TGIF: Don't Blame Wokeism on the Unfinished Liberal Revolution

The National Conservatives are not only wrong about genuine liberalism -- that is, libertarianism -- they also apparently haven't bothered to read up on what they think they're attacking. Take Yoram Hazony, author of Conservatism: A Rediscovery, who recently appeared on the YouTube show Triggernometry. As Hazony makes clear, for him it's straw men all the way down.

Throughout the interview he uses the word liberalism for the philosophy he blames for saddling the West with wokeism. That's unfortunate because people use that term in many ways. What definition does he have in mind? I think we can infer that he means something like libertarianism (and not, say, Nancy Pelosi's "liberalism") since he faults the philosophy for its powerful commitment to free markets. Although he's not thoroughly opposed to free enterprise, he favors a government strong enough to step in when the "national interest" (ascertained by whom?) requires it. National conservatism without a commitment to government power to override the free market would be like a square circle.

Like other right-wing critics of libertarianism, Hazony believes that Western societies are in the woke soup because Enlightenment liberalism is intrinsically prostrate before its leftist adversaries. Why would that be? In his eyes, it's because liberalism's only message is this: do your own thing. He told Frances Foster and Konstantin Kisin:

If you [liberals, presumably] raise children and you tell them, "Look, do whatever you want. Do whatever feels good. Use your own reason, exercise your own thinking, and come to your own conclusions, and you don't give them anything else, a great many people, maybe the majority, end up stuck and unable to make the decisions among, you know, what exactly is it I'm supposed to do and what is it I'm supposed to believe.

I have no idea why Hazony thinks that liberalism teaches people to do whatever feels good, or that, as he says elsewhere, that freedom is "all they need." One of the first things liberal parents would teach their children is to respect other people's rights: specifically, don't hit other kids and don't take their stuff without asking.

By the way, "do whatever feels good" is hardly the same as "use your own reason, exercise your own thinking, and come to your own conclusions." How does Hazony not see that?

Further, using your own reason does not mean: don't read history, don't learn from others' experiences, don't absorb the moral and political lessons of those who came before. Liberalism is not about the individual's starting from scratch and reinventing the wheel. Rather, it means that you shouldn't blindly accept what others tell you. Use your head. We have much to learn from other people and other ages. So what's Hazony's real beef with liberalism?

As this makes clear, he clearly doesn't know what liberalism is, but he's certain he knows what it has wrought:

Liberalism is what brought woke neo-Marxism. Every single institution that the woke neo-Marxists are running now was a liberal institution 15 years ago. So if liberalism had the antibodies, if it was enough to say let's just be free, if that was strong enough to be able to defeat woke neo-Marxism we wouldn't be where we are today....

Liberalism brought Marxism.

Have you noticed how everything the woke left favors these days -- to be sure, genuinely abhorrent stuff -- is reflexively condemned by the right as "neo-Marxist" -- even when the idea in question has nothing to do with the material forces of history and economic classes? You'd think Marxism was the only evil in the world. Actually, It's not.

Sometimes, when Hazony thinks he's scored points on liberalism, he sounds a bit like a liberal, such as when he reminds us that each individual is born into a culture, which ought not to be automatically rejected. The reason he doesn't realize that liberals can agree with this is that he thinks -- wrongly -- that liberals are Jacobins, who aspire to wipe the social slate clean and start over. Some liberals have occasionally sounded like they're saying something like that, but to suggest that Jacobinism or utopianism is intrinsic to liberalism is to do a disservice to an honorable and valuable -- yes -- heritage.

While Hazony concedes that it might be okay to reject some inherited traditions, he seems uncomfortable with that prospect. As he puts it, your forebears "hand[ed] down things [and] you have a responsibility to fight for those things." Why? Because they were handed down?

I prefer Thomas Sowell's take: another culture may well have features that are better than one's own -- superior at dealing with an aspect of life.

The entire history of the human race, the rise of man from the caves, has been marked by transfers of cultural advances from one group to another and from one civilization to another....

Cultures exist to serve the vital practical requirements of human life -- to structure a society so as to perpetuate the species, to pass on the hard-earned knowledge and experience of generations past and centuries past to the young and inexperienced, in order to spare the next generation the costly and dangerous process of learning everything all over again from scratch through trial and error -- including fatal errors.

Cultures exist so that people can know how to get food and put a roof over their head, how to cure the sick, how to cope with the death of loved ones, and how to get along with the living. Cultures are not bumper stickers. They are living, changing ways of doing all the things that have to be done in life. [Emphasis added.]

Every culture discards over time the things which no longer do the job or which don’t do the job as well as things borrowed from other cultures. Each individual does this, consciously or not, on a day-to-day basis. [Watch the video; read the text.]

Problems with change occur not when people are free to adopt "the stranger's ways" (the supposedly scary phrase is from Fiddler on the Roof); they occur when those who favor change have access to state power -- especially when government controls or strongly influences education, the media, and other commanding heights. Then some people, however well-meaning, can potentially impose their preferences on the rest.

Without access to power, people are free to adopt changes for themselves and try to persuade others, but then they would have to wait to see if the new ways catch on. Change, under those circumstances, tends to happen at the margin, although exceptions can't be ruled out. (Social contagion is possible.) But even then, free people would have peaceful consensual ways to protect themselves and their children from unwanted change. This is where freedom of association kicks in.

In general it seems reasonable for individuals to provisionally defer to tried-and-true ways because they have apparently passed the cultural natural selection test. Yet one also ought to remain open to demonstrations of better alternatives. Liberalism delivers the best of both: stability without stagnation and dynamism without chaos. But individual rights must be respected.

As a national conservative, Hazony of course favors nationalism. If all he means is that a world of many nation-states is preferable to a global empire, then libertarians stand with him. If we can't get rid of power, at least let's disperse it among small competitive jurisdictions. But he means much more than that since he and his fellow National Conservatives favor trade restrictions and other forms of welfare-state industrial policy. And I presume he would oppose secession, at least from nation-states he approves of. (He is an Israeli.)

Hazony commits a major blunder when he says that liberalism is inherently imperialist and that nationalism is inherently anti-imperialist. How does he figure that? Since liberals believe they have identified universal principles, he says, it is committed to imposing those principles on everyone. If you fail to see his logic, I imagine you're not alone.

Contrary to Hazony, liberalism doesn't says it has the one true way for everyone to live. Rather, it says all people ought to be free to decide how to live. Liberalism, which seeks to limit state power, doesn't entail imperialism because that would expand state aggression both domestically and abroad. Thus "liberal imperialism" is a contradiction in terms. Nationalist imperialism, however, is not.

While I wouldn't expect Hazony to be persuaded by what I'm about to say, I will point out that the alarming and long-standing decline of liberalism can be plausibly explained by its initial incompleteness politically, economically, legally, and even morally. Twentieth-century liberal writers, scholarly and popular, pointed this out repeatedly and tried to do something about it. That's why they wrote so much. These included Ludwig von Mises, F. A. Hayek, Murray Rothbard, Leonard Read, Henry Hazlitt, Milton Friedman, and most fundamentally, Ayn Rand, who argued persuasively (to me at least) that as long as a secular or religious ethics of self-sacrifice predominated in a culture, the political-economic-legal system rooted in individualism and private property would never be whole-heartedly embraced because it would be tainted by the alleged sin of "selfishness."

Even the doctrine of limited government kept liberalism from fully blossoming because, as we've learned so often the hard way, limited governments don't stay limited. (See my article "Anthony de Jasay on Limiting Power.")

Thus liberalism didn't yield because it was inherently weak. It yielded because it was fatally compromised from the start. That's my answer to Hazony's question of why wokeism has succeeded. We don't need illiberal national conservatism to win back our freedom.

TGIF: The Economic Way of Thinking Can Save Lives

Thomas Sowell

The Cambridge economist Joan Robinson (1903-1983) wisely said, "The purpose of studying economics is not to acquire a set of readymade answers to economic questions, but to learn how to avoid being deceived by economists."

Excellent point, though I would both broaden and narrow her category of suspects. I would include most politicians, bureaucrats, pundits, and social-science and humanities professors in the suspect group. And I would exclude the economists -- spoiler alert: primarily those of the Austrian school, although others stand out -- who paint a much more realistic picture of the world than the others do.

For the record, Robinson was sympathetic to John Maynard Keynes and, later in life, communist China's Mao Zedong, and North Korea's Kim Il Sung. Obviously, her study of economics did not teach her how to avoid being deceived by all who represented themselves as economists. (I heard once that Che Guevera became head of Cuba's national bank in 1959 because when Fidel Castro asked his cadre, "Who here is a good economist?" Guevara, thinking he heard, "Who here is a good communist?" raised his hand. But that's apparently apocryphal.)

At any rate, mankind would have been spared a good deal of misery had people learned at an early age to engage in the economic way of thinking. If I were to sum it up in a short phrase, I would say: in a world in which the law of identity, causality, and scarcity rule, you can't do just one thing. Human action has consequences. This apparently is also the first law of ecology, but oddly, environmentalists (as opposed to humanists) seem ignorant of it.

The point is that all human action has rippling consequences across society and across time. The economist who called his textbook The Economic Way of Thinking, the late Paul Heyne, wrote, "All social phenomena emerge from the choices of individuals in response to expected benefits and costs to themselves." (Happily, Peter J. Boettke and David L. Prychitko keep updating the book. It's in its 10th edition.)

Heyne's maxim applies to the choices of politicians and bureaucrats also. So before proposing or endorsing a government policy, one ought to wonder about the social phenomena that are likely to emerge from it. Economics is an indispensable tool in this respect.

Henry Hazlitt's classic, Economics in One Less, is a great way to get started. Hazlitt wrote, "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." Hazlitt's book elaborated an important message of his intellectual ancestor, Frédéric Bastiat, the 19th-century French laissez-faire liberal, in the classic essay "That Which Is Seen and That Which Is Unseen."

Individuals who adopt this way of thinking are better equipped to judge the promises of politicians, etc. who support taxes, minimum-wage laws, rent control, general wage-and-price controls, and the rest of the program of political authority over contractual freedom and other peaceful conduct. Even well-intended regulations will have unintended bad secondary consequences. Good intentions are never enough.

Any good introduction to the economic way of thinking will introduce readers to concepts like opportunity cost, the unseen, sunk costs, the margin, and tradeoffs. Most people seem to intuit some of these in their own lives. But they fail to do so when it comes to society as a whole. They are encouraged by politicians and pundits to think that common sense in private life does not apply to the big picture.

Opportunity cost refers to the fact when you choose a course of action, you necessarily foreclose another course of action. The true cost, then, is the (subjectively judged) next-best choice forgone. If you buy something for two dollars, your cost isn't really two dollars. It's what you regard as the next best use of those two dollars -- the future not chosen. You might decide afterward that you made a mistake: "I could've had a V-8!" Good economists do not regard people as omniscient robots.

Opportunity cost is another way of looking at trade-offs. If you do or choose A you can't do or choose B. Thus you trade B for A. Trade-offs are inescapable. Thomas Sowell, for whom the word genius is woefully inadequate, dramatically drew attention to this feature of life when he wrote, "There are no solutions. There are only trade-offs." Today's problems, he adds, may well be the result of yesterday's solutions. We'd do well to bear this in mind, especially in deciding what the government should be doing (if anything).

Opportunity costs and trade-offs are examples of the "unseen," another important concept in good economics. Bastiat's fable of the broken window (see link above) debunked the myth that destruction stimulates the economy by prompting spending and thus makes communities or nations as a whole richer. Bastiat showed that a town does not get richer when a store owner has to buy a new window. Sure, he spends money, benefiting some people in town, but wouldn't he have spent the money on something else? What else? No one knows. It's unseen. But we know that he and others are now worse off. The owner has the window, but he would have had a window plus whatever he wishes he could have spent the money on. No general enrichment occurs.

Remember that next time a pundit rhapsodizes about the silver lining in earthquakes and hurricanes ("Think of the jobs that will be created!") or a politician proposes to spend your money. Ask yourself, "What sort of things won't happen?"

Although many other concepts are entailed by the economic way of thinking, I will mention only one more variation on the unseen. This one has incited ugly bigotry and cost many lives: it's the concept middleman.

No one has documented this as well as Thomas Sowell, not only its economic dimensions but more broadly as well.  As Sowell shows in many works (see, for example, Black Rednecks and White Liberals), middlemen -- peddlers, storefront and chain-store retailers, importers, and money lenders -- perform an important service in the market by matching up people who would gain from trade but might otherwise have a hard time finding each other. Retailers specialize in matching manufacturers with consumers, sometimes extending credit, while wholesalers match manufacturers with retailers. Money lenders specialize in matching lenders with borrowers. (Estimating the creditworthiness of borrowers is no piece of cake.)

In short, middlemen save us a lot of inconvenience. Free exchange is win-win or it does not take place. If they do their jobs well, middlemen make us richer, which is why they earn profit. If their function were inherently superfluous, they would be driven out of business by better business forms.

Alas, the value produced by middlemen is unseen by the economically ignorant, but it is real. Historically, successful middlemen, even if they were only slightly richer than the people around them, have been despised for their success, especially (but not exclusively) if they had started out poor and were immigrants who noticeably differed racially or ethnically from the majority population. Why? Because the ignorant believed the middlemen were exploiters. They made good incomes seemingly without creating anything. They "merely" moved goods or money around or made them available sooner rather than later -- as if place and time were irrelevant. Where's the value in that?

Sowell's work shows that this animosity born of economic ignorance and envy is at the bottom of a great deal of the world's racial, ethnic, and religious bigotry and violence, including mass murder, even when such ignorance is obscured by added rationalizations. (Demagogues often fanned that bigotry for political gain.)

"Middleman minorities" have in fact been the most persecuted groups in history all over the world, Sowell writes. That description might bring the Jews to mind, but Sowell shows that the Jews were far from unique in that respect. His list of chronically persecuted and even slaughtered middleman minorities includes the Chinese in Southeast Asia, Lebanese in west Africa, Indians and Pakistanis in east Africa, Armenians in the Ottoman Empire, Ibos in Nigeria, Parsees in India, and Tamils in Sri Lanka.

The magnitude of that violence, Sowell says, dwarfs that of other violence. Middleman minorities were hated not only for their higher incomes but also for the distinctive cultural traits that made that success possible, among them thrift, willingness to work long hours, strong families, and so on. The majority population often was at an economic disadvantage because of its cultural disadvantage; it wouldn't or couldn't compete against the minority, fanning the hatred.

The story is tragically common. Sowell says that while the overseas Chinese and other groups have been called the "Jews of [insert pertinent location]," that could easily be turned around: the Ashkenazi Jews were the Chinese, Lebanese, etc. of Europe.

While emphasizing these beleaguered groups' commonalities, Sowell does not deny the uniqueness of each group's story. The Nazi's unprecedentedly bureaucratized and mechanized elimination of Europe's Jews, of course, comes to mind. Nevertheless, Sowell writes in Black Rednecks and White Liberals (PDF), "In view of what was actually done to some of these other groups [the Chinese and Armenians, for example], there is little reason to doubt that their persecutors would have used such technological and organizational capabilities [as the Nazis used] if they had them." Sowell is no ivory-tower, library-bound intellectual. He's traveled the world more than once for an international perspective on this and related issues.

As I said, mankind would have been spared a great deal of grief -- and would have been much richer -- had people early on learned the economic way of thinking.

What Kind of Liberal?

Not to put too fine a point on it, but I am a Locke-Smith liberal.

TGIF: Where the Socialists Go Wrong

Since socialism is "in" today -- even though many people who say they favor it have no idea what it is -- F. A. Hayek's last book, The Fatal Conceit: The Errors of Socialism (1988), is worth checking out. Hayek, the late great Nobel-laureate economist of the Austrian school, begins this way:

This book argues that our civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection -- the comparative increase of population and wealth -- of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be 'fruitful, and multiply...' This process is perhaps the least appreciated facet of human evolution.

Socialists take a different view of these matters.

Well, that last sentence is quite an understatement. By socialism Hayek didn't mean the welfare state or continuing government efforts to manipulate market outcomes according to some notion of equity. That would be interventionism or the mixed economy. No, socialism is the abolition of the market order and its necessary condition, private property: the replacement of free private enterprise with centralized bureaucracy. Let's cut to the chase:

The main point of my argument is, then, that the conflict between, on one hand, advocates of the spontaneous extended human order created by a competitive market, and on the other hand those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources is due to a factual error by the latter about how knowledge of these resources is and can be generated and utilised. As a question of fact, this conflict must be settled by scientific study. Such study shows that, by following the spontaneously generated moral traditions underlying the competitive market order (traditions which do not satisfy the canons or norms of rationality embraced by most socialists), we generate and garner greater knowledge and wealth than could ever be obtained or utilised in a centrally-directed economy whose adherents claim to proceed strictly in accordance with 'reason'. Thus socialist aims and programmes are factually impossible to achieve or execute; and they also happen, into the bargain as it were, to be logically impossible.

Hayek is saying that once we understand how information about resources is produced and transmitted, we realize that central planners can't deliver the goods. Socialism can't keep its (earlier) promises of plenty. (Nor of justice, but that's for another time.)

Here Hayek extended Ludwig von Mises's fatal critique of socialism; namely, that

1. without tradeable private property in the means of production, markets for resources and producers' goods don't exist;
2. without such markets, true prices can't exist; and
3. without prices, rational economic calculation is impossible;
4. therefore, socialism is impossible; it's "planned chaos."

By impossible Mises meant that without genuine money prices resulting from free exchanges, the millions of disparate resources and goods could not be accorded a common unit of account, and therefore rational decision-making about what ought to be produced, how much should be produced, and the best methods of production is foreclosed. In a world of scarcity with a growing population, that is bad news indeed.

When the socialists responded to Mises that planners could simulate market prices with computers and bureaucratic trial and error, Hayek said, No, they can't because what makes true and informative prices happen -- producer and consumer free choice in an environment with widely dispersed and ever-changing local and often tacit knowledge about resources and preferences -- is beyond any central planner's reach. In what Hayek called "the great society" -- which is marked by extended cooperation with countless strangers rather than the earlier, primitive face-to-face tribal relations -- spontaneous coordination via the price system is the name of the game, literally a matter of life and death.

Thus Mises identified the "calculation problem," and Hayek the complementary "knowledge problem." The Mises-Hayek tag team was triumphant. When the Soviet Union dismantled itself, the American socialist economist Robert Heilbroner declared, "Mises was right."

As a result, newer generations of socialists gave up their goal of outproducing the market in favor of the "era of limits." In effect they said: "It's good that socialism can't outproduce the market. Affluence is bad for the planet, so the last thing we should want is for the people of the developing world to achieve our sinfully high living standards. Better that we should produce far less according to the instructions of trusted, saintly, and omniscient bureaucrats, who will distribute the output more caringly than profit-driven impersonal and spontaneous market forces could ever do."

And would you like to buy a bridge cheap? Back to Hayek.

The demands of socialism are not moral conclusions derived from the traditions that formed the extended order that made civilisation possible. Rather, they endeavour to overthrow these traditions by a rationally designed moral system whose appeal depends on the instinctual appeal of its promised consequences. They assume that, since people had been able to generate some system of rules coordinating their efforts, they must also be able to design an even better and more gratifying system. But if humankind owes its very existence to one particular rule-guided form of conduct of proven effectiveness, it simply does not have the option of choosing another merely for the sake of the apparent pleasantness of its immediately visible effects. The dispute between the market order and socialism is no less than a matter of survival. To follow socialist morality would destroy much of present humankind and impoverish much of the rest.

Many people with whom I share a deep loathing of war and surveillance apparently get a warm cozy feeling from the word socialism. I suspect it's because they've never encountered Hayek's point, much less examined it. That's a shame. They have nothing to lose but their self-forged chains.

To Capitulate or Not to Capitulate? That Is the Question

Why is it bad to capitulate but good to recapitulate, especially since no one could recapitulate without first capitulating?

TGIF: The Mythical Right to Medical Care

This clever video juxtaposes footage of Bernie Sanders and the late Milton Friedman to create a debate over whether the central government should take over medical care in America. Sanders condemns as a "national disgrace" the lack of a medical care guarantee for all -- rich, poor, and in between. Medical care, he insists, should be "a right of citizenship." Then, echoing someone in the audience, he changes that to "health care is absolutely a human right."

The remarks by Friedman from the '60s and '70s chosen for the video address the efficiency problems with government-run medical services, including the inevitable restrictions on consumer choice. Politicians and activists may feel good when they passionately declare that the government should guarantee all people medical care. Unfortunately, such declarations neither create nor deliver quality care justly or efficiently. Friedman was a long-time advocate of the separation of medicine and state. In his 1962 book, Capitalism and Freedom, he called for, among other things, the end of medical licensing, and he defended that view in these recorded remarks before a group of presumably uncomfortable doctors at the Mayo Clinic.

Since Friedman spoke as an economist, not a political philosopher, in his remarks, I thought I'd say something about the rights issue that Sanders raises. To pick a nit: Sanders needs to make up his mind. Is medical care a right of American citizenship or a human right? I don't see how it can be both. The term human right suggests universality, while a right of American citizenship does not.

But let's leave that and look at this purported right. The first thing that occurred to me is that this "right" doesn't match its billing. Medical care is not like air or water; it doesn't appear naturally. On the contrary, the many services and products that constitute medical care must be created through human effort.

This ought to pose a problem for the right-to-medical-care set. A declared right to medical care would camouflage something even more ominous: a right to the labor of doctors, nurses, technicians, developers of medicines, inventors and producers of medical devices, and so on.

That raises a question: do those people have a say in the matter? If the answer is yes, then there goes the purported right; they would be free to decline to go along. But if the answer is no, they are no longer free people, but slaves. Don't we all agree that slavery is bad? (Well, almost everyone. Slavery still exists today, including in Libya, thanks to the U.S.-led regime change in 2011, and many other places. The number of slaves today is larger than in previous times, but it gets nowhere the attention still given to American slavery, which was abolished 158 years ago.) Abraham Lincoln correctly said that "if slavery is not wrong, nothing is wrong." It follows that if self-ownership -- the opposite of slavery -- isn't right, nothing is right.

Is Sanders calling for slavery?

No, no, he and his allies will protest. No one is talking about slavery. No one wants anyone compelled to produce medical services and products. (I'm not entirely sure about that. Would they not endorse conscription for doctors if enough of them opted out of Medicare and Medicaid because of the bureaucratic intrusions?)

If they don't favor slavery, what do they mean? They mean that the government should guarantee payment for medical services for all. (As if the government would pay for something without dictating terms.) But how can the government guarantee payment? Society's medical bill is huge (partly because of government intrusion on both the supply and demand sides), and politicians and bureaucrats certainly don't personally have that sort of money. So they'd have to get it from somewhere else, and we know where that is: the pockets of the people living in America. All that politicians and bureaucrats can do is rearrange existing wealth according to their own preferences. (Actually, it's worse than that; by intervening, they impede the creation of new wealth and innovation in the medical field.)

One way or another, the government would have to transfer wealth from the people who create it to bureaucrats. If the chosen method is taxation (and if it didn't create a tax revolt), the transfer would be straightforward. The dollars the government takes and spends are dollars surrendered under duress by the individuals who earned them. Okay, taxation is not slavery, but it is extortion.

On the other hand, if the government borrows the money, the Federal Reserve would monetize the debt by inflating the money supply, driving up prices (and distorting the structure of production). Depreciation of the money would constitute a transfer of purchasing power from consumers to bureaucrats. That's just a hard-to-see form of taxation. (By the way, without the power to tax, the government would be unable to borrow.)

Sure, everyone theoretically would eventually get some kind of medical attention (if they lived long enough; you know how government monopolies are), but would the system be worth it in terms of lost liberty and utility? It's not as though free people wouldn't arrange for decent medical services, insurance, mutual-aid associations, and philanthropy if liberated from government domination. (Bulletin: we don't have a free medical system.) 

Sanders and the Medicare-for-all brigade endorse an untenable situation in which two or more sets of people are in a conflict over the same money: those who earned it and those whom the legislators and bureaucrats claim to be serving. We ought to be able to agree that they can't both have a valid claim to the same money. (How could the earners, who include entrepreneurs, business owners, managers, and employees, not be entitled to their earnings?)

For a rights theory to do its job -- which is to define the moral-political zone in which each individual can act and flourish in peace -- rights must be mutually consistent, or compossible, as the political philosopher Hillel Steiner puts it. That means the test of any rights theory is this: could all people exercise their rights simultaneously without conflict? Under classical-liberal natural-rights theory, they could. Under the progressive theory, they could not. Thus the progressive theory fails.

Sanders's view would eviscerate the Lockean principle that each person is an end in himself and not merely a means to other people's ends. Sanders & Co. effectively repudiates self-ownership and the rights to life, liberty, and the pursuit of happiness, which is really a single right: the right to be free from aggression.

No right to medical care exists. Everyone has a right to engage in peaceful and consensual cooperative activities aimed at obtaining medical care. But a right to medical care per se? No way, not if we value liberty -- and quality medical care.

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!

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?

 

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.

 

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?

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?

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.

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. 

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.

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-market, crony, laissez-faire, political, 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.

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.