Category Archives: Libertarian Thought

Saving, Taxation and the Three Axes

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Suppose that Lois Lender and Sammy Spender work at identical jobs, earning identical incomes. However, Sammy spends all his earnings, while Lois saves 20 percent of hers. Do you think that Lois should pay more in taxes than Sammy, as happens when we treat interest, dividends, and capital gains as income?

Along the conservative civilization-barbarism axis, the answer is clearly “no.” Lois is deferring gratification and is entitled to consume more as a result. Sammy is enjoying instant gratification and should not be given favored treatment for doing so.

Along the libertarian freedom-coercion axis, it is hard to say. From this perspective, all taxation is theft. One libertarian argument might be that you want to permit the government to tax as few activities as possible in order to hold down theft. But does that argument provide a rationale for making capital income, rather than labor income, excluded from taxation? Ultimately, I think that a lot of libertarians would fall back on the conservative rationale against taxing capital.

From the progressive’s oppressor-oppressed axis, Lois becomes an oppressor. I realized this when this Douglas Hopkins essay was emailed to me by the author. Hopkins argues for taxing capital income at the same rate as labor income, rather than at a lower rate (remember that the conservative position would be that capital income should not be taxed at all).

Who would have believed that a society governed by majority vote would over-burden its working middle class in order to provide tax preferences to its privileged elite? But that is exactly what we do when we offer preferential tax treatment to investment income. …Reducing the marginal tax rate on earned income and putting more discretionary income in the hands of laborers would be a far more effective method of stimulating savings where we most need it – than continuing to siphon money from the middle class into the hands of current wealth-holders.

Since Hopkins emailed the essay to me, I tried to open his mind to other narratives about capital taxation. Not surprisingly, in his email responses he would not budge. I thought that his responses just recycled the same rhetoric, in which those who accumulate capital are oppressors and those who only have labor income are oppressed.

The essay complains about economists failing to get the oppressor-oppressed narrative. I only wish that were the case. In fact, there is a whole army of economists ready to talk about income and wealth inequality in oppressor-oppressed terms. When the U.S. experiences a sovereign debt crisis, I predict that wealth confiscation will be put on the table as a solution. Why cut spending on the oppressed when there is so much wealth concentrated among the oppressors that could be used to pay down the debt?

I expect that the demonization of “the rich” and “the one percent” will gain more and more traction as the level of government spending ratchets ever upward. And, yes, I am mostly on the libertarian axis on this issue.

Defeatism and Appeasement

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Peter Berkowitz writes,

In these circumstances, conservatives must redouble their efforts to reform sloppy and incompetent government and resist government’s inherent expansionist tendencies and progressivism’s reflexive leveling proclivities. But to undertake to dismantle or even substantially roll back the welfare and regulatory state reflects a distinctly unconservative refusal to ground political goals in political realities.

Former Bush officials Bradley Belt and Philip Swagel join Jared Bernstein and William Gale in proposing a compromise on the “fiscal cliff.”

Our proposals are explicitly temporary. We propose a one- year, $200 billion tax refund to support household spending, with rebate checks of about $1,200 for a couple and an additional $600 a child sent out in the first half of 2013. As with a similar measure enacted with bipartisan support in 2008, the tax rebates would phase out for higher-income households, focusing the cash on low- and middle-income households.

We would add $50 billion for spending to rebuild roads, repair and modernize public schools, and fund scientific research. We see a need for a sustained increase in infrastructure spending, even in the face of the long-term fiscal adjustment. This amount is meant as a start, and in recognition that only so many high-quality projects can be initiated in 2013.

Thanks to Reihan Salam for the pointer.

While Berkowitz, Belt, and Swagel are all reasonable individuals, I reject their approach. I think that defeatism and appeasement are the wrong response to the election and to the Orwellian media environment, in which the definition of fiscal responsibility has been reversed from what I know it to mean.

I may be committed to being charitable to those with whom I disagree, but my disagreement with progressives is profound. I will articulate my views whether or not other people come around to them. I see nothing to be gained by pandering in order to win public support.

Market Failure in Government

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Bryan Caplan writes,

Coming soon: The Tiebout model is wrong in fact, but how can it be wrong in theory?

The Tiebout model is a model of government competition based on exit rather than voice. If you do not like your local government services, then you leave. That forces governments to get better.

I think that the market for government services fails, for a number of reasons. First, exit is difficult. I would gladly trade my Maryland government for the government in Texas or for that of a Swiss canton. But my friends are in Maryland.

Second, there is a lot of bundling. Government is like cable TV. You have to buy the whole package, not just the channels you want. In the case of cable TV, the justification for this is high fixed cost. Once you have the cable hooked up, the marginal cost of a particular channel is low, so it makes some sense to charge a bundled price.

In the case of local government, I think that the bundling is more pernicious. It is not the case that bundling K-12 schools with snow removal serves to spread a high fixed cost that covers both.

In the third part of the widely-unread Unchecked and Unbalanced, I talk about steps that could be taken to make government more competitive by making it easier to exercise the exit option.

The Three Axes and the Middle East

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I have been suggesting that a model of three axes helps to organize ideological differences. Conservatives emphasize the civilization-barbarism axis. Progressives emphasize the oppressor-oppressed axis. And libertarians emphasize the coercion-freedom axis.

Consider the relationship between Israel and the Palestinian Arabs. To conservatives, the Arab tactics, such as suicide bombing and firing rockets from civilian homes into civilian areas, are barbaric. Conservatives tend to be pro-Israel.

Progressives are inclined to view the Palestinians as the oppressed in the oppressor-oppressed narrative. As Secretary of State Clinton put it recently,

the Israelis need to do to demonstrate that they do understand the pain of an oppressed people in their minds.

George Gilder, in The Israel Test, excoriates progressives for this view. He argues that Palestinian Arabs are helped by Jewish success, not oppressed by it. He points out that economic gains for Palestinian Arabs were greatest during the 30 years between the 6-day war and the launching of the intifada. Gilder’s book is a celebration of the positive-sum nature of markets and a condemnation of the oppressor-oppressed narrative. Israel is almost beside the point–it performs for Gilder the same function that risque scenes did for Ayn Rand. Rand lured teenagers into reading pro-capitalist lectures, and Gilder wants to lure Zionistic liberal Jews down the same path.

Although he is pro-market, Gilder does not speak to libertarians, and he certainly does not speak for them. Libertarians generally do not concern themselves with the Middle East, other than to suggest that the United States stay out of it and stop providing foreign aid. However, one strand of libertarian thinking assigns substantial blame to Israel for being ethnocentric and coercive. My guess is that this comes from Murray Rothbard, and it is part of his “revisionist” analysis that argued that the Cold War was the fault of the West, with Soviet Policy defensive. I do not find the revisionist view persuasive. I think that what we now know of the history of Eastern Europe suggests that the Soviets were very pro-active in their “defensive” maneuvers. In an alternative history, suppose that the United States makes no effort to create NATO or express an interest in Europe. According to Rothbardian vision, as a result Western Europe would have been left alone and Eastern Europe would have been freed. I think that the former is doubtful and the latter is certainly false.

Similarly, I doubt the Rothbardian vision that Palestine without a Jewish state would become a secular bastion of individual rights. There are indeed many Arabs who have that as an ideal. But they do not seem to hold sway anywhere. The Middle East strikes me as mired in ethnocentrism, coercion, and I daresay barbarism. I understand that Zionism is not a libertarian ideology. But that does not make me particularly excited by anti-Zionism.

The Three Axes and the 1960s

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Paul Rahe writes,

Liberty requires a responsible citizenry, and the sexual revolution (very much like the drug culture, which was and is its Doppelgänger) promotes irresponsibility of every kind. It promotes dependence, and it fosters an ethos in which those who exercise the virtues fostered by the market are punished for doing so and in which those who live for present pleasure are rewarded.

This is the way conservatives tend to view the cultural legacy of the 1960s. Along the civilization-barbarism axis, they view it as a slide from civilization toward barbarism.

Of course, progressives see it entirely differently. Along the oppressor-oppressed axis, they view the cultural changes as favorable, because women were liberated (a conservative would put scare quotes around “liberated”).

Along the libertarian’s coercion-freedom axis, the picture is mixed. On net, did the cultural changes lead to more or less government coercion? It is hard to say. For example, in the area of Civil Rights, I would argue that getting rid of Jim Crow laws reduced government coercion. (Note that in the early 1960s, prominent libertarians tended to take the states’ rights position, which strikes me as misguided.) However, there is a sense in which today government is overly intrusive on matters of race. (You may be happy with that if your concern is with the oppressor-oppressed axis, and you believe that government is helping the oppressed.) I would prefer that government model treating people as individuals by refusing to classify people by race (You may be very unhappy with my suggestion if you think that the oppressor-oppressed model is significant).

What to think of the unwed mother? To a conservative, she represents a slide down the slope away from civilization. To a progressive, she represents the oppressed “single mom.” To a libertarian, she represents someone who has made a choice. I think that conservatives and libertarians would agree that the state should not be the substitute father. However, it is quite a stretch to suggest that undoing the cultural revolution ought to be on the libertarian agenda.

Targeted Killing

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In a long piece, Glenn Greenwald writes,

Ultimately, what is most extraordinary about all of this – most confounding to me – is how violently contrary this mentality is to the ethos with which all Americans are instilled: namely, that the first and most inviolable rule of government is that leaders must not be trusted to exercise powers without constant restraints – without what we’re all taught in elementary school are called “checks and balances”.

He discusses Presidential exercise of power in the name of fighting terrorism. Read the whole thing. There are many interesting issues here. My thoughts:

1. One hundred years ago, if you did not have a mass of men wearing uniforms, you could not pose much of a threat to society. One hundred years ago, governments did not have available to them the surveillance technology and drone strike technology that some governments have today. I am not saying that I am confident about which old rules, if any, no longer apply, but it is worth thinking about the issue. For a book-length treatment that pre-dates 9/11 (but anticipated it), see David Brin’s The Transparent Society. To see my alternative to Brin’s solution, read The Constitution of Surveillance.

2. My general view is that if we want the government to have new powers, then we ought to build in new checks and balances. I think this applies to much more than just the issue of terrorism, drone strikes, and surveillance. I have written about the generic benefits of having a strong audit function in government.

3. It could be that the best principle to follow when it comes to drone strikes is “never do them.” I think it is easy to develop the hypothesis that they will do more harm than good. It is also quite hard to think of a way to test that hypothesis reliably.

4. At the very least, it would seem better to arrive at a “kill list” by having suspects tried in absentia under some form of courtroom procedure (obviously not with full rights for the accused, and not necessarily public, but subject to audit) than simply have suspects nominated by the intelligence bureaucracy and approved by the President.

5. How does this issue play out with libertarians, progressives, and conservatives? One of Greenwald’s main points is that progressives are not consistent on the issue. They distrusted the Bush Administration but not the Obama Administration. I would say that conservatives fairly consistently support the use of unusual powers. Remember that, as I see it, conservatives’ main focus is on the struggle between civilization and barbarism. Through that lens, provided that you see our side as representing civilization and the members of terror organizations as representing barbarism, drone strikes look good. I would say that libertarians are fairly consistent on the opposite side, because libertarians fundamentally distrust government exercise of power.

6. I think of the essence of progressivism as being on the side of the oppressed against the oppressors. I suspect, as does Greenwald, that because progressives see Obama as on the side of the oppressed they have difficulty imagining that he would abuse power. That does not strike me as a very charitable interpretation of the progressive position. Can one do better?

Axes of Exaggeration

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Partly in response to comments, here are a few more thoughts on the three axes I propose. I think the axes help to predict which threats will be exaggerated by which partisan.

A conservative will exaggerate the extent to which a practice leads to barbarism. Again, I use the example of illegal immigration. A conservative emphasizes that it is illegal, therefore the immigrants are lawbreakers by definition, hence the threat to civilization is intrinsic. In general, I think that conservatives view social trends as much more dire than I do and see society in decline more readily than I do.

A progressive will exaggerate the extent to which people fall into classes of oppressors and oppressed. If you look at the biography of UN Ambassador Susan Rice, she apparently both inherited and married into wealth, received an elite education, worked for McKinsey, and now has a net worth of over $20 million. Yet people on the left describe her as oppressed, because she is African-American and female. I want to say, “Really?”

A libertarian will exaggerate the extent to which a practice represents coercion. They are fond of saying, “If you don’t comply with xyz policy, men with guns will come and take you to prison.” I understand this argument and I generally take it as valid. However, I can also understand how someone with a different point of view might argue that when they pay taxes what they get in return is a fair deal.

I also believe that the three axes are different. A practice can be barbaric without being coercive or oppressive. Body piercing, for example. A practice can be coercive without being oppressive or barbaric. Social Security, for example. A practice can be oppressive without being coercive or barbaric. Owners of restaurants refusing to serve non-white customers, for example.

It is Sometimes Appropriate…

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I wish that people would begin political conversations by conceding that the generic way that their opponents view the world is sometimes correct. Start by saying, “It is sometimes appropriate…”

My hypothesis is that progressives, conservatives, and libertarians view politics along three different axes. For progressives, the main axis has oppressors at one end and the oppressed at the other. For conservatives, the main axis has civilization at one end and barbarism at the other. For libertarians, the main axis has coercion at one end and free choice at the other. So here is what I recommend doing when arguing with each:

When arguing with a progressive, start by saying, “It is sometimes appropriate to view particular classes of people as oppressors and other classes as oppressed.” Slavery is an example. Proceed then to suggest that, on the other hand, there are instances in which this way of looking at things is not so compelling. For example, if you think about it, borrowers who obtained homes with no money down are not necessarily oppressed, and the banks that lent them the money are not necessarily oppressors.

When arguing with a conservative, start by saying, “It is sometimes appropriate to view particular practices as barbaric and to view tradition and authority as protecting civilization.” There are, for example, criminals who commit assault and murder without remorse. Proceed then to suggest that, on the other hand, there are instances in which this way of looking at things is not so compelling. For example, if you think about it, Latin Americans who sneak across the border in order to work in this country are probably more civilized than barbaric.

When arguing with a libertarian, start by saying, “It is sometimes appropriate to view particular policies as coercion.” For example, taking tax revenue to hand out political favors. Proceed then to suggest, that, on the other hand, there are instances in which this way of looking at things is not so compelling. For example, if you think about it, it is plausible that some activities function better as monopolies: water and sewer service; courts; road systems. If competition is unworkable, then provision via elected government should not be considered coercive.

Again, I will have an essay that delves more into this way of characterizing ideological differences.

Being Uncharitable to Those Who Disagree

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In his recent book, Libertarianism: What Everyone Needs to Know, Jason Brennan writes,

American politics has two large camps. The first camp advocates an American police state–one that polices the world at large while policing its citizens’ lifestyles. It advocates having government promote traditional Judeo-Christian virtues. It wants to marginalize or expel alternative modes of life. The second camp advocates an American nanny state–one that tries to nudge and control the behavior of its citizens “for their own good.” Both camps support having the government manage, control, and prop up industry and commerce. In rhetoric, a vicious divide separates the two camps. Yet when in power, the two camps act much the same.

Brennan’s book is in large part an effort to refute the uncharitable views that others hold about libertarians. In that regard, it may be valuable. However, the quoted paragraph offers what I believe is an uncharitable view of progressives and, especially, conservatives.

Consider Bryan Caplan’s Ideological Turing Test. If you were to say, “I advocate an American police state,” would conservatives be convinced by that statement that you share their beliefs? Instead, I think that they would view this as a highly uncharitable characterization of conservatism.

I think that if you want to be convincing in an argument, taking an uncharitable view of the opponent is a bad strategy. Just as libertarians become scornful and defensive toward those who take an uncharitable view of our beliefs (think of people who say “libertarians just want to let people starve” or “libertarians believe markets are perfect”), we can expect others to become scornful and defensive if we take an uncharitable view of their beliefs.

I have written an essay, to appear next month, in which I suggest that the core conservative belief is that civilization is always threatened by barbarism. Think Lord of the Flies. Meanwhile, I think that progressives also see a threat everywhere–the threat of oppression. Think of the Biblical story of the Exodus. Libertarians do not typically focus on barbarism or oppression. Instead, we focus on coercion vs. free choice. We celebrate the fruits of voluntary cooperation via markets. Think I, Pencil.

Suppose that my characterization of conservatives is correct. Then libertarians need to address their concern. How do you keep civilization from sliding into barbarism? Conservatives viewed Communism as barbaric, and they saw a need for our government to defend against it. Similarly, they see terrorism as barbaric, and they see a need for our government to defend against it.

How should this concern with external barbarian threats be addressed? One approach is to deny the threat or to insist that our side is just as bad. I think of Murray Rothbard and his descendants as taking that path (am I being uncharitable?). It seems to me that you have to be incredibly selective in your choice of facts in order to sustain that position. A more promising approach, in my view, is to emphasize the costs and risks of various government strategies (airport screening, foreign invasion) for dealing with these threats.

Conservatives view a number of cultural phenomena as representing a slide into barbarism. There certainly is room to disagree with conservatives about what constitutes barbarism (gay marriage? marijuana?). However, nearly everyone I know shares some of the conservative’s worries. Few would argue that teenage motherhood, heavy drug use, or poor impulse control are desirable. Again, I think that the place to make a stand is to be skeptical of the practical results of government policies that purport to improve social character.

Finally, note that the pattern of demonization is likely to be predictable. Libertarians will demonize their opponents as statists, because what libertarians care most about is the coercion-freedom axis. Conservatives will demonize their opponents as enemies of civilization (“the left wants to destroy our way of life”), because what conservatives care most about is the civilization-barbarism axis. Finally, progressives will demonize their opponents as oppressors (“they want poor people to suffer”), because what progressives care most about is the oppressor-oppressed axis. One psychological benefit of demonization is that it provides a way of coping with people with whom you disagree without having to acknowledge the possible partial validity to their perspective. However, the cost of demonization is that it accentuates animosity–both yours and that of the group that you demonize.