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Friday, December 23, 2022

TGIF: Year-End Downers

One always hopes to end the year on a high note, but politically speaking, at least, that is difficult again in 2022. One searches in vain for advances in individual liberty and setbacks for power.

Sure, with the receding of the pandemic, life has returned to normal in many respects. But the ratchet effect that Robert Higgs identified still is the rule. After a rise in government power in response to a crisis (real or imagined), the drop-back is never complete because those who wield power have had their appetite whetted. The precedent itself presents a new threat. If the federal and state governments could so easily shut down virtually all of society (because of a virus that threatened mainly old and sick people), they could do so again. What's even more ominous is how so-called public-health officials and other government agents stigmatized dissenters, no matter how good their credentials, who might have stoked public opposition to the historic infringement of their liberty.

Other political fronts are no more encouraging. The central government is spending obscene amounts of money, so it obviously doesn't need a pandemic to get away with it. Congress has allocated $858 billion to the Pentagon, which is apparently more than the Biden administration asked for. Some $44 billion more is in the offing in support of Ukraine against Russia, bringing the year's total to over $100 billion. (Russia's war is indefensible, but the U.S. and Ukrainian governments are not blameless.)

This military spending has bipartisan support, prompting a two-part question: why do so many "responsible" people 1) think bipartisanship is dead and 2) wish for its resurrection? In an important way, politics is not polarized nearly enough! What we need is a more pronounced polarization over opposing principles: liberty and power.

Need I point out that all that spending has bad consequences? The government will borrow a goodly portion of what it spends, and the Federal Reserve will then create money to buy up that debt. The conjured-up money will join the previously created fiat money in chasing the existing supply of goods and services, pushing prices up even more. That's inflation, which already is eating our purchasing power and savings. Interest rates are prices, by the way, which means they will rise too now that lenders expect money to be worth less in the future. This increases the government's (and our) cost of borrowing. So interest on the debt will grow, requiring more borrowing, and so on. Bad outcomes breed more bad outcomes.

Imagine if the politicians and bureaucrats did not have our best interests at heart!

For the record, as Eric Boehm at Reason reports, "The government spent $501 billion in November but collected just $252 billion in revenue, meaning that about 50 cents of every dollar spent were borrowed."

But that's not all. "And now Congress is gearing up to spend even more," Boehm writes. That's because before year's end, Congress will send Biden a $1.7 trillion omnibus (translation: everything-including-the-kitchen-sink) spending bill. 

All of this comes as the current occupant of the White House insists that the budget deficit is declining. Boehm writes,

That was always misleading, as the falling deficit was entirely the result of one-time, emergency COVID-19 spending coming off the books. The underlying figures showed all along that the deficit situation was continuing to worsen, and that President Joe Biden's policies were adding trillions of dollars to the deficit over the long term.

November's spending and revenue figures should put an end to these silly games. We're only two months into the fiscal year, but the federal government is now on pace to run a deficit of about $1.9 trillion, which would be the largest nonpandemic budget deficit ever and a huge increase from the $1.38 trillion deficit in the fiscal year that ended on September 30.

Excuse me, $1.9 trillion? In nominal terms, that's bigger than Bill Clinton's final budget. Not that it would be preferable for the government to raise taxes, mind you. What is needed are massive spending cuts via the elimination of entire departments, programs, and missions. Let's start with the military by liquidating the empire.

Enough of that bit of depressing news. Let's turn to something else: the revelation that Twitter (and presumably all the social media) worked closely with the FBI, Department of Homeland Security, Pentagon, and other government agencies to monitor our posts and promote their own propaganda. First Amendment violations surely occurred. Government officials need not have commanded Twitter to suppress posts they did not like. They didn't even have to wink. They're government officials, after all.

It wasn't all about keeping information about Hunter Biden's laptop and dissenting views on COVID-19 away from the public, though. The Pentagon used Twitter to spread its propaganda about Russia, China, Iran, and other subjects through covert accounts. It identified many of these accounts for Twitter so they would be protected, and for years several Twitter accommodated the U.S. military's campaign to mislead the public.

Because Twitter's new chief, Elon Musk, made these disclosures possible, one might think this is a welcome high note on which to end the year. Maybe. On the other hand, Musk does not inspire confidence. His vacillations and murky definition of "free-speech absolutist" suggest he has no clear idea of how he sees the platform. The whole thing seems so half-baked.

I could mention Congress's failure to stop the war in Yemen (damn Bernie Sanders), the threatening rise of national conservatism, and the heavy yoke of wokeism, but I'll stop. Let's rest up to resume the battle. Happy Holidays!

Friday, December 16, 2022

TGIF: The State Fuels Identity Politics

Anyone with an ounce of good sense knows that destructive identity politics is run amuck in America and elsewhere. All incentives these days seem to go in one direction: toward identifying oneself as a member of an aggrieved group supposedly due compensation through government action -- of course at the expense of people who had nothing to do with the grievance. The actual perpetrators (if any), like the actual victims, tend to have long departed this world.

Where real victims and perpetrators are still on the scene, grievances ought to be handled on an individual basis with due process, rather than through pressure-group pandering.  But we may justifiably wonder why innocent taxpayers should bear the consequences for offenses their rulers committed.

Like so many things, identity politics, as the name itself tells us, would be little more than an annoyance if the U.S. government didn't have nearly plenary power over society. But it does have it, and so the politicians and bureaucrats and their pressure groups have profited immensely from dividing us into racial, ethnic, national, and other sorts of groups. This sows the ground for social strife that harms us all.

At different times and places, such classification has been used to enslave, otherwise harm, and even exterminate despised groups; at other times, like now, it's been used to distribute taxpayer money and other benefits to politically favored groups. This stimulates people outside the government to game the system in order to win advantages at the expense of others. Incentives have consequences.

Another potential effect is to provoke a backlash from the majority that bears the burdens of favoritism. This adds yet another layer of resentful identity consciousness to the volatile mix. No one should want to see a society torn apart by racial, ethnic, or similar conflict. Too much depends on social cooperation and the benevolent toleration that underlies it.

Identity politics should be especially objectionable in a country ostensibly founded on freedom and individualism. Treating human beings as interchangeable members of racial, ethnic, or other groups is execrable collectivism.

Now imagine that the government's categories constitute a crazy quilt of arbitrariness, caprice, and pressure-group pandering. Wait -- you don't have to imagine it. You can see it in contemporary America.

What began in the late 1970s as an effort to make record-keeping consistent across government departments has since morphed, contrary to stated policy, into a political device to treat Americans differently according to their race and ethnicity. The goal was to distribute such favors as government loans, contracts, hiring, and college admissions to aggrieved group members. Differential treatment was even applied during the COVID-19 pandemic. It was all justified in the name of righting past wrongs, that is, using discrimination to counteract previous earlier discrimination, real and imagined. (As Thomas Sowell has demonstrated, statistical disparities are not in themselves evidence of discrimination.)

Because of the government campaign to define those groups, it's now impossible to fill out any kind of form or application without being asked to identify one's race, ethnicity, "gender" (whatever that may mean today), and "sex assigned [sic] at birth."

Thus we should thank David Bernstein of George Mason University's Antonin Scalia Law School, author of Classified: The Untold Story of Racial Classifications in America, for ripping away the veil of this horrendous and ridiculous system. The story he tells would be hilarious if it weren't pernicious and illiberal. As he points out in this lecture, although the government warned decades ago that the categories had no scientific foundation and were not to be used to determine "eligibility for government programs," that is exactly what happened. The obsession with these arbitrary categories extends even to medical research, which is crazy, not to mention dangerous.

In his talk Bernstein provides lots of examples of absurdity. For example, the category Asian includes Americans descended from national groups that have very little in common, such as Filipinos, Japanese, and Pakistanis. While Indians (from the subcontinent) are classified as Asian, the related Afghans are classified as white, as are Arabs and Iranians. (You can see how this could wreak havoc with medicine.)

One might think that the classification black or African American is justified for government consideration because many black Americans are descendants of American slaves and victims of Jim Crow. But how would that justify including Nigerians who freely immigrated more recently and who are doing quite well?

The category Hispanic also makes little sense. By what standard does an American directly descendant from Spaniards qualify for government favors? Americans with roots in other European countries get no favors. The Spanish came to the New World not as victims but as conquerors, so whence the victimhood? You might think that Hispanic was meant to designate the mixed Spanish and Portuguese Indians from south of the border. But if that's the case, why aren't they simply classified as Indian? Bernstein explains: that category was reserved only for Indians with roots in North America above the Rio Grande, including Canada. Expanding the category further would have unacceptably spread the benefits too thin. So pressure groups opposed it.

If the government was forbidden to dispense benefits to particular individuals and groups, it would lose the opportunity to use the arbitrary classifications that Berstein documents. On the other hand, if some reasonable classification is useful to document government mistreatment of particular groups, I'm confident that civil liberties watchdogs will find a way to handle it.

Racial and ethnic classification is a territory best kept off-limits to the state. Have we learned nothing from history?


Saturday, December 10, 2022

Walter Grinder, 1938-2022

 I note with great sadness the passing of my friend and former colleague Walter Grinder. He was 84. Walter may be the most important libertarian that most libertarians have never heard of.

Although he made important contributions to the literature of liberty (such as his work with John Hagel on the far-reaching destructive effects of state intervention in money and banking and his introduction to Albert Jay Nock's classic, Our Enemy the State), he devoted his professional activities primarily to keeping libertarian scholars and writers informed about a wide range of literature relevant to understanding liberty. His interests covered the broadest range of disciplines, including history, political philosophy, and economics. He also helped to advance the intellectual careers of many libertarian students by putting them in contact with established academics who had similar research interests. Thus he helped the students navigate the treacherous graduate-school waters in which advocates of individualism and free markets can be at a disadvantage. In the process, he himself mentored countless students who have gone on to become accomplished professors and public intellectuals.

Over many years he did this largely unseen work at the Institute for Humane Studies, where I worked in the late 1980s. For me, one of the great joys of that job was being able to talk with Walter regularly. He was so well-read and was always so reasonable that I wouldn't have thought to undertake a writing project without talking to him first. Like his friend and colleague Leonard Liggio, he was a walking multidisciplinary bibliography. I met Walter more than a decade earlier at one of the first conferences of the old Center for Libertarian Studies. Then in 1978 I attended a Cato Institute summer seminar at which he lectured on central banking and other topics. Those lucid, erudite, and passionate lectures helped inspire my decision to leave newspaper reporting and become a full-time libertarian writer.

Unfortunately, Walter had long been plagued by bad health, but when he finally retired from IHS, he kept up his breakneck pace of looking out for and assimilating new and old important works relevant to liberty and making them known to his large email list of scholars, authors, and other liberty enthusiasts. He helped each of those individuals (me included) immensely. Despite his physical impediments, Walter's optimism and determination never seemed to diminish, I often wondered how he possibly kept at it.

Walter will be missed by the many, many people he helped and inspired. He will be missed not only because of what and whom he knew but also because of who he was: a thoroughly decent, kind, and good-natured family man. He profoundly affected all who knew him at that level. He was a pleasure to be around.

My heartfelt condolences to the Grinder family, which includes grandchildren.

For more on Walter Grinder, see Alberto Mingardi's appreciation. For Walter's perspective on subjectivism in economics, I recommend his introduction to the collection he edited of Ludwig Lachmann's writings, Capital, Expectations, and the Market Process.


Friday, December 09, 2022

TGIF: Why Freedom Is the Goal

In online interviews and conversations I'm hearing intellectuals in the national conservative movement say that the liberal Enlightenment "project" has mostly failed because people need more in their lives than freedom. I've also heard this from a few people who have lately become disillusioned with leftism but yet are uneasy about libertarianism.

My first response is to wonder whom these critics of classical liberalism, or libertarianism, its modern-day form, have in mind. Which important and widely influential liberal political, economic, or, social thinker even implied that freedom is the only thing worth valuing? Let's name names, please. I can't think of one, but perhaps I'm overlooking someone.

Those conservatives will also insist that freedom without virtue is not just worthless but a clear and present danger. But again, which past and present of genuine liberal stalwarts would disagree? I've always understood liberalism to be distinct from libertinism. I see no grounds for confusing the two.

Classical liberalism, in its consequentialist, deontological, and eudaemonist forms, has been concerned with what makes for a proper society by some articulated standard or other, starting with the most fundamental unit of analysis, the individual. The literature is saturated with positive observations about society, the division of labor, association, and rich communities -- in a word, cooperation.

One way or another, all of that is related to values in addition to freedom; it all is related to virtue. Far from embodying an atomistic, licentious, to-hell-with-everyone-else (pseudo)individualism, libertarianism extols what I call Adamistic (Smith, that is) individualism, in which human beings "selfishly" flourish through mutually rewarding relationships of all kinds. I've also dubbed this "molecular individualism. Of course, some people will engage in vice and aggression (those aren't the same things), but as long as the state is unavailable for social engineering, free individuals using private property in association with others can peacefully protect themselves and their children from what they find abhorrent. Live and let live is the rule.

For liberals, freedom was never just an end in itself. Freedom means freedom from aggression, whatever the source, but at least implicit in the liberal vision -- and indispensable to truly understanding it -- is the freedom to produce material and nonmaterial values in a social context. We want freedom so we may live fully as human beings and enjoy fruitful lives among other people. Successful long-term participation in the market and society more widely encourages honesty, justice, and conscientiousness -- virtues by any reckoning. To understand the value of society is to understand the need for -- yes -- order, but it is specifically the bottom-up, emergent, spontaneous order that F. A. Hayek and other liberals have emphasized. (You find this in Adam Smith, Thomas Paine, Herbert Spencer, Carl Menger, Ludwig von Mises, and countless others.)

The critics of liberalism are right of course when they say that freedom is not enough to properly address the social problems we observe today. But again, which libertarian ever said it was? The libertarian point is that freedom is the condition in which people have the best chance of dealing with problems. Liberalism doesn't promise a rose garden; it's not utopian. In fact, freedom is not the answer to any problem. Rather, it -- along with the resulting decentralization and competition -- is essential to the discovery process that enables people to deal with problems as best they can. Since no one is omniscient, that discovery process is indispensable both for the good life and the good society.

Freedom is not some magic ingredient that when sprinkled on a problem miraculously produces a solution. It's the political, legal, and social environment in which people can act to make their lives better. In the process of virtuously pursuing their rational self-interest, they make others better off too. No central coercive authority, conservative or progressive, can hope to deliver the equivalent, no matter what theory of virtue it seeks to impose. For one thing, they could never know enough.

Thus those who reject libertarianism as unequal to modern challenges show themselves to be boxing with a strawman. But worse, they deceptively pose as the guardians of virtue when they are not.

When conservatives say politics is downstream from culture, they mean that for freedom to be a good thing, people must first be virtuous. But that suggests the conservative program is to change things around and put culture downstream from politics. It's a justification for limits on freedom of speech, religion, commerce, association, etc., until the state's subjects have been prepared to live freely. But who is qualified to tutor the people or to say when the people are ready for freedom? How are their overlords to be chosen?

Liberals have long asked those questions, but not because they thought virtue is unimportant. It is because they knew how important virtue is. They also asked how people can be virtuous without being free to make choices.

Albert Jay Nock, the quirky libertarian writer of the 20th century, wrote about this in his 1924 essay "On Doing the Right Thing," Nock wanted to see human beings free precisely so that they "may become as good and decent, as elevated and noble, as they might be and really wish to be.” (See my essay "Nock Revisited.") He elaborated:

The point is that any enlargement [of state authority], good or bad, reduces the scope of individual responsibility, and thus retards and cripples the education which can be a product of nothing but the free exercise of moral judgment.... The profound instinct against being "done for our own good" ... is wholly sound. Men are aware of the need of this moral experience as a condition of growth, and they are aware, too, that anything tending to ease it off from them, even for their own good, is to be profoundly distrusted. The practical reason for freedom, then, is that freedom seems to be the only condition under which any kind of substantial moral fibre can be developed. [Emphasis added.]

That's the answer to the paternalists of all parties.

In contrast, conservatism wants the government to control the culture in the name of building virtuous people. How can they overlook the perils of this program? Once political officials assert control over culture, where does it stop? And how can they be sure that the people whose values they despise won't eventually grab hold of the muscular state they've fortified?

Friday, December 02, 2022

TGIF: On Liberty and Security

"Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety." Benjamin Franklin's famous words are often quoted because, alas, they are always relevant.

Whether Franklin meant what libertarians take him to have meant has been challenged in recent years. See this disagreement between Benjamin Wittes and Leya Delray. In defense of her interpretation, Delray argues that Franklin shed light on his meaning when he quoted himself 20 years later.

Whoever is right, for Franklin the word liberty on these occasions meant not individual freedom but colonial "self-government" independent of the king of England and those to whom he had granted land in the New World. And for Franklin, the powers of such a government include the power to tax. Franklin thus was defending the collective "freedom" of Americans through their colonial legislatures (that is, majority rule) against undemocratic rule from afar. (Pennsylvania was a proprietary colony granted to the Penn family by the king of England. The family-appointed governor had repeatedly vetoed bills from the legislature that included provisions to tax the family's proprietary estate to pay for the defense of frontier settlements during the French and Indian War. The family objected but offered instead to pay a lump sum for that defense in return for a legislative renunciation of its power to tax the family land.)

In my view, Delray makes a better case than Wittes, but whatever Franklin had in mind, we as libertarians are free to apply Franklin's words to the individual rather than the collective. After all, we're methodological individualists, who realize that no group can possess rights not possessed by its members. So let's do so. (Another Benjamin -- the French-Swiss classical liberal Benjamin Constant -- had important insights about the critical difference between individual freedom and so-called collective freedom in his must-read 1819 essay "The Liberty of Ancients Compared with that of Moderns." Spoiler: Three cheers for modernity!)

Many points could be made about the trade-off allegedly required between liberty and safety, or security. For starters, can they really be traded off? The libertarian philosopher Roderick Long thinks not:

What we want is not to be attacked or coercively interfered with – by anyone, be they our own government, other nations’ governments, or private actors. Would you call that freedom? or would you call it security?

You can’t trade off freedom against security because they’re exactly the same thing.

Consider what's happening in China. In the name of delivering the impossible -- zero COVID-19 -- the people have been deprived of all liberty. Are they more secure for this deprivation? The virus is spreading apace anyway, and people are dying and suffering because whatever freedom they had previously has been curtailed. It is inspiring to see so many Chinese protesting their oppression in cities throughout the country. How sad that many other Chinese are willing brutally to police the people who are demanding freedom and justice.

Another way to look at the alleged trade-off between freedom and security is to realize that one doesn't gain actual security through state limits on freedom but rather a false sense of security. A false sense of security is worse than no sense of security at all.

When the state, even a democratic one, assumes the role as security provider, how do we know it will actually provide security rather than make us less safe? Because politicians and bureaucrats (think Anthony Fauci) say so? Because elected officials will accurately identify and appoint well-meaning and expert bureaucrats? A good deal of faith is expected on the part of the people who will be compelled to obey the resulting decrees. This model of governance also ignores the fact discovering what ought to be done in a given situation requires a decentralized competitive process in which competing hypotheses and theories are freely aired. Centralization in this realm suffers from the same fatal calculation and knowledge problems of central economic planning.

At any rate, what assurance does anyone have that the experts, who are human beings, will not err or act corruptly? We have no assurance at all. Even if a state official gets caught in a blunder or corrupt act, the likelihood that he will be held accountable is minuscule. Good luck suing that person. As for mounting an effort to defeat a politician at the polls, good luck with that too.

The doctrine that a democratic state (as opposed to a society of individual liberty and consensual social cooperation) can deliver security is actually rather peculiar. It's based on the curious principle that while we are too incompetent to manage our own lives through individual action and voluntary cooperation, we are perfectly competent to pick other people to manage our lives coercively. No one better exposed this contradiction than Frédéric Bastiat, the great 19th-century French classical liberal economist and legal philosopher. In The Law he wrote:

What is the attitude of the democrat when political rights are under discussion? How does he regard the people when a legislator is to be chosen? Ah, then it is claimed that the people have an instinctive wisdom; they are gifted with the finest perception; their will is always right; the general will cannot err; voting cannot be too universal.

When it is time to vote, apparently the voter is not to be asked for any guarantee of his wisdom. His will and capacity to choose wisely are taken for granted. Can the people be mistaken? Are we not living in an age of enlightenment? What! are the people always to be kept on leashes? Have they not won their rights by great effort and sacrifice? Have they not given ample proof of their intelligence and wisdom? Are they not adults? Are they not capable of judging for themselves? Do they not know what is best for themselves? Is there a class or a man who would be so bold as to set himself above the people, and judge and act for them? No, no, the people are and should be free. They desire to manage their own affairs, and they shall do so.

But when the legislator is finally elected — ah! then indeed does the tone of his speech undergo a radical change. The people are returned to passiveness, inertness, and unconsciousness; the legislator enters into omnipotence. Now it is for him to initiate, to direct, to propel, and to organize. Mankind has only to submit; the hour of despotism has struck. We now observe this fatal idea: The people who, during the election, were so wise, so moral, and so perfect, now have no tendencies whatever; or if they have any, they are tendencies that lead downward into degradation.

Any reasonably intelligent person ought to see that it is far easier for us to manage our own lives than to select "the right" social engineers, with their compulsory one-size-fits-all plans, to do it for us.

It is said that neither freedom nor security is free. I agree. But must we pay coercive monopoly prices for inferior services?

Friday, November 18, 2022

TGIF: Beware the Regulatory Storm over FTX

The bankruptcy of the cryptocurrency exchange FTX and the alleged fraud by co-founder Sam Bankman-Fried, which has cost customers millions, is tailor-made for anyone who already wants the power of government to expand, especially in the area of financial privacy. For that reason I think it would be useful to take a 30,000-foot view of the matter. I offer these considerations as someone with no more than a layman's knowledge of the cryptocurrency phenomenon. (I found this Reason video helpful.)

First, fraud is illegal. If a firm accepts money from clients and uses it in violation of the contractual terms, that is already against the law and the victims have legal recourse. So right off the bat we should be highly doubtful about calls for new laws and regulations or expanded regulatory oversight.

Second, regulation can create a moral hazard. That's what happens when a sense of security provided by insurance or government regulation unintendedly encourages the very bad thing that one sought to avoid. Think of the massive stock fraud perpetrated by Bernie Madoff. Madoff was a well-connected investment insider who defrauded highly sophisticated individuals and charities. He didn't prey on naive widows. Madoff had even worked with the Securities and Exchange Commission (SEC). Isn't it plausible that the existence of the regulatory regime worked to Madoff's advantage? Imagine if no such regime had existed and investors had not been led to rely on an SEC "watchdog," with all the classic bureaucratic deficiencies, to protect them. Would they have been such easy marks? I think not.

Fraud is always possible no matter the regulatory environment. Thus a false sense of security is worse than none at all.

Critics of markets denigrate the buyer beware principle, but when compared to the alternative -- trust state bureaucrats -- it looks pretty good. To the extent that regulators weaken buyer beware, they do a disservice to the public while posing as benefactors. Buyer beware is necessary in any legal environment. If you were you're looking for a new doctor, would you be content simply to throw a dart at a list of government-licensed physicians? Or would you ask around?

Third, the alleged criminality of FTX should not impugn cryptocurrency per se any more than Maddoff's criminality impugned the stock market per se. If, as appears to be the case, a bad actor harmed a lot of people, he should have to compensate his victims. (Of course, that may not come close to making them whole.) But Bankman-Fried's wrongdoing must not be used to demonize cryptocurrency as inherently suspect and illegitimate or to drive it out of existence. No reasonable person concluded that we should not have a stock market because Madoff used it to fleece lots of people.

Fourth, some powerful people are out to get cryptocurrency precisely because it can help regular people maintain some privacy. Those with a fetish for government power have pushed and often attained measures designed to abolish financial privacy. For example, through the government's "Know Your Customer" rules, banks are obliged to inform regulators about their depositors' behavior even if no evidence of criminality exists. Regulation of the government-cartelized banking industry is so extensive that bureaucrats can make virtually any demand and the unwitting depositors whose privacy is compromised have little or no recourse. In a competitive banking industry with market-based money, banks would perhaps offer different assurances about privacy and consumers would freely decide what level they valued at what price. That's how it should be.

If people believe that financial privacy matters only to those who have harmful activity to hide, they need to get over it. Financial privacy and privacy in general are simply implications of self-ownership and should matter to everyone. It is obviously important in authoritarian and totalitarian countries, where governments freely confiscate people's wealth, but it's also important here. We can't know exactly what the future holds. Remember what happened to protesting truckers' bank accounts in Canada? Let's also not forget PayPal's threat, since rescinded, to fine customers for spreading alleged misinformation. And the war on drug sellers and users can't be a good reason for denying financial privacy because the so-called drug war should be abolished.

No one who cares about individual freedom should stand by and let the FTX scandal become a pretext for expanded government power and the destruction or nationalization of cryptocurrency.

Friday, November 11, 2022

TGIF: Midterm Blues

As midterm elections go, for champions of individual liberty this one could have been worse. I see two bright spots. The likely slim majority of Republicans in the House could -- maybe -- produce a measure of gridlock on domestic spending and regulation, and the blame for the Republicans' substandard midterm performance might fall entirely on Donald Trump, driving him from the stage. When you consider all the possible outcomes from Tuesday, that's not bad.

In most midterm years the only outcome worth hoping for is gridlock. Gridlock, however, wouldn't be the best outcome under all conceivable circumstances. Libertarians want Congress to get many things undone, especially but not limited to out-of-control military and so-called entitlement spending. The latter, which is on autopilot, finances programs that are facing insolvency. When that happens, today's spending, taxing borrowing, and money creation will look trivial.

But hardly anyone in power even talks about these and similar problems, so gridlock for the next two years is hardly likely to stop anything good from happening. In other words, gridlock was worth rooting for. It won't be worse than continued Democratic domination.

So regardless of what happens in the Senate, if the House goes Republican, even by the small margin that appears likely, we might see it block the most egregious domestic spending and regulatory measures proposed by Joe Biden and the congressional Democrats. I'd keep an eye on any more energy bills intended to interfere with the use of fossil fuels. Not that Republicans are reliable when it comes to opposing domestic spending -- far from it -- but we can hope. On the other hand, don't look for a freeze, much less a reduction in military and related spending. Republicans have not lost their commitment to the warfare state. 

As noted, the other good news from Tuesday was the poor showing for Trump, some of whose favorite candidates lost. Not all of those he endorsed bit the dust, but some key ones did, such as in Pennsylvania and New Hampshire. He may yet be disappointed by still-undecided races in Arizona, Georgia, Colorado, and elsewhere.

I'm hoping that Republicans will blame Trump for their party's poor showing in the midterms. The out-party is supposed to make big gains in Congress, in governor's mansions, and in state houses, but the Republicans did not do it. This happened in a year when the voters' top concerns were inflation and crime, and with an unpopular Democrat in the White House. Who or what else could be responsible for the lackluster midterm performance if not Trump?

So if Tuesday's results play a role in convincing Trump to stay out of the 2024 presidential election, we can breathe a sign of relief. Liberty would be better off without his toxic presence. (This is not to say that Ron DeSantis, who would be the chief beneficiary, offers any hope.)

With another election behind us, it's worth remembering what a fraud electoral politics is. Campaigns are little more than performance art -- bad performance art. The skill that ignorant voters tend to reward is a candidate's mastery at delivering a particular tribe's or coalition's talking points. Much of what elected officials do is interfere with our peaceful productive endeavors, but how many voters know anything about economics? Without that knowledge, all that's left are cosmetics and rhetoric that reassures.

The candidates typically don't know anything either, but they and their handlers do know that the voters are ignorant and thus are suckers for comforting soundbites. It's just a matter of which candidate gets more of his or her tribe to the polls.

If you can see in this any resemblance to selecting office holders according to their actual knowledge, judgment, competence, and integrity, let me know.

I'm not implying that politics could be better than this. The problems are inherent because government is a top-down way of attempting to organize society that cannot help but violate individual liberty. What I'm saying is that at best politics is show-biz by other means. 

So as usual, the election gave us both good news and bad news. The good news is that the losers lost. The bad news is that the winners won. 

Friday, November 04, 2022

TGIF: Election Day 2022

Another election day is upon us. We're told that we have a duty to vote because so many Americans gave their lives for that right. But perhaps it ought to be spelled R-I-T-E, as in a religious ritual.

Is it a duty or a right? Let's make up our minds. In 21 countries voting is mandatory -- although the law is not always enforced -- but that absurd idea has never had traction here. There is something weird about an alleged right that one is compelled to exercise. It certainly would be unique.

And did Americans really fight wars for the vote? Many who were killed in wars that the government tricked them into fighting might have thought they were risking their lives for freedom, but the freedom to vote probably didn't rank high on the list. Americans certainly died in the domestic struggle for full citizenship -- civil rights-- which includes the vote, and I don't mean to disparage that struggle.

I'm saying that the freedom to govern one's own life is more important than the vote, and deep down people know it. In our private lives individual action really counts: we tend to reap the lion's share of the benefits and pay the price of our actions. When I go to the supermarket to buy eggs, I am confident that I'll bring home eggs. Virtually all the costs, both in time and money,  and the benefits are mine; thinking about them is how I decide if going to the supermarket is worthwhile in the first place.

Voting is different. Individual action is almost always indecisive -- each person has only one vote, and the costs and benefits of each person's decision are widely and thinly dispersed throughout society. That disconnect breeds irresponsibility.

Imagine if we shopped for groceries the way we pick rulers. On Shopping Day you would walk into the supermarket and see before you two (maybe three or four) sealed pre-filled shopping carts. Each cart has a different selection of products. Your task is to vote for a cart from among the candidates. That may not be easy. Undoubtedly, you would like some of each cart's contents and dislike others. You would have to decide which one has more of what you want and less of what you don't want. And no, you would not be to able exchange items with other people.

So you would mark your ballot and then return home to watch the election returns. The cart that you get to bring home is the one that wins 50 percent plus 1 of the votes or perhaps a plurality. Of course, it may not be the one you voted for. Oh well. (To make this even more like politics, the cart you bring home isn't exactly like the one you saw in the supermarket. Campaign promises are notoriously ephemeral.)

I submit that that would be a stupid way to shop for groceries. But that's the system we use to pick the people who are empowered to meddle in our lives, embroil us in war, and do other foolish things that no one has any business doing. I acknowledge that voting is preferable to violence for selecting rulers, but when Churchill said democracy beat any alternative, he overlooked a contender: consistent liberalism (libertarianism), which does not allow majorities to negate individual rights.

Mathematically, one vote is rarely decisive and that's only in the smallest jurisdictions. As the late public-choice economist Gordon Tullock pointed out (watch the video "Voting Schmoting"): "It’s more likely that you’ll get killed driving to the polling booth than it is that your vote will change the outcome of the election."

No election in my adult lifetime would have turned out differently had I done something other than I did on election day. Not one. While the smaller the vote pool, the greater the chance of a tie, greater is not the same as great. In most places that chance is insignificant. People still talk about how close the 2000 Bush-Gore vote for president was in Florida. But the margin there was 537 out of nearly six million votes. As far as I've been able to determine, no individual Floridian cast or declined to cast 537 votes that day.

So when the good-government types tell you to get to the polls because "every vote counts," you know not true. It is certainly true that the winner by definition must have more votes than the loser. (Presidential elections are more complicated, of course.) But each person has only one vote, and it will make no difference. The only action you can control will not decide the outcome.

Someone might object that although your chance of casting the decisive vote is typically only the tiniest bit above zero, you won't know for certain how things will turn out until the votes are counted -- so you'd better vote. But if that were the right way to look at it, playing the lottery would be a good financial strategy because your chance of winning, no matter how small, is greater than zero. But it's not a good strategy. Except in truly desperate circumstances, we don't usually undertake a course of action unless we see a reasonable chance of success. That's how we avoid wasting scarce time, energy, and resources. Instead of voting, perhaps your time would be better spent doing something that has a reasonable chance of making a difference in some way that matters to you. Every action -- including voting -- has opportunity costs.

Tullock wasn't telling people to stay home on election day. He pointed out that many people vote because they like to vote, and he meant no criticism of them. Voters can have many reasons for liking that activity, such as feeling part of a like-minded group of people. Tullock simply thought that aiming to determine the outcome of an election is a bad reason to vote.

People can also have good reasons to dislike voting. They may not want to participate in a civic religious-style rite, which apologists for the government power will invoke in order to blame the voters and excuse the politicians and bureaucrats for bureaucratic incompetence and misconduct. If "we are the government," as we are often told, then the fault must lie in ourselves. But are we the government? Or is popular sovereignty the secular equivalent of the divine right of kings -- a fiction to rationalize an elite's power over us? (See the section titled "The Fiction of Representative Government" in my article "The Misrepresentation of Health Care Reform.")

One last thing: we are also told that if we don't vote we have no grounds to complain. That fallacy was put to rest in 1851 when the classical liberal Herbert Spencer pointed out that, apparently, voters have no grounds to complain either because those who voted for the winner got what they wanted and those who voted for the loser accepted the rules of the game. So everyone must shut up and obey. How convenient.

Friday, October 28, 2022

TGIF: Free Markets and Greed

"Greed, for lack of a better word, is good."

Ever since corporate raider Gordon Gekko, the lead character in Oliver Stone's Wall Street (1987), made that declaration, left-wing opponents of the market economy have regarded that one-liner as the only rebuttal required to silence their libertarian adversaries. (Right-wingers like the national conservatives probably find Gekko's line useful too.)

But Gekko's scriptwriters, Stone and Stanley Weiser, neglected to have their creature define the word. How interesting, then, that Gekko says, "for lack of a better word." Is there no better word or phrase than greed for what he might have had in mind? "The peaceful pursuit of one's interest" or "the pursuit of happiness" works for me.

The lack of a definition, of course, has never stopped anyone from quoting Gekko. It's as though a real person had finally blown the whistle on the market economy. It's about greed, and we all know that greed is the worst thing! What more do we need to know?

Bear in mind that the economy that Gekko operated in was not free, especially in banking and corporate finance. The politicians' and bureaucrats' hands were and still are all over it.

The video clip of Gekko praising the morality and efficacy of greed is still a staple of the left. So advocates of the market ought to be prepared for the charge. Milton Friedman can help.

Friedman, the late Nobel-Prize-winning economist, market advocate, and classical liberal was second to none when it came to handling questions from critics, and fortunately we can watch him in action as he answers the charge that greed is a moral stain on the marketplace. (YouTube has many videos showing Friedman answering market critics. Each is a superb lesson in how to respond with patience, civility, and clarity. Everyone would benefit from studying those videos.)

In 1979, eight years before Wall Street, Friedman appeared on Phil Donahue's popular television program. In this short segment of the interview, Donahue asked Friedman, "When you see the greed and the concentration of power, did you ever have a moment of doubt about capitalism and whether greed's a good idea to run on?" (Like greed, the ink-blot word capitalism means different things to different people, which it makes it a bad name for a social system. Hence it is often modified with such conflicting adjectives as free-marketcronylaissez-fairepolitical, and state. That's only one reason I have for rejecting the word.)

Friedman replied:

Well, first of all, tell me, is there some society you know that doesn't run on greed? Do you think Russia doesn't run on greed? Do you think China doesn't run on greed?

What is greed? Of course, none of us are greedy. It's only the other fellow who's greedy.

The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about, the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, it's exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear: that there is no alternative way, so far discovered, of improving the lot of ordinary people that can hold a candle to the productive activities that are unleashed by a free-enterprise system.

Donahue isn't finished, however. "But it seems to reward not virtue as much as the ability to manipulate the system."

Then Friedman:

And what does reward virtue? You think the communist commissar rewards virtue? You think a Hitler rewards virtue? You think -- excuse me, if you'll pardon me -- you think American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout?

Is it really true that political self-interest is nobler somehow than economic self-interest? You know, I think you're taking a lot of things for granted. Just tell me where in the world you find these angels who are going to organize society for us. I don't even trust you to do that. [Smiling.]

Without my intending any criticism, Friedman might have asked Donahue what system he thinks some business people try to manipulate in today's mixed economy. Isn't it the interventionist political system that free-market advocates object to? Friedman also might have asked what's unvirtuous about a system that leaves individuals free to peacefully pursue their happiness through production and trade that necessarily makes many other individuals better off too. State-run or state-guided alternatives are all zero-sum, if not negative-sum, systems. One person's gain is another's loss. Only the market economy is positive-sum -- win-win. John Stossel likes to underscore that buyers and sellers typically thank each other when they complete their transactions. That should tell the Phil Donahues of the world something.

By the way, if you want an actual good movie on the economics of corporate takeovers, check out Other People's Money (1991), based on the play by Jerry Sterner, screenplay by Alvin Sargent, directed by Norman Jewison, and starring Danny DeVito and Gregory Peck.

Friday, October 21, 2022

TGIF: Are Bosses like Rulers?

What does the libertarian philosophy have to say about business management as an institution? Is it analogous to the state or something entirely different? Since we libertarians generally dislike seeing people being bossed around, whether by the state or anyone else, we may be tempted, as I've certainly been, to think that a free and just society would spontaneously dispense with the traditional employer-employee relationship. After all, libertarians have good reasons to at least be suspicious of all hierarchies and subordination, right?

So freedom would achieve its glorious pinnacle through flat bossless worker-owned co-ops, small partnerships, single-proprietorships, and peer-to-peer arrangements that lack even Uber's central ownership.

But maybe not.

The prediction that managerial specialists are due for extinction, however, looks more like wishful thinking in light of solid economic theory and empirical evidence, write economists Peter G. Klein and Nicolai J. Foss in their new book, Why Managers Matter: The Perils of the Bossless Economy. (This is not intended as a formal book review. Listen to Klein's conversation with Keith Knight of Don't Tread on Anyone.)

Klein and Foss's thesis grabbed my attention because, as I've experienced firsthand, drawing an analogy between the state and the traditional firm is seductive. On the other hand, I've known and respected Klein, an economist of the Austrian school who teaches at Baylor University's Hankamer School of Business, for many years. I take him seriously. (Foss teaches at the Copenhagen Business Schools in Denmark.)

The case against the traditional firm has this touch of plausibility: because government interventions in mixed economies can make quitting a job artificially costly, people might feel trapped in bad work situations. To the extent that the government deliberately or inadvertently creates obstacles to starting businesses or relocating (through licensing,  zoning, and more), or through a tax system that ties medical insurance to one's job -- to that extent, the government can in effect block employees from leaving bad workplaces or reduce their bargaining power. Such interventions provide a politically derived advantage to employers over actual and prospective employees that could not be achieved in the market.

But employers can create these impediments. Politicians and bureaucrats can and do.

For libertarians, the obvious remedy for politically bestowed advantages on employers is freedom, specifically, the freedom to compete, to start businesses, to move where the terms are better, etc. Ready options increase employee bargaining power. (Adam Smith in The Wealth of Nations decried the English laws that barred workers from moving to other areas in search of better pay.) Competition is the universal solvent.

The case against government policies that favor employers (again, not necessarily by design) should not facilely be extended to managerial hierarchy or traditional employment per se. Socialists haven't been the only ones to equate employment with servitude. Even the great classical liberal philosopher Herbert Spencer compared it to slavery. (Ironically, the pre-Civil War South's most eloquent defenders of chattel slavery denounced the wage slavery of the free labor market.) However, in a free market and even in a mixed economy like ours, the problem isn't distinct ownership and management. It's politicians and bureaucrats.

This is a big subject, and I'm certainly no expert, so I can only scratch the surface here. But Klein and Foss specialize in the economics of industrial organization and are an important reality check on those who think managerial hierarchy is morally objectionable and economically superfluous or worse.

Morally, of course, as long as neither side of a transaction, including the employer-employee relationship, uses force against the other, the transaction passes muster. It is irrelevant that one side can be said to have a "greater need" than the other for that relationship at that time. It is no employer's fault that people need to earn a living. One might even praise the employer for providing the means to do so. But let's remember that no firm is founded to provide jobs. Firms exist to make money for their owners by producing something of value for others. To do that they will typically hire people. Like other market transactions, all these exchanges produce mutual gains.

People start businesses with plans to produce something specific. Until they decide that a new objective is needed, the owner (or owners) will want to motivate and guide the staff to carry out the mission. Exactly who decides how the mission is carried out is a management's judgment call that depends on many factors. That's what management is about, and managing is real work, as the early classical liberals understood. The owner of an Indian restaurant is unlikely to hire chefs who insist on the autonomy to add other kinds of dishes to the menu. It would be wrong to think that those chefs are oppressed or stripped of their dignity.

Owners or their managerial agents, then, select the company's ends. However, the authors say, in the new information economy, it makes more sense than ever to leave the means to frontline employees. "We agree that the new environment suggests the need for a redefinition of the traditional managerial role." But they add: "Despite all the changes that have occurred, there is a strong need for someone to define the framework. In the knowledge economy, the main task for top management is to define and implement the rules of the game." Managers are also important for coordinating different divisions of a company that depend on each other.

Nuance, then, is the order of the day. Klein and Foss clearly are not dogmatically pro-hierarchy: "Indeed, some companies have excessive corporate fat: layers could often be cut, and empowering employees might increase productivity."

But the authors note that although the new technologies have revolutionized business, "the laws of economics are still the laws of economics, human nature hasn't changed, and the basic problem of business -- how to assemble, organize, and motivate people and resources to produce the goods and services consumers want  -- is the same as it ever was."

Any firm or noncommercial organization, for that matter, requires a focus on both the forest and the trees, the long and short term. Why would we be surprised that different people have different skills and different preferences in this regard? Skills, of course, are not evenly distributed throughout a population. A division of labor, knowledge, and inclinations is to be expected. Many will want to concentrate on a specific job, without having to think about management, long-term planning, and such. Lots of people dislike sitting through meetings.

Moreover, people differ in their preferences for risk-taking. Some prefer a regular paycheck in return for less overall responsibility.

The upshot is that human diversity makes noncoercive hierarchies perfectly understandable, inevitable, and beneficent as long as the market is free. That in no way means that bosses can't be stupid, obnoxious, or abusive. Of course they can and are. But if they have to compete without government privilege, abuse and stupidity won't survive because profits will go to the better-run firms, which will attract the best employees. 

In interviews (as in his and Foss's book), Klein emphasizes that one size surely does not fit all companies. As a Hayekian, he understands that nonmanagement workers possess local and tacit knowledge that managers don't -- and that good managers will want their employees to capitalize on that knowledge and reward them for doing so. "[T]here are many benefits to decentralization, as well as costs, and these vary widely with context and circumstance," Klein and Foss write.

Klein and Foss intend their book to correct the impression given by many current writers on management philosophy that hypes the spread of nonhierarchical companies and predicts a future marked by this new way of doing business. It's not true, Klein and Foss respond: "... echoing Mark Twain ... the death of hierarchy has been greatly exaggerated and ... its bad reputation is largely undeserved."

Their point is not simply that some degree hierarchy is more efficient than none at all, but that bosslessness poses perils to businesses, such as discoordination and -- perhaps counterintuitively -- lack of flexibility.

As you can tell, this is a rich thesis. I'll close with a couple more quotes:

Writers [who favor bossless firms] ... are fiercely critical of traditional hierarchy, but we think they exaggerate its problems and neglect many benefits.... The near-bossless companies -- and there aren't many of them -- with their self-managing teams, empowered knowledge workers, and ultra-flat organizations are not generally or demonstrably better than traditionally organized ones. Bosses matter not just as figureheads but as designers, organizers, encouragers, and enforcers....

[I]f you look more closely at ... ostensibly bossless companies, you see that they do have formal [or informal] bosses.... Right away, this suggests that perhaps the whole bossless company narrative is a bit of a head-fake -- a way to draw attention to the charismatic, influential leaders who create and promote flat structures..... Contrary to popular opinion, the world is not becoming dominated by flatter, even bossless, network organizations.

The market is an efficient decentralized information-generating process. Through private property, voluntary exchange, free enterprise, and the price system, we learn things that we can't learn in other ways. This is as true for the best management methods as it is for the many other things we look to the market for. Government should never impede worker-owned enterprises, but it shouldn't help them either. Freedom is for all. 

Related reading: "Free Men for Better Job Performance" by C. L. Dickenson, published by the Institute for Humane Studies in 1966. It is posted here and here.

Friday, October 14, 2022

TGIF: Governments Create Problems; Markets Fix Them

My article "Complete Liberalism" prompted an unexpected challenge. An interlocutor, who says he owns a business and thus is not antibusiness, claimed that my article suggested that, unlike government regulators, businesses never get things wrong. Yet business failures outnumber successes 10,000 to one, this person said, for all kinds of reasons, both innocent and malign, including a desire to pull the wool over consumers' eyes for as long as possible.

The problem with the comment is that my article never claimed that business people always get it right or are always virtuous. I've pointed out repeatedly that the best economists -- especially the Austrian economists -- never ignore the inherent existence of error in describing how markets work. And libertarian writers have never suggested that business owners cannot have bad intentions, which are magnified by access to state power. Quite the contrary! What these thinkers have emphasized are the systematic incentives and disincentives produced by free competition that reward pro-consumer performance and penalize incompetence and malevolence. Think of all the libertarian criticism of the malignant relationship between business and government. Now think of Ayn Rand's businessmen-villains in Atlas Shrugged.

One need only read the accessible writings of Ludwig von Mises ("Profit and Loss," Bureaucracy), F. A. Hayek ("The Use of Knowledge in Society," "Competition as a Discovery Process"), or Israel Kirzner ("Economics and Error") to see that the plague of uncertainty, error, and incomplete and dispersed knowledge figures heavily in good economic analysis. The question they sought to answer is: how can people coordinate their productive social cooperation in the face of such ignorance? Individual freedom produces the only answer for a great society: prices.

In fact, if it weren't for imperfect knowledge, free markets would be unnecessary and profit and loss would disappear. Mises wrote:

If all people were to anticipate correctly the future state of the market, the entrepreneurs would neither earn any profits nor suffer any losses.... What makes profit emerge is the fact that the entrepreneur who judges the future prices of the products more correctly than other people do buys some or all of the factors of production at prices which, seen from the point of view of the future state of the market, are too low....

On the other hand, the entrepreneur who misjudges the future prices of the products allows for the factors of production prices which, seen from the point of view of the future state of the market, are too high. His total costs of production exceed the prices at which he can sell the product. This difference is entrepreneurial loss.

It's hard to believe that an economist who writes about entrepreneurs with correct or incorrect judgments about the future could have thought that business owners were infallible. Economic analysis, after all, is supposed to be about real human beings who, whether they are acting as producers or consumers, are fallible.

The free-market position is that free and competitive markets are not perfect but better than government bureaucracies at detecting and correcting errors about what consumers will want and what they will be willing to pay. That's what counts, isn't it? Since omniscience is not an option, we want the best method available. That's all we can hope for, and it turns out not to be too bad. We must always ask about any touted solution to a problem: compared to what? Thomas Sowell's Law -- "There are no solutions, There are only tradeoffs" -- is relevant here.

David D. Friedman is another important scholar who has shed on the relative merits of bureaucracies and markets in his important article "Do We Need a Government?" (I recommend his video lecture.) Friedman addresses a different matter than the one I'm concerned with, namely, the collective-action problem, one manifestation of which is called "market failure." But much of what he writes applies. Here's the key, which is about systematic incentives:

In private markets, most of the time, an individual who makes a decision bears most, although not all, of the resulting costs, and receives most of the resulting benefits. In political markets that is rarely true. So we should expect that the market failure that results from A taking an action most of whose costs or benefits are born by B, C, and D should be the exception in the private market, the rule in the political market. It follows that shifting control over human activities from the private market to the political market is likely to increase the problems associated with market failure, not decrease them.

This shouldn't be controversial. We experience this as shoppers when we spend our own money on the very goods we then bring home and use, and as voters, where the disconnect among choices, costs, and benefits is stark. This has critical implications for both business owners and bureaucrats. A fundamental contribution of public-choice theory is that the normal principles of human action apply to government employees. Bureaucracies are filled with ambitious people too, so this is only fair. They don't become sainted creatures with perfect knowledge and perfect virtue merely because they step across the threshold and take government jobs. 

Incentives matter, as we all know first-hand. The same human being operating in two different institutional environments should be expected to behave differently. And indeed they do.

In a competitive -- that is, free -- market a business owner's mistake or bad conduct is someone else's chance to make a profit. Because entrepreneurs know this, they are on the lookout for errors. "Hence in a market society," Friedman writes, "there is an incentive for private parties to find ways around the inefficiencies due to market failure."

Nothing is more powerful than the profit motive, something that even opponents of the market readily concede.

The same incentive is not to be found in bureaucracies, which are not profit-and-loss organizations. Most important, bureaucrats don't have the price information that entrepreneurs have. Their revenue is obtained by force -- taxation -- and their "products" are not offered on markets where prospective buyers can pass them by for competing offerings. That's an entirely different ballgame from market activity.

Notice that bureaucratic failures are routinely portrayed as market failures (most people's economic ignorance leaves them gullible) and are used to justify even more government: larger budgets, bigger staff, and wider powers. If (alleged) market failures require more government, as some people believe, how can government failures require, not more markets, but more government?

We should want the incentives for spotting and fixing errors to be as undiluted as possible. The way to achieve that is to keep the government from interfering with people's peaceful activities.

Friday, October 07, 2022

TGIF: How the State Violated Free Speech during the Pandemic

Is anyone shocked by this observation?

Public statements, emails, and recent publicly released documents establish that the President of the United States and other senior officials in the Biden Administration violated the First Amendment by directing social-media companies to censor viewpoints that conflict with the government’s messaging on Covid-19....

This insidious censorship was the direct result of the federal government’s ongoing campaign to silence those who voice perspectives that deviate from those of the Biden Administration. Government officials’ public threats to punish social media companies that did not do their bidding demonstrate this linkage, as do emails from the Centers for Disease Control and Prevention (CDC) and the Department of Homeland Security (DHS) to social media companies that only recently were made public.

So states the New Civil Liberties Alliance (NCLA) in announcing its lawsuit against President Joe Biden, former chief medical adviser Anthony Fauci, and other government public-health officials,  departments, and spokesmen. The case now before a federal district court in Louisiana is called State of Missouri ex rel. Schmitt, et al. v. Joseph R. Biden, Jr., et al. No social-media company was named as a defendant. Rather, the suit is about the government's illegal and unconstitutional conduct. (See the complaint for the eye-opening details.) In fact, the complaint states: "Notably ... prior to Defendants’ campaign of threats and pressure, social-media platforms generally declined to engage in the acts of censorship alleged herein." 

The plaintiffs are the states of Missouri and Louisiana and several health care experts, including Dr. Jay Bhattacharya of Stanford University (among other prestigious affiliations) and Dr. Martin Kuldorff of Harvard University, two of the three authors of the Great Barrington Declaration, published in October 2020 and signed by thousands of medical professionals. The Declaration challenged the government-led strategy of shutting down American society through a variety of mandates as though everyone -- young and old, healthy and ill -- were equally vulnerable to the dangers of COVID-19. The government's data on who was suffering serious, possibly lethal illness and requiring hospitalization contradicted that baseless premise early in the pandemic.

The Declaration, which today has signatures from more than 62,000 scientists and health care professionals (and 932,000 signatures overall) called instead for "focused protection" of the elderly and those with already-compromised immune systems. Otherwise, Americans should be left free to live normal lives. The shutdown of society, this view holds, would inflict untold harm in regard to health (because of deferred medical examinations/treatments), psychological well-being, children's education, and lost income. All of this and more have now been documented. "Focused protection," it must be emphasized, was not a radical position in 2020. Rather, it had been the mainstream approach to pandemics for the previous 100 years.

Unfortunately, the authors, who also included Dr. Sunetra Gupta of Oxford University, were smeared by government officials and spokesmen as fringe characters who could be safely ignored. At the same time, the national government pressured social media to suppress challenges to its message and policies. In other words, the government did everything it could short of direct censorship to keep the American people from knowing that eminently qualified doctors and other scientists disagreed with the party line.

Under the U.S. Constitution and case law, the government is not only barred from directly interfering with speech on the basis of content, but it is also prohibited from inducing or coercing private entities, such as social networks, to do so. The Supreme Court has spoken on this.

The plaintiffs contend that this is precisely what the defendants did during the pandemic through "express and implied threats" against the social networks, including the threat of antitrust action and the threat to withdraw the protection provided by Section 230 of the Communications Decency Act, which immunizes the platforms from liability for what participants post. 

NCLA says:

Government-induced censorship is achieved through a wide variety of mechanisms, ranging from complete bans, temporary bans, “shadow bans” (where often neither the user nor his audience is notified of the suppression of speech), deboosting, de-platforming, de-monetizing, restricting access to content, requiring users to take down content, and imposing warning labels that require click-through to access content, among others. These methods also include temporary and permanent suspensions of disfavored speakers.

This sort of censorship, which strikes at the heart of what the First Amendment to the U.S. Constitution was designed to protect—free speech, especially political speech—constitutes unlawful government action. The federal government is deciding whose voices and ideas may be heard, and whose voices and ideas must be silenced. Moreover, this state action deprives Americans of their right to hear the views of those who are being silenced, a First Amendment corollary of the right to free speech.

The lawsuit seeks no monetary damages, but it asks the court to declare that the plaintiffs acted illegally. It also asks the court to

Preliminarily and permanently enjoin Defendants, their officers, officials, agents, servants, employees, attorneys, and all persons acting in concert or participation with them, from taking any steps to demand, urge, pressure, or otherwise induce any social-media platform to censor, suppress, de-platform, suspend, shadow-ban, de-boost, restrict access to content, or take any other adverse action against any speaker, content or viewpoint expressed on social media.

Going further, we must demand an end to the government-university-science complex, which puts a heavy political thumb on the scale of scientific debate without which the truth cannot be ascertained. As the complaint states, "Yesterday’s 'misinformation' often becomes today’s viable theory and tomorrow’s established fact.... This prediction has proven true, again and again, when it comes to suppressing 'misinformation' and 'disinformation' on social media." (The complaint notes other examples of similar reversals despite official government efforts, including the Hunter Biden laptop story and the Wuhan lab-leak theory of the coronavirus's origins. These once-belittled accounts either have been confirmed, as with the laptop story, or have achieved reasonable credibility if not confirmation, as with the lab-leak theory.)

Government officials must not be permitted to suppress, directly or indirectly, public-health and other sorts of claims they disagree with. Officials of course can say what they believe are the facts, but they must not attempt to smear, marginalize, and silence dissenters. The very act of financing scientific research is prejudicial because of the stamp of exclusive legitimacy it implies. As the pandemic illustrates, a truly free marketplace of ideas is literally a matter of life and death.

Friday, September 30, 2022

TGIF: The Scourge of Conscription

By now Randolph Bourne's observation that "war is the health of the state" ought to be such a cliche that it would hardly need to be said. And yet, it must be said -- often -- because many still haven't gotten the word.

If the state is the adversary of liberty, as it nearly always has been, then it follows that war is also the ill health of liberty. And when one thinks of war, one ought also to think of conscription because it's often somewhere close by. In a perverse way, Americans have been lucky. The divisive decade-long Vietnam war and access to the latest war-making technology have made the draft just a bad memory for Americans since 1973 and politically toxic. Repeated attempts to bring it back, even with "national service" packaging fortunately have failed.

Outrageously, however, American men 18-25 must register with the euphemistically named Selective Service System, as they've been required to do since 1979 when the Soviet Union invaded Afghanistan. Make no mistake about it. This is not a registration for a benign contest. As the Selective Service website states:

While there is currently no draft, registration with the Selective Service System is the most publicly visible program during peacetime that ensures operational readiness in a fair and equitable manner. If authorized by the President and Congress, our Agency would rapidly provide personnel to the Department of Defense while at the same time providing an Alternative Service Program for conscientious objectors.

How reassuring. The draft is always in the wings. And the penalty for the felony of not registering is a $250,000 fine and/or a five-year prison term.

The evil of slavery is almost universally appreciated, so why is the draft, which is slavery with an expiration date and high risk of death and injury, not universally condemned? Is it because in many places people believe that governments ultimately own their subjects and may dispose of them as they see fit?

The draft has been in the news lately because Russia, the invader, and Ukraine, the invaded, compel men into combat and other military "service." It is encouraging that neither Russians nor Ukrainians are fans of that policy. Russian men are protesting and some are getting out of the country. Ukraine has had to forbid men from leaving. Many people just don't relish war.

It should go without saying that if individuals have the right to life, liberty, and the pursuit of happiness, then individuals have the right to decide when they will take up arms, free of a despotic elite or majority. We may not always like the consequences of freedom, but that's how it is.

Until 1973 America had suffered the tyranny of conscription repeatedly, but not everyone accepted it. One of the most eloquent speeches ever delivered in the House of Representatives was aimed at conscription by Rep. Daniel Webster of Massachusetts (1782-1852) in 1814 after a bill to draft men for the lingering War of 1812 had been introduced. Despite Webster's efforts, the bill passed, but the war ended before it took effect. Originally from New Hampshire, Webster also was a U.S. senator and secretary of state. He was in the Federalist party until 1825. As a staunch nationalist, he opposed nullification by the states of national legislation, a position that will seem at odds with his objection to the conscription bill.

We must bear in mind that Webster's speech came when many people distrusted standing armies and believed that the national government constitutionally could call up the state militias only in specified emergencies, namely, to "repel invasion, suppress insurrection, or execute the laws.” In the first few decades of the republic, however, membership in the militias was mandatory. But unlike a regular army, the militia did not require full-time service for a period of years. For the rank and file, it was a sideline (like being in a fire brigade) that was part of their normal lives. All but one of America's earliest wars were fought with such conscripts.

Webster objected not to compulsory military service per se, but rather to a bill according to which the "services of the men to be raised ... are not limited to those cases in which alone this government is entitled to the aid of the militia of the States." In other words, he was making a federalist case against the claims of the national government. This is a far narrower objection than a libertarian might have hoped for, but Webster still had worthwhile things to say against the inherent features of conscription.

Webster thought the bill was an attempted end-run around the Constitution. He asked:

What is this, Sir, but raising a standing army out of the Militia by draft, and to be recruited by draft, in like manner, as often as occasions require?... That measures of this nature should be debated at all, in the councils of a free government, is a cause of dismay. The question is nothing less than whether the most essential rights of personal liberty shall be surrendered, and despotism embraced in its worst form. [Emphasis added.]

Later in the speech he said, "If the Secretary of War has proved the right of Congress to enact a law enforcing a draft of men out of the Militia into the Regular Army, he will at any time be able to prove quite as clearly that Congress has power to create a Dictator."

He saw the threat of despotism all through the bill:

Is this, sir, consistent with the character of a free government? Is this civil liberty? Is this the real character of our Constitution? No sir, indeed it is not. The Constitution is libelled, foully libelled. The people of this country have not established for themselves such a fabric of despotism. They have not purchased at a vast expense of their own treasure and their own blood a Magna Charta to be slaves.

Imagine such words being spoken in Congress today. He clearly spelled out the consequences, which should be familiar to all in our own time:

Where is it written in the Constitution, in what article or section is it contained, that you may take children from their parents, and parents from their children, and compel them to fight the battles of any war in which the folly or the wickedness of government may engage it? Under what concealment has this power lain hidden which now for the first time comes forth, with a tremendous and baleful aspect, to trample down and destroy the dearest rights of personal liberty?

Who will show me any Constitutional injunction which makes it the duty of the American people to surrender everything valuable in life, and even life itself, not when the safety of their country and its liberties may demand the sacrifice, but whenever the purposes of an ambitious and mischievous government may require it?

Then he addressed the stated concern of Secretary of War John Armstong, a champion of the bill:

But it is said that it might happen that an army would not be raised by voluntary enlistment, in which case the power to raise an army would be granted in vain, unless they might be raised by compulsion. If this reasoning could prove anything it would equally show that whenever the legitimate powers of the Constitution should be so badly administered as to cease to answer the great ends intended by them, such new powers may be assumed or usurped, as any existing administration may deem expedient.

Webster, here sounding like an old Antifederalist, seemed to be rejecting the Constitution's "necessary and proper" clause as a potential blank check. That doctrine attributed to Armstrong, he said, would result in a central government of unlimited self-defined powers, which he condemned as a violation of the framers' intent: "An attempt to maintain this doctrine upon the provisions of the Constitution is an exercise of perverse ingenuity to extract slavery from the substance of a free government."

Should the law pass, he said, it would fall to the states to protect their citizens from that arbitrary national encroachment. The central government would then require an army to enforce conscription, just as it believed it needed conscription to raise an army. Webster said:

It will be the solemn duty of the State Governments to protect their own authority over their own Militia, and to interpose between their citizens and arbitrary power. These are among the objects for which the State Governments exist, and their highest obligations bind them to the preservation of their own rights and the liberties of their people. [Emphasis added.]

How is that not nullification?

In his expectation that the states would protect their citizens from a national draft, Webster's speech reminds us of the Defend the Guard campaign now going on in state legislatures to end Washington's power to commit National Guard units to overseas combat without a declaration of war, as has happened throughout the 21st century. (Watch Scott Horton's speech in Minnesota on behalf of the Defend the Guard movement there.)

The more things change....

Friday, September 23, 2022

TGIF: Sam Harris on Saving Democracy from Voters

Neuroscientist/philosopher Sam Harris caused quite a stir recently by defending the social networks' conspiracy (his word) to suppress news coverage of Joe Biden's son Hunter's smoking-gun laptop shortly before Election Day 2020. Harris said the suppression was justified because Donald Trump was such a threat to America that he had to be defeated whatever the cost to the election's integrity.

In other words, according to Harris, such tampering is okay as long as he deems it necessary to save American democracy from the voters.

The social networks are privately owned, of course, but remember that Facebook chief Mark Zuckerberg has acknowledged that the FBI warned him, shortly before the New You Post broke the laptop story, that unspecified major Russian disinformation aimed at the election was about to surface. The authenticity of the laptop, with its damaging emails about Hunter Biden's lucrative business dealings with Ukrainian and Chinese entities while his father was the vice president, was known early on and has since been confirmed by others. Even the New York Times now concedes it. Allegations of Russian election tampering had as much merit in 2020 as they had in 2016, when Trump was portrayed by his critics as a Russian stooge.

But with or without prodding from the FBI, the social network operators, should not have suppressed the laptop story for a host of obvious reasons. These businesses acquired huge numbers of participants on the promise that they would be open forums. When they first began to interfere with that process, the networks let users down. To do this during a presidential election is a particularly egregious disservice. Why do people still depend on them for information? (No, this does not justify antitrust action.)

I leave it to others to debate whether Harris's assessment of Trump is accurate. I'm more interested in the principle Harris has set out.

Although I am as far from Trump fandom as anyone could be, the first question I would ask Harris is whether he considers himself the only person wise and trustworthy enough to decide if a candidate is sufficiently threatening to justify concerted suppression of unflattering information about the other candidate. If he says yes, then he's as self-centered as Trump. If he says no, he might do us the courtesy of spelling out how that decision would be made. Does he want a constitutional office created? How would the decider be chosen?

If he were to answer my questions, I would move on to this one: what makes him think that if his principle was adopted, he would like its future applications? Supreme Court justices have often disappointed the presidents who appointed them. For similar reasons, the decision makers anointed to carry out the Harris principle might somewhere along the way disappoint him. Harris must be a lousy chess player because he doesn't think even two moves ahead.

Still, Harris's remarks do raise an interesting dilemma. It's not a new conundrum: what if democracy looks to be on a suicide course? Does the "sacred" principle of majoritarianism, which libertarians as individualists abhor, extend to the principle itself? Or is it proper to cripple democracy to save it?

Small-d democrats might say, "Yes -- temporarily." But there's the rub. The future is uncertain. Temporary in intent is not necessarily temporary in fact. Governments taught us that long ago. We know that people don't like to give up power, as Lord Acton taught us. Power doesn't only tend to corrupt; it attracts the already corrupt. Wouldn't that suggest that democracy should never be suspended or tampered with in the present for fear that the winner of an election might suspend or tamper with it in the future? What say you, Sam Harris?

If this problem is addressed only after it arises, it's probably too late. The time to think about it is before a democracy with few real limits on power is launched. The War Games line, spoken by the computer after learning that nuclear war is futile, applies: "The only winning move is not to play."

It's not as if the original classical liberals and their libertarian descendants didn't warn us. Individualist political economists and social philosophers long ago pointed to the dangers of a democratic state with the power to meddle in all aspects of people's lives. For these thinkers, the whole point of laissez-faire in the age of democracy was to keep elected rulers, and thus the electorate itself, out of our private peaceful productive affairs so that the contest for political power would not become socially and economically disruptively cutthroat. When the government is just about omnipotent, everyone will want to get to their hands on it -- if only for defensive purposes.

Even if those pioneering political economists did not want to dispense with government entirely (a few did), they understood that society essentially runs itself without a heavy-handed state because people generally understand that their best interests are served through cooperation with others. Thomas Paine, for example, in Rights of Man wrote:

Great part of that order which reigns among mankind is not the effect of government. It has its origin in the principles of society and the natural constitution of man. It existed prior to government, and would exist if the formality of government was abolished. The mutual dependence and reciprocal interest which man has upon man, and all the parts of civilised community upon each other, create that great chain of connection which holds it together. The landholder, the farmer, the manufacturer, the merchant, the tradesman, and every occupation, prospers by the aid which each receives from the other, and from the whole. Common interest regulates their concerns, and forms their law; and the laws which common usage ordains, have a greater influence than the laws of government. In fine, society performs for itself almost everything which is ascribed to government.

Thus, at most, governments should be kept on a short leash, with their powers dispersed and their missions held to the barest minimum necessary to protect the peace, that is, individual rights. If we can eliminate the state altogether, even better!

What the good liberals didn't tell us -- because there's no magic formula -- is how to keep government to the bare minimum. Constitutions are no guarantee, are they? Today's libertarians are still working on cracking that nut. Most people are not going to read books on political philosophy or economics, even something as accessible as Frédéric Bastiat's The Law. So somehow we must strive to create a taboo against asking the government to do anything more than keep the peace in ways that respect everyone's rights. How do we do that?

Saturday, September 17, 2022

Friday, September 16, 2022

TGIF: Question Intuition!

In the 1960s a popular button that New Left activists wore implored everyone to "Question Authority!" It was good advice, even though many kinds of authority exist. Some authority is chosen (for example, one's doctor) and others are compulsory (the government). But in either case, questioning it is reasonable. The button did not implore anyone to reject authority, only to question it.

What about intuition? I have the impression that people think their own intuitions need not be questioned because they are reliable. But is that wise? I don't think so.

First let's acknowledge that much of what people take for an intuition is often a mere claim heard repeatedly through the mass media or social networks. Something that seems like an intuition may not be one at all.

But ignore that distinction for this discussion. Some factual claims just feel true to people who have not read much about the matter. For example, many people are likely to say that it is intuitively true that a growing human population must bring a progressive depletion of natural resources (and the products embodying them) and thus scarcer supplies, higher prices, more hardship for poorer people, greater economic inequality, and other bad things. They feel this must be the case. How could it not be true? Resources are finite and nonrenewable, so if more and more people demand them, harm must follow.

But is it really true? Or is this a case of knowing something that isn't so?

It will shock many people to learn that we know empirically and theoretically that it is not true. If that sense of doom is an intuition, then intuition can be and often is wrong. Malthus got it exactly upside down. As Marian Tupy and Dale Pooley, building on the work of the late great Julian Simon, demonstrate, world population has grown dramatically -- one billion in 1800, eight billion today -- along with a dramatic fall in absolute poverty and a dramatic increase in the production of and access to food and all the other things we need and want.

More people are living longer and materially better lives than ever before. This simply cannot be denied. Tupy and Pooley emphasize a largely unknown fact among laymen: today it takes people on average everywhere less labor time to earn the money to buy all sorts of goods and the underlying resources than it took in the past, even the fairly recent past. In the time the average manufacturing worker labored to earn the money to buy one egg in 1919, he could buy 36 eggs in 2019. The time price of an egg thus had dropped to 1/36 of the earlier time price, roughly a 97 percent drop in the real price. And so on across the board.

Today, Tupy and Pooley say, average time prices have fallen to 2 percent of their 1850 level. (Quality improvements, which are hard to quantify, make this fall an underestimate.) Let that sink in, especially how that disproportionately benefits the poorest people. They have more time to buy more things or to enjoy leisure. That's new wealth. Industrious people at all levels have become smarter and more productive because of modern technology.

Tupy and Pooley call their new book Superabundance because, contra Malthus, the increase in resources has outpaced population growth. That's counterintuitive. We forget that while people are consumers, most are also net producers. (See the charts here.)

Exactly what accounts for that great progress? Two things, the authors say. The first is human intelligence, or as Simon called it, the "ultimate resource." This is an apt term. Contrary to intuition, there are no natural resources. Zilch. In the pilot of the 1960s TV show The Beverly Hillbillies, the backwoods farmer and hunter Jed Clampett discovers oil on his land. Does he cheer? No, he is unhappy. He sees it as a curse. When a city man offers to remove the oil, Jed says he can't afford to pay for the removal. The city man laughs and explains that Jed will be paid (a lot), not charged, for the removal. (Jed was really behind the times.) Obviously, that was not always the case.

What happened? Knowledge happened. Chemically, the crude was the same stuff as before. But in the 19th century, a chemist (in Canada, I believe) discovered that kerosene, which could fuel lamps, could be distilled from that oil. Then others discovered that oil could be pumped and refined economically, that is, cheaply enough to make a mass market. (John D. Rockefeller had a lot to do with this.) This solved a problem: the common fuel for lamps, whale oil, had been getting expensive because the whales were being killed off. Eventually, it was discovered that gasoline, which could fuel machines, also could be refined from oil, and we were off to the races.

What turned useless black gunk into useful "black gold" was human intelligence. This is true for all so-called natural resources. Nature provides stuff, but it neglected to furnish a user manual. People had to figure it out for themselves. And we all benefited immeasurably.

As important as human intelligence is to the creation of resources, something more is needed: freedom (or at least a good measure of it). If people are not substantially free to act and interact, peacefully, of course -- if society instead is planned from the top -- little if any innovation will take place to improve the lives of entire populations. Freedom and innovation go together.

A further implication, as Simon heroically taught, is that population growth (along with immigration, by the way) is good. More people means more ideas that can combine with other ideas to produce even better ideas. (Free speech is obviously crucial.)

The great economist Ludwig von Mises understood all of this. My favorite line in his magnum opus, Human Action, reads: "The fact that my fellow man wants to acquire shoes as I do, does not make it harder for me to get shoes, but easier." As the number of our fellow human beings increases, getting shoes and everything else becomes even easier -- if the government can be kept at bay.

Everything today is more plentiful and cheaper than in previous eras -- well, almost everything. The only thing that has gotten more expensive is labor, which indicates that people have become more scarce relative to consumer demand and resources. If a demographic problem for economic growth is looming, it's de-population in the most productive parts of the world. What's your intuition have to say about that?

Indisputably, then, free human beings have made the earth more, not less, hospitable. (For details on all these matters, see the works of Simon and Tupy and Pooley, as well as others, including Matt Ridley, Bjorn Lomborg, Alex Epstein, Patrick Moore, and Michael Schellenberger.)