even rights violations in order to enjoy our freedom.

More reading

Roderick Long, "Market Anarchism as Constitutionalism."
Sheldon Richman, "The Constitution of Anarchy," in America's Counter-Revolution: The Constitution Revisited.
David D. Friedman, The Machinery of Freedom: A Guide to Radical Capitalism, 3d ed.

TGIF: Hurrah for Real Globalization!

Globalization, like the free market and classical liberalism generally, isn't wildly popular these days, is it? People blame globalization for all sorts of bad things, and the raps are usually bum. In truth, to the extent that governments keep out so-called foreign people, goods, and money, they make nearly everyone poorer. Even the few immediate beneficiaries pay a price in the long run.

So who speaks up for real globalization? I have to add the adjective real because counterfeit globalization has been circulating for a while. That's politically managed commerce where governments, most prominently the U.S. government, manage cross-border private trade and migration. When that happens, we -- especially the poorest people in the world -- not only miss out on the full wealth-creating benefits of worldwide freedom, but we also suffer all kinds of consequences that follow from bumbling politicians and bureaucrats making decisions for the rest. Let's have no more of that, if you please.

One of the top voices favoring real globalization is Deirdre N. McCloskey, the Cato Institute Distinguished Scholar and specialist in classical liberal history. McCloskey has been writing big and important books on how it was the growing acceptance of bourgeois virtues and culture over hundreds of years that lifted the world materially. McCloskey calls it the "Great Enrichment." Most people don't appreciate how rich we are in the West and how rich the world's absolute poorest could be in fairly short order. Freeing individuals and the market is the key

A new essay by McCloskey, "Globalization Creates a Global Neighborhood, Benefiting All," is featured in a 12-part Cato series called "Globalization: Then and Now." It's an apt title for what McCloskey sets out to do.

It begins:

The word “globalization” delights some and terrifies others. But it’s merely the gradual emergence [in] our world of a single economy.

It’s a natural and beneficial result of humans doing what humans have done since the beginning, making their families better off by working hard, inventing new stuff, keeping alert, looking around, making little deals, etc. The result of all this human liberty of choice has been globalization. At various scales of time, it’s been happening from the caves to the modern world, or from 1350 to 1800, or from 1776 to 2024.

That's right. The international movement of people and wealth is not new, although it was never embraced wholeheartedly and uninterruptedly. Governments and other barriers, such as self-defeating cultural biases against foreigners and markets, got and still get in the way. But when those barriers are lowered or, better, are removed and governments loosen their grips, a single unified market emerges, with its tendencies toward one price through arbitrage (buy low, sell high), increased specialization and division of labor, higher productivity, more and cheaper known goods, and more innovation -- that is, new things. Hence, people are enriched across the board, no matter where they began.

Prosperity has even spread to communist China and India, thanks to economic liberalization. (Political liberalization, on the other hand, was not embraced by China's rulers, and the future of economic liberalization is by no means certain.) The same wealth-enhancing process would spread to other poor areas if rulers and bad values were repudiated by the people longing for better lives. It's already happening, and McCloskey has the data. (The West can help by not insisting that the poor countries pretend that fossil fuels are destroying the planet -- they aren't. The poorest people need them badly, as do we all.)

"It’s all about liberty," McCloskey writes.

In light of all this, why is "Buy American" so popular? It's because people never learned to think economically or overcome self-defeating biases. That goes for politicians too. Spending more than necessary to buy so-called American-made goods (Really? No foreign parts whatsoever?) leaves buyers less money with which to buy other things (also hurting the makers of those things) and leaving foreign producers less money with which to buy American goods that can compete without government help. Don't worry about the "balance of trade," which Adam Smith knew was "absurd" in 1776. (Have you checked your trade deficit with your Amazon lately? Probably not.)

And if the nation should "protect" itself from other nations' exports, shouldn't each U.S. state protect itself from the other states' exports? How about each city and town? Or each neighborhood? Heck, let's go all the way down to household self-sufficiency. That would create maximum employment. It would also create maximum poverty. Specialization and the division of labor saves and enhances lives, and as Adam Smith noted, "The division of labor is limited by the extent of the market."

This is not to say that no one loses in the short run from the market's dynamism. But should the automobile and personal-computer industries, which have benefited everyone a million ways beyond description, have been throttled to protect (in the short run) the relative few in the buggy and typewriter industries? Such thinking would have sentenced us to cave-dwelling. It's absurd to think change can be stopped anyway. People won't permit it. What we should do is safeguard all freedom so the few immediate losers can adjust speedily, smoothly, and comfortably. The richer the society, the easier that is.

As McCloskey points out, U.S. manufacturing employment, which has fallen since 1945, is not the same thing as manufacturing output, which has diminished less than employment as world production has grown. American workers have gotten more productive, so fewer are needed to make a given array of products than previously. But that frees up those workers to make things or, importantly, to provide services we couldn't afford yesterday. Human wants are infinite. It's labor that is finite. We'll always need stuff, and we're waiting to see what new things innovators will offer us to make life better.

For all these reasons, McCloskey tells Americans, "Quit being fearful about globalization.... Globalization is part of liberty."

TGIF: Free Speech Affirmed -- Pretty Much

The preliminary injunction against federal censorship of social-media users has survived the Biden administration's appeal. However, it remains on hold until Sept. 22 while the Supreme Court considers the matter.

The latest ruling, 78 pages long, by a panel of Fifth Circuit Court of Appeals judges, affirmed the core of District Judge Terry Doughty's July 4 preliminary order, but the revised order has two big differences. The appellate judges exempted some defendants and narrowed Judge Doughty's list of prohibited actions to just one modified but broad prohibition. We'll have to see how that works out, but the court has certainly admonished Biden officials for censoring Americans' speech by systematically leaning -- sometimes very heavily -- on the social-media companies.

The New Civil Liberties Alliance (NCLA), which represented some of the plaintiffs, commented, "Today’s order should stop that conduct."

Recall that Judge Doughty's ruling in the suit filed by Missouri and Louisiana on behalf of its residents, along with several private individuals, including COVID-19 dissident Drs. Jay Bhattacharya and Martin Kulldorff. Doughty had agreed that the plaintiffs had shown that the federal government, through repeated contacts with social-media personnel, had perpetrated “arguably the most massive attack against free speech in United States history.” He likened the Biden administration's efforts to "an Orwellian Ministry of Truth.”

The upshot of the ruling is that when the government "suggests" to Facebook or X that certain posted material is, well, unhelpful, concerning, or even dangerously misleading, it constitutes implicit censorship in violation of the First Amendment. Why? Because some government officials are in a position to punish (through antitrust action, civil-liability rules, or regulation) uncooperative parties. Therefore, even recommendations or pleas to remove or suppress posts necessarily carry a veiled threat. In the present case, the appellate judges write, the threats were sometimes stark naked.

It is well-established in law that what the government may not do directly -- say, block expression -- it may not do indirectly, such as by pressuring private companies to in effect censor.

The judges' panel recapped the findings:

For the last few years—at least since the 2020 presidential transition—a group of federal officials has been in regular contact with nearly every major American social-media company about the spread of “misinformation” on their platforms. In their concern, those officials—hailing from the White House, the CDC, the FBI, and a few other agencies—urged the platforms to remove disfavored content and accounts from their sites. And, the platforms seemingly complied. They gave the officials access to an expedited reporting system, downgraded or removed flagged posts, and deplatformed users. The platforms also changed their internal policies to capture more flagged content and sent steady reports on their moderation activities to the officials. That went on through the COVID-19 pandemic, the 2022 congressional election, and continues to this day.

Enter this lawsuit. The Plaintiffs—three doctors, a news website, a healthcare activist, and two states—had posts and stories removed or downgraded by the platforms. Their content touched on a host of divisive topics like the COVID-19 lab-leak theory, pandemic lockdowns, vaccine side effects, election fraud, and the Hunter Biden laptop story. The Plaintiffs maintain that although the platforms stifled their speech, the government officials were the ones pulling the strings—they “coerced, threatened, and pressured [the] social-media platforms to censor [them]” through private communications and legal threats.

The judges pointed out in great detail that the "platforms were apparently eager to stay in the officials’ good graces" and did not just wait for suggestions about stifling dissent. That sounds like the Stockholm syndrome. But their efforts to please their overseers weren't always enough: "The officials were often unsatisfied. They continued to press the platforms on the topic of misinformation throughout 2021." A powerful thirst can be hard to quench.

The judges reversed the injunction against three defendants: the National Institute of Allergy and Infectious Diseases (which Anthony Fauci ran until he retired), the State Department, and the Cybersecurity and Infrastructure Security Agency. The judges wrote: "We find the district court erred in enjoining these other officials. Put simply, there was not, at this stage, sufficient evidence to find that it was likely these groups coerced or significantly [encouraged] the platforms."

The White House, the Surgeon General, the CDC, and the FBI continue to be enjoined.

A preliminary injunction, of course, aims at future behavior, which the government unsurprisingly objects to. In rejecting the defendants' appeal, the judges responded refreshingly, "The district court found that the Plaintiffs submitted enough evidence to show that irreparable injury [from First Amendment violations] is likely to occur during the pendency of the litigation."

Put another way, the district and appellate judges do not believe the executive branch when it says in effect, "We didn't do it, and we promise never to do it again."

As for the modification of Judge Doughty's prohibitions, the judges found that his list had too many vague and overlapping items. So it struck down all but one and modified it. The edited version now reads:

Defendants, and their employees and agents, shall take no actions, formal or informal, directly or indirectly, to coerce or significantly encourage social-media companies to remove, delete, suppress, or reduce, including through altering their algorithms, posted social-media content containing protected free speech. That includes, but is not limited to, compelling the platforms to act, such as by intimating that some form of punishment will follow a failure to comply with any request, or supervising, directing, or otherwise meaningfully controlling the social-media companies’ decision-making processes.

That looks pretty good, doesn't it? We'll see how all this works out in practice. The next move is the Supreme Court's.

 

 

TGIF: Who Rules? That Is Not the Question

Today's two major contenders for political power seem to be elitists and populists. Funnily enough, both types are present in each of the big tribes known as progressive/liberal and conservatism, left and right, or Democratic and Republican. (Here's the lowdown on paleoconservative elitists.)

However, the elitist/populist framework should leave everyone dissatisfied. It omits too many details. Namely, it presents a contest apparently over who should rule: an anointed elite or "the people," which is not always well-defined. I put the term in quotes because the whole people cannot possibly rule.

The common framework ignores the far more fundamental question: which rules? In other words, what are the rulers, whoever they are, proposing to do? Exactly which orders are to be enacted as legislation and imposed by force? Are there to be limits on this rule? By what means? What happens if the limits are breached, as they have been constantly over the years?

That's what libertarians care about first: the rules. Who rules comes second. But everyone should care about this. Under certain rules, it wouldn't matter who was "in charge." Imagine a rule against anyone -- even "rulers" --  initiating force in any way against anyone else.

The problem is that the rules typically administered by the state, including representative democracies, shouldn't exist. We shouldn't want anyone enforcing those rules because they are bad rules. They may constitute legislation, but, as F. A. Hayek and others have taught, they are not (natural) law.

We cannot assume that populist, or unfiltered democratic, rule would be preferable in all circumstances to elitist rule. I think of the self-styled "extreme libertarian" H. L. Mencken's famous observation, "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

Take the Federal Reserve System -- please! If a gun were held on me, I'd choose the current system over a Fed run by Congress or by plebiscite. I'm not sure that's a tough call, but I'm marking on a steep curve. (Ron Paul wanted to end the Fed, not hand it over to "the people.") 

In The Myth of the Rational Voter, libertarian economist Bryan Caplan reports that surveys consistently indicate that better-educated individuals tend to give more sensible answers on economic-policy questions than the general, less-educated population do and thus are less, say, anti-trade and anti-foreign.  What might that mean for trade, immigration, and even monetary policies? Of course there shouldn't be trade, immigration, and monetary policies. They override individual freedom, cooperation, and spontaneous order.

Look across the Atlantic and consider Brexit. With good reason, a majority of Britons didn't like policies being made by distant and largely unaccountable politicians and bureaucrats. Most voters chose to exit, that is, they opted for decentralization. At the same time they favored nationalism and national sovereignty, that is, immigration control and protectionism.

Notice what wasn't on the ballot: individual sovereignty -- not just for Britons but for everyone. In the Brexit case, decentralization coincided with more national government power over the freedom to trade and to deal with would-be migrants. That's hardly a win if the standard is individual liberty. (Decentralization has a potential advantage: it lowers the cost of voting with one's feet.)

It's not that "the people" are stupid -- far from it. While most of us are reasonably competent in normal life, in the political realm we face special incentives and disincentives that make us act stupid. When one vote is impotent, why would most individuals spend scarce time and money studying complicated subjects to investigate whether to vote for Smith or Jones? They might as well vote their feelings and biases. Besides, most individual voters will bear a only microscopic fraction of the total expense that the winning candidate will help to impose. Bad incentives all around.

Admittedly, democracy as a way to pick officeholders is certainly preferable to violence in the streets, but that is faint praise. We can do better.

But we don't want an elite to rule either. Elitism's track record here and elsewhere is nothing to brag about. It includes war, depression, and other lamentable political maladies. Of course, the rejection of elitism doesn't mean the wholesale rejection of expertise, as some people seem to think. That would be irrational. Who doesn't consult a doctor when ill? No, what must be avoided is endowing select experts with access to political power. The damage can be seen in the recent pandemic.

The alternative to elitism isn't more democracy, which would trade one form of authoritarianism for another. The alternative is individual liberty in markets and civil society, and that calls for the strictest limitation on -- as we work for the elimination of -- all coercive political power. The objective is to free all peaceful relations from government. Instead of elitism and populism, let's have individual liberty and cooperation.

TGIF: Tribalism and the Dark Art of the Package Deal

Tribalism not only lives; it rules -- even more than I thought! I've been reading Hyrum Lewis and Verlan Lewis's book The Myth of Left and Right: How the Political Spectrum Misleads and Harms America. It's certainly clarified my thinking.

The Lewis brothers are a historian and a political scientist. What they show is something that I and many others have only partly understood. But for me, that's changing now. (Here's an interview with them.)

Their thesis is that the terms left, right, liberal, progressive, conservative, Republican, and Democrat do not indicate opposing sides of a single basic ideological principle that would make their respective policy programs coherent. Instead, those labels identify two social/cultural tribes that are based on something other than ideology. The disparate components of their respective policy package deals change, depending on contingent events, but the tribes endure with few defections. Compare "right-wing" Republican leaders Robert Taft, Barry Goldwater, Ronald Reagan, and Donald Trump. You can do the same with the "left."

What do those labels really mean? You can't say, for example, that the left is for big government and the right is for small government: too many shifts and inconsistencies have occurred. Think of their changing attitudes toward free speech, foreign intervention, surveillance and the intel apparatus, free trade, the rule of law, and even tax cuts.  Republicans have joined Democrats in opposing even future cuts to doomed Social Security and Medicare. Why don't the media report that the Republicans have moved to the left on entitlements? Anything they do is called a move to the right; anything the Democrats do is a move to the left. How can that be?

Have you heard the cliche "This isn't your father's Republican [or Democratic] Party?" Tribal change is not new. (That was lifted from an Oldsmobile advertising slogan.)

When you come right down to it, members of Team Red hate members of Team Blue because they wear the wrong color jersey and vice versa.

The Lewises' "social theory" explains the scene better than the prevailing "essentialist theory." If the two tribes had ideologically driven platforms, each side's members could coherently (but not necessarily correctly) say, "My team's positions are all good because of our underlying vision, and the opposing team's positions are therefore all bad. But if their lists of positions are grab bags determined by something other than a worldview, then the members can't reasonably say that.

The authors ask us to imagine that supermarkets offered just two pre-loaded shopping carts to choose from. You'd pick the one that had more things you liked than disliked. But you wouldn't say that every item in your basket manifests a consistent worldview and so is better than every item in the other one. But that's how most people think of their political tribes.

Libertarians have more or less known this since the modern movement arose after World War II. As young libertarians, my friends and I wondered how so-called conservatives and so-called liberals could be pro-freedom in some ways and anti-freedom in others. Why weren't they consistent?

We wondered how a political spectrum could make sense when it had totalitarian Josef Stalin at one extreme and totalitarian Adolf Hitler at the other. The authors ask a similar question: what use is a spectrum that puts Milton Friedman, a staunch advocate of individual liberty, the free market, and limited government, on the same side as Hitler, a staunch advocate of national socialism and the total state? Is a center-right person moderately pro-free market or moderately pro-Nazi? Is a center-left person moderately pro-welfare state or moderately pro-Bolshevik?

If the Lewises are correct, we should be wary about common phrases like moving further to the left/right or becoming more progressive/conservative. The reason is that there is no single-issue spectrum with fixed points to move along. The tribes define, not reflect, what it means to be rightwing, leftwing, conservative, and liberal/progressive.

If you have doubts about this, try stating the principles that unify the conservative and progressive programs or the party platforms. You can't do it. If you ask a conservative or progressive what principle unifies his program, his answer, write the Lewises, will be a post-hoc rationalization. The tribes could exchange positions (and have) and still rationalize their new programs in terms of their previous answers.

This phenomenon need not apply to every group. Libertarians are united on a central principle -- individual liberty -- and their policy positions show it. (They sometimes argue about how to derive or apply the principle, but that's a different matter.) Their policy preferences are predictable when we know that principle. Tribal policies are predictable because we know the color of the jerseys. What does support for abortion rights have to do with high taxes on the wealthy? What does opposition to abortion rights have to do with support for tariffs on Chinese goods?

How do people choose a tribe if not by principle? Lewis and Lewis say that a person's choice can have a variety of sources: parents, friends, a single heartfelt issue (abortion, say), or a charismatic leader. But once he's joined, his incentive is to embrace the whole package deal. Exceptions exist, but they are exceptions.

So enough with left and right, conservative and progressive (or liberal). Those labels obscure thought and fuel tribal antagonism. They are also harmful to libertarians who would benefit from public clarity. The only phrase I dislike more than conservatives and libertarians is libertarians and conservatives.

TGIF: Why the State Is Corrupt

Why is government corrupt? You'll notice that I did not ask, "Is government corrupt." We've had enough experience to go right to the main question. I might have softened it with the phrase tends to be to acknowledge that not everyone in government is corrupt, at least not in the conventional sense. Lord Acton's statement was, "Power tends to corrupt, and absolute power corrupts absolutely" -- although I wish he had added, "Power also attracts the corrupt."

At any rate, we have a question on the table. Let's go beyond the easy answer. Obviously, any government is intrinsically corrupt because it uniquely has the widely approved ("legitimate") power -- for "the common good" -- to use physical force against others who never used force against anyone. The state's personnel should know that they benefit at others' expense on the basis of this dishonest claim.

For most of the public, of course, that's not corruption. Thank the government's own schools in large part for that. As philosopher Michael Huemer points out, in challenging political authority (as others have), most people have no problem with government officials doing things by force that would be condemned if anyone else did them. No one thinks it would be proper for non-officials to extort money from their neighbors to feed hungry people or to pursue another good cause. For the government, the rules are different. Why? Huemer demolishes the popular answers. (See his The Problem of Political Authority.)

Let's leave that aside and look at what everyone would consider corruption (at least if the opposing team did it). That includes politicians or bureaucrats who benefit financially or otherwise from performing certain actions. When such transactions become known, we call them scandals. These involve privileges in the proper sense of the word, not the pseudo-privileges implied by the weird terms overprivileged and underprivileged.

So why is such corruption endemic around the world? It doesn't take much imagination to see why; it relates to the more fundamental kind of corruption already discussed. Certain politicians and bureaucrats are close to the power the government has to hand out other people's money, both directly and indirectly. A subsidy is an example of direct distribution. A tariff or competition-stifling regulation is an example of indirect distribution. In both sorts of cases money is politically and coercively transferred from some people -- taxpayers, consumers, disfavored businesses  -- to a favored person, business, or industry. Inflation, brought to you by the Federal Reserve's money creation and government borrowing, is another way to transfer wealth through the shifting of purchasing power.

Since some officials have access to such transfer power, other people outside the government will seek to benefit by currying favor with them. Reluctantly, some business people may do so just to keep up with competitors who are doing it.

History is full of stories of benefits provided to politicians and bureaucrats in return for political favors: outright bribes, campaign contributions, expensive vacations, post-retirement jobs, sinecures for family members (even relatives of presidents, if you can believe that!), and more. The buyer of favors might even be a foreign official who wants better treatment for himself or his government. Let's also acknowledge that the favor sought might be something that libertarians would approve of, such as the repeal of an unjust government policy, such as a tax, regulation, or trade embargo. Ironically, corruption could serve a good cause.

Of course, some people in government will not be tempted by corrupt offers, but others will be, and still others will be disappointed that no offers are tendered. It will be hard for voters to tell who's who. As for those who accept such offers, it would not necessarily mean they are malicious. They may really believe they are promoters of the "public good" and deserve to stay in power and enjoy its perks. I'm not saying that's a good excuse. We know how the road to hell is paved.

We shouldn't be shocked by scandals, but we should be perturbed. Attempted reforms such as mandatory disclosure and the like have not shown notable success. Proximity to power holds temptations that many will find too good to resist. As the Public Choice school of political economy teaches us, people don't become saints the moment they take government jobs.

The only way to change this is to radically reduce, check, and decentralize (if we can't eliminate) government power.

 

TGIF: On "Giving Back"

P&G, the maker of popular household brands like Tide and Downy laundry products, is giving away $10,000 in college scholarships. That's $1.5 million and 150 scholarships in all. My problem, aside from its encouraging college attendance, is with how the company is promoting the program. The television ads proclaim that the company sees the scholarships as a way of "giving back." I've written about this before, but some further thoughts might be useful.

So, to whom does P&G wish to give back? Not to existing customers exclusively. The only eligibility requirements are U.S. residency, a minimum age of 16, enrollment in or acceptance by an undergraduate program, and free registration at P&G's website. The online application does ask applicants if they are first-generation college students and where they do their laundry, which sounds creepy. The program is called a "sweepstakes", and multiple entries are apparently allowed, so the winners are apparently picked randomly. The winners' checks will be sent to the schools.

The "payback" angle that P&G touts will sound good to many people. ("Aw, that's so nice.") I suppose P&G never even considered entries by saying:

Because we at P&G are always looking for ways to increase our profits by creating goodwill, keeping our current customers from looking at rival products, and luring new customers from our competitors, we are giving away 150 scholarships worth $10,000 each. We'd prefer you to just buy our great products, but if that's what it takes to get good publicity, so be it. Enter today!

That would offend too many people, though pro-market and pro-free-enterprise people like me would be approvingly amused. Why call it "giving back"? Unearned guilt, what's why.

Adam Smith famously wrote that we do not believe the grocer puts food on the shelves because they are nice people (which of course they may well be). They do it because that's how they earn a living. Smith wasn't being pedantic. He was acknowledging that shoppers already know this. He writes, "We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." (Sometimes we talk of our own necessities, for instance, when we can't find what we want. But we know the grocer doesn't help us out because he loves us.)

The "logic" of payback addresses the matter from the seller's, not the buyer's, side. Smith could have addressed grocers by writing:

It is not from the benevolence of the customers that you expect your income but from their regard to their own interest. You address yourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Telling this to merchants would hardly be necessary. No merchant thinks his customers are doing him a favor by shopping in his store. A salesperson asks customers, "How can I help you," not "Here's how you can help me." It's true that when transactions are complete, both the merchant and customer typically express gratitude. It's what John Stossel calls the double thank-you moment. That's an interesting peculiarity of markets. The people on both sides of the counter seem grateful. Each party knows that the other could have been somewhere else. But at the same time, each knows that the other is (properly) acting in his own self-interest. Maybe that is why we are all grateful. Or maybe we're unwittingly approving of the harmonization of diverse interests in a market setting.

P&G and every company that claims to be "paying back" act as if they think we're stupid -- that we buy to help them out and so are owed something. But I don't think that's what such companies really believe. I think they talk about payback because they, like nearly everyone else, suffer from antimarket bias. Even business people have absorbed the view that profit-making is exploitative. To assuage the guilt, they "give back" to their victims. That is sad. It's also wrong. In the absence of coercion, fraud, and government favors, no exploitation occurs.

When two people trade, we know that at that moment each is confident he is getting more than he is giving up. The trade would not happen otherwise. Afterward, one or both may have regrets, but that's a fact of life when you're fallible. Note, though, that in our competitive economy, sellers, eager to win customers, accept returns, no questions asked. That was unusual not so long ago.

As for the seller's profit, in its financial sense it results when buyers value a product so much that they are willing to pay more for it than it costs others to make and provide. It's a reward for the welfare-enhancing service of correcting price discrepancies.

Profit's bad reputation is unearned, But it's not true that only sellers can make a profit. Buyers do also, though in a non-financial sense, because they prefer the thing they obtain to the money's alternative use. Moreover, to the extent that they pay less for an item than they were willing to pay, buyers make an additional profit. No exploitation occurs, of course.

Trade is the harmony of interest on glorious display, and we should celebrate that freedom makes it possible. Now if only we could find a way to get the favor-granting politicians and bureaucrats out of the way.