Category Archives: Libertarian Thought

Private Cities

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Mark Lutter makes the case for them.

What if…there exists a system of governance that could provide an alternative to the morass of public interest which stagnate change in cities today? What if these cities could not only provide local public goods, but also institutional change to jumpstart economic growth? I argue that private cities could do just that.

Pointer from Don Boudreaux.

I am puzzled as to why we have not seen more private cities emerge. You would think that large investors, developers, or venture capitalists would try them if there were a profit opportunity. Some possible answers:

1. Cities must emerge naturally. You really cannot start a good city from scratch.

2. It is too difficult to acquire the land to start a private city.

3. Existing governments will not allow private cities the freedom to operate.

Financial Stability, Regulation, and Country Size

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Lorenzo writes,

Something that is very clear, is that “de-regulation” is a term empty of explanatory power. All successful six have liberalised financial markets–Australia and New Zealand, for example, were leaders in financial “de-regulation”. If someone starts trying to blame the Global Financial Crisis (GFC) on “de-regulation”, you can stop reading, they have nothing useful to say.

Pointer from Scott Sumner.

The deregulation story amounts to saying that we know that regulation can prevent a crisis, but a crisis occurred, therefore there must have been deregulation. In fact, the risk-based capital rules that I have suggested helped cause the crisis were at the time they were enacted viewed as regulatory tightening, to correct flaws in the regime that existed at the time of the S&L crisis. The deregulation that did take place was intended to reduce bank profits by making the industry more competitive, not to increase profits or risk-taking.

Lorenzo’s post mostly beats a drum that I have been beating, which is that government tends to get worse as scale increases. He writes,

It is generally just harder to stick it to folks (either by what you do or what you don’t do) in a way that doesn’t get noticed in smaller jurisdictions. (Unless jurisdictions are so small they fly under the media radar but are big enough to be semi-anonymous–urban local government in Oz has a bit of a problem there.)

If I Gave a High School Graduation Speech

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I am going to talk about community service…and why I am against it.

Today, you will see students given awards for community service. I want to explain why I disagree with that.

I think that young people can learn to be good citizens at least as well by day-dreaming, playing, socializing, or working for paying jobs at profit-making enterprises. I am tired of seeing them indoctrinated to believe that only volunteer work for no-profits qualifies as doing good.

We live in a complicated world. Many people try to simplify difficult moral issues by using the shortcut that some of us call the intention heuristic. With the intention heuristic, you say that if your intentions are good, then you are doing good, and conversely. Moreover, most people apply the intention heuristic by saying that non-profits have good intentions while profits are an indicator of bad intentions.

In fact, there are many well-intentioned people involved in profit-making enterprises. And non-profits are hardly free from venality and corruption. But leave that aside. The important point is that in a complicated world intentions do not correlate with outcomes.

If you judge people by how their life’s work contributed to better lives for people and less poverty in the world, then I will gladly stack up the Henry Fords and Thomas Edisons against the Mother Theresas. Collectively, the capitalists and entrepreneurs have a much better claim on our gratitude than do the icons of community service.

What would you rather have in your community? Would you rather have the Wal-mart that hires the workers that other businesses cannot use and for whom politicians can offer no assistance–people with little education or training, including people with disabilities? Or would you rather have the “activists” who fight to keep out Wal-Mart or who insist that they should dictate Wal-Mart’s labor policies?

In a complicated world, good intentions can have terrible consequences. One hundred years ago, many well-intentioned people championed Communism. When Lenin took power in Russia in 1917, he actually believed that the economy would organize itself, and that without profits production would be more efficient and more equitable. When both his ideas and his leadership proved unpopular, he responded with ruthless tyranny. His took his self-righteousness to a mad extreme, but I am afraid that there is a little bit of Lenin lurking among all of those who are so certain that community service is morally superior to business.

If those of you who are graduating today go on to attend a liberal arts college, you will hear constantly from people who equate moral character with political expressions of approval for non-profits and disapproval of business. They judge you not by the content of your character but by the conformity of your political expression. I urge you to reject their doctrines.

If you undertake community service, do so quietly, without righteousness. Do not celebrate community service. Do not give a special place of honor to community service. Above all, do not demean those who serve the community by helping to provide ordinary goods and services through profit-making enterprises. Their community service is honored not by wealthy donors or by doctrinaire teachers. Instead, their community service is honored by ordinary people who voluntarily choose to spend money to obtain what the profit-seekers have to offer. These willing consumers are all the evidence that is needed to show that the occupation of those in business has decent moral worth.

Timothy Taylor on Economics and Morality

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He writes,

After all, many academic subjects study unsavory aspects of human behavior. Political science, history, psychology, sociology, and literature are often concerned with aggression, obsessiveness, selfishness, and cruelty, not to mention lust, sloth, greed, envy, pride, wrath, and gluttony. But no one seems to fear that students in these other disciplines are on the fast track to becoming sociopaths. Why is economics supposed to be so uniquely corrupting?

I think that economics is singled out for opprobrium because of the way that it challenges the intention heuristic. The intention heuristic says that if the intentions of an act are selfless and well-meaning, then the act is good. If the intentions are self-interested, then it is not good.

The intention heuristic is what generates the veneration of non-profits. One can readily suppose that the intentions of a non-profit are better than those of a for-profit institution. Accordingly, it seems morally superior to work at a non-profit. However, once one drops the intention heuristic, the case for non-profits becomes much weaker.

I think that the ability to think beyond the intention heuristic is very important in social and political philosophy. However, there are many people who are heavily invested in the intention heuristic, and it is my hypothesis that such people are anxious to discredit economics.

Work for a Profit

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Let me re-post a recent quotation of the day from Don Boudreaux of Cafe Hayek.

from page 184 of Thomas Sowell’s 1995 book, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy (original emphasis):

The call for more “public service” is then a call for more people to work in jobs not representing the preferences of the public, as revealed through the marketplace, but the preferences of third parties enforced through government and paid for by the power of taxation. Sometimes work for foundations and other nonprofit organizations is also included in “public service.” What is crucial is that public service not be service defined by the public itself through its choices of how to spend its own money in market transactions, but defined for them by third-party elites.

For my recent birthday, my daughters wrote me a song in which they included my line about wishing that one of them would work for a profit. If there is one notion that K-12 teachers and college professors drill into students’ heads, it is that non-profit is good and profit is bad. When I teach about the difference between profits and non-profits, I say that the main difference is that for-profit organizations are responsive to customers while non-profit organizations are responsive to donors.

Another Proto-Libertarian

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Philip K. Howard writes,

Generations of lawmakers and regulators have written so much law, in such detail, that officials are barred from acting sensibly. Like sediment in the harbor, law has piled up until it is almost impossible — indeed, illegal — for officials to make choices needed for government to get where it needs to go.

I might term this sort of thinking proto-libertarianism. A proto-libertarian is someone who, like Peter Schuck, recognizes that government performance falls far short of its promises, yet still believes that government could function effectively at its current size and scope.

In Howard’s case, I would make the following suggestions for climbing further up the mountain of libertarianism.

1. Recognize that it is not only well-meaning government officials who can be prevented from doing the right thing by legal paralysis. Private individuals and corporations also are often prevented from doing the right thing, not only by law but by regulations issued by well-meaning government officials.

2. Consider that legislation may be an inferior form of law not just recently, or occasionally, but usually. Instead, consider the ideas of Bruno Leoni, which suggest that common law that emerges from individual cases represents a spontaneous order, while legislation represents an attempt at top-down control that works less well.

The Constitution, the President and Us

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In Room to Grow, Ramesh Ponnuru writes,

Confronted by presidential lawlessness, some conservatives are tempted to throw up their hands. They conclude there does not seem to be much conservatives can do about it besides such extreme, and for that reason impractical, measures as impeachment. But…we can make the case that the president must be bound by the laws and that executive dereliction of duty is a threat to national well-being…we could try to reestablish a political norm by raising the cost of violations of it and increasing the odds that future presidents will feel bound by it.

Good luck with that. I just finished reading The Once and Future King: The Rise of Crown Government in America, by F.H. Buckley. The main take-away is that once you have a chief executive chosen by popular election, you are in trouble. The “extreme” measure of the legislature removing the head of state happens much more readily in parliamentary systems, Buckley argues. He says we are just about the only country without a parliamentary system that isn’t pretty far along on the autocracy spectrum.

Buckley says that our founders did not want a popularly elected President. They wanted a President chosen by the House of Representatives. But they were afraid to take that idea to the people, so they instead proposed that the selection would go the House in the case of an electoral college deadlock–which they thought would be the norm once George Washington left office. Oops!

Buckley says that the problem with popular election of Prime Ministers, and especially of Presidents, is that they become much more powerful than legislatures. They have national legitimacy, they can present a unified front, and they can dominate the news media. Separation of powers is a pipedream.

Where we’re headed, ultimately, is for the Presidency to become more and more powerful, until we have the equivalent of Hugo Chavez or Vladimir Putin. That’s Buckley’s version of “Have a nice day.”

Immigration and Skills

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Reihan Salam writes,

While only 6 percent of working-age native-born Americans do not have a high school diploma, the share of working-age immigrants without a high school diploma is over 25 percent. And though immigrants represent 16 percent of the U.S. workforce, they represent 44 percent of workers without a high school diploma.

Salam clearly sees it as a mistake that the U.S. encourages more low-skill immigration than high-skill immigration. However, this is not as obviously correct as it appears. One interesting question is how much the U.S. raises the productivity of low-skilled workers when they cross the border. If the answer is “a lot,” then the case for restricting low-skilled immigration is not particularly strong.

From the conservative point of view, the dire scenario is one in which low-skilled immigrants and their families ultimately consume more in government services than they produce. The libertarian answer would be “more immigration, less social welfare spending,” neither of which seem like popular policy positions at the moment.

The Passivity of the Progressive College Administrator

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In a long article about controversies about rape at Swarthmore College, Simon van Zuylen-Wood writes,

The second central remnant of the school’s Quaker legacy — the “peaceful resolution of conflicts” — resides not in the student body, but in the administration. “From the very smallest scale to the largest scale, the college does have a long history of finding a way through that won’t leave half the people in any room feeling like they lost,” says Swarthmore history professor Tim Burke. “It means, for one, we tend to defer difficult decisions.”

My remarks.

1. I do not think that the Quaker tradition has anything to do with it. The passivity of college administrators is everywhere. They are passive when it comes to alcohol abuse. (I wish I had saved the email sent to parents by the President of Muhlenberg several years ago, with its helpless hand-wringing over the fact that more than a dozen students had been hospitalized with alcohol poisoning during the first semester. I wrote back saying that I could make a few suggestions to the admission office that would probably suffice to solve the problem.) They are passive when it comes to students exercising a heckler’s veto of speakers. They are passive when it comes to anti-semitism.

2. The article made me wonder how there came to be an overlap between “casual sex about which I felt ambivalent” and “rape.” It seems to me that one ought to be able to draw a reasonably clear line between the two.

3. Colleges seem to want to be separate jurisdictions in which ordinary laws do not apply. They do not want their students to be arrested and prosecuted for vandalism, violations of drug laws, or rape. Instead, they prefer their own judicial processes.

4. How does this issue play out along the three axes? Suppose that along the oppressor-oppressed axis you think women are oppressed with regard to sex. In that case, it might seem reasonable to believe that women are entitled to casual sex and also to later claim that casual sex about which they felt ambivalent was rape. Along the freedom vs. coercion axis, I think you would support colleges that want to apply their own laws and judicial processes, and let students and parents choose colleges knowing what the rules are.

But it turns out that my views on the issue are more along the civilization vs. barbarism axis.

–I think that what is missing from college is the concept of punishment. I think you have to decide whether students are adults or children, and punish accordingly. If you treat students as adults, then you put them through the legal system. If you treat them as children, then you limit their privileges.

–If students are exempt from adult law enforcement, then colleges should reinstate what used to be called “parietal rules.” No sex, no drinking, no drugs. On the other hand, if students are adults, then they ought to face adult consequences.

–If I were a school administrator, I would put students into the “adult” category, and I would tell students and parents to expect that treatment. I would only have a campus judicial process for academic issues, not for issues involving alcohol or sex. That means allowing local police to patrol campus and enforce laws. If drunk students are arrested for disorderly conduct and vandalism, so be it. If students face the same risk of drug prosecution that someone faces off campus, so be it. If they can be charged with rape and convicted in court, so be it. I certainly would not discourage victims from pressing charges. On that note, Heather MacDonald writes,

But the main reason “survivors” don’t demand to bring their cases to criminal court is that they know that what they have experienced is something far more complex and compromised than criminal sexual assault, almost invariably involving mixed signals, ambiguity, and a large degree of voluntary behavior on their part.

That is certainly the impression that I took away from the Swarthmore article. If I were an administrator, I would not try to set up the college as the official arbiter of such cases.

–When a sexual advance becomes too persistent or aggressive, I would encourage the victim to be very assertive, to the point of screaming “rape” rather than giving in. You are entitled to your body and your personal space, and that deserves priority over protecting the other person’s feelings.

–Colleges go out of their way to make condoms available (e.g., resident assistants must keep them in a candy jar for students to be able to access) and to ensure that students know how to use them. I would say do the same thing with rape whistles.

UPDATE: Megan McArdle has similar thoughts:

If students are adults, and the college is not supposed to be in charge of their sex lives, then the correct place to adjudicate sexual crimes is in the courts, not the campus judiciary system.

Two Affirmations

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1. From Jason Potts.

For conservatives, public funding of arts and culture is worthy when it supports the values of civilisation, which means a John Ruskin type view of the best of cultural heritage: museums, galleries, botanical gardens and opera will always do well here. What this group is hostile to are threats against that – barbarism – which come from the transgressive, edgy frontiers of arts and culture.

He offers a three-axis model take on arts funding.

2. From Tim Harford.

People are too used to the idea that someone else – the state or an insurer – will pay the bill. Free choice is nice but what everyone seems to prefer is free treatment.

Pointer from Mark Thoma. I call it the desire to be insulated from paying for health care.