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What Social Animals Owe to Each Other

Friday, April 09, 2021

TGIF: The Fraught World of Second-Bests

When discussion turns to how to make government "better," however any particular person would conceive that condition, libertarians understand that we are in the fraught world of second-bests. In other words, because of the nature of the state, no solution that merely attempts to reform it will be or could be truly satisfying. The system will continue to feature exploitation, rent-seeking, public-choice and knowledge problems, and worse.

We have an example of this in a recent Soho Forum Debate in which political scientist Terry Moe of Stanford University and Gene Healy of the Cato Institute argued over whether Moe's proposal for federal legislative fast-tracking, which is intended to enable presidents to eliminate congressional obstruction, is a good idea. I think Healy, a long-time critic of "the cult of the presidency," won the debate, but that of course doesn't mean that leaving things as they are is a good idea. Healy would agree.

Moe would add a feature to how Washington does things. His constitutional amendment would empower presidents to put legislation on a fast track. Thus within, say, 90 days after introduction, both houses of Congress would have to vote up or down on the president's bill--no committees, no amendments, no filibuster. Legislation could still be handled the old-fashioned way. Members of Congress could introduce bills that would go through the committee process of both houses and would be subject to amendment. Presidents could still veto those bills. Any prevailing filibuster rules would apply. Moe would simply put another arrow in a president's quiver.

Why does Moe want to do this? (It's not unprecedented, as Moe acknowledges: Congress has legislated that trade bills can be fast-tracked in this manner.) Simply put, he thinks the federal government is failing the country and has been doing so for a long time. The system set up by the framers of the Constitution, he says, is obsolete: they were operating under far different conditions from today's, and it's long past the time for change. Specifically, the system has too many "veto points" at which legislation can be derailed, resulting in paralysis and a dire failure to address important matters. (He offers immigration reform as a prime example.) The system all but assures that nothing happens, Moe insists, and we simply can't go on this way any longer.

One can readily acknowledge that things are not good now without embracing Moe's or any other particular reform. After all, it's always possible to make thing worse. 

I guess if your priority is the passage of legislation--any legislation--Moe's proposal would be appealing. But who judges Congress merely by how many bills it passes? (Come to think of it, some newspapers apparently do.) Quality is more important than quantity. Different people will evaluate the difficulty in passing bills differently depending on what they think the government would do with a free hand.

For people who love individual liberty, the first thing to notice is that legislative obstacles are bad only if the likely legislation would reduce government power and expand government respect for freedom. Gridlock, however, is good (with qualifications below) whenever it blocks government interference with peaceful private conduct, whether "personal" or "economic." (I regard this distinction as pernicious. Economic liberty is personal liberty; making and spending money in pursuit of one's life projects are as personal as human activity can get. Dividing liberty into two spheres, an idea endorsed decades ago by the Supreme Court, has been catastrophic. The courts scrutinize limits on freedom of speech and religion far more stringently than they scrutinize limits on the use of property. See my What Social Animals Owe to Each Other.)

The reverse is also the case; libertarians would applaud fast-tracking for bills that would remove restrictions on liberty, but oppose it for liberty violations. The problem is that exclusively pro-liberty fast-tracking is not likely to be adopted by the powers that be. Since bad bills easily outnumber good ones, fast-tracking would be no welcome reform.

This might suggest that gridlock is the best we can hope for in the current world. I have tended to think that is the case, but I things aren't that simple. As Healy points out, the libertarian preference for gridlock must be tempered by the fact that stymied presidents can turn to executive orders to get what Congress refuses to given them. Recent presidents have done this often. So the situation looks bleak. Reformed or not, the government will produce violations of liberty most of the time.

To be sure, Healy scored direct points against Moe's amendment during the debate. For some matters the proposal terrifies him. For example, George W. Bush wanted a much broader authorization for the use of military force after 9/11 than Congress gave him. Had fast-track been the rule, Bush would probably have gotten his way because members of Congress would have been afraid to vote against him after the horrific attacks. Could the government's war record since the start of the century been worse as a result? Maybe.

On the other hand, Healy suggested that Moe's amendment might not change things all that much. With fast-track the houses of Congress could defeat a presidential bill, then introduce something similar in the traditional manner, allowing amendments, etc. It occurs to me that presidents hoping for legislative success might informally negotiate with members of Congress to arrive at a bill that has a good chance of being fast-tracked even through houses in the other party's hands. Thus fast-tracking might accomplish much less than Moe expects.

We should be surprised by none of this. That the state--an irredeemably flawed and predatory organization--cannot be satisfactorily reformed is unremarkable. Conceived in sin and conquest, the state is based on the principle that some people should be empowered to coerce other people simply for living their lives in peaceful yet disapproved ways. Thus the only true reform is abolition.

Friday, April 02, 2021

TGIF: Targeted Advertising Violates No Liberty

Last week I modestly attempted to show that no injustice takes place when A sells B the opportunity to pitch its product to C. This is the principle behind print, television, and radio advertising, and it is no different in the era of social networks like Facebook. In principle, the commercial act I've described is similar to many other commercial acts. Someone has a megaphone and rents it to someone else, who then uses it to convey product messages to others. Where's the objection?

But this does not dispose of the matter because many people are bothered that the social networks collect information about their members, which advertisers may buy in order to tailor and target their merchandising campaigns for maximum effect. The thing that bothers critics seems, certainly a first glance, to make a lot of sense for all concerned. A car company quite sensibly would want to make its pitch to people who have already shown an interest in buying a car. It could waste a lot of money trying to sell cars without that information. Advertising is always iffy, so anything that increases the chances of success, however small they remain, may be worthwhile. On the other hand, people who want to buy a car could well appreciate that car dealers are seeking to direct commercial messages to them, and some (though not necessarily all) people not looking for a new car could well be glad to be free of such advertising, which they might regard as a nuisance.

The point is that when advertisers acquire information about potential customers and narrow the pool, they benefit others besides themselves. We need not start off suspicious of such a practice. One thing markets do best is produce information, and generally speaking, access to consumer information is a good. 

Of course wanting and acquiring market research is nothing new. What's new is the sophistication of the tools in the information age. However, it is easy to overestimate the efficacy of those tools. We too easily think that the ability to acquire information is equivalent to the power to manipulate. That is wrong.

Before the information age, gathering market data was a more crude operation. When Chevrolet advertised on TV's "Bonanza" decades ago, General Motors had at least a rough idea about who was watching the western each week. The networks did research--does anyone remember the Nielsen survey?--and that information was available to advertisers. There was no point in trying to sell Chevys to 6-10-year-old children. I suspect most people were not bothered by such research, although principled opponents of the market surely were.

But today's advanced online marketing research bothers many people because of how it is gathered. It's understandable. When we visit websites and or use social networks, we leave electronic trails unless we undertake efforts to avoid doing so. Everything we do online expresses our preferences to some degree, subject to recording; for a long time we've been on notice that this is the case.

We are also on notice that for a price such information may be made available to people who want to sell us things. We are free, though it may not be costless, to avoid leaving trails by using web browsers that protect privacy, such as DuckDuckGo or Startpage. Also, users may eschew social media if they find their privacy options inadequate or nonexistent. Granted, reading user agreements and navigating the privacy settings can be perplexing, but the market addresses that problem through online experts who often advise lay people on how to protect their privacy on the social networks. We live in a world of trade-offs, and we try to choose the mix of costs and benefits that best suits us as individuals.

Most people understand the trade-offs and are willing to give up some information in return for the convenience and fun of online activities. But others are upset to the point where they want the government to regulate or even stop the social networks and other platforms. Advocates of liberty would have to object to government interference beyond redress for fraud and breach of contract. As a general matter, making data from market research available is not only unobjectionable but ought to be welcome.

Let's not forget that placing an online ad before a group of people is no guarantee they will click on it, and clicking on it is no guarantee that they will buy the product. Consumers are in control. Why do critics of the information age insist on portraying us as puppets?

To sum up, research and targeted advertising is generally good in a variety of ways. Advertisers can waste less money. Entrepreneurs can refine their estimates of which consumer needs have been overlooked. And consumers can minimize their exposure to annoying and irrelevant ads. People wishing to opt out can find ways. 

One downside to the preoccupation with research-based online advertising is that the real threat to privacy--the government--gets too little attention. In the morality play, social networks and advertisers are bad and government regulators are good. But we've long known how little government at all levels respects our privacy. Information-age technology has aggravated that situation by orders of magnitude, as Edward Snowden showed us some years ago. Yet Congress keeps reauthorizing the executive branch's authority to spy on us (and people abroad) with impunity. Something's wrong when this is of less concern than Amazon's ability to tell me that it has what I was looking for last week.

What's the bigger threat: a company that buys information we've given up in order to sell us things, or the state, which ultimately seeks to control us?

Friday, March 26, 2021

TGIF: The Bias against Advertising

People who dislike markets harbor a special animosity toward advertising as cynically controlling. This is not new. In the mid-20th century John Kenneth Galbraith and other market opponents condemned advertising as business's way to manipulate people into buying things they had no real need for and actually didn't want. To hear them tell it, the consumer is not an agent but a puppet, with advertisers as the puppet masters.

This position was and is wrong--Galbraith and his colleagues, I suspect, did not think they were helpless buyers--and it was debunked by sensible people, including Israel Kirzner, the great economist of the Austrian school and student of Ludwig von Mises. After all, advertising is information about products, including products many people may be unaware of but would be happy to learn about. Sure, ads try to be attention-grabbing, but so what? People are busy, and information is all around. So the value of advertising is obvious.

This point is not undercut by the undoubted fact that manufacturers present their products in the best light possible. Part of growing up is acquiring a degree of skepticism about the claims made in advertisements. As long as government doesn't impede competition by blocking entry into markets and as long as consumers have recourse for actual fraud, consumers can be reasonably protected from false information. The value of advertising thus stands untouched.

The claim that ads can easily manipulate consumers is refuted by history and everyday events. If it were true, no business that advertised would fail. But businesses fail every day. The market antagonists who attacked advertising in the 1950s and '60s apparently missed the story of the Ford Edsel, a notorious example of a heavily advertised product from major company that flopped spectacularly.

Alas, we're usually wrong to assume that when a proposition is thoroughly debunked, it disappears and is never spoken of again. That would be nice, but in fact, advocates of freedom well know that hoary falsehoods must be refuted over and over for each new generation if not more often than that.

So the attack on advertising is still with us. Anyone who has seen the Netflix video "The Social Dilemma" will understand this. The program is an attack on all the social-media platforms for, among other things, cynically delivering helpless customers to businesses that want to sell them things. The program goes so far as to feature a retired Harvard Business School professor who said that Facebook et al., are simply "markets that trade human futures"! That sounds horrible, of course, but what she could have meant is anyone's guess. In a real futures market, people buy and sell options to engage in future transactions involving commodities at prices set in the present. The parties certainly do not buy people, and neither do advertisers on Twitter and the other platforms.

What do they do then? They pay the platform for the opportunity to place their product messages before potential buyers. Stated that way, the process sounds rather benign, and that's because it is.

It also should seem commonplace because it is. This is how print and broadcast media have long made money. Is a newspaper less of a news medium because it sells car dealers and funeral homes space in which they can pitch their products and services to readers? Are radio and television stations not really entertainment and news media because they sell time to businesses to make pitches to listeners and viewers? Is something wrong with commercial billboards? Are potential consumers merely helpless pawns of the advertisers? Of course not.

Broadcast advertising was an ingenious solution to a vexing free-rider problem. With old-style broadcast, a station or network could not charge consumers for its programs. The signal was transmitted, and anyone with a receiver could enjoy the programs. People were able to be free-riders, so as a business model, the drawbacks were substantial. (Entirely viewer-supported programming might work in some circumstances.) Luckily, some bright entrepreneur hit on the idea of selling advertising time to soap and soup companies. In return, the companies got the opportunity to pitch their wares to potential customers.

But notice that buying time did not guarantee that anyone would watch or listen to commercials. Many people instead broke for the kitchen or bathroom. And even if they stayed in their seats, that did not guarantee they would buy what was being offered. But they might, and advertisers were willing to pay for that chance.

Consumers are not puppets. They are human agents with preferences and interests. And they can take as active a stance toward advertising as they choose.

All of this applies to the social media. Even if advertisers have access to all the data that participants choose to give away through their online activities, it is no assurance either that they will click on ads or that they will buy the products even if they do click on ads. It's been pointed out that in 2017 only 0.9 percent of Facebook ads were clicked on. I'd like to know what percentage of clickers actually bought something. That hardly supports the claim that the social media are diabolical platforms for manipulating helpless people on behalf ruthless sellers.

So much for the hysterical insistence that Facebook et al. collect so much data on their participants that they can predict with great precision any individual's behavior and thus guarantee success to their advertisers.

This does not mean that the social media are beyond all criticism. One can be rightly irritated by their condescension toward participants, as when they suppress controversial links, and other objectionable features. But among their least objectionable features is they sell businesses the opportunity to pitch their products to us.

Friday, March 19, 2021

TGIF: What's Wrong with the Welfare State

Let's start with what is not wrong with the welfare state.

Much criticism of the welfare state focuses on how it encourages dependence not only on the government, but dependence on others per se. In some circles the wish for a social safety net is disparaged as a moral flaw encouraged by people who want to subvert humanity in general and the original liberal, or libertarian, project in particular. The welfare state is said to clash with such alleged and desirable virtues as rugged individualism and radical self-reliance. In this view the welfare state robs human beings of their essential character as independent persons--that it corrupts them with handouts and makes them parasites on the labor of others. (Such corruption of character cannot be ruled out as a consequence and can be found in some degree in the United States, but it is not inevitable because culture surely plays a role in how people respond to political incentives. See the case of Sweden and other countries in Scandinavia, which combine a "generous" welfare benefits with a substantially free-enterprise system.)

You ought to be able to spot the problem in the first step of this criticism of the welfare state. In the original liberal project, rugged individualism and radical self-reliance were not guiding principles because it was understood that people have always lived socially. The first liberal theorists knew this and had no wish to change society or human nature in that respect. In other words, people were always interdependent and dealt with one another in continuous mutually advantageous ways. That's what society is. A human being living in isolation is not fully human.

Of course the ways of social living changed over time. For example, circles of trust grew, transcending family ties, and the division of labor expanded as technology and political institutions permitted. Dealing with strangers, once unthinkable and highly risky, became increasingly common as people glimpsed the gains from trade and other benefits of social contact. The ideal was to live interdependently to mutual advantage with others. Thinkers like Frederic Bastiat in the 19th century understood that well.

What's the appeal of social living? The question really doesn't need answering because the truth has been so obvious since antiquity. Peacefully interacting with others as a way of life magnifies our individual intellectual power, our ability to produce, and out emotional satisfaction. For example, as a practical matter, an individual may know something about a subject, but that person surely won't know everything about it. Much is to be learned, then, simply by talking to other people, not to mention reading what others have written. A person is likely to learn more about a subject even when talking to an ignorant but inquisitive counterpart because just answering questions can lead to an extension of one's knowledge though the emergence of overlooked connections. John Stuart Mill had this sort of thing in mind when he wrote in On Liberty, "He who knows only his own side of the case knows little of that."

Society extends our intelligence. But that's just one of the many benefits of social living.

Aristotle makes the point that continuous peaceful interaction with other people is the rational mind in action. As reasoning animals, we need that to live according our essential nature. Justice, respecting people's rights, that is, the commitment to interaction via reason, fosters the flourishing of everyone concerned.

An obvious fact bearing on this subject is that social life takes place in a world of uncertainty. No one can know what personal and social misfortune lies ahead. Therefore everyone has an interest in hedging against calamity. Insurance, the pooling of risk with others, is an old institution, and no one would say that someone who buys insurance against bad luck is shirking his duty of self-reliance or seeking unreasonable dependence on others.

This point should sit well with any advocate of individual liberty and global free markets in which people, goods, and money moved around according to the preferences of the individuals involved.

Superficially, the welfare state can look like nothing more than than the formalization of this legitimate liberal (libertarian) social welfare principle. That could explain why most people accept the welfare state to some degree. Welfarism can appear to be a proper plan to address our entirely reasonable concern about the risks of an uncertain future. You pay in when things are going well; you draw out when they aren't. That's where libertarian analysis comes in. For the welfare state's appearance is misleading. Moreover, the state's underlying flaws point to a better way not toward fostering fictional atomistic individualism, but toward a moral and more effective way to address our rational need to hedge against an uncertain future.

Then what is wrong with the welfare state? The two biggest flaws stem from its nature as a government institution. The welfare state is coercive, and it is monopolistic and anti-market. As a tax-financed institution, the welfare state is obviously coercive. The fig leaf of democratic representation aside, taxes are compulsory payments. They are not like club dues or prices in a shop. As a taxpayer, you cannot say no.

It follows that a tax-financed arrangement has little in common with a market or noncommercial voluntarily financed service. If consumers are free to say no and buy elsewhere--as taxpayers are not--then service providers must be responsive to customers in a way that no government must be. Otherwise, they could go out of business. Moreover, free consumers provide critical feedback to providers, which tends to improve service.

On the other hand, a government system is subject to what are known as public-choice and (Austrian-school) knowledge problems. That is, first, the bureaucrats and politicians who run the system have their own personal agendas (like career advancement and power) that may have little to do with the good of the people they ostensibly serve, and second, even if their incentives were perfectly aligned, they couldn't know what they would need to know to do the best job possible because the competition and consumer feedback that freedom generates would be absent. Ludwig von Mises showed that without market-generated prices, economic calculation and hence efficiency in the use of scarce resources are impossible, and F. A. Hayek showed that crucial knowledge related to what would serve our well-being is scattered throughout society and much of it is never articulated. The only way to obtain that knowledge in a usable form is via the prices that emerge when people are free to express their preferences through market activity.

These are serious practical flaws. Because of incentive and knowledge problems, even a modest welfare system that at first addressed only actually unfortunate people may not stay that way. Political dynamics may tend to bring expansion far beyond the original mandate, leading to fiscal problems, slowed economic growth, and liberty violations. And because of knowledge problems, blunders could abound in the absence entrepreneurship to sniff out and correct error.

In contrast, since all participants in an unmolested competitive marketplace and the larger noncommercial voluntary sector are free, providers have to work to win consumers over, that is, to persuade them that their offerings are superior to those of competitors. Hence, they must innovate, exhibit entrepreneurship, and find ways to lower prices and enhance quality. It is no accident that the market, even a heavily regulated one such as ours, displays more imagination than governmental service providers. Competition makes it in people's interest to spot and correct errors.

These considerations lead us to conclude that what's wrong with the welfare state is not that it caters to people's concern with uncertainty, but that it does so in a coercive and inferior way to other alternatives that would be available if the government did not crowd them out. That's a damning indictment. (It has also been shown that the welfare has been politically intended to keep poorer people who have been exploited through crony capitalism from rocking the boat by giving them money and other benefits and so keeping them quiet.)

What are the alternatives? We can point to two broad categories: for-profit market institutions and what were once known as mutual-aid organizations. The first group would include commercial insurance firms of all kinds. The second are voluntary organizations that are cooperatively owned by their members. The largely unknown history of mutual aid offers excellent ideas on how people can grapple with uncertainty without the coercive state. (For details see David Beito's landmark work From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890-1967.)

In their heyday mutual-aid organizations, also known as lodges and friendly societies, were largely working-class associations that not only provided an arena for camaraderie but also elaborate methods of obtaining a variety of insurance benefits and even medical care, including hospital services. It was an extraordinary chapter in American (and British) history that holds the key to replacing the costly, debt-ridden, and ever-expanding U.S. welfare state with a free, innovative, and flexible arrangement capable of catering to a variety of needs in an uncertain world.

Who knows what services would be available today had mutual aid not been subverted by the welfare state?

TGIF--The Goal Is Freedom--appears on occasion Fridays. Topics discussed here are also addressed in my What Social Animals Owe to Each Other and Tethered Citizens: Time to Repeal the Welfare State.)

Friday, March 12, 2021

TGIF: U(nspeakably) S(adistic) Foreign Policy

If you had set out to construct a foreign policy designed to impose indescribable suffering on millions of innocent people around the world, you'd have a tough time coming up with anything more systematic and effective than U.S. foreign policy. An inventory of U.S. direct military and covert operations, aid to savage governments and murderous "rebels," and economic sanctions would easily lead one to think that the architects of this constellation of policies aimed to inflict death and maximum pain on innocent bystanders. It has been one series of crimes against humanity.

That would be an oversimplification of course. Clearly, the makers and executors of those policies have not merely aimed to inflict such suffering on innocents. Larger geopolitical goals have always been in play. But that by no means mitigated the results, which have been foreseeable and avoidable. Besides, the geopolitical goals are themselves to be condemned, seeing as how they flow from U.S. rulers' "exceptional nation" zeal to shape the world according to their idea of what's good.

Nor does it help to point out that the foreign regimes and other targets of U.S. policy have often perpetrated unfathomable brutality against innocents. The fact is that U.S. intervention predictably enlarges local and regional violence by orders of magnitude. So other people's crimes are no excuse for U.S. piling on.

Over many years, from Latin America to Africa, the Middle East, and throughout Asia, U.S. policymakers have imposed great hardship in a variety of forms: open combat through invasion and occupation, covert activities, and aid to allied repressive governments and insurgent groups aiming at regime change.

And then there are the economic sanctions. The U.S. government seems ready to impose sanctions on a population at the drop of a hat. (Thomas Jefferson called sanctions "peaceful coercion" presumably because shots need not be fired.) News of sanctions gets good play in the media. They may even bring sighs of relief if the public sees them as a substitute for sending American troops into yet another endless war. But detailed media follow-up is rare, and the real story of suffering is rarely told. On their own, most people won't give the sanctions on any given country a moment's thought, much less use their common sense to trace out the lethal implications. They certainly won't read sources that specialize in meticulous description of the ugly consequences.

Sanctions of course cut the target population off from global trade/finance and humanitarian assistance. The policy is meant to keep building materials, food, medicines, medical equipment, and other critical goods from reaching the victims of the policy. These are not unavoidable and unfortunate secondary consequences or collateral damage. They are the prime objective. That is nothing less than policy sadism, crimes against humanity.

Often sanctions are defended on the grounds that they will cause the stricken people to rise up and overthrow their bad rulers. But does that ever happen? It appears not. (The U.S. government has had sanctions on Cuba and Iran for a very long time, to name just two stark examples.)

Instead, people rally around "their" existing government in opposition to the cruel foreign government that is making their lives miserable. That's the most likely reaction, and it's unreasonable to expect otherwise. (Not that the policy would be justified under other circumstances.)

As has been pointed out so often, sanctions also give the government of the target country a plausible excuse for its own home-grown economic disasters. A government that tries to centralize economic activity according to a top-down plan will always fail miserably, creating terrible hardship including starvation  and disease for the public. In the absence of foreign intervention, the target public might figure out that the hardship is the government planners' fault, and that could lead to some kind of movement for change, possibly toward a free or at least freer market-based society.

But if the country is the target of sanctions, especially imposed by the powerful U.S. government (which has the clout to force other governments to comply), the local rulers can blame their own shortcomings on the outside intervention--blockades, boycotts, and the like--and survive. The self-serving rulers may even be able to throw in credible allegations about CIA-sponsored "liberal" insurgents because this sort of thing has happened often before. Most people in the population won't have the information necessary to understand their rulers' crimes and so will continue to look to those rulers for assistance in hard times. Savvy governments will score points by providing some relief to at least part of the population. Meanwhile, the rulers will demonize America, perhaps even creating conditions in which terrorism takes place.

In other words, sanctions may be counterproductive even from the point of view of the U.S. government. This, however, may not be the case if it wants to sow chaos in the target country and use terrorism as an excuse to violate civil liberties at home. That, too, of course would be sadism in action.

While I've focused on the harm U.S. sanctions inflict on the target populations, we should also mention that they have bad consequences for Americans who are not part of the policy elite. Sanctions obviously forbid them from trading with the target populations, harming firms and their employees and shareholders. This should not be overlooked, though the primary victims are the people of the target countries.

The upshot is that in the name of the American people but without their real consent, the political elite casually imposes unimaginable cruelties on foreign populations in pursuit of objectives that are not in the interest of Americans. The ordinary people of the target countries simply do not count in the policymakers' global gamesmanship. They are expendable. This is intolerable. Somehow the mass of the American people must be made aware of this long-standing cruelty so that they may be enlisted in a campaign to finally end the unspeakable sadism.

TGIF--The Goal Is Freedom--appears occasionally on Fridays.

Friday, March 05, 2021

TGIF: That Old Minimum-Wage Magic

You don't have to actually think that legislating and raising the minimum wage will help low-skilled workers earn more money. That's not the point. The point is to display your correct political religion. Today favoring stepping the minimum wage up to $15 an hour is part of the so-called progressive dogma, or civic religion. Progressives who oppose $15 would likely have their credentials questioned or yanked. They would be branded heretics on Twitter. And religiously minded people, even if the religion is secular, rarely like heretics. They must be rooted out, shamed, and if possible, induced to recant.

What gives force to this take on the subject is that the case against legislating a minimum wage is nothing like rocket science. It's rather simple logic. If someone can't produce something like $15 worth of goods or services in an hour, why would a law forbidding any wage below $15 help that person? Common sense would tell almost anyone that it will be of no help whatever, and studies bear this out. You may ask how wages and productivity are determined, and the answer lies in the competitive market process. Arbitrariness is driven out by rivalry among entrepreneurs trying to maximize their profits. (More on this below.)

So someone whose productivity is below $15 won't be hired, and those with jobs may well be fired and replaced either by people with higher skills (which is why unions support the minimum wage) or machines. Either way, that's not good for the stated beneficiaries of the law. It wouldn't be the first time that the stated beneficiaries of a policy turn out not to be the same as the actual intended beneficiaries. Many lies go into policy-making. Remember Bismarck's insight that it would be better if the people didn't see how laws and sausages are made. Better for whom?

Okay, maybe not every low-skilled worker will lose the job. Employers have avoided firing people (not necessarily a pleasant experience or good for morale) by cutting other aspects of a job. Maybe, in firms' efforts to cut their losses, the workers will have their hours reduced so that total payrolls don't change, or workers may lose other on-the-job opportunities and noncash benefits, such as formal training for advancement and other amenities. That's not necessarily an improvement for low-skilled workers.

Depending on particular market conditions, companies may be able to pass a wage increase on to consumers through higher prices. But let's not forget that many consumers also have low incomes, so where is the general gain in welfare? If people eat fast food less frequently because of the price hike, how does that help workers? One thing we can predict is that the least-efficient firms may be driven out of business, killing jobs for more than the unskilled.

The point is that Adam Smith's invisible hand will continue to operate. Companies will find ways to avoid losing money. They aren't charities after all; they're businesses. If they go out of business, all their employees will lose jobs. People who want to help low-skilled individuals should find other, peaceful, ways that don't impose requirements on others, especially when they harm the vulnerable in the process. If you really want to help, find a charity that assists the low-skilled to gain the skills they need to make higher wages. When the competition (including from small-scale self-employment and cooperative management) is free, wages tend to correspond to productivity, so the key is to improving low-skilled workers' wages is to increase their productivity. Mucking with the price system is the wrong way to go because prices, including wages, are indispensable signals that guide our activities in a world of scarcity. If government distorts the signals (which it does in many ways), it misleads individuals as they try to improve their situations. (It's a sobering thought that our well-being hinges on people learning to appreciate something as so seemingly boring as price theory. It's not really boring.)

The government can help low-income by removing the myriad barriers to improvement, starting with the monopoly schools, which give no more than crumbs to kids growing up in lousy circumstances. Also on the policy hit-list should be occupational licensing, zoning and other land-use controls, intellectual property laws, and anything else that bars or impedes free-lance competition against vested business and labor interests. 

This assumes the minimum wage is well-intentioned. While I'm willing to assume that most people who favor it do mean well, can that really be said for organized labor, whose members make far more than even $15 an hour? Maybe labor organizations are willing to spend so much on lobbying for the wage because they anticipate that when low-skilled workers are let go, higher skilled workers, potential union members, will take their place. We should also understand that in early days, progressives caught up in the eugenics movements favored the minimum wage as a way to keep undesirables out of the workforce.

Some defenders of the minimum wage will insist economic theory is on their side. But when will they explain how a worker who is worth $15 an hour persists in being paid less than $15? Even in our government-saturated economic system competition exists for low-skilled workers; the fast-food industry is just one example. If workers really do produce $15 worth of value in an hour, why hasn't the wage been bid up simply through competitive hiring among all the fast-food rivals? It has not been explained why alert fast-food entrepreneurs haven't offered a wage somewhat higher than the prevailing wage to lure the best workers. That competitive move would set in motion a rivalrous process that would culminate in $15, if that is indeed the magic number under current circumstances. It seems unlikely that every fast-food owner and manager in the country once met in a room somewhere and agreed not to pay more than, say, $10. So what's the theory? Keep in mind that many fast-food and other low-skilled workers already earn more than the legislated minimum, $7.25. Ask yourself why.

There is no theory. Rather, as I said at the top, it's a religious creed and nothing more. Questioning it is a sin. But obviously it's not harmless. As one economist put it, the minimum wage has the same effect as a law banning low-skilled people working. Who would support that?

 

TGIF--The Goal Is Freedom--appears on occasional Fridays.

Thursday, March 04, 2021

Individual, Not National, Self-Determination Should Be the Goal

Jeff Halper, the American-born, Israel-based veteran human-rights activist is heroic. He has dedicated his life to working for justice for the Palestinian victims of Israeli settler colonialism, much of that as the director of the Israeli Committee Against House Demolitions. His new book, Decolonizing Israel, Liberating Palestine: Zionism, Settler Colonialism, and the Case for One Democratic State is the subject of a recent YouTube video, which I recommend to all who are interested in the struggle for freedom.

As much as I admire Halper, I still must take issue with him and many others in his camp on a basic issue: national self-determination. The issue is important because it is a key part of the collectivist-left outlook and therefore in conflict with libertarian individualism, which otherwise shares many of the same concerns.

Halper, like a growing number of people who have worked to bring attention to the Palestinians' plight, favors "one democratic state" in the land between the Mediterranean Sea and Jordan River. This position has emerged from the realization that the two-state solution is impossible in light of Israeli policy and actions in the West Bank, Gaza Strip, and East Jerusalem. These areas are still called "occupied territories," but in fact, after the more than half-century since Israel conquered them, they are more aptly called de facto annexed territories, with varying degrees of repression of the stateless non-Jewish residents. In January the most prominent human rights organization in Israel, B'Tselem, issued a report supporting its declaration that the entirety of the land between the sea and river, and not just the territories acquired in 1967, constitutes "a regime of Jewish supremacy." "This is apartheid," B'Tselem said.

I agree with these positions. For me they flow naturally from my commitment to individual rights, including the right to peacefully acquire and exchange things, even things like parcels of land. When individual rights are respected, we may reasonably speak of the right to self-determination. But regrettably, Halper and his colleagues don't talk so much about individual self-determination. They prefer to talk about national self-determination; they seem to see the oppression of individuals as merely a manifestation of the oppression of a national group. I find this odd. I would have thought that self-avowed left universalists would find the idea of national self-determination unappealing. It's true that the slogan has been used by groups striving to break free from an empire. But nationalism and national rivalries have cost many lives and caused much misery over the centuries. So why does the left emphasize national self-determination rather than individual self-determination? Nations after all don't have selves. People do.

I wonder if it's because the collectivist left senses that individualism clashes with their basic beliefs. It suggests a framework that is pro-market, pro-trade, and -- horror! -- pro-private property--things they do not generally like.

What I want to say to such leftists is that, with respect to Palestinian justice, they can't get where they want to go by confining their analysis to national self-determination.

This is clear from Halper's interview. He says he supports both Palestinian and Jewish national self-determination and insists that an exclusive nation-state is not required for it to be realized. (This may strike one as odd since Palestinian refers to geography and Jew refers to religion.) All that's required for national self-determination, Halper says, is for a group to control its culture (whatever that means), resources, and land. But if he's right, how can a program of national self-determination for both groups get him where he wants to go, namely, to a non-supremacist state in which both groups can coexist?

The very heart of the controversy as it is generally understood is a dispute over who the land belongs to and who should control it: the group that has lived there continuously for the last millennium-plus -- mostly, Palestinian Muslims, Christians, and secularists, along with other, including Jewish, communities -- or the Europeans (of the Zionist movement) who arrived only a bit more than a century ago for the explicit purpose of changing the land into a Jewish State by dispossessing most if not all of the Palestinians. (Many of the Europeans in this group were complete secularists, even atheists, who nevertheless called themselves members of the Jewish People. They thereby invoked the same discredited racial theory that was rejected by liberal-minded people when it was espoused Europe in the 1930s by those who wanted to murder Jews.)

Halper's embrace of national self-determination for both "national peoples" in Israel/Palestine, then, can't be the path to peace and justice because it resolves nothing.

But we need not despair. We can still hope for peace and justice. How? By jettisoning national self-determination in favor of individual self-determination. After all, the rights that the Zionist project violated, and continues to violate, are not national rights. They're individual rights. Identifiable Palestinians were expelled by European Zionists from homes and real estate that they demonstrably owned. (Pre-Zionist Jews also legitimately owned property in Palestine, and their rights should be respected in any new arrangement.) Those property-owning Palestinian individuals lived in the hundreds of villages that the Zionist militias destroyed in their quest to establish a Jewish state in 1947-48. Some of those Palestinian individuals still possess the keys to their old houses and the deeds to their old real estate.

In other words, this isn't about nations or peoples. It's about individual human beings with natural rights, including property rights. The Palestinian People were not killed, dispossessed, and plundered by the Jewish People. Rather, particular Palestinian individuals were victimized by particular European Jewish individuals (though again, most were secular and even anti-religious) who claimed to be acting in the name of an ethnic or racial entity. (In fact, Jews are of many races and ethnicities.)

I don't deny that in process of establishing a Jewish state, Palestinian culture was assaulted and even erased. What I'm saying is that culture is carried by individuals. You can oppress a culture only by systematically violating the rights, including the property rights, of many individuals. The individual is the unit of moral analysis.

The path to peace and justice, then, lies in a single classically liberal state in which the rights of all individuals, regardless of religion, race, or ethnicity, are respected. This entails the right to engage in commerce and to move about peacefully.

I discuss these and many issues, including the claim that Zionist organizations and individuals purchased all of the land from Palestinians legitimately, in Coming to Palestine.