Category Archives: Libertarian Thought

David Brooks and Mark Shields on Obamacare

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The transcript is here.

At one point, Shields says

this is beyond the Obama administration. If this goes down, if the Obama — if health care, the Affordable Care Act is deemed a failure, this is the end — I really mean it — of liberal government, in the sense of any sense that government as an instrument of social justice, an engine of economic progress, which is what divides Democrats from Republicans — that’s what Democrats believe.

At this stage, they are inclined to put the blame on the American people. Here is Brooks:

My big thought is, are we no longer the kind of country in which you can pass this sort of thing? And by that, I mean, when you were passing the New Deal or the Great Society, there were winners and losers.

But the losers felt part of a larger collective and they said, OK, I’m going to take a hit for the team. We may no longer have that sense of being part of a larger collective, so when you’re a loser, you just say, I’m a loser. And, as a result, you’re just not willing to be part of the group.

…we have lower social trust, lower faith in the institutions, lower sense of collectivity.

And those are deep social trends that have been building for decades, but it just makes it much harder to sustain this kind of big legislation.

Shields agrees:

The we-ness of our society, the we, that we’re all in it together, has really been diminished.

To be charitable, this narrative could be correct. That is, it could be that the wonks who designed Obamacare had the right idea, and that the American people are too selfish and too unwilling to trust government to allow it to be implemented honestly and properly.

However, I see things differently.

Start by asking why it is that Healthcare.gov is not as good as Amazon.com or Kayak.com. One answer is that the government is not good enough at deploying information technology. However, I think that is only a shallow answer.

The deeper answer is that when we look at Kayak and Amazon, we are seeing the survivors that emerged from an intense tournament. In this tournament, thousands of competing firms fell by the wayside. Competitors tried many different business models, web site designs, business cultures, and so on.

Healthcare.gov did not emerge from this sort of competition. It came about because Congress passed a law.

Central to my approach to economics, and that of other economists who are variously called Austrians or market-oriented economists or Smith-Hayek economists or what have you, is the respect that we have for the evolutionary process by which markets produce innovation and excellence. My sense is that what divides us from pundits like Brooks and Shields, and even from most economists, is the credit that we assign to market evolution rather than elite expertise as a process for solving problems.

Thoughts on Secession

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Alberto Mingardi writes,

We are sometimes vote-intoxicated: we live in countries that consider voting the legitimate means for collecting [sic] decision making for everything but the extent and the boundaries of the very political community that is supposed to make decisions by voting. The bureaucratic apparatus is happy to have people decide democratically on other peoples’ money and lives, but not to the ultimate question of the survival of a nation state in its current geographical form. Too often secessionist movements are kicked out of the “respectable” public debate by quasi-religious appeal to the apparently immortal value of “national unity”.

I think you will find in general that the political class supports “reforms” that strengthen incumbents institutions and people in power, and that it opposes reforms that strengthen ordinary individuals. Making secession and “foot-voting” easier are examples of the latter.

Three Axes the Minimum Wage, and Fair Trade

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A reader writes,

However, progressives cannot understand that business owners will reduce staffing when labor costs more. It’s incomprehensible to them. They keep talking about the emotions of those who are making low salaries.

From a three-axes perspective, the problem is pretty simple. A profitable firm pays low wages to workers, either at home or overseas. The firm is presumably able to “afford” to pay workers more, so should it not be pressured to do so? In this context, the firm looks an awful lot like an oppressor, and the workers look an awful lot like the oppressed.

The libertarian (or economist’s) counter is that the workers may end up worse off as a result of a “fair trade” boycott or a higher minimum wage. If these measures cause layoffs, then the workers who lose their jobs are certainly not better off.

I think that the hard part is getting progressives past the intuition that firms can “afford” to pay more. One of the reasons that I try to have my class go through the exercise of planning a simple start-up business is so that they can see that profit is not something that automatically accrues to any business. In general, I think that it is important to get people to think about issues from the standpoint of an entrepreneur, rather than simply treat business as “the other” and the enemy.

Fantasy Despot Syndrome

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In this essay, I offer a deeper diagnosis of the problems with healthcare.gov.

Cutler’s memo strikes me as shallow and self-serving. He is shocked, shocked to find that when his pet health care reforms are passed through the political process, their implementation is hampered by politics. In that sense, Cutler suffers from Fantasy Despot Syndrome.

I go on to contrast people who try to solve problems and undertake reforms by starting businesses with people who try to impose solutions through the political process.

Meanwhile, I’m seeing reports of progress on fixing the web site. It is impressive that the tech folks have been able to improve the performance of the system without any major setbacks (data losses or multi-day outages). They must have a pretty robust release process in place.

Getting the front-end enrollment process functioning should give them time to iron out the remaining technical problems. However, other business issues remain with this startup-without-a-CEO. Will individuals who are not experienced health insurance shoppers be able to figure out how to choose?. Do the insurance plans have enough doctors willing to participate to sustain consumer satisfaction? etc.

The Minogue Litmus Test

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My review of The Servile Mind is available. I do not think liberaltarians or bleeding-heart libertarians will be comfortable with Minogue’s swipes at cultural decadence. My conclusion:

Overall, I would say that for libertarians Minogue’s book provides a litmus test. If you find yourself in vigorous agreement with everything he says, then you probably see no value in efforts to work with progressives to promote libertarian causes. The left is simply too dedicated to projects that Minogue argues undermine individual moral responsibility, and thus they are antithetical to liberty. On the other hand, if you believe that Minogue is too pessimistic about the outlook for freedom in today’s society and too traditional in his outlook on moral responsibility, then you would feel even more uneasy about an alliance with conservatives than about an alliance with progressives.

Extortion vs. Trade

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Apropos Halloween, George Paci writes,

Thursday, American children will be going door-to-door making notional
threats in exchange for sugary foodstuffs. (This may or may not be a
good analogy for a particular popular political stance.)

Friday, American children will be making piles out of their loot:
stuff they want to keep, and stuff they want to swap for treats they
actually like. They will then commence creating and participating in
a market, trading things they don’t want for things they want, negotiating
exchange rates between various bite-size currencies, and sometimes
trading things they do want for things they want more, or for more of
something else they want.

They do this entirely out of self-interest: because it will increase
their happiness. No adult needs to coerce them into trading, or
even suggest or facilitate it.

There is no better day to teach kids about the benefits of trade (and
about subjective value), so I propose we promote November 1 as
Benefits from Trade Day.

Sentences to Ponder

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From Robert Wright.

Self-doubt can be the first step to moral improvement. But our biases are so subtle, alluring, and persistent that converting a wave of doubt into enduring wisdom takes work. The most-impressive cases of bias neutralization I’m aware of involve people who have spent ungodly amounts of time—several hours a day for many years—in meditative practices that make them more aware of the workings of their minds. These people seem much less emotion-driven, much less wrapped up in themselves, and much less judgmental than, say, I am. (And brain scans of these highly adept meditators have found low levels of activity in brain networks associated with self-regarding thought.)

Read the whole thing. I think he is saying that utilitarianism is insufficient as a moral framework, because utilitarians with too much hubris can be morally dangerous. Maybe you will read him differently.

They Change Their Minds

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Vernon Smith writes,

My mother was a socialist and her Wichita friends were Marxian socialists; she had only an eighth grade education but that did not keep her from running for Kansas State treasurer on the Socialist ticket. In 1936 when I was nine years old I helped pass out program leaflets for Norman Thomas, candidate for President against Roosevelt. He used to complain that Roosevelt got elected by stealing his program. At 18 (1945) I would have been a member of the YPSL (Young People’s Socialist league).

This is from a very interesting project to ask Nobel Laureates to describe the evolution of their ideological views. Pointer from Tyler Cowen.

Some remarks:

1. Several other Nobel laureates were socialists at one point, although none remained so at the time they responded to the survey. Those of you who are under 55 may have a hard time appreciating how central the issues of socialism, Communism, and anti-Communism were in the middle of the twentieth century. In fact, if you don’t understand the role that the socialist ideal played in American intellectual life from 1930 until at least 1960, you cannot fully understand that period.

2. As we start to see more Nobel laureates born after 1950, I expect to see a sharp drop-off in the number for whom socialism played any role at all in their intellectual development. In a way, this is too bad, because I think that it is easier to get stuck feeling comfortable as a conventional liberal than as a socialist. To be a socialist, you have to think through how socialism can work in theory and how it has worked out in practice, and sooner or later you become are likely to change, particularly if you study economics. It seems that once a former socialist becomes skeptical, he or she can wind up almost anywhere else on the ideological spectrum. In contrast, if you just think that “government can do good things,” that is a more robust point of view. You are less likely to undergo a period where you are reconsidering everything.

3. There is not a social conservative among the lot.

4. I never would have guessed that Peter Diamond was a conservative who read National Review in his younger days. In those days, I imagine a nice Jewish boy would have gotten in less trouble sneaking Playboy into the house.

5. In a summary analysis, Daniel Klein says that of the 21 Nobel Laureates he has been able to determine has having moved ideologically, 16 moved in what he calls the classical liberal direction, while 5 moved the other way.

6. I myself have migrated in the classical liberal direction from the far left (not socialist, though). You can read an essay I wrote about that if you buy Marc Guttman’s book.

Jeffrey Friedman on Voter Ignorance

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He writes,

the libertarian conclusion does not follow from the rational ignorance premise. Rational ignorance theory blames public ignorance on the low incentive to become a well-informed voter. Raise the incentives and you solve the problem. One way to raise the incentives would be to make government far more powerful than it now is, so that everyone had a much higher stake in electoral outcomes. Another solution would be to turn state power over to highly knowledgeable experts who would be fired or even fined if their policies didn’t work.

Yet another solution was suggested by Bryan Caplan: pay voters to become informed.

While voter ignorance is a problem for fans of democracy, it is not an insurmountable problem. Elite hubris is the killer. Yes, voters think they know more than they do about public policy. But elites also think that they know more than they do. And it is the elites who end up more dangerous. Read Jeffrey Friedman’s whole essay.

Brad DeLong Makes an Omission

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He writes,

So what do economists have to say when they speak as public intellectuals in the public square? As I see it, economists have five things to teach at the “micro” level–of how individuals act, and of their well-being as they try to make their way in the world. These are: the deep roots of markets in human psychology and society, the extroardinary [sic] power of markets as decentralized mechanisms for getting large groups of humans to work broadly together rather than at cross-purposes, the ways in which markets can powerfully reinforce and amplify the harm done by domination and oppression, the manifold other ways in which the market can go wrong because it is somewhat paradoxically so effective, and how the market needs the state to underpin and manage it on the “micro” level.

Pointer from Mark Thoma.

The phrase “the ways in which markets can powerfully reinforce and amplify the harm done by domination and oppression” locates Brad on the three-axis model, doesn’t it? You can read his post and see whether his examples prove his point. I tend to think not, but I do not want to focus my post on this issue.

What is absolutely missing in Brad’s list is any mention of public choice. Thus, we are left to take the enchanted view of the state as the cure for all of the market’s problems. Is he saying that economists are not qualified to speak about the flaws in government processes? Or is he saying that even though we know something about incentive problems and institutional weaknesses of government, we should shut up about it?

If Brad were to employ this gambit in a debate on economic philosophy, I think he would be dead out of the opening, as a chess player would put it.