Category Archives: Libertarian Thought

Three Axes, individual reasoning, and social justification

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A commenter writes,

There’s one thing I’m still not clear about from the book. You distinguish talk from thought but … many readers do not make this distinction…

Three antagonistic framings of issues that the three tribes use in a constant intellectual war – the antagonism causing them to represent each issue entirely as one of civilization versus barbarism, or oppressor-victim, or coercion-liberty. This leaves little room for hope as it has nothing to say about what people think: perhaps it’s not simple partisanship but how they really think too.

In theory, I see a distinction between:

1) arriving at an opinion by yourself. Call this private reasoning.

2) justifying your opinion to others. Call this public justification.

I mean for three axes model to apply to (2). But in practice (1) and (2) are so closely related that it is easy to slip into applying the model to (1).

Let’s use an example. Take the travel ban from Muslim countries. Along the oppressor-oppressed axis, what stands out is the fact that many American non-Muslims are wary of Muslims, and to progressives this makes Muslims an oppressed class. For a progressive, this justifies opposing the ban. Along the civilization vs. barbarism axis, what stands out is the threat that Muslim extremism poses to our civilization. For a conservative, this justifies supporting the ban. Along the coercion-liberty axis, what stands out is that the ban coercively deprives innocent people of an important right. For a libertarian, this justifies opposing the ban.

However, I do not wish to say that any person adopts a single-axis reason for supporting or opposing the ban. In fact, a person who self-identifies as progressive and who takes a progressive position on many issues might, for some reason, support the ban. Our tribal axis plays a role in private reasoning, but it is not everything.

When I say “justifies,” I mean public justification, not private reasoning. In public (i.e., talking with others), a progressive is likely to:

a) make oppressor-oppressed arguments against the ban;
b) view favorably others who use such arguments;
c) accuse supporters of the ban of being oppressors

In fact, even if a progressive for some reason had decided to support the ban, that progressive still would be receptive to (a) – (c). With regard to (c), the hypothetical ban-supporting progressive probably would feel a need to say, “Yes, I know there are many Islamophobes out there who support the ban, but my reason for supporting the ban is not Islamophobia.”

It is easier to escape your preferred axis privately than in public. When you are among members of your own tribe, it is almost impossible to escape from your (tribe’s) preferred axis.

I hope that helps.

Russ Roberts on The Three Languages of Politics

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He sketches the main ideas of the book, and then he uses the three-axes model to discuss the blind spots of each tribe. For example,

Liberals first. In their eagerness to empathize with the victim, they can turn the victim into an object rather than an independent actor. Poor people are so oppressed in the liberal view, they don’t just have limited agency to choose and live life in meaningful ways. They have no agency. They are simply objects manipulated by powerful people around them.

Indeed. I would say that the oppressor-oppressed axis attaches too little agency to the individuals in the oppressed categories. Also, it attaches too much agency to the individuals put into the oppressor category. Progressives prefer to explain market outcomes as deliberate exploitation rather than the operation of supply and demand.

I would say that conservatives have a blind spot when abandoning tradition can enhance civilization rather than threaten it. Think of abandoning the tradition of Jim Crow in the South.

Concerning libertarians, Roberts writes,

We often romanticize the power of economic freedom. We struggle to imagine that some people are poorly served by markets, that some transactions involve exploitation of ignorance and that the self-regulation of markets can fail. In our zeal to de-romanticize government, we often ignore the good that government does especially in cases where freedom might perform badly. Our worst mistake is to defend the freedom of business to do what it will in situations where government has hampered or destroyed the feedback loops of profit and loss that make economic freedom successful.

I get what he is driving at with the last sentence–the problem sometimes called crony capitalism–but it comes across as more of a humble-brag than a blind spot.

What might I see is the libertarian blind spot? Perhaps it is the tendency to view coercion as a binary phenomenon. We speak as if you either are coerced by the government or you make a free choice. Perhaps it is more reasonable to think in terms of a continuum. There are many government policies that people do not experience as horribly coercive. Traffic regulations are one obvious example. There are market situations where people do not sense that they have free choice–remember the guy who got thrown off a plane by the airline? And what if a gay couple could not find any convenient baker willing to bake them a wedding cake?

The left, the market, and economists

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In a recent exchange with Don Boudreaux, Bryan Caplan writes,

The heart of the left is being anti-market.

From the standpoint of the oppressor-oppressed axis, it may make sense to be anti-market. If you look at market outcomes, you see some people do much better than others. It is natural to assume that those doing well are oppressors and those doing not as well are oppressed.

As an economist, I look at the market as impersonal. It is a process. As a process, it has many virtues.
Competition helps to regulate exploitation. The profit motive spurs innovation that helps people in general. You know the drill.

Bryan is among those who believe that teaching people economics can help them to understand the process perspective and to see the market in less personal terms. Hence, if you confront people on the left with economics, their leftism will soften. That indeed has happened to many economists. Vernon Smith and Deirdre McClosky are two prominent ex-socialists.

Unfortunately, I think that going forward we are going to see the opposite effect of confronting leftists with economists. That is, I think that the academic economics will be converted to an oppressor-oppressed view of markets. Not that I think that such a view is more justified now than in the past. Rather, I think that the leftism in academia is stronger than in the past. See my recent essay. As I have pointed out in previous posts, we are already seeing much more focus in academic economics on anti-market perspectives that align with the oppressor-oppressed framing.

Facts, Feelings, and Filters

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A commenter writes,

Arnold’s argument that economics is about using particular frameworks as lenses for interpretation is also quite postmodern.

Well, sort of.

Consider three statements.

a) Amazon announced its intention to purchase Whole Foods.

b) Amazon should not be allowed to purchase Whole Foods.

c) Amazon’s purchase of Whole Foods damages the prospects of other grocers.

(a) is an example of a fact. (b) is an example of a feeling.

(c) is an example of an observation based on a filter, in that it depends on one’s framework of interpretation. You might think one way if you see Amazon’s move as intensifying competition in the grocery industry. You might think differently if you see it reducing competition and/or as a signal that there is value in national grocery franchises (what if Google or Facebook decide they also want to own grocery stores?). And, yes, the drop in stock prices for other large grocery chains says that investors favor one interpretation more than another. But my point is that the interpretation is contestable.

Some more remarks.

1. In 20th-century philosophy, the Logical Positivists seemed to dismiss the concept of filters. They would regard (c) as an attempted fact-claim. Anything other than a fact-claim or a feeling is a dogma.

2. The Post-modernists take the opposite view. Every statement comes through a filter. This would make every statement contestable, including (a).

3. I wish to take an intermediate position. I believe that there are scientific observations and laws that are not contestable, but I also believe that filters are very important. Synonyms for filters include frameworks of interpretation, models, theories, and paradigms.

4. In Specialization and Trade, I argue against the dominant filter in macroeconomics, which I call the GDP factory.

5. In The Three Languages of Politics, I argue that progressives, conservatives, and libertarians each use distinctive linguistic filters. If you make an argument using terms that correspond to (for example) the progressive’s linguistic filter, a progressive will approve that argument, while it will fail to resonate with a conservative or libertarian.

6. In both books, I am suggesting that people think they see truth, but there are different plausible filters that would change their outlook.

7. However, I do not go so far as to say that there is no truth, and that any belief system is as good as any other. Instead, I am saying that sometimes there is more than one plausible filter. If you are sending a man to the moon or building a computer, you had better use the consensus scientific filters. In other realms, where causal density is high, no filter is robust.

8. If you want to be wise, you need to acknowledge the anomalies that cast doubt on your filters. Otherwise, you end up treating your filter as a sacred tribal doctrine.

9. There is a prominent version of post-modernism that I would term Left Post-modernism. Strictly speaking, post-modernism should lead one to be aware of many possible filters and skeptical of one’s own filters. In contrast, Left Post-modernism puts everything through the filter of race and gender and is entirely lacking in self-doubt. For example, in Sunday’s WaPo, Tung Yin writes,

Mass killings look the most like terrorism when their perpetrators seem the most alien from the Judeo-Christian, white majority.

This is Left Post-modernism treating its filter as a sacred tribal doctrine, ignoring some pretty obvious contrary evidence. Just off the top of my head, the Irish Republican Army and the Baader-Meinhof gang were labeled terrorists.

The WaPo itself has an analysis on line (not in print, that I could see) of Friday’s terrorist stabbing in Jerusalem, which is focused on “who they were working with and for.” That is one distinctive feature of terrorism, which is that the perpetrators claim to act on behalf of an organization that engages in terrorism. But far be it from Yin to admit that the term “terrorism” is anything other than a racist epithet.

Speaking of Friday’s attack, in which an Israeli policewoman was stabbed to death before the attackers were killed, The BBC notoriously headlined the incident “Three Palestinians killed after deadly stabbing in Jerusalem.” This is how they prefer to filter such news (although in this rare instance, following Israeli outrage the BBC later changed the headline). The WaPo filtered the news even more effectively, because I did not see any coverage of the incident at all in its print editions. It might otherwise disturb the narrative that the WaPo put forth prominently in recent Sunday editions, in which the Palestinians suffer from checkpoints for no reason under “occupation.”

The WaPo news and Outlook sections are now all Left Post-modernism, all the time. The editorial page is sometimes more broad-minded, but I have given up on the heavy-handed filtering disguised as reporting and analysis. For news, I look elsewhere.

Modernity and the Three-Axes Model

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Michael Aaron writes,

Modernists are those who believe in human progress within a classical Western tradition. They believe that the world can continuously be improved through science, technology, and rationality. Unlike traditionalists, they seek progress rather than reversal, but what they share in common is an interest in preserving the basic structures of Western society. Most modernists could be classified as centrists (either left or right-leaning), classical liberals and libertarians.

Postmodernists, on the other hand, eschew any notion of objectivity, perceiving knowledge as a construct of power differentials rather than anything that could possibly be mutually agreed upon. Informed by such thinkers as Foucault and Derrida, science therefore becomes an instrument of Western oppression; indeed, all discourse is a power struggle between oppressors and oppressed.

The reader who pointed me to this essay suggested that it fits the three-axes model. I am not sure that it does. It would fit the model if put traditionalists on the civilization vs. barbarism axis, modernists on the liberty vs. coercion axis, and progressives on the oppressor vs. oppressed axis. But when Aaron writes,

modernists perceive an influx of Islam, and particularly conservative strains of Islam, in the form of unbridled mass migration, to pose a threat to Western culture due to its authoritarian, sexist and homophobic views

the phrases “influx of Islam” and “threat to Western culture” strikes me as appealing to the civilization vs. barbarism axis.

High Fixed Costs and Public Goods

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The June 2017 issue of Cato Unbound looks at how the private sector could provide public goods. It considers the idea of what Alex Tabarrok calls a Dominant Assurance Contract.

Alex writes,

The dominant assurance contract adds a simple twist to the crowdfunding contract. An entrepreneur commits to produce a valuable public good if and only if enough people donate, but if not enough donate, the entrepreneur commits not just to return the donor’s funds but to give each donor a refund bonus. To see how this solves the public good problem consider the simplest case. Suppose that there is a public good worth $100 to each of 10 people. The cost of the public good is $800. If each person paid $80, they all would be better off. Each person, however, may choose not to donate, perhaps because they think others will not donate, or perhaps because they think that they can free ride.

Now consider a dominant assurance contract. An entrepreneur agrees to produce the public good if and only if each of 10 people pay $80. If fewer than 10 people donate, the contract is said to fail and the entrepreneur agrees to give a refund bonus of $5 to each of the donors. Now imagine that potential donor A thinks that potential donor B will not donate. In that case, it makes sense for A to donate, because by doing so he will earn $5 at no cost. Thus any donor who thinks that the contract will fail has an incentive to donate. Doing so earns free money. As a result, it cannot be an equilibrium for more than one person to fail to donate. We have only one more point to consider. What if donor A thinks that every other donor will donate? In this case, A knows that if he donates he won’t get the refund bonus, since the contract will succeed. But he also knows that if he doesn’t donate he won’t get anything, but if does donate he will pay $80 and get a public good which is worth $100 to him, for a net gain of $20. Thus, A always has an incentive to donate. If others do not donate, he earns free money. If others do donate, he gets the value of the public good. Thus donating is a win-win, and the public good problem is solved.

I think of a public good as a special case of a more general problem, which is that it is often the case that average cost exceeds marginal cost. In fact, one of my main complaints about courses in basic microeconomics is that they focus on the opposite situation where marginal cost exceeds average cost, which is is not so often observed in reality.

For example, if you are building a cell phone network, the fixed cost of the infrastructure will be high. However, once you have the infrastructure, the marginal cost of transmitting a gigabyte of data will be low. If you charge this low marginal cost, you will never recover your fixed cost. Instead, you need customers to “donate” to pay for the infrastructure. The “donation” comes in the form of a monthly subscription fee.

In a typical cell phone pricing model, the charge for using data is zero until you reach your limit, and then it is ridiculously high. This model helps facilitate price discrimination. You pay a higher subscription fee to be in a higher data tier, meaning that you face the zero price at higher levels of data usage. Price discrimination of this sort helps the cell phone company recover fixed cost while making sure that most customers are charged low marginal costs most of the time.

The cell phone company has the ability to exclude non-subscribers from getting its service. With a public good, such as national defense, you no longer can exclude particular individuals. Either everybody gets it, or nobody gets it. Call this the non-excludability property.

Note: The textbook definition of a public good is one that is non-excludable and non-rivalrous. What I am suggesting here is any good that has very low marginal cost is “pretty close to” non-rivalrous. These “pretty close to” non-rivalrous situations are very common. {And with the Internet, they become more common. As maps turned into Google Maps, the marginal cost of producing a tryptich plummeted. As travel agents became TripAdvisor, the marginal cost of vacation planning services plummeted. etc.] Those that are also non-excludable, and therefore meet the textbook definition of public goods, are less common.

Governments, like private firms, can and do use price discrimination and bundling to cover fixed costs. People pay different tax amounts. People receive bundles of services–you pay for trash collection and government schools, even if you desire one but not the other.

Non-excludability is a different issue. Governments typically solve the problem of non-excludability by using coercion–you are forced to “donate.” Coercion produces the “everybody gets it” outcome instead of the “nobody gets it” outcome.

Alex’s contract is an alternative to coercion. The idea is that a typical consumer will receive a small benefit in the “nobody gets it” outcome, but only if that consumer is willing to donate. With the “everybody gets it” outcome, the consumer gets a benefit above that consumer’s willingness to pay. That is the sense in which either outcome is a win for a consumer who is willing to donate, so that it is in the consumer’s interest to be willing to donate.

My problem is that I cannot see a way to combine Alex’s contract with price discrimination and bundling. And I think that price discrimination and bundling are very important for funding government in practice.

Somewheres vs. Anywheres

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we need more nuanced terminology than “populists” versus “elites.” Thankfully, David Goodhart, a British author affiliated with the London think tank Policy Exchange and the founding editor of Prospect, offers just that. In his forthcoming book, The Road to Somewhere, Goodhart sees “two rival value blocks” that are setting people at odds with each other: those who see the world from anywhere versus those who see the world from somewhere. Educated and mobile, the Anywheres value autonomy, openness, and fluidity. They flourish in a globalized economy: If a software engineer loses his job in one city, he packs up and moves to another, with national boundaries posing little impediment. By contrast, the Somewheres are more rooted and less well educated. They value group attachments, familiarity, and security—they are deeply concerned about the welfare of particular places.

That is from Michael Doran and Peter Rough. I’ve been using the terms Abstract vs. Concrete, or Bobo vs. anti-Bobo. The Bobos are Anywheres because they could be comfortable anywhere among other members of the Abstract class. As I put it in The Three Languages of Politics, they are more comfortable in Prague than in Peoria. The Somewheres need to be located in their home town in order to work and to feel comfortable.

One can argue that the Somewheres and the Anywheres need one another, although neither side would admit it. The Anywheres have the competence in dealing with abstractions in the economy and government. The Somewheres have patriotic solidarity, without which the Anywheres might have their world broken up by face violence and chaos. Note, of course, that the libertarian line is that government is the chief source of violence and chaos, and if you go with that, then patriotic solidarity is a bug rather than a feature. I have trouble buying into this particular libertarian line.

By the way, Goodhart’s book is due to be available July 1.

A kind review of my book

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From an Amazon reader,

the second edition is much better than the first. It’s nearly three times as long (146 pages vs the original edition’s 54), and more importantly gets the ideas across better. And that’s important because this is a very important idea, one that — if read by everyone — would lead to much more understanding all around.

Nonetheless, the second edition of The Three Languages of Politics landed with a thud on Amazon. It’s a book geared toward political peace. But no one is interested in peace when they think they are winning the war.

Advertisement for Three Languages of Politics

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Do you think it will get anyone interested in ordering it?

I tend to doubt it, but I am pretty pessimistic about the book’s prospects in general. I’m proud of the book, but the most avid audience for political books won’t like it and the people who would most like it (other than you folks, of course) are not the most avid about politics.