you can argue that places with big government are great for other reasons, and this draws people there despite the big government and not because of it. And I think there’s a lot of truth to this. But what it tells you is that revealed preferences show that having a small government is less important to people than the other things that make a place great, like culture, quality of life, agglomeration, and economic dynamism.
Pointer from Tyler Cowen. In response, David Henderson points out that what is unrealistic today can change if you can change people’s opinions. My thoughts:
Find the locality with the most freedom of all of the localities in the U.S. Call it Libertymax. If economic liberty is what is most conducive to wealth creation, then why is Libertymax not the richest town in the country? If personal liberty is your highest priority, then why are you living where you are instead of moving to Libertymax?
Here is the way that I think about it. Statism comes from the Fear Of Others’ Liberty. The statists are more than 90 percent wrong. As people, they represent a positive externality–they make me wealthier, and I enjoy being around them. But as FOOLs, they represent a negative externality–their wrong views lead to statist policies that are clumsy, ineffective, and based on delusional notions of the benevolence and wisdom that political leaders can possess.
You cannnot escape from the statists. But it is still worth trying to convince them not to be FOOLs.
If a government controlled an important commodity resource we could expect it at least be able to be simultaneously inefficient and wealthy. It’s #1 priority as a government would be maintaining control of that resource.
Smart people create things, but can’t create them in a vacuum. They need to be around other smart people, working in smart institutions, and be allowed to do so by the governing authority. These networks of human relations are like a commodity that can be exploited. The #1 goal of any government would be controlling that resource.
Since exploiting smart humans and exploiting a commodity are different, you get different kinds of government, but the goal of control and enrichment is the same.
What we’ve learned from the lack of an internet revolution and various Galt’s Gulch type Seasteading experiments is that you can’t build networks of smart people ex nihilo though some kind of planning process. Nearly all current agglomerations of smart people have some kind of historical reason for existing the way they do.
So if you need existing institutions to change to allow you more liberty, one ought to ask what are the most reasonable ways to change them. Some people believe its writing policy papers for Cato. Some think its to win elections and pass laws.
I like this idea. We live in a world of competing governments each seeking to maximize or at least optimize its power and wealth. In the grand experience of different governance, what succeeds and what does not. Differing measures of success support different models so one needs to be careful choosing measures, but most measures have leaned to moderate intervention.
If you were sitting on a pile of oil, even fairly mediocre governance would lead to decent enough outcomes. Though of course you couldn’t go full retard (Nigeria).
If you are sitting on a pike of smart people, even fairly mediocre governance would lead to decent enough outcomes (all of the OECD), but you couldn’t go full retard (North Korea).
“Nearly all current agglomerations of smart people have some kind of historical reason for existing the way they do.”
Right. That’s why Ozimek is obviously wrong about so-called ‘revealed preferences’. One can’t infer some clear preference when big, prosperous cities are different from other places in so many ways.
What big, prosperous cities all around the world have is a self-perpetuating lock on certain economies of agglomeration of human capital. This is the kind of productive capital that really matters nowadays for the bulk of the labor force.
If an affluent individual leaves the agglomeration that enables their productivity, their best alternative source of employment has a much, much lower income. That’s why they are willing to (1) pay through the nose for rent, and (2) put up with awful local government.
A willingness to put up with big, bad governance because they own the place where money can be made is obviously not a revealed preference for big government.
Indeed, the direction of causation works the other way. The fact that people are a captive audience if they want to participate in the huge gains from agglomeration is precisely what enables governments to turn up tax rates, spending, intrusiveness, ideological obnoxiousness, and avoid any electoral accountability based on the quality of governance.
It’s noteworthy that in the early 70’s when urban governance in the US was approaching its nadir, when people voted with their feet, they didn’t actually go very far, and usually decamped to the nearest well-governed and freer suburb, fully intending to commute to the same urban agglomeration.
Now that’s revealing. Because it reveals that people really disliked awful urban big government and wanted to escape it, but still couldn’t go without access to the city that enabled them to earn a better living than anywhere else.
Some fears are justified, some are not, some laws are passed out of fear, some are not, the wisdom is to know the difference and seek to improve them, to be skeptical of what can be accomplished, but not dismiss what can, to be alert to delusions, but not to mistake differences in values for them.
“If personal liberty is your highest priority, then why are you living where you are instead of moving to Libertymax?” I suppose Libertymax is somewhere in New Hampshire. But the amount of liberty I would enjoy in Libertymax is only very slightly greater than what I enjoy living where I do (near Chicago, outside of Cook County). It would not be worth my while to move; after all, personal liberty is a high priority of mine, but not the only priority.
The conclusion of your post is rather confusingly stated. You write: “You cannot escape from the statists. But it is still worth trying to convince them not to be FOOLs.” This seems to be playing on a distinction between statism and FOOLishness, but these are virtually the same thing (“Statism comes from the Fear Of Others’ Liberty”). And I think I disagree with your conclusion. Is it really worthwhile trying to convince people to change their worldview? How about trying to change their religion, or their practices regarding diet and exercise, or their sexual practices, or their artistic tastes? I think that, for the most part, you should let people be; your efforts to change them in fundamental ways should be, at most, very modest.
Libertymax not the richest town in the country?
1) Let us call LibertyMax, Singapore? They are the richest city state in the world and yet a lot of libertarians find concerns underneath it all including the world’s lowest birth rate. And they have a lot of government that support the bottom immigrants to survive in the economy.
2) What if LibertyMax was not wealth maximization but Rod Dreher Benedict Option? Now you maximizing religious liberty above all else? And there small religious communities that do well across the US but a few fail and become weird religious cults.
3) In a lot ways, wasn’t the Japan Inc. LibetyMax in the 1970 – 1990? That economic ride was tremendous but as an Econ Prof. said in 1993, they will suffer long term without cheap labor.
4) Is Utah a LibertyMax? But if you aren’t Mormon, well it might not feel that way.
5) Our imagine of the Rust Belt of Ohio or Michigan as a lot of LibertyMax. But there were Unions to fund the lower classes in 1965. (Along with segregation laws)
In general an economic LibertyMax would be wealth maximization but it still needs a source of cheap labor or a lower class to function. And they need to find a way to agree with the rich and the cheap labor. So they may fund Silicon Valley funds it through Obamacare, Singapore funds through other programs, Detroit Unions in 1965 or Utah funds it through the Mormon Church. (Or with global creative destruction will weaken LibertyMax of Japan Inc. or Detroit 1965.)
And in terms of LibertyMax, wasn’t the 2016 US election mostly fought on the position of WWC versus minorities (including illegal immigration)? I tend to agree with Bryan Caplan, that higher immigration would increase GDP the quickest.
Also, I like Adam’s point that ‘Crony Capitalism’ issues I do believe that state and especially local governments tend to be easier targets for this. If your business is thriving and employing 10% of the population, then your industry by economics allow becomes the dominant force in the neighborhood. (And residents can’t vote against your interest.)
Note how important coal mining jobs are to WV and KY and the Rust Belt.
Once I head a quip, why do rock stars date supermodels, and the answer was, “because they can”. Why do wealthy, otherwise great places to live (think France or California) have large governments with high taxes, because they can. You try that in Texas or Oklahoma and you get a wasteland.
They tried to do it in Detroit, which after WWII was one of the most prosperous places in the world, and indeed, probably in human history given the average living standard of a typical laborer. It wasn’t sustainable.
I agree with most of the structural points above, and add one thing.
Arnold for somebody who talks about specialization and patterns so much, here you are proposing a “toy” model. The specialization associated with the highest paying jobs (software, finance, healthcare, etc.) is also bound into patterns. It makes no sense to do surgery or M&A work in a dessert.
Libertymax as you describe is really “a total dessert of patterns of trade” – and there’s no government there because there are no patterns to make surplus to feed it.
Excess government is a kind of infection that feeds on the surplus of good patterns of specialization and trade. If you converted Libertymax to place with great patterns of economic activity, an infection of government would follow.
This is not an argument that more government is OK, just as biological explanations of why your garage is full of rats doesn’t mean you shouldn’t extirpate them.
“Excess government is a kind of infection that feeds on the surplus of good patterns of specialization and trade. If you converted Libertymax to place with great patterns of economic activity, an infection of government would follow.”
Perfect
Another thought:
Human history is basically an endless string of wars of one kind or another – all to gain resources, status, etc.
One can argue that tax policy, various rent seeking schemes, union forces, populism, and so forth, are all really the expression of those same biological forces by other means. (Clauswitz backwards in a sense.)
“But it is still worth trying to convince them not to be FOOLs.”
Are they fools because of what they believe, or fools because its a dominant personal strategy for getting along in this world.
Progressivism can bestow benefits and distribute punishments. People see that. If they were true believers we would end up in some full retard death spiral like the Cultural Revolution. But if they are ad hoc mixed believers just trying use and avoid progressive tenets to their own ends ad hoc you get what you get today.
As such the best way to make people not FOOLs would be to make being a FOOL a bad personal bet. You can’t CATO policy paper your way to that.
I’m reminded of this essay on Crony Beliefs:
http://www.meltingasphalt.com/crony-beliefs/
And so we can roughly (with caveats we’ll discuss in a moment) divide our beliefs into merit beliefs and crony beliefs. Both contribute to our bottom line — survival and reproduction — but they do so in different ways: merit beliefs by helping us navigate the world, crony beliefs by helping us look good.
The point is, our brains are incredibly powerful organs, but their native architecture doesn’t care about high-minded ideals like Truth. They’re designed to work tirelessly and efficiently — if sometimes subtly and counterintuitively — in our self-interest. So if a brain anticipates that it will be rewarded for adopting a particular belief, it’s perfectly happy to do so, and doesn’t much care where the reward comes from — whether it’s pragmatic (better outcomes resulting from better decisions), social (better treatment from one’s peers), or some mix of the two. A brain that didn’t adopt a socially-useful (crony) belief would quickly find itself at a disadvantage relative to brains that are more willing to “play ball.” In extreme environments, like the French Revolution, a brain that rejects crony beliefs, however spurious, may even find itself forcibly removed from its body and left to rot on a pike. Faced with such incentives, is it any wonder our brains fall in line?
Even mild incentives, however, can still exert pressure on our beliefs. Russ Roberts tells the story of a colleague who, at a picnic, started arguing for an unpopular political opinion — that minimum wage laws can cause harm — whereupon there was a “frost in the air” as his fellow picnickers “edged away from him on the blanket.” If this happens once or twice, it’s easy enough to shrug off. But when it happens again and again, especially among people whose opinions we care about, sooner or later we’ll second-guess our beliefs and be tempted to revise them.
Mild or otherwise, these incentives are also pervasive. Everywhere we turn, we face pressure to adopt crony beliefs. At work, we’re rewarded for believing good things about the company. At church, we earn trust in exchange for faith, while facing severe sanctions for heresy. In politics, our allies support us when we toe the party line, and withdraw support when we refuse. (When we say politics is the mind-killer, it’s because these social rewards completely dominate the pragmatic rewards, and thus we have almost no incentive to get at the truth.) Even dating can put untoward pressure on our minds, insofar as potential romantic partners judge us for what we believe.
If you’ve ever wanted to believe something, ask yourself where that desire comes from. Hint: it’s not the desire simply to believe what’s true.
In short: Just as money can pervert scientific research, so everyday social incentives have the potential to distort our beliefs.
……
Of course there’s nothing special about climate change. We find similar bad-faith incentives among many different types of beliefs:
Political beliefs, like whether gun control will save lives or which candidate will lead us to greater prosperity.
Religious beliefs, like whether God approves of birth control or whether Islam is a “religion of peace.”
Ethical beliefs, like whether animals should have legal personhood or how to answer the various trolley problems.
Beliefs about the self, like “I’m a good person,” or “I have free will.”
Beliefs about identity groups, like whether men and women have statistically different aptitudes or whether certain races are mistreated by police.
Since it’s all but impossible to act on these beliefs, there are no legitimate sources of reward. Meanwhile, we take plenty of social kickbacks for these beliefs, in the form of the (hopefully favorable) judgments others make when we profess them. In other words, they’re all cronies.
Every time I am at a stop light waiting for it to change, I am upset by the patent unfairness that those not going my way have a green light.
Statist bs
Everyone wants liberty for themselves. A large part of the population fears liberty for others.
The mistake libertarians tend to make is in thinking that the state is the enemy. Actually, the state may well be on the libertarian side – but the neighbors, not so much.
The thing is, relatively libertarian political orders have become more wealthy and more successful than less libertarian ones – and states know that.
So, states tend to impose more relative liberty than their populations would like – not full-on liberty, but more than the populations would like.
Do too much of that, and you get a revolt. Democracy is a mechanism for providing feedback.
Democracies who actually give their voters the socialism (or other centrally planned system) they think they want, become poor, and fail. That experiment has been done – it’s being proven out again in Venezuela, unfortunately. Most governments know that, and have enough institutional good sense to try to avoid it – but you can’t always be sure, and sometimes you get a Venezuela. Most educated voters know it too – but you can’t always be sure, and sometimes you get a Venezuela.
Policy think tanks serve a useful purpose in reminding government institutions of the dangers of central planning and oversized government.
Outreach serves a useful purpose in reminding the voters.
I think what people really fear is not others’ liberty but their own liberty, and the implied personal responsibility that comes with it. Most people don’t want to be free, they want to be taken care of. See Buchanan, “Dependency as a Desideratum: Afraid to be Free.”