TGIF: Liberty as a Problem-Solving Process

Strictly speaking, liberty isn't the solution to problems. It's what creates the framework in which solutions can be discovered. That is an important distinction because it reminds us that advocates of full-blown liberty do not offer the world a problem-free society but "only" a society in which problems are discovered and problem-solvers are mobilized as quickly, fairly, and efficiently as impossible.

To get this point across to students in lectures, I used to quote the the title of a 1970 hit record: "I beg your pardon, I never promised you a rose garden." Social troubles will not disappear with the emergence of full freedom, but the chances of spotting and addressing them will be maximized in the most just way. That's the best we can hope for in a world of scarcity and uncertainty. On the other hand, that's not too shabby, is it?

What makes this happen? The answer can be captured in a single word: incentives. In a free society people are rewarded--they profit--by spotting and solving problems or correcting errors, before others have done so. Self-interest is further aligned with the interest of others.

This aspect of social life has been developed for many decades by the most important economists, among whom I would spotlight those of the Austrian school. In the 20th century they include Ludwig von Mises, F. A. Hayek, Israel Kirzner, and Murray Rothbard, followed by a couple of later generations of social scientists who continue to work in this tradition.

If the incentive system is to work, people need to be free to offer solutions. The scientist Joseph Priestley (1733–1804), in writing about education, wrote that to discover the best methods, we need an environment characterized by "unbounded liberty, and even caprice." As Priestley also put it, "Now, of all arts, those stand the fairest chance of being brought to perfection, in which there is opportunity of making the most experiments and trials." (I wrote about Priestley's radical advocacy of freedom in education in Freedom and School Choice in American Education.)

The logic behind Priestley's idea isn't complicated. We don't always know if a method of accomplishing something will work--however good it may look on paper. It has to be tried. Since that's the case, we need a highly decentralized environment in which ideas can be tested. (I don't like the word system for what I have in mind because that suggests an overall design rather than what Hayek called "spontaneous order.") In a centralized system, trial and error would be dicey since the inevitable mistakes would be committed on a large scale, with little chance for individuals to opt out. But in a decentralized environment, mistakes are necessarily contained, readily observed by others, and then corrected by those who offer a different product or service.

Government agents face different incentives since government usually is the only game in town. In fact, they face perverse incentives: politicians and bureaucrats may prosper by the existence and even the exacerbation of problems. If an agency is failing, the solution most often is to appropriate more money! And since government centralizes approaches to problems, mistakes are committed on a large scale, especially when they are undertaken at the national level. Federalism can reduce the scale of error, but not nearly as much as the free market can because state and local governments lack other features of the marketplace.

This point turns the spotlight on another aspect of a free society: competition. Competition is what happens with one person thinks he or she has a better way of doing something than someone else does. The way to find out is to offer it to the public. This shows that competition and cooperation are two sides of the same coin, not opposites. But if the government erects obstacles to upstart competitors, the it throttles the process, and better ways of addressing problems are left on the shelf, if undiscovered at all.

Hayek called competition a "discovery procedure," which gets at a crucial point. I call competition the "universal solvent." We can find a similar idea in John Stuart Mill's On Liberty, in which he extols the truth-discovering value of the radically free exchange of ideas. (My favorite line from that book: "He who knows only his own side of the case, knows little of that.")

Freedom and competition make possible discoveries that would not have been found otherwise precisely because it is only in that environment--the market order--that people encounter circumstances and alternatives with respect to which they will demonstrate in action their true preferences--preferences they might not have expected to demonstrate. This is part of what is meant by "spontaneous order." For this reason, government planners cannot hope to simulate market outcomes. The planners are barred from ever knowing what would have happened if people were left free. As James Buchanan pointed out:

I want to argue that the “order” of the market emerges only from the process of voluntary exchange among the participating individuals. The “order” is, itself, defined as the outcome of the process that generates it. The “it,” the allocation-distribution result, does not, and cannot, exist independently of the trading process. Absent this process, there is and can be no order.”

...Individuals do not act so as to maximize utilities described in independently-existing functions. They confront genuine choices, and the sequence of decisions taken may be conceptualized, ex post (after the choices), in terms of “as if” functions that are maximized. But these “as if” functions are, themselves, generated in the choosing process, not separately from such process. If viewed in this perspective, there is no means by which even the most idealized omniscient designer could duplicate the results of voluntary interchange. The potential participants do not know until they enter the process what their own choices will be. From this it follows that it is logically impossible for an omniscient designer to know, unless, of course, we are to preclude individual freedom of will.

Much more could be and has been said on this subject, but the upshot is this: the best way to expose and correct problems and errors is to leave people free.

TGIF: Is "Free Election" an Oxymoron?

American leaders and their loyal media pundits love to sit in judgment of other countries' election, declaring them fair or rigged according to their seemingly meticulous standards. In fact, the real standard is that the regimes "we" like hold free and fair (enough) elections, while the regimes "we" dislike don't. What about regimes "we" like that hold no national elections at all, like Saudi Arabia? They are forgotten whenever the loveliness of democracy is the topic of discussion.

Maybe a broader approach would shed light on the matter. We could ask: does any country have really free and fair elections? In other words, could an election be described that way even if the authorities did not engage in blatant voter or candidate suppression or outright vote fraud?

I'm not trying to be clever here. I am not one of those people who might say that since free will is an illusion, the idea of a free election must also be an illusion. Free will is real. To borrow a trope from philosopher Etienne Gilson (1884-1978), free always buries its undertakers. (Gilson said this about philosophy, though many people think he said it about metaphysics or natural law. What he said applies to these.)

I'm saying that other features intrinsic to political elections prevent them from being truly free and fair. First, the people who cast votes do so under duress. Not that armed agents of the state literally hold guns on to their heads as they go to the polls. It's more subtle: opting out of an election is not the same as opting out of the consequences of the election. The latter cannot be done. Nonvoters are subject to the same impositions as voters are. If the winning candidate raises taxes and interferes with peaceful conduct, everyone will be caught in the net. The only way to escape is literally to leave the jurisdiction, which implies that government owns all property. Of course, one cannot leave a jurisdiction without entering another, which will likely have similar impositions. (Political competition among jurisdictions may provide some relief at the margin.)

Because of the duress under which people vote, Lysander Spooner acknowledged that a person might vote simply in self-defense: "In short, he finds himself, without his consent, so situated that, if he use the ballot, he may become a master; if he does not use it, he must become a slave. And he has no other alternative than these two. In self-defence, he attempts the former."

I'm reminded of Herbert Spencer's sarcastic comment on the popular idea that nonvoters are not entitled to complain about the outcome of elections. But, Spencer pointed out, according to the conventional wisdom, voters--no matter whom they voted for--are not entitled to complain either. Why not? Because those who backed the winner can hardly have grounds for dissatisfaction, and those who voted for the loser knew the risks when they chose to participate in the election. So everyone must shut up and do what they are told. How convenient!

We have other grounds for questioning the fairness and freedom of any election. Even if we concede that voters freely elect the officeholders by majority rule--ignoring all the obstacles to maverick parties and candidates--can we really say that voters select the policies that the resulting regime will carry out. I don't think so. For one thing, the connection between what candidates say and what they do in office is extremely weak. Candidates are often vague about what they will do, but even when they aren't, voters have no good reason to think the candidate will do more than make symbolic moves in the direction of keeping their promises. Voters have little and mostly no recourse. They cannot take back their votes or sue the candidate for breach of promise. (Some jurisdictions have recall procedures, but they are expensive and require a majority vote.) Voting is like buying a pig in a poke.

Another problem is that most voters most of the time vote behind a veil of ignorance. They not only do not know what a candidate will do if elected; they also don't understand the issues that governments deal with. For example, if candidates differ on the minimum wage--whether to raise it or to have such a law at all--how are voters who know nothing about economics to make an intelligent choice? They will be unable to, so they will vote on the basis of feelings, a candidate's campaign skill, or sheer tribal partisanship. (See Bryan Caplan's The Myth of the Rational Voter: Why Democracies Choose Bad Policies.) That's an unreliable way to make good decisions.

The same goes for foreign policy and any other area in which government officials act. Each of these areas require study, which requires time and resources. How many people will have the resources, not to mention the inclination, to acquire the knowledge needed to make good choices about all the things candidates promise to do?

A final problem is one that most people understand but don't like to talk about: no single vote counts. People who have abstained from voting their whole lives can rest assured that no election would have come out differently had they voted. One thing that tells us is that each individual is free to vote on any basis they like because they know the consequences of that one vote are nil. In that sense, elections are free, but that's not what the democracy advocates mean by free elections. We might call them free and irresponsible.

Critics of democracy are often accused of favoring authoritarianism because most people think that is the only alternative. Some people who dislike democracy indeed favor authoritarianism, but that certainly cannot be true of libertarians. The libertarian alternative to democracy is the removal of matters from the political sphere so that they can be addressed in the social sphere, that is, the sphere of consent, cooperation, and contract, where persuasion replaces force. That's what created human progress in the first place.

Decentralized Revolution Appearance

I discussed Israel-Palestine with Aaron Harris on the Mises Caucus's Decentralized Revolution podcast. Watch and listen here.

TGIF: VP Tells Guatemalans to Stay in Their Place

Shame on Vice President Kamala Harris.

On her recent trip to Guatemala she said, "I want to be clear to folks in the region who are thinking about making that dangerous trek to the United States-Mexico border: Do not come. Do not come. I believe if you come to our border, you will be turned back.”

This is what passes for sensitivity to human rights in the post-Trump era. It's the same attitude that marked not only the Trump years but also the pre-Trump era under Barack Obama, the deporter-in-chief, and Joe Biden.

Notice Harris mentioned the "dangerous trek" without acknowledging that the U.S government is a big reason for the danger. If immigrants were welcome, they would have safe ways to travel north to the United States with their children. It's typical of government officials to create a peril and then pose as humanitarians in offering advice about safety.

What's the Biden-Harris solution to the problems that Guatemalans are trying to escape from by migrating to America? Harris promised U.S. help in reforming the government there. "The goal of our work is to help Guatemalans find hope at home,” she said. Her administration has about as much chance of doing that as it has to help Americans find hope at home.

The U.S. government would have a chance to improve conditions in Guatemala and other places, but that would require doing something it has no desire to do, namely, slash its power dramatically. It could start by permitting unconditional free trade and by ending the drug war, which has ravaged Guatemala and Latin America even worse than it has the United States. Do you think Biden-Harris would entertain that truly progressive program? Me neither.

But even if that were to happen and Guatemalans became much freer and safer, many might still want to come to the United States. Yet that would be none of the U.S. government's business. Until someone has been proved to have violated someone else's rights, they should be left unmolested by the state. That's not just a right of Americans; it's a right of all persons. The right to move is a natural individual right that in itself does no harm to others as physical force does. Accepting a job that an American wanted or affecting the culture doesn't count as harm. We benefit from the countless people who have changed the culture over years and from the immigrants who have started businesses, invented products, and achieved great productivity. That some people fear change should not be allowed tilt government policy against immigrants.

All the fear-mongering about free immigration is nothing more than that: baseless attempts to scare Americans essentially into shutting the borders. To see this, one need only consult the heroic work of Bryan Caplan of George Mason University, who demolishes every bogey about open borders in blog posts, journal articles, and graphic nonfiction. Caplan shows that fear of immigrants--about wages, culture, politics, and more--is simply irrational. He also points out how much free movement would increase the wealth of the world, as people in low-productivity countries moved to high-productivity countries like the Unites States. He and others have emphasized that the best global antipoverty program would be open borders.

And as I pointed out recently, a new book emphasizes that restrictions on immigrants and would-be immigrants necessarily constitute restrictions on Americans. Chandran Kukathas writes in Immigration and Freedom: "It is difficult to control outsiders without also controlling insiders, since insiders are all too ready and willing to hire, teach, rent to, trade with, marry, and generally associate with outsiders. Moreover, insiders and outsiders are not readily distinguishable unless there are instruments of control in place to identify one or the other."

Telling Guatemalans or anyone else "Do not come" is no different from telling them to stay in the place where they belong. The long-suffering victims of tyranny, corruption, and government planning are properly resentful of American officials who give them such a condescending admonition.

TGIF: What the Really State Is

To better understand the nature of government, one can think of it as an agency that sells or, more precisely, rents power to others. The greater the power and the wider its scope, the more opportunities the state's agents will have to sell access to it in return for favors. Of course the demand for that power will also be greater. This stands to reason. If the government is allowed to make many important decisions about private activity, people will want to influence or control that decision-making--and they'll be willing to pay for that influence as long as the price is less than the expected payoff.

In other words, the supply of government power creates its own demand. This answers the concern over the corrupting influence influence of money in politics. If government has nothing to sell, no one will be trying to buy. 

This not to say that all that government officials do is rent out power. Many activities can be attributed to their own agendas. Like all people, they are prone to various incentives and foibles that lead them to do things that others who are affected either do not like or approve only because they can't imagine an alternative.  The motives of state agents can vary: self-regard and paternalism, for two examples. Motives can be tricky to identify: a good deal of self-deception can always be involved, and words often parts ways with the truth.

Nevertheless, much of what state agents do constitutes in effect the renting out of power to well-connected private interests. The renting out of power can also have various motives. Power may be used to benefit special interests as a way to garner political support, financial and otherwise. Campaign finance is the most obvious example, though many more subtle ways also exist. Again, the motive for renting power to special interests could also have paternalist. Politicians could (erroneously) figure that for the good of all, certain people ought to have access to power that no one else has. Motives of course tell you nothing about the morality or effectiveness of any particular action.

Private interests that pay to get their hands on power can have various motives also, but I would guess that most of the time the motive is self-regard.

I should note that I am using the term rent idiosyncratically. Economists use the phrase rent-seeking to label the private pursuit of returns through government favors. By that they mean that private interests seek returns on investment that exceed what they would earn in the market without power being exercised on their behalf. I'm using rent in the colloquial sense in which people pay to use something (in this case) without acquiring ownership.

It's easy to think of examples of what I've been saying here. When business firms lobby for a tariff or an import quota, they are seeking higher prices and profits through the state's power to burden foreign competitors with taxes and import limits. Likewise, when firms seek licenses, subsidies, and other political favors, they grab for advantages that their competitors don't have. Similarly, complicated financial regulations that burden smaller and potential upstart competitors are likely to be welcomed (if not written) by large dominant institutions. (When things go bust, uninformed people will readily  blame the private firms without seeing the state's essential culpability. See my "Wall Street Couldn't Have Done It Alone.")

Another source of extra-market advantage is government contracting. Why should a firm take chances in an uncertain marketplace with fickle consumers if it can obtain guarantees by selling things to government agencies? Military contractors come to mind immediately. Billions of dollars of taxpayer money go to such companies every year. Private companies can't tax anyone, but government contractors in effect can do just that.

The more powerful the state, the more possibilities will exist for favoritism. And notice that favoritism breeds dependence on and support for the state. For obvious reasons military contractors are unlikely to be convinced by arguments for a noninterventionist foreign policy. Likewise, companies that rely on tariffs and import quotas probably won't find inspiration in the great British free traders Richard Cobden and John Bright.

Understanding the state is the first step toward rethinking the state, which is necessary for changing one's view about its value. If people think the government is nothing more than a well-intended social-service agency--the organizer of huge and benevolent mutual-aid society--their attitude will be favorable overall, even if they dislike some of what the state does. But if people come to see that the state exists to amass power and private resources in large part to distribute it to special interests, the majority who are victims might begin to object and demand change.